Sun Alliance Australia Limited v Moulds (T/As L.J. Moulds & Son Bobcat Hire)

Sun Alliance Australia Limited appealed to the New South Wales Court of Appeal against a decision of the District Court of New South Wales. The dispute concerned an insurance policy issued by Sun Alliance to L.J. Moulds & Son Bobcat Hire. The insured sought to claim under the policy for damage to a bobcat, which had been stolen. Sun Alliance denied liability, alleging that the insured had breached a condition of the policy by failing to disclose material facts relating to the risk.

The primary legal issue before the Court of Appeal was whether the insured had breached the duty of disclosure under the *Insurance Contracts Act 1984* (Cth) by failing to inform Sun Alliance of certain matters concerning the use and security of the bobcat. Specifically, the court had to determine if the non-disclosure of these facts was a breach of the duty of utmost good faith and if such a breach entitled Sun Alliance to avoid the policy.

The Court of Appeal considered the scope of the duty of disclosure owed by an insured to an insurer. It held that the insured's failure to disclose that the bobcat was being used for hire and that it was not kept in a locked compound at night constituted a breach of the duty of disclosure. The court found that these were material facts that a reasonable insurer would have taken into account when assessing the risk and determining the premium. Consequently, Sun Alliance was entitled to avoid the policy *ab initio* (from the beginning) due to the non-disclosure. The appeal was allowed, and the judgment of the District Court was set aside.