Waterman v Gerling Australia Insurance Company P/L and Anor

(2005) 65 NSWLR 300; [2005] NSWSC 1066

Supreme Court of NSW

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Interrogate

Catchwords

1. Insurance
2. › General insurance
3. › Premium
4. › Non-payment of instalment
5. › Deferred premiums endorsement
6. › Whether provision for automatic cessation of cover or voidable at election of insurer
7. › Construction of 'void' and 'deemed to have ceased'
8. › Insurance Contracts Act 1984 (Cth), ss 39, 59, 60, 62, 63
1. Insurance
2. › General insurance
3. › Cancellation
4. › Whether automatic cessation of cover constitutes cancellation by insurer
5. › Whether Part VII of Insurance Contracts Act applies
6. › Distinction between provisions limiting liability and provisions authorising cancellation
7. › Insurance Contracts Act 1984 (Cth), ss 39, 59, 60, 62, 63
1. Contract
2. › Construction
3. › Provisions declaring contract void on specified event
4. › Whether 'void' means void or voidable
5. › Rule of construction from New Zealand Shipping and Suttor v Gundowda
6. › Whether rule applies where termination always benefits innocent party
7. › Distinction between life policies with surrender value and general insurance
1. Estoppel
2. › Estoppel by convention
3. › Common assumption as to terms of contractual relationship
4. › Whether post-contractual conduct can found conventional estoppel despite written contract
5. › Whether detriment required
6. › Whether notice required before departure from common assumption

Quick Take

A 'deferred premiums endorsement' that deems cover to have ceased at midnight on the due date for an unpaid premium instalment effects an automatic cessation of cover, not a cancellation by the insurer, and is therefore not caught by Part VII (ss 59, 60, 63) of the Insurance Contracts Act 1984 (Cth). The Newbon rule of construction (treating 'void' as 'voidable') does not apply where the policy is not a life policy with surrender value and cessation of cover would always benefit the insurer. However, a course of dealing in which late payments are accepted without assertion that cover has ceased may establish a conventional estoppel preventing the insurer from relying on the automatic cessation provision without first giving notice of intention to insist on strict compliance.