Trenwick International Ltd v Tanevski & Ors [2004] HCATrans 498 (30 November 2004)

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Trenwick International Ltd v Tanevski & Ors [2004] HCATrans 498 (30 November 2004)

Last Updated: 16 December 2004

[2004] HCATrans 498

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S617 of 2003

B e t w e e n -

TRENWICK INTERNATIONAL LIMITED

Applicant

and

DAVID DUSKO TANEVSKI

First Respondent

SAMAC PTY LIMITED

Second Respondent

I & S INSURANCE BROKING GROUP PTY LIMITED

Third Respondent

Application for special leave to appeal

McHUGH J
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON TUESDAY, 30 NOVEMBER 2004, AT 12.29 PM

Copyright in the High Court of Australia

__________________

MR M.A. PEMBROKE, SC: If the Court pleases, I appear with my learned friend, MR A.P.P. LO SURDO, for the applicant. (instructed by Anderson Rice Lawyers)

MR N.C. HUTLEY, SC: If the Court please, I appear with my learned friend, MR J. BARTOS, for the first and second respondents. (instructed by Deacons)

MR P.H. GREENWOOD, SC: May it please the Court, I appear with my learned friend, MR S.A. GOODMAN, for the third respondent. (instructed by Minter Ellison)

McHUGH J: Yes, Mr Hutley.

MR HUTLEY: Do I get to start first, your Honour?

McHUGH J: Yes, Mr Hutley, yes.

MR HUTLEY: In our respectful submission, your Honour, this is not an appropriate vehicle for special leave.

CALLINAN J: You know, I always think that is a very unattractive formula and not a very good submission. I remember unsuccessfully appearing here once and my client saying, with an expletive, “What have I got to do, drive a Cadillac into Court?”. It never impresses me, if standing alone.

MR HUTLEY: It was not intended to stand alone, your Honour, so can I proceed. The applicant, at all relevant times until a claim was made, acted on the basis that the broker agent, Citilink, had bound cover in favour of the first and second respondents. That is the first proposition.

Citilink asserted that this had occurred to the insurer and remitted premium to the applicant for that cover which the applicant accepted. As the Court of Appeal found at application book 102, paragraph 64, the closing note of 17 April 1998 made no reference to Lloyds. In fact, as appears from the evidence in the supplementary appeal book at 273J to M and 276H to K, the respondents’ agent, that is, I & S, worked on the basis that the insurer was in fact Citilink.

Now, as the Court of Appeal found, it was not a case where the identity of the insurer was critical to the insured. This, of course, was supported by the fact that such communication as there was referred to the fact that the insurance was at Lloyds, which, of course, does not identify an insurer; it merely identifies a marketplace in which insurance can be effected. This is not, of course, notwithstanding section 35 of the Insurance (Agents and Brokers) Act, which allows an insurer and a broker when it has effected – that is, after it has effected insurance at Lloyds to refer to Lloyds.

Now, the finding of fact that, in effect, the identity of the insurer was not critical to the insured was one which was open to the Court of Appeal and is not a matter which would excite the interests of this Court on an application for special leave.

McHUGH J: But it does raise some important questions, does it not, about contract, about the objective nature of contract and whether or not somebody can be bound by a contract that that person does not know about. This is not a case of an undisclosed principal.

MR HUTLEY: Your Honour, can I say - - -

McHUGH J: That seems to me, arguably, the fallacy that underlies your side of the record.

MR HUTLEY: Your Honour, the case was put in two ways in the Court of Appeal, firstly, that what occurred is, in effect, I & S retained Citilink to get insurance, and the identity of the insurer was a matter of indifference to it. That, in essence, is what the Court of Appeal - - -

McHUGH J: That is not quite what Acting Justice Davies said, is it? He put it in some negative way. It was not a case where Samac had made it clear that it was unwilling to accept any cover from the insurer other than Lloyds. That is the way he put it, I think.

MR HUTLEY: Your Honour, that takes us to the point of departure that he had expressed a view – that is, Samac, through its agent, I & S – it expressed a view that it would only take Lloyds or, for that matter, that it sought Lloyds, because factually the source of the reference to Lloyds was not emanating from the Samac side of the record, but was merely an intimation on the part of Citilink in advance of the closing note that the insurance would be at Lloyds. That then led to the issue of the closing note, which made no reference to the insurer at all, Citilink at all times intending to bind cover in favour or burdening the applicant.

Now, in those circumstances, the finding was open, in our respectful submission, that Samac, through its agent, was prepared to take such cover as Citilink bound, and that is what occurred. The alternate way in which it was put in the Court of Appeal, which also shows that this will not be an appropriate vehicle, is to look at it from the point of Citilink. Citilink purported to bind the applicant to cover, and in fact took premium, and that premium was accepted by the insurer.

Therefore, on conventional principles of ratification, there was quoad the insurer via Citilink a purported contract of insurance, which the respondents were entitled to ratify by suing on the cover, and that is what they did. So one has the extraordinary situation of an insurer who, at all times up until a claim is made upon it, acts as if it is bound to my clients, and that is done as a result of its broker who has a binder representing to it that that is exactly what it has done.

My clients then, in effect, take that insurer at the word of its broker and sue upon that cover. Now, whether it be actual authority, such as how the Court of Appeal interpreted it, on the basis, in a sense, of indifference, or on the basis of ratification – on any basis, in our respectful submission, this insurer is bound to meet this claim. So it was not just put in the Court of Appeal on the basis of actually a contract being effected, but also on the basis of a ratification.

McHUGH J: Did the Court of Appeal deal with it on the basis - - -

MR HUTLEY: The Court of Appeal did not need to pass upon that issue.

McHUGH J: No, they did not deal with it.

MR HUTLEY: The way they dealt with it was on the basis, in essence, as apparent from paragraph 59, which my learned friend’s submissions, in effect, seek to rectify, by saying, in essence, the insured sought cover from the insurer, Citilink, with the binder, and the mere fact that there may have been some slight disparity as to what the understanding as to who the insurer was - - -

McHUGH J: But it is more than that, is it not, Mr Hutley, because if the agent had been honest, Citilink would have had to disclose to Samac that Sorema was an unauthorised foreign insurer, and it strikes one as highly unlikely that in that situation, your clients would have been happy to have a contract with this unauthorised foreign insurer. They thought they were dealing with Lloyds.

MR HUTLEY: Can I take that in two propositions? Firstly, merely to have disclosed who the insurer was would have been sufficient. If they had been completely honest, they would have said they were unauthorised, but the issue is, if they had disclosed that alone, what would our clients have done?

McHUGH J: If they had been well-advised, they would have been told, would they not, that Sorema was not bound by the Insurance Act 1973.

MR HUTLEY: Your Honour, that does not go to the existence of contract. That merely goes to how my client might have reacted - - -

McHUGH J: Well, that is right, but you are looking at what the objective facts are. I mean, it is a strange proposition. Assume this is not a case of undisclosed principal, that somebody has entered into a contract with somebody that they have not heard of and do not know. It just looks like the old jewellery cases.

MR HUTLEY: But, your Honour, that happens at every occasion one almost engages to insure at Lloyds, because you do not know – Lloyds tells you nothing about the insurer. It merely tells you that somebody has bound you in a marketplace.

McHUGH J: No, with an authorised broker – with a Lloyds broker. Now, that is a different thing from contracting with somebody who is an unauthorised foreign insurer.

MR HUTLEY: Your Honour, can I turn then – anyway, I have put the point.

McHUGH J: Yes.

MR HUTLEY: We say it is not an appropriate vehicle – if I can be allowed to repeat those words?

CALLINAN J: You can repeat it as much as you like. It is very unpersuasive.

MR HUTLEY: Because, one, we say Justice Davies was supportable on the facts. There was evidence to support an indifference on the part of my client as to who the insurer was. Secondly, in our respectful submission, on any view, because Citilink purported to create a contract on our behalf with its principal and so informed its principal. It, through its bordereaux, said to the applicant, “You have a contract with X”, my clients. My clients were in a position simply to ratify that, if they chose to, and they did.

So, in our respectful submission, it does not raise, as it were, the point of principle of objective theory of contract, because there is also the case of ratification to be dealt with, and on conventional principles Citilink, in purporting to act and create a contract on our behalf, thereby acting as our de facto agent, put us in a position to ratify that which we did by suing on it. They are the two points.

Your Honour, can I turn to the other aspects of the special leave question which are identified in appeal book 120. In our respectful submission, it would be apparent from what we have submitted that there are a number of factual assumptions, explicit and implicit, in the formulation which do not reflect the findings of the Court of Appeal and must render the case as not a suitable vehicle to address the question raised, assuming that question is of such interest to otherwise attract the consideration.

The introductory words assume a contentious fact, namely, that Citilink purported to effect insurance on behalf of what is called “insurer (D)” – Lloyds – and we submit at all times Citilink intended and equally purported in communicating with “insurer (A)” to effect insurance on behalf of the applicant. That was the objective intent and actual conduct of the relevant officer of Citilink. That is made clear by paragraph 52 in the Court of Appeal’s judgment, which appears at appeal book 98, which sets out the conduct or what was intended to be done by Citilink, being the evidence as to the course adopted by Mr Holdsworth. That is at the bottom of page 98 over onto 99. So there was absolutely no doubt that the objective acts that he undertook were intended to consummate an insurance between the applicant and my clients.

Secondly, there is an assumption in the proposition that to refer to Lloyds of London is to refer to an insurer, which is quite incorrect, as the reference to “insurer (D)” and as the reference to the insurer in proposition (b) of the formulated question.

Proposition (e) in the formulated question is also contentious. As can be seen from the closing note, at the time of the conclusion of the insurance, the cover note – that closing note showed complete indifference to the identity of the insurer and showed a preparedness to enter into such insurance as the broker, Citilink, was able to bind and was prepared to bind.

In our respectful submission, the poverty of the applicant’s position is demonstrated by the perceived need to, as it were, rectify the Court of Appeal’s reasons, that is, in the judgment of Justice Davies at paragraph 59, where, as can be seen from application book 125, paragraph 22, it is contended that the Court of Appeal, in effect, made an error – that is, Justice Davies – in the underlined passage on that page, where he says:

“notwithstanding that the broker may have breached the instructions which the insured party gave”.

In our respectful submission, those words were the words intended by the judge and they make perfect sense if one characterises the factual analysis as we say, as supported by the findings of the Court of Appeal. Further, the perceived need, which appears from page 126 of the application book, to challenge the finding of fact by the Court of Appeal concerning the lack of concern of my client as to the identity of the insurer, that is a matter of fact which would not exercise the interests of this Court.

Thus, while one could imagine a circumstance where the question posed, if pure and based on uncontentious and indisputable facts, might exercise the interests of this Court, that essential premise is not present and it will be necessary for this Court to embark upon a consideration of the facts to address the question raised and determine those matters of contention which we have advanced as justifying a refusal of special leave. Those are our submissions.

McHUGH J: Yes, thank you. Yes, Mr Greenwood.

MR GREENWOOD: Thank you, your Honours. Mr Hutley has taken your Honours to the special leave question. Could I take your Honours to the grounds of appeal that are put forward at page 117 of the application book.

McHUGH J: Which are slightly different, I think, are they not?

MR GREENWOOD: Yes, but centre upon this notion of intention, because the error that is put forward in ground 2 is a finding of liability on the basis that:

the insured did not intend and could not have intended to contract with that insurer –

and it has two limbs to it –

but instead intended to contract with Lloyd’s of London.

The submission to your Honours will be that the evidence shows there was no intention to contract with Lloyds.

McHUGH J: What about the evidence of Mr Hakim and Mr Hyman? Did it not rather indicate that the insured was not willing to automatically accept anybody?

MR GREENWOOD: No, I do not think so, your Honour. I will take your Honours to it, but could I just point out in the second ground of appeal the same question arises, because in the second ground of appeal it is put that the error occurs in circumstances where the second respondent and the broker:

were not willing to accept as insurer anyone on whose behalf the agent may have been authorised to contract.

As we would understand it, “anyone other than Lloyds” is what is being put. If we then go to the material that is in the supplementary application book, there is transcript commencing with Mr Hyman’s evidence. The application book numbers in the bottom right have been cut off in some copies – I will refer to the original transcript page numbers. At 256 there is the evidence about the proposal being completed - - -

McHUGH J: Is that the transcript or the appeal book? It is the transcript number, 256?

MR GREENWOOD: Transcript, page 256. At 36:

it was prepared in [I & S] Insurance Brokers and I went through it with –

the I & S Brokers, it should read. Your Honours will recall, as appears at line 52, that it was for several different policies, policies for property insurance as well the public liability insurance. There were in fact seven policies. Then on the next page, 257, the reason for this insurance is referred to – line 32 – in terms of the instructions to be given:

I was told that our finance company requires evidence that we’re properly covered in terms of insurance and we require a certificate of currency in regards to that.

And at 258, line 7:

I wanted some comfort on our files that we had a certificate of currency that we were properly covered for insurance with a reputable organisation.

No suggestion that Sorema is not a reputable organisation, no suggestion that Lloyds was the only person with whom they wanted cover. One goes across then to 260. At line 15, when asked “what would you have done” if there was no insurance cover in place:

We would have made sure we got it elsewhere, it’s just imperative, well we wouldn’t have got our finance, the settlement wouldn’t have happened and from a commercial point of view, it’s a high risk business, we would never trade in that position –

without some insurance. At line 33:

we had to make sure we were covered by a good public liability policy. It was part of my initial discussions with I & S insurance brokers.

So that was the ambit of the initial instructions, “We need a policy so that we are able to trade and we can satisfy our financier”. When one gets then to the quotes coming in at page 267, there is reference to the quotes being discussed with the broker. At line 6:

I didn’t view all these quotations . . . He may have presented a couple to me. That’s possible, but I cannot recollect.

Q. It’s certainly possible, yes?
A. Yeah.

Then at 14:

I wasn’t aware that it was a Citylink quote –

but does not recall specifically what the quote was. It is in that context that the insurance is then effected through Citilink, but so far not a mention of Lloyds. When we get to 269, an invoice or a closing is provided that refers to Citilink. The top of the page:

It would’ve been important to have documents which state exactly what our insurance was at the time.

Q. That’s right. You would’ve read it?
A. Yes.

Q. You would’ve seen, I suggest to you, that there’s a reference there, almost half way down the first page, to Citylink Insurance Brokers?

At line 24:

At that stage I would’ve assumed Citylink was an underwriter. I was never told they weren’t an underwriter . . . I was never told they weren’t an underwriter at this point.

So at this stage, indeed, Samac has effected insurance or given instructions to effect insurance, believing that the underwriter is Citilink. That is added to at page 271, when Mr Hyman, the principal of Samac, says at line 22:

I had seen the name, Citylink, but whether they were subsidiary of Lloyds of London I had no idea.

And that “no idea” is repeated at line 40:

I was aware that there was a party Citylink –

and already said that was the underwriter –

but I had no idea who they were and what they were. I assumed they were underwriters and I assumed that there is certain credibility attached to an underwriter and a certain size of an underwriter organisation.

It is in that context that his Honour found in paragraph 64, application book 102 - - -

McHUGH J: That was what I had in mind.

MR GREENWOOD: Yes. This is not a case where the insured had made it clear that they were unwilling to accept cover from any insurer other than Lloyds, but the grounds of appeal specifically promote that there was a finding to that effect. Indeed, this was a case, in our submission, where the insured had made it clear that it wanted insurance to be effected with a reputable organisation so that it would covered, but it was not only indifferent, but uninterested, in who the actual insurer was. The fact of getting insurance from Lloyds was apparent to the insured once they got the certificate currency that said it, and so there is evidence that there was then an unequivocal impression that they were insured with Lloyds, but that is after the event.

It is for those reasons that we submit that the Court is being invited to deal with the matter on a false premise that there were in fact findings about intention that underlined the submissions that have been put about the need for the insured to know the identity of the insurer. If the Court pleases.

McHUGH J: Thank you. Yes, Mr Pembroke.

MR PEMBROKE: Could I make six short points, your Honours. Your Honours, the reason for the deliberate conduct of the agent was simple. Section 93 of the Insurance Act (Cth) provided that Lloyds underwriters were authorised to carry on general insurance business in Australia. Sorema was not. The evidence of the insured and its agent has been mischaracterised, but I take you to the supplementary application book to transcript page 301. At line 23, Mr Hakim says:

Lloyd’s has enormous presence in Australia –

and so on. At line 50, the judge asked him this question:

Q. Just say for example you saw an insurance company with a name that you said, well they don’t usually do public risk liability?
A. I would definitely question that.

Then the judge asked a question at the bottom of the page, and the next page:

A. The truth is that it’s very difficult. If it wasn’t Lloyd’s and was somebody you didn’t know, I didn’t know, I would try and find out who was the insurer by going back to Citilink –

and then the judge said:

Q. But with Lloyd’s you didn’t see a necessity to do that?
A. You don’t need to do that. I mean there are so many facilities, there are so many brokers, the amount of business conducted by Lloyd’s here is enormous. To obtain the right to deal with Lloyd’s already makes the person bone fide, means you know if Lloyd’s is allowing them to trade under their name, they’re fine.

The third point that I would like to make is that it cannot be denied that the Court of Appeal wholly ignored the principle of objectivity which this Court in three recent decisions, two of which were delivered this month, has reminded us all about. It has paid no credence to the submission that we made that what was necessary was to have regard to what each party, by words and conduct, would have led a reasonable person in the position of the other party to believe.

The fourth point is that reliance is placed on the closing, but that is, like Acting Justice Davies, to mischaracterise the sequence of events. Can I take your Honours to page 84 of the application book. In paragraph 8 of the judgment, the starting point was 16 April, about the fifth line:

Mr Hakim rang Mr Holdsworth and was informed that the insurer would be Lloyd’s –

Paragraph 9:

On 20 April 1998, I & S [the broker] sent a facsimile to a Mr Hyman, who was a director of Samac.

The facsimile said, amongst other things, about the fourth line from the bottom of that paragraph:

“The policy is underwritten by Lloyds of London with claims settled in Australia.”

Acting Justice Davies then said, paragraph 10:

The purchasers of the Grand Hotel were satisfied with the premium and with insurance through Lloyd’s. They gave I & S instructions to proceed. I & S issued an invoice –

At paragraph 11, and this is about 20 April – we have set out the dates on page 122 – I & S issued a closing. Over the page, your Honours, the next step was the issue of a proposal on 21 April. That is paragraph 12 on page 85. The proposal was headed “LLOYDS”. Then paragraph 14, on 21 April, the facsimile which accompanied the submission of the proposal requested a certificate of insurance by return. Paragraph 15, Citilink then, on 22 April, returned a certificate of insurance which said, at the bottom of the page, “Lloyds of London”. Then your Honours know that as late as June – we get this from page 87, paragraph 18:

Citilink issued to I & S a certificate entitled “BUSINESSPAK CERTIFICATE NO. C22391” . . . It indicated that the insurer of all covers was Lloyd’s of London.

So we submit that there is no proper basis for relying upon the closing by itself, not having referred to Lloyds. The whole of the context which preceded the issue of the closing, and, indeed, relevant events which occurred after that date, made reference to Lloyds.

The next point is that this could not possibly be an undisclosed principal case, and, indeed, the first respondents in their written submissions at page 134 of the application book said so. In that regard, can I refer your Honours to the passing statement by Acting Justice Davies on page 102 of the application book where, after referring to what he called the “closure notes” but without getting, with respect, the sequence of events correct, he then made the statement which appears in the last sentence, which suffers from two defects, in our submission.

Firstly, it wrongly characterises the evidence in relation to the insured’s willingness to accept any insurer on whose behalf the agent was authorised, and, secondly, your Honours, it clearly misstates the Diplock test in Teheran v Belton (Tractors). The question is, are there circumstances which should lead the agent to realise that the insured was willing to accept anyone on whose behalf the agent was authorised?

His Honour has put the question around in a different way, which is not reflective of the true test. Clearly, there were circumstances which led the agent to realise, because the agent went out of his way to mislead those involved by saying that the insurer was Lloyds underwriters who were specifically authorised by statute to write general insurance business.

The last point, your Honours, is that there is no ratification or estoppel case, and one cannot introduce one now - - -

McHUGH J: Why do you say that? Mr Hutley says it was argued in the Court of Appeal.

CALLINAN J: Was it pleaded?

MR PEMBROKE: It was not pleaded. I do not remember it being argued, to be perfectly frank. I do not think it is referred to in the judgment. I did not see it.

McHUGH J: No, well, I did not see it.

CALLINAN J: It would need to be pleaded, would not it? It is a very important point.

MR PEMBROKE: I can be almost certain it is not pleaded, but the factual basis for it is really not there. We have acknowledged that the premium worked its way through a chain of brokers and was ultimately credited in the broker’s books against Sorema. We have acknowledged that, and if we are right, ultimately, there will have to be a disgorging of the premium because it is clearly money had and received.

CALLINAN J: All $900, is that right?

MR PEMBROKE: Yes, $850. Mr Hutley is telling me about things that I said but I - - -

CALLINAN J: He said you made written submissions.

MR HUTLEY: On this very point. My junior was present, on this very point.

MR PEMBROKE: I do not have a recollection of that. I cannot see how it can arise, either on the pleadings or on the evidence. I am not sure.

CALLINAN J: Ratification always depends heavily on the facts, and that is why there would need to be a pleading, I would have thought. It would be in your defence, and then there would be a reply in relation to it, I would have thought.

MR PEMBROKE: I cannot deal with this on the run. Mr Hutley is saying to me it was. I do not have any recollection of it, but whether it was or it was not - - -

CALLINAN J: The Court of Appeal certainly has not dealt with ratification, is that right?

MR PEMBROKE: No, it has not.

CALLINAN J: It is common ground - - -

McHUGH J: Yes, I got a surprise when I heard Mr Hutley’s submissions.

MR PEMBROKE: So did I, and my immediate reaction was to say what I did. If the piece of paper which was just flashed in front of me then to go by, it warranted one line at the end of Mr Hutley’s clients’ written submissions.

CALLINAN J: The difficulty about it, if it was not pleaded, no matter what was argued or not argued in the Court of Appeal, is that there would not have been evidence about it.

MR PEMBROKE: No, there was not. It was not.

CALLINAN J: And if any evidence got in, it could not have got in on that issue. It must have been incidentally relevant to it only.

MR PEMBROKE: It was incidental. The frame of the case did not incorporate the direct addressing of a ratification issue, as I read what occurred in the District Court.

McHUGH J: Yes.

MR PEMBROKE: If the Court pleases.

McHUGH J: You have a right of reply, Mr Hutley.

MR HUTLEY: Thank you, your Honour. I have been handed the submissions in the Court of Appeal. I do not need to take your Honours through them in great detail. What I have, your Honour, is our submissions in reply to the submissions of Mr Pembroke. That refers to paragraph 4 of their submissions, and at paragraph 5.1 it says, “the facts necessary to make out ratification are pleaded”, so the issue seems to have been embarked upon in the Court of Appeal. I do not understand that any point was taken that it was not open in the Court of Appeal.

CALLINAN J: That is an assertion that the relevant facts were pleaded?

MR HUTLEY: Yes, your Honour. All I can tell your Honours is that this issue – I was not present, Mr Meagher was, and Mr Bartos was there – was, as I understand it, extensively argued in the Court of Appeal and no point was taken or suggested that that issue was not available in the circumstances of the case.

McHUGH J: The trial judge formulated the issues at 36, 37. He does not mention ratification.

MR HUTLEY: Your Honour, all I can tell you is how it proceeded, and there was no suggestion in the Court of Appeal, but if there is then to be a debate about whether points are open, which were fully argued in the Court of Appeal, that, in our respectful submission, adds to certain aspects about this application which would make it unattractive. I can assure your Honours this argument was fully developed in the Court of Appeal. I am happy to supply over lunch or now the relevant submissions in the Court of Appeal if that would inform your Honours’ determination of the issue.

McHUGH J: Yes. Yes, Mr Greenwood.

MR GREENWOOD: I was only going to add, your Honours, that it was.....dealt with by Justice Davies perhaps in an elliptical way. At paragraph 57, application book 100, the proposition that Mr Pembroke is advancing in advance there appears, and then at 58, Acting Justice Davies then responded by noting that there was no repudiation, but rather seeking to enforce it in the context of this argument about the form of the contract.

McHUGH J: Yes, the notion of repudiation assumes they were bound.

MR GREENWOOD: Yes.

McHUGH J: I think the Court will adjourn in a few moments to resume at 2 o’clock. I think the Court would be assisted by counsel if they could let us have any material bearing on this question of ratification, its argument below and in the Court of Appeal.

CALLINAN J: I would like to see the pleadings.

MR GREENWOOD: As your Honours please.

AT 1.08 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.00 PM:

McHUGH J: Is there anything anybody wants to briefly say about the matter?

MR PEMBROKE: Yes, your Honour. I now know why this point was so forgettable. Can I just show you how it arose and how it unfolded. Can I hand up to each of you a couple of documents which include the transcript, the written submissions which were directed following the oral argument and the pleading.

Your Honours, towards the end of Mr Meagher’s address, he said at transcript page 86, line 50 – he is going through the pleading:

Over the page at para 43 between August 1999 and 11 April 2001, the cross-claimants –

that is, the insured –

notified Trenwick of the claim and claimed indemnity from Trenwick. That is clearly a ratification . . . So that in our submission the relevant ratification occurred between August 1999 and 11 April 2001 by my clients upon becoming aware of this certificate which was issued to them, although they did not know about it. They accepted Mr Holdsworth’s conduct purporting to enter into the contract on their behalf.

Then Acting Justice Davies said, line 12 on the next page:

Why do you say Serema ratified, what was the act of ratification?

Mr Meagher corrects him:

My clients ratified. We ratified.

There was an exchange with Justice Tobias. Mr Meagher then went on for a couple of pages to deal with Trident v McNiece and McGillivray and then at page 91, line 36, I said that we had never heard the point before:

that Mr Holdsworth was for some purpose acting as the agent of the appellant and that the appellant had by some means ratified some unauthorised conduct of Mr Holdsworth on its behalf.

This is, of course, not Mr Hutley’s point this morning. His point this morning was about some supposed ratification by the insurer, Sorema, in relation to the acceptance of the premium. The court then directed some brief written submissions and that is the next document - - -

McHUGH J: I thought his point was by commencing the action?

MR PEMBROKE: If that is his point, then it is the same point that Mr Meagher was raising in the Court of Appeal. We responded to that in the written submissions - - -

McHUGH J: Anyway, I think we understand it. Yes, Mr Hutley, is there anything you wish to say?

MR HUTLEY: Just this, your Honour, the points being raised – no suggestion in any of the submissions that my learned friend was, as it were, a Suttor v Gundowda point. It is a point which will have to be addressed were special leave to be granted, and we submit that in those circumstances, it is really not an appropriate vehicle to really address the points which have been raised.

McHUGH J: Yes, thank you. Mr Greenwood, nothing?

MR GREENWOOD: Nothing, your Honour.

McHUGH J: Yes, there will be a grant of special leave in this matter.

AT 2.03 PM THE MATTER WAS CONCLUDED