Abstract

Article

 

Surrounding Circumstances on Ambiguity

To identify ambiguity in the text of policy it is permissible to consider mutually known surrounding circumstances: Mainteck Services Pty Ltd v Stein Heurtey SA [2014] NSWCA 184; (2014) 89 NSWLR 633 (at [69]-[86]); Newey v Westpac Banking Corporation [2014] NSWCA 319 (at [89]); Stratton Finance Pty Ltd v Webb [2014] FCAFC 110 (at [40])); Liberty Mutual Insurance Company v Kellogg Brown and Root Pty Ltd [2017] NSWSC 1519.

Status of a Slip

The subscription of a slip constitutes a contract of insurance between the parties, but when the policy is issued it supersedes it: Eagle Star Insurance Co Ltd v National Westminster Finance Australia Ltd (1985) 58 ALR 165 at 170, but the antecedent agreement may form part of the circumstantial context which could influence the construction of a later instrument made pursuant to it: Shanemist Pty Ltd v Denmac Nominees Pty Ltd [2003] QSC 373 at [17]; Liberty Mutual Insurance Company v Kellogg Brown and Root Pty Ltd [2017] NSWSC 1519.

Construction of Commercial Contracts

The principles concerning the construction of commercial contracts were summarised by the High Court in Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640; HCA 7 (at [35]):

“The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean. … [I]t will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding ‘of the genesis of the transaction, the background, the context [and] the market in which the parties are operating’. As Arden LJ observed in Re Golden Key Ltd [[2009] EWCA Civ 636 at [28]], unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption ‘that the parties... intended to produce a commercial result’. A commercial contract is to be construed so as to avoid it ‘making commercial nonsense or working commercial inconvenience’.”