Canberra Pools Pty Ltd v MMI General Insurance Ltd

THE COURT: 1 This is an appeal from a decision of Miles CJ in the Supreme Court of the Australian Capital Territory. At all material times the respondent was an approved insurer pursuant to s 17 of the Workers' Compensation Act 1951 (ACT) (the "Act"). At such times the appellant was an employer, obliged pursuant to s 17B of the Act to maintain a "prescribed insurance policy" with an approved insurer. For present purposes it is agreed that the prescribed form of policy was that stipulated in Sch 3 to the Act. Section 17D of the Act provided: (1) An approved insurer shall not refuse to issue a prescribed insurance policy required by an employer for the purposes of subsection 17(B)(1) or (2) unless the Minister consents in writing. Penalty: $10,000. (2) An approved insurer shall not issue an insurance policy required by an employer for the purposes of subsection 17(B)(1) or (2) which is not a prescribed insurance policy. Penalty: $10,000. 2 Section 18 provided: (1) An employer applying to an insurer for the renewal of a prescribed insurance policy shall give the insurer, in relation to the period relevant to the determination of the premium payable for the renewal of the policy - (a) a certificate from a registered auditor stating the total amount of wages paid to the employer's employees; and (b) a statutory declaration setting out - (i) the determined categories of workers employed by the employer; and (ii) the total amount of wages paid in respect of each of those categories. Penalty: $5,000. (2) Where an employer is a party to an insurance policy in the form set out in Schedule 3, the employer shall give the insurer - (a) a certificate from a registered auditor; and (b) a statutory declaration; of the type, and in the circumstances, provided for under the terms of the policy corresponding to paragraph 11 or 13, as the case requires, of the conditions in that form. Penalty: $5,000. (3) … 3 Section 20 provided that an insurer was not to charge or accept a premium greater than the prescribed maximum. 4 The form of policy in Sch 3 commenced with the words: "Estimated Earnings, $…", and "Premium, $… (Subject to adjustment as provided below.)" It then continued: Whereas by virtue of the Workers' Compensation Act 1951 of the Australian Capital Territory (hereinafter called the Act) it is provided that every Employer shall obtain from an Insurer approved under the Act, a policy of insurance … in respect of any injury to, or death of, any of the employer's employees, and shall maintain such Policy in force and whereas … of … (hereinafter called the Employer) is carrying on the business of … and no other for the purpose of this Policy … and has made to … an Insurer approved under the Act (hereinafter called the Insurer) a written Proposal and Declaration, dated the … day … of …, 19…, containing certain particulars and statements which it is hereby agreed shall be the basis of this contract and be considered as incorporated herein. Now this policy witnesseth that in consideration of the payment by the Employer to the Insurer of the abovementioned Premium (which Premium is subject to adjustment as hereinafter provided) if, between the … day of …, 19…, and Four O'clock in the afternoon of the … day of …, 19…, and thereafter to Four O'clock in the afternoon of the last day of any subsequent period in respect of which the Premium shall have been paid to and accepted by the Insurer, the Employer shall be liable to pay compensation under the Act to or in respect of any person who is or is deemed by the Act to be a worker of such Employer or to pay any other amount in respect of the Employer's liability independently of the Act for any injury to any such person, then and in every such case, the Insurer will indemnify the Employer against all such sums for which the Employer shall be so liable; … And it is hereby further agreed that the above indemnity is made subject to the due and proper observance and fulfilment by the Employer of the conditions hereunder. And the Insurer shall be (a) directly liable to any worker, and in the event of the worker's death to his or her dependants, to pay the compensation for which the Employer is liable and in respect of which the Employer is indemnified under this Policy, and (b) bound by and subject to any order, decision or award made against the Employer of any such worker under the provisions of the Act or in respect of the Employer's liability independently of the Act and in respect of which the Employer is indemnified under this policy. ... 5 Other possibly relevant terms were as follows: PREMIUM 9. The first and every subsequent premium that may be accepted shall be regulated by the amount of all wages, salaries and other forms of remuneration paid or allowed to workers during each period of indemnity. WAGES BOOKS MUST BE KEPT 10. The name and earnings of every worker employed by the Employer shall be entered regularly in a proper Wages Book so that a record may exist of such workers as are entitled to call upon the Employer for compensation. ADJUSTMENT OF PREMIUM 11. The Employer shall at all times allow any officer duly authorized by the Insurer to inspect the Wages Book, and shall supply the insurer with: (a) a certificate from a registered auditor stating the total amount of wages paid to workers employed by the employer; and (b) a statutory declaration setting out: (i) the determined categories of workers employed by the employer; and (ii) the total amount of wages paid in respect of each of these categories of workers; during any period of indemnity within one month from the expiry of such period of indemnity, and if the total amount shall differ from the amount on which premium has been paid, the difference in premium shall be met by a further proportionate payment to the Insurer, or by a refund by the Insurer, as the case may be, subject always to the retention by the Insurer of the Minimum Premium stated in the Proposal. CANCELLATION OF POLICY 13. The Insurer may at any time, by giving written notice to the Employer, cancel this Policy. The notice of cancellation shall be posted to the Employer at the withinmentioned address, and the cancellation of the Policy shall be effected on the expiration of seven clear days from the date of posting the said notice. Notwithstanding the cancellation of the Policy as aforesaid, the employer shall supply the insurer with: (a) a certificate from a registered auditor stating the total amount of wages paid to workers employed by the employer; and (b) a statutory declaration setting out: (i) the determined categories of workers employed by the employer; and (ii) the total amount of wages paid in respect of each of those categories of workers; during the period of indemnity prior to the time of the cancellation, and the premium for the period of insurance prior to cancellation shall be adjusted on a pro-rata basis in the manner provided by Condition 11 of this Policy. Provided that the Policy may not be cancelled without the consent of the (here insert official description of appropriate Minister) first had and obtained. NO WAIVER OF CONDITIONS 14. No condition or provision of this Policy shall be waived or altered unless the consent of the Insurer be previously obtained and signified by endorsement hereon, nor shall notice to any agent, nor shall knowledge possessed by any agent, or by any person, be held to effect a waiver or alteration in this contract or any part of it. 6 In order to understand the various communications between the parties which are relevant to the determination of this appeal, it is necessary to be aware of two assumptions and/or understandings which appear to have been shared by those parties. The first is that although there had been a policy in force from 21 April 1992 until 21 April 1993, it was proposed that for reasons of convenience, any new policy commence on 30 June. Secondly, although the relevant legislative provisions and terms of the policy are difficult to understand, it is common ground that the respondent was entitled to demand from the appellant both a declaration as to wages paid in 1992-93 and an estimate of wages to be paid in 1993-94. It is also of assistance in understanding the dealings between the parties to keep in mind that the brokers, Peelgrane and Associates, and Mr Norenbergs of that firm, were acting on behalf of the appellant. 7 The evidence discloses the facts of the case in a fairly disjointed way. The appellant was in the business of pool-service and maintenance. In 1992 it applied to the respondent for an insurance policy. It is common ground that such policy was to be a prescribed insurance policy pursuant to the Act. An appropriate policy was subsequently issued for the period from 21 April 1992 to 21 April 1993. Miles CJ found that in early March 1993 the respondent forwarded to the brokers an invitation to renew the policy, together with appropriate documentation to bring about that result, particularly a form of declaration as to wages paid during the term of the existing policy and a form of estimate of wages to be paid in the following year. This resulted in a letter dated 25 March 1993 from the brokers to the appellant as follows: RE: ACT Workers Compensation Policy Number: CWT 0025068 We are writing to advise that the above policy will be falling due for renewal on April 21, 1993. Should renewal be required would you please complete and return the attached wage declaration form so that your premium may be calculated. If you have any queries or need of assistance, do not hesitate to contact this office. … 8 The appellant did not reply to this letter and according to his Honour's findings, the brokers wrote again on 28 May 1993 as follows: It has been drawn to our attention that your Wages Declaration for the last Period of Insurance has not been forwarded to this office. Workers Compensation is a Statutory Insurance and it is required by law that the Wages Declaration be forwarded as soon as possible after the policy due date. We look forward to receiving your completed declaration and should you require any assistance in this regard please contact this office. 9 Again there was no response. On 7 June 1993 Mr Norenbergs attempted to contact a principal of the appellant, Mr Garbutt. This attempt was initially unsuccessful but subsequently, and prior to 15 June, some contact was made. As a result, on that day, Mr Norenbergs spoke to a woman called Michelle, an employee of the respondent. He made a note of the conversation as follows: Client being held covered "Dec. with Accountant" and when received future date is to be 30/6/94. 10 His Honour inferred from this that Mr Norenbergs had informed Michelle that the documents necessary to complete the various declarations were with the appellant's accountants, and that Mr Norenbergs understood from the conversation that the appellant would be "held covered" provided that the various declarations and schedules were returned by 30 June 1994. His Honour also inferred that Mr Norenbergs and Michelle had discussed the question of the new policy commencing on 30 June 1993, rather than 21 April 1993. Whilst we accept the latter inference, we have some difficulty in accepting his Honour's inference that it was a condition of continuing cover that the documents in question be returned by 30 June 1994. Neither the note of the conversation nor, as far as we can see, the oral evidence supported such an inference. 11 On 22 July 1993 Mr Norenbergs wrote to the appellant as follows: RE: ACT WORKERS' COMPENSATION POLICY NUMBER: CWT 0025068 Further to our discussion regarding the above which had due date of 21 April 1993 we confirm that arrangements had been made with the underwriter, MMI, to have the due date extended to 30 June 1993 and future dates will be on 30 June each year. This was done to assist your accountants and to tie in with your taxation return and group certificate issue. Enclosed please find new wage declaration form for completion and return, but please note that the actual wages paid for last year is for period 21 April 1992 to 30 June 1993. Mr Norenbergs again wrote in similar terms on 17 August 1993. 12 On 20 September 1993, following discussion with Mr Norenbergs, the respondent wrote to the appellant as follows: RE: WORKERS' COMPENSATION INSURANCE POLICY NUMBERS: CWT 0025068 Reference is made to the above and advice received from Peelgrane and Associates, your insurance broker. This policy was due for renewal on 21/4/93 and to date we have not received a declaration setting out actual wages for the period 21/4/92 to 21/4/93 nor have we received any renewal estimate wages to maintain the policy in force. We require the enclosed declaration completed signed where appropriate and returned with 14 days of receipt of this letter or we shall have no alternative than to lapse this policy. Should we lapse the policy we are required to notify the relevant authorities which may potentially exposure [sic] you to a fine for no-insurance. Additionally, we shall arrange to have your records verified by our Accounting Services department to ensure correct wages are declared for the period 21/4/92 to 21/4/93. 13 On 23 September Mr Norenbergs again wrote to the appellant. This resulted in telephone conversations between Mr Norenbergs and both the appellant and the respondent. At some stage a possible premium of $9,800 was mentioned. Mr Norenbergs assured Michelle that the appellant was "chasing" the accountants for the relevant figures. 14 On 17 November 1993 there was a conversation between Mr Norenbergs and Ms Twohill of the respondent. The latter made the following note: He phoned back advising he had told the client we at least have to get estimates and his accountant could forward actuals once books were fixed up. Eddie gave a quote based on estimates and client was shocked at the amount. He said he would get his accountant to check the estimates. Eddie told him he had 14 days. Client did not respond. "Eddie" is Mr Norenbergs. 15 At about 10.00 am on 1 December, Ms Twohill telephoned Mr Norenbergs. Her note of the conversation is as follows: I phoned Eddie and advised we cannot hold policy any longer. He is phoning client to advise we are off risk should a completed dec not be received by tomorrow. Awaiting Eddie's reply. 16 At about 10.45 am on 1 December, Mr Norenbergs telephoned Ms Twohill to advise that there was a claim in respect of the death of Mr Mark Garbutt which, he said, had occurred on that day, although other evidence indicates that it had occurred on 30 November. 17 At some stage on 1 December, the respondent sent a fax transmission to Mr Norenbergs as follows: Subject: Canberra Pools Pty Ltd Eddie, As per our telephone conversation we are confirming cover will be held until 4 pm 2/12/93. Should a completed declaration or at least estimate wages not be supplied cover shall cease effective 21/4/93 and an audit will be arranged to obtain actual wages. 18 There was a further fax from the respondent to the appellant on the same day, declining indemnity in respect of Mr Garbutt's death because there was "no current policy". It is common ground that the declarations referred to above were not provided by 4 pm on 2 December 1993. 19 In these circumstances the respondent sought a declaration that it was not bound to indemnify the appellant in respect of the death of Mr Garbutt. By its statement of claim it alleged the original contract of insurance for the period from 21 April 1992 to 21 April 1993, that the appellant had failed to renew that policy "and it thereby lapsed". By its defence the appellant alleged the original policy, claiming: · that it was renewed by the respondent; · that it could not be terminated by the respondent except as provided by the Act; · that the respondent had represented to the appellant that the policy was in force "prior to 2 December 1993" and was thereafter estopped from denying that such was the case; and · that the respondent had wrongfully refused to accept payment of the premium. (This latter incident occurred some time after 2 December 1993.) 20 By its reply the respondent denied any representation as alleged. Paragraphs 2, 3 and 4 of the reply are as follows: 2. The (respondent) says that on 1 December 1993 it offered to the (appellant) that if the (appellant) lodged with the (respondent) on or before 4.00pm, 2 December 1993 a renewal form containing a wages declaration or at least, wages estimate, the (appellant) would be indemnified in respect of the risk covered by the Workers Compensation policy for the period 1993/4 but that if such renewal was not lodged the policy would be treated as having lapsed in accordance with prior communications. 3. The offer was not accepted and the renewal was not lodged with the (respondent) within the allowed time. 4. By reason of the above no estoppel operates against the (respondent) as alleged. 21 These paragraphs seem to relate only to the issue of estoppel, although the facts alleged may have wider relevance. 22 Miles CJ relevantly characterized the various transactions between the parties after 21 April 1993 as constituting an offer by the respondent: … to grant further indemnity as from 21 April 1993 in terms identical to those in the previous policy, so long as the plaintiff furnished a completed declaration as to wages and remuneration paid until 21 April 1993 and completed declarations as to wages and other remuneration estimated to be paid from 21 April 1993 to 21 April 1994, such declarations to be furnished no later than 4 pm on 2 December 1994. 23 The primary basis for this conclusion must have been the conversation of 1 December 1993 and perhaps the subsequent fax which confirmed it. His Honour found that such offer was either withdrawn on 1 December 1993 (presumably by the fax declining indemnity) or lapsed as a result of its not having been accepted by delivery of the relevant declarations prior to 4 pm on 2 December 1993. It is inherent in this view of the case that there had been no agreement to extend cover after 21 April 1993 and prior to 1 December 1993. The following declaration was made: The (respondent) is not liable to indemnify the (appellant) in respect of the (appellant's) liability to pay compensation under the Workers' Compensation Act, 1951 arising out of death or injury to any employee of the (appellant) after 21 April 1993. 24 Obviously enough, the appellant submits that it is entitled to indemnity from the respondent in respect of the loss in question. This submission is based primarily upon the assertion that the parties had, at some time between 21 April and 1 December 1993, made an agreement for such indemnity. 25 In C E Heath Underwriting & Insurance (Australia) Pty. Ltd. v Edwards Dunlop & Co. Ltd. (1992-1993) 176 CLR 535, Dawson Toohey and McHugh JJ said (at 545-6): Whether there is a renewal or an extension of an insurance policy is a question of construction, the term "renewal" often being used to refer to both "renewal" and "extension" in the sense that those words are used above. It is, however, well established that, where a policy is renewable only by mutual consent (i.e. not as of right), the renewal results in a fresh contract rather than the extension of an existing contract. Of course, a policy may expressly stipulate that it is not to continue in force beyond the period of insurance, unless renewed by mutual consent. And where a policy, such as the ordinary form of life policy, expressly provides for continuation beyond the specified period of insurance unless a particular event, such as the non-payment of the premium, takes place, the renewal is an extension of the original contract. But where a policy is silent on the question of renewal, renewal of it will generally constitute a new contract. At 550 Gaudron J concurred in this view. 26 Given that s 17D of the Act forbade an approved insurer from refusing to issue a prescribed policy without the Minister's written consent, the concept of "mutual consent" could not be easily applied to renewal of a policy issued in accordance with the Act. Nonetheless the fact that the insurer might refuse to issue (or to renew) a prescribed policy only with the Minister's consent indicates that an insured had no vested right to renewal of a prescribed policy. In any event, Sch 3 contemplated a voluntary tender of the premium and a voluntary acceptance of it, implying that renewal was consensual. It follows that such renewal was to be effected by way of a new contract. We turn to the evidence to ascertain whether or not it demonstrates the necessary agreement. 27 The communication from the respondent to the appellant in March 1993 was apparently an invitation to renew the policy for a further year. Amongst the exhibits is a poor copy of that, or a similar invitation, providing that: Should the declaration of wages not be lodged within the prescribed time this policy will be lapsed with effect from the due date. 28 The invitation was sent prior to the expiry of the original insurance cover and seems not to have contemplated the possibility that there might be any untoward delay in complying with the requirement to provide the necessary declaration. The evidence suggests that such delay was by no means unusual. A large number of policies fell due for renewal at the end of June and/or at the beginning of July, creating a backlog in the respondent's office. As a matter of practice the respondent treated its clients as "covered", even if their respective renewal applications had not been processed prior to the expiry of their earlier policies. Although the appellant placed much emphasis in argument upon this practice, it is difficult to see its direct relevance for present purposes. As far as we can see, there is no evidence that the appellant relied upon it. However the practice may be of some assistance in understanding the respondent's conduct. 29 The first occasion upon which the question of interim insurance cover was expressly addressed appears to have been the conversation of 15 June 1993 between Mr Norenbergs and Michelle, resulting in his note of that conversation to the effect that: Client being held covered 'Dec. with Accountant' and when received future date is to be 30/6/94. 30 As we have previously observed, Miles CJ inferred from this that Mr Norenbergs had been led to believe that the appellant would be "held covered", although his Honour considered that this was conditional upon the declarations and schedules being provided by 30 June 1994. We see no basis for imposing such a condition but find it difficult to avoid the conclusion that the respondent and Mr Norenbergs (on behalf of the appellant) had, on 15 June, agreed that the appellant should, for the time being, be "covered". The actual words of offer and acceptance do not appear from the evidence, but Mr Norenbergs' summary of the conversation was accepted by Miles CJ. Although it is not very clear, Mr Norenbergs' oral evidence suggests that Michelle said that the client was "being held covered" (TS 55 ll 2-4). There is no evidence that he expressly accepted that "offer", but it is impossible to imagine any reason for his not doing so, and silence would seem sufficient acceptance in the circumstances. This is particularly so when the conversation is considered in the context of the obligations imposed by the Act and the previous dealings between the parties. Their subsequent conduct also suggests such an agreement. From the respondent's point of view, such cover was not out of the ordinary, given the practice as to renewal to which we have referred. 31 With respect to the condition concerning provision of the declarations by 30 June 1994 as found by Miles CJ, we have said that we see no basis for such finding. In any event, there is no suggestion that the respondent exercised any right to determine for breach of such a condition or for any other reason until, at the earliest, 1 December. The conduct of both parties suggested that the cover continued until that date. The respondent had asserted in its letter of 20 September 1993 that: We require the enclosed declaration completed signed where appropriate and returned within 14 days of receipt of this letter or we shall have no alternative than to lapse this policy. Should we lapse the policy we are required to notify the relevant authorities which may potentially exposure [sic] you to a fine for no insurance. 32 This observation is only consistent with a belief that, for the moment, the appellant was "covered" for the purposes of the Act, although the respondent was asserting an entitlement to "lapse the policy" should its requirements not be met within fourteen days of receipt of the letter. Again, there is no suggestion that it ever did so. The conversation between Ms Twohill and Mr Norenbergs on 1 December 1993 was to similar effect. Ms Twohill's note recorded that: I phoned Eddie and advised we cannot hold policy any longer. He is phoning client to advise we are off risk should a completed dec not be received by tomorrow. Awaiting Eddie's reply. 33 The note implies that Ms Twohill, on behalf of the respondent, concurred in the course proposed by Mr Norenbergs and did not dispute the factual assumptions upon which it was based. This indicates that the respondent considered the appellant to be covered as at that time. Such cover was the only possible source of the respondent's "risk". The first fax of 1 December confirmed this position, stating that "… cover will be held until 4 pm 2/12/93. Should a completed declaration or at least estimate wages not be supplied cover shall cease effective 21/4/93 … ." Miles CJ considered that the respondent was making an offer of cover. In our view, it was rather threatening revocation of existing cover. It is impossible to avoid the conclusion, based upon the conduct of the parties, that Mr Norenbergs (acting for the appellant) and Michelle (acting for the respondent) had agreed in June for at least a temporary renewal of cover. 34 The current facts are similar in some respects to those considered by a Divisional Court (Lord Parker CJ, Marshall and Widgery JJ) in Taylor v Allon [1966] 1 QB 304. In that case the defendant was found using a motor car on a road on 15 April 1964. He had previously been insured in respect of the vehicle, but that policy had expired on 5 April. On 16 April he obtained temporary cover from another insurance company, but it was not retrospective in operation. He was charged with the offence of using a motor car on a road (on 15 April) without an appropriate policy of insurance in respect of third party risks. At some stage the defendant's solicitor produced a temporary cover note from the former insurer, purporting to cover the defendant for fifteen days commencing from, and including 6 April, thus, purporting to cover him as at the date of the alleged offence. At p 311-2 Lord Parker CJ said: Bearing in mind that a valid insurance for the purposes of the section must arise from an enforceable contract, it seems to me that the contract, if any, contained in the temporary covering note must arise by offer and acceptance. It is conceded that the policy that expired had no provisions for extended cover, and accordingly this document sending this temporary covering note must in my judgment be treated as an offer to insure for the future. It may be, although I find it unnecessary to decide in this case, that there can be an acceptance of such an offer by conduct and without communication with the insurance company. It may well be, as it seems to me, that if a man took his motor car out on the road in reliance on this temporary cover, albeit that there had been no communication of that fact to the insurance company, there would be an acceptance, and that the contract so created would contain an implied promise by the insured to pay, either in the renewal premium when that was paid, or if it was not paid, for the period for which the temporary cover note had, as it were, been accepted. I find it unnecessary in the present case to decide that matter, and for this reason, that it seems to me that the defendant must at any rate go to the length of saying that he knew of the temporary cover and that he took out his motor car in reliance on it. … In those circumstances it seems to me that the defendant has never gone to the length of showing that he knew of the temporary cover, that he acted in reliance on it, and thereby had accepted the offer contained in it. 35 In the present case, both the offer of interim insurance and acceptance of that offer are to be inferred from Mr Norenbergs' note of the conversation, his evidence and the subsequent conduct of the parties. The letter of 20 September 1993 reflected the respondent's understanding of the position, as did the conversation and fax of 1 December, although at that later stage, the respondent purported to impose a further condition which had not been previously suggested. Whatever the consequences of proposing such a condition, it cannot have affected rights and liabilities already accrued under the interim cover. Notwithstanding the view of Miles CJ to the contrary, we infer that there was an agreement for insurance cover commencing on 15 June 1993 at the latest, which remained in force until at least 1 December. 36 This characterization of the parties' legal relationship poses some superficial problems. Firstly, it is necessary to ascertain the terms of the insurance cover. However, as it is clear that the respondent was acting in its capacity as an approved insurer, it could only lawfully have issued a prescribed insurance policy. Further, it seems probable that the parties understood the cover to be upon the same basis as the previous cover. We have little difficulty in inferring that the insurance cover was upon the terms prescribed in Sch 3, subject only to the minor qualifications which we mention below. 37 Firstly, there was no statutory provision as to the term of cover, although Sch 3 contemplated the insertion of the dates of commencement and termination. Clearly, the parties did not stipulate any such period. In Burns v MMI-CMI Insurance Ltd (1995) 8 ANZ Insurance Cases 61-287 at 76,176, Hansen J of the Supreme Court of Victoria observed with respect to interim cover as follows: Yet it is obvious that an interim contract cannot go on indefinitely and hence must be subject to some reasonable limit in point of time. In my view however, it is not necessary to determine what such a limit may be… . 38 This passage is cited with apparent approval by Professor Sutton (Insurance Law in Australia, 3rd ed, LBC Information Services, Sydney, 1999). We consider that in the absence of express agreement as to the term of interim cover, there will generally be an implied term that the cover is to continue for a reasonable time in the absence of termination by either party or by the issue of the proposed policy. In the present case, the parties clearly considered that the appellant was still covered on 1 December, and there was no submission that any interim cover had lapsed prior to that date. Therefore it is not necessary to take this matter further. We mention it only to dispel any fear that the interim contract of insurance might have been uncertain for failure to stipulate its duration. However it may be that a policy for a reasonable period was not strictly in accordance with Sch 3 which, as we have said, contemplated fixed dates. We will deal with this matter at a later stage. 39 A second possible area of difficulty is the absence of any apparent agreement as to premium. Although Sch 3 contemplated the specification of the amount of the premium in the policy, parties who abstained from so specifying would probably have intended that it be a reasonable amount or the insurer's usual amount. Sutton (op cit at par 7.1) asserts: There is no necessity for the parties to agree, before or at the time the contract is entered into, on the amount of the premium which is to be paid, and an agreement to insure "at a reasonable premium" is binding on the insurer, what is reasonable being a question of fact in the particular case. 40 The author refers to the decision of Megaw J in Kirby v Consindit Societa Per Azioni [1969] 1 Lloyd's Rep 75, in which decision his Lordship found no difficulty in enforcing a contract which provided for payment of "a reasonable premium". There are numerous other cases to similar effect. See for example Banque Sabbag S.A.L. v Hope [1972] 1 Lloyd's Rep 253 and Liberian Insurance Agency Inc. v Mosse [1977] 2 Lloyd's Rep 560. Doctor Clarke in his work, The Law of Insurance Contracts (3rd ed, LLP Ltd, London, 1997) observes at par 11-1A4: Under the maxim certum est quod certum reddi potest courts give effect to terms which have not been settled by the parties themselves and stated in the contract but incorporated in the contract by reference. The reference may be to the market or to a nominated person. A notable example of this device is the practice at Lloyd's of stating a term, such as premium, TBA (to be arranged). Generally, the law does not enforce an agreement a term of which remains to be settled by the future agreement of the parties: it is in the nature of people that future agreement may not be reached, so it is not sufficiently certain that the matter can be made certain. Prima facie, therefore, a term that premium shall be agreed in future by the insurer and insured is uncertain and no contract of insurance at such a premium can be enforced. Nonetheless, it is generally believed that insurance for a premium TBA is enforceable. 41 In MacGillivray on Insurance Law (9th edition, Sweet & Maxwell Ltd, London, 1997) at par 2-6 it is said that: Rate of premium. The rate of premium must be agreed, but in the absence of an expressed figure it may be inferred to be the company's ordinary rate if it has a fixed tariff and there is no doubt as to how the risk should be classed, or, again, it may be inferred to be the same rate as that at which the risk was previously insured. All the parties have to do is to commit themselves to a certain arrangement for ascertaining the rate of premium. Thus in insurances effected at Lloyd's, it is a common practice for underwriters to take certain risks at a rate to be agreed. The parties thereby agree to leave the rate open for future settlement, and if a loss occurs before settlement, the sum insured becomes payable subject to deduction of a reasonable premium. In default of agreement between the parties, the amount of the premium will be settled by the court or an arbitrator. Insurance at a rate to be agreed is not usual in fire, life or accident insurance, but it is not unknown. 42 Cases frequently cited in support of this proposition include Hyderabad (Deccan) Company v Willoughby [1899] 2 QB 530 at 535 (per Bigham J) and Greenock Steamship Company v Maritime Insurance Company, Limited [1903] 1 KB 367 at 375 (also per Bigham J). In the latter case, his Lordship said: I think even in that case the clause still holds good, and the only open question would be, what is a reasonable premium for the added risk? To answer this the parties must assume that the breach was known to them at the time it happened, and must ascertain what premium it would then have been reasonable to charge. If they cannot do it by agreement, they must have recourse to a Court of law. It is like the case of goods sold at a reasonable, though an unnamed, price. The sale is good, but the price has to be ascertained, either by agreement or at law. In the present case the parties ask the court to fix this additional premium, and I am prepared to do it. 43 A number of the cases to which we have referred arose in circumstances in which the parties had agreed that additional cover would be available in certain circumstances at a premium to be agreed or at a reasonable premium. Once it is accepted that it is possible to calculate a reasonable premium, there seems to be no reason why, when the parties have not expressly agreed on the amount, there should not be an implied term for payment of such a sum. As Bigham J pointed out, such a course is common in the case of sale of goods, and, we would suggest, in connection with the supply of a wide range of services. 44 Taylor v Allon (supra, at 311) is also authority for the proposition that an implied promise to pay a premium may be found in a contract of insurance effected by the offer of interim cover and acceptance thereof. As Lord Parker CJ also pointed out, in the event that the original policy is eventually renewed, the premium for interim cover may be included in the new annual premium. 45 The level of premium is dealt with in both the Act and in Sch 3. As previously pointed out, s 20 of the Act requires that the premium not exceed the prescribed maximum rate. As far as we have been able to discover, no such prescription has been made. In Sch 3, cl 9 prescribes that the premium "shall be regulated by the amount of all wages, salaries and other forms of remuneration paid or allowed to workers during each period of indemnity". Although these factors may assist in calculating a reasonable premium, they do not detract from the appropriateness of implying a term as to payment of such a sum. Again, it may be arguable that the failure to specify the premium meant that the agreement was not in the form prescribed in Sch 3. We will return to this matter at a later stage. 46 The decision in Codelfa Constructions Proprietary Limited v State Rail Authority of New South Wales (1981-1982) 149 CLR 337 applies to the implication of terms such as those discussed above. For two reasons, we have not felt it necessary to discuss the application of that case for present purposes. Firstly, implication of these terms is so well-established that the matter would seem to be beyond argument. Secondly, the respondent has not submitted that any contract as alleged by the appellant was lacking in certainty. 47 The appellant made passing reference to the question of whether or not, under a Sch 3 policy, there could be any cover prior to payment of the premium. The decision of the majority of the Court of Appeal of New South Wales in Georgoulis v Mandalinic [1984] 1 NSWLR 612 at 616 (per Hutley JA) and 619 (per Glass JA), suggests that payment is not a condition precedent to liability. In any event, we do not understand the respondent to have raised the point. 48 Two other matters require brief mention. Firstly, the appellant sought to justify its position by reference to certain provisions of the Act dealing expressly with cover notes. However it seems that these provisions were introduced after the events which are relevant for present purposes. The absence of those express provisions at the relevant time did not imply that interim insurance was impermissible. The second matter is the question of illegality. Because the interim cover was arguably not upon precisely the terms prescribed in Sch 3 (for example, as to duration and premium), it might be suggested that it was illegal. Although this matter was not argued, it is appropriate for reasons of public policy that we address it. Gibbs ACJ (as his Honour then was) said in Yango Pastoral Company Pty Ltd v First Chicago Australia Limited (1978) 139 CLR 410 at 413: There are four main ways in which the enforceability of a contract may be affected by a statutory provision which renders particular conduct unlawful: (1) The contract may be to do something which the statute forbids; (2) The contract may be one which the statute expressly or impliedly prohibits; (3) The contract, although lawful on its face, may be made in order to effect a purpose which the statute renders unlawful; or (4) The contract, although lawful according to its own terms, may be performed in a manner which the statute prohibits. 49 A similar approach was adopted by Dawson and Toohey JJ in Fitzgerald v F J Leonhardt Pty Limited (1997) 189 CLR 215 at 219, and by Kirby J in the same case at 244. 50 Sub-section 17B(1) of the Act required that an employer maintain a prescribed insurance policy. Sub-section 17D(2) prohibited an insurer from issuing a policy required by an employer for the purposes of subs 17B(1) which was not a prescribed insurance policy. Thus it would be relatively easy to infer that a policy not in accordance with Sch 3 was prohibited by the Act. It would follow, in the absence of any contrary intention in the Act, that such a non-conforming contract was void for illegality. However subs 17B(6) was to contrary effect. It provided: Where - (a) an employer contravenes subsection (1)…; and (b) the employer maintains an insurance policy in respect of any liability arising under this Act; that contravention does not - (c) annul that policy; (d) affect the liability of the insurer under such a policy; or (e) … 51 Thus an employer who had taken out a policy which did not comply with Sch 3 was nonetheless entitled to the benefit of its protection. It is therefore impossible to read either s 17B or s 17D as rendering such a contract void. 52 The interim cover effected in June 1993 remained in force on 1 December 1993. The respondent could not have cancelled it pursuant to cl 13 of Sch 3 without the prior consent of the Minister. That may not have precluded the respondent's determining it upon the ground that a reasonable period had expired, although reasonable notice may have been necessary. However, on no view of the facts did the respondent seek so to proceed until 1 December, by which time the relevant loss had occurred. If we are correct in our conclusion that a contract for interim insurance was made on 15 June 1993, then there was no legal basis for its purported retrospective termination on 1 or 2 December with effect from 21 April 1993. It follows that the appellant was covered in respect of any relevant loss which occurred on 30 November 1993. 53 We would therefore allow the appeal and set aside the declaration and other orders made by Miles CJ at first instance. The application should be dismissed and an appropriate declaration made upon the cross-claim. We are uncertain as to the appropriate form of such declaration. This may, to some extent, depend upon the status of any proceedings between Mr Garbutt's estate and/or his family on the one hand and the appellant on the other, and upon the attitude of the nominal insurer. We would expect that any declaration should be limited to a determination that the appellant was, on 30 November 1993, entitled to indemnity pursuant to a policy substantially in accordance with that prescribed in Sch 3 of the Act. However the parties should make written submissions as to the appropriate form of declaration. It would seem to follow that the appellant should have the costs of the trial and of the appeal. However, should the parties wish to make submissions as to that issue, they may do so. 54 Submissions by each party as to appropriate orders and/or as to costs should be delivered to the other not later than fourteen days after the publication of these reasons for judgment. Any party receiving such submissions should reply thereto within seven days. The appellant is thereafter to convey to the District Registrar of the Court at Canberra four copies of such submissions and replies, for transmission to the members of the Court. The parties should have liberty to apply. I certify that the preceding fifty-four (54) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Court.