Garage Fashions Pty Ltd v Insurance Australia Ltd trading as NRMA Insurance

Garage Fashions Pty Ltd sought damages from Insurance Australia Ltd trading as NRMA Insurance for losses sustained due to a fire that destroyed the plaintiff's retail fashion shop. The case involved determining the extent of the insurance coverage, specifically whether the replacement cost of stock, fixtures, and fittings should include mark-ups, expenses, and profits. The plaintiff's businesses, both retail and wholesale, were no longer trading, and the stock had been purchased through the wholesale company. The claim included business interruption losses and interest under section 57 of the Insurance Contracts Act 1984 (Cth).

The primary legal issues before the court were the proper calculation of the replacement cost of the stock, whether the claim should account for mark-ups, expenses, and profits, and the extent of business interruption losses. The court needed to consider expert evidence provided by both parties regarding the value of the stock and the business interruption. It also had to determine the appropriate interest rate to be applied to the claim under section 57 of the Insurance Contracts Act.

The court examined the evidence and determined that the replacement cost should reflect the actual cost of purchasing the stock without any mark-ups, expenses, or profits. It found that the experts' views on the value of the stock were not reliable indicators of the replacement cost. Regarding business interruption, the court assessed the evidence and concluded that the plaintiff had suffered losses. The court applied section 57 of the Insurance Contracts Act to calculate the interest on the claim, taking into account the specific provisions of the statute.

The court ordered Insurance Australia Ltd to pay Garage Fashions Pty Ltd damages for the loss of stock, fixtures, and fittings, along with business interruption losses and interest as determined by the court. The order specified the amount to be paid and the interest rate applicable to the claim.