Council of the City of Penrith v Govt Insurance Office of NSW

[1999] HCATrans 453

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S43 of 1999

B e t w e e n -

COUNCIL OF THE CITY OF PENRITH

Applicant

and

GOVERNMENT INSURANCE OFFICE OF NEW SOUTH WALES

Respondent

Application for special leave to appeal

KIRBY J
HAYNE J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 10 DECEMBER 1999, AT 12.38 PM

Copyright in the High Court of Australia

MR D.L. DAVIES, SC:   May it please the Court, I appear for the applicant.  (instructed by Phillips Fox)

MR A.J. MEAGHER, SC:   If the Court pleases, I appear with MR M.A. JONES, for the respondent.  (instructed by Dunhill Madden Butler)

KIRBY J:   Yes, Mr Davies.

MR DAVIES:   The special principle in this case for which we seek special leave is the question of what amounts to professional advice or service for insurance purposes in relation to local authorities, and to some extent it follows on from your Honour Justice Kirby’s decision in GIO v Newcastle.  As we perceive the position, there is a conflict between that decision and the decision of the Queensland Court of Appeal in FAI General Insurance v Gold Coast City Council.

KIRBY J:   But is it not the case that both the majority and the minority in the Court of Appeal purported to apply what I had said in that case - purported?

MR DAVIES:   It would be our submission that the majority did not.  Although the majority made passing reference to it, because of the way the majority dealt with the appeal, that was an issue which in a sense they were able to bypass.  At trial the case was conducted on a very narrow basis.  It was accepted that the letter of 27 July 1981 was negligent and the only question was whether it fell within the insuring clause by reason of being a breach of the professional duty brought about by the behaviour and activities of officers of the Council in a professional capacity.

Now, the majority in the Court of Appeal raised other matters, in a sense, to go behind the way the case was conducted at trial.  Justice Powell, for the majority, for example, stated that there were two questions to be decided in the case.  At page 19 of the application book, the first question at line 20 being the correct question and the only question, and the second question which he set out was one which was raised by him at the appeal and then thereafter taken up.  It is our submission that that in itself led to a confusion in the way that the appeal was dealt with.  When one then goes to the judgment of the President who followed Mr Justice Powell but gave some short reasons of his own, the President seemed unable to accept the acknowledgment of negligence in the letter of 27 July 1981 and seemed unable to accept that at trial the matter was conducted on the basis that it did not matter which officers of the Council were concerned, it was only a question to decide whether, in writing the letter in the terms it was, there was a professional element involved.

KIRBY J:   Yes, but the President at 18 refers to the passage in GIO v Newcastle City Council.

MR DAVIES:   Yes, he refers to the passage but ‑ ‑ ‑

KIRBY J:   …..disagree.  You see, what we keep our eye on in matters like this is whether there is an issue of principle involved.

MR DAVIES:   Yes.

KIRBY J:   It is just not possible for us to be construing every insurance policy in this country.

MR DAVIES:   No, that is so, your Honour.

KIRBY J:   And, therefore, when one looks at the principle the principle is, “What does professionally mean?  What is its width?  What is its ambit?” On that question there was no real difference in the Court of Appeal.

MR DAVIES:   It emerges in this way because both of the judges in the majority take as an assumption that the mere provision of information by a Council is not a professional service.  That appears in Justice Mason’s judgment at 18 and in Justice Powell’s judgment at 24.

KIRBY J:   So, this is no more than the application of the concept that “professional”, at the end of the 20th century, as a very wide ambit applied to the facts of this particular case.

MR DAVIES:   We say that it goes beyond that because if one starts from the assumption that the mere provision of information is not a professional service it begs the question to be decided.  That was the approach taken by the Queensland Court of Appeal to say that the supply of information alone, by an officer, where there was no investigation of his professional qualifications, could not amount to professional in the ‑ ‑ ‑

KIRBY J:   Let us just test that.  If somebody in a delicatessen supplied information that is relevant to the kind of issue that is before the Court in this case, that could not be, on any view, professional, unless by chance the person happened to be, or purported to be, some expert of some kind.

MR DAVIES:   But this has to be seen in the context of insurance for local government purposes.

KIRBY J:   Yes.

MR DAVIES:   And, significantly, against the background which brought about this sort of insurance, and this is the point we make in our written submissions that after the decision of this Court in Shaddock’s Case it became the more imperative for local councils to have insurance against claims for economic loss resulting from the supply of information.  It was that background which the majority in the Court of Appeal simply ignored.

KIRBY J:   Yes.  Well, did they ignore it or did they simply make the point that in the end, in all claims of this kind, you have to get back to the terms of the policy, and I think, even as between this case and the earlier case of GIO General Ltd v Newcastle City Council, the policy is different.

MR DAVIES:   That is so, your Honour, but ‑ ‑ ‑

KIRBY J:   All of these policies are different.

MR DAVIES:   But, the precise wording of this policy does not remove what it was insuring.  It might have said it in more verbose language because it occurred at an earlier time.  What was being talked about was the provision of professional advice or service.  Now, whilst one has to look at the words of the policy it has been said again and again by this Court, and more recently by the House of Lords in ICS v West Bromwich, that one has to look at the background before you can see what is meant by the contract, how it is interpreted.  Your Honour made the same point in Johnson in this Court.

KIRBY J:   Yes, if I can say so, I think that the argument you want to advance is arguable but the issue is not that, we are not a third tier of general appeal.  It is a question of whether there is some error of principle or some other basis on which the case stands out and warrants being brought up into this Court.  That is what you have got to show and there are two problems there, A, that every policy is different, therefore, ultimately, you have to get back to the policy; and, B, when it got to the issue of principle the Court of Appeal embraced the notion that “professional” in this day and age has a very wide ambit, so that it just does not seem to lift itself out of the ruck, it is just another case of the construction of an insurance policy.

MR DAVIES:   No, your Honour, we say that the point of principle is whether one takes a narrow or broad approach and with all due respect to what your Honour has put to me, the majority in the Court of Appeal did not accept that a broad approach was to be taken to the matter.  By their statement, without further inquiry, that the mere provision of information was not professional they were impliedly adopting the narrow test in Gold Coast City Council.

KIRBY J:   That is one way to read it.  The other way to read it is that by their references to what was said in the Newcastle City Council Case that they did not dissent from that and then they went on to apply that view and reached what you say is a narrow view of the broad approach, but the approach was not contested.  They did not say, “We do not agree with this.  We think, in this context, professional means somebody with an established and traditional professional relationship with the person to whom advice is given”.  They do not say that.

MR DAVIES:   No, but the conclusion that the majority came to had a very limiting effect.  They say, impliedly, that they adopt what was said in Newcastle City Council but then they say, despite the fact that engineers and town planners and other in the Council were responsible for the provision of information, there was no breach of professional duty.  Now, when the only question to be determined at trial was, “Was that provision of information professional?”, when it was accepted that the information was provided by those suitably qualified people, a decision that ‑ ‑ ‑

HAYNE J:   But the relevant information being information about the intentions of Council.

MR DAVIES:   Yes, based on inquiries that those two departments had made about the land.

HAYNE J:   Yes.

MR DAVIES:   And that was where we say that the professional aspect of the matter came in.  Now, as I say, your Honour, passing reference is made to Newcastle City Council.  The test is impliedly accepted but the result is completely inconsistent with the broad approach and is consistent only with the narrow approach in Gold Coast City Council because they say information merely provided is not professional.

KIRBY J:   Yes, but as I have illustrated, if it were a street cleaner in the Council giving information or advice that would not, even on the broadest of broad views, be professional, and, therefore, in every case you have got to lift this word out of the policy, go down to the facts of the case and see if the facts fall within the ambit.  Now, the vehicle for us, for the Court to consider this, would be in a case where a Court of Appeal said, “We simply do not agree that professional, in the context of professional indemnity insurance, embraces a broad ambit and extends beyond traditional professional relationships”.  That would be the occasion for this Court to ‑ ‑ ‑

MR DAVIES:   Your Honour, with all due respect, that is unlikely to arise, at least from New South Wales because of what the Court of Appeal has said in Newcastle.

KIRBY J:   And could arise from Queensland.

MR DAVIES:   It could arise from Queensland.

KIRBY J:   Well, is not that the time for this Court to be looking at the issue, when there is a real contest of the fundamental?  The problem in your case is that the Court of Appeal has purported to apply the fundamental and has come to what you think - and on what is distinctly arguable - is a narrow view, but the principle is not contested.

MR DAVIES:   But, I think the mere fact that the case has to examine the facts here, as I think was said this morning in an earlier case, we do not come here disembodied of facts.

KIRBY J:   No, of course not.

HAYNE J:   And this one is overlayed by the fact that one of the claims made against Council was for wrongful lodgment of caveat.

MR DAVIES:   Yes.

HAYNE J:   A claim of a kind which would not, would it, fall within the insuring words?

MR DAVIES:   We argued that it did, your Honour.  We have been unsuccessful all the way through on that.

HAYNE J:   Yes.

MR DAVIES:   Whilst we do not lie down and die about it, we put the case mostly on the letter of 27 July and also for the fact that it was that letter which gave rise to the lodgement of the caveat in the end.

HAYNE J:   Yes.

MR DAVIES:   Now, just if I may summarise the points that we say justify a grant of special leave, there is a conflict between those two authorities, but the Court here appears to have adopted one in preference to the other,

although saying that they did not, and that they misstated the questions, the majority, that were conducted at the trial and that that brought them to the error that we say they fell into.  At trial it was accepted that there was no need to inquire who the officers of the Council were but that became a point of dissension in the majority’s decision, so Justice Mason refused to draw the conclusion that he says that the trial judge made, although that was an accepted part of the basis on which the trial was conducted.

The final matter which I repeat in my summary is that it is the context of the policy that has to be seen.  This is a policy that councils took out following Shaddock to cover them against provision of information with the restriction that it was based on professional qualifications or was professional advice or service.  Now, when one looks at it in that context it is very difficult to understand how a letter from a Council, based on information from two suitably qualified persons, does not fall within a policy that was intended by the parties to it.

KIRBY J:   I do not think there would be too much argument about the intention.  The question is the language and whether the language is broad enough and on that question the Court of Appeal thought not, so that it is many cases, perhaps most cases, of insurance policy conflicts the intention may have been there but the question is, did the words go so far.

MR DAVIES:   Your Honour, even Justice Powell, in the majority, accepted that the excessive verbiage in the policy, if I can put it that way, really came down to the question of whether there was professional advice or service given by the Council officers.

KIRBY J:   Yes.

MR DAVIES:   So, that nothing turns on the form of this policy.

KIRBY J:   Yes, thank you very much.

MR DAVIES:   Those are my submissions.

KIRBY J:   Yes.  Thank you very much.  I think we understand the point.  The Court does not need your assistance, Mr Meagher.  Was there anything else that you wished to put, Mr Davies?

MR DAVIES:   No, your Honour.

This application for special leave concerns the meaning, in the particular facts of the case, of the words of a specific clause in a professional liability policy of insurance.  Upon that question, the judges in the Court of Appeal of New South Wales divided.  However, both the majority and minority agreed that the correct approach to ascertaining the meaning of the clause was that stated in GIO General Ltd v Newcastle City Council (1996) 38 NSWLR 558 at 568. There is, accordingly, no question of general legal significance that would attract the intervention of this Court. No other basis propounded supports a grant of special leave which is therefore refused with costs.

AT 12.55 PM THE MATTER WAS CONCLUDED