Freshmark Ltd v Mercantile Mutual Insurance (Australia) Ltd

[1993] QCA 222

IN THE COURT OF APPEAL

[1993] QCA 222

SUPREME COURT OF QUEENSLAND

Appeal No. 8 of 1993

Brisbane

Before The President
Mr Justice McPherson
Mr Justice Dowsett

[Freshmark Limited v. Mercantile Mutual Insurance

(Australia) Limited]

BETWEEN:

FRESHMARK LIMITED

(Plaintiff) Respondent

- and -

MERCANTILE MUTUAL INSURANCE (AUSTRALIA) LIMITED

(Defendant) Appellant

REASONS FOR JUDGMENT - THE PRESIDENT

Judgment delivered 16/06/93

This is an appeal by the insurer of a trailer owned by the respondent which was damaged on or about 28 July 1991 while being towed by a prime mover driven by a person then aged 22 years.

A clause in the policy provided:
"Articulated Vehicles:

If any articulated vehicle covered under this policy is, at the time of an accident, being driven by or is in the charge of a person under the age of twenty-five (25) years the Company shall not be liable to pay for any loss, damage [sic] to liability."

Despite this provision, the respondent lodged a claim form on 1 August 1991 and, although it was there disclosed that the damaged trailer had been "in the charge of a person under the age of twenty-five (25) years", the appellant authorized repairs to the trailer on the following day.
However, on 7 August, the appellant notified the respondent that it would not indemnify it in respect of the damage because of the age of the person in charge of the trailer at the time of the accident and directed the repairer to stop work.
The parties did not distinguish between any repairs which had been effected prior to the appellant's change of attitude on 7 August and the repairs carried out after that time. The respondent claimed and was awarded the total cost of the repairs on the footing that the appellant had waived the benefit of the provision in the policy which gave it the right to deny liability.
In the absence of any suggestion of estoppel or contention that the terms of the policy had been varied by agreement, this argument raises two questions:

(a) had the appellant made a binding election to abandon its right to deny liability; and

(b) had the appellant otherwise waived that right ?
One possible answer to (b) is that there is no material

doctrine of waiver which is wider than the doctrines of estoppel and election: contrast the differing views expressed in the High Court in The Commonwealth v. Verwayen

(1990) 170 CLR 394; eg., per Mason CJ. at pp.406-407 and per Brennan J. at pp.423-424. However, I do find it necessary to pursue this question since, in my opinion, the judgment below is correct because the appellant made an irrevocable election.

In Immer (No.145) Pty. Ltd. v. The Uniting Church in

Australia Property Trust (NSW) (1993) 9 Leg. Rep. 12,
Deane, Toohey, Gaudron and McHugh JJ. said at p.15:

"The true nature of election is brought out in this sentence from the seminal work of Spencer Bower and Turner, The Law Relating to Estoppel by Representation:

`It is of the essence of election that the party electing shall be "confronted" with two mutually exclusive courses of action between which he must, in fairness to the other party, make his choice".

When Immer's solicitors wrote their letter of 26 June 1989, the date 1 April 1989 in cl.7 of the deed had passed. It was then open to Immer, as purchaser, to rescind the deed, subject to any question that might arise as to whether rescission could be effected peremptorily or only after reasonable notice. Can it be said that Immer was then confronted with two mutually exclusive courses of action between which it must choose? Were its actions consistent only with an intention to keep the agreement on foot and inconsistent with the exercise of the right to rescind.

If a party to a contract, faced with the choice of terminating the contract or keeping it on foot, terminates the contract that party will ordinarily have acted in a way that leaves no doubt as to the choice made. And that choice will be clearly inconsistent with the exercise of the right to keep the contract on foot because the contract no longer exists. But where, as here, the situation is the converse the question is not answered so readily.

...

As Spencer Bower and Turner point out in the passage quoted earlier, at the heart of election is the idea of confrontation which in turn produces the necessity of making a choice. But in a case such as the present one, the choice is not merely one of affirming the agreement; it involves as well the abandonment of the right to rescind. Abandonment is more readily inferred in some circumstances, for instance where the choice arises once and for all. ... The point is that where the right to rescind is a continuing one, it is not so readily concluded that the party entitled to rescind has abandoned that right completely as opposed to taking no action to exercise the right at the time in question.

...
In Tropical Traders Ltd. v. Goonan Kitto J. commented:

`Not that election is a matter of intention. It is an effect which the law annexes to conduct which would be justifiable only if an election had been made one way or the other."

On the other hand, in Sargent v. A.S.L. Developments Ltd. Mason J. said of the element essential to the making of a binding election:

`The question is complicated because in some instances election may take place as a matter of conscious choice with knowledge of the existence of the alternative right and in other cases it may occur when the law attributes the character of an election to the conduct of a party."

But, in drawing this distinction, Mason J. was focusing on the dichotomy between awareness of the right to rescind an awareness of the facts giving rise to the right. We do not read that passage from his Honour's judgment as implying that a party to a contract who is aware either of the right to rescind or of facts giving rise to a right to rescind will necessarily be held to have elected to affirm a contract if he or she acts on the basis that the contract remains on foot. Such an implication is at odds with the notion of being confronted with the necessity of making a choice.

...

In a context ... where the stage had not been reached where Immer was required to make an election either to rescind the contract or to abandon the right to rescind, the forwarding of the documents for settlement did not constitute an election to affirm the contract regardless of whether the Council had or had not approved.

The letter of 26 June 1989 and Immer's actions at the time were consistent with Immer being prepared to continue with an agreement which it understood to be ready for completion and because of which it did not direct attention to its rights."

In my opinion, the appellant was confronted with two mutually exclusive courses of action between which it was required to make a choice. For the purpose of the doctrine of election, it is unnecessary for another party to have relief on the choice made or to have suffered detriment, and it is fair to require a party to adhere to the course it had chosen if it does so with knowledge of the material facts. In this matter, it was not disputed that it had the requisite knowledge at the material time (cf. Khoury v. Government Insurance Office (NSW) (1984) 165 CLR 622, 633- 34), and its actions were consistent only with an intention to accept liability under the policy and inconsistent with the exercise of its right to deny liability.

When it authorised repairs as the insurer of the trailer, the appellant pursued a course inconsistent with a denial of liability and destroyed its inconsistent right to deny that it was liable as insurer to indemnify the respondent: cf. C.E. Heath Underwriting and Insurance (Australia) Pty. Ltd. v. Campbell Wallis Moule and Co. Pty. Ltd. (1992) 1 VR 386, 394; and see Sutton: Insurance Law in Australia (2nd Ed.) p.687 para.11.14.

The appeal should therefore be dismissed, and the appellant ordered to pay the respondent's costs, to be taxed.

THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 8 of 1993

Brisbane

Before The President
Mr Justice McPherson
Mr Justice Dowsett

[Mercantile Mutual Insurance v Freshmark Ltd]

BETWEEN

MERCANTILE MUTUAL INSURANCE (AUSTRALIA) LIMITED

(Defendant) Appellant

- and -

FRESHMARK LIMITED

(Plaintiff) Respondent

REASONS FOR JUDGMENT - McPHERSON J.A.

Judgment delivered 16/06/1993

I have read and agree with the reasons that have been prepared by Dowsett J. for allowing this appeal.

Estoppel now being out of the way, for the plaintiff to succeed in this action it must show an irrevocable election that binds the defendant to indemnify the plaintiff under the motor vehicle policy sued upon. The defendant's action in authorising repairs to be carried out on the vehicle was relied on by the plaintiff, and accepted in the court below, as conduct amounting to such an election.

It is not easy to see why that action should have the consequence of fixing the defendant with a liability that, it is now accepted by both parties, would otherwise not have attached. The case is not, like Commonwealth v. Verwayen (1990) 170 C.L.R. 394, one where, quite apart from the election, there was on the defendant's part a liability under the general law to indemnify the plaintiff for the consequences of the defendant's wrongdoing.

Here there was no liability under the terms of the policy except in certain specified circumstances that were not present in this case. The defendant was therefore not in the position of a person who, having the option of choosing between alternative and inconsistent rights, elects to adopt one of them and so places it beyond his power to revert to the other. Under section 1 of the policy the defendant as the insurer had the right to elect between repairing a vehicle and paying the amount of the loss or damage to it. The defendant elected to repair. Had the policy been applicable according to its terms, the election to repair might well have precluded the defendant from later asserting its alternative right under section 1 of simply paying the amount of the loss or damage.

But that is not this case. The defendant was not confronted with the option of choosing between two alternative and inconsistent rights, nor did it elect to pursue one of those rights to the exclusion of the other.

There was no choice between a right to accept liability under the policy, and a right to reject liability. That is so because there never was any liability under the policy, and consequently no right or even power under the policy to reject that liability. It would not, I think, be a correct use of language, or a correct application of the doctrine of election, to speak of the defendant as having elected to exercise its right not to reject the plaintiff's claim.

What the defendant (like everyone else) enjoyed might be regarded as an immunity from claims that were not within the scope or terms of the policy; but, properly considered, it could not be accurately described as a right that it had a choice or option not to exercise.

If the defendant had repaired the vehicle and then discovered that there was no liability under the policy, it could not have claimed the cost of the repairs from the plaintiff. It would have occupied the position of a person voluntarily expending money, work or labour on the property of another without - as far as can be seen from the facts pleaded or disclosed in the record - any request in that behalf from the property owner. In those circumstances, no liability to reimburse it for that expenditure would arise : Falcke v. Scottish Imperial Insurance Co. (1886) 34 Ch.D. 234, 248-249. Conversely, except under the terms of the policy, there is no liability on the insurer's part to repair the vehicle, or to carry those repairs through to completion simply because they were mistakenly begun. Once estoppel is eliminated from the scene, the defendant's position did not differ from what it would have been if it had done nothing but to say it would repair the vehicle and had then refused to go on with those repairs on finding that the policy did not apply.

For these reasons I would make the orders proposed by

Dowsett J.
IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 8 of 1993

Brisbane
[Mercantile Mutual Insurance v. Freshmark Ltd]

BETWEEN

MERCANTILE MUTUAL INSURANCE (AUSTRALIA) LIMITED

(Defendant) Appellant

- and -

FRESHMARK LIMITED

(Plaintiff) Respondent

The President
Mr Justice McPherson

Mr Justice Dowsett

Judgment delivered 16/06/93

Separate Reasons prepared by the President, McPherson J.A. and Dowsett J. McPherson J.A. in agreement with the orders proposed by Dowsett J. The President dissenting.

APPEAL ALLOWED. JUDGMENT BELOW SET ASIDE AND, IN LIEU, ENTER JUDGMENT FOR THE APPELLANT. RESPONDENT TO PAY APPELLANT'S COSTS OF THE ACTION AND OF THE APPEAL.

CATCHWORDS	MOTOR VEHICLE INSURANCE - Liability - Waiver - Whether election to repair constitutes admission of liability
Counsel:	M. Wilson Q.C., with her M.D. Martin, for the appellant
S. Williams Q.C. for the respondent
Solicitors:	O'Mara, Patterson & Perrier for the appellant Gadens Ridgeway for the respondent

Hearing Date: 27 April 1993
IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

C.A. No. 8 of 1993

Brisbane

Before The President
Mr. Justice McPherson
Mr. Justice Dowsett

[Re: Freshmark Limited v. Mercantile Mutual Insurance (Australia) Limited]

BETWEEN:

FRESHMARK LIMITED

(Plaintiff) Respondent

AND:

MERCANTILE MUTUAL INSURANCE (AUSTRALIA)

LIMITED

(Defendant) Appellant

REASONS FOR JUDGMENT - DOWSETT J.

Judgment delivered 16/05/1993

At all material times, the appellant (the defendant below) carried on business as an insurance company while the respondent (the plaintiff below, previously known as Bagley Transport Pty. Ltd.) owned a number of motor vehicles, including trailers. The respondent had effected insurance cover over those vehicles with the appellant. The relevant policy is ex. 1. On or about 28 July 1991 one of the respondent's vans suffered damage whilst being towed by a prime mover owned by a third party and driven by a person then aged 22 years. The respondent lodged a claim with the appellant on 1 August 1991. That claim (ex.2) disclosed by implication both the age of the driver at the time of the accident and that the vehicle in respect of which the claim was made was a trailer being drawn by a prime mover. On 2 August, the appellant appointed a loss assessor to investigate the claim and on the same day, authorised the commencement of repairs. This latter order was countermanded on 7 August. On that date, the appellant wrote to the respondent as follows (ex. 5):

"We refer to this matter and after a review of our file we find that the driver of the Prime Mover, a Mr. Shane Lee McCormick was under 25 years of age.

We should now refer you to the Articulated
Vehicles Endorsement, which reads inter alia:

'It is agreed that if any articulated vehicle covered under this policy is, at the time of an accident, being driven by or is in the charge of a person under the age to (sic) twenty-five (25) years the Company shall not be liable to pay for any loss, damage or liability.'

Therefore in view of the abovementioned, we regret to advise that we will be unable to assist any further with this claim."

The wording of the endorsement as recorded in the letter was not precisely in accordance with the wording of the policy. Miss M.S. Moore, the appellant's claims clerk said that when she initially examined the claim form and the policy, she formed the view that because the prime mover was not the property of the respondent, the Articulated Vehicles endorsement did not apply. It was only on 6 August, in the course of discussions with the underwriters, that she realised the loss was excluded. On the following day, she stopped the repair work and denied liability. No evidence was led as to the value of the work performed on the vehicle prior to 7 August. The respondent claimed the whole amount of the repair bill, the quantum of which was admitted at the trial.

The respondent asserted that the appellant was estopped from relying upon the Articulated Vehicles endorsement or had otherwise waived any entitlement to so rely. The appellant denied estoppel and that, "as a matter of law ... the doctrine of waiver is applicable to the facts alleged in the plaint ...". The learned trial Judge found that there was no relevant detriment sufficient to ground an estoppel. This was not challenged on appeal. However his Honour also found that the appellant had waived its entitlement to rely upon the clause and gave judgment for the respondent.

In point 3 of the appellant's outline of argument, it was submitted that, "In any event a waiver is essentially revokable", perhaps raising a factual matter not raised at the trial. In the end, however the appellant's argument was that the appellant's conduct prior to 7 August 1991 was not such as to extend its liability under the policy to a loss falling within the Articulated Vehicles endorsement. The appeal also proceeded upon the basis that the appellant's conduct prior to 7 August was consistent with its accepting liability under the policy and inconsistent with its denying such liability.

Numerous decisions in recent years have extended and clarified the operation of the doctrine of estoppel in regulating relationships between parties to non-contractual arrangements, including variations of contracts. These developments have often found bases for estoppel in areas where previously, the courts had resorted to other doctrines and legal mechanisms, sometimes using the term "waiver". In the Commonwealth of Australia v. Verwayen (1990) 170 CLR 394, the High Court undertook an examination of the boundaries of estoppel and other such concepts including "waiver".

Verwayen claimed damages for personal injury suffered in the well-known collision between HMAS "Melbourne" and HMAS "Voyager" whilst those ships were engaged in combat exercises in 1964. He was serving in "Voyager" at the time. Probably because of doubts surrounding the legal duty of care owed by the Commonwealth to members of the defence force prior to the decision of the High Court in Groves v. The Commonwealth (1982) 150 CLR 113, no action was taken against the Commonwealth until 1984. Thereafter, the Commonwealth indicated, both by its pleading in the action and in solicitors' correspondence, that it intended neither to rely upon a limitation defence which was available to it, nor to deny breach of a duty of care owed to Verwayen. The outstanding issues were therefore extent of injury and damages. However, in 1985 or 1986, the Commonwealth decided to change its position and obtained leave to amend the defence to raise both points.

At the trial, and before the matter was put to the jury, the trial Judge determined that on the alleged facts, it was not open to the Commonwealth to deny liability in reliance on the combat exercises point. His Honour also held that even if the Commonwealth had waived the limitation defence, the waiver was revokable and had been revoked. He therefore entered judgment for the Commonwealth upon the basis that any claim was statute-barred. The Full Court rejected the plaintiff's submissions concerning waiver, but found that the Commonwealth was estopped from resiling from its promise not to plead the limitation point. By majority, the court also dismissed a cross-appeal by the Commonwealth against the trial Judge's decision on the combat exercises defence. Judgment was therefore set aside and the matter remitted for trial. The Commonwealth appealed to the High Court on both points.

Having outlined the history and substance of the matter, I will subsequently refer only to those parts of the judgments dealing with waiver. The majority (Deane, Dawson, Toohey and Gaudron JJ.), in affirming the decision of the Full Court, relied upon different grounds. Deane and Dawson JJ. found an estoppel whilst Toohey and Gaudron JJ. relied upon waiver. Mason C.J. and McHugh J., although dissenting, expressed views of waiver closely resembling those of Deane and Dawson JJ..

At p.406, Mason C.J. said:-

"As often as not, the term 'waiver' is used to describe the result of the application of various principles rather than to designate a particular legal concept or doctrine ... This is because 'waiver' is an imprecise term capable of describing different legal concepts, notably election and estoppel.

"It has been doubted that waiver exists as a defence or answer in any case except where it is used as an alternative designation for some other defence or answer, for example, election, estoppel or new agreement ... Generally speaking, ... an existing legal right is not destroyed by mere waiver in the sense of an express or implied intimation that the person in whom the right is vested does not intend to enforce it ... In these cases, unless consideration is present, something in the nature of an election or an estoppel is required."

At p. 407, his Honour continued:-

"It is necessary to consider whether, first, the doctrine of election and, secondly, the principles of estoppel (including quasi-estoppel by acquiescence) apply in the present case. The broad principles of election are not in doubt. They were formulated by this court, under the title of waiver, in Craine v. Colonial Mutual; see also O'Connor v. S.P. Bray Ltd..

In Sargent v. ASL Developments Ltd. Stephen J. explained:-

'The doctrine only applies if the rights are inconsistent the one with the other and it is this concurrent existence of inconsistent sets of rights which explains the doctrine. Because they are inconsistent neither one may be enjoyed without the extinction of the other and that extinction confers upon the elector the benefit of enjoying the other, a benefit denied to him so long as both remained in existence.’”

Clearly, his Honour considered that there was no room for the operation of any independent doctrine of waiver. In the absence of an estoppel or a contractual variation, the respondent could only justify the plea of waiver if it constituted an election.

Deane J., who agreed generally with Dawson J., dealt with waiver only briefly at pp.449 and 450. His Honour said:-

"In the context of the development of the general doctrine of estoppel by conduct in recent years, it seems to me to be preferable to confine the rubric of 'waiver' within the area of the law in which, notwithstanding the absence of consideration, the act of the alleged waiver is of itself directly operative to 'waive' a right or entitlement without there being any need to establish that the other party has acted upon the basis that the right or entitlement in question was no longer asserted. The principal examples of cases falling within that area are cases of true election ... Even if I had (like Gaudron J.) seen the present case as falling within a category where, in the context of a change of relationship, detriment could be assumed, it would not, in my view, be one in which any particular act or acts of the Commonwealth had themselves operated as a waiver of the relevant defences. That being so, I have identified the applicable doctrine solely in terms of estoppel by conduct."

Although his Honour did not in terms limit the operation of waiver to circumstances of election, it is fairly clear that such was intended. His Honour's test for waiver required that the act be itself sufficient to constitute the termination of a right or entitlement. It is difficult to conceive of a situation other than that of election where this could be so (excluding surrender by agreement or deed). Given that the conduct of the Commonwealth in Verwayen was not thought sufficient to constitute a waiver, although it clearly indicated an intention not to rely upon available defences, it is unlikely that the conduct in the present case could be so characterised.

Dawson J. considered waiver at p. 451 et seq.:-

“In argument, the respondent did not draw any clear distinction between waiver and estoppel. Indeed, authority favours the view that, in the present context, no such distinction can in principle be drawn. 'Waiver' is an imprecise term and is used to describe what is done in a variety of circumstances rather than to assert any particular legal process. However, where it is not used in the sense of election between mutually exclusive alternatives, if it has any identifiable legal consequence, it is generally indistinguishable from estoppel. Isaacs J. made this point in a well-known passage in Craine v. Colonial Mutual Fire Insurance Co. Ltd., where, in delivering the judgment of the Court, he used the word 'waiver' in the sense of waiver by election and said that waiver requires a distinct act done with knowledge and intention in order to see whether there has been an election. Waiver looks 'chiefly to the conduct and position of the person who is said to have waived, in order to see whether he has 'approbated' so as to prevent him from 'reprobating' - in English terms, whether he has elected to get some advantage to which he would not otherwise have been entitled, so as to deny him a later election to the contrary.'

"Isaacs J. contrasted election with the doctrine of estoppel by conduct which, he said, 'looks chiefly at the situation of the person relying on the estoppel' with the consequence that 'the knowledge of the person sought to be estopped is immaterial'. He concluded that 'estoppel may be established where waiver cannot, and conversely waiver may be found where estoppel does not exist.’”

And at p. 457:-

"In this case, the appellant having amended its defence to plead the statute of limitations and the respondent having pleaded waiver or estoppel, an issue was raised for trial. But the issue raised was one of estoppel rather than of waiver in some other sense. When the term 'waiver' is not being used to describe election or estoppel it may be used loosely to indicate non-insistence upon a right either by choice or by default. The use of the term in that sense raises a different question, namely, whether a party having failed to insist upon his right at an appropriate time, should later be allowed to do so. In this case, that question was determined when the appellant was given leave to amend its defence. ... Sometimes the questions of estoppel and waiver in this loose sense are not kept distinct."

And at p.459:-

"In this case, by pleading waiver the respondent was asserting that the appellant had lost the opportunity to plead the statute of limitations. Obviously, having been given leave to amend, it had not. Rather, the respondent was seeking to have the issue which was raised by the amended pleadings determined; he was seeking to have the appellant estopped from relying on the statute."

As I understand it, his Honour meant that as a matter of substantive law (as opposed to procedural matters arising in the course of litigation), waiver is a term used to describe the outcome of an election or possibly the outcome of an estoppel. However there is also a more extended usage of the term in the context of litigation where a party, either in its pleadings or elsewhere, makes an election to which it may be held by the court for reasons not necessarily limited to the substantive merits of the point, but also including other factors commonly considered by courts in entertaining applications to amend. His Honour's reasons, too, preclude reliance upon waiver in the present case unless it be properly one of election.

McHugh J. considered the question at pp. 491 et seq,

observing:

"Most cases which purport to apply the doctrine of waiver are really cases of contract, estoppel or election ...

"Nevertheless, there are a number of cases in England and Australia which appear to hold that a party may waive a statutory condition conferred for his or her benefit. At least, some of them cannot accurately be categorised as cases of contract, estoppel or election. ..."

At p. 496, his Honour continued:-

"The principle that statutory conditions enacted solely for the benefit of individuals and not for the public can be waived has also been recognized in this Court on a number of occasions. ... In each of those cases, however, the defence of waiver failed on the facts or because the right was one enacted for the benefit of the public and not for the benefit of individuals.

"In my opinion, the cases to which I have referred do not establish any principle which supports the claim of waiver in the present case. ..."

And at p. 498:- where a party has done no more than consciously refuse to plead a defence or a cause of action. If, having decided not to plead a cause of action or defence, a party then seeks to amend his or her pleading before verdict, the right to amend will be governed by the principles expounded in such cases as ... If the party seeks to raise the defence or cause of action after verdict, the right to amend will be governed by the principles expounded in cases such as ... In neither case, however, will the deliberate decision not to raise the point by itself be a fatal bar to the grant of a subsequent amendment or the right to raise the defence or cause of action, and this will be so even if the party seeking to amend had previously announced his or her intention not to raise the point. ..."

"The deliberate act of the Commonwealth in not
raising the Limitation Act, or if it matters,
renouncing the defence based on that Act is not
enough to attract the principle of waiver
enshrined in the cases to which I have referred.

To the extent that there are cases of waiver beyond the categories of election, contract and estoppel, his Honour categorized them as cases involving conditions precedent to the existence of a statutory right. The reasoning of McHugh J. is inconsistent with the respondent's reliance upon waiver, unless it constituted an election.

Even the reasons of those Justices who took a broader view of waiver offer little real comfort to the respondent. Brennan J. considered that there was a doctrine of waiver apart from election, estoppel and contract. See p. 421. At p. 422-4, his Honour said:

"Waiver is a term of shifting meaning. Lord Wright
in Smyth & Co. v. Bailey & Co. said:

'The word "waiver" is a vague term used in many senses. ... It is always necessary to ascertain in what sense and with what restrictions it is used in any particular case. It is sometimes used in the sense of election as where a person decides between two mutually exclusive rights. Thus, in the old phrase, he claims in assumpsit and waives the tort. It is used where a party expressly or impliedly gives up a right to enforce a condition, rely on a right to rescind a contract, or prevent performance or announces that he will refuse performance, or loses an equitable right by laches.'

"To identify the relevant legal doctrine, it is necessary to identify the sense in which we intend to use the term 'waiver'. In this case there is no contract to admit liability ... and we can put aside until we consider estoppel the kind of waiver which depends on the suffering of detriment by a person who relies on the waiver. We are concerned here with a unilateral release or abandonment of a right. In Banning v. Wright, Lord Hailsham of St. Marylebone L.C. pointed out that 'waiver' is derived from the same root as the word 'waif' - a thing, or person, abandoned. Lord Hailsham, after citing the speech of Lord Wright, continued:

'In my view, the primary meaning of the word "waiver" in legal parlance is the abandonment of a right in such a way that the other party is entitled to plead the abandonment by way of confession and avoidance if the right is thereafter asserted.'

His Honour continued:-

"... Yet it is clear that the doctrine of waiver has long been applied to grounds of defence without reference to estoppel. In Craine v. Colonial Mutual Fire Insurance Co. Ltd., Isaacs J. distinguished waiver from estoppel, although he appeared to regard waiver as synonymous with election and the doctrine of approbating and reprobating. The sterilizing of a right might, in some circumstances be attributable to either a waiver or an election, but the doctrines are distinct, for a right may be waived though there is no alternative right inconsistent with it. As it is erroneous to treat waiver in the sense relevant to this case as synonymous with, or as a species of, estoppel it is convenient to examine these doctrines separately. There is a difference in their respective applicability to the pleas in paras. 4 and 5 of the amended defence."

His Honour then referred to a number of cases concerning waiver of statutory requirements and at p. 425 continued:-

“As it is a characteristic of a right susceptible of waiver that it is introduced solely for the benefit of one party, a condition precedent to the jurisdiction of a court to grant relief cannot be waived. ..."

At p. 426 his Honour referred to the limitation defence

and said:

"As the right created by s.5(6) is introduced solely for the benefit of a defendant who must plead the right before it is effective, the right is capable of waiver by a defendant.

"However, waiver does not apply to an element in a plaintiff's cause of action. An element in a cause of action simply does not answer the description of a right which has been introduced solely for the benefit of a defendant. It follows that the defence of s.5(6) of the Limitation Act is amenable to waiver but the issue of negligence is not."

His Honour's distinction between waiver of a stipulation solely for the benefit of the party waiving and waiver of an element of a cause of action would seem to be fatal to the respondent in the present case. Subject to one argument of construction advanced by the respondent with which I will deal later, the waiver alleged here is prima facie of an element of the cause of action, namely that there was a loss within the insured risk.

Toohey and Gaudron JJ. relied upon waiver. Although each urged a wider approach to that notion than that adopted by Mason CJ, Deane, Dawson and McHugh JJ., both limited their decisions to the question immediately before the Court, namely waiver in the course of litigation.

At p. 472-3, Toohey J. said:-
"In this appeal we are concerned with waiver as it
exists within the adjudicative process. It is
commonplace to speak of a person 'waiving' a
right, for instance, by submitting to the
jurisdiction of a court which otherwise has no
jurisdiction over him, by not insisting upon
arbitration, where an agreement so provides, by
not taking advantage of some irregularity in
proceedings or by not pressing a particular
argument that is available at trial ..."
At p. 481-2, Gaudron J. observed:-

"For present purposes the question whether there is a doctrine, be it called 'waiver' or anything else, which operates by reference to the taking of inconsistent positions rather than the assertion of inconsistent rights can be confined to the situation where, in the course of litigation, a person asserts a right to take a position which is inconsistent with one earlier taken in the same litigation.

"If, in the course of litigation, a person fails to plead a matter, take an available objection, or pursue a particular point of law, the matter proceeds on the basis that the point which might have been taken is not an issue. Were it otherwise the conduct of litigation would be unmanageable. Of course, leave may be granted for the point to be raised notwithstanding the failure to take the point at the appropriate time. Generally, leave is granted if the point can be raised without injustice to the other party. ...."

At p. 484, her Honour continued:-

"Perhaps there is a principle of wider application, but it is clear that a party to litigation will be held to a position previously taken (that position having been intentionally taken with knowledge) if, as a result of that earlier position, the relationship of the parties has changed. The changed relationship ... constitutes an equity which the other has raised."

Neither Toohey J. nor Gaudron J. distinguished between the considerations which are relevant in determining an application to amend pleadings to raise a defence not previously raised and those which might lead to such a defence, once raised being unsuccessful at the trial. As I have previously pointed out, and as was pointed out by Dawson and McHugh JJ., different considerations will apply to these two quite distinct questions. Toohey and Gaudron JJ. gave no indication as to what might be the ambit of operation of waiver other than in the conduct of litigation.

The better view is that a mere indication of an intention not to rely upon contractual rights will not generally constitute a waiver sufficient to bar a future action to enforce such rights. Waiver should not be seen as an alternative weapon to estoppel in the war against the doctrine of consideration. However, where a party elects between alternative rights available under a contract, such election will usually be final.

In the present case, the respondent argued that the appellant's actions in appointing a loss assessor and authorising repairs constituted such an election. The appointment of a loss assessor cannot indicate anything other than a desire to investigate the claim. It does not indicate an "election" to accept liability. It is arguable, I suppose, that to approve repair work is to "elect" to accept liability for the performance of such repair work, presumably a liability arising under the policy. However that is not an election in the sense contemplated in Verwayen. Obviously, a contracting party always has the right to insist or not insist upon his rights and conversely, to accept or not accept alleged liability. Such a choice is not accurately described as an election in the sense intended in Verwayen. There, the Commonwealth chose not to rely on available defences, but that was not, relevantly, an election.

A secondary argument advanced by the respondent was that because the Articulated Vehicles endorsement is found in the body of the policy and not in the list of exclusions, the policy should be construed as extending cover to the present loss, subject to an "election" not to rely on the clause. That argument places far too much importance upon the structure of the policy and not enough upon the clear intention revealed by the wording. A situation of the kind contemplated by the Articulated Vehicles endorsement is simply outside the cover. There is no question of election. This distinction may have borne greater significance had the views of Brennan J. prevailed, in that it might then have been relevant to determine whether waiver of the endorsement was waiver of an element of the cause of action. It is not necessary to take that matter further.

A third approach to the problem of demonstrating an election was the submission that the appellant had exercised a right to attend to the repair of the vehicle, thus electing between so proceeding and choosing to decline cover. To my mind, this argument is based upon a misuse of the term "right". It is unconvincing to speak of a right to repair the vehicle. Such repair is part of the insurer's obligation under the policy. Because the courts are so often concerned with insurance policies of this kind, one is inclined to discuss the matter in general terms rather than in the framework of the particular policy. However the question of what is a right and what is an obligation must be determined by reference to the terms of the policy in question. Pursuant to the present policy, the appellant was liable to indemnify against loss, damage or liability arising out of accidental loss or damage to the vehicles insured (p. 17), by repair, replacement or reinstatement (p. 21). Whilst the insurer might be said to have "elected" to discharge its obligation to indemnify in one of a number of ways, such a choice is not an "election" in the sense intended in Verwayen. Clearly, election there implied a choice between rights, not between different ways of discharging an obligation. This is consistent with common legal usage.

Support was sought in the decision in C.E. Heath Underwriting & Insurance (Australia) Pty. Ltd. v. Campbell

Wallis Moule & Co. Pty. Ltd. [1992] 1 VR 386. In that case, the Full Court of Victoria considered that to exercise a right to defend proceedings conferred on an insurer by a policy was inconsistent with the insurer's denying liability thereunder. The respondent submitted that if to elect to defend pursuant to the policy was to elect finally not to deny liability, then an election to repair should have similar effect. Implicit in the argument was the assertion that the act of authorizing repair and the act of defending proceedings were both rights capable of being alternatives to the right to decline liability, thus constituting a situation in which an election could be made.

I have demonstrated that authorizing repair was a method of discharging an obligation, not the exercise of a right. The appellant was also obliged to indemnify the respondent in respect of, "law costs and all charges and expenses incurred with the written consent of the insurers or which may be ordered to be paid in respect of any legal action which is defended with the written consent of the insurers." This was an obligation to bear the cost of legal proceedings, not to conduct them. (See p. 23). The appellant also had the right to defend certain proceedings on behalf of an insured person (see p. 24) as did the insurer in C.E. Heath Underwriting. To elect to defend proceedings pursuant to such a clause might well be to elect between that right and the right to decline liability for some reason, but that is not the present situation. For these reasons, C.E. Heath Underwriting is of no assistance to the respondent.

In my view, the decision below proceeded upon the basis that there was an independent doctrine of waiver separate from estoppel or election. The better view is that there is no such doctrine. In the absence of an estoppel or election, there was no justification for depriving the appellant of the benefit of the Articulated Vehicles endorsement. I would allow the appeal, set aside the judgment below and enter judgment for the appellant/defendant who should also have the costs of the action and of this appeal.