ACN 068 691 092 Pty Ltd v Plan 4 Insurance Services Pty Ltd - [2009] SADC 53

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
ACN 068 691 092 PTY LTD & ANOR v PLAN 4 INSURANCE SERVICES PTY LTD & ORS
[2009] SADC 53
Reasons for Ruling of His Honour Judge Burley
8 May 2009
TRADE AND COMMERCE - TRADE PRACTICES AND RELATED MATTERS - CONSUMER PROTECTION - MISLEADING, DECEPTIVE OR UNCONSCIONABLE CONDUCT - CHARACTER AND ATTRIBUTES OF CONDUCT - CAUSAL CONNECTION BETWEEN CONDUCT AND LOSS
TRADE AND COMMERCE - TRADE PRACTICES AND RELATED MATTERS - CONSUMER PROTECTION - MISLEADING, DECEPTIVE OR UNCONSCIONABLE CONDUCT - CHARACTER AND ATTRIBUTES OF CONDUCT - RELIANCE
TORTS - NEGLIGENCE - ESSENTIALS OF ACTION FOR NEGLIGENCE - DAMAGE - CAUSATION
Proceedings arise in relation to an insurance policy providing cover over the plaintiffs’ premises. Plaintiffs’ property destroyed by fire. Plaintiffs claim they were underinsured due to the misleading conduct and negligence of the defendants. Defendants make no case to answer application. Whether the defendants need to be put to an election to call no evidence. Whether evidence of the plaintiffs should be taken at its highest or at face value.
As to no case application of first, second and third defendants: issues of reliance and causation discussed. Whether reliance on misleading conduct continued to have effect up to the date of the fire.
As to additional no case application of fourth defendant: whether fourth defendant reduced insurance cover value without the consent of the insured. Whether new contract came into existence upon policy renewal.
Held: No established practice of courts in dealing with no case to answer applications in regards to putting a defendant to an election. Nature of the application of defendants did not require a review of the evidence thus defendants not put to an election. Evidence of plaintiffs taken at its face value.
As to first, second and third defendants’ application: essential part of the causes of action had not been made out. The loss was not connected to the misleading conduct or negligence. Common sense approach adopted as to causation.
As to fourth defendant’s additional application: even if sum insured originally reduced without authority, a new contract had come into existence upon the renewal.
Defendants’ submissions of no case to answer upheld. Plaintiffs’ claim dismissed in its entirety.
Corporations Act 2001 (Cth) ss 1041H, 1041I, 1041N and 1325; Australian Securities and Investments Commission Act 2001 (Cth) ss 12DA, 12EF and 12GM; Trade Practices Act 1974 (Cth) ss 52 and 82, referred to.
Residues Treatment and Trading Co Limited & Anor v Southern Resources Limited and Ors (1989) 52 SASR 54; Popovic v Tanasijevic (No 3) [1999] SASC 339; Protean (Holdings) Ltd & Ors v American Home Assurance Co [1985] VR 187; March v E and MH Stramare Pty Ltd (1991) CLR 506; Stapley v Gypsum Mines Ltd [1953] AC 663; Wardley Australia Limited v Western Australia (1992) 175 CLR 514; Argy & Anor v Blunts & Lane Cove Real Estate Pty Limited & Ors (1990) 26 FCR 112; Kabwand Pty Ltd v National Australia Bank Ltd (1989) 11 ATPR 50; Henville & Anor v Walker & Anor (2001) 206 CLR 459; C E Heath Underwriting & Insurance (Australia) Pty Ltd v Edwards Dunlop & Co Ltd (1993) 176 CLR 535; Royal Exchange Assurance v Hope [1928] 1 Ch 1791; Tallerman & Co Pty Ltd v Nathan’s Merchandise (Victoria) Pty Ltd (1957) 98 CLR 93; Illawong Village Pty Ltd v State Bank of New South Wales [2004] NSW SC 18; City and Industrial Demolitions v Shanahan [2000] NSW SC 1197, considered.

ACN 068 691 092 PTY LTD & ANOR v PLAN 4 INSURANCE SERVICES PTY LTD & ORS
[2009] SADC 53
Submissions by the defendants of no case to answer

These proceedings relate to an insurance policy providing cover over shop premises at 87 to 91 Commercial Road, Port Adelaide. Two shops, respectively at 87 and 89 Commercial Road, belong to the plaintiffs; the premises at number 91 belonged to a Mr and Mrs Zientara. The premises were destroyed by fire on 27 July 2006. At the time of the fire, the “total declared value” of nos 87-89 was $400,000 and of no. 91, $400,000. The plaintiffs contend that, at the time of the fire, nos 87-89 should have been insured for $800,000 and that no. 91 was insured for $500,000.
The plaintiffs sue as the insured in respect of nos 87-89 and as the assignees of the Zientaras’ rights under the relevant policy of insurance. The first defendant was the agent of the insurer and the second defendant was a director of the first defendant. The insurance on the premises was arranged by them. It is not entirely clear what role the third defendant played in effecting and maintaining the relevant insurance. The fourth defendant is the insurer.
The plaintiffs maintain that the measure of their loss is up to $400,000 and $100,000 respectively. So far, the trial of this matter has been confined to matters of liability. Declaratory relief has been sought in the prayer for relief of the Amended Statement of Claim as follows:
16A The plaintiffs seek in relation to 87-89 Commercial Road:
(1)Orders pursuant to s 12GM of the Australian Securities and Investments Commission Act 2001 (Cth) and s 1325 of the Corporations Act 2001 (Cth) that the total declared value of the plaintiffs’ insurance be varied to $800,000. Alternatively:
(2)Declarations that the defendants are liable to pay damages pursuant to s 12GF of the Australian Securities and Investments Commission Act 2001 (Cth) and s 1041I of the Corporations Act 2001 (Cth) for the contraventions pleaded in paragraph 10 herein and damages for negligence pleaded in paragraph 12 herein;
…
16BThe plaintiffs seek against the fourth defendant in relation to 91 Commercial Road:
(1)A declaration that the total declared value of Zientara’s interest assigned to the plaintiffs is $500,000;
…
Without opposition, an order was made on the third day of the trial that matters of quantum be dealt with if and after liability is determined in favour of the plaintiffs. No point has been taken, as yet, that loss is an essential ingredient of the causes of action pursued in respect of 87-89 Commercial Road.
The plaintiffs called one witness, Mr Peter Scragg, a director of the plaintiffs. In addition, their counsel, Mr Hoile, tendered a number of documents. He then closed his case on liability. All of the defendants submitted that there was no case to answer. Mr Trim QC, counsel for the first and second defendants, advanced an argument directed to the causes of action affecting all defendants. Counsel for the other defendants adopted his submissions. Mr Doyle, counsel for the fourth defendant, pursued, in addition, a submission of no case to answer in respect of the cause of action pursued only against the fourth defendant.
The defendants submitted that they should not be put to an election that they would call no evidence. Having heard argument on the point, I ruled in favour of that contention. The “no case” argument then proceeded. These reasons relate to my determination of those submissions.
The law relating to a submission of no case to answer
There is a helpful summary of the applicable principles contained in Civil Procedure (SA) at par 6R209.65.1. The main South Australian case is Residues Treatment and Trading Co Limited & Anor v Southern Resources Limited and Ors (1989) 52 SASR 54. In that case Perry J dealt with the way in which a submission of no case in civil proceedings should be dealt with. He reviewed previous decisions in this Court and came to the conclusion that there was no established practice that the Court would allow a submission of no case to answer to be put without putting the defendant to an election to call no evidence. He referred at page 68 to four categories of such submissions, commencing with the category where there need be no reference to the evidence and ending with the category that requires a detailed examination of the evidence. It was his Honour’s view that the more the evidence needed to be reviewed, the less likelihood there was of the Court entertaining a no case submission without the Court first requiring an election not to call evidence.
When I heard submissions from the parties as to whether or not the defendants should be put to an election, Mr Trim QC, counsel for the first and second defendants, informed me that the nature of his application did not require a review of the evidence. His submission was directed more to the lack of evidence as to an essential part of the plaintiffs’ claim. Because of that, I ruled that the defendants need not be put to an election in relation to the submission of no case regarding the claims in respect of 87‑89 Commercial Road. As to the fourth defendant’s additional submission of no case, Mr Doyle submitted that a review of the facts was not necessary because the evidence adduced by the plaintiffs, taken at its face value, on the question of whether or not they had a claim in respect of no. 91 Commercial Road supported, as a matter of law, only one result, namely that, contractually, the cover on no. 91 as at the date of the fire was only $400,000. It was for this reason that I did not put the fourth defendant to an election before hearing the additional no case submission which was confined to no. 91 Commercial Road.
On the question of the approach to be taken to the evidence on a submission of no case, Mr Hoile submitted that the evidence of the plaintiffs should be taken at its highest. That was discussed by Olsson J in Popovic v Tanasijevic (No 3) [1999] SASC 339 at [15] and [16]:
[15] The exercise which is involved in ruling on a no case submission is, in reality, the conduct of an inquiry as to whether a plaintiff has, on the balance of probabilities, made out a case on the material then before the court, in absence of an answer from the defence (Rasoman appeal decision). It has been said that such an assessment is to be made taking the plaintiff’s case at its highest and disregarding evidence favouring the defence. (See Glass JA, The Insufficiency of Evidence to Raise a Case to Answer (1981) 55 ALJ 824).
[16] In my view the more accurate summation of the situation is, with respect, that Young CJ in Protean at 215, which seems to have found favour in Rasomen appeal decision. Relevantly, Young CJ said:-
“Where a trial judge entertains a submission that there is no case to answer without requiring an election, any one of three results may ensue. The judge may conclude that the evidence could sustain a finding against the party making the submission, in which case he would overrule the submission and allow the case to proceed. The second possible result is that the case is so finely balanced that the judge is not satisfied that even if the evidence could sustain a finding against the party making the submission he would be prepared to make the necessary finding himself. Where the case is being tried without a jury, a trial judge in such a position would no doubt allow the case to proceed. …
The third possible result of a submission that there is no case to answer is that the judge is persuaded by it and decides to uphold it. In reaching such a conclusion a trial judge is entitled to draw all proper inferences from the evidence, but he cannot draw inferences against the party making the submission based upon the absence of evidence from that party. Theoretically he then concludes that the evidence could not sustain a finding against the party making the submission. In such a case he upholds the submission. The consequence must then be that judgment must be entered for the party making the submission. His opponent has simply not discharged the burden which rested on him of establishing his case. Where this result ensues there is no room for a distinction between whether the evidence could sustain a finding against the party making the submission and whether the judge would make such a finding. Such a case is covered by the second possible result referred to above. This third possibility is where the proposition ‘no case to answer’ means ‘would you, the Judge, on the evidence given, decide for the party against whom the submission is made’: cf Jones v Dunkel (1959) 101 CLR 298 at 330-331.”
Young CJ stated that the trial judge “is entitled to draw all proper inferences from the evidence”. In my view, that is the guiding principle. It involves taking the evidence of the plaintiff at its face value.
I should also mention that I raised with counsel during the course of argument the question of the approach to be taken by me when considering the submission. I suggested that it was incumbent upon the defendants to establish that when the evidence adduced by the plaintiffs is taken at its face value, it must lead, by the application of the correct principles of law, to the conclusion that the plaintiffs have failed to establish their case. I further suggested that the approach to be taken to the plaintiffs’ submissions was that, if an arguable case was established by them supporting the causes of action pursued by them, that was sufficient to put to an end the no case submissions by the defendants. Those approaches were accepted by all the parties. They are consistent with what was said by Young CJ in Protean (Holdings) Ltd & Ors v American Home Assurance Co [1985] VR 187 at 215 referred to above.
Mr Trim’s submission was limited to the causes of action pursued by the plaintiffs in respect of nos 87-89 Commercial Road. As stated earlier, Mr Doyle made an additional submission in relation to no. 91 Commercial Road.
The pleadings
It is helpful to set out paras 9, 10, 11 and 12 of the Amended Statement of Claim before referring to the facts:
9.The conduct of the defendants in relation to the provision of financial services to the plaintiffs was misleading in that the defendants failed to properly distinguish between the respective interests of the plaintiffs and their neighbours, the Zientaraas, in their dealings with the plaintiffs.
PARTICULARS
(a)In providing commercial insurance to the plaintiffs the defendants allowed the business insurance of Mr and Mrs Zientaraa in respect of shop premises at 91 Commercial Road Port Adelaide (and adjoining the premises of the plaintiffs) to be included on the same Policy of Insurance (No AP81L00144) as the insurance of the plaintiffs in respect of the shop premises at 87-89 Commercial Road.
(b)In the course of taking the instructions of the plaintiffs on or about 10 March 2005 as alleged in paragraph 4 hereof Dixon failed to distinguish properly between the property and interest of the plaintiffs and the property and interest of the Zientaras.
(c)Immediately before Dixon’s approach to the plaintiffs on or about 10 March 2005 the respective shop premises of the plaintiffs and the Zientaras at 87-89 and 91 Commercial Road were insured under the said policy of insurance for total declared values as follows:
87-89 Commercial Road  - $800,000
91 Commercial Road  - $500,000
(d)After receiving Mr Scragg’s instruction on or about 10 March 2005 Dixon reduced the total declared values for the respective properties so that thereafter the total declared values for the purposes of the policy appeared as follows:
87-89 Commercial Road  - $400,000
91 Commercial Road  - $400,000
These figures were then routinely adopted and carried forward for the purposes of renewal of the insurance for the year ended 20 March 2007.
(e)By virtue of the way in which the separate insurances for different interests were maintained on the same policy of insurance without identifying the ownership of Mr and Mrs Zientara and by virtue of the language used by Dixon in taking Mr Scragg’s instruction the conduct of Dixon was misleading.
(f)Mr Scragg on or about 10 March 2005 affirmed that the total declared value of $800,000 (referred to in paragraph 3(d) hereof) should be attributed as to one-half to the plaintiffs’ shop at 87 Commercial Road and one-half as to the plaintiffs’ shop at 89 Commercial Road but Dixon wrongly treated Mr Scragg’s instruction as requiring the total declared value of the shop at 91 Commercial Road to be reduced from $500,000 to $400,000.
(g)In taking instructions from Mr Scragg on behalf of the plaintiffs Dixon and Plan 4 Insurance Services Pty Ltd should have realised that to insure the plaintiffs’ shops for only $400,000 in total would result in substantial under-insurance of the premises as compared to their full insurable value.
(h)With the knowledge available to Dixon and Plan 4 Insurance Services Pty Ltd of the plaintiffs’ business they should have recognised that it was contrary to the practice of the plaintiffs to deliberately under-insure but Dixon and Plan 4 Insurance Services Pty Ltd failed to take any adequate steps to verify Mr Scragg’s instructions.
(i)On or about 10 March 2005 Mr Scragg sought information from Dixon as to the declared value of the shop premises and was informed by Dixon that the total declared value was $1,300,000 but Dixon did not disclose that this amount included the declared value of 91 Commercial Road at $500,000 which had been previously adopted for insurance purposes in accordance with the instructions of the Zientaras as owners thereof.
(j)In response to Dixon’s statement that the total declared value was $1,300,000 Mr Scragg observed that this amount was too high and that $800,000 was the appropriate amount for which to insure the interest of the plaintiffs.
10.The conduct referred to in paragraph 9 hereof was in breach of s12DA of the Australian Securities and Investments Commission Act and in breach of s1041H(1) of the Corporations Act.
11.The plaintiffs in good faith relied upon Dixon and Plan 4 Insurance Services Pty Ltd as representatives of AMP GI Distribution Pty Ltd to give effect to the instructions of the plaintiffs as hereinbefore mentioned and the plaintiffs could reasonably be expected to rely upon Dixon and Plan 4 Insurance Services Pty Ltd to give effect to those instructions.
12.Dixon and Plan 4 Insurance Services Pty Ltd assumed a duty to exercise a reasonable degree of care and skill in taking and executing the instructions of the plaintiffs but were negligent in failing to avoid or to resolve ambiguity arising in the course of taking and executing those instructions.
The facts
Because of the nature of the submissions advanced, the facts are not in dispute. The evidence given by Mr Scragg and the documents tendered largely support the allegations made in the Amended Statement of Claim. The following narrative consists of my findings. In early 2002 the plaintiffs acquired the shop premises at nos 87-91 Commercial Road Port Adelaide in conjunction with a Mr and Mrs Zientara from a common vendor. Mr Scragg left it to Mr Zientara to arrange insurance on the premises, but he gave the name of the first and second defendants to Mr Zientara as a possible source from whom the insurance might be obtained. A quotation was given (Exhibit P5), directed to Mr Scragg and to Mr Zientara. Initially the premises were described as 87‑91 Commercial Road, Port Adelaide, without making any distinction as to the ownership of the premises, and without noting that the plaintiffs were the owners rather than Mr Scragg.
By letter dated 24 July 2003 (Exhibit P6) from the fourth defendant to Mr Zientara and Mr Scragg, sent by post to Post Office Box 529 Hindmarsh, the fourth defendant provided a public liability questionnaire. Although the post office box was retained by Mr Zientara, it is apparent that at least the questionnaire was provided to Mr Scragg, because he filled it out. He changed the customer name from Mr B Zientra (sic) to the name of the first plaintiff. The questionnaire referred to the policy number AP81L00144, which is the number of the policy issued in early 2002. It remained the number of the policy until at least the date of the fire.

The first question of the questionnaire is:
You have previously told us that you or your business can be described as:
DRESSMAKERS SHOP
Mr Scragg was asked whether this was still correct and he responded that it was not correct. He said:
My business is landlord. The tenant’s business is dressmaker’s shop. There is also a St Vincent de Paul shop next door for which I assume there is also cover.
By letter dated 29 June 2004 (Exhibit P7) Mr Scragg wrote to the second defendant as follows:
Dear Sir
Commercial Property Insurance – 87-91 Commercial Road, Port Adelaide
Could you please attend to the following insurance requirements:
Could you please arrange for the property which is situated at 87-89 Commercial Road which is the St Vincent de Paul and the Conti Bar Shops to have noted on them the interests of Challenger Managed Investments Limited as responsible entity and Permanent Trustee Australia Limited as custodian on behalf of Howard Mortgage Trust as mortgagees. This is the property comprised in Certificate of Title Register Book Volume 5774 Folio 736 and registered in the names of A.C.N. 068 691 092 Pty Ltd and Naima [sic] Pastoral Company Pty Ltd …
It is apparent from that letter that as at June 2004 Mr Scragg was aware that the plaintiffs were the owners of shops situated at 87-89 Commercial Road.
Exhibit P8 is the second defendant’s undated written response to that request. Under the heading “Recommendation/Advice”, Mr Dixon stated:
(b) Property Situated at 87-89 Commercial Road, Port Adelaide.
1. Fire & Other Damage
Increased building Sum Insured to $800,000.
Mr Dixon also said:
Wish to advise that we have noted the following interested party for both properties at 87-89 Commercial Road, Port Adelaide and 255-265 St Vincent Street, Port Adelaide as follows:
Challenger Managed Investments Ltd as responsible entity and permanent trustee Australia Ltd as custodian on behalf of Howard Mortgage Trust as mortgagees.
It is to be noted that under “Client Details” the two plaintiffs were referred to, as well as Melanie Bernadette Scragg.
The next document chronologically is Exhibit 1D29 dated 13 July 2004. It is addressed to the second plaintiff at Mr Scragg’s professional address. The document is described as “extra premium notice”. The persons insured are described as follows:
ACN 068 691 092 Pty Ltd & Naima [sic] Pastoral Company Pty Ltd.
ACN 068 691 092 Pty Ltd & Malanie Bernadette Scragg.
The situation of the properties is described as 87-89 Commercial Road, Port Adelaide, in the name of the plaintiffs and 255-265 St Vincent Street, Port Adelaide, in the name of the first plaintiff and Melanie Bernadette Scragg. For the property situated at 87-89 Commercial Road, Port Adelaide, the buildings were insured for $800,000.
Exhibit 1D29 also refers to the property insured at 91 Commercial Road, Port Adelaide. At the time, that property was owned by Mr and Mrs Zientara, but there is no reference to them in that exhibit. The document discloses that a premium of $1,079.11 applied in relation to the property at 91 Commercial Road.
Mr Scragg accepts that he may have seen that document after it was issued, but he says that he did not then realise that 91 Commercial Road was the property owned by Mr and Mrs Zientara.
Exhibit P10 is a record of client contact which shows that on 20 August 2004 Mr Zientara instructed Mr Dixon to increase the cover in respect of 91 Commercial Road to $500,000. Exhibit P11 appears to be the fourth defendant’s response to that request because on its second page it refers to increasing the building cover on no. 91 Commercial Road to $500,000, although the insured is described as the plaintiffs.
The next document in chronological sequence is Exhibit P24. It is headed “extra premium notice” and is dated 1 October 2004. It is directed to the second plaintiff at Mr Scragg’s address. Apart from the amount due and the “endorsement for term”, pages 1, 2 and 3 are the same as those pages in Exhibit 1D29. Page 4 is different in that it shows cover in the sum of $500,000 for no. 91 Commercial Road. Mr Scragg did not dispute that he saw this document at about the time that it was issued.
The next document in chronological sequence is Exhibit 1D32, being a renewal notice dated 4 February 2005. The printed part of page 3 is the same as the previous notices, but the amount of the building cover for 87-89 Commercial Road, shown as $800,000 in print, has been deleted and reduced to $400,000 in hand-writing. Page 4, which relates to 91 Commercial Road, is in its printed form essentially the same as the previous documents and again the building cover in the printed form stated to be $500,000 has been deleted and the sum of $400,000 has been substituted in handwriting. Mr Scragg did not dispute that he saw this document at about the time that it was issued.
The next document is Exhibit P14, which is an amended renewal notice issued on 10 March 2005. It was issued shortly after the conversation between Mr Scragg and Mr Dixon which took place at Mr Scragg’s office following a telephone request by Mr Scragg to Mr Dixon for a review of his insurances. It was on this occasion that Mr Dixon said, in response to Mr Scragg’s enquiry about the amount of cover on the Commercial Road property, that the cover was $1.3 million. When Mr Scragg put the question, he was referring to the properties owned by him at Commercial Road and not by Mr and Mrs Zientara, although he did not make this clear. When Mr Dixon responded, he provided the total amount of insurance for the properties belonging both to the plaintiffs and to Mr and Mrs Zientara. This induced in Mr Scragg the belief that the property at Commercial Road owned by the plaintiffs was over-insured. According to Mr Scragg, he told Mr Dixon that the insurance was too high and he wanted it reduced to the level applicable to the requirements of the lender, Challenger Finance, namely $800,000. It is clear Mr Dixon took that instruction to be in relation to nos 87-89 and no. 91.
Mr Dixon asked how the cover was to be divided and Mr Scragg, intending to respond only in relation to the property owned by the plaintiffs at Commercial Road, said that the cover was to be divided equally or on a 50/50 basis. This was in the context that nos 87-89 consisted of two separate and distinct shops, although they were on the one title.
As a result of that conversation, the amended renewal notice, which is Exhibit P14, was issued on 10 March 2005. Pages 1 and 2 were the same as the previous documents relating to the description of the insured and the situation of the properties, but there being no mention of Mr and Mrs Zientara. Nos 87-89 Commercial Road were shown as having cover for $400,000 and no. 91 as having cover for $400,000. Mr Scragg accepts that he may have seen this document at about the time that it was issued, but he said that he did not realise that it recorded a reduction in cover on nos 87-89 to $400,000 and that the policy included cover in respect of the property owned by Mr and Mrs Zientara. He thought, from his conversation with Mr Dixon on 9 March 2005, that the property at Commercial Road belonging to the plaintiffs was insured for $800,000.
A “Confirmation of advice” dated 15 March 2005 (Exhibit P9) was forwarded by Mr Dixon to Mr Scragg’s office. It was directed to the second plaintiff and to Melanie Bernadette Scragg, Mr Scragg’s daughter. The document referred to the meeting on Wednesday 9 March 2005 at Mr Scragg’s office. Under the heading “Recommendation/Advice”, Mr Dixon said:
We wish to confirm our discussions as follows:
1. Fire & Other Damage
(a)Building Situated at 87-89 Commercial Road, Port Adelaide. Peter Scragg advised to reduce Sum Insured on the building from $800,000 to $400,000.
(b)Property situated at 91 Commercial Road, Port Adelaide. Peter Scragg advised to reduce Sum Insured on the building from $500,000 to $400,000.
(c)Property situated at 255-265 St Vincent Street, Port Adelaide, to remain as is and unaltered.
Mr Scragg accepted that he saw that document at about the time that it was sent and understood it to be in accordance with the instructions given by him on 9 March 2005. It is clear that underlying that conclusion, he understood nos 87-89 and no. 91 to be the properties owned by the plaintiffs at Commercial Road. He did not realise that no. 91 belonged to Mr and Mrs Zientara and that nos 87-89 were the properties owned by the plaintiffs.
Later, a premium adjustment notice (Exhibit P12) was forwarded to the second plaintiff at Mr Scragg’s address. Again, he did not dispute that he saw the document at about the time that it was issued, but it is clear that he did not realise that the document disclosed cover in respect of the plaintiffs properties at Commercial Road in the sum of $400,000 and cover in respect of the Zientara’s property at no. 91 Commercial Road at $400,000.
The next renewal notice (Exhibit P18) was issued on 5 February 2006. It is directed to the second plaintiff and the persons insured are set out in two separate lines, namely as the plaintiffs on one line and the first plaintiff and Melanie Bernadette Scragg on the second line. The period of insurance was from 20 March 2006 to 4.00pm on 20 March 2007. Page 2 of Exhibit P18 refers to the property at 87-89 Commercial Road, the insured in respect of that property being the plaintiffs. Under the heading “Multiple situations”, there is no reference to no. 91 Commercial Road, but page 4 refers to that property without naming the owners. It discloses cover of $400,000. The cover for nos 87-89 is disclosed on page 3 at $400,000. There is also reference to a property at 19 Montpelier Square, Port Adelaide, which needs no further elaboration.
There are other documents issued by the defendant relating to the policy (eg. Exhibit P17) making reference to no. 91 without disclosing the ownership of that property. It is clear from the evidence that none of the documents issued by the defendant, when reviewed by Mr Scragg, caused him to change his belief that nos 87‑89 were insured for $800,000. It was not until shortly after 27 June 2006, when Mr Scragg examined a premium adjustment notice (Exhibit P20) issued on 27 June 2006, that he realised that cover on nos 87-89 was $400,000 and that the policy included insurance on no. 91 for the sum of $400,000 which he then realised belonged to Mr and Mrs Zientara. He said in his evidence that on looking at Exhibit P20 he wrote his own first name on page 3, which referred to nos 87-89; and on page 4, which referred to 91 Commercial Road, Mr Zientara’s first name, Barry (T91). When asked why he wrote those names he said (T91/20):
Because I became aware for the first time that there was a sleeper within the document. In other words, I became aware for the very first time that Mr and Mrs Zientara held an interest in relation to those properties at Commercial Road. Up and until that time I was not aware and I was able to identify from events relating to the creation of this document that the sleeper existed and I wrote “Peter” against what related to my interests, the plaintiffs’, and I wrote “Barry” as in relation to the sleeper interest to identify it on page 4.
He said (at T92/28):
… I was able to go from my knowledge and dissect and make a calculation that 87/89 related to me and 91 related to Zientara.
He was asked (T92/34) whether he noticed the amounts of cover stated on pages 3 and 4 respectively. He said:
I saw the amounts, but I didn’t ask myself the question, I didn’t take the next step and say, “Is this amount right?” I didn’t ask myself that question. I just simply noted it, noted that I had a sleeper, became very annoyed that I was paying for a sleeper without my knowledge, but I didn’t look at the document and say “In actual fact is what’s declared here and put in place here right or wrong?” I just didn’t ask myself that question.
The evidence of Mr Scragg referred to above was given in examination-in-chief. Mr Trim later cross-examined Mr Scragg about the realisations he came to as a result of reading P20. Evidence on this topic occurred from time-to-time commencing at p 193 of the transcript to p 249 of the transcript.[1] I do not intend to set out all of these references. It is clear from both the examination-in-chief and the cross-examination:
(a)that when Mr Scragg read Exhibit P20 he became aware that no. 91 Commercial Road belonged to Mr and Mrs Zientara;
(b)that no. 91 was included in the policy;
(c)that the property at nos 87-89 Commercial Road belonged to the plaintiffs, and
(d)that the property at nos 87-89 Commercial Road was insured for $400,000, as was no. 91.
[1] T193/6, 193/14, T194/12, T240/31, T241/20, T244 in particular T244/16-22 and T244/31-34, T245/31, T247/18-28, T248/7, T248/19-25 and T249/2-16.
I have already referred to the passage in the examination-in-chief (T92/34), where Mr Scragg said that he saw the amounts stated on pages 3 and 4, namely $400,000 for each of the two properties. This was raised in cross-examination (T245/31):
QBut you told us earlier in your evidence that you were aware when you went through the renewal document, Exhibit P20, that the sum insured for your property, 87‑89 Commercial Road was, in fact, $400,000.
AAt the time, yes. I had forgotten.
The earlier reference was the passage at T92/34. A little later, Mr Trim returned to the topic (T247/18 et seq):
QYou have told us already that you noted upon examining P20 when it came in at the end of June 2006, that the sum insured for your properties at 87-89 Commercial Road had a sum insured of $400,000. You also noted that the sum insured for 91 Commercial Road that you noted as being owned by Barry were insured for $400,000.
AYes, I had no idea what his requirements were.
QNo, just answer my question.
AYes, I did note that, yes, I did.
QYou noted that the sum insured was $400,000.
AYes.
A little later the following passage occurred (T248/15 et seq):
QReferring to the sum insured for 87-89. So you were aware in the earlier documents that the sum insured had been declared for your property of $400,000.
ANo, sorry that’s a combo effect of my state of mind now and my state of mind then. At the time I was aware that P20 had an amount of $400,000 in respect of each of us and that’s – what I was really referring to was that I became aware that what was set out in P20 was wrong and I had forgotten the amount of my instructions in relation to the value of the insurance cover that I wanted at the time.
Taking the evidence given by Mr Scragg as to the realisations he came to when he read P20 in late June 2006, I find that he became aware that the policy provided cover of the properties respectively at nos 87-89 and no. 91, that the declared value for each property was $400,000 and that Mr and Mrs Zientara were the owners of no. 91. After that realisation, by email dated 5 July 2006 (Exhibit P21), Mr Scragg wrote to Mr Dixon requesting him, among other things, to advise as to the premium cost in relation to, among other properties, 91 Commercial Road, Port Adelaide. He did not on that or any other occasion after 27 June 2006 ask Mr Dixon to increase the cover on 87-89 Commercial Road to $800,000.
The claim relating to 87-89 Commercial Road
The defendants’ submission in relation to nos 87-89 involves an examination of these questions:
(a)Was the effect of the misleading conduct of Mr Dixon brought to an end in late June 2006 when Mr Scragg realised that nos 87-89 were only insured for $400,000; or
(b)Was the position (after that realisation) that there were at least two causes of the declared valued being $400,000 at the time of the fire, namely the misleading conduct and the fact that Mr Scragg took no steps to increase the declared value to $800,000.
In setting out question (a) I have used the neutral expression “brought to an end”. During submissions, the concepts of reliance and causation were raised. It was put by Mr Trim that, when Mr Scragg realised the true situation, he could no longer be said to have relied on the misleading conduct. That was, it was said, the same as contending that the misleading conduct did not cause the declared value to remain at $400,000 which in turn led to the alleged loss. In the circumstances of this case, and perhaps only this case, it is better to use the neutral expression so as to avoid confusion with questions of reliance and causation which are not necessarily the same thing. In particular, because the plaintiffs’ argument raises the question of multiple causes giving rise to the need to apportion responsibility, the dispute is better dealt with by examining whether the misleading conduct had any effect after June 2006.
If the answer to (a) is “yes”, there is no case to be answered, because the misleading conduct ceased to have effect in June 2006. In that event, the answer to (b) must be “no”. Similarly, if the answer to (b) is “yes”, the answer to (a) must be “no”.
Mr Trim argued for a positive answer to (a) and Mr Hoile argued for a positive answer to (b). It seems to me that, if Mr Hoile is correct, the no case submission must fail because, not only does the misleading conduct continue to have effect at the date of the fire, but also matters of apportionment of responsibility (as to which see s 1041N of the Corporations Act 2001 (Cth)) may arise. If the claim were to be dismissed, the plaintiffs would not have had the opportunity to obtain from the Court an apportionment of responsibility.
If, on the other hand, Mr Trim is correct, the no case submission should be upheld because an essential part of the causes of action based on misleading conduct and negligence has not been made out, namely that the impugned conduct caused the loss.
It is convenient now to turn to some of the case law referred to by counsel.
Causation
In March v E and MH Stramare Pty Ltd (1991) 171 CLR 506, the High Court considered the question of causation in relation to a motor vehicle negligence claim. Mason CJ, with whom Toohey and Gaudron JJ agreed, referred (at 515) to the common law tradition of determining matters of causation “by applying common sense to the facts of each particular case”: Cf. Stapley v Gypsum Mines Ltd [1953] AC 663 at 681 per Lord Reid. Some academic commentary placed too much importance on the “but for” test which Mason CJ thought undesirable. Nevertheless, he said (at 515-6):
… the ‘but for’ test, applied as a negative criterion of causation, has an important role to play in resolution of the question [of causation].
His Honour later said (at 516):
The cases demonstrate the lesson of experience, namely, that the test, applied as an exclusive criterion of causation, yields unacceptable results and that the results which it yields must be tempered by the making of value judgments and the infusion of policy considerations.
The question of the role of causation in statutory causes of action such as the one pursued by the plaintiffs in respect of nos 87-89 was dealt with by the High Court in Wardley Australia Limited v Western Australia (1992) 175 CLR 514. Although the case involved ss 52 and 82 of the Trade Practices Act 1974 (Cth), they are equally applicable to the essentially identical causes of action contained in the Corporations Act. As to the relevant statutory provisions, the majority (Mason CJ, Dawson, Gaudron and McHugh JJ) said at 525):
As loss or damage is the gist of the statutory cause of action for which s 82(1) provides, the cause of action does not accrue until actual loss or damage is sustained. The statutory cause of action arises when the plaintiff suffers loss or damage “by” contravening conduct of another person. “By” is a curious word to use. One might have expected “by means of”, “by reason of”, “in consequence of” or “as a result of”. But the word clearly expresses the notion of causation without defining or elucidating it. In this situation, s 82(1) should be understood as taking up the common law practical or common-sense concept of causation recently discussed by this Court in March v Stramare (E. & M.H.) Pty Ltd, except in so far as that concept is modified or supplemented expressly or impliedly by the provisions of the Act.
[Citations omitted.]

Later, their Honours said (at 525):
In this situation, as at common law, acts done by the representee in reliance upon the misrepresentation constitute a sufficient connexion to satisfy the concept of causation.
Mr Trim also relied upon the decision of Hill J in Argy & Anor v Blunts & Lane Cove Real Estate Pty Limited & Ors (1990) 26 FCR 112 where his Honour said (at 135):
For misleading conduct to give rise to the statutory cause of action under either the Trade Practices Act or the Fair Trading Act it is necessary that the loss or damage suffered arise from or out of the misleading or deceptive conduct. This causative requirement flows from the preposition “by” which is present in [the relevant sections].
Hill J referred to Kabwand Pty Ltd v National Australia Bank Ltd (1989) 11 ATPR 50, 367 at 50, 378 where the Full Court of the Federal Court said:
No doubt, by way of analogy the general law of deceit readily suggests the necessity that the misleading or deceptive conduct induce the situation which gives rise to damages, albeit that the conduct complained of need not be the sole inducement: cf Gould v Vaggelas (1985) 157 CLR 215 at 236 per Wilson J; but the connection to be found in the section and expressed in the word ‘by’ is not necessarily limited by the common law concept of inducement.
Hill J then said (at 135):
In Gould v Vaggelas … Wilson J (at 236) in a passage concerned with the law of deceit but by analogy equally applicable to a cause of action under the Trade Practices Act or the Fair Trading Act restated four principles which in his Honour’s view were correctly enunciated by the trial judge in that case:
“1.Notwithstanding that the representation is both false and fraudulent, if the representee does not rely upon it he has no case.
…
4.The representation need not be the sole inducement. It is sufficient so long as it plays some part even if only a minor part in contributing to the formation of the contract.”
To adapt paragraph 4 above to this case, the inducement must play “some part even if only a minor part”, in inducing the belief in Mr Scragg that the property at nos 87-89 was insured for $800,000.
The case of Argy involved a consideration of whether or not misrepresentations induced the plaintiff to enter into a contract. The plaintiff was a solicitor and it was contended that whatever misrepresentation may have been made, it was clear from the contract what the actual position was and the solicitor read the contract before signing it. Hill J set out his findings in that regard (at 138) as follows:
Accordingly I find that the applicants were induced by the misrepresentations of Blunts to enter the contract and that the effect of these misrepresentations was not lost by Mr Argy’s cursory perusal of the contract.
Mr Hoile sought to derive some assistance from this conclusion, contending that the fact that Mr Scragg read Exhibit P20 in late June 2006 and drew certain conclusions from his reading of the document, did not have the effect of bringing to an end the false and misleading conduct of Mr Dixon of March 2005. He said that after late June 2006, it was arguable that two things caused the insurance cover to be at the $400,000 level at the date of the fire: the misleading conduct/negligence of Mr Dixon and Mr Scragg’s failure to request an increase in cover when he learned the true situation. For that reason alone, the no case submission should be overruled. In addition, he said, the plaintiffs should not be deprived of the opportunity to obtain an apportionment of responsibility.
In summary, the position of the defendants on the no case submission was that if the plaintiffs were to make out the causes of action based in negligence or a statutory cause of action, they must demonstrate that Mr Scragg maintained the belief up to the date of the fire that the insurance was at a particular level, namely $800,000 rather than the actual $400,000.
Mr Hoile relied upon the decision of the High Court in Henville & Anor v Walker & Anor (2001) 206 CLR 459. In that case an architect obtained advice from a real estate agent about the purchase of a property near Albany for the purposes of the construction of home units. The agent stated that there was demand for quality units in the town and that if three units were built on the site they would fetch between $250,000 and $280,000 each. At the time the statements were made there was in fact little or no unsatisfied demand for quality units and there was no demand for units in the price range of $250,000 to $280,000. The architect prepared a feasibility study which subsequently underestimated the cost of the project. He formed the belief that the project would make a profit of more than $100,000.
The Court (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ) held that the agent’s contravention of s 52(1) of the Trade Practices Act was one of two concurrent causes of the architect’s loss and that was enough to enable damages to be recovered under s 82 of the Trade Practices Act 1974. McHugh J said (at [110]-[112]):
His [the plaintiff’s] belief that the project would make a profit of more than $100,000 was the product of two errors. First, he erroneously miscalculated the cost of constructing the units. Secondly, he was induced by Mr Walker’s misrepresentations to believe erroneously that the units would be sold reasonably quickly for not less than $750,000. Both errors were fundamental to his belief that the project would return a handsome profit. Mr Walker’s misrepresentations, therefore, directly induced Mr Henville to proceed with the project and its resultant loss. …
The fact that Mr Henville chose a design that was ultimately too expensive did not deny or neutralise the operative effect of Mr Walker’s misrepresentations. The misrepresentations remained operative at all material times. Indeed, they were obviously operating after the units had been completed and played a decisive part in the initial price for which the units were marketed.
Contrary to the conclusion of the Full Court, Mr Walker’s misrepresentations were causally connected with the loss sustained by Mr Henville.
Mr Hoile submitted that the plaintiff had an arguable case that the effect of the misleading conduct of Mr Dixon survived beyond late June 2006 and, if it did, it constituted a sufficient cause of the building not being adequately insured as at the date of the fire. Mr Trim submitted that the case was distinguishable because, on the facts, the realisation of the true situation in late 2006 on the part of Mr Scragg operated to bring to an end the effect of the misleading conduct on the part of Mr Dixon.
Conclusions
The defendants have, for the purposes of the submission of no case, accepted that Mr Dixon’s response, in March 2005, that the premises were insured for $1.3M, constituted false and misleading conduct contrary to s 1041H of the Corporations Act 2001 (Cth). That conduct resulted in an instruction by Mr Scragg to alter the insurance cover to $800,000 and induced in him the belief that the properties belonging to the plaintiffs at Commercial Road were thereafter insured for $800,000. That belief continued until he read P20 in late June 2006, approximately a month before the fire. The conduct of Mr Scragg between March 2005 and late June 2006 may have contributed to the maintenance of that belief until late June 2006, in which event, questions of apportionment of responsibility could well have arisen if the fire had occurred before Mr Scragg realised the true situation in late June 2006. I have found that, by late June 2006, Mr Scragg realised that nos 87-89 Commercial Road belonged to the plaintiff companies and that no. 91 belonged to Mr and Mrs Zientara. He also realised that the total declared value of nos 87-89 was $400,000. I find that he took no steps to increase the cover to $800,000, even though, by email dated 5 July 2006 to Mr Dixon (Exhibit P21), Mr Scragg asked for cancellation of insurance in respect of another property and details of the “premium cost” in relation to insurance of no. 91 Commercial Road. Had he been concerned about the level of cover regarding nos 87-89, he could have then asked for an increase in cover.
No explanation was given as to why there was no request after late June 2006 to increase the cover in respect of nos 87-89. In the absence of an explanation as to why no steps were taken to increase the cover, I refrain from speculation so that I might take the plaintiffs’ evidence at its face value.
I now come to questions (a) and (b).[2] The findings made by me lead to the conclusion that the misleading conduct came to an end in late June 2006. By then Mr Scragg was aware of the true state of the insurance over nos 87-89. In the absence of any explanation as to why he allowed the insurance level to remain as it was, it cannot be said that anything done or not done by Mr Scragg, or any decision made or not made by Mr Scragg, in relation to increasing the insurance, was an additional cause of the insurance being at the $400,000 level at the time of the fire, that is, additional to the misleading conduct which was engaged in in March 2005.
[2] See p 11 above.
The misleading conduct came to an end when Mr Scragg realised the true situation. Thereafter it lost its misleading nature and so could be causative of nothing. The misleading conduct was therefore neither the sole cause nor one of two or more causes of nos 87-89 being insured for $400,000 rather than $800,000 at the time of the fire. There is a difference between Mr Henville operating under two misapprehensions as opposed to a realisation of the true situation by Mr Scragg a month before the fire. The latter, in my opinion, clearly precludes a conclusion that there was any causal relationship between misleading conduct and the fact that the building was insufficiently insured at the time of the fire. I refrain from using the expression that, in late June 2006, there was an intervening act which broke the chain of causation, but what occurred is similar to that concept. The realisation by Mr Scragg that nos 87-89 were insured for $400,000 constituted the truth of the situation and from that time onwards the fact that insurance on the building at the time of the fire was at the $400,000 level was not connected to the false and misleading conduct of Mr Dixon in March 2005. In forming that conclusion I apply the commonsense approach to causation advocated in March v Stramare (supra).
In addition, dismissal of the claim relating to nos 87-89 does not deprive the plaintiffs of the opportunity to obtain an apportionment of responsibility between the plaintiffs and the defendants. In the events which occurred, no such opportunity arises because it has not been demonstrated that the defendants’ conduct caused the plaintiffs’ loss.
The fourth defendant’s submission re no. 91 Commercial Road
This cause of action is different from those pursued in relation to nos 87-89. The relevant part of the Amended Statement of Claim is as follows:
15AAs at 27 July 2006 Mr and Mrs Zientara (“Zientara”) as owners of shop premises at 91 Commercial Road Port Adelaide held a policy of Business Insurance No AP8IL00144 [sic] issued by the fourth defendant as insurer.
15BThe said policy (section 1 – Fire and other damage) provided insurance to Zientara in respect of loss or damage by fire and provided that the maximum amount payable under this section of the policy was the total declared value.
15COn or about 20 August 2004 Zientara gave instructions to Dixon and Plan 4 Insurance Services Pty Ltd to increase the total declared value from $275,000 to $500,000 and the fourth defendant gave effect to those instructions.
15DAfter 20 August 2004 and including upon renewal of the policy prior to 27 July 2006 Zientara gave no instructions to vary or reduce the total declared value.
15EOn 27 July 2006 the shop premises at 91 Commercial Road were totally destroyed by fire and Zientara thereby suffered a loss which at least amounts to $500,000 and became entitled to benefits in terms of the policy.
15FThe fourth defendant refused to recognise the total declared value as being $500,000 and asserted the total declared value to be only $400,000.
15GOn about 29 July 2007 Zientara assigned to the plaintiffs all Zientara’s rights and entitlements to receive the balance falling due under policy AP8IL00144 [sic].
15HOn about 16 November 2007 notice of the said assignment was given to the fourth defendant.
15IThe fourth defendant has recognised the said assignment but continues to assert that the total declared value with respect to the shop premises at 91 Commercial Road was only $400,000 as at the time of the said fire.
The essence of the plaintiffs’ complaint is that the fourth defendant, without the authority of Mr and Mrs Zientara, reduced the cover from $500,000 to $400,000 and thus, as a matter of contract law, the actual cover at the time of the fire was $500,000. The fourth defendant has made two responses: first, that the reduction in cover was authorised because it was made pursuant to the instructions of Mr Scragg who, it is asserted, had the Zientaras’ authority to do so; and, second, even if the reduction was made without authority, a new contract came into existence when the policy was renewed after the reduction in cover. Mr Doyle argued that when that renewal took place, the defendant made an offer to renew the policy in relation to no. 91 with cover set at $400,000 and the Zientaras accepted that offer, thereby creating a new contract. Mr Doyle did not attempt to debate the question of whether the cover was reduced without authority. He accepted that it was not open to the fourth defendant to do so on a submission of no case to answer. His submission had to proceed on the assumption that Mr Scragg had no authority to request a reduction in cover from $500,000 to $400,000.
It is common ground, as alleged in paragraph 3(a) of the Amended Statement of Claim that the “policy had originally been issued in the year 2002-2003 and was renewed from time to time”. Mr Doyle submitted that for each subsequent renewal in 2004, 2005 and 2006, separate contracts were entered into. He then said (at T336-1):
We then come to February/March 2006, either Mr Scragg had authority on behalf of Mr Zientara, in which case, pursuant to that authority, on the documents I have taken your Honour to, he renewed the policy i.e. he entered into a new policy in the amount of $400,000 or alternatively he had no authority and there is no contract in effect on behalf of Mr Zientara. But what there cannot be, on any view of the law or facts; on the law, properly understood, and on any view of the facts, … there cannot be a contract from the period March 2006 onwards for a declared sum of $500,000.
The thrust of Mr Doyle’s submission was that at the time of renewal of the policy in early 2006, no offer to renew had been put by the defendant for cover in the sum of $500,000, whatever may have occurred in the past. I accept that that is factually correct and I find accordingly.
On the question of the renewal of the insurance constituting a new contract, Mr Doyle relied upon C E Heath Underwriting and Insurance (Australia) Pty Ltd v Edwards Dunlop and Co Limited (1993) 176 CLR 535. In that case the High Court considered how a renewal of a contract of insurance was to be characterised. The majority, Dawson, Toohey and McHugh JJ, said (at 545):
In the course of argument considerable attention was devoted to whether the successive renewals of the Blanket Fidelity Policy resulted in a series of new contracts being entered into by the respondent and the appellant. The distinction between the renewal of a policy and the extension of a policy was expressed in the following terms by Mayo J in Re Kerr [1943] SASR 8 at 16:
“Strictly, a ‘renewal’ is descriptive of a repetition of the whole arrangement by substituting the like agreement in place of that previously subsisting, to be operative over a new period, whereas an ‘extension’ betokens a prolongation of the subsisting contract by the exercise of a power reserved thereby to vary one of its provisions, that is, by enlarging the period. Upon a renewal similar rights revest … A contract reserving continuous rights of renewal will, if these be exercised, lead to succeeding contracts in a series, the identity of each contract [being] separate and distinct. On the other hand, the exercise of the right of extension augments the length of time over which the contract operates, without changing its identity.”
Whether there is a renewal or an extension of an insurance policy is a question of construction, the term “renewal” often being used to refer to both “renewal” and “extension” in the sense that those words are used above. It is, however, well established that, where a policy is renewable only by mutual consent (ie. not as of right), the renewal results in a fresh contract rather than the extension of and existing contract. Of course, a policy may expressly stipulate that it is not to continue in force beyond the period of insurance, unless renewed by mutual consent. And where a policy such as the ordinary form of life policy, expressly provides a continuation beyond the specified period of insurance unless a particular event, such as the non-payment of the premium, takes place, the renewal is an extension of the original contract. But where a policy is silent on the question of renewal, renewal of it will generally constitute a new contract.
In this case, there is no basis upon which to reach any conclusion other than that each renewal of the Blanket Fidelity Policy required the consent of both the respondent and the appellant underwriters. Accordingly, each renewal when it occurred constituted a new contract.
[Citations omitted.]
Mr Hoile, on the other hand, relied upon the decision of the Court of Appeal in Royal Exchange Assurance v Hope [1928] 1 Ch. 179. In that case, in August 1925 the insurer provided a policy requiring it to pay the sum of £1,000 in the event of the insured’s death on or before 31 July 1926. Before that date an extension of the period was granted by the company to 31 October 1926. This was given effect to by an endorsement on the policy of the declaration “that the sum assured shall be payable in the event of the death of the life assured on or before the 31^st October, 1926…”. Lord Hanworth MR said (at 191):
It is, in my opinion, impossible to hold that the insurance for the later three months was a new and separate contract. The terms offered and accepted were for a short extension of the contract of insurance which was then in being and unexpired. No suggestion was made for a new and independent policy.
The point at issue in the case was whether or not the assignee of the policy who took by way of an assignment before the extension was granted, remained entitled to the benefit of the policy. It was contended that a new contract had been entered into which was not the subject of an assignment and therefore the assignee had no entitlement under the new contract of insurance. Both the trial judge and all members of the Court of appeal took the view that what occurred by way of extension prior to the expiry of the policy constituted a variation of the original policy and not a new contract.
Mr Hoile also relied upon the decision of Tallerman & Co Pty Limited v Nathan’s Merchandise (Victoria) Pty Limited (1957) 98 CLR 93 where Kitto J (at 135) dealt with whether or not a particular sequence of events constituted a variation of a contract or the discharge of a pre-existing contract by the entry into a new contract. Kitto J referred to what Lord Hanworth MR said in Royal Exchange Assurance v Hope (supra) where his Lordship said that a variation may be in strict logic a new contract, but the discharge of an old contract is a matter of intention. He said that this approach was followed in Illawong Village Pty Limited v State Bank of New South Wales [2004] NSW SC 18 and City and Industrial Demolitions v Shanahan [2000] NSW SC 1197.

In my opinion, none of the cases relied upon by the plaintiffs deals with the clear statement of the majority in C E Heath Underwriting and Insurance (Australia) Pty Ltd that “where a policy is renewable only by mutual consent … the renewal right results in a fresh contract rather than the extension of the existing contract”. It could not be suggested that the policy document (Exhibit P39) contained within it an automatic right on the part of the insured to renew the policy. It is clear that if a renewal were to be effected, the consent of both parties to the renewal was necessary. It is equally clear that the duration of the policy at any given time was for a period of one year. In those circumstances, I consider that the policy the subject of these proceedings comes squarely within the principles enunciated by the High Court in C E Heath Underwriting and Insurance (Australia) Pty Ltd.
It follows that I must uphold the fourth defendant’s submission as to 91 Commercial Road. Because I uphold both submissions of no case, I propose to dismiss the plaintiffs’ action against all of the defendants. I will hear the parties as to costs and any other consequential orders.
Addendum - 22 May 2009
When I originally published reasons for my decision on 8 May 2009 I indicated to counsel that the reasons were subject to revision because they had not been finally proofread and examined for error. Having read through the corrected reasons, I have noticed an omission relating to the submission of no case to answer pursued by Mr Trim. The causes of action pursued against all the defendants in respect of nos 87-89 were based on false and misleading conduct and negligence. I have not included my conclusions regarding the negligence claim. I now make explicit what was implicit in my reasons as originally published. I do so on the assumption that the defendants were negligent as alleged in the Amended Statement of Claim.
In my opinion, for the same reasons given in relation to the claim based on false and misleading conduct, the plaintiffs have failed to establish a case in negligence because the effect of the negligent conduct of Mr Dixon, arising from the conversation between him and Mr Scragg as set out in [30] and [31] above, was brought to an end when Mr Scragg subsequently realised, at the end of June 2006, the matters set out at [40]. In other words, the negligence was not causative of the loss. It follows that the claim in negligence could not survive the no case submission.