Sagacious Legal Pty Ltd v Wesfarmers General Insurance Ltd (No 2)

In the case of Sagacious Legal Pty Ltd v Wesfarmers General Insurance Ltd (No 2), the insured sought to amend their reply to include new pleas under sections 13 and 14(1) of the Insurance Contracts Act 1984 (Cth), alleging that the insurer was in breach of the duty of utmost good faith and could not rely on an exclusion of liability. The insurance policy included an exception to the exclusion, which required the insured to assume an onus of proof if they wished to establish that they did not consent to a motor vehicle being driven by or being in the charge of Mrs O’Shanassy when or if she was affected by alcohol, and also to prove that the insured had no reason to suspect that the driver was under such influence. The court had to determine whether the amendment to the reply should be allowed on the first day of the hearing, as the proposed amendment raised significant new issues that had not been adequately investigated prior to the trial.

The court considered whether the insured's proposed amendment to the pleadings should be allowed, given that the current pleadings were already complex and detailed. The court held that the ordinary course of pleading required an exception to an exclusion to be pleaded in a reply or replication. The allegation of a breach of duty of utmost good faith by the insurer required the pleading of material facts. The proposed amendments raised significant new issues that had not been thoroughly investigated, and it would be unfair to grant the proposed amendments given the lack of investigation into these issues.

The court concluded that the proposed amendments sought to rely on matters in the notation, which provided a contractual exception from the exclusions in the policy. The insured had an obligation to raise with the insurer the basis on which it did not consent to Mrs O’Shanassy driving and, if it wished to have the exclusion not apply to it, to prove that the insurer had no reason to suspect that she was under the influence of alcohol at the time. The court found that the insured must discharge a burden both of pleading and proving that the exception is made out, namely, that it did not consent to her driving the vehicle at the time in that condition and had no reason to suspect that she was in that condition.

ORDERS:
1. The amended application is refused.