Anndean Pty Ltd v South British Insurance Company Limited

[1987] TASSC 46

TASSC A42/1987

CITATION: Anndean Pty Ltd v South British Insurance Company Limited [1987] TASSC 46; A42/1987

PARTIES:  ANNDEAN PTY LTD
  v
  SOUTH BRITISH INSURANCE COMPANY LIMITED

TITLE OF COURT:  SUPREME COURT OF TASMANIA
JURISDICTION:  ORIGINAL
FILE NO/S:  489/1980
DELIVERED ON:  14 August 1987
DELIVERED AT:  
HEARING DATE:  
JUDGMENT OF:  Underwood J

CATCHWORDS:

REPRESENTATION:

Counsel:
             Plaintiff:  
             Defendant:  
Solicitors:
             Plaintiff:  
             Defendant:  

Judgment Number:  TASSC A42/1987
Number of paragraphs:  28

Serial No A42/1987
  File No 489/1980

ANNDEAN PTY LTD v SOUTH BRITISH INSURANCE COMPANY LIMITED

REASONS FOR JUDGMENT  UNDERWOOD J

14 August 1987

1. This is a claim upon a policy of insurance. The policy is a contract of marine insurance extended to include land risks incidental to the sea voyage. The following are the circumstances which led to the claim being made.

1. Some time prior to 1974, a Mr Crosby and a Professor Dunbar designed and produced educational material which they called "Basic Accountancy Slide Charts". The material comprises five flat cardboard sleeves, open at each end. Each sleeve measures approximately 29cm x 11cm x 1cm. On one side of the sleeve a small rectangular "window" is cut out. Inside each sleeve is a single flat piece of cardboard. On both sides of the sleeve and the cardboard slide information and hypothetical calculations are printed. The information on the sleeve can be viewed through the "window" by sliding the cardboard along the sleeve. Each of the five sleeves and its slide contain instruction on, and examples of, one of five basic accounting procedures. The whole of this material is packaged in a box entitled "Basic Accountancy Slide Charts; Journals, Ledger Accounts, General Journals, Final Accounts and Balance Sheet, Analysis and Interpretation". The idea was that persons who needed to understand, and keep records in accordance with the five basic accounting functions covered by the material, could do so if they studied these slide charts.

1. In 1974, Mr Crosby and Professor Dunbar entered into an agreement with Mr Richard Porter, a Tasmanian businessman, whereby it was agreed that Mr Porter would manufacture, promote and sell the slide charts. Mr Crosby and Professor Dunbar were to receive a $2 royalty for each box of slide charts sold.

1. Mr Porter commissioned a brief preliminary evaluation from a market researcher and improved the quality and presentation of the slides and the box containing them. Ten thousand of these kits of basic accountancy slide charts were then manufactured in Melbourne. All of this cost in the vicinity of $30,000.

1. The boxes of slide charts were in turn packed into boxes of fives, tens and twenties. These were delivered to the office of an advertising agency in St Kilda Road, Melbourne, referred to in the evidence as "Gartons".

1. In about early 1976 Mr Porter entered into an agreement with an accountant, Leonard Drever. The agreement was that Mr Drever would sell the accountancy slide charts in Melbourne. Mr Drever was to be paid expenses and receive half of the net profits of sale. At some stage, which was not identified by the evidence, the plaintiff was incorporated with the sole object of manufacturing and selling the accountancy slide charts.

1. Unfortunately, the product was not a success. Despite his best efforts, Mr Drever was not able to sell a single box either directly or on commission. Sometime in 1976, all the boxes were moved from Gartons to a lock–up shed in the grounds of a block of flats, one of which was occupied by Mr Drever, at 648 High Street, Prahran.

1. It was then decided between Mr Drever and Mr Porter that Mr Drever would try and effect sales by medium of mail order advertising. This met with very limited success and, by October 1977, had resulted in the sale of only 136 accountancy slide charts and a gross income of approximately $1,670. By this time, Mr Drever decided that there was no future for him in selling this product and he took employment in the office of the Public Trustee in Melbourne. No slide charts were sold after October 1977.

1. In early 1978, as Mr Drever was required to vacate his flat in High Street, Prahran, it was arranged between him and Mr Porter that the slide charts would be sent to Mr Porter in Hobart. Mr Drever obtained some quotations for the cost of doing this and advised Mr Porter when they were to hand. In an attempt to obtain transport at rates cheaper than those quoted, it was decided that Mr Drever would advertise in the Age Newspaper seeking quotations for the carriage of the goods from Melbourne to Hobart. In response to the advertisement, two men attended Mr Drever at his flat, to inspect the goods and provide a quotation. These men represented to Mr Drever that they were from a transport company called McKenna Transport Co of 304 Coventry Street, South Melbourne. A quotation was provided. There was considerable confusion in the evidence of both Mr Drever and Mr Porter with respect to the amount of this quotation and the dates upon which various subsequent events took place. Correspondence between Mr Drever and Mr Porter was put in evidence. This correspondence refers to several relevant dates and events. The oral evidence of these matters was uncertain, conflicting and unreliable. It was not capable of supporting any findings of fact. I rely in the main, upon the documentary evidence to make the following findings of fact.

1. Following receipt of the initial quotation from the two men, Mr Drever engaged in a bargaining process which resulted in an agreement that McKenna Transport Company would transport the goods from the shed at High Street, Prahran to Mr Porter's office in Hobart for a sum in the vicinity of $500. In September 1978 Mr Porter sent Mr Drever a cheque for $500. Mr Drever cashed the cheque and the money was handed to one or both of the two men purporting to be employees of McKenna Transport Company. A day was fixed for the removal of the goods. Mr Drever arranged with the two men that he would hide the key to the shed in the garden nearby, so that the men could come and take the goods on the agreed day whilst he was at work. It was also arranged that after removal of the goods the key would be left in Mr Drever's letter box. Having made these arrangements, Mr Drever telephoned Mr Porter and advised him of the agreed date for removal and the name of the transport company so that Mr Porter could arrange insurance to cover the goods whilst in transit. Mr Porter made a note of this telephone conversation which reads "slides being picked up 3.10.78 from Len Drever McKenna Transport 304 Coventry St, S Melbourne".

1. On the 3 October 1978 Mr Porter telephoned an agent of the defendant and entered into a contract of marine insurance in the sum of $50,000. The contract was subsequently reduced to writing, the terms of which I shall refer to shortly.

1. In his oral evidence, Mr Drever said that the goods were taken from the shed on the 4 October 1978 but that evidence is in conflict with the note of the phone conversation made by Mr Porter, and a letter written to him by Mr Drever, and dated the 11 October 1978 which said, "just to confirm that the slide charts were picked up on Tuesday the 3rd of October". I find that the goods were removed from the shed sometime during working hours on 3 October 1978.

1. After work on 3 October 1978, Mr Drever returned to his flat and found the key to the shed left in his letter box as arranged. He looked in the shed and found it was empty. He assumed that the goods were on their way to Hobart in accordance with the arrangements he had made. However, the goods did not arrive in Hobart and have not been seen since.

1. Subsequent enquiries revealed that McKenna Transport Company had gone into liquidation and ceased trading in about 1976. Enquiries by the police failed to identify either of the two men who had purported to enter into the contract with Mr Drever. The probabilities are that the goods were stolen by thieves who answered the advertisement with the fraudulent intention of stealing the goods if entrusted by Mr Drever with the task of transporting them to Hobart.

1. The plaintiff claims to be indemnified, pursuant to the contract of insurance, for the loss of the accountancy slide charts.

1. On 18 October 1978, the defendant issued a document entitled a Certificate of Insurance. It provided that the type of insurance was "Marine Cargo", the interest insured was "crated plastic accounting slides", the sum insured was "$50,000", the situation was "Melbourne to Hobart" and the insured "Anndean Pty Ltd" The certificate further provided that the period of insurance was "from 4th October 1978 to 4th November 1978 at 4pm." It was endorsed to be subject to the Institute Cargo Clauses (All Risks), which clauses were attached to the certificate. The certificate concluded, "This certificate is issued in lieu of a policy and grants insurance in terms of the proposal and subject to the terms exceptions and conditions of the Company's standard form of policy for the type of insurance requested, as modified or extended by any endorsement hereon." [my emphasis]

1. The company subsequently issued a policy No 61/MC3199–5616. It commenced with the following words:

"Be it known that Anndean Pty Ltd as well in his own name, as for and in the name and names of all and every other person or persons to whom the same doth, may, or shall appertain, in part or in all, doth make insurance with the South British Insurance Company Limited (hereinafter called the company) and cause himself/themselves and them and every of them to be insured, lost or not lost, [my emphasis] at and from Melbourne to Hobart in the good ship or vessel called McKenna Transport (Bass Strait Ferry)".

1. The policy referred to the goods described in the certificate of insurance and incorporated the Institute Cargo Clauses (All Risks). Clause 1 thereof provides (so far as is material):

"This insurance attaches from the time the goods leave the warehouse or place of storage at the place named in the policy for the commencement of the transit, continues during the ordinary course of transit and terminates either on delivery ..."

1. The defendant denied that it was bound to indemnify the plaintiff because:

1The plaintiff had failed to establish that the goods were lost during the period referred to in the certificate of insurance namely on or after the 4 October 1978, and/or

2The plaintiff had failed to establish that at the time of the loss, the goods were on risk as such risk only attached from the time the goods left the storage for the commencement of the transit.

Learned counsel for the plaintiff submitted that, even if the loss occurred on 3 October 1978, either before or after the oral contract was made, the expression in the policy, "lost or not lost" entitles the plaintiff to the indemnity sought. In short, it was submitted that, the words "lost or not lost" meant that the policy was to have retrospective operation.

1. Section 36(1) and the 2nd Schedule, of the Marine Act 1909 (Cth), makes provision for a form of policy of marine insurance. The policy issued by the defendant is substantially in accordance with the statutory form. Section 36(2) and the 2nd Schedule provide rules for the construction of such a policy. With respect to the express "lost or not lost" the schedule provides:

"Where the subject matter is insured 'lost or not lost', and the loss has occurred before the contract has concluded, the risk attaches unless, at such time, the assured was aware of the loss, and the insurer was not."

1. The expression "lost or not lost" is one commonly found in policies of marine insurance. See Arnould, Law of Marine Insurance and Average, 16th ed, par31.

1. An insured is entitled to indemnity for the loss of his goods, insured "lost or not lost" under a policy of marine insurance against all risks, on a specified voyage, notwithstanding that without his knowledge, the loss occurred before the contract was made. That is the effect of s36(2) and the 2nd Schedule. See also London and Lancashire Insurance Co Ltd v Puzyna [1955] 3 S Afr LR 240; Neilson & Ors v The Association for the Protection of Commercial Interests as Respects Wrecked and Damaged Property (1874) 43 LJCP 218; Mead v Davison (1835) A & E 303; 4 LJKB 193, 111 ER 428; Sutherland v Pratt (1843) 11 M & W 296, 12 LJ Ex 235; 152 ER 185.

1. However, no obligation to indemnify the insured arises unless, at the time of the loss, the risk had attached to the goods. In the case of an ordinary voyage policy, the risk attaches throughout the duration of the voyage and, if cl 1 of the Institute Cargo Clauses (All Risks) is a term of the contract, from the time the goods leave the place of storage for the commencement of the transit.

1. In the present case, although the policy, which is dated 27 October 1978, described the period of risk with reference to the voyage alone, the certificate issued on 18 October 1978 "issued in lieu of a policy", described the period of risk with reference to the voyage and the period from 4 October 1978 to 4 November 1978 at 4pm.

1. What then is the effect of the insertion of these dates in the certificate of insurance next to the printed heading, "period of insurance"? In construing a policy of insurance the court is obliged to have regard to all the words on the certificate and the policy to ascertain the intention of the parties. See Elderslie v Borthwick [1905] AC 93; The Hibernian [1907] 277.

1. The dates were expressly typed into the certificate. They do not form part of the printed words. To hold that the attachment of risk is determined by reference to the voyage alone, is to completely ignore the temporal limitation expressly inserted into the printed documentation. Looking at the certificate, the proposal and the policy, I reach the conclusion that the parties intended the policy to be both a voyage policy and a time policy as is referred to in s31(1) of the Marine Act. Accordingly, the expressions "lost or not lost" will not aid the plaintiff unless it is able to prove that the loss occurred whilst the risk was attached. The risk only attaches to the goods if the loss occurred within the limits of time specified and during the voyage described. See Robertson v French (1803) 4 East 130, 102 ER 779.

1. I find by way of inference from the evidence that the goods were stolen on the 3 October 1978 when removed from the shed by the two men fraudulently claiming to represent the McKenna Transport Company. The probabilities are that the goods were never in transit from Melbourne to Hobart. They were probably taken from the place of storage for the commencement of transit to some place unknown pursuant to a criminal enterprise entered into by the two thieves.

1. Accordingly, the plaintiff has failed to discharge the onus of proof that the loss occurred after the risk had attached to the goods, namely, between 4 October 1978 and 4 November 1978 and after leaving the place of storage for the commencement of transit from Melbourne to Hobart. There will be judgment for the defendant.