High Court: February 2023

Insurance

Contract of insurance  

In Allianz Australia Insurance Limited v Delor Vue Apartments CTS 39788 [2022] HCA 38 (14 December 2022) the High Court was required to consider whether an insurer was bound by its gratuitous representation that it would indemnify the insured.

The insured, who was also the respondent in the High Court proceedings (‘Delor Vue’) was the body corporate for an apartment building complex (‘Complex’) located in north Queensland. In March 2017, Tropical Cyclone Debbie struck north Queensland damaging the Complex. Five days before the cyclone, Delor Vue had insured the Complex with the applicant (‘Allianz’) for public liability and property damage (‘Policy’). Prior to its entry into the insurance policy, Delor Vue knew, but did not disclose, that the Complex had serious non-structural defects. Immediately after the cyclone, Delor Vue notified Allianz and made a claim under the Policy. Allianz arranged for an inspection of the Complex and discovered the pre-existing defects. Some of those defects had to be repaired together with the cyclone damage. Allianz subsequently sent an email to Delor Vue containing a gratuitous representation that it would grant indemnity despite its power to reduce its liability, under s 28(3) of the Insurance Contracts Act 1984 (Cth) (‘ICA’), by reason of Delor Vue’s non-disclosure. The email was ambiguous as to the extent of the indemnity being offered.