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Dalby v Allianz [2019] FACFC 85
from Coffee and a Case Note Hosted by James d'Apice
“I’m not paying you if that grain catches fire!” An ethanol manufacturer stored grain at a refinery. An insurance policy obliged the insurer to indemnify the manufacturer. The policy had exclusions for “spontaneous combustion… spontaneous fermentation or heating or any process involving the direct application of heat”: [4] One morning, smoke was detected in one of the refinery’s bays. Emergency services attended, found a “burnt smell” in one bay, and significant damage in two others. These discoveries led to destruction of the relevant stockpiles. The manufacturer made a claim. An expert concluded the damage was caused by “self-heating”: [11]. This turned the parties’ attention to the exclusions. There had been negotiation between the parties before they entered into the policy, including re the exclusions: [20]. The Court counselled caution when applying the contra preferentum rule as there had been negotiations: [32]. The manufacturer noted the referee could not point to the cause of the self-heating, which might (or might not) have been rain. The Court found the lack of precision about the cause of self-heating was not doubt that self-heating occurred: [36] to [38]. The manufacturer’s appeal was dismissed. The insurer did not have to pay out. Pretty lit!
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