Appeal Outcome: Appeal allowed, 2 February 2010 [2010] HCA 9 New South Wales Court of Appeal CITATION: QBE Insurance (Australia) Ltd v Stewart [2009] NSWCA 66 HEARING DATE(S): 28 November 2008 JUDGMENT DATE: 3 April 2009 JUDGMENT OF: Ipp JA at 1; Gyles AJA at 9; Brereton J at 52 (1) The appeal asto liability is dismissed. DECISION: (2) The verdict and judgment below against QBE should be set aside and the matter remitted to the Dust DiseasesTribunal for orders to be made in accordance with the judgment of the majority. (3) As each party has had both success and failure on discrete issues there should be no order as to costs of the appeal. CATCHWORDS: TORTS - negligence - where employee exposed to asbestos dust - whether supplier of asbestos goods negligent in failing to provide warnings and precautions - where breach of statutory duty not dealt with - INSURANCE - employer's indemnity insurance - statutory workers' compensation employer's indemnity policy - scope of insurer's liability under policy - where policy document not in evidence - onus of proof in relation to contents of cover Dust Diseases Tribunal Act 1989 Factories and Shops Act 1912 LEGISLATION CITED: Factories, Shops and Industries Act 1962 Law Reform (Miscellaneous Provisions) Act 1946 Workers Compensation Act 1926 CATEGORY: Principal judgment BI (Contracting) Pty Ltd v Strikwerda [2005] NSWCA 288 Balmain New Ferry Co Limited v Robertson [1906] HCA 83; (1906) 4 CLR 379 Blatch v Archer (1774) 1 Cowp 63; 98 ER 969 Bond Air Services Ltd v Hill [1955] 2 QB 417 Causer v Browne [1952] VLR 1 Curtis & Sons v Matthews (1918) 119 LT 78 Darlington Futures Limited v Delco Australia Pty Limited [1986] HCA 82; (1986) 161 CR 500 Di Cecco v Mercantile Mutual Insurance (Workers Compensation) Ltd [2002] NSWDDT 1; (2002) 23 NSWCCR 143 EM Baldwin & Son Pty Limited v Plane [1998] NSWCA 23; (1998) 17 NSWCCR 434 Gordon v Australian & New Zealand Theatres Ltd (1940) 40 SR (NSW) 512 Ho v Powell [2001] NSWCA 168; (2001) 51 NSWLR 572 CASES CITED: Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 Kodak (Australasia) Pty Ltd v Retail Traders Mutual Indemnity Insurance Association (1942) 42 SR (NSW) 231 Maughan & Chapman v Sun Alliance Insurance Ltd (1987) 4 ANZ Insurance Cases 60-793 Neill v NSW Fresh Food and Ice Pty Ltd [1963] HCA 4; (1963) 108 CLR 362 Orica Ltd v CGU Insurance Ltd [2003] NSWCA 331; (2003) 59 NSWLR 14 Robertson v Balmain New Ferry Co Limited [1910] AC 295 Royal & Sun Alliance Insurance Australia Ltd v Betta Industries Pty Ltd [2002] NSWCA 323; 24 NSWCCR 164 Swain v Waverley Municipal Council [2005] HCA 4; (2005) 220 CLR 517 Sydney Turf Club v Crowley [1972] HCA 25; (1972) 126 CLR 420 Vozza v Tooth & Co Ltd [1964] HCA 29; (1964) 112 CLR 316 Westminster Fire Office v Glasgow Provident Investment Society (1888) 13 App Cas 699 Wyong Shire Council v Shirt [1980] HCA 112; (1980) 146 CLR 40 Derrington & Ashton, The Law of Liability Insurance, 2nd ed Ivamy, Fire and Motor Insurance 3rd ed TEXTS CITED: Ivamy, General Principles of Insurance Law, 6th ed McGillivray on Insurance Law, 10th ed Couch on Inusrance, 2nd ed QBE Insurance (Australia) Limited (Appellant) PARTIES: Irene Stewart (Legal representative for the Estate of the late Angus Clugston Stewart) (First Respondent) Wallaby Grip Limited (Second Respondent) FILE NUMBER(S): CA 40070/07 G Little SC, G Parker (Appellant) COUNSEL: J Sheahan SC, D Toomey (First Respondent) D J Russell SC, J Gooley, S Bouveng (Second Respondent) Moray & Agnew (Appellant) SOLICITORS: Turner Freeman (First Respondent) Middletons Solicitors (Second Respondent) LOWER COURT JURISDICTION: Dust Diseases Tribunal of New South Wales LOWER COURT FILE NUMBER(S): DDT 7279/07 LOWER COURT JUDICIAL OFFICER: Kearns J LOWER COURT DATE OF DECISION: 18 March 2008 IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL 40070/07 IPP JA GYLES AJA BRERETON J Friday, 3 April 2009 QBE INSURANCE (AUSTRALIA) LIMITED v Irene STEWART (as legal personal representative of the Estate of the late Angus Clugston Stewart) & Anor Judgment 1 IPP JA: I agree with Gyles AJA that, on the warning case, the evidence supports a finding of negligence on the part of the employer. 2 Section 18(1) of the Workers Compensation Act 1926 (NSW) at the relevant time provided that every employer was required to obtain a policy for an amount of "at least forty thousand dollars" in respect of its liability independently of the Act for any injury to its workers. It was common ground that the employer in this case had complied with s 18(1) by obtaining such a policy from QBE. 3 It is therefore to be inferred that the policy issued by QBE to the employer provided for cover of at least $40,000. No evidence was led of any variation to such a policy. 4 The amount of cover provided by a policy of insurance is an essential term of the contract between insurer and insured. The cover may be for a specified amount or may be open-ended. On first principles, the onus was on the plaintiff to prove the amount of the cover provided by the policy issued by QBE, that is, whether it was for a specific amount or whether it was open-ended. 5 The only evidence that bore upon the amount of cover under the policy was that which gave rise to the inference that the cover was at least $40,000. Therefore the case had to be resolved on the basis that cover of $40,000 only was provided by the policy. There was simply no proof that the parties agreed upon cover to a greater extent. There was certainly no proof that the cover was open-ended. 6 The fact that QBE could not produce the policy does not transform the onus of proof that otherwise arises. I agree with what Gyles AJA has written in this regard and with his Honour's conclusion that the trial judge erred in holding that the onus was on QBE to prove that the cover was limited. 7 The true question is not whether the cover was limited; it is rather: what was the amount of the cover? The argument that, because the cover was limited to $40,000, this constituted an "exception" to unlimited cover is fallacious. There was no proof of any agreement to provide unlimited cover. Thus, an inferred provision fixing cover at $40,000 (because that was the minimum cover the statute required the policy to provide) was not an exception to any obligation on the part of QBE that otherwise existed. 8 I agree with the orders proposed by Gyles AJA. 9 GYLES AJA: On 18 March 2008 Kearns J, sitting in the Dust Diseases Tribunal of New South Wales, found a verdict against the appellant, QBE Insurance (Australia) Limited (QBE), and another defendant (the second respondent to this appeal), Wallaby Grip Limited (Wallaby Grip), for $356,510 in favour of the plaintiff (and first respondent to this appeal), Irene Stewart as the legal personal representative of the estate of the late Angus Clugston Stewart. QBE was sued on the basis that it was the workers' compensation insurer of Pilkington Bros (Australia) Limited (Pilkington), the employer of Mr Stewart from about 1964 until about 1967. QBE raises two issues on appeal – the first is the liability of the employer, the second is the extent of its liability as insurer. The first issue is confined to these facts. The second issue may have wider significance. Wallaby Grip supports the first respondent. 10 Mr Stewart had worked for Pilkington from 1964 to 1967. Much later he was diagnosed as suffering from mesothelioma. He died as a result on 22 October 2007. By then he had commenced proceedings. Following his death his widow Irene Stewart, was appointed legal personal representative of his estate. She was the plaintiff at the time of hearing. 11 The relevant facts were summarised by the trial judge as follows: "The evidence as to Mr Stewart's exposure may be summarised briefly. Mr Stewart was employed on the multi-stage dye bending machine. Most of his time at Pilkington was on that machine and he worked an average of 50-60 hours a week. In working on that machine, he wore asbestos gloves for heat protection. Use of those gloves gave off visible dust in various circumstances. The dust settled on his working clothes to such an extent that when they were shaken at the end of a working day, they gave off visible dust. He also worked on the furnace. The work included replacing the seal around the inspection window. Visible dust was given off in that work process. The work was less frequent than the job on the multi-stage dye bending machine, but it was dustier work. He also gave evidence of lack of warnings and precautions. There is evidence from John McDermott and Edgar Furnass which, in essence, corroborates Mr Stewart's evidence." 12 It was accepted by QBE that if dust was visible in the atmosphere then its concentration was in excess of 5 million particles per cubic foot of air. Mr Stewart was exposed to dust that was visible in the atmosphere and, it can be taken, was exposed to a concentration of dust that was dangerous. More importantly, QBE mounted no substantive challenge to evidence put before Kearns J that supported the conclusion that the employer should have known the situation to have dangers for the employees exposed to the dust. 13 His Honour was satisfied that Pilkington was negligent in the occurrence of Mr Stewart's mesothelioma; although the reasoning was not spelt out, this finding appears to have been based on a lack of warnings and precautions. It was also held that Wallaby Grip, which was Pilkington's supplier of asbestos gloves and tape, gave no warning as to the dangers of the products and therefore was also negligent. (Red 51 [10]). Liability 14 A ground of appeal is that his Honour erred in holding the appellant liable in negligence in the absence of evidence demonstrating that an alternative system of work which obviated the risk of injury to Mr Stewart was available to the appellant. It is submitted for the appellant that the trial judge did not identify the warnings or precautions which ought to have been given and taken. There is evidence that the employer was required to supply the plaintiff with gloves for heat protection in the handling of glass which was very hot. The gloves, which were provided, were from a reputable manufacturer and were designed specifically for the purpose for which they were used. They were supplied to the employer by the supplier without a warning. The plaintiff produced no evidence as to any available alternate glove. Insofar as there was escape of dust from an inspection window there was no evidence as to what alternative material could be used as a seal for placement around the inspection window, or, indeed, of any precautions which might be taken to avoid the inhalation of asbestos dust. 15 It was submitted for QBE that the decision in Vozza v Tooth & Co Ltd (1964) 112 CLR 316 per Windeyer J at 321-322 (with whom the other members of the Court agreed) establishes that some evidence of reasonably practicable precautions was required (see also Neill v NSW Fresh Food and Ice Pty Ltd (1963) 108 CLR 362 at 369-370). 16 The only appeal to this Court is relevantly by a party who is "dissatisfied with the decision of the Tribunal in point of law" (s 32 Dust Diseases Tribunal Act 1989). Thus, it is conceded, QBE needs to demonstrate that there was no evidence for the finding that was made in the strict sense that applies to a jury verdict. 17 Undoubtedly there are cases in which it is necessary to lead evidence as to the availability of practicable precautions to avoid injury for there to be a verdict for the plaintiff in the absence of such precautions. On the other hand there are undoubtedly cases where the danger is so clear and the precautions so straightforward that no such evidence is required. Common sense is sufficient. Both alternatives were discussed at some length in the judgments in Swain v Waverley Municipal Council [2005] HCA 4; (2005) 220 CLR 517. The respondents contend that the acknowledged appreciation of the dangers involved in the inhalation of asbestos dust were such as to require some action to be taken or some warning to be given. That is precisely the reasoning criticised by McHugh J in Swain at [40] (although in dissent). 18 Examination of the particulars of negligence alleged against the employer reveals that most of the particulars are expressed at such a level of generality as not to be helpful. Several did, however, deal with precautions, namely: "(f) Failing to restrict the liberation of the said asbestos dust and fibre by water damping or otherwise. … (j) Failing to provide or maintain or enforce the wearing of efficient and approved respirators or any other respiratory protective equipment. (k) Failing to provide or maintain exhaust equipment or adequate ventilation in areas where the said asbestos dust and fibre was liberated. (l) Failing to provide heat protection equipment free from asbestos fibre." It was not alleged that the employer was negligent in continuing to operate the factory. 19 Unfortunately, and unaccountably, no evidence was led as to any of the particularised precautions. The nature, operation, availability and practicability of those precautions between 1964 and 1967 was not investigated. They are certainly not matters of which judicial notice can be taken and common sense cannot fill the void. 20 The plaintiff relied upon what were said to be notices served pursuant to s 25B of the Dust Diseases Tribunal Act. The plaintiff relied on the following items: "It is futile for an employer which exposed an employee who now has an asbestos related disease to substantial asbestos dust during a period within the last 35 years to litigate foreseeability in the Dust Diseases Tribunal in other than exceptional circumstances. The fact that asbestos dust was generated or given off from products obtained from an apparently reputable supplier who provided no warning is not a circumstance which excludes foreseeability, at least if the employer was are of the dust which was occurring. EM Baldwin & Sons Pty Ltd v Plane [1998] NSWCA 32; 17 NSWCCR 434 at 488 [III]." "By 1953, the state of knowledge was such that asbestos dust was perceived as being a dangerous material per se and in certain concentrations, that is, over five million particles per cubic foot of air, it was probably very dangerous. Raif v Sayer [1995] NSWDDT 6; 13 NSWCCR 393 at 405AB.'" 21 It will be observed that both purported items were directed to foreseeability rather than the appropriate response. Precautions, by and large, need to be tailored to the particular industrial circumstances. The employer was a glass manufacturer and the factory in which the deceased worked manufactured glass for Holden cars as well as the manufacturers of other cars. His work was concerned with a multi-stage dye bending machine described as a furnace which shaped glass used in various parts of motor vehicles. It was not an establishment that mined or processed asbestos in any way. It must be borne in mind that these events occurred more than 40 years ago. All of the medical and litigious experience since cannot convert an employer with no particular connection with asbestos into an insurer in relation to events between 1964 and 1967 as if negligence were a tort of strict liability. Proof of breach of duty is undemanding where there is a known risk of serious injury, but the necessity to do so cannot be ignored. Vozza has not been overruled (cf Wyong Shire Council v Shirt [1980] HCA 12; (1980) 146 CLR 40 at 47-48). In my opinion there was no evidence from which it could be concluded that the employer failed to take reasonable precautions. to prevent injury. 22 That leaves the warning case. It was particularised by the plaintiff and found by the trial judge. It is not quite clear how his Honour came to that conclusion but there is no appeal from it. It must be implied that a warning, if given, would have been heeded by the deceased. This case is just enough to provide a basis for the finding of liability against the employer and so avoid a conclusion that there was no evidence to support the liability of the employer as a question of law. The appeal as to liability should be dismissed. 23 A more satisfactory basis for the finding of liability would have been the breach of s 25(2) of the Factories and Shops Act 1912 and s 41(2) of the Factories, Shops and Industries Act 1962 (as amended) that was pleaded and particularised. Section 41 provided as follows: "(1) In this section 'fume' means fume, mist, gas, vapour, dust or other impurity. (2) Where in connection with any process carried on in a factory there is generated or given off any fume of such a character and to such an extent that the inhalation thereof would be likely to be injurious or offensive to persons of any kind, effective measures shall be taken to prevent the accumulation in any workroom of such fume or dust and to protect such persons against the inhalation thereof. Where the nature of the process makes it practicable, exhaust appliances shall be provided and maintained, as near as possible to the point of origin of the fume or dust, so as to prevent it from entering the air of any workroom." 24 In a similar case, this Court in EM Baldwin & Son Pty Limited v Plane [1998] NSWCA 23; (1998) 17 NSWCCR 434 at [100], held that an action for breach of that statutory duty would lie. However, that basis of liability was not referred to during the course of the hearing and was not referred to by the trial judge in his judgment. The respondents seek to raise it by way of notice of contention. It is submitted that the pleading was not amended and the count was never withdrawn. It was thus up to the trial judge to deal with it. The appellant submits that this basis for liability was not pursued at the trial and cannot be raised on this limited appeal. It must be regarded as abandoned. 25 In the light of the fact that the finding on liability will stand on the slim foundation of the warning case, there is no need to decide whether the respondents are entitled to rely upon the statutory count. If the appeal on liability were to be allowed, I would have been inclined to uphold the notice of contention and order that the matter be remitted for determination of the statutory count. The count was pleaded and not expressly abandoned. The proper order for costs in that event would have required some consideration. Insurance 26 Paragraph 6 of the further amended statement of claim was as follows: "At all material times there existed between Pilkingtons and the first defendant, a contract of insurance whereby the defendant agreed upon the payment of certain premiums to indemnify against liability for damages Pilkingtons in respect of any claim for damages for personal injury arising independently of the Workers Compensation Act , 1926. The plaintiff seeks relief pursuant to section 6 generally and section 6 (4) specifically of the Law Reform (Miscellaneous Provisions) Act, 1946 that the defendant indemnify in respect of all liability to pay damages that may be attributed to Pilkingtons in respect of any damages accruing to the plaintiff deceased as a result of the negligent acts or omissions of Pilkingtons." 27 Paragraph 4 of the defence by the first defendant was as follows: "As to paragraph 6 of the Further Amended Statement of Claim QBE: (a) Admits that Eagle Star Insurance Ltd was the employer's indemnity insurer of Pilkington Bros (Australia) Ltd (deregistered) between at least 8 February 1960 and 1967. (b) Admits that QBE is responsible to meet the liabilities of Eagle Star Insurance Ltd in respect of any liability that company would have to indemnity Pilkington Bros (Australia) Ltd in the circumstances of the plaintiff's claim. (c) Does not admit that the said policy provided cover to Pilkington Bros (Australia) Ltd in excess of the statutory minimum level of cover from time to time as prescribed by Regulations made pursuant to the Workers Compensation Act 1926. (d) Notes that as at 1967 the statutory minimum required level of cover for the common law extension of an employer's indemnity policy was $40,000.00 inclusive of the plaintiff's entitlement to costs. (e) Does not admit that Pilkington Bros (Australia) Ltd was entitled to an indemnity pursuant to the policy for greater than the statutory minimum level of cover from time to time." 28 QBE had been joined to the proceeding pursuant to s 6 of the Law Reform (Miscellaneous Provisions) Act 1946 by leave. That section relevantly provided as follows: "Amount of liability to be charge on insurance moneys payable against that liability (1) If any person (hereinafter in this Part referred to as the insured) has, whether before or after the commencement of this Act, entered into a contract of insurance by which the person is indemnified against liability to pay any damages or compensation, the amount of the person's liability shall on 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. … (7) No insurer shall be liable under this Part for any greater sum than that fixed by the contract of insurance between the insurer and the insured." 29 The only evidence tendered on this issue was a notice to produce served by the plaintiff upon QBE in the following form: " TAKE NOTICE that the Plaintiff requires you to produce at the hearing of the matter on Friday 1 February 2008 at 10.00am 1. All contracts of insurance between Eagle Star Insurance and Pilkington Bros (Australia) Ltd with effect for the period of 1 January 1957 to 31 December 1974; 2. Any document how so ever described setting out any contractual term limiting indemnity in any contract of insurance between Eagle Star Insurance and Pilkington Bros (Australia) Ltd with effect for the period 1 January 1957 to 31 December 1974. …" QBE did not produce any documents in answer to paragraphs [1] and [2] of the notice. 30 Between 1964 and 1967, the Workers Compensation Act 1926 (as amended) included the following: "Part III Insurance 18(1) Subject to subsection (1 a ) of this section, every employer shall obtain from an insurer licensed under this Act to carry on business in the State, a policy of insurance or indemnity for the full amount of his liability under this Act to all workers employed by him and for an amount of at least forty thousand dollars in respect of his liability independently of this Act for any injury to any such worker and shall maintain such policy in force: … (3)(a) Every policy of insurance or indemnity shall, in so far as it relates to any liability referred to in subsection one of this section, contain only such provisions as are prescribed, but may contain such other provisions relating to any other liability at common law or under any Act or Commonwealth Act as are appropriate to any particular case. Any contravention of this provision shall not annul such policy or diminish or affect the liability of the insurer to the person insured under such policy. Every such policy shall provide that the insurer shall as well as the employer be directly liable to any worker insured under such policy and in the event of his death, to his dependants, to pay the compensation or other amount for which the employer is liable, and that the insurer shall be bound by an subject to any judgment, order, decision, or award given or made against the employer of such worker in respect of the injury for which such compensation or amount is payable. In this paragraph the expression 'other amount' means an amount not exceeding the amount for which the employer has obtained a policy of insurance or indemnity in respect of his liability independently of this Act for any injury to any such worker. …" 31 The Workers Compensation Regulations included Division 1 headed "Insurance – Employers' Indemnity Policies" and (so far as is relevant) was as follows: "1(a) Every policy of insurance or indemnity shall contain only such provisions relating thereto as are contained in the form of policy in Appendix hereto. … (b) An insurer who issues a policy otherwise than in the form in the Appendix hereto shall be liable to a penalty not exceeding £50." 32 The form of policy in the appendix was described as "employers' indemnity policy". The first recital is as follows: "WHEREAS by virtue of the Workers' Compensation Act 1926, as amended (hereinafter called the Act), it is provided that every employer shall obtain from an Insurer licensed under the Act to carry on business in the State a policy of insurance or indemnity for the full amount of his liability under the Act to all workers employed by him and for an amount of at least twenty thousand pounds in respect of his liability independently of the Act for any injury to any such worker and shall maintain such policy in force." (emphasis added) 33 The operative clause was as follows: "NOW THIS POLICY WITNESSETH that in consideration of the payment by the Employer to the Insurer of the abovementioned Premium (which Premium is subject to adjustment as hereinafter provided) IF, between the day of 19 and four o'clock in the afternoon of the day of 19 and thereafter to four o'clock in the afternoon of the last day of any subsequent period in respect of which the Premium shall have been paid to and accepted by the Insurer, the Employer shall be liable to pay compensation under the Act to or in respect of any person who is or is deemed by the Act to be a worker of such Employer or to pay any other amount not exceeding twenty thousand pounds in respect or his liability independently of the Act for any injury to any such person, THEN, and in every such case the Insurer will indemnify the Employer against all such sums for which the Employer shall be so liable; the Insurer will also pay all costs and expenses incurred with the written consent of the Insurer in connection with the defence of any legal proceedings in which such liability is alleged. PROVIDED that this Policy shall not extend to any business or occupation other than that described herein, unless and until particulars thereof shall have been supplied to and accepted by the Insurer and the acceptance of such extension endorsed hereon by the Insurer. AND it is hereby further agreed that the above indemnity is made subject to the due and proper observance and fulfilment by the Employer of the conditions hereunder, and the Insurer shall be (a) directly liable to any worker and in the event of his death, to his dependants, to pay the compensation or other amount for which the Employer is liable and in respect of which the Employer is indemnified under this Policy; and (b) bound by and subject to any judgment, order, decision, or award given or made against the Employer under the provisions of the Act or in respect of his liability independently of the Act and in respect of which the Employer is indemnified under this Policy. Provided lastly that this Policy shall be subject to the Act and the Rules and Regulations made thereunder, all of which shall be deemed to be incorporated in and form part of this Policy." (emphasis added) Fourteen clauses then follow, which are described as conditions. 34 His Honour gave a ruling in advance of his ultimate judgment as to the extent of cover to be afforded by QBE. He held that QBE's liability to indemnify the employer was unlimited, and in particular was not limited to $40,000. His Honour followed a decision of Curtis J in Di Cecco v Mercantile Mutual Insurance (Workers Compensation) Ltd [2002] NSWDDT 1; (2002) 23 NSWCCR 143, in which his Honour held that the insurer bore the onus of establishing that the relevant policy was limited in its cover. In that case, as in this, no policy had been produced and no further evidence had been led. Curtis J (at [13]-[15]) stated without explanation that the insurer bore the onus. His Honour referred to the passage from Blatch v Archer (1774) 1 Cowp 63 at 65; 98 ER 969 at 970, cited by Hodgson JA in Ho v Powell [2001] NSWCA 168; (2001) 51 NSWLR 572 at 576, where it was said: "all evidence is to be weighed according to the proof which it was in the power of one side to have produced and in the power of the other to have contradicted." Curtis J went on: "In the instant case Mercantile is an insurance company which has traded under various corporate personalities for many years and may be presumed to know underwriters employed in the industry in 1972. … If, perhaps understandably, the policy cannot be produced and there is no other evidence led by Mercantile, such evidence of underwriting policy, to suppose that NEM issued a limited policy, is to engage in a speculation. I believe that no one knows whether the policy issued by NEM to Auqual was limited to the statutory minium or not." 35 The trial judge followed that decision as a matter of judicial comity and independently thought that there was much to be said for it. His Honour was of the view that the insurer should be able to produce evidence to show the limit, if there was one, even if the primary documents were not available. His Honour also agreed with the submission by counsel for the plaintiff that it was within the power of the insurer to have called evidence from a number of people in the insurance industry as to practices in circumstances such as these which may have assisted in deciding as to whether, at the time, in the type of industry and with the particular insurer, policies tended to be underwritten for the limit or more than the limit or without limit. 36 It is submitted for QBE that the trial judge erred in law in imposing an onus upon it to prove an element of the plaintiff's case, namely the terms of the policy of insurance, particularly the extent of the obligation to insure. It is submitted that the pleading revealed the error – the plaintiff alleged the contract and QBE did not admit the critical term of the contract for the present purposes. That left the plaintiff in a position where it had to prove that aspect of the case. It was submitted that the judgment of Santow JA in this Court in Royal & Sun Alliance Insurance Australia Ltd v Betta Industries Pty Ltd [2002] NSWCA 323; 24 NSWCCR 164 at [40] (distinguished by the trial judge) is in point as the question of what risk is covered and on what terms can only be answered by construing the contract. Counsel distinguished Ho v Powell as a particular application of the rule in Jones v Dunkel (1959) 101 CLR 298, which had no application here. It was submitted that there is no basis for the suggestion that this insurer ought be able to or could produce relevant evidence and, in any event, there was no evidence which required contradiction by QBE. Evidence of practice would not be probative of what occurred in this instance. It was submitted that the conclusion that the policy of insurance was unlimited is contrary to the decision in Orica Ltd v CGU Insurance Ltd [2003] NSWCA 331; (2003) 59 NSWLR 14 at [34]-[42] and at [191]. However, the comment in that case about the decision in Di Cecco is not pertinent to this case. Counsel for QBE also pointed out that the insuring clause of the statutory policy (so far as is relevant) was to pay any other amount "not exceeding twenty thousand pounds" in respect of liability independently of the Act, although the recital was in the form "of at least twenty thousand pounds". 37 Counsel for each of the respondents supported the reasoning of the trial judge and Curtis J. 38 One strand of the argument rested upon the ability and obligation of the insurer to produce the policy as it was within its custody and it had the power to produce it. It was submitted that, contrary to Blatch v Archer, the insurer did not call evidence to explain the steps that had been taken to locate the insurance policy that had been or would have been issued by Eagle Star Insurance Ltd to the employer; or as to policy wordings generally; or as to the policy of Eagle Star Insurance Ltd at the time as to the extent of cover; or evidence from people in the industry as to practices in the industry as to the extent of cover at that time. 39 It was submitted that this argument was supported by the decision of Pidgeon J in the Western Australian Supreme Court in Maughan & Chapman v Sun Alliance Insurance Ltd (1987) 4 ANZ Insurance Cases 60-793. That case is not in point. The public liability policy was available. It contained a recital making a written proposal the basis of the contract and the proposal was deemed to be incorporated in the contract. The insurer led evidence that the proposal could not be found in its office but that there was evidence to suggest that there was such a proposal and that its terms could be inferred. Pidgeon J said (at 74,850): "The defendant seeks to prove the contents of the proposal, which, if it existed, would have been a document forwarded to them that would have caused them to issue the policy. It is accordingly a document in the defendant's possession and not the plaintiffs'. In these circumstances I would consider that the onus is on the defendant to show that there was such a document and what its contents were. The defendant's witnesses are not able to say that they saw the document in existence and that it was subsequently lost. I am asked to come to the view on the probabilities that there was such a document and that it would contain matter referred to by the defendant. Even if I could come to the view that there was probably a proposal form I could not on the evidence before me form any view as to what its contents might have been." 40 It is clear enough that the reference to onus in that passage relates to the evidentiary onus. In that case the policy itself was complete and required no supplementation to give it effect, although the recital provided a basis for supplementing it if the proposal could be proved. An application of an evidentiary onus was explicable because the proposal would only have been in the custody of the insurer. The position in this case is different. It is to be expected that the insured would hold the policy, although it may also be expected that the insurer would have a copy of it or at least a note of it. The position here is also different because the form of the policy in this case is a public document, in part at least. 41 In BI (Contracting) Pty Ltd v Strikwerda [2005] NSWCA 288, Mason P warned against taking too much from Blatch v Archer. He cited with approval the following statement from McCormick on Evidence, 5th ed at 388: "Very often one must plead and prove matters as to which his adversary has superior access to the proof". Mason P went on to say (at [38]): "But the point remains that a party bearing the persuasive burden who seeks to cast the evidentiary burden on the other party must point to something out of the ordinary or to compelling precedent. None exists in the present case." In my opinion the same can be said in this case. 42 The events in question took place 40 years or more before the trial. Both the insured and the insurer had ceased business. QBE had accepted that it was the successor to the insurer but that is all. It responded to a notice to produce by producing no documents. There is no evidence that it holds any relevant documents. There is no evidence from which it could be concluded that it ought to hold documents. The fact that the plaintiff is even further removed from having any relevant documents is not to the point. 43 The appeal to Jones v Dunkel is out of place. No relevant witness has been identified, and there is no evidence to be answered. 44 Another strand of the respondent's argument was that the burden of establishing a condition of, an exception to or a limitation upon liability lies upon the insurer. Counsel for the first respondent put a subtle, indeed rather elusive, argument based on the premise that since 1953 there has been no statutory limit on the amount of common law cover or any standard form of policy provided that the statutory minima are met. It was submitted that, in this context, the admission by QBE of the existence of a relevant policy involved acceptance that the policy would respond to the claim absent proof by the insurer that the policy cover was not greater than the statutory minimum. 45 The discussion of the topic by Jordan CJ in Kodak (Australasia) Pty Ltd v Retail Traders Mutual Indemnity Insurance Association (1942) 42 SR (NSW) 231 at 236-237, is instructive. His Honour said, inter alia (at 237): " Again, a plaintiff seeking to enforce an obligation qualified by a general exception which is applicable to all cases must negative the exception; but if the obligation is general and qualified only by particular exceptions, a person seeking to rely on an exception must prove himself within it: Munro Brice & Co. v. War Risks Association [[1918] 2 KB 78 at 88-89]; Pye v. Metropolitan Coal Co. Ltd. [(1934) 50 CLR 614 at 625]; Williston on Contracts (1936) III, p. 1939. Similarly a person who seeks to escape an accrued liability by a claim that it has been discharged by breach of a condition subsequent must prove the breach; and a person who contends that a contract has been rescinded in pursuance of a resolutive condition must produce evidence in support of his contention: Gordon v. Australian and New Zealand Theatres Ltd ." 46 In that case, it was held that the particular condition was a condition precedent and therefore it was for the insured to prove that it had complied with the condition, rather than for the insurer to prove that it had not (see also Gordon v Australian & New Zealand Theatres Ltd (1940) 40 SR (NSW) 512 at 516 per Jordan CJ). Those principles apply where the terms of the contract are known and some of them can be described as conditions, exceptions or limitations. 47 It is submitted for the respondents that, in circumstances where the policy has been admitted as being responsive, it is for the insurer to show why the policy should not respond or should only respond to a particular monetary limit. It is submitted that limiting the amount of liability was akin to an exception or limitation once the obligation to insure was established, as it was here. It was submitted that in the case of the common law extension of the statutory policy there was no assumption that the statutory minimum would be the amount of the cover. Provided that the mandatory terms were included, the parties were free to bargain as they saw fit (Sydney Turf Club v Crowley (1972) 126 CLR 420 at 425-426 per Barwick CJ); Orica at [19] per Spigelman CJ). 48 Principles as to the construction and operation of conditions, exclusions and limitations have no application where the question is whether a term is included in a policy. That question is governed by ordinary contractual principles. The party asserting the agreement must prove it. The amount and subject of the cover are essential terms in proof of an insurance contract. (Derrington & Ashton, The Law of Liability Insurance, 2nd ed, para 2-25; McGillivray on Insurance Law, 10th ed, para 2.7; Couch on Insurance, 2nd ed, vol 1, para 2:1; Bond Air Services Ld v Hill [1955] 2 QB 417 at 426, 427, 428; Santow JA in Royal & Sun Alliance at [40]). Where the extent of cover is defined by a maximum amount it may be said that cover is limited to that amount but that is not to categorise that amount as an exception to, condition of or limitation to cover. It is an essential part of the primary obligation to insure. 49 There is no substance in the contention that, by accepting that it was the successor to Eagle Star Insurance Ltd and so liable to provide cover, QBE was accepting that the contract of insurance provided for unlimited cover. QBE's defence expressly put the extent of cover in issue. In a sense, the plaintiff/first respondent and Wallaby Grip are fortunate that the form of the legislation, at the relevant time, enables it to be safely concluded that the policy must have contained provision for cover for an amount of at least $40,000 in respect of common law liability. 50 In my respectful opinion, the trial judge fell into error in following the decision of Curtis J and holding that there was an onus lying upon QBE to negative unlimited cover. Cover is limited to $40,000. The ultimate onus was always carried by the plaintiff and no evidentiary onus arose which altered that situation. 51 The appeal on the insurance issue must be allowed. The verdict and judgment below against QBE should be set aside and the matter remitted to the Tribunal for orders to be made in accordance with this judgment. As each party has had both success and failure on discrete issues there should be no order as to costs of the appeal. 52 BRERETON J: The late Angus Clugston Stewart died from mesothelioma, having commenced proceedings in the Dust Diseases Tribunal against the appellant QBE Insurance (Australia) Ltd - for negligence on the part of Pilkington Bros (Australia) Ltd, Mr Stewart's employer from about 1964 until about 1967, and QBE's insured, in exposing Mr Stewart to asbestos dust in the course of his employment - and also against the second respondent Wallaby Grip Ltd, the supplier to Pilkington of asbestos gloves and tape. Following Mr Stewart's death, the proceedings were continued by his widow and legal personal representative, the first respondent Irene Stewart. On 18 March 2008, Kearns J gave judgment in favour of Mrs Stewart against QBE and Wallaby Grip for $356,510 damages. In this appeal from that judgment, QBE challenges, first, the finding that Pilkington was negligent ("the employer's liability issue"), and secondly, the holding that QBE was liable for more than $40,000 (the then minimum limit of an employer's indemnity policy under the (NSW) Workers Compensation Act) ("the insurance issue"). 53 As to the employer's liability issue, I agree with Gyles AJA that there was (just) sufficient evidence to entitle the primary judge to conclude that Pilkington failed to warn Mr Stewart of the risks attendant on use of asbestos gloves and tape, and that if given a warning Mr Stewart would have acted on it. I therefore agree with Ipp JA and Gyles AJA that, on the employer's liability issue, the appeal fails. Moreover, had I not reached that conclusion, I would have upheld the Notice of Contention and remitted the matter to the Tribunal for determination of the allegation of breach of statutory duty under (NSW) Factories Shops and Industries Act 1962, s 41(2). 54 On the insurance issue, however, I have the misfortune to disagree with their Honours. For the reasons that follow, in my opinion the appeal on that issue also should fail. 55 QBE was the successor to and liable for the employer's indemnity obligations of Eagle Star Insurance Ltd, the employer's indemnity insurer of Pilkington during Mr Stewart's employment. QBE's liability arose pursuant to (NSW) Law Reform (Miscellaneous Provisions) Act 1946, leave having been granted to Mrs Stewart, pursuant to s 6(4), to commence an action directly against QBE. It is uncontentious that, by reason of s 6(7), QBE could not be liable for any greater sum than that fixed by the contract of insurance between its predecessor Eagle as insurer and Pilkington as insured. The critical question is what if any amount was fixed by that contract of insurance. 56 As Gyles AJA has set out in detail, at the relevant time the Workers Compensation Act required, by s 18(1), that an employer obtain from an insurer licensed under the Act a policy of insurance for indemnity "for the full amount of his liability under this Act for all workers employed by him and for an amount of at least $40,000 in respect of his liability independently of this Act for any injury to any such worker and shall maintain any such policy in force." By s 18(3)(a), an employer's indemnity policy could, in respect of common law liability, contain other provisions appropriate to the particular case apart from those in the statutory prescribed policy. The statutory form of policy recites the obligation imposed by the Act on an employer to obtain from a licensed insurer a policy of insurance or indemnity "for an amount of at least £20,000 in respect of his liability independent of the Act for injury to any such worker", and the operative clause provides that "if ... the employer shall be liable to pay any other amount not exceeding £20,000 in respect of his liability independently of the Act for any injury to any such person", then the insurer would indemnify the employer against all such sums for which the employer shall be so liable. 57 I do not attach any significance to the supposed failure on the part of QBE to produce the policy, or to call evidence of its terms or of prevailing practice as to employer's indemnity insurance at the relevant time. I agree with Gyles AJA that the appeal to Jones v Dunkel is, in this factual context, inapt. However, I would reject QBE's submission that the trial judge erroneously imposed on it an onus to prove an element of the plaintiff's case, namely, the terms of the relevant policy of insurance and in particular the maximum sum insured. In my judgment, Kearns J was right to conclude that QBE bore the onus of proving that the policy was subject to a limit, and the amount of that limit. 58 It is said in some of the texts that for a contract of insurance to exist, there must be agreement as to the sum to be insured [Ivamy, General Principles of Insurance Law, 6th edn, p107; Derrington & Ashton, The Law of Liability Insurance, 2nd edn, 2-25]. However, this means no more than that if the state of the evidence is such that it is impossible to ascertain the amount of the insurance, the insurance agreement (or policy) is void for uncertainty. Particularly in the field of liability insurance – where the liability insured against provides, in the absence of express provision, an indication of the amount of the insurance - an insurance policy need not specify a limit of indemnity (or a sum insured), and it is not legally essential to a valid contract of insurance that there be a maximum sum insured. Insurance policies may be limited or unlimited. In the absence of a specified limit, an agreement to insure against liability of a certain class is one to indemnify against all liability of that class, whatever its amount. It is not axiomatic that all insurance policies must have a sum insured; they may, but not all do. The function of a "sum insured", except in a valued policy, is to limit to it the maximum sum that the insured can recover, even if the value of the loss exceeds it [see, for example, Westminster Fire Office v Glasgow Provident Investment Society (1888) 13 App Cas 699, 711 (Lord Selborne); Curtis & Sons v Matthews (1918) 119 LT 78, 81]. 59 One common example of an unlimited policy is the statutory employer's indemnity policy, in respect of liability under the Workers Compensation Act (as distinct from at common law): in respect of liability under the Act, an employer's indemnity policy must be unlimited, and it would be quite unnecessary for an insured suing on such a policy explicitly to plead that the policy was unlimited; it would be sufficient to plead an agreement to indemnify. Similarly, compulsory third party motor vehicle policies are usually unlimited. As Ivamy writes in Fire and Motor Insurance (3rd edn, p 288), albeit in respect of third party motor insurance, "In the absence of any limitation in the policy, the insured is entitled to recover the whole amount for which he is legally liable to the person injured". The sum insured, where there is one, thus operates as a limit on the primary obligation to indemnify - it limits the liability of the insurer to the sum insured. 60 Where the issue is whether or not a contract of insurance exists, the insured must plead and prove the contract [Bond Air Services Ltd v Hill [1955] 2 QB 417, 426-428]. However, a party asserting an agreement is not required to plead or prove every term of the agreement; it need only plead and prove sufficient to establish an enforceable agreement containing the terms on which that party relies. A defendant wishing to rely on another term of the contract bears the onus of proving that term. This is a fundamental contractual and pleading principle: a party relying on a term of a contract must show that it did all that was reasonable in the circumstances of the case to bring the relevant term to the attention of the other party [Balmain New Ferry Co Limited v Robertson (1906) 4 CLR 379, 386; affirmed Robertson v Balmain New Ferry Co Limited [1910] AC 295]. Where the defendant cannot show that the plaintiff has had reasonable notice of the relevant term, the defendant fails to prove that the term is part of the contract. 61 Thus, in Balmain New Ferry, the High Court, while holding that a passenger who had regularly used the ferry and knew the system was bound by a term stated on a notice board near the turnstiles, said: If the plaintiff had been a stranger who had never before been on the premises, it would have been for the defendants to prove that they had done what was reasonably sufficient to give the plaintiff notice of the conditions of admittance. 62 In Causer v Browne [1952] VLR 1, a dry cleaner sought to rely on a clause printed on a docket handed to the customer at the time the clothes were handed to the dry cleaner. The Court said: Before the person delivering the document can hold the person receiving it bound by any special conditions recorded there on, he must show that the person receiving it was aware (or to be treated as aware) that the person delivering it intended to modify the effect of the ordinary contract thereby. 63 The party relying on an express exclusion or limitation of liability bears the onus of showing that it is a term of the contract. The "ticket cases" are the paradigm of this rule. In this respect, a provision that limits liability is treated in the same manner as one that excludes liability [Darlington Futures Limited v Delco Australia Pty Limited [1986] HCA 82; 161 CLR 500, 510]. 64 This is a distinct concept from proof of facts that bring a claim within an admitted or proved exclusion or limitation (the onus of which also, usually, falls on the defendant); it is concerned with proof that a term excluding, exempting from or limiting liability is a term of the contract. The observations of Jordan CJ in Kodak (Australasia) Pty Limited v Retail Traders Mutual Indemnity Insurance Association (1942) 42 SR (NSW) 231, 236-7 are not to the point: his Honour was there concerned with proof of the facts bringing a case within an exception or negativing an exception; not with proof of whether the exception was a term of the contract. In issue here is not whether the facts brought the case within an exception or limitation, but whether a limitation was a term of the contract. 65 In the Further Amended Statement of Claim, it was pleaded (par 6): At all material times there existed between Pilkington and the first defendant, a contract of insurance whereby the defendant agreed upon the payment of certain premiums to indemnify against liability for damages Pilkington in respect of any claim for damages for personal injury arising independently of the Workers Compensation Act , 1926. The plaintiff seeks relief pursuant to s 6 generally and s 6(4) specifically of the (NSW) Law Reform (Miscellaneous Provisions) Act 1946 that the defendant indemnify in respect of all liability to pay damages that may be attributed to Pilkington in respect of any damages accruing to the deceased as a result of the negligent acts or omissions of Pilkington. 66 QBE's defence was, relevantly, as follows: As to paragraph 6 of the Further Amended Statement of Claim QBE: (a) Admits that Eagle Star Insurance Limited was the employer's indemnity insurer of Pilkington Bros (Australia) Ltd (deregistered) between at least 8 February 1960 and 1967. (b) Admits that QBE is responsible to meet the liabilities of Eagle Star Insurance Ltd in respect of any liability that company would have to indemnify Pilkington Bros (Australia) Ltd in the circumstances of the plaintiff's claim. (c) Does not admit that the said policy provided cover to Pilkington Bros (Australia) Ltd in excess of the statutory minimum level of cover from time to time as prescribed by regulations made pursuant to the Workers Compensation Act 1926. (d) Notes that as at 1967 the statutory minimum required level of cover for the common law extension of an employer's indemnity policy was $40,000.00 inclusive of the plaintiff's entitlement to costs. (e) Does not admit that Pilkington Bros (Australia) Ltd was entitled to an indemnity pursuant to the policy for greater than the statutory minimum level of cover from time to time. 67 Here, the plaintiff pleaded a contract whereby in consideration of the payment of premiums QBE's predecessor agreed "to indemnify against liability for damages Pilkington in respect of any claim for damages for personal injury arising independently of the Workers Compensation Act". An agreement to indemnify as so alleged is, in the absence of any limit, an agreement to indemnify absolutely, without monetary limit. QBE effectively admitted the allegation (in par 4(a) and (b) of its defence). In my view, the plaintiff having pleaded (and proved, by admission) a contract for valuable consideration to indemnify against the relevant type of loss, it was then for QBE to plead and prove any limitation on its obligation to indemnify. Having admitted the pleaded contract, it could not somehow escape the legal consequence that the burden of proving a limitation fell upon it, by the artifice of pleading a "non-admission" that the policy exceeded the statutory minimum. Rather, having admitted the contract of insurance, it was for QBE to plead and prove that its obligation to insure was limited. 68 As Ipp JA observes, the only evidence that bore upon the amount of cover under the policy was that which gave rise to an inference that the cover was at least $40,000. That does not tend to prove that the cover was at most $40,000, or subject to any other limitation. QBE failed to discharge the onus that it bore of proving that its admitted obligation to indemnify was capped at $40,000, or any other limit. 69 It follows that, in my view, the trial judge was correct in concluding for the purposes of the case that QBE's liability under the policy should be treated as unlimited. I would, therefore, dismiss the appeal with costs. ********** 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.