Galaxy Homes Pty Ltd v The National Mutual Life Association of Australasia Ltd (No 2)

The Full Court of the Supreme Court of South Australia considered an appeal by Galaxy Homes Pty Ltd (appellant) against The National Mutual Life Association of Australasia Ltd (respondent) concerning a life insurance policy. The dispute centred on whether the appellant was covered by the policy at the time a claim was made, and the proper interpretation of the policy's terms, particularly regarding pre-existing illnesses and the assessment of an insured's prognosis.

The court was required to determine several legal issues. Firstly, whether a claimable event occurred during the currency of the policy, thereby entitling the appellant to coverage. Secondly, the court had to ascertain the admissible evidence for determining the prognostic character of an illness, specifically whether it should be limited to information available at the time the illness was said to have occurred. Finally, the court needed to construe clause E.1 of the policy, which dealt with pre-existing illnesses, and consider whether section 47 of the *Insurance Contracts Act* would preclude the application of this exclusion.

The court reasoned that the appellant was covered by the policy because a claimable event occurred within its currency. Regarding the prognostic character of the illness, the court affirmed the judge's determination that only evidence known at the time the illness occurred was admissible. This principle was supported by distinguishing the case from situations involving future economic loss and by reference to established case law, emphasizing that the assessment must be based on the prognosis as it stood at the relevant date, not on subsequent events that might retroactively inform that prognosis. However, the court found in favour of the respondent on the construction of clause E.1, holding that the appellant did have a pre-existing illness that excluded coverage under that clause, and that section 47 of the *Insurance Contracts Act* did not operate to prevent this exclusion.