Act quickly! How long do I have? – Property Damage Insurance Proceedings Statute of Limitations

30 September 2022

In this case, the Court of Appeal allowed an appeal brought by Mr Mukhtar Ali against an earlier decision of the District Court, which dismissed his damages claim for an alleged breach of a home and contents insurance policy by Insurance Australia Ltd.

The background

Following an alleged break-in at his home on 9 October 2013, Mr Ali lodged an insurance claim under a policy (held with Insurance Australia Limited, the respondent (IA)) on 10 October 2013. However, the claim was rejected on 20 May 2014.

On 16 October 2019, Mr Ali commenced proceedings against IA for damages for failure to comply with the policy. In response, IA argued that the 6-year limitation period (s 14 of the Limitation Act 1969 (NSW)) was applicable. IA sought an order that the claim be dismissed, as the cause of action was based on the date of the alleged break-in, which meant that proceedings had been brought outside the limitation period, and were consequently statute-barred.

The decision at trial

At trial, Judge J Smith SC held in IA’s favour, confirming that Mr Ali’s cause of action accrued when the break-in took place, and that the proceedings were statute-barred.

The issues on appeal

  • Whether the cause of action for damages arose at the time when property damage occurred or upon when determination of the claim took place?
  • The primary judge’s reliance on and application of the decision in Globe Church Incorporated v Allianz Australia Insurance Limited (2019) 99 NSWLR 470;

The Decision on appeal

Mitchelmore JA, Ward P and Leeming JA ultimately held that under the policy, the relevant obligations were for IA to compensate Mr Ali for loss, as stipulated in the Product Disclosure Statement. These obligations arose upon the respondent’s decision either to accept or decline a claim made by an insured. Mr Ali’s policy did not contain a clear contractual promise to the effect that the respondent was liable under the policy to indemnify an insured upon the occurrence of a listed event (such as the burglary) and the limitation period therefore did not start running at that point in time.

The Court of Appeal refused to grant leave to reconsider the correctness of the decision in Globe Church because Mr Ali’s policy of insurance contained distinctly different terms from the policy considered in Globe Church, such that the decision in Globe Church was not determinative of the construction of Mr Ali’s policy.

Implications for you

This decision highlights the importance of considering the particular policy terms before making assessments on the merits of procedural issues such as limitation periods.

Ali v Insurance Australia Limited [2022] NSWCA 174

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