Australia: Show and tell: an insurer's duty of disclosure: O'Farrell v Allianz Australia Insurance Ltd [2015] NSWCA 48

Insurance Update

In the recent case of O'Farrell v Allianz Australia Insurance Ltd, the New South Wales Court of Appeal considered ss 21, 21A and 22 of the Insurance Contracts Act 1984 (Cth) (ICA) regarding the insured's duty of disclosure and an insurer's obligation to inform the insured of that duty. The Court's decision highlights the need for insurers to "clearly inform" the insured of his or her obligations and provides a salient warning about the dangers of imprecise questioning.


In May 2010, O'Farrell insured his car with Allianz Australia Insurance Ltd. His car was stolen and he made a claim under the policy. Allianz refused to pay the claim on the basis that O'Farrell had failed to disclose two criminal convictions arising out of minor brawls in a pub.

O'Farrell brought proceedings in the Consumer, Trader and Tenancy Tribunal (CTTT) seeking an order of payment for the value of his car. O'Farrell submitted that he was only asked about convictions that related to driving and he was not alerted to the duty of disclosure or the consequences of failing to comply. The CTTT decided the case in O'Farrell's favour, finding he had not been properly advised of his duty of disclosure and, in any event, the undisclosed convictions were not to be understood as a "material risk" covered by the policy. After a successful appeal by Allianz to the District Court, the matter came before the Court of Appeal.

In a unanimous decision, the Court of Appeal overturned the decision of the District Court and reinstated the CTTT's decision.

The obligations

In brief, s.21 of the ICA requires the insureds to disclose every matter that they know, or could reasonably be expected to know, is relevant to an insurer's decision to enter into a contract of insurance with them.

As O'Farrell was applying for comprehensive car insurance, s.21A of the ICA applied. Accordingly, Allianz had to ask specific questions relevant to its decision to enter into a contract of insurance and O'Farrell was obliged to answer those questions by disclosing each matter known to him and disclose what a reasonable person in his circumstances could be expected to include in the answer. However, pursuant to s.21A, if the insurer fails to ask specific questions, then it is deemed to have waived the applicant's obligation to comply with their duty of disclosure.

The case turned on whether or not Allianz had met the requirements of s.22 in clearly informing O'Farrell of the general nature and effect of his duty of disclosure. The burden of proof lay with Allianz to show it had complied.

O'Farrell obtained the insurance policy through brokers. O'Farrell gave evidence, by affidavit, as to his recollection of events which was ultimately accepted. In essence O'Farrell said he was provided with a quote for the premium and then asked a series of questions by the broker who said that she would enter the answers into the computer later. O'Farrell said that he was asked about his driving history and speeding fines and so disclosed his previous negligent driving offence, speeding fines and drink driving offence. O'Farrell said he was not asked about criminal convictions.

Allianz relied on affidavit material by a technical development manager which annexed an email from the broker's employee about what questions would have been asked. The broker's employee who dealt with Mr O'Farrell was not called to give evidence herself.

Also attached to the affidavit was a five page document signed on the last page by O'Farrell. However, it was unclear to the Court whether this was the questionnaire which the broker had before her when she asked O'Farrell questions. The document appeared to be a computer printout. The first page of the document contained a number of "important notices" including a paragraph commencing "your duty of disclosure". The Court of Appeal did not accept that the notice complied with the permissible form in Schedule 1 of the ICA.

It was decided that O'Farrell's attention had not been directed to the notices on the first page of the proposal form at the time he was asked to sign the final page or at any time. Allianz tried to argue that by signing the "Declaration" on the last page, which included a declaration that O'Farrell had read the information concerning the duty of disclosure, that his attention must have been drawn to the duty. However, this was insufficient to establish that Allianz had "clearly informed" O'Farrell of the duty.

Once O'Farrell paid the premium and was then handed a "tax invoice" which included details of his policy and other information. The "tax invoice" was also stamped with "Your duty of disclosure. Please read important notice overleaf". However this was provided after payment had been made and the contract of insurance entered into.

In considering the language used in decisions below, the Court emphasised the judgment of Stein JA in Suncorp v Cheihk. In that case it was held that "inform" means "make-known" and clarity was required in both method and form:

"Clarity was required not only in the contents of the note by which the information was conveyed but also by the manner in which the note conveying the information was made known. A note in a document without attention appropriately drawn to it would not suffice..."

O'Farrell highlights the risks for insurers of relying on proposals being "administered" by others if the person administering the proposal cannot lead clear evidence that the insured was clearly informed of his or her duty of disclosure.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.