98 In saying that, I recognise that the question of repudiation in the context of insurance policies is not without difficulty and different results may be produced depending on the nature of the insurer's assertions (eg an assertion that the policy was induced by fraud, misrepresentation or non-disclosure (see for example Johnson v Australian Casualty Co Ltd (1992) 7 ANZ Ins Cas 61-109), an assertion that the policy was never effected because for example it is claimed that the agent had no authority, an assertion that conditions of the policy were not complied with, reliance on an exclusion clause), but:
(1) There is authority at a high level for a distinction between repudiation of liability under the policy and repudiation of the policy itself: Kennedy v Queensland Insurance Co (1924) 24 SR (NSW) 542, in which Street ACJ (as he then was), with whom Gordon J concurred, said:
"I think that the present case is also distinguishable from Juriedini's Case . By denying the existence of any liability for the loss sustained the company precludes itself from relying on a reference to arbitration as a condition precedent to the plaintiff's right of action, but it is not repudiating its obligation in the sense that it is disputing the existence of any binding contract at all. It is not avoiding the policy. In resisting the claim it affirms it, and relies upon the non-compliance with its conditions by the plaintiff as a ground for relieving itself from liability. That is merely a repudiation of liability under the contract, and not a repudiation of the contract itself. In denying liability on the ground of non-compliance with the conditions it is merely rejecting the claim, and in those circumstances I can see nothing to prevent it from relying on the stipulation that an action must be brought within three months after the rejection."
This seems to involve a notion of "repudiation" that is different to the general approach to repudiation of contract having as its consequence, not the termination of the contract of insurance, but the inability of the insurer to rely on a condition or requirement in relation to that claim. See also the passage in the statement of Stephen J in Distillers Co (Bio-Chemicals) (Aust) Pty Ltd v Ajax Insurance Co Ltd (1974) 130 CLR 1 at 25, in which his Honour cited authority for the proposition that "the insurer's repudiation of liability to indemnify prevents it from relying, by way of defence to the insured's action against it, upon the insured's prudent settlement of the third party's claim against him". The judgment of Halse-Rogers J in Edwards v Insurance Office of Australia Ltd (1933) 34 SR (NSW) 88 seems to indicate a different approach, but see the judgment of Davidson J which refers to Kennedy with approval.
(2) In CIC Insurance Ltd v Bankstown Football Club Ltd (unreported, NSWSC, Cole J, 16/09/93), a fire policy case, Cole J said:
"The purported exercise of a contractual power does not normally constitute repudiatory conduct. That is so even if it be found that the factual basis for the purported exercise was not present. The reason why that is so is because the bona fide but wrongful exercise of the power conferred by the contract does not 'evince an intention that the party will not perform the contract according to its terms' ( DTR Nominees Pty Ltd v Mona Homes Pty Ltd and Anor (1978) 138 CLR 442 at 432; Braidottie v Queensland City Properties Ltd (1991) 65 ALJR 387 at 397)."
Although the case went on appeal to the Court of Appeal and then to the High Court, Cole J's decision on the question of repudiation was not the subject of appeal, and although Powell JA did not agree with Cole J's conclusion (notwithstanding the absence of appeal) the basis for disagreement was explained by Rolfe J in Harrison v Zurich Australian Insurance Ltd (BC9603264, NSWSC, Rolfe J, 30/7/1996).
(3) In Harrison v Zurich at 21-22, having made reference to Progressive Mailing House and Shevill , Rolfe J said:
"In order for there to be a repudiation it must be established that the insurer is disputing the existence of any binding contract at all, rather than liability under the contract and on a basis for which the contract provides. The resistance of a claim and the bases for a claim, in circumstances where there is reliance on non-compliance with policy conditions as a ground for relieving the insurer from liability, is not a denial of the contract, but an affirmation of it. Accordingly, the repudiation, in those circumstances, is of the liability under the contract and not of the contract itself: Kennedy v Queensland Insurance Co (1924) 24 SR (NSW) 542; Edwards v Insurance Office of Australia Ltd (1933) 33 SR (NSW) 88 and Broadlands Properties Ltd and Broadlands Estates Ltd v Guardian Assurance Co Ltd [1984] 3 ANZ Ins Cas 60-552."
(4) Not only is the approach of Rolfe J in Harrison (a fire policy) and Cole J in CIC v Bankstown (a fire policy) consistent with Till , but so is the approach of Campbell J in Green v AMP Life Ltd (2005) 13 ANZ Ins Cas 90-124; [2005] NSWSC 370 (another sickness and accident policy).
(5) There is a further complication which is the recognition in some cases that damages for breach of the insurance contract will not mean damages at large, but effectively the amount that would have been paid had the insurer met the claim: see Green at [140] and see the passage from Russell Young Abalone Pty Ltd set out at [83] above.