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." 13 Mrs. Jarvis appears to have consulted a Mr. Muscat, solicitor, shortly after the accident, as he wrote to the manager of the Caringbah store on 24 March 1992 (AB 83) seeking the name of VSLR's public liability insurer so that "(he might) contact them with details of (his) client's claim". 14 In June 1992 CIGNA wrote to Mr. Muscat's firm (AB 87) in relation to Mrs. Jarvis' claim advising of an appointment which had been made for Mrs. Jarvis to be examined by a Dr. Reid. In the course of that letter CIGNA wrote: "Our investigation of the claim indicates that the incident could be the fault of the cleaning firm that is employed by our insured and we are making further inquires (sic) into the matter as quickly as possible." 15 It would appear that, by this time, the fortunes of Venture and VSLR had deteriorated, for, in the course of his Judgment (AB 196), Nash DCJ recorded: "… it was about this time that (VSLR) had others managing its affairs. Notifications to the Australian Securities Commission of appointment of receiver and manager began on 13 July 1992 and a filing of application for winding up order on 13 August 1992. This order was made on 10 December 1992. Full co-operation with CIGNA by (VSLR) ceased at about July 1992." 16 It would, however, appear that CIGNA did not become aware of the appointment of the receiver until some time after July 1992 for in the letter, to which I have earlier (see p.4 (above)) referred, written by CIGNA to VSLR on 27 July 1992, the following (inter alia) appears (AB 88): "As mentioned in our letter dated 10th June 1992 we consider that A and B Conlon are responsible for the incident and wish to write to them and advise them accordingly but before doing so we seek your permission that it will be in order to carry this out. Would you therefore please inform us of your decision and if it is in the affirmative then we would wish to know the name of the person we should contact at A and B Conlon. As the matter is urgent would you please give this your immediate attention." 17 Despite the terms of this letter there appears to have been no evidence whatsoever that, at any time prior to the commencement of these proceedings in the District Court in February 1995, CIGNA wrote to Cleaning Services; nor, for that matter, does there appear to be any evidence whatsoever that, at any time prior to the commencement of these proceedings in the District Court, any claim was made on behalf of Mrs. Jarvis against Cleaning Services. 18 I think it appropriate at this stage to make an observations about the following statement (AB 186): "In his Affidavit sworn 21 November 1996 Mr. Crittenden, the former solicitor for the first defendant and now the solicitor for CIGNA, stated that the contract cleaner for the Venture Stores at Caringbah at the relevant time was the second defendant." made by Nash DCJ in the course of his judgment. First, it is to be observed that Mr. Crittenden's Affidavit - which is not included in the appeal papers - was not served upon the solicitors acting for FAI, nor was it read on the hearing before Nash DCJ as against FAI (see AB 134); and, second, that, even if, as Nash DCJ has recorded, Mr. Crittenden's Affidavit did contain a statement to that effect, the only basis for Mr. Crittenden making that statement would appear to have been statements in the correspondence to the effect of that contained in the letter of 27 July 1992 from CIGNA to VSLR. That this was so is made clear from the following passages in the course of Mr. Crittenden's oral evidence on the hearing before Nash DCJ (AB 138-139): "REYNOLDS: Q. Mr. Crittenden in providing advice to your insurance client in respect of the resistance of the plaintiff's claim, it would be relevant would it not to have the details of the insurance - the cleaning contract between the store and the cleaner? A. Oh, very much so. Q. And also the name, the last known full name of the cleaner who regularly attended the store? A. Yes that would be relevant. Q. And the full name of any person such as Allison Halliday who may or may not have on the face of her statement may or not have been an employee of the store? A. Yeah certainly the records of addresses, telephone numbers for Ms. Halliday would have been relevant. HIS HONOUR: Yes unfortunately her statement doesn't provide, and neither does the statement of Halliday - of Waterman neither provides an address. REYNOLDS: Q. And the person Grove you referred to as the manager, his name comes from the claim - the Accident Report Form which is exhibited C in your Affidavit? A. Yes. Q. And it would be relevant to have access to him to assist in the, as you say, cleaning … A. Yeah we thought he was very …. Q. … contractual arrangements that may or may not have existed? A. We thought he was a very important witness to provide information as to, A, the documents that might exist between Venture and the cleaner and also any verbal instructions that may have been given to the cleaner. Q. And do you hold any information at the moment which would identify the cleaner as being A & B Conlan Cleaning Services Pty. Limited ……… A. Do I hold any evidence? Q. Yes do you hold any evidence which would - to suggest that A & B Conlan Cleaning Services Pty. Limited was the cleaner. A. From memory really its only the basis of the reference to A & B Conlan and the various pieces of correspondence. ……… Q. And that correspondence is the correspondence between Messrs. Hunt and Hunt and your firm? A. No I think correspondence earlier in the peace (sic) between …. Q. The plaintiff's former solicitors? A. Yes and also the correspondence between CIGNA and Venture. ……… REYNOLDS: I'm not putting it forward in the case against FAI your Honour, I'm putting it forward on the basis of highlighting the very situation that CIGNA has in respect of the case because its position would be without the proof of the cleaner but based on what Waterman says that it would be impossible for the insurer now to join whoever the cleaning might be, whether its A & B Conlan or Smith and Jones or anybody else. ……… REYNOLDS: Q. So Mr. Crittenden is there any evidentiary basis for identifying who the cleaner might be. A. Certainly not in terms of any contractual documents as I said only in relation to the correspondence that I have seen." 19 Although it may not be entirely clear from the passage which I have set out above, the evidence before Nash DCJ would tend to indicate that, at that time, no one had any information as to the then present whereabouts of Mr. Grove, Ms. Haines, Ms. Halliday or Mr. Waterman. 20 However, to return yet again to the narrative: Save that it appears that Cleaning Services policy with FAI lapsed in March 1993 and that, Cleaning Services ceased to carry on business by no later than the end of 1994, the evidence does not disclose anything of what occurred in the intervening period and prior to the commencement of these proceedings in the District Court. 21 On 1 February 1995 CIGNA wrote to Mrs. Jarvis' present solicitors a letter (AB 177) which was, in part, as follows: "According to the information on our file the cleaners at the time of the incident were A & B Conlan. No further details were provided by our insured however, we have consulted the telephone directory and the undermentioned is listed: A & B Conlan Cleaning Services Pty. Limited 153 George Street, Liverpool telephone number 602-4707. Upon reviewing our file it is clear that the issue of indemnity is in dispute and therefore regarding further information we would refer you to the insured's liquidator who are (sic) Ferrier Hodgson (Vic), P.O. Box 781, Dandenong 3175. We understand T.R. Vince is the official liquidator concerned." 22 Although, at that time, leave to proceed against VSLR, notwithstanding that it was in the course of being wound up, had not been granted, the proceedings at first instance - to which, at that stage, only VSLR and Cleaning Services were joined as party-Defendants - were commenced on 28 February 1995. 23 Thereafter, on 6 March 1995, there was filed in the Supreme Court of Victoria on behalf of Mrs. Jarvis a Notice of Motion in which she sought leave to commence, and to continue, the proceedings against VSLR in the District Court. That Notice of Motion came on to be heard on 10 March 1995 on which day Master Wheeler ordered, by consent (inter alia) (AB 9): "Pursuant to section 471B of the Corporations Law, the Applicant has leave (nunc pro tunc) to commence proceeding number 1237 of 1995 in the District Court of New South Wales at Sydney against VSLR Pty. Limited (In Liquidation)("VLSR") and leave to continue that proceeding against VSLR." 24 One assumes that, in due time, a copy of the Statement of Claim which had been filed in the District Court was served upon VSLR's liquidator as, in the course of his judgment, Nash DCJ refers (AB 186) to Mr. Crittenden's Affidavit in which he apparently stated that, on about 29 September 1995, he received instructions from CIGNA to act on behalf of it and VSLR. Grounds of Defence (AB 13) putting in issue the material parts of the Statement of Claim and, as well, raising contributory negligence on the part of Mrs. Jarvis were ultimately filed on behalf of VSLR on 8 February 1996. 25 An Affidavit of one Thomas Pfeifle which has been filed in the District Court (AB 8) contains the following - less than accurate - statement: "I did on twenty-fourth day of April 1995 duly serve the PROPER OFFICER A & B CONLAN CLEANING SERVICES PTY. LTD, the Second Defendant, with a sealed copy of ORDINARY STATEMENT OF CLAIM, by attaching them to the door at SUITE 6, 153 GEORGE ST., LIVERPOOL 2170 which is the registered office of the PROPER OFFICER A & B CONLAN CLEANING SERVICES PTY. LTD in the said State." (One may question whether, notwithstanding the provisions of s.220(1) of the Corporations Law, such "service" ought to be regarded as good service (see, for example, Deputy Commissioner of Taxation v. Abberwood Pty. Limited (1990) 19 NSWLR 530.) 26 There is no evidence to indicate that the Statement of Claim ever came to the attention of Mr. and Mrs. Conlan or any other person connected with Cleaning Services. But even if it did come to their notice, it seems clear enough (AB 35) that FAI was not made aware of the existence of any claim on the part of Mrs. Jarvis, or the commencement of the proceedings at first instance, until late May 1996, when, following a telephone conversation with an employee of FAI, Mrs. Jarvis' solicitors wrote to FAI a letter (AB 19) which, so far as is relevant, was as follows: "KAREN JARVIS v. VSLR PTY. LTD. (In Liquidation) (ACN 004 859 438) We act on behalf of the above named in relation to injuries sustained in an accident on 16 March 1992. We note that A & B Conlan Cleaning Services Pty. Limited held a policy with your office as at the date of the accident. We enclose, a copy of the following: 1. Affidavit of Service of Thomas Pfeifle dated 27 April 1995 attaching Statement of Claim. ……… We advise that the above matter is listed for hearing in the District Court at Sydney on 18 June 1996 before an Arbitrator. We would appreciate your prompt attention to the matter and look forward to receiving notification of your attitude to the claim." 27 FAI thereafter instructed its solicitors to investigate the claim. Having obtained those instructions, FAI's solicitors wrote to Mrs. Jarvis' solicitors, a letter (AB 20-22) which, so far as is relevant, was as follows: "A & B CONLON CLEANING SERVICE PTY. LTD. (sic) ats JARVIS We act on behalf of FAI Insurance Limited and have been forwarded a copy of your letter to our client dated 24 May 1996. From that letter we note the following: 1.. You act on behalf of Karen Jarvis. 2. District Court proceedings were instituted against A & B Conlon Cleaning Service Pty. Limited (sic) on behalf of Karen Jarvis by your firm in February 1995 and were apparently served upon A & B Conlan Cleaning Service Pty. Limited's registered office on 24 April 1995. ……… 4. You contend that as at the date of your client's injuries (16 March 1992) A & B Conlon Cleaning Service Pty. Limited (sic) were insured by our client insurer. We are instructed that receipt of your above mentioned letter was the first notification which our client insurer had of this matter and our client is therefore not even certain at this stage whether it was in fact the relevant liability insurer of A & B Conlon Cleaning Service Pty. Limited (sic) at the relevant date. If our client was the relevant insurer then an immediate question arises as to whether or not our client has been prejudiced as a result of the extreme late notification of this claim and consequently before our client can make any decision in relation to the matter a preliminary determination will need to be made as to whether or not indemnity under the policy is available. This is currently being explored and as soon as we are able to do so we will advise you of our client's decision. ………" 28 On the following day, FAI's solicitors wrote to Mr. and Mrs. Conlan at their last known address seeking to ascertain whether they had any information which bore upon the claim being made by Mrs. Jarvis. That letter (AB 38-39) produced no reply and other inquiries made by FAI's solicitors tended to indicate that, as I have earlier recorded, Cleaning Services was then no longer trading and Mr. Conlan had retired and resided overseas and that, although the whereabouts of Mrs. Conlan were not known, it was believed that she, also, was then residing overseas. 29 Thereafter, on 12 June 1996, FAI's solicitors forwarded to Cleaning Services, addressed to it at its registered office, a letter (AB 44) which was in part, as follows: "A & B CONLON CLEANING SERVICE PTY. LTD (sic) ats JARVIS We enclose herewith a copy of a self-explanatory letter forwarded to Andrew and Barbara Conlon (sic) dated 4 June 1996. As at today's date we have received no response to this letter, however, as a result of inquiries which we instigated into this matter we understand that this may be because of the fact that Mr. and Mrs. Conlon (sic) are overseas. In any event we advise that having investigated the matter as much as is possible given the fact that the matter is listed for hearing on 18 June 1996 and that our client was only made aware of the claim on 24 May 1996, our client has determined that as a result of the late notification which it received in relation to the claim, it has been severely prejudiced and it is not in a position to defend this action on behalf of the company given that prejudice. We have therefore been instructed to advise that indemnity in relation to the claim is being denied. ………" 30 On the same day, FAI's solicitors, forwarded to Mrs. Jarvis' solicitors by facsimile, a letter (AB 23) which was as follows: "RE: A & B CONLON CLEANING SERVICE PTY. LTD (sic) ats JARVIS We refer to previous correspondence in this matter. Having investigated this matter as much as is possible given the time allowed, our client insurer has determined that it has been severely prejudiced as a result of the late notification of this claim by its insured and as such we have now been formally instructed that we are not to represent the Second Defendant in these proceedings. Notice of our client's decision has been forwarded to the registered office of the Second Defendant and the last known address of the Directors. We will therefore be playing no further part in this matter." 31 On the following day, CIGNA's solicitors, forwarded to Mrs. Jarvis' solicitors by facsimile a letter (AB 24) which was as follows: "RE VSLR PTY. LIMITED (IN LIQUIDATION) & ANOR. ats JARVIS We refer to our facsimile of earlier today. We have received instructions to cease acting on behalf of the First Defendant. We have given the First Defendant Notice of our Intention to Cease Acting on its behalf. We shall be seeking leave at the arbitration to withdraw from the proceedings. You should address all further correspondence to the First Defendant to: Mr. P.R. Vince Official Liquidator VSLR Pty. Limited (in liquidation) c/- Messrs. Ferrier Hodgson Chartered Accountants P.O. Box 781, DANDENONG VIC 3175" 32 Thereafter, on 18 October 1996, there was filed the Notice of Motion (AB 15) which came ultimately to be dealt with by Nash DCJ in which Notice of Motion there were sought the following - not entirely appropriate - orders: "1. Cigna Insurance Australia Limited be joined as the Third Defendant in these proceedings. 2. FAI Insurance Limited be joined as a Fourth Defendant to these proceedings." 33 I say that the orders sought were not entirely appropriate, since the purpose of the application was, not merely to have the proceedings amended by joining additional parties-Defendants, but to enable Mrs. Jarvis to pray in aid the provisions of s.6 of the Law Reform (Miscellaneous Provisions) Act 1946 ("The Law Reform Act"), which provisions, so far as is relevant, are as follows: "6(1) If any person (hereinafter in this Part referred to as the insured) had, whether before or after the commencement of this Act, entered into a contract of insurance by which he is indemnified against liability to pay any damages or compensation, the amount of his liability shall in the happening of the event giving rise to the claim for damages or compensation, and notwithstanding that the amount of such liability may not then have been determined, be a charge on all insurance moneys that are or may become payable in respect of that liability. ………. (4) 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: Provided that, except where the provisions of subsection (2) apply, no such action shall be commenced in any court except with the leave of that court. Leave shall not be granted in any case where the court is satisfied that the insurer is entitled under the terms of the contract of insurance to disclaim liability, and that any proceedings, including arbitration proceedings, necessary to establish that the insurer is so entitled to disclaim have been taken. ………" 34 In due time, the Notice of Motion came before Nash DCJ, at which time counsel appeared for Mrs. Jarvis, there was no appearance on behalf of either VSLR or Cleaning Services and counsel appeared for each of CIGNA and FAI. 35 Whether or not, on the hearing of the application, CIGNA sought to submit that no prima facie case of liability on the part of VSLR to Mrs. Jarvis had been made out, the extracts from the transcript which I have earlier set out (see pp. 4-6 (above)) would tend to indicate that counsel appearing for FAI did submit that no prima facie case of liability on the part of Cleaning Services to Mrs. Jarvis had been made out. Notwithstanding that, as I have earlier indicated, it is my view that there was no admissible evidence that Cleaning Services was, at the relevant time, employed by VSLR to carry out cleaning at the Caringbah store, that view did not prevail with Nash DCJ. Thus, in the course of his Judgment, his Honour said (AB 181-182): "For the purpose of this application only, and without going into detail because it is unnecessary to do so, I am satisfied that the plaintiff at least has an arguable case against the first and second defendants which, if successful, should attract an award of damages which would make the case worthwhile pursuing." 36 What I can only describe as the extremely lax approach to that question which seems to have been adopted by his Honour is indicated by the following passage in his Honour's Judgment when he came to deal with what he described as the question of discretion (AB 199): "Each insurer claims actual prejudice in not having details to the cleaning contract which existed between the defendants. This can only relate to the claim each may make for indemnity and/or contribution if both present defendants are found liable. Cigna says it is greatly prejudiced because the cleaning contract may provide that the second defendant fully indemnified the first defendant in respect of any claim arising from the conduct for the cleaning operation in its store. FAI does not make a similar claim but says it does not know if the second defendant was in fact the cleaning contractor at the relevant time. Although not in any way binding upon the second defendant or FAI by its Notice of Grounds of Defence filed by Cigna's solicitors on behalf of the first defendant, it admitted the second defendant was at all material times a cleaning company sub-contracted by the first defendant for the purpose of cleaning the first defendant's store. However, the point in respect of possible indemnity is, of course, valid." 37 Despite the doubt which may exist as to whether or not CIGNA or FAI or both sought to submit that Mrs. Jarvis had failed to establish a prima facie case of liability to her on the part of either VSLR or Cleaning Services, it seems clear enough that each of CIGNA and FAI sought to submit that, in the circumstances, each was entitled, under the terms of the contract of insurance with its insured, to disclaim liability, and that, that being so, leave to proceed against it should not be granted to Mrs. Jarvis. 38 Although it is less clear, it seems to be tolerably plain that, for her part, Mrs. Jarvis sought to rely on the provisions of s.54 of the Insurance Contracts Act 1984 (Cth) ("the Contracts Act") as denying to each of CIGNA and FAI the right, in the circumstances, to disclaim liability under their respective contracts of insurance. 39 Section 54 of the Insurance Contracts Act 1984, as far as is relevant, provides as follows: "54(1) Subject to this section, where the effect of a contract of insurance would, but for this section, be that the insurer may refuse to pay a claim, either in whole or in part, by reason of some act of the insured or of some other person, being an act that occurred after the contract was entered into but not being an act in respect of which subsection (2) applies, the insurer may not refuse to pay the claim by reason only of that act but his liability in respect of the claim is reduced by the amount that fairly represents the extent to which the insurer's interests were prejudiced as a result of that act. ……… (6) A reference in this section to an act includes a reference to: (a) an omission; and (b) an act or omission that has the effect of altering the state or condition of the subject-matter of the contract or of allowing the sate or condition of that subject-matter to alter." 40 In McMillan v. Mannix ((1993) 31 NSWLR 538), Meagher JA, with whom Cripps JA agreed, when dealing with the manner in which s.6 of the Law Reform (Miscellaneous Provisions) Act 1946 operates said ((supra) at 547-548): "The details of how the section operates in some circumstances is not entirely free from doubt; nor is it in doubt that, whatever construction one gives the section, some anomalies will persist; but, all that being said, the main purpose of the section is clear. That purpose is to enable a plaintiff to have recourse to funds paid or payable by the defendant's insurer to the defendant in respect of the injury of which the plaintiff complains. It does so by granting the plaintiff, on application, a charge over the moneys paid or payable. In this manner it prevents the defendant from either dispersing the moneys amongst its creditors or frittering it on its own purposes; it also prevents the defendant and its insurer making a corrupt bargain. All this is apparent from reading the section. Whether one considers the purpose of the section, or whether one considers the words used, one arrives at the same result. Moneys payable by the insurer should be made available to the plaintiff. If one undertakes the superogatory task of reading the relevant Second Reading Speeches, one comes to the same conclusion. But the converse is also true. If there are, absent a corrupt bargain, no moneys payable to the insured, there is no right for the plaintiff to have a charge over anything or an action against the insurer. This flows implicitly from a consideration of the purposes of the section; it is also made explicit in the provisions of subs (7). It has been recognised by a decision of this Court: Grimson v. Aviation and General (Underwriting) Agency Pty. Ltd. (1991) 25 NSWLR 422. It was not the purpose of this section to increase the liability of insurers. In the present case, the insurers rely on a provision of the policy of insurance which requires the co-operation of the insured in the event of a claim, breach of which provision being both a condition precedent to liability and a basis for disclaiming liability. His Honour found there had been a breach of the provision in question and that, apart from s.6 of the Law Reform (Miscellaneous Provisions) Act 1946, the insurer was entitled to decline liability. This conclusion was hardly challenged at first instance, and although an attempt to challenge it was made on appeal, such an attempt cannot be treated seriously. In view of the policy of the legislation which I have endeavoured to summarise, any view of the provisions of subs (7) of s 6, it is not easy to see how Mr. Mannix's application was acceded to. Yet it was. ……… Not to allow the appeal would amount to augmenting the insurer's liability, contrary to the statute." 41 In the event, the appeal was, by majority, (Kirby P dissenting) allowed, the orders made at first instance set aside, and in lieu thereof Mr. Mannix's application was dismissed. 42 The decision of the Court of Appeal in McMillan v. Mannix (supra) was considered by the High Court in Bailey v. New South Wales Medical Defence Union Limited ((1995) 184 CLR 399) when dealing with the appeal from the decision of the Court of Appeal in New South Wales Medical Defence Union Limited v. Crawford ((1992-1993) 31 NSWLR 469). Although, given the basis upon which they upheld the decision of the Court of Appeal upholding the liability of the Medical Defence Union to indemnify Dr. Bailey's estate in respect of the claim made against it, it was strictly not necessary for their Honours to express a concluded view upon the matter, it should be noted that, in the course of their Judgment, Brennan CJ, Deane and Dawson JJ said ((supra) at 415): "The result is, in our view, that the Court of Appeal was correct in upholding the liability of the Union to indemnify Dr. Bailey's estate in respect of the claim against it. That result also provides an answer to the questions arising under s.6 of the Law Reform (Miscellaneous Provisions) Act. It was not argued that if, as we hold to be the case, the alterations to the articles of the Union were incapable of affecting the liability of the Union to indemnify Dr. Bailey or his estate, s.6(1) of the Act did not impose a charge upon all insurance moneys that were or may have become payable by the Union in respect of the liability of Dr. Bailey or his estate to Mr. Crawford. However, as the proper construction of s.6 appears to have given rise to difficulty and as the matter was argued, it is appropriate to express our agreement with McHugh and Gummow JJ upon the effect of that provision." 43 In the course of their Judgment, McHugh and Gummow JJ said ((supra) at 445): "The construction of s.6 of the Law Reform Act has produced divisions of opinion in the New South Wales Court of Appeal. These are reflected not only in the present case, but in Oswald v. Bailey ((1987) 11 NSWLR 715), Grimson v. Aviation & General (Underwriting) Agents Pty. Limited ((1991) 25 NSWLR 442) and McMillan v. Mannix ((1993) 31 NSWLR 538). The New South Wales decisions, in turn, have been considered, in construing the New Zealand legislation, by the New Zealand Court of Appeal in FAI (NZ) General Insurance Co. Ltd. v. Blundell & Brown Ltd. ([1994] 1 NZLR 11). Some of these decisions concern limitation questions. These were not agitated before us. Rather, the focus of submissions was on the proposition, advanced by the Union, that, on the proper construction of s.6 and in the light of the 1982 amendments to the articles, in 1985 the Council had been entitled to withdraw assistance from the Estate. The result was said to be that no insurance moneys are payable by the Union in respect of Dr. Bailey's liability and no subject matter exists upon which a charge could fix under s.6 in favour of Mr. Crawford. We turn then to consider the basic questions of construction of s.6 which are raised by the case put by the Union." and, later (448-450): "It is now possible to come to the central issue of construction of s.6 which arises on this appeal. It is necessary first to turn to the text of the last sentence in s.6(4). This states: 'Leave shall not be granted in any case where the court is satisfied that the insurer is entitled under the terms of the contract of insurance to disclaim liability, and that any proceedings, including arbitration proceedings, necessary to establish that the insurer is so entitled to disclaim, have been taken.' This provision is not directing the court that leave be denied only in a case where it is satisfied both of the entitlement to disclaim liability and that necessary steps have been taken to establish entitlement to do so. Leave may be refused in other cases but must be refused in these cases. What the sentence does suggest is that, if there is an entitlement to disclaim, there may be no moneys which are or may become payable in respect of the liability of the insurer to the insured and thus nothing upon which the charge specified in s.6(1) can operate. The phrase in s.6(4) is 'the insurer is entitled under the terms of the contract of insurance to disclaim liability'. A clear example of such entitlement would be a disclaimer under the general law or right to rescind for non-disclosure. Another instance would be the exercise of the right to avoid the contract of insurance given the insurer in certain cases of non-disclosure and misrepresentation by s.28 of the Insurance Contract Act 1984 (Cth). However, the terms of s.6(4) of the Law Reform Act are apt to include more than avoidance by reason of some vitiating factor in the formation of the contract of insurance. For example in McMillan v. Mannix ((1993) 31 NSWLR 538) a provision of the policy of insurance required the co-operation of the insured in the event of a claim; such co-operation was a condition precedent to liability and breach of it was a basis for disclaiming liability. It was true that the relevant event, failure to co-operate in the event of a claim, occurred only after, in the terms of s.6(1), 'the happening of the event giving rise to the claim for damages or compensation'. Nevertheless the entitlement to disclaim liability was conferred by the contract as it stood at the earlier date, albeit the entitlement became exercisable only after the happening of a later event. In McMillan v. Mannix, the New South Wales Court of Appeal, by majority, held, correctly in our view, that there were no insurance moneys which were or might become payable in the sense of s.6(1) of the Law Reform Act. It is necessary now to return to the text of s.6(1). As we have indicated, the charge is created, by the force of the legislation, on the happening of the event giving rise to the claim for damages. It is expressed to be a charge on all insurance moneys that are payable in respect of that liability. That clearly would cover the case where the terms of the policy and the events that had happened were such that it could be said that a particular sum was payable by the insurer to the insured. In that state of affairs, the charge has an immediate operation upon an existing and quantified obligation of the insurer to make payment to the insured. However, even though all other necessary facts and circumstances for the insured to have a present right to receive payment may exist, the contract of insurance may be liable to avoidance for non-disclosure or misrepresentation. Then there can be no moneys payable and thus nothing upon which the charge may operate at any time. Thus, in substance, it may be accurate to say that the charge mentioned in s.6(1) never comes into existence. The phrase in s.6(1), 'insurance moneys that … may become payable', is apt to deal with the situation where, whilst the charge has descended, there is as yet no sum which could be identified as presently payable by the insurer to the insured. In such a case, the statutory charge operates, by loose analogy to an agreement for a charge on after-acquired property, upon such moneys as and when they do become payable. However, there will be nothing in respect of which the charge may be enforced if the moneys never become payable by reason of the exercise by the insurer of rights to avoid the contract or of a vitiating factor in its formation. So also in the case of a breach which, pursuant to the terms of the contract (cf Westralian Farmers Ltd. v. Commonwealth Agricultural Service Engineers Ltd (1936) 54 CLR 361 at 379-380) or the general law, entitles the insurer to disclaim liability and this state of affairs exists when action is brought by the claimant under s.6(4) or, as necessary, leave is sought to commence that action. In all these cases there were no insurance moneys which were payable when the charge arose and none have become payable. However, once the charge has descended on the happening of the event giving rise to the claim for damages or compensation, no mutual or unilateral action of insurer or insured which is taken otherwise than under or pursuant to the contract of insurance or the general law as it operates upon the contract may vary, discharge or otherwise qualify or abrogate the contract of insurance so as to deny to the claimant what otherwise would be the fruits of enforcement of the charge by action taken under s.6(4) against the insurer." 44 The decision of the High Court in Bailey v. New South Wales Medical Defence Union Limited (supra) would seem to indicate, as also does the decision of this Court in McMillan v. Mannix (supra), that a failure by an insured to comply with provisions such as that contained in Condition 5(b) of the CIGNA policy, or Condition (F) - Claims of the FAI policy, is - notwithstanding the provisions of s.54 of the Insurance Contract Act 1984 (Cth) - sufficient for the purposes of s.6 of the Law Reform Act to prevent a court granting to a plaintiff, or intending plaintiff, leave to commence proceedings against, or leave to amend existing proceeding so as to permit the making of a claim against, the relevant insurer pursuant to the provisions of s.6 of the Law Reform Act . That this should be so is not entirely surprising, for the provisions of s.6(4) are directed to the question whether leave to commence, or to amend, such proceedings might be granted, whereas the provisions of s.54 of the Contracts Act clearly require the determination, at a trial, of the extent of the prejudice which an insurer may have suffered, and the determination of whether or not, in those circumstances, the act or omission of the insured which would otherwise have permitted a disclaimer of liability should be permitted to provide a defence, either in whole, or in part, to the claim made by the insured (see, for example, Ferrcom Pty. Limited v. Commercial Union Assurance Company of Australia Limited (1992-1993) 176 CLR 332; Antico v. Heath Fielding Australia Pty. Limited (1996-1997) 188 CLR 652). If this be a correct assessment of the effect of the Judgment of the High Court in Bailey v. New South Wales Medical Defence Union Limited (supra) then it follows that the provisions of s.54 of the Contracts Act are irrelevant to any consideration of the question whether or not leave to commence, or to amend, proceedings ought to be given pursuant to the provisions of s.6(4) of the Law Reform Act. If this be not so, then, by reason of the coming into force of the provisions of s.54 of the Contracts Act, the proviso to s.6(4) of the Law Reform Act has long since been deprived of operation, a position for which no-one seems yet to have argued. 45 That this was, or might be, the effect of the decision of the High Court in Bailey v. New South Wales Medical Defence Union Limited (supra) and of the decision of this Court in McMillan v. Mannix (supra) does not appear to have been appreciated by Nash DCJ for, in his Judgment, his Honour said (inter alia) (AB 194-195): "In McMillan v. Mannix it was not stated what were the breaches by that defendant of the subject policy. However the court assumed they were sufficient to justify the insurer disclaiming its liability under the policy. Whilst it is clear from this case that a plaintiff should not be put in any better position than the defendant so far as the insurer's liability is concerned, it is equally clear that a plaintiff should not be put in any worse position. Consequently, if breaches of the policy are established, the court must also take into account the provisions of s.54 of the Insurance Contracts Act 1984 (Cth) (hereinafter called 'the Insurance Act')." 46 Far from it being the case that the decision of the Court of Appeal in McMillan v. Mannix (supra) did not disclose the nature of the breach relied upon by the insurer and held by the majority to be sufficient to entitle the insurer to disclaim, what I have earlier recorded will make it abundantly clear that this was not so. If any further proof be called for however, I note that, in the Judgment delivered by him at first instance in that case (see 31 NSWLR at 540) Loveday J said: "There seems to be no doubt that under the terms of the policy this (failure to co-operate) is a breach by Skyline Scaffolding and that by reason of that breach the insurers would be entitled to exercise their right to avoid liability under the policy." and, further, that, in the course of his dissenting Judgment (31 NSWLR at 546), Kirby P said: "In this case it was argued before Loveday J that because of the insured's failure to supply and forward relevant information to the insurer, the insurer was entitled subsequently, and as a consequence, to deny indemnity to the insured. It was submitted that this was so because such a breach amounted to a breach of a true condition precedent to the operation of the contract of insurance. Loveday J appears to have gone some way toward making a finding of fact that there was a breach which, as between it and the insured, would (the statute apart) have entitled the insurer to disclaim liability with serious consequences for the respondent's chance of recovery. I have set out above the passages in his Honour's reasons." 47 Nash DCJ, however, did not approach the matter on the basis which I have suggested is the correct one. Thus, when dealing with the case of CIGNA, his Honour said (AB 196-197): "The principal allegation by Cigna is that lack of co-operation by the first defendant's liquidator has resulted in it not having the relevant cleaning contract or knowing if one existed. However, at latest by 10 June 1992 Cigna knew some person, firm or company with the name of Conlon (sic) had been engaged by the first defendant to clean the subject store and nevertheless did not seek further information from the first defendant in respect thereof. If a written contract existed the liquidator may have it among the large boxes of documents held and if it was located on search, Cigna could have had it on payment of the liquidator's fees in relation thereto. There is no evidence as to the assets and liabilities of the first defendant on liquidation and as to what funds may be available to its creditors. In any event, Cigna if liable under the policy, will be liable only for verdict and costs in excess of $20,000.00. In the circumstances it is obvious in my view that Cigna is not entitled to disclaim liability under the policy by reason of breaches on the part of the first defendant. In any event, if I am wrong in that regard, it is a clear case for the finding that no part of any verdict and costs in excess of $20,000.00 was caused by any act or omission of the first defendant or the plaintiff and s.54(3) of the Insurance Act applies." 48 Having thus disposed of the matters raised by CIGNA, Nash DCJ then turned to the matters raised by FAI, in respect of which matters his Honour said (AB 197-199): "At face value this application is quite different from the one in respect of Cigna. There has been no co-operation by or on behalf of the second defendant with FAI. Consequently, barring s.54 of the Insurance Act, FAI is clearly entitled to disclaim its liability. It is submitted on behalf of FAI that, because there has been no claim on it by or for the second defendant, s.54 cannot apply. Each case must be determined having regard to all the circumstances. In my view it is important that the real claimant in this type of action is the plaintiff. I am satisfied that in an application of this nature, 'insured' where used in s.54 of the Insurance Act should be equated with 'plaintiff' or 'claimant' because in practice, absent any dispute in respect of liability under the relevant policy, the recipient of any payment under the policy is the plaintiff and the insurer conducts the litigation, if any, on behalf of the actual insured and pays the costs and expenses relating to any such litigation on behalf of the insured. Indeed, in practice, in the absence of any provision such as applied to claims by the first defendant on Cigna which are probably observed more in the breach than the observance, insurers do not consult their insured over the prospects of settlement, any actual settlement, or the way in which the case is to be conducted, including admissions of liability. So far as this litigation is concerned, FAI is in exactly the same position as Cigna in that it has everything it needs to conduct the litigation with the exception of the details of the cleaning contract. This could not affect liability to the plaintiff but, as I shall refer to later, could affect any claim for indemnity or contribution made by either insurer against the other. In my view, so far as the plaintiff's claim against the second defendant and/or FAI is concerned, no act on the part of the second defendant could reasonably be regarded as capable of causing or contributing to any loss by FAI and the provisions of s.54(3) of the Insurance Act apply to the claim against it." 49 If I am correct in the view which I have expressed as to the proper approach to applications such as this, then, as it seems to me, his Honour's finding, at the commencement of the passage which I have just set out, that "barring s.54 of the Insurance Act, FAI is clearly entitled to disclaim its liability", dictated that, whatever might be the correct approach to the application made in respect of CIGNA, the leave sought in respect of FAI should have been refused. 50 Assuming, however, that I am not correct on the view which I have expressed as to the approach which is proper to be taken in a case such as this, and that, in some way, consideration has to be given to the provisions of s.54 of the Contracts 1984, I am at a loss to understand upon what basis it can be said that the word "insured" is to be construed as if it were "plaintiff", as also am I at a loss to understand how, if that be so, Mrs. Jarvis' case is in any way advanced, if only because there is not the slightest suggestion that Mrs. Jarvis did, or failed to do, anything which bore upon the question of the potential liability of FAI to indemnify Cleaning Services - the insuring clause was one in respect "liability occurring during the period of insurance" not in respect of claims made or claims made and notified in respect of which types of claim some interesting questions might arise (see, for example, Antico v. Heath Fielding Australia Pty. Limited (supra); Newcastle City Council v. GIO General Limited (1997) 72 ALJR 97; Greentree v. FAI General Insurance Co. Limited Court of Appeal 27 October 1998 (as yet unreported)). 51 If, contrary to the views which I have expressed, it was open to Nash DCJ to consider the relevance of the facts of the present case of the provisions of s.54 of the Contracts Act and, on an interlocutory hearing, to determine finally - for that is what he purported to do - that it was not open to FAI to disclaim liability, the question still remains whether, in the circumstances, his discretion to grant or to refuse leave miscarried. 52 When he came to deal with the question of discretion, Nash DCJ commenced (AB 199): "There is a slight possibility that each insurer will be prejudiced because it cannot anticipate obtaining co-operation from either defendant. However, that is generally the situation where section 6 of the Act is invoked because, for whatever reason, it is the principal reason for which that section is invoked by a plaintiff." 53 Then, following the passage which I have earlier set out (see p. 21-22 (above)), his Honour continued (AB 199-200): "Despite the lack of co-operation of both defendants with their insurers in relation to this contract, I do not consider there is actual prejudice to either Cigna or FAI because of it. The liquidator of the first defendant may have the contract, if one exists. The directors or other officers of the second defendant may have it. It is quite obvious that the Conlons (sic) are unlikely to remain in the United Kingdom for a considerable length of time, but of course this is possible. The procedures of the Court may be invoked by way of subpoena for the production of any such contract. Naturally, this would mean whoever issues the subpoena would have to pay proper and reasonable expenses incurred by the person to whom the subpoena is directed. That of course, is quite reasonable. The plaintiff must prove her case against one or other, or both defendants, and the insurer(s), whichever may be liable if any of them is liable. In the circumstances of this case I consider it appropriate to make orders which will protect the insurers as far as possible. The delay in FAI knowing of this claim has not caused prejudice to it because in my view it would be in no better position than it now is in defending this case if it had been notified promptly of the circumstances giving rise to the claim and had thereafter received co-operation from the defendant. In the ultimate I conclude there is every justification for making the orders and no compelling reason for refusing to do so. In the exercise of my discretion, I make orders 1 and 2 as asked in the notice of motion as amended." 54 The Orders which his Honour apparently considered appropriate to make in order to protect CIGNA and VSLR seem to be the following (AB 201): "I direct the plaintiff no later than 16 June 1997 to inform in writing the solicitors for the third and fourth defendants of the names and addresses of all witnesses from whom it is proposed to adduce evidence on liability and to provide them with copies of any documents, excluding statements, to be relied upon in respect of that issue. This direction not only applies to how the plaintiff was injured but also as to how she proposes to prove that the second defendant was the cleaner of the subject store at the time she was injured." 55 If I may, with respect, say so, even if it could be said that his Honour's discretion to allow Mrs. Jarvis to proceed against CIGNA did not miscarry - and since CIGNA has not sought to appeal from his Honour's orders in this respect, I make no judgment on the matter - it seems to me that, on the assumption that it was open to his Honour, within his discretion, to grant leave to Mrs. Jarvis to proceed against FAI, his discretion miscarried. In this regard it is sufficient to point to the fact that his Honour asserts that FAI has not sustained any prejudice, a conclusion which, if I may, with respect, say so, I find completely unsustainable. The simple facts of the matter are, first, that, in the absence of information from Mr. and Mrs. Conlan, and in the absence of any knowledge of the whereabouts of any of the records of Cleaning Services and of access to such records, FAI has no opportunity, whatsoever, of determining whether or not Cleaning Services had contracted to provide cleaning services to the Caringbah store and, if it had not, of mounting a positive case in this respect; and, second, that, as it would appear that no one has any information whatsoever as to the present whereabouts of Mr. Grove, Ms. Haines, Ms. Halliday and Mr. Waterman, the probability is that the only witness available to give evidence at any trial as to the circumstances of Mrs. Jarvis' accident, would be Mrs. Jarvis herself. 56 For these reasons I would propose the following Orders: 1. ORDER the appeal be allowed. 2. ORDER that the Order made by Nash DCJ granting leave to the First Respondent to join the Appellant as a party-Defendant to the proceedings in the District Court be set aside. 3. IN LIEU THEREOF ORDER that, insofar as the Notice of Motion filed by the Defendant in the District Court on 18 October 1996 sought an order that the Appellant be joined as a party-Defendant to the proceedings in the District Court, the Notice of Motion be dismissed. 4. ORDER that the First Respondent pay the Appellant's costs of the appeal and of the Notice of Motion but, if qualified, she have a Certificate under the Suitors' Fund Act 1951. 5. MAKE NO ORDER as to the costs of the Second or Third Respondents of the appeal. 57 BEAZLEY JA: I have had the opportunity of reading in draft the judgments of Powell and Stein JJA. I agree with the orders proposed by Powell JA and with his reasons in respect of the application of s 6(4) of the Law Reform (Miscellaneous Provisions) Act 1946 and s 54 of the Contracts Insurance Act 1984 (Cth). I otherwise agree with Stein JA. 58 STEIN JA: I have had the benefit of reading the draft judgment of Powell JA. I am indebted to his Honour for his extensive examination of the relevant facts and law. I agree with his Honour save in one respect. 59 The appeal raises a number of issues: 1. Whether there was an arguable case that A & B Conlon Cleaning Services Pty Limited was the cleaning contractor for the Venture store at Caringbah on 16 March 1992 when the first respondent, Mrs Jarvis, had her accident? Nash DCJ found that there was. 2. Whether the appellant FAI, the cleaning company's insurer, is entitled to disclaim its liability pursuant to the proviso to s 6(4) of the Law Reform (Miscellaneous Provisions) Act 1946? Nash DCJ answered this in the affirmative, unless s 54 of the Insurance Contracts Act 1984 (Cth) applied. 3. Whether s 54 of the Insurance Contracts Act applies? Nash DCJ found that it did. 60 As to questions 2 and 3, I agree with Powell JA. Applying McMillan v Mannix (1993) 31 NSWLR 538 and Bailey v NSW Medical Defence Union Limited (1995) 184 CLR 399, it is apparent that the provisions of s 54 are irrelevant to consideration of the question of leave to commence proceedings under s 6(4) of the Law Reform Act. As Powell JA makes plain, the two provisions are directed to different questions. Section 6(4) is directed to applications for leave to commence proceedings and to whether, in such a leave application, the Court is satisfied that the insurer is entitled, under the contract of insurance, to disclaim liability. Section 54(1) of the Insurance Contracts Act is directed to a quite different question and one which may arise at a trial stage. A contrary conclusion would mean that, once the latter statute was enacted in 1984, it would have deprived s 6(4) of the Law Reform Act of much application. It follows that the insurer was entitled to disclaim liability and the appeal should be upheld. 61 Therefore, the issue with respect to which my opinion differs from that of Powell JA is irrelevant to the fate of the appeal. Accordingly, I will state my reasons in brief form only. I think that there was evidence before Nash DCJ which entitled him to find that there was an arguable case. This includes the letter from Venture's insurer (CIGNA) to the respondent's solicitor dated 1 February 1995 indicating that the cleaners at the time were A & B Conlon. Counsel for the respondent stated from the Bar table, by agreement, that in April 1996 the respondent's solicitor spoke to Mr Andrew Conlon who told him that A & B Conlon were the cleaners at the time and employed Mr Waterman. In addition, notice was served on the cleaning company on 27 April 1995 at its registered office. Notwithstanding that the company had ceased to trade, I do not see that this was not good service. On the basis of this material, I do not think that the court should interfere with the finding of fact of Nash DCJ. However, as I have said, this is immaterial to the result of the appeal. 62 I agree with the orders proposed by Powell JA. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.