Mattress Innovations Pty Ltd v MIB Insurance Brokers Pty Ltd
[2013] QSC 28
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- Unreported Judgment
- Appeal Determined (QCA)
- Mattress Innovations Pty Ltd v MIB Insurance Brokers Pty Ltd[2013] QSC 28
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Mattress Innovations Pty Ltd v MIB Insurance Brokers Pty Ltd[2013] QSC 28
Mattress Innovations Pty Ltd v MIB Insurance Brokers Pty Ltd[2013] QSC 28
SUPREME COURT OF QUEENSLAND
PARTIES: | |
FILE NO/S: | |
Trial | |
PROCEEDING: | Trial |
ORIGINATING COURT: | |
DELIVERED ON: | 13 March 2013 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 7 November 2012 |
JUDGE: | Dalton J |
ORDER: | The proceeding is dismissed |
CATCHWORDS: | Insurance – The policy – Principles of construction – where insured owned a building which was destroyed by fire – where the amount of the loss was greater than the total of the sums insured – where insurer elected to pay the insured the value of the insured property destroyed – where the insurance policy provides that the insurer is entitled to reduce payment by any input tax credits the insured is or would be entitled to – where insurer paid an amount totalling all sums insured under the policy less 1/11th of that sum – whether the policy allowed such reduction Insurance Contracts Act 1984 (Cth), s 57 Central Negev Properties Pty Ltd v QBE Insurance (Aus) Ltd [2012] VCC 1856, cited McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579, considered Velvet Glove Holdings Pty Ltd v Mount Isa Mines Ltd [2011] QCA 312, considered |
COUNSEL: | CC Heyworth-Smith for the plaintiff JD McKenna SC for the defendants |
SOLICITORS: | Hyland Lawyers for the plaintiff DLA Piper for the defendants |
[1] This matter was listed for trial but the scope of the dispute was much reduced by the co-operation of the parties so that I am only required to determine two points of law: one as to the interpretation of the policy and the other as to the time from which interest should run.
[2] The plaintiff owned a building which it leased on a commercial basis. The building was totally destroyed by fire on 25 April 2007. The amount of the loss was greater than the total of the sums insured. On 21 August 2007 the second defendant, rather than reinstate, elected to pay an amount which was the total of all sums insured under the policy, less 1/11th of that sum. The insured, it was conceded, used the insurance monies to reinstate the building and received input tax credits under the GST legislation in the amount of the 1/11th deduction. In this proceeding the plaintiff contends that the insurer was not entitled to make that deduction pursuant to the terms of the insurance policy. It claims the amount deducted as money due under the policy.
Policy Interpretation
[3] The policy was one of commercial insurance. Relevantly, there were sections covering destruction of the building by fire; removal of debris; destruction of contents, and business interruption. Each of those separate sections of the policy had a separate sum insured.
[4] The certificate of insurance shows the following:
Item | Basis of settlement | Sum insured |
Building | Reinstatement | $1,800,000 |
Contents | Replacement | $150,000 |
Underneath this was something called an optional benefit, “removal of debris – additional to extra benefit $10,000”. The certificate also showed under the heading, “Business Interruption”:
Limit of Liability | |
Annual Revenue | $140,000 |
[5] The total of the sums insured was $2,100,000. The insurer has paid 10/11th of each of the amounts $1,800,000, $150,000, $10,000 and $140,000.
[6] The policy is arranged so that a section called, “General Conditions” precedes various sections which deal with the separate risks insured (fire, contents and business interruption). It was not argued that any differences in the wording of these individual sections matters to the result. That is, it was accepted by the insured that if the insurer is right in its interpretation of the policy, it is entitled to deduct 1/11th of the amount paid under each section of the policy. That being so, I will only set out relevant provisions found in the section of the policy which covered the risk of fire to the building and the removal of debris. And likewise, my reasons for decision will deal only with that section of the policy, on the basis that the result in relation to the claim made under the contents and business interruption sections will be the same, albeit by reference to slightly different, but substantially similar, facts and clauses.
[7] The insuring clause in the fire section of the policy is as follows:
“In the event of destruction of or damage to any of the Insured Property occurring during the Period of Insurance and directly caused either by an insured Defined Event or as described in an applicable Optional Benefit, We will:
(a)in the case of destruction at Our option:
(i)pay to You the Value of the Insured Property destroyed; or
(ii)in accordance with General Condition [13][1] Restoration of Property:
(A)restore such property; or
(B)substitute the property for that destroyed;
…
(d)when Removal of Debris is insured under Optional Benefit 5, pay to You an amount equal to the cost of the removal of debris; and
…”
[8] Here the insurer elected to pay (rather than reinstate) under (a)(i). The fire section contains the following clauses relevant to that election.
[9] The word “Value” is defined in the following way:
“Basis of Settlement
The following provisions are to be read subject to the provision headed ‘Sum Insured’ in this Section.
…
Reinstatement Basis
When the Certificate of Insurance indicates that the insurance is provided on a Reinstatement Basis, Value means and (where the Insured Property is damaged) the amount of the damage is:
the cost, as at the date of the event giving rise to the claim, which would be incurred in the reinstatement of the Insured Property destroyed or damaged, including architects’, surveyors’, legal and consulting engineers’ fees, necessarily incurred in the reinstatement.
Subject to the following Reinstatement or Replacement Condition, reinstatement here will mean:
(a)when the Insured Property is destroyed, its rebuilding in a condition equal to but not better or more extensive than its condition when new; and
…”
[10] In the same section there appears the following:
“Sum Insured
Our liability under this Section is limited to the Sum Insured:
(a)expressed against the particular Insured Property in the Certificate of Insurance … and
(b)expressed against the particular Optional Benefit in the Certificate of Insurance.”
[11] Here, the amount of loss due to fire was greater than the sum insured under the policy and the cost of removal of debris was more than $10,000. Rather than reinstate, the insurer elected to pay the plaintiff the value of the insured property destroyed, as it was entitled to do under the insuring clause set out above. Except for cl 16, discussed immediately below, that approach would have meant that the sum insured, $1,800,000, shown on the certificate of insurance, together with the extra benefit of $10,000 for removal of debris, was paid to the insured. The plaintiff would have had no quarrel with this.
[12] However, at cl 16 of the General Conditions of the policy the following clause appears:
“16.Goods and Services Tax Endorsement
This Endorsement attaches to and forms part of Your Policy, effective from the commencement date of the Period of Insurance shown in your Certificate of Insurance.
1.Information You Must Give Us
If You are registered, or required to be registered, for goods and services (GST) tax purposes, You must when requested tell us what Your entitlement to input tax credits (ITC’s) is for Your Insurance premium.
2.Calculating Claims
If You make a claim under this Policy, any payment or supply We make to You in respect of the acquisition of goods, services or other supply (or monetary compensation in lieu thereof) or otherwise in relation to Your claim will be calculated on the GST inclusive cost of Your claim.
In calculating such payment, We are entitled to reduce it by any ITC which You are, or would be, entitled to:
(a)for the acquisition of such goods, services or other supply; or
(b)had the compensation been used to acquire such goods, services or other supply
However, the total of all payments We make to You will not exceed Your sum insured, limit or sublimit of liability, or other monetary limitation.
The sums insured, limits and/or sublimits of liability, or any other monetary limitations are inclusive of any taxes, levies, duties or charges that the payment would be affected by or subject to.
…
4. Interpretation
(a)Where this Endorsement is in conflict with any other provision of this Policy, this Endorsement will apply.
(b)Reference to payments made to You include payments made on Your behalf or at Your direction.
(c)Other expressions which are not defined but which are used in any legislation will have the meaning given to them in that legislation. Examples of this are ‘GST’, ‘ABN’ and ‘ITC’.”
[13] The insurer relies on the second sentence under the heading, “2. Calculating Claims” to make the deduction it has made in paying the insured.
[14] It would be an understatement to describe cl 16 as infelicitously drafted. It is marked by incorrect use of legal terms (such as compensation and indeed, endorsement); poor word choice, and a lack of conceptual clarity as a matter of ordinary English. Other comments are made about the drafting below.
[15] Attention might first be paid to the last sentence under the heading, “2. Calculating Claims”. The insurer submitted that, relevantly here, it means that generally under the policy, the sums insured are inclusive of the GST which actually applies to payments made by the insurer, or which would apply had the insurer elected to reinstate rather than pay money in satisfaction of a claim. The plaintiff did not advance an alternative interpretation. Despite its obscure location in the policy document and its poor wording, I interpret it as contended for by the insurer. So, if the sum insured under the policy is $1 million and property is destroyed which costs $1 million plus GST to reinstate, the insurer is not liable for the sum insured together with the GST, but only for the amount of $1 million.
[16] I turn to the sentence beginning, “In calculating such payment, …”. The plaintiff correctly criticised the use of the word “compensation” in this (and the previous) sentence. The plaintiff’s first argument was that as the word “compensation” was not apt to refer to a payment under the policy when the insurer elected not to reinstate, this sentence did not apply to the payment in this case. The term “compensation” has no sensible relevance to a claim for indemnity under an insurance policy or a payment due under a contract of insurance. Appropriate words are used elsewhere in the policy – such as in the insuring clause extracted above. Notwithstanding this, it seems to me more likely that the word refers to a payment of monies due under the insurance contract, than to something else entirely. Indeed, the plaintiff did not suggest what the word might alternatively refer to. I interpret the word “compensation” as comprehending a payment made to the insured when the insurer elects not to reinstate, but to pay under the policy, which is what happened here.
[17] Further, I read the alternatives (a) and (b) in this sentence distributively, i.e., the sentence means that payment can be reduced by an input tax credit (a) to which the insured is entitled because it has bought goods, services or supplies, or (b) to which the insured would have been entitled had it spent the payment buying goods, services or supplies. That is, only insureds who are eligible to receive input tax credits are affected. However, if an insured which is eligible chooses not to spend the payment on reinstatement, it does not by that choice escape the reduction in payment.
[18] I turn to the first sentence under the heading, “2. Calculating Claims”. Despite the great number of supervening words, I cannot see that this sentence means any more than, “If You make a claim under this policy, any payment or supply We make to You will be calculated on the GST inclusive cost of Your claim”. Even in that abbreviated version, the word “cost” sits unhappily. Presumably where payments are involved this word means Value, as defined, and otherwise, cost of reinstatement.
[19] The words “Your claim” at the end of this sentence are the genesis of the plaintiff’s second (alternative) argument as to how General Condition 16 of the policy ought to be interpreted. The plaintiff says that the words, “Your claim” mean the actual claim made by the insured. So that, hypothetically, if there were a policy with a sum insured of $1 million (GST inclusive) but, after a loss, the insured claimed $2 million (GST inclusive), this clause would require that the figure of $2 million is the starting point for the calculation of the payment by the insurer, because that is the amount of the claim made by the insured. Then, moving to the next sentence which begins, “In calculating such payment, …” the plaintiff argues, the $2 million (GST inclusive) claim would be reduced by 1/11th to accommodate the notional input tax credit which the insured would receive if it paid a sum equivalent to the whole of the amount of its loss on a supply which attracted GST – in this example $181,818. That reduction having been made, the calculation would stand at about $1.8 million. One would then move to the next sentence in the clause, “However, …”, and cut the $1.8 million figure back to the sum insured, $1 million, which is the amount of the payment due to the insured under the policy.
[20] One attraction of the plaintiff’s argument as to the way to construe the four sentences under the heading, “2. Calculating Claims” is that it does provide a cohesive thread linking the four sentences together, in the order in which they appear. The plaintiff’s interpretation of the four sentences under the heading, “2. Calculating Claims” also has the advantage of making sense of, and giving some meaning to, the third sentence under the heading beginning, “However, …”.
[21] This third sentence, “However, …”, provides that the insurer will not pay more than the sum insured. It will be remembered that there is a provision to that effect under the heading, “Sum Insured” in the fire section of the policy. Rather than put such a clause in each individual section of the policy, one might have thought it a better practice to have put one clause in the General Conditions of the policy. However, if that choice were to have been made, one might have expected that there would be an individual clause devoted to that purpose, rather than a stray sentence in the middle of the last General Condition under the heading, “Goods and Service Tax Endorsement”. However, a similar, stray clause at the bottom of General Condition 13 rather detracts from the force of this argument, which might otherwise favour the plaintiff’s argument that the sentence was not of general application.
[22] To begin this sentence with the word, “However” implies that the sentence or sentences which precede it might (if left unqualified) be taken to mean something to the contrary of what this sentence provides. The plaintiff’s submission was that, if the defendant’s interpretation of General Condition 16 were correct, the preceding sentences could never lead a reader to think that more than the sum insured would be paid. The submission was that this rendered the sentence beginning, “However, …” otiose, indeed nonsensical, and that for that reason, the insurer’s interpretation should be rejected. The defendant could not advance any sensible reason why this sentence should appear where it does, and no reason why, appearing after the sentences which precede it, it should begin with the word, “However”.
[23] Taken literally, particularly given that “Your” is a defined term in the policy, the final words of the first sentence under the heading, “2. Calculating Claims” might well refer to the actual claim made by the insured. However, the next sentence does not speak of the claim, but of payment. I accept the insurer’s submission that the word payment in the sentence, “In calculating such payment …” must mean the actual payment to be made to the insured, and that this payment will be one in accordance with the policy terms – including being within the policy limit. The sentence uses the words, “calculating such payment” – a clear reference back to the preceding sentence. The second sentence of cl 16.2 talks about payment, whereas the preceding sentence talks about payments or supplies. Further, the second sentence talks about payments in respect of which the insured is entitled to an input tax credit. The insured will only be entitled to an input tax credit where it pays for the provision of, say, building services. If the insurer pays a builder direct, it is the insurer who will be entitled to the input tax credit. It seems then, by necessary implication, that the second sentence under the heading, “2. Calculating Claims” is referring only to payments of claims by the insurer to the insured. This seems confirmed by the next sentence which deals with, “the total of all payments We make to You …”.
[24] Further, the sentence beginning, “In calculating such payment”, allows a reduction for input tax credits. The amount of input tax credits, and thus the amount of that reduction, can only be calculated once the actual payment (which will be within the policy limits) to the insured is known. Otherwise the clause calls for a purely mathematical reduction of 1/11th of the claim based on an assumption that, if the amount of the claim were to be paid, theoretically that is the amount of GST, and therefore input tax credits applicable.
[25] Coming to interpret these first and second sentences of General Condition 16 with the facts of this case in mind makes their relation to one another less clear than it would be if the facts of the case did not involve an under-insurance. Considering a hypothetical claim which, including GST, was less than the sum insured gives a clearer idea. If a claim for $500,000, plus GST is made on a policy where the sum insured is $1 million (including GST), the first sentence requires use of the GST inclusive amount of $550,000 as the starting point for calculating payment, which, if the insured is eligible to claim input tax credits, is made in the sum of $500,000.
[26] If however the insured mistakenly were to claim $500,000 plus GST, when its loss was in reality only $50,000 plus GST, neither of the sentences would require the use of the sum $550,000 in calculating the payment to the insured, just because that is the claim actually made by the insured. In my view the sentence beginning, “In calculating such payment …” deals with reduction of a payment otherwise due in terms of the policy. It makes no commercial sense to reduce the claim actually made by a notional input tax credit as a purely mathematical exercise, and then look to see whether the quantum of the thus reduced claim is otherwise within the policy terms and conditions, including the sum insured. As I think the example at paragraph [30](c) below illustrates, it is an unreal exercise.
[27] As discussed, the insured’s interpretation relies upon a literal interpretation of some of the language of cl 16, and (in relation to the sentence, “However …”) the well‑accepted idea that meaning should be accorded to all the parties’ words where possible. I think it is necessary to frankly acknowledge when confronted with drafting as poor as this, that rules for interpreting contracts are less useful than they would normally be, because they are predicated on the assumption that more thought and skill has been applied to drafting the document to be interpreted than has apparently been applied to drafting this policy. In my view the plaintiff’s interpretation must be rejected in favour of one which is conceptually more commercially sensible (above) and has a more commercially sensible operation in practice (below). This approach accords with authority. In McCann v Switzerland Insurance Australia Ltd [2] Gleeson CJ said:
“A policy of insurance, even one required by statute, is a commercial contract and should be given a businesslike interpretation. Interpreting a commercial document requires attention to the language used by the parties, the commercial circumstances which the document addresses, and the objects which it is intended to secure.”
[28] To like effect is the dicta from the Court of Appeal in Velvet Glove Holdings Pty Ltd v Mount Isa Mines Ltd,[3] quoting the primary judge, “The contract is to be construed with a view to making commercial sense of it. A commercially sensible construction is more likely to give effect to the intention of the parties. There is a general tendency against literalism and technical interpretation.”
[29] Acknowledging, sotto voce, the difficult wording of General Condition 16, the insurer called in aid of its interpretation the stochastic results which would flow from the insured’s interpretation of that clause, and the consistent, and it submitted, commercially sensible, results which would flow from the interpretation it advanced. A series of examples illustrates the line of reasoning.
[30] I use the example of a policy where the sum insured was $1 million (GST inclusive) and there was destruction of a building so that the loss was $2 million (GST inclusive). This scenario assumes the insured was under-insured.
(a)If the insurer elects to pay for reinstatement up to the policy limit, it pays the builder $1 million which includes $90,909 GST. The insurer gains an input tax credit of $90,909 and its net position is $909,091 down on the claim. The insured meets the builder’s payments after the $1 million mark is reached; pays the builder $1 million, and receives an input tax credit of $90,909. Its net position is $909,091 down.
(b)If the insurer elects to pay the insured rather than partially reinstate, and adopts the defendant’s interpretation of cl 16, it pays $909,091 to the insured. Its position is $909,091 down on the claim. The insured receives $909,091 from the insurer; pays $2 million to the builder, and receives input tax credits of $181,818. The insured’s net position is $909,091 down.
(c)If the insurer elects to pay rather than partially reinstate, and adopts the interpretation of cl 16 propounded by the plaintiff, it deducts $181,818 from the $2 million claim, then pays $1 million to the insured. Its net position is $1 million down. The insured receives $1 million; pays $2 million to the builder, and receives input tax credits of $181,818. Its net position is $818,182 down.
[31] Adopting the plaintiff’s interpretation, the insurer is worse off, and the insured is better off, if the insurer elects to pay rather than partially reinstate. There seems no sensible reason for this discrepancy.
[32] I now examine the effect of the two alternative interpretations where a claim is made which is less than the sum insured. I take an example where the sum insured under the policy is $1 million (GST inclusive) and there is a loss of $800,000 (GST inclusive).
(a)If the insurer elects to reinstate, it pays the builder $800,000, obtains an $72,727 input tax credit. Its net position on the claim is $727,273 down. The insured’s position is neutral; it is indemnified.
(b)If the insurer elects to pay the claim rather than reinstate, and adopts the defendant’s interpretation, it pays the insured $727,273. The insured pays the builder $800,000 and gains an input tax credit of $72,727. Its net position is neutral.
(c)If the insurer elects to pay the claim rather than reinstate, but adopts the interpretation of cl 16 contended for by the plaintiff, it pays the insured $727,273; the insured pays the builder $800,000, and obtains an input tax credit of $72,727. The insured’s net position is neutral and the insurer is down $727,273 on the claim.
[33] On the plaintiff’s interpretation of General Condition 16 an insured whose claim is under the sum insured, and to whom the insurer elects to make a payment, receives 10/11th of the amount of the loss, together with the benefit of an input tax credit in the amount of 1/11th of the loss. It is put in a neutral financial situation. Yet if the insured’s claim is more than the sum insured, the plaintiff’s interpretation means that it receives not 10/11th of the sum insured, but the whole sum insured. As well, it receives the benefit of an amount equivalent to 1/11th of the sum insured as an input tax credit. There seems no sensible reason why an insured whose claim is more than the sum insured (i.e. an under-insured insured) should be in a better financial position, relatively speaking, than an insured whose claim is within policy limits.
[34] Where the defendant’s interpretation of cl 16 is used, consistent results are produced in the practical operation of the clause, both when the position of an insurer who reinstates and an insurer who pays out are compared, and when payment of a claim above the sum insured is compared with payment of a claim below the sum insured. There is in no case a windfall gain for either the insurer or the insured. Essentially it can be seen that the GST inclusive amount to which the insured is entitled under the policy, less any input tax credit to which the insured is entitled, is equivalent in dollar terms to the GST inclusive price to reinstate or replace property.
[35] Objection was raised to the interpretation propounded by the defendant on the basis that if the insurer elects to pay the claim rather than reinstate, the insured can spend the money paid as it likes, that is, it is not obliged to spend the money reinstating the property. However, at least in this case, I think the clear words of the policy are conclusive against the objection. The sentence under the heading, “2. Calculating Claims” which begins, “In calculating such payment, …” makes it clear that the reduction to be made is made where an input tax credit is actually earned – (a) – or where it would be earned had the insurance payment been used to reinstate – (b).
[36] There is a second way in which the interpretation contended for by the plaintiff produces an irrational operation in practice. The plaintiff’s interpretation depends upon the deduction of notional input tax credits from the amount which the insured claims under the policy. Where an insured claims an amount to which it is entitled under the policy, that interpretation will do no harm. Not so where for any reason – innocent or otherwise – an insured claims more than it is entitled to. The hypothetical example at [30](c) shows the result in such a case. Factually it is not so far removed from the facts in the instant case where the plaintiff’s total loss was in the vicinity of $2.7 million, but the total of the sums insured was only $2.1 million. There is no reason an insured who wrongly claims for an amount higher than it is entitled to under the policy should be in a better position – as per the example at [30](c) – than an insured who reads the policy carefully, realises that it is only entitled to claim the total of the sums insured and submits a claim at the policy limit, even though its loss is greater.
[37] If the plaintiff’s interpretation of cl 16 were correct, a calculating insured might deliberately inflate the amount of the claim it made, anticipating that even when it was reduced by the amount of notional input tax credits, it would still overtop the total of the sums insured and thus payment would be at the policy limit. It might do this even if its claim were in truth below the total sum insured, on the plaintiff’s interpretation it would not matter, for it is the claim actually made which would be reduced by a notional input tax credit.
[38] Because this policy is a reinstatement policy it may often be that when a loss occurs nobody knows the cost of reinstatement before that has been valued by professionals. The insured might well just claim for reinstatement and specify no monetary loss. In that case the provisions set out at [9]-[10] above apply and what will be paid under the policy is the Value of the Insured Property destroyed. Value is defined as the cost of reinstatement, subject to, and limited by, the sum insured. In these circumstances, it seems highly artificial to me to treat the claim of the insured as anything other than a claim for what it is entitled to under the policy.
[39] It is only an insured who is entitled to claim input tax credits whose payments will be reduced by the operation of General Condition 16. This is a commercial policy and therefore one might expect that the vast majority of claimants will be entitled to claim input tax credits. However, were there to be an insured who could not,[4] its position would be identical with one who could, if the insurer elected to reinstate. If the insurer elected to pay, rather than reinstate, such an insured would receive more money than one who could claim input tax credits. However, correspondingly, that insured would not obtain the tax advantage of an insured in a position to claim input tax credits. Both insureds would be put in a neutral position – their loss would be indemnified, but there would be no windfall gain. There might be a reduction in the insurer’s net position in a case where it made a payment (rather than reinstatement) to an insured who could not claim input tax credits.[5] However, there is certainly no windfall to either the insurer or the insured.
[40] A third submission was made on behalf of the plaintiff. It argued that to construe cl 16 in the way contended for by the insurer was untenable because, by this one rather obscurely‑situated and obscurely‑worded clause, a very dramatic effect would be produced: the sum insured expressed on the certificate of insurance would be altered, in effect to 10/11th of the amount there stated. It is only where the insurer elects to pay a claim, rather than reinstate, that this argument can be made. If the insurer reinstates it pays the sum insured to the builder. Further, if for some reason the insured is not eligible to claim input tax credits, even if the insurer elects to pay, it will pay the sum insured. Nonetheless, it can be presumed that the amount written against “sum insured” on the certificate of insurance is fundamental to the parties’ bargain. Clauses such as that found at paragraph [10] above serve to highlight the importance of such a change to the parties’ bargain. In the end I am not persuaded that this argument overwhelms the other considerations I have discussed above.
[41] Finally, I note that there seems to be almost no case law on GST provisions such as that found in this policy. There are interstate decisions at District Court level which reach a result consistent with that I have reached.[6] However, these decisions do not contain any reasoning as to the interpretation of the clause, equivalent to General Condition 16 of this policy.
Interest
[42] The second point for my determination has strictly been rendered redundant by my conclusion as to the construction of cl 16. The plaintiff contended it was entitled to interest according to a particular calculation (which was conceded by the defendant at the hearing) from the date which the insurer paid pursuant to the policy.
[43] Pursuant to s 57 of the Insurance Contracts Act 1984 (Cth), interest is to be paid from the day, “as from which it was unreasonable for the insurer to have withheld payment”. Had I been in favour of the plaintiff’s interpretation of the policy, I would have held that interest was payable from the date the insurer otherwise paid the claim – 21 August 2007. Had the amount been due then it would have been reasonable to pay it, no further factual investigation was necessary. Any misunderstanding or uncertainty as to the operation of cl 16 (whether by the insurer or the insured) could only have been due to its dreadful drafting and that must be laid at the feet of the insurer, whether it had caused the insurer to misunderstand its own policy, or the insured not to understand, and therefore be slow to assert, its rights.
[44] The proceeding is dismissed. I will hear the parties as to costs.
Footnotes
[1] The policy actually says 16 but it was agreed that this was an error.
[2] (2000) 203 CLR 579, [22].
[3] [2011] QCA 312, [36].
[4] And there may be, see for example paragraph 92 of the Australian Taxation Office, Goods and Services Tax Ruling 2006/10.
[5] However, the taxation law in relation to this is complex and beyond the bounds of what I need to consider to determine this matter. See Goods and Services Tax Ruling 2006/10 paragraph 91 ff.
[6] [2002] NSWDC 112, [2012] NSWDC 126; Central Negev Properties Pty Ltd v QBE Insurance (Aus) Ltd [2012] VCC 1856.