ACN 068 691 092 Pty Ltd & Anor v Plan 4 Insurance Services Pty Ltd & Ors [2012] HCATrans 209 (7 September 2012)

Last Updated: 10 September 2012

[2012] HCATrans 209

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Adelaide No A8 of 2012

B e t w e e n -

ACN 068 691 092 PTY LTD

First Applicant

NAIAMA PASTORAL COMPANY PTY LTD

Second Applicant

and

PLAN 4 INSURANCE SERVICES PTY LTD

First Respondent

JEFFREY DIXON

Second Respondent

AMP GI DISTRIBUTION PTY LTD

Third Respondent

GIO GENERAL LTD

Fourth Respondent

Application for special leave to appeal

FRENCH CJ
KIEFEL J

TRANSCRIPT OF PROCEEDINGS

FROM CANBERRA BY VIDEO LINK TO ADELAIDE

ON FRIDAY, 7 SEPTEMBER 2012, AT 9.35 AM

Copyright in the High Court of Australia

____________________

MR P.A.R. SCRAGG: May it please the Court, I appear for the applicant. (instructed by Peter Scragg & Associates)

MR R.J. WHITINGTON, QC: May it please the Court, I appear with my learned friend, MR D.T. CROCKER, for the first and second respondents. (instructed by Gilchrist Connell)

MR S.J. DOYLE: May it please the Court, I appear for the third and fourth respondents. (instructed by Johnson Winter & Slattery and by Mouldens Solicitors)

FRENCH CJ: Yes, Mr Scragg.

MR SCRAGG: Your Honour, the special points we seek to argue which are of public interest is one, the question of what was the status of the insurance intermediary in relation to this matter. The traditional approach of the courts has been to define the obligations of such an individual in relation to the contractual nexus between that individual and the parties with whom that individual is dealing with in the insurance cycle, and the GT varies significantly depending on whether the intermediary is either classified as an agent or a broker.

The law has now changed in that the intermediary is now required to provide a financial service guide and as part of the legislative performance is now required to make certain declarations in relation to that individual status. To that end I take your Honours to section 942C of the Corporations Act which reads information about who the authorising licensee, or each of the authorising licensees acts for when financial services are provided on their behalf by the providing entity.

In this particular matter it is the case, your Honours, that in the financial services guides provided by the respondents, which are guides issued with the knowledge and approval of all the respondents, there is an express declaration that at the material time the respondents were authorised to give personal advice and effectively to act under a binder – except as to acting under a binder.

What the applicants say is that the effect of the financial services guides takes the consideration of the status of the intermediary out of the normal contractual matrix and that in forming a view as to what the duties are upon the particular entity, one must have regard to the disclosures made, pursuant to section 942C(2)(e) - - -

FRENCH CJ: Mr Scragg, can you just try and encapsulate for us – when I looked through your written submissions it looked very much like a complaint about the way the Full Court approached the facts. How do you encapsulate the error made by the Full Court which raises the special leave point in this case?

MR SCRAGG: The error, your Honour, is categorising the agent as effectively an agent, an individual, who owed no duty of care to the - - -

FRENCH CJ: Where do you point to that? Where is the particular finding that you take us to?

MR SCRAGG: The finding, your Honour, is in – what happened was that the agent was found - - -

FRENCH CJ: I am just looking for a part of the judgment of the Full Court.

MR SCRAGG: Sorry, going to the Full Court, your Honour. The finding, your Honour, is that – the Full Court held that the decision of the District Court to say that there was no duty in the circumstances constituted – was correct.

FRENCH CJ: What do you say about the finding at paragraph 38 on page 69 in the judgment of Justice Kelly?

MR SCRAGG: Page 69 of the application book, your Honour?

FRENCH CJ: Yes. It refers to the appellant’s contention that:

it should have been obvious to Mr Dixon that Mr Scragg was referring to his properties at 87-89 Commercial Road and not the properties at 87-91 Commercial Road. I do not agree with that submission. In my view the objective facts point to the opposite conclusion.

MR SCRAGG: Yes, your Honour. We simply say that that is wrong in the law and the answer to that - - -

FRENCH CJ: That is a matter of fact, though, is it not?

MR SCRAGG: With respect, your Honour, it is a matter of law because what the court has done is to approach the matter on the basis that Mr Dixon owes essentially no duty to disclose what is set out in the documents. If your Honour goes to paragraph 99 of the judgment of the District Court, which is in the application book at page 22, the submission put for the plaintiff’s case was that:

Mr Dixon had an obligation having regard to all of the circumstances to volunteer information which was available and which Mr Dixon should have had.

I do not accept that there was such a duty.

He goes on to explain, but the second and third statements in that paragraph and 100 are effectively, we say, are comment, but the approach taken by the court is to say that there is no duty. Then the court has gone on to consider the two Supreme Court decisions of Victoria and New South Wales. Veljkovic is recorded there. The conflicting decision of that, your Honours, is found at the very back of the judgment at application book page 43, paragraph 221, where the court has gone on to consider what is the actual situation in relation to the conflict between Veljkovic and Caldwell’s Case.

KIEFEL J: I am sorry, what is the reference in the judgment to those cases; what paragraph number?

MR SCRAGG: Paragraph 221. If your Honours look at paragraph 221 you will see his Honour noted that there was conflict between Veljkovic and Caldwell but distinguished them on the basis that Veljkovic was not a case against an agent. If your Honours turn to Veljkovic your Honours will see at page 422 of Veljkovic the court notes, at about point 5:

Having found, as I think correctly, that the appellant at all relevant times was merely an agent for C.M.L. and not a broker, his Honour nevertheless said –

and so forth. So Veljkovic is clearly a case where the agent is characterised – the party involved, the intermediary, is characterised as an agent. We say that in this case that characterisation is wrong.

KIEFEL J: What do you say is the conflict of principle between these cases as distinct from an exercise in relation to different factual situations?

MR SCRAGG: That is shown in Caldwell, where Caldwell considers the judgment of Veljkovic at paragraph 109. What his Honour at that point does is recite a paragraph of Veljkovic and then goes on to say:

In my respectful opinion, there are difficulties in the principles so expressed.

At paragraph 111:

The agreement by the agent of an insurer to obtain for the insured a policy from the insurer does not, without more, result in the assumption of a duty of care on the part of the agent.

That principle is in flat contradiction to what is set out in Veljkovic. This is at page 422. At the bottom of the page:

When the respondent asked the appellant to obtain insurance and the appellant said he would, he assumed a duty to exercise a reasonable degree of care and skill which an insurance agent of ordinary prudence and ability might be expected to show in the situation –

Effectively, what it means is that the decisions of the two Full Courts are at direct conflict with each other. Going back to Caldwell’s Case at paragraph 114:

It is conceivable that the insurer’s employee or agent may attract a duty of care in the course of selling insurance, but the existence and scope of that duty will be defined by the particular circumstances, and will depend on the general law of negligence –

In other words, the duty is simply negligence simpliciter and not a special duty which is the duty which Veljkovic assumes. At paragraph 115:

Accordingly, I respectfully disagree that it is appropriate to describe the scope of the duty of care imposed on an agent, each time an agent agrees, on behalf of an insurer, to offer insurance cover to a prospective insured, as being the degree of care and skill which any insurance agent of ordinary prudence or ability might be expected to show in the situation.

With respect, your Honours, those authorities are in direct contravention. The Full Court reference - - -

KIEFEL J: In this case in the Full Court, that was not the only basis upon which this claim failed, was it? The question of reliance both for the trial judge and the Full Court was also a factor.

MR SCRAGG: Yes, it was, your Honour.

KIEFEL J: Paragraphs 123 to 126 of the Full Court’s decision.

MR SCRAGG: If I may give your Honours the reference - - -

KIEFEL J: There is a discussion there about if there be any confusion and it being resolved by some communications. That is fairly critical, is it not?

MR SCRAGG: Yes, your Honour. We say that, having misled at the meeting, in other words, having been advised of what the applicant’s requirements were, it fell upon Mr Dixon in plain terms to investigate the matter. If your Honours were to come with me to the appeal book at page 209, you can see the irrelevant renewal notice. If your Honour looks at it – this is the notice which Mr Dixon wrote on at the meeting on 9 March – you can see that the notice is addressed to one of the applicants.

If your Honours look at 210, you will see that the insureds described within the policy document under the word “Insured(s)” are the applicants and another, but not the entity of Mr Zientara or his wife. If your Honours look down “MULTIPLE SITUATIONS”, you can see that the description of the situations which are covered in respect of the policy are described there as situations which are owned by the applicants or someone connected with the applicants. If your Honours go to page 211, you can see that one of the properties described in the multiple situations is picked up and identified at page 211.

KIEFEL J: But these notices are five days after the request for confirmation that is referred to in paragraph 123 of the Full Court decision.

MR SCRAGG: No, these are prior to the meeting. This is before the confirmation. This is the notice which led to the meeting coming about. This is the notice which led to the inquiry. If your Honour goes to page 212, you can see there that there is an interest defined as 91 Commercial Road, but I ask you to note that that is not listed under the multiple situations. If your Honours go to page 213, you can see that there is another interest which is listed.

Now, what happened at the meeting was that there was an inquiry as to what was the amount it covered because there was a concern that the applicants had too much insurance. It is clear ground and common between the parties that the requirement of the applicants was that they required $800,000 worth of insurance. At the meeting, Mr Dixon, looking at this document – and I ask your Honours to note that there is no reference to the sleeper by name anywhere within the document; the only reference to the sleeper exists by reference simply to the number 91, which appears on page 212. In other words, to understand this insurance document, you need to know a code. What the applicants say is that the code was forgotten from time to time. Likewise Mr Dixon, when he, being the author of this document, looked at it, should have known that there were two separate situations, one in relation to page 211 and one in relation to 212.

What he was told – he told $1.3 million, and then the applicants said that they wanted $800,000. Now, if you see the way that this policy is set out, the reasonable request then is: well, look, there is one interest here for $800,000, there is another interest here for $500,000, what is going on? But Mr Dixon said nothing. The common ground is that he simply then said, “Well, how do you want that $800,000 divided between the properties at Commercial Road?” The approach of the court was to say, well, the question lacks sufficient specificity.

KIEFEL J: No, what the Full Court pointed to was your fluctuating awareness of the situation. I am looking at paragraphs 88, 89 and 90. It was regarded as critical. Reliance was really the point upon which all of this failed. What you are really rehearsing here is a review of the facts relating to reliance and knowledge.

MR SCRAGG: Your Honour, in a sense what I am simply saying is that there is sufficient attendant doubt in relation to reliance and knowledge to justify a review of that factor by your Court, and that there is an arguable case that the findings made by his Honour – in particular, there is a significant error that the Full Court has fallen into in relation to its analysis of paragraph 10 of his Honour’s judgment. If your Honour looks at page 74 of the appeal book, you will see at paragraph 67 there is the statement:

Mr Scragg has acknowledged that while he did see documents which described the level of insurance over No. 87-89 Commercial Road as being $400,000, his belief at the time of the fire was that the total cover for those premises was $800,000. Number 91 Commercial Road was also insured for $400,000.

What his Honour has done is approach the matter on the basis that the assertion made by the applicants was that their belief, when looking at the documentation – and the important time is at the time of the fire – that the cover that the applicants asserted existed on the policy was $800,000. Now, the document that was issued immediately prior to the fire is the document at page 175 of the appeal book. If your Honours go to, in particular, page 180 of the appeal book. The case of the applicants is that immediately prior to the fire they in fact became aware of the existence of the sleeper.

Now, his Honour’s statement, reciting of the evidence or the allegations set out at paragraph 10, is in direct contradiction with what you would call a plain and simple reading of page 180. How could anyone, realising that that was the only property they had on the policy, seriously contend that the amount of cover there was $800,000? That is conceded.

FRENCH CJ: Mr Scragg, all this indicates, does it not, that your application is critically dependent upon challenges to findings of fact by the District Court and subsequently in the Full Court?

MR SCRAGG: Yes, but what we say is that – if I can develop the argument – there is an obvious error that the court has fallen into, which is palpable on the reasoning of court. If I may just develop that for a moment. What the Full Court does from paragraph 73 is to go through evidence which indicated that in March there was knowledge that the cover in respect of the property was $800,000, and that evidence is recorded at paragraphs 74, 75 and 76. The conclusion that is arrived at, and it can be seen at paragraph 77:

Thus it can be seen that the trial Judge’s remarks at [10] of the judgment are, as a matter of historical fact, accurate.

Now, the error that the court has fallen into is in actual fact those remarks recorded, or the evidence recorded, in the paragraphs that I have taken your Honour to in actual fact relates to a period 15 months before the fire and not at the time of the fire. It is clear that the Full Court has misunderstood that. If your Honours go to paragraph 124 there is the statement:

At the bottom of the document there was a warning “you should check to ensure the recommendation I have set out meets your needs” –

This is a referral to the exhibit P9 –

In any event by June of that year –

remembering, your Honour, that the document P9 which is referred to at paragraph 123; you can see that it is dated March 2005 –

In any event by June of that year, Mr Scragg realised that his property . . . was insured only for the sum of $400,000.

FRENCH CJ: Mr Scragg, you will need to finish up because your time is up.

MR SCRAGG: I am sorry, your Honour. What we say, your Honour, is that clearly demonstrates an error. The final point I make, your Honours, is that the burden in paragraph 137 of the Full Court judgment is wrong. O’Connor’s Case is a case requiring disclosure by an insurance company to an insurance company, whereas in actual fact in this particular circumstance the matter is travelling in the opposite direction and it is a disclosure by an insurer to the insured. The standard is different. I can just quickly take your Honour to the The “Superhulls Cover” Case at page 454, the first strike mark:

But I can see no justification for imposing on the client a duty owed to the broker to check the suitability of the cover obtained with a degree of care similar to that which the broker is paid to employ when obtaining it.

So what happens is that the court has fallen into error by imposing a disclosure obligation to review documents upon the applicants when in actual fact the opposite is the case; the greater requirement to get the document accurate and to disclose it in fact rests - - -

FRENCH CJ: Yes, thank you, Mr Scragg, your time is up.

MR SCRAGG: Thank you.

FRENCH CJ: We will not need to trouble the respondents.

The applicants seek special leave to appeal against a decision of the Full Court of the Supreme Court of South Australia dismissing their appeal against a decision of the District Court of South Australia. The District Court had dismissed claims brought by the applicants against the respondents based upon the misleading or deceptive conduct and negligence by an insurance agent said to have resulted inadequate insurance cover for certain commercial properties in Port Adelaide. The application in substance depends upon challenges to factual findings of the District Court and the Full Court. It therefore is not a suitable vehicle for the grant of special leave. Special leave will be refused with costs.

AT 10.00 AM THE MATTER WAS CONCLUDED