Manufacturers Mutual Insurance Limited v Withers

[1988] HCATrans 169

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S67 of 1988

B e t w e e n -

MANUFACTURERS MUTUAL INSURANCE

LIMITED

Applicant

and

ROGER WITHERS

First Respondent

and

THE STATE COMPENSATION BOARD

formerly known as THE WORKERS'

COMPENSATION COMMISSION OF NEW

SOUTH WALES

Second Respondent

Application for special leave to

Withers

appeal

MASON CJ
BRENNAN J

DEANE J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 12 AUGUST 1988, AT 9.39 AM

Copyright in the High Court of Australia

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MR C.G. GEE, QC:  May it please Your Honours, I appear with

my learned friend, MR J.D. HISLOP, for the

applicant in this case. (instructed by Dexter,

Healey & Co)

MR P.D. CUMMINS, QC; If Your Honours please, I appear

with my learned friend, MR W.P. KEARNS, for the

second respondent. (instructed by J.A. Kernick)

MASON CJ:	Yes, Mr Gee.
MR GEE:	Your Honours, the Court of Appeal disposed of

the matter simply on a construction question
as to the meaning of the policy. If it were
the case that Their Honours were in error in

the conclusion that they reached then the situation

would be that His Honour the Workers Compensation

Judge would have been held to be correct in his

approach to the construction of the policy, namely,

that it covered only the business of fuel carrying -

I pause - and repairing as he held, and the question

would then be whether there was any evidence

upon which he could rightly conclude that what

was involved in the case, namely, the carrying

of bricks, fell within the embrace of that description

and it would ultimately be a question for a Court

of Appeal as to whether he properly so concluded.

The Court of Appeal not having dealt with

that question because they treated it as a construction

point only, it would obviously leave us in the position of this Court having to come to grips with that ultimate question and that is included

in the notice of appeal. That is the preliminary

problem, that it is not quite as simple as whether

the Court of Appeal correctly approached the

question of construction or not.

Your Honours, turning then to what happened

in the Court of Appea 1: the bases upon which

we would respectfully suggest that this is no

mere question of construction inter partes which

is best left to rest at Court of Appeal level

is by asking this Court quickly to examine the
approach that was taken by Their Honours in the

Court of Appeal and to found our submission to

this application that principles were involved

and principle or supposed principles were put

forward relevant to all construction cases.

May I then, respectfully, turn to what

His Honour Mr Justice Hope wrote. Having set

out the facts, Your Honours, and the approach

taken by His Honour the Workers Compensation Judge,

at page 32 His Honour Mr Justice Hope, first

of all, dealt with the question of what the words

really did mean, the words "fuel carrying and

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repairing 11 and he dealt at that page with the

question of whether one could, legitimately,	treat the word 11 fuel 11 as adjectival, qualifying
the word 11 carrxing 11 or whether one could treat
the word 11 fuel' as being nominative and standing
alone so that one had the business of fuel, the business of carrying and the business of repairing.
And he asked himself the question, 11 If fuel was adjectival and qualified the word 1 carrying'? 11 ,
then it would be an odd usage because one would
then be compelled to read 11 fuel 11 as also qualifying
the word 11 repairing 11 , leading to a linguistic
oddity.

We would respectfully submit that that process

11 fuel 11 was adjectival and qualified 11 carrying 11	is not necessary and the finding that the word
does not carry with it the necessary consequence that it also qualifies 11 repairing 11 • Having engaged
in that process, Your Honours, His Honour
Mr Justice Hope then acknowledged, at page 32
line 25, that the construction put on the language
by His Honour the Workers Compensation Judge
was a possible one, although, he would ·have said,
not the only construction that was available.

That acknowledgment, in our respectful submission,

throws up at the lowest the question of whether

what is involved here really was a question of

law or a question of fact in the appeal to the

Court of Appeal, given that His Honour at first

instance was said to have adopted a construction

which was a possible one, it does not, in our

respectful submission, ipso facto follow that

an appeal from that reasoning and that decision

was simply a question of law. It was treated

as a fair question of law by His Honour

Mr Justice Hope but it does not necessarily follow

and I will not, at this stage, just deflect myself

by authority but put the point.

Your Honours, so far nothing I have said

would have, perhaps, attracted the Court to the

notion that there was any wide question involved

but, Your Honours, at 34 and following His Honour

Mr Justice Hope proceeded to set out what he

regarded as being the principles involved in

the approach to this problem. And at 34 line 20,

after setting out his reasoning in relation to

the ambiguity that he said existed in the language:

In these circumstances is it permissible
to go to any extrinsic circumstances to
interpret the words describing the business

to which the policy applied.

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He then referred to the primary rule:

that it is not permissible to go outside
the document to assist in the

interpretation -

and he cited the, with respect, well-known passage

of His Honour the Chief Justice in CODELFA and

then set out the insurer's submission:

that this rule would not allow evidence

to be tendered of the nature of the business

or businesses in fact carried on by the

employer for the purposes of interpreting

the descriptive words, for those facts were

not known to both parties and were not notorious.

And then His Honour went on, at line 17:

This lack of knowledge must be conceded -

and, with great respect, that is important because
a lot follows from the fact that it was.taken
by His Honour as read that the insurer; indeed,
did not have the same knowledge of the relevant

circumstances as did the proposing insured -

but nonetheless I have concluded that evidence

as to the nature of that business or those

businesses could be received and used as

an aid in interpretation.

No question of notority arose, I add, Your Honours.

So, thus was thrown up, Your Honours, the question

of how, notwithstanding the statement in CODELFA,
one could have an admission for construction
purposes of knowledge of one party only and,
with that problem, His Honour then proceeded
to deal and he then dealt with some cases that

spoke of the rules as to the admission of extrinsic

evidence and acknowledged at 36 line 33,

Your Honours:  It is undoubtedly true that when the

facts of these cases are investigated, it

will be found that the evidence to which

it has been held reference can be made for the purposes of interpretation is evidence as to matters of which all parties to the

contract had knowledge. However I see nothing

in principle or in the authorities which would exclude evidence known only to one

party in appropriate cases. It will have

been noticed that in the passage I have

quoted from the judgment of Mason J -

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as Your Honour then was -

1n CODELFA the last sentence is ~ualified by the words "generally speaking'. In my

respectful opinion that is a necessary and

important qualification.

Your Honours, pausing there, this, in our respectful
submission, is starting to advance in the general

law of admissibility of evidence in aid of

interpretation of documents, into a distinctly

unploughed area and the two examples that

His Honour then proceeded to give to support

the proposition that he just put forward do need

examination for the purposes of this application.

May I, incidentally, apologise for taking up

so much time in going to the judgments on a leave

application but I have to do so, Your Honours,

to try and make good my ultimate point.

MASON CJ:	Yes, we understand that.
MR GEE:	His Honour gave two examples at 37 in re\ation

to a contract for sale of a house at Chatswood

with no other identification:

evidence is admissible to show that both

· parties knew what house was being ref erred.

Your Honours, with great respect, that is a

proposition with which there could be no quarrel

since the question that is involved there is

proof of the knowledge of each party not the

question of whether matters unilaterally known

may be admitted in aid of the construction of
the document which, in our respectful submission,

are very different concepts.

Then His Honour went on, at line 9:

But suppose that, although it may be unlikely,

the vendor says to somebody who is verft

anxious to buy a house in Chatswood: 'I

have a house in Chatswood. It is in excellent

repair and I  know it will suit your purposes",

and that other person, without further

identification or· knowledge about the identity

of the house, agrees to buy it and the agreement
is duly recorded in those terms in writing

together with the price.  I have no doubt

that there is a valid contract and that

extrinsic evidence can be given as to the

identity of the vendor's house in Chatswood.

The purchaser has accepted that as a sufficient description of the house for his purposes,

and all that remains to be done is to identify

it.

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Your Honours, again, with great respect to

His Honour, His Honour is speaking about a bare

question of identification where, to the knowledge

of both parties, only one house can possibly

fit the description. It is true that one of

the parties does not know precisely which house
in this extreme example, but both parties at

least know that only one house can meet the

description. And so, again, we are not talking

about the problem that has been posed by this

case.

Then His Honour went on, at line 21:

If of course the vendor owned two dwelling

houses in Chatswood, there would be no

enforceable contract and evidence would

not be admissible as to what house the vendor
had, in his own mind, intended to sell.

Again, with great respect, Your Honours, we rather embrace that as making our point. Here

the question was: to the knowledge of the proponent

he had more than one business; he communicated,

on the view we embrace, only one business

and the process that is now sought to be engaged

in is the admission of his unilateral knowledge

to do precisely what His Honour, in that passage,

acknowledges is not available, namely, to make

a choice between two possibilities where only one party knows which of two possibilities is

available.

So, in our respectful submission, Your Honours,

if this matter went to full argument, the Court

would be asked to consider what we respectfully

submit is an important question, namely, whether

the sort of reasoning and the principle that

His Honour advanced as to the admissibility of

unilateral knowledge is, indeed, a legitimate

extension of what has already been decided.

MASON CJ: Yes. It may almost come to this, that if the

insured gives an ambiguous description of the

business that he is carrying on then the insurer

must face the consequences that the insurance

policy may cover that which is, in fact, the

business carried on by reason of the ambiguity.

MR GEE:  That is, with respect, of course, a possibility

and it appealed to His Honour Mr Justice Hope

as being at least one of the factors involved. is that it could beg the question as to, first,

whether there is an ambiguity in this case, a matter
which is, by no means, as clear as those below

would have put; and, secondly, whether in those

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circumstances one is really dealing with a question

of interpretation at all.

MASON CJ:  But it is difficult to resist the proposition

that there is an ambiguity here, is it not, Mr Gee?

MR GEE:  There are competing choices, with respect,

Your Honour. There were three set out as

possibilities in His Honour Mr Justice Hope's

judgment, one of which,"fuel carrying and fuel

repairing:' may readily be rejected. So the choice

is between"fuel carrying and repairing': "fuel,
carrying and repairing'! The fact that there

is a choice may give .rise to the question of ambiguity but that is not the same as saying

that, in our respectful submission, there is

a necessary ambiguity. That question will be

resolved, in our respectful submission, by looking

at the document and the words that were chosen and rather than deep philosophical analysis of

all the linguistic possibilities a decision might

still be made that there was no real ambiguity

when one looked at the whole of the document.

BRENNAN J: If that were so, Mr Gee, would this be a special

leave case?

MR GEE:  It would, Your Honour, in our respectful submission,

because there would simply have been shown to

have been error below.

BRENNAN J: Quite. In other words, let it be assumed special

leave is given. I take it you would then submit

there is no ambiguity in order to support a

submission that the judgment should simply be

that on a true construction of this document
there is only one business meant and that is

the carrying of fuel.

MR GEE:  Two, perhaps, Your Honour, 'repairing'must play

some part in the equation.

BRENNAN J: That does not sound to me like a special leave

point.

MR GEE:  But, Your Honour, if leave is not granted that

submission, however well founded, can never be

made with the consequence that unless on this

application the Court was prepared unequivocally
to say that the ultimate submission of no amgibuity
must fail then it would be, in our respectful

submission, unjust to refuse special leave.

DEANE J: Was there anything in the proposal about the

consequences of an ambiguous description of the

business or is it only in your client's document,

the polic½ that one suddenly finds that the

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result of an ambiguous description may be that

you are not covered at all?

MR GEE:  Your Honour, I can only answer that by saying

that the descriptive words, subject to a spelling

error which was ignored on all hand, was identical

in both documents.

DEANE J:	But that begs the question, does it not, because
if in the proposal the insured is only asked to identify his business and the insurer then takes an ambiguous identification as part of
its document and limits liability by reference
to that ambiguous identification, I would have
~hought the ambiguity lay on the head of the
insurer.
MR GEE:	Your Honour, I have tried to put what I had

a moment ago about the question of the insurer being stuck with accepting that situation and,

assuming against myself for a moment that that

proposition must be good, does it not still remain

the case, Your Honours, that the case cannot

be left there. There is an ambiguity.· The question

then comes: how does one resolve it? In our

respectful submission, it has been resolved by

a process that is not legitimate in this case.

So that the quest ion then becomes, 1 'How do you

ever resolve it?", and that is answered in this

case where a non-legitimate process has been
engaged in by resort to such things as, "Well,

it is ambiguous and there is no way of resolving
it so it is void for uncertainty.and other legal

doctrines come into play."

DEANE J:	The way to resolve it may be that if the ambiguity
is on the head of the insurer you identify the
business that the ambiguous phrase is referring to, which His Honour Mr Justice Hope did.
MR GEE:	Yes, Your Honour, but we could, with great respect,

reverse that with equal force, in our respectful

in terms of the insurer accepting an

submission, by calling in a contra proferentem. expressed

ambiguously worded risk?

DEANE J:	But that jumps what I was putting to you, Mr Gee, and that is, if the insurer took an ambiguous
phrase from a proposal which did not make plain that the ambiguous phrase would be treated as the basis of limiting liability and then adopts it as its document, as I say, I would have prima facie thought that the ambiguity became the insurer's for the purpose of the policy.

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MR GEE:  I do not know that this is an answer to

Your Honour, there was a basis clause in the

proposal but that, I am conscious, does not

necessarily solve the problem that Your Honour

is putting.

MASON CJ:  Mr Gee, what do you say about Mr Justice Mahoney's

approach to the case which resulted in the resolution

of the question as a matter of interpretation without recourse to surrounding circumstances

at all? Why is not His Honour's interpretation

the aatural interpretation one would place upon

these words?

MR GEE:  I was going to put two things about it, Your Honour.

The first is that the fact that His Honour did

not try to resolve the question by resort to

the principles that His Honour Mr Justice Hope

put rather suggests that His Honour Mr Justice Hope

might have been going beyond what had been decided

in relation to that question but, turning to
the question that Your Honour put immediately,

it has to be accepted that as a matter of linguistics

an available interpretation is the one·put and

we do not shrink from that. The difficulty,

Your Honour, is that of the four judges who have

had to wrestle with the words the interpretation

accepted by His Honour Mr Justice Mahoney, and
it would seem accepted by His Honour Mr Justice

Hope, has appealed to only two of the four.

Indeed, Mr Justice McHugh made it clear that

if he had been considering the matter he would

not have done it one the basis of simply resolving

it in the way that it was done.

He said that, in his view, evidence of

surrounding circumstances woulcl be admissible -

and I am inserting a word - "only" if it is

known .. to both partiesor sufficiently notorious

to be presumed within their knowledge and,

Your Honours, in our respectful submission, one

cannot simply solve it where judges have taken

such disparate approaches to the question and

felt the needto engage in such advanced consideration

of the extrinsic evidence rules without further

consideration, in our respectful submission,

by this Court.

I am obliged to Your Honours, they are the submissions for the applicant.

MASON CJ: Thank you, Mr Gee. Despite the forceful arguments

that have been put to the Court by Mr Gee, we

have come to the conclusion that this application

should be refused.

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The question here turns upon the interpretation

of particular words in an insurance policy.

The resolution of that question, in the circumstances

of this case, is unlikely to result in an elucidation
of the general principles of the interpretation
in the field of contract law. It is suggested
that the case calls for elaboration of the
circumstances in which courts can resort to

surroundine circumstances for the purpose of

resolving an ambiguity in a contract. In

our opinion the case is not a suitable vehicle

for that exercise.	The application is therefore
refused.

Do you ask for costs, do you, Mr Cummings?

MR CUMMINGS:	Yes, indeed, Your Honour.
MASON CJ:	You cannot resist that, Mr Gee?
MR GEE:	No submission, Your Honours.

MASON CJ:  The application is refused with costs ...

AT 10.03 AM THE MATTER WAS ADJOURNED SINE DIE

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