Toikan International Insurance Broking Pty Limited v Plasteel Windows Australia Pty Limited & Ors; Plasteel Windows Australia Pty Limited & Anor v Salamander Investment Corporation Pty Limited

The case before the High Court of Australia involved two applications for special leave to appeal. The first application was brought by Toikan International Insurance Broking Pty Limited, an insurance broker and one of the original defendants. The second application was brought by Plasteel Windows Australia Pty Limited and Plasteel Industries (referred to collectively as the "occupiers"). The dispute arose from a fire in February 1987 at premises occupied by the Plasteel companies. The occupiers had purchased the business as a going concern from a receiver. Following the fire, the occupiers made a claim upon their insurer, Sun Alliance Australia Limited (also a respondent), which denied liability, partly on the basis that no contract of insurance existed between itself and the occupiers. The occupiers had initially sued Toikan for negligence, alleging a failure to ensure proper insurance was in place.

The primary legal issues for determination in the first application concerned the existence of a contract of insurance between the occupiers and Sun Alliance. Specifically, Toikan sought to argue that a novation had occurred, which would establish such a contract. Alternatively, Toikan sought to rely on the effect of section 48 of the *Insurance Contracts Act* (Cth) to establish a contract. The third issue raised was the question of non-disclosure. Toikan contended that if either the novation or section 48 argument succeeded, it would demonstrate a contract of insurance, thereby discharging its duty as a broker to obtain such insurance, and rendering the non-disclosure issue moot from its perspective.

Toikan's argument regarding novation aimed to establish that the original insurance arrangements had been replaced by a new contract between the occupiers and Sun Alliance. The application highlighted that the principles of novation, particularly in a strict sense, had not been extensively considered by the High Court, with the most detailed examination being in a dissenting judgment in *Olsson v Dyson*. The alternative argument under section 48 of the *Insurance Contracts Act* also sought to establish a contractual relationship between the occupiers and the insurer. The success of either of these arguments would mean that Toikan had fulfilled its brokerage obligations, irrespective of any issues of non-disclosure.