Marsh v CGU Insurance Ltd t/as Commercial Union Insurance [2004] NTCA 1

PARTIES:	MARSH, Merilyn Kaye

	v

	CGU INSURANCE LIMITED t/as COMMERCIAL UNION INSURANCE
	(ACN 004 478 371)

TITLE OF COURT:	COURT OF APPEAL OF THE NORTHERN TERRITORY

JURISDICTION:	CIVIL APPEAL FROM THE SUPREME COURT EXERCISING TERRITORY JURISDICTION

FILE NO:	AP10 of 2003 (20101291)

DELIVERED:	22 January 2004

HEARING DATES:	11 December 2003

JUDGMENT OF:	Mildren, Thomas & Bailey JJ

REPRESENTATION:

Counsel:
	Appellant:	P O’Dwyer and M Cujeticanin
	Respondent:	S Ower

Solicitors:
	Appellant:	Ward Keller
	Respondent:	Hunt & Hunt

Judgment category classification:	C
Judgment ID Number:	Mil04326
Number of pages:	28

IN THE COURT OF APPEAL
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN

Marsh v CGU Insurance Ltd t/as Commercial Union Insurance [2004] NTCA 1
No. AP10 of 2003 (20101291)

	BETWEEN:

	MERILYN KAYE MARSH
	Appellant

	AND:

	CGU INSURANCE LIMITED t/as COMMERCIAL UNION INSURANCE (ACN 004 478 371)
	Respondent

CORAM:	MILDREN, THOMAS & BAILEY JJ

REASONS FOR JUDGMENT

(Delivered 22 January 2004)

Mildren J:
[1]	I have had the advantage of reading a draft of the judgment of Thomas J, in which the facts and issues in this appeal are set out and need not be repeated.
[2]	The first issue in this appeal is whether the learned trial Judge was correct in drawing the inference that the respondent, which bore the onus of proof, had proved that the appellant had received a copy of the relevant policy of insurance before she renewed that policy prior to the flood which damaged her property in January 1998.
[3]	The learned trial Judge found that the relevant policy was issued in August 1996 and renewed in 1997.  The respondent insurer was unable to prove by direct evidence that the policy was received by the appellant, and sought to rely upon evidence of its system to prove the receipt of the policy.  There is no doubt that evidence of a system may be admissible to prove such a fact, but the question is, was the evidence sufficient to enable that inference to be drawn?  This did not depend upon the learned trial Judge’s view of the credibility of the witnesses, and that being so, this Court is in as good a position as the learned trial Judge to see whether or not that inference should be drawn, although respect and weight will be given to the conclusion of the trial Judge: Warren v Combes (1979) 142 CLR 531.
[4]	The defendant’s case, in so far as it relied upon the system, attempted to show that invariably the policy document was attached by stapling it to the renewal notice whenever there was a change in policy wordings.  As the respondent clearly received the renewal notice at a time when there had been a change in policy wordings, she must have received the policy.  The evidence of the Darwin branch manager Mr Wardle, was that during the period from June 1996 to November 1998 when he was manager, the insurer produced renewal notices at its Melbourne data centre which were air bagged to the Darwin office.  It was the assigned duty of a clerical assistant to dispatch the renewal notices in accordance with standard procedures which required the enclosure of policy wordings in the renewal notices whenever there was a material change made to a relevant policy wording.  As the policy issued in August 1996 materially changed the wording of a previous policy between the parties (attachment CW7 to the statement of Craig Wardle), the system required the renewal notice in August 1996 to have the policy wordings attached to it by the respondent’s clerical assistant.  The system required the renewal notice, and the policy attached to it, to be sent to Katherine Insurance Services Pty Ltd, an insurance agent.  There is no finding that Katherine Insurance Services Pty Ltd acted as the appellant’s agent.  Rather, the assumption has been made by the parties that Katherine Insurance Services Pty Ltd acted as agent for the respondent.  No evidence was given by any one from Katherine Insurance Services Pty Ltd as to what it did with renewal notices it received from the respondent.  The appellant acknowledged that she received the relevant renewal notices and paid the premium to renew the insurance.
[5]	Mr Wardle’s evidence was that whilst he was manager, he personally saw policies attached to renewal notices to be sent out and on occasions when he had visited Katherine Insurance Services Pty Ltd he had seen renewals and new contracts in that office ready for posting, and that the policy booklets were attached.  There was no evidence as to when this occurred, other than at some time during the period June 1996 to November 1998, and no evidence as to whether or not this had been seen on one occasion only or more than one occasion.
[6]	No evidence was called from the clerical officer or officers employed by the respondent between 1996 and 1998.  The respondent did call a Ms Jane Maher who was a clerical officer employed by the respondent between 1990 to 1995 in the Darwin office.  Her evidence supported that of Mr Wardle.  In addition, she assisted with the training of clerical staff responsible for sending out renewal notices, which included instructions on the need to attach a copy of the policy wording to the renewal notice, whenever there was a significant change to policy wordings.
[7]	In addition, evidence was led that the appellant had held policies with the respondent over this property or another property in Katherine for a number of years, that the policies on each occasion expressly excluded cover for damage by flood, and that the respondent’s system required a copy of the policy to have been given whenever it was “offered, renewed, varied or extended.”  Mr Wardle’s evidence supported the conclusion that on at least two or three other occasions, the respondent’s system, if it had been faithfully followed, required the sending to the appellant of the policy wording with the renewal statement.
[8]	Evidence of the general course of business or of an office system is admissible in order to show what would ordinarily be done in a particular set of circumstances.  From this, a court may be entitled to infer that what would ordinarily have been done, was done on this occasion, it being more probable than not that the general course will be followed in the particular case: see Martin v Osborne (1936) 55 CLR 367 at 375-376 per Dixon J; at 386 per Evatt J; Connor v Blacktown District Hospital [1971] 1 NSWLR 713 at 721 per Asprey JA; Olga Investments Pty Ltd v Citipower Ltd [1998] 3 VR 485 at 486-7 per Ormiston JA; at 497-498 per Charles JA.  These principles may enable an inference to be drawn from the evidence of Mr Wardle and Ms Maher that in or about August 1996, a copy of the renewal notice with a policy attached addressed to the appellant was dispatched to Katherine Insurance Services Pty Ltd.  However, that evidence does not, by itself enable any inference to be drawn about whether or not Katherine Insurance Services Pty Ltd sent on the renewal notice with the policy attached to the appellant.  The evidence of system related to the respondent’s system.  Mr Wardle could not say that this system was followed by Katherine Insurance Services Pty Ltd when it sent out the renewals, but that was not the only evidence on the topic, and the question ultimately is whether or not the facts warranted an inference to be drawn adversely to the appellant from all of the circumstances.  The remaining factors to be considered are these.  First, there is some evidence from Mr Wardle that he has seen on at least one occasion between June 1996 and November 1998 renewal notices with policies attached ready for posting in the office of Katherine Insurance Services Pty Ltd.  Secondly, there is no reason why, if a renewal notice with policy attached was received by Katherine Insurance Services Pty Ltd, the policy would be detached by Katherine Insurance Services Pty Ltd before sending out the renewal notice.  Common sense suggests that this would be most unlikely.  Thirdly, although there is no evidence of postage, the fact that the renewal notice was received is not in doubt.  This being so, in my opinion the policy more likely than not was received with it.  Furthermore, the same inference can be drawn in respect of two or three prior renewals.  The probability that on not one of these occasions the appellant received the policy wording with her renewal notice is very slight indeed.  As against that, the appellant did not say she did not receive the policy, only that she had no recollection of having done so, and that if she had received it, she would not have read it but filed it in her filing cabinet with the renewal notice.  Her evidence is, as Thomas J says, neutral.  The appellant also relied upon the inference to be drawn from the so-called rule in Jones v Dunkel (1959) 101 CLR 298.  In fact, the circumstances in Jones v Dunkel related to what inferences might be drawn by the failure of the defendant to give evidence in a civil trial.  However, the so-called rule now relates to what inference can be drawn by the failure of any party to call a witness, or to tender documents, or to produce material to an expert witness, where the witness, evidence or material was within the power of the party in question, and, in the case of a non party witness, the missing witness would be expected to be called by one party rather than the other.  I am far from satisfied, even on the balance of probabilities, that evidence from a suitable person from Katherine Insurance Services Pty Ltd as to its systems in posting out renewal notices was not equally available to both parties, given that the appellant had been doing business with that company and its predecessor for over twenty years, that Katherine is a small town where long-term residents know each other well, that there is nothing to show that Katherine Insurance Services Pty Ltd acted solely as agent for the respondent, and nothing to show that an employee of that company at a junior level would not have been able to give this evidence and would have been more likely to favour the respondent than the appellant.  Moreover, the rule in its modern form does not permit an inference that the untendered evidence would be damaging to the party not tendering it – despite what Wigmore on Evidence, 3rd Edn, (1940) Vol 2, s 285, p 162 said, viz that the inference to be drawn is that the party feared to call the evidence because it would have exposed facts unfavourable to the other party: see also Jones v Dunkel, supra at 320-321.  On the authorities in Australia, the inference to be drawn is that the evidence would not have assisted that party’s case, but that does not mean (a) that the untendered evidence would have been damaging to that party’s case, or (b) an inference cannot be drawn favourable to the party who failed to call the witness if there is other evidence which justifies the drawing of the inference.  Nevertheless if there is doubt about whether the inference should be drawn, the rule may operate to resolve that doubt: see generally Cross on Evidence, (Aust Edn, J D Heydon Ed) para [1215] and the authorities therein cited.  In the circumstances of this case, I would draw the inference in favour of the respondent even if I thought the rule had any application to the circumstances of this case because I consider that the circumstantial evidence is strong.  Therefore, in all the circumstances, in my opinion the correct inference to be drawn is that the policy was received at the time when the renewal notice arrived in about August 1996.
[9]	The second issue is whether proof of the receipt by the appellant of the policy wording in about August 1996 is sufficient to prove that the appellant had been “clearly informed … in writing” that her policy did not contain flood cover: see s 35(2) of the Insurance Contracts Act 1984, (Cwth) which provides (relevantly):
“Subsection (1) does not have effect where the insurer proves that, before the contract was entered into, the insurer clearly informed the insured in writing (whether by providing the insured with a document containing the provisions, or the relevant provisions, of the proposed contract or otherwise) … 
(b) … that the contract would not provide insurance cover in respect of the happening of that event.”
[10]	In this case the policy provided that the policy does not cover damage by flood, as well as a simple definition of flood: see p 13.  This is repeated on p 15.  On p 36, the lack of flood cover is again mentioned, although there is no reference there to the definition.  Finally, the policy contains an index on p 43 which refers to the references to “flood” at pps 13, 15 and 36 of the policy.  There is no lack of clarity in the wording of the policy.  It is quite clear from the definition, for example, that when water overflows from a river onto normally dry land that is a “flood”.
[11]	In Hams & Anor v CGU Insurance Limited (2002) 12 ANZ Insurance Cases 61 – 525, Einstein J held that the provisions of s 35(2) of the Insurance Contracts Act 1984 (Cth) could be met if the insurer provided to the proposed insured a document such as the proposed policy, which contained the relevant wording.  I agree.  Plainly, the words in parenthesis is s 35(2) clearly contemplate such a possibility.  Whether the policy wording in fact “clearly informed” the insured that there was no cover for flood is a question of fact to be determined by an examination of the document in question.  I do not consider that it is necessary for the relevant exclusion to be prominently displayed in bold capitals over the front cover in order for the insurer to succeed on this question.  There are now a large number of “prescribed events” such as flood which are required to be excluded by clearly informing the proposed insured that they are not covered risks and it would be impractical to require them all to be so displayed.  Furthermore, the language of s 35(2) suggests that the proposed insured can be clearly informed merely by providing the insured with a copy of the policy which shows the exclusion in clear and unambiguous terms.  I agree with the learned trial Judge that this is plainly so in this case.  I reject the submission of the appellant’s counsel that the policy is a lengthy document, did not readily disclose that flood was exempted, and required a careful reading of the policy.  The answer to the question “is flood covered” is easily ascertainable by any person of average intelligence and education.  Similarly, the answer to the question, “what risks are excluded” would easily have revealed that flood is not covered.  Even though s 35 is plainly beneficial legislation, a fair reading of s 35(2) does not warrant the conclusion that the result need go further than provide for the relevant exclusion in the policy wording in clear and unambiguous language and in a manner which a person of average intelligence and education is likely to have little difficulty in finding and understanding if that person reads the policy in question.
[12]	I would dismiss the appeal.
Thomas J:
[13]	This is an appeal from a decision of the learned trial judge in which he dismissed the plaintiff’s (appellant’s) claim against the defendant (respondent) for flood damage to her property at 56 Riverbank Drive, Katherine.
[14]	The appellant had made a claim for damages plus interest pursuant to s 57 Insurance Contracts Act 1984.  The appellant accepted that the policy in its terms does not indemnify the plaintiff against flood damage.  The appellant relied on s 35 of the Insurance Contracts Act 1984.
[15]	The grounds of appeal as set out in the Notice of Appeal (AB 682) are as follows:
“2.(i)	His Honour erred in finding that the Defendant established, within the meaning of the Section 35(2) of the Insurance Contracts Act 1984, that it ‘clearly informed’ the Plaintiff in writing, at or before the new policy effected by the home insurance policy commencing August 1996 and being Exhibit P3 (CW7) or the First Choice Home Insurance Policy, Exhibit P7, that the Plaintiff did not thereby have insurance cover for damage by flood.
(ii)	There was no evidence that the Defendant sent either the Home Insurance Policy, being Exhibit P3 (CW7) or the First Choice Home Insurance Policy being Exhibit P7 beyond its agent.
(iii)	His Honour erred in failing to take into account the principle in Jones v Dunkel by reason of the Defendant’s failure to call any evidence from its agent Katherine Insurance Services or by offering an acceptable explanation why no evidence could be called from this source.
(iv)	His Honour failed to give adequate reasons for his decision.”
[16]	The orders sought by the appellant are (AB 683):
“1.	That the whole of the judgment of His Honour Justice Angel delivered 20 June 2003 be set aside.
2.	That the matter be remitted for re-trial.
3.	Alternatively that the Court of Appeal substitute a verdict for the plaintiff in place of the verdict of His Honour Justice Angel.
4.	That the respondent pay the appellant’s costs of and incidental to the proceedings before His Honour Justice Angel at the Supreme Court scale to be taxed in default of agreement and certified fit for Counsel.
5.	That the respondent pay the appellant’s costs of an incidental to this appeal.
6.	Such further or other order or orders as this honourable Court sees fit.”
[17]	In his reasons for judgment, the learned trial judge found (par 13 AB 674) as follows:
“In the present case I am of the view that if the defendant insurer has established on the balance of probabilities that the plaintiff was sent either the Home Insurance Policy document annexure CW 7 to Exhibit P3 or the First Choice Home Insurance Policy Exhibit P7 in force at the time of the flood at or before the time the plaintiff renewed her insurance in August 1997 that is sufficient to establish that the plaintiff was clearly informed in writing by the defendant that the defendant was under no liability in respect of a claim for damage by flood.”
[18]	The relevant policies are the 1995 and 1996 policies, the 1995 policy was referred to as CW7 and is set out in the Appeal Book commencing at 443 and the 1996 policy referred to as CW8 commencing at AB 579.  On page 13 (AB 586), page 15 (AB 587) and page 36 (AB 598), this policy states the insurer does not cover damage caused by flood.
[19]	The first issue on the appeal was whether the relevant policy was actually sent and whether the respondent had established on the balance of probabilities that it had complied with the requirements of s 35(2) of the Insurance Contracts Act 1984.  Section 35 of this Act provides as follows:
“(2) INSURANCE CONTRACTS ACT 1984 
- SECT 35
Notification of certain provisions
(1)	Where: 
(a)	a claim is made under a prescribed contract; and
(b)	the event the happening of which gave rise to the claim is a prescribed event in relation to the contract;
the insurer may not refuse to pay an amount equal to the minimum amount in relation to the claim by reason only that the effect of the contract, but for this subsection, would be that the event the happening of which gave rise to the claim was an event in respect of which:
(c)	the amount of the insurance cover provided by the contract was less than the minimum amount; or 
(d)	insurance cover was not provided by the contract. 
(2)	Subsection (1) does not have effect where the insurer proves that, before the contract was entered into, the insurer clearly informed the insured in writing (whether by providing the insured with a document containing the provisions, or the relevant provisions, of the proposed contract or otherwise) or the insured knew, or a reasonable person in the circumstances could be expected to have known: 
(a)	where the effect of the contract, but for subsection (1), would be that the liability of the insurer in respect of a claim arising upon the happening of the event would be less than the minimum amount—what the extent of the insurer's liability under the contract in respect of such a claim would be; or 
(b)	where the effect of the contract, but for subsection (1), would be that the insurer would be under no liability in respect of such a claim—that the contract would not provide insurance cover in respect of the happening of that event. 
(3)	Regulations made for the purposes of this section take effect at the expiration of 60 days after the day on which they are notified in the Gazette. 
(4)	Where regulations made for the purposes of this section are amended after the day on which a particular contract of insurance is entered into, the amendments shall be disregarded in relation to the application of subsection (1) to that contract.”
[20]	The background to this matter is set out in his Honour’s reasons for decision at par 5 (AB 667 - 668):
“The plaintiff first insured with the defendant’s predecessor in July 1983, when, through an insurance agent, one Brodie, she entered into a Homepak II Buildings and/or Contents Policy jointly with her then husband in respect of the then matrimonial home in Katherine.  That policy expressly excluded damage caused by flood.  The plaintiff separated from her husband in June 1985 and the plaintiff through the insurance agent Brodie had the home contents insurance transferred into the plaintiff’s name alone.  That contents policy was renewed in the plaintiff’s name on 24 August 1985. The plaintiff was not requested to fill in a new proposal in respect of this change of circumstance.  On 1 January 1986 the Insurance Contracts Act 1984 commenced.  As a consequence the defendant issued new policies in respect of house contents insurance in the form of Exhibit D4 annexure B.  This policy also expressly excluded damage caused by flood.  In July 1991 the defendant altered its contents policy and once more expressly excluded flood cover.  In 1992 the plaintiff’s father died and the plaintiff inherited the Riverbank Drive property.  The plaintiff requested the insurance agent Brodie to transfer the contents insurance in respect of the property to her.  In November 1992 the home insurance policy of the defendant with respect to the riverside property was in the form of Exhibit P6.  Once again flood cover was expressly excluded.  At p 15 of that policy document appears the following:
	‘Note:  Flood cover is not included in this policy.  Special application may be made if you require such cover.’
In December 1995 a further contents policy was issued by the defendant being attachment ‘CW 7’ to the witness statement of the witness Craig Wardle being Exhibit P3.  At p 13 of the policy document appears the sentence, inter alia -
		‘We do not provide cover for damage by flood.’
In August 1996 the defendant issued yet another policy called ‘First Choice Home Insurance’ in respect of the contents of the plaintiff’s riverside property.  That policy, being Exhibit P7, was the policy of insurance in force between the plaintiff and the defendant at the time of the Katherine flood.”
[21]	Mr O’Dwyer, counsel for the appellant, submitted that the appellant’s evidence before the learned trial judge was capable of supporting the proposition that the respondent had not discharged its onus of establishing that the appellant had received the policies.
[22]	On behalf of the respondent, it was not asserted that Ms Merilyn Kaye Marsh was not a truthful witness.  The appellant’s argument, is that the issue is the inferences to be drawn from her evidence.  On the submission made by Mr O’Dwyer, the evidence of Ms Marsh is capable of supporting the proposition that she did not receive the policy documents.
[23]	Counsel for the appellant referred to Ms Marsh’s statement (AB 304) in which Ms Marsh said (par 6):
“I cannot say that I was aware of the flood exclusion endorsements or the endorsement notices or renewal invitations sent to me because when I got the notices I would look at them fairly briefly, note the amount of the premium and pay the premium.  I did not know that I had to read the notices sent to me by Pfitzners.  I thought they were just like a receipt of what I had to pay.  It was never brought to my attention by Mr Pfitzner that flood was not included in the policy nor was the definition of flood as contained in the policy explained to me.”
[24]	In par 11 of this statement, Ms Marsh has listed all of the policy numbers from the renewal schedules provided to her by solicitors for the respondent with different policy numbers.  In par 12 Ms Marsh deposes to the fact that she cannot explain the difference in the policy numbers.  She further states that she did not receive a copy of any of the policies of insurance referred to in the renewal schedules or any notification that the policies had changed in any way.  Ms Marsh gave evidence (AB 38) that when she received the renewal notices she took them to a Mr Brodie, obtained a receipt and then filed the renewal notice and the receipt away.  She stated she did not remember ever having received a copy of a policy.  At AB 41 Ms Marsh stated she had never received a policy.
[25]	Under cross examination about the first policy issued in July 1983, Ms Marsh gave evidence (AB 52) that she did not remember seeing it.  Her evidence is that every year thereafter she received a renewal notice which she paid and then stapled the receipt to the renewal notice and placed in a file (AB 55).  Ms Marsh gave further evidence in cross examination (AB 61) that she cannot remember whether she received a document in 1986 which stated “Please note the policy does not cover flood”.  She stated “I could’ve got it, yes, but I don’t remember whether I got it or not.  It’s too long ago.”
[26]	Ms Marsh was shown Exhibit P5, or alternately Exhibit CW5, which is the first of the two relevant policies.  On reading the relevant part of the document, Ms Marsh agreed that it stated “flood cover is not included in this policy.  Special application may be made if you require such cover.”
[27]	Ms Marsh gave the following evidence in cross examination (AB 66):
“Now CGU says that when you got the next renewal after that in 199 (?) - in fact, it would’ve been August 1991 - - -?---Yes.
- - - you would’ve got a copy of that booklet - - -?---Yes.
- - - attached.  Do you recall that?---No.
If you did get a copy what would you have done with it?---I would’ve just looked through it and just put it in my filing cabinet with the rest of my stuff.
Attached to the receipt?---Well, just put it in - if I had a booklet, I would’ve just put it in the filing cabinet, yes.”
and at AB 67:
“His Honour:  Ms Marsh, do you deny every receiving that or you just can’t remember whether you got one or not?---I just can’t remember ever seeing a booklet.  I never - you know, I just don’t remember seeing it at all.  I always got my renewal notice but never ever remember getting a policy from the beginning from when I took out the insurance.”
[28]	Her evidence at AB 78 is as follows:
“So this document was sent to you in 1997?---Yes.
Now you’ll see as we talked about before underneath the words ‘Date of issue’ above the two addresses?---Yes.
Are the words ‘To be attached to and read in conjunction with the company’s policies’?---Yes, that’s right.
Isn’t it possible, Mrs Marsh, that in light of those words there was a policy booklet attached to this renewal?---No.
I’m not asking whether you agree with the proposition - - -?---No.
- - - I’m just saying is it possible?---No.
It’s not possible?---No.
Well, you’ve already - - -?---I really don’t think - like I said, I don’t remember seeing anything like - as a policy booklet or anything else.
Well, that’s your evidence?---Yes.
You do not remember?---No, I don’t remember seeing it.
I’m not asking whether you remember it or whether it actually occurred, my question is, is it possible that a policy booklet was attached to that schedule of renewal?---No.”
[29]	I am not persuaded the evidence of Ms Marsh supports an inference that she did not receive the policy documents.  Her evidence on this issue is neutral and does not assist to prove or disprove whether such documents were sent.
[30]	Since preparing these reasons for judgment, I have had the benefit of reading the draft judgment prepared by Mildren J.  I have come to a different conclusion to Mildren J as to the disposition of this matter.  However, I am in agreement with the findings by Mildren J that the actual policy document adequately advised an insured that flood was exempt.  His Honour deals with this issue in pars 9 to 11 inclusive in his reasons for judgment.
[31]	There was other evidence presented by the defendant on which his Honour the learned trial judge relied to make his finding (AB 676) that “it is more probable than not that the appellant received the Home Insurance Policy document annexure CW7 to Exhibit P3 and the First Choice Home Insurance Policy Exhibit P7 before her last renewal in August 1997 prior to the flood”.
[32]	Evidence was called for the respondent.  In his witness statement dated 3 June 2003 (AB 332 par 10) Mr Craig Wardle:
“From about 1994 or 1995 to about 2000, correspondence from CGU to policy holders was sent via Katherine Insurance Service.  In respect of the renewal of policies, CGU produced an agent copy and an insured copy of the renewal schedules.  The renewal notices were air bagged to the Darwin office of CGU from the Melbourne data centre.  Both agent and insured copies of the renewal schedule were sent to Katherine Insurance Services for dispatch to the insured.  It was the assigned duty of a clerical assistant to dispatch the renewal notices in accordance with standard procedures.  Compliance with the standard procedures forms part of the initial training of the clerical assistant.  Attached hereto and marked with the letters “CW4” is a computer generated copy of the renewal notice to the plaintiff for the period 24 August 1997 to 24 August 1998 which shows the nature of the content of the renewal notice.  A similar notice would have been sent to the insured in respect of each period of renewal of the policy (see attached bundle “CW2”).”
[33]	In his evidence in cross examination, Mr Wardle gave the following evidence (AB 96 - 97):
“Now you were employed as manager in the Darwin office from June 1996 to November 1998 and you say with respect to that, that during that period the systems operated generally the way you have described.  Did you personally see that the documents were sent out in the form described, which is one document renewal notice, the whatever other notices that had to be attached and the policy?---Yes.
How was the policy attached to that?---Stapled to the back of the renewal schedule so it could folded.
And to whom did they go?---In my time here, they went to Katherine Insurance Service.
And you do not know what Katherine Insurance Service did with them?---Only through the business dealings that I had with them at the time, they would forward them on in the usual manner.
Yes, but have you got any personal knowledge of that occurring?---Other than to say than when - when I did visit them and they were going through a renewal run, I would see the things that they would be posting out.
Yes.  You have no independent - apart from that you have no independent memory of any document with respect to Mrs Marsh being treated in that way?---No, that’s correct.”
[34]	Mr Wardle gave evidence in cross examination (AB 99) that he actually supervised the system in 1997 and 1998.  He believed the policies were received by the Katherine Insurance Services.  He could not say absolutely that is what occurred.  In re-examination, Mr Wardle gave evidence (AB 101) that he did visit the Katherine Insurance Services.  He recalls seeing the renewals or new contracts at this office sitting there ready to be posted.  He stated the policy booklets were attached.  In answer to a question from the learned trial judge it is Mr Wardle’s evidence that the renewal notices were sent from the Melbourne office of CGU to Darwin.  It was in the Darwin office of CGU that any necessary attachments were made to the documentation received from Melbourne.
[35]	Mr O’Dwyer on behalf of the appellant submits that Mr Wardle’s answers with respect to what happened in the Katherine office are unsatisfactory.  It is argued that there is no evidence as to when Mr Wardle went to the Katherine office, or how long he was there for.  It is submitted that in these circumstances the answers are unsatisfactory in terms of establishing what happened in the Katherine office.  Mr O’Dwyer points to the fact that no person was called from the Katherine office to give evidence of what occurred in that office.  There is no evidence from the person who was assigned the task of sending out the renewal notice and the policy.  Mr Brody ran the Katherine office till 1993.  The affidavit of Jacqueline May Presbury sworn 30 March 2003 in the submission for the appellant, highlights the absence of a person from the Katherine office to give evidence as to their procedures.
[36]	Mr O’Dwyer further argued that there was no explanation given for why someone from the Katherine office was not called.  Such a person was only available to the respondent.  The appellant could not have been expected to call such evidence.
[37]	On the case argued for the appellant the Court had been asked by the respondent to draw an inference that because the Melbourne office attached the policy to the renewal notice, the appellant received the policy because she had agreed she received the renewal notice.
[38]	On the appellant’s case the real issue is, did Ms Marsh receive policy number 4 and policy number 5?  In the absence of any evidence from that part of the organisation responsible for forwarding the policy, it is the appellant’s argument that the respondent has not discharged the onus of proof.
[39]	It is submitted the learned trial judge did not weigh up all these matters and did not weigh up the point referred to as the Jones v Dunkel rule.  This is a reference to the High Court authority of Jones v Dunkel 101 CLR 298.
[40]	Counsel for the appellant argues that the unexplained failure by the respondent to call evidence from the Katherine office concerning the forwarding of the policy to the appellant may give rise to an inference that such evidence would not have helped the respondent.  The appellant’s complaint is that the learned trial judge did not have regard to this principle when drawing inferences in favour of the respondent.
[41]	Mr Ower, on behalf of the respondent, concedes that the burden of proof concerning the application of s 35(2) of the Insurance Contracts Act 1984 (Cth) lies with the respondent.
[42]	Mr Ower refers to the evidence before the learned trial judge that during 1996 and 1997 “the policy wording” was attached to renewal notices and sent to Katherine Insurance Service to be forwarded to the policy holder.  At AB 101, Mr Wardle gave the following evidence:
“His Honour:  Mr Wardell (sic), can I - I just want to ask you something.  All this documentation originated in Melbourne, is that right?---Correct.
That was the then head office of Commercial Union?---Correct.  It still does, today.
Yes, and the Melbourne office sends everything to the Darwin office?---It’s actually not out of our Melbourne office, it’s a secured premises off-site where all these things get run through and printed, and then they’re air bagged to us on a given day of the weeks, each week, and then we, in our office, would distribute the items and attached any attachments that would need to be sent out with them.
So as far as the attachments went, it all happened in Darwin rather than Melbourne?---Correct.
Mr Ower:  Now in respect to paragraph 10 my learned friend has asked you whether you had any independent knowledge of what occurred in 1995 or up to June 1996, and you said, ‘No’.  Isn’t it the case that you’ve also given evidence that you inherited a system?---Yeah there was a system in place, and the system’s been, basically, in place before my time here, that whenever there was a change to the contract, that we would put the wordings on dispatch them in that format that I talk about.  And that system was already in place when I arrived here, so we continued with that system - - -
And you maintained that system?---Absolutely, yes.
But you don’t have any independent knowledge of what occurred in ‘94/95?---No.
But when you started, that was the system in place?---Yes.”
[43]	Mr Wardle also gave evidence (AB 101):
“Mr Wardell (sic), you stated that, in cross-examination, that you actually visited Katherine Insurance Services at some time?---Yep.
And what did you see when you actually visited Katherine Insurance Services?---Basically if we’d sent them a bundle of renewals, or new contracts, the wordings were attached in our office and sent to Katherine Insurance Service, and I can recall on occasions that they were sitting there, or ready to be posted, or whatever.  I mean, it was just a standard practice.  We would issue it to them and they would on forward.
And at that time, on these occasions when you saw them waiting to be sent, did you actually see the policy booklets attached in certain circumstances?---Yes.”
[44]	Mr Ower further argues that the renewal notices also support an inference that they were attached to a policy wording.  The Court was taken to AB 374 which is the renewal notice for period 24 August 1996 to 24 August 1997.  It states at the top of the first page that this document “To be attached to and read in conjunction with the Company’s Policy”.  The same wording is used at the top of the first page of the renewal notice for period 24 August 1997 to 24 August 1998 (AB 378).
[45]	Mr Ower also noted the learned trial judge’s reference to evidence from Ms Maher, Mr Pile and Mr Nolland that the sending of policy wordings in this manner was part of a system.
[46]	The evidence of Mr Damien Pile appears at AB 103 - 107 and his statement appears at AB 614 - 616.  Mr Pile has been an employee of the respondent since 1989.  From June 1989 to November 1998, Mr Pile was the area manager for the respondent in Alice Springs.  Mr Pile did not have within his knowledge what occurred in Darwin with respect to insurances for the Katherine area (AB 103).  Mr Pile stated in his statement (AB 614).  In par 6 of this statement, Mr Pile states (AB 615):
“From my experience, it is CGU’s normal practice that a renewal notice is sent out without a policy wording, unless there has been an alteration to the policy wording since last renewal date.  If there has been an alteration, or a policy conversion, then a new policy wording will be attached to the renewal advice with some sort of letter advising the customer of the alteration.”
[47]	A statement prepared by Ms Jane Maher was tendered (Exhibit D19, AB 620 - 663).  Ms Maher was employed by Commercial Union the predecessor to the respondent.  From 1990 to 1995 she was employed in the Darwin office.  Ms Maher attests in her statement to the standard practice at that time in respect of renewal notices.  She referred to the requirements to attach policy documents to the renewal notices where a new policy wording had been implemented since the last notice or notices.  She also stated that between 1990 - 1995 she assisted with training of staff which included training staff as to the requirement to attach new policy wordings to renewal notices.  Ms Maher gave evidence (AB 113 - 177).  Her evidence was that during the time she was in Darwin the office would receive the renewal schedules from the Melbourne office.  If the policy wordings were required to be attached this was done in the Darwin office and sent to the insured with a copy sent to the agent.
[48]	Mr Ronald Nolland gave evidence at AB 109.  Mr Nolland is an employee of the respondent company and has been an employee of this company and its predecessors for 29½ years.  He made a statement Exhibit D4 (AB 493).  Mr Nolland became national underwriting manager in 1990.  From 1983 onwards he was based either in Melbourne or Sydney.  In his statement, Mr Nolland attests at par 9 (AB 495):
“In the period between 1987 and 1998 insureds received periodic dispatches from Commercial Union, outlining the details of any policy alterations relating to its product enhancements or variations.  These notices would have been set out as part of the renewal cycle.  Attached hereto and marked with the letter ‘D’ is an example of an Important Notice and bears the coding C06H10 and is dated 5/96.”
[49]	Mr Nolland agreed that he had no personal knowledge whether the systems to which he adverted were implemented in Darwin.
[50]	Mr Ower argues that the learned trial judge drew an inference from all of this evidence that the relevant policy wordings had been set to Ms Marsh (AB 676).
[51]	It was submitted for the respondent that the rule in Jones v Dunkel (supra), goes no higher than the failure by a party to call a witness may, not must, in appropriate circumstances, lead to an inference that the uncalled evidence would not have assisted that party’s case.
[52]	Mr Ower asserts in his written submission that circumstances where a finding has been made by the learned trial judge, the rule has no application:
“Jones v Dunkel (1959) 101 CLR 298.
JPQS Pty Ltd v Cosmarnan Constructions Pty Ltd [2003] NSWCA 6 at [23] - [24].
Cross on Evidence (6th Aust Ed.), para [1240] ff.
Mr Ower further submitted that:
“11.	It is also unclear whether the evidence of any employee of Katherine Insurance Services would assist or not assist the Court.  This characteristic of the rule was explained by Glass JA in Payne v Parker [1976] 1 NSWLR 191 at 202:
“… the condition is made out when the witness is presumably able to put a true complexion on the facts, might have proved the contrary, would have had a close knowledge of the facts, or where it appears that he had knowledge.  I would think it insufficient to meet the requirements of principle that one party merely claims that the missing witness has knowledge, or that, upon the evidence, he may have knowledge.  Unless, upon the evidence, the tribunal of fact is entitled to conclude that he probably would have knowledge, there would seem to be no basis for any adverse deduction from the failure to call him.”  (footnotes omitted)”
[53]	Mr Ower goes on in his written submissions to state:
“12.	By way of contrast, the Appellant’s evidence was clearly that she had no memory of whether she either received a policy wording.  It is erroneous to suggest otherwise: AB 67, 68, 70, 78.
13.	Cross on Evidence (6th Aust Ed.,) at [1215] states:
“[t]he rule [in Jones v Dunkel] only applies where a party is ‘required to explain or contradict’ something.  What a party is required to explain or contradict depends on the issues in the case as thrown up in the pleadings and by the course of evidence of the case.  No inference can be drawn unless evidence is given of facts ‘requiring an answer’.”  (footnotes omitted)
14.	There is nothing in the evidence of Mrs Marsh that requires contradiction.
15.	Furthermore, her answers to various hypothetical suggestions demonstrates that her evidence is not to be preferred: AB 67, 78.
16.	In the circumstances, it can not be categorically stated that the decision of the trial judge was not affected by his impression about the credibility of Mrs Marsh, or her demeanour, etc., in giving evidence.  As such, this Court would be reluctant to interfere with his findings.
Warren v Coombes (1979) 142 CLR 531 at 551.
Fox v Percy (2003) 197 ALR 210.”
[54]	In my opinion, the evidence of Mrs Marsh that she does not remember receiving the requisite policy document may not call for contradiction but it does require explanation if the respondent is to discharge the onus upon them under s 35(2) of the Insurance Contracts Act 1984.
[55]	The evidence of Mr Pile related to the systems employed by the respondent company.  However, Mr Pile was not able to assist with how the systems were implemented in Katherine.  Ms Maher gave evidence as to standard practises of the respondent company up to 1995 which was prior to the period covered by the two relevant policies.
[56]	Mr Nolland also gave evidence as to the systems employed by the respondent.  However, Mr Nolland could not give evidence as to whether these systems were implemented in Darwin.  Mr Wardle gave evidence he visited the Katherine Insurance Services.  However, he does not state when it was he visited Katherine Insurance Services and observed the renewal notices ready to be posted.  There was no evidence called from the Katherine Insurance Services.
[57]	Counsel for the appellant has put forward six reasons why evidence from Katherine Insurance Services is of critical importance:
1.	The Katherine Insurance Services is the actual office from which the policy would have been sent.
2.	The systems that applied in the Katherine office was in point not what happened in Darwin.
3.	The forwarding of the policy was the assigned duty of a clerical assistant in Katherine trained in the procedures.
4.	The policy of the respondent company was that the company should be able to prove the document was sent.
5.	At least some evidence of what occurred in the Katherine Insurance Services office was critical.
6.	It would be wrong to suggest that anyone who might give such evidence was not in the camp of the respondent and was somehow accessible to the appellant.
[58]	I agree with Mr O’Dwyer, counsel for the appellant, that in these circumstances the unexplained failure to call evidence from the relevant clerical assistants at the Katherine Insurance Services ought to have led the learned trial judge to infer that such evidence would not have helped the respondent’s case.
[59]	I have given consideration to the High Court authority of Warren v Coombes (1979) 142 CLR 531, Gibbs ACJ, Jacobs and Murphy JJ at 552:
“…  The duty of the appellate court is to decide the case - the facts as well as the law - for itself.  In so doing it must recognize the advantages enjoyed by the judge who conducted the trial.  But if the judges of appeal consider that in the circumstances the trial judge was in no better position to decide the particular question than they are themselves, or if, after giving full weight to his decision, they consider that it was wrong, they must discharge their duty and give effect to their own judgment.  …”
[60]	I have come to the conclusion that in these circumstances the respondent has not discharged its onus of establishing that the relevant policies were actually sent to the appellant.
[61]	I would allow the appeal.
Bailey J:
[62]	I have had the advantage of reading in draft form the judgments of Mildren and Thomas JJ.  I agree that the appeal should be dismissed for the reasons referred to by Mildren J.  In my view, any assistance the appellant may draw from the so-called rule in Jones v Dunkel (1959) 101 CLR 298 falls a long way short of undermining the strong circumstantial evidence that the appellant must be taken to have received a copy of the policy at least by around August 1996.