Kassem v Colonial Mutual

COUNSEL : Mr T.M. Lynch - Appellant Mr J.D. Hislop QC/Mr G.A. Seib - Respondent SOLICITORS : Colin Daley Quinn - Appellant McCulloch & Buggy - Respondent CATCHWORDS : Practice and Procedure - Competence of Appeal from District Court - Whether appeal from District Court incompetent because the affidavit pursuant to Part 51 rule 8 SCR failed to show that the appeal involved a matter at issue amounting to or of the value of $100,000 or more - Held the appeal was incompetent at the time the Notice of Appeal was filed as the affidavit did not disclose facts but rather a belief: Anthony v Maglovenos (Court of Appeal - 11 July 1978 - unreported) and Ozpinar v Assaily (Court of Appeal - 19 February 2001 - unreported) followed. - Held by Powell JA that the appeal was also incompetent at that time as a substantial amount involved was liquidated damages for which the plaintiff could not sue under the policy having elected to affirm it: Larratt v Bankers & Traders Insurance Co Limited (1941) 41 SR 215 and Russell Young Abalone Pty Limited v Traders Prudent Insurance Company Limited (1993) 7 ANZ Ins Cas 61-182 - Principles on which leave to appeal will be granted - Application for leave to appeal refused as neither the amounts involved justified it and there were no questions of principle: Dunn v Ross Lamb Motors [1978] 1 NSWLR 26 and Carolan v AMF Bowling Pty Limited (Court of Appeal - 16 November 1995 - unreported) followed and applied - Matters for Pleading - Desirability for the pleading of all issues, which should be pleaded, rather than reliance on the way in which case fought or argued: Dare v Pulham (1982) 148 CLR 658 referred to. District Court Act 1973 LEGISLATION CITED : Insurance Contracts Act 1984 (C'th) Supreme Court Act 1970 Dunn v Ross Lamb Motors [1978] 1 NSWLR 26 Larratt v Bankers & Traders Insurance Co Limited (1941) 41 SR 215 Russell Young Abalone Pty Limited v Traders Prudent Insurance Company Limited (1993) 7 ANZ Ins Cas 61-182 Anthony v Maglovenos (Court of Appeal - 11 July 1978 - unreported) CASES CITED: Ozpinar v Assaily (Court of Appeal - 19 February 2001 - as yet unreported) CIC Insurance Limited v Bankstown Football Club Limited (1997) 187 CLR 384 Huntsman Chemical Company Australia Limited v International Pools Australia Limited (1995) 36 NSWLR 242 Dare v Pulham (1982) 148 CLR 658 Carolan v AMF Bowling Pty Limited (Court of Appeal - 16 November 1995 - unreported) DECISION : (a) The appeal be dismissed as incompetent; (b) Leave to appeal be refused; (c) Leave to amend the Notice of Appeal by adding Ground 20 in the Proposed Second Amended Notice of Appeal be refused; (d) Each party pay its own costs of the appeal

THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

POWELL JA IPP AJA ROLFE AJA TUESDAY, 6 MARCH 2001 KASSEM v COLONIAL MUTUAL GENERAL INSURANCE COMPANY LIMITED JUDGMENT

1 POWELL JA: In his Judgment which I have read in draft Rolfe AJA has recorded the facts which gave rise to the proceedings at first instance and to the filing of the Notice of Appeal on 31 May 1999. 2 In that Notice of Appeal, the relevant orders which were sought were as follows: "3. An award be made in favour of the appellant for $29,241.75, being damages for breach of contract, as assessed as the amount due under the contract, plus interest from the date of breach of the contract; 4. The matter be remitted to the District Court for hearing as to quantum for the damages that flow from the respondent's breach of contract."

3 The claims that were the subject of the appeal were thus:

1. a claim to receive an additional sum of $13,931.70 - $29,241.75 less the amount of $15,310.05 awarded by Naughton DCJ - in respect of the stock and other business objects lost in the fire, together with an additional sum for interest; and

2. the claim for unliquidated damages for breach of contracts.

I put the matter in this way since, as Reynolds JA (with whom Moffitt P and Hope JA agreed) wrote in Dunn v. Ross Lamb Motors [1978] 1 NSWLR 26, 28 : "It is the appeal that must involve directly or indirectly the claim, demand or question to or respecting any property or any civil right amounting to or of the value of $3,000.00 or upwards."

4 Quite apart from the fact that the affidavit sworn by the Appellant's solicitor on 5 July 1999 does not meet the requirements of SCR Pt 51 r 8, it is, in my view, clear that the claims sought to be advanced by the Appellant were not of the value of $100,000.00 or upwards. Thus:

1. even if Naughton DCJ erred in rejecting, upon the ground that there had been no "claim in writing" made in respect of them, the claim made in respect of "other business objects", the value attributed in the Amended Statement of Claim to such of the items as might properly fall within that description was, as Mr. Lynch conceded on the hearing (T. 45) only $8,150.00;

2. the policy did not indemnify the Appellant against consequential loss caused by any of the events covered under the fire class of the policy;

3. the Appellant having sued to recover under the policy, it was not open to him to seek to recover unliquidated damages for breach. That this was so was made clear by Jordan CJ in Larratt v. Bankers & Traders Insurance Co. Limited (1941) 41 SR 215 where his Honour said supra at 223 : "If the plaintiff is correct in his contentions that the defendant company had refused to regard the policy as a binding document, and that it had no just cause for doing so, he was entitled, at his option, either to ignore the company's invalid refusal, and sue to recover a liquidated sum under the policy, or else to avail himself of the invalid repudiation as a ground for himself putting an end to the contract and suing for unliquidated damages for breach."

More recently, in Russell Young Abalone Pty. Limited v. Traders Prudent Insurance Company Limited (1993) 7 ANZ Ins Cases 61-182 , Underwood J, with whom Green CJ concurred wrote (inter alia) supra at 039-78, 040 : "If an insured elects to accept the insurers wrongful repudiation the damages are measured in accordance with the principles laid down in Hadley v. Baxendale (supra). If an insured does not accept the repudiation the contract remains on foot entitling him or her to recover only in accordance with its terms. See Steven Taylor v. J. Thomas & Son; VACC Insurance Co. Limited (Third Party) (supra); Shelbourne & Co v. Law Investment & Insurance Corp Limited [1898] 2 QB 626; Maurice v. Goldsbrough Mort & Co Limited [1939] AC 452. The nature of a claim against an insurer who fails to pay but does not repudiate the policy is discussed in F & K Jabbour v. Custodian of Israeli Absentee Property [1954] 1 WLR 139 at 143 et seq. Pearson J examined a large number of authorities and concluded that such a claim is one for damages but that the expression has a different meaning in claims for a failure to indemnify under a policy of insurance for the only wrong has been a failure to pay a sum due under a contract. The method of calculating this sum is usually provided for in the contract itself. This decision is referred to by the Editor of McGregor on Damages (15 Edn.) at 1, where it is said that actions (inter alia) to recover money under insurance policies are to be distinguished from claims for damages for breach of contract and are outside the scope of the book. However, as I understand it, this does not mean that an insured seeking to recover money under a contract of insurance is denied the right to recover interest for late payment. In Hungerford v. Walker (supra) Mason CJ and Wilson J (with whose reasons Brennan and Deane JJ expressed agreement said (1989 Aust. Torts Reports p68,436; 84 ALR 119 at 130): 'It is pointless to insist on a distinction between the award of damages for loss of the use of money in the case of a liquidated claim and the award of such interest in an unliquidated claim.'"

5 There is nothing about the issues sought to be agitated if leave to appeal were granted which in my view justifies the grant of leave to appeal. 6 I agree with the Orders proposed by Rolfe AJA. 7 IPP AJA: I agree with Rolfe AJA. 8 ROLFE AJA: Introduction

On 8 December 1992, the appellant/plaintiff, Mr Michael Kassem, for whom Mr T.M. Lynch of Counsel appeared, and his then wife purchased a fruit and milk bar business, which they carried on in partnership from a rented shop at 49/49A Morts Road, Mortdale. The purchase price, as disclosed by the written contract for sale, (BAB102-105), was $25,000 made up of $8,000 for goodwill, $15,450 for plant, fittings and chattels, and $1,550 for fixtures. The inventory and valuation of plant, fixtures, fittings and chattels referred to in clause 1 disclosed:-

1 Cool Room $ 3,500 . 00 1 Truck $ 3,000 . 00 Shelves $ 1,500 . 00 2 Cash Registers $ 1,200 . 00 1 Refrigerator $ 2,800 . 00 2 Freezers $ 4,000 . 00 1 Scale $ 100 . 00 1 Milk Shake Maker and Canisters $ 50 . 00 1 Stove $ 50 . 00

The total of these amounts is $17,000, which is the sum of the amounts of $15,450 for plant, fittings and chattels, and $1,550 for fixtures. 9 The present proceedings have been brought by the appellant alone in consequence of some arrangement entered into between him and his former wife on the dissolution of their marriage, the details of which need not be explored as no point is taken as to the appellant's entitlement to sue. 10 On 25 February 1983, the appellant entered into a contract of insurance, effective from 8 December 1982, with the respondent/defendant, Colonial Mutual General Insurance Company Limited, for which Mr J.D. Hislop of Queen's Counsel and Mr G.A. Seib of Counsel appeared, in respect of stock-in-trade, plant and equipment in the shop. The policy was renewed, relevantly for present purposes, on 25 August 1983, for a further period of six months. The Notice of Payment, (BAB137), described the various risks against which the appellant was insured which, relevantly for present purposes, included burglary and fire in the respective sums of $8,000 and $39,200. The premium for all risks insured was $567.52, although the appellant only paid $430: BAB138. However, nothing turns on this as the respondent did not suggest that the cover did not extend to burglary and fire, which, it was not in issue, were the causes of the loss to which I shall refer. The lesser premium obviously was for insurance against some other risk, which was not continued. It is important, none-the-less, to note that the appellant did not insure for consequential loss. 11 During the night of 15 September 1983 there was a fire in the premises, which destroyed and damaged stock, fittings and fixtures and also the shop premises. The reasonable inference from the evidence is that the fire was started by persons who broke into the shop and stole a quantity of cigarettes and tobacco. A coronial inquiry was held on 23 January 1985, which returned an open finding. There is no suggestion that either the appellant or his then wife or any person acting in collusion with them was in any way involved in the events giving rise to the loss. 12 On 29 November 1983, the appellant had made a written claim. It set out in great detail the stock-in-trade, which had allegedly been lost, which gave a total of $14,324.75: BAB162. 13 At BAB148 there was a summary of stock-in-trade, the reader being referred to the attached schedule to which I have just referred; removal of debris for which $920 was claimed; glass service to board up the front of the shop for which $1,450 was claimed, and a claim for three "fridges", one cool room, two registers and two scales. In relation to these items it was stated:- "Cost of damage repairs or replacement to follow." 14 So far as the evidence disclosed these particulars were not furnished until the letter furnishing further and better particulars from the appellant's solicitors of 20 August 1987, almost four years after the event. 15 On 26 February 1987, the appellant filed a Statement of Claim in the Common Law Division of this Court in proceedings 11549 of 1987 in which he alleged the entry into the insurance contract; payment of the premiums; that it was a term of the contract that the respondent would indemnify him against destruction or damage to items described in the Certificate of Insurance directly caused by fire; the happening of the fire; the making of a claim "pursuant to the said contract of insurance" on 29 November 1983; and a breach by the respondent of its obligations to indemnify him for the loss he had suffered. 16 The allegation of this breach appeared in paragraph 8, the particulars of loss being $14,126.75 for stock, $15,398 for plant and equipment, and $3,500 for fixtures, totalling $33,024.75. 17 In paragraph 9 the appellant pleaded:- "9. Further, as a result of the defendant wrongfully refusing to meet its obligation pursuant to the said agreement, the plaintiff was unable to continue operating his business and lost the entire benefit of same. PARTICULARS Value of business as at the 15th September 1983 - $ 14,000 . 00." 18 On 27 May 1987, the solicitors for the defendant sought particulars which, inter alia, asked for identification of the items of stock, plant and equipment, and fixtures and the cost thereof referred to in paragraph 8 of the Statement of Claim. 19 On 20 August 1987, the solicitors for the appellant furnished those particulars and, relevantly for present purposes, identified the plant, fittings and chattels as one cool room, one counter, two cash registers, one refrigerator, two freezers, one scale, and one milk shake maker and canisters valued respectively at $3,500, $800, $2,800, $4,000, $100 and $50. The total of these amounts is $12,450. 20 The significance of these particulars relates to the obligation of the appellant to give notice of any event likely to give rise to a claim under the policy and, conformably with the requirements of the policy, to:- "(iii) Immediately notify the Company and if property is lost or if theft or malicious damage is suspected inform the Police. (iv) Within 30 days thereafter deliver to the Company full particulars of the claim in writing."

21 In May 1988, the appellant suffered severe brain damage in an accident rendering him unfit to engage in any gainful employment or to give evidence in the proceedings. A tutor was appointed to continue them on his behalf. 22 On 30 July 1990, pursuant to an order of this Court made on 23 July 1990, the appellant filed an Amended Statement of Claim, which was, save for certain matters to which I shall refer, in essentially the same terms as the original. In paragraph 8 a claim was made for payment, which it was alleged the appellant had failed to make in breach of its obligations to indemnify the appellant. 23 Paragraph 9 averred the same basis of claim as that in the original Statement of Claim and sought the same amount for the value of the business. It added, however, a claim for loss of profits from the business at the rate of $700 net per week as at 15 September 1983 "to date, and continuing". The amount claimed was $168,000. 24 The respondent filed a Defence in which it admitted the various allegations in relation to the entry into the insurance contract, the occurrence of the fire and the making of a claim on 29 November 1983. It did not admit that the shop was destroyed by fire and it denied the allegations in paragraphs 8 and 9 of the Amended Statement of Claim. 25 In paragraph 2 it pleaded to paragraph 5:- ".. that it has offered to indemnify the Plaintiff for the items described in the Certificate of Insurance which were destroyed by fire. This offer has not been accepted by the Plaintiff." 26 Whilst the Defence admitted the claim had been made on 29 November 1983, it did not plead, as in my view it should have in conformity with the requirements of Part 15 rule 13 of the Supreme Court Rules, that no other claim had been made, as required by the policy, and, in particular, that no monetary claim had been made as required by the policy in respect of the items the appellant had stated in the earlier claim form would be quantified subsequently. 27 On 2 March 1988, the respondent filed a Notice of Deposit stating that it had filed a Security to Pay into Court $30,000 "in answer to all the causes of action on which the plaintiff claims". 28 The Notice of Deposit continued that if that amount was not accepted within fourteen days after service of the notice, the Court may order the appellant to pay, in respect of those causes of action, all the respondent's costs incurred on and after the date of such service. 29 Thereafter no steps were taken to bring the matter on for hearing for a long time. It was conceded by Mr Lynch that there was no evidence to explain the delay. In 1997, as a consequence of the increased monetary jurisdiction of the District Court and the removal of matters, which fell within that jurisdiction, from this Court to the District Court, these proceedings were transferred to it and thereby obtained the District Court number they now bear. 30 The matter came on for hearing before Naughton DCJ in February 1999 and, on 11 February 1999, he entered a verdict for the appellant in the sum of $25,720.89 and made various costs' orders. The verdict comprised an amount for certain stock-in-trade of $15,310.05 and interest thereon, which was ordered pursuant to s.83A of the District Court Act 1973 and calculated at the rate of seventeen per centum per annum. In the exercise of his undoubted discretion in relation to interest, his Honour allowed a period of four years, which produced a payment for interest of $10,410.84.

The Appeal 31 On 31 May 1999 the appellant caused a Notice of Appeal With Appointment to be filed. It contained sixteen grounds, but as it has been overtaken by an Amended Notice of Appeal With Appointment, which was filed on 16 August 2000, and as it is sought to be further overtaken by a Proposed Second Amended Notice of Appeal With Appointment, which was sought to be filed in Court on the hearing of the appeal, I shall refer to it only briefly. Further, a number of the grounds of appeal have not been pursued. 32 Grounds 1 to 7 inclusive, which were included in all the Notices of Appeal, were abandoned. Each relied upon an alleged reasonable apprehension of bias on the part of the trial Judge. In my opinion when such grounds are taken, but no attempt is made to support them, it is appropriate that this Court should state that clearly in its reasons. 33 The seventh ground of appeal had other significance. It alleged a reasonable apprehension of bias flowing from his Honour's refusal to accept the tender of the appellant's expert reports, being the chartered accountant's reports from which loss of goodwill and profits was sought to be proved. Various figures were suggested for loss of profits, depending on which scenario was accepted. 34 In his final written submissions, Mr Lynch not only confirmed that Grounds 1 to 7 inclusive were not maintained, but also stated in paragraph 35 that the appeal in respect of lost profits was not pressed. This was also the position on the hearing of the appeal. 35 Paragraphs 8, 9 and 10 of the original Notice of Appeal were repeated in the Amended Notice of Appeal and are sought to be repeated in the Proposed Second Amended Notice of Appeal. They read:- "8. His Honour erred in finding that the Defendant had not breached the contract of indemnity with the Plaintiff by failing to pay under the contract of indemnity. 9. His Honour erred in finding that it was reasonable for the Defendant not to pay the Plaintiff under the contract of indemnity until after a coronial inquiry. 10. His Honour erred in finding that the Plaintiff had not made a claim against the insurer as required by the contract of indemnity." 36 Mr Lynch abandoned Grounds 11 and 12 and his concession in relation to loss of profits meant that Ground 13 did not have to be considered. Paragraph 14 alleged that his Honour misdirected himself as to the appellant's right to recover for fire damage to the cool room, counter and shelving. Paragraphs 15 and 16 were not pressed. 37 In the Amended Notice of Appeal paragraphs 17, 18 and 19 were added. They stated:- "17. The appellant was denied procedural fairness in that his Honour determined aspects of his claim adversely to him upon a basis not addressed by the parties, namely, that the appellant had made a claim in writing, without first putting the appellant on notice of his Honour's intention to decide the claim on that basis. 18. His Honour erred in holding that the delivery to the respondent of a claim in writing was a condition precedent to the respondent's liability to indemnify the appellant for loss and damage. 19. His Honour failed to exercise the discretion provided by s.18(1) Insurance Act 1902 so as to excuse any failure of the appellant to observe or perform a term or condition of the contract of indemnity notwithstanding the absence of any evidence of prejudice to the respondent." 38 The provisions of the Insurance Contracts Act 1984 (C'th) were not applicable at the time of this loss and do not have retrospective application. 39 In the Proposed Second Amended Notice of Appeal, paragraphs 17 and 19 were amended to read:- "17. The appellant was denied procedural fairness in that his Honour determined aspects of his claim adversely to him upon a basis not pleaded by the defendant but raised by his Honour, namely that the appellant had not made a claim in writing. ………………………………. 19. In respect of the matter in 17, his Honour failed to consider the matter of s.18(1) Insurance Act 1902, whether any failure of the appellant to observe or perform a term or condition of the contract of indemnity had occasioned prejudice to the respondent." 40 Finally, the Proposed Second Amended Notice of Appeal stated:- "20. His Honour's exercise of discretion under s.83A of the District Court Act miscarried in that: (1) he regarded delay in the finalisation of the proceedings as itself a sufficient basis for refusing the plaintiff interest under that section, and (2) he did not have regard to all relevant considerations."

Mr Lynch conceded that leave was required to amend the Amended Notice of Appeal in the terms of the Proposed Second Amended Notice of Appeal, which leave was sought. Mr Hislop objected to such leave being granted to add Ground 20. 41 I have been through the various grounds of appeal in some detail to seek to expose the issues, which have arisen on this appeal. 42 I should also note at this point that none of the counsel, who appeared on the appeal, appeared at the trial.

An Initial Point - The Question Of Whether Leave To Appeal is Required 43 The Notices of Appeal, in their various manifestations, have proceeded as if there is an appeal as of right. 44 Section 127(2)(c) of the District Court Act 1973 provides:- "(2) The following appeals lie only by leave of the Supreme Court: --- (c) An appeal from a final judgment or order, other than an appeal: (i) that involves a matter at issue amounting to or of the value of One hundred thousand dollars or more; or (ii) that involves (directly or indirectly) any claim, demand or question to or respecting any property or civil right amounting to or of the value of One hundred thousand dollars or more."

Section 101(2)(n) of the Supreme Court Act 1970 makes essentially the same provisions in respect of appeals from Judges of this Court. 45 Part 51 rules 8 and 25 state:- "8. Where an appeal to the Court of Appeal is restricted by reference in any Act to a specified amount or value, the appellant shall, within the time limited for instituting the appeal, file and serve on each necessary party an affidavit stating facts which show that the restriction does not apply. ……………………………… 25. (1) A respondent who objects to the competency of an appeal shall, by motion on notice filed and served on all other parties to the appeal within 21 days after service upon the respondent of the notice of appeal with appointment, apply to the Court of Appeal for an order striking out the appeal as incompetent. (2) If the respondent fails to comply with subrule (1), but the appeal nevertheless is dismissed as incompetent, he shall not, unless the Court of Appeal otherwise orders, receive any costs of the appeal, and the Court of Appeal may order that he pay to the appellant any costs of the appeal proving useless or unnecessary." 46 Part 51 rule 8 makes it necessary, in every appeal from the District Court, for there to be an affidavit, where an appeal is brought or purported to be brought as of right, "stating facts" demonstrating that the restriction does not apply. 47 In Anthony v Maglovenos (Court of Appeal - 11 July 1978 - unreported) it was held that the affidavit must disclose facts as to why an appeal lies as of right, and that it is not sufficient compliance with the rule if the deponent merely states a belief that the relevant amount is involved. That decision was recently approved and applied by this Court in Ozpinar v Assaily (Court of Appeal - 19 February 2001 - as yet unreported) in which Powell JA, who delivered the judgment of the Court with which Sheller JA and I agreed, said in paragraph 14:- "As is apparent, the Affidavit must disclose facts which show that an appeal lies as of right. It is not a sufficient compliance with the rule if the deponent merely states a belief that the relevant amount is involved (see Anthony vMaglovenos ). If the affidavit does not comply then it is open for the other side to apply to strike out the appeal as incompetent (SCR Pt 51 r 25)." 48 Whilst the respondent has not filed a Notice of Motion pursuant to Part 51 rule 25, Mr Hislop has, in his written submissions, taken the point that leave to appeal is required and should be refused, his short submission being:- "The Rule 8 affidavit is based upon information and belief as to the asserted claim for lost profits, now abandoned." 49 The affidavit pursuant to rule 8 is that of the solicitor for the appellant sworn 5 July 1999. It states:- "2. The appellant claims damages for the respondent's failure to indemnify the appellant for the loss of chattels and stock in accordance with a policy of insurance held by the appellant with the respondent. 3. The appellant further claims damages for loss of opportunity to reinstate a small business and consequent loss of same by reason of the respondent's failure to indemnify the appellant in accordance with the policy of insurance. 4. I verily believe that the respondent failed to indemnify the appellant for the loss of chattels and stock in accordance with the policy of insurance to the sum of $29,241.75. 5. I am informed by Furzer Crestani Services, Chartered Accountants, and verily believe that as a consequence of the failure to indemnify the appellant, and the subsequent inability on the part of the appellant to reinstate the business, the appellant has suffered loss to the value of $1,600,431, or in the alternative $104,332 plus interest from 30 June 1988. 6. It appears that the appellant's damages are likely to exceed the sum of $100,000 and therefore I am of the opinion an appeal lies as of right." 50 I shall assume for the moment, but only for the purpose of considering this point, that the appellant was entitled to be indemnified, contrary to his Honour's findings, in the sum of $29,241.75. The problem, which then confronts the competency of the appeal, is to establish the entitlement to the figures referred to in paragraph 5. They are taken from the accountant's report of 5 February 1999, BAB263, which provides for loss of profits of $104,332 on Scenario 1 and $1,660,431 on Scenario 2. The figure of $1,600,431 in paragraph 5 should have been, I am prepared to assume, $1,660,431. 51 There was no evidence of these figures before the trial Judge as his Honour rejected the tender of these reports for reasons he gave on 10 February 1999: BAB99-101. Essentially, he considered that the source material for them was an hypothetical extrapolation of theorised possible profits unsupported by the evidence and unrelated to the particular shop conducted by the appellant. 52 As I have noted the claim for loss of profits has not been pursued, and the rejection of the tender, which was not challenged, means that there is no expert evidence of the loss of goodwill. 53 In the result, at the hearing of the appeal the amount claimed did not meet the requirements of s.127(2)(c) allowing an appeal as of right. In my opinion, that was the position when the Notice of Appeal was filed. This flows from the failure of the affidavit to state the facts on which reliance was placed, thus ignoring the authority of Anthony v Maglovenos that an affidavit does not meet the requirement of the rule by doing no more than stating a belief that the relevant amount is involved. 54 During submissions the Court raised the question whether the claims for consequential loss could be pursued in any event notwithstanding that there was no insurance against it, because the appellant had sued on the contract of insurance, rather than accepting the respondent's failure to pay as a repudiation and suing for damages in consequence thereof. Reference was made to the decision of the High Court in CIC Insurance Limited v Bankstown Football Club Limited (1997) 187 CLR 384 at p.402. 55 No doubt because the Court raised the point, Mr Lynch was not in a position to deal with it fully, although he submitted it did not apply to this case. Mr Hislop's written submissions did not address the matter. 56 The appeal was incompetent when the Notice of Appeal was filed for the reason I have given. It is not necessary, in my opinion, to find any further ground for incompetence and, I am not disposed to deal with this further point, which I do not regard as an easy one, in the absence of full argument.

Conclusions On Leave Thus Far 57 For the reason I have stated, I am of the opinion that when the Notice of Appeal and the Amended Notice of Appeal were filed, purportedly as of right, the appellant required leave to appeal as the affidavit purporting to comply with Part 51 rule 8 was defective. I have explained my reasons for that conclusion but, for emphasis, I repeat that the affidavit cannot proceed on the basis of a belief that the relevant amount is involved but must, as the rule requires in terms, state facts demonstrating that the restriction does not apply. 58 The abandonment of the claim for loss of profits tended to obscure the point that this reason for requiring leave was in existence when the Notice of Appeal and the Amended Notice of Appeal were filed. The relevance of this is the careful submission made by Mr Lynch that the time for determining whether leave to appeal was or was not necessary was when the Notice of Appeal was filed. His submission was that that was the proper time to decide on the competency of the appeal and that the happening of subsequent events, such as the abandonment of the claim for loss of profits in the present case, did not reactivate the need for such leave. He submitted that after a Notice of Appeal is filed, in circumstances where leave is not necessary, further consideration of the grounds may lead responsible legal advisers to the view that some or other of the grounds cannot succeed. In those circumstances he said that the proper professional approach is to abandon the grounds of appeal, but that legal advisers may not do so if the consequence was that leave to appeal was then required. Put another way, and perhaps more bluntly, hopeless points may be maintained and argued simply to ensure that points perceived to be good would not, perhaps, be able to be argued because of a refusal of leave to appeal. 59 A somewhat similar point was considered, although in a different context, in Huntsman Chemical Company Australia Limited v International Pools Australia Limited (1995) 36 NSWLR 242. In that case the appeal against one respondent was abandoned at the commencement of the hearing, no proper prior notice of the intention to do so having been given. I came to the view, pp.270-273, that the appellant should pay the successful respondent's costs on an indemnity basis. Kirby P and Mahoney JA disagreed with that part of my reasons. 60 At pp.247-248, Kirby P said:- "2. Considerable store was placed upon the late abandonment of the appeals and the acknowledgment that this was said to provide that the appeals were always hopeless. Whilst that argument has force, it would be undesirable for the Court, by its costs orders, to discourage the proper, but late, abandonment of unwinnable appeals or points. Yet this might occur if there were a suggestion that such an act of responsible advocacy would be penalised by the making of a special costs order. Although it is proper for the Court, in providing for the costs of these appeals, to concentrate its attention on the justice of the order as it affects the immediate parties, it is impossible to overlook the general significance of the making of the orders sought …" 61 Mahoney JA, who said that his mind had "wavered", concurred in the order proposed by the President. 62 However, these are matters of policy, which have to be weighed against the countervailing policy considerations that this Court should not be inundated with appeals purportedly as of right, where leave to appeal is required. The starting point, in my opinion, in ensuring that this does not happen, is to put in place an effective procedure for considering the affidavits pursuant to Part 51 rule 8 to ensure their compliance with that rule as specified in Anthony v Maglovenos and Ozpinar v Assaily and, I believe, reinforced in these reasons. There is a primary responsibility on legal representatives to ensure that affidavits complying with that rule are filed. Further, there is an obligation on respondents to bring before the Court, as soon as possible and by way of Notice of Motion, that the appeal has not been disclosed as being competent. Rule 25 makes this clear and, even if the Notice of Motion is stood over to the hearing of the appeal or an application for leave to appeal, the respondent has the costs' protection for which the rule provides. 63 All that having been said, however, it is unnecessary to decide whether the appeal should be competent when the Notice of Appeal is filed or when the appeal is heard because, in this case, it was incompetent at both times. In these circumstances, I would propose that the appeal be dismissed as incompetent.

The Grant Of Leave To Appeal 64 Mr Lynch, confronted with the Court's prima facie view that the appeal was incompetent, sought leave to appeal. The matter proceeded on the basis that the Court would hear full argument and then determine whether leave to appeal was required, as I now believe it is, and, if it is required, whether it should be granted. 65 Mr Lynch presented his submissions in a careful and precise way in a case which, from the appellant's point of view, was not an easy one and which he had not had the advantage of running at trial. In my respectful opinion, Mr Lynch said everything which could possibly have been said in favour of his client's position. 66 I propose to deal firstly with the application for leave to amend to argue the matters raised in Ground 20, in respect of which it was expressly conceded that leave was necessary. In my opinion, leave to amend on this ground should not be granted. It was conceded by Mr Lynch that there had been no prior attack on his Honour's exercise of discretion in awarding interest for the period and on the basis he did. Mr Hislop objected to this matter being raised at so late a stage in the proceedings. He submitted, and so much appears from certain of the evidence and certain matters to which his Honour referred which were not the subject of any objection, that attempts had been made to settle this case over a long period and, had the point been raised earlier, the respondent would have produced evidence, on the question of interest, to demonstrate the steps taken, which would militate strongly against any interference with his Honour's exercise of discretion. I consider that this reason alone is sufficient to refuse leave. Additionally, the award of interest is highly discretionary and essentially a matter for the trial Judge's determination. In my opinion, Mr Lynch has not identified any error of fact or law which would justify this Court's interference.

67 For all these reasons leave to amend in the terms of paragraph 20 must, in my opinion, be refused. 68 Mr Lynch submitted that his Honour was wrong in finding that there was no claim in writing in relation to the cool room, the counter, two cash registers, one refrigerator, two freezers, a scale, a milk shake maker and canisters, shelves and a stove. He submitted that the respondent had not pleaded the absence of a written claim, which is undoubtedly correct, nor sought leave to do so when his Honour raised the point and, accordingly, was not entitled to rely upon it. Thus, he submitted, his Honour had in effect decided the issues on a point not put forward for his consideration. Whilst, the pleadings generally do and normally should define the issues, that is not always so. The parties may, by the introduction of evidence relevant to other issues or going beyond the pleading, or otherwise by their conduct of the case, at least impliedly, agree to other issues being determined. The High Court recognised this in Dare v Pulham (1982) 148 CLR 658. It is to be appreciated, of course, that in that case there was evidence admitted without objection. In that context their Honours said, at p.666:- "The parties, bound by the course which they took at the trial must accept the answer given by the jury to the question of damages submitted in the form to which they assented or in which they acquiesced ..". 69 This case is not quite so easy. During the hearing, his Honour raised the question of the claim having been made as required by the policy. The simple fact was that no written claims other than that made towards the end of 1983 and that particularised in 1987, had been made. However, when the point was raised, counsel, who then appeared for the respondent, made no application to amend to allege the absence of a written claim and, notwithstanding, made submissions to his Honour in final address that there had been no proper claim. Mr Lynch informed the Court that these submissions were made and that counsel then appearing for the appellant took no objection to them. 70 It should be noted that counsel for the appellant, after a lengthy exchange with his Honour about the subject, said that he did not wish it to be argued at any later stage that the appellant had acceded to a proposition that he had not complied with his obligations under the policy, as that had not been raised as a defence: BAB53. However, in final addresses that point was argued by counsel for the respondent without objection or submissions in reply by counsel for the appellant. 71 In my opinion, trial Judges should be alert to ensure that matters decided are the subject of a pleading. In this way there can be no suggestion that the matter has not been adequately and properly raised for the consideration of the parties and the Court. On the other hand, in the way in which this trial proceeded, I can understand how his Honour was of the view that the need to make a claim in writing was an issue before him in respect of all items, and that notwithstanding what had been said earlier, the non-objection and non-response to final submissions meant that the appellant's previous attitude was not being maintained. 72 In the end the amount involved in relation to this argument was approximately $9,700. It may have been $10,500 depending on whether one treated the counter as a fixture. 73 In all the circumstances, and having regard to the amount involved, I do not consider that this point, even if it is correct to say that his Honour erred, which I am not satisfied it is, raises a sufficient basis for the grant of leave to appeal. 74 As Reynolds JA said, with the concurrence of Moffitt P and Hope JA, in Dunn v Ross Lamb Motors & Anor [1978] 1 NSWLR 26, at p.28:- "Without attempting to categorise cases in which it is appropriate to grant leave, no features are apparent in this simple case, even if the learned Judge was arguably wrong, which would justify a grant of leave." 75 This point was reinforced by the Court of Appeal in Carolan v AMF Bowling Pty Limited (Court of Appeal - 16 November 1995 - unreported), which is a significant decision on an important issue relating to appellate rights but, for some reason, does not seem to have been reported in the New South Wales Law Reports. Sheller JA, with whom Cole JA agreed, said:- "In order to be granted leave to appeal the applicant must demonstrate something more than that the trial Judge was arguably wrong in the conclusion arrived at." 76 Kirby P considered the policy reasons for limiting the right to appeal as including the discouragement of unnecessary litigation in small amounts where public costs, including the time of Judges, Court staff and the use of public buildings were necessarily involved, and:- "The need ordinarily to conserve the time of the Court of Appeal in small claims to matters which involve issues of principle, questions of general public importance or an injustice which is reasonably clear, that is to say goes beyond merely being arguable." 77 I propose to apply the principles stated in these cases in considering the various submissions supporting the application for leave to appeal. 78 The next matter raised by Mr Lynch involved his Honour's refusal to award $8,000 by way of loss of goodwill. This was said to arise by virtue of the failure to pay the amount to which the appellant was ultimately found to be entitled. In these circumstances, so it was submitted, the business could not be re-established. There are three major difficulties for this submission. First, there was no insurance for consequential loss. Secondly, Mr Lynch conceded that there was no evidence as to the cost of repairing the shop, such as to allow the business to be re-started and, accordingly, that no causal connection between the failure of the respondent to pay and the failure to re-start the business was established. Thirdly, there was no evidence that even if the payment for stock-in-trade had been made and was used to restore the premises, that the appellant would then have had sufficient money to purchase new stock-in-trade. For all these reasons, and applying the applicable principles, leave should not be granted to litigate this point. 79 The next submission was that there should have been a payment in respect of the cool room and the counter. However, the cool room was undoubtedly part of the premises, which were not insured. At BAB95, that was expressly conceded in evidence, a concession Mr Lynch accepted as fatal to this aspect of the claim. Mr Lynch agreed there was no evidence of the status of the counter and, as the onus was on the appellant to prove that to which he was entitled, that, in my opinion, leaves the position that the Court simply does not know, because the appellant failed to prove, whether the counter was a fixture and, thus, whether it was insured. That is sufficient to dispose of that claim, although even if the counter were not a fixture, I do not consider that an argument about $800, involving no matter of principle, would justify the grant of leave to appeal.

Costs 80 Part 51 rule 25 prescribes the steps a respondent should take if it wishes to allege an appeal is incompetent. The respondent failed to take them although, in its written submissions, which were necessarily delayed by the failure of the appellant to put on its final submissions, the point was specifically taken. However, the rule is clear as to the circumstances in which a respondent becomes entitled to costs. The most cursory consideration of the rule 8 affidavit should have disclosed to the respondent that that rule's requirements had not been met. A Notice of Motion should then have been filed to dismiss the appeal as incompetent. As I have said there is not only an obligation in those situations for the party appealing to comply with the rules. There is an obligation on the respondent to be vigilant in taking all proper steps if it appears that an appeal is or may be incompetent. 81 Although all the matters may have had to have been argued in any event, the fact that the point should have been taken by the respondent and was not disentitles it to an order for costs. I do not consider, however, that the respondent should pay the appellant's costs of the appeal. In my opinion, there should be no order as to the costs of the appeal.

Orders Proposed 82 The orders I propose are that:- (a) The appeal be dismissed as incompetent. (b) Leave to appeal be refused. (c) Leave to amend the Notice of Appeal by adding Ground 20 in the Proposed Second Amended Notice of Appeal be refused. (d) Each party pay its own costs of the appeal. ********

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