S & Y INVESTMENTS (NUMBER 2) PTY LTD (IN LIQUIDATION) v COMMERCIAL UNION ASSURANCE COMPANY OF AUSTRALIA LIMITED

Supreme Court of the Northern Territory of Australia Maurice J.
18, 19 & 20 November 1985, 27 March 1986 at Darwin.

Insurance -- public liability policy - meaning of II accident"
doctrine of proximate cause - hotel manager firing shot to frighten intruder - electrician working on premises killed - claim covered by policy.

Insurance - public policy - public liability - policy issued to company - hotel manager firing shot to frighten intruder
electrician working on premises killed - circumstances amounting to manslaughter - organic theory of corporate personality - special statutory position of nominated manager of licensed premises - claim unenforceable - s.69 Licensing Ordinance 1923 (see now Liquor Act s.25).

Insurance - condition of policy - public liability - reasonable precautions by insured - test to be applied - recklessness - subjective - onus of proving compliance on insured - hotel manager firing shot to frighten intruder - person killed - onus not discharged.

Insurance - condition of policy - public liability - insured not to make admissions - claim rejected - insured allowing default judgment to be entered whether amounting to admission - circumstances in which insurer can rely on condition.

Criminal law - manslaughter - unlawful and dangerous act - hotel manager firing shot to frighten intruder - person killed - Pemble's Case distinguished - manager guilty of manslaughter.

Criminal law - companies - offences involving mens rea - manslaughter - organic theory - whether company can be guilty of crime of violence - company manager firing shot to frighten intruder - person killed - whether company criminally responsible.

Liquor Licensing- company licensee - nominated manager - identity with company - organic theory of corporate personality - hotel manager firing shot to frighten intruder
person killed circumstances amounting to manslaughter - whether company criminally responsible - public policy - company's claim under public liability insurance unenforceable -

manager's failure to take reasonable precautions under policy attributed to company.

Evidence - estoppel - acquittal in criminal proceedings - no relevance in subsequent civil proceedings involving similar issues.

Evidence - condition precedent - contract of insurance - alleged breach of condition - insured required to take reasonable precautions - onus of proving compliance on insured.

Evidence - statutory exceptions to hearsay rule - doub e hearsay - whether statement made in contemplation of l gal proceedings - onus of proof - claim facing sheet filled in by insurance company clerk - whether onus discharged - Evidence (Business Records) Interim Arrangements Act 1984.

Precedent - common law doctrine - State appellate court - conflicting decision of English Court of Appeal - single judge in Northern Territory free to choose which to follow.
Cases applied:
Beresford v Royal Insurance Co. Ltd (1938) AC 586 Vines v Djordjevitch (1955) CLR 512
Cases approved:
Marcel Beller Ltd v Hayden (1978) 1 QB 694
Stats v Mutual of Omaha Insurance Co. (1976) 73 DLR (3d) 324
Cases distinguished:
Pemble v .R (1971) 124 CLR 107
Public 'I'ransport Commission (NSW) v J Murray-More N-SW Pty Ltd (1975) 132 CLR 336
Cases considered:
Distillers Co. Biochemicals (Australia) Pty Ltd v Ajax Insurance Company Ltd (1974) 130 CLR 1
General Omnibus Company Ltd v London General Irisurance Company Ltd (1936) IR 596
Fraser v B.N. Furman (Productions) Ltd (1967) 3 All ER 57 R v Larkin (1949) 29 CAR 18
Viro v R (1978) 141 CLR 88
 ne		Tank and Pump Co. Ltd v The Employers' Liability Assurance Corporation Ltd (1973) 3 All ER 825
Cases followed:

Body Corporate Strata Plan No. 4303 v Albion Insurance Company Ltd (1982) VR 699·
Fenton v J Thorley & Co. Ltd (1903) AC 443

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I

249

Goody v Odhams Press Ltd (1967) 1 QB 333
Gray v Barr (1971) 2 QB 554
Hollington v F. Hewthorn and Company Ltd (1943) l KB 887 Kodak (Australasia) Pty Ltd v Retail Traders Mutual
Indemnity Insurance Association (1942} 42	SR (NSW) 231 Universal Telecasters (QLD) Ltd v Guthrie (1978) 32 FLR 360
Cases not followed:

R v Cory Brothers & Company Ltd (1927) 1 KB 810 R v Murray Wright Ltd (1970} NZLR 476
Cases questioned:
·:!:-

A.F. and G.Robinson v Evans Bros. Pty Ltd (1969) VR 885 Balfour Williamson (Aust.} Pty Ltd v Douterluingne (1979)
2 NSWLR 884
Barisic v Topic (1981} 37 ACTR 1
Cases referred to:
Board of Management of Trim Joint District School v Kelly (1914) AC 667
Cleaver v Mutual Reserve Fund Life Association (1892) l QB 147
Cooper Park Apartments Pty Ltd v The Prudential Insurance Co. Ltd (NSW Supreme Court, 19 December 1979, unreported)
Director of Public Prosecutions v Newbury (1976) 2 All ER 365
Edwards v Insurance Office of Australia (1933) 34 SR (NSW) 88
Hardy v Motor Insurers' Bureau (1964) 2 QB 745
James v British General Insurance Co. Ltd (1927) 2 KB 311 Keighly v Northumberland Insurance Co. Ltd (1974) WAR 156 Lennard's Carrying Company Ltd v Asiatic Petroleum Campa
Ltd (1915) AC 705	·
Lombard Australia Ltd v NRMA Insurance Ltd (1968) 72 SR (NSW) 45
Mason v Century Insurance Co. Ltd (1973) 2 NZLR 216 Norwich Union Insurance Co. Ltd v R & W Products Pty Ltd
(1969) 90 WN (NSW) 554
R v Crabbe (1985) 58 ALR 417
R v Holzer (1968) VR 481
Roberts v State Insurance General Manager (1974) 2 NZLR 312 Smorgon v Australia and New Zealand Banking Group Ltd (1976)
134 CLR 472
Tesco Supermarket Ltd v Nattrass (1972) AC 153
Tinline v White Cross Insurance Association Ltd (1921) 3 KB 327
Trade Practices Commission v Tubemaker (1983) 47 ALR 719 W & J Lane v Spratt (1970) 1 All ER 162
Cases mentioned in argument but not cited in Judgment: A.N.I. Australia Pty Ltd v Hannay (1981) Qd R 598

Alle	Snyder (1977} 2 NSWLR 685
Andrews v Director of Public Prosecutions (1937) AC 576 Bond Air Service v Hill (1955) 2 QB 417
Briginshaw v Briginshaw (1938) 60 CLR 336
Day and Dent v North Australian Properties 34 ALR 595 Deatons v Flew (1949) 79 CLR 370
Director of Public Prosecutions v Kent & Sussex Contractors Ltd (1944) 1 KB 146
Grant v Southern Cross Assurance Co. Ltd (1927) 30 WAR 65 Green v Windman (1964) VR 297
H.L. Bolton (Engineering) Co. Ltd v T.J. Graham & Sons Ltd (1957) 1 QB 159
Hamilton Fraser & Co. v Pandorf & Co. (1887) 12 App Ca . 518 Helton v Allen (1940) 63 CLR 691
The Lady Gwendolen (1965) P. Div 294
Maye v The Colonial Mutual Life Assurance Society Ltd (1924)
35 CLR 14
Midland Insurance Co. v Smith (1881) 6 QBD 561
Peter Dumenil & Co. Ltd v James Ruddin Ltd (1953) 2 All ER 294
Pugh v London Brighton and South Coast Railway Co. (1896) 2 QB 248
R v Australasian Films Ltd (1921) 29 CLR 195
R v Bugg (1978) VR 251
R v Church (1966) 1 QB 59
R v East Crest Oil Co. Ltd (1944) 3 DLR 535 R v I.R.C. Haulage Ltd (1944) l KB 146
R v Turner (1962) VR 30
Rejfek v McElroy (1965) 112 CLR 517
Steinke v Australian Provincial Assurance Assocn Ltd (1944) St.R.Qd 7
Stebbing v Liverpool London & Globe Insuranc (1917) 2 KB 433
Tannous v Mercantile Mutual Insurance Company Ltd (1978)
2 NSWLR 331

Counsel for the Plaintiff: Solicitor for the Plaintiff:

Counsel for the Defendant: Solicitor for the Defendant:

Mr. Dean Mildren Q.C.

Mildren Silvester & Partners

Mr. D.N. Angel Q.C. & Mr.
P.G. Alderman Ward Keller

IN THE SUPREME COURT
OF THE NORTHERN TERRITORY OF AUSTRALIA

No. 72 of 1983

:ft

BETWEEN:
S & Y INVESTMENTS (NUMBER 2)
PTY LTD (In Liquidation)
Plaintiff

AND:

COMMERCIAL UNION ASSURANCE COMPANY OF AUSTRALIA LIMITED
Defendant

CORAM:	MAURICE J.

REASONS FOR JUDGMENT
(delivered 27th March 1986)

In this action the plaintiff seeks to recover by way of indemnity from the defendant insurer compensation which the plaintiff is liable to pay under a judgment of this Court in a previous action (No. 444 of 1977) brought against it at the suit of Jillian Logan.	The indemnity is

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said to be payable under the terms of a public liability insurance policy issued by the defendant to the plaintiff in respect of a hotel business carried on at premises situated on Casuarina Drive, Nightcliff:	the Seabreeze Hotel.

Mrs. Logan is the widow of an electrician who was fatally wounded at the hotel by a shot fired from a .22
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calibre rifle by the manager, Robert Victor Holmes on 20
January 1975.	By a writ of summons (No. 444 of 1977) dated
13 July 1977 she commenced an action under the Compensation (Fatal Injuries) Act against both S & Y Investments (Number Two) Pty Ltd and Holmes.	That company entered an appearance to the action, but did not file a defence.	As a result, interlocutory judgment was entered against it on 5
.April 1978 and the action set down for assessment of damages.	On 9 June 1982 Sir William Forster assessed the compensation due the widow and her two sons at $188,245-32 and entered judgment against both defendants accordingly. He also ordered them to pay the widow's costs.	These were subsequently t xed and allowed by the taxing master at
$3,532-36.	In this action the plaintiff seeks to recover the sum of this judgment and the costs awarded against it from its public liability insurer.

It is not in dispute that at the time of the shooting there was in force between the parties a public liability policy issued in respect of the hotel business,

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although the original policy document was not produced and Commercial Union 1 s policy record sheet has been lost or destroyed.	One issue raised in the defence is the question of the monetary limit on the insurer's liability to  indemnify under the policy;	it being contended on the one hand that it was set at $100,000 and, on the other, that
there is no evidence in admissible form to that effect.
i

grounds:

The insurer originally resisted the claim on two firstly, the shooting was no accident and

therefore not within the terms of the policy;		and, secondly, it would be against public policy to allow the insured to recover in a case such as this.	However, since then, additional grounds have been raised, two involving alleged breaches of express conditions of the policy and a third alleging that by not defending the widow's action against it, the plaintiff showed a lack of good faith entitling the defendant to refuse to meet the claim.

The Facts

It is appropriate to begin by a consideration of the circumstances of the shooting.	The Seabreeze Hotel consisted of two main single storey buildings more or less rectangular in shape and sited parallel to one another.
The building closest to Casuarina Drive had a public bar in its eastern half and a lounge bar on the western side.

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Internally the two bar areas were separated by a large coolroom with steel--framed glass doors behind which drinks were stored.	The coolroom did not extend the full width of the building;	it appears to have stood in about the centre of it.	Patrons could gain access to the public bar through a series of glass doors facing the road.	In about roughly
the middle of the southern side of the front building t,here
;,

was an external wooden door used to enable staff to gain direct access from the rear of the building to the working area behind the counter in the public bar.	Just to the east of this door was a servery opening onto a grassed beer­ garden area on the southern side of the building.	The servery had a counter and, when not in use, the opening was secured by drawing wooden concertina-type shutters across it.	Further to the east of the servery was a set of glass doors located in a position that enabled patrons to move from the public bar out into the beer-garden.

The second main building was divided into several accommodation units.	One was occupied by the hotel manager.	It was separated from the front building by the

open grassed area used as a beer-garden. were about 73 feet apart.

The two buildings

At the time of the shooting there was a temporary structure on the eastern end of the front building housing a generating plant.	At the western end of the open area

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between the two main buildings was a swimming pool, the surrounds of which were also used as a beer-garden.

The hotel premises were badly damaged during Cyclone Tracy which devastated much of the city and suburbs on 25 December 1974.	Temporary repairs had been made to enable trading to recommence as it had done some time Refore the shooting, but it was still not possible to completely secure the bar areas.		The hotel was staffed by only two persons:	the manager and a barman.	The practice at the time was for the manager or the·barman to sleep in the bar at night armed with a loaded rifle or shotgun.

There were three directors of the defendant company at the time:		Maisie Younq and her dauqhter and son-in-law, Sue and Paul Smith.	The publican's licence required in respect of the premises was held by the company, but in accordance with s.69 of the Licensing Ordinance 19j9-1974 (since repealed) it had nominated Mr. Holmes as its manager. In consequence, for the	urposes of the Ordinance he was "deemed to be the person licensed in respect of the premises or the holder of the licence thereof;	and the premise [were] deemed to be his licensed premises or the premises in respect of which he [was] licensed or [held] a licence" (s.69(5)).	This meant, of course, that the various obligations and duties imposed upon holders of publican's licences by the Ordinance devolved upon Mr. Holmes

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personally.	I will have more to say about this important statutory provision later.

1973.

Mr. Holmes had held the position of manager since He lived on the premises and had the day-to-day

control of the hotel;	as he put it "running the hotel ...

ordering the stock, putting it into the bars, hiring the

staff;	just the general duties of running a hotel, making

the decisions".	With the exception of Mr. Paul Smith, the

directors did not interfere much with Mr. Holmes' management of the hotel business.	Mr. Smith concerned himself mainly with financial matters, checking the takings, the banking, paying the accounts and consulting with Mr. Holmes on items of major expenditure.

At the time of the shooting the deceased was the manager of an electrical contracting business, Kennedy & Middletons, and had done work at the hotel before.		A decision had been made by Mr. Holmes in consultation with Mr. Smith to get the swimming pool filters and lights operational again by connecting them to the hotel generating plant, there being still no town power supply available at the time.	At about 12.30 p.m. on the day of the shooting Mr. Holmes sought the deceased out at his home in suburban Jingili and asked him to do the necessary work.	He evidently agreed.

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The deceased arrived at the hotel at about 2.30 pm with another electrician, Stephen Ronald Feltus.		The manager was not there at the time.	The barman, being the only other person employed on the premises by the defendant, was in charge and was just closing up the public bar for the afternoon.	He allowed the two electricians to help themselves to a can of beer which they took with them over  to the pool area and drank.	They then ran power cables from the generator shed to the pool equipment.	At about this time Mr. Holmes returned to the hotel and the three men had a conversation near the pool.

As to the events leading up to the shooting, I had evidence from both Mr. Feltus and Mr. Holmes.	Their accounts vary, but not in respects that I consider important.	The elapse of over 10 years since these events occurred has understandably diminished their abilities to recall points of detail, although I would expect Mr. Holmes' recollection of his role in the matter to have been substantially reinforced by his involvement in the criminal proceedings launched against him afterwards.

When the conversation with the manager concluded, Mr. Feltus recalls that he and the deceased headed back towards the generator shed to connect the cables at that end.	On the way they decided to help themselves to another can of beer from the now closed public bar.	They found the

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wooden staff door leading from the beer garden to the area behind the counter in the public bar was unlocked.	They entered through it, got themselves another drink each from the refrigerator and then sat on the servery counter facing the road.	Immediately behind their backs were the concertina-type wooden shutters in the closed position.
They had not long been sitting there drinking their dr nks when the deceased, who was immediately to Mr. Feltus' left, fell sideways along the server counter saying that he had been shot.	There was a wound in the middle of his back from which he was bleeding profusely.	Three weeks later he died at a hospital in Sydney;	the death certificate records

the cause of death as: the chest".

"Haemorrhage due to bullet wound to

Mr. Holmes recalls talking to the two electricians around the pool area for about half an hour, during which time he got them a can of drink each from the bar.	He says, in effect, that he left them at the generator shed.
Not long after that he went to the room he occupied in the

accommodation section.	The entrance to his room looked out

across the beer garden to the public bar.	r·t" seems to have been roughly in line with the eastern edge of the building
closest to the road.	[Whilst the parties thought it

important that I have no less than five plans each showing the lay-out of roughly the same area, none are to scale.
One, drawn by a policeman who investigated the shooting,

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indicates the distance from Mr. Holmes' door to the servery shutters was 100 feet.]	Shortly after he returned to his room Mr. Holmes looked out the door and "glimpsed someone
behind the bar	the public bar".	He could see the

person through one of the glass doors.	Later, he

explained, he saw that person behind the counter in the public bar, and he saw him go around the corner of the, coolroorn on the side closest to the road.		Once around the corner, his view of the intruder was totally obscured by the coolroom.	He did not recognise the person.		It did not occur to him that it might be one of the electricians.	He picked up a loaded .22 calibre rifle that he kept in his room, put it to his shoulder, aimed it at the servery shutters and fired.	He did not shout any warriing before he pulled the trigger and, when he did so, the person who he had seen inside the bar was not in view.	After discharging the rifle, Holmes entered the public bar where he fo11n the deceased "by those doors I had shot through".

Asked by the plaintiff's counsel why he had fired at the servery doors, Mr. Holmes replied:

"Because I knew there was a fridge behind it, and it couldn't really hurt anyone;	because the person I saw was round the other side, and I didn't think it would go through the door anyway;	I thought it would just make a noise."

He claimed that he had little experience with firearms and said that his intention had been to scare the

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person inside.	Asked how he thought that person would have been scared, Mr.		Holmes said:

"Well, I presumed it would have made a noise when the bullet hit the wood, or even if it had gone through the wood, there was the big cold room behind it.	It would have made a noise".

The view I formed about Mr. Holmes' veracity	s best illustrated by the following exchange in the evidence before me:

''You do know [the rifle] was loaded at the time? --­ Well, I found out it was loaded when I pulled the trigger, didn't I?
His Honour:	Would you just answer the question.

Did you know if it	as loaded at the time? ---	No, I didn't."

In the light of the other evidence I have quoted, not to mention evidence which Mr. Holmes gave about sleeping with the rifle in the bar, other loaded weapons being kept on the premises, having been assaulted and having had to confront intruders previously, this answer is not believable.

Mr. Holmes was charged with the manslaughter of the deceased, but a jury of twelve returned a verdict of not guilty on 8 August 1975.	Almost two years later Mrs. Logan issued her writ claiming compensation from S & Y Investments (Number Two) Pty Ltd on the basis that her husband's death

was the result of Holmes' negligence for which the company as his employer was vicariously liable.

A form of of public liability policy was submitted in evidence and the defendant admitted that it was a copy of the terms and conditions which formed part of the contract
of insurance between the parties at the time of the
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shooting.	The general indemnity provision is in these terms:

"Now this Policy witnesseth that in consideration of the payment of the Premium and subject to the terms and conditions exceptions and memoranda contained herein endorsed hereon or attached hereto the Company will pay to or on behalf of the Insured all sums which the insured shall become legally liable to pay for
comp nsation in respect of
bodily injury (which expression includes death and illness)
damage to property (which expression includes loss of property)

occurring during the period of Insurance as a result of an accident and happening in connection with the Business carried on at and from any Situation specified in the Schedule."

The manager of the defendant's Darwin office at the time of the events with which we are concerned, Mr. R.J.W. Bottrell, gave evidence that when a policy issued, his company's practice was to retain only a document called a policy record sheet.	The company had searched for that sheet, but was not able to find it.	What was available, however, was a document called a claim facing sheet which

was, in fact, attached to a claim file opened on 28 January 1975.	Mr. Bottrell testified fhat when a claim was notified, the practice of his office was for a clerk to take a blank claim facing sheet and transpose on to it from the policy record sheet details of the insurance, including the type of policy, its number, the name of the insured, the due

date of the policy and the sum insured. attached to the inside of a new file.

Then it woulq.,,  be Not surprisingly,

Mr. Bottrell was unable to identify the handwriting on the claim facing sheet in this instance;	there were, as he said, the handwritings of various clerks, who had worked on the file, to be found in it.	Nonetheless, on the basis of his evidence and the appearance of the document, I am satisfied that it is what it purports to be:	a claim facing sheet made up by one of the defendant's clerks in the course of his duty.	I am also satisfied that it was entered up by that clerk using information he derived by inspecting the now missing policy record sheei.	But its tender is object to, and I will deal with that in these reasons.	If admitied, it would constitute evidence that the limit on the defendant's liability was stipulated to be $100,000 (plus costs).

I shall defer setting out the facts relating to the defences involving alleged breaches of the conditions of the policy until I have dealt with what I see as the two main issues:	(1)	was the liability incurred by the plaintiff to

pay compensation in respect of Mr. Logan's death the result of an accident;	and ( 2)	do public policy considerations preclude the plaintiff from recovering under the policy.

Significance of the acquittal

At the outset I ought to point out that the	:,;
defendant is not precluded by Mr. Holmes' acquittal by the jury from raising these defences.	The outcome of a criminal prosecution has no evidentiary value in civil proceedings involving similar issues:	see Hollington v
F Hewthorn &    Company Ltd (1943) 1 KB 887;	Goody v Odhams Press Ltd (1967) 1 QB 333;	and Gray v Barr (1971) 2 QB 554.

Was the shooting "an accident"?

I was referred to several cases dealing with the meaning of th·e word "accident" in insurance law.	I have looked at many others.	In none were the words defining the cover phrased precisely as here:	injury etc "occurring ... as a result of an accident".			These I take to mean that the injury, death or damage must be caused by an	ent that may be described as an accident;		hardly surprising, perhaps, in a policy which has as its object the provision of an indemnity for legal liability to persons who are virtual strangers to the insured.	In a common-form policy such as this, no strained or artificial meaning should be given to

words which are in everyday use in the community at large. In any event, "accident" is not a technical legal term with a clearly defined meaning.	Its popular and ordinary meaning has long been treated as comprehending any unlooked for mishap or untoward event which is not expected or designed:	Fenton v J. Thorley & Co. (1903) AC 443, 448 &
453;	and see the useful discussion of earlier decision;s and writings by Starke J. in A.F. & G. Robinson v Evans Bros.
Pty Ltd (1969) VR 885;	by Blair J.A. in Stats v Mutual of Omaha Insurance Co. (1976) 73 DLR (3d) 324;	and by Judge Edgar Fay in Marcel Beller Ltd v Hayden (1978) 1 QB 694.
Here there was an event that may fairly be described as an accident in the popular sense:	the bullet striking the deceased.	In the circumstances of this case, I would also regard that occurrence as t:hP. proximntP e;r1nse of the plaintiff's liability to the deceased's widow (as to which see Ivamy, General Principles of Insurance Law, 4 ed 404 to 407;	MacGillivray & Parkington on Insurance Law 6 ed 720 to 722; and Wayne Tank  &  Pump Co. Ltd v The Employer's Liability Assurance Corporation Ltd {1973) 3 All ER 825).

In its application to public liability policies, the doctrine of proximate cause requires that the liability in respect of which indemnity is claimed have been proximately caused by injury or damage occurring as a result of an accident, not that the proximate cause of the event claimed to be an accident be itself some fortuitous

happening.	Indeed, it would run counter to the notion that the word 1'accident" is to be understood in its popular sense if, in deciding whether some event was properly so to be described, one were confined to identifying a single cause let alone a lawyer's view of what was the "proximate" cause of that event.	A failure to keep this distinction clear has, I think, over-complicated some of the arguments in this case.

It follows that in deciding whether the bullet striking the deceased was an accident, one is entitled to take into account all of the circumstances surrounding that event and is not required to isolate one single cause;		for example, in this case, the discharge of the firearm.	Here there were in fact two causes of the bullet coming into contact with Logan.	Obviously Holmes pointing the rifle and pulling the -trigger is the one that springs quickest to mind.	But it must not be forgotten that he could not see the deceased nor, in the view I have formed, did he actually believe him to be in the line of fire.	The other circumstance necessary to bring about the unfortunate event which was followed was for Logan to unwittingly place himself in the line of fire by sitting on the counter behind the servery shutter.		What gives the fact that the bullet struck him its accidental quality is that these two causes more or less independently combined to produce that result - neither was sufficient on its own.

I have said the wounding of Logan was unintended: it was neither designed or looked for.	In my view it was unexpected in the sense that not only do I believe Holmes was shocked by its occurring but also a reasonable man in Holmes' position, whilst he would not have acted as Holmes did, would still have considered it not likely that the bullet would have struck anyone.	There was a large a ea of public bar obscured from Holmes' view, much of it behind the cool room through which the bullet could not pass and behind which Holmes had seen the intruder disappear shortly before he fired.		As foolish as Holmes' actions were, I cannot get away from the view that it was, in the circumstances, unlucky that Logan was actually hit, let alone killed as a result.	In other words, if it be a r levant test, the wounding was not, without more, a probable consequence of Holmes' action.

Despite suggestions to the contrary by Starke J. in
A.F. & G. Robinson v Evans Bros. Pty Ltd (cited above, 892 & 896) senior counsel for the defendant urged me to accept that in deciding whether what occurred was an accident or not, the question of what were the expected ccinsequences of Holmes' actions was to be determined subjectively.
Mr. Mildren Q.C. for the plaintiff supported this view, citing Judge Edgar Fay in Marcel Beller Ltd v Hayden (cited

above, 694, 701 & 705); Co (cited above, 328:

Stats v Mutual of Omaha Insurance "The test of whether [a] mishap is an

accident is the actual mental state of the actor at the time the act leading to it is performed");	and Prof. Sutton's Insurance Law in Australia &    New Zealand par. 10.101.		.More so than an objective test, this view, it seems to me, sits more comfortably with the well-settled principle that whether an occurrence is to be regarded as an accident must be determined from the point of view of the insured:	aoard of Management of Trim Joint District School v Kelly (1914) AC 667;	Lombard Australia Ltd v NRMA Insurance Ltd (1968)
72   SR(NSW) 45;	and Gray v Barr {cited above) per Phillmore J at 585.

Much reliance was placed by counsel for the defendant upon the decision of the Court of Appeal in Gray v Barr (cited above).	The defendant in that case sought an indemnity from an insurance company which had been joined as a third party.	The claim was made under a "hearth & hnmP" policy indemnifying the insured against all sums which he "shall become legally liable to pay as damages in respect of
... bodily injury to any person	caused by accidents
II	The principal action was brought by the widow of a man who had been killed when a shotgun held by the defendant was unintentionally discharged.	The defendant had gone to the deceased's house with the gun to look for his wife whom he suspected of having an affair with the deceased.
Confronted by the deceased whilst ascending a stairway inside his house, the defendant fired a warning shot into

the ceiling.	A struggle ensued during which the defendant fell backwards down the stairs.	In his fall the shotgun accidentally discharged thereby killing the deceased.	The trial judge, Geoffrey Lane J., held that the fatal shot was accidental, but disallowed the claim under the insurance contract on the grounds of public policy.	His conclusion that recovery should be denied on public policy ground was unanbnously upheld by the Court of Appeal.		It was therefore unnecessary for its members to consider the alternative defence, i.e. death was not caused by accident. However, all did and gave varying reasons for their different conclusions.	Lord Denning M.R. took the view that he was obliged by "settled ... insurance law" to identify a single dominant cause of death (567).	In his opinion, that was the act of the defendant in going up the stairs in the deceased's house carrying a loaded gun.
Hence, death was no accident.	Salmon LJ appears to have eschewed such a narrow approach, saying that the trial judge had rightly considered the second shot, not "in vacua", but in the light of all that led up to it - including the contrast of the first shot having been accidental (579, but compare 5BO).	He held "the accident in question was of the genus 'accident' referred to in the policy", but went on to find an implied term excluding "injuries caused by an accident occurring in the course of threatening unlawful violence with a loaded gun" (580).	Phillmore LJ said that in deciding this issue the incident should be regarded as a

whole;	"I think that the true question is whether people would commonly agree with Barr, if after describing all the circumstances as they occurred, he went on to say 'It was an

accident'". would not".

So far as he was concerned:	"I confess that I

(585).

With such a diversity of approach and, dare I ,say, possible confusion between the application of the doctrine of proximate cause and the question of how one determines whether an event can be described as 11an accident" in the popular sense, I have difficulty in extracting much of value from Gr y v Barr on this point.	I note that in Marcel Beller Ltd v Hayden (cited above) Judge Edgar Fay did not
£ind any of the three different analyses binding upon him
(703).

In my judgment, the plaintiff's liability to Mrs. Logan did arise as a result of a risk insured against namely death occurring as a result of an accident.	For
reasons I will give later, I have formed the opinion that in this episode Holmes and the company that employed him are legally indistinguishable.	If I am wrong in that conclusion then, of course, my judgment about the occurrence having been an accident would be reinforced, because then the matter would have to be looked at from the plaintiff's point of view as distinct from Holmes 1 (see the authorities cited above for this proposition).	From the company 1 s

perspective, if it can be total then the shooting was an accident.

dissociated from Holmes',

Public policy

"No system of jurisprudence can with reason include amongst the rights which it enforces rights directly
:'/;
resulting to the person asserting them from the crime of  that person" said Fry LJ in Cleaver v Mutual Reserve Fund Life Association (1892) 1 QB 147, 159.	This statement was adopted by Lord Atkin in Beresford v Royal Insurance Co. Ltd (1938) AC 586, 596.	In his words:

"[A] man is not to be allowed to have recourse to a Court of Justice to claim a benefit from his crime whether under a contract or a gift.	No doubt the rule pays regard to the fact that to hold otherwise would in some cases offer an inducement to crime or remove a restraint to crime, and that its effect is to act as a deterrent to crimE .	But apart from these considerations the absolute rule is that the Courts will not recognise a benefit accruing to a criminal from his crime." (598 to 599).

Applying this rule, all members of the Court of Appeal in Gray v Barr (cited above) held the claim under the "home and hearth" policy unenforceable;	Barr, in their iew, had been guilty of wilful and culpable manslaughter - the jury's "merciful" verdict notwithstanding.

In the present case the defendant contends that Holmes was guilty of manslaughter, and that for this reason

the claim must be refused.		It recognises, of course, that the claim is not made by Holmes but by the company that employed him.	He is not insured under the policy:	he cannot personally benefit from the claim.	A similar point was recognised in Cleaver v Mutual Reserve Fund Life Association (cited above), the ratio of the case being succinctly put by Fry LJ:	"[T]he rule of public policy should be applied so as to exclude from benefit the criminal and all claiming under her, but not so as to exclude alternative or independent right •• (159 - italics mine).
See also Hardy v Motor Insurers' Bureau (1964) 2 QB 745, 765 and 768.	What Commercial Union argues in this case is that by applying the so-called "organic theory" of corporate structure to the circumstances of this case, Holm.es' contribution to Logan's death should be treated as if his actions were those of his employer.

It was submitted that Holmes' conduct amounted to manslaughter under the rule that the offence is committed by anyone who kills another in the course of carrying out a dangerous and unlawful act, regardless of the fact that no harm was intended to the person killed.	The leading Australian authority on this head of manslaughter has the dubious distinction of originating outside another Darwin hotel -also blown away by Cyclone Tracy:	Pemble v The Queen (19 71 )	12  4   CLR 10 7 .	Pemble shot a former girlfriend in the head and killed her near the old Fannie Bay Hotel.	He was

tried by a jury of 12 before the Supreme Court in Darwin and convicted of murder.	On appeal directly to the High Court the conviction was set aside;	however, a verdict of guilty of manslaughter was entered in its place.	Pernble's defence was the rifle discharged accidentally;	but through his counsel he accepted, in effect, that this occurred whilst he had been performing a dangerous and unlawful act, virt ally inviting the jury to find him guilty of manslaughter.	The rifle had discharged whilst he was approaching the deceased from behind with it cocked, loaded and pointing upwards.
His admitted intention was to frighten her.	He claimed to have stumbled and the rifle discharged.	The evidence suggested the deceased was not conscious of Pemble's approach or of having been hit by fhe bullet.		Whilst all five members of the Hiqh Court were of the opinion that the
conviction for murder could not stand, only three supported
.
the order substituting a verdict of guilty of manslaughter .
Barwick CJ was among this majority.	He said:

"The killing of a human being in the course o·f committing certain unlawful acts is manslaughter.	What unlawful acts are sufficient for this purpose are perhaps not yet precisely and fully defined or stated in decisions or in texts:	but it may be taken that so far the view is held that to be relevantly unlawful the act must be in breach of the criminal law." (122)

He found the following statement of Humphreys J. in R v Larkin (1949) 29 CAR 18, acceptable and appropriate to the case at hand:

"Where the act which a person is engaged in performing is unlawful, then if at the same time it is a dangerous act, that is, an act which is likely to injure another person and quite inadvertently the doer of the act causes the death of that other person by that act, then he is guilty of manslaughter.'' (122)
Because there was no evidence that the deceased was ever conscious of the impending assault upon her, there was doubt about whether an assault had actually been committed.	But the Chief Justice was of the opinion that the act of t e appellant in brandishing the rifle in the way he had done was an unlawful act of the kind which would make the
subsequent killing manslaughter.	At the least, he said, it

constituted an attempt to assault her and was obviously

dangerous to the deceased (123).	McTiernan J. agreed that

the killing "resulted from an act which was both unlawful and dangerous" (127 to 128), but in so doing he relied upon the appellant having co nitted an offence against s.75(1A) of the Police and Police Offences Ordinance 1923 prohibiting the discharge of firearms in public places without lawful excuse.	The other member of the majority was Windeyer J. He concluded that the homicide was.not excusable, saying:

11 A homicide is excusable as accidental, by misadventure or misfortune, when the act causing death was not done whilst carrying out an unlawful and dangerous undertaking nor was it the result of culpable negligence11   •	(138)

Both members of the minority accepted accidental homicide by dangerous and unlawful act as a form of manslaughter, they thought it should go back to a jury for

determination.	Apart from McTiernan J, no member of the Court appears to have considered the unlawful discharge of a firearm a criminal act of the order required.	Perhaps it may be deduced from this that an offence against the person must be involved before the unlawful act is ttrelevantly criminal u.	(I note that Pemble was considered recently by the High Court in R Crabbe (1985) 58 ALR 417, but the , discussion was confined to mens rea in murder by reckless act.)

The present case does not present the same difficulty as did Pemble;	here the rifle was deliberately discharged at the public bar with the intention of frightening the person inside.	In this respect, Holmes achieved his admittPd nhjP tivP only too well.	And, unlike the girlfriend in Pemble, Holmes' victim was aware he had been shot;	indeed, as Mr. F'P.lt-1rn t-nl<'l us, the de:csased announced he had been shot as he fell iideways.		It was suggested that this assault, at least as far as Holmes intended it to go, was justified in defence of property.	I do not accept this;	no reasonable person would claim to be entitled to stand outside his home and fire bullets into it because he saw an intruder inside.	Law enforcement agencies do not behave in that way, nor may a householder or business proprietor.		There was no warning here, no attempt to discover the identity of the intruder, to ascertain his purpose or to have him leave the premises without recourse

to violence.	Darwin was not	he Wild West and, despite Holmes' experiences of lawlessness in the aftermath of Cyclone Tracy, no basis existed for following a policy of "shoot first, ask questions later".

Nor can it be seriously argued that Holmes' actions were not obviously dangerous in the sense that they involved appreciable risk of really serious injury.		He could not say that in the minute or so before he fired after his last glimpse of the intruder that he had not.moved into a position behind the shutters;	Holmes did not know where the intruder was.		Nor could Holmes predict that the bullet would not go through the shutters and be deflected off in a different direction or ricochet off some hard surface inside the bar.	How far he appreciated these risks I cannot say, but I do not believe his statement that he did not think the bullet would go through the sPrvPry rlnnr;	after all, he began the answer in which he made this assertion by saying he fired at the "slats" because he knew there was a fridge behind it.		To find that the risk was appreciable does not, I think, conflict with the view that Logan was unlucky to have been caught in the line of fire	that means no more than, objectively judged, it was less than probable he would actually be hit.

On these facts it is my opinion that Holmes was guilty of manslaughter.	I do not think it was necessary to

prove that he himself appreciated the degree of danger created by	the discharge of the firearm, had he done so then it would have been manslaughter by criminal negligence:	see per Smith J. in R v Holzer (1968) V.R. 481 at 482 (cited  with approval by Menzies Jin	Pemble (cited above, 134);
and DPP v Newbury (1976) 2 All ER 365 (HL).

Not every insurance claim arising out of a

:i:

manslaughter will be precluded on the grounds of public policy.		Thus, in the category of homicide called "motor manslaughter", it is settled that the insur d is entitled to recover:		see Tinline v White Cross Insurance Association Ltd (1921) 3 KB 327;	and James v British General Insurance Co. Ltd (1927) 2 KB 311.	In Gray v Barr (cited above) the Court of Appeal was careful not to lay down any general rule.	Phillmore LJ said it would be foolish to do so: manslaughter varies from conduct which is almost murder to conduct which is only criminal in the technical sense (587)

(see also Salmon LJ at 581). facts of that case he said:

Confining his decision to the

"In an age of violence - an age where the	se of firearms is all too frequent - it would I think be very odd if a man who had had in his hands a loaded shotgun from which a shot had been fired and had killed another at a time when he had just assaulted that other with the gun could recover on an insurance policy which protected him from liability if he was not negligent in the use of the .shotgun.	This was in fact a grave case of manslaughter and in my judgment the judge was right in saying that the defendant could not recover against the
Prudential on the grounds of public policy." (587 to 588).	.

Salmon LJ expressed his view this way:

"I am confident that public policy undoubtedly requires that no one who threatens unlawful violence with a loaded gun should be allowed to enforce a claim for indemnity against any liability he may incur as a result of having so acted." (581)

Lord Denning M.R. adopted the test suggested by Geoffrey Lane J.:	::,;

"The logical test, in my judgment, is whether the person seeking the  indemnity  was  guilty  of-deliberate intentional and unlawful  violence,  or  threats  of violence.	If he was, and  death  resulted  therefrom, then, however  unintended  the final  death of  the victim may have been, the court should  not  entertain  the claim for indernnity. 11 • ( 5 6 9)

Counsel for the plaintiff was at pains to draw distinrtinns hPtWPPn that case and this, £Oms finer than others.	Each case had/has its mitigating circumstances: indeeo, of Rn rr it-	wr1 s s;=i id by	Salmon LJ;		"[EJ vcryon_c muot have the greatest sympathy with [him].	He was pushed almost beyond the limits of human endurance." (582)	It cannot be simply those circumstances which are to be taken into account in drawing the line.	So the fact that Holmes believed the person he saw was an intruder, had a duty to protect his employer's property, had previously had trouble with intruders, did not think the bullet would hit anyone, only used a .22 calibre rifle - and so on, none of these are enough to take the case out of the class which the Court of

Appeal thought should fail.	In my opinion, it is the broad similarities that are important:	the deliberate and legally unjustified recourse to loaded arms, the inherent danger of the conduct, and the assault that went wrong with its fatal

consequences. by accident.

At least Barr could say the gun discharged

i,
In my view it is not really satisfactory that the application of public policy should rest upon the making of fine comparisons;	if Gray v Barr is good law in Australia - and I ought to treat it so - then the principle I would prefer to extract from it is that public policy precludes the enforcement of contracts of indemnity against liability arising out of manslaughter where death occurred as the result of a dangerous and unlawful assault on the victim.
This case, in my judgment, falls into that class.

All this is only of significance if Holmes' actions are to be treated as those of the company which employed  him, because this head of public policy has been held to be limited to claims by the person who committed the crime out of which the claims arise and those claiming under him: Cleaver v Mutual Reserve Fund Life Association (cited above, especially 153 and 159);	Hardy v Motor Insurers Bureau (cited above, 745, 765 &   767);	and Stats v Mutual of Omaha Insurance Co. (cited above, 332 to 335).	The only basis for making this identification between employer and employee

suggested to me was the application of the so-called organic theory of corporate structure.		In particular, it was not suggested that anybody other than Holmes specifically authorised him to act as he did, or that he was merely acting out some policy decided on by officers of the company at a higher level than his.	Something was sought to be made of the fact that one of the directors, Mr. Paul Smith, knew of the practice of keeping loaded arms at hand - may himself have carried them - but that by itself establishes nothing more than that the company may have authorised the keeping of firearms for the purposes of self-defence or the defence of property as a last resort.	If that is all the company had done, then it was in no different a position from any· of thousands of property owners around Australia who then and today who contract the services of armed security guards to protect their properties.	Indeed, if
Holmes had been employed solely as an armed security g11;=irn,
could it seriously be suggested that what occurr.ed was	not an accident from the company's point of view, or that his actions were to be treited as if those of the company itself?

Turning now to the position of S & Y Investments (Number 2) Pty Ltd as a result of all this, I think it apposite to being by quoting the well-known passage from Viscount Haldane LC's speech in Lennard's Carrying Company Ltd v Asiatic Petroleum Company Ltd {1915) AC 705:

"My Lords, a corporation is an abstraction.	It has no mind of its own any more than it has a body of its own; its active and directing will must consequently be sought in the person of somebody who for some purposes may be called an agent, but who is really the directing mind and will of the corporation, the very ego and centre of the personality of the corporation.		That person may be under the direction of the shareholders in general meeting;	that person may be the board of directors itself, or it may be, in some companies it is so, that that person has an authority co-ordinate with the board of directors given to him under the articles of association, and is appointed by the general me ting of the company, and can only be removed by the gen ral meeting of the company." (713)

This theory about the nature of corporate personality was considered at length by the House of Lords in Tesco Supermarket Ltd v Nattrass (1927) AC 153.	In Smorgon v Australia & New Zealand Banking Group Ltd (1976)
134 CLR 475, Sir Ninian Stephen described it as a legal fiction but noted, approvingly, that it has been applied in areas in which the ends of justice have been thought to require the attribution of mental states to corporations, most notably where personal fault or a guilty mind must be sought for (482-483).

In my opinion, with one qualification I will mention later, there can be no justification ;or extending public policy so as to preclude recovery by the plaintiff under its contract of insurance unless it could itself have been convicted of the manslaughter of which Holmes was guilty.	That a company may be guilty of crimes involving mens rea through the application of the organic theory is now widely accepted:	Gower's Principles of Modern Company

Law 4 ed. 206 to 210 and the cases cited by the learned authors;	Prof. Howard's, Criminal Law 4 ed. 379 to 382; Trade Practices Commission v Tubemakers of Australia Ltd (1983) 47 ALR 719 per Toohey J. at 737 to 738;	and Smorgon's case (op. cit.);	R.N. Purvis, Q.C. Corporate Crime Chapt. 13;	and L.H. Leigh The Criminal Liability of
Corporations in English Law, Chapt. 4.	In his book,
:
Principles of Company Law 3 ed. Professor H.A.J. Ford says:

"A form of primary corporate liability now exists.		The acts and mental state of those persons who act as the company may be attributed to the company itself.	Thus a person may in doing particular things be regarded as the company itself or merely as the company's servant or agent.	If he is regarded as being merely a servant or agent the company cannot be liable unless the statute creating the offence creates absolute or vibarious liability ... "	(135).

It could only be by attributing Holmes' state of mind (i.e. his intention to frighten the intruder) td the plaintiff that the conclusion could be arrived at that the company itself was criminally liable for Holmes·' actions. The question is:	where did Holmes fit within the structure of this company?

Managers of licensed premises where the licence is held in the name of a company occupied a special position under the Licensing Ordinance 1939 (since repealed). (Indeed by virtue of the provisions of s.25 of the Liquor

Act they still do.) Ordinance stipulated:

Section 69(5) of the repealed

"For the purposes of this Ordinance the manager of the licensed premises shall be deemed to be the person licensed in respect of the premises or the holder of the licence thereof;	and the premises shall be deemed to be his licensed premises or the premises in respect of  which he is licensed or holds a licence."

In reality this provision appears to have been a statutory embodiment of the organic theory because it said, in effect, that for the purposes of performing the funGtions and discharging the obligations imposed on licensees by the Ordinance, no distinction was to be made between the nominated manager and the company licensee.	Various sections of the Ordinance imposed	pecific duties on licensees;	those sections may be summarised by saying they required close personal supervision of the premises and the liquor-orientated business by the manager, imposing duties to control the presence (eq. ss.145, 155, 155A & 175) and conduct (eg. ss.177, 118, 124, 143, 143A & 192) of persons on the premises and to ensure they were    kP.pi-   sPr11rP	( s. 155).

Indeed, s.58 obliged the manager to continuously reside on the premises unless he obtained permission to temporarily absent himself from the licensing magistrate (see also s.126).	It was the nominated mana er's name that was required to be conspicuously displayed in the front of the premises as being the "Licensed Dealer in Liquor" under s.107, not the company's.

The evidence which Holmes gave about the involvement or rather the lack of involvement of the directors in the non-financial aspects of the management of the plaintiff's affairs so far as the hotel was concerned reflected the authority he enjoyed as the manager of licensed premises under the Ordinance.	Quite simply, there were significant limits on the extent to which even the directors could interfere with his management.

In my judgment it must follow according to prevailing theories about corporate personality that so far as the management of the hotel premises was concerned, including the expulsion of persons from the public bar, Holmes' actions must be treated as those of.the company's and his intentions in performing those actions the company's intentions.

It was submitted that a corporation can never be guilty of crimes of personal violence.	The old case of The King v Cory Brothers & Company Ltd (1927) 1 KB 810 was cited.	There Finlay J., relying upon authorities which ante-date modern theories about corporate cri inality, held that a company could not be indicted for manslaughter:	cf The Queen v Murray Wright Ltd (1970) NZLR 476.	For my part, the point being an open one, I prefer Professor Howard's view:

nrt may be thought that the natural limitations on the power to punish a corporation imply that there are some crimes, notably offences against the person, that a corporation cannot commit.	There seems to be no warrant for this.		No theoretical reason suggest itself why, if it can be within the scope of a managing director's employment to commit fraud in what he supposes are the company's financial interests, it should not be equally well be within the scope of his employment to commit murder, or any other offence against the person, with the same object.	It is highly improbable that any good would come of prosecuting the company, as opposed to the managing director, and	t is clear that the usual punishment for murder could ndt be imposed.	These considerations, however, have no logical bearing on the company's criminal responsibility."	(op. cit. 382)

In any event, if the question of the plaintiff's culpability for the crime of manslaughter turns solely on technical considerations such as those Professor Howard mentions, it could strongly be argued that they ought not be allowed to interfere with the application of public policy considerations which otherwise would apply.

I must say that the view I have reached about the plaintiff's primary responsibility for manslaughter is founded upon the statutory provisions to which I have referred rather than the evidence adduced about the internal management of the company.	From that point of view, attempts to prove Holmes was the company was desultory.
There was no evidence from any of the directors or the company secretary, the articles of association were not tendered, there were no minutes of directors' meetings put before me.	I respectfully adopt what was said by Bowen CJ in Universal Telecasters (Qld) Ltd v Guthrie (1978) 32 FLR

360 about what comes out of the decision of the House of Lords in Tesco Supermarkets Ltd v Nattrass (cited above)

"The view was taken that what natural persons were to be treated in law as being the corporation were to be found by identifying those natural persons who, by the memorandum and articles of association or as a result of action taken by the directors or by the corporation in general meeting pursuant to its articles, were entrusted with the exercise of the powers of the corporation " (364)

In this case, the defendant can hardly claim to have proved a case identifying Holmes with the company in accordance with this view.	The mere fact that the directors of a company interfere little with the performance by a manager of his duties may signify no more than that he is a good manager, not that they have yielded up to him control of the affairs he manages.	But a company licensee's position is somewhat different:	the licensing legislation  provides  a  s011rce  additional to the corporation's constitution wherein authority may be found to act as the directing mind and will of the company.

Accordingly, I have reached the view that the plaintiff is precluded by reason of public policy from enforcing its claim to indemnity under the policy.

Other defences

This conclusion makes it strictly unnecessary to deal with the other defences, but because they were fully debated - at least by the plaintiff - and my judgment on other points may be appealed, it is right that I give my opinion of them as well.

Reasonable precautions by insured	:i:

The policy contained the following condition:

"4.	The insured shall exercise reasonable care that only competent employees are employed and shall take all reasonable precaution to prevent bodily injury or damage to property and shall take reasonable measures to maintain all premises furnishings fittings appliances and plant in sound condition and to comply with all statutory obligations and by-laws or regulations imposed by any Public Authority for the safety of persons or property."

It is alleged that the plaintiff breached this condition in a number of ways but, when analysed, they come down to raising the same matter of fact:	Holmes' deliberate use of the rifle in the manner and circumstances in which he did.

In Fraser v B.N. Furman (Productions) Ltd (1967) 3 All ER 57 the Court of Appeal considered the meaning of a condition in an employerrs liability indemnity policy in these terms:	"The insured shall take reasonable precautions to prevent accidents and disease."	Diplock LJ, delivering a judgment with which Wilmer and Winn LJJ agreed, identified

the appropriate rule of construction to apply as being that the Court should avoid giving a condition a meaning repugnant to the commercial purpose of the contract. "Reasonable'' did not mean reasonable as between the insured and the injured party, it meant reasonable as between the insured and the insurer having regard to the commercial

purpose of the contract, which in that case included indemnifying the insured against liability for his own

::i,

personal negligence.	What the hypothetical reasonably careful employer might foresee as dangerous was irrelevant, because failure to foresee dangers is one Of the commonest

grounds of liability in negligence (60 to 61). to say:

He went on

"What in my view is 'reasonable I as betwer2n t.hR i nsurPn and the insurer, without being repugnant to the commercial object of the contract, is t_hat the insured should not deliberately court a danger,: the existence of which he recognised, hy	rPfrAinin from taking any measures to avert it ... [W]here he does recognise a danger, [the insured] should not deliberately court it by taking measures which he himself knows are inadequate to avert it.	In other words, it is not enough that the employer's omission to take any particular precautions to avoid accidents should be negligent;	it must be at least reckless, i.e. made with actual recognition by the insured himself that a danger exists, not caring whether or not it is averted." (61)

Lord Diplock's approach has been followed in other cases involving the construction of similarly worded conditions by Roskill Jin	W & J L Lane v Spratt (1970) l All ER 162;	Macfarlan Jin		Norwich Union Insurance Co. Ltd v R &    W Products Pty Ltd (1969) 90 WN(NSW) 554;	Yeldham J

in Cooper Park Apartments Pty Ltd v The Prudential Insurance Co Ltd (NSW Supreme Court 19 December 1979, unreported); Kaye Jin	Body Corporate Strata Plan No. 4303 v Albion Insurance Company Ltd (1982} VR 6997	and Mahon Jin	Mason v Century Insurance Co Ltd (1973) 2 NZLR 216.	It was raised before the Full Court of the Supreme Court of Western
Australia in Keighley Northumberland Insurance Co Ltd (1974)
:i:

WAR 156, but on my reading of the report the Court refrained from expressing any opinion on its correctness (158).	In Roberts v State Insurance General Manager (1974} 2 NZLR 312, McMullin J rejected Diplock LJ's test in favour of an objective one.	There is nothing about the wording of Condition 4 that would cause me to depart from the mainstream of authority;	I approach it accordingly.

This leads to a second problem to which Condition 4 0ive	rise in tho procont ca.oc:	upon whom lies  L11e  Lu.ule11 of proving compliance or non-compliance as the case may be? On this point there is the high authority of Sir Frederick Jordan delivering the judgment of the Full Court in Kodak (Australasia) Pty Ltd v Retail Traders Mutual Indemnity Insurance Association (1942} 42 SR(NSW} 231.	Having distinguished between various types of conditions in insurance policies, his Honour said:

''I think that as a general rule, and subject to any special provisions in the policy, the burden of proving breaches of conditions going to the existence or the continued existence of the policy  as a whole, as a binding  document, rests  on the insurer:	Williston on

Contracts (1936), III, pp.1910-1920, whilst as to any provisions which are merely conditions precedent to the accrual of liability of the insurer according to the terms of the policy treated as a binding document, the ordinary rule applies that the insured must allege1   and if the matter is put in issue prove, the performance by him of all conditions precedent".	(237}

Plainly Condition 4 falls into the latter category.
The policy itself says that ''the due observance and fulfilment by the Insured of ... conditions ... contairled herein ... insofar as they relate to anything to be done or complied with by the Insured ... shall be conditions precedent to any liability of the Company to make any payment under the Policy".	There is no provision in the document that indicates the onus should lie elsewhere; indeed, the policy lists one set of clauses subsumed under the heading "Exceptions" and another "Conditions'', a dichotomy that to my mind reinforces the idea that proof of compliance. with the latter lies upon the insured if specifically denied by the insurer.	Unfortunately, however, the Court of Appeal did not make this distinction in Fraser v B.N. Furman (Productions} Ltd (cited above), Diplock LJ simply asserting, in effect, that the onus lay on the insurer.	Thus I am faced with the dilemma of which Court to follow.	So too was Kaye Jin		Body Corporate Strata Plan No. 4303 v Albion Insurance Company Ltd (cited above).	He pointed out that the Kodak Case had been followed three times at first instance in New South Wales and once in Victoria (703}.		The English and Australian authorities being irreconcilable, Kaye	decided to follow

the Kodak Case saying "there are sound reasons for seeking uniformity of the common law throughout the Commonwealth of Australia by following a decision of an appellate Court of another State unless it is manifestly wrong".	(705)

But counsel for the plaintiff submitted I am bound

to follow the Court of Appeal, citing decisions of	J
Shepherd J. in Balfour Williamson (Aust.) Pty Ltd v

DouterluingnE:_ (1979] 2 NSWLR 884 and Kelly Jin	Barisic v Topic (1981) 37 ACTR 1 to this effect.	These decisions in turn are founded upon remarks made obiter by two members of the High Court in Public Transport Commission (NSW) v
J. Murray-More (NSW) Pty Ltd (1975) 132 CLR 336.	Speaking of New South Wales, Barwick CJ said:	"[T]he Supreme Court at first instance, where there is no relevant decision of this Court, should as a general rule follow the decisions of the English C:rn1rt-  nf	AppPal" (341 -· ·italicc mine).
Gibbs J's remark was:	"In my judgrnent, the learned judges in the Supreme Court should have treated Cory & Son Ltd v France, Fenwick & Co Ltd (1911) 1 KB 114 as an authority binding upon them"	(349).	He gave no explicit reasons for this view, although it is quite possible to interpret his remark in the context in which it appears as being founded not upon any ascendant position of the English Court of Appeal over Australian intermediate courts of appeal, but rather the degree to which the English Court's decision in the instant case had become entrenched in English and

Australian law.	However that may be, much water has flowed under the bridge since then.

In Viro v R (1978) 141 CLR 88 where the High Court held it was no longer bound by decisions of the Privy Council, naturally enough, it considered the common law doctrine of precedent.	Gibbs J acknowledged that the modern English rule is usually said to be that "every court is bound to follow any case decided above it in the hierarchy", although he did not explicitly adopt it as the basis for his decision (119 to 122).		Mason J agreed with Gibbs J  on this point (135 to 137).	The other five members of the Court were unequivocal.	Barwick CJ:	"The essential basis for the observance of a decision of a tribunal by way of binding precedent is that that tribunal can correct the decisions of the court which is said so to be bound" {93).
Stophon J:	"[T]he exisLenL:tc: uf ctll ctppeal is inherent in and essential to the doctrine" {129).	Jacobs J:	"The law of precedent depends upon the existence of a hierarchy of courts ..." (151).	Murphy J:	"(N]o court in Australia is bound by the decisions of the House of Lords or the courts below it in the English system" (166).	Aickin J:	"Now that the Privy Council is no longer the apex of a judicial hierarchy of which the High Court forms part the basis for adherence to the views of the Privy Council has disappeared" (174).	I should add that with the commencement of the Australia Act 1986, all remaining ties with the English

hierarchy have been finally severed.	In my opinion, a single judge of this Court is free to choose which of the English Court of Appeal and the Australian appellate courts
- State, Territory or Federal - he will follow when there is no relevant decision of the High Court or the Court of  Appeal of the Northern Territory binding upon him.

For the reasons adumbrated by Kaye Jin	his

.:,;

judgment referred to above, I prefer to follow the I<odak Case.

The area that I need consider in deciding whether the plaintiff has discharged the burden of proof lying on it has been considerably narrowed by	irtue of the fact that the defendant in its defence pleaded the breaches of Condition 4 upon which it relied with considerable
SpR<:i  fi   ri   ty,	As I have pointed out, thcnc relate solely Lu Holmes' conduct in discharging the rifle.	I am thus relieved of having to consider what precautions the plaintiff, by which I mean its shareholders, directors and officers other than Holmes, might have taken antecedent to the shooting to prevent such an occurrence.		For example, although I had some evidence suggesting that the director, Paul Smith, was aware that loaded firearms were kept on the premises, may have had one himself, it would be unfair to the plaintiff to treat that as raising any question about compliance with Condition 4, because I do not know what

evidence it	might have led to deal with the matter, it having come to the trial entitled to treat compliance in a broader respect as a non-issue.

·>,

For the purposes of a condition requiring reasonable precautions I am in no doubt that the organic theory outlined in Tesco Supermarkets v Nattrass (citeq above) should be applied.	In the case of a company the need for those precautions against damages can only be recognised by human beings and it is only they who can
implement them.	This was the view taken by Kaye Jin	9--3:Y
Corporate Strata Plan No. 4303 v Albion Insurance Company Ltd (cited above, 707 to 709).	It is also consistent with observations made in the Kodak Case (at 236), although, perhaps, not made with the theory as it has since developed specifically in mind.

This means I have to deal with the alleged breach of Condition 4 solely on the basis of whether the plaintiff has satisfied me that Holmes was not reckless in discharging the rifle, that is that he did not actually recognise a danger to exist or, if he did, that when he fired he did so caring whether that danger was averted.	The answer depends entirely upon Holmes' evidence.		As I think I have already indicated, I found him to be an unsatisfactory witness.	I do not think I got from him an honest account of what went through his mind at the time.	Add to that the fact that I

have difficulty in seeing how anyone could have acted as he did without being conscious that he was taking a calculated risk with the safety of the person inside and I must conclude that the plaintiff has not discharged the onus on it.	Whilst I have not been able to find that Holmes was reckless, on the evidence I am not able to say he was not either.	::,

Admissions by insured

A further condition relied upon by the defendant was as follows:

"2(a)	The insured shall not without the consent in writing of the Company make any admission offer promise or payment in connection with any occurrence or claim and the Company if it so desires shall be entitled to take over and conduct in the name of the insured the defence or settlement of any claim."

The defence alleged a breach of ihe condition in these terms:	"[T]he plaintiff without the consent of the defendant permitfed Gillian Logan to obtain a default judgment against it in Action Number 444 of 1977".	Counsel for the defendant declined to address any submissions to me in support of this defence;	in these circumstances it should have been formally withdrawn.	Instead, I was left to deal with it without knowing how the defendant's case was put in the light of all the other evidence before me and the relevant authorities.

It will be recalled that Mrs. Logan issued her writ on 13 July 1977.	On 8 August 1977, solicitors acting for S & Y Investments (Number 2) Pty Ltd wrote to the manager of the defendant's branch office in Darwin confirming that
Mr. Bottrell had collected a photocopy of the writ, and seeking information about what action the defendant proposed
taking in relation to  the claim.	There followed	-'#
correspondence between the plaintiff insured's solicitors on the one side and Commercial Union and its solicitors on the other, culminating in letter from Alderman Lee Wilson & Mansfield on behalf of the defendant dated 12 January 1978 stating that "our client is not  prepared  to grant  your client indemnity  under the public liability policy''.	Two reasons were given:	public  policy  and  that  the circumstances giv:ing risP to ljability were not "accidental and fortuitous".	In the result, I have held the first of these reasons to be oound.	If I am wrong a11u Llle ueiendant was obliged to ind mnify the plaintiff, then this letter amounted to a clear and unequivocal  repudiation  of  the policy by the company.

In my opinion, failing to deliver a defence involved a breach of Condition 2(a) because, in effect, it constituted an admission of the allegations in the statement of claim (Order 23 Rules 13, 14, 15, 17 & 19) entitling the plaintiff to enter interlocutory judgment where the claim is one for unliquidated damages (Order 31 Rule 4).	In

Distillers Co. Biochemicals (Australia) Pty Ltd v Ajax Insurance Company Ltd (1974) 130 CLR 1 the High Court by a majority of two to one held that an insurer who elected not to take over or conduct the defence of an action under a condition in terms indistinguishable from Condition 2(a) did not merely thereby forgo the right to have the insured
comply with the first part of the condition, as for ex9mple by settling the action (although Stephen J did not consider
the insurer without obligation to the insured if it so elected (29 to 32)).

Counsel for the plaintiff distinguished this decision, pointing out in that case there had been no repudiation  of the policy  by the insurer.	He referred me to General Omnibus Company Ltd v London General Insurance Company Ltd (1936) I.R. 596 where the policy in question involved a c:onnii-inn in	terms 8imilu.r to Condition 2(d).
The Supreme Court of the Irish Free State upheld a decision

of Hanna J holding that where an insurer wrongly refused to indemnify the insured by erroneously asserting the claim fell within an exclusion clause thereby repudiating the policy, it could not afterwards rely upon a breach of a condition prohibiting admissions, settlements and the like. This case was referred to by all members of the Bench in the Biochemicals Case:	Menzies J approved it on this point (9 to 10);	Gibbs J approved another aspect of the decision, he did not disapprove it on this point (13 to 14);	Stephen J

appears to have approved it on this point (28).	I was also referred to Edwards v Insurance Office of Australia (1933)
34 SR (NSW) 88, but find it of little assistance because in that case no express provision such as Condition 2(a) was involved.

It could not be alleged that by suffering judgment to be signed in default of a defence, the plaintiff in any way compromised the defendant's interests.	The defendant did not suggest the plaintiff had any defence to the widow's action, plainly there was none.	No question of the plaintiff having acted otherwise than in good faith so far  as the defendant was concerned can therefore arise.
My conclusion may	liP.   sta·f·prJ   thns:	if I am wrong in                         . holding that the defendant is not obliged to indemnify the
plaintiff on grounds of public policy and because of failure to prove compliance with Condition 4, the defendant would not be entitled to avail itself of Condition 2(a), it having repudiated the policy before the default judgment was signed.

What I have said is enough to dispose of one other defence left standing but not supported by any submissions from the defendant, namely breach of an alleged implied condition to act in good faith, the breach being  constituted, so it was asserted, by the plaintiff failing to defend Mrs. Logan's action.

Limit of liability

I come now to the last defence raised in this action:	the claim the defendant's obligation to indemnify the plaintiff was expressly limited to $100,000.	The original policy was not produced.	The defendant's only original record of it - the policy record sheet - has been lost or destroyed.	The only evidence offered to support this particular limit was the claim facing sheet which came into existence in circumstances I have already outlined.
Everyone knows that public liability policies are subject to limits, the premiums vary accordingly.	The copy of the defendant's standard form of public liability policy, tendered by consent, expressly contemplates a limit of inaemnity.	Why the issue comes before mo the way it doc□ when it was for the plaiptiff to prove the relevant terms  and oondition:::i of the contra.cl of i11.su1-d11ce upon which it relies I cannot fathom.

To support the tender of the claim facing sheet the defendant relies upon s.5 of the Evidence (Business Records) Interim Arrangements Act 1984:

"5.	Admissibility Generally

Subject to this Act, where in a legal proceeding evidence of a fact or of an opinion is admissible, a statement of the fact or opinion in a document is admissible as evidence of the fact or opinion if -

the document forms part of a record of a business, whether or not the business existed at

the time when the question of admissibility arises;

the statement was made in the course of or for the purposes of the business;	and
the statement was -
made by a qualified person;	or
reproduced or derived from information -
in one or more statements, eac made by a qualified person in the c6urse of or for the purposes of the business;	or

from one or more devices designed for, and used for the purposes of the business in or for, recording, measuring, counting or identifying information, not being information based on information supplied by a person,
or both.
This section makes a statement admissible notwithstanding -
the rules against hearsay;
the rules against secondary evidence of the contents of a document;

that a person concerned in the making of the statement is a witness in the legal proceeding, whether or not he gives testimony consistent or inconsistent with the statement;	or

that the statement is in such a form that it would not be admissible if given as oral testimony,

but does not make admissible a statement which is otherwise inadmissible."

"Qualified person" is defined in s.4 as including, amongst others, a servant or agent employed or engaged in the business who had, or may reasonably be supposed to have

had, personal knowledge of the facts stated.	It was argued that it had not been shown that the claim facing sheet was made up by a qualified person, but for reasons given earlier in this judgment I think it may be inferred from the evidence given by Mr. Bottrell about the practice of his office and the file from whence the record came that the entries wer8 probably made in the handwriting of a cle k employed in the defendant's Darwin office from information taken directly by him from the original policy record sheet when the claim file was first opened on 28 January 1985.	I am assisted in reaching this conclusion by reference to the form and content of the document, something which s.8 permits me to do (i.e. for the purposes of drawing inferences to decid the question  of admissibility).	The person who  fillP.o  thP shPPt out, it	being Commercial Union's printed form for the purpose, appears to have had access to
the policy detail□	In other words, lL ct	ectr dUthentic.

More problematical is the submission that the claim facing sheet is inadmissible by reason of s.6(1) which provides:

"6(1)	Notwithstanding section 5, a statement made or obtained for the purpose of, or in contemplation of, a legal proceeding or other legal proceeding arising out of the same or substantially the same facts is not admissible."

I have no difficulty in ruling that the clerk's representations of the policy details in the facing sheet

were not made for the purpose of this or any other legal proceeding, by which I understand the sub-section to mean brought into existence with a view to being used in evidence.	I am satisfied that this document was a purely internal record entered up without thought of its having any evidentiary value in such proceedings.
;;
But what of the words "in contemplation of".	'l'hey ought to be construed as adding something to the words "for the purposes of'', though what they add is far from obvious. It is not, I think, sufficient to exclude a statement that it was made at a time when legal proceedings were contemplated;	the words "made in contemplation of" express more· than a temporal connection.	They suggest that the prospect of legal proceedingc must at leact bo the oooacion for the statement being made.	The document in question prc2upposes a claim undei· Ll1e vullcy llctv.LwJ been made, but it does not follow that legal proceedings were in contemplation.		The truth is that the state of the evidence does not enable me to say one way or the other.

The party seeking to tender a statement under s.5 must prove that it meets the requirements of that section. Section 6(1) constitutes, in effect, an exception to the right to have a statement received in evidence under s.5. The normal rule to apply is that where an enactment "expresses an ... exclusion which assumes the existence of

·i,

the general or primary grounds from which the ... right arises but denies the right ... in a particular case by reason of additional or special fact, then ... such an enactment supplies considerations of substance for placing the burden of proof on the party seeking to rely upon the additional or special matter" per Dixon CJ, McTiernan, Webb Fullagher and Kitto JJ	in Vines v Djordjevitch (1955) QI CLR 512, 519 to 520.	Often the fact that a statement was made for the purposes of or in contemplation of legal proceedings will be obvious from the statement itself - it is no so  here.	If the evidence on the point is peculiarly within  the knowledge of the party seeking to have the statement admitted, then not much will be required from the party objecting to it to transfer the evidentiary burden to his opponent.	Neither looking at the matter objectively or subjectively can I say that when the then clerk filled out thP facing &heet he contemplated legal proceedl11ys arising out of the claim.

I do not believe that this interpretation is in any way unsatisfactory.	The Courts have reserved to them ample power to determine what weight should be attached to hearsay material, be it single or double (s.9), and a broad discretion to reject evidence of this kind where its weight is slight or its admission would be unfair.	Happily, I can say that there is not the slightest reason to doubt the authenticity and accuracy of the claim facing sheet or any

other than a fanciful basis for supposing that the clerk concerned had the slightest interest in recording the facts inaccurately.	After all, it was not until nearly 10 years later that legislation making it admissible came into force.

I was asked by counsel for the plaintiffs to exercise my discretion under s.6(2) to reject the clai facing sheet on the ground that the policy record sheet had not been produced.	I decline to do so.	I accept
Mr. Bottrell's evidence that the defendant had tried but been unable to locate it.	On the other hand, I heard no explanation from the plaintiff about why it did not produce its copy of the policy or any other evidence, documentary or oral, about how much public liability cover it purchased when it paid its premium for the period in question.	Given my views about the probable accuracy of the claim facing sheet, the suggested basis for rejecting the document is quite inadequate.

For these reasons, the claim facing sheet is admissible and shows the limit of liability to have been
$100,000.	However, for other reasons the plaintiff's claim must fail altogether.

There will be judgment for the defendant.	I order the plaintiff to pay the defendant's costs of an incidental to the action.