Davis v CGU Insurance Ltd - [2008] SADC 69

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
DAVIS & ANOR v CGU INSURANCE LTD & ANOR
[2008] SADC 69
Judgment of His Honour Judge Burley
3 June 2008
CONTRACTS
TRADE AND COMMERCE - TRADE PRACTICES ACT 1974 (CTH) AND RELATED LEGISLATION
ESTOPPEL
INSURANCE - GENERAL - POLICIES OF INSURANCE - MISREPRESENTATION AND NON-DISCLOSURE
Claims by plaintiffs in respect of property covered against theft and damage by a policy of insurance - whether the policy only covered items owned by the plaintiffs or for which the plaintiffs were liable - whether the defendants or either of them represented to the plaintiffs or induced the belief that the obligation to idemnify extended to certain items to which third parties laid claim - whether the first defendant (the insurer) estopped from denying liability to indemnify - whether first defendant guilty of breach of the terms of the policy of insurance - whether the second defendant guilty of breach of contract or breach of duty in relation to arranging insurance on behalf of the plaintiffs - meaning of "own" and "liable for".
Trade Practices Act 1974 (Cth) s 52; Insurance (Agents and Brokers) Act (Cth) s 16, referred to.
Messagemate (Aust) Pty Ltd v National Credit Insurance (Brokers) Pty Ltd (2002) 222 LSJS 417 at [40], applied.

DAVIS & ANOR v CGU INSURANCE LTD & ANOR
[2008] SADC 69
JUDGE BURLEY:

This is a claim by the plaintiffs for indemnity under an insurance policy against the first defendant (CGU) and for damages for breach of contract, breach of duty and breach of statutory duty against the second defendant (BSAI). The plaintiff also relies on s52 of the Trade Practices Act 1974 (Cth) and estoppel in its claims against CGU.
Background findings
By a written contract dated 21 December 2001, the first plaintiff, Ms Davis, purchased from a mortgagee in possession a property near Narrung on the shores of Lake Albert. If it was not initially a purchase by Ms Davis and her husband, Mr N Morcombe (the second plaintiff), it soon became a joint purchase because on 15 March 2002, she assigned her interest in the purchase contract to herself and to her husband jointly. The contract was settled in June 2002. The property purchased by the plaintiffs is known as “Campbell Park”.
The area consisting of Lake Albert was and remains Crown land. The registered proprietor of Campbell Park, at the time of the mortgagee sale, was a Ms Cummings. Prior to December 2001 (and, I infer, prior to the acquisition of the property by Ms Cummings) a jetty, some 90 metres in length, had been constructed in front of the homestead. The jetty ran in a north-south direction in line with the central hall of the homestead. Mr Morcombe said that, aesthetically, the jetty was an integral part of the property. I agree with that sentiment. Photographs of the property contained in the sales brochure (Exhibit P17) printed for the purposes of the mortgagee sale are ample proof of what Mr Morcombe asserted. However, the judgment to be given in this case must be based on the law, not aesthetics.
The plaintiffs wished to insure Campbell Park from the time of its purchase. It is not in dispute that Mr Morcombe suggested to Ms Davis that she contact Mr Lindsay at BSAI to arrange a cover note. This was done. By letter dated 28 February 2002 (Exhibit P25), BSAI forwarded to Ms Davis the cover note and an application for insurance cover with CGU. The completed application form is Exhibit P28. It was signed by each of the plaintiffs on 12 April 2002.
According to the evidence of Ms Davis, she completed the section in the application form headed “Specified Above Ground Farm Improvements”. Under that heading she wrote in “Jetty & grunphos (sic) pump on Crown Land”.
It is apparent from Mr Morcombe’s evidence that he ran a line through that section of the application form and inserted instead the wording “See Bank SA inspection and attached C/W Bank valuation for full description”. The valuation and report are respectively Exhibits P23 and P24. The report consists of a memorandum from Mr Porcaro, an employee of CGU, to Mr Lindsay, an employee of BSAI. It is dated 22 February 2002. It contains a photograph of the jetty. Neither document deals with the grundfos pump situated on the Crown land. Consequently, the application form is somewhat equivocal about the question of whether cover is to extend to the pump and the jetty. Nevertheless, the plaintiffs subsequently, on a number of occasions, requested confirmation from Mr Lindsay that the jetty and the pump were included in the insurance cover. Such confirmation was given.
Each of the plaintiffs said that they assumed that ownership of the jetty and pump passed to them upon their acquisition of Campbell Park. As a result of that assumption, they asserted (at least by implication) to the insurer on more than one occasion that they were the owners of that property. However, it became apparent from the evidence given respectively by the plaintiffs that they each had a different idea of ownership. Ms Davis assumed that because she and her husband had purchased Campbell Park, they had also purchased the jetty and the pump. Her understanding of her ownership of the items was based on that assumption.
Mr Morcombe, an experienced lawyer, had a different view of the nature of the “ownership” that he and his wife had in respect of the pump and the jetty. He said in evidence that he never regarded those items as property which he and his wife “owned” in the commonly accepted meaning of that term. His understanding was that they had an interest in the jetty and the pump of a type which came within the concept of “ownership” for insurance purposes.
CGU’s defence in respect of the plaintiffs’ claim for indemnity under the policy is that the policy only applied to property which was owned by the insured or for which the insured was liable. Reference was made to the provisions in the policy booklet (Exhibit P26) under the heading “What is insured”. The policy states (at page 7):
The property set out on your Schedule is insured if it is destroyed, lost or damaged. It is insured only if you own or are liable for the property.
This is to be read in conjunction with the listed events commencing at page 9 of the policy booklet. The policy states:
We will cover your domestic buildings and domestic contents shown on your schedule, for the events listed below. There must be damage or loss from one of these events to the domestic buildings or domestic contents for you to make a claim…
The listed events included theft, malicious damage including vandalism and deliberate or intentional acts. Where deliberate or intentional acts are relied upon, the policy specifically provides that the deliberate or intentional acts do not include theft.
Further findings and issues
I propose to set out a narrative consisting of necessary findings of fact which help with an understanding of the issues in dispute between the parties. There was very little factual dispute, but the legal consequences of the dealings between the parties between December 2001, when the insurance was first effected, and February 2003, when a claim for indemnity under the policy was refused, must be ascertained.
At the time of the purchase of Campbell Park by the plaintiffs, there was a licence over the adjoining Crown Land issued by the Department to Mr Valdis Tomanis who owned the property immediately prior to Ms Cummings. In about February 2002, Ms Cummings managed to get a licence from the “LandsSA” issued in her name. At that time, the property the title to Campbell Park still showed Ms Cummings as the registered proprietor because settlement of the contract arising from the mortgagee sale did not take place until June 2002. It is clear from the terms of the licence that it may only be issued to whoever owns the property adjoining the Crown Land the subject of the licence. Ms Cummings later purported to sell the jetty and the pump to a company run by a Mr Rogers.
After the sale of the property and both before and after settlement in June 2002, various acts were performed by third parties which interfered with or damaged the jetty and pump. These included the removal of the Grundfos pump, the cutting of water pipes and the damaging and removal of parts of the jetty. The pump and jetty timber were, after their removal for the first time, recovered by the plaintiffs.
As from 1 August 2002, the Grundfos pump was the subject of an endorsement on the policy (Exhibit P30A). In October 2002 the pump was removed from the Crown land for the second time without the approval of the plaintiffs and has not since been recovered by the plaintiffs.
In December 2002, the insurance policy was renewed. Before the renewal the first and second defendants respectively confirmed that the jetty was covered by the policy.
In January 2003, Mr Rogers and a Mr Balnaves cut up and dismantled the jetty and took it away. The timber has not since been recovered by the plaintiffs.
Paragraph 31 of the amended statement of claim contains the factual assertions relating to some of the findings set out above. The paragraph is as follows:
31.     CGU:
(a)     issued the insurance contract (as a cover note) in December 2001;
(b)     confirmed and issued the insurance contract in February 2002;
(c)            when cover was arranged or subsequently, confirmed to Bank SA Insurance that the cover included the jetty as part of the building cover;
(d)     issued or reissued the insurance contract with variations in June 2002;
(e)     following the events in paragraphs 15 and 16 above, in August 2002, endorsed the insurance contract to specifically refer to the pump;
(f)            following the events in paragraphs 18 to 22 above, in December 2002, confirmed that the building sum insured included cover on the jetty and renewed the insurance contract;
(g)            at no time prior to 15 January 2003, informed the plaintiffs that the insurance contract did not include cover for the pump, jetty and pipes or alternatively that in the event of theft of or damage to the pump, jetty or pipes, CGU would not or might not indemnify the plaintiffs against the loss of or damage to the pump, jetty or pipes.
All of the matters referred to in subparagraphs (a) to (g) of paragraph 31 have been established on the evidence.
Paragraph 15 of the amended statement of claim asserts that during May 2002, part of the jetty was damaged by being dismantled and stolen, that irrigation pipes were damaged and that the pump was disconnected and stolen and electrical and plumbing connections for the pump were damaged. Apart from the assertions that items were stolen, those facts have been established by the plaintiffs.
Paragraph 16 asserts that the plaintiffs retrieved those parts of the jetty taken in May 2002 together with the pump and that they reinstated those items. It has been established in the evidence that in July 2002 the plaintiffs retrieved the pump and the parts of the jetty that had been taken away in May. It has also been established that the Grundfos pump was reinstated, but it is not clear on the evidence whether or not the parts of the jetty which were retrieved were replaced on the jetty at that or any other time.
Paragraph 18 of the amended statement of claim asserts that on 11 October 2002, the pump was stolen and that the plaintiffs had claimed the sum of $4,000 pursuant to the insurance contract but that CGU has refused to pay the claim. It has been established by the plaintiffs that on 11 October 2002, the pump was taken from the Crown land in front of Campbell Park and has not been seen since. The making of the insurance claim and CGU’s refusal to pay have also been established.
Paragraph 18A asserts that on 17 October (presumably 2002), two men attended at Campbell Park and started damaging the jetty by dismantling it. The plaintiffs have established that about that time two men commenced to dismantle the jetty but had only partly done so when they ceased such work on the second day of their attendance.
Paragraphs 19 to 22 of the amended statement of claim refer to the dealings between Ms Davis and Mr Andrew Stevens, an employee of Crawford and Co, International Loss Adjustors. Mr Stevens was retained by CGU following a property claim report (Exhibit P38) lodged by the plaintiffs with CGU towards the end of October 2002. That report referred to the removal of the pump on 11 October 2002, and the partial dismantling of the jetty on 17 and 18 October 2002. The referral of the claim by CGU to Crawford Loss Adjustors is Exhibit P39. Mr Stevens made two reports which are respectively Exhibits P40 and P47. The first report stated the cause of the loss to be “theft of external water pump and part of a timber jetty”.
The claim under the contract of insurance
The plaintiffs claim they are entitled to damages for breach of the insurance contract held with CGU. They say that the jetty and pump were “covered” by the insurance policy, that the jetty was either damaged or stolen, that the pump was stolen and that these constitute events which trigger the obligation on the part of CGU to indemnify the plaintiffs in respect of such losses.
According to CGU, even if the jetty was either damaged or stolen and even if the pump was stolen, no obligation to indemnify arises because the plaintiffs were never at any material time the owners of or liable for (within the meaning of the policy) those items.
The issues which arise for determination in respect of the contractual cause of action are, firstly, what is the meaning of the words “own or are liable for the property”; and secondly, did the plaintiffs own, or were they liable for, the property in respect of which indemnity is sought?
As I understand CGU’s case, the plaintiffs’ contention that the property was either damaged or stolen is neither contested nor admitted. Rather, CGU’s defence is directed towards establishing that the plaintiffs were never at any material time the owners of or liable for the property within the meaning of the policy.
Ownership
It was submitted by Mr J White, counsel for the plaintiffs, that the concept of ownership as stated on page 7 of the policy document was not confined to the commonly accepted notions of ownership either as the law states or as people understand. He submitted that I should adopt an interpretation of the policy such that ownership extended to the circumstances under which the plaintiffs acquired the use of both the jetty and the Grundfos pump. Mr D Trim QC, counsel for CGU, argued to the contrary. He submitted that the concept of ownership referred to in the policy should be regarded as the type of ownership ordinarily contemplated by the use of the words “own … the property”. In my opinion, the contention of the defendant is to be preferred to that of the plaintiffs. There is no reason why the expression “own … the property” should bear other than its ordinary meaning both legally and in every day parlance: Messagemate (Aust) Pty Ltd v National Credit Insurance (Brokers) Pty Ltd (2002) 222 LSJS 417 at [40].The fact that the witness, Mr Parnell, an experienced insurance broker called by the plaintiffs, stated that an extended definition of ownership could have been obtained by the plaintiffs from another insurer if CGU had declined to cover them, supports the argument that the use of the expression “own … the property” must be given its ordinary meaning, otherwise there would be no need for an extended definition.
The second question, as to whether or not the plaintiffs owned the property at any material time, falls to be decided by reference to the meaning of ownership just referred to.
Have the plaintiffs established ownership?
There were no direct dealings between the plaintiffs and others leading to the plaintiffs’ alleged ownership of the jetty and pump. The written contract for the purchase of Campbell Park specifically excluded items that were not within the security held by the mortgagee. In my opinion, the ownership of neither the jetty nor the pump could have passed to the plaintiffs by the exercise of the power of sale contained in the mortgage granted by Ms Cummings to the mortgagee. Other potential owners who may have been able to transfer ownership to the plaintiffs were Ms Cummings, her predecessor in title (Mr Tomanis) and the Crown.
If it is assumed that Ms Cummings, at the time of the mortgagee sale, was the owner of the jetty and the pump, it is clear that there were no dealings between her and the plaintiffs with regard to a transfer of ownership from Ms Cummings to the plaintiffs of those items. Indeed, the evidence is to the contrary in that, according to Exhibit P40A, which is an invoice from Ms Cummings to Garden Hill Pty Ltd dated 4 May 2002, she purported to sell the jetty and pump for the sum of $16,000.
The other potential owner is the Crown, because the jetty, at the time of the purchase of Campbell Park in December 2001, was a fixture on Crown land and the pump may have been a fixture. If it is assumed that the Crown owned the pump and jetty, there is no evidence that there were any dealings between the Crown and the plaintiffs whereby the plaintiffs obtained the ownership of those items. The Crown did grant a licence to the plaintiffs to use the adjoining Crown land (Exhibit P14), but that document could not be said to confer ownership of the pump and jetty on the plaintiffs, and, in any event, the licence was not granted until 1 February 2004, well after the jetty and pumps were removed from the Crown land.
Although the jetty was a fixture on Crown land, it is clear from the evidence that the Crown recognised an ability on the part of Ms Cummings to sell the jetty provided she reinstated the land after its removal. This is evident from Exhibit P31 which is a letter from Crown Lands S.A. to Ms Cummings dated 16 September 2002. The letter is important, not from the point of view of the author’s assumption that Ms Cummings was free to sell the pump and jetty, but from the point of view that Crown Lands S.A. laid no claim to ownership of those items.
The licenses to use the adjoining land issued from time to time by Crown Lands to the successive owners of Campbell Park (Exhibit P10, P12 and P16) have different wording as to the fixtures on the Crown land, but they all have in common the ability of the Crown to purchase such fixtures in given circumstances. This must mean that the Crown accepts that if a fixture is introduced on to the Crown land during the currency of a licence, the person who installed the fixture on the land retained ownership thereof notwithstanding that the item was a fixture.
In the absence of the Crown asserting ownership in respect of the jetty, the only potential owners who could have passed ownership to the plaintiffs were Ms Cummings, Mr Tomanis, the licence holder prior to Ms Cummings, or the person who originally built the jetty. There was no evidence that any of these persons conferred ownership of the jetty on the plaintiffs.
In my opinion, the plaintiffs have not established, on the balance of probabilities, that they were, at any material time, the owners of the jetty.
I turn now to the Grundfos pump. It is common ground that the pump was situated in a pump-house on Crown Land in front of Campbell Park. There was a pipe from the pump along and attached to the jetty which, when water levels were high enough, drew water from the lake through the pump onto Campbell Park. There is no evidence as to the age of the pump. There is no evidence as to when it was first installed on the Crown Land in front of the homestead. If it was a fixture, in the absence of an agreement to the contrary between the original owner and the Crown, it became Crown property because it was a fixture. If it was not a fixture, or if there was an agreement to the contrary with the Crown (as appears from the license to use the land), the pump was capable of being owned by someone other than the Crown. That could have been Ms Cummings if she had acquired ownership of the pump, or it could have been a prior owner of Campbell Park (that is, prior to Ms Cummings).

In relation to Mr Tomanis, the owner immediately prior to Ms Cummings, it could well be inferred that upon the disposal of Campbell Park to Ms Cummings, assuming that he owned the pump, he either abandoned the pump or specifically agreed to transfer the ownership of the pump to Ms Cummings. In the former case, she was capable of acquiring ownership of abandoned property or in the latter case, of taking the ownership of the pump by virtue of an agreement with the previous owner. Even if Mr Tomanis was not the owner of the pump (which is unlikely), Ms Cummings, when she acquired Campbell Park, may also have obtained ownership of the pump if it had been abandoned.
In light of the above analysis, the only way in which the plaintiffs could have obtained ownership of the pump was if it was abandoned property, the ownership of which had never been obtained by Ms Cummings or, if she had obtained ownership of the pump by whatever means, she had abandoned ownership of the pump to the extent that it was possible for the plaintiffs to obtain ownership by acquiring abandoned property. There is no evidence that the pump was abandoned by Ms Cummings.
The above analysis leads to the conclusion that it may be safe to infer that Ms Cummings obtained ownership of the Grundfos pump either by purchasing it new or by obtaining ownership of it second-hand from the previous owner or, in the event that it was abandoned by the previous owner, by using the pump and thereby obtaining ownership. I am not able to make any final finding about these various alternatives, but they are potential findings sufficient to cast a cloud on the alleged ownership of the pump by the plaintiffs. In short, it is by no means clear that the plaintiffs ever acquired any form of ownership of the pump in circumstance where it had twice been taken off of the Crown land by persons (other than the plaintiffs) who claimed ownership of the pump. These events preclude a finding on a balance of probabilities that the plaintiffs were at any material time the owners of the pump.
In arriving at these conclusions, I have taken into account that a finder of apparently abandoned property may obtain title against all except the true owner. That, in my view, is sufficient ownership for insurance purposes. However, for the reasons given, the plaintiffs have not established that type (or any other relevant type) of ownership. For the sake of completeness, I mention there is no evidence of a claim made by “a true owner” to any “abandoned” property.
Were the plaintiff’s “liable for” the pump and jetty?
Mr Trim submitted that the words “liable for” meant the type of liability imposed upon, for example, a bailee of goods. He used the analogy of a guest unintentionally leaving a tennis racquet at the insured’s premises. In those circumstances a duty was imposed upon the insured (as an involuntary bailee) to care for the tennis racquet. It is not necessary for present purposes to go into the exact nature and extent of the duty imposed upon such a bailee. The example was given to explain the nature of the liability that the insured had in relation to an item covered by the insurance policy.
Mr White contended that it was clear from the terms of the various licences issued by Crown LandsSA in respect of the adjoining Crown land that the licensee had an actual obligation to maintain both the pump and the jetty. He then argued that the plaintiffs were entitled to become licensees from, at the latest, settlement in June 2002 and as such incurred an obligation to maintain the items. I do not accept the latter part of this submission. Even if it is assumed that the licence imposed upon the licensee an obligation to maintain the jetty and the pump, such an obligation could only arise if and when the licence was issued by LandsSA to the plaintiffs. That licence was not issued to them until well after the respective removals for the final time of the pump and the jetty.
I accept that the plaintiffs formed a belief that they were legally responsible for the pump and jetty, but any understanding they had with regard to their obligation to maintain and repair and generally to be responsible for the pump and jetty is not to the point.
In my opinion, the argument advanced by Mr Trim is correct. The concept of being liable for an item as set out in the policy embraces the type of liability that arises from such things as a bailment. In other words, if an insured had possession of an item, and if a legal liability (of whatever nature) was imposed on the insured to pay to a third party for the loss occasioned by the occurrence of a listed event whilst the insured had possession, the policy imposed an obligation on the insurer to indemnify the insured to the extent of that loss. The plaintiffs have never been liable for the pump or the jetty in the sense that if either or both of the items were damaged or removed, they would be financially responsible to anyone else for any loss that might occur as a result of such removal.
If the plaintiffs were not, within the meaning of the policy, owners of or liable for the jetty and pump, they cannot claim indemnity merely because those items were “covered” by the policy. Much has been made by the plaintiffs of their frequent requests to Mr Lindsay to confirm that the pump and jetty were covered by the policy. I say in passing that the communication to Mr Lindsay was effectively communication to CGU because Bank SA Insurance Agencies was at all material times the agent of CGU. Similarly, a communication by Bank SA Insurance agencies to the plaintiffs was a communication by CGU.
It is apparent from the evidence of Ms Davis and Mr Morcombe that the plaintiffs wanted reassurance that the pump and jetty were covered by the policy in the sense that, if a listed event occurred in respect of those items, CGU was liable to indemnify them in respect of their loss. In other words, it is implicit in their request for reassurance that they wanted confirmation that CGU accepted that they were the owners of the goods. However, it seems to me that the parties were at cross-purposes. Mr Lindsay’s response on more than one occasion that the items were covered by the policy should be taken to mean no more than that the specific items were covered for the listed events on the assumption that the plaintiffs were the owners. This conclusion is reinforced by Mr Lindsay’s letter of 2 January 2003 to the first plaintiff (Exhibit P45) where he confirmed that the jetty was “covered under the domestic property (Section 1) section of the policy”. This is a clear reference to page 7 of the policy which refers to the insuring of “domestic buildings” and “domestic contents”. In other words, Mr Lindsay, therefore CGU, is confirming by his letter of 2 January 2003, that the jetty is to be regarded as domestic property. The fact that this advice is given where there exists a dispute, known to Mr Lindsay, between the plaintiffs and other parties as to the ownership of the jetty, does not give rise to the inference that Mr Lindsay, and therefore CGU accepted that the plaintiffs were the owners of the jetty. It is a matter of common experience that there is a difference between issuing policy certificates that state that specified items are covered and the making of a claim in respect of such property for indemnity in respect of loss which occurs from a listed event.
Both plaintiffs dealt with two things: the insurance cover and the claim for theft and damage. Both plaintiffs were anxious to ensure that the jetty and pump were covered by the policy. This is in the context that the policy booklet provided to the plaintiffs concerned domestic buildings and contents. The pump and jetty were not necessarily, respectively, domestic contents or domestic “buildings”. There were two other pumps, smaller in size, which, I infer, were used to pump water for domestic purposes. The large 10 HP Grundfos pump was for irrigation and stock purposes. Nevertheless, CGU was willing to include the large pump as domestic contents and the jetty as a domestic building.
It was the plaintiffs’ understanding that, by including those items within the policy, CGU accepted that the plaintiffs were the owners of the pump and jetty. Mr Lindsay provided or arranged for the confirmation of cover. If the plaintiffs’ case is that, when asking for confirmation of cover, the plaintiffs were also seeking confirmation from CGU that it accepted that the plaintiffs were the owners, such a stance is at odds with Mr Morcombe’s evidence that he did not regard himself and his wife as “owners” of property in the conventionally accepted meaning of that term. Nothing was said to CGU or Mr Lindsay along the lines – although we don’t own the property in the conventional sense, we do have a type of ownership and would you confirm that the policy covers this type of ownership.
Paragraph 29(b) of the amended statement of claim refers to alleged conduct inducing “the plaintiffs to believe the insurance contract covered the loss”. The evidence of the plaintiffs referred to a request for confirmation that the policy covered specified property. The pleading refers to covering a loss, the evidence to covering specified property. This distinction, in my opinion, highlights the fact that the parties, when dealing with what was covered by the policy, were at cross-purposes, such that it could not be said that CGU at any material time accepted that the plaintiffs were the owners of the property and would be covered in the event of a loss arising from a listed event. All that CGU did was acknowledge that property which was not obviously domestic in nature, was nevertheless to be included within the policy on the assumption that it was owned by the plaintiffs.
It follows from these conclusions that Mr White’s arguments directed to whether or not CGU became aware (particularly before it renewed the policy for the first and only time) from reports provided to the claims department of CGU by Mr Stevens, the assessor, of the full details of the dispute between the plaintiffs and Ms Cummings, Mr Rogers and Mr Balnaves, do not have the effect contended for by Mr White. Even if it is assumed that the provision of Mr Stevens’ reports to CGU’s claims department constitutes notice to CGU of those matters as contended for by Mr White, that does not mean that CGU ever agreed to indemnify the plaintiffs against losses allegedly sustained by the plaintiffs as a result of the actions of Ms Cummings, Mr Rogers or Mr Balnaves in relation to the jetty and the pump.
In reality, knowledge that others laid claim to the jetty and pump only serves to weaken the argument that CGU, by implication, accepted that the plaintiffs were the owners of the pump and jetty or that CGU intended to cover the plaintiffs in respect of those items irrespective of whether or not they could prove ownership of them. Why would an insurer do so when it was aware that others laid claim to the items sought to be insured? To do so would be to take a side in an unresolved dispute between the insured and the persons claiming the items. I accept Mr Trim’s argument that CGU never put itself in that position. To the extent that the plaintiffs may have believed to the contrary, no such belief could be said to have been induced by either of the defendants. At best, it was only wishful thinking on the part of the plaintiffs.
I accept Mr Trim’s submission that CGU, by stating through Mr Lindsay or otherwise, that certain items were covered by the policy, did not thereby admit that the plaintiffs were the owner of the goods or waive the requirement that the plaintiffs establish ownership of, or that they were liable for, the pump and jetty. Thus, where the plaintiffs cannot establish ownership (or that they were liable for the items) at the time of the alleged theft or damage, no obligation to indemnify arises, even if the goods have actually been damaged or stolen.
Other causes of action against the defendants
First, at paragraph 29(b) of the amended statement of claim, the plaintiffs assert that certain conduct of CGU, particularised at paragraph 31 of the amended statement of claim, was misleading, thereby constituting a breach of s 52 of the Trade Practices Act 1974 (Cth), in that the “conduct induced the plaintiffs to believe the insurance contract covered the loss”.
Second, the plaintiffs’ pursue a claim against CGU based on estoppel. This is referred to at paragraph 29(c) of the amended statement of claim. The claim depends on proof that CGU induced in the plaintiffs the belief that the insurance contract covered the relevant loss.
Third, the plaintiffs pursue a claim against BSAI based on the allegation of breach of s 52 of the Trade Practices Act 1974 (Cth). That claim is dependent on proof that BSAI induced in the plaintiffs the belief that the insurance contract covered the relevant loss.
The first two of these three aspects of the plaintiffs’ claims are determined by my earlier finding that CGU did not, by its actions or otherwise, induce in the plaintiffs these beliefs. The third relates to the claim against BSAI. For the same reasons, in relation to CGU, it could not be said that BSAI induced in the plaintiffs the relevant belief.
In pursuing a case based on estoppel, the plaintiffs relied upon the decision of the High Court in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 where Brennan J (as he then was) said (at 413):
The nature of an estoppel in pais is well established in this country. A party who induces another to make an assumption that a state of affairs exists, knowing or intending the other to act on that assumption, is estopped from asserting the existence of a different state of affairs as the foundation of their respective rights and liabilities if the other has acted in reliance on the assumption and would suffer detriment if the assumption were not adhered to.
In my opinion, the plaintiffs have failed to bring themselves within that statement of principle. I have already found that neither defendant induced the plaintiffs to make an assumption that CGU would indemnify the plaintiffs in respect of the loss of the pump and jetty resulting from actions by Mr Rogers or Mr Balnaves or Ms Cummings. There was no intention on the part of either defendant (or, for that matter, knowledge), that the plaintiffs would act on such an assumption. Whilst I accept that the plaintiffs had such a belief, it was a belief that did not reasonably arise from the conduct or statements of either of the defendants.
It follows that the claims against CGU based respectively on s 52 of the Trade Practices Act 1974 (Cth) and estoppel cannot succeed because a necessary element of these causes of action has not been established. Similarly, the cause of action against BSAI based on s 52 of the Trade Practices Act 1974 (Cth) must fail.
That leaves the cause of action against CGU based on an alleged amendment or variation of the insurance contact and the cause of action against BSAI based on alleged breach of contract and negligence.
Alleged variation of the policy
Paragraph 32A of the amended statement of claim is as follows:
32A. Further or alternatively, [the plaintiffs] say that the policy incorporated;
32A(1) The endorsement dated 2 August 2002 concerning the pump;
32A(2)A letter of CGU dated 2 January 2003 confirming insurance of the jetty;
and by reason thereof, and of: [sic]
32A(3)The statements pleaded at paragraphs 17 and 23 of the statement of claim whereby Bank SA Insurance represented that the pump and jetty were insured,
The policy was amended or varied so as to cover the jetty and pump in circumstances in which they were stolen, taken, damaged or interfered with.
As I understand it, the pleading is intended to mean that by reason of the matters referred to in paragraphs (1), (2) and (3) of paragraph 32A, an amendment or variation was effected to the policy so that cover was to be afforded irrespective of whether or not the plaintiffs could bring themselves within the wording of the policy that otherwise required them to be the owners of or liable for the relevant items. In my opinion, this aspect of the plaintiffs’ claim must fail. None of the matters referred to in sub-paragraphs 32A(1), (2) and (3) could be said to effect a contractual change in the policy as contended for or at all. Not only must the parties be at ad idem in relation to the formation of a contract, but also, if there is to be a subsequent variation of the contract, the same requirement applies. For the reasons given by me which were to the effect that the parties were at cross- purposes when discussing the extent of the cover of the policy, such dealings between the parties as referred to in paragraph 32A could not have led to a situation where both were clearly of the intention and understanding that the policy was to be varied or amended so that the requirement to establish ownership of, or being liable for, the relevant goods, was removed.
Remaining causes of action against BSAI
I turn now to the question of the nature and extent of the contract that existed between the plaintiffs and BSAI. The relevant parts of the statement of claim are as follows:
9.The plaintiffs contracted with Bank SA Insurance as their insurance broker to advise them and to effect insurance on their behalf in respect of the property and the Crown land, including all improvement thereon. The plaintiffs provided to Bank SA Insurance the sales brochure for the property, which brochure refers to a jetty, 3 pumps, and irrigation pipes from the lake.
There are a number of inaccuracies in that paragraph. First, the plaintiffs say that they retained BSAI as their insurance broker. There is no evidence to suggest that that was the basis of the retention of BSAI. It was Mr Morcombe’s assumption, arising from his previous dealings with BSAI, that that entity was an insurance broker. This assumption was continued by both Mr Morcombe and Ms Davis after Mr Lindsay was contacted in order to obtain the issue of a cover note. However, nothing in the evidence supports the contention that the contractual relationship between the plaintiffs and BSAI was that of insurance broker and client. At all material times, BSAI was the agent of CGU Insurance Ltd. Specifically, it was not the agent of the plaintiffs. The plaintiffs’ assumptions to the contrary do not alter that position.
Paragraph 10 of the amended statement of claim is as follows:
10.It was an implied term of the contract that Bank SA Insurance would arrange insurance required by the particular circumstances referred to in this Statement of Claim to insure all property situated on the property, and the crown land, and the jetty, and if it was not able to do so, it would inform the plaintiffs of that fact.
It seems to me that such an implied term could have arisen as part of the contract between the plaintiffs and BSAI, even though the contract was not one of broker and client. I assume for the purposes of this litigation that such an implied term did arise between the plaintiffs and BSAI. However, I do not consider that BSAI was ever required to inform the plaintiffs that it was not able to effect the cover referred to because, at best, the implied term could only mean that the plaintiffs’ wished to have included within the policy all of the insurable property acquired by them on the purchase of Campbell Park and, in addition, the jetty and the pump. I have already referred to the effect of the dealings between the plaintiffs and each of the defendants in relation to ensuring that the pump and the jetty were covered by the policy. The plaintiffs meant one thing and the respective defendants by their agents had a different understanding. For the reasons which I have given earlier, both the defendants, by their relevant employees, acted reasonably in arriving at the understanding that the plaintiffs required cover in respect of the jetty and the pump on the basis that they owned those items. By agreeing to include the items in the policy, they could not be said to have accepted that the plaintiffs owned or were liable for the items. BSAI therefore effected the insurance it was instructed to procure. It is for that reason that any requirement that BSAI notify the plaintiffs that it was unable to effect the required cover never came into play. BSAI was therefore never in breach of the alleged implied term.

By paragraph 12 of the amended statement of claim the plaintiffs plead:
12.Bank SA Insurance owed to the plaintiffs a duty of care to arrange insurance required by the particular circumstances referred to in this Statement of Claim to insure all property situated on the property, and the crown land, and the jetty, and if it was not able to do so, to inform the plaintiffs of that fact.
Like paragraph 10, the paragraph may be divided into two components: a duty of care to arrange insurance; and second, a duty of care to inform the plaintiffs if such cover could not be provided.
For the same reasons given in relation to paragraph 10 of the amended statement of claim, it could not be said that there was ever imposed upon BSAI a requirement to inform the plaintiffs that it had been unable to effect the required insurance because the reverse was the case. BSAI arranged for the provision of insurance required to be provided based on a reasonable understanding of the plaintiffs’ instructions.
The claims in paragraphs 10 and 12 of the amended statement of claim must fail.
The next cause of action pursued against BSAI is set out at paragraph 12A of the amended statement of claim.
12A. In the alternative to paragraphs 9 to 12:
12A(1)Bank SA Insurance was a party to an agreement with CGU dated 31 March 1995;
12A(2)       The said agreement was either or both;
(i)a “binder” as defined in the Insurance (Agents and Brokers) Act (C/W); or
(ii)    an agreement within section 10 of that Act;
12A(3)Section 16 of that Act required that Bank SA Insurance give notice that it acted under authority of CGU, and as CGU’s agent and not that of the plaintiffs, and BSAI was under a duty to do so;
12A(4)       In breach of duty, Bank SA Insurance did not give such notice;
12A(5)Had Bank SA Insurance given such notice, the plaintiffs would have sought independent advice on insurance;
12A(6)If, as the defendants assert, the policy does not respond to the loss of the jetty, pumps and pipes, the plaintiffs have lost the opportunity to obtain insurance that would respond.
The plaintiffs assert that BSAI was in breach of s 16 of the Insurance (Agents and Brokers) Act (Cth). Mr Morcombe stated in his evidence that, had he been aware that BSAI was not an independent broker, he would have sought independent advice on insurance. As such, he lost the opportunity to effect insurance in respect of the jetty and the pump. Mr Trim submitted that even if there was a breach of s 16 of the relevant Act as alleged, no loss was suffered because, had the plaintiffs sought insurance elsewhere, they would not have obtained cover in respect of the pump and jetty.
The inability to obtain cover was clear from the evidence of Mr Parnell, a former insurance broker called by the plaintiff. In my opinion, the evidence is clear that no insurer would have provided a policy extending cover to the jetty and pump where damage to or removal of same was caused by parties who asserted ownership in respect of that property. To do otherwise would be to provide indemnity to an insured for the value of goods the ownership of which was in dispute. That is plainly not a risk that an insurer would undertake, at least in relation to domestic insurance. For these reasons that aspect of the plaintiffs’ claim against BSAI must fail.
I should mention that I have considered the plaintiffs’ argument at paragraph 79 of counsel’s written submission which relied upon the evidence of another insurance expert, Mr Hoffman on the question of whether or not an insurer would refuse to insure in circumstances of disputed ownership. Although I consider that Mr Hoffman was an honest witness, his evidence was quite confusing and little reliance can be placed upon it. The evidence of Mr Parnell, if it conflicts with that of Mr Hoffman, is to be preferred.
Finally, the plaintiffs have pleaded against BSAI a claim based on alleged “representations” referred to in paragraphs 34-36 of the amended statement of claim. It is not clear whether these paragraphs are an amplification of the claim based on alleged breach of s 52 of the Trade Practices Act 1974 (Cth). If they are, I have already stated why that claim must fail. If they constitute an additional claim based on the common law cause of action for damages for misrepresentation (modified by Statute or not) the claim must be dismissed because it could not be said that anything said or done by BSAI should be taken to be a representation or to have induced the belief that the policy covered the theft, damage to, or removal of the relevant items without the necessity to establish ownership of or being liable for such items.
My findings and conclusions set out above are determinative of the question of whether or not the defendants or either of them are liable as alleged in the statement of claim. The arguments advanced by the plaintiffs were many and varied and I have not dealt with all of them specifically. I have attempted in these reasons to isolate those aspects of the arguments advanced by both parties which, once decided, determine the result of the proceedings. For example, at paragraph 44 of the plaintiffs’ written submission, several cases were referred to in relation to constructive of trusts. It was submitted that these cases had a bearing upon how the ownership of the jetty was to be determined. My determination that the plaintiffs have not established any relevant type of ownership of either the jetty or the pump was based on a factual not a legal analysis. In my opinion, the cases cited at paragraph 44 of the plaintiffs’ written submission do not assist the plaintiffs. To the extent that the plaintiffs also relied upon those cases in relation to asserting relevant ownership of the pump, the same considerations apply.
At paragraph 64 of the plaintiffs written submission reference was made to the decision of the Full Court in SA River Fishery Association Inc. v State of South Australia (2003) 85 SASR 373. Whilst I accept that that case is authority for the proposition that a fishing licence could be regarded as a valuable form of property, the decision has no application to these proceedings because the insurance provided was in respect of specific items and not property rights that might arise from a document giving rise to a licence.
In light of the conclusions to which I have come, it is not necessary to canvass the various alternative claims for damages pursued by the plaintiffs in respect of the several causes of action raised in the statement of claim.
The plaintiffs’ action will be dismissed.