Hammer Waste Pty Ltd v QBE Mercantile Mutual Ltd

Hammer Waste Pty Ltd brought a case against QBE Mercantile Mutual Ltd regarding the interpretation of an insurance policy, the applicability of implied terms, and the insurer's duty of disclosure, among other issues. The central dispute was whether QBE was liable under the insurance policy and if it could exclude its liability by relying on ambiguous terms or implied terms. The case was heard in the Federal Court of Australia.

The court had to determine the proper interpretation of ambiguous terms in the insurance policy, whether an implied term could exclude liability, and whether QBE acted in good faith by taking advantage of the ambiguity to deny liability. Additionally, the court examined the insurer's duty of disclosure under the Insurance Contracts Act (Cth) and whether QBE was entitled to declarations regarding its subrogation rights before fully paying its liability under the policy.

The court ruled that liability under the insurance policy could only be excluded by clear and express terms, applying the contra proferentem rule strongly against insurers who attempted to use ambiguous words and implied terms to deny liability. The court found no implied term could exclude liability as it would contradict the express terms. The court also held that a matter was not considered "known" for disclosure purposes if the insured's agent forgot to inform the insured, as the agent was not consciously aware that it had forgotten. The court emphasised that insurers relying on ambiguous terms and implied terms to deny liability were not acting in good faith, making indemnity costs against the unsuccessful insurer appropriate.

The court ruled in favour of Hammer Waste Pty Ltd, awarding costs against QBE Mercantile Mutual Ltd.