FAI GENERAL INSURANCE LIMITED v. JARVIS & ORS [1999] NSWCA 23

Reported Decision : 46 NSWLR 1 150 FLR 96

New South Wales Court of Appeal CITATION : FAI GENERAL INSURANCE LIMITED v. JARVIS & ORS [1999] NSWCA 23 FILE NUMBER(S) : CA 40376/97 HEARING DATE(S) : 11 May 1998 JUDGMENT DATE : 19 February 1999

FAI GENERAL INSURANCE LIMITED (Appellant) PARTIES : KAREN JARVIS (First Respondent) A & B CONLON CLEANING SERVICES PTY. LTD. (Second Respondent) CIGNA INSURANCE ASIA PACIFIC LIMITED (Third Respondent) JUDGMENT OF : Powell JA at 1; Beazley JA at 57; Stein JA at 58

LOWER COURT JURISDICTION : District Court LOWER COURT FILE NUMBER(S) : 1237/95 LOWER COURT JUDICIAL OFFICER : Nash DCJ

P.J. Deakin QC/S. Campbell (Appellants) COUNSEL : D.G.T. Nock SC/S. Torrington (1 Respondent) No appearance (2 Respondent) G.P.F. Rundle (3 Respondent) Curwood & Partners (Appellant) SOLICITORS : Hunt & Hunt (1 Respondent No appearance (2 Respondent) Moray & Agnew (3 Respondent) CATCHWORDS : Insurance - Third Party liability insurance - Statutory charge - Proceedings to enforce - Application for leave to proceed against insurer - Relevant considerations - Insurer entitled to decline liability - Whether leave properly granted DECISION : Appeal allowed

1 POWELL JA: Many of the difficulties which attend the resolution of the present appeal are due to the fact that the proceedings at first instance before Nash DCJ appear to have proceeded upon the basis of a number of assumptions - both as to fact and to law - the validity of which is, at the least, questionable, if not totally absent. 2 The proceedings - of which the proceedings before Nash DCJ form but a part - relate to an accident said to have occurred on 16 March 1992 when the first respondent ("Mrs. Jarvis") fell while in a store at Caringbah, which store was then occupied by VSLR Pty. Limited ("VSLR"), a company which appears to have been associated in some way with another company known as Venture Stores Limited ("Venture"), as the result of which fall Mrs. Jarvis sustained a comminuted fracture of the right kneecap. The material which is in the appeal books (AB 77-82) tends to indicate that Mrs. Jarvis fell when she was walking on a walkway between the store entrance and what is described as the lay-by section of the store, which walkway had been sprayed with floor polish and which was, at the time, being buffed by a cleaner. 3 In was later to be claimed that, at the time of the accident, VSLR was insured by the Third Respondent, CIGNA Insurance Asia Pacific Limited ("CIGNA") under a Public and Products Liability Policy, the insuring clause of which, so far as is relevant, was as follows (AB 28): "1. COVERAGE … CIGNA shall indemnify the insured for all sums which the insured shall be legally liable to pay compensation in respect of: (i) personal injury; ……… occurring within the Policy Territory during the Policy Period as a result of an Occurrence happening in connection with the business of the Insured described in the Schedule. ………" 4 It should, however, be pointed out that the document which formed part of the evidence on the hearing before Nash DCJ and was put forward as the relevant policy calls that claim into question. The document is not the relevant policy but is a copy of a policy said to have been issued by CIGNA Insurance Australia Limited - which may, however, merely have been an earlier name for CIGNA - which, although identifying both Venture and VSLR as the insured and designating the policy period as being from 31 July 1991 at 4.00 p.m. to 31 July 1992 at 4.00 p.m. has attached to it two endorsements the second of which, said to be effective from 29 April 1992, provided for the amendment of Item 1 - Insured - in the schedule to the policy so as to read, instead of "Venture Stores Limited", "Venture Stores (Retailers) Pty. Limited - Scheme". However, as the hearing before Nash DCJ appears to have proceeded upon the basis that, at the relevant time, VSLR was insured by CIGNA under such a policy, and as CIGNA has not, although the Appellant (FAI) has, appealed in respect of the orders made by Nash DCJ, I suppose I should not concern myself further with the matter. 5 The form of policy which is in evidence contains the following (inter alia) provision (AB 31): "4. INSURED'S DUTIES IN THE EVENT OF AN OCCURRENCE, CLAIM OR SUIT (a) In the event of an Occurrence or the likelihood of a Occurrence the Insured shall immediately take at his own expense all responsible steps to prevent Personal Injury or Property Damage arising or continuing out of such Occurrence. (b) The Insured shall give notice in writing to CIGNA as soon as practicable of every Occurrence, and shall immediately forward to CIGNA all information relevant to such Occurrence received or held by the insured or his representative, in particular: Every demand, writ, summons, proceedings, impending prosecution, inquest and all information in relation thereto. (c) the Insured shall not, without CIGNA'S written consent make any admission, offer, promise or payment in connection with any Occurrence or claim. (d) the Insured shall use his best endeavours to preserve all property, products, appliances and plant and all other things which may assist in the investigation or defence of a claim or in the exercise of rights of subrogration and so far as may be reasonably practicable no alteration or repair shall be effected without the consent of CIGNA until CIGNA shall have had an opportunity of inspection. 5. RIGHT TO DEFEND; ASSISTANCE AND CO-OPERATION OF THE INSURED ……… (b) the Insured shall co-operate with CIGNA and shall comply with the terms and conditions of this policy, and shall enforce any right of contribution or indemnity against any person, corporation or organisation who may be liable to the insured because of Personal Injury or Property Damage with respect to which insurance is afforded under this police." 6 Although there was, in my view, no evidence admissible against either the Second Respondent, A & B Conlon Cleaning Services Pty. Limited ("Cleaning Services"), or FAI as to the matter tendered on the hearing before Nash DCJ, Mrs. Jarvis' claim then was, as it still is, that, at the time of her accident, VSLR had contracted Cleaning Services to carry out cleaning at its Caringbah store and that the cleaner who, at the relevant time, was buffing the walkway - a Mr. Waterman - was employed at the time by Cleaning Services. 7 I say that no evidence admissible as against either Cleaning Services or FAI as to the existence of any such contractual arrangement between VSLR and Cleaning Services was tendered on the hearing before Nash DCJ for the following reasons: 1. although the evidence which was tendered on that hearing included a letter dated 27 July 1992 from CIGNA to VSLR (AB 88), which letter asserted, inter alia, that "(CIGNA considers) that A & B Conlon are responsible for the incident" the tender of that letter against FAI was objected to at the hearing before Nash DCJ (AB 126) and was not read as against FAI; 2. although there was tendered on the hearing before Nash DCJ as Exhibit "A" a letter from CIGNA to Mrs. Jarvis' solicitors dated 1 February 1995 the tender of that letter was prefaced by the following statement by counsel then appearing for Mrs. Jarvis (AB 140): "TORRINGTON: There is just one matter which I'd seek leave to tender a letter before your Honour. It was a matter that arose before the adjournment and that is how the plaintiff came to be informed that A & B Conlan were the cleaners. Your Honour could I tender a letter under the hand of CIGNA Insurance Australia Limited dated 1 February 1995 in the hand of Mr. Peter White." So far as is relevant, that letter (AB 177) was as follows: " ……… According to the information on our file the cleaners at the time of the incident were A & B Conlon. No further details were provided by our insured however, we have consulted the telephone directory and the undermentioned is listed: A & B Conlon Cleaning Services Pty. Limited, 153 George Street, Liverpool, telephone number 602-4707. ………" 3. the transcript further records that following after the tender of that letter (AB 140): "TORRINGTON: Your Honour, there was one other matter which I informed my learned friend for FAI that I could call evidence from my solicitor. He does not require my solicitor to be called and indicates I can say to the court that Mr. Jones of Hunt and Hunt, the solicitor handling this matter, in fact spoke to Mr. Conlan. HODGSON: A person describing himself as … TORRINGTON: Sorry, a person describing himself as Andrew Brian Conlan who stated two relevant matters, your Honour. This was in April 1996. One, A & B Conlon were the cleaners employed at Venture Stores on the day in question, and two, Mr. Chris Waterman was employed by them, that is A and B Conlan Cleaning Services. And my learned friend does not concede as to whether or not the person we spoke to identified himself as Mr. Conlan was in fact Mr. Conlan of the same company. He doesn't concede that aspect of it. And your Honour, could I indicate from the bar table that we informed the solicitors for FAI of Mr. Andrew Brian Conlan's phone number which is deposed to in their affidavit in any event, your Honour. And I thank your Honour for allowing me to adduce that further evidence." 8 Even if - which I would dispute - Mr. Torrington's statement could be regarded as evidence of anything, it would not, in my view, have been admissible against either Cleaning Services or FAI; and even if it were, it would, in my view, have been of not the slightest weight whatsoever, since evidence which was available and tendered on the hearing before Nash DCJ tended to indicate, first, that Cleaning Services ceased to trade at about the end of 1994 (AB 95-96); second, that the directors of Cleaning Services, who, at the time, included Mr. A.B. Conlan, his wife Mrs. B.M. Conlan and their daughter Mrs. B.M. Role, all retired and lodged with the National Companies and Securities Commission notices of retirement prior to the end of June 1995; third, that, in about July 1995, there was lodged with the National Companies and Securities Commission an application for deregistration of Cleaning Services as a defunct company (AB 40-43); and, finally, that, as at the date of the hearing before Nash DCJ in April 1997, Mr. and Mrs. Conlan were, as they had for an extended period prior thereto been, overseas - their whereabouts, except in the most general terms, not being known (AB 96) - and it was not known when, if at all, they might return to this country (AB 97-98). 9 Whether or not Cleaning Services had been retained by VSLR to carry out cleaning at its Caringbah store, it is clear enough that, at the time of Mrs. Jarvis' accident, Cleaning Services was insured by FAI pursuant to what was described as an FAI Business Package Policy, the initial currency of that policy having been from 29 March 1991 to 29 March 1992 - it appears then to have been renewed for the following year but not thereafter renewed. That policy (AB 51-69), in Section 6 - Legal Liability, provided (inter alia) (AB 64): "COVER UNDER SECTION 6 We will pay on your behalf all sums you shall become legally liable to pay by way of compensation … for bodily injury … provided: - this occurs during the period of insurance as a result of an accident happening and - this happens in connection with the carrying on of the Business ………" 10 The general conditions applying to all sections of that policy contained the following (inter alia) (AB 68): "(F) CLAIMS On the happening of any Event likely to produce a claim under any Section of this Policy, you must forthwith give notice in writing to us and give us at your own expense full details in writing containing as particular an account as is practicable of all the circumstances with particulars of the Property lost, destroyed or damaged or persons injured and the extent of the loss or damage or the injury sustained and if demanded a statutory declaration verifying the claim and any connected manner. You must notify the Police immediately if any of the Property is lost, stolen, or maliciously damaged and take all practicable steps to discover the person(s) responsible and to recover the Property lost or stolen. ……… We and any every (sic) person authorised by us, without incurring any liability and without prejudicing our rights in any way to rely upon any conditions of any Section of this Policy, may enter, take or keep possession of the Buildings or Premises where any loss, damage or destruction has occurred and we may take fossession (sic) or require to be delivered to us any of the property which is insured and deal with the same for all reasonable purposes and in any reasonable manner. This condition shall be evidence of our right to do so. If you or anyone acting on your behalf shall not comply with our requirements or shall hinder or obstruct us or any person authorised by us in carrying out any of the acts referred to, then we may at our option decline to pay any monies otherwise payable under any Section , but without prejudice to our rights to cancel this Policy or any of its Sections. You shall not in any case be entitled to abandon any property to us whether or not we have taken possession. You must give us written notice as soon as possible of every occurrence, claim, writ, summons or proceedings including any prosecution or inquest and all information in relation to such matters for which there may arise any liability under any Section of this Policy. You must not admit liability if an accident occurs which is likely to result in someone claiming against you and for which we insure you. We may at our option take over and conduct in your name the defence or settlement of any claim made or which may be made against you and we shall have full discretion in doing so. We shall have full discretion in the conduct of any proceedings in connection with any claim and you must give us all information and assistance that we may require." 11 However, to return to the narrative: In accordance with what seems to have been VSLR's practice in such matters, the manager of the Caringbah store prepared a "Customer Accident Report" (AB 77-78) dated 16 March 1992 and obtained short statements from two of the store's employees, a Ms. Haines (AB 79), who appears to have been the store medical officer, and a Ms. Halliday (AB 80). In addition, a statement was obtained from a cleaner, a Mr. Waterman (AB 81-82). The accident report and those statements appear to have been forwarded by VSLR to CIGNA in mid-May 1992 (AB 85). 12 Ms. Halliday's statement was to the following effect: "I was calling for a service 60 (?) at app. 9.40 a.m. on Monday 16th March 92 when I watched the cleaner spray a watery solution on to the floor before buffing. The lady was walking in the middle of the isle (sic) coming from the lay-by section as she reached the cleaner she slipped on the wet floor - she grabbed for her knee. The cleaner and myself rushed to her assistance." while Mr. Waterman's statement was as follows: "I Chris Waterman the cleaner working at the carinbah (sic) Venture store on the 16.3.92 was bushing the main corrider (sic) down from the front of the store. As I was buffing a part of the floor I had just sprayed with polish. There was a lady walking on the otherside (sic) of the area I was buffing. I looked momentarily at her and she was just about to walk on the other side (sic) of the corrider (sic) so I continued buffing and I heard a thud and a scream. I looked around and the lady had fallen over and was holding her knee which looked as if the knee cap had been pushed out of place. I waited around to see if I could help as much as aid was given to her by the Venture staff whilst we waited for an ambulance. The ambulance men come and put her on a stretcher and they took her away."