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ARTICLE · 13 APRIL 2011

Insurer’s arguments fail on policy construction and insured’s obligation to mitigate loss

Moray & Agnew
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Orica Australia Pty Limited v Limit (No. 2) Limited [2011] VSC 65 The Victorian Supreme Court has reminded insurers that, if insurers wish to draft an exhaustive definition of coverage, there are simple means to do so. As to an insured’s obligation to mitigate loss, the Court has held an insured is not required to sacrifice its own commercial interests in favour of the insurer.

AustraliaInsurance
Oszkar Denes
Oszkar Denes
Geoffrey Flint Esq
Geoffrey Flint Esq
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Orica Australia Pty Limited v Limit (No. 2) Limited [2011] VSC 65

The Victorian Supreme Court has reminded insurers that, if insurers wish to draft an exhaustive definition of coverage, there are simple means to do so. As to an insured's obligation to mitigate loss, the Court has held an insured is not required to sacrifice its own commercial interests in favour of the insurer.

Background

In late 2004, Orica Australia Pty Limited ('Orica') chartered a vessel for the purposes of shipping bagged ammonium nitrate from Canada to Australia. As between itself and the owner of the vessel, Orica was liable to the owner for the manner in which the cargo was loaded and stowed on the vessel. The cargo shifted during the voyage, causing the vessel to list to port. The United States' coast guard ordered the vessel to anchor at Jamestown and to remain at anchor until a suitable re-stowage plan was devised.

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