Allianz Aust v Canberra Pools

[2001] HCATrans 160

IN THE HIGH COURT OF AUSTRALIA

Registry  No C13 of 2000

B e t w e e n -

ALLIANZ AUSTRALIA INSURANCE LIMITED in the court below known as MIMI GENERAL INSURANCE LIMITED

Applicant

and

CANBERRA POOLS PTY LIMITED

Respondent

Application for special leave to appeal

GUMMOW J
HAYNE J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON FRIDAY, 1 JUNE 2001, AT 9.33 AM

Copyright in the High Court of Australia

MR M.J. CRANITCH, SC:   May it please the Court, I appear for the applicant with my learned friend, MR P.T. TAYLOR. (instructed by Hickson Wisewoulds) 

MR S.W. TILMOUTH, QC:   May it please the Court, I appear with my learned friend, MR N.J. ADAMS, for the respondent.  (instructed by Macphillamy Donald) 

GUMMOW J:  Mr Cranitch. 

MR CRANITCH:   Thank you, your Honour.  Your Honours, as the Court is aware, this matter concerns whether an employer had workers’ compensation insurance in respect of the death of a worker. 

GUMMOW J:   Perhaps I should note that we are in receipt of a proposed amended draft notice of appeal. 

MR CRANITCH:   Yes.  That should have been included in the application book.  That was a matter which is subject to - - -

GUMMOW J:   I see, yes. 

MR CRANITCH:   There is one other matter, very briefly, and that is, if it matters, the application was made before final judgment was entered.  I have spoken to my learned friend about that and there is no issue.  We are here to deal with the relevant concerns, and so far as consent is necessary ‑ ‑ ‑

GUMMOW J:   Yes, I was wondering about that.  What is the date of the final order out?  Do we have it?

MR CRANITCH:   The date of the final order is 16 November 2000. 

GUMMOW J:   Were you already here by 19 October? 

MR CRANITCH:   Yes.  We might have jumped the gun a little bit. 

GUMMOW J:   Do we have the final order? 

MR CRANITCH:   Yes. 

GUMMOW J:   Is that page 38? 

MR CRANITCH:   Yes. 

GUMMOW J:   Thank you.  Yes. 

MR CRANITCH:   Your Honours, this matter concerns whether an employer had workers’ compensation insurance in respect of the death of a worker, occurring after more than seven months after – it is said, at least – the employer’s yearly policy expired.  We contend the matter warrants a grant of special leave for two reasons.  In the first case, the judgment is plainly wrong, and the application involves a matter of special importance and of general relevance to insurance contracts.  If I could firstly deal with the reasons why the judgment is wrong.  At 29.29 of the application book, the Full Court found that an offer made by the insurer was accepted by the employer’s silence. 

GUMMOW J:   Yes, but that all rests upon very peculiar circumstances in this particular litigation. 

MR CRANITCH:   Yes, it is peculiar to the litigation, but what arises is of general importance, if I may come to it a little bit later. 

GUMMOW J:   What about offer and acceptance? 

MR CRANITCH:   That is absolutely vital.  There does not appear to have been any offer or any acceptance, depending upon which interpretation you place – whether you take the original trial judge’s suggestion that there was a continuing holding out of an offer. 

GUMMOW J:   There are lots of commercial cases where these sorts of problems arise. 

MR CRANITCH:   I am sorry, your Honour? 

GUMMOW J:   There are a number of commercial cases – we have all been in them – where there are questions about what you infer as to offer and acceptance, where there is correspondence, and dealings in a commercial relationship. 

MR CRANITCH:   Yes.  But we would contend the proper construction is that the insurance company continued to hold out an offer of cover – and I will come to that in a minute – and there was never any acceptance, and acceptance could not be construed by silence, in the circumstances of this case.  The employer’s representative had told the insurer when the amount of premium was quoted that the employer “was shocked at the amount” – at application book 25.27 – and it is clear that the employer at that point of time was considering alternatives to placing the insurance with this particular insurer.  In other words, he was considering placing the insurance elsewhere. 

Secondly, the offer repeatedly provided, in the plainest terms, how acceptance could be effected, that is, by the provision of a wages declaration.  Now, in the circumstances of workers’ compensation, the wages declaration is tantamount to a proposal, because without that the policy premium cannot be calculated and therefore the consideration for the policy.  References to that continually being reiterated appear, inter alia, at 23.25 of the application book, 23.37, 24.8, 25.7, 25.26 and 25.36. 

HAYNE J:   But in the end does it not come down to, as appears at page 26, line 10 or 11: 

As per our telephone conversation we are confirming cover will be held until 4 pm 2/12/93. 

Does it not turn on what happened in the telephone conversation, what was said?  And where is the special leave point in what happened between the broker and the insurer? 

MR CRANITCH:   Your Honour, there is the old adage, of course, that “loose lips sink ships”, but they were dealing here with what is being imported into a suggestion that cover is held, when the factual circumstances do not support the fact that cover is being held.  Or if it is being held, it is being held ‑ ‑ ‑

HAYNE J:   I do not know what your client was doing saying cover was held, then.  Where is the leave point, when it turns on what was said between a broker and some clerk in the insurer on the date referred to in these facts? 

MR CRANITCH:   The special leave point is this, your Honour.  If you look at it from the other point of view – if you try and look at it from the point of view that there was a continuing holding out of cover, that is, that cover continued to be effected, presumably, the insurance company would be entitled to recover premium in respect of that.  That would take place regardless of whether or not an incident occurred.  In other words, should cover be, as the court held, effected by this means of communication and by the communications which took place repeatedly since April of that year, you would think that the insurer would then be entitled to turn around and sue the Pools for the recovery of premium. 

HAYNE J:   You might have a good Magistrates’ Court claim for recovery of premium.  Do not see the special leave point yet. 

MR CRANITCH:   I will come to the special leave point in a second, your Honour, but can I deal firstly with the issue that your Honour raised.  If the insurer wished to recover premium, what evidence would he be able to call?  On what basis could it be said that the employer had committed to a policy?  All that the insurer has done is said, “Well, look, the cover is there if you want it - it is there, it is there, it is there.”  But should it not turn around in, say, December, assuming nothing had happened, assuming there had been no accident and assuming it would want to say, “Well, I would like to recover the premium for the eight months we have held you covered”, there would be no chance that that insurer would be able to recover premium because there is simply no evidence that there was a meeting of the minds on whether the cover continued.  There is no evidence at all.  Indeed, absent the accident, the cover might well have been placed elsewhere, independently of the broker, so far as the insurance company knew.  Looked at from that point of view of that test, clearly, there was no contract, and the construction of the matter by Mr Justice Miles is the preferred option. 

The special leave point, we say, is this.  This is a way of writing business which is universal in workers’ compensation throughout this State, that is, the Australian Capital Territory, and also New South Wales and others.  Of necessity, there has to be what might be termed the period of grace, after the expiry of the policy, where the premium which is calculated upon wages past and an estimate of wages in the future is paid.  So there is premium adjustment in respect of the past, and there is a premium calculation in respect of the future. 

That cannot take place, by definition, unless the period of the policy has expired.  The way of doing business would have to be completely revised, and that is that there could be no chance of a period of grace being held out for the policy.  Now, that clearly is absurd, when one has to take into account that the act itself requires the policy to be held in that fashion.  If this judgment were to stand, then the whole of the insurance contract business, in the sense of the way in which these contracts are written and underwritten, would have to change in a significant respect.  It has a bearing both in a legal sense and, in its wider application, in the way the contract in relation to this particular type of insurance is applied. 

We say it cannot be said that a new policy is entered into which continues until the Minister’s approval is obtained for it to be cancelled.  The offer of a period of grace is a critical factor in the underwriting of this form of business.  If an offer is to be taken as giving rise to a contract of insurance without any real prospect of recovery of a premium, it is expected that these offers will not continue to be made in the industry, notwithstanding this would make the scheme unworkable.  That is because there is, inevitably, as I have said, a necessary delay between the expiry of the policy and the calculation of the appropriate premium. 

Those are our submissions in relation to the special leave point. 

GUMMOW J:   We do not need to trouble you, Mr Tilmouth.

This matter raises issues which turn upon the application of settled principles to the evidence concerning the provision of interim insurance cover.  There is no issue which was the grant of special leave.  Special leave is refused with costs.

AT 9.45 AM THE MATTER WAS CONCLUDED