Akai Pty Ltd v Peoples Insurance Co Ltd

[1995] HCATrans 375

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney   No S58 of 1995

B e t w e e n -

AKAI PTY LIMITED

Applicant

and

THE PEOPLES INSURANCE COMPANY LIMITED

Respondent

Application for special leave to appeal

BRENNAN CJ
DAWSON J
McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 15 DECEMBER 1995, AT 9.43 AM

Copyright in the High Court of Australia

MR D.M.J. BENNETT, QC:   If the Court pleases, I appear with my learned friend, MR C.R.R. HOEBEN, for the applicant. (instructed by Gadens Ridgeway)

MR T.E.F. HUGHES, QC:   May it please the Court, I appear with my learned friend, MR D.E.J. RYAN, for the respondent. (instructed by Freehill Hollingdale & Page)

BRENNAN CJ:   Yes, Mr Hughes.  We would be assisted by Mr Hughes, at first instance.

MR HUGHES:   Your Honour, I can be brief.  I am not going to try and regurgitate what is in the written argument or in the application book.  The dissentient judge in the Court of Appeal recognised, page 40, that on its true construction section 8(2) did not foreclose the parties to a contract of insurance from providing that the governing law of the contract, the proper law, should, in all circumstances or in some circumstances, be the law of another country.  If one starts at line 25, one finds that very clear expression of the President’s view:

In interpreting section 8 of the Act as I would, it is not suggested that all express provisions which might tend to indicate that the proper law of a contract is to be other than Australian law (assuming there is the initial nexus with Australia as in the present case) are invalid.  This is a question which should be approached on a case by case basis.

It is difficult, we would submit with respect, to see how, in the case of a provision like this, a case-by-case approach is necessarily appropriate.  What we say is that the legislature which one compares certain other provisions of the Act, such as section 43, 53 and 54, has drawn a clear distinction between the type of provision there made and the provision made in section 8(2).  Those other sections refer to provisions having a particular effect.  That is a form of expression that, in our submission, is apt to include implied terms.  The form of expression used in section 8(2) is not apt to include implied terms or an implied term as to the proper law or a term to be inferred, if there is any difference between the two concepts.

Section 8(2), viewed in its statutory context which includes these other sections to which I have alluded, makes it very clear, in our submission, that the only choice of law provision in the contract of insurance that is hit by the subsection, is a provision which expressly states, states in terms, that the choice is to be or that the governing law is to be the law of another country.  If, when one reads the contract, a court is put to the task of implying the intention of the parties or inferring it, a permissable process, hallowed by authority, then the contractual clause is not an express provision to the contrary.

DAWSON J:   But that is to ignore subsection (1), is it not?  Does not subsection (1) bring in implications?

MR HUGHES:   In our submission, no.  Subsection (1) says:

Subject to section 9, the application of this Act extends to contracts of insurance and proposed contracts of insurance the proper law of which is or would be the .law of a State or the law of a Territory in which this Act applies or to which this Act extends.

DAWSON J:   And that may be by implication.

MR HUGHES:   It could be by implication, it could be, but that rather, with respect, reinforces the argument that I have endeavoured to put in relation to subsection (2).

DAWSON J:   What subsection (2) ignores and what the draftsman apparently did not turn his mind to was an implication which arises from the express term.

MR HUGHES:   Yes there is that sort of implied ‑ ‑ ‑

DAWSON J:   That is what has happened here, because it was not covered, but the aim of the legislation is surely where the proper law of the contract, apart from some expression of intention by the parties, is New South Wales law, then New South Wales law will apply.

MR HUGHES:   That conclusion cannot be reached, in my respectful submission, without regard to the limited nature of the barrier or prohibition imposed by subsection (2).  It is a very short point.

DAWSON J:   Unless you regard subsection (2) as including implications arising from express term.

MR HUGHES:   Implications arising from the language, not ‑ ‑ ‑

DAWSON J:   Well it is an express term that the matter “be referred to the Courts of England”, is it not?

MR HUGHES:   That is an express term.

DAWSON J:   And the implication which is said to arise from that is the one which you seek to support.

MR HUGHES:   Yes, but the implication is not an express provision to the contrary; an integral right ‑ ‑ ‑

DAWSON J:   An arises from one.

MR HUGHES:   Yes, it arises from one but it is not one; your Honour, that is true.

BRENNAN CJ:   Well, is that right?  Perhaps this is not in itself a special leave point but as a matter of construction of clause 9 as an entirety, is that the right construction to place upon a second sentence of it?

MR HUGHES:   We would say that one approaches the construction of clause 9 by blacking out what has to be blacked out in obedience to subsection (2).

BRENNAN CJ:   But that is assuming the question is to be decided, is it not?  The first question is to decide what are the express terms which are the subject of section 8(2), and the answer to that must be arrived at as a matter of construction.

MR HUGHES:   Yes, but ‑ ‑ ‑

BRENNAN CJ:   Well now, looking at clause 9, why would one not construe it as an entirety?

MR HUGHES:   The difficulty that that approach faces is that the body is lying there by force of the statute; the body being the first sentence of clause 9, and one gives effect to it on the approach that your Honour is adumbrating, without regard to the fact that the body needs to be taken away by the undertaker, so that one is left, we would say, to construe clause 9 as it is dismembered, without regard to the dismembered part.

BRENNAN CJ:   So you are looking at the legs without the torso.

MR HUGHES:    Because the statute tells you to.

BRENNAN CJ:   You just then have to think, “What were those legs going at one stage?”

MR HUGHES:   Well, those legs were doing nothing but providing a possible basis, not a conclusive basis, for an inference that the parties intended that the governing law was the law of the forum selected.  Now, what we have done, if I may hand it up if I can find it, is to demonstrate what we would submit is such strength as our position has, by redrafting subsection (2) so as to catch the second sentence of clause 9.  If that is done ‑ if I can hand up the redraft - it becomes a very different subsection from that which appears in the statute book.  To get the result ‑ ‑ ‑

BRENNAN CJ:   It rather begs the question again, does it not, your redraft, because it takes the portion of the sentence and it welds it to other provisions and other circumstances, as distinct from determining what is the express provision which is the subject of the whiting out?

MR HUGHES:   It does not beg the question, your Honour; once one concedes the force of the command that you must whiteout the first sentence of clause 9 because it is directly and ineluctably within the purview of subsection (2).  Why, as a matter of drafting, and we have made bold to refer to other circumstances, is simply this, that if it is a matter of implying a term or inferring a term as to the governing law of the contract, it is necessary to have regard not only to the intention that might come out by inference or implication from what the parties have said, but not expressly said, and also to the circumstances in which the contract came to be made and, indeed, both courts below have admittedly, in a rather glancing way, recognised the relevence of the circumstances in which the contract was made.  We have referred to those passages in the judgments in our written argument.

This is a matter that is best met, it might be thought, by legislative amendment, if a forum clause is not caught by the terms of section 8(2).  The point short and I do not propose to elaborate it any further.  I doubt whether I could do my case any further assistance by talking about it at greater length.

BRENNAN CJ:   Yes, thank you, Mr Hughes.  We need not trouble you, Mr Bennett.  There will be a grant of special leave in this case.

MR BENNETT:   If the Court pleases.

AT 9.58 AM THE MATTER WAS CONCLUDED