The decision of the
A full copy of the judgment can be accessed here.
Background
On
The duration of the Facility specified in the Master Slip was expressed as covering risks attaching during the period from
In
While the helicopter was being packaged and prepared for transit on
As a result of insufficient packing in the shipping container on 18 Mary 2018, the helicopter sustained significant damage during transit and Swashplate made a claim under its policy to recover the costs of repair.
In reliance on the Placement Slip, Liberty rejected Swashplate's claim on the ground that the commencement of cover took effect on
Swashplate's position was that the insurance cover applied to the whole of the transit period, as well as for an additional five days before loading in accordance with a static cover extension included in the Master Slip. Since the packing of the helicopter took place within this period, Swashplate contended that it was entitled to be indemnified by Liberty.
The trial judge commented that the wording in the policy (in particular, clause 8.1 of ICC(A)) made it difficult to be precise as to when transit cover would commence, and that the specific wording in the Placement Slip overcame this uncertainty. He therefore agreed with Liberty that the policy exclusion applied, given that the helicopter was packed prior to the commencement of the cover on
The Federal Court's decision
The Court held that the Facility did not contemplate cover that commenced from a nominated date; rather it provided cover for a single transit the duration of which commenced and terminated as provided for in the ICC(A). The Court accepted that it was not necessary for there to be certainty as to the date on which risk would commence and terminate.
The Court considered that the 'Period of Insurance' in the Placement Slip merely specified the basis upon which the particular transit is said to be within the insurance period as specified in the Master Slip, and was not determinative of when cover commenced and terminated. The construction contended for by Liberty was considered by the Court to be inconsistent with the express language identifying the voyage to be covered, and was inconsistent with the commercial context of the arrangement.
Accordingly, the Court found that the policy of insurance with Liberty covered the whole transit period, plus the prior five days pursuant to the static cover extension.
Our comment
The judgment demonstrates the difficulties that can arise in interpreting insurance contracts, particularly where the terms of a contract originate from a variety of different documents, and the importance Courts place on interpreting contracts in light of the commercial purpose behind the policy. Although a Placement Slip will generally show clearly when cover commences and terminates, it should always be read in conjunction with the terms of the policy, and care should be taken when the policy does not provide for certainty as to the date on which risk would commence and terminate (such as transit policies).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Mr
Level 11
1010
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