Extra! Extra! ASIC appeals Auto & General Judgment

20 May 2024

On 19 April 2024, ASIC lodged an appeal of the Federal Court’s decision in Australian Securities and Investments Commission v Auto & General Insurance Company Limited [2024] FCA 272 (the Judgment).

For context, in the Judgment, his Honour Jackman J of the Federal Court held that a clause requiring an insured to advise if ‘anything changes about [their] home or contents‘ during the period of insurance (the Notification Clause) was not an unfair contracts term (under section 12BG(1) of the Australian Securities and Investments Act 2001 (Cth) (ASIC Act). Further information on the Judgment can be found here.

In its Notice of appeal, ASIC alleges that the whole of the Judgment was in error because:

  1. The Notification Clause required the insured to advise ‘if anything changes about the [insured’s] home or contents relevant to the insured risk‘. As the Court adopted another construction of the Notification Clause in the Judgment, the Court’s analysis of unfairness was also in error; and
  2. The Court did not properly take into account the lack of transparency of the Notification Clause in determining the ‘significant imbalance’ or ‘legitimate interests’ elements of the definition of unfairness in the ASIC Act.

The appeal will be heard by the Full Federal Court on a date to be determined.

It will be significant to understand how the Full Federal Court approaches the interplay between transparency and unfairness.

We will need to watch out for the appeal judgment and other judgments touching on the UCT regime likely to be delivered later in 2024.

This article was written by Nicholas Matkovich, Partner, Vignesh Iyer, Senior Associate, and Sally Tran, Law Graduate.

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