FAI GENERAL INSURANCE LIMITED v. JARVIS & ORS [1999] NSWCA 23

1 POWELL JA: Many of the difficulties which attend the resolution of the present appeal are due to the fact that the proceedings at first instance before Nash DCJ appear to have proceeded upon the basis of a number of assumptions - both as to fact and to law - the validity of which is, at the least, questionable, if not totally absent. 2 The proceedings - of which the proceedings before Nash DCJ form but a part - relate to an accident said to have occurred on 16 March 1992 when the first respondent ("Mrs. Jarvis") fell while in a store at Caringbah, which store was then occupied by VSLR Pty. Limited ("VSLR"), a company which appears to have been associated in some way with another company known as Venture Stores Limited ("Venture"), as the result of which fall Mrs. Jarvis sustained a comminuted fracture of the right kneecap. The material which is in the appeal books (AB 77-82) tends to indicate that Mrs. Jarvis fell when she was walking on a walkway between the store entrance and what is described as the lay-by section of the store, which walkway had been sprayed with floor polish and which was, at the time, being buffed by a cleaner. 3 In was later to be claimed that, at the time of the accident, VSLR was insured by the Third Respondent, CIGNA Insurance Asia Pacific Limited ("CIGNA") under a Public and Products Liability Policy, the insuring clause of which, so far as is relevant, was as follows (AB 28): "1. COVERAGE … CIGNA shall indemnify the insured for all sums which the insured shall be legally liable to pay compensation in respect of: (i) personal injury; ……… occurring within the Policy Territory during the Policy Period as a result of an Occurrence happening in connection with the business of the Insured described in the Schedule. ………" 4 It should, however, be pointed out that the document which formed part of the evidence on the hearing before Nash DCJ and was put forward as the relevant policy calls that claim into question. The document is not the relevant policy but is a copy of a policy said to have been issued by CIGNA Insurance Australia Limited - which may, however, merely have been an earlier name for CIGNA - which, although identifying both Venture and VSLR as the insured and designating the policy period as being from 31 July 1991 at 4.00 p.m. to 31 July 1992 at 4.00 p.m. has attached to it two endorsements the second of which, said to be effective from 29 April 1992, provided for the amendment of Item 1 - Insured - in the schedule to the policy so as to read, instead of "Venture Stores Limited", "Venture Stores (Retailers) Pty. Limited - Scheme". However, as the hearing before Nash DCJ appears to have proceeded upon the basis that, at the relevant time, VSLR was insured by CIGNA under such a policy, and as CIGNA has not, although the Appellant (FAI) has, appealed in respect of the orders made by Nash DCJ, I suppose I should not concern myself further with the matter. 5 The form of policy which is in evidence contains the following (inter alia) provision (AB 31): "4. INSURED'S DUTIES IN THE EVENT OF AN OCCURRENCE, CLAIM OR SUIT (a) In the event of an Occurrence or the likelihood of a Occurrence the Insured shall immediately take at his own expense all responsible steps to prevent Personal Injury or Property Damage arising or continuing out of such Occurrence. (b) The Insured shall give notice in writing to CIGNA as soon as practicable of every Occurrence, and shall immediately forward to CIGNA all information relevant to such Occurrence received or held by the insured or his representative, in particular: Every demand, writ, summons, proceedings, impending prosecution, inquest and all information in relation thereto. (c) the Insured shall not, without CIGNA'S written consent make any admission, offer, promise or payment in connection with any Occurrence or claim. (d) the Insured shall use his best endeavours to preserve all property, products, appliances and plant and all other things which may assist in the investigation or defence of a claim or in the exercise of rights of subrogration and so far as may be reasonably practicable no alteration or repair shall be effected without the consent of CIGNA until CIGNA shall have had an opportunity of inspection. 5. RIGHT TO DEFEND; ASSISTANCE AND CO-OPERATION OF THE INSURED ……… (b) the Insured shall co-operate with CIGNA and shall comply with the terms and conditions of this policy, and shall enforce any right of contribution or indemnity against any person, corporation or organisation who may be liable to the insured because of Personal Injury or Property Damage with respect to which insurance is afforded under this police." 6 Although there was, in my view, no evidence admissible against either the Second Respondent, A & B Conlon Cleaning Services Pty. Limited ("Cleaning Services"), or FAI as to the matter tendered on the hearing before Nash DCJ, Mrs. Jarvis' claim then was, as it still is, that, at the time of her accident, VSLR had contracted Cleaning Services to carry out cleaning at its Caringbah store and that the cleaner who, at the relevant time, was buffing the walkway - a Mr. Waterman - was employed at the time by Cleaning Services. 7 I say that no evidence admissible as against either Cleaning Services or FAI as to the existence of any such contractual arrangement between VSLR and Cleaning Services was tendered on the hearing before Nash DCJ for the following reasons:

although the evidence which was tendered on that hearing included a letter dated 27 July 1992 from CIGNA to VSLR (AB 88), which letter asserted, inter alia, that "(CIGNA considers) that A & B Conlon are responsible for the incident" the tender of that letter against FAI was objected to at the hearing before Nash DCJ (AB 126) and was not read as against FAI;
although there was tendered on the hearing before Nash DCJ as Exhibit "A" a letter from CIGNA to Mrs. Jarvis' solicitors dated 1 February 1995 the tender of that letter was prefaced by the following statement by counsel then appearing for Mrs. Jarvis (AB 140): "TORRINGTON: There is just one matter which I'd seek leave to tender a letter before your Honour. It was a matter that arose before the adjournment and that is how the plaintiff came to be informed that A & B Conlan were the cleaners. Your Honour could I tender a letter under the hand of CIGNA Insurance Australia Limited dated 1 February 1995 in the hand of Mr. Peter White." So far as is relevant, that letter (AB 177) was as follows: " ……… According to the information on our file the cleaners at the time of the incident were A & B Conlon. No further details were provided by our insured however, we have consulted the telephone directory and the undermentioned is listed: A & B Conlon Cleaning Services Pty. Limited, 153 George Street, Liverpool, telephone number 602-4707. ………"
the transcript further records that following after the tender of that letter (AB 140): "TORRINGTON: Your Honour, there was one other matter which I informed my learned friend for FAI that I could call evidence from my solicitor. He does not require my solicitor to be called and indicates I can say to the court that Mr. Jones of Hunt and Hunt, the solicitor handling this matter, in fact spoke to Mr. Conlan. HODGSON: A person describing himself as … TORRINGTON: Sorry, a person describing himself as Andrew Brian Conlan who stated two relevant matters, your Honour. This was in April 1996. One, A & B Conlon were the cleaners employed at Venture Stores on the day in question, and two, Mr. Chris Waterman was employed by them, that is A and B Conlan Cleaning Services. And my learned friend does not concede as to whether or not the person we spoke to identified himself as Mr. Conlan was in fact Mr. Conlan of the same company. He doesn't concede that aspect of it. And your Honour, could I indicate from the bar table that we informed the solicitors for FAI of Mr. Andrew Brian Conlan's phone number which is deposed to in their affidavit in any event, your Honour. And I thank your Honour for allowing me to adduce that further evidence." 8 Even if - which I would dispute - Mr. Torrington's statement could be regarded as evidence of anything, it would not, in my view, have been admissible against either Cleaning Services or FAI; and even if it were, it would, in my view, have been of not the slightest weight whatsoever, since evidence which was available and tendered on the hearing before Nash DCJ tended to indicate, first, that Cleaning Services ceased to trade at about the end of 1994 (AB 95-96); second, that the directors of Cleaning Services, who, at the time, included Mr. A.B. Conlan, his wife Mrs. B.M. Conlan and their daughter Mrs. B.M. Role, all retired and lodged with the National Companies and Securities Commission notices of retirement prior to the end of June 1995; third, that, in about July 1995, there was lodged with the National Companies and Securities Commission an application for deregistration of Cleaning Services as a defunct company (AB 40-43); and, finally, that, as at the date of the hearing before Nash DCJ in April 1997, Mr. and Mrs. Conlan were, as they had for an extended period prior thereto been, overseas - their whereabouts, except in the most general terms, not being known (AB 96) - and it was not known when, if at all, they might return to this country (AB 97-98). 9 Whether or not Cleaning Services had been retained by VSLR to carry out cleaning at its Caringbah store, it is clear enough that, at the time of Mrs. Jarvis' accident, Cleaning Services was insured by FAI pursuant to what was described as an FAI Business Package Policy, the initial currency of that policy having been from 29 March 1991 to 29 March 1992 - it appears then to have been renewed for the following year but not thereafter renewed. That policy (AB 51-69), in Section 6 - Legal Liability, provided (inter alia) (AB 64): "COVER UNDER SECTION 6 We will pay on your behalf all sums you shall become legally liable to pay by way of compensation … for bodily injury … provided:

this occurs during the period of insurance as a result of an accident happening and
this happens in connection with the carrying on of the Business ………" 10 The general conditions applying to all sections of that policy contained the following (inter alia) (AB 68): "(F) CLAIMS On the happening of any Event likely to produce a claim under any Section of this Policy, you must forthwith give notice in writing to us and give us at your own expense full details in writing containing as particular an account as is practicable of all the circumstances with particulars of the Property lost, destroyed or damaged or persons injured and the extent of the loss or damage or the injury sustained and if demanded a statutory declaration verifying the claim and any connected manner. You must notify the Police immediately if any of the Property is lost, stolen, or maliciously damaged and take all practicable steps to discover the person(s) responsible and to recover the Property lost or stolen. ……… We and any every (sic) person authorised by us, without incurring any liability and without prejudicing our rights in any way to rely upon any conditions of any Section of this Policy, may enter, take or keep possession of the Buildings or Premises where any loss, damage or destruction has occurred and we may take fossession (sic) or require to be delivered to us any of the property which is insured and deal with the same for all reasonable purposes and in any reasonable manner. This condition shall be evidence of our right to do so. If you or anyone acting on your behalf shall not comply with our requirements or shall hinder or obstruct us or any person authorised by us in carrying out any of the acts referred to, then we may at our option decline to pay any monies otherwise payable under any Section , but without prejudice to our rights to cancel this Policy or any of its Sections. You shall not in any case be entitled to abandon any property to us whether or not we have taken possession. You must give us written notice as soon as possible of every occurrence, claim, writ, summons or proceedings including any prosecution or inquest and all information in relation to such matters for which there may arise any liability under any Section of this Policy. You must not admit liability if an accident occurs which is likely to result in someone claiming against you and for which we insure you. We may at our option take over and conduct in your name the defence or settlement of any claim made or which may be made against you and we shall have full discretion in doing so. We shall have full discretion in the conduct of any proceedings in connection with any claim and you must give us all information and assistance that we may require." 11 However, to return to the narrative: In accordance with what seems to have been VSLR's practice in such matters, the manager of the Caringbah store prepared a "Customer Accident Report" (AB 77-78) dated 16 March 1992 and obtained short statements from two of the store's employees, a Ms. Haines (AB 79), who appears to have been the store medical officer, and a Ms. Halliday (AB 80). In addition, a statement was obtained from a cleaner, a Mr. Waterman (AB 81-82). The accident report and those statements appear to have been forwarded by VSLR to CIGNA in mid-May 1992 (AB 85). 12 Ms. Halliday's statement was to the following effect: "I was calling for a service 60 (?) at app. 9.40 a.m. on Monday 16th March 92 when I watched the cleaner spray a watery solution on to the floor before buffing. The lady was walking in the middle of the isle (sic) coming from the lay-by section as she reached the cleaner she slipped on the wet floor - she grabbed for her knee. The cleaner and myself rushed to her assistance." while Mr. Waterman's statement was as follows: "I Chris Waterman the cleaner working at the carinbah (sic) Venture store on the 16.3.92 was bushing the main corrider (sic) down from the front of the store. As I was buffing a part of the floor I had just sprayed with polish. There was a lady walking on the otherside (sic) of the area I was buffing. I looked momentarily at her and she was just about to walk on the other side (sic) of the corrider (sic) so I continued buffing and I heard a thud and a scream. I looked around and the lady had fallen over and was holding her knee which looked as if the knee cap had been pushed out of place. I waited around to see if I could help as much as aid was given to her by the Venture staff whilst we waited for an ambulance. The ambulance men come and put her on a stretcher and they took her away."

17 Despite the terms of this letter there appears to have been no evidence whatsoever that, at any time prior to the commencement of these proceedings in the District Court in February 1995, CIGNA wrote to Cleaning Services; nor, for that matter, does there appear to be any evidence whatsoever that, at any time prior to the commencement of these proceedings in the District Court, any claim was made on behalf of Mrs. Jarvis against Cleaning Services. 18 I think it appropriate at this stage to make an observations about the following statement (AB 186): "In his Affidavit sworn 21 November 1996 Mr. Crittenden, the former solicitor for the first defendant and now the solicitor for CIGNA, stated that the contract cleaner for the Venture Stores at Caringbah at the relevant time was the second defendant." made by Nash DCJ in the course of his judgment. First, it is to be observed that Mr. Crittenden's Affidavit - which is not included in the appeal papers - was not served upon the solicitors acting for FAI, nor was it read on the hearing before Nash DCJ as against FAI (see AB 134); and, second, that, even if, as Nash DCJ has recorded, Mr. Crittenden's Affidavit did contain a statement to that effect, the only basis for Mr. Crittenden making that statement would appear to have been statements in the correspondence to the effect of that contained in the letter of 27 July 1992 from CIGNA to VSLR. That this was so is made clear from the following passages in the course of Mr. Crittenden's oral evidence on the hearing before Nash DCJ (AB 138-139): "REYNOLDS: Q. Mr. Crittenden in providing advice to your insurance client in respect of the resistance of the plaintiff's claim, it would be relevant would it not to have the details of the insurance - the cleaning contract between the store and the cleaner? A. Oh, very much so. Q. And also the name, the last known full name of the cleaner who regularly attended the store? A. Yes that would be relevant. Q. And the full name of any person such as Allison Halliday who may or may not have on the face of her statement may or not have been an employee of the store? A. Yeah certainly the records of addresses, telephone numbers for Ms. Halliday would have been relevant. HIS HONOUR: Yes unfortunately her statement doesn't provide, and neither does the statement of Halliday - of Waterman neither provides an address. REYNOLDS: Q. And the person Grove you referred to as the manager, his name comes from the claim - the Accident Report Form which is exhibited C in your Affidavit? A. Yes. Q. And it would be relevant to have access to him to assist in the, as you say, cleaning … A. Yeah we thought he was very …. Q. … contractual arrangements that may or may not have existed? A. We thought he was a very important witness to provide information as to, A, the documents that might exist between Venture and the cleaner and also any verbal instructions that may have been given to the cleaner. Q. And do you hold any information at the moment which would identify the cleaner as being A & B Conlan Cleaning Services Pty. Limited ……… A. Do I hold any evidence? Q. Yes do you hold any evidence which would - to suggest that A & B Conlan Cleaning Services Pty. Limited was the cleaner. A. From memory really its only the basis of the reference to A & B Conlan and the various pieces of correspondence. ……… Q. And that correspondence is the correspondence between Messrs. Hunt and Hunt and your firm? A. No I think correspondence earlier in the peace (sic) between …. Q. The plaintiff's former solicitors? A. Yes and also the correspondence between CIGNA and Venture. ……… REYNOLDS: I'm not putting it forward in the case against FAI your Honour, I'm putting it forward on the basis of highlighting the very situation that CIGNA has in respect of the case because its position would be without the proof of the cleaner but based on what Waterman says that it would be impossible for the insurer now to join whoever the cleaning might be, whether its A & B Conlan or Smith and Jones or anybody else. ……… REYNOLDS: Q. So Mr. Crittenden is there any evidentiary basis for identifying who the cleaner might be. A. Certainly not in terms of any contractual documents as I said only in relation to the correspondence that I have seen." 19 Although it may not be entirely clear from the passage which I have set out above, the evidence before Nash DCJ would tend to indicate that, at that time, no one had any information as to the then present whereabouts of Mr. Grove, Ms. Haines, Ms. Halliday or Mr. Waterman. 20 However, to return yet again to the narrative: Save that it appears that Cleaning Services policy with FAI lapsed in March 1993 and that, Cleaning Services ceased to carry on business by no later than the end of 1994, the evidence does not disclose anything of what occurred in the intervening period and prior to the commencement of these proceedings in the District Court. 21 On 1 February 1995 CIGNA wrote to Mrs. Jarvis' present solicitors a letter (AB 177) which was, in part, as follows: "According to the information on our file the cleaners at the time of the incident were A & B Conlan. No further details were provided by our insured however, we have consulted the telephone directory and the undermentioned is listed: A & B Conlan Cleaning Services Pty. Limited 153 George Street, Liverpool telephone number 602-4707. Upon reviewing our file it is clear that the issue of indemnity is in dispute and therefore regarding further information we would refer you to the insured's liquidator who are (sic) Ferrier Hodgson (Vic), P.O. Box 781, Dandenong 3175. We understand T.R. Vince is the official liquidator concerned." 22 Although, at that time, leave to proceed against VSLR, notwithstanding that it was in the course of being wound up, had not been granted, the proceedings at first instance - to which, at that stage, only VSLR and Cleaning Services were joined as party-Defendants - were commenced on 28 February 1995. 23 Thereafter, on 6 March 1995, there was filed in the Supreme Court of Victoria on behalf of Mrs. Jarvis a Notice of Motion in which she sought leave to commence, and to continue, the proceedings against VSLR in the District Court. That Notice of Motion came on to be heard on 10 March 1995 on which day Master Wheeler ordered, by consent (inter alia) (AB 9): "Pursuant to section 471B of the Corporations Law, the Applicant has leave (nunc pro tunc) to commence proceeding number 1237 of 1995 in the District Court of New South Wales at Sydney against VSLR Pty. Limited (In Liquidation)("VLSR") and leave to continue that proceeding against VSLR." 24 One assumes that, in due time, a copy of the Statement of Claim which had been filed in the District Court was served upon VSLR's liquidator as, in the course of his judgment, Nash DCJ refers (AB 186) to Mr. Crittenden's Affidavit in which he apparently stated that, on about 29 September 1995, he received instructions from CIGNA to act on behalf of it and VSLR. Grounds of Defence (AB 13) putting in issue the material parts of the Statement of Claim and, as well, raising contributory negligence on the part of Mrs. Jarvis were ultimately filed on behalf of VSLR on 8 February 1996. 25 An Affidavit of one Thomas Pfeifle which has been filed in the District Court (AB 8) contains the following - less than accurate - statement: "I did on twenty-fourth day of April 1995 duly serve the PROPER OFFICER A & B CONLAN CLEANING SERVICES PTY. LTD, the Second Defendant, with a sealed copy of ORDINARY STATEMENT OF CLAIM, by attaching them to the door at SUITE 6, 153 GEORGE ST., LIVERPOOL 2170 which is the registered office of the PROPER OFFICER A & B CONLAN CLEANING SERVICES PTY. LTD in the said State." (One may question whether, notwithstanding the provisions of s.220(1) of the Corporations Law, such "service" ought to be regarded as good service (see, for example, Deputy Commissioner of Taxation v. Abberwood Pty. Limited (1990) 19 NSWLR 530.) 26 There is no evidence to indicate that the Statement of Claim ever came to the attention of Mr. and Mrs. Conlan or any other person connected with Cleaning Services. But even if it did come to their notice, it seems clear enough (AB 35) that FAI was not made aware of the existence of any claim on the part of Mrs. Jarvis, or the commencement of the proceedings at first instance, until late May 1996, when, following a telephone conversation with an employee of FAI, Mrs. Jarvis' solicitors wrote to FAI a letter (AB 19) which, so far as is relevant, was as follows: "KAREN JARVIS v. VSLR PTY. LTD. (In Liquidation) (ACN 004 859 438) We act on behalf of the above named in relation to injuries sustained in an accident on 16 March 1992. We note that A & B Conlan Cleaning Services Pty. Limited held a policy with your office as at the date of the accident. We enclose, a copy of the following:

Affidavit of Service of Thomas Pfeifle dated 27 April 1995 attaching Statement of Claim. ……… We advise that the above matter is listed for hearing in the District Court at Sydney on 18 June 1996 before an Arbitrator. We would appreciate your prompt attention to the matter and look forward to receiving notification of your attitude to the claim." 27 FAI thereafter instructed its solicitors to investigate the claim. Having obtained those instructions, FAI's solicitors wrote to Mrs. Jarvis' solicitors, a letter (AB 20-22) which, so far as is relevant, was as follows: "A & B CONLON CLEANING SERVICE PTY. LTD. (sic) ats JARVIS We act on behalf of FAI Insurance Limited and have been forwarded a copy of your letter to our client dated 24 May 1996. From that letter we note the following: 1.. You act on behalf of Karen Jarvis.
District Court proceedings were instituted against A & B Conlon Cleaning Service Pty. Limited (sic) on behalf of Karen Jarvis by your firm in February 1995 and were apparently served upon A & B Conlan Cleaning Service Pty. Limited's registered office on 24 April 1995. ………
You contend that as at the date of your client's injuries (16 March 1992) A & B Conlon Cleaning Service Pty. Limited (sic) were insured by our client insurer. We are instructed that receipt of your above mentioned letter was the first notification which our client insurer had of this matter and our client is therefore not even certain at this stage whether it was in fact the relevant liability insurer of A & B Conlon Cleaning Service Pty. Limited (sic) at the relevant date. If our client was the relevant insurer then an immediate question arises as to whether or not our client has been prejudiced as a result of the extreme late notification of this claim and consequently before our client can make any decision in relation to the matter a preliminary determination will need to be made as to whether or not indemnity under the policy is available. This is currently being explored and as soon as we are able to do so we will advise you of our client's decision. ………" 28 On the following day, FAI's solicitors wrote to Mr. and Mrs. Conlan at their last known address seeking to ascertain whether they had any information which bore upon the claim being made by Mrs. Jarvis. That letter (AB 38-39) produced no reply and other inquiries made by FAI's solicitors tended to indicate that, as I have earlier recorded, Cleaning Services was then no longer trading and Mr. Conlan had retired and resided overseas and that, although the whereabouts of Mrs. Conlan were not known, it was believed that she, also, was then residing overseas. 29 Thereafter, on 12 June 1996, FAI's solicitors forwarded to Cleaning Services, addressed to it at its registered office, a letter (AB 44) which was in part, as follows: "A & B CONLON CLEANING SERVICE PTY. LTD (sic) ats JARVIS We enclose herewith a copy of a self-explanatory letter forwarded to Andrew and Barbara Conlon (sic) dated 4 June 1996. As at today's date we have received no response to this letter, however, as a result of inquiries which we instigated into this matter we understand that this may be because of the fact that Mr. and Mrs. Conlon (sic) are overseas. In any event we advise that having investigated the matter as much as is possible given the fact that the matter is listed for hearing on 18 June 1996 and that our client was only made aware of the claim on 24 May 1996, our client has determined that as a result of the late notification which it received in relation to the claim, it has been severely prejudiced and it is not in a position to defend this action on behalf of the company given that prejudice. We have therefore been instructed to advise that indemnity in relation to the claim is being denied. ………" 30 On the same day, FAI's solicitors, forwarded to Mrs. Jarvis' solicitors by facsimile, a letter (AB 23) which was as follows: "RE: A & B CONLON CLEANING SERVICE PTY. LTD (sic) ats JARVIS We refer to previous correspondence in this matter. Having investigated this matter as much as is possible given the time allowed, our client insurer has determined that it has been severely prejudiced as a result of the late notification of this claim by its insured and as such we have now been formally instructed that we are not to represent the Second Defendant in these proceedings. Notice of our client's decision has been forwarded to the registered office of the Second Defendant and the last known address of the Directors. We will therefore be playing no further part in this matter." 31 On the following day, CIGNA's solicitors, forwarded to Mrs. Jarvis' solicitors by facsimile a letter (AB 24) which was as follows: "RE VSLR PTY. LIMITED (IN LIQUIDATION) & ANOR. ats JARVIS We refer to our facsimile of earlier today. We have received instructions to cease acting on behalf of the First Defendant. We have given the First Defendant Notice of our Intention to Cease Acting on its behalf. We shall be seeking leave at the arbitration to withdraw from the proceedings. You should address all further correspondence to the First Defendant to: Mr. P.R. Vince Official Liquidator VSLR Pty. Limited (in liquidation) c/- Messrs. Ferrier Hodgson Chartered Accountants P.O. Box 781, DANDENONG VIC 3175" 32 Thereafter, on 18 October 1996, there was filed the Notice of Motion (AB 15) which came ultimately to be dealt with by Nash DCJ in which Notice of Motion there were sought the following - not entirely appropriate - orders: "1. Cigna Insurance Australia Limited be joined as the Third Defendant in these proceedings.

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