MOBIS PARTS AUSTRALIA PTY LTD V XL INSURANCE CO SE

[2018] NSWCA 342, New South Wales Court of Appeal, Beazley P, Meagher JA and Leeming JA, 24 December 2018

Insurance (property and business interruption) - Warehouse collapsed in storm - Most stock later lost by fire - Whether policy should be rectified to include a financial limit for storm or hail damage - Whether loss of contents proximately caused by storm - Whether stock lost in storm had to be replaced before indemnity payable - Business interruption - Whether depreciation should be deducted from indemnity for loss of gross profit

On 25 April 2015, a severe storm in Sydney caused the collapse of a warehouse belonging to Mobis and used to store and distribute spare parts for motor vehicles. There were two potentially relevant insurance policies, a master policy issued to an associated company, Mobis Slovakia in which Mobis was listed as one of the "Insured Companies", and a local policy underwritten by XL and issued to Mobis. Both policies covered property damage and business interruption losses. The master policy had a storm or hail damage limit of €10 million. The local policy was issued to Mobis by XL as an independent contract but forming a part of the overall package. The local policy had a storm damage limit of €50 million, with no mention of a limit of indemnity for hail, and provided indemnity on a reinstatement basis. On 5 June 2015 XL wrote to Mobis that it "accepts liability under the policy in respect of the loss on the basis of known facts and circumstances, and subject to the applicable terms and conditions. The maximum limit of liability applicable to the loss is €10 million". That sum was duly paid to Mobis. In the present proceedings Mobis made a claim under the local policy for the balance of its loss in excess of €10 million, and if its claim failed then under the global policy.