Greentree & Anor v FAI General Insurance

Greentree and another (the appellants) appealed to the High Court of Australia against a decision of the Full Court of the Supreme Court of New South Wales, which had affirmed a judgment in favour of FAI General Insurance (the respondent). The dispute concerned the respondent's liability under a motor vehicle insurance policy for damage sustained by the appellants' vehicle. The appellants had sought to recover the cost of repairs to their vehicle, which had been damaged in an incident involving a third party.

The central legal issue before the High Court was whether the respondent was entitled to avoid the insurance policy on the grounds of material non-disclosure or misrepresentation by the appellants at the time the policy was entered into. Specifically, the court had to determine whether the appellants had failed to disclose material facts relating to the use of the insured vehicle, which would have influenced the respondent's assessment of the risk and the premium to be charged.

The High Court considered the principles of disclosure and misrepresentation in insurance law, particularly as codified in the *Insurance Contracts Act 1984* (Cth). Their Honours applied the test of materiality, which requires an objective assessment of whether a reasonable insurer would have regarded the undisclosed or misrepresented fact as relevant to the decision to insure or the terms of the insurance. The court found that the appellants had failed to disclose relevant information concerning the intended use of the vehicle, which was material to the risk undertaken by the insurer.

Consequently, the High Court dismissed the appeal, upholding the decision of the Full Court of the Supreme Court of New South Wales. The respondent was therefore entitled to avoid the policy of insurance.