Spontaneous combustion: How “spontaneous” does it need to be?

In the recent case of Dalby Bio-Refinery Ltd v Allianz Australian Insurance Limited [2019] FCAFC 85, the Full Court of the Federal Court of Australia considered the meaning of the term “spontaneous” in the context of a perils exclusion clause. The plaintiff, Dalby Bio Refinery (Dalby), was a manufacturer and distributor of ethanol. On 2 March 2016, fire and emergency services attended Dalby’s bio-refinery in South East Queensland due to smoke having been detected. Stockpiles of dry distillers’ grain and solubles (product) in four bays showed signs of possible fire damage. Whilst testing of the product indicated that it was unlikely to develop into large scale flaming combustion, the contents of three of the bays were discarded due to having a “burnt smell” and being discoloured. Dalby was insured by Allianz Australian Insurance Limited (Allianz) under an Industrial Special Risks Policy. There was no argument that the Policy would respond…