Allianz Australia Insurance Ltd v Haddad
[2015] NSWCA 186
•8 July 2015
|
New South Wales |
Case Name: | Allianz Australia Insurance Ltd v Haddad |
Medium Neutral Citation: | [2015] NSWCA 186 |
Hearing Date(s): | 11 June 2015 |
Decision Date: | 8 July 2015 |
Before: | Beazley P; Meagher JA; Ward JA |
Decision: | 1. Grant leave to appeal from the judgment of the District Court ordered on 13 May 2014. |
Catchwords: | AUSTRALIAN CONSUMER LAW – insurance contract – Australian Securities and Investments Commission Act 2001 (Cth), ss 12CA, 12CB, 12DA and 12GF – misleading or deceptive conduct by omission of information – renewal of annual home insurance policy – whether insurer’s failure to invite renewal or to indicate that renewal would not be invited was misleading or deceptive conduct in circumstances where the insurer was separately dealing with insured in relation to a claim under an earlier policy – whether conduct gave rise to a reasonable expectation that the policy had been renewed or extended |
Legislation Cited: | Australian Securities and Investments Commission Act 2001 (Cth) |
Cases Cited: | Battley v Faulkner (1820) 3 B&A 288; 106 ER 668 |
Category: | Principal judgment |
Parties: | Allianz Australia Insurance Limited (Appellant/Cross Respondent) |
Representation: | Counsel: |
File Number(s): | 2014/172638 |
Publication Restriction: | Nil |
Decision under appeal: | |
Court or Tribunal: | District Court of New South Wales |
Jurisdiction: | Civil |
Citation: | [2014] NSWDC 132 |
Date of Decision: | 13 May 2014 |
Before: | Cogswell DCJ |
File Number(s): | 201293399 |
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
HEADNOTE
[This headnote is not to be read as part of the judgment]
Between July 2003 and July 2009, the applicant insurer, Allianz, insured the respondent under annual contracts of home insurance. In June 2007, the respondent made a claim against the 2006-2007 policy for storm damage. That claim was finalised in March 2008. In June 2009, the respondent made a supplementary claim under the 2006-2007 policy for damage arising from the same storm. That claim was finalised in November 2009. The 2008-2009 policy expired in July 2009 and was not renewed. Allianz overlooked sending a renewal notice to the respondent and did not indicate that it did not intend to renew the policy. The respondent believed that her policy with Allianz had been extended or renewed, such that she was still insured in September 2010. At that time, the respondent made a claim on Allianz for damage to the property that occurred in August 2010. Allianz denied that claim on the basis that there was no home insurance policy current at that time.
The primary judge found in favour of the respondent on the basis that Allianz had breached the 2008-2009 contract and engaged in misleading or deceptive conduct.
The issues before the Court were:
whether the primary judge was correct to find a breach of the 2008-2009 contract;
whether the primary judge was correct to conclude that Allianz had engaged in misleading or deceptive conduct; and
whether the primary judge erred in rejecting the respondent’s arguments as to a statutory policy of insurance arising under s 58 of the Insurance Contracts Act 1984 (Cth).
The Court held, granting leave to appeal and allowing the appeal:
In relation to (i)
Allianz did not communicate to the respondent or outwardly act upon any intention to cancel the 2008-2009 contract. There was no breach or repudiatory conduct: [26].
Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61; 233 CLR 115 applied.
In relation to (ii)
Allianz did not engage in misleading or deceptive conduct by omitting to provide the respondent with information in relation to the expiry or lapse of the home insurance in July 2009. Allianz did not undertake that it would renew the policy and its conduct did not justify an expectation that, if no notice of expiry was received, the policy would automatically be renewed: [43], [46]. The dealings between Allianz and the respondent in relation to the claim under the 2006-2007 policy were not relevant to the renewal of the 2008-2009 policy: [44].
Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd [2010] HCA 31; 241 CLR 357 considered.
In relation to (iii)
As a result of Allianz’ failure to comply with s 58(2), by not providing the respondent with notice of the expiry of the 2008-2009 policy, a “statutory” policy arose. That policy only continued until July 2010: [52]. The malicious damage that was the subject of the respondent’s claim occurred after the expiry of that statutory policy: [51].
JUDGMENT
THE COURT: This is an application for leave to appeal from a judgment for the respondent on the question of liability in proceedings in the District Court. That judgment was ordered on 13 May 2014 and leave to appeal is required because it was interlocutory: District Court Act 1973 (NSW), s 127(2)(a); Computer Edge Pty Ltd v Apple Computer Inc [1984] HCA 47; 54 ALR 767. The primary issue in the proposed appeal is whether the applicant insurer (Allianz) engaged in misleading or deceptive conduct in relation to the renewal of a policy of home insurance.
Background facts
Between 22 July 2003 and 22 July 2009 Allianz insured the respondent’s brick veneer house at Wadalba under annual contracts of home insurance. Those policies were renewed with effect from 4pm on each anniversary of the commencement of that cover. In June 2007 the respondent made a claim under the 2006–2007 policy for storm damage. That claim was finalised in March 2008. In June 2009 the respondent’s husband, acting on her behalf, lodged a supplementary claim for damage caused by that storm. That claim related to the repair and replacement of electricity power poles within the property. Allianz appointed loss adjusters (GAB Robins Australia Pty Ltd) to investigate the claim. The principal adjuster was Scott McKenzie. Between June and October 2009 he prepared five short claim reports. In October 2009 it was agreed that the supplementary claim be settled for $10,533. That occurred and payment was made to the respondent in late November 2009.
In the course of Allianz assessing the supplementary claim, a decision was made by Allianz, but not communicated to the respondent, to record the 2008–2009 policy as “lapsed due to underwriting decline”. Further reference to this will be made in due course (at [37]-[38]). That being the position, the policy was not renewed from 4pm on 22 July 2009. Because it was “renewable insurance cover” Allianz had been required by subs 58(2) of the Insurance Contracts Act 1984 (Cth) (the ICA), to inform the respondent of the day and time at which that cover was to expire and whether it was prepared to negotiate to renew or extend it. No such notice or information was given. That was due to administrative error on the part of Allianz. The fact that this information was not given and that this occurred in circumstances where the supplementary claim under the 2006-2007 policy was still being dealt with, form the basis for the claim that is the subject of the proposed appeal to this Court.
On 2 September 2010, the respondent made a claim on Allianz in respect of malicious damage to the property that occurred at some time between 26 August 2010 and that date. Allianz denied that claim, maintaining that there was no home insurance policy current during any part of that period.
The respondent’s claim against Allianz
The respondent brought proceedings against Allianz claiming as damages the amount that would have been recoverable had the Wadalba property been insured at the time it was damaged in 2010. That claim, as finally formulated by her Amended Statement of Claim, was made on five bases. They were breach of contract (being a breach of the 2008-2009 policy); unconscionable conduct within the meaning of ss 20-22 of the Australian Consumer Law (enacted as a law of the Commonwealth by the Competition and Consumer Act 2010 (Cth), s131); conventional and promissory estoppel; misleading or deceptive conduct; and the benefit of insurance cover by the operation of s 58 of the ICA.
An order was made for liability to be determined separately and before any assessment of damages. That hearing proceeded before the primary judge (Cogswell SC DCJ). His Honour delivered two judgments, the first on 13 May 2014 (Haddad v Allianz Australia Insurance Ltd [2014] NSWDC 132) and the second on 21 August 2014 (Haddad v Allianz Australia Insurance Ltd (No 2) [2014] NSWDC 308). At the conclusion of the first, his Honour ordered the entry of judgment in favour of the respondent. It is from that order that Allianz seeks leave to appeal. (The transcript of the judgments to which the Court was referred differed from those available at the preceding citations. The paragraph numbers referred to in these reasons correspond to the later form of the judgments.)
Notwithstanding the delivery of the August 2014 reasons, the only reasons to which regard may be had when determining whether the primary judge erred in ordering judgment are those delivered at the time that order was made: see Spencer v Bamber [2012] NSWCA 274 at [13]; Tre Cavalli Pty Limited v The Berry Rural Co Operative Society Limited [2013] NSWCA 235 at [55], [57].
The decision of the primary judge
His Honour rejected the respondent’s claims alleging unconscionable conduct, conventional or promissory estoppel and relying on s 58 of the ICA: [2014] NSWDC 132 at [29]–[37], [44]–[47]. He also rejected the respondent’s claim that Allianz had breached the 2008–2009 policy “by unilaterally stopping the automatic renewal process”: [2014] NSWDC 132 at [17].
However the primary judge did hold that Allianz was in breach of that contract by purporting to cancel or terminate it. Clause 5 of the policy recorded that Allianz had the right to cancel the policy “where permitted by law”. By paragraph 40 of the Amended Statement of Claim the respondent alleged that Allianz had breached cl 5 “by unilaterally cancelling the Policy”. The primary judge upheld that allegation saying at [26]:
I think that what Sally Haddad asserts at [40] of the amended statement of claim is right. The policy said that Allianz has "the right to cancel this policy where permitted by law". The law contained in the Insurance Contracts Act provided for the basis of a cancellation and for a cancellation procedure. It is clear to me that there was no basis to cancel the contract relying on any of the provisions of s 60(1) of the Insurance Contracts Act. Allianz was concerned about whether Sally Haddad had "failed to comply with the provisions of the contract", but it was clearly still investigating that concern. It seems to me that it neither had a basis to cancel the contract, nor did it follow the statutory cancellation procedure. In my opinion, Allianz, being in breach of s 63(1) of the Insurance Contracts Act, was also in breach of the policy.
In July 2009, s 63 of the ICA provided that an insurer could not cancel a contract of general insurance except as provided by that Act and that any purported cancellation in contravention of that section was of no effect. The primary judge’s reference to s 63(1) takes account of amendments made to s 63 (with effect from 28 June 2013) by the Insurance Contracts Amendment Act 2013 (Cth), Sch 5, Pt 4 in relation to the cancellation of life insurance contracts.
In relation to the claim of misleading or deceptive conduct, the primary judge held at [42]:
… the continued dealing between Allianz and Sally Haddad through her representative Jim Haddad regarding the outstanding 2007 claim during most of the latter half of 2009, without informing her through him that the policy was not to be renewed (because it had been cancelled or had lapsed) was likely to mislead her.
Notwithstanding that there was no finding that the respondent had suffered any damage by reason of that misleading conduct, his Honour concluded at [47] and [48]:
… I find in favour of Sally Haddad in her assertion that there has been a breach of the contract between her and Allianz and I find in her favour that Allianz engaged in misleading conduct towards her, in breach of s 18 of the Australian Consumer Law.
Accordingly, I enter a verdict and judgment in favour of the plaintiff.
The reasons delivered on 21 August 2014
It is necessary to refer to these reasons, in order to explain the position taken by the parties in relation to the appeal.
The purpose of the further hearing that preceded the delivery of the August reasons was to address additional issues formulated by the primary judge. Those issues included whether the respondent had suffered any damage from Allianz’ “purported unilateral cancellation of the policy”; whether she had suffered any damage by reason of the misleading conduct (this issue was described as being whether the damages claimed were too remote); and, formulated by the primary judge as a separate question, whether the respondent had relied upon Allianz’ conduct: [2014] NSWDC 308 at [2], [3], [14], [30].
As to the first of these issues, the primary judge found that the respondent had not suffered any damage "arising from the repudiation of the contract" by the appellant. Allianz’ "repudiation" was described as being its uncommunicated decision in June 2009 to allow the 2008-2009 policy to lapse and not to negotiate to renew it. To the extent that the making of this decision involved any breach of contract, the primary judge held that the respondent had not suffered damage because that contract came to an end “in accordance with its terms” and could not have covered the malicious damage which occurred over a year later: [2014] NSWDC 308 at [5].
As to the second, his Honour found that the respondent had suffered loss by reason of Allianz’ misleading conduct. His Honour then separately addressed the third question and concluded that the respondent had relied upon Allianz’ conduct: [2014] NSWDC 308 at [30], [33]-[34]. His Honour’s reasons for that finding of causation included at [25]-[26]:
In my opinion, Allianz's conduct "materially contributed" to Sally Haddad's loss in the sense that Sally Haddad's ongoing dealings with Allianz up to November 2009, without Allianz mentioning that Sally Haddad was no longer insured by Allianz, no doubt left Sally Haddad with the impression that there was otherwise no issue with her insurance cover with Allianz.
I acknowledge that there was another contributing cause to her loss, namely, the fact that she overlooked the need to renew her insurance, not once but twice. I bear in mind that, for a substantial period, Sally Haddad was dealing with Allianz about another claim. It was resolved less than a year before the loss which this case is about. But those very dealings I have found were misleading Sally Haddad by inducing a belief on Sally Haddad's part that the business relationship between her, as insured, and Allianz, as insurer, was not fundamentally altered. In fact, it was fundamentally altered because Allianz had cancelled the contract of insurance between them and had failed to notify her of that cancellation. [Emphasis added]
Finally, in these reasons the primary judge revisited the statutory basis for the respondent’s claims for damages for unconscionable conduct and misleading or deceptive conduct. The pleadings alleged that the relevant statutory provisions were Parts 2-1 and 2-2 of the Australian Consumer Law. However, the primary judge correctly observed in these reasons that the Competition and Consumer Act 2010 had come into force on 1 January 2011, well after the conduct complained of. At the time of that conduct the provisions prohibiting unconscionable and misleading or deceptive conduct in relation to the issue of insurance contracts were contained in Div 2 (Subdivs C and D) of Pt 2 of the Australian Securities and Investments Commission Act 2001 (Cth) (the ASIC Act) and specifically, ss 12CA, 12CB and 12DA. The statutory right to recover the amount of any loss or damage suffered by conduct in contravention of those provisions was conferred by s 12GF of that Act.
In this Court no point was taken that the respondent’s claims for unconscionable conduct and misleading or deceptive conduct had been dealt with as governed by the Australian Consumer Law rather than the ASIC Act.
The issues in the proposed appeal
Allianz seeks leave to appeal from the judgment in favour of the respondent on the grounds that his Honour erred in holding that it had engaged in misleading or deceptive conduct (grounds 3 and 4 of its Amended Notice of Appeal) and that the respondent had suffered loss or damage by reason of that conduct (ground 5). Grounds of appeal 1 and 2 were not pressed.
At the outset three matters should be noted in relation to proposed ground 5. The first is that it addresses a finding that was not made as part of the reasoning in support of the judgment as to liability. The second is that it is not accompanied by any ground that such a finding was necessary to justify a holding of liability, if that liability was based on the allegation of misleading or deceptive conduct. The need for such a finding follows from the decision in Wardley Australia Ltd v Western Australia [1992] HCA 55; 175 CLR 514 which held that the sustaining of some loss or damage is the gist of the statutory cause of action under s 82 of the Trade Practices Act1974 (Cth): at 525. See also I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; 210 CLR 109 at [42]–[46]. The respondent’s misleading conduct claim was for recovery of damages only and was made relying on s 12GF of the ASIC Act, which takes the same form as s 82.
The third matter is that Allianz did not by any ground of appeal address the other reason given by the primary judge for the judgment in favour of the respondent. That reason was that there had been a breach of contract which did not require, for a holding as to liability, that there had been any damage suffered by reason of that breach: [2014] NSWDC 132 at [47]. In an action for breach of contract, the cause of action accrues at the time of breach. See Battley v Faulkner (1820) 3 B&A 288; 106 ER 668; Howell v Young (1826) 5 B&C 259; 108 ER 97 and, for a more recent application of that principle, Hawkins v Clayton t/a Clayton Utz (1986) 5 NSWLR 109 at 115, 122.
The respondent does not consent to the grant of leave to appeal and seeks to uphold the judgment as to liability, arguing that the primary judge correctly concluded that Allianz had engaged in misleading or deceptive conduct and that she had suffered loss or damage by that conduct. She also contends, albeit by way of an Amended Notice of Cross-Appeal, that the primary judge’s conclusion as to liability should be affirmed on the ground that by the operation of s 58 of the ICA there was a statutory policy in force at the time of the malicious damage. That issue is raised by ground 8 and is to be treated as if raised by a notice of contention (see Uniform Civil Procedural Rules 2005 (NSW), Pt 51, r 51.40).
More significantly, neither by the Amended Notice of Cross-Appeal nor by her written or oral argument did the respondent submit that if the issues as to misleading or deceptive conduct and the application of s 58 are decided in Allianz’ favour, any appeal must nevertheless be dismissed because she has a finding of breach of contract which is not sought to be challenged.
After the Court had reserved its decision, the parties were invited to confirm that the proposed appeal was to be dealt with on the basis that, if leave to appeal was granted and these two issues decided in Allianz’ favour, the appeal should be allowed and the judgment for liability set aside. That would also mean that should the respondent succeed only in respect of the misleading conduct issue, the judgment for liability would not be disturbed, notwithstanding that the May reasons make no finding as to reliance and some damage.
The parties did not accept that invitation. The respondent sought to argue that the judgment for liability should be maintained on the basis of the finding as to breach of contract. In response, Allianz contended that the finding as to breach of contract was wrong and could not sustain that judgment. This makes it necessary for the Court to address this issue notwithstanding that it is not formally raised as a ground of appeal.
In our view, the primary judge’s finding as to breach of contract cannot be sustained. That finding was that Allianz’ uncommunicated decision to lapse or cancel the 2008-2009 policy was a breach of contract because at that time Allianz had no right under s 60 of the ICA to terminate the contract: [2014] NSWDC 132 at [25], [26]. The problem for this analysis is that whatever Allianz may have thought or done internally, it did not communicate any such intention to the respondent or outwardly act on that intention in any way. For that reason there was no “purported” cancellation, which could be or give rise to a breach or constitute an anticipatory breach or repudiatory conduct. For conduct to be repudiatory it must be such as to convey to a reasonable person in the position of the other party an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with the party’s obligations: Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61; 233 CLR 115 at [44].
The issues remaining in the proposed appeal are whether the primary judge was correct to conclude that Allianz engaged in misleading or deceptive conduct that resulted in the respondent’s not being insured at the time of the malicious damage and whether he erred in rejecting the respondent’s arguments as to the application of s 58 of the ICA.
Did Allianz engage in misleading or deceptive conduct (grounds of appeal 3 and 4)?
The conduct in context
The respondent’s husband, Jim Haddad, gave evidence before the primary judge. The respondent did not. Mr Haddad was involved in all of the dealings with the appellant concerning the insurance and acknowledged that the first policy, effective from 4pm on 22 July 2003, “was to be renewed on an annual basis”.
The 2003–2004 policy wording included the following renewal provision:
Renewal procedure
Before this policy expires we will normally offer renewal by sending a renewal invitation advising the amount payable to renew this policy. You should carefully check the details contained in your renewal invitation. These details are the terms and conditions that apply to your policy, including but not limited to:
. the names of the people who are insured,
. the address of the property insured,
. specified items and the amount each item is insured for,
. any excess which you must pay towards the cost of a claim, and
. the sums insured.
Prior to sending your renewal invitation we will adjust your sum(s) insured.
Before the 2007–2008 policy was renewed the respondent received a renewal notice dated 29 June 2008. That notice commenced:
Thank you for choosing Allianz for your insurance cover. Your Household Insurance policy is now due for renewal by 4pm on the expiry date of 22/07/2008. It is important that you pay your premium of $323.59 by the due date to continue your cover with Allianz. [Emphasis in original]
The evidence was that the respondent and her husband appreciated that, ordinarily, insurance policies were issued from year to year and were renewed at the end of each annual period by the payment of a further premium. That appears clearly from two documents signed by the respondent in support of her claim to an indemnity for the malicious damage. The first is a letter to Allianz dated 27 December 2010. That letter pointed out that at the time for renewal of the 2008-2009 policy (July 2009) the respondent had two homes insured with Allianz, one at Carlingford and the other at Wadalba, and that she had received and acted on a renewal notice in respect of the insurance of the Carlingford property. The second is a letter from the respondent to Allianz dated 31 January 2011. That letter included the following statement:
… Further I have numerous policies with Allianz for myself and my work which have involved claims and not once was a renewal notice not dispatched on these policies.
Allianz’ conduct
On 15 May 2009 Mr Haddad contacted Allianz to make a claim for the cost of repairing power poles which apparently had been damaged by the June 2007 storm. On 19 May 2009 that claim was referred to Mr McKenzie of GAB Robins. (At some stage in June or July 2009 this entity changed its name to Cunningham Lindsey Australia Pty Ltd). There followed communications between Mr McKenzie and Mr Haddad. The latter described those communications in the following terms:
Mr Scott McKenzie requested Sally Haddad to seek information from Energy Australia and to provide a report from a suitable qualified engineer identifying the cause of the failure of the lines. These communications continued up to November 2009 and culminated in [Allianz] accepting the claim at this time.
During this same period Mr McKenzie prepared and forwarded claim reports to Allianz. Those reports indicate that, after the building damage which had been the subject of the initial claim had been rectified, “the electricity authority attended to inspect power lines within the property. The authority advised that the lines no longer exceed minimum height requirements”. The respondent then stated that “the storm has caused the poles to sink and the poles require repair or replacement to comply with the authorities [sic] requirements”. Mr Haddad subsequently obtained a quote of $10,533 for the completion of that work. The adjuster recommended settlement of the claim for that amount. Allianz agreed and payment was made in November 2009.
On 18 June 2009 there was a telephone conversation between Mr McKenzie and Laurel, an employee of Allianz. Mr McKenzie’s note of that conversation included the following:
Agreed we will need to review the situation if the additional matter is accepted in order to confirm repairs are done and we will need to seek receipts confirming the cash has been spent on repairs.
agreed to add a request in letter for insured to confirm unoccupancy
Suggested laurel mention to underwriting that the matter is still on risk and they seek to ask for unoccupancy details and confirmation of building repairs done
On the same day Laurel sent an email to the Allianz underwriting department headed “URGENT – confirmation of completion of repairs Unoccupancy”. After referring to the supplementary claim and to the fact that the earlier claim had been the subject of a “cash settlement” on the basis of damages totalling $41,000, that email continued:
This policy has renewed since then, and is up for renewal again on 22.7.2009.
Issues that you may wish to review prior to offering renewal:
1/ have all repairs been completed to the home to satisfy that premises is in good order and repair (considering cash settlement of $41,000 repair to insured back in 2007)
2/ it appears that if the power was cut off back in 2007, has the premises been unoccupied since then (unoccupancy limits may apply)?
3/ if the premises has been unoccupied since 2007, and there is currently no one in the premises, would you be offering cover?
We have only become aware of the following when Insured called regarding now claiming for the sinking power poles and wish your office to act on the obtained information as policy is approaching renewal.
What then occurred, according to the evidence, appears from two screen shots of the Allianz “Customer Information System”. The first shows the following note was made in that system at 16:29 on 19 June 2009:
Have spoken with [someone within Allianz] … and advised we require additional information prior to offering a renewal
**property may have been unoccupied since 2007
***proof of repairs required for cash settled repairs in 2007
The second screen shot is of the respondent’s “Contact Details” and contains the following description recorded as entered at 16:57 on 19 June 2009:
Lapsed due to underwriting decline
The Allianz underwriter called to explain its renewal procedures current as at June 2009 was Ms Burke. She gave evidence that due “to an administrative error” someone from the section within Allianz known as Policy Services “lapsed” the policy instead of sending a request for further information as to whether repairs had been completed. In cross-examination she explained that “lapsed” meant not offer renewal and in the case of the 2008-2009 policy referred to allowing it to lapse or expire on 22 July 2009.
The reasoning of the primary judge
The respondent’s pleaded claim was that the provisions in the policy wording, containing the promises to indemnify for damage caused by “malicious acts” (a defined insured event) and giving a right to cancel “where permitted by law” (general condition 6), were misleading or deceptive as to whether the Wadalba property “would be covered for building insurance on an annual basis from the year 2003 to the present” (presumably referring to the date of the pleading filed in October 2012).
The primary judge rejected the argument that the conditions “themselves” were misleading or deceptive: [2014] NSWDC 132 at [40]. He then turned to whether Allianz’ conduct was otherwise misleading or deceptive and identified that conduct as being:
… Sally Haddad had had cover with Allianz for some six years and had renewed it annually. Allianz unilaterally cancelled the policy (or allowed it to lapse in their view) without telling her. They carried on dealing with her through Jim Haddad, her representative, about paying a claim under the policy, without telling her that there was no longer any ongoing contract between them, because they had cancelled it (or let it lapse).
His Honour’s conclusion as to whether that conduct was misleading or likely to mislead is extracted above at [11]. In terms it was that Allianz’ conduct was “likely to mislead” the respondent, leaving open the possibility that that was because of an erroneous assumption or belief on her part that was not reasonably made or held.
Was Allianz’ conduct misleading or deceptive?
As the judgments in Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd [2010] HCA 31; 241 CLR 357 show, there are different approaches which can be taken to the characterisation of conduct as misleading or deceptive where, as here, it consists of or includes an omission to provide information. One approach is to consider whether in the circumstances the conduct, including any such omission, conveyed a representation which was misleading or deceptive. Another is to inquire whether those circumstances were such as to give rise to a reasonable expectation that if some relevant fact existed a particular thing would not be done, or not done, without disclosing that fact.
The conduct of Allianz upon which the respondent relies has three aspects. The first is that the contract of insurance was entered into in 2003 and subsequently renewed on an annual basis on five occasions. The policy wording stated that Allianz would “normally offer renewal”. It did not undertake to do so and if there was no renewal, the current policy would expire on the last day of the insurance period. None of that was consistent with there being any “ongoing contract” in the event that renewal did not occur, for whatever reason.
The second aspect of Allianz’ conduct is that of dealing with the respondent’s supplementary claim made under the 2006-2007 policy. That dealing commenced in June 2009 and continued until the claim was paid in late November 2009. The fact that the handling of that claim continued after the expiry of the 2008-2009 policy on 22 July 2009 said nothing about whether that policy had been or was to be treated as having been renewed or regarded as “ongoing”. The existence or continuance of that 2008-2009 policy was not relevant at all to the acceptance or rejection, in whole or part, of the claim under the 2006-2007 policy. Nor was anything said or done in the course of that dealing to suggest otherwise.
The third aspect of that conduct is that Allianz did not notify the respondent that the 2008-2009 policy was about to expire or indicate, as its internal records suggested, that it did not propose to offer renewal of the policy. Allianz, nevertheless, remained subject to the obligation imposed by s 58(2). As the primary judge was prepared to accept, Allianz’ omission to notify of the expiry of the policy and whether it was prepared to negotiate to renew was an “oversight” and unintended: [2014] NSWDC 132 at [43]. However, it had not promised to give the respondent a notification under s 58(2) or represented that if it did not, the policy could be taken to have been renewed. Nor had it promised to renew or to offer to renew.
Considered as a whole, Allianz’ conduct did not assume any different character. It did not convey that Allianz had renewed or would renew or extend the 2008-2009 policy in the absence of any agreement to that effect. So much was stated in the policy wording and was the basis upon which the policy had been issued and renewed from year to year. Allianz’ conduct did not justify the respondent having a reasonable expectation that Allianz would not allow the 2008-2009 policy to expire without having disclosed that was about to occur. Nor was there any reasonable basis for an expectation that if no notice of expiry was received, the policy could be taken to have been renewed or extended indefinitely.
In argument reference was made to the characterisation of Allianz’ conduct by the primary judge (when considering the question of causation) as likely to induce “a belief on Sally Haddad's part that the business relationship between her, as insured, and Allianz, as insurer, was not fundamentally altered”: [2014] NSWDC 308 at [26]. That characterisation begs the question as to what was the relationship that remained unaltered. It was one in which annual policies of insurance were issued and expired unless renewed.
For these reasons we consider that Allianz’ conduct was not misleading or deceptive and that the primary judge erred in holding otherwise. This makes it unnecessary to consider Allianz’ further argument (raised by ground 4) that its failure to inform the respondent of the expiry of the policy and of the fact that it did not propose to invite renewal, was not conduct to which s 12DA of the ASIC Act applied because that omission was inadvertent and accordingly not conduct to which that provision applied: s 12BA(2)(b),(c).
Section 58 of the ICA (contention by ground 8 of amended cross appeal)
Section 58
Section 58 of the ICA relevantly provides:
(1) In this section, renewable insurance cover means insurance cover that:
(a) is provided for a particular period of time; and
(b) is of a kind that it is usual to renew or for the renewal of which it is usual to negotiate.
(2) Not later than 14 days before the day on which renewable insurance cover provided under a contract of general insurance (in this section called the original contract) expires, the insurer shall give to the insured or a person acting as agent for the insured a notice in writing informing the person to whom the notice is given of the day on which and the time at which the cover will expire and whether the insurer is prepared to negotiate to renew or extend the cover.
(3) Where:
(a) an insurer has failed to comply with subsection (2); and
(b) before the original contract expired, the insured had not obtained from some other insurer insurance cover to replace that provided by the original contract;
then, by force of this section, there exists between the parties to the original contract a contract of insurance that provides insurance cover as provided by the original contract, except that the cover provided is in respect of the period that:
(c) commences immediately after the insurance cover provided by the original contract expires; and
(d) expires, unless the contract is sooner cancelled, at:
(i) the expiration of a period equal to the period during which insurance cover was provided by the original contract; or
(ii) the time when the insured obtains from the original insurer or some other insurer insurance cover to replace that provided by the original contract;
whichever is the earlier.
Section 60 which deals with the cancellation of contracts of general insurance provides by subs (4):
(4) Where a contract of insurance is:
(a) a contract that is in force by virtue of section 58; or
(b) an interim contract of general insurance;
the insurer may at any time cancel the contract.
Was there statutory cover at the time of the malicious damage?
It was accepted by Allianz that the result of its failure to comply with s 58(2) was that, by force of that section, there was insurance which commenced at 4pm on 22 July 2009 and continued until 22 July 2010 because it was not cancelled earlier (in exercise of the right given by s 60(4)) and the respondent did not obtain replacement cover at any time during that 12 month period. The malicious damage occurred after the expiry of that “statutory” policy.
The respondent makes two arguments in reliance upon s 58. First it is submitted that the “statutory” policy in force by virtue of the first operation of s 58 was also “renewable insurance cover” to which s 58 applied. That argument must be rejected. The policy in force by virtue of s 58 was not the result of any consensual arrangement. It was imposed by reason of the insurer’s non-compliance with subs 58(2). It was not insurance cover that “it is usual to renew or for the renewal of which it is usual to negotiate” within subs (1)(b). Nor was it cover “provided for a particular period of time” within subs (1)(a). The effect of subs (3) is that the cover is not for a definite period. It may be cancelled by the insurer at any time by 14 days’ notice and ceases if the cover provided by the original contract is replaced.
The respondent’s second argument starts with the proposition that Allianz’ purported cancellation took effect after the commencement of the 2009-2010 policy. It is then said that that cancellation was, by s 63, of no effect. Therefore the 2009-2010 policy expired on 22 July 2010. As there was no compliance with s 58(2) in relation to the expiry of that policy, there was a “statutory” policy in force from 22 July 2010. The fundamental flaw in this argument is that the first proposition is not sustainable. The 2008-2009 policy lapsed or expired at 4pm on 22 July 2009. There is no suggestion in the evidence that Allianz unilaterally extended the operation of that policy for another 12 months or renewed it for that period and then sought to cancel it. This second argument also must be rejected.
Conclusion
The primary judge erred in holding that Allianz was liable to the respondent in damages for misleading or deceptive conduct. For that reason the interests of justice require that Allianz have leave to appeal. That appeal, amended to include a ground challenging the finding as to breach of contract, should be allowed.
The Court makes the following orders:
1. Grant leave to appeal from the judgment of the District Court ordered on 13 May 2014.
2. Grant leave to the appellant to file an amended Notice of Appeal which includes as a ground that the primary judge erred in finding that it had breached the 2008-2009 policy.
3. Direct that the appellant file an amended Notice of Appeal within seven days of the date of this order.
4. Allow the appeal.
4A. Dismiss the amended cross appeal.
5. Set aside the judgment of the District Court.
6. Judgment for the appellant (as defendant) in the District Court.
7. Order that the respondent (as plaintiff) pay the appellant’s costs (as defendant) of the District Court proceedings.
8. Order that the respondent pay the appellant’s costs of the application for leave to appeal and of the appeal.
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Amendments
24 August 2015 - [52] "... unusual to negotiate" corrected to read " ... usual to negotiate
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