Highway Hauliers Pty Ltd v Matthew Maxwell (The
authorised, nominated representative on behalf of various Lloyds
underwriters) [2012] WASC 53
Section 54 of the Insurance Contracts Act 1984 was
designed to protect insureds whose acts or omissions would, in the
absence of section 54, have given an insurer the right to refuse to
pay a claim. Essentially, it requires the insured to show that the
breach of policy had no causal effect on the loss, or if it did,
that the insurer's liability can only be reduced to the extent
of its prejudice.
The Supreme Court of Western Australia was recently asked to
consider the operation of the section in a policy dispute. Justice
Corboy's decision in Highway Hauliers v Matthew
Maxwell confirms that the precise scope and application of
section 54 remains in doubt. It also serves as a reminder to
insurers of the potential for section 54 to override what might
seem to be clear provisions of the policy.
