Ferrcom Pty Limited v Commercial Union Assurance Co of Australia Limited

The applicant, Ferrcom Pty Limited, sought special leave to appeal to the High Court of Australia from a majority decision of the Court of Appeal of New South Wales. The respondent was Commercial Union Assurance Co of Australia Limited. The dispute concerned the interpretation and application of section 54(1) of the *Insurance Contracts Act 1984* (Cth), which deals with the insurer's interests being prejudiced by the insured's non-disclosure.

The central legal issue before the High Court was whether the Court of Appeal erred in determining the amount that fairly represented the extent to which the respondent insurer's interests were prejudiced by the appellant's non-disclosure. Specifically, the applicant argued that the Court of Appeal incorrectly applied a subjective rather than an objective test in assessing this prejudice. The applicant contended that the trial judge, Mr Justice Giles, had not applied a subjective test but had instead made an assessment within the ambit permitted by the subsection, considering factors such as the particular insurance offered and its price.

The applicant submitted that the Court of Appeal's characterisation of the test as "subjective" was misleading. They argued that the trial judge was entitled to consider the fact that the insurer offered the insurance at a particular price, and that this involved taking into account the specific circumstances, including the broker involved. The applicant's position was that the trial judge's assessment was not confined to what that particular insurer would have done with that particular broker, but rather a broader consideration of what fairly represented the prejudice. The applicant sought to persuade the High Court that the Court of Appeal should not have allowed the appeal from the trial judge's decision.