FAI Insurances Ltd v Winneke [1982] HCA 26

High Court of Australia Gibbs C.J. Stephen, Mason, Murphy, Aickin, Wilson and Brennan JJ. FAI Insurances Ltd v Winneke [1982] HCA 26

ORDER In each case: Appeal allowed with costs against the Attorney-General for the State of Victoria. Order that the Honourable Sir Henry Arthur Winneke and James H. Ramsay cease to be parties to the proceedings. Order of the Full Court of the Supreme Court of Victoria set aside, and in lieu thereof order as follows: Appeal against the order of Jenkinson J. and motion for leave to appeal against that order, dismissed with costs. Declare that the decision of the Governor in Council made on 26 May 1981 not to approve the appellant as an insurer under the Workers Compensation Act 1958 Vict. is void. Order that the Attorney-General pay the applicant's costs other than those incurred in relation to the attempt to add the first and third-named respondents as parties.

Cur. adv. vult.

The following written judgments were delivered:—

1982, May 11 Gibbs C.J.

The facts of these two appeals, and the legislative provisions on which they depend, are set out in other judgments and I need not repeat them.

The first, and most important, question that arises is whether the Governor in Council for the State of Victoria, when deciding whether to renew an approval previously granted to a company for the purpose of s. 72(1) of the Workers Compensation Act 1958 Vict. ("the Act"), is subject to the requirements of the rules of natural justice. Such an approval entitles the company to issue the policies of insurance mentioned in that section; the refusal to renew an approval has the result that the company may no longer accept any premiums or carry on any insurance business against liability in relation to workers' compensation to which employers are subject under the Act. It is obvious that a company may, in reliance on an approval, set up an insurance business, or expand its existing business into another field of insurance, and that the refusal to renew an approval will mean that the business, or part of the business, of the insurer must immediately come to an end. A company does not set up a business of insurance in the expectation that it will last for only one year — that would be quite inconsistent with the nature of a business of insurance. The natural expectation is that the business will continue indefinitely, so long as it is properly conducted and proves successful. It is apparent that the refusal to renew an approval may have a seriously adverse effect on a company which was previously an approved insurer. In these circumstances, a company which becomes an approved insurer has a legitimate expectation that its approval will be renewed unless some good reason exists for refusing to renew it. It would not be fair to deprive a company of the ability to carry on its business without revealing the reason for doing so, and, if the reason is one related to some alleged misconduct or deficiency in the conduct of the company's affairs, without allowing the company a full and fair opportunity of placing before the authority making the decision its case against the existence of the alleged misconduct or deficiency. I have recently set out my views as to the application of the rules of natural justice in Salemi v. MacKellar [No. 2] [1] ; and Bread Manufacturers of New South Wales v. Evans [2] . In accordance with the views that I have there expressed, I regard it as clear that, in circumstances such as the present, the exercise of the power to grant or refuse a renewal of an approval will be subject to the common law rule whose effect is that a company that would be affected by a refusal to grant a renewal should be given an opportunity to be heard before a decision is made, unless that rule is either excluded by the Act on its proper construction, or is rendered inapplicable by the fact that the power is vested in the Governor in Council.