Suncorp General Insurance v Evans & Anor

Suncorp General Insurance Limited appealed to the High Court of Australia against a decision of the Full Federal Court concerning the interpretation of a home building insurance policy. The dispute arose after the respondents, Mr. and Mrs. Evans, made a claim under their policy for damage to their home caused by a termite infestation. Suncorp denied liability, asserting that the policy excluded damage caused by termites. The Full Federal Court had found in favour of the Evans, holding that the policy did not exclude their claim.

The High Court was required to determine whether the exclusion clause in the Suncorp home building insurance policy, which excluded "loss, damage, destruction or disablement caused by or arising from or in consequence of or contributed to by... termites", operated to exclude the Evans' claim for damage caused by a termite infestation. The central legal issue was the proper construction of this exclusion clause in the context of the policy as a whole and the nature of the damage claimed.

The High Court, comprising Gleeson CJ and McHugh J, allowed Suncorp's appeal. Their Honours reasoned that the plain and ordinary meaning of the words in the exclusion clause clearly indicated that damage caused by termites was not covered by the policy. They found that the termite infestation was the direct cause of the damage, and therefore fell squarely within the exclusion. The Court rejected the argument that the exclusion only applied to the termites themselves rather than the damage they caused, finding this interpretation to be commercially unreasonable and contrary to the clear language of the policy. The Court concluded that the Full Federal Court had erred in its interpretation of the exclusion clause.