Anchorage Marine Underwriting & Anor v Hansen Development S118/1999 [2000] HCATrans 170 (14 April 2000)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S118 of 1999

B e t w e e n -

ANCHORAGE MARINE UNDERWRITING AGENCY PTY LIMITED

First Applicant

MERCANTILE MUTUAL INSURANCE (AUSTRALIA) LIMITED

Second Applicant

and

HANSEN DEVELOPMENT PTY LIMITED

Respondent

Application for special leave to appeal

GUMMOW J

CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 14 APRIL 2000, AT 2.15 AM

Copyright in the High Court of Australia

____________

MR A.W. STREET, SC: May it please the Court, I appear with my learned friend, MR M.K. CONDON, for the applicants. (instructed by McCulloch & Buggy)

MR P.E. KING: If your Honours please, I appear with MR C.A.B. FAIRBAIRN for the respondent. (instructed by Attwood Marshall)

GUMMOW J: Mr Street.

MR STREET: Can I indicate to your Honours at the outset that there was some supplementary material that I think was sent up to the Court indicating that the applicants seek to rely upon section 8(2). To the extent that might not have been apparent, I understand there is no - - -

GUMMOW J: Yes. This is the document dated 12 April?

MR STREET: Yes, your Honour. I understand there is no objection to the issue being clarified that that is an issue we rely upon. Your Honours, the applicants in the present case say that the case raises the importance of the application of the Marine Insurance Act 1909 to the third party liability risk cover on navigable inland waters. In substance, the applicants contend that the Court of Appeal erred, at pages 53 and 56, in the constructions of section 8 and section 9.

Could I briefly take your Honours to pages 53 and 56 of the application book. Your Honours will see at page 56 that his Honour Justice Meagher, who committed the judgment on behalf of the Court of Appeal, characterised the policy at line 10 as one of a "public liability policy". That approach was then adopted by his Honour in some reasoning that appears at the bottom of page 55 where he goes on to refer to the ships and goods policy as being a marine policy. He then refers to certain exclusions that one finds in what I would describe as a collision policy, and he then says at about line 20:

In the whole of Arnould's work I have not located a single example of a public liability risk being treated as a marine insurance risk, let alone a policy dealing with nothing but public liability being treated as a marine policy.

GUMMOW J: I think we understand that, Mr Street, but what do you say about his Honour's, admittedly brief but nevertheless emphatic, statements at page 58 in paragraph 15 of the judgment? It seems to suggest, may it not, that the points you wish to raise, which at first blush certainly look significantly legal questions, that they may nevertheless not necessarily arise?

MR STREET: No, your Honour, our submission in that regard is as follows: the trial judge identified - - -

GUMMOW J: This is developed, I think, by Mr King at paragraph 3.7 of his submissions, at page 169.

MR STREET: It is, your Honour. There are two matters that we would address. The first is in relation to the issue in 3.7 so far as there is some alleged issue relating to the breach of regulation 6 is concerned, there were concurrent findings of fact that the activity falls within regulation 6 so far as aquaplaning is concerned. That was held by the trial judge, that the activity was aquaplaning and the same thing was held by Justice Meagher at page 56, line 40. The question of the number of persons on the vessel was the subject of evidence, first of all by Mr Hansen, who was the officer on behalf of the respondent. He gave clear evidence that the number of persons as a matter of practice were four. The plaintiff gave evidence that identified four people having used the wave sled, which would be a breach of - - -

GUMMOW J: I was thinking in particular about the sentence at line 19 on page 58:

If the second third party had done as it was asked, the defendant would have been covered.

MR STREET: Your Honour, in that regard - I apologise, your Honours, I was dealing with the regulation 6 issue. So far as the loss issue is concerned, the position is this: the appeal was one which was conducted, at least the trial was conducted, on the basis that was different to an opportunity lost case. No lost opportunity case was advanced, it was not pleaded, it was not the subject of argument before the trial judge. Mr Hansen, the officer of the respondent who gave evidence, said that he believed the policy was, in fact, one which covered the wave sled activity. So there could be no link in respect of the lost opportunity claim.

Your Honour, no evidence was led to support the opportunity lost, so that is the answer we advanced in those matters, and they are the only two issues, in our respectful submission, that might - - -

CALLINAN J: But, Mr Street, if your client had done as was asked, that is to obtain a policy that covered the defendant against wave sled accidents, there would not have been any loss on any view.

MR STREET: Yes there would have been, your Honour, there would have been the breach of regulation 6 and no entitlement to recover under the policy because of its strict compliance with the warranty. In that regard, that is why - - -

GUMMOW J: Could you say that again, Mr Street, a little more slowly.

MR STREET: Under section 39(3) the warranties must be strictly complied with, both express and implied. The trial judge found a breach of both the express and the implied warranties in respect of the breach of regulation 6. In that regard, the findings of fact he made in respect of regulation 6 were ones which I sought briefly to touch upon were ones that there was evidence to support and findings of fact which were concurrent in respect of the activity.

CALLINAN J: Where do I find regulation 6 in the application book?

MR KING: I have a copy of it, your Honour, if it is of any assistance.

GUMMOW J: Is it in the book?

MR KING: It is not, your Honour, but I have prepared a bundle in response to my friend's further material that we only received yesterday.

CALLINAN J: I have to say I am sorry, Mr Street, I do not follow what you have said, how that is an answer to what Justice Meagher said. Could you just - - -

MR STREET: What his Honour Justice Meagher said was this, your Honour, at page 58, he said that on the view that he took as to the application of the Marine Insurance Act, in those circumstances, the finding of the trial judge is one that he says could have no application. Because, in essence, he says the Marine Insurance Act does not apply. If the Marine Insurance Act applies though, and I accept that there might have been a case sought to be advanced for opportunity lost, it was not, no evidence led to support it, it is inconsistent - - -

GUMMOW J: Your premise at the moment is if the Marine Insurance Act applied, what then?

MR STREET: Well, then in that regard, the trial judge found a breach of the express and the implied warranty in respect of the breach of regulation 6 of the Water Traffic - - -

GUMMOW J: Now, the implied warranty being where, in section 39(3)?

MR STREET: The implied warranty is that under section 47 as to legality.

GUMMOW J: Yes. There was an implied warranty that the adventure is lawful.

MR STREET: Yes, and there is an express warranty that all activities would be conducted as per approval, which he said was a permit required under regulation 6. So, your Honours, in essence, the requirements of - - -

GUMMOW J: Now, there is no corresponding provision in the Insurance Contracts Act?

MR STREET: No. The Insurance Contracts Act does not require a strict compliance with warranty. Section 39(3) expressly says materiality is not an answer to warranties, and it is for that reason one has - - -

GUMMOW J: Section 39(3).

MR STREET: I think it is 39(3), your Honours.

GUMMOW J: Section 47 is in Division 7, so section 39 applies to it.

MR STREET: Yes, and it is an implied warranty. Section 39(2) refers to a warranty being "express or implied" and then it refers to:

A warranty, as above defined, is a condition which must be exactly complied with, whether it be material to the risk or not.

That is certainly a division that is not in the Insurance Contracts Act. Your Honours, the requirements of the - - -

GUMMOW J: So, if the Insurance Contracts Act did apply, how does that produce an answer to Justice Meagher, page 58?

MR STREET: If the Insurance Contracts Act did apply, then the question of whether the breach of regulation (6) was material would arise. That is the significance of it. In that regard, what his Honour Mr Justice Meagher was saying was that if it is the Insurance Contracts Act, strict compliance with the warranties is not required. Materiality then is a matter that can be agitated and the question of loss would not necessarily have been answered by saying warranties must be strictly complied with. That is the reasoning his Honour was adopting. So, in our respectful submission, in the present case - - -

GUMMOW J: What is your answer then to section 3.7 of Mr King's submissions at page 169 in so far as they involve any different point against you?

MR STREET: Your Honour, that was what I was seeking to address erroneously at the start when I started saying there was current findings of fact that the activity of aquaplaning occurred and his Honour Justice Meagher found that to be the case at page 56, line 40. He says:

it seems to me, His Honour was clearly correct: "aquaplanning" would have to be endorsed on the policy in order to be covered, and it was not - - -

so his Honour accepts that the activity involved was aquaplaning. The only other issue was the number of skiers. If one goes back to the trial judge's judgment, page 19, line 25, it is apparent that the judge appreciated the need for there to be more than three people, namely four people, as appears between lines 25 and 30:

This Regulation requires that permission be obtained from the Maritime Services Board where a vessel is towing more than three water skiers or aquaplaners -

He appreciated the need for the number. In that regard there is evidence, as I have sought to indicate a moment ago, from Mr Hansen, who was the officer and mind behind the respondent. He gave evidence that the practice was to carry four persons, consistent with his Honour's finding. The plaintiff gave evidence that there were four persons who had been using the wave sled: her ex-husband, Mark Corby, John Mullock and Leanne Kelly and the plaintiff. The reference is in the appeal book, Court of Appeal 103Q to R, 106X - - -

GUMMOW J: Sorry, 103? I am looking at 103.

MR STREET: Page 103Q to R. Your Honour, there is reference at 103Q to R, there is identification of where the plaintiff was when she fell off, there was two other persons referred to, her ex-husband Mark and John Mullock. If one goes over to page 106X, there is a reference there to "You said that there were three persons", and she says, "I was the second last, I think, on the four-seat ride, at the back of the ride". Then over the page, at page 107J: "I see, well just I want to ascertain at the time that you came off that there were three persons on the torpedo?---That is correct, that is right, and a driver of the speed boat. There was also Leanne Kelly, who had come off the ride previously - - -

GUMMOW J: What page are you reading from?

MR STREET: On page 107 I. She identifies at the bottom of the page - - -

GUMMOW J: We only have the application book.

MR STREET: I apologise, your Honours. The references I was seeking to give your Honours was the evidence in the Court of Appeal.

CALLINAN J: Mr Street, before you go to that, I am sorry to bring you back to it, but would it not have been a matter of indifference to the defendant whether the defendant had a policy of marine insurance or some other policy, what the defendant wanted was a policy which would cover the defendant against:

any form of Towed rides -

I am reading from the foot of page 57 -

(except aerial equipment) eg. Tube, Toboggan and Wave Sled.

Whether, in the course of doing that or not there might have been a breach of some regulation, would have been a matter of complete indifference to the defendant. The defendant wanted to be covered against all risks, not simply perhaps legal risks arising out of no breach of the regulations, but risks arising, howsoever caused, just in the same way as somebody wants insurance in respect of damage to a motor car even though that person might be in breach of the traffic regulations. That was what the defendant thought the defendant was bargaining for. Is that not so?

MR STREET: Certainly that is the document that was brought into existence that supported the finding of a breach of duty.

CALLINAN J: What other construction can you put on that document?

MR STREET: First of all that is a construction in respect of a document where what was being obtained, we say, was marine insurance, cover under the Marine Insurance Act. The significance of it is this: if it is cover under the Marine Insurance Act - - -

CALLINAN J: I understand that. Did the defendant stipulate for marine insurance?

MR STREET: Yes, your Honour.

CALLINAN J: Or did the defendant simply seek insurance?

MR STREET: No, your Honour, he stipulated for cover over a particular craft. Indeed, in his own evidence, Mr Hansen gave evidence referring to "cover for particular craft". The policy identifies particular craft. He gave evidence that that craft was one that he gave attention to in respect of the policy. The policy clearly required a nexus between the insurable interest in that insurable property and what we say was the risk of third party liability. That is the - - -

GUMMOW J: So, the customer, the client, was taking the risk on itself that it would get a policy under the wrong Act?

MR STREET: No, your Honour. The policy itself refers to application of the Marine Insurance Act. In our respectful submission, navigation on inland waters for reasons - - -

GUMMOW J: No, no, that is what it ended up with. The question is what it wanted.

MR STREET: Well, your Honour, in so far as the policy is concerned, it has on it, and he was cross-examined about it, a notation saying "please read carefully the schedule". It identifies in the policy that it is a Marine Insurance Act policy, or purports to be, and it identifies cover for particular vessels and, indeed, there was evidence about the cover changing. Initially he had cover for hull cover when the policy was first taken out in 1994. Then he dropped the hull cover and kept it as simply third party liability cover.

CALLINAN J: Mr Street, the note that is his Honour Justice Meagher relied upon does not, to me, disclose any preference for any particular form of policy but records a desire to be covered against risks.

MR STREET: But your Honour, that would be putting that note in a matrix which is just in a vacuum. That note was brought into existence in circumstances where in 1984 a policy of insurance had been issued which was a marine policy. It identified particular vessels, it provided hull cover. There was evidence about the desire to get particular cover for these vessels because of the activity of paraflying. That paraflying activity ceased and they then only sought cover in respect of commercial water skiing, in respect of specified vessels. So that the note was not brought into existence in that vacuum.

Then what occurred was this: there was a reminder sent out for renewal of the policy, that is the policy identifying particular vessels, and it is in those circumstances that that note came to be sent - after a reminder for renewal of the particular policy was sent. In our respectful submission, it is a case where the Marine Insurance Act applies to the insurance of the kind here issued. The proposition I was seeking to turn to was that the requirements of the Act in relation to the nature of a marine policy are all made out in identification of each element of the requirements of, I think it is section 29. It sets out what a marine policy must require. In our respectful submission, in the present case, those requirements were all made out.

Section 8(2) clearly identifies that the Marine Insurance Act applies to an adventure that is analogous to a marine adventure. In our respectful submissions, navigation on inland waters is analogous to a marine adventure. His Honour, Mr Justice Meagher, in the Court of Appeal judgment does not address it at all.

GUMMOW J: Was it put to the Court of Appeal?

MR STREET: Yes, your Honour. Can I take your Honours to the trial judge's decision. If your Honours would turn, please, to page 6, line 30:

Mr Street relied upon s.8(2) of the Act as applying to inland waters, a view, he stated which is supported `by the commentators on the CCH Insurance loose leaf -

Your Honours have a copy of that -

The fact the lake was tidal does not matter and he denies the applicability of the Con-Stan Industries decision.

His Honour sets out the provisions and then his Honour continues on page 7:

Section 9 describes (rather than `defines' as used in the Act) `marine adventure' as exposure of insurable property being any ship, goods or other moveables to maritime perils. It also includes any liability or third party incurred by the owner or person responsible for the insurable property by reason of the maritime perils.

Then his Honour continues to emphasise the extended words at the end of section9 (2). Could I take your Honours down to the bottom at line 45:

The insurable property consisted of boats which each carried registration numbers. They were to be engaged in water activities - water skiing and paraflying. They were to be navigated upon a lake which is analogous to a marine adventure in that it could be said that the insurable property could be exposed to any of the maritime perils nominated (certainly fire).

So his Honour addressed section 8(2), found that it was analogous and, in those circumstances, said that the Act applied. His Honour Mr Justice Meagher failed to address section 8(2) altogether. In our respectful submission, the reason he gave in respect of the exclusion in respect of the ships and goods policy, only emphasises that but for such an exclusion, the policy is one which would cover personal injury. It is clear from section 9(2)(c) that liability to third parties is something which is covered by the Act.

So, in our respectful submission, the Court of Appeal erred by failing to give effect to section 8 and section 9. It is a matter which we say is of importance because of the purpose behind the legislation. In that regard, your Honours, we refer to the second reading speech, which is in the material we handed up. In that second reading speech, your Honours, the honourable Mr Groom emphasised the need for this area of the law to be one which was "made clear, definite and certain." The consequence of the decision of the Court of Appeal would be that - - -

GUMMOW J: Well, the Attorney-General, his successor, has a reference of 21 January this year to review the Marine Insurance Act.

MR STREET: Your Honour, in our respectful submission that does not remove the significance of the issue. It is clear that there is a decision already, I think, reserved before the Full Court of Western Australia on the same issue. It is a matter which arises in the present case, we say, in circumstances where similar issues are likely to arise in the future. Mr Fullerton gave some evidence identifying inland waters and the like in that regard. If the Court pleases, we would respectfully submit this is an appropriate case for a grant of special leave.GUMMOW J: Yes, Mr King.

MR KING: Your Honours, there were three reasons - powerful reasons, we would submit - why the appellants were not entitled in the findings and the circumstances of this case to rely upon section 47 of the Marine Insurance Act. The first was that the Marine Insurance Act had no application to the facts of the case. I will come back to that shortly. The second was that on the application of the decision of this Court in the matter of Norwest Refrigeration Services Pty Ltd v Bain Dawes that it should not be assumed that the negligent conduct of the broker, the appellant in this case, if it had not occurred, would have occurred in circumstances where there was no breach of the relevant provision. The third point is that in any event there was no breach of regulation 6.

Can I just deal with the last point first because it is an issue of fact. My friend started reading from transcripts of other proceedings which are not in evidence in before this Court. The preparation of the appeal book was such that we do not have any evidence about any of those matters.

GUMMOW J: Well, anyhow, we do have the reasons for judgment of the District Court judge.

MR KING: We do, and I will take your Honour to those reasons.

GUMMOW J: Do you get any comfort from page 10, line 50, and over to page 11 as to what the customer wanted?

MR KING: Yes, and again a little bit further on, your Honour, at page 26 to the same effect where the negligence is set out at the bottom of the page, line 47:

if the topic of the Monster Ride did not occur in that conversation, it was clearly raised as an instruction -

that was a document in writing, your Honour -

to ensure that the ride was covered. Now if the card was received before 22 January 1986, by leaving the cover unaltered the Second Third Party either believed the coverage was adequate or failed to ensure that it was. In either case the Second Third Party was negligent either in its advice or in failing the secure proper coverage.

His Honour then went on to make findings which justified Justice Meagher's comments at paragraph 15 at page 58, to which your Honours have drawn reference, that the applicant for appeal either refused to follow its instructions or alternatively falsely represented that it had done so. In either case, it was negligent.

GUMMOW J: Which makes a breach or otherwise, if that is right, it is right, makes a breach of these regulations irrelevant.

MR KING: That is the point in Norwest, we respectfully submit. Your Honours, but there is a further point which means that the appellant just does not get off the ground at all. This relates to the issue regarding the breach of regulation 6. If your Honours go to page 19 of the application book, regulation 6 is referred to. Also a regulation 8 offence was suggested as well, but his Honour found in my client's favour on that point. But in relation to regulation 6, his Honour said this:

This Regulation requires that permission be obtained from the Maritime Services Board where a vessel is towing more than three water skiers or aquaplaners on any enclosed waters, otherwise an office is committed. On this point I am entirely in agreement with Mr Street's assessment of the matter.

But your Honours will see that he then went on to make no finding to precisely what that assessment was. Can I hand to your Honour a copy of the written submissions of Mr Street before his Honour about which assessment his Honour entirely agreed. The relevant passage appears in relation to breach of regulation 6, paragraph 16 - - -

GUMMOW J: We had better be sure Mr Street accepts that these are the submissions.

MR STREET: I handed these to my learned friend, your Honour.

MR KING: Paragraph 16, page 7. This was the submission put to his Honour which his Honour entirely accepted. "The plaintiff's evidence was that there were three people on 22 February 1987 being conveyed on the wave sled on the enclosed waters". Then his Honour said in the next sentence, "this is a plain breach". But if your Honours go to either the document that I have handed to your Honours a little while ago when my friend commenced his address, the Water Traffic Regulations, regulation 6, your Honours will see it says "towing more than three persons", not "three persons", but "more than three persons". So there is only a breach of the regulations if it is towing four or more. But on my friend's case, there was only three persons on it and his Honour entirely accepted that story. End of any suggestion, we say, that there has been any breach. There is no other material before the Court which could lead to any other conclusion, we respectfully submit.

The second point, your Honour - or the first point if I could come back to it - deals with the Marine Insurance Act and its application. Can I take your Honours to the relevant parts of the Act.

GUMMOW J: Mr King, you are not suggesting, are you, that that is a completely open and shut book?

MR KING: That point about three or more, your Honour?

GUMMOW J: No, no, anything in the Marine Insurance Act.

MR KING: No, I do not accept that, and I would not suggest that. But we respectfully submit that it is reasonably clear and that the present case is not an appropriate vehicle to agitate the issue that is currently being sought to be agitated. And that the facts of the case are not appropriate to agitate that question.

Perhaps I should just address those two points initially. In the application book my learned friend sought to rely upon an affidavit, which we objected to but nonetheless it is in the book. That is at page 73 and following. This is an affidavit of Mr Fullerton, who gave evidence in the proceedings before Judge Bell. Your Honours will see that at paragraph 4, page 74, we have evidence about the wording in respect of the policy which is the subject of appeal. The policy, your Honours, is set out at page 78, but I will come to that policy in a moment. But importantly, in paragraph 4, we see that this policy was in circulation between 1986 and 1991 and has not been used since. That is the first point - it has no general application - - -

GUMMOW J: Yes, I noticed that.

MR KING: Now, your Honours, the point can be taken further. Can your Honours go to paragraph 12 of this affidavit. My friend then sets out current marine policies of other insurers. But what is the position about the current marine policies of other insurers? We see that none of them use the phraseology, the terminology upon which the applicant relies here. That critical phrase is "by reason of the interest in the vessel". So we have the FAI policy at page 93 that is attached to this affidavit. Page 93, column 2, 5.2: the phrase is not "by reason of the interest of", but the phrase is "in the use of or arising out of the ownership of". So anything that this Court could decide about the construction and application of that policy would be of no assistance there.

Then the next policy that is relied upon is the NRMA policy, and the relevant terms is at page 108, line 25, column 1. What is the phrase there? It is "the use of your boat", nothing to do with interest at all. So the NRMA policy has no application. Then we have the QBE policy at page 136, and again the word is "use", not "interest". Then we have the Club Marine policy at page 123, and again the text in the insurance clause is "use" and not "interest". So the affidavit assists the respondent, not the appellant.

GUMMOW J: Why did you object to it?

MR KING: There are lots of other assertions unsupported by appropriate evidentiary methods, your Honour. Then the second point is that apart from it being an inappropriate case, it is not a suitable vehicle because the question that my friend seeks to raise, as a matter of principle, is whether inland waters can be the subject, or risk in inland waters, can be the subject of marine insurance.

Your Honours, the only real difficulty in this area of the law is not whether an inland perched lake, as this one is, can be the subject of risk under a marine policy strictly defined in the Act. The only problem in this area deals with waters that are connected to the open sea, such as Sydney Harbour or Port Kembla. That is where a problem may arise. But this case does not raise this problem at all. What we have here is a one kilometre square inland perched lake, and on no view of the facts, we respectfully submit, could it possibly be said that it is part of the sea. Hence, the case is not a vehicle which sensibly raises any important point.

Can I address, then, the specific arguments relating to the application of the Act. If your Honours go to Part II, Division 1- Limits of Marine Insurance. Under section 7 it refers to a contract of indemnity, that is to say concerning "losses incident to marine adventure". Then section 9(2) defines what a marine adventure is:

(a) any ship, goods, or other movables are exposed to maritime perils.

Then (b), not relevant, but in similar wording, "maritime perils" again mentioned. Section 9(2)(c), a section not mentioned in any of my friend's written submissions:

any liability to a third party may be incurred by the owner of, or other person interested in or responsible for, insurable property, by reason of maritime perils.

The policy in this case, your Honour, which I have mentioned is set out at page 78, is a pure third party liability policy. It is not a policy covering a whole risk, it is not a policy covering freight or any of the accepted subjects of marine insurance. That appears from line 53:

the Policy being restricted to Third Party only.

So, the only way in which this policy could have any application would be under section 9(2)(c). But the problem for the applicant is the last five words of (c), "by reason of maritime perils". It is possible to have marine insurance on third party liability, but it must be by reason of maritime perils. Then those perils are set out:

"Maritime perils" means the perils consequent on , or incidental to, the navigation of the sea -

then a number are specified, and then it concludes:

and any other perils, either of the like kind, or which may be designated by the policy.

Your Honours, there cannot be any suggestion that the navigation on an inland lake has anything to do with a peril consequent on, or incidental to, the navigation of the sea and his Honour Justice Meagher so found at page - - -

GUMMOW J: What about the Caspian Sea?

MR KING: The Caspian Sea, your Honour?

GUMMOW J: Yes.

MR KING: Well, that is not an inland lake, that is a sea.

GUMMOW J: I see, that is because it is big.

MR KING: Well, it is a matter of definition. My friend has referred to the Canadian and the US position. Of course, that is an entirely different position. In the United States and Canada, particularly the United States, each of the states have their own marine insurance legislation. That is significant because they differently define what are marine risks, particularly bearing in mind the problems about Lake Eyre and the Great Lakes. So nothing can be taken from the US or Canadian cases that will be of any assistance in the resolution of the suggested concern or problem.

So, your Honours, Justice Meagher, at page 56, lines 29 and 30, noted that Lake Cugden can hardly be referred to as the sea.

GUMMOW J: When does a lake become a sea?

MR KING: When, if there is evidence of the waters being so great, so expansive, as to be referred properly to in normal parlance, ordinary and accepted language, as the sea. One does not need to define it precisely for present purposes, all we know is that certainly this lake is not a sea.

Your Honours, there are a number of cases, including decisions in this Court, in particular the Con-Stan Case, which has been mentioned in my submissions, the decision of Lord Justice Scrutton in Leon v Casey which was referred to with approval by this Court in Con-Stan, which hold that the subject matter of marine insurance must substantially relate to risks attended upon the sea. We respectfully submit that those authorities make it clear that a risk of the type proposed here could not possibly fall within those definitions.

Then my friend does not rely upon section 8(1) for obvious reasons, because the policy here is limited to the lake itself and extends no other part of the main, so it does not give rise to that general concern or problem that possibly exists in relation to harbours and in relation to waters connected to the open sea where great ships travel and ply their trades. He, however, does rely on section 8(2), but there is no authority that he can point to, no statement of principle that he can rely upon, that brings himself within the words "adventure analogous to a marine adventure" in circumstances such as the present case.

The learned trial judge in his discussion of the matter, at page 7, towards the bottom of the page, thought that navigating upon a lake was analogous to navigating upon the open seas and referred to the possibility of fire. But there is absolutely no authority for that proposition. It was not accepted by the Court of Appeal and, with respect, it does not give rise to any question of any sensible merit or substance in the context of the present case. Those are my submissions.

GUMMOW J: Yes. Thank you. Yes, Mr Street.

MR STREET: Your Honours, can I deal first of all with the matter which my learned friend referred to under section 6. In the application book at page 68, there is set out reference to, in the facts, the plaintiff's statement which is picked up by the trial judge. If I could just read it to your Honours, line 45, and your Honours will see it says:

"This time Leanne Kelly and myself went along with Mark and John. The boat driver showed us where to sit then started the boat. The ride itself had about 5 spills -

so there are four persons. That is referred to in paragraph 9. Could your Honours turn to page 15 of the judgment. Page 15 of the judgment, the trial judge, your Honours will see at the bottom of the line, line 50, a reference to the statement of the plaintiff, exhibit N. In our respectful submission, when one goes to the trial judge's reasons, it is perfectly clear at page 19, at line 30, that he appreciated the need for more than three people. He identifies such at line 30. So, in our respectful submission, there is no substance in the suggestion that there is some inappropriateness because of the breach of regulation 6.

Your Honours, in so far as the proposition was advanced that this is a case on all fours with the Bain v Dawes decision, it is one where I sought to emphasise that Mr Hansen gave evidence that he knew, at least he believed, the wave sled was covered. There cannot, in those circumstances be a break in the chain of causation, nor was any evidence led to support an opportunity lost case. So there is not that answer, and in my respectful submission, was not suggested there was.

The next matter my learned friend referred to was the terms in the policy itself. Your Honours we annexed the terms also of the institute clauses and in that regard it would not have escaped your Honours that the language in the Institute Yacht Clause at page 145 is almost identical to the language used in the present case. However, it refers to "by reason of interest in the vessel insured". Your Honours, my learned friend sought to draw a difference with the other policies which were referred to because of the word "use". In reality, the words "by reason of your interest in the vessel" necessarily require a causal link in respect of use of the vessel and the insurable interest. So, in our respectful submission, there is no material difference that arises in that regard.

To the extent it is suggested there are no authorities to support the approach of application of the Act to inland waters, I think it is Marks and Buller, the commentators to CCH, support such an approach and there is an extract of that in the bundle we sought to hand up to your Honours. Dober, in a work on Marine Insurance supports such an approach. Sutton suggests the contrary. The words in section 8(2) "adventure analogous to", in our respectful submission, embrace navigation on inland waters.

Your Honours, the last aspect in that regard is when one goes to section 9(2) maritime perils, the reference to maritime perils is also one which includes "and of like kind". A "like kind" of maritime peril, in our respectful submission, must be one such as navigation on inland waters. So, in our respectful submission, it is one which falls within the Act. And, your Honour, we do rely upon section 8(2)(c). So far as the lake is concerned, it is one which we accept was inland waters, but we say that the Act applies to it and that his Honour Justice Meagher, has failed to address the argument that was addressed by the trial judge in that regard. Your Honours, the proposition that we do not rely upon section 8(1) is not one I accept. There is a construction of section 8(1) that also applies the Act to inland waters.

Your Honour, in our respectful submission, this is one which it is a case falling within what was said by Mr Groom in the second reading speech, this is an area of law which is of considerable importance and requires a clear and certain application as to where the Act applies. It is clear from the material in Mr Fullerton's affidavit that there is such uncertainty and, in our respectful submission, it is a matter of importance. If the Court pleases.

GUMMOW J: The applicant seeks special leave so as to raise various questions of construction of the Marine Insurance Act 1908 (Cth). However, having regard to the particular circumstances of this litigation which were identified in paragraphs 14 and 15 of the reasons for judgment of Justice Meagher, who gave the leading judgment in the Court of Appeal, these questions would not necessarily arise for the resolution of an appeal in this Court. Accordingly, this is not an appropriate case for the determination of these questions of statutory construction. Special leave is refused and refused with costs.

AT 2.57 PM THE MATTER WAS CONCLUDED