“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!