In June 2013 the plaintiff took out a home and contents insurance policy with the defendant in respect of his home at Bonnyrigg Heights. He claims that on 9 October 2013 an unknown person or persons broke into his home, stole goods from it and caused damage to the house and contents.
The following day he made a claim under the insurance policy. On 20 May 2014 the defendant denied cover. It was not until 16 October 2019 that the plaintiff commenced proceedings in this court seeking damages for the defendant's failure to comply with its obligations under the policy. In its defence, the defendant contends, amongst other things, that the proceedings were brought out of time and are barred by s 14 of the Limitation Act 1969 (NSW). That provision states:
14 General
(1) An action on any of the following causes of action is not maintainable if brought after the expiration of a limitation period of six years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims--
(a) a cause of action founded on contract (including quasi contract) not being a cause of action founded on a deed,
(b) a cause of action founded on tort, including a cause of action for damages for breach of statutory duty,
(c) a cause of action to enforce a recognizance,
(d) a cause of action to recover money recoverable by virtue of an enactment, other than a penalty or forfeiture or sum by way of penalty or forfeiture.
(2) This section does not apply to--
(a) a cause of action to which section 19 applies, or
(b) a cause of action for contribution to which section 26 applies.
(3) For the purposes of paragraph (d) of subsection (1), "enactment" includes not only an enactment of New South Wales but also an enactment of the Imperial Parliament, an enactment of another State of the Commonwealth, an enactment of the Commonwealth, an enactment of a Territory of the Commonwealth and an enactment of any other country.
(Emphasis in original)
On 26 March 2021 the Judicial Registrar ordered pursuant to UCPR [1] 28.2, by consent, that the following question be determined as a separate question:
"Whether the plaintiff's claim in these proceedings is barred by s.14 of the Limitation Act 1969 (NSW) as raised in Prayer 4 of the Further Amended Statement of Claim and paragraph 28 of the Defence to the Amended Statement of Claim, or any further or amended pleadings in relation to this question."
The limitation period defence now appears in paragraph 29 of the Defence to the Further Amended Statement of Claim.
The question for determination boils down to whether the defendant was liable under the policy on the occurrence of the claimed break in (9 October 2013) or only when it denied cover (20 May 2014). If it is the former, then the six year limitation period expired prior to the commencement of proceedings and the proceedings are time barred. If the latter, the proceedings were brought within time.
In Globe Church Incorporated v Allianz Australia Insurance Ltd (2019) 99 NSWLR 470, the Court of Appeal held, at 514 (209) (Bathurst CJ, Beazley P, Ward JA), that:
"Absent a provision in an indemnity insurance policy that makes lodgement of a claim a condition precedent to liability, the concept of a promise to indemnify (to make good the loss or to hold harmless against loss) in the context of a property damage insurance policy is such that the promise is enlivened when the property damage is suffered. …"
Here, the plaintiff did not contend that liability under the policy commenced on the making of a claim under it: the date of the claim, too, was more than six years before commencement of the proceedings. Rather, he argued that liability arose when the defendant made a decision not to accept the claim and denied cover.
The plaintiff relied on three arguments to support this contention: first, the policy was not one of indemnity but indemnification; secondly, in any event, the defendant's obligation arose upon its decision to accept the claim; and thirdly, Globe Church was wrongly decided. I need not consider the third argument as I am bound by that decision.
The plaintiff's first argument turns on the use of the word "cover" in the policy, as opposed to "indemnify" which was the word used in the policy considered in Globe Church. The policy here, unlike that in Globe Church was written in plain English and prepared for retail, rather than commercial purposes. As a corollary of that, there are a number of high level statements explaining the terms of the policy as well as more specific statements concerning the way in which the policy is intended to work. All the statements must read together.
On page 1 of the product disclosure statement (PDS), one of the documents that form the contract, the defendant explains that its experience helps it to "provide … great customer service as well as quality cover to protect the things you value". It adds:
"Plus, when you need us, we provide a simpler way to make a claim, so that you're back on your feet as soon as possible."
In the diagrammatic explanation of the policy, on page 2, the PDS explains the different types of insurance "covers" as well as the different level of "covers" and what the defendant pays. Page 3 explains what the insured is "covered for". The details of the policy are set on page 7. At page 8 the "Insurance Cover" is explained as follows:
"Your policy is made up of cover for your home and cover for your contents.
The insurance cover we provide under your policy depends on:
…
the listed events you're covered for and any other cover that applies …"
At page 10, under the heading "Listed Events", the document states:
"We cover your home or contents when certain things happen - for example, fire, theft, storm and earthquake. …
You can make a claim if a listed event you are covered for takes place and causes loss or damage to your home or contents during the policy period. …"
(Emphasis added)
Page 12 explains "Our agreement with you". Critically, under the heading "paying your premium" on that page, the document states:
"In return for paying your premium, we provide the cover you have chosen."
Part 3 of the document is entitled "What you're covered for" (at page 21). The critical paragraph in this section is on page 22 which relevantly provides:
"We cover your home or contents when certain things happen. These are known as 'listed events'. You can make a claim if a listed event takes place and causes loss or damage to your home or contents during the policy period.
In this section, we tell you what events you're covered for and any specific exclusions and conditions that apply to the event. General exclusions may also apply - see Section 5.
Also, if you don't meet your responsibilities when you make a claim you may put your claim or your cover at risk - see page 55.
How we settle a claim is set out in Section 6."
Part 6 deals with claims: page 54. At page 55 the document first explains "what happens when you make a claim". This includes that the defendant will ask questions and indicate whether an excess needs to be paid. This is followed by an explanation of the responsibilities of the insured.
At page 60, under the heading "What we pay for - Contents Insurance", the document states:
"If we agree to cover your claim under Contents Insurance, then we will:
- pay the cost to repair or replace your contents (whichever is lower)
- pay for any extra costs we cover under 'other cover' - see below."
The plaintiff argues that the word "cover" in the context of this policy is nothing more than a description of the bundle of contractual rights which are explained in the PDS. Those rights include the right to make a claim on the happening of certain events and payment of certain sums if the defendant agrees to pay it.
That submission is inconsistent with the plain meaning of the PDS. First, the ordinary meaning of the noun "cover" is "protection" and as a verb it is "to protect". Secondly, a number of important provisions show that the defendant's obligation is to "cover" home and contents in certain events: see pages 12, 22.
Thirdly, when the contract documents are read as a whole, it is plain that the "cover" provided is separate from the concepts of claims and settlement of those claims. At page 22, for instance, it is explained that a "claim or cover" may be at risk if an insured does not meet his or her responsibilities.
For those reasons, the word "cover" in this policy is no more than a different word for "indemnify". It may be noted that the insuring clause in Globe Church used both "indemnify" and "cover" suggesting that they have the same meaning: 99 NSWLR 470 at [36].
The plaintiff's second argument relies on the following statement at page 60 of the PDS: "If we agree to cover your claim under Contents Insurance then we will … pay …". He argues that the words "cover your claim" involves two prior steps namely, the occurrence of a "listed event" and the making of a claim.
The use of the words "cover" in the phrase "cover your claim" is at odds with the use of the word everywhere else in the document. It does not mean "protect" here but, rather, "meet". There is a distinction here between a building or contents cover and liability cover, the latter of which arises in respect of claims made against the insured: see page 41. The claim referred to at page 60 is a "claim" that may be made on the occurrence of a "listed event".
As the other provisions make clear, the defendant agrees to "cover" the home and contents of an insured in respect of a "listed event": see especially page 22. That page also distinguishes between the "cover" provided and the settlement of claims. The latter is dealt with in Part 6 which includes page 60.
Thus, the promise set out at page 22 arises immediately on the occurrence of a "listed event". The way in which that promise is met is then dealt with by the claims mechanism in Part 6. Importantly, the document provides only that the insured "may" make a claim. There are no words that suggest that the making of a claim is a pre-condition to the existence of the obligation to "cover". Further, and for the same reasons, the defendant's liability under the contract does not depend on its own decision as to liability. That would be a strange conclusion even assuming the defendant fulfilled its obligation to act in good faith and one that would require very clear language indeed.
It may be noted that in Globe Church the majority found that there was no such precondition even though the insuring clause expressly stated that the indemnity was "subject to" a number of matters, one of which required the making of a claim.
This conclusion is supported by the explanation at page 10 that an insured may make a claim "if a listed event you are covered for takes place". This highlights the separation of the obligation to "cover" and the making of a claim. Put simply, the claims mechanism and the statement that the defendant will pay upon acceptance of a claim are no more than mechanisms by which the obligation to cover the insured will be met by the defendant.
For those reasons, the plaintiff's cause of action arose, on his claim, on 9 October 2013 and the claim is statute barred. The following orders ought to be made:
1. The answer to the separate question is: yes.
2. The plaintiff should pay the defendant's costs of the motion.
[2]
Endnote
Uniform Civil Procedure Rules 2005.
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Decision last updated: 06 August 2021