Fishwives Pty Ltd v FAI General Insurance Co Ltd

Fishwives Pty Ltd (the appellant) appealed a decision concerning an insurance claim against FAI General Insurance Co Ltd and two other insurers (the respondents). The dispute arose from FAI's denial of indemnity under an architects' indemnity insurance policy. The appellant had notified a claim against the insured during the policy period, but the insurers contended that the insured had failed to disclose material circumstances that may have given rise to a claim in its proposal for insurance. The appeal was heard in the Supreme Court of New South Wales.

The primary legal issues before the court were whether the insured had failed to make a material disclosure in its insurance proposal, and consequently, whether the insurers were entitled to disclaim liability. Specifically, the court considered whether the insured's principals were aware of circumstances that might give rise to a claim at the time of the proposal, and if so, whether this constituted a breach of the policy's disclosure obligations. A related, though ultimately unaddressed, issue was the applicability of section 6(4) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) to a "claims made and notified" policy.

The court reasoned that the insured's proposal form contained a question asking if the principals were aware of any circumstances which might give rise to claims, whether they considered themselves liable or not. Evidence, including a memorandum from March 1990 and subsequent reports, indicated that the insured's principals were aware of issues concerning dislodged granite tiles from the building's external wall as early as 1990 and again in 1992. The court found that this awareness constituted circumstances that could give rise to a claim, and the failure to disclose these circumstances in the proposal was a material non-disclosure. This non-disclosure, coupled with an exclusion clause in the policy relating to claims and circumstances noted on proposal forms, provided a basis for the insurers to disclaim liability.

The appeal was dismissed with costs. The cross-appeal by FAI General Insurance Co Ltd concerning costs was also dismissed with costs.