Globe Church Incorporated v Allianz Australia Insurance Ltd  NSWCA 27
26 February 2019, Supreme Court of New South Wales, Court of Appeal – Bathurst CJ, Beazley P, Ward, Meagher and Leeming JA
The Assemblies of God New South Wales Ltd (AOG) was the trustee of a trust under which Globe Church Incorporated (Globe) was the beneficiary. Pursuant to the terms of the trust, Globe had an equitable interest in AOG’s properties at Gateshead, was legally responsible for the properties and agreed to keep the properties insured.
Allianz Australia Insurance Ltd (Allianz) and Ansvar Insurance Ltd (Ansvar), in respective proportions of 60% and 40%, insured Globe under an Industrial Special Risks Policy for the period 31 March 2007 to 31 March 2008 (the 2008 policy). In subsequent renewals, Ansvar was the sol insurer. The policy included the church, church hall and car park. Cover against loss or damage to buildings or property was included in Section 1, and business interruption cover was provided in Section 2. Terms on which indemnity would be granted was included in the policy, which also imposed certain obligations on the insured that were designed to protect the insurer in the provision of indemnity.
Damage suffered and claimed
Resulting from a severe thunderstorm on 8 June 2007, Globe made a claim for property damage, which was subsequently settled, (covering the repair and/or replacement of carpet and underlay inside the church buildings) and for related business interruption loss. However, it was discovered later that as a resulting that flooding between 8 and 10 June 2007, the property also allegedly suffered structural damage at some time between then and 31 March 2008. Globe claimed that as a result of that damage, it incurred additional costs, suffered loss of income resulting from the interruption of or interference to the business; and incurred professional fees for the preparation of the claim.
Globe made a claim in respect of the further damage on 29 September 2009, and both insurers denied indemnity. On 4 November 2016 Globe commenced proceedings against Allianz and Ansvar, claiming damages for the alleged breach of contract constituted by the insurers’ denials. The insurers maintained the claim was statute barred, the cause of action for damages having accrued before 31 March 2008, for otherwise any damage that occurred was not insured under the 2008 policy.
Questions for determination
- In respect of any of the alleged damage to the properties that occurred between 8 June 2007 and 31 March 2008, which (if any) of Globe’s claims in these proceedings in respect of the 2008 policy accrued at the time of alleged damage, for the purposes of s 14(1) of the Limitation Act 1969 (NSW)?
- In light of the answer to (a), which (if any) of Globe’s claims in these proceedings in respect of the 2008 policy for that damage was maintainable?
The court held the causes of action statute barred; and the proceedings against Allianz dismissed with costs.
Answer to (1): the claim for damages in relation to the 2008 policy for property damages accrued at the time of the property damage no later than 31 March 2008 and the claim for damages in relation to additional costs, business interruption and professional fees accrued no later than the end of September 2009.
Answer to (2): none.
Per: Bathurst CJ, Beazley P and Ward JA:
- A term requiring a reasonable time for performance of the promise to indemnify could be implied if the promise to indemnify was assumed to be a promise to pay money (with no time stipulated) – .
- A claim for unliquidated damages for breach of contract could accrue before the final quantum of damages was determined or could be determined, and it is not decisive that the insured may have taken steps (after the property damage occurred) such as electing to reinstate the property, that may affect the damages recoverable in the end – .
- Quantification of the insurers’ liability, depending on the insured’s election, was to pay the indemnity value – .
- Insurance contracts are to be given a businesslike interpretation – .
- Absent a provision in an indemnity insurance policy that made lodgment of a claim a condition precedent to liability, the concept of a promise to indemnify in the context of a property damage insurance policy was such that the promise was enlivened when the property damage was suffered – .
- Upon construction of the 2008 policy with regard to its terms, the making of a claim was not a pre-condition to liability arising on the happening of the insured event; and there was no implied term requiring performance of the obligation within a reasonable time – .
Per: Meagher JA (with whom Leeming JA agreed):
- A cause of action within the Limitation Period 1969 (NSW), s 14(1) first accrued when the aggregate of facts required to be proven for Globe to obtain a remedy, came into existence – .
- Those facts as required for (1) are, in an action seeking damages for breach of contract, the formation of a valid contract; the fulfilment (or an excuse for the non-fulfilment) of each condition precedent to the obligation said to have been breached; the non-performance of that obligation; and the competence of the promise to sue and the promisor to be sued – .
- There was no suggestion in the reasonable commercial expectations of the parties nor the language of the policy that the payment obligation was to be performed immediately upon the happening of the relevant damage – .
- It was plain from the terms of the policy that the parties contracted on the basis that the event of loss would be followed by a period of adjustment to enable the assessment of the insurer’s payment obligation(s) – .
Per Leeming JA:
- The contract of insurance was to be given a businesslike interpretation, with attention to the language used by the parties, the commercial circumstances which the document addressed and the objects it was intended to secure – .
- It would be incorrect to proceed from the premise that an insurer was liable in damages for breach of its obligation to hold its insured harmless, to the conclusion that the insurer was in breach of its promise before it had even been notified of a claim – .