Antico v Ce Health Casualty & General Insurance

[1996] HCATrans 279

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S11 of 1996

B e t w e e n -

SIR TRISTAN ANTICO

Applicant

and

C.E. HEATH CASUALTY & GENERAL INSURANCE LIMITED

First Respondent

and

HEATH FIELDING AUSTRALIA PTY LIMITED

Second Respondent

Office of the Registry
  Sydney  No S17 of 1996

B e t w e e n -

HEATH FIELDING AUSTRALIA PTY LIMITED

Applicant

and

SIR TRISTAN ANTICO

First Respondent

and

C.E. HEATH CASUALTY & GENERAL INSURANCE LIMITED

Second Respondent

Applications for special leave to appeal

TOOHEY J
GAUDRON J
GUMMOW J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 13 SEPTEMBER 1996, AT 11.30 AM

Copyright in the High Court of Australia

MR J.D. HEYDON, QC:   If the Court pleases, I appear with MR R.J. POWELL for the applicant in the first of the two matters.  (instructed by Allen Allen & Hemsley)

MR A. EMMETT, QC:   May it please your Honours, I appear with my friend, MR J.P. DURACK, for C.E. Heath which is the respondent in both applications.  (instructed by Phillips Fox)

MR J.E. MIDDLETON, QC:   If the Court pleases, I appear with my learned friend, MR I.G. WALLER, for the second respondent, Heath Fielding Australia Pty Limited, and the applicant in the second matter.  (instructed by Clayton Utz)

TOOHEY J:   Yes, Mr Heydon.

MR HEYDON:   If your Honours please.  The background, briefly, to this application is that it concerns a common clause in directors and officers insurance policies providing that the insurer is not liable to indemnify unless the insured obtains consent to the incurring of costs covered by the policy.  The facts, briefly, were that some costs were incurred - - -

TOOHEY J:   I think we are sufficiently familiar with the facts, thank you.

MR HEYDON:   Thank you, your Honours.  The essential point that we wish to raise is that the approach of the Court of Appeal, that is to say the approach adopted by the President with whom the other two members of the court, in effect, agreed, is to err in the construction and application of section 54 because it chose to select as the appropriate manner of analysis what we would call an over-precise dissection or an over-precise filleting of the factual circumstances so as to isolate out, as it were, the fact that at the end of the day the consent of the insurer was needed and to - - -

TOOHEY J:   On the footing that that was the relevant omission.

MR HEYDON:   Yes.  The approach of the President is to say that if, for example, the insured had not made any application at all, there would have been an omission, namely, an omission to apply for consent.  The insured did make an application, though what was regarded as an incomplete one, and his reasoning was that section 54 cannot excuse or assist in relation to the failure of the insurer to grant consent.  Our basic submission would be that that is an erroneous approach because - - -

TOOHEY J:   It was a different approach to that taken by the primary judge, was it not, who used the language of “inaction”?

MR HEYDON:   Yes.  The primary judge, in effect, said that section 54 did not arise at all because of his construction of the Court of Appeal’s decision in Perry’s Case.  Mr Justice Kirby, in effect, distinguished Perry’s Case and with that out of the way said that section 54 was capable of applying and did apply, at least so far as there were acts or omissions of the insured, but did not apply on this process of analysis to the ultimate step, namely, the non‑consent of the insurer.

In substance, what has happened is that there has been a failure of the insured to comply with condition 1 of the policy.  One could describe it as the failure to make a proper application; one could describe it as a failure, having made some application, to comply properly with requests for information thereafter; or one could describe it more globally as a failure to get the insurer’s consent.  Whatever form of words one is using, one is describing the same events.

In our submission, when one takes the words of the section which require one to see whether the effect of the contract is that the insurer may refuse to pay by reason of some act or omission of the insured - - -

TOOHEY J:   That is section 54?

MR HEYDON:   That is section 54(1) which, if the Court does not have it handy, can be conveniently found on page 97 of the application book:

where the effect of a contract of insurance would, but for this section, be that the insurer may refuse to pay......by reason of some act -

or omission of the insured.  The effect of condition 1 of the policy is, for example, that the insurer could refuse to pay because no proper application was brought forward or the effect of the contract is that the insurer may refuse to pay because, though an application was made, no sufficient details were thereafter supplied.  Whichever way one looks at it at that level the effect of the contract is to deny or at least to give the insurer an opportunity to refuse to pay.

The relevant catenation of events is the same whatever formal label or verbal label one chooses to attribute to it.  One of the difficulties, we would respectfully urge upon the Court that flows from that approach is that in the first place it produces anomaly.  The anomaly is that in the case of an insured who simply fails to make any attempt to comply with condition 1 and makes no application at all, section 54 will come to that insured’s aid, whereas, in the case of an insured like the present applicant who has made some attempt to comply but has not, at the end of the day, got consent, the section simply does not apply.  In other words, the - - -

GUMMOW J:   Why will it work on the first hypothesis? 

MR HEYDON:   I am sorry, your Honour?

GUMMOW J:   In terms of the language of the section, why will it work on the first example but not on the second?

MR HEYDON:   It would work, we would submit, because the effect of the contract of insurance would be that the insurer may refuse to pay a claim because he simply has not been asked to consent.  It is “by reason of some act”.  The phrase “by reason of”, we would say, embraces a number of concurrent causes.

GUMMOW J:   “Act” rather than “inaction”.

MR HEYDON:   “Act” is defined to include “omission” and your Honour is, as it were, postulating this distinction which hovers on the edge of this point and in front of Mr Justice Giles was part of the case but is not strictly part of this point.  We would submit that that is a - I mean, it might be a deliberate refusal to apply for consent, it might be a reckless one or it might simply be an inadvertent one but whatever it was it would have been an omission and the section would have save that insured or applied to that insured but it does not apply to the lesser degree of activity of the applicant insured.

The other point we would urge as part of the application upon the Court is this:  it places a premium, really, upon insurers drafting conditions of this type so that they call either for the conferring of consent by themselves or of a third party or they would permit the stipulation of the formation of an opinion, for example, by themselves or a third party.  Either of those techniques or groups of techniques would mean that that insurer would have fitted the contract in under the Court of Appeal’s reasoning and thereby narrow down the scope of section 54.  Now, one thing does seem plain.  There may be a limit to the extent to which one can appeal to these general expressions but the section itself seems to concentrate on substantial things by the use of the words “effect” and so forth.  Chief Justice Gleeson ‑ ‑ ‑

GUMMOW J:   That phrase, “the effect” is in a number of sections in the Act and one thinks it might be indicative of some general scheme of the Act.

MR HEYDON:   Yes.  The general scheme of the Act, if I could just read to the Court - - -

GUMMOW J:   In other words, not to concentrate too much on form at the expense of substance.

MR HEYDON:   We respectfully adopt that point, your Honour.  The long title of the Act was:

An act to reform and modernise the law relating to certain contracts of insurance so that a fair balance is struck between the interests of -

all parties and the provisions included “operated fairly”.  Chief Justice Gleeson said this in East End:

It would hardly be consistent with the purposes thus described to construe the language of s 54 in such a way as to make its operation depend upon the choice that is made between various available drafting techniques.

And the approach of the court below does, as it were, offer to a mind interested in avoidance or frustration of section 54 of ingenuity in the selection of drafting techniques which would fit within the reasoning and we submit that highlights the fact that in the context of the legislation there has been a wrong approach to the application of the section.

TOOHEY J:   Mr Haydon, could I make sure I understand the implications of this application and the other application before us.  As things stand, your client’s claim against the first respondent, Heath Casualty, stands dismissed?

MR HEYDON:   Yes.

TOOHEY J:   The claim against Heath Fielding is still on foot?

MR HEYDON:   Yes.

TOOHEY J:   Certain questions have been answered, one adverse to Heath Fielding which it seeks to air before us on its application.  The claim against Heath Fielding relates to the failure to notify the insured - that is Heath

Casualty - of certain events but which is said, if I understand it correctly, to be attributable to fault on the part of the broker, namely, Health Fielding.

MR HEYDON:   Yes.

TOOHEY J:   Now, if special leave were granted in respect of the particular point that is now before us and the matter went on appeal and you succeeded in respect of that point, where does that leave the dismissal of the claim against Heath Casualty, having regard to the failure to notify?

MR HEYDON:   It would leave that claim dismissed and it would leave our continuing role in the litigation as an action against the broker for its negligence in having failed to procure notification.  If, however, Mr Middleton’s application today succeeds and the appeal that flows from that is ultimately allowed, it would broaden the field of combat to this extent, because we would have available to us the renewed possibility of a claim against the insurer on the basis that one of the insurer’s points against us, namely, no notification, had gone. 

There was common to the lis between ourselves and the insurer and the broker below the question of the application of section 54.  If leave is granted in respect of our section 54 point, which is our point, but Mr Middleton fails in getting leave, the matter will proceed only against the broker.  If Mr Middleton succeeded in getting leave and succeeded in the appeal, the action could continue against both insurer and broker.  That is the overall conspectus.

TOOHEY J:   Just to make sure I understand this:  if the section 54 point is resolved favourably to your client, you say that of itself does not reinstate your claim against Heath Casualty?

MR HEYDON:   No, it does not because there would remain in place, as it were, the decision by 2:1 of the Court of Appeal that there had been no proper notification and it is that which Mr Middleton wants to revive but for the moment Heath Casualty, as it were, can take advantage of that.

TOOHEY J:   Yes.  But is that something that you are seeking to draw before us?  It is not, is it?

MR HEYDON:   No.  We are in a slightly mobile position.  Below, we were supportive of Mr Middleton in that regard.  Here - - -

TOOHEY J:   It is the mobility that really forces me to ask this question.

MR HEYDON:   Yes, I know.  For the limited but crucial purposes of today’s application, we are not supporting it.  We will be saying nothing about it.  If it succeeds, Mr Middleton will find us marching enthusiastically behind him.  Of course, there is another aspect.  If Mr Middleton were successful here at the end of the day he would be out of the case because he would not have been negligent.  He would have affected notification so that our focus of - I should correct what I said, our focus of attack would then shift back to the - - -

TOOHEY J:   That would bring you back in - that would give you a cause of action against Heath Casualty.

MR HEYDON:   The insurer, yes.

TOOHEY J:   But not in respect of the point that you have been urging.

MR HEYDON:   It would.  We have to win on this section 54 point, whichever - - -

TOOHEY J:   Yes, but the notification point is one that - - -

MR HEYDON:   Yes, our position is that we have two perfectly fat defendants or pots of money.  If we win on the 54 point and Mr Middleton does not win on his point, we have Mr Middleton to aim at.  If Mr Middleton wins, he ceases to be negligent, drops out, but we remain with our claim against Mr Emmett.

TOOHEY J:   I understand.  But in another situation where one of the respondents was unfinancial, this could be quite critical.

MR HEYDON:   It could be quite critical.

TOOHEY J:   But it is not here.

MR HEYDON:   But as far as we know they enjoy the best of financial health.

TOOHEY J:   Yes.  Mr Emmett.

MR EMMETT:   Your Honour, that puts us in a somewhat difficult position.  The draft notice of appeal - perhaps I should say, with respect, my learned friend, Mr Heydon, is in a bit of a difficult position.  The draft notice of appeal which is at pages 148 and following, which is Mr Heydon’s draft notice of appeal in this Court, does not raise the notification question.

TOOHEY J:   No.  I thought he was at some pains to say that he does not want to raise it.

MR EMMETT:   In that case, really, we are an improper defendant or respondent to his application.  He does not seek, in a sense, any relief against us.

TOOHEY J:   He cannot seek an order against anyone else, I suppose, in respect of that matter.

MR EMMETT:   At the moment, as the record below stands, he has on foot a claim against Heath Fielding but no claim against C.E. Heath.  The only ground upon which he seeks to appeal, if it is upheld, does not have any effect on the dismissal of proceedings against C.E. Heath, which is the point your Honour took with my learned friend, but he expressly said, “We don’t support that application and it is not a ground of appeal.”  That being so, we say, we should not be joined as a respondent to these proceedings.  He can pursue his appeal, if he wishes to, in relation to the adverse determination as against Heath Fielding.  If, however, he wants to - - -

TOOHEY J:   He has not an adverse determination against Heath Fielding.

MR EMMETT:   He has.

TOOHEY J:   Has he?

MR EMMETT:   The section 54 point.

TOOHEY J:   Against Heath Fielding?

MR EMMETT:   Yes.  I am terribly sorry, no.  The adverse determination he has is on the notification point as against - - -

TOOHEY J:   He really needs to get up, ultimately - on whatever avenue it is pursued, he really needs findings favourable to him on section 54 and also to disturb the finding of notification.

MR EMMETT:   He can succeed against Heath Fielding by having overturned the finding in relation to section 54.  Now, if that happens, C.E. Heath is out of the picture.  He could, but he has not yet, seek to disturb the adverse finding in relation to the claim against C.E. Heath, namely, the notification point.  Now, if he does not seek to have that overturned in his claim as against Heath, that is an end to the matter as far as Heath is concerned.

TOOHEY J:   That simply leaves him with an action in damages against Heath Fielding.

MR EMMETT:   That is right.  But in so far as the application he is making today, it is really to enable him to pursue his action against Heath Fielding.  He adopts and embraces the finding made by the trial judge and the majority of the Court of Appeal that there was negligence on the part of Heath Fielding in the failure to give notice.

TOOHEY J:   And you have no interest in the claim as between the insured and the broker.

MR EMMETT:   None at all, and if he does not want to ventilate as between Antico and Heath the question of notification, then we say we should be dismissed as a respondent and he can pursue his application against Heath Fielding.

TOOHEY J:   That is on the footing that although the point that has been urged may have validity, it is not a point that, as things presently stand, affects you.

MR EMMETT:   Exactly.  There is nothing really to respond to except on an hypothetical basis.  I could advance arguments to support the holding below in relation to section 54.  Although my learned friend, Mr Middleton, has a direct interest in this application in doing that, I only have an indirect interest if, somehow, we were brought back into the matter by reason of the notification matter being - - -

GUMMOW J:   You are really saying Mr Middleton should be hooked on first.

MR EMMETT:   Yes.

TOOHEY J:   You are saying more than that.

MR EMMETT:   I am saying more than that.

TOOHEY J:   You are saying you should not be brought on at all.

MR EMMETT:   Indeed.  That is ultimately the point.  The short answer to Justice Gummow’s point is - - -

TOOHEY J:   Yes.  There is probably not much point detaining you, at least at this stage.  I am not suggesting you should leave.

MR EMMETT:   We are but that is - I think your Honour is probably right.  It is probably preferable that your Honours hear from my learned friend, Mr Middleton, in relation to the question that has been ventilated already and then, perhaps, we see what happens so far as we are concerned when Mr Middleton becomes applicant rather than respondent.

GAUDRON J:   And Mr Middleton’s application would bring you back in.

MR EMMETT:   We say, no, because he has no claim against us.  There was no cross-claim or anything else between the defendants below.  There is simply no direct issue between Mr Middleton and Heath.

TOOHEY J:   But you are a respondent to his application.

MR EMMETT:   He has joined us and I would be making the same comments that I have just made when that matter is called on.  We say we are not properly joined as a respondent because we have no interest in the outcome of the decision.

GUMMOW J:   It might be foolish to stay away from both though.

MR EMMETT:   We have not, your Honour.

TOOHEY J:   Perhaps the matter might be more speedily resolved if we hear from you, Mr Middleton.

MR MIDDLETON:   If your Honour pleases.  Can I indicate this, that we have an interest in both questions.  We have an interest in the notification question, which is our application because, if we are successful on that, then we simply cannot be negligent.  We have satisfied the duty upon us, that is, to notify, in which case that would be the end of the case against us.

As currently the position stands, we agree with Mr Emmett, that there would be nothing further that our interests in Antico would have against the insurance company because there is nothing agitated in relation to notification.  We also though have an interest in section 54.  The reason we have a section 54 interest was explained and is explained at page 66 of the application book by the comment of the trial judge.  In essence, it is this:  let us assume against us that we did not make notification.  We will say there is no loss or damage arises because condition 1 has not been satisfied.

TOOHEY J:   Because the insurance out of court is ‑ ‑ ‑

MR MIDDLETON:   Exactly.  So, in that sense, we do not wish the interests in Antico to be successful in reagitating section 54 and that is why we oppose it.  But we do wish to also say that notification was given so you never have to get to that.

TOOHEY J:   Yes.  You might in difficulty on that application in so far as it might be put against you that it is, essentially, a question of fact and does not involve - - -

MR MIDDLETON:   I understand that.

TOOHEY J:   I appreciate you will come to that but - - -

MR MIDDLETON:   Yes, I will address that, your Honour.

TOOHEY J:   One does not necessarily get dragged along by the other, as it were.

MR MIDDLETON:   No.  Except that, if I may say so, the discussion we have had in the last five or so minutes would indicate the desirability of the matter going up, if at all, in one sense, on both bases, we would say, than splitting the matters because of the interconnection between the parties.  Whatever Mr Emmett’s position is, we cannot be precluded from seeking to overturn the decision on notification.

TOOHEY J:   You would want to be heard on that even if the application for special leave by Mr Heydon were rejected.

MR MIDDLETON:   Yes, and if Mr Heydon, because of some procedural matter is left out in the cold, so to speak, and he has no action against anyone if we are successful on that, well, so be it.  That is not a problem which we could be confronted with.

GAUDRON J:   But is there not going to be a problem, and a problem, I would have thought, of some magnitude, if Mr Emmett is not in it, of inconsistent verdicts?

MR MIDDLETON:   Exactly, if we may say so, your Honour, and that is the reason why we - - -

GAUDRON J:   Somebody has got to bring them in or it is not a matter that this Court can really entertain.  Is that not right?

MR MIDDLETON:   One suggestion, your Honour, is that the applicant in this matter seek to amend the notice of appeal to include the notification matter and then that would clearly raise it.  If leave is granted to the broker in that matter, then the matter is going to be before the Court.  So, it should be before the Court as far as both parties because Mr Heydon said to the Court that if we are successful on that he will be supporting us.  We are not dealing with the situation here of one or other of the defendants being insolvent.  So, it has no practical consequence other than clarifying, we would say, the law on an important aspect.

GUMMOW J:   And resolving the lis.

MR MIDDLETON:   Yes, your Honour.  If I may say so, your Honours, I would have thought that Mr Heydon would not have a problem in foreshadowing an amended notice of appeal, having regard to fact that he said if we are successful he will be supporting us so, in a sense, the question will be there.  There will be two people arguing instead of one.  I do not know if that is something which encourages the Court to hear the application but that would be the only practical difference.  I do not know now if your Honours wish me to proceed to the substantive matter?

TOOHEY J:   Perhaps we should hear what Mr Heydon has to say and, if anything, proposes to do.

MR MIDDLETON:   If your Honours please.

MR HEYDON:   If I can indicate three possibilities.  If our application today fails, that is the end of the whole case.  If it succeeds and Mr Middleton’s fails, it goes on against Mr Middleton but not Mr Emmett, so he goes away.  Mr Emmett, that is, goes away after today.  If both Mr Middleton and myself succeed, Mr Emmett should remain and, indeed, he will be a party because if the Court looks at page 149, line 30, of the application book, that is part of our draft notice of appeal to which Heath Casualty is the first respondent.  Order sought, 3(d):

that the orders sought in the Appellant’s Notice of Appeal in the New South Wales Court of Appeal proceedings be made.

That is to be found on page 75, those orders, and the substance of them is in four questions to which answers are suggested.  The first question is the notification question; (b), (c) and (d) are section 54 questions.  If Mr Middleton fails in relation to notification, we will not be proceeding with question (a).  If he succeeds in relation to notification, we will be asking for question (a) to be answered yes, and if the Court desires this to be done, we will add another ground to our draft notice of appeal, 2A, which would relate to notification.

TOOHEY J:   It is a matter for you, really.

GAUDRON J:   Is that, in effect, a fresh application for leave to appeal?

MR HEYDON:   We would submit not, because it operates against a background of both us succeeding and Mr Middleton succeeding.  If Mr Middleton succeeds, it will be a recognition by the Court that he has isolated a point meriting special leave.  Our notice of appeal in this Court would then merely reflect the substance of what had been done.

TOOHEY J:   There is a certain unreality, is there not, in the section 54 point which is being urged not against the insurer but against the broker?

MR HEYDON:   If Mr Middleton wins today, it does not follow, of course, that he will succeed in the appeal.

TOOHEY J:   No, no, but as far as your application is concerned.

MR HEYDON:   In order to succeed against anyone, we have to win our 54 point, so it is real, it has reality in that way.  The point is that the success on the notification point really affects only which of the defendants or respondents we are looking to but, either way, section 54 is crucial to us.

TOOHEY J:   It does not all have about it the crystal clarity that one looks for in a special leave application, does it?

MR HEYDON:   Your Honour, that is a hurtful thing to say.  Our point has considerable clarity.  Mr Middleton’s point has clarity but less charm.

TOOHEY J:   The points have clarity but it is where they take you that it becomes a bit obscure.

MR HEYDON:   Procedural matters, your Honour, are really - I appreciate they are difficult for anyone to understand but once one has grasped them, they are mere matters of detail and can be rectified, if necessary, by the amendment of the notice of appeal, and I appreciate what your Honour says about - - -

TOOHEY J:   We may take comfort from that, Mr Heydon, but it is your application and we will deal with it as it stands.

GAUDRON J:   I am not sure that you, in fact, have an application for special leave to appeal against C.E. Heath, here and now.

MR HEYDON:   That is, strictly speaking, correct, the answer to Justice Gaudron’s question.  They are parties - - -

GAUDRON J:   You see, it seems to me, as I said to Mr Middleton, at least on the notification point, that cannot possibly go forward if there is any possibility that it will result in inconsistent verdicts.  It would be most undesirable for it to go forward as between Mr Middleton and yourself, leaving the verdict below standing.  So, it seems to me the only way you can regularise this proceeding to make it one that I would consider appropriate to be entertained is by your filing a further application for special leave to appeal and seeking leave to file it out of time.  I speak only for myself in that.

TOOHEY J:   Mr Heydon, what we are minded to do is to hear from Mr Middleton on his application and let you consider your position while we are hearing and dealing with that.

MR HEYDON:   If your Honour pleases.

GAUDRON J:   If his application fails, you have no problem.  It is only if it succeeds that you have a problem, if it would otherwise succeed.

MR HEYDON:   Yes.  It is perhaps prudent that I do not interrupt Mr Middleton.  I would wish to explore precisely one or two things that Justice Gaudron raised but it is best, I think, that I do not delay Mr Middleton further.

TOOHEY J:   Yes, Mr Middleton.

MR MIDDLETON:   If your Honours please.  The question raised in our application, in our submission, goes as to what constitutes notification either under the Insurance Contracts Act, section 40(3), or a notification provision which is a common provision in claims made and notification policies. More specifically though, the question is what is the requirement as to intent when one is relying on a condition 5 or section 40(3). The difference of view which the members of the Court of Appeal expressed was the one taken by the trial judge, the primary judge, that there has to be an intent, in a sense, to rely upon the clause as distinct from a deliberate action, that is an intent, to just notify of facts.

The Court of Appeal recognised the persuasiveness of both views, your Honours may recall.  The President said it was a difficult question and so did the majority judges.  In effect, what occurred was, by the majority, was a reading of the primary judge’s reasons and a reading of his Honour the President’s reasons and they said in their supplementary - if I may put it that way - judgment that they were persuaded by the trial judge’s views.

Now, in our respectful submission, that is an important question to be determined and if I may move to the point that it is not just a factual matter in the context of this particular case at all, and that is the matter put against us by my learned friend, Mr Emmett, because one thing is clear, found on the facts, that the notification given was in actual fact adequate for the purposes of notifying - putting aside the question of what purpose it was for.  That is made clear by one fact and one fact relied upon by the President because in a later policy, as your Honours may recall, there was an actual fact put in the reference to the Minter Ellison letter in a later policy. 

If one has a look at page 29 of the application book, the last paragraph, the trial judge said:

Mr Gregory Brown of C E Heath, an experienced underwriter, took note of the letter of 29 June 1990 -

that is the letter which is said to constitute notification -

in that he caused to be added to the first policy an exclusion “in respect to circumstances notified in Minter Ellison’s letter dated 29th June 1990 referring to potential action by Messrs Bunny, McGhee, Perse [sic] and Banks”.

This point was picked up at page 117 by the President of the Court of Appeal when talking about the burden upon insurers as to different locations of their offices.  At line 6, at page 117:

I am fortified in this view by the fact that, in the facts of this case, Mr Brown of the first respondent actually caused an exclusion to be added to the first policy “in respect to circumstances notified -

and then he reads out the same -

It would have been a comparatively simple task for Mr Brown to have checked whether the appellant had any other policies and expressly notify -

and I do not need to read any more, it goes to a different point.  But the thrust of what is found there and what I am submitting to the Court is that there is no factual difficulty in this case that the insurer knew the circumstances and the fact that they related to facts relevant to the policy because, for a different purpose admittedly but that does not matter for the purposes of my argument - for a different purpose they specifically analysed that they were the circumstances.  What you have is you have an insurance company that on one hand in another policy later on can exclude the liability because you have handed to them the information which we say is all you need to do for notification and at the same time they say, “Well, you can’t rely upon the notification clause in the earlier policy, so you fall between two stools.”  We would say that is a result which, in the normal circumstances, would ask one to inquire whether that was a proper result.  In our respectful submission, the answer is, “No, it isn’t.”

The facts therefore raised by a number of ways by my learned friend in his outline, dealing with matters of what the letter constituted; what was in the letter; whether there was a schedule, really go by the way because that is not in issue.  The only issue is the one as to intent. 

Then one has the matter of the policy of the legislation, your Honours, and that is why the President of the Court of Appeal said the policy is in favour of the insured to make it so that one does not have tests that one has to satisfy as to intent or to raise a lot of problems in relation to intent, one is encouraging the situation whereby if the facts are notified, and as the President said, all the Act and all condition 5 requires is the imparting of information and once you get over the hurdle of imparting it by the insured, in writing, and that information is satisfactory for the purposes of telling the insurance company of the facts and circumstances, that should be the compliance with it.

TOOHEY J:   How, Mr Middleton, would you express that as a special leave point?

MR MIDDLETON:   I probably cannot go much better than what I attempted to do in the outline, your Honour. What we say is what constitutes notification under claims made in circumstances of notified policies of insurance and if one wants me to be more specific, I would go back, perhaps, to the way in which I put it to the Court, does notification require intent to rely upon condition 5 or section 40(3)?

GUMMOW J:   What does “intent” mean in this - - -

MR MIDDLETON:   We say that is the confusion that has arisen with the majority, your Honour.  What we say “intent” means is a deliberative act of giving information.  Not turning one’s mind to rely upon - - -

GUMMOW J:   What, to produce a result?

MR MIDDLETON:   No, your Honour, just to give the information. That is what we say and that is the special leave point that we wish to have agitated. There are a number of American cases that have looked at this, your Honours, and I have not, obviously - will not be taking your Honours to in any detail but they are set out by the primary judge and the Court of Appeal. Of course, they deal with their facts but what they do have is a line of principle and a line of thinking which supports, we say, our approach; that you do not worry about intent. In fact, the President of the Court of Appeal picked on one case and said, “Intent can’t make a notice any better if the facts aren’t there. Equally, if the facts are there, the intent can’t take away from that.” That is our point. That is the point which requires analysis, we say. It is an important point because it is not just dealing with an unusual clause in a contract of insurance, it is dealing with a clause which is very common, as your Honours will appreciate but, in any event, it is picked up by Commonwealth legislation, section 40(3).

GUMMOW J:   So, how is this “intent” notion then injected into subsection (3)?

MR MIDDLETON:   We say it is not.

GUMMOW J:   I know that but how would it be if - - -

MR MIDDLETON:   The way in which it is put against us - - -

GUMMOW J:   In other words, what is the construction of 40(3) you disagree with?

MR MIDDLETON:   The construction is to put in words.

GUMMOW J:   Which words and where, that is what I do not understand?

MR MIDDLETON:   The words of 40(3):

Where the insured gave notice in writing to the insurer of facts ‑ ‑ ‑

GUMMOW J:   It gave notice of them.  Something is injected in there, is it?

MR MIDDLETON:   Yes, it is said to be injected in there.  We took the Court of Appeal to the dictionary definitions:  “‘give notice’ means to impart information”, and his Honour, the President of the Court of Appeal, in his judgment picked that up and said, “Yes, that is correct.  You don’t need anything more.”  What policy aspect of this legislation requires you to superimpose upon that a requirement of specifically relying upon the provision of condition 5?  That is the question.  We say that undoubtedly what the legislation is is the opposite. “Why do you put an extra hurdle in the way of an insured?”, we ask the question rhetorically, and there is no answer.

The application of it to take it out of this case, which may be unusual in the sense of what applications are otherwise before the Court, but if you think about it from the point of view of what obstacles you are putting in in the place of an insured, in the general way in which this case will be applied as currently decided by the Court of Appeal, then you will have to have an intent, a deliberate act and adequate notice by whatever means that is which, we would say, puts a higher onus than is required in a claims made policy.

So, as far as a vehicle for the determination of this issue, on the basis of what the Court of Appeal decided which had a clear look at two judgments, the primary judge and, really, in a sense, what the President said, and it is a policy decision and one which this Court, we ask, should look at.  One of the problems, if the Court does not look at it - - -

GUMMOW J:   I do not think it is a policy question at all.  I think it a question of construing the wretched Act.  It is all cosmic.   Cosmos, you have got your feet on the ground in section 40.

MR MIDDLETON:   Your Honour, when I say “policy”, we are ahead, we say, by the mere application of the word “notify” as I indicated to your Honours.  But when, in answer to it, someone says, “No, you have to have more than that”, we say the policy of the Act - it is a rebuttal, if you like.

GUMMOW J:   You have got the word there, “balance”.

MR MIDDLETON:   Yes, your Honour.

GUMMOW J:   All right.

TOOHEY J:   Mr Middleton, do you seek any relief against Heath Casualty?

MR MIDDLETON:   No, other than they obviously have to be a party to this, as far as we are concerned.

TOOHEY J:   Well, as a party.  A lot of this is brought about, I suppose, by the fact that there were questions asked.

MR MIDDLETON:   Exactly, your Honour.

TOOHEY J:   And answered.

GUMMOW J:   Rather than trials.

MR MIDDLETON:   Yes, your Honour.

TOOHEY J:   I was just looking at your notice of appeal which is - - -

MR MIDDLETON:   You will not find any relief, your Honour - - -

TOOHEY J:   Well, only by way of costs.

MR MIDDLETON:   Yes.

TOOHEY J:   I do not know whether that is intended or not, but otherwise there is nothing.

MR MIDDLETON:   Yes.  Your Honours will appreciate the position we are in.  We cannot control what Mr Haydon’s client does in relation to what he wants to appeal against but we wish to agitate this point, for obvious reasons, which we have explained to your Honours previously, as well as the other point.  They are the matters which I wish to put before the Court in support of our application.

TOOHEY J:   Thank you for that.  Mr Heydon, do you wish to be heard in respect of this application?

MR HEYDON:   No, but in the event of the outcome that - - -

TOOHEY J:   What is “No, but” - - -?

MR HEYDON:   No, but if he is successful we have something to say in answer to the problem that Justice Gaudron raised 10 minutes ago.

GAUDRON J:   Yes.  That is really the next question, as I see it.  Do you, in fact - Mr Middleton, to my mind, cannot succeed on that point unless your notice of appeal is amended to include a claim against Heath Casualty because it would leave inconsistent results on the record.  So what one needs to know - what I need to know, I speak only for myself, is whether you, now, wish to advance that point against Heath Casualty?

MR HEYDON:   Yes, we wish to advance that point against Heath Casualty but we have nothing to add to Mr Middleton’s arguments.

GAUDRON J:   Yes, and you will amend your draft notice of appeal?

MR HEYDON:   Yes.  I have a couple of directions which I can give the Court now or in due course, as appropriate, in that regard.  They would be that time be extended to permit the filing of a special leave application.

GAUDRON J:   I have had a further look at that and it seems your application is sufficient in terms but your draft notice of appeal is not.

MR HEYDON:   If your Honour pleases.  Secondly, that special leave be granted to file or amend our notice of appeal on Mr Middleton’s issue so that it will be to the same effect as his notice of appeal on that point.  That is what we would seek.

TOOHEY J:   Are you in a position to let us have anything - a note in writing at all, Mr Heydon?  I do not mean immediately but - - -

MR HEYDON:   We will prepare one in the next few minutes.

TOOHEY J:   I do not want there to be any misunderstanding.  At the moment, the Court has not acceded to anything at this stage in respect to an amendment of the application.

MR HEYDON:   I appreciate that, your Honour.

TOOHEY J:   Mr Emmett.

MR EMMETT:   Perhaps I should respond to my learned friend, Mr Middleton, on the basis that he is Mr Heydon’s ventriloquist to date.  What fell from my learned friend, Mr Middleton, will in due course fall from my learned friend, Mr Heydon.  Had the application, as your Honour Justice Gaudron points out, been framed in that way, then we - - -

GAUDRON J:   The first question is do you object to the matter going ahead on the basis suggested?

MR EMMETT:   I have to confess we assumed this would have been done before today.

GUMMOW J:   The answer is no.

MR EMMETT:   We did signal it in our summary of argument.  This is how it was conducted below and I therefore have to say no.  Can I also, in defence of the commercial division though, say that this problem would have arisen even if the matter had gone to trial.  The problem arises by reason of the failure to take the point on appeal, not because of the way the matter proceeded at first instance.

GAUDRON J:   But these points were taken by Mr Heydon in the Court of Appeal?

MR EMMETT:   Yes, indeed.  I am not complaining at all.  As I say, it is only a procedural matter but my learned friend, Mr Heydon, seemed to be insistent on not correcting the procedural deficiency.  We accept that it is capable of being corrected in the way that is now being proposed.  Having said that, I will endeavour to deal with the substance of the application for leave in relation to the notification point.

TOOHEY J:   Yes, if you will.

MR EMMETT:   Your Honours, our simple position is it really does not raise any question as to the construction of section 40(3) or of the policy. It involves no more than the construction of the letter. Unfortunately, the document that is sought to be relied upon as notification is not in the application book. There are bits of it extracted in the judgment of Mr Justice Giles.

Could I indicate a bit of background just to indicate the context in which this communication occurred?  There was on foot the policy presently in question and in due course I will take your Honours to the policy because it is not, in our submission, a policy to which section 40 refers in the first place.  Let it be assumed for the moment that it is.  That policy was in place.  It is a legal expenses policy, that is, the indemnity is not in respect of legal liability incurred to a third party, it is to reimburse the insured in respect of legal expenses incurred in defending a claim by a third party.

During the currency of this policy, that is the policy in issue, Sir Tristan sought to put in place an additional policy.  His brokers went to a different office of the underwriter.  The present policy was issued by the Melbourne office.  Sir Tristan’s brokers went to the Sydney office and said, “We would like a new policy.”  That policy was going to be a directors and officers policy whereby the insurer would indemnify the insured in respect of legal liability to third parties.  The sort of policy that is referred to in section 40.

In the course of completing the proposal, there was a communication to the insurer in connection with that new proposed policy making disclosure of circumstances which would clearly be material to an intending insurer in respect of the risk of liability to third parties.

There was a document of some - I think, over 100 pages which constituted the communication of the proposal.  His Honour the trial judge described that at pages 28 and following of the application book, at line 35:

Heath Fielding wrote to C E Heath’s Sydney office by a letter dated 5 September -

and it is that document which is said to constitute notification under the earlier policy.  But the letter, of course, was written in the context of completing the proposal for a new and different type of policy.  It was headed “Bernborough Breeding and Racing Ltd & subsidiaries” and it was an application for a policy which the practice would always have in two sections.  There is the section which deals with an indemnity to the Company in respect of its liability to reimburse its directors and the second section is the direct indemnity to the directors in respect of any liability which the Company cannot indemnify them for.  That dichotomy arose out of the provisions of the Companies legislation which prohibited companies from indemnifying their directors in respect of certain breaches.

The letter enclosed copies of various documents and it said, we:

enclosed “copies of various documents relating to quotations required for the above -

that is, this letter was a request for quotation of premium.  Then it referred to “a corporate proposal for BBR and six personal proposals”, that is, the proposal for the Company insurance and the six separate proposals by each of the directors, including Sir Tristan.  It referred to “what was called a ‘summary sheet’”.  So, the letter itself refers to a further document called a summary sheet. 

In Sir Tristan’s proposal itself, a number of questions were asked:

Are you aware of any act, omission or dispute or alleged act, omission or dispute -

and I think it should be:

or other circumstances which you have reason to suspect might afford grounds for any future claim -

and the answer was:

“Yes - see attached statement”.

And that is how the summary sheet was then incorporated by reference.  However, the summary sheet, under a heading called “Claims/GRCS” which was taken to mean -

TOOHEY J:   Gives rise to circumstances.

MR EMMETT:   Yes, sorry.  The attachment though referred only to Giant Resources but the point is that although the proposal referred to claims, it referred to a summary but the summary made no reference to the matters presently under consideration.  It referred to claims in respect of Giant Resources.  So, the net effect of the answer was, “Are you aware of any possible claims?”, the answer is, “No, except to the extent of claims in respect of Giant Resources”.  No mention of claims in respect of Bernborough.  There was, however, “the words ‘Refer legal correspondence and Giant Resources’”.  There then followed a diverse collection of further documents.  Amongst those documents was the letter from Minter Simpson which is relied upon as disclosing the facts, part of which claims were subsequently made and in respect of which costs were incurred for legal expenses.

So that what was sent was a document seeking quotation for insurance premiums on a new policy.  What the argument involves is saying, “In those circumstances where we sent to a different office a document which happens to disclose some information in connection with an inquiry for a quotation in relation to different insurance, you must be taken to have received notification of circumstances that might give rise to a claim under a totally different policy issued by a different office of the Company.

Now, that is the factual circumstance that the Court has to consider.  Whether, in the light of that, one could say that that communication could constitute a notifying within the meaning of section 40 or notification within the meaning of the terms of the policy.  Now, my learned friend raised the question of intent.  Nobody has suggested that the question of subjective intention is relevant nor, really, does it depend upon whether any intention is relevant.  It is a matter of construing the piece of paper.  Was the communication from the insured to the insurer something which constitutes a notification of circumstances for the purposes of the relevant policy?  It does not depend upon either an objective or a subjective intention, it depends upon construing the piece of paper:  “Is this a notification of circumstances for the purposes of the particular policy in question?”

The short proposition that we say is that, both in the interests of the insurer and in the interests of the insured, one cannot have notification by accident because that is what happened.  It was an accident if there was a notification, and as the trial judge points out and, indeed, the Chief Justice in Perry points out, there may be very good reasons why an insured in these circumstances does not want to give notification of circumstances.  It is a right which an insured has and the mere chance communication of information, even by a third party, will be sufficient - - -

GUMMOW J:   Mr Justice Priestley weighed, on the one side, what was said by the President at pages 106 and following in the application book which include the matters Mr Middleton is talking to us about.

MR EMMETT:   I will take your Honours to what the President said in a moment.

GUMMOW J:   Just a moment.  Mr Justice Priestley, who is the determinative factor in all of this, he put on side what Justice Kirby was saying at those pages and, on the other, what the primary judge had said.  Have we the particular passage in the primary judge’s judgment?

MR EMMETT:   Your Honour, just before we leave Mr Justice Priestley, at 137 line 30, what he does say:

However, now that I have given specific consideration to the cross-appeal, I have come to a firm opinion on the notification point.

GUMMOW J:   Of course.

MR EMMETT:   So, he was not saying I got any doubt about it.

GUMMOW J:   No, no, what he was comparing was (a) and (b), trying to identify (a) and (b).

MR EMMETT:   I am sorry, yes, indeed.

GUMMOW J:   And he chose (a) which is a comfort to you but he was comparing it with (b).  The question then is whether any issue that should attract our attention arises out of the treatment of that comparison.  That is the question.

MR EMMETT:   Yes, I take your Honour’s point and I agree that that is the question.

GUMMOW J:   Now, the passage - - -

MR EMMETT:   Page 42, I think, is the part of the trial judge’s consideration of these questions.

GUMMOW J:   The trial judge was looking at it on two footings, condition 5 and the subsection.

MR EMMETT:   Yes, he said it does not matter.

GUMMOW J:   It does for other people.

MR EMMETT:   It may to other people.

GUMMOW J:   So, it may matter for us.

MR EMMETT:   Although the President suggested there might have been some difference in the wording, he approached it on the basis there was no difference.  But I will come back to the question of whether section 40 would apply to this case in any event.  But the reasoning is really at page 42.  It is a question of choice and his Honour refers to the question of - - -

GUMMOW J:   Where does that appear.

MR EMMETT:   About line 15:

Having regard to the part played by such notification in setting parameters to the rights and liabilities of the parties, the choice to be exercised by notification, and the requirement that Sir Tristan “notify us in writing”, in my view more was required than the incidental conveying of information -

I do not think anybody would quarrel with that finding, that it was an incidental conveying of information -

by the inclusion of the letter of 29 June -

that is the Minter Ellison letter -

in the documents provided to C E Heath in connection with proposals for other insurance.

GUMMOW J:   Then there are the words at line 40, you see, “did not subjectively intend”.

MR EMMETT:   “If it be relevant, I consider it clear”.  He did not think it was relevant.

TOOHEY J:   He goes on to express - - -

MR EMMETT:   He made a finding.

TOOHEY J:   - - - a view on the objective approach also.

MR EMMETT:   Yes, but you look at the document and can you construe this document as being a notification for the purposes of the policy in question?  The answer clearly is “No.”  I do not think even my learned friend would suggest that.  That was argued at first instance that this was in fact a claim under the original policy.  That was rejected by all four judges below.  It does not seem to be advanced now.  So, the question is whether a document which, on its objective construction, is not a notification for the purposes of the policy, can, because it incidentally conveys information to the insurer in connection with a totally different matter, satisfy the requirements of section 40.  That is the issue.

The President dealt with the question.  He begins dealing with the matter at page 106 and then, I think, in detail at page 114 at line 45:

I agree that because of the way in which “claims made” policies operate, and in particular the vital function of the notice requirement in these policies, the courts should be reluctant to allow much latitude in construing the notice requirement.

So, that is how the President regarded the issue how you construe the notice of requirement.

GUMMOW J:   It is really 115, line 30, is it not?

MR EMMETT:   Line 29, yes.  “I accept that notification provisions operate”, et cetera.  But the second sentence:

I do not think that these considerations constitute a barrier to proper notification where the insured has taken the deliberate step of providing the information to the insurer in a serious and obviously deliberate commercial setting.

What his Honour omits to say there though is, of course, it is a totally different setting from that of the policy in question.  The question is, “If, by chance, you happen to communicate information to an insurer in a context which has absolutely nothing to do with the policy in question, is that sufficient to satisfy section 40?”  I do not think, in our submission, it has to be stated to be answered “No”.

Then later on in that same passage:

To limit the operation of s 40(3) of the Act to the situation where the insured chooses to rely on s 40(3).....would import an element of subjective intention.

Well now, that is with the greatest respect not correct.  It does not involve a consideration of what was in the mind of Sir Tristan Antico but what this document said:  does it, on its face, constitute a notification of circumstances for the purposes of the policy?

His Honour the President then went on to deal with the question of large insurance companies and their duty to be efficient in communicating within departments at page 116.  With respect, in our submission, that really militates against the conclusion which his Honour reached.  His Honour says, at line 9, on page 116:

large insurance companies may be expected to have in place competent and reliable filing and cross reference systems.....persons dealing with large insurers are entitled to expect that information provided to them will be circulated to the relevant divisions.

That may be right but the person who communicates should give the insurer some hint as to what division might be relevant and that really is the question.  Given the size of insurers and corporations these days, is it appropriate - was it the intention of the legislature in section 40 to say, “If, by chance, some information comes into the hands of an insurer without any hint that it might be relevant to some policy issued somewhere in Australia, is that sufficient to constitute notification?”  An insured may, in some circumstances, say, “Heavens above, I don’t want that to happen.  I don’t want to give notice of circumstances in this year.  I might prefer not to give notice of circumstances because it might affect my premium in a subsequent year.”  No claim may ever be made.  This is not a question of notifying a claim that is made, but only notification of circumstances out of which a claim may make and an insured might take a view, “I think it’s so unlikely that a claim will be made, I don’t want this to be a notification of circumstances so as possibly to affect my future insurability.”

Then at the bottom of page 116, line 55:

As I have said, the mere supply of information will not alone be sufficient.

We agree with that.  But his Honour then goes on to say:

However, in this case the information was supplied with reference to D & O insurance.

Now, that really is the touchstone.  The only thing that his Honour said makes a difference is that the other matter happened to be D & O insurance but without any hint to the insurer, “by the way, you should treat this as being a notification pursuant to some totally different insurance.”

On page 117, line 15:

It would have been a comparatively simple task for Mr Brown to have checked whether the appellant had any other policies -

Now, why should it be incumbent upon the insurer - if the insured does not take the trouble to tell him, why should it be incumbent upon the insurer to check, just by chance, to see if the insured might have some other policy in relation to which this policy might be relevant?  Now, they are the factual matters which have to be examined by this Court.  They, in our submission, do not raise any question of general importance.

TOOHEY J:   Yes, thank you, Mr Emmett. 

MR EMMETT:   There was the final matter and that is the question of whether section 40 would apply to this policy at all.  Section 40 applies only to contracts of liability insurance.  Section 40 says, “This section applies in relation to a contract of liability insurance”.  Section 11(7) says:

a contract of liability insurance is a contract of general insurance that provides insurance cover in respect of the insured’s liability for loss or damage caused to a person who is not the insured.

As I indicated, this policy is not to insure against liability to third parties but it is a liability to insure against the risk of incurring legal expenses in defending claims by third parties.  In our submission, it is not within section 11(7).  May it please your Honours.

TOOHEY J:   Thank you, Mr Emmett.  Are there any other submissions to be made in respect of either application?

MR MIDDLETON:   I would like just, if I may, to briefly respond to Mr Emmett, if that is required and, your Honour, I have not addressed the Court in relation to the question of section 54.  I would only like to say a very brief matter about that if I may?

TOOHEY J:   Yes.

MR MIDDLETON:   Could I deal with responding to Mr Emmett.  All the background facts that he has referred to and he referred to in his written outline are all historical for the purposes of this application.  I say they are all historical for the purposes of this application because both the trial judge at page 32 and the President of the Court of Appeal, President Kirby, decided one thing quite clearly.  If one goes to the top of page 32, line 5, at first instance:

It appeared to be common ground that if there were relevant notification, all claims resulting in Sir Tristan’s legal costs were in respect of the facts in the letter of 29 June 1990 or arose out of those facts:  at least, there was no issue posed of that kind.

And that was picked up at page 107 by the President of the Court of Appeal at line 35, where he said - I will not read, but he repeated that statement of the trial judge and then he picked up the point that I have sought to explain to the Court previously:

This conclusion appears inescapable, given that the information in the letter was sufficient for Mr Brown -

Mr Brown being of the insurer -

to exclude any claims arising from it in the first policy.

Now, that is the finding, and all the information about looking at the document; what comprised the letter; what was in the schedule, goes to whether or not it is within that compass. That is all irrelevant. We have gone past that. All we are now looking at is the question of what is the requirement of notice in relation to condition 5 or section 40(3) in relation to intent. It cannot be said, my learned friend, to say, “Well, look at what the trial judge said and look at what Justice Priestley said” and say “There’s no distinction between them.” There clearly is a distinction. It was recognised as such between them on this point. The point comes because of this notion of choice and choice encompasses, so it is said by the majority, this concept of intent, “Which way do I go”, deliberately and we say that is not encompassed within the notice requirements.

As to the question of factual matters dealing with the Melbourne office and Sydney office and D & O insurance, again they are matters of historical interest as far as this question is concerned.  We know that it did not cause a problem as far as information was concerned with the insurance company for the same reason that it was picked up in a later policy and whether it is a different company or not, the policy consideration may arise which was identified by the President as to the question of whether it is a high onus we put on an insurance company or not, that is not a factual argument as to what occurred in this particular case, that is a question of working out how one interprets the Act.

I finally say this in relation to whether section 40(3) applies or not. It should not matter for the purposes of our application today because condition 5 and section 40(3) are effectively regarded both in the submissions of my learned friend and by the President of the Court of Appeal as raising the same issues. So, whether we have an issue about whether section 40(3) applies or not is really irrelevant. That would be the only submissions I wish to make on behalf of my application, if I may, your Honours, and can I briefly state - - -

GUMMOW J:   You may get a fresh lease of life on the other one though.

MR MIDDLETON:   I will not take advantage of it though, your Honours, other than to say this, that the only point we raise in answer to section 54 is

this, that we say it is not an appropriate vehicle because the Court of Appeal were clearly right, that obtain, because it has the two aspects, that is asking for and giving, section 54 does not apply to that.  It is simply not an appropriate vehicle to determine what are nice issues in another context on section 54.  We would concede, for the purposes of the argument, there are some very nice points to be raised in relation to section 54 but this is not the case to raise them as brought by my learned friend, Mr Heydon, because “obtain”, whatever semantics you use, involves a concept of the insurer acting and that would be the factual answer, we would say, at the end of the day and that is why the majority are correct.  I do not wish to develop that, your Honours.  They are the submissions.

TOOHEY J:   Yes, thank you, Mr Middleton.  Now, Mr Heydon?

MR HEYDON:   I have nothing to add to what I have said in-chief.

GUMMOW J:   What do you say about the last point Mr Middleton has made.

MR HEYDON:   We say it is not merely a question of fact and of construction of the word in this particular policy.  The meaning of section 54 is something that can only be worked out in a context from document to document.  This is a common clause and is in an important gyro of policies.  The approach of the Court of Appeal is not merely a matter of construction of that particular policy, we would submit, but rather of the section and its contents.

TOOHEY J:   The Court will give its decision in this matter at 2.15.

AT 12.43 PM THE MATTER WAS ADJOURNED
UNTIL LATER THE SAME DAY

UPON RESUMING AT 2.17 PM:

TOOHEY J:   In application No S17 of 1996, that is Heath Fielding Australia Pty Limited v Antico and Heath Casualty, the application for special leave to appeal is refused on the ground that on the facts of the case an appeal would not enjoy sufficient prospects of success to warrant a grant of special leave.

In application No S11 of 1996, the matter of Antico v Heath Casualty and Heath Fielding, there will be a grant of special leave on the section 54 point in accordance with the draft notice of appeal as it appears in the joint application book.  Are there any applications?

MR EMMETT:   Two, I think, your Honours.  It would be our submission, in the light of what your Honours have done, the application for leave to appeal should be limited to Heath Fielding and C. E. Heath should not be a party to the appeal in the light of the limitation of the appeal to grounds outlined in the notice of appeal.

TOOHEY J:   Do you want to say anything about that, Mr Heydon?

MR HEYDON:   We would accept that.

MR EMMETT:   We would also ask for costs of both applications.

TOOHEY J:   You seek an order that Heath Fielding be removed from application No S11 of 1996, Mr Emmett, do you?

MR EMMETT:   Not removed from the application but that the leave to appeal be limited to an appeal in which the only respondent is Heath Fielding.

TOOHEY J:   In other words, in terms of the draft notice of appeal but removing the second respondent.

MR EMMETT:   Yes, your Honour.

TOOHEY J:   Yes.  Very well, there will be an order accordingly.

MR EMMETT:   And we would ask for costs of both applications, your Honour.

TOOHEY J:   Any objection?

MR HEYDON:   Yes, we object to having to pay Mr Emmett’s costs.  In our submission, he was a necessary party to this application.

TOOHEY J:   What are you seeking costs in respect of, Mr Emmett?

MR EMMETT:   Costs of both applications, your Honour.  We would have no objection to Mr Middleton paying our costs of both applications but - - -

TOOHEY J:   No, I know.

MR MIDDLETON:   It is only then I will be called upon to.....,your Honours.

TOOHEY J:   While you are on your feet, Mr Middleton, do you say anything about the costs so far as they concern your client?

MR MIDDLETON:   No, no, clearly not, in relation to our application.

TOOHEY J:   Very well.  There will be an order for costs accordingly.  There will be no order for costs in respect of S11 of 1996 on Mr Emmett’s application.

AT 2.20 PM THE MATTER WAS CONCLUDED