Insurance Contracts Act 1984 (Cth), s 10(2), s 51(1)

Respondent (Plaintiff) : Mr C J L Pullin QC & Mr J P Wilson

Accident Insurance v Sullivan (1986) 7 NSWLR 65

Bradley v Eagle Star Insurance Co Ltd [1989] AC 957

Distillers Co Biochemicals (Australia) Pty Ltd v Ajax Insurance Co Ltd [1974] HCA 3; (1974) 130 CLR 1

Foxe v Brown [1984] HCA 69; (1984) 58 ALR 542

Khoury v Government Insurance Office [1984] HCA 55; (1984) 165 CLR 622

McDowell v Baker [1979] HCA 44; (1979) 144 CLR 413

Mills v Meeking [1990] HCA 6; (1990) 169 CLR 214

Nelson v Nelson [1995] HCA 25; (1995) 184 CLR 538

Penrith City Council v Government Insurance Office of New South Wales (1991) 24 NSWLR 564

Phoenix General Insurance Co of Greece SA v Halvanon Insurance Co Ltd [1988] 1 QB 216

Post Office v Norwich Union Fire Insurance Society Ltd [1967] 2 QB 363

R v Cohen [1979] HCA 46; (1979) 141 CLR 577

Saraswati v The Queen [1991] HCA 21; (1991) 172 CLR 1

Yango Pastoral Company Pty Ltd v First Chicago Australia Ltd [1978] HCA 42; (1978) 139 CLR 410

1 KENNEDY J: The facts are sufficiently set out in the reasons for judgment of Pidgeon J, and it is unnecessary for me to repeat them at length.

2 Clause 3 of the conditions of hire provides as follows:

"3(a) Not being an insurer; the Owner provides collision indemnity, only during the agreed rental term.

(ii) On a Court Judgment against the Renter for third party property damages to $500,000 (cover can be forfeited if the Renter proportions blame).

(iii) On claims by third parties for bodily injuries per the MVIT Act.

(i) The first $200 of each occurrence of damage or the first $600 where a driver aged 20-26 is listed, regardless of blame, including: windscreen damage, tyre damage, lost wheel covers, lost petrol cap, lost keys and defaced decal stickers.

(ii) The first $2000 of damages arisen out of a single-vehicle accident (running into a roadside obstacle or rolling-over, including whilst avoiding a vehicle).

(iii) All damages to the car and claims by third parties, in the event of a breach of these conditions: including wilful damage, unsecured keys and damages where details are not available."

3 Clause 1(k) also refers to the indemnity. By that paragraph, the Renter agrees, presumably with the Owner, that "All indemnity is voided and the Owners listed unlimited-km-rate will be charged if the speedo cable/seals have been interfered with".

4 The application of the Insurance Contracts Act 1984 (Cth) extends to contracts of insurance, the proper law of which is the law of a State - see s 8. Clearly, the proper law of the contract in this case is that of Western Australia. None of the exceptions in s 9 has any application.

5 By s 10(2), a reference in the Act to a contract of insurance includes a reference to a contract that includes provisions of insurance insofar as those provisions are concerned, although the contract would not ordinarily be regarded as a contract of insurance.

6 By s 51(1) of the Act, it is provided as follows:

(a) the insured under a contract of liability insurance is liable in damages to a person (in this section called the "third party");

(b) the insured has died or cannot, after reasonable inquiry, be found; and

(c) the contract provides insurance cover in respect of the liability;

the third party may recover from the insurer an amount equal to the insurer's liability under the contract in respect of the insured liability in damages."

7 The expression "contract of liability insurance" in defined in s 11(7) as follows:

"For the purposes of this Act, a contract of liability insurance is a contract of general insurance that provides insurance cover in respect of the insured's liability for loss or damage caused to a person who is not the insured."

For the purposes of the Act, "a contract of general insurance is a contract of insurance that is not a contract of life insurance" - see s 11(6).

8 The initial question is whether the car rental contract "includes provisions of insurance". The conditions are very poorly drafted. The opening words of cl 3(a), "Not being an insurer", cannot control the meaning of the clause if the operative part brings the car rental contract within the definition of a contract of insurance under the Act. In terms, it is the Owner which provides "collision indemnity". The reference to "during the agreed rental term" must mean that the indemnity will be given in respect of events occurring during the course of the term of the rental appearing on the front of the car rental contract or during any agreed extension. If, without authority, the Renter keeps the vehicle for longer than the agreed period, an issue may well arise as to whether he is an unauthorised driver in terms of s 15 of the Motor Vehicle (Third Party Insurance) Act 1943.

9 The critical question then comes down to whether the Owner is undertaking itself to indemnify the Renter or whether it is undertaking simply to arrange for an outside insurer to indemnify the Renter against the risks identified in that clause.

10 MacGillivray and Parkington on Insurance Law, 8th ed (1988), at 1, indicate that a satisfactory definition of "contract of insurance" is elusive, but they go on to say:

"A useful working definition can be derived from that given by Channell J in Prudential Insurance Company v Inland Revenue Commissioners [1904] 2 KB 658. A contract of insurance is one whereby one party (the "insurer") promises in return for a money consideration (the "premium") to pay the other party (the "assured") a sum of money or provide him with some corresponding benefit, upon the occurrence of one or more specified events."

11 In Prudential Insurance Company v Inland Revenue Commissioners [1904] 2 KB 658, Channell J, at 663, said:

"Where you insure a ship or a house you cannot insure that the ship shall not be lost or the house burnt, but what you do insure is that a sum of money shall be paid upon the happening of a certain event. That I think is the first requirement in a contract of insurance. It must be a contract whereby for some consideration, usually but not necessarily for periodical payments called premiums, you secure to yourself some benefit, usually but not necessarily the payment of a sum of money, upon the happening of some event. Then the next thing that is necessary is that the event should be one which involves some amount of uncertainty. There must be either uncertainty whether the event will ever happen or not, or if the event is one which must happen at some time there must be some uncertainty as to the time at which it will happen. The remaining essential is that which was referred to by the Attorney-General when he said the insurance must be against something. A contract which would otherwise be a mere wager may become an insurance by reason of the assured having an interest in the subject matter - that is to say, the uncertain event which is necessary to make the contract amount to an insurance must be an event which is prima facie adverse to the interests of the assured. The insurance is to provide for the payment of a sum of money to meet a loss or detriment which will or may be suffered upon the happening of the event."

12 As is pointed out in Halsbury's Laws of England, 4th edn reissue, vol 25 par 3:

"Most contracts of insurance belong to the general category of contracts of indemnity in the sense that the insurer's liability is limited to the actual loss which is, in fact, proved. The happening of the event does not of itself entitle the assured to payment of the sum stipulated in the policy; the event must, in fact, result in a pecuniary loss to the assured, who then becomes entitled to be indemnified subject to the limitations of his contract."

13 In MacGillivray and Parkington, at 368, the editors indicate that the amount or adequacy of the premium in relation to the risks run is a matter for the insurer rather than a court. A similar view is expressed in Colinvaux's Law of Insurance, 7th edn (1997), at 157: "A premium is in no respect a prerequisite of a contract of insurance : all that is necessary is the undertaking by the insurer for good consideration." If the present contract is a contract of insurance, it is clear that the respondent has provided good consideration for the insurance by payment of the charges.

14 The reference in cl 3 of the contract to the Owner providing collision indemnity, standing alone, appears to me to indicate that the Owner itself will provide the indemnity to the Renter. It does not readily convey the impression that the Owner is not undertaking direct responsibility for the indemnifying the Renter, but is undertaking to arrange insurance on behalf of the Renter, with the consequence that the Renter's claim for an indemnity under the clause lies only against the outside insurer. The assertion that the Owner is not an insurer does not appear to me to require a different answer.

15 The position is somewhat complicated by the wording of the three categories of indemnity provided for in condition 3. The wording in subpar (i) appears to be inappropriate for giving rise to an agreement by the appellant to "indemnify" the Renter for damage to the rented car. It simply amounts to the Owner agreeing not to make any claim against the Renter in respect of that damage. It is in the nature of a waiver of any claim for damage to the vehicle. It may be presumed that the appellant will itself insure its own vehicle for its own benefit.

16 So far as the agreement to provide collision indemnity on "claims by third parties for bodily injuries per the MVIT Act" under subpar (iii) is concerned, there is a requirement for all owners of motor vehicles, whilst on a road, to be insured against liability generally in the terms of the policy set out in the schedule to the Motor Vehicle (Third Party Insurance) Act 1943 - s 4. That policy insures the Owner and any other person who drives the vehicle. The arrangement under par (iii) lacks any promise by the appellant to indemnify the Renter against third party claims.

17 It is, however, subpar (ii) with which the present dispute is concerned, and that provision should, it seems to me, be read as indicating that the appellant will itself provide an indemnity to the Renter, limited to collisions, against a court judgment against the Renter for third party property damages up to $500,000.

18 Clause 3(b) is more consistent with the appellant itself providing the indemnity than with its arranging insurance indemnifying the Renter, the agreement which it contains being between the Owner and the Renter. Condition 1(k) is similarly worded.

19 Even if I am wrong as to the foregoing, in my view, the obligation of the Owner to indemnify the Renter arises only on a judgment of the court being obtained by the third party against the Renter for an amount of damages. It is at that stage that the Owner's liability arises. The securing of a judgment against the Renter is the relevant event giving rise to the Owner's liability. It is not intended that a third party should be placed in a better position than the Renter.

20 It follows that it is unnecessary to consider the respondent's notice of contention that "the learned Commissioner was wrong in law in concluding that the need to make reasonable inquiry for the purposes of s 51(1)(b) of the Insurance Contracts Act .... extended beyond the date of commencement of action under s 51(1) of that Act". It might be thought, however, that the time at which proceedings were instituted is not the critical time, the critical time being the time of recovery.

21 In the circumstances, I would allow the appeal, set aside the judgment of the District Court and, in lieu thereof, order that the appeal to that court from the Local Court be dismissed.

22 PIDGEON J: The question which has arisen in this appeal is whether a particular car hiring agreement containing a reference to collision indemnity amounted to a contract of liability insurance so as to permit an outside third party to bring an action against the car owner under the provisions of s51(1) of the Insurance Contracts Act 1984 (Cth). The circumstances in which the question has arisen are that, by an agreement dated 27 May 1994, Mr R W Perraton, rented a car from the appellant, Bayswater Car Rental Pty Ltd. His address as set out in the agreement was an address in Brunei. On 2 June 1994, he was driving this hired vehicle and collided with the rear of the respondent's vehicle in circumstances where Mr Perraton was clearly negligent. Mr Perraton returned to Brunei. The respondent brought action in the Local Court against Bayswater Car Rental Pty Ltd for the sum of $1,758.71 being the costs of repairs to his vehicle arising from the collision. The basis of the respondent's claim as against the car rental company was s51(1) of the Insurance Contracts Act 1984 (Cth) which reads:

(a) the insured under a contract of liability insurance is liable in damages to a person (in this section called the 'third party');

(b) the insured has died or cannot, after reasonable enquiry, be found; and

(c) the contract provides insurance cover in respect of the liability;

the third party may recover from the insurer an amount equal to the insurer's liability under the contract in respect of the insured's liability in damages."

23 The rental agreement contains six clauses, five of which related to the hiring and return of the motor vehicle. However, cl 3(a) read:

"3(a) Not being an insurer, the Owner provides collision indemnity, only during the agreed rental term.

(ii) On a Court Judgement against the Renter for third party property damages to $500,000 (cover can be forfeited if the Renter proportions blame).

(iii) On claims by third parties for bodily injuries per the M.V.I.T. Act."

24 The resolution of the question depends on the interpretation of this clause. It is followed by sub clause (b) making the renter liable for the first $200 of each occurrence of damage in certain instances and referring to other similar amounts in other instances.

25 The respondent, in order to establish that the car hiring agreement is a contract of liability insurance, refers to an extended definition contained in s 10(2) of the Insurance Contracts Act which reads:

"10(2) A reference in this Act to a contract of insurance includes a reference to a contract that includes provisions of insurance in so far as those provisions are concerned, although the contract would not ordinarily be regarded as a contract of insurance."

26 The respondent in his particulars of claim in the Local Court pleaded the accident and the negligence of the renter and pleaded the fact that the renter, after reasonable enquiry, could not be found. He then pleaded that the hiring contract "provides insurance cover in respect of the insured's liability to the plaintiff" and consequently the appellant was liable to the respondent pursuant to s51(1). The question of negligence was put in issue in the particulars of defence, but ceased to be an issue at the commencement of the trial in the Local Court. The particulars of defence claimed that the vehicle was hired pursuant to a rental agreement. The particulars set out cl 3 in full and denied that the contract provided insurance cover.

27 His Worship, M T Whitely SM concisely summarised the questions in issue. He said that the first matter in issue was whether the rental agreement was a "contract of liability insurance" under the Act. His Worship reached the view that the agreement was not a contract of insurance for the following reasons:

"In this particular case the vehicle was owned by the defendant and would appear to me that all the defendant was doing was giving an undertaking that the vehicle was insured by the defendant and that the rentor would be required to make some contribution should the vehicle be damaged and if there was a court judgment against the rentor then the defendant would indemnify the rentor."

28 The contribution which the renter was required to make was referred to in sub clause (b). The essence of the first part of His Worship's reasons was that the owner was not itself giving the indemnity and was doing no more than giving an undertaking that the vehicle was insured by the owner. His Worship also answered the next question he formulated. He held that if it could be said that the agreement was a contract of insurance, then the event insured against did not occur, namely that there was no "Court Judgment" obtained. He was also not satisfied that reasonable enquiry had been made to locate Mr Perraton. He dismissed the action.

29 The respondent, as unsuccessful plaintiff, appealed to the District Court against this decision. Mr Commissioner Greaves was of the view that the rental agreement was a contract of insurance. His Honour considered that the contract did provide insurance cover in respect of the liability of Mr Perraton to the appellant. His Honour considered further that the evidence did establish on the balance of probability that reasonable enquiry had been made. His Honour allowed the appeal accordingly.

30 The appellant has appealed to this Court in respect of each of the findings of the learned Commissioner. The first and most important question is whether the rental agreement is a contract of liability insurance. The grounds of appeal relating to this are:

"1. The learned Commissioner erred in law in finding that clause 3 of the Rental Agreement between the Appellant (Defendant) and Mr Perraton (the 'Rental Agreement') was a contract of liability insurance within the meaning of the Insurance Contracts Act 1984 (the 'Act') in that he should have found that the said clause was merely a provision of a car rental agreement which, as between owner and hirer apportions responsibility for potential expenses associated with the use of the hired car."

31 The most important question, as both the learned Magistrate and learned Commissioner realised, was the construction of cl 3(a). The cornerstone of the submission on behalf of the respondent is that the appellant, itself, as owner, has indemnified the renter. That is, the appellant is personally liable. If the owner has not given such an indemnity then it is clear and it is accepted that there could be no insurance cover within the meaning of the Act. The agreement could possibly give rise to a number of meanings, but the essential question is, what was the intention of the parties? The fundamental rule of interpretation for deeds, as for all instruments, is that to interpret a deed the expressed intention of the parties must be discovered. It must be discovered from the words the parties have used and from the whole of the document. This is clear from the old texts and is the law in Australia (see Norton on Deeds, 50 (2nd ex), 6 Halsbury's Laws of Australia, para 110-2235 onwards). What must be ascertained is the intention of the parties who actually entered into the agreement, namely the appellant and Mr Perraton. It must, in the first instance, be ascertained objectively from the words the parties used.

32 There are three words or expressions in cl 3(a) which the parties have purposely used and which must be considered, namely the expression "Not being an insurer", the use of the verb "provides" and the use of the word "collision" before the word indemnity. The simplest way for the parties using standard words to give an indemnity of the type suggested by the respondent would have been to use words to the effect "I indemnify you and will keep you indemnified against all property damage arising from an event occurring during the period of the hiring". The parties have not used these or similar words. The first expression "Not being an insurer" is an indication, but no more than an indication, of an intention not to give an insurance type indemnity with the owner being the actual insurer liable on the indemnity. It is submitted that if the words used do in fact give such an indemnity, then to say that the owner is not an insurer is an irrelevancy. This proposition is correct, but it cannot detract from the fact that the words must be examined to see if they assist in expressing the parties' true intention.

33 The next word of importance is the word "provides". It is used in the operative part of the clause. The common way to give an indemnity is to use the verb "indemnify". What did the parties intend by using the verb "provides"? The common meaning of the verb "provide" as set out in the Concise Oxford Dictionary is "supply" or "furnish". This strengthens the fact that the owner was to supply such a policy and not itself to give the indemnity. This concept is strengthened by the earlier use of the words "Not being an insurer". This indicates that the owner is saying in effect "Not being an insurer, I shall supply an insurance policy" which indicates that the insurance policy is to come from another source. The subject matter to be provided was "collision indemnity". These words are capable of conveying the meaning of an insurance policy. These factors support His Worship's interpretation. A further factor to consider is that if one is providing an insurance policy for property damages, it is normally limited, whereas the statutory policies for bodily injuries are not limited and the sub clause which follows limiting the amount payable for property damage is consistent with this.

34 The next expression I would see as having some significance is the word "collision" before the word indemnity. If one is giving a personal indemnity there would be no need to use the word collision and an enquiry must be made as to what is the purpose for its use. One purpose may be to limit any possible indemnity to damages arising from the collision. Such word is not necessary when the subject matter is "a court judgment for third party property damages". If, however, the word "collision" is considered in conjunction with the opening phrase "Not being an insurer", a possible meaning comes to the fore and that is, that the owner is stating that it is not itself an insurer, but will provide a contract whereby the renter does receive an indemnity. The normal and only permissible way this could be done is with a company properly registered and authorised to carry on business as an insurer. The fact that the owner is not permitted by law to do this would be a further indication that that was not the intention of the parties.

35 The intended meaning becomes clearer and, in my view, compelling when one has regard to para (iii) of clause 3. The canons of interpretation to which I have referred require the ascertainment of the intentions of the parties by reading the document as whole. Para (iii) provides that the collision indemnity is provided "on claims by third parties for bodily injuries per the MVIT Act". Policies for claims for bodily injuries are issued and can only at law be issued pursuant to the Motor Vehicle (Third Party Insurance) Act 1943 and, at present, are to be issued by the Insurance Commission of Western Australia (s6). Prior to that, such policies were issued by the Motor Vehicle Insurance Trust which was well known to anyone administering the law and I consider well known to the courts under the acronym MVIT. It is clear to me that the owner's obligation under this covenant would be discharged by the obtaining of such a policy which would be obtained through the licensing of the vehicle. It is that policy which gives the renter the indemnity and cover needed and required.

36 If the words in the opening paragraph of clause 3(a) were to have the meaning contended for by the respondent, then the owner would have given to the renter the owner's personal indemnity for unlimited damages for personal injury. The fact that this was not the intended meaning is given further strength by examining the operation of s7 of the Motor Vehicle (Third Party Insurance) Act 1943. If the driver of the vehicle at the material time, who is negligent, is dead or cannot be found, then action can be brought against the Commission. If the respondent's interpretation of cl 3 is a valid one then there would be an option to bring the action either against the Commission or against the owner. It would be inconceivable for this to be the intended meaning.

37 If it were to be read that the indemnity for property damage was to be given personally by the Owner, then clause 3(a) would to a large extent be ineffectual. It does not purport to say that the owner will keep the renter indemnified. It states that the indemnity is provided "only during the agreed rental term". This was only a short time, possibly a week or two. It would have been of little use to the renter as it would be unlikely that a judgment would be obtained against him in that time. The reading that the owner was to provide an insurance policy overcomes this difficulty. The insurance policy is provided during the length of the hiring, but the policy itself would provide the necessary cover against judgments occurring after the hiring has ceased.

38 For these reasons I consider his Worship is correct in saying that all the owner was doing was giving an undertaking that the vehicle was insured by the owner. His Worship did go on to refer to the fact of an indemnity against the court judgment, but for the reasons which I have said I do not consider there was any intention to personally give that indemnity. It was merely to provide or supply a personal body that would give such indemnity.

39 I have not understood that part of ground 1 of the appeal which states that the learned Commissioner should have found that the car rental agreement as between owner and hirer "apportions responsibility for potential expenses associated with the use of the hired car". This is probably referring to who pays for the insurance policy. The grounds must be interpreted as seeking to restore and uphold the learned Magistrate's finding.

40 I consider therefore that the words used in clause 3 did not nor were they intended to provide that the owner was to give a personal indemnity. It would be clear that if no such indemnity is given, then it cannot be a contract of insurance. I consider the appeal must succeed by reason of this.

41 I would make some reference to the other two issues arising on the appeal. I consider his Worship was correct to hold that in the event of its being an insurance policy, then the event covered was a court judgment. 42 The learned Commissioner took a different view. His reasons for this view were: (AB22):

"The words 'liable in damages' employed in s51(1)(a) of the Act are to be construed in the context of the section and in the scheme of the Act. It is a remedial section which provides a cause of action to a third party against an insurer in certain circumstances so that the third party may recover an amount equal to the insurer's liability under the contract in respect of the insured's liability in damages. It seems to me that as a matter of construction the words should be construed in a way which avoids the need to obtain judgment against the insured before proceeding against the insurer in circumstances such as those predicated by s51(1)(b), where the insured has died or cannot, after reasonable enquiry, be found."

43 It is clear from the terms of the car hiring contract that the court judgment was the relevant event. Section 51 was not intended, and in my view, could not alter the terms of the contract actually agreed between the parties so long as the parties are not contracting out of the section. The parties have not contracted out of the section. If it were a contract of insurance and if there were a court judgment, then the section would operate.

44 The final ground relates to the decision of the learned Commissioner in setting aside His Worship's finding of fact that reasonable inquiries had not been made. In view of my reasons on the other two questions there would be no purpose in examining this question.

45 I would allow the appeal, set aside the judgment of the District Court and reinstate the order of the learned Magistrate.

46 STEYTLER J: I have had the advantage of reading the reasons for decision proposed to be delivered by Pidgeon J. It is consequently unnecessary for me to set out the circumstances giving rise to this appeal save insofar as is necessary in order to explain the different conclusion at which I have arrived on the first of the two questions addressed by his Honour.

47 It seems to me, with respect, that the learned Commissioner was right in his conclusion that the contract made between Mr Perraton and Bayswater Car Rental Pty Ltd ("Bayswater Car Rental") was a contract of liability insurance for the purposes of s 51(1) of the Insurance Contracts Act 1984 (Cth) ("The Act").

48 The term "contract of liability insurance" is defined in s 11(7) of the Act as follows:

"For the purposes of this Act, a contract of liability insurance is a contract of general insurance that provides insurance cover in respect of the insured's liability for loss or damage caused to a person who is not the insured."

49 A contract of "general insurance" is defined in s 11(6) of the Act to mean one that is not a contract of life insurance.

50 The word "insurance" is not defined in the Act. However s 10 thereof provides that:

" (1) A reference in this Act to a contract of insurance includes a reference to a contract that would ordinarily be regarded as a contract of insurance although some of its provisions are not by way of insurance.

(2) A reference in this Act to a contract of insurance includes a reference to a contract that includes provisions of insurance insofar as those provisions are concerned, although the contract would not ordinarily be regarded as a contract of insurance.

(3) Where a provision included in a contract that would not ordinarily be regarded as a contract of insurance affects the operation of a contract of insurance to which this Act applies, that provision shall, for the purposes of this Act, be regarded as a provision included in the contract of insurance."

51 There is no doubt that the contract between Mr Perraton and Bayswater Car Rental would not ordinarily be regarded as a contract of insurance. It is one for the hire of a motor vehicle. Nor is there anything in it which affects the operation of a contract of insurance to which the Act applies. However it does, in my opinion, include "provisions of insurance" and is, by virtue of s 10(2), a contract of insurance insofar as those provisions are concerned.

52 The material provisions are those in cl 3 of the contract. They read as follows:

"(a) Not being an insurer, the Owner provides collision indemnity, only during the agreed rental term

(ii) On a Court Judgment against the Renter for third party property damages to $500,000 (cover can be forfeited if the Renter proportions blame).

(iii) On claims by third parties for bodily injuries per the M.V.I.T. Act.

(i) The first $200 of each occurrence of damage or the first $600 where a driver aged 20 - 26 is listed, regardless of blame, including: windscreen damage, tyre damage, lost wheel covers, lost petrol cap, lost keys and defaced decal stickers.

(ii) The first $2000 of damages arisen [sic] out of a single-vehicle accident (running into a roadside obstacle or rolling-over, including whilst avoiding a vehicle).

(iii) All damages to the car and claims by third parties, in the event of a breach of these conditions including wilful damage, unsecured keys and damages where details are not available."

53 The effect of these somewhat awkwardly worded provisions, as I read them, is that Bayswater Car Rental (as "the Owner") has, subject to subcl (b), agreed to indemnify Mr Perraton (as the hirer of a motor vehicle) against any liability which he might incur in the three respects referred to in subcl (a) arising out of a collision, involving the vehicle hired by him, which takes place during the term of the hiring.

54 The most commonly quoted definition of a contract of insurance (see Australian Health Insurance Association Ltd v Esso Australia Ltd [1993] FCA 376; (1993) 41 FCR 450 at 486 - 487 and the cases there referred to) is that given by Channell J in Prudential Insurance Co v Inland Revenue Commissioners [1904] 2 KB 658. The learned Judge there (at 663) identified four requirements as follows:

"Where you insure a ship or a house you cannot insure that the ship shall not be lost or the house burnt, but what you do insure is that a sum of money shall be paid upon the happening of a certain event. That I think is the first requirement in a contract of insurance. It must be a contract whereby for some consideration, usually but not necessarily for periodical payments called premiums, you secure to yourself some benefit, usually but not necessarily the payment of a sum of money, upon the happening of some event. Then the next thing that is necessary is that the event should be one which involves some amount of uncertainty. There must be either uncertainty whether the event will ever happen or not, or if the event is one which must happen at some time there must be uncertainty as to the time at which it will happen. The remaining essential is that which was referred to by the Attorney General when he said the insurance must be against something. A contract which would otherwise be a mere wager may become an insurance by reason of the assured having an interest in the subject-matter - that is to say, the uncertain event which is necessary to make the contract amount to an insurance must be an event which is prima facie adverse to the interest of the assured. The insurance is to provide for the payment of a sum of money to meet a loss or detriment which will or may be suffered upon the happening of the event."

55 The learned authors of MacGillivray on Insurance Law, 9th ed have, in reliance upon this extract, derived the following working definition (at 1):

"A contract of insurance is one whereby one party (the 'Insurer') promises in return for a money consideration (the 'premium') to pay to the other party (the 'assured') a sum of money or provide him with some corresponding benefit, upon the occurrence of one or more specified events."

56 If the provisions to which I have referred are looked at against this working definition then, it seems to me, the provisions of cl 3(a)(ii) of the contract can be seen to fall within it.

57 There is, in the case of that clause, a money consideration given in return for the promise to pay a sum of money upon the occurrence of the event specified. It should be borne in mind in this respect that a premium, in the sense in which that word is ordinarily used in the context of insurance policies, is not a prerequisite of a contract of insurance. What is necessary is that the undertaking by the insurer be given for good consideration. (See Colinvaux's Law of Insurance, 6th ed 1990, page 131, cited with approval by Sheppard J in Australian Health Insurance Association Ltd v Esso Australia Ltd, supra, at 489 and MacGillivray, supra, par 7 - 2.)

58 The hirer, under this contract, undertook to pay to the owner a daily rental together with other charges referred to in the agreement. While no proportion of what was to be paid by the hirer was ascribed, in the contract, to the indemnity provision there was no need that it should be. The amount paid by the hirer by way of rental was paid in consideration of all of the promises made by the owner which were contained in the contract, including that made in cl 3(a)(ii) thereof. Nothing would have been served by apportioning the monetary consideration moving from the hirer amongst the various promises made by the owner. Indeed, it would have been cumbersome and unrealistic to have done so. Moreover if, as seems plainly to be the case, the intention underpinning the enactment of s 10(2) of the Act was that of extending the protection afforded by the Act to contracts which, while not ordinarily regarded as contracts of insurance, contain provisions of insurance then that intention would largely be defeated if the Act was to be construed in such a way as to deny to those provisions what would otherwise be an appropriate categorisation as "provisions of insurance" merely because no part of the contractual consideration payable was identified as a "premium" payable in respect of the insurance provided.

59 As to the second requirement there is no doubt that the owner has undertaken, by cl 3(a)(ii), a binding obligation to pay to the hirer whatever sum of money, up to a maximum of $500,000, the hirer might be required to pay, by a judgment of a court, in respect of damage to the property of a third party caused by that hirer as a consequence of a collision involving the hired car.

60 The event referred to, the giving of a court judgment against the hirer arising out of damage to the property of a third party as the result of a collision, is one involving uncertainty.

61 It consequently seems to me that each of the requirements mentioned by Channell J in Prudential Insurance Co v Inland Revenue Commissioners has been satisfied, as have the similar requirements identified by the learned authors of MacGillivray on Insurance Law, and that cl 3(a)(ii) does contain provisions of insurance for the purposes of s 10(2) of the Act.

62 That conclusion cannot, in my opinion, be altered merely because cl 3(a) of the contract provides that the owner of the hired vehicle is not an insurer. In one sense, of course, the statement that it is not an insurer is quite true. It operates the business of hiring out motor vehicles and not that of an insurer, at least in the sense in which that term is ordinarily understood. More importantly, perhaps, if the words "Not being an insurer" evince an intention that the owner of the vehicle should not, for any purpose, be regarded as an insurer, that cannot have the result, if the contract in fact includes provisions of insurance within the meaning of s 10(2) of the Act, that the contract will, for that reason only, be removed from the compass of the Act. Section 10(2) of the Act gives to a contract of that kind the statutory consequences provided for regardless of the wishes of the parties to it.

63 I am also unable to accept that the use of the word "provides" should lead to any different result. That word seems to me to be at least as consistent with the provision of insurance by the owner as it is with the provision of insurance by some third party through arrangements made by the owner.

64 I agree, in this last respect, with Pidgeon J that, so far as cl 3(a)(iii) is concerned, the owner's obligation under that clause would be discharged by obtaining the standard policy which should be obtained through the licensing of the hired vehicle as a consequence of the provisions of the Motor Vehicle (Third Party Insurance) Act 1943 (which Act is plainly intended to be referred to by the words "the MVIT Act"). That provision was presumably included so as to confirm, perhaps for the benefit of international hirers, that the hirer will be insured, pursuant to a local statute, against claims by third parties for bodily injuries resulting from a motor vehicle collision involving the hired car. However the existence of a provision of that kind cannot, in my opinion, alter the natural and ordinary meaning of the words used in subcl (ii) or their effect as a matter of law.

65 It is, I think, also noteworthy in this respect that, by virtue of cl (1)(k) of the contract, "All indemnity is voided ... if the speedo cable seals have been interfered with." That is more consistent, at least so far as subcl (ii) is concerned, with the provision of insurance by the owner itself than with the provision of insurance by a third party at the request of the owner. The same is true of the provisions of cl 3(b).

66 Finally, so far as the use of the word "collision" is considered, it seems to me that this is intended to do no more than to make it plain that the indemnity referred to in cl 3(a) is intended to be given only in circumstances in which the hired car is involved in a collision.

67 That brings me next to Pidgeon J's conclusion, with which I am in respectful agreement, that the learned Magistrate was correct in holding that, if cl 3(a)(ii) contained provisions of insurance, those provisions insured the hirer only against the event of a court judgment. Clause 3(a)(ii) says so in terms. No insurance is provided for anything less than that.

68 We were referred, by senior counsel for the respondent, to a number of cases in support of the proposition that notwithstanding that the insurer is only obliged to pay out the amount of the judgment the insurance is, in truth, one in respect of a liability which might later become merged in a judgment. However each of those cases, as I read them, turned upon the construction of the policy there under consideration and is consequently of limited assistance as regards the construction of this contract. There is in this case no provision which might be taken to suggest that cl 3(a)(ii) is not intended to be given its natural or literal meaning.

69 I agree also with Pidgeon J that there is nothing in s 51 of the Act which aids the respondent in his claim. Section 51(1) provides that:

(a) the insured under a contract of liability insurance is liable in damages to a person (in this section called the 'third party');

(b) the insured has died or cannot, after reasonable enquiry, be found; and

(c) the contract provides insurance cover in respect of the liability;

the third party may recover from the insurer an amount equal to the insurer's liability under the contract in respect of the insured's liability in damages."

70 Senior counsel for the respondent contended that each of the requirements of this section has been met. If it be assumed that those in sub-paras (a) and (b) have been met, it seems to me that that in sub-para (c) has not.

71 The contract of liability insurance in this case provides insurance cover only, insofar as is relevant for the purposes of this argument, in respect of a court judgment. There was no court judgment. That being so, the only liability relevantly insured against is not present. Consequently the third party has no claim against the insurer.

72 While senior counsel for the respondent contended that the words "in respect of" are so wide as to comprehend, in this case, the liability of the hirer to the third party which might ultimately become the subject of a court judgment that cannot, in my opinion, be so. The words "in respect of the liability" simply make plain that the section will not operate unless the contract provides insurance cover in respect of "the liability" which has been insured against, in this case that created by a judgment of a court.

73 That, in my opinion, is the natural and ordinary meaning which should be given to the section. The construction contended for on behalf of the respondent would mean that the third party would be in a better position, as against the insurer, than the insured. I very much doubt that this could have been intended.

74 These conclusions render it unnecessary for me to consider the respondent's notice of contention that the learned Commissioner was wrong in law in concluding that the need to make reasonable inquiry for the purposes of s 51(1)(b) of the Act extended beyond the date of commencement of action under s 51(1).

75 I would consequently allow the appeal, set aside the judgment of the District Court and reinstate the order of the learned Magistrate.