34 In Greentree Mason P referred, with obvious approval, to the decision in Permanent Trustee. This was understandable as it raised essentially the same point. After a detailed consideration of the relevant authorities, including East End, his Honour concluded, at p.721, having cited the passage in the joint judgment in Antico at pp.669-670 upon which Mr Einfeld placed reliance for the proposition that Antico over-ruled Perry:-
"The words used in the concluding sentence and the passages from FAI General Insurance Co Limited v Perry cited by the High Court from 30 NSWLR 89 at 93 and 107, make it plain to me that the High Court was rejecting portion of the reasoning in FAI General Insurance Co Limited v Perry , but not questioning the result in that case."
35 After a further consideration of the reasoning in Antico his Honour said, at p.722:-
"It follows that Antico should not be read as over-ruling FAI General Insurance Co Limited v Perry . It certainly cannot be viewed as authority for the proposition that the terms under which insurance cover is defined in a claims made policy are irrelevant to the causation inquiry which s.54(1) mandates. While portion of Gleeson CJ's judgment in FAI General Insurance Co Limited v Perry contains reasoning relating to a choice or election by the insured, such reasoning being disapproved by the High Court in Antico , a distinction remains between terms of the policy which should rightly be seen as conditions to be satisfied by the insured, and terms which might expand the scope of the policy itself: see Clarke, 'After the Dust Settles on Antico : FAI v Perry Lives' (1997) 9 ILJ 29 at 33. It will be obvious from what I have written that I have been greatly assisted by this article.
The distinction is difficult to express definitively. Ultimately, it is a question of applying the words of s.54 and the policy it expresses to the substance of the words of a particular insurance policy. Section 54 was not available to cure the omission in FAI General Insurance Co Limited v Perry , because the effect of doing so would have altered the scope of the contract of insurance in such a way that it would have been impossible for the Court to find a sufficient causal connection between the terms of the policy and the insurer's refusal to pay a particular claim. In FAI General Insurance Co Limited v Perry and Antico , the Court was at pains to identify the insured's rights existing under the contract at the time of the claim. Only when they were understood was it possible to determine whether the insurer's refusal of the claim could fairly be said to flow 'by reason of' some act (or omission) of the insured or of some other person. Some acts or omissions are simply 'non events', in the sense of having no connection with the substantive rights conferred under the policy and negotiated between the parties."
36 That, if I may say so with respect, was clearly correct in Greentree as no claim was made while the policy was current. Therefore, nothing happened to activate the policy and the policy had nothing to say about a claim made after its expiry. East End was a different case. The claim was made during the currency of the policy but notice of it was not given within the stipulated time. Non-the-less the insured was able to recover. This was not the cover the insurer had offered, but s.54 overcame that omission and, in doing so, gave cover where a claim was made within time, but notification was made after the contractually stipulated time. That was not what the parties had contracted for. In so far as the President said that some acts or omissions are simply "non events" and have no connection with substantive rights conferred under the policy, that is undoubtedly correct. But the failure to give notice does have a connection with substantive rights. In the case of a claim made or of becoming aware of circumstances which may give rise to a claim, notice must be given. If, in the first case, the failure to give notice is an "omission", as has been authoritatively determined, it seems to me that it is very strongly arguable that it also is in the second case. Indeed, in my respectful opinion, consistency would demand that approach. In each case there is a failure to give notice in circumstances where an event potentially triggering the policy has occurred and, if notice is given of that event, the policy will respond. I do not see why the nature of the event, provided it happens within the policy year, affects the consequence of the failure to give notice of it, where the omission is the failure to give notice.
37 In Perry Condition 3 was, to all intents and purposes, in the same terms as clause 4(b) and the facts are not distinguishable. Although in East End the Court, of which both Gleeson CJ and Clarke JA were members, held that a failure to give notice of a claim was an omission within the meaning of s.54, in Perry their Honours held that the failure to give notice of circumstances of which the insured became aware was not such an omission. At p.93, Gleeson CJ said:-
"Here the primary cover afforded by the policy is cover against claims made and reported during the relevant period. An insured who, during the relevant period, becomes aware of an occurrence and hence the possibility of a future claim, is entitled, if he or she chooses to do so, to notify the insurer and thus extend the scope of the cover to future claims in respect of occurrences discovered and notified during the relevant period . There could be reasons why an insured would choose not to do so. The possibility of a future claim might, for a number of possible reasons, be regarded as remote. Notification might indirectly affect future premiums. When one is dealing with claims that are mere future possibilities, a decision not to elect to expand the scope of the cover to include such claims does not seem to me to constitute an omission of the kind with which s.54 is concerned . Condition 3 is intended to relieve an insured (in a way that is similar but not identical to the relief given by s.40 of the Act) against a certain practical problem that can arise in liability insurance. It does that by giving the insured a choice. The insured may choose not to follow the course made available by Condition 3. In that event I am unable to conclude that the absence of liability on the insurer is by reason of an omission on the part of the insured within the meaning of s.54 ." (My emphasis.)
38 His Honour thus held that the insured may extend the scope of the cover from claims made against it and reported during the relevant period to claims arising out of circumstances of which the insured has notice during the period of insurance, and of which circumstances the insured gives notice during that period to the insurer, which circumstances, in the absence of notice of them and subsequent claims arising from them, would not be covered by the policy. His Honour's reasoning continued on the basis that there was no obligation on the insured to give notice in the latter case, and thereby increase the scope of the cover, and that there may be reasons why the insured would choose not to do so. He considered that if the insured chose to adopt the course of not giving notice, for reasons which appealed to the insured, that would not constitute an omission, but rather an election or choice not to extend the scope of the insurance to subsequent claims arising from those circumstances. This was the reasoning set out at p.93 and it led his Honour to the critical conclusion, on the basis of which he found that s.54 did not apply. Thus, in East End, his Honour had said that as the claim had been made the insured event had occurred and the failure to give notice was an omission. In Perry the election or choice not to give notice of circumstances was a matter which precluded the operation of the policy because an insured event did not happen until the notice was given and, thereafter, a claim was made based on those circumstances, the policy not responding merely to the insured's knowledge of circumstances. This was based, at least in part, on his Honour's view that that exercise of choice precluded an event to which the policy responded coming about, and, because it was a matter of choice or election, it could not be an omission within the meaning of s.54. However, his Honour's decision was also based on the finding that the failure to give notice meant that the scope of cover was not increased as clause 4(b) provided, the primary cover, as I have said, being in respect of claims made. Independently of his Honour's views about choice or election (and there is an element of choice or election in giving notice of a claim made), his Honour's decision would stand on the basis to which I have just referred. But none-the-less the right to recover was lost, even though not the primary right, by reason of the failure to give notice, which, arguably, was an omission. To conclude otherwise could be said, if I may say so with respect, to allow form to triumph over substance.
39 At p.107, Clarke JA said:-
"Despite the obvious width of the language in s.54 it operates only where the effect of the contract is that an insurer might refuse to pay a claim because of an act (omission) of the insured or some other person. As East End makes clear it does not matter whether the insurance policy achieves this effect in the definition of the cover or by the imposition of obligations the breach of which entitles the insurer to avoid the policy. Nonetheless it is essential that the contract have that effect before s.54 operates.
Upon the assumption I have made for the purposes of the argument, the contract under consideration (upon the assumption that Condition 3 was not in the contract) would not have that effect. The position under the contract would simply be that the insured could claim only if the claim was made and notified within the period of the policy. In those circumstances it could not be said that the fact that the insured had not notified the existence of facts within the period constituted an act (omission) by reason of which the insurer could exercise a right under the policy to deny a claim.
…. What, as it seems to me, s.54 is concerned with is the loss by an assured of a right to claim under a policy by reason of some act or omission - either of the insured or some other person. It assumes the existence of a right which by virtue of the contractual provisions is lost. But in the circumstances under discussion here there is no right which has been lost. All that has occurred is that the insured has not taken action, the effect of which would be to enable a claim to be made for which (on the stated hypothesis) the policy does not provide ." (My emphasis.)