De Jong, Michael Edgar v Prudential Assurance Co Ltd

[1977] FCA 22

.

and

Defendant

ORDERS OF Thss C o u r t o r d e r s that the Defendant

'TIE COURT : pay a p e n a l t y of Fxve Thousand Dollars

($5 ,000) LII r e l a t l o n t o each of two

con t raven t lons of s e c ~ ~ o n j 3 ( c ) of t h e

Trade Practlccs A c t 1974.

?h15 Court orders the Det'andaulL L O pay

l-he Tnformant 's costs.

PLACE AUD

DATE :

. -<

FEDERAL COIrRT O F . -

AITSTFULIA U ~ 0 . 1 8 4 o f 1976

B So.186 of' 1976

Genera l Dlv is lon

THE PRTJDENTTAL ASSVRhKCE COMPASI~

LIMITED

FOR REASOUS JTJDDGMEST : N - r n O , . T .

The Defendant, The Prudential Assurance Company LlmlLed,

by I t s Counsel, has pleaded gullty to two contraventions

of' s e c t ~ o n 5 3 ( c ) o f The Trade Practices Act 1974. The

c h a r g e s a r e t h a t on 10 November 1375 In co l lnec t ion wlth the

poss lb l e supp ly of services, t o w l t , t h e r lgh ts o r b e n e f l t s

to be provlded under a schcme o r fund d ~ ~ s c r l b n d $35 'Tlx?

Prudential Austral1 an Ernplo)-c?d P ~ r s o n s Supernmluai 1011 Fund' I t

r c p r e s e n t e d t o Richard Mlchlel Watsoll a t R l 5 d o n III thc StaLt?

o f Tasmania and to Ashley Stewart a t HobarL Ln the 3a ld 5 Ldte

t h a t s u c h services had hener'lts they dld not have, namely,

that the b e r w f ~ I S from snch scnr1ces h-ould be frcr rrom

_.

Tasmanian Death Dut les .

*I -..

2. .;

.?

_.

1 L 1s noli conceded by t he Defendant tImL I L S p o l l ~ ~ c s 15surd

About the end of 197'4, the Defendant began t o doubt xihether

r

11,s l n t e r p r e t a t l o n o f t h e r e l e v a n t p r o v l s l o n s of' the Act

afLer t h e 1968 amendments %a5 correc t and rook t h c m a t t e r up

w l t h t h e Tasmanian Commlssroner o f raxatlon. R y letter

da ted 6 May 1 9 7 j the Commlssloner Informed thr 1)efendant

t h a t he d l s a g r r e d w l t h ~ t l n t r r p r e t a L l o u s and stated that 3-11

211s v l e w the p o l l c l e s l s s u e d u n d e r t h e srhernc: were not f ree

from dury as c1almt.d.

i

3 .

Between 6 May 1973 and 7 January 1976 the Defendant sought

and obtalned legal oprnior ls from malrlland counsel on whether

i t s i n t e r p r e t a t l o n or that of the Commlssloner wnb t he

co r rec t one to p l ace on the r e l evan t l~ rov l s lons oi rhe Act

w h l c h a r e n o t f r e e f r o m obhcur l ty and have not ye t heen

cons ldered by a cour t o f record .

A t the beglnnlng of 1976 the Defendant decldad to accep t t he

Comm~ss ioner ' s Interpretation, b u t It w a s n o t u n t l l O c t o b e r

1976 that I t proceeded to ge t 111 touch wl th a l l persona t u

whom a pol icv had been issued and Inform them o f t he t rue

p o s l t l o n . When i t d i d t h l s , ~t gave them the opportunxty

t o c a n c e l their p o l l c y xrth f u l l r e s t l t u t l o n or t o change

t h e n a t u r e o f t h c l r c o v c r If they so deslred. Only one

p o l i c y h o l d e r d e c l d e d n o t t o c o n t l n u e w l t h t h e p o l l c y a s It

stood. He r eques t ed cance l l a t lon wh lch was granted and all

premlums paid by h i m were refunded.

Not one o f the persons assured under the 553 p o l x c i e s ~ s s u e d

under the Defendant 's scheme ha5 d led .

I a m s a t l s f l e d that u n t l l the end of 1974 the Defendant

genu lne ly be l i eved that the bene f l t s p rov lded unde r the

pol lcy concerned were f ree of Tasmanian Death Dutles. 1

corlsider, however, that once 11. en te r t a l l l ed ~i doubt In the

matter and even more so when ~t recelved the Commlssionor 's

l e t t e r of 6 May 1975 i t shou ld have Ins t ruc t ed Its

r e p r e s e n t a t l v e s n o t t o sell on the basis of t h e a l l e g e d

. . 4.

exemptlon a t l e a s t u n t l l t h e m a t t e r h a d h e e n finally

de termlnad.

I am a l so s a t ~ s l ' l e d that t h e f a l s e r e p r e s e n r a t l o n t h a L 11112

b e n e f ~ t s u n d e r Lhe pol lcy x-crc f rcc from deaLh du t l e s w a 5

' l l k e l y t o I n d u c e p e o p l e t o take our a pollcy %-It11 tllo

Defendant. It IS p e r h a p s f o r t u n a t e t h a t Lo d a t e nothing

whlch mlcht Involve a p o l l c y h o l d e r 311 loss o r damage has

L

occurred and I am s a t l s f l e d that It 15 u n l l k e l y LhaL a n y .. %

such th lng 1 s l xke ly to occur III the i 'nture.

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It IS a l s o f o r t u n a t e for the Defcndant that only O I L ~ ol' che

5 5 3 p o l l c y h o l d e r s t o whom t h e f a l s e a s s e r t l o n w a s made has

e l e c t e d t o h a v c hIs po l l cy cance l l ed or var l ed .

L- c

4.

I n	de te rmin lng	t he	pena l ty	t o	be Imposed for the	Defendant ' s	.	-
*<l	*

contraventions, I am ob l lged to have r ega rd to the

de t e rmlna t lon o f t h e l e g l r l a t u r e t h a t t h e p r o v l s r o n s of

Dlvlslon 1 - U n f a l r Practices - o f P a r t V - Consumer

Protection - of the Trade P rdc t l ces A C L , among whlch 3 S

. L .

s e c t l o n 5 3 ( c ) shall be observed dnd, where necessary,

enforced. T i n s j s c lea r ly demonr t r a t cd l.)>- t he nla::nlLude

+

of	Lhe maximum p e n a l t y of $50,000 for. each contravention
by	a body corporate .

=,	,.
-L
G -

The Defendant i n t h e s e c a s e s i s a world-wide company of high

I .

t ..-

r e p u t a t i o n b u t It was prepared to s e l l i t s s e r v i c e s when It

..

e n t e r t a i n e d a doubt as to whether a mater la l repre ' sen ta t lon

.c

c .	t	.-...
1	1.

.* 5.

I can only regard the Defendant ' s cont rnventz~ons as s c r l o u s

and accord lne ly the pcna l ty In r e l a t l o r l t o each contrdvent-Ion

1 s Five Thousand Dollars ($5,000). I order the Defendant

"

t o pay t h e Informant's c o s t s .

i