- One of the more polarising questions in Australian insurance law is what is required of an insured by the duty of disclosure in s 21 of the Insurance Contracts Act 1984.
- The mixed subjective and objective tests in the duty of disclosure continue to demonstrate the tension between an insured and an insurer for matters outside a proposal.
- Subsequent remedial questions are also difficult because of that tension.
One of the more polarising questions in Australian insurance law is what is required of an insured by the duty of disclosure in s 21 of the Insurance Contracts Act 1984 (‘ICA’). It is a question quickly followed by another polarising question, being the effect of such non-disclosure on cover pursuant to s 28 of the ICA.
The duty question is probably polarising because s 21 involves a mixed subjective and objective test for assessing an insured’s knowledge of what is relevant to the insurer. Assessing ‘knowledge’ necessitates understanding the contextual, itself a nuanced question of practice and practicality.
The s 28 ‘effect’ question is probably polarizing because it often becomes infected by the arguments that proceed it in respect of the operation of s 21.
This then results in one person’s declinature being another’s acceptance. A recent example arose from the New South Wales Court of Appeal in Stealth Enterprises Pty Ltd t/as The Gentlemen’s Club v Calliden Insurance Limited  NSWCA 71 where two central disclosure issues arose on appeal, namely:
- whether a reasonable person in the circumstances of the insured appellant brothel owner (‘Insured’) could be expected to know that an association between it and the Comancheros bikie gang was relevant to the respondent insurer’s (‘Insurer’) decision to accept the risk; and
- whether at the time of renewal the Insured could be expected to know that the brothel registration had lapsed.
Concomitant s 28 remedial questions then arose as to what would have happened had disclosure of the above matters been made.