Federation Insurance Ltd v Wasson

[1987] HCA 34

HIGH COURT OF AUSTRALIA

Mason C.J., Wilson, Dawson, Toohey and Gaudron JJ.

FEDERATION INSURANCE LIMITED v. WASSON AND OTHERS

(1987) 163 CLR 303

5 August 1987

Insurance

Insurance—Policy—Cancellation—Co-insured parties—Insurance of motor vehicles against damage or loss-Purported unilateral cancellation by one co-insured—No right conferred by policy for such termination.

Decisions

MASON C.J., WILSON, DAWSON AND TOOHEY JJ.: This is an appeal from a unanimous decision of the Court of Appeal of the Supreme Court of New South Wales (Kirby P., Priestley and McHugh JJ.A.) in which it was held that the respondents were entitled to an indemnity from the appellant ("Federation") under an insurance policy issued by Federation in respect of a Ford utility motor vehicle registration number JWK 503 ("the vehicle").

2. At all material times the respondents together with Mr Gregory Wasson ("the Wassons") were in partnership trading as the Gulargambone Hotel. In October 1978 a lease-rent agreement was entered into between the Wassons and Commercial and General Acceptance Limited ("CAGA") in respect of the vehicle. Under that agreement the Wassons as the lessee were required to insure the vehicle and at all times during the term of the lease to keep it insured with an insurer approved by CAGA. The insurance was to be held in CAGA's name as lessor and in the name of the Wassons as lessee for their respective rights and interests and subject to such terms, conditions and exceptions as CAGA might require. The Wassons were to be responsible for all the premiums payable in respect of the insurance.

3. The obligations so imposed on the Wassons were met by their entry into a contract of insurance with Federation. The policy referred to a proposal dated 11 October 1978 and stated that the period of insurance was from 10 October 1978 to 10 October 1979 "(a)nd any subsequent period for which the Insured shall pay and the Company shall agree to accept a renewal premium". The insured were stated to be the Wassons as lessee and CAGA as lessor. The initial annual premium, including stamp duty, totalled $687.54.

4. On 27 June 1979 the vehicle was involved in an accident. Mr Gregory Wasson was killed. The vehicle was so badly damaged as to be beyond repair. In due course the respondents claimed under the policy but Federation refused to accept the claim. It was asserted that the policy had been cancelled prior to the accident. It is this assertion which gives rise to the present appeal.

5. On 2 April 1979 Mr Robert Wasson, for reasons which have not been disclosed and which in any event are of no consequence, telephoned Mr Dunn, the representative in Dubbo of Federation, instructing him to cancel all insurance policies held by the Wasson family. It is accepted that Mr Robert Wasson acted with the authority of the Wassons. There was a further conversation between Mr Wasson and Mr Dunn on 11 April 1979, when the instruction given on 2 April was repeated. Notwithstanding these oral instructions to Mr Dunn, in the following month Federation sent its regular statement to the Wassons showing that premiums in respect of certain policies were due and payable. Presumably this statement was despatched by the Sydney office of Federation. Mr Robert Wasson responded with a letter to the Sydney office dated 21 May 1979, reading as follows:

"21.5.79

Re Insurance Policy

(R. Wasson) Gulargambone Hotel

Dear Sir

We wish to inform your Company that we are no longer insured with your firm.

This was told to your company on 2-4-79, also again by Phone on 11-4-79. My instruction (sic) were that all insurance held by the (Wasson) family were cancelled. This also included retirment (sic) funds held by my children. I also stated insurance on our two vehicles namely Ford ute JWK 503 and Holden P/V JHS 421 were also cancelled.

Please return refund payment at your earliest convenience. Sincerely yours

R. Wasson".

It will be noted that the first-mentioned vehicle in the above letter is the vehicle in respect of which the respondents made a claim against Federation. There is no suggestion that any other insurance covered the vehicle at the time of the accident on 27 June.

6. Mr Robert Wasson did not receive a reply to his letter of 21 May before the accident happened. However, a copy of a letter dated 11 June 1979 from Federation addressed to CAGA was tendered at the trial. It is agreed that CAGA had searched for the original letter, had not found it and had no record of receiving it. That letter, after reciting particulars of the policy, read as follows:

"We have received a request to cancel the above policy which covers a 1978 Ford Utility Reg. No. JWK 503. The reason given is that the vehicle has been insured elsewhere.

However, our records indicate that you also have an interest in this policy as Lessor so we would appreciate your advices before acceding to this request, but should we not hear from you to the contrary within the next 14 days, we will act on the assumption that it is in order to effect the cancellation concerned.

Yours faithfully,

for SERVICE DEPARTMENT (COUNTRY BRANCH)".

7. Following the accident, Mr Dunn telephoned Mr Robert Wasson to convey his condolences on the death of his son Gregory. During that conversation the question whether the insurance policy covered the vehicle was raised. Mr Dunn assured Mr Wasson that the policy had not been cancelled and he encouraged Mr Wasson to make a claim. It is apparent that at this time Mr Dunn was not aware of Mr Wasson's letter of 21 May to the Sydney office of Federation. When a copy of that letter later came into Mr Dunn's possession, he wrote to the respondents, by letter dated 24 August 1979, advising that the policy had been cancelled. We mention the history of events following the accident, not because they bear on the problem which the case raises for resolution but in order to show how the claim came to be made.

8. In essence, Federation argues that the Wassons effectively terminated the insurance of their interest in the vehicle before the accident happened. There can be no doubt that they intended to do so and did their best to give effect to that intention. But the question remains: could the Wassons, merely by notifying Federation of their wish to do so, thereby bring to an end the insurance of their interest in the vehicle? The answer to that question must be found in the proper construction of the policy in the light of all the circumstances. The material features of the policy may be summarized as follows:

1. The preamble incorporated the proposal in the

policy. The proposal revealed, inter alia, that the vehicle was under lease to the Wassons from CAGA for a term of four years at a rental of $357 per month and that the first annual premium of $687.54 had been paid.

2. Federation undertook to indemnify "the Insured"

against, inter alia,

(a) loss of or damage to the vehicle;

(b) liability at law by way of damages in respect of personal injury and damage to property caused by the use of the vehicle.

3. The insured were described as the Wassons in their

capacity as lessee and CAGA in its capacity as lessor.

4. Condition 6, to which the policy was subject,

provided:

"This Policy may be terminated at any time at the request of the Insured in which case the Company will retain the Company's short period rate for the time the Policy has been in force. The Company may cancel this Policy at any time by giving written notice to the Insured; such notice may be delivered personally or posted to the Insured at the address last known to the Company and the cancellation of the Policy shall be effective on the delivery of the said notice or if posted from the time the said notice should be delivered in the ordinary course of post. After cancellation by the Company as aforesaid the Company will refund to the Insured the proportionate part of any Premium received in respect of the unexpired period of the Policy."

9. The form of the first sentence of condition 6 lends some support to Federation's submission that the condition denies to the insured any authority to do more than request the insurer itself to take action to terminate the policy. This submission is inconsistent with the view expressed in Deaves v. C.M.L. Fire and General Insurance Co. Ltd. (1979) 143 CLR 24, by Jacobs J. (at p 71) and Murphy J. (at p 77), that a request by an insured to the insurer to terminate the insurance operates as an automatic termination of the policy. And it seems that Gibbs A.C.J. was of the same opinion (at p.41), notwithstanding that he considered that the condition did not entitle one co-insured to terminate the policy without the consent of the other co-insured. The other members of the Court in Deaves did not deal with the point. Courts in the United States have consistently treated provisions very similar to condition 6 as conferring a unilateral right on an insured to cancel the policy: see American Jurisprudence 2d, vol.43, .406-407, pp.476-477. We are content to assume, without finally deciding, that provided all the insured parties to a particular policy join in a request for termination, that request will operate as a termination of the policy.

10. It is argued for Federation that a policy such as this constitutes two separate insurances and is to be construed and applied distributively. In our opinion, there can be no doubt about the first part of this submission. Indeed, we do not think that anyone has suggested that in this case there is only one insurance covering the Wassons and CAGA jointly for an interest held by them jointly. Although, unlike some policies, the policy does not expound Federation's liability to indemnify the insured by adding the phrase "for their respective rights and interests", the description of the insured as lessee and lessor respectively thereby identifies the distinct and separate interests that form the subject of the policy. The Wassons, of course, as between themselves, have a joint interest and the insurance they gained under the policy was a joint insurance. But their interest in the vehicle was quite distinct from that of CAGA. The well-known exposition by Sir Wilfrid Greene M.R. in General Accident Fire and Life Assurance Corporation, Ltd. v. Midland Bank, Ltd. (1940) 2 KB 388, at pp 404-405, is entirely apt in its application to the present case. His Lordship said:

"That there can be a joint insurance by persons having a joint interest is, of course, manifest. If A and B are joint owners of property - and I use that phrase in the strict sense - an undertaking to indemnify them jointly is a true contract of indemnity in respect of a joint loss which they have jointly suffered. Again, there can be no objection to combining in one insurance a number of persons having different interests in the subject-matter of the insurance, but I find myself unable to see how an insurance of that character can be called a joint insurance. In such a case the interest of each of the insured is different. The amount of his loss, if the subject-matter of the insurance is destroyed or damaged, depends on the nature of his interest, and the covenant of indemnity which the policy gives must, in such a case, necessarily operate as a covenant to indemnify in respect of each individual different loss which the various persons named may suffer....

Such a policy, in my judgment, may be more accurately described as a composite policy, because it comprises, for reasons of obvious convenience, in one piece of paper the interests of a number of persons whose connection with the subject-matter of the insurance makes it natural and reasonable that the whole matter should be dealt with in one policy."

It follows that in such a case, when property the subject of insurance is damaged or destroyed, the claim of each of the insured will fall to be determined by reference to the obligation to indemnify "the insured" against loss or damage to their respective interests in the property. So, in Lombard Australia Ltd. v. N.R.M.A. Insurance Ltd. (1968) 72 SR (N.S.W.) 45, it was held by the Court of Appeal that the owner of a motor vehicle was entitled to recover under a composite policy notwithstanding that the hirer had deliberately caused damage to the vehicle. See also Woolcott v. Sun Alliance and London Insurance Ltd. (1978) 1 WLR 493; (1978) 1 All ER 1253.

11. In General Accident the policy expressly provided that the insurance of the named insured was "for their respective rights and interests". This provision, reinforcing the general nature of the contract, led Sir Wilfrid Greene M.R. to say, at p.408:

"... wherever the phrase 'the insured' appeared in the printed part of this document, it would be wrong to treat that as meaning, as a matter of construction, all the three persons named in the endorsement. The printed words 'the insured' must be construed and qualified by the words 'for their respective rights and interests,' and those printed words must be given a construction which will fit in with the essential nature of the contract which is being undertaken."

In saying this, his Lordship was directing his attention to the provisions in the policy relating to indemnity and payment. As no question of termination or cancellation arose in that case, the passage which we have quoted was not aimed at a provision such as condition 6 in the present case.

12. Whilst a composite policy may call for a distributive application in the determination of multiple claims by the insured for indemnity under the policy, different considerations apply when it is the very existence of the contract itself which is in question. The former merely identifies the method of performance of a contract of indemnity covering diverse interests. The issue in this case is whether the policy allows one insured to terminate unilaterally the policy so far as it indemnifies that insured in respect of that insured's respective rights and interests in the property the subject of the policy, leaving the policy in force so far as concerns another insured; in other words, whether the Wassons were authorized by the policy to terminate the policy so far as it covered their interests in the vehicle. If that question were to be answered in the affirmative a consequential question would arise, namely, whether in fact that was what they did.

13. A somewhat similar question was considered by this Court in Deaves. Differing views of that decision have been expressed in the courts below. But first we turn to the case itself. Mr and Mrs Deaves purchased a service station and then mortgaged it to the vendors to secure the unpaid portion of the price. They obtained from the State Government Insurance Office in Queensland ("S.G.I.O.") a fire insurance policy in the names of themselves and the mortgagees. Thereafter, seeking increased cover, Mr Deaves secured a policy in the name of himself and his wife from the C.M.L. Fire and General Insurance Company Ltd. ("C.M.L."). He attempted to cancel the S.G.I.O. policy but S.G.I.O. refused to accept the cancellation because he did not have the consent of the mortgagees. Shortly thereafter the service station was destroyed by fire. Claims were made on both insurers. After litigation in the Supreme Court of Queensland, S.G.I.O. satisfied a judgment against it in favour of the purchasers and the mortgagees. Mr and Mrs Deaves failed in their action against C.M.L. and appealed to this Court. It was held by majority (Gibbs A.C.J., Stephen and Mason JJ., Jacobs and Murphy JJ. dissenting) that the S.G.I.O. policy had not been determined, with the consequence that Mr and Mrs Deaves were in breach of a condition in their policy with C.M.L. which required them to notify that company in writing of the existence of any other insurance. Their action against C.M.L. therefore failed. The report of the argument in this Court (at pp.27-29) suggests that no submissions were made with respect to the efficacy of the efforts of Mr Deaves to cancel the S.G.I.O. policy. This is understandable because S.G.I.O. had already been held liable on the policy and had satisfied the judgment against it. The central issue between the parties in this Court was the effect of the condition in question in the C.M.L. policy. In his reasons for judgment, Mason J. (at p.59) observed that the correctness of the finding that S.G.I.O. did not cancel the policy (because the consent of the mortgagees to cancellation was not produced by Mr and Mrs Deaves) was no longer in dispute. His Honour said no more about it. However, the other members of the Court considered the matter. Gibbs A.C.J. (at p.40) expressed the opinion that the purported termination by Mr Deaves of the contract of insurance with S.G.I.O. was entirely ineffective. After describing the policy as a composite one and referring to General Accident, his Honour continued, at pp.40-41:

"It may be assumed, without deciding, that for certain purposes, e.g., payment of the indemnity, the word 'insured' in the policy should be regarded as meaning the insured 'for their respective rights and interests', although those words do not appear in the policy. In my opinion it does not follow that some of the insured may terminate the policy so far as it affects their respective rights and interests without the consent of the other insured. On termination the insurer is entitled, under condition 5, to retain the customary short period rate for the time the policy has been in force. There is nothing in the policy to indicate the values of the respective interests of the mortgagees and the owners, and there are therefore no means of determining how much of the premium should be attributed to one group of interested parties and how much to the other. The amount to be refunded to Mr. and Mrs. Deaves, if they cancelled the policy so far as it concerned their interest, was therefore not susceptible of calculation by the insurer. Further, although the policy is a composite one, all four insured are parties to it; the policy may embody two insurances, but it constitutes one contract. It would be contrary to principle to allow one insured to withdraw from a contract of insurance, thus leaving the insurer bound to indemnify another insured only - a liability the insurer might not have been prepared to assume, if it had been proposed in the first place. In my opinion a termination under condition 5 can only be effected at the request of all the insured or at the option of the insurer."

14. Stephen J. (at p.57) posed the question whether it was possible for Mr and Mrs Deaves unilaterally to cancel the insurance of their interest as owners of the property. But his Honour did not find it necessary to answer the question because he took the view that not only did Mr Deaves purport to cancel both of the separate interests covered by the policy but this was

"surely both the intention of Mr. Deaves and the understanding of S.G.I.O. The last thing Mr. Deaves had in mind was that that policy should continue in force as to the mortgagees' interest, the Deaves continuing to be liable for premiums thereon while at the same time having to pay premiums on the new C.M.L. policy."

15. Jacobs J. (at pp.71-72) and Murphy J. (at p.77) each took the view that Mr Deaves' request to S.G.I.O. to cancel the policy was effective to terminate the insurance of the interest of Mr and Mrs Deaves without affecting the insurance of the interest of the mortgagees. This view led their Honours to dissent from the decision favouring C.M.L., for the reason that Mr and Mrs Deaves, having effectively terminated their insurance with S.G.I.O., were not in breach of any condition of their policy with C.M.L.

16. On the trial of the present action in the District Court the learned trial judge concluded, in reliance in part on the reasons for judgment of Jacobs J. and Murphy J. in Deaves, that there was a majority view in that case in favour of the proposition that each insured party to a composite policy is capable of terminating its separate and distinct rights and interests under the policy. In the Court of Appeal, Kirby P. was satisfied that Stephen J. and Mason J., in order to reach the conclusion they did, must have been of the opinion that Mr Deaves could not and did not cancel the policy of insurance with S.G.I.O. In his Honour's view Stephen J. and Mason J., together with Gibbs A.C.J., probably constituted a majority in favour of that conclusion. Priestley J.A. found that there was nothing said in Deaves to prevent the Court of Appeal from adopting the views of Gibbs A.C.J. McHugh J.A. was of the opinion that there was no ratio decidendi in Deaves on the cancellation point. His Honour concluded that Gibbs A.C.J. had taken the view that it was not open to the mortgagors to cancel the policy in respect of their interest, that Stephen J. held that the mortgagors did not intend to cancel only their separate interest even if they could do so and that Mason J. regarded the point as not in dispute in the High Court.

17. It is not strictly necessary for this Court now to resolve the controversy as to what Deaves actually did decide. If it matters, we agree with the assessment made by McHugh J.A. Certainly, it would not be proper to seek to extract a binding authority from an opinion expressed in a dissenting judgment: Dickenson's Arcade Pty. Ltd. v. Tasmania (1974) 130 CLR 177, at p 188; Great Western Railway Co. v. Owners of S.S. Mostyn (1928) AC 57, at pp 73-74. That is not to say, however, that a dissenting judgment may not deserve respectful consideration. A dissenting judge will often see his or her judgment as an appeal to the brooding spirit of the law, waiting for judges in future cases to discover its wisdom. In any case, we think it would be a misunderstanding of the reasons for judgment of the trial judge to conclude that his Honour was doing any more than seeking to discover where the balance of persuasion lay in the differing views expressed in Deaves.

18. We return to the facts of the present case. As we have said, the primary question is whether the Wassons could effectively terminate the insurance of their rights and interest in the vehicle merely by giving notice to that effect to Federation. If that question is answered in the affirmative, it would then be necessary to decide whether that is in fact what they did. There is force in the view expressed by Stephen J. in Deaves that the last thing an insured who sought to cancel his insurance would have in mind would be that the policy should continue in force so far as it covered the interest of another party while leaving him with a continuing liability to pay the premium. But, having regard to the view we have formed on the first question, this further question will not arise.

19. Neither General Accident nor Deaves cast any doubt on the proposition that a policy of insurance of the present kind by which the insurer indemnifies the co-insured for loss or damage to their respective rights and interests in one item of property is a composite contract. Indeed, Gibbs A.C.J., Jacobs and Murphy JJ. accepted that this was so. By a composite contract we mean a contract by which an insurer undertakes separate and distinct obligations to the various insured. This concept has been accepted and applied in the United States and Canada: Wenig v. Glens Falls Indemnity Co. (1945) 61 NE 2d 442, at p 445; Morgan v. Greater New York Taxpayers Mutual Insurance Association (1953) 112 NE 2d 273, at pp 275-276; Rankin v. North Waterloo Farmers Mutual Insurance Co. (1979) 25 O.R.(2d) 102. There is no suggestion in these decisions that a co-insured can unilaterally terminate the policy in relation to his separate insurance otherwise than for breach, without the participation or consent of the other co-insured, unless the policy plainly confers such a unilateral right of termination.

20. In our opinion, the policy did not authorize the Wassons to act unilaterally so as to terminate the insurance of their interest in the vehicle. Condition 6 is quite clear. It speaks of the termination or cancellation of the policy, not of the insurance of the respective rights and interests of the parties. It follows that the intention must have been that, if it were to be terminated at the request of the insured, all the insured must participate in that request. The language of the condition does not readily lend itself to the interpretation favoured by Jacobs J. and Murphy J. in Deaves whereby they read the words "This insurance" in the relevant clause in that case as referring to the separate insurances of the respective interests of the joint owners and the mortgagees. And, as Gibbs A.C.J. pointed out in Deaves (at p.41), the amount of the premium to be refunded is not susceptible of calculation if one co-insured terminates his separate insurance. In the same case Murphy J. suggested that the amount of the refund would depend on the ascertainment of the respective interests of the co-insured, but the very complexity of this exercise indicates that it was not contemplated by the contract as an outcome. Another response which Federation seeks to make to the point made by Gibbs A.C.J. is that condition 6, as applied to termination by one co-insurer, contemplates that the insurer will pay the refund to the party who has actually paid the premium, whereupon the insurer can cancel the separate insurance of the other co-insured under the second sentence of the condition. This then raises the further problem of how the insurer complies with the requirement in the last sentence of the condition for refund of the premium. Moreover, it is not to be expected that the insurer would cancel without giving the co-insured the opportunity of deciding whether it would continue its insurance at a new premium to be determined. The insurer would therefore be at risk for some time without having the benefit of a premium. A third answer suggested by Federation is that no question of return of the premium can arise because there has been no failure of consideration. But this is inconsistent with condition 6. It contemplates a refund in the event of termination. The absence of any clear solution to the problem of refund of a proportion of the premium indicates that the premium is indivisible. And there is the second consideration mentioned by Gibbs A.C.J., namely that the insurer, on the withdrawal of one insured, would be bound to indemnify the other insured, at least until the insurer exercised his right to cancel, thereby incurring a liability which it might not have been prepared to assume if it had been proposed in the first place. Furthermore, considerations of fairness and concern for its reputation would disincline the insurer to peremptorily exercise its right of cancellation.

21. The alternative construction occasions none of these difficulties. Nor should it occasion any undue hardship or inconvenience to a lessee or mortgagor, desiring to change insurers, to require it to secure the consent of the lessor or mortgagee as the case may be to the termination of the existing policy. The "reasons of obvious convenience", to adopt the phrase used by the Master of the Rolls in General Accident, which make it appropriate to combine two insurances in a composite policy would be frustrated if it were possible for one only of the insured, acting unilaterally, to bring part of that policy to an end.

22. It follows, in our view, that the Wassons were unable to effect a unilateral termination of the insurance cover of their interest in the vehicle. Although the letter of 11 June 1979 from Federation to CAGA reflects an intention on the part of the former to bring the policy to an end by cancellation, that final step had not been taken by 27 June when the accident occurred. Even if the letter of 11 June might constitute notice to CAGA as required by condition 6, which we doubt, there was certainly no notice of cancellation conveyed to the Wassons before Mr Dunn's letter of 24 August 1979.

23. We would dismiss the appeal.

GAUDRON J.: I have had the benefit of reading the judgment of Mason C.J., Wilson, Dawson and Toohey JJ. I agree generally with their Honours' reasons and the order proposed by them. I would however add some observations.

2. The present case concerns a policy of insurance by which the appellant ("Federation Insurance") agreed to provide indemnity against loss, damage or liability arising out of the use of a motor vehicle of which the respondents and Mr Gregory Wasson (now deceased) were lessees (the "Wasson family") and Commercial and General Acceptance Limited ("CAGA") was lessor. Condition 6 of the policy provided for termination and cancellation of the policy as follows:

"This Policy may be terminated at any time at the request of the Insured in which case the Company will retain the Company's short period rate for the time the Policy has been in force. The Company may cancel this Policy at any time by giving written notice to the Insured; such notice may be delivered personally or posted to the Insured at the address last known to the Company and the cancellation of the Policy shall be effective on the delivery of the said notice or if posted from the time the said notice should be delivered in the ordinary course of post. After cancellation by the Company as aforesaid the Company will refund to the Insured the proportionate part of any Premium received in respect of the unexpired period of the Policy."

3. Where a policy of insurance issues to persons having separate interests in the property insured, the question whether one only of the insured parties may terminate the insurance of that party's separate interest in the insured property is a question to be answered by construction of the terms of the policy. A particular provision dealing with termination or cancellation, as condition 6 is, must be construed in the context of the contract as a whole, including the nature of the obligation or obligations owed to and by the persons insured.

4. Where a promise is made to two or more parties the question whether the obligation thereby created is owed to the parties jointly or severally is primarily a matter of construction: see Glanville Williams, Joint Obligations, (1949), Ch.1. Where the obligation is capable of being construed either as one owed jointly or one owed severally, the rule of construction is that laid down in Slingsby's Case (1587) 5 Co. Rep. 18 b (77 E.R. 77). It was expressed by Parke B. in Sorsbie v. Park (1843) 12 M &W 146, at p 158 (152 ER 1146, at p 1151) as follows:

"That rule is, that a covenant will be construed to be joint or several according to the interest of the parties ...".

See also Keightley v. Watson (1849) 3 Ex 716, at p 721 (154 ER 1034, at p 1036). In the present case the obligation to provide indemnity to the insured is silent as to whether the obligation is owed jointly or severally, although the schedule attached to the policy identifies the insured by name and descriptively by reference to their interests as lessees and lessor as follows:

"Robert Raymond Wasson, Mrs Joan Marie Wasson, Gregory Stuart Wasson and Miss Helen Yvon Wasson (Lessee) Commercial and General Acceptance Finance Ltd. (Lessor)."

5. The application of the rule of construction to the obligation to provide indemnity contained in the subject policy results in obligations owed severally to the members of the Wasson family and to CAGA as to their separate interests as lessees and lessor in the insured property, although as between the members of the Wasson family, the separate obligation was owed to them jointly.

6. Although it is not necessary to so decide in the present case, I conceive that an obligation to indemnify two or more persons against loss or damage to property in which they hold separate interests, even if expressed to be owed to them jointly is necessarily owed to them severally. In Halsbury's Laws of England (4th ed., vol.9 par.620) the rule in Slingsby's Case is said to have been "applied without regard to the language of the covenant, unless the terms of the covenant unequivocally showed a contrary intention". But in White v. Tyndall (1888) 13 AC 263, Lord FitzGerald, with whom Lord Halsbury L.C. agreed, stated at p 275:

"We do not mean to say that there may not arise cases in which the entirely separate interests of the lessees would render it necessary, in the interests of all parties, to interpret covenants differently from their express words."

In the same case, Lord Herschell (at p.277) observed that:

"It has no doubt been held that where the interests of covenantees are several, a covenant which in form is joint may be moulded according to those several interests; but that, I take it, is only in the case where, to use the language of Lord Coke, the covenant is to several for the performance of several duties to each of them."

7. One set of words, albeit that they are used once only, expressing an obligation to indemnify different persons against loss of property in which they have separate interests, necessarily gives rise to several different obligations, for the content of the obligation is different for each of the insured, the difference being referable to their different interests. The same concept, although viewed from the perspective of promisors rather than promisees, was given expression by Parke B. in King v. Hoare (1844) 13 M &W 494, at p 505 (153 ER 206, at p 210), in the statement that "a joint and several bond ... though on one piece of parchment or paper, in effect comprises the joint bond of all, and the several bonds of each of the obligors ...".

8. The consideration that the policy encompasses separate obligations with respect to the different insured parties, or separate insurances of the separate interests of the insured parties, does not mean that every right and obligation provided in the policy should be construed as a separate right or obligation inhering in each of the insured parties.

9. A transaction may involve entirely separate obligations owed to and by different persons. Such a transaction involves several different contracts, notwithstanding that transaction is embodied in one document and, in the absence of an express or implied term to the contrary, the different parties will be entitled to exercise their rights independently of each other. However, as is pointed out by Glanville Williams (at p.44), "it is ... possible for some promises to be joint and other promises in the same contract to be purely several". In such circumstances there is but one contract. In the present case, it is clear that the obligation by the insured to pay the specified premium was a joint obligation: the premium was specified as a total sum without specification of proportions referable to the interests of the insured parties; it was payable by all or any of the parties, in the sense that payment by one constituted performance by all. The joint obligation as to payment of the premium constituted the policy a single contract although it effected separate insurances, and in that sense constituted a "composite policy" or "composite contract" as explained in the judgment of Mason C.J., Wilson, Dawson and Toohey JJ.

10. The nature of the policy, and in particular the singular nature of the contract therein embodied, provides the context within which condition 6 must be construed to ascertain whether it confers a right on one only of the insured parties to terminate the separate insurance of the separate interest of that party.

11. By condition 6 it is "the Policy" which may be terminated or cancelled. As noted above the policy is the written embodiment of a single contract effecting separate insurances. Condition 6 postulates termination or cancellation of the entire transaction, and not merely a component part thereof. As it is the entire insurance transaction which may be terminated by "the insured", it follows that all insured must participate in a request for its termination, for otherwise as pointed out in the joint judgment, there would arise difficulties and uncertainties in relation to the refund of the premium, and questions of fairness both to the insurer and the non-terminating insured party.

12. Accordingly the Wasson family were not enabled to effect a unilateral termination of the insurance of their separate interest in the insured motor vehicle. Nor for the reasons given by Mason C.J., Wilson, Dawson and Toohey JJ. had the policy been cancelled at the time of the accident which gave rise to the present claim.

13. The appeal should be dismissed.

Orders

Appeal dismissed with costs.