Wallaby Grip Limited v QBE Insurance & Anor.doc; Stewart v QBE Insurance & Anor

[2010] HCATrans 2

[2010] HCATrans 002

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S281 of 2009

B e t w e e n -

WALLABY GRIP LIMITED

Applicant

and

QBE INSURANCE (AUSTRALIA) LIMITED

First Respondent

IRENE STEWART (AS LEGAL PERSONAL REPRESENTATIVE OF THE ESTATE OF THE LATE ANGUS CLUGSTON STEWART)

Second Respondent

Office of the Registry
  Sydney  No S284 of 2009

B e t w e e n -

IRENE STEWART (AS LEGAL PERSONAL REPRESENTATIVE OF THE ESTATE OF THE LATE ANGUS CLUGSTON STEWART)

Applicant

and

QBE INSURANCE (AUSTRALIA) LIMITED

First Respondent

WALLABY GRIP LIMITED

Second Respondent

FRENCH CJ
GUMMOW J
HAYNE J
HEYDON J
KIEFEL J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON TUESDAY, 2 FEBRUARY 2010, AT 10.16 AM

Copyright in the High Court of Australia

__________________

MR B.W. WALKER, SC:   May it please the Court, in S281 of 2009, I appear with my learned friend, MR D.J. RUSSELL, SC, for the appellant and in the other appeal I appear with him for the second respondent.  (instructed by Middletons Lawyers)

MR D.F. JACKSON, QC:   If the Court pleases, I appear with my learned friend, MR D.R.J. TOOMEY, for the second respondent in S281 and for the appellant in S284.  (instructed by Turner Freeman Lawyers)

MR A.J. SULLIVAN, QC:   May it please the Court, in each of these appeals, I appear with my learned friends, MR G.F. LITTLE, SC and MR D.T MILLER, for the first respondent.  (instructed by Moray & Agnew Solicitors)

FRENCH CJ:   Is there an agreed order of argument?

MR WALKER:   Yes there is, your Honour.

FRENCH CJ:   All right, Mr Walker.

MR WALKER:   Your Honours, the issue in this case is not one that had been confronted or raised in the arguments which were decided by the various authorities, both cited in the reasons below and, for that matter, cited in the written submissions by all parties that your Honours have seen.  That is because the concern of the case law, in relation to so‑called exclusions or limitations, being the case law pressed upon your Honours, has been concerning what might be called the application or operation of a conceded exclusion or limitation as to which there are well known, if not entirely clear in articulation and operation, propositions to be found in the case law concerning the allocation of onus of proof.

That case law seems to have been drawn on below to an extent and is manifestly sought to be applied by way of near analogies by the various parties for their opposite reasons to a somewhat different and logically anterior issue in this case, namely, where the policy document – there being a requirement for a document – has been left unknown to the deciding court.  Shorthand would be it is a lost policy.  We do not actually know whether it was lost but it may be an inference from the fact that QBE was not able to produce it when sought.  What happens when there is a lost policy in that sense, and the question arises whether the obligation of indemnity is subject ‑ ‑ ‑

GUMMOW J:   Is there not a threshold evidentiary question about lost documents and best evidence?

MR WALKER:   Yes, there is.  That is why I have said shorthand might be used to save my longwindedness about calling it a lost policy.  We cannot actually say in this case there was not a threshold finding for the admission of secondary evidence, for example, such as the rules of evidence would have required.  In particular, there was not the evidence of search, et cetera, et cetera, which would have produced an inference of loss. 

Strictly speaking, all we know is the party who was in a position from information that may be only surmised at to make an admission as a successor that it was successor to an entity which had been the indemnity insurer – that is the pleaded expression - we know that that party, of all the parties before the Court, was the only candidate for, in the nature of things, having the document.

We also know that there was court process issued to compel production of the document, or for that matter, of any record which might be secondary evidence of a term containing a monetary limit, and we know there was no production.  Beyond that, we cannot really go, although I confess we would not strenuously resist an inference having been drawn, though that none was drawn.

Now, it means that the issue in this case differing from the case law in the respect I have identified, starts with the admitted proposition that QBE was to be treated as the insurer, that is, was responsible for the position of the insurer, not a putative insurer but an admitted insurer.  Your Honours will recall the way in which these issues arise so as to make us have a concern that brings us to this Court is that we also had judgment entered against us for the damages in question.  If the policy of indemnity responded at all, then we would be sharing that burden with the insurer of Pilkingtons, the deregistered, defunct as it were, insured employer.  The question is to what extent that burden is shifted or shared.  Your Honours appreciate, however, that at stake in this case is a principle which will apply just as surely in a case where there is no sharing, where there is only, for example, one defendant, a defunct employer, once insured – perhaps intervals of 40 years or more may have expired, records have been lost ‑ ‑ ‑

FRENCH CJ:   What do we know about the policy?  We know that it would have been in the form prescribed in the relevant regulations.

MR WALKER:   No, we do not.

FRENCH CJ:   Why do we not know that?

MR WALKER:   We know by admission, not by inference.  We know by admission that QBE was answering for the insurer’s obligations, Eagle Star, being what was called in the first subparagraph of paragraph 4 of the defence the indemnity insurer and then go to the fourth subparagraph - there is a reference to the statute.  From that we know that they were the indemnity insurer within the meaning of the statute.  From that we know they provided indemnity against liabilities of a kind which were in question in this case of the employer, Pilkingtons, and it was indemnity of at least at the time $40,000.  Now, that is what we know, that comes from the statute.

The prescribed form forms we think an important part of an argument which seems first to have surfaced in resistance to special leave and is, of course, entirely properly put before this Court.  It is now relied upon by QBE   in this Court on this appeal.

FRENCH CJ:   This is that extension is by endorsement.

MR WALKER:   This is the argument that says – and I apologise if I have mistaken the nature of the argument against us, but we think it is an inference of fact argument, though that is not the way in which the case was put below – I do not protest about that.  We think it is an inference of fact argument.  We think it says because this is the prescribed form, and an actual endorsement on or with the form is necessary to differ from the form, therefore in the absence of any evidence, one – and I think the word is “infers” - perhaps I could be unkind enough to say it really means presumes – one presumes or infers that there was no departure from the form.

Now, with great respect, that argument really does bring to a head the issues between the parties because behind those contentions I have attributed to our opponents is of course the proposition that it was for us to show that there was an endorsement.  However, we would start by saying no, what was admitted between these parties, leaving the issues to be understood about which onus required to be allocated according to the nature of those issues, what was admitted was that they were the statutory indemnity insurer.

Now, it need hardly be said, given the way Justice Brereton has fully explained this point that the nature of indemnity insurer, taken literally, of course admits of no limit.  The indemnity is a reflex of the liability for which the indemnity is granted and, indeed, that is true for the workers compensation component of the cover.

KIEFEL J:   Does that raise the question of whether or not this is truly indemnity insurance?

MR WALKER:   If one is to look at the literal meaning of the word “indemnity” a linguistic question is raised.  However, the statute says that what is to be provided is indemnity and then for the common law ‑ ‑ ‑

KIEFEL J:   I think it says “insurance or indemnity”, does it not?

MR WALKER:   Your Honour, the wording is “a policy of insurance or indemnity” and then follows after that phrase:

for the full amount of his liability under this Act to all workers employed ‑ ‑ ‑

KIEFEL J:   Which would be referable to an indemnity and then for a minimum amount which might be referable to liability insurance per se rather than indemnity insurance.

MR WALKER:   However, of course, below whatever limit, if any, in relation to the common law liability there is no question, in accordance with ordinary insurance principles, that all that is being granted is an indemnity, that is, as much as the liability of the insured and no more.  In that sense, of course, it is always going to be indemnity. 

KIEFEL J:   You mean because it is referable to actual loss?

MR WALKER:   Yes, yes or there is no question of agreed value or the like it is only going to be indemnity.  It is going to be as complete indemnity in the absence of a limit or below a limit for common law as it would be for workers compensation.  However, the language is clear in the statute.  There may be a limit on the insurance or indemnity which is provided pursuant to a policy issued in performance of the obligation imposed by section 18(1).  There may be a limit.

Now, I say “may be” because the statute stipulates for a policy of insurance or indemnity for an amount of at least $40,000 and to comply with such a requirement one has the full and infinite range – I should not say infinite – one has really the full range of policies naming maximum amounts $40,000 or more - any figure more than $40,000 as well as $40,000 itself - and, of course, one has the other category, the possibility, by no means unknown in commerce, namely unlimited common law cover and all of those policies would equally satisfy the statutory requirement.

What is interesting in light of, with great respect, Justice Kiefel’s proper distinction between the position for the workers compensation and the position for the other or common law liability, what is interesting is that the shorthand of the pleading asserted the existence of insurance of indemnity, but the even shorter hand of the defence asserted and admitted that Eagle Star had been the indemnity insurer, for which QBE now answered.

HAYNE J:   I am sorry.  Can you put that again and put it by reference to the exact expression?

MR WALKER:   The exact provision in the pleading your Honours will see is in 4(a).  It is referred to in a number of different places, page 74 it is quoted in the joint appeal book. 

FRENCH CJ:   We are looking at page 13, are we, the defence?

MR WALKER:   Of the defence, your Honour. 

FRENCH CJ:   Yes, page 13.

HAYNE J:   In response to page 3, paragraph 6?

MR WALKER:   That is right. 

HAYNE J:   Now, what is the point you made about that?  I do not follow it.

MR WALKER:   It is a very small point.  The language is indemnity insurer.  That is what QBE says is the nature of the party for whom it answers. 

HAYNE J:   Yes, in response to a plea, which was that the defendant agreed upon payment of premiums to indemnify against liability.

MR WALKER:   To indemnify against liability.  That is correct and that is my only point.  I draw it to attention because, with respect, Justice Kiefel correctly points out insurance or indemnity and points out the unlimited compulsory nature of the workers compensation cover and the possibility of maximum – that is, of a limit to common law cover.

When the parties came to set the issues they set the issues in terms of indemnity for liability.  One sees the second sentence of paragraph 6 of the pleading – the section 6 part of the pleading – which, if it was necessary, underlines the indemnity proposition by talking about indemnifying in respect of all liability.  So that was the issue to which the shorthand defence was “Yes, we answer for Eagle Star as an indemnity insurer”.  Then there was a non-admission of cover over what was called the statutory minimum.  That has been by dint of the onus reasoning in the reasons below to which may now, I think, be added a kind of factual inference attempted in this Court an answer by QBE that says that that statutory minimum became an actual maximum in this case.

Could I take your Honours to the way in which the reasoning appeared in the Court of Appeal starting at page 66 of the joint appeal book in the reasons of Justice Ipp.  In paragraph 4, about line 50, his Honour said:

The amount of cover provided by a policy of insurance is an essential term of the contract between insurer and insured.  The cover may be for a specified amount or may be open-ended. 

Together, those two sentences mean, of course, that his Honour has in mind that there needs to be nothing expressed in numerical terms.  It may be simply described in generic terms, such as classically, a complete indemnity provision.  Then his Honour refers to first principles, and we think that may be a reference to “He who asserts must prove”.  It is not clear if there is anything else. 

the onus was on the plaintiff to prove the amount of the cover provided ‑ ‑ ‑

GUMMOW J:   This is all as if there is no statute at the root of it.  What is at the root of it is section 18 of the Workers ‑ ‑ ‑

MR WALKER:   I cannot fairly say that, your Honour, because of paragraph 2 of his Honour’s reasons.  It is, however, with respect, true that in paragraph 4 his Honour is not – at least at that point in his reason – employing the presence or operation or, as we would say, compliance with the statute as it should have been.  So in paragraph 4, these first principles are said to allocate to, in this case it turns out to be the widow pursuant to the statutory cause of action, to prove the amount of the cover provided, that is whether it was for a specific amount or whether it was open-ended. 

Our answer, of course, is well, no.  The existence of the statute and the admitted compliance with the statute produces cover of at least $40,000.  There is no question of an incomplete negotiation, that is a failure to make a policy.  There is no question of uncertainty, that is reference to a maximum but in such a way as not to permit calculation.  There is simply a reference to “at least $40,000”.  That is, by definition, open-ended.  It is not to be contrasted with “at least $40,000” – that expression.  It does not call for a specific amount.  It is not necessary there be a specific amount, so long as if there is one it is not less than $40,000.  None of that is taken account of in paragraph 4 of the reasons.

On page 67, Justice Ipp then moves to the question of what he calls evidence.  His Honour identifies that body of evidence as:

that which gave rise to the inference that the cover was at least $40,000.

That rather makes our point, rather than hurts it, quite so, at least not at most.  Then his Honour says, in what we submit was a fallacy of reasoning:

Therefore the case had to be resolved on the basis that cover of $40,000 only was provided by the policy.

One moves from “at least” to “at most” through the pivot of “therefore”.  In our submission, that is illogical.  Then his Honour says, returning to the question of evidence or what it supports by way of inference:

There was simply no proof that the parties agreed upon cover to a greater extent.

If it means to a greater extent than at least $40,000, then of course we respectfully agree with his Honour there was no proof of anything other than at least $40,000.  But by now his Honour in his reasoning erroneously has said that “at least” meant “at most”.  Then the last sentence:

There was certainly no proof that the cover was open-ended.

But if there is cover of at least $40,000, it is open-ended.  Now, paragraph 6 is, with respect, correct so far as it goes, or at least granted the premises already established:

The fact that QBE could not produce the policy does not transform the onus of proof -

However, the error is that there had already been an admission of a binding, effective policy of indemnity, an indemnity insurance.  It is just that there was no admission that it was for greater than what was called the minimum level of cover.  But the minimum level of cover is precisely that, a minimum level of cover, and therefore the admission of course is of an open‑ended policy.

In paragraph 7, notwithstanding the correct observation that his Honour had made in paragraph 4 that there need not be a specified amount, his Honour shrinks the issue in the case:

The true question is . . . what was the amount of the cover?

In our submission, one cannot at that point depart from the proposition that all we knew is that the amount of the cover was at least $40,000.  “At least $40,000” is consistent with not only $40,000, but with every sum greater than that.

KIEFEL J:   I suppose it depends how you put it.  It is not perhaps incorrect to say that the question is what is the amount of the cover, but another way of putting it in your argument would be what is the ceiling?

MR WALKER:   Yes.  Is there a ceiling?

KIEFEL J:   The amount insured is often seen as the ceiling.

MR WALKER:   Is there a ceiling?

KIEFEL J:   Yes.

MR WALKER:   But any figure that is expressed by the phrase “at least $40,000” we know for sure it is not only $40,000.  That is the only purport, semantically the expression “at least”.  It says there is a range, the lowest end of which is 40 and the highest end of which is unlimited.

HAYNE J:   Can I interrupt you and take you back to 18(1)?

MR WALKER:   Yes, your Honour.

HAYNE J:   This phrase “policy of insurance or indemnity” which we see is a defined expression.

MR WALKER:   Yes.

HAYNE J:   But what is the effect, if any, that is to be given to the two different terms – “insurance” and “indemnity”?  Is anything to be gleaned from the fact that the indemnity must be for the full amount of his liability under the Act, that is the statutory liability under the Compensation Act?  Is insurance to be understood as monetarily limited, or am I simply cutting up what should be treated as a single global expression “policy of insurance or indemnity” which should be not be further subdivided?

MR WALKER:   No.  It lends itself and by both the words and concepts to subdivision, that is, there are components of the policy.  On the other hand it is single or global in the sense that all those components must be present in order for the statute to be complied with.  That does not answer Justice Hayne’s question completely.  We respond by saying that assuming that the phrase “insurance or indemnity” severally indicates that it is indemnity for the first of the components of cover, namely, full amount of statutory liability – the draftsman seems to have reversed the order, but I cannot make really anything out of that – and the second component, assume that that is the insurance, nonetheless, it is insurance of the nature of an indemnity, that is, the cover provided is a reflex of the insured’s liability to another subject to – and I stress the possibility of, neither the certainty of nor the probability of, simply the possibility of, which really means the lawful capacity to agree on, a limit so long as that limit is no less than $40,000.

It is for those reasons that although there is the distinction between indemnity in the ordinary meaning of that word which conveys its completeness and an indemnity in the rather looser use of that expression which contemplates a limited indemnity, not an impossible contradiction in terms in commerce even if it is in logic, that difference rather dissolves when one sees that the statutory wording is only “at least $40,000”.  It is not “at most $40,000” or “for $40,000” with a statutory liberty to agree a higher figure, which is really the statutory scheme that would have fitted the approach the QBE is taking now.

It was a statutory scheme by which there was the open‑ended insurance or indemnity for common law liabilities with a capacity to agree case by case with an employer depending upon the perception of risk and the capacity to make a bargain.  These are not contracts where, as it were, one starts with the proposition that from the heavens there descends a policy binding two private parties which will be in such a form unless otherwise agreed.  There has to be an agreement on cover, and there was no exploration of and it is left purely to conjecture or surmise as to how the various interests and positions of Pilkingtons and Eagle Star may have been at the periods in question concerning the real factual likelihoods of there being any limit or being a limit higher than $40,000.

GUMMOW J:   Well, what do you say is the distinction between, on the one hand, a policy of insurance and, on the other, a policy of indemnity, to the extent to which there is not a complete overlap between them?

MR WALKER:   Your Honour, in this case for the reasons I have put there is no distinction because in both cases the cover is purely a reflex of a liability owed by the insured to another.  Both are indemnity in that sense.  Now, that is not the only sense in which indemnity is used in relation to insurance.  It has a wider more general meaning which encompasses, for example, the cover being provided being or calling for the insurer to pay simply an amount which is a reflex of the loss actually suffered by the insured falling within the indemnity provisions.

The word “insurance” or the expression “insurance or indemnity” does convey the fact, explicit on the face of subsection (1), that whereas completeness is required in relation to workers compensation liability, completeness of cover is not required in relation to common law liability.  That is the only distinction.  It appears completely and for all purposes sufficiently on the face of this statute.  There is not called up, in our respectful submission, any other body of lore or law in relation to insurance or indemnity.

FRENCH CJ:   Regulations prescribing the conditions of the policy referred, am I correct in saying, to employers’ indemnity policy?

MR WALKER:   Yes, and of course, just to complete the reference to the prescribed form, that is the form as QBE now argues, that uses the phrase “not exceeding”, which does, as it were ‑ ‑ ‑

FRENCH CJ:   Is there any contest that the relevant policy would have followed that form?

MR WALKER:   Absolutely.  There is a contest.  We have said that Eagle Star was the indemnity, so when we said, we argue that as the widow pleaded and was admitted, Eagle Star was the indemnity insurer.  There was no factual exploration permitting one to assign any greater probability to an unendorsed statutory form than to an endorsed statutory form.  The statutory obligation was for at least ‑ ‑ ‑

FRENCH CJ:   Putting to one side the question of endorsement I am saying ‑ ‑ ‑

MR WALKER:   It is endorsement which would lift the figure from ‑ ‑ ‑

FRENCH CJ:   Yes, I understand that, but just putting to one side the issue of endorsement ‑ ‑ ‑

MR WALKER:   For everything except the not exceeding $40,000 of course there is no contest that otherwise the language, including the language of indemnity found in the prescribed form, is the statutory policy.

FRENCH CJ:   That is what is required by section 18(3) and Justice Ipp said it was common ground the employer had complied with 18(1) by obtaining such a policy from QBE.  We are not speculating about the possibility of some ‑ ‑ ‑

MR WALKER:   All I am jibbing at is the not exceeding $40,000.

FRENCH CJ:   I understand that, yes.

MR WALKER:   Everything else, of course, the answer is, yes.  Paragraph 7 concludes then at about line 35 with Justice Ipp moving to the language of a fact finding:

Thus, an inferred provision fixing cover at $40,000 (because that was the minimum cover –

In our submission that is not self‑explanatory reasoning.  There is no presumption, for example, that the cover least beneficial to an insured would factually be more likely than a more commercial figure.  Then his Honour refers, in deference to the arguments as they had been presented, to the proposition that that is the provision which is not an exception to any obligation, a reference, very tersely, to the argument concerning onus that you saw in the case law with which I started.

Justice Gyles deals with this issue commencing first in laying out the material available.  Starting on page 74 in paragraphs 26 and following, and having set out, with respect, usefully and completely the relevant provisions and documentation which continues right onto page 78 in paragraph 33 with the operative clause, I draw to attention the emphasised expression, one finds then on page 81 in paragraph 40 – in discussing some of the case law - his Honour distinguishing a decision by saying on line 49:

In that case the policy itself was complete and required no supplementation to give it effect, although the recital provided a basis for supplementing it if the proposal could be proved.

I interpolate in this case the admitted policy is complete and means no supplementation.  Indemnity against common law liability of at least $40,000 is open‑ended.  On page 82 at the foot of the page, paragraph 44 introduces his Honour’s consideration of that strand of the argument below, concerning:

the burden of establishing a condition of, an exception to or a limitation upon liability -

and that turns out to be really a reference to the case law concerning the operation of a conceded, agreed or established exception, et cetera.  That follows from consideration of the general propositions expressed by Sir Frederick Jordan, quoted in paragraph 45 by Justice Gyles on page 83 of the joint appeal book from Kodak 42 SR (NSW) 231 at pages 236 to 237. In turn, Sir Frederick was quoting from Mr JusticeBailhache’s so‑called rules – called by His Lordship “rules” – in Munro Brice to which your Honours see the reference halfway through that passage.

Then in paragraph 46 his Honour correctly points out, with great respect, last sentence that the principles in question that he has just noted:

apply where the terms of the contract are known –

That is the difference from this case –

and some of them can be described as conditions, exceptions or limitations.

In paragraph 47, however, his Honour notes the argument on our behalf that:

the policy has been admitted as being responsive . . . was akin to an exception or limitation once the obligation to insure was established as it was here.

Now, I think that obligation to insure is really a slip for obligation to indemnify.  Then in paragraph 48 on page 84, which contains really the nub of the reasoning, his Honour says of those principles to which Sir Frederick Jordan had referred, that they:

have no application where the question is whether a term is included in a policy. 

With great respect, there is much to be said for that corralling of that law:

That question is governed by ordinary contractual principles –

to which we add, and for present purposes, are governed by the principles, if there be such, governing the allocation of onus, bearing in mind the way in which the issues between parties are left for trial.  His Honour recognises that in the next sentence:

The party asserting the agreement must prove it.

We, at that point, interpolate this, but his Honour fully appreciates clearly that the asserted agreement as an enforceable obligation to indemnify, for some amount at least, that has been agreed, admitted, established.  It is not an issue between the parties by reason of the pleadings in question and the content the statute gives to them - the statute, which is incorporated, obviously, by reference in paragraph 4 of the defence. 

In truth, with respect, his Honour missed steps in paragraph 48, line 21 on that page.  Really it should by then have been, “The party asserting the term must prove it.”  I stress, this is not a case of whether one can prove any contract – and there is a dispute about the state of negotiations that may or may not have produced consensus ad idem.  This is a case where consensus ad idem is accepted, but the question is as to what the plaintiff said as to indemnity against the common law liability of my late husband’s employer.

The defendant said “But I do not admit that that was for more than the minimum”, the “at least”.  Plainly enough, the benefit being sought by the defendant in its then and current continued forensic stance is to say there was a limit and it was the maximum was the minimum, statutory minimum.  Proving that that was the term of the policy was something which, given the framing of the issues, naturally fell to the party seeking to benefit from the existence of that term, it not being necessary for the plaintiff. 

There is no supplementation – to use the language of the previous authorities – no supplementation of the plaintiff’s case necessary by reference to any monetary limit at all.  It sufficed for the plaintiff’s case to say “at least $40,000”.  At the foot of that paragraph 48, following the references to authority on the beside the point question when the existence of an obligation is in question, his Honour then says:

Where the extent of cover is defined by a maximum amount it may be said that cover is limited to that amount but that is not to categorise that amount as an exception to, condition of or limitation to cover.

Of course, it is clear from that sentence, which starts with a proposition that there is a maximum, that this is not concerning the question anterior in nature, well, is this a policy with a maximum or not?  Of course, when there is a simple numerical maximum and it is a liability indemnity or insurance policy, one has a claim advanced in numerical terms, verdict $100,000, and one has a policy amount specified, say, $80,000.  To talk of onus is almost as fatuous as to talk of proof in such a case as to whether that condition has been met or not. 

The question whether 100 is greater than 80 is not susceptible really of either the allocation of onus or the demonstration by evidence, let alone argument.  So for those reasons, all of the principles and case law concerning the operation of exceptions and the very difficult question – reminding one of Williston’s comment about a semantic bog in relation to other elements of an insurance policy – concerning whether something is an exception or whether it is an exception to a general case, to use Sir Frederick Jordan’s expression, or only in particular cases, is really beside the point.  All of that is beside the point.

The question simply here, as Justice Brereton might correctly identify, with respect, is was there a limitation to the cover.  If there was, then allocation of onus as to whether it was satisfied is really not to the point.  It would simply be a comparison of two figures.  To say in the last sentence of paragraph 48 as Justice Gyles did that:

It is an essential part of the primary obligation to insure -

of course, again, merely describes the case where it has been established there was a maximum.  This is a case about whether that had been established.  I do not want to dwell in detail on Justice Brereton’s reasoning which, with respect, we seek to support, except as we have put it in our written submission, as a matter of emphasis we would respectfully suggest that the ticket cases are not absolutely decisive or critical to this case, although they are in the same general area.

HEYDON J:   Why do you say “as a matter of emphasis”?  Do you not really mean the ticket cases should not be decisive?

MR WALKER:   Yes, I do.  I do just mean that, your Honour, yes.

GUMMOW J:   Just go back to section 18(1) for a minute.

MR WALKER:   Yes, your Honour.

GUMMOW J:   In section 18(1), may the word “indemnity” not be apt insofar as the subsection is talking about the amount of liability under the Workers’ Compensation Act.

MR WALKER:   Unquestionably.

GUMMOW J:   May not the word “insurance” then be linked to the words “for an amount of at least” independently of the Act?

MR WALKER:   Yes.  Again, unquestionably.  However, the insurance is of an indemnity kind.

HAYNE J:   Well, there is a difficulty I think in that.  I have just got hold of the Act as originally enacted, the 1926 Act, and in those days as originally enacted you had to insure for workers comp liability, not for common law liability.

MR WALKER:   Yes, your Honour.

HAYNE J:   As originally enacted, 18(1) had this expression “policy of insurance or indemnity” for the full amount of liability under this Act, or workers employed, et cetera, so it was insurance or indemnity but in respect only of the statutory workers comp scheme.

MR WALKER:   So it would appear that that may have been drafting of an excessively cautious kind perhaps and it may explain why the order is insurance and indemnity, notwithstanding ‑ ‑ ‑

GUMMOW J:   Well, it then becomes a question of what was the full amount being spoken of, and of the liability under the Act?

MR WALKER:   Yes.

GUMMOW J:   We do not know really because we are just given bits and pieces, as usual.  To understand section 18 you have to know what the provision ‑ ‑ ‑

MR WALKER:   That is not relevant in this case though; it is for an amount in respect of his liability independently of this Act which this case concerns.

GUMMOW J:   I realise that, but to construe section 18(1) you need to know all of this matter.

MR WALKER:   Yes, you need to know the whole of the (a) principal provisions and (b) ancillary provisions which affect and ultimately determine by their application how much workers compensation is paid.

GUMMOW J:   One wants to know what was the full amount of the liability under the Act.

MR WALKER:   Yes.

GUMMOW J:   What did the Act create in the nature of liabilities in respect of which there was insurance or indemnity?

MR WALKER:   Well, that liability was what has been colloquially but fairly accurately ‑ ‑ ‑

GUMMOW J:   In terms of sections.

MR WALKER:   ‑ ‑ ‑ called – I do not have the sections at hand, your Honour.

GUMMOW J:   I know.

MR WALKER:   They are the no fault workers compensation payment obligations imposed on employers because they were employers and because with the requisite nexus between a person and their employment and their injury, which has been variously expressed ‑ ‑ ‑

GUMMOW J:   No, we know that in generalities, Mr Walker, but it seems to me that in 1926 this notion of full amount of liability under this Act had branches to it and qualifications to it that made it prudent perhaps to use the words “insurance or indemnity”.  That is what I am trying to get at.

MR WALKER:   Arguably, your Honour, except for this general answer, that liability under the Act is a concept which only ever produces one figure for each case.  “Indemnity” is a word that naturally describes cover against a liability to another, so that it is difficult to understand even with the possibilities that may occur, for example, to cut down entitlements due to a worker due to particular circumstances, it is difficult to understand how the word “indemnity” would not entirely do the work of providing cover against the established liability.

HAYNE J:   The liabilities could be amounts under the table of mains, weekly payments, death benefits ‑ ‑ ‑

MR WALKER:   Yes.

HAYNE J:   ‑ ‑ ‑and the redemption of weekly payments.

MR WALKER:   There will only ever be one amount which describes the full amount of the employer’s liability under the Act.               There could only ever be one sum that answers that description and it is for that reason, although with respect it may be, as Justice Gummow points out, the details and permutations under the Workers Compensation scheme may explain the caution of the drafter in using the expression “insurance”.  In fact, bearing in mind the nature of the notion of full amount of liability, it must be said that the word “indemnity” was surely sufficient.

In any event, in our submission, be it “insurance” or “indemnity”, which is the word selected, the nature of the cover is clearly an indemnity in the sense of being an amount which is simply the reflex of an amount answering the description of the liability to the worker, the worker’s estate.  Your Honours, I did not want to dwell on the way Justice Brereton put it any further than that.  We with respect urge the way he approached the question.  May it please, your Honours.

FRENCH CJ:   Yes, Mr Jackson.

MR JACKSON:   Your Honours, the points that we seek to make may be stated relatively shortly and may I commence by saying this.  There was a statutory obligation on the employer to take out an insurance policy, leaving aside its exact description, not in the sum of $40,000, but in a sum not less than $40,000.  The obligation so to insure may have been satisfied by a policy providing cover of $40,000 but that was not the only way of satisfying the obligation and one might expect, your Honours, that many employers would want to be covered for significantly more, or indeed for all, potential liability to their employees.

I will come, your Honours, in a few moments to give your Honours references to three decisions, one of the New South Wales – before the Court of Appeal.  Your Honour, without endeavouring to identify precisely what emanation it was at the time ‑ ‑ ‑

HEYDON J:   The Full Court of the Supreme Court of New South Wales.

MR JACKSON:   Yes, your Honour.

HEYDON J:   It is not a particularly arcane idea.

MR JACKSON:   I appreciate that, your Honour.  It still keeps going in some other jurisdictions in which there were awards - one in this Court, Teubner v Humble and a later one in the New South Wales Court of Appeal in which awards were given in sums exceeding £20,000, as it was then stated, before the period of employment of the employee in question here, and one significantly higher at a time during the middle part of his employment.  May I come to those in just a moment, your Honours?

What emerges, we would submit, is this, that the respondent accepts that it is the successor to Eagle Star as the employers’ insurer, but contends that the cover provided for by the policy was the minimum and it does so, your Honours, in order to contend that a judgment in our favour against it is limited to the statutory minimum in proceedings in which it is being sued by a person who is not a party to the policy.  It comes about also, your Honours, in circumstances where the insurer was required to keep a record of any changes to the former policy and where also, for reasons known to the insurer or its predecessor, the policy cannot be found.

Could I say this, your Honours.  It seems clear from the terms of the Act that it contemplated that there would be a paper policy and that that is so, your Honours, one can see from section 18(5).  It should be, your Honours, on page 4 of the document we have given the Court called “Amended Annexure Setting Out Relevant Statutory Provisions and Regulations”, and you will see at page 4 there is a reference on the bottom of the page to section 18(3) - I will come back to that in just a moment, your Honours - but one then sees on page 5 subsection (5) and subsection (5) requires an employer, unless the employer is a self‑insurer, to be able to produce the policy on being given notice to do so.  Could I take your Honours to the parts of that section that are relevant?  You will see that it says:

Proceedings in respect of a failure to comply with any of the provisions of subsection one may be instituted -

and then it gives a time limit for that.  It says in the third line:

In any such proceedings, proof that the employer . . . have been served pursuant to subsection one of section 18A of this Act with a notice requiring him to produce for inspection a policy of insurance or indemnity obtained by him and in force at a specified date or between specified dates has not so produced any such policy so in force . . . shall be sufficient evidence, unless the contrary be proved . . . the employer had failed to comply with the provisions of subsection one of this section.

That provision, your Honours, clearly contemplated that there would be a policy and that the policy would be one that could be produced on inspection and, your Honours, condition 14, that your Honours have been taken to already, of the conditions of the policy required that variations – and your Honours will see this set out in the same document at the last page – referring to conditions or provisions are not to:

be waived or altered unless the consent of the Insurer be previously obtained and signified by endorsement hereon –

contemplate that there will be a written policy.  Now, your Honours, in circumstances of that kind one comes to the central question, which party should bear the burden of proof, and the choices are the claimant, not a party to the policy, or the insurer which was a party to the policy.

Your Honours, if I could go on to say in just a moment that we would submit too that the reasoning of the majority in the Court of Appeal on this issue should not be accepted, but may I before doing so revert to the issue that your Honours have raised about the meaning of the terms “insurance” or “indemnity”.  The two expressions, your Honours, seem to recur in the provision.  Your Honours will see that subsection (1) on page 3 of that document contains a definition which – not very helpfully your Honours – says:

“policy of insurance or indemnity” means a policy of insurance or indemnity which an employer is required to obtain -

Your Honours, perhaps some light is cast on the issue in the sense that it makes the issue remain as dark as it was when one started by the terms of subsection (3) on page 4.  If one goes to (3)(a), the third paragraph of paragraph (a) says that:

Every such policy shall provide that the insurer shall as well as the employer be directly liable to any worker insured under such policy . . . to pay the compensation or other amount for which an employer is liable -

and your Honours will see the remainder of that paragraph.  Then the next paragraph on (3)(a) says that the expression “other amount”, which is used in the preceding paragraph:

means an amount not exceeding the amount for which the employer has obtained a policy of insurance or indemnity in respect of his liability independently of this Act –

which is the liability commonly expressed as being common law liability.  But your Honours will see in the first paragraph of subsection (1) that that is the liability independently of the Act, to which the requirement for insurance of “at least forty thousand dollars” applies.  The point I am seeking to make, your Honours, is that one sees when the expression “other amount” is used in (3)(a), it simply refers to a policy of insurance or indemnity without distinguishing between the two, but yet refers to the common law liability, to put it shortly.

HAYNE J:   At some point, Mr Jackson, not immediately, could you let us know what the Act was that changed the 1926 Act to provide for the insurance to extend to common law liability.  The 1926 Act is only for compensation under the statute and when the common law liability comes in.

MR JACKSON:   I think the answer is 1953, your Honour, but I will endeavour to get your Honours a copy of it.

HAYNE J:   Thank you.

MR JACKSON:   Your Honours, could I then go to say this?  In our submission the reasoning of the majority in the Court of Appeal should not be accepted and may I go to Justice Ipp at page 66.  Your Honours, I am conscious that my learned friend has been to this already, but may I seek to make briefly the observations we would make.  If I go to page 66, your Honours will see in the first sentence of paragraph 4 that Justice Ipp refers to the fact that:

The amount of cover provided by a policy of insurance is an essential term of the contract between insurer and insured.

Well, your Honours, of course the existence of a specified amount or there being no limit in relation to the amount for which the insurer is liable, the existence of some determination or means of determination of that question is an important matter if one is deciding whether there is an agreed policy or not because the issue is one of contract.  But, your Honours, that is not this case.  It was accepted that there was a policy.  The question was upon whom lay the burden of proof of a limitation in the amount of the cover. 

It was a case, your Honours, if I could refer to something that your Honour Justice Kiefel mentioned to my learned friend earlier, 40,000 was not a ceiling - 40,000 was the floor.  The question was, was there some limitation at all beyond the minimum of $40,000?

Your Honours will see then if one remains on paragraph 4 of his Honour’s reasons that his Honour goes on to say immediately:

On first principles, the onus was on the plaintiff –

Well, your Honours, one might ask, with respect, what was the principle which his Honour described there as being the first principle.  It simply seems to mean that the appellant, being the plaintiff in the proceedings, bore the burden of proof and if that were so seems to appear from the reference in paragraph 6 by his Honour to the burden of “proof that otherwise arises”.

Your Honours, if one goes to what is said at paragraph 5 of his Honour’s reasons it is difficult to see, with respect, why the second sentence of paragraph 5 would follow from the first.  We would say the better response to the question, opposed in a sense by the first, would be that it had been shown that (a) there was cover, (b) the cover was for at least $40,000, and that it was for the respondent to show what the limitation on liability was. 

Your Honours, if one goes to Justice Gyles’ reasons - they commence at page 74 - there is, with respect, a good deal of recitation of matters up to paragraph 47 of his reasons.  But if one goes to page 84 in paragraphs 48 and 50, you will see in paragraph 48, about line 20, once again the reference to the essentiality of the amount the subject of the cover.  Well, in some context that is true.  If one goes to paragraph 50, what his Honour says simply is to say the ultimate onus was always carried by the plaintiff and no evidentiary onus arose which altered that situation. 

With respect, your Honour, what there had to be and what was accepted that there was was a policy.  The policy had to be for at least $40,000.  There was only one party to the proceedings which was capable of giving evidence, of adducing evidence to show it was an amount of $40,000.  In those circumstances, the burden of proof, which was the ultimate question, should have been based, in our submission, on the respondent.

HEYDON J:   That last point you make perhaps suggests, although you may not embrace the suggestion, that the burden might lie in one place in a case between the worker or the widow of the worker, on the one hand, and the insurer on the other, but in a different place if there was a dispute between the employer and the insurer.

MR JACKSON:   Yes, I think the answer is yes, your Honour.  May I seek to indicate what I mean by that?  If one had a case where there was a contention as between employer and insurer where the employer said, “We had agreed on a no limitation of liability policy”, and the insurer said, “There was a limitation, the limitation was to $40,000”, the question would have to be decided in the light of the fact that there would be, by virtue of section 18(5), an expectation that the employer had, and was required to have, a copy of the policy because it would be an offence not to.  There would also be an expectation that the insurer would have had access to the policy. 

Now, in those circumstances, one might well say that as between those two parties who were in a position where each, at least theoretically, had as much access to the policy as the other, that the burden of proof would lie on a plaintiff to establish what the policy was, in effect.  But a different situation arises as between us and the insurer, we would submit, and also as between another defendant who is not a party to the policy and the insurer.

HEYDON J:   This is really an application of what was said in Blatch v Archer and what Mr Justice Hodgson has from time to time said.

MR JACKSON:   Yes your Honour, and I think we quoted from an observation of members of this Court in Vetter v Lake Macquarie Council to the same effect.  Your Honours, could I then go on to say if one looks at paragraphs 48 and 50 of Justice Gyles’ reasons which are, with respect, where fundamentally it comes down to the issue, one, he refers again to essential terms and simply asserts the plaintiff bearing the onus.

Could I come, your Honours, then, to a matter relied on in a sense by our learned friends, the respondent, and that is the reliance on the form of policy.  Could I take your Honours back to the Act for a moment, and to section 18(1)?  What the Act required was a policy for at least $40,000. 

GUMMOW J:   You seem to be correct about the 1953 Act, Mr Jackson.

MR JACKSON:   Yes, your Honour.  Your Honours, the position then was that it was the policy had to be for an amount of at least $40,000.  The regulations required the policy to be in the form of the appendix – form in the appendix to the regulations and your Honours have been referred also to section 18(3)(a). 

Now, your Honours, if one goes to the form in the appendix and your Honours will see the regulation to which I referred at page 7 of that document in the bottom half of the page, and then when one goes to the actual appendix, which is set out on page 8, you will see that in the recitals, about halfway down the page, in the recitals it recites the obligation under the Act to obtain:

a policy of insurance or indemnity for the full amount of his liability under the Act to all workers employed by him and for an amount of at least forty thousand dollars -

One sees then, your Honours, that in the operative part what has been put – and this is at the bottom of the same page:

any other amount not exceeding forty thousand dollars –

and then, your Honours, one sees also that the operative part – and I am referring now to page 9 about halfway down the page, and the four lines immediately above the heading “CONDITIONS”, but it says, your Honours:

Provided lastly that this Policy shall be subject to the Act and the Rules and Regulations made thereunder, all of which shall be deemed to be incorporated in and form part of this Policy.

So the point I am seeking to make about that, your Honours, is just this, that whilst there is contained in the document a reference to not exceeding $40,000, yet it is plain that the terms of that policy themselves contemplate that there may be something different.

It is not just the fact of those four lines immediately above the heading “CONDITIONS” which recognise that the Act contemplates that policies may be more than 40,000, nor the recitals at the start of the policy.  If one goes then to condition 14, which you will see at page 11, it reflects the fact that not only is there to be something that can be seen as the policy, but also that there may be variations to it, and the variations, obviously one might think, would include changes to any limit of liability.

Now, your Honours, the last matter with which I wished to deal was this.  I said I would give your Honours references, and may I do so simply by indicating to your Honours the references to these cases and essentially where one finds what was done in them.  Three decisions, one 1962, one 1963 and one 1966, dealing with amounts that were awarded in the courts at that time.  Your Honours, the first is a decision of the Full Court in New South Wales Proctor v Shum (1962) SR (NSW) 511 where a 51‑year‑old woman who was made quadriplegic was awarded £39,000 and it was said by the court of Chief Justice Evatt and Justices Sugerman and Wallace that that was very, very high - at page 520 - but the verdict was not set aside. That was heard in the Full Court in October 1961.

In Teubner v Humble (1963) 108 CLR 491, a man who lost a leg and suffered some other injuries, a man aged 50, they are set out at page 504 the injuries in the reasons for judgment of Justice Windeyer, and at page 510 one sees that the award made in this Court was then £24,848 13s., and it was heard in this Court on 5 October 1962. Finally, your Honours, Thurston v Todd [1966] 1 NSWR 321, a decision of the Court of Appeal, President Wallace and Justices Jacobs and Holmes, a 15‑year‑old girl was made quadriplegic, she was awarded at trial £69,477 and that judgment was not set aside on appeal.

The point I am making from those, your Honours, is simply that one might well understand that employers, particularly ones in industrial activities as was the employer here, might wish to insure for more than the amount of £40,000, and that one sees a reference by our learned friends in their written submissions to the fact that Justice Stephen in this Court had once said that it was common for indemnity policies to have a limit.

Some indemnity policies no doubt might have a limit, but could we also say, your Honours, that if one looks at what was said by the primary judge in this case at page 26, line 20 - and, with respect, on matters of personal observation one would be entitled to look at what he said at least as much as one would be entitled to look at in terms of what Justice Stephen had said - he said it was well known that very frequently policies were taken out for more than that amount. 

Your Honours, those are the submissions we wish to make orally.  May I just say one thing further about the matter?  Your Honours will have seen that the actual orders made by the Court of Appeal which your Honours will see – I am sorry, I just lost the page for a moment – page 93, was that the matter was to be remitted to the Dust Diseases Tribunal for orders to be made in accordance with a judgment majority and we, of course, lost our costs in the Court of Appeal. 

I just wish to mention one caveat in relation to any order that your Honours might make.  We would be perfectly happy to have the orders made that we have sought in our notice of appeal, but the matter to which I invite your Honours to draw attention is that, if one goes back to page 13, paragraph 4(d), you will see the assertion by QBE that the minimum level of cover:

was $40,000.00 inclusive of the plaintiff’s entitlement to costs.

Now, that appears to be based on a decision of the New South Wales Court of Appeal in, to put it shortly, AMP v Miltenburg which held that the – I will give your Honours the reference in just a moment, if I may – costs of a plaintiff suing the employer, not suing the insurer, suing the employer, were included in the $40,000.  Now, your Honours, the case went to the Privy Council but that point was not pursued in the Privy Council. 

It would not, we would suggest, be applicable here, but I just wish to avoid a situation where if the Court were to assume that that is correct, that we accept that that would apply in this case.  We do not.  The reference to Miltenburg, your Honours, in the Privy Council is AMP Fire and General Insurance Co Ltd v Miltenburg [1982] 1 NSWLR 393. It is on the list of authorities of QBE I think, your Honours. So the only point I am seeking to

make about this is we would not want your Honours to enter into that issue unknowingly because the issue may arise in this case perhaps.

HEYDON J:   What is the reference to the judgment from which there was an appeal to the Privy Council?  Is not that the important thing?

MR JACKSON:   Yes.  Your Honour, I am sorry, I just do not have that.  Can I give it to your Honours by a note if necessary?

HEYDON J:   We do not accept it is correct, but what are we to do about it?  Are we going to have some arguments about it?

MR JACKSON:   No, your Honours do not have to do anything about it.  All I am saying is that if we were successful in the appeal, then the appropriate order would be as we have set out in our notice of appeal.  If we fail in the appeal the matter would go back, one would expect, to the Dust Diseases Tribunal, because our appeal would fail, the judgment of the Court of Appeal would stand.

GUMMOW J:   You do not want it to go back with any implicit blessing of this.

MR JACKSON:   That is so, your Honour, yes.

FRENCH CJ:   Thank you, Mr Jackson.  Yes, Mr Sullivan.

MR SULLIVAN:   Thank you, your Honour.  As is apparent from the discussion already, the insurance arrangement to which my client succeeded, originally between Eagle Star and Pilkington, cannot be looked at in a vacuum.  It must be considered in its context and especially the regularity context. 

Now, your Honour the Chief Justice asked my learned friend, Mr Walker, a question which we would like to answer, the question being, did he concede, or words to the effect that the form of policy to be entered into had to be in the prescribed form, the form set out in the appendix, and in our respectful submission, it is crystal clear that it must be, without variation, without change, in that form, subject to the question of an endorsement when one looks at the overall legislative regime set out in the Act in the regulation and in the policy itself which is an appendix to the regulation by Gazette.

Most of the provisions have been touched on already, but it is important, in our respectful submission, to look at them together and as they form a legislative scheme.  Might I just simply say in answer to Justice Hayne’s question in respect of the words in section 18(1), “insurance or indemnity”, a contract of insurance or indemnity, in our respectful submission, given the textual difficulties of the matters already adverted to and the fact that the same expression was used in the 1926 Act when there was only a cover in respect of workers compensation liability, your Honours it would be appropriate to look at those as a global matter, your Honours should not think that it was an intention to distinguish between insurance and indemnity as such.

The second point of a general nature on the legislative stem I wish to make is this.  My learned friend, Mr Jackson, used the colourful expression that what had been done was to convert what was a legislative floor into a ceiling, and in our respectful submission, when one properly analyses the statutory regime which is set up here, that is not the case at all.  The true position on analysis of the legislative scheme is that the legislative policy was that there had to be – or intent – was that there had to be a policy for a sum of at least $40,000, but that policy was given effect to by the legislature expressly in a specific way, first by a prescribed form of policy for the “floor” amount of $40,000 ‑ ‑ ‑

GUMMOW J:   That is not the legislature, is it?  It is some regulation.

MR SULLIVAN:   I am sorry, I will withdraw that.

GUMMOW J:   Where is the regulation‑making power, by the way?

MR SULLIVAN:   The regulation‑making power – I will have to check up the provision of the Workers Compensation Act.  I am sure there is one, your Honour, of course, but the overall scheme was given effect to by a mechanism of prescribing a policy – and that was the intention of the legislature to prescribe the policy for a particular amount and then to enable the parties to increase that amount by endorsement, and indeed a useful illustration of that which we will come to is what happened in the case of Miltenburg to which my learned friend ‑ ‑ ‑

GUMMOW J:   Section 66(1) said:

The Governor may make regulations not inconsistent with this Act prescribing all matters which by this Act are required or permitted to be prescribed or which are necessary or convenient to be prescribed for carrying out the provisions of this Act ‑ ‑ ‑

MR SULLIVAN:   Yes, and what we say is that the regulation which was made was not inconsistent because it provided a mechanism for the statutory objective of cover of at least $40,000 by saying, yes there is a fixed amount of $40,000, and then by endorsement on the policy in accordance with condition 14 you can increase that amount thereby having a situation which the parties agree has a sum in excess of $40,000.

That scheme, in our respectful submission, is clear from reading together first of all sections 18(1) and 18(3)(a) of the Act and in particular subsection (3)(a) of the Act, which makes it plain that the policy of insurance or indemnity shall – the words used in the cases will demonstrate - Miltenburg and if I take your Honours to it and the decision of the New South Wales Court of Appeal in Orica v CGU - the “shall” is used there in the sense of a – not a temporal sense, but in a mandatory or compulsory sense and it shall:

contain only such provisions as are prescribed, but may contain such other provisions relating to any other liability at common law or under any Act or Commonwealth Act as are appropriate to any particular case.

There is a penal sanction or a fine provided for in the event that such is not done and that is contained in section 18(3)(b).  I am sorry, I will withdraw that – it is in the regulation; I will come to that in one moment.  One then goes from there to the regulation made pursuant to section 66.

FRENCH CJ:   Incidentally, I notice that there was a continuation of the regulations in force as immediately prior to the commencement of the 1953 Act and that is by statute.  That is (3)(b), I think, 18(3)(b).

MR SULLIVAN:   Yes, your Honour, that is right, yes.  The regulations in force and made pursuant to section 66 are contained in my learned friend’s retyped version.  I am afraid I do not have Mr Jackson’s retyped version, but the regulation is regulation 1(a) which reflects, in our respectful submission, at least for the intent of section 18(3)(a) - which states that:

Every policy of insurance or indemnity shall contain only such provisions relating thereto as are contained in the form of policy in the Appendix hereto.

Regulation 1(b) provides that:

An insurer who issues a policy otherwise than in the form in the Appendix hereto shall be liable to a penalty not exceeding –

the sum of $100.

HAYNE J:   Well, how then do you say consistent with the construction of the regulations and 18(3) that you are propounding is it possible for an insurer to issue a policy with unlimited indemnity in respect of common law liability?

MR SULLIVAN:   By reason of taking advantage, your Honour, of condition 14 of the prescribed form.  May I take your Honour to that?

HAYNE J:   I understand that, but you accept, do you, that a policy that insured an employer by providing a complete indemnity without monetary limited for common law liability would be a policy of insurance which complied with 18(3)(a)?

MR SULLIVAN:   Yes, your Honour, we accept that if the appropriate endorsement was made to the prescribed ‑ ‑ ‑

HAYNE J:   It would comply with 18(3)(a), would it not, because of the application of the third and fourth paragraphs in 18(3)(a)?

MR SULLIVAN:   It would comply with 18(3)(a) because on our reading of the fourth paragraph of that section, your Honour, the definition of “other amount” is not “exceeding the amount for which the employer has obtained a policy of insurance”.  We would respectfully agree that an unlimited policy could be such a policy.

HAYNE J:   Yes, and that reference to “other amount” is engaged in the third paragraph of 18(3)(a) in “pay the compensation or other amount for which” an employer is liable.

MR SULLIVAN:   Yes, your Honour.

HAYNE J:   And the expression in the first paragraph of 18(3)(a) that a policy:

shall, in so far as it relates to any liability referred to in subsection one of this section, contain only such provisions as are prescribed –

is an expression, is it, which encompasses the possibility of unlimited indemnity for common law liability?

MR SULLIVAN:   Ultimately the answer to that, with respect, is yes, that it does in a particular way, if I may say so, your Honour.  The prescribed form contemplated there contained a provision, condition 14, as we have said, which enables, to use the language of the condition, that:

No condition or provision of this Policy shall be waived or altered unless the consent of the Insurer be previously obtained and signified by endorsement hereon –

So it would be possible to take the operative clause of the insurance clause here to take out the words “up to an amount of $40,000” to by an endorsement to delete those words which would then prima facie produce an unlimited cover.

HAYNE J:   Yes.

MR SULLIVAN:   Yes, we accept that.  But what the important mechanism, in our respectful submission, in that regard is is the way the statutory scheme works and to give effect to the legislative objective of a cover of $40,000 or more is to say well, the policy is going to say $40,000 the prescribed form, and if you want to increase that you vary it.  You vary it by way of endorsement under condition 14.  It is in that context, in our respectful submission, and indeed the compulsory nature of that ‑ ‑ ‑

GUMMOW J:   That turns what is a ground – what is the floor into prima facie a ceiling, is it not?

MR SULLIVAN:   No, in our respectful submission, not, your Honour, because ‑ ‑ ‑

GUMMOW J:   That runs into the words in (3)(a), “liability referred to in subsection one” which is the concept of the floor, is it not, “contain only such provisions as are prescribed”.  The prescription has to still flesh out but not qualify, I would have thought, the purport of 18(1).

MR SULLIVAN:   Your Honour, the prescription, in our respectful submission – sorry, the legislative policy – the reason the statutory policy was put into a statute, in our respectful submission, as a prescribed policy was so that it was a public document.  Anyone could see what the terms of the workers compensation policy were, including workers and the like, and of course, there had to be some certainty as to the amount insured.  Now, to put in, with respect, into the prescribed form of the policy the words – mirroring the words of section 18(1) of the Act, the cover is “for an amount of at least forty thousand dollars” were to introduce, with great respect, an element of complete uncertainty as to the amount of cover.

So what the scheme was to do was to give effect to that same legislative policy by, as I say, fixing the amount and then saying, but of course conformably with the legislative purpose in 18(1) you may increase that amount below ‑ ‑ ‑

FRENCH CJ:   The statute requires at least maximum cover in respect of liability independent of the Act of $40,000, and you can increase the maximum.

MR SULLIVAN:   Yes, your Honour.  Yes, you can.  Indeed, as I say, a useful ‑ ‑ ‑

GUMMOW J:   Well, the question then is how do we know or not know that there was not an increase in this case?

MR SULLIVAN:   Your Honour, that is a question of who bears the onus of ‑ ‑ ‑

GUMMOW J:   Where do the cards fall on that question?

MR SULLIVAN:   In our respectful submission, once you have the legislative policy established of that sort – and it is an interest we draw on, and we respectfully submit the Court of Appeal in the majority did draw the inference, that the policy was entered into in accordance with the prescribed form, and the prescribed form required for a change to be (a) to increase it, to be a variation of that contract.  It was said to be a variation of the contract.  Now, as a matter of ‑ ‑ ‑

GUMMOW J:   Where does that come from?  Where does that expression come from?

MR SULLIVAN:   Variation ‑ ‑ ‑

GUMMOW J:   Yes.

MR SULLIVAN:   From condition 14, your Honour?

FRENCH CJ:   I suppose there is this question.  Condition 14 is one of the prescribed conditions ‑ ‑ ‑

MR SULLIVAN:   Yes, your Honour.

FRENCH CJ:   ‑ ‑ ‑ and that embodies a way of altering other conditions existing within the framework of prescribed conditions.  Now, (3)(a) seems to allow for the introduction of provisions other than those prescribed relating to any other liability at common law.

MR SULLIVAN:   Yes, your Honour.

FRENCH CJ:   I suppose a question might arise whether any other – this may reflect what Justice Hayne put to you earlier – whether any other liability at common law covers - beyond other heads of liability - also an extension of the common law liability that is contemplated by the $40,000 least maximum.

MR SULLIVAN:   Yes.  I am not aware – to answer your Honour the Chief Justice’s question, the language would perhaps be wide enough to embrace entering into, if you like, a separate policy for additional cover above $40,000, and one would think that that would – although having said that, I think that one would think the more natural reading of those words in 18(3)(a) and given the prescription of condition 14, it is contemplating liabilities of a type which are not otherwise covered within the insuring clause ‑ ‑ ‑

FRENCH CJ:   You might be assisted by the words “other provisions” in that respect.

MR SULLIVAN:   Yes, I am your Honour, in our respectful submission, so ‑ ‑ ‑

HAYNE J:   It picks up, at least, Commonwealth workers compensation insurance or insurance against liability for workers compensation under Commonwealth legislation.  It would pick up things like seamen’s compensation and those industry‑specific compensation schemes that may have obtained, I suspect.

MR SULLIVAN:   I am obliged to your Honour.  Your Honour is correct of course because there are separate regimes, as your Honour rightly observes, in respect of those forms of employment.  In our respectful submission, however, when one looks at the rest of the scheme, it is plain that the way that it was to be increased, and it would have been easy to change the operative clause to make an unlimited cover on the example of the discussion I had with Justice Hayne, by simply taking out the qualifying words as to the amount of cover.

HAYNE J:   Does your argument on, or at least this branch of your argument, proceed from a premise about statutory policy?  In particular, does it proceed from a premise that you can discern a statutory policy that $40,000 shall be the ordinary case?

MR SULLIVAN:   The only word I would cavil with your Honour is the word “ordinary”.  It proceeds from the presumption that $40,000 is to be the stated amount which everyone knows, but it can be increased.  Whether it is the ordinary amount or not, in the sense ‑ ‑ ‑

HAYNE J:   That is your difficulty is it not, Mr Sullivan, that unless you begin from a premise ordinary case, usual case, the statute is – I suspect today you would say that the default case would be 40,000.  Unless you start from a premise expressed in that form does not reading the statute simply leave you at large?  You are obliged to have indemnity, at least $40,000, but what you take is a matter for you, the employer.

MR SULLIVAN:   May I put our submission this way in answer to your Honour’s question.  The legislature obviously fixed $40,000 as being what the Executive pursuant to the regulation‑making power regarded as a figure which was the minimum which was fair and reasonable, and so it is a fair and reasonable figure.  It recognised that, of course, there may be particular employers or particular exposures – my learned friend did not refer to some judgments that would result in a greater exposure – and provided expressly for the ability to change the cover.

But we do not, in our respectful submission, have the difficulty that your Honour postulates, because once one appreciates what the scheme was, the starting point and, indeed, the mandatory starting point was a policy containing the words of that prescribed form including the words “not exceeding $40,000”, and then providing for, in the ordinary contractual way, an ability to change the contract.  Now, in the question of changing the contract by variation, the normal contractual principles, as indeed the majority of the Court of Appeal correctly stated, is that the person seeking to prove a variation of a contract has to prove it.

That is what we respectfully submit is orthodox approach and correct approach and it is not inconsistent at all with the legislative scheme but, indeed, in our respectful submission, consistent with it, as consistent with a desire to have as transparent as possible and as well known as possible to all members of the public, what is the level of cover.

KIEFEL J:   The difficulty is that in this particular case, as Justice Hayne said, if you do not have a presumption that in the ordinary course this is usually what happens, what you are suggesting is that you presume that the policy in this particular case is the minimum when that is the very question.

MR SULLIVAN:   In answer to your Honour Justice Kiefel, may I say this.  What you presume is the parties entered into the particular form of contract because they had to, for at least that amount.  That is the presumption you could make with absolute confidence in our respectful submission, or an inference you could draw.

KIEFEL J:   But all that means is that the presumption in fact is, with respect to any number of insurance policies, that they must be for a minimum amount.  That is as far as you can go.  You cannot draw that down to the form of policy document absent all the possibilities that the legislation sets up for further amounts unlimited liability.

MR SULLIVAN:   We would respectfully submit that the presumption would be it was for the minimum amount, unless otherwise varied.

KIEFEL J:   Is not the true issue in this case, before one gets to the question of who proves it, identifying the question itself is what was the maximum amount of cover?  If there is a maximum, it might be unlimited, but the essential question is what is the maximum amount of cover?  Now, the maximum might be the minimum provided by the statute, it may not be.  But that is the question, is it not?

MR SULLIVAN:   Not in our respectful submission is the question that forms it.  Your Honour, we acknowledge that there could be cover greater than $40,000 in a policy complying with the statute.  That was the case in AMP v Miltenburg and neither the Court of Appeal, nor the Privy Council of course ‑ ‑ ‑

KIEFEL J:   But as you say, your starting point is different.  Your starting point assumes that the policy document in this particular case, which cannot be found, follows the form of policy document before parties can agree to something else.  You take that as your starting point.

MR SULLIVAN:   Yes.

KIEFEL J:   So that you can say that the onus of proof has regard to the variation or alteration.  The question is, is that the valid starting point?

MR SULLIVAN:   In our respectful submission, it is a valid starting point by reason of the language of particularly section 18(3)(a) which requires you to enter into a policy in that precise form.  Indeed, the important thing is, and I will take your Honours to it now if I may – if one goes to the decision which is in our list of documents of OricaLimited v CGU Insurance (2003) 59 NSWLR 14, and his Honour the Chief Justice, Justice Spigelman, was discussing a workers compensation policy which had been brought into existence under the Workers Compensation Act and in a prescribed form, and at paragraph 11 on pages 19 to 20, his Honour set out in a series of distilled propositions based on the authorities what we respectfully submit are important uncontroversial matters relating to the approach to construction and ‑ ‑ ‑

HAYNE J:   The controversy in this case is about the third dot point, is it not?

MR SULLIVAN:   It is about the third dot point, your Honour, but the fourth dot point and the fifth dot points are also of importance.  The fifth dot point is of particular importance here and by reference to the authority for this reason, that it emphasises the fact that the parties are to enter into this contract in a prescribed form and that is why you cannot have a contra proferentem approach to its interpretation, which would normally be the case with an insurance policy. 

That is why that approach of the case - and very similar things are said, if I may just take your Honours to it very briefly, the case my learned friend, Mr Jackson, alluded to of Miltenburg [1982] 1 NSWLR 393. In the advice of the Privy Council, first of all your Honours will note at 395, letter F, the Privy Council notes that:

The limit of the indemnity in respect of the employer’s liability –

in this case – this is when the statutory amount was $100,000 – had:

been agreed at $150,000 instead of the statutory minimum of $100,000.

But for present purposes may I take your Honours to page 396 where their Lordships adopted the approach adopted by Mr Justice Samuels in the Court of Appeal, and the passage appears at letters F to G of that page, where their Lordships said as follows:

The approach adopted by Samuels JA appears from the following passage in his judgment:

“What is in contention here is the construction of the policy and, although it is a statutory policy which the employer was required to have and the defendant compelled to issue in the terms laid down by the Act, it is to be construed according to its terms; although it is legitimate to take into account the provisions of the Act and its legislative intention.”

Again emphasising, in answer to your Honour Justice Kiefel, that the starting point has to be a situation where the parties have entered into a contract in accordance with the Act and they may by endorsement change it, but the starting point has to be in accordance with the prescribed form which says for an amount not exceeding $40,000.

KIEFEL J:   But their policy may never have had that.  Are you saying that the form of policy has to be the original with endorsements?

MR SULLIVAN:   With a subsequent endorsement under condition 14.

KIEFEL J:    But that might have always been the form of the policy.  It has only ever been in that form.

FRENCH CJ:   Incidentally, in relation to condition 14, would it be right to say that it is really directed to ensuring that on the piece of paper which is the policy there is a complete record of its terms?  In other words, they cannot be found in extraneous correspondence, because this covers both waivers and alterations and requires obviously the prior consent of the insurer, but endorsement thereon.

MR SULLIVAN:   That would be our submission, your Honour, and would conform with what my learned friend, Mr Jackson ‑ ‑ ‑

FRENCH CJ:   And then links into the obligation to – sorry, the power in section 18A for an option of the Commission to require an employer to produce for inspection so they see the one piece of paper with everything that has happened in relation to that policy on it.

MR SULLIVAN:   Yes, we would accept that that is the intention, your Honour.

KIEFEL J:   Is there then the possibility that the original form may have had a different amount in the policy of insurance?

MR SULLIVAN:   Your Honour, there is that possibility that it could have had ‑ ‑ ‑

HAYNE J:   Well, then, if that is accepted does it matter that the pleadings in this case were the plaintiff said there was an indemnity policy?

MR SULLIVAN:   No.

HAYNE J:   The answer of the insurer was, yes, but the indemnity was limited.

MR SULLIVAN:   The pleading point, if I might use that expression - which was so heavily relied upon by Justice Brereton – as you have seen in our written submissions we regard as being not a valid one – what was done quite plainly on the pleadings here, in our respectful submission, was there was a qualified admission.  It was an admission of indemnity, and it was in the context, my learned friends both very fairly conceded, of the workers compensation legislation because both paragraph 4 of the statement of claim to which this was responding and this response expressly adverted to the workers compensation legislation, and indeed the paragraph my learned friend, Mr Walker, relied upon in the defence of 18A talking about the employer’s indemnity insurer, as the Chief Justice rightly pointed out, it can be inferred that was used because that is the title or the description given to the statutory policies, the prescribed wording, which contemplates it being for a limited amount.

On no stretch, in our respectful submission, of the pleadings could it be assumed or inferred, or indeed construed, that QBE was assuming a burden of proving that the policy was limited to $40,000.  It admitted there was cover up to $40,000.  It did not say that was the maximum amount, it did not have to say that.  It cast the onus on that person – to use Mr Walker’s language – who would be seen to have the benefit of an increased amount to prove that increased amount.

HEYDON J:   Is this convenient for me to ask you – this may not affect the outcome of the case, but your argument has been assuming that condition 14 applies to what I might call changes in the terms of the contract from the outset.  If the question is, is it to be $40,000 or $80,000, you say you cannot have an $80,000 term unless you comply with condition 14.  Let me put this.  Condition 14 is really not dealing with that, it is dealing with events after the contract has been entered into, events of waiver or events of alteration where, as life runs on, the parties modify the terms up or down, and the correct method of having an 80,000 cover rather than 40,000 cover is to be justified by reference to section 18(3)(a), first part.  It:

shall . . . contain only such provisions as are prescribed, but may contain such other provisions . . . as are appropriate to any particular case –

and the particular case might be a case in which the insured wants 80,000 cover, the insurer wants a higher premium, so what is appropriate to those desires is to have the higher cover.  Now, as I say, it may not affect the justification for the – or it may not affect the merits of the conclusion for which you contend, but (a) what is wrong with what I have just said, and (b) if what I have just said is correct, can your argument live with it?

MR SULLIVAN:   In our respectful submission, your Honour, because the prescribed form specifically contemplates an alteration to the wording of the prescribed conditions and one of those alterations is to the operative clause which has embedded in it, as part of the general operative insuring clause, the limit, in our respectful submission, and because of the incongruity of not altering or varying that clause, but saying that entering into a policy not exceeding $40,000 for this amount but we will also give you $30,000 for something else and the inconsistency thereto, in our respectful submission the way that 18(3)(a) needs to be read is the way mentioned in my discussion with his Honour Justice Hayne, namely it is looking at other liabilities as are appropriate, talking about species of liability, as opposed to quantums of liability.

HEYDON J:   Of course, policy – this is the proviso just before the heading “CONDITIONS” – the policy is to be “subject to the Act” and the Act does speak of at least 40,000, implying that you can have more.

MR SULLIVAN:   Yes, no doubt about that, and the mechanism, we say, is by a variation.  Your Honour, a variation can occur, as was the import, as I understood, of Justice Kiefel’s question, almost instantly with the formation of the contract.

HEYDON J:   It is funny to talk about, though, varying a contract which has no existence before the point in time at which you make the “variation”.  That is really just creating ab initio a particular form of relationship, a particular set of terms.  It is not varying anything.

MR SULLIVAN:   Well, your Honour, it is not varying anything if you do it in advance.  But if you do it one second thereafter it varies it and it is done, therefore, effectively simultaneously.  In legal terms one achieves the same result. 

FRENCH CJ:   I suppose unless you give a reading to condition 14 which sees it as addressing the obligations that you are required to assume, in terms of the prescribed policy and a waiver or variation of that - I mean it is not particularly elegantly or accurately worded to achieve that result, as against the construction that Justice Heydon is putting to you.

MR SULLIVAN:   Yes.  It is against the obligation and one of the obligations is, we say, the obligation to indemnify up to an amount.  Now, your Honour Justice Heydon asked me whether, if that was not accepted, could we live with the outcome.  In our respectful submission, yes, because again, what we have admitted is that we were the indemnity insurer under the workers’ compensation under this policy.  If there was some other separate provision entered into which my learned friends say increase the liability, increase the exposure, in our respectful submission, it was up to them to prove that amount.

HEYDON J:   What do you say to Mr Jackson’s argument that whatever may be the case between the employer and the insurer it is different when you are talking about a claim by a widow who knows nothing about the dealings between the parties against the insurer?

MR SULLIVAN:   We have said this in our submissions, but may I just deal with it.  We think, with great respect, it would be an example of hard case making bad law if that was the case.  It would introduce an inconsistency or a disconformity or perhaps an incoherence, to use that expression, in the law in the situation as your Honour rightly postulated in debate with my learned friend that it may depend on whom the claim it is as to whether or not the claim succeeded or not.

FRENCH CJ:   Is not the point good even if you just talk in terms of employees as a class, vis-à-vis the insurer.  Forget about widow status.

MR SULLIVAN:   Yes, exactly that is right.  Forget widow status ‑ ‑ ‑

FRENCH CJ:   The point is good against you, is it not?  If it has any force, it is as good for employees as it is for a widow.

MR SULLIVAN:   Of course it is, your Honour.  It is as good for employees as it is for a widow, but if the case was a case between the employer and the insurer and if the onus was on the employer in that situation to prove that in respect of a claim made against him by one of his workers that the amount of cover was X, this burden of proof, as a question of construction of a policy, the burden of proof would be different – and on my learned friends’ postulation to what it would be if it was a case where an employee, or a widow of an employee was commencing action directly against the employer.

So we say that is an inconsistency or an anomaly which this Court would not encourage to exist in the law to have essentially when there is the same cover, the same policy, two different outcomes depending upon the character of the claimant.

FRENCH CJ:   But the distinction may be supported by the obligation imposed on the employer to keep a record which has to be available for inspection.

MR SULLIVAN: Yes. Indeed, the distinction, in our respectful submission, in that regard would not meant that an onus being created against us – who has not got that obligation – against the employee, but the second point about it, your Honour, is that why as a matter of policy one would not have a differential onus of the type which my learned friend advances, is because if one looks at the sections 6(4) and 6(7) of the Law Reform (Miscellaneous Provisions) Act upon which a person such as the claimant in this situation moves for their relief, the quite clear policy of particularly section 6(4) and 6(7) is to put the person claiming through the policy in no better position than the employer would have been. If I might just take your Honours to the language of that provision. Section 6(4) says:

Every such charge as aforesaid shall be enforceable by way of an action against the insurer in the same way and in the same court as if the action were an action to recover damages or compensation from the insured; and in respect of any such action and of the judgment given therein the parties shall, to the extent of the charge, have the same rights and liabilities, and the court shall have the same powers, as if the action were against the insured –

and section 6(7) then contemplates in terms of an amount, a contemplation that the insurer is not liable for a greater sum than fixed between the contract of insurance –

insurance between the insurer and insured.

Those policy matters which can be discerned from those provisions, in our respectful submission, would militate against having different onuses if an onus for a claimant has been different from that of that insured because in a sense then, to use a not completely accurate metaphor, the stream would be rising higher than its source.  In our respectful submission, the law would not countenance that.

GUMMOW J:   Can I just ask you another question about section 18(3)?  Beginning at line 4, the words “but may contain”, I think it is accepted that the phrase “under any Act or Commonwealth Act” would include other statutory regimes like Commonwealth compensation and seaman’s provisions, would it not?  Does that not throw some light on this phrase “such other provisions relating to any other liability at common law”?  In other words, the other liability at common law is a liability other than the liability at common law for an injury to the worker.  It is not talking about quantum at all.  It is talking about the nature of the risk.

MR SULLIVAN:   In our respectful submission, that is right.  It is talking about the nature of the risk, we would respectfully submit, it is not talking about quantum at all.

GUMMOW J:   That is right, and condition 14 does not do the work you want it to do.  One is left simply with the situation that the policy may or may not provide for more than $40,000, as indicated by 18(1), and there it is.  The parties are at liberty to put it in, if that is what happens.

MR SULLIVAN:   No, with great respect, they are not; only by variation or endorsement, your Honour.

GUMMOW J:   We are back to where we were before.

MR SULLIVAN:   I am sorry.  The reason we say they are not entitled to put it in without it that way ‑ ‑ ‑

GUMMOW J:   The regulation insofar as you say it produces this form is simply beyond power.

MR SULLIVAN:   In our respectful submission, it is not beyond power because it is not ‑ ‑ ‑

GUMMOW J:   Because it was not facilitating 18(1).  It was making a prima facie, a ceiling, what in fact, is a floor.

MR SULLIVAN:   With great respect, as my learned friend, Mr Walker, observed, an amount for ‑ ‑ ‑

GUMMOW J:   Just a minute, that was not convenient within the meaning of section 66 of the Act.

MR SULLIVAN:   Section 66 includes a requirement be not inconsistent with ‑ ‑ ‑

GUMMOW J:   Exactly.

MR SULLIVAN:   In our respectful submission, the legislative scheme as given effect to by the regulation is not inconsistent with section 18(1) because $40,000 being, if you like, the floor which is put in there, but the contemplation you can increase it by condition 14 means that the legislative intent is given effect to if the parties wish to have a policy in excess of $40,000.

FRENCH CJ:   Does this involve reading the words “contain only such provisions as are prescribed” in (3)(a) as a prohibition against the inclusion of a maximum cover in excess of $40,000 except through the mechanism of variation and endorsement on your reading of 14?

MR SULLIVAN:   Yes, your Honour.

FRENCH CJ:   It is an odd thing, is it not, to prohibit the inclusion of a greater cover?  Why should one read it in that way?

MR SULLIVAN:   Because they are not precludingit, in our respectful submission, your Honour, they are contemplating that it can still be done, but in a particular way.

GUMMOW J:   Yes, I know, but why?

MR SULLIVAN:   For two reasons.  First, they want to have certainty about the terms of the policy.  That can be either regulation.  It can set up the terms of the policy – so that it is done there so that in any given case you do not need to find the actual policy wording because the statute provides for it, except, of course, if you want to have an increased amount and then that is given effect to by reason of the endorsement.  Your Honour, one may speculate a number of reasons why, but it would be speculation as to why they have done it that particular way, but by reason of emphasising that in 18(3)(a) that they are prescribed conditions, the legislature is giving primary force to the actual language used, as discerned from the cases I have taken you to, particularly Miltenburg and Orica.

In our respectful submission, the reason for that is the reason of certainty, to ensure that there has got to be a situation where everyone will know what, in any given case, are the terms of the cover, and presumably for consistency of interpretation by courts and the like.  May I move on from those comments to discuss another matter which we have dealt with in our written submissions that needs considering, and it really arises out of what Justice Kiefel has already asked me ‑ ‑ ‑

GUMMOW J:   Mr Jackson explained to us provisions which indicated that there would be a document, did he not?

MR SULLIVAN:   Yes, there must be a document, in our respectful submission, that is section 18(5) I think, your Honour.

FRENCH CJ:   Section 18A makes it clear.

MR SULLIVAN:   18A too, yes.

GUMMOW J:   If there is going to be more than $40,000 stipulation it will be in the document; the Act requires there to be a document.

MR SULLIVAN:   It will be in the endorsement of the document, your Honour, which is position 14 ‑ ‑ ‑

GUMMOW J:   All right, but there will be a document, so there will be certainty.

MR SULLIVAN:   Yes, your Honour, there would be certainty, but it is otherwise a public document so that workers, for instance, do not need to go ‑ ‑ ‑

GUMMOW J:   The worker is happy because to a limited extent the worker is confident of at least $40,000; maybe even happier if he gets access to the policy and sees it is more.

MR SULLIVAN:   He may, but of course, he would be happier not to have to take advantage of the policy, your Honour.

GUMMOW J:   This implication of certainty is something of a red herring, I think.

MR SULLIVAN:   In our respectful submission, it is not, it is the reason why it is a ‑ ‑ ‑

GUMMOW J:   There is going to be a certainty on any basis because of the requirement that there be a document that can be inspected with its endorsement.

MR SULLIVAN:   Yes, but, your Honour, it was not required for the legislature to say, we are going to have a prescribed form of workers compensation policy, there could have been a complete freedom of parties to enter into any form of workers compensation contract which had certain minimum criteria without any particular form, but the legislature has evinced the intention that it is not sufficient to meet its objectives, but there is a very particular form used and that form is that which is set out.  In our respectful submission, that evinces the requisite intention and demonstrates why the starting point is that statutory wording.  Now, may I just move on one moment from there to the point that Justice Kiefel raised to say, well, if it could be varied straight away you have not proved that it was varied or what the promise was.

KIEFEL J:   Which is to say, what was the original agreement, that is the only question?

MR SULLIVAN:   Yes, but the important aspect in answer to that question, in our respectful submission, is this, and although my learned friend, Mr Walker, eschewed reliance upon cases such as Munro Brice and Kodak, they are instructed because when one is considering who bears the burden of proof in an insurance policy which is deemed to contain a particular term, it is important to determine whether the limitation of cover is an exclusion or a limitation on the one hand, or on the other hand, is part of the insurance itself.  Now, given the express language of the operative clause of the insurance of the statutory form which embeds within it – not by way of a separate clause – the limitation of up to $40,000 applicable across the board to all claims without exception and without any particular event occurring, it is quite clear, in our respectful submission, on the approach which has been accepted in the common law and in America that the “limit of liability” as Justice Gyles rightly said, is not an exclusion or a limitation at all as known to the law.

So that in other words, when your Honour says there would be a silence as to what the term was, in our respectful submission, when one properly analysed the law the obligation to prove in that vacuum what the amount was would still rest upon the person making the claim as that is an essential part of the cover it is relying upon – and it would not rest upon us because it is not truly a limitation or exclusion as the law now knows.  Now, to make good that submission may I take your Honours to ‑ ‑ ‑

KIEFEL J:   Unless you convert the question to what was the ceiling on the amount of cover, given that there is shown to be a minimum cover.

MR SULLIVAN:   Your Honour, in our respectful submission, once one starts with the proposition that whether there is going to be a ceiling or not it is going to be either a change to or a variation of the language of the particular operative clause or endorsement thereto which affects that change.  It is quite plain that in considering whether that would amount to an exclusion or a limitation or be part of the essential term of the cover which must be proved by the insured is to be determined by the ordinary process of construction of the policy. 

That process basically says – if I could take your Honours in the first place to the decision my learned friend has referred to of Munro, Brice v War Risks Association (1918) 1 KB 78 where as Mr Walker rightly said that his Lordship Justice Bailhache laid down some rules, he lay down a rule of particular importance here at page 88 of the judgment and the distinction which I was seeking to make in response to your Honour Justice Kiefel. He said:

2.      When the promise is qualified by exceptions, the question whether the plaintiff need prove facts which negative their application does not depend upon whether the exceptions are to be found in a separate clause or not.  The question depends upon an entirely different consideration, namely, whether the exception is as wide as the promise, and thus qualifies the whole of the promise, or whether it merely excludes from the operation of the promise particular classes of cases which but for the exception would fall within it, leaving some part of the general scope of the promise unqualified.  If so, it is sufficient for the plaintiff to bring himself prima facie within the terms of the promise, leaving it to the defendant to prove that, although prima facie within its terms, the plaintiff’s case is in fact within the excluded exceptional class.

Now, the language of the operative clause here is clearly one where the limitation not exceeding $40,000 is one which qualifies the whole of the promise of cover because it is all liabilities of all sorts but in every single case and without exception it is limited to $40,000.  So that is the rule he says of construction and where the onus lies in that situation, and that, of course, was picked up and adopted by Sir Frederick Jordan in Kodak 42 SR (NSW) 231, and the passage in particular I have in mind is at page 237 at about point 6 or 7 of the page:

Again, a plaintiff seeking to enforce an obligation qualified by a general exception which is applicable to all cases must negative the exception; but if the obligation is general and qualified only by particular exceptions, a person seeking to rely on an exception must prove himself within it.

He cites Munro Brice.  The other reference there, your Honours, the decision of Pye v Metropolitan Coal Limited, is a reference to a judgment of Sir George Rich who quotes that passage and says it seems to be right but does not seem to be part of the ratio of the decision of the Court.  So I cannot say it is a decision to that effect.

Now, that very approach is adopted in the United States, and, although listening to my learned friends one would think that the United States law has no relevance.  The United States law makes it plain that the premium limits of cover in respect of a lost policy, one that cannot be found, are upon the person proving the claim, or seeking to make the claim, namely the insured or the person claiming through them, but it also tests in response to this point, the Munro Brice point, indicates that the law of the United States is the same as that in Australia.

The case which illustrates that is the case of the City of Tacoma v Great American Insurance Companies 897 Federal Supplement 486.  It is a decision of the United States District Court in Washington State.  His Honour Judge Bryan had this to say at page 487 in the second column, and it is really the last full paragraph on that page:

The argument that any limitation on coverage is exclusionary in nature and should be treated as an exclusion is plainly wrong.  Under that Rationale, literally anything less than the insurer’s unconditional promise to pay any amount at any time for any reason and under any circumstances would be an exclusion and the insurer would bear the burden of proof.  It would not be necessary for the policyholder to prove anything to bring its claim within the coverage.  That argument betrays a fundamental misunderstanding of the logic and organization of an insurance policy.  The coverage language defines the set of all claims that are covered.  The exclusions define subsets of claims that, although within the main set, are nevertheless excluded.  The coverage language specifies a number of factors that must be present for the coverage to exist . . . .

Then it went on to find that the burden was on the insured to prove:

all elements of coverage, including the monetary value of the coverage.

at paragraph [3].  That test I have just read, in our respectful submission, is substantially identical to what was said by the Court in Munro Brice and adopted by Sir Frederick Jordan.

FRENCH CJ:   Does that just reduce to this?  I know we get into some slippery categories sometimes here, but that the nature of the promise for which the plaintiff in effect contends is necessarily, I promise to provide indemnity coverage without limit.

MR SULLIVAN:   Yes.

FRENCH CJ:   You say you admit nothing more than a lesser promise to provide indemnity coverage to a limit of $40,000 and that no question therefore of exceptional qualification arises, it is just how you define “promise” which is applicable.

MR SULLIVAN:   Yes, your Honour; that is the point.  My learned friend’s submissions proceed upon the premise that any qualification at all on unlimited liability is a “limitation or exclusion” which we must prove.  The point of these submissions is to point out that that, with great respect, is not correct.  It depends upon how you would characterise the policy or the particular words which state the amount of cover.  The test which has been articulated in the three cases I have taken you to would indicate that if those were applied you would decide that the prescribed form of policy which it must be presumed had been entered into in respect of amount of cover is one which is not a limitation or exclusion as known to law.  That is why his Honour Justice Gyles was quite correct in what he said in paragraph 48 of his judgment about it not being something which would be – just because it is a limitation does not mean in law it is to be treated as a limitation.

I have mentioned to your Honours that – and indeed this was a matter which was raised on the special leave application – but to the extent that it matters it is clear from the language of the prescribed policy that the amount of cover is an essential term of the policy.  The American cases make it quite plain that that is the case and that the burden of proving the amount of cover is upon the insured in a lost policy situation.  There are three particular cases we have given references to in that regard that support the proposition.  They are, first of all, Century Indemnity Company v Aero‑Motive Company, a decision of the United States District Court of the State of Michigan, 254 F.Supp.2d 670.

GUMMOW J:   Is there any relevant treatise we can go to?  There are many jurisdictions in the United States.

MR SULLIVAN:   We understand that, your Honour.

GUMMOW J:   They look in the first place to any treatises and they do not necessarily immediately romp into the United States District Court, Southern Division of Michigan.  That is why they have these extensive treatises, because they have to cope with so many jurisdictions.

MR SULLIVAN:   Your Honour, that is correct and I am going ‑ ‑ ‑

GUMMOW J:   What we tend to get is cherry picking, for all we know, in ‑ ‑ ‑

MR SULLIVAN:   Well, your Honour, we have given your Honour a reference to Couch being the treatise.

GUMMOW J:   ‑ ‑ ‑ these common law matters where there is no final Court of Appeal.

MR SULLIVAN:   Yes, your Honour.  Well, your Honour, may I say this?  We have given your Honours a reference to a treatise which is Couch and what we are doing is taking your Honours to cases which are referred to there, which ‑ ‑ ‑

GUMMOW J:   What does Couch say?

MR SULLIVAN:   It depends on which edition of Couch one reads, your Honour, but the current edition – the most recent edition seems to have gone from a hard copy to being online.

GUMMOW J:   That is always a bad sign.

MR SULLIVAN:   Do your Honours have an extract?

GUMMOW J:   We have got 1983, second edition.

MR SULLIVAN:   In our documents, your Honour, I think we handed up and made available the December 2009 update.

HEYDON J:   Is that Lee R. Russ in consultation with Thomas F. Segalla?

MR SULLIVAN:   That is correct, your Honour.  Just to complicate matters, if I may say in answer to your Honour Justice Gummow, not only has there been new editions, so to speak, of Couch, but also he has completely reorganised the book so that paragraph numbers, et cetera, are all completely different now to what they were in earlier editions and topics and the like, so it is not easy to reconcile or to marry up the two.

The three relevant extracts appear to be at paragraph 254:11, where he says, “Insured Bears Burden of Showing Coverage”.  He says:

Generally speaking, the insured bears the burden of proving all elements of a prima facie case including the existence of a policy, payment of the applicable premiums, compliance with policy conditions, the loss as within policy coverage, and the insurer’s refusal to make payment when required to do so by the terms of the policy.

There is, with great respect, not much more I can take you to in that passage.  The second of the references is at paragraph 254:12 ‑ ‑ ‑

FRENCH CJ:   Now, is this said to reflect a consensus position emerging or a common position emerging from all the cases in footnote [34], is it?

MR SULLIVAN:   Your Honour, I do not think I would put it that highly.  It does not seem to have the same status as say, a restatement of the law which would, on my understanding, seek to do what your Honour has just indicated.  This appears to be, in our respectful submission ‑ ‑ ‑

GUMMOW J:   No, that is not true at all.  Restatements quite often say what the law ought to be.  The theory of a restatement is that the restatement says what the law would be if the United States had a final court of appeal in common law matters.  That is why you have got to be careful in dealing with the restatement.

MR SULLIVAN:   I stand corrected, your Honour.

FRENCH CJ:   I think Chief Justice Roberts once referred to pick me up friends at a cocktail party when referring to the use of foreign law, it is in a different context, but there is the risk of this with this diversity of jurisdictions that you are ‑ ‑ ‑

MR SULLIVAN:   Your Honour, I am fully appreciative of it, and the reason I think all parties have referred to America is because we were asked on the special leave application to look at the situation.  We are not going to take very long on this at all, but if I may just refer you to Couch?

GUMMOW J:   The question is, what comes out of it?

MR SULLIVAN:   In our respectful submission, it is consistent with the approach which has emerged from Munro Brice and from Kodak, namely, that when you have a lost policy, that there is some evidence given as to the terms or some evidence in which you do it, the burden of proving the amount of cover, unless it can be characterised as a limitation or exclusion, rests upon the insured not the insurer because the amount of cover is regarded as an essential part of the coverage.  We have given your Honours a reference in our written submissions to the authorities which make that good but I will not in the light of our discussion take you to them any further except to say that my learned friends attempt to distinguish them is incorrect in the sense that they do state for those propositions I have just said and particularly for instance in Century, which I was going to give a reference to, at page 680, and the case of Dart Industries v Commercial Union Insurance. It is a decision this time of the Supreme Court of California, so the highest court, and that is 52 P.3d 79.

GUMMOW J:   52 Pacific you mean, do you?

MR SULLIVAN:   Thank you, your Honour.  It is Dart Industries v Commercial Union Insurance Company.  At pages 91 to 92, although the whole of the judgment is instructive, the court goes to great lengths to make a finding in respect of the amount of cover and the limitation of cover and to make a finding that in fact the insured had discharged its onus of proof in respect of those amounts of cover by reason of secondary evidence which it was able to lead.  Those cases and the City of Tacoma Case which I have taken you to already are all authority for the proposition that across the United States, in general, and indeed Crouch is not inconsistent with this either, generally speaking, the burden in on the insured to prove the cover.  Your Honours, subject to one matter, that is all which I wish to say orally.

In respect of the pleadings point I do not think I can say anything more than we have said in paragraphs 8 to 19 of our written submissions which in our respectful submission, indicates the error of the approach of Justice Brereton to the pleading point.  In our respectful submission, it is a matter on a clear reading of the whole of the defence, particularly of the paragraph set out at page 13 of the appeal book, any admission was a qualified one which would not give rise to an obligation to prove that which was not qualified.  Your Honours, may I, like my learned friend Mr Jackson, leave with one matter which is at the periphery of this appeal?  If, in the event that the appeals are dismissed, of course we would submit they should be dismissed with costs, but there has been some – prior to the appeal being conducted there was communications between the parties which may impact on the discretion as to costs and we would ask if the Court was prepared to give us leave for an opportunity to make short written submissions – very short and very brief – on the special order as to costs in the event the appeal was otherwise dismissed.

GUMMOW J:   More than the ordinary costs, say you?

MR SULLIVAN:   Yes, your Honour.  Subject to anything I can assist the Court with, they are our submissions.

GUMMOW J:   When are you going to produce these?  Why are they not produced now?

MR SULLIVAN:   The correspondence?

GUMMOW J:   No, the submission.  You want leave to put in more written submissions.

MR SULLIVAN:   Only on an issue which only arises on the question of costs, your Honour.

GUMMOW J:   Yes.  I would have thought you would normally come equipped with them.

MR SULLIVAN:   The practice varies in courts to courts.  I am sorry, your Honour.  My understanding would be that because it is contingent on the outcome of this matter, it would be appropriate to raise the matter, to seek your Honours’ leave to do so rather than to – because it would depend upon the outcome of what happens.

FRENCH CJ:   Yes, we will consider that, Mr Sullivan.

GUMMOW J:   Well, when are they going to be produced?

MR SULLIVAN:   Well, your Honour, we would be happy to produce them within 48 hours.

GUMMOW J:   That might be a bit precipitative.

FRENCH CJ:   We will leave it for the moment, Mr Sullivan.  Yes, Mr Walker.

MR WALKER:   Your Honours, in relation to the position in the various States of the United States of America, in our submission, what it all boils down to is, with respect, accurately reproduced in paragraph 37 on page 15 of our learned friend’s written submission, though, with respect, the conclusion drawn from the quoted passages cannot be supported by them.  The quoted passages that you find accurately in the last sentence of our friend’s paragraph 37 stitch together the notion of a prima facie case which on the basis of the material earlier referred to is said to encompass coverage limits, and then simply puts that side by side with a notion of the establishment of a prima facie case and then the insurer having the burden of establishing a policy limitation of its liability.

There are obvious logical difficulties with that.  If the existence or not, that is the terms or not of a policy limitation were truly part of the insured’s prima facie case then there they are, if they are established or not.  Rather, what the treatise indicates is that where there is what the academics quoted in City of Tacoma talk about a set within which there is a subset, the prima facie case so-called is proved by demonstrating that the claim falls within the set, and contrary to the scorn which those academics pour upon the notion, the cases referred to in Couch say establishing membership of the subset falls to the insurer when it is a so-called policy limitation.

Now, I referred to the academics, but our learned friends have put City of Tacoma to the forefront.  The passage which is found in the report, 897 F.Supp. 486 at page 487, right‑hand column, paragraph [2] halfway down, is of course a quotation from the article by the authors Thorsrud and others in the Gonzaga Law Review, which was itself quoted by the Supreme Court of Washington in Queen City Farms, 126 Wash.2d at 71 to 72, 882 P.2d 703. That is the passage that starts with what we submit is the, with respect, rather overwrought collapse of the opposing argument to this absurd notion that were the intellectual opponent’s view correct, then all you would have to do is to turn up as an insured and claim, to quote their expression, an:

unconditional promise to pay any amount at any time for any reason and under any circumstances.

Any exception to that is an exclusion, the burden of which fell upon the insurer.  No one has ever said that, Couch does not say that.  Falling within what I will call “the class”, to adopt those learned authors’ expression, is making out the prima facie case.  In this case that translates to, there is a liability of the kind referred to in section 18(1) and covered by the insuring clause which uses the expression “to indemnify” in the policy which was issued.  That is the prima facie case for entitlement, and the insurer then says “but I wish to take the benefit of a supposed monetary limit to that”, which was a policy issued in response to the obligation to issue a policy to cover for at least $40,000, and I am tempted to say on first principles, by which I mean simply applying an analysis of where the issues fell out between the parties in this case, and in a case such as the current case, namely long lost policy.  In our submission, it is plain that those who assert that there was agreed such a limitation, which would be a subset of the larger set or class of a liability for which indemnity was sought, have to prove it.

FRENCH CJ:   Is the plaintiff doing anything less in this case than asserting a promise of unlimited coverage?

MR WALKER:   In effect, that is rather close.  The difference – and it may not be difference that matters – is that the plaintiff asserts either no limit or no limit which affects full recovery.

KIEFEL J:   In a further passage in Couch at 254:73 entitled “Limitation of Liability”, which was provided by one of the parties, I think, it is said that:

The insurer has the burden of establishing a policy limitation –

but that there is “some authority” to the contrary on the basis that it falls within proof of coverage, which does not seem to accept that as a general proposition.

MR WALKER:   Quite.  As Justice Gummow has pointed out, it requires courage or rashness to assert without an enormous number of footnotes that there is unanimity on any common law point on anything among the United States.

HEYDON J:   That is an exaggerated submission.

MR WALKER:   It is.  I am sorry, your Honour.  It is an exaggerated submission when one thinks about in particular just this area of the law of contract and I withdraw it.  It is safer to say that the kind of notation Justice Kiefel draws to attention concerning the presence of other or opposite holdings among authorities of the various courts is by no means uncommon in questions of common law in the United States.

I was drawing attention to that general proposition to which exceptions are noted in the treatise in the passage which is the last quoted in paragraph 37 of the written submission against us, namely:

the “insurer has the burden of establishing a policy limitation of its liability”.

I accept that it cannot be said that that is the universally true position in those jurisdictions.  In any event, as we have drawn to attention in writing, the academic passage which is quoted in that passage, itself quoted from the Washington Supreme Court, then in the Federal District Court in the City of Tacoma decision, itself uses the notion of exclusion in a way that clearly differs within the space of two or three sentences.  In our submission there is not the clarity that might be supposed from the beginning of that passage.

We, in our submission, respectfully adopt as our submission matters which were raised for our friend’s consideration by Justices Hayne, Heydon and Gummow in turn concerning the nature of the way in which the issues fell out in terms of the plaintiff’s recovery.  In particular, we would simply wish to add that it is section 18(1) which of course is referred to explicitly in paragraph 18(3)(a) which makes it, we submit, absurd to suppose that it would be a contravention of the Act for a policy to be entered into which in place of 40 had 80 or in place of “not exceeding $40,000” had “without limit”.

GUMMOW J:   Just looking at section 18(1) for a minute, it is an offence provision, is it not?

MR WALKER:   Yes.

GUMMOW J:   Is there an appendant offence section?  When it says, “every employer shall obtain”, it means, shall obtain a payment permitting an offence.

MR WALKER:   In subsection (5) there is a reference to proceedings in respect of a failure to comply with any of the provisions of subsection (1).

FRENCH CJ:   It is a general penalty provision of section 67, I think, is it not?

MR WALKER:   Yes, and we have read section 18(5) as being a particular stipulation in respect to the otherwise general offence provision attaching to section 18.  In our submission, it would be absurd to suppose that it would be a breach of the Act, either framed in terms of subsection (1) or subsection (3) for there to be a policy which, in place of 40 had a larger figure, or in place of the phrase “not exceeding 40” have the phrase “without monetary limitation”.  Whether one thinks of this as a benevolent legislation so long as it be done vicariously, to adapt Sir Frederick Jordan’s rather sharp observation in Kodak, or whether one simply looks at the terms and appreciates that this is clearly intended for the provision of insured capacity to pay damages payable to a worker or a worker’s estate, in our submission, only a moment’s thought is necessary to reject the idea that there is anything, however technical, however unlikely to be prosecuted, anything in the nature of contravention.

FRENCH CJ:   You would say that under (3)(a) the words “contain only such provisions as are prescribed” do not affect a provision for a maximum recovery greater than $40,000?

MR WALKER:   That is right, and that one cannot read subsection (3), which of course is also in the Act like subsection (1), as to any degree detracting from what is required, and we submit, permitted by subsection (1).  Similarly, but with more force of course, nothing prescribed

by regulation can cut back that which is required or permitted by subsection (1) or subsection (3), and it is clear, in our submission, for those reasons that the notion of having to go through clause 14 in order to raise from the minimum level of cover required is to be rejected.  Clause 14 has to do with an effect upon what is called a condition or provision which already has the status of being a condition or provision.  We embrace, with respect, what Justice Heydon suggested, to put it in my words, namely that it applies after inception.

GUMMOW J:   There must be some awkwardness in using condition 14 in the later regulatory system, to complete what otherwise is the legal norm imposed by 18(1), which is an offence provision.

MR WALKER:   Yes.  In our submission condition 14 has nothing to do with the notion of ‑ ‑ ‑

GUMMOW J:   This is not just a case about insurance people, this is a case about sanctions to give effect to a legislative scheme.

MR WALKER:   Protective of the capacity of a worker or worker’s estate to receive – actually receive – a judgment in sum of money, rather than a judicial statement.  May it please the court.

FRENCH CJ:   Do you have any comment or submission in relation to Mr Sullivan’s application for leave to file contingent submissions in relation to costs?

MR WALKER:   No, I do not.  I am content that that simply occurs.

FRENCH CJ:   All right, thank you.  Yes, Mr Jackson.

MR JACKSON:   Your Honours, there are five matters I wish to mention.  May I deal first with the question of section 18(1) and section 18(3)?  If one goes to the terms of section 18(3)(a) it is speaking of a:

policy of insurance or indemnity shall, in so far as it relates to any liability referred to in subsection one –

Subsection (1) makes it apparent that the policy it is talking about is one which covers a minimum liability of $40,000, $40,000 as a minimum.  It would be, in our submission, an unusual reading of section 18(3)(a) when one speaks of the words “contain only such provisions as are prescribed” to regard that as in some way cutting down the ambit of section 18(1).  Those words would refer, in our submission, to provisions which relate to the policy, but do not deal with the question of any increase in the ambit above $40,000, your Honours.

So far as the condition 14 is concerned, our position has an element of neutrality about it.  It does seem a little odd to be a provision which would vary a policy not yet in existence, or form part of a policy not yet in existence.  If, as our learned friend’s argument accepts, it is a way to provide for an amount in excess of $40,000 in the policy then, your Honour, so be it in a sense.

FRENCH CJ:   I suppose some policies one finds have – just in ordinary commercial practice – have standard clauses and an endorsement which departs from those at the time of issue of the policy.  That may not help us with the constructional point.

MR JACKSON:   No, your Honour, and it is plain that condition 14 is a provision which is to facilitate the terms of the policy being capable of being seen, as is required also by 18(5).  That is the first point, your Honours.  The second point concerns the Tacoma Case, and your Honours, if one goes to page 488 of the City of Tacoma Case 897 F.Supp. 486 our learned friends referred to the long quotation at the bottom of page 487 in the right‑hand column.  If one goes over to the completion of it on the next page, page 488, your Honours will see on the sixth line on the page, because the rationale for it, which is said to be:

Because the insured is more likely to know of “its expectations or intentions”, the burden of proof of coverage falls more squarely on the insured.

Well, that is quite the opposite to a case such as this. The third point, your Honours, concerns the references to sections 6(4) and (6) of the Law Reform (Miscellaneous Provisions) Act 1946, made by our learned friends; your Honours will see that at the front of the document to which I was referring earlier. Could we just say, your Honours, that if one goes first of all to section 6(4), what is being spoken about is enforcement of a charge by an action directly against the insurer? That is done in the same way as if the action were an action to recover damages or compensation from the insured. Now, your Honours, that really does not tell one anything about the present case. If one goes then to section 6(7), it says that:

No insurer shall be liable under this Part for any greater sum than that fixed by the contract of insurance between the insurer and the insured.

So be it, your Honours, but it does not tell one anything about the method of ascertaining what is the amount fixed by the contract of insurance.  Your Honours, could I come then to a further point, and it is this.  Great reliance is placed by our learned friends, in one way or another, upon the

form of the contract which one sees in the regulations.  One needs to recognise, of course, that they are regulations and their status is that they cannot be inconsistent with the Act. 

But leaving that aside for the moment, the theoretical importance placed upon the suggested limitation of liability in the regulations seems not to have presented itself with such force to the governor‑in‑council, because when £3,000 became the amount provided for by section 18, the amending Act coming into force on 20 November 1953, the time taken to work on the issue of providing the appropriate form was not completed until the regulations were amended on 3 September 1954. 

So that it was a period of almost a year, in a sense, before there came into being a form of policy.  When the amendment to the amendment took place to make the sum £20,000 rather than £3,000, the amending Act took effect on 9 December 1958, but the amended regulation did not come into force, your Honours, until 12 February 1960.  Interesting questions might have arisen, your Honours, about how the provisions of the Act with the higher amended figure on the one hand and on the other hand the regulation with £3,000 remaining there would have been resolved. 

Your Honours, I will not go into what happened after that with the later amendments and something of a similar path can be seen, but it does make one think that the effect of the regulation was hardly thought to have been, as my learned friends have suggested.

Finally, your Honours, I was going to say in relation to Couch – to the references to Couch, there are actually three provisions, but the one your Honour Justice Kiefel referred to was the third to which I wish to refer.  Your Honours, so far as our learned friend’s submissions on costs are concerned, we are content there to be written submissions and perhaps if we could have seven days after they have been delivered within which to reply in writing.

FRENCH CJ:   Thank you, Mr Jackson.  The question of the cost submissions can wait until the outcome of the appeal.  The Court will reserve its decision and adjourns until 10.15 tomorrow morning.

AT 1.00 PM THE MATTER WAS ADJOURNED