INSURANCE – CONSTRUCTION – AMBIGUITY – IMPLIED TERM – Whether liability under insurance policy excluded upon true construction of ambiguous words in excess clause – whether liability excluded by implication of term. HELD: Liability not excluded except by clear express terms – contra proferentem rule to be strongly applied against insurers who take advantage of ambiguous words and implied terms to deny liability – principles discussed – no implied term because contrary to express term.
INSURANCE – GOOD FAITH – whether insurer acting in good faith in taking such points – INSURANCE – DUTY OF DISCLOSURE – “MATTER KNOWN” – Insured does not know matter requiring disclosure because insured’s agent forgets to inform insured of relevant fact – agent not conscious that it has forgotten to inform insured – whether agent “knows” matter relevant to insurer’s decision – what is meant by “matter known” for purposes of s.21(1) Insurance Contracts Act (Cth).
SUBROGATION – Whether insurer entitled to declarations as to enforcement of rights of subrogation before insurer has paid out in full its liability under the insurance policy.
EQUITY MAXIMS – Maxim “equity regards as done that which ought to be done” explained.
INDEMNITY COSTS – Whether insurer who relies upon ambiguous words and implied terms in its insurance policy in order to deny liability is acting in good faith – whether indemnity costs against unsuccessful insurer in such circumstances is appropriate.
Tim Castle appeared for the first defendant.