FAI General Insurance Co Ltd (In Liq) v Sherry

FAI GENERAL INSURANCE CO LTD (In Liq) v SHERRY AND ORS
[2002] SASC 431
Full Court: Doyle CJ, Bleby and Besanko JJ

DOYLE CJ: A Judge of this Court ordered that questions of law arising on the pleadings in an action be disposed of before proceeding to a trial of the facts. The questions of law related to the meaning of an insurance contract. The Judge then heard and determined the questions of law.
The defendant in the action now appeals, by leave of the Judge. The defendant submits that the Judge should not have determined the questions of law. The defendant submits that they are hypothetical, or that issues of fact upon which the application of the answers depends remain unresolved, and that the answers will not resolve any issue of significance. The defendant also challenges the meaning given to provisions of the insurance contract, and so challenges the answers to the questions.
Background
What follows is drawn from the Statement of Claim. I will come in due course to the question of what facts are admitted or agreed.
The plaintiffs are the executors and trustees of the estate of Ms Laubman and of Mrs Schultz. Ms Laubman and Mrs Schultz are both deceased.
Mr Davies was a chartered accountant, and between July 1987 and June 1993 (“the relevant period”) a member of the partnership known as Mann Judd, a firm of chartered accountants (“Mann Judd”). He was a director of Mann Judd Associates Pty Ltd during the relevant period, a company that provided accounting services. The company changed its name to Amjex Pty Ltd, and I will refer to it as “Amjex”.
During their lifetimes, Ms Laubman and Mrs Schultz each gave Mr Davies a power of attorney over their property. Although the power of attorney was given to Mr Davies personally, during the relevant period, Amjex provided accounting services to Ms Laubman and Mrs Schultz. In his capacity as a director or employee or representative of Amjex, Mr Davies was involved in the provision of these services. For a time Mr Davies also acted as executor of the estate of Ms Laubman.
During the relevant period Mr Davies was also a member of Mann Judd. This firm also provided accounting services to Ms Laubman and to Mrs Schultz during the relevant period, and Mr Davies was involved in the provision of those services.
During the relevant period Mr Davies dishonestly misappropriated, for his own purposes and benefit, substantial sums of money belonging to Ms Laubman and Mrs Schultz, or to their respective estates. Mr Davies was convicted of criminal offences in respect of some of these misappropriations.
Mr Davies exercised the powers of attorney, acted as executor of the relevant estate, and misappropriated funds, in the course of his practice as an accountant and as a director and employee of Amjex. Further or alternatively, Amjex held Mr Davies out or represented by conduct that he represented Amjex and had authority to act for it in its accounting practice. It is not clear whether it is alleged that he did these things also in his capacity as a member of the partnership of Mann Judd.
It is alleged that Amjex is liable for Mr Davies’ conduct. Several bases are advanced. First, that as a director or employee of Amjex, he was authorised to carry out the work in the course of which he misappropriated the money. This seems to be an allegation of vicarious liability. Second, that Mr Davies acted within the scope of his apparent authority from Amjex. Third, that by accepting benefits from Mr Davies’ conduct, Amjex adopted his conduct.
On 11 September 1992 the defendant FAI General Insurance Company Limited (“FAI”) entered into a contract of insurance with Mann Judd and with Amjex. Three other companies of which Mr Davies and other accountants were directors were also parties to the contract. Apart from noting the fact of these other parties, they can be put to one side.
The proposal for insurance had been signed by Mr Davies on 14 April 1992. The proposal was made on behalf of Mann Judd, Amjex and the other companies. It was headed “Proposal Form Accountant Professional Indemnity Insurance”. The proposal makes it clear that the proposal was made on behalf of the partnership of Mann Judd and on behalf of Amjex and the companies referred to.
The dishonest misappropriations by Mr Davies took place before and after the signing of the proposal.
There is no allegation that the other partners of Mann Judd or the other directors of Amjex were implicated in the misappropriations or had any knowledge of them when the proposal was signed. Mr Davies did not disclose in the proposal any wrongdoing in connection with the property of Ms Laubman or Mrs Schultz.
The insurance contract provided cover for claims made between 1 July 1992 and 1 July 1993. By letter dated 30 May 1993 notice was given to FAI of a claim under the policy. The claim was in respect of the dishonest misappropriations by Mr Davies of the property of Ms Laubman and Mrs Schultz. FAI denied liability.
The executors and trustees of the estates of Ms Laubman and Mrs Schultz instituted proceedings in 1993 against Mr Davies and in 1994 against Amjex and others. The others did not include Mann Judd or any of the accountants who were the other partners in Mann Judd and the other directors of Amjex. Having made that point, the other defendants can be put to one side. However, it needs to be remembered that the partnership of Mann Judd has not been sued, nor have any of the partners (other than Mr Davies).
In those actions, it is alleged that Davies dishonestly misappropriated money belonging to Ms Laubman and Mrs Schultz, and that he did so as a director, employee or representative of Amjex.
In June 1998 the executors and trustees of Ms Laubman obtained judgment against Mr Davies and Amjex for $2,093,982.14. In March 1997 Mrs Schultz obtained judgment against Mr Davies and Amjex for $3,386,244.16.
In July 1997 the Federal Court made a sequestration order against Mr Davies. In June 1997 Amjex was wound up by order of this Court and a liquidator was appointed. The trustee in bankruptcy of the estate of Mr Davies assigned any benefits under the contract of insurance with FAI to the executors of Ms Laubman and to Mrs Schultz in November 1997. The liquidator of Amjex did the same in December 1998. Mrs Schulz died after these events.
The Proceedings
The proceedings now before the Court were instituted on 3 May 1999. The plaintiffs are the trustees of the estates of Ms Laubman and Mrs Schultz.
It is important to note that they sue as assignees of the rights of Mr Davies and of Amjex under the contract of insurance with FAI. The plaintiffs stand in the position of those two insureds under the contract.
The plaintiffs claim that FAI has wrongfully denied its “liability to indemnify the insured and has failed to pay them the amount of the said judgments or any part thereof”. The plaintiffs claim declarations that the contract of insurance entitles Mr Davies and Amjex to indemnity in respect of their liability to the plaintiffs under the judgments referred to, and a declaration that the plaintiffs are entitled to recover the amount of the judgment (relying on the assignment) from FAI.
The pleadings are lengthy and complex. The Statement of Claim pleads the policy, the powers of attorney, the relationship between Ms Laubman and Mrs Schultz on the one hand and Amjex on the other hand, the misappropriations, the breaches of duty by Mr Davies and by Amjex, the claim under the policy, the claim and the judgments against Mr Davies and Amjex, and the assignments. The Defence pleads to all this, not by any means admitting all matters, not even all of what might be called background matters, and also pleads the proposal and the insurance contract in detail. FAI denies liability.
The Issues
In general terms the issues that were said to warrant determination before trial, and that were raised on appeal, are these.
First, does the relevant provision of the insurance contract provide cover to Amjex? The submission by FAI is that it does not provide cover to a body corporate.
Second, does the insurance contract provide cover in the circumstances to Mr Davies, bearing in mind that he signed the proposal without disclosing any wrongdoing (it is common ground that in this respect he was dishonest), and bearing in mind that the loss claimed from him (the amount payable to the estates of Ms Laubman and Mrs Schultz) is attributable to the intended consequence of a deliberate act on his part? That is, is he entitled to be indemnified bearing in mind that he committed a deliberate act of dishonesty, involving misappropriation of the money of Ms Laubman and Mrs Schultz.
Third, do these latter circumstances mean that even if the insurance contract provides cover to a body corporate, Amjex is unable to claim indemnity because of the dishonest completion of the proposal and because of the circumstances in which the conduct of Mr Davies as a director or employee or representative of Amjex gave rise to the claim?
These issues arise in the form of a dispute about the meaning of the relevant provisions of the insurance contract. They also arise in the form of a dispute about the significance of the proposal having been completed by Mr Davies. As well, there is a submission that, whatever the contract means, it would be contrary to public policy to allow Mr Davies or Amjex to recover under the policy for loss which is the intended consequence of deliberate dishonesty.
The Court is not directly concerned with the entitlement of the other partners of Mann Judd, or of the other directors of Amjex, to be indemnified under the insurance contract. As I have mentioned, and for reasons that were not explained, so far the only claim made in respect of the loss caused to Ms Laubman and Mrs Schultz is the claim made by the plaintiffs against Mr Davies and against Amjex.
The Questions
I now set out the questions considered by the Judge.
“1.1The Basis of Contract Argument
Was the effect of Section 24 of the Insurance Contracts Act such that the particulars and statements contained in the proposal for the Contract of Insurance operated:
(a) merely as precontractual representations; or
(b) did they have any other, and if so what effect?
(Paragraph 39.1 of the Second Amended Defence and paragraph 15.1 of the Reply).
1.2The Extent, and Subsequent Waiver, of Rights of the Defendant where there has been a Non-Disclosure or Misrepresentation
1.2.1Was Section 21 of the Insurance Contracts Act the only precontractual duty imposed on the insured, in relation to the disclosure of a matter to the insurer? (Paragraph 43 of the Second Amended Defence and paragraph 16A of the Reply).
1.2.2Subject to any contracting out by the defendant of the rights conferred thereunder, was Section 28 of the Insurance Contracts Act the only source of the defendant’s rights to avoid the Contract of Insurance or have its liability in respect of any claim thereunder reduced for precontractual non-disclosure or misrepresentation? (Paragraphs 44, 48, 50, 52, 52A, 56A, 56B and 56C of Second Amended Defence and paragraphs 16B, 19, 21, 23, 23A, 23B, 23C and 23D of the Reply).
1.2.3Was the effect of Clause 4 of Part II of the Policy such as to exclude, restrict or modify any rights that the defendant may have had pursuant to Section 28 of the Insurance Contracts Act? (Paragraphs 16B, 19, 21, 23, 23A, 23B, 23C and 23D of the Reply).
1.3Other Points of Construction of the Policy
1.3.1[Deleted].
1.3.2Does Clause 4 of Part II of the Policy only operate in relation to a partnership? (Paragraph 39.2.3 of the Second Amended Defence).
1.3.3Does the rule of law identified in paragraph 39B of the Defence (or any cognate rule of law) preclude the extension of indemnity to:
(a)Davies? and/or
(b)Amjex Pty Ltd?
in the circumstances pleaded in the Statement of Claim?
(Paragraph 39B of the Second Amended Defence).
1.3.4Would it be contrary to public policy to extend indemnity under Clause 4 of Part II of the Policy to Davies and Amjex? (Paragraph 56A of the Second Amended Defence).
1.3.5Is there an implied term of the Policy that illegal acts by the insured would not be rewarded? (Paragraph 56B of the Second Amended Defence.)
1.4Constraints imposed on the Plaintiffs in their Reliance on the Policy
1.4.1In the circumstances pleaded in paragraph 39A of the defence, would it be a breach of their duty of utmost good faith for reliance to be placed on Clause 4 of Part II of the Policy by:
(a)Davies; and/or
(b)Amjex Pty Ltd?
(Paragraph 39A of the Second Amended Defence).
1.4.2In the circumstances pleaded in paragraph 56C of the Defence, should equity intervene to estop Davies and Amjex Pty Ltd and those claiming through them, from enforcing any rights under the Policy, or require restitution from those persons? (Paragraph 56C of the Second Amended Defence).
1.4.3Are the rights of action of Davies and Amjex Pty Ltd under the Policy assets which, by virtue of Clause 4 of Part II of the Policy either operate to reduce any liability of the defendant to the full extent of that asset or inure to the benefit of the defendant? (Paragraph 57.1, 57.2 and 57A of the Second Amended Defence).
1.5The Exclusion Clause
1.5.1In the circumstances pleaded in paragraph 53 of the Defence, does the exclusion in Part III paragraph (e) of the Policy apply? (Paragraph 53 of the Second Amended Defence).
1.5.2In the circumstances pleaded in paragraph 53 of the Defence, does the exclusion in Part III paragraph (c) of the Policy apply? (Paragraph 53 of Second Amended Defence).”
Procedural Matters
The Judge ordered that these questions be tried, exercising the powers conferred by r 75.02 of the Supreme Court Rules. The rule provides for the disposal before trial of “any points of law arising on the pleadings”.
The Judge noted what the High Court had said in Bass v Permanent Trustee Company Ltd [1999] HCA 9; (1999) 198 CLR 334 and the principles suggested by Walters J in Rogers v Baillieu Bullock Wilkinson Pty Ltd (1981) 28 SASR 594. He said that the facts were admitted or not seriously in dispute. He said that the relevant issues arose on the pleadings. Nevertheless, the parties had not agreed facts for the purposes of these questions. The Judge said that what he had to do was to decide the meaning of some clauses in the contract of insurance and the meaning of some provisions in the Insurance Contracts Act 1984 (Cth) “the ICA”).
There are some difficulties in the course the Judge followed. As I have mentioned, the parties did not agree facts for the purposes of having these questions determined. Many of the facts relevant to each question are not admitted on the pleadings. Bleby J has identified a number of them in his reasons. Some of the matters in dispute on the pleadings are merely matters of background. But some of them are matters of substance. Although some of the details relevant to the misappropriations are admitted, the misappropriations are not. Allegations of breach of duty owed by Mr Davies and Amjex to Ms Laubman and Mrs Schultz or to their estates are not admitted. There are other factual matters yet to be determined. For example, is the act of Mr Davies in signing the proposal to be treated as the conduct of Amjex, on the basis that for that purpose his act was the act of Amjex, or is it merely to be regarded as conduct of one director or employee? On what basis, if at all, is Amjex liable for his conduct? FAI does not admit that Amjex is liable for Mr Davies’ conduct. Moreover, in its Defence FAI appears to plead (it is not clear) that the conduct of Mr Davies in some respects is the conduct of Amjex. There are other issues which involve questions of fact, and as to which it seems to me the facts are unresolved. As well, some of the questions appear to me to be open-ended or to be expressed with awkward generality, for example, questions 1.2.1 and 1.2.2. Nor is it clear what is to follow from the answers. Are parts of FAI’s Defence to be struck out? Or will the case now go to trial, on the basis that the trial judge will be bound by the answers? In the latter event, how is the consequence for the action of each answer to be decided?
Like the Judge, I recognise the powerful reasons for doing what the Judge did. The estates of Ms Laubman and Mrs Schultz have suffered a large loss. It looks as if the case will be long, because of the complexity of the facts, and because FAI shows signs of putting the plaintiffs to proof on the facts. The costs are likely to be heavy. If the claims under the insurance contract are doomed to fail because of the terms of the contract, it would be hard on the plaintiffs to inflict a long case on them, only to learn that the claims were always doomed to fail. Moreover, FAI is in liquidation. The plaintiffs hope that if the meaning of the contract can be settled, it may be possible to reach an accommodation with the liquidator.
On the other hand, if facts material to the application to the case of an answer to a question are in dispute, answering the question may achieve nothing. What may seem efficient and just may prove to be a diversion, as the High Court pointed out in Bass. I am conscious of the need for caution and for restraint, identified by the High Court in Bass, especially at [49]. However, as the Court said at [51]:
“It cannot be doubted that in many cases the formulation of specific questions to be tried separately from and in advance of other issues will assist in the more efficient resolution of the matters in issue. However, that will be so only if the questions are capable of final answer and are capable of being answered in accordance with the judicial process.”
As will appear, I consider with some hesitation that some questions as to the meaning of the insurance contract can properly be dealt with under r 75.02. To do so is conducive to the efficient determination of the case, because these questions can be answered in a final manner, and the answer is likely to shorten the proceedings. But most of the questions answered by the Judge cannot, in my respectful opinion, be answered at this stage. They cannot be answered because the answers depend on factual matters that are in dispute, or because the answers cannot be applied to resolve or decide any issue at this stage of the case.
With some sensible cooperation the parties might be able to establish a basis on which significant questions of fact and law could be answered. That might well shorten the trial, and that is a result to be encouraged. But as will appear, as things stand most of the questions cannot be answered.
In Jacobson v Ross [1995] 1 VR 337 the Appeal Division of the Supreme Court of Victoria considered the appropriateness of an order for the determination of a preliminary question. The majority of the Court held that the Judge should have declined to answer the preliminary question as there was no proper factual foundation laid for answering it. Smith J took the contrary view. He said (at 351):
“Courts are now expected to take an active role in the management of long and complex litigation and this requires trial judges to respond positively to reasonable proposals from parties which may expedite such litigation. It is also important that when such attempts are reviewed by the Full Court, the Full Court should not fetter unnecessarily the powers and discretions of trial judges. It is also important that, within proper limits, it should support such attempts at case management.”
I agree with what he said, as a general proposition. I agree also with the general remarks of Bleby J in Rivers v Rivers [2002] SASC 197; (2002) 220 LSJS 74. It is sufficient to justify the hearing and determination of a preliminary issue if to do so will dispose of some substantial issue in the action, or will at least substantially narrow the area of dispute. But it remains the case that when the question in issue is one of law and fact, the question of the factual basis upon which the question is to be answered will necessarily be critical. In some cases it may be appropriate to answer a question on the basis of the facts alleged by the plaintiff, even though they are not admitted by the defendant. It may be appropriate to determine whether, even if the plaintiff makes out the facts alleged, the plaintiff’s claim can succeed. But subject to that, when the facts are in dispute it will rarely be appropriate to answer a mixed question of law and fact. The reason for this is that even if a satisfactorily precise question can be formulated, the application of the answer to the case will depend upon the facts as ultimately found. Accordingly, answering the question before the facts are found will usually be of no benefit, because the trial will still proceed. Moreover, in all probability it will be necessary to revisit the question and the answer once the facts are found, because the facts as found may raise issues as yet unconsidered.

In short, although I agree with the sentiment expressed by Smith J, it remains necessary to identify a satisfactory factual basis before preliminary questions are determined.
The Contract
The contract recites the proposal. It then provides for an indemnity as follows:
“THIS CERTIFICATE is to indemnify the Insured against any claim or claims first made against them during the period set forth in the said schedule and reported to the Company during such period by reason of any act error or omission whether of acts, facts, law or otherwise or breach of contract between the Insured and its clients whenever and wherever the same was or may have been committed or alleged to have been committed on the part of the Insured or their predecessors in business or any person now or heretofore employed by the Insured during the period of this Certificate in or about the conduct of any professional business conducted by or on behalf of the Insured or their predecessors in business.”
I will refer to this clause as “the Certificate”, but emphasise that the Certificate is in fact the contract as a whole.
The contract has a clause providing for payment of costs incurred in defending a claim. There is a definition of “professional business”. Then there is a definition clause which is material. It is as follows:
“Wherever the words ‘Insured‘ or ‘partner’ or ‘partners’ appear in the wording of this Certificate they are respectively understood to mean also where applicable ‘incorporated company‘, ‘director‘, ‘directors‘, ‘shareholder‘, ‘shareholders‘, the words ‘employee‘ and ‘employees‘ are understood to mean also where applicable employee or employees other than shareholders of the Insured incorporated company.”
There follows a section headed “Extensions”. It provides that the contract covers the liability of, for example, employees and former employees. In this section appears an extension which is at the centre of the argument. It is as follows:
“4.The Insured shall be protected, within the terms of this Certificate for any claim upon which suit may be brought by reason of any alleged dishonesty, mis-statement or fraud on the part of the Insured or its partners or its employees, unless a judgement or other final adjudication thereof adverse to the Insured shall establish that acts of active and deliberate fraud or dishonesty committed by any partner or partners of the Insured with actual fraudulent or dishonest purpose and intent were material to the cause of action so adjudicated and notwithstanding that such acts were not disclosed within the Insured’s proposal for insurance in which event this Certificate shall only pay in excess of the full extent of such Partner’s or Partners’ assets in the firm. Any other personal assets of such Partner or Partners recovered by the Insured shall inure, to the extent of the amount paid by this Certificate, to the benefit of Company.”
I will refer to this extension as “clause 4”.
There is a number of other extensions. Then there is a section containing a number of “Exclusions”, a section with “Conditions” dealing with claims under the contract, with “limits” and some other matters. There is a further part headed “Additional Extensions” which contains a clause providing for fidelity insurance, dealing with loss of money or property belonging to the insured or for which the insured is legally liable. But this extension does not indemnify against any loss attributable to an act or omission “of the Partners of the Insured”.
Does the Contract provide protection to Amjex and to Mr Davies in respect of the Claims against them?
The central issue argued on appeal is whether Amjex is an insured person under the contract and whether, in the circumstances, either of Amjex or Mr Davies was entitled to claim indemnity under the insurance contract in respect of their liability to the plaintiffs for the funds misappropriated by Mr Davies. If not, the action is doomed to fail.
For present purposes I will assume that Amjex is liable to the plaintiffs for the losses suffered by Ms Laubman, Mrs Schultz and their estates. Although FAI does not admit that Amjex is liable to the plaintiffs, it is efficient to decide whether Amjex is insured against such a liability. If it is not, that is the end of the claim made by the plaintiffs in right of Amjex. Whether Mr Davies or Amjex is entitled to be indemnified in the circumstances is a separate issue. I will come to that in due course.
These issues require consideration of the scope of the cover provided by the contract (and of the meaning of clause 4 in particular) and of the significance of the fact that Mr Davies was the one who completed the proposal, dishonestly failed to disclose any wrongdoing in the proposal, misappropriated funds before and after the signing of the proposal, and was a director of Amjex. It also requires consideration of the circumstance that the claim against Mr Davies and Amjex is for a loss that was an intended consequence of a deliberate act.
It is convenient to approach the matter in this way before turning to the particular questions posed.
Is Amjex an insured person under clause 4 of the contract?
Mr Wells QC, counsel for FAI, submits that clause 4 does not provide protection to Amjex.
Clause 4 is awkwardly expressed. In a number of respects it is difficult to determine its meaning.
Mr Wells’ submission is as follows. The extended definitions of “Insured” and “Partner” only operate “where applicable”. Clause 4 provides, contrary to what would otherwise be the effect of the Certificate, that the insurance contract provides “protection” against claims for deliberate wrongdoing by the insured, a partner or an employee. But if it is established by a judgment that a partner’s deliberate fraud was involved (this is the approximate meaning of the proviso) then, even though the proposal did not disclose such acts (assuming them to have been committed when the proposal was made), a “substitute cover” (for that provided under the Certificate) is provided by clause 4. The “substitute cover” is the amount by which the claim exceeds “the full extent of such Partner’s or Partners’ assets in the firm”.
The quantum of the “substitute cover” is measured by reference to the partnership assets of the dishonest partner. The provision of “protection” in the form of the “substitute cover” therefore assumes that, and applies only if, the Insured is a partnership. The extended definition of “Insured” and “Partner” is therefore not “applicable”.
I do not accept this submission.
There are strong reasons to decide otherwise. The proposal is for insurance for a partnership and for bodies corporate. These days that would be common in connection with professional indemnity insurance. The insured is defined in the Schedule to include Amjex. The extended definitions of “Insured” and “Partner” indicate that usually in the contract “Insured” includes an incorporated company. There is no difficulty in reading clause 4, by virtue of the extended definition of “Insured” and “Partner”, as applying to Amjex (as insured) in respect of fraud committed by Mr Davies (as director), if Amjex is liable for that fraud. The only difficulty is in the provision as to the quantum of the “substitute cover”. I consider that this provision should be read as referring to the interest (if any) of the director as a shareholder of the incorporated company which is the insured. The definition clause enables this to be done. I agree with the Judge in this respect.
I realise that there is no extended definition of “firm”, the term used in the penultimate sentence of clause 4. But that does not outweigh the matters relied on by me. I consider that “firm” is used as a substitute for “insured”. I note that “firm” is used in some other clauses of the contract, for example, Extension 8(b) and Extension 10 in this sense. It is also used in Exclusion (a) in that sense.
For those reasons I conclude that Amjex is an “insured” for the purposes of clause 4 of the contract.
In the circumstances, is Mr Davies entitled to an indemnity under clause 4 of the contract?
A more difficult question is whether Mr Davies is entitled to protection under clause 4 in respect of a deliberate act which produces intentional loss, the act being dishonest and criminal. Consideration of this point involves two matters.
The first is the usual rule of construction of a policy of insurance that the policy will not cover intended loss or injury arising from a deliberate act. The second is the principle that a loss, even if covered by the policy, that is the result of an unlawful and deliberate act that produces intended loss or injury cannot be the subject of a claim under the policy, for reasons of public policy. The relevant law and principles applicable to both matters are conveniently summarised in Sutton, Insurance Law in Australia (3^rd edition, LBC Information Services 1999) chapter 14, paras 14.1-14.12. Under this head it is also necessary to consider the significance of the fraudulent non-disclosure on the part of Mr Davies when he completed the proposal for insurance.
It is appropriate to decide this issue even though the facts are not agreed. It is appropriate to do so on the basis of the plaintiffs’ allegations, as if the defendant had demurred. If the plaintiffs cannot succeed on their own case, it is in the interests of justice to decide that now. As will appear (and this is why I consider it appropriate to answer this question), the question can be answered without the need to descend to the factual details.
I propose to consider these matters in relation to the entitlement of Mr Davies to protection under clause 4. I will then return to the entitlement of Amjex. Similar issues arise in connection with its entitlement, because its director Mr Davies was guilty of deliberate wrongdoing and guilty of fraudulent non-disclosure when the proposal was completed.
I turn first to the construction of the policy. The principle to which I referred is said to give rise to an implied term in the contract of insurance that there will be no protection in respect of a loss intentionally caused: Sutton at 14.11.
In the present case clause 4 provides a basis for an argument that no such term is to be implied, and that protection is provided under clause 4 in respect of a deliberate act which produces intended loss.
As the Judge pointed out at [22], partners in a firm will not necessarily be aware of the acts or omissions of their fellow partners. They will want insurance against claims made against the firm even when the claim arises from an intentional and criminal act committed by a fellow partner. As well, they will want to be protected against the possibility that the partner who completes the proposal has, unknown to the other partners, already acted dishonestly or fraudulently, and completes the proposal dishonestly. They will also want to be protected against their own innocent non-disclosure, in a proposal, of wrongdoing of which they were unaware. These circumstances explain the presence of a clause such as clause 4. But for it the Certificate would not provide cover in such circumstances.
I did not understand Mr Wells to argue that the partners of Mann Judd other than Mr Davies were not entitled to protection under clause 4, were a claim to be made against them in respect of the loss suffered by Ms Laubman and Mrs Schultz. At issue is the entitlement of Mr Davies, because the plaintiffs in these proceedings assert against FAI Mr Davies’ entitlements under clause 4.
Mr Wells submits that clause 4 operates as follows. (In summarising his submission I will not always repeat all of the relevant words used in clause 4.) First, clause 4 provides that “protection” is given to the Insured by the Certificate even though the claim against the Insured alleges dishonesty by the Insured or a partner. This indicates an intention to displace, in part at least, the usual principle referred to above. But if a judgment establishes dishonesty by a partner of the Insured, then the protection under the Certificate is varied and is now limited to the amount by which the claim exceeds that partner’s assets in the firm. In addition, in such a case “personal assets” of the partner recoverable by the Insured are available to FAI, in reduction of the amount paid by it. Although Mr Wells called this a substitute cover, it seems to me that it is still cover under the Certificate although in a varied amount. This protection under clause 4 is available even though the relevant dishonest acts were not disclosed in the Insured’s proposal (assuming of course that the acts occurred before acceptance of the proposal). So much, I consider, is reasonably clear, even though clause 4 is awkwardly worded.
In short, clause 4 is intended to displace (to some extent at least) any implication against an intention to cover loss deliberately brought about by the Insured, and to waive to some extent the duty of disclosure imposed on the Insured by s 21 of the ICA, and in such circumstances to impose a limit on the amount that would otherwise be payable by FAI under the Certificate.
Mr Wells then submits that clause 4 uses “Insured” to distinguish between the Insured and the partner guilty of dishonesty. He submits that the references to “such Partner” in the last few lines of clause 4 is a reference to the partner guilty of dishonesty and that the reference to “the Insured” who recovers assets is a reference to the Insured not comprising or including the dishonest partner.
I accept that submission. However, standing alone it does not appear to me to compel a conclusion that “the Insured” in the opening parts of clause 4 does not include a dishonest partner. “Insured” might well be used in clause 4 in different senses. But I agree that it may suggest that clause 4 is not intended to provide protection to a dishonest partner. I say that because the concluding part of clause 4 appears to envisage that when clause 4 applies the Insured will be entitled to recover personal assets from the dishonest partner. But if the dishonest partner is the person against whom proceedings have been brought, and FAI is compelled to make a payment under clause 4, the liability of the insured firm will not arise, and there will be no question of “the Insured” recovering assets of the dishonest partner. In short, the concluding lines of clause 4 appear to assume a liability on the part of “the Insured” other than the dishonest partner. However, it does not follow that these are the only circumstances in which clause 4 applies. In the present case it is not possible to say whether or not Mr Davies’ partners are liable for his dishonesty. But if they are, and assuming that clause 4 provides them with protection, there is no difficulty in making clause 4 operate as a whole. In that circumstance FAI would be liable to indemnify Mr Davies’ partners by a payment less the amount of Mr Davies’ assets in the firm. Assuming that the partners had a right to claim contribution or indemnity from Mr Davies in respect of their liability to the claimants, that right could be exercised by FAI to make recovery of Mr Davies’ personal assets.
Having said all that, the question remains of whether these considerations lead to the conclusion that clause 4 is not intended to provide protection to the dishonest partner whose acts bring into operation the protection provided by clause 4.
I return to clause 4. A claim by Mr Davies to be “protected” under the Certificate relying on clause 4, is made by him in his capacity as a partner of Mann Judd or as a director of Amjex or in both capacities. His dishonest acts were committed by him in the course of the profession or business conducted by Mann Judd or by Amjex. As a partner of Mann Judd he is one of the insured, because in relation to the partnership “the Insured” must mean the partners. In relation to Amjex Mr Davies is “the Insured” in his capacity as a director of Amjex. Accordingly, Mr Davies could be “the Insured” for the purposes of the opening part of clause 4.
Clause 4 states that it provides protection when a claim alleges dishonesty on the part of the Insured. There is no difficulty in reading this as again referring to Mr Davies.
But clause 4 then refers to dishonesty by a partner of the Insured. This does suggest that the earlier references to “the Insured” are intended to be references to the Insured firm, and not to a, or not including, a partner whose dishonest act is in issue. And that lends weight to the submission by Mr Wells, based on the concluding parts of clause 4, that a distinction is being drawn in clause 4 between the Insured and a partner whose dishonesty gives rise to a claim. If the early references in clause 4 to “the Insured” are read as references to Mr Davies, it becomes difficult to give clause 4 a sensible meaning when one comes to the reference to “dishonesty committed by any partner or partners of the Insured”. The difficulty is that the dishonesty is committed by Mr Davies himself.
On the other hand, it can be said that he is a partner of “the Insured”, if the reference in the middle of clause 4 to “the Insured” can be taken as a reference to the insured in the primary sense of the partnership. The reference to “dishonesty committed by any partner or partners of the Insured” can be treated as a way of describing the act of dishonesty, and dishonesty by Mr Davies answers the description of dishonesty committed by a partner of Mann Judd. So clause 4 can be read either way.
But there is force in the submission by Mr Wells that clause 4 is not to be read as providing protection to the partner of the insured whose dishonesty is referred to.
Mr Wells’ submission is supported by the consideration that it would be surprising, although not impossible, that protection should be provided to a dishonest partner in respect of deliberately caused loss. On the other hand, it is necessary to remember that professional indemnity insurance does not only protect the practitioner who is insured. Such insurance also provides protection to members of the public dealing with the person or firm or company insured, and members of the public will benefit if protection is given in respect of dishonest acts. But, in my opinion, it is reasonable to expect that if indemnity is to be provided to a dishonest person in respect of deliberately caused loss, the contract of insurance will make that intention clear.
I fully agree with the Judge that the purpose of clause 4 is to protect an innocent insured, innocent partners and innocent directors against claims attributable to dishonesty by one of their partners, fellow directors or employees. The difficulty is in extending that protection to Mr Davies as well. As to that, the Judge said:
“[30]The fact that the contract is designed to protect innocent partners in the firm or the companies and innocent directors of the companies has the necessary consequence that Davies is also one of the insured and, notwithstanding his guilty acts, is entitled to be indemnified. In this way, the innocent parties gain a measure of protection. This conclusion is reinforced by the fact that the excess is increased where a judgment or other final adjudication finds fault or dishonesty on the part of Davies. If FAI had wished to limit the cover to exclude the guilty partner or partners or a guilty director, it could so easily have done so. Any doubts as to the meaning of this provision must, I think, be resolved against FAI as the drafter of the document.”
The Judge had earlier said that the contract was essentially for the protection of the innocent members of the partnership, or the innocent directors of the relevant company. I agree. But, with respect to the Judge, I am not persuaded that this has the “necessary consequence” that Mr Davies is to be protected under clause 4. As I see it, clause 4 can be read in a manner that provides protection to innocent partners and innocent directors, and an innocent incorporated company, without providing protection to Mr Davies. I consider that this conclusion does not depend upon findings of fact not yet made.

In the end, I am not persuaded that clause 4 does displace, in relation to Mr Davies, the usual principle that an insurer does not intend to cover loss deliberately brought about by the insured. To my mind it would be unusual to provide protection to a dishonest insured, nor can I see any need to do so to achieve what I accept is the main purpose of clause 4, the provision of protection to an innocent insured, innocent partners and innocent directors.
For those reasons I respectfully disagree with the Judge. Nor do I think that the matter can be resolved by construing the policy against FAI as the drafter of the document. The usual principle, the result of which is that protection would not be available to Mr Davies, is well established. It is not clear to me that the commercial or practical purpose of the policy is infringed upon if clause 4 is read as not providing protection to Mr Davies in his capacity as a dishonest partner. I have borne in mind the observations made by members of the High Court in McCann v Switzerland Insurance Australia Ltd and Ors [2000] HCA 65; (2000) 203 CLR 579, to the effect that a policy of insurance should be given a business-like interpretation, taking into account its commercial and social purposes: at [22] Gleeson CJ and at [74] Kirby J. I have also borne in mind the tendency to take a generous approach in favour of the insured when the policy, drafted by the insurer, is ambiguous. Nevertheless, at the end of the day I am not satisfied that clause 4 is intended to provide protection to Mr Davies.
I conclude that in the circumstances, Mr Davies is not an insured for the purposes of clause 4.
If I am wrong in that, it becomes necessary to consider the submission that to allow Mr Davies to claim protection under the policy is contrary to public policy. For this purpose I am content to adopt the principles stated by the Full Court of the Supreme Court of Victoria in Fire and All Risks Insurance Co Ltd v Powell [1966] VR 513. The position is conveniently summarised by O’Bryan and Pape JJ at 521-522, in a passage which came after their consideration of the case law dealing with the maxim ex turpi causa non oritur actio:
“So much for the special application of the maxim ex turpi causa non oritur actio to contracts of insurance against third-party liability. The principles upon which this maxim operates in general are more difficult to state with precision. In what cases does public policy demand that a person shall not be allowed to recover damages or an indemnity or contribution, as the case may be, from another, when the event upon which such claim is based has happened while the claimant is engaged in doing an unlawful or maybe a criminal act? When does public policy demand that the claim shall not be entertained in the courts of justice? It may be that each case is to be decided on its own particular facts. The gravity of the illegal or criminal act in question, the possible tendency to encourage the doing of such acts if civil claims are entertained in respect of them, the necessity for the courts to uphold a deterrence to the doing of such acts, all spring to the mind as relevant considerations. The cases seem to support the view that they are all relevant.”
This is a notoriously difficult area of the law.
Mr Davies’ conduct was deliberate and dishonest. The consequence of it, the loss caused to Ms Laubman and Mrs Schultz, was an intended consequence of his acts. Mr Davies committed serious crimes. There are solid reasons of public policy for not permitting him to claim indemnity. On the other hand, to allow him (and others in his position) to claim indemnity provides protection to members of the public dealing with such persons. I do not consider that allowing Mr Davies to claim indemnity would encourage wrongdoing or would undermine the policy or purposes of the criminal law. There is a chance that someone might commit a wrong, thinking that he or she will not be severely punished (if detected) because the victim will be protected by the wrongdoer’s insurance. But that seems unlikely. If indemnity is available, the main result will be to provide protection to those who suffer the consequences of Mr Davies’ dishonesty. In the present case Mr Davies is bankrupt. There is no possible benefit to him if protection is available under clause 4. If clause 4 is read so that indemnity is available to a wrongdoer, his assets in the firm are liable to be applied to the loss. Whether his “personal assets” become so liable is not so clear. But any benefit to Mr Davies from the provision of protection under clause 4 seems to me to be relatively minor, whether he is a bankrupt or not.
In all the circumstances I am not persuaded that a claim to protection under clause 4 should be precluded as a matter of public policy, were clause 4 read as providing protection to Mr Davies.
I come now to the question of non-disclosure.
In relation to Mr Davies that issue arises only if clause 4 provides protection to Mr Davies in his own right.
If it does, my view is that clause 4 sufficiently indicates an intention to waive the duty of disclosure that would otherwise exist in relation to acts of dishonesty committed by Mr Davies before the proposal was accepted by FAI. It is clear, in my view, that the duty of disclosure under s 21 of the ICA is waived in relation to an innocent insured, innocent partners and directors, when a proposal is completed by a dishonest partner or director. That must be the case, to make sense of clause 4, at least when the proposal is completed by an innocent partner or director, unaware of the acts of dishonesty. But I can see no reason to limit the waiver of the duty of disclosure to that situation. It is likely to be a matter of chance who completes a proposal for insurance, as between the partners or directors of an insured. The waiver is expressed in unqualified terms as applying whenever “such acts” are not disclosed. If clause 4 were to be read as giving protection also to the dishonest partner, by like reasoning I would hold that there is no reason not to take the same approach that the duty of disclosure is waived.
In the circumstances is Amjex entitled to an indemnity under clause 4 of the contract?
While I agree with Bleby J that unresolved factual issues make it inappropriate to determine whether, in the circumstances, Amjex is entitled to an indemnity, I agree with the Judge that there are some issues that can be determined in favour of Amjex.
Having decided that Mr Davies would not be precluded from obtaining indemnity by reason of his own non-disclosure, I cannot see how Amjex could be in any worse position by reason of the non-disclosure by Mr Davies. It is not suggested that there has been non-disclosure by any other natural person. Accordingly, indemnity could not be withheld from Amjex on the basis of non-disclosure.
Nor do I agree that there is any issue concerning public policy. Just as Mr Davies would not be precluded from obtaining indemnity on the ground of public policy, likewise Amjex could not be in any worse position that Mr Davies on this point. Accordingly, indemnity could not be withheld from Amjex on the grounds of public policy.
But, as I have said, the answer to the question of whether Amjex is entitled to an indemnity depends on matters that remain in issue, and the question cannot be determined at this stage of the proceedings.
Answers to the Questions
Question 1.1. This question relates to para 39.1 of FAI’s Defence. It does not bear directly on the matters considered above, but has the capacity to bear indirectly on them. There is the difficulty that the question does not limit itself to the plea in para 39.1. Part (b) of the question is open-ended. The question is not limited to the particular matters dealt with, the non-disclosure of acts of dishonesty.
In para 39.1 of the Defence, FAI pleads:
“The certificate wording incorporates as part of the contract of insurance the particulars and statements contained in the proposal forms and makes the contents of the proposal form the basis of the contract of insurance.”
The Judge said that having regard to the terms of s 24 of the ICA, statements in the proposal form could not have contractual effect, and could have effect only as if they were statements made during the course of the negotiations. Accordingly, the Judge answered the question “No”. I take this to mean that the particulars and statements operated as pre-contractual representations, and not with any other effect.
For the reasons given by Bleby J, I would set aside the answer given by the Judge and substitute the answer:
“Not appropriate to answer.”
Question 1.2.1. This question is expressed in inconveniently general terms. It refers to a plea by FAI that Mr Davies breached his duty of disclosure, his duty of utmost good faith, engaged in fraudulent non-disclosure, made false answers and fraudulent misrepresentations.
The Judge’s answer was that the insured had to comply with the duty of disclosure in s 21 of the ICA and with the common law duty not to make any misrepresentations as that duty is qualified by the ICA. That limited answer recognises the generality of the question.
In my opinion the question should not be answered. Even the limited answer given by the Judge appears to me, with respect, to amount to a general statement of the law. It is not clear to me what the consequence of answering the question will be. I am not satisfied that it will dispose of the plea or effectively dispose of any particular issue in the case.
I would set aside the answer to this question and substitute the answer:
“Not appropriate to answer.”
Question 1.2.2. The Judge’s answer to this question was:
“The defendant’s rights to avoid the contract of insurance are contained in section 28 of the Insurance Contracts Act.”
I do not disagree with the answer. I have doubts about the utility of answering the question. However, I am not persuaded that it should not be answered, and accordingly I would not intervene.
Question 1.2.3. This question attempts to raise a number of the issues considered above. The Judge answered it by an answer to the effect that clause 4 had modified the rights of FAI pursuant to s 28 of the ICA when “there has been a failure to disclose acts of dishonesty, misstatement or fraud which a judgment or a final adjudication adverse to the insured has established as having been committed by a partner or partners of the insured”. This answer highlights the difficulty created by the general form of the question. The application of the answer to the case depends upon findings of fact yet to be made. When those findings are made, it will in any event be necessary to reconsider the question in light of the findings. The question cannot usefully be answered at this stage.
For reasons that I have already given, I would answer this question as follows:
(1)In the case of Mr Davies, not necessary to answer.
(2)In the case of Amjex, not appropriate to answer.
Question 1.3.1. [deleted].
Question 1.3.2. This question raises the application of clause 4 to an incorporated company. I agree with the Judge’s answer which was “No”. Accordingly, there is no reason to interfere. Nevertheless, it would have been better if the question asked whether clause 4 was capable of providing protection to Amjex. That is the real issue.
Question 1.3.3. This question gives rise to several difficulties. Para 39B of FAI’s Defence pleads a rule of law that loss or damage which is inflicted deliberately by the insured is not insurable. No such rule of law was relied on in argument before us. It also pleads that to treat clause 4 as providing indemnity to Mr Davies or to Amjex in the circumstances pleaded would be contrary to a rule of construction. The rule of construction is said to be that it is presumed that an insurer does not intend to cover loss intended by the insured. My approach to the meaning of clause 4 has been influenced by an analogous rule. But the real issue before the Court is the application of the relevant principle of construction to clause 4, and the result of that process.
It is not appropriate to answer the question as formulated. The question is too general. I would set aside the Judge’s answer, which was “No”. I would substitute the answer:
“Not appropriate to answer.”
Question 1.3.4 and Question 1.3.5. The Judge answered these together. His answer was “No”. For reasons that I have indicated, I agree with the answer that the Judge gave to question 1.3.4 in its application to Mr Davies. However, there is no need to answer the question because Mr Davies is not entitled to an indemnity. The same applies to question 1.3.5, although as to that question I disagree with the Judge’s answer.
As to Amjex, it is appropriate to answer Question 1.3.4. It is not appropriate to answer Question 1.3.5. The question is loosely expressed. Its precise ambit is unclear. Although I have indicated that I disagree with the Judge’s answer, and have expressed a view on issues that arise under the question, the looseness of the question, and the fact that any answer to the question is bound up with factual issues not yet resolved, make it inappropriate to answer Question 1.3.5 in relation to Amjex.
Accordingly, I would answer Questions 1.3.4 and 1.3.5 as follows:
(1)In the case of Mr Davies, not necessary to answer.
(2)In the case of Amjex:
Question 1.3.4 – no.
Question 1.3.5 – not appropriate to answer.
Question 1.4.1. I agree with the answer proposed by Bleby J.
Question 1.4.2. Para 56C of FAI’s Defence pleads that if clause 4 of the contract extends indemnity to Mr Davies and to Amjex in the circumstances pleaded, equity should hold that they are estopped from enforcing any rights under the policy and should require them to make restitution in respect of benefits acquired under the policy.
The question of equitable intervention and estoppel can hardly be answered on such limited material. On the other hand, I agree with the answer that the Judge gave, which was to the effect that if clause 4 entitled Mr Davies or Amjex to protection, no basis had been identified for equity to interfere. Accordingly, while I doubt the utility of answering the question, because I agree with the Judge’s approach I would not interfere.
Question 1.4.3. The Judge answered this question “No”. I agree with the answer given and would not interfere.
Question 1.5.1 and Question 1.5.2. The Judge held that it was not desirable to answer these questions. Accordingly, it is not necessary to say anything about them.
Reformulated Question. In dealing with Question 1.3.2, Bleby J has proposed a reformulated question and an answer to it. I consider that the answer to Question 1.3.2 can stand, but I agree that it is appropriate to formulate a further question as proposed by Bleby J, and to answer it as he proposes.
It may be that I am going further than is usual in dealing with the issues with which I have dealt, and in proposing the orders which I have proposed. But, as I have already mentioned, like the Judge, I am influenced by a concern, as a matter of justice, to avoid a long trial at the end of which one of the parties, and the plaintiffs in particular, may find that the proper construction of the policy means that substantial costs have been wasted. However, having said that, I would have thought that appropriate questions could have been formulated. In effect the plaintiffs’ advisers have posed a number of rather general questions of law which do arise on the pleadings, but which are formulated in a manner that will result in answers that are unhelpfully general or, at the least, which will require further working out in their application to the pleadings, which process could itself be the subject of dispute and might not, in the end, lead to the resolution of any particular issue.
It is in the public interest, and in the interests of justice, that if there are preliminary issues that can be identified, and which will have a real bearing on the length or outcome of the case, such issues should be disposed of at an early stage of the proceedings. But this can be done only if appropriate care is given to the identification and formulation of the issues.
BLEBY J: The essential facts and allegations of the plaintiffs contained in the Statement of Claim have been referred to by the Chief Justice and I will not repeat them. As will be seen, I share his reservations about the efficacy of the process adopted by the trial Judge.
The pleadings – some additional background
The Statement of Claim alleges a number of formalities, not all of which are admitted, concerning the existence and capacity of the parties, the nature of the business of Davies and Amjex, the execution of several insurance proposals and the issue of the relevant Policy by FAI. For ease of reference I shall use the expression “the Laubman plaintiffs” as referring to Ms Laubman or to the executors and trustees of her estate as necessary. I shall also refer to “the Schultz plaintiffs” as referring to Mrs Schultz or the executors and trustees of her estate as necessary.
Part 3 of the Statement of Claim alleges a series of acts of fraudulent conversion by Mr Davies in respect of monies of the Laubman plaintiffs and the Schultz plaintiffs and a breach by Davies and Amjex of various contractual, fiduciary and other duties allegedly owed to the plaintiffs by both Davies and Amjex. Neither the fraudulent conduct nor the breaches of duties are admitted by FAI.
The liability of Amjex is said to arise on four possible bases. In the first place it is alleged that Davies as a director of Amjex was performing the acts of Amjex. This is no doubt in reliance on the principle expressed by Lord Reid in Tesco Supermarkets Ltd v Nattrass [1972] AC 153 at 170. Secondly, it is said that the liability of Amjex is a vicarious liability for the acts of Davies. Thirdly, it is alleged that he acted within the scope of his apparent authority from Amjex. Fourthly, it is alleged that Amjex benefited from the acts and omissions of Davies, and in accepting those benefits, adopted his acts and omissions as their own. None of those bases of liability is admitted by FAI.
The Statement of Claim pleads two actions by the Laubman plaintiffs and one by the Schultz plaintiffs in the Supreme Court against Davies and Amjex. It pleads that the allegations in the Statements of Claim in those actions were to the effect of those set out in part 3 of the Statement of Claim in these proceedings, being the part which alleges the substance of the wrongdoing by Davies in respect of both sets of plaintiffs. It pleads the judgment that was entered against Davies and Amjex in all actions.
FAI admits the actions and the judgments, but pleads reliance on the respective Statements of Claim in each of those proceedings for the nature of the allegations made in those proceedings. Those pleadings were not before the trial Judge nor before us. It is therefore not known what the precise nature of those allegations was, nor is it known the basis on which judgment was “entered” in any of those proceedings.
The plaintiffs allege and FAI admits the winding up and appointment of a liquidator of Amjex. The Statement of Claim alleges but FAI does not admit the bankruptcy of Davies and the appointment of his trustee in bankruptcy. It further alleges the assignments by the liquidator and the trustee in bankruptcy to the plaintiffs of their right to be indemnified by FAI under the Policy and of any benefits arising therefrom in respect of or arising out of the claims of the plaintiffs against Amjex and Davies. FAI admits the existence of the deeds of assignment containing the terms pleaded, but denies that Amjex or Davies had any right, title or interest in the nature of that pleaded which could be assigned.
By way of defence, FAI, among other things, pleads that Davies was prosecuted in relation to his use of the monies of Mrs Schultz during the period April 1991 to August 1993, that he pleaded guilty to five counts of fraudulent conversion and was convicted after a trial on a further 13 counts. It further alleges that the trial Judge was requested after the trial to take into account, when sentencing Davies, a further fraudulent payment of $70,000 made in August 1993. These facts are all admitted by the plaintiffs. However, the total amount of the conversions in respect of which Davies was convicted together with the amount taken into account on sentencing, are significantly less than the amount of the judgment obtained by the Schultz plaintiffs against Davies. Furthermore, the reference in the pleading to the counts on which Davies was convicted suggests that there were many more counts not proceeded with. There is no allegation that any prosecutions took place in respect of the amounts obtained from the Laubman plaintiffs.
The nature of these proceedings

As has already been stated, it is important to realise from the outset that this is not an action by the plaintiffs for damages against Davies, Amjex or any other entity that may have provided accounting services to the plaintiffs. They have already succeeded in that regard, at least against Davies and Amjex. The plaintiffs now allege that they stand in the shoes of Davies and Amjex for the purpose of claiming indemnity under the policy issued by FAI for the liability of Davies and Amjex to the plaintiffs under the earlier Supreme Court judgments.
The questions answered by the trial Judge therefore relate only to the liability of FAI to indemnify either or both of Davies and Amjex.
The Policy – whether Davies is indemnified
The structure and wording of the Policy assumes that the body being indemnified is a partnership of individuals. Its language is cast entirely in terms of granting indemnity to such a partnership. Clause 4 is typical in that regard in speaking of “the Insured or its partners or its employees” and by reference to any fraud or dishonesty committed “by any partner or partners of the Insured”. The assumption behind the limits on liability pursuant to that clause is that there are partners and partners’ assets. The only extension of the Policy to cover bodies corporate and their employees appears from the following definition:
“Wherever the words “Insured” or “partner” or “partners” appear in the wording of this Certificate they are respectively understood to mean also where applicable “incorporated company”, “director”, “directors”, “shareholder”, “shareholders”, the words “employee” and “employees” are understood to mean also where applicable employee or employees other than shareholders of the Insured incorporated company.”
The extension of indemnity to bodies corporate in respect of their liability and that arising from the actions of their directors and employees in that manner causes many of the difficulties which give rise to the questions raised in these proceedings.
I deal first, however, with the indemnity given to a partnership and to the individual partners. For ease of reference it is convenient to divide the indemnity contained in clause 4 into a number of parts as follows:
“1.The Insured shall be protected, within the terms of this Certificate for any claim upon which suit may be brought by reason of any alleged dishonesty, mis-statement or fraud on the part of the Insured or its partners or its employees,
2.unless
2.1    a judgment or other final adjudication thereof
2.2    adverse to the Insured
2.3    shall establish that acts of active and deliberate fraud or dishonesty
2.4    committed by any partner or partners of the Insured
2.5    with actual fraudulent or dishonest purpose and intent
2.6    were material to the cause of action so adjudicated and
3.notwithstanding that such acts were not disclosed within the Insured’s proposal for insurance
4.in which event this Certificate shall only pay in excess of the full extent of such Partner’s or Partners’ assets in the firm.
5.Any other personal assets of such Partner or Partners recovered by the Insured shall inure, to the extent of the amount paid by this Certificate, to the benefit Company.”
The primary indemnity is set forth in what I have designated as part 1. In so far as it gives indemnity to a partnership, it treats the partnership as an entity in itself. It is the partnership which is “the Insured”, being the partnership named in the schedule to the Policy under the name of the Insured. The expression “the Insured” must therefore refer to the partnership except where it is otherwise apparent. Where a clause (and this applies to other parts of the Policy also) seeks to refer only to a particular partner or group of partners, its says so. There is nothing in the definition section which requires that the expression “the Insured” be read as a reference to individual partners, other than in the sense of all the individuals together comprising the partnership. It is therefore the partnership which is “protected” by clause 4.
The dishonesty, mis-statement or fraud from which the Insured is protected by part 1 of clause 4 may be of two types. The first type may be dishonesty etc on the part of the partnership as a whole, in which case the granting of the indemnity may depend upon questions of an implied term and of public policy which would deny entitlement to indemnity for intended acts and/or certain types of criminal acts.
As to an implied term, O’Bryan and Pape JJ said in Fire & All Risks Insurance Co Ltd v Powell [1966] VR 513 at 517:
“It is a fundamental principle of all insurance law that the insured is debarred by an implied term from recovering on the policy if he intentionally caused the loss or the event upon which the insurance moneys were expressed to be payable.”
This is not a rule of public policy but an implied term of the contract. The question which needs to be addressed is whether that implied term is expressly negated in this case.
A question of public policy may arise where the claim involves the commission of a crime by the insured. However, it is not an inflexible rule that liability will be denied in every case which involves commission of a crime. In Fire & All Risks Insurance Co Ltd v Powell (supra) Smith J said, at 527:
“It is to be noted that in Beresford v Royal Insurance Co Ltd [1938] AC 586, the authorities relied upon were cases of murder, of intentional killing constituting manslaughter, and of death by execution for a capital offence. And it may be that in relation to crimes of the gravest sort the rule, in its application, is inflexible, taking no account of the particular circumstances: cf. Cleaver v Mutual Reserve Fund Life Association, [1892] 1 QB 147 at p 152; [1891-4] All ER Rep 335. Outside that field, however, it would seem that the basis on which the rule rests requires that its application should depend upon a weighing, with reference to the public interest, of all the relevant circumstances. And these, I consider, must include the gravity of the class of crime; the offender’s knowledge of facts or law making his conduct a crime; the degree of likelihood that if enforcement were allowed the commission of similar crimes would be promoted; the degree of likelihood that enforceability would promote the interests of the victims; and the public interest in the observance of contracts: compare, generally Beresford v Royal Insurance Co Ltd, [1937] 2 KB 197, at pp 219-220; [1937] 2 All ER 243; Fender v St. John-Mildmay, [1938] AC 1, at pp 12-14; [1937] 3 All ER 402; St. John Shipping Corporation v J. Rank Ltd., [1957] 1 QB 267, at p 292; [1956] 3 All ER 683; Hardy v Motor Insurers’ Bureau, [1964] 2 QB 745 at pp 768-70; [1964] 2 All ER 742; Ramsay v Trustees Executors & Agency Co Ltd. (1948), 77 CLR 321; [1949] ALR 105.”
The first aspect of the indemnity provided by the first part of clause 4 of this Policy in its terms provides indemnity in respect of acts which might constitute extremely serious and intentional crimes. It remains to construe the clause as a whole to examine whether the implied term that indemnity will not be granted in respect of an intentionally caused loss has been excluded by those words. I will return to that question after examining the rest of clause 4.
In relation to questions of public policy, part 1 of the clause is wide enough to cover liability arising from the most innocent of mis-statements to the most serious fraud. That in itself is consistent with offering as wide an indemnity as the common law will allow, while leaving it to the common law to determine, in a given case, the limit of that indemnity according to the nature of any criminal activity that may be involved and associated questions of public policy. This aspect of the indemnity cover will need to be revisited when I consider the entitlement of Amjex to indemnity.
The second aspect of the indemnity stated in the first part of clause 4 is in respect of dishonesty or other acts on the part not of the Insured but on the part of its partners or employees. There would appear to be no doubt that this part of the indemnity arises out of the operation of sections 10 to 12 of the Partnership Act 1891:
“Liability of the firm for wrongs
10.Where, by any wrongful act or omission of any partner acting in the ordinary course of the business of the firm, or with the authority of the partner’s co-partners, loss or injury is caused to any person not being a partner in the firm, or any penalty is incurred, the firm is liable for the loss, injury or penalty to the same extent as the partner so acting or omitting to act.
Misapplication of money or property received for or in custody of the firm
11.In the following cases, namely –
(a) where one partner, acting within the scope of the partner’s apparent authority, receives the money or property of a third person and misapplies it; and
(b) where a firm in the course of its business receives money or property of a third person, and the money or property so received is misapplied by one or more of the partners while it is in the custody of the firm:
the firm is liable to make good the loss.
Liability for wrongs joint and several
12.Every partner is liable jointly with the partner’s co-partners, and also severally, for everything for which the firm, while the partner is a partner of it, becomes liable under section 10 or 11.”
My parts 2 and 3 of the clause provide a qualification on what might otherwise be the more extensive operation of part 1. They operate to the exclusion of liability under part 1. The qualifications are expressed in parts 2 and 3, and the liability of FAI in those circumstances is stated in parts 4 and 5. It means that if the qualifications are fulfilled, the protection afforded by part 1 does not apply.
By part 2.1 there must be a judgment or final adjudication. By part 2.2, the judgment or adjudication must be adverse to the Insured, i.e. the partnership.
By part 2.3, the judgment or adjudication must establish that acts of active and deliberate fraud or dishonesty occurred. Part 2.4 requires that they be committed by a partner or partners of the Insured (the partnership). As I have earlier pointed out, here there is a clear distinction between the partnership on the one hand and individual partners on the other.
By part 2.5 the acts of fraud etc must be committed with actual fraudulent or dishonest purpose and intention. Finally, by part 2.6 the acts of fraud etc must be material to the cause of action the subject of the judgment or adjudication mentioned in part 2.1 as being adverse to the Insured (part 2.2).
In this case the Statement of Claim pleads that both sets of plaintiffs brought their action against Davies and Amjex and others, and that judgment was entered against Amjex and Davies. There is no suggestion that the partnership or the other partners were ever party to any of the proceedings. Thus, it would appear that there has never been any judgment or other final adjudication adverse to the Insured in this case. If this current action proceeds to judgment, there will not be such a judgment or adjudication. It follows that some of the essential elements of the qualification have not been fulfilled, and if it operates at all, the indemnity depends solely on the operation of what I have described as part 1 of clause 4.
Nevertheless, I should say something briefly about the remaining parts of the clause. The non-disclosure in what I have referred to as part 3 of the clause recognises, not unreasonably, a situation such as is alleged in this case, where the fraudulent partner, without disclosing his fraud to his partners, actually signs the proposal form, or one of the “innocent” partners does so in ignorance of the fraudulent activities of his partner. Such a provision is not surprising, as it is dealing with a situation where fewer than the whole number of partners is guilty of the fraud. It follows that fewer than the whole number of partners know about the fraud. If they all knew about the fraud, they would either be party to it themselves or would be guilty of a material non-disclosure sufficient to avoid the Policy anyway. As Mr Wells QC argued for the appellant, that section of the clause was probably inserted to overcome the effect of Yorkville Nominees Party Ltd v Lissenden (1986) 160 CLR 475. Thus, as it is acknowledged on the pleadings that Mr Davies signed the proposal on behalf of the partnership and failed to disclose his prior acts of fraud, and if it be the case that the other partners did not know of those acts at that time, then the qualified alternative form of indemnity would apply, notwithstanding that non-disclosure.
Parts 4 and 5 of clause 4 as I have dissected it deal with the consequences of the qualifications in part 2 having been met. Once again, it assumes a partnership, and part 4 is no doubt drawn with s 41 of the Partnership Act in mind. That section provides:
“Rights where partnership dissolved for fraud or misrepresentation
41.Where a partnership contract is rescinded on the ground of the fraud or misrepresentation of one of the parties to the contract, the party entitled to rescind is, without prejudice to any other right, entitled –
(a)to a lien on, or right of retention of, the surplus of the partnership assets, after satisfying the partnership liabilities, for any sum of money paid by the party for the purchase of a share in the partnership and for any capital contributed by the party; and
(b)to stand in the place of the creditors of the firm for any payments made by the party in respect of the partnership liabilities; and
(c)to be indemnified, by the person guilty of the fraud or making the representation, against all the debts and liabilities of the firm.”
Likewise part 5 assumes recovery by the partners pursuant to that section and requires that any such amounts paid be applied, in effect, towards what would otherwise be the liability of the insurer.
As I have already observed, the qualifications contained in part 2 of clause 4 have not been made out in this case. The necessary judgment or adjudication has not been obtained adverse to the Mann Judd partnership. Part 1 of the clause therefore applies, but the only protection given by part 1 is to “the Insured”. As I have already said, that is the partnership, not an individual partner. What the qualifications in part 2 of the clause do is to reinforce the need for there to be at first a claim against the partnership rather than against an individual partner. It is in parts 2, 4 and 5 that the clause shows the drafter’s clear intention to distinguish between the insured partnership on the one hand and the individual partners on the other. They show that the protection afforded by part 1 is to the partnership as such and not to an individual member of it. The operation of parts 2, 4 and 5 demonstrate the intention, by a somewhat circular means, that a fraudulent partner is not entitled to benefit from any claims on the Policy. His assets in the partnership are available, in effect, to satisfy any claim against the insurer.
Accordingly, in my opinion, Mr Davies in his own right is not “the Insured” for the purposes of clause 4 of the Policy. The Policy is, in reality, an indemnity policy for the benefit of innocent partners. It does not protect the fraudulent partner. It also follows that, although the wording of part 1 of the clause on its face is sufficiently wide to grant indemnity to an Insured who intentionally causes the loss which gives rise to the claim, the implied term to which I earlier referred, namely that an indemnity policy will not cover loss deliberately or intentionally brought about by an Insured, is not excluded. Where it is established that “acts of active and deliberate fraud or dishonesty” (part 2.3 of clause 4) have been committed, it is unlikely that they and the loss which followed was caused other than deliberately and intentionally. This manifests an intention by the drafter not to exclude that implied term, and part 1 of clause 4 should be read accordingly.
This latter aspect of my conclusion does not affect the claim for indemnity by Mr Davies. He is excluded from indemnity for other reasons. However, it may have some bearing on Amjex’s right to indemnity, depending on the basis of its liability to the plaintiffs.
However, even if I am wrong and Mr Davies is prima facie entitled to indemnity under part 1 of clause 4, his right to indemnity at this stage could not be determined without the finding of further facts relevant to his possible exclusion from indemnity on grounds of public policy associated with his possibly unlawful conduct. I do not have sufficient confidence to reach the same conclusion in that regard as the Chief Justice. As Mr Davies is not entitled to indemnity, the question of his non-disclosure does not arise. However, if he were entitled to indemnity, I am inclined to agree with the Chief Justice that the duty of disclosure has been waived by clause 4. However, as will be seen, I cannot reach any conclusion on that issue in relation to Amjex.
The Policy – whether Amjex is indemnified
Once again, for ease of reference, I refer to clause 4 of the Policy as divided into the same parts as I did when considering it where the Insured is a partnership. By virtue of the interpretation clause, “the Insured” includes, in this case, Amjex.
I have already referred to the four bases on which it is alleged in the Statement of Claim that Amjex is liable for the losses sustained by the plaintiffs. I am prepared to assume for present purposes that all four bases of liability are covered by part 1 of clause 4, although on the pleadings as they presently stand and on the other information that was before the trial Judge, none of those bases have been admitted by FAI, and the facts necessary to make appropriate findings on these matters are not established.
In relation to part 2.1 of the clause, judgments of the Court against Amjex and in favour of the plaintiffs have been admitted on the pleadings. For the purposes of part 2.2, the judgments are adverse to Amjex, the Insured.
In relation to part 2.3, whilst it may well in fact be so, we are in no position to say on the information before the trial Judge that those judgments establish “acts of active and deliberate fraud or dishonesty”.
Part 2.4 requires that it be shown that such acts, if they occurred, were committed by any “partner or partners” of the Insured. By virtue of the definition clause in the Policy, partner or partners are to be understood to mean director or directors and shareholder or shareholders of the Insured. While it is established that Mr Davies was a director of Amjex, we are in no position to say, on the material before us, that the earlier judgments establish that, if there were acts of active and deliberate fraud or dishonesty, they were committed by Mr Davies, although that may well be the case. The same can be said of the requirements of part 2.5 of the clause relating to the allegedly dishonest purpose and intention of Mr Davies. For similar reasons it is also not possible to say that if the judgments establish the existence of all the previous elements, the acts of fraud or dishonesty were material to the cause of action the subject of the judgments.
It cannot be said that the convictions of Mr Davies of the criminal offences establish that element. All they establish is that Mr Davies was guilty of fraudulent conversion of some money belonging to Mrs Schultz. It may be assumed that that is included in the claim by the Schultz plaintiffs, but it is not the full extent of it. The conviction is not a judgment for the purposes of part 2.1 and part 2.2 of clause 4, and the convictions merely establish that Davies was guilty of some fraud or dishonesty, but not sufficient to satisfy the requirements of parts 2.3 to 2.6 of clause 4.

So far as the non-disclosure referred to in part 3 of the clause is concerned, it is not necessary to repeat the observations I made on this part in respect of the claim by a partnership for indemnity. Non-disclosure by the offending director or employee, where the relevant facts were not known by the company, will not preclude the operation of the qualification in part 2 of the clause. However, there may well be a difficult question as to whether, in the circumstances of a particular case, including this case, the knowledge of the director is to be attributed to the company. For a discussion of the application of this principle see Duke Group Ltd (In Liquidation) v Pilmer (1999) 73 SASR 64 at 188 – 198. If the knowledge of the acts of the director are treated as knowledge of the company, there may well be the existence of circumstances entitling FAI to deny liability on the ground of a material non-disclosure of a type not covered by part 3 of the clause. However, no findings on these matters can be made at present.
If the qualifications in part 2 do apply in the case of Amjex, part 4 and part 5 of the clause immediately raise difficulties caused by the grafting, by way of a definition clause, of indemnity of a corporation onto that designed for a partnership. If the qualifications in part 2 of the clause do apply, the obligation on FAI is to pay only any claim “in excess of the full extent of (the) partner’s or partners’ assets in the firm”. The extension by definition would enable that to read in this case “in excess of the full extent of such director’s or shareholder’s assets in the firm”. As a matter of common sense I would have no difficulty in construing the expression “the firm” in this part as referring to the company. It seems to me that the only way any director could have any “assets” in a company is by way of loan. There may or may not have been such an asset of Mr Davies in existence at the time. We do not know. As the company is now in liquidation, that “asset”, if it existed, may well be of little or no value.
The nearest equivalent of a partner’s assets in a partnership is a shareholder’s share in a company. However, a share in a company is not an “asset” in the company. It is a “chose in action”: Archibald Howie Pty Ltd v Commissioner of Stamp Duties (NSW) (1948) 77 CLR 143 at 156. The definition of a share frequently cited is that of Farwell J in Borland’s Trustee v Steel Bros & Co Ltd [1901] 1 Ch 279 at 288:
“A share is the interest of a shareholder in the company measured by a sum of money, for the purpose of liability in the first place, and of interest in the second, but also consisting of a series of mutual covenants entered into by all the shareholders inter se in accordance with s 16 of the Companies Act, 1862. The contract contained in the articles of association is one of the original incidents of the share. A share is not a sum of money settled in the way suggested, but is an interest measured by a sum of money and made up of various rights contained in the contract, including the right to a sum of money or a more or less amount.”
The interest in the company represented by a share includes both rights and obligations as contained in the company’s Constitution and in the Corporations Act. It may include a right to dividends and a right to participate in the distribution on a winding up of the company. It is nevertheless an indivisible piece of property: Re: Alex Russell [1968] VR 285 at 299. It is capable of being bought and sold and of becoming a security in its own right. However, it cannot properly be described as an “asset” in the company. It is here that the analogy with the partnership breaks down, and it may well be that, in most cases, if the qualification in part 2 of the clause applies, there will be no practical difference in the level of indemnity to be provided by FAI. The application of the qualification in part 2 may be academic. However, it may, depending on the facts, have some practical application. That is sufficient to give some efficacy to parts 2 to 5 in the case of an insured corporation. It is not sufficient to say that corporations are excluded from indemnity under clause 4.
As in the case of a partnership, parts 2 to 5 of the clause leave room for the implied term excluding indemnity for deliberately or intentionally caused loss to operate. Seldom, if ever, will “acts of active and deliberate fraud or dishonesty” (part 2.3), with “actual fraudulent or dishonest purpose and intent” (part 2.5) be other than intentional. Seldom will the loss giving rise to a claim for indemnity be other than intentional.
There remain, however, the four possible bases of liability of Amjex under part 1 of the clause as pleaded by the plaintiffs. If the liability of Amjex is by way of vicarious liability for the acts of Davies (if they occurred), or if Davies was acting or failed to act within the scope of his apparent authority from Amjex, it is likely that Amjex would be entitled to indemnity under part 1 of the clause. If the acts of Davies (if they occurred) as director of Amjex were properly construed as being the acts of Amjex, then there will arise serious questions as to whether the infliction of the loss by Amjex was deliberate or intentional, in which case, for reasons previously discussed, there will be an implied exclusion of liability under the Policy. There will also be questions as to whether the criminal acts and other circumstances were such as to deprive Amjex of indemnity on the grounds of public policy. Similar considerations may well apply if the basis of Amjex’s liability is the acceptance of a benefit from the acts or omissions of Davies. However, none of these bases of liability can be determined without the finding of a great many facts which are in dispute.
I have identified a sufficient number of unresolved factual issues relating to many aspects of clause 4 of the Policy to indicate that it is quite impossible at this stage to determine whether Amjex is entitled to indemnity under the Policy or not. It is therefore not possible to answer any preliminary questions which turn on the resolution of that issue.
The desirability of determining preliminary issues
I echo the doubts expressed by the Chief Justice as to the efficacy of the course followed by the trial Judge in attempting to formulate and answer questions where so many relevant factual issues were not established. I recently had occasion to consider the circumstances in which preliminary questions should be determined under r 75.02 of the Supreme Court Rules in Rivers v Rivers [2002] SASC 197; (2002) 220 LSJS 74. I will not repeat all that I said on that occasion. While there has been some detectable relaxation in the circumstances in which such questions can properly be formulated and answered, the fact remains that a question of law should only be determined where there is no dispute about the relevant facts giving rise to it and those facts are clearly identified. It will seldom be an appropriate procedure where facts have to be decided by the trial Judge in order to determine a preliminary point. The questions to be answered should not be formulated on assumptions which may never be proved. I think it is unfortunate that in this case the attempt to take a short cut has only resulted in further delay and expense.
Answers to the questions
Question 1.1 I agree with the Chief Justice that there are grave doubts about the utility of this question and of the answer. The effect of the statements in the proposal form and the failure to disclose the acts of fraud will also be governed by the operation of what I have described as part 2 and part 3 of clause 4, if they apply. As the application of those parts to Amjex is quite uncertain, I consider that the question should not be answered. I would set aside the answer of the trial Judge and answer the question:
“Not appropriate to answer”.
Question 1.2.1 I agree with what the Chief Justice says about this question and have nothing to add.
Question 1.2.2 I agree with the Chief Justice and have nothing further to add.
Question 1.2.3 I have concluded that Mr Davies is not entitled to indemnity under the Policy. Amjex may be entitled to indemnity. Accordingly, in the case of Mr Davies it is not necessary to answer this question. In the case of Amjex it is not possible. I would set aside the answer of the trial Judge and substitute the answer:
“(1) In the case of Mr Davies, not necessary to answer
(2) In the case of Amjex, not appropriate to answer”.
Question 1.3.2 I agree with the answer “No” to this question given by the trial Judge. I also agree with the Chief Justice that the question and answer are unhelpful.
I have concluded that on the facts which have been admitted, Davies is not entitled to indemnity under the Policy. None of the further allegations in the Statement of Claim which are in dispute can change that.
Rule 95.15 of the Supreme Court Rules provides that the Full Court, when hearing an appeal “shall have all the powers and duties as to amendment and otherwise as the Court or Tribunal appealed from had”. The questions were formulated initially by the plaintiffs. The trial Judge agreed to answer all but two of them. His Honour records that it became apparent that some questions required amendment. He considered that he had power to amend the questions. I respectfully agree. The questions were amended. If it would assist the parties it would be appropriate for this Court also to exercise that power of amendment to pose a question which can properly be answered.
In order to give whatever assistance can be given to the parties I would formulate an additional question as follows:
“Does clause 4 of Part II of the Policy apply so as to grant Mr Davies a right to indemnity in the circumstances pleaded in the Statement of Claim?”
I would answer the question: “No”.
One cannot answer a question similarly formulated in respect of Amjex, and so I decline any attempts to reformulate any such question or to answer it.
Question 1.3.3 In light of my proposed answer to the reformulated question 1.3.2, it is inappropriate to answer this question. I would set aside the answer “No” given by the trial Judge and substitute the answer:
“Not appropriate to answer”.
Question 1.3.4 It is not necessary to answer this question in respect of Mr Davies. He is not entitled to indemnity. In relation to Amjex, on the view I have taken the question cannot be answered until further facts are established. I would set aside the answer given by the trial Judge and would answer the question:
“(1) In the case of Mr Davies, not necessary to answer.
(2) In the case of Amjex, not appropriate to answer”.
Question 1.3.5 For similar reasons, it is not necessary to answer this question in relation to Mr Davies. In relation to Amjex, I have concluded that clause 4 does leave room for an implied term excluding indemnity for deliberately or intentionally caused loss to operate. However, it is not possible at present to say whether it does. I would therefore set aside the answer of the trial Judge and answer the question:
“(1) In the case of Mr Davies, not necessary to answer.
(2) In the case of Amjex, not appropriate to answer”.
Question 1.4.1 I have concluded that Mr Davies was not entitled to indemnity and that Amjex may be. In my opinion there are insufficient facts available on which to give a proper answer to this question. I would set aside the answer of the trial Judge and to both parts (a) and (b) I would answer:
“Not appropriate to answer”.
Question 1.4.2 I agree with the Chief Justice and have nothing to add.
Question 1.4.3 I agree with the trial Judge’s answer “No”. I would not interfere.
Question 1.5.1 and Question 1.5.2 It is not necessary to say anything about these questions which the trial Judge declined to answer.
BESANKO J: I agree with the answers to the questions proposed by the Chief Justice. I agree with his reasons and there is nothing that I wish to add.

[2002] SASC 431

23 December 2002