[1996] 38 NSWLR 681 ANTICO v CE HEATH CASUALTY AND GENERAL INSURANCE LTD and ANOR [NO 2] SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL KIRBY P, PRIESTLEY and POWELL, JJA 18-19 October 1995, 5 February 1996 [1996] NSWCA 18 PRACTICE and PROCEDURE — variation of orders — cross appeal — costs — held — (by Maj) — cross appeal dismissed Kirby P On 30 January 1996 the Court published reasons and pronounced orders in these proceedings. In my reasons, I dealt with the issues argued, including in the cross appeal. However, I misled myself because the other judges did not embrace my reasoning on "notification". I did not provide orders to dispose of the cross appeal consistent with my reasons. It follows from my reasons that the following additional orders should be made to dispose of the cross appeal which, I agree, is not disposed of by the previously announced orders in the appeal: 1. Cross appeal allowed; 2. The first cross respondent to pay the costs of the cross appeal; 3. Order that those parts of the decision of Giles CJ Comm D in which his Honour answered the questions set out in para2.2, paraS.2 and para5.4 of the Statement of Issues be set aside; 4. In place of the answers given by Giles CJ Comm D to the questions set out in para2.2, paraS.2 and paraS.4 of the Statement of Issues order that the following answers be given: (a) Question: Whether the letter of 5 September 1990 from Heath Fielding to CE Heath constitutes notification of the facts asserted in the letter so as to require CE Heath to treat the claims made against Sir Tristan as having been made during the period of insurance under the Earlier Policy. Answer: Yes. (b) Question: Whether Heath Fielding breached the implied terms of the retainer between it and Sir Tristan by failing to notify CE Heath of the Minter Ellison letter or by failing to advise Sir Tristan to do so. Answer: No. (c) Question: If Heath Fielding was under a duty to notify CE Heath of the Minter Ellison letter or to advise Sir Tristan to do so, whether Heath Fielding breached that duty. Answer: No. Two questions were debated before this Court in relation to these orders. The first concerned the answers to questions 4 (b) and (c). It was suggested for the insured that the questions should not be answered but should be sent back to the Commercial Division to be answered in a way consistent with the decision of this Court. If I thought that, at trial, there had been an issue (eg that, even if notification were given to the insurer by the broker, the insured wished to reserve the possibility of arguing that such notice was inadequate or unclear and caused him damage) I would so order. However, I do not believe that any such issue was 2 UNREPORTED JUDGMENTS litigated. There is, therefore, no point in returning the proceedings to the Division. On the way the trial was conducted, I believe it follows from a finding that the broker gave notification on behalf of the insured, that there was no breach of duty by the broker. Questions 4 (b) and (c) should be answered "No". As to costs, the cross appellant (broker) asked for the costs of the cross appeal which, in my view, it should have. It was obliged to come to the Court and to contest the finding that it had failed to notify the insurer. Upon my view, it gave the notification required. It follows that the answers offered by Giles CJ Comm D on this point were wrong. But who should bear the costs of the cross appeal? For the insured (first cross respondent) it was pointed out that: 1. He supported the cross appellant's arguments in the cross appeal; and 2. The insurer did not, as it could have done, submit to the orders of the Court in the-cross appeal. Belatedly, at the hearing of argument in this Court, the insurer indicated its indifference to the outcome of the cross appeal, relying on the want of cover to rebuff any obligation of indemnity. It should, so it was argued, have signified this position earlier. For the insurer it was pointed out that: 1. The ultimate outcome of my reasoning is that the insured fails in his claim against the insurer who should therefore not have to bear the costs of the litigation. They should fall on the unsuccessful insured; and 2. The insurer's lack of interest in the cross appeal was obvious given its principal basis for resisting the insured's claim. It was not really concerned in any dispute which the insured had with his broker. Such disputes could not affect the insurer's liability. The insurer was brought to court unnecessarily. It had wholly succeeded. It should have its costs. I agree with the arguments of the insurer. That is why I have proposed that Sir Tristan Antico (the insured) (first cross respondent) should pay the costs of the cross appeal. Priestley JA The court delivered judgment in this matter on 30 January 1996. On one of the issues argued in the appeal, I thought it followed that the appeal must be dismissed. I then did not find it necessary to deal with the other issues. A further reason for not dealing with the other issues was that I considered them to be difficult and I preferred not to decide them when it was not necessary to do so. After judgment was delivered, it was drawn to the court's attention that the court had not disposed of the cross-appeal of the second respondent, Heath Fielding Australia Pty Ltd (Heath Fielding). The parties were heard this morning on the outstanding matters and the court then adjourned to consider the position. In order to dispose of the cross-appeal I have re-considered the other issues upon which it was unnecessary to decide for the disposition of the appeal. The facts concerning these are all set out in Kirby P's reasons. One of these issues was whether the letter from Heath Fielding dated 5 September 1990 to CE Heath Casualty and General Insurance Limited (CE Heath) and which enclosed a number of documents including the letter of 29 June 1990, constituted notification to CE Heath within the meaning of condition 5 of the relevant policy or could satisfy s40(3) of the Insurance Contracts Act 1984. Giles CJ Comm D had been of opinion that there had not been notification either within the meaning of condition 5 or s40(3). It followed from this opinion that Heath Fielding was in breach of an implied term of its retainer by the appellant. Before Giles CJ Comm D a submission had been foreshadowed for the UWAUTICO v CE HEATH CASUALTY AND GENERAL INSURANCE LTD and ANOR [NO 4 (Powell JA) appellant that had Heath Fielding made due notification, there was a chance that CE Heath would not have resisted provision of indemnity on the other grounds raised in the proceedings, so that it did not follow if Giles CJ] Comm D were to make the adverse decisions on other issues (which he subsequently did) there would be no loss recoverable from Heath Fielding. The validity of that submission, and the quantification of the value of the loss of the chance if the issue were found in the appellant's favour were deferred for subsequent hearing at first instance. Kirby P took a different view on this point from Giles CJ Comm D. Kirby P thought the letter of 5 September enclosing the letter of 29 June was a sufficient notification. It would follow from this that Heath Fielding's cross-appeal should be upheld. The issue of notification was one which seemed to me to be particularly difficult. I do not think the difficulty can be better illustrated than by comparing the reasons given for his view by Giles CJ Comm D (at 32-43, AB 279-290) with those of Kirby P (at 25-36 of his reasons of 30 January 1996). The reasoning in each case seems to me to be very persuasive. The various decisions referred to also illustrate the difficulty that frequently arises in issues of this kind. Usual lines of approach can be seen in the decisions, the difference in result being attributable in the main to the different factual situations. It seems to me that Giles CJ Comm D and Kirby P have fully covered the opposing considerations on the facts of the present case. My own view, in the course of argument in this court on this point, on further consideration of Giles CJ Comm D's reasons, and then on reading Kirby P's reasons in draft, always tentatively led me to the same conclusion as Giles CJ Comm D, but because my view was only tentative and I regarded the arguments as almost evenly balanced, I was content to withhold my opinion, which was not necessary for the decision of the appeal, and to confine myself to the one matter on which I had a clear and firm opinion and which decided the appeal. However, now that I have given specific consideration to the cross-appeal, I have come to a firm opinion on the notification point. I see no advantage in repeating the various matters taken into account by Giles CJ Comm D. I find his reasoning more persuasive than that which leads to the opposite view. I therefore adopt his reasoning. In my view he was right in holding that the letter of 5 September, with its enclosures, did not achieve relevant notification. This conclusion is enough to decide the cross-appeal. It follows from my conclusion on the notification point that I agree with the answers given by Giles CJ Comm D to the questions set out in para2.2, paraS.2 and para5S.4 of the Statement of Issues. (Whether the answers to the second and third of the three questions followed from the answer to the first, as I think they do, was raised with the parties this morning, and none of them made a submission to the contrary.) These answers require that the cross-appeal be dismissed. I therefore propose that the court should add to the orders made on 30 January 1996, an order that the cross-appeal be dismissed with costs. Powell JA I agree with the Orders proposed by Priestley JA and with his Honour's reasons for so doing. Add to the orders handed down on 30.1.96 - order that the cross-appeal be dismissed with costs. Counsel for the appellant: FM Douglas QC 4 UNREPORTED JUDGMENTS Solicitors for the appellant: Allen, Allen and Hemsley Counsel for the first respondent: AR Emmett QC Solicitors for the first respondent: Phillips Fox Counsel for the second respondent: I Waller Solicitors for the second respondent: Clayton Utz