Flanagan v Bernasconi

[2022] NSWSC 381

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Flanagan v Bernasconi [2022] NSWSC 381

Hearing dates:

14 – 22 March 2022

Date of orders:

04 April 2022

Decision date:

04 April 2022

Jurisdiction:

Common Law

Before:

Schmidt AJ

Decision:

1. Judgment entered for the defendants.

2. The parties are directed to confer and approach in the event that they wish to be heard on costs within 14 days.

3. The parties are to file final orders within 14 days, which will then be made.

Catchwords:

INSURANCE — Property insurance — Home and contents — Exclusions — events involving swimming pools excluded from coverage — swimming pool lifted causing damage to pool and pool enclosure — plaintiff not aware of lack of coverage under policy — failure to give necessary advice.

NEGLIGENCE — duty of care — insurance broker — whether insurance broker failed to advise of exclusion regarding events involving swimming pools — whether insurance broker breached common law duty and statutory duty under the Corporations Act 2001 (Cth) — breach established.

EVIDENCE — tendency evidence — affidavit evidence from former clients regarding service insurance broker provided — admissibility objection — whether the evidence had “significant probative value” — Evidence Act 1995 (NSW), s 97(1)(b) — admitted.

EVIDENCE — credibility and reliability – authenticity of documents.

CAUSATION — onus — liability — whether defect existed — whether reasonable precautions taken by insured.

DAMAGES — assessment— whether too remote — actions of plaintiff — expert evidence.

Legislation Cited:

Civil Liability Act 2002 (NSW), ss 5B, 5D(1), 5D(3), 5E

Corporations Act 2001 (Cth), ss 766A, 766B, 944A, 945A, 946A, 947C

Evidence Act 1995 (NSW), ss 97, 128

Motor Accidents Act 1988 (NSW)

Trade Practices Act 1974 (Cth), s 52

Cases Cited:

CGU Insurance v Porthouse (2008) 235 CLR 103; [2008] HCA 30

Chappel v Hart (1998) 195 CLR 232; [1998] HCA 55

Fraser v BN Furman (Productions) Ltd [1967] 1 WLR 898

Hancock v East Coast Timber Products Pty Ltd (2011) 80 NSWLR 43; [2011] NSWCA 11

Horsell International Pty Ltd v Divetwo Pty Ltd [2013] NSWCA 368; 18 ANZ Insurance Cases 61-991

Hughes v The Queen (2017) 263 CLR 338; [2017] HCA 20

Hutchison Construction Services Pty Ltd v Fogg; Fogg v Les Quatre Musketeers Pty Ltd (t/as Plastamasta South Coast) [2016] NSWCA 135

IMM v The Queen (2016) 257 CLR 300; [2016] HCA 14

Legal & General Insurance Australia Ltd v Eather (1986) 6 NSWLR 390

Malec v JC Hutton Pty Ltd (1990) 169 CLR 638; [1990] HCA 20

McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579; [2000] HCA 65

Murray v Sheldon Commercial Interiors Pty Ltd [2016] NSWCA 77

Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 77 ALJR 768; [2003] HCA 10

Prasad v Minister for Immigration, Local Government and Ethnic Affairs (1991) 101 ALR 109; (1991) 23 ALD 183

Sellars v Adelaide Petroleum NL; Poseidon Ltd v Adelaide Petroleum NL (1994) 179 CLR 332; [1994] HCA 4

Thiess Pty Ltd v Zurich Specialties London Ltd [2009] NSWCA 47

TL v R [2020] NSWCCA 265

Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd (1998) 192 CLR 603; [1998] HCA 38

Zurich Australian Insurance Limited v CSR Limited [2001] NSWCA 261

Zurich Specialities London Ltd v Thiess Pty Ltd [2008] NSWSC 1010

Category:

Principal judgment

Parties:

Sue Flanagan (Plaintiff)
Robert John Bernasconi (First Defendant)
Nadic Insurance Brokers Pty Ltd t/as Nadic (Second Defendant)

Representation:

Counsel:
D Priestley SC (Plaintiff)
M Elliott SC (First & Second Defendants)
Solicitors:
Mayweathers (Plaintiff)
Hall & Willcox (First & Second Defendants)

File Number(s):

2019/66093

INDEX

Conclusion - paragraph 9

The agreed facts - paragraph 10

Issues - paragraph 12

The disputed evidence led in Mr Bernasconi’s case - paragraph 18

Credibility and reliability - paragraph 30

The relationship - paragraph 42

Problems with Dr Flanagan’s recollection - paragraph 61

The disputed 2005 conversation - paragraph 72

The pool was not empty in 2010 - paragraph 84

Dr Flanagan’s financial position - paragraph 92

The planned commercial use of the property - paragraph 116

Other evidence Mr Bernasconi volunteered - paragraph 126

The 28 February meeting did not occur - paragraph 137

The altered funding document and the March meetings - paragraph 163

How the Vero policy came to be taken out on 15 March - paragraph 172

How the pool came to be emptied - paragraph 189

How the Vero claim and other steps were pursued - paragraph 199

Other factual issues

How the pool and enclosure were built - paragraph 209

How the pool came to be left empty - paragraph 217

Breach

Breach of duty - paragraph 223

Breach of the Corporations Act - paragraph 245

Causation

What must Dr Flanagan prove? - paragraph 255

The pleadings - paragraph 263

The onus - paragraph 267

The available insurance cover - paragraph 272

Was there a defect? - paragraph 293

Was there a failure to take reasonable precautions? - paragraph 316

Damages - paragraph 336

What was covered? - paragraph 344

Demolition costs - paragraph 355

The cost of the initial demolition - paragraph 361

The waste would not be kept onsite - paragraph 372

The cost of disposal of material which remain onsite - paragraph 378

The cost of further demolition and removal of the remaining material is too remote - paragraph 386

Conclusion - paragraph 390

The new pool - paragraph 392

The cost of repairing the pool enclosure - paragraph 406

Additional works - paragraph 412

The FOS challenge - paragraph 425

Calculation - paragraph 428

Orders - paragraph 430

Judgment

1. In 2013 the 25-metre swimming pool and surrounding pool enclosure at Dr Flanagan’s home were damaged when the pool partially lifted out of the ground, damage which her insurance did not cover. She claims that this was the result of the negligence of Mr Bernasconi, who had long been her and her former husband, Dr Oldfield’s insurance broker and who was then employed by Nadic Insurance Brokers Pty Ltd.

2. Dr Flanagan claims that in 2012 Mr Bernasconi advised her to take out homeowners’ insurance with a new insurer, Vero Insurance Ltd, rather than with her former insurer, CGU Insurance Ltd, which had fully insured her home. But contrary to the duty which he owed her, Mr Bernasconi did not advise her that while under both policies the property was insured for some $3,500,000, the Vero policy had an exclusion in respect of the pool.

3. The result was that when the pool, surrounds and enclosure were later extensively damaged, the claim Mr Bernasconi prepared for accidental damage under the Vero policy was declined, Dr Flanagan having earlier made a claim to the Mine Subsidence Board, which had also failed. Her later application for review of the insurer’s decision by the Financial Ombudsman Service, which she pursued on legal advice, was also rejected.

4. Dr Flanagan had the pool and structure demolished in 2014, given the requirements of her financier and not then having the means to rebuild. She considered that in their damaged condition they posed risks to health and safety, creating a potential for release of fibreglass debris into the surrounding soil and air, and also adversely affecting the value of the property.

5. On the pleadings what was in issue included the circumstances in which Dr Flanagan came to take out the Vero policy; her instructions to Mr Bernasconi; the nature of the advice and services he offered and provided her; breach; causation; contributory negligence; whether Dr Flanagan had failed to mitigate any loss which she suffered; and whether she had a basis for claiming that she had lost a business opportunity.

6. Before the hearing the parties agreed what remained in issue between them. At the hearing they identified various other matters which were also in issue.

7. Dr Flanagan did not finally pursue her lost opportunity claim and while there was no issue about the nature of the duty she was owed, it was only after Mr Bernasconi was cross-examined that it was conceded that it had been breached. Despite this, her claims were still defended, although the contributory negligence and mitigation claims were also not finally pursued, other than in the former case on the basis of Dr Flanagan’s failure to read the Vero policy, which it was accepted was unlikely to amount to contributory negligence. On the evidence I will explain, I consider that it did not.

8. Much turned on the credibility and reliability of the evidence which Dr Flanagan and Mr Bernasconi each gave.

Conclusion

9. For reasons which follow I have concluded that despite the admitted breach, there must be judgment for the defendants.

The agreed facts

10. The parties agreed that:

“1. In 2012, the Plaintiff was the registered owner of the property Lot 6 DP xxxxxx situated at xxxxxxxxx in NSW South Wales (Property), jointly with her former husband Geoffrey Oldfield (Oldfield), until 30 June 2013 and then solely.

2. In addition to a large two-story house, garage, tennis court and standalone shed, erected on the Property were:

(a) A concrete and fibreglass inground swimming pool measuring 25 meters long and wide enough for 5 painted lanes (the Pool); and

(b) A building surrounding and enclosing the Pool measuring 32 meters by 12.5 meters (the Pool Building).

3. The First Defendant commenced providing insurance broking services to the Plaintiff and Oldfield for the first time in or around 1984.

4. The First Defendant provided the Plaintiff and Oldfield with Insurance Broking Services in respect to a suite of insurance products for both personal and various medical services business for almost 30 years.

5. The Plaintiff has been at all material times a medical practitioner.

6. On 20 December 2000, the First Defendant commenced employment with the Second Defendant as an insurance broker and continued to provide the Insurance Broking Services to the Plaintiff under an agreement between the Plaintiff and the Second Defendant.

7. In 2003, the First Defendant recommended that the Plaintiff and Oldfield take out a Homeowner's Insurance policy with CGU Insurance Limited (CGU). The Plaintiff accepted this advice and incepted the Homeowner's Insurance policy with CGU to provide coverage of the buildings and contents on the Property. This was renewed each year until 2012 (the CGU Policy).

8. On 5 December 2011, the CGU Policy was amended to name the Plaintiff as the sole insured, following the marital separation of the Plaintiff and Oldfield.

9. The CGU Policy was not renewed in 2012.

10. The Plaintiff took out a Homeowner's Insurance Policy with Vero [titled "Secure Home Elite Insurance" bearing the policy number HAHA015730948] on or about 16 March 2012 (the Vero Policy).

11. On or about 28 March 2012, the Second Defendant issued the Plaintiff with a Tax Invoice bearing the same date for the sum of $8,562.16, which related to the inception of the Vero Policy and which was paid through premium finance funding taken out by the Plaintiff [as had been her usual funding course].

12. As a result of action taken by the Plaintiff, the Pool was empty in 2013.

13. In each of the months of January and March 2013, there were days of heavy rain at and around the Property.

14. On or around 2 March 2013, the Pool partially lifted out of the ground, causing extensive damage to the Pool itself, to the surrounding concrete and tile surface, to equipment connected to the Pool and a collapse of the 30-meter eastern brick wall of the Pool Building (the Pool Damage).

15. On 9 July 2013, the Plaintiff made a claim on the Vero Policy with respect to the Pool Damage by submitting a claim form (the Claim).

16. The Claim was declined by Vero on 8 October 2013 (declinature). The Claim was expressly declined on the basis of exclusion 12 in the Vero Policy, which excluded events involving swimming pools, including pool lifting or any area around the pool lifting (the Pool Exclusion Clause).

17. The Plaintiff challenged the Vero’s declinature of the Claim with the Financial Ombudsman Service on or about 18 May 2014 (the FOS Application). The FOS Application was rejected by the Financial Ombudsman Service on 6 January 2015.

18. In about December 2014, the Plaintiff demolished the damaged Pool Building and caused the damaged Pool to be filled in with the surrounding rubble.”

11. It emerged at the hearing that it was common ground that the CGU policies had insured accidental damage to the pool and pool building; that the Vero policy had an exclusion which the CGU policy did not; that Mr Bernasconi did not tell Dr Flanagan about the existence and effect of the Vero exclusion; that other insurers also offered cover for damage to the pool and building, but he also did not tell Dr Flanagan about them, or that advice as to their premiums, some less than CGU required, had been obtained by Nadic staff.

Issues

12. Before the hearing the parties identified facts in dispute to be:

“1. The usual practice of the First Defendant in providing Insurance Broking Services to the Plaintiff, in particular in providing documentation and explanation of policies at or before the time of renewal.

2. Whether the Plaintiff and the First Defendant met and discussed Homeowners insurance on 28 February 2012.

3. Whether the Plaintiff said any words to the First Defendant to the effect that she was not prepared to pay a high premium for Homeowners insurance for the 2012 – 2013 year.

4. The terms of the conversations between the Plaintiff and the First Defendant in relation to Homeowners insurance in 2012.”

13. At the hearing other facts in issue were identified to include:

1. What instructions and advice were given at the 15 March 2012 meeting between Dr Flanagan and Mr Bernasconi;

2. Whether there was another meeting on 28 March 2012;

3. Whether Dr Flanagan and Mr Bernasconi had discussed insurance cover for the pool in 2005;

4. How Mr Bernasconi came to learn about the damage to the pool; and

5. Whether the pool was empty in 2010.

14. The matters in issue the parties identified before hearing were:

“Duty & Breach

1. What meetings and conversations occurred between the Plaintiff and the First Defendant in about February and March 2012?

2. What advice and other broking services did the Defendants provide to the Plaintiff in relation to Homeowners insurance, and in particular the matters in dispute, in 2012?

3. What instructions did the Plaintiff give the First Defendant in relation to Homeowners insurance in 2012?

4. Should the Defendants have provided different advice or broking services as alleged by the Plaintiff such as to breach their duty to exercise due care and skill?

5. Was the Second Defendant in breach of the pleaded provisions of the Corporations Act in not providing the Plaintiff with a Statement of Advice in relation to Homeowners insurance in 2012?

Causation

6. If the Defendants breached their duty, what insurance cover would the Plaintiff have had as at March 2013 if such advice and services had been provided?

7. If the Second Defendant was in breach of the pleaded provisions of the Corporations Act, what insurance cover would the Plaintiff have had as at March 2013 if such breaches had not occurred?

8. Having regard to the Plaintiff's conduct after the inception of the Vero policy in 2012, in particular in emptying the pool, and leaving it empty for a period of time, would a notional policy taken out have covered the claim for damage which was made?

9. Was there any existing defect in the pool or pool building and if any, would it have affected cover under a notional policy for the claim that was made, and if so, in what manner?

Damages

10. Did the Plaintiff sustain the loss and damage claimed as a result of the alleged breaches, and if so, what is the quantum of damages?

11. Should the damages be reduced by reason of any conduct of the Plaintiff as pleaded in the Defence?”

15. As well as the credibility and reliability issues pursued, the authenticity of documents exhibited to Mr Bernasconi’s affidavit also arose.

16. It was after Mr Bernasconi was cross-examined that the defence announced that it was agreed that the duty owed to Dr Flanagan had been breached. His evidence also resulted in parts of the report of the defence liability expert, Mr Gribbin not being read, as well as aspects of the experts’ joint report. It did not, however, resolve the credibility and reliability issues.

17. In final submissions issues also emerged between the parties about the nature of the case advanced on the pleadings, who bore the onus in respect of some issues and whether there were relevant evidentiary gaps in Dr Flanagan’s case.

The disputed evidence led in Mr Bernasconi’s case

18. Mr Bernasconi led affidavit evidence from other of his clients, the admissibility of which was in issue. They were not required for cross-examination and the resolution of the objection was deferred until judgment.

19. The objection was that the evidence was inadmissible under s 97 of the Evidence Act1995 (NSW), which does not permit evidence of conduct, with which the affidavits were concerned, to be admitted unless “the court thinks that the evidence will, either by itself or having regard to other evidence adduced or to be adduced by the party seeking to adduce the evidence, have significant probative value”: s 97(1)(b).

20. That was in issue, the argument advanced for Dr Flanagan being that the evidence said nothing about the course which Mr Bernasconi had pursued in her case, he having elected to call evidence from only a handful of clients from the hundreds he had advised over the years and where differences between them, their needs, and the reasons why those practices had developed, could only be speculated upon.

21. “Probative value” is defined in the dictionary to the Evidence Act to mean “the extent to which the evidence could rationally affect the assessment of the probability of the existence of a fact in issue”. It need not have significant probative value with respect to all facts in issue: TL v R [2020] NSWCCA 265. It must be assessed on the assumption that the evidence is credible and reliable: IMM v The Queen (2016) 257 CLR 300; [2016] HCA 14 at [48]. But it must be of importance in establishing facts in issue: at [46].

22. Further, what the tendering party seeks to establish must be identified with some precision and the strength of the inference and the extent to which the tendency increases the likelihood that a fact in issue did or did not occur must all be considered: Hughes v The Queen (2017) 263 CLR 338; [2017] HCA 20 at [153], [213], [216].

23. The affidavits each dealt with matters such as what Mr Bernasconi did when providing his services. Mr Emerton, for example, said that at each of their meetings held shortly before insurance renewal “Mr Bernasconi would sit down with me and go through the insurance documents (including schedules and policy wordings) for the policies that Swansea RSL was buying that year. He would explain what was and was not covered under each policy. He would also bring to my attention any changes to policies from one year to the next.”

24. Mr Kentish said that Mr Bernasconi would go through each insurance policy “in detail so that we understood the extent of the cover we were buying and what our responsibilities were to the insurers. He would bring to our attention any exclusions in the policies as part of that process.”

25. Ms Borrelli, Mr Richards and Mr Bolth gave like evidence.

26. The affidavits, I am satisfied, established relevant similarities between the type of services Mr Bernasconi provided to Dr Flanagan and these clients and how he went about providing them to other clients. This evidence was led in order to establish that Mr Bernasconi had a tendency to act in the way these witnesses explained, when providing his services to his clients, in order to infer that he had behaved in conformity with that tendency when he provided his services to Dr Flanagan in 2012 when she took out her home and contents insurance.

27. I am thus satisfied that the evidence was admissible, having significant probative value, given what was in issue.

28. But as I will explain, even taking that evidence into account, all of the evidence which has to be considered does not establish that Mr Bernasconi did what he claimed in relation to the CGU and Vero policies. Indeed, the evidence supports the conclusion that he did not then act in conformity with his usual practices, but departed from them in the ways Dr Flanagan described.

18. This conclusion rests in part on conclusions which I reached about the credibility and reliability of the evidence of both Dr Flanagan and Mr Bernasconi, as well as on concessions which he made in cross-examination.

Credibility and reliability

30. Dr Flanagan and Mr Bernasconi’s credibility and the reliability of their evidence turn on disputed conversations and actions and what various documents, the authenticity of some of which were in issue, do and do not establish. Dr Flanagan and Mr Bernasconi each gave affidavit evidence, aspects of which were not in dispute, and they were cross-examined about matters which were.

31. Dr Flanagan’s case was that Mr Bernasconi’s evidence had been proven to be incorrect about numerous matters and could not be preferred over hers. The defence case that there were aspects of Mr Bernasconi’s evidence, including about what Dr Flanagan told him on 28 February 2012 about her insurance needs, that were more plausible than her evidence.

32. I am unable to accept that submission.

33. Given the real conflict in their evidence about many matters, it is necessary to “engage with, or grapple or wrestle with the cases presented by each party” on these issues: Murray v Sheldon Commercial Interiors Pty Ltd [2016] NSWCA 77 at [60]. Such conflicts must be resolved by “reasoning so far as possible on the basis of contemporaneous materials, objectively established facts and the apparent logic of events”, as well as upon the assessment of a witness’ reliability: Hutchison Construction Services Pty Ltd v Fogg; Fogg v Les Quatre Musketeers Pty Ltd (t/as Plastamasta South Coast) [2016] NSWCA 135 at [60].

34. Having undertaken that exercise I have concluded that Dr Flanagan did not give deliberately false evidence, nor can it be concluded that she was not a credible or reliable witness. I have not been able to reach the same conclusion about Mr Bernasconi.

35. In her case Dr Flanagan called affidavit evidence from Mr Murray, a business adviser, who corroborated her evidence that it was in 2011 that he first began giving her advice about the possibility of the property being used for various commercial purposes. During the course of the hearing she also led affidavit evidence, without objection, from her daughter, who corroborated Dr Flanagan’s evidence about the pool not being empty in 2010, as was Mr Bernasconi’s evidence. Only Mr Murray was cross-examined. Their evidence and contemporaneous documents, including those which evidenced the ongoing regular pool maintenance, supported Dr Flanagan’s evidence about various issues.

36. As well as the disputed evidence called from his clients, during the course of the hearing Mr Bernasconi also called evidence, without objection, from the CEO of Nadic, Mr Dallas James, after Mr Bernasconi was cross-examined about the authenticity of documents he claimed he had given to Dr Flanagan. Mr James’ evidence established that aspects of Mr Bernasconi’s evidence were inaccurate, including in relation to such documents.

37. I thus came to the conclusion that what appeared to be contemporaneous documents supporting aspects of Mr Bernasconi’s evidence, had not been given to Dr Flanagan and further, that his evidence about critical matters was not reliable.

38. Finally, that in the event of conflict Dr Flanagan’s evidence had to be preferred, was supported by an analysis of their disagreements and the concessions which they each made, including in Mr Bernasconi’s case, ones which led to breach of duty being accepted. Despite this, I was still unable to prefer his evidence.

39. Consideration had to be given to the passage of time, not only since the events in question, but in his case, since Mr Bernasconi’s retirement in 2013. That, I accepted could explain some of his difficulties in recollecting matters put to him, but not other difficulties with his evidence.

40. Despite the nature of the regard which Mr Bernasconi repeatedly said in cross-examination he had for Dr Flanagan; I came to have reservations about his evidence about various matters. This included the extent of his business contact with her, rather than with her staff; what he did in 2012, before the Vero policy was taken out; and finally, his general credibility and the reliability of his evidence when it conflicted with that of Dr Flanagan. In the end I had to conclude that some of his evidence was simply not plausible and finally, that his evidence could not be preferred over hers.

41. In explaining these conclusions it is convenient to resolve various of the factual issues lying between the parties.

The relationship

42. Dr Flanagan is a medical practitioner and Mr Bernasconi a retired insurance broker who had almost 50 years’ experience when he retired in 2013, although on his evidence he was never licensed. They had a professional relationship over some 29 years beforehand, during which they had regular contact about the complex business and personal insurance needs which Dr Flanagan and Dr Oldfield had, other than in relation to life insurance. Before their divorce Dr Flanagan, Dr Oldfield and various of their companies were involved in the operation of businesses which included a private hospital and cardiac testing business. Dr Oldfield also had a cardiology practice.

43. Dr Flanagan’s role in the businesses included medical work, such as filling in for other doctors who provided their services, as well as an administrative and financial role, essentially that of a chief financial officer. She was assisted by both administrative and accounting staff and was responsible for overseeing insurance. Both she and other staff dealt with Mr Bernasconi about insurance matters over the course of each year, although not to the extent that he claimed.

44. In cross-examination Dr Flanagan acknowledged that before she left the business in 2011 she was very busy, as was Mr Bernasconi’s experience, she also having the care of five children and the home, which is situated on a three-acre property. She also had various staff to assist her there.

45. Dr Flanagan denied, however, that her interactions with Mr Bernasconi were as he described them, visiting the office two or three times a week, but dealing mainly with her staff, because she was too busy to see him.

46. It was common ground that Dr Flanagan and Mr Bernasconi had a longstanding friendship, which he described in cross-examination. Her evidence was that it was she who usually dealt with Mr Bernasconi, which he disputed. In cross-examination she said that while she could not always see him when he called in, usually she could make time.

47. After Dr Flanagan’s separation from Dr Oldfield, Mr Bernasconi continued to provide her with broking services for her professional and personal needs, about which she also took the advice of her accountant. He also continued to provide his services to Dr Oldfield.

48. Dr Flanagan, Dr Oldfield and Mr Bernasconi had considerable personal contact, although Dr Flanagan and Mr Bernasconi also disagreed about how frequently he visited the home. He had swum in the pool with Dr Oldfield on at least one occasion and on Dr Flanagan’s evidence, even had an access code to enter the property. On his evidence, when he met with Dr Flanagan at her home, it was usually early in the morning.

49. Theirs was undoubtedly a relationship of considerable trust, Mr Bernasconi taking their business with him whenever he changed employers.

50. Dr Flanagan’s evidence was that because of the pattern of brokerage services Mr Bernasconi had provided over the years, during which he worked for various brokers, she did not closely review documents which he provided and he did not advise her to review them, nor to satisfy herself that they were satisfactory. She relied on him that the wording was appropriate.

51. From February 2003 the property was insured with CGU, he having recommended it to be the best policy in the market for her. Mr Bernasconi corroborated this. He considered that policy provided the best cover for the property even in 2012 when the Vero policy was taken out, although he did not tell Dr Flanagan this.

52. The CGU policy was index linked, providing for automatic yearly increases to the amount of cover according to inflation. Several substantial claims had also been made under the policy and his view was that it was more prudent to take a long-term view and establish a good relationship based on loyalty between the client and underwriters. In his experience chasing the cheapest premium could be counterproductive. In any event he considered that the CGU policy was a high-end policy and that the difference in other policies and premiums would have been negligible.

53. Dr Flanagan also deposed that in or around November each year, Mr Bernasconi would tell or remind her that he was going to review the existing policies, compare them against the available policies in the marketplace and recommend the best one. They invariably followed his recommendations, and he would organise an insurance premium funding loan for the premiums, arrange for the policies to be taken out and send an invoice, indicating that payment had been made. Mr Bernasconi disputed some of this.

54. Dr Flanagan also said that they usually met in person in or around February of each year at her workplace and from around 2001 at her home, when he provided his advice and/or recommendation on the best policies and she signed the premium funding document. He would later send her the tax invoice that included premiums and the brokerage services fees.

55. Despite the evidence led from his other clients, Mr Bernasconi did not agree. On his account he dealt more often with her employees than with Dr Flanagan, who often had no time to speak to him and he did not contact Dr Flanagan each November. While he agreed that he reviewed the insurance cover on the property each year, there was no reason for him to contact her each November; he did not regularly seek alternative quotes for insurance; and it was his practice to provide a folder containing the relevant documents which he left for her with her staff, not Dr Flanagan. She disagreed.

56. Mr Bernasconi also said that he always provided copies of policy documents and product disclosure statements when writing new business and at renewal. He did so every year for Dr Flanagan, presented in a folder, as was her evidence, but he disagreed as to the time at which it was presented and to whom. He also disagreed with Dr Flanagan that he did not advise her to review the policy documents or satisfy herself that they were satisfactory for her need. But he insisted that he did not usually provide them to her, but rather to her staff, Ms Nichols and Mr Tickle, advising them “Here are the renewal documents. I'm happy to go through them with you, but if there are any questions feel free to call me at any time”.

57. On his next visit Mr Bernasconi would ask them whether Dr Flanagan had any questions, and he would also have a brief conversation with her to the effect:

“Dr Flanagan:   Is there anything we need to do?

Me: Not really Sue. Your sums insured have been indexed linked to keep pace with inflation. The premium might have increased slightly from last year. I’d only be too happy to run through the schedule and the policy wording at a time to suit you.

Dr Flanagan: No I’m happy with that. I’ll have to leave you.”

58. On Mr Bernasconi’s evidence he rarely spoke to Dr Flanagan directly otherwise. This was also disputed by Dr Flanagan, who also explained why he could not have spoken to Ms Nichols, and later Mr Tickle as he claimed. On her evidence whilst she had many business, professional and personal obligations and at times was busy when Mr Bernasconi called in, he was a friend for whom she always tried to make time and they spoke regularly.

59. When challenged both Dr Flanagan and Mr Bernasconi insisted that their evidence as to their interactions was correct, although Dr Flanagan accepted that she did not articulate each year the requirement that he compare the existing policy against the available policies in the marketplace and recommend the best one to her. That, however, was her expectation, given the considerable broking services he was providing.

60. I am satisfied that her evidence must be preferred.

Problems with Dr Flanagan’s recollection

61. What the cross-examination did establish was that while Dr Flanagan had a good memory of events dealt with in her evidence, supported as much of it was by contemporaneous records, the reliability of which were not in issue, as well as by the evidence of other witnesses, including Mr Bernasconi, her memory about some matters was mistaken.

62. For example, she told the engineer engaged by Vero to investigate her claim that the pool had been emptied in December 2012, which was reflected in his 2013 report. On her evidence when she received it, she realised her error, having emptied the pool at the end of winter.

63. It was the defence case that this was a part of Dr Flanagan’s deliberate attempt to mislead Vero, which she denied. This was also said to be evidenced by her failure to inform the investigating engineer about problems with the hydrostatic valves. On her evidence there were problems when the pool was first built, after which it was emptied three times and one of the valves replaced, before the dispute over the problems was resolved in 2001, when she made payment.

64. Dr Flanagan explained that she did not mention this to the engineer in 2012, who did not ask her about the valves. She did not then consider the initial problems with the pool to have been relevant to the investigation of what had caused the pool to lift, they having been repaired at the pool builder’s cost before the final payment was made for the pool in 2001. There had not been further problems afterwards, apart from a leaking light which was repaired without the pool needing to be emptied, until it was identified in 2012 as the likely source of a leak which she had become aware of in late 2011 from an increased water bill.

65. This accorded with Dr Flanagan’s daughter’s evidence that she had lived in the home since 1999 and had regularly used the pool as a child and until her late teenage years, and also with the pool maintenance records. It was in February 2012 that she saw the pool had started turning green and her mother told her that it had been turned off to investigate a leak. The pool was not emptied until winter, after Dr Flanagan had been advised that it was designed to be emptied. That accorded with the expert evidence.

66. I am satisfied that neither this nor any other evidence established that Dr Flanagan had set out to mislead Vero or the Court, let alone that she gave false or generally unreliable evidence.

67. On documents which she wrote at the time, after the pool was emptied Dr Flanagan was not prepared to spend money on the pool which she considered might only prove be to the bank’s benefit if it sold the property, as was being threatened. That proved to be a costly decision, given what eventuated, and there being no suggestion that what may have been involved in the investigation and repair of the cause of the leak after the pool was emptied would have been expensive or something which Dr Flanagan did not have the finances to deal with.

68. The property was not sold, but the empty pool lifted, and the Vero policy proved not to have covered the resulting damage.

69. When cross-examined about her finances and sources available to her to pay her commitments, Dr Flanagan also referred to money held in her solicitor’s trust account, which she thought was available in 2012 to meet expenses she was incurring. They showed, however, that those amounts had been expended by December 2011, rather than February 2012, as had been her recollection.

70. I am satisfied that this mistake also does not permit the conclusion that Dr Flanagan’s evidence was generally not credible or otherwise unreliable. Everyone has lapses in memory. The evidence establishes that this was a particularly challenging and difficult time for Dr Flanagan. That she made mistakes then and when giving her evidence about events that occurred at that time, which were evidenced by documents, did not lead me to conclude that her evidence was falsely given, or otherwise unreliable.

71. I did not reach the same conclusion in relation to Mr Bernasconi.

The disputed 2005 conversation

72. That Dr Flanagan’s evidence was generally reliable was established by other evidence. It is convenient to begin with the conversation Dr Flanagan deposed having in February 2005, while Mr Bernasconi was at her home.

73. Between 1997 and 1999 Dr Flanagan and Dr Oldfield had built a new house, the 25-metre pool and pool building of commercial sized proportions on their property. There were problems and they obtained written advice about the adequacy of the pool and pool building and in mid-1997, on her evidence, she instructed Mr Bernasconi to take out insurance cover, including for the pool and pool building, because of the size of their investment.

74. There was an issue about this, but not that in 1998, problems with the pool leaking were investigated. Ongoing issues with the pool after it was filled were pursued and, Dr Flanagan believed, resolved by the pool builder by 2001. On her evidence they required the pool being emptied a number of times and the replacement of a faulty hydrostatic valve. From that time the pool was cleaned and maintained monthly or fortnightly depending on the season, until it was emptied in mid-2012.

75. On Dr Flanagan’s affidavit evidence in 2005 she discussed with Mr Bernasconi at her home:

“Me: Rob, is the pool fully insured, I mean for everything the equipment, the building and all?

Bernasconi: No.

Me: What about the tennis court and the shed?

Bernasconi: No Sue. They are not included in the policy.

Me: Why not? They need to be included. Please make sure they are all insured.

Bernasconi: Okay, no problem Sue. I will need you to give me a figure for the cost of each item to re-build.

Me: I can give you some round figures, the pool was approximately, $250,000 and the building enclosure was approximately $127,000. The tennis court and shed were approximately $75,000. I cannot remember the exact dollar amounts, but those figures would be close to the mark.

Bernasconi: Ok, I will arrange it for you.”

76. Mr Bernasconi had no recollection of this conversation and also denied that Dr Flanagan had ever discussed with him her requirement that the pool be fully insured. Dr Flanagan was adamant that both had occurred.

77. But Dr Flanagan did make some pertinent concessions. For example, her affidavit evidence was that she had a regular pattern of communication with Mr Bernasconi in around November of each year, from 1984 to 2013, in which her instructions were to “make sure I am fully insured and that I have the right insurance to cover me”. In cross-examination she accepted that she had not expressly articulated this each year.

78. By way of contrast, in cross-examination Mr Bernasconi insisted not only that full insurance had not been discussed, but he said that it was not available in the insurance industry, because exclusions always apply. When pressed, while finally agreeing that some of his clients did use that expression when he dealt with them, he insisted that Dr Flanagan had not.

79. Despite Mr Bernasconi’s reluctance to accept the concept, the expression “full insurance” is not an unusual one. It was used, for example, in Horsell International Pty Ltd v Divetwo Pty Ltd [2013] NSWCA 368; 18 ANZ Insurance Cases 61-991, where it was observed that “the evidence as to Mr Todd's determination to have full insurance cover” amply supported the conclusion that had the client “been properly advised about the limits on the cover available under the Policy, he would have taken out the full insurance Horsell otherwise could have arranged: s 5D(3), Civil Liability Act”: at [242].

80. On Mr Bernasconi’s evidence the pool and pool house had always been included in the definition of “buildings” in the CGU policy, which covered all the buildings on the property and their replacement value had been taken into account in determining the sums insured. That reflected a valuation undertaken at his suggestion in 1998 by a Mr Hemmings of Rushtons. Colloquially, on his evidence, the CGU policy thus always offered “full insurance”.

76. In evidence, however, were documents which showed that the insurance cover had been increased in September 2004 from $1,715,000 to $2,500,000. That was consistent with a conversation to the effect that Dr Flanagan described, albeit at a time somewhat earlier than she remembered and she then having a concern about being fully insured, which the increase in the CGU cover seemingly achieved.

77. There is no issue that the Vero policy did not provide such cover

78. Having considered this and other conflicts in their evidence, I am satisfied that Mr Bernasconi’s evidence cannot be preferred on these matters. I consider that it must be accepted that had Mr Bernasconi drawn the difference in the policies to Dr Flanagan’s attention, that the Vero policy did not provide the full insurance which the CGU policy did, would have been of concern to her.

The pool was not empty in 2010

84. Dr Flanagan, in the extensive attack in cross-examination on many aspects of her evidence, insisted that she had a good memory of conversations dealt with in her affidavits, even those held long ago. She was also certain that some events Mr Bernasconi gave evidence about had not occurred, such as Mr Bernasconi speaking to her in 2010 when he saw the pool empty.

85. In his affidavit Mr Bernasconi described the occasion in February 2010 when he went to the home to retrieve his swim fins and saw that the pool was empty. On his account he then spoke to Dr Flanagan about the risk of the pool lifting out, which he explained in cross-examination he was aware of, because of his general knowledge. She then told him that they had been having problems with the pool since it was built; that it was leaking; and that she was pursuing the matter with the builder, Bel-Air Pools.

86. Dr Flanagan denied this in her affidavit. None of the contemporaneous documents support Mr Bernasconi’s account, and it was contradicted by some of them, as well as by the evidence which Dr Flanagan’s daughter gave.

87. Mr Bernasconi also said in his affidavit that he told Dr Oldfield in 2010 that the pool was empty and that he was very angry. But there was no suggestion that Dr Oldfield did anything as a result, unlike in 2012 when he sent Dr Flanagan an email, at a time when there is no issue that the pool had been emptied.

88. In cross-examination Mr Bernasconi denied that he could have been confused about the timing. He also volunteered that he knew that Dr Oldfield had spoken to Dr Flanagan about the pool being empty in 2010, because he was present when Dr Oldfield telephoned her “and told her in no uncertain terms to refill the pool”.

89. This had not been put to Dr Flanagan, whose cross-examination had been:

“Q. In February 2010 Mr Bernasconi came to the property and when he did, he was with you and noticed that the pool was empty. Correct?

A. No. The pool was full. I don't believe he came over but I'm telling you in 2010 the pool was full.

Q. You don't believe he came over in February 2010. Is that what you say?

A. I did not see Mr Bernasconi in 2010 with an empty pool. I - I need to explain this differently perhaps. The pool was full in 2010.

Q. Do you accept that Mr Bernasconi may have come to your property in February 2010?

A. He may have come.

Q. He may have come to ask for his pool fins back. Correct?

A. He could have got them without asking.

Q. You had a conversation with him about the pool being empty?

A. No.

Q. You told him you'd let the water out because the pool had been leaking?

A. No.

Q. The pool at that stage was in a untidy condition, wasn't it?

A. No.

Q. The whole pool area was littered, wasn't it?

A. No.

Q. You said to Mr Bernasconi that you never really wanted the pool, didn't you?

A. Not - at different times I may have said it.

Q. You said that it was Geoff's folly, didn't you?

A. Yes. I have called it Geoff's folly before.

Q. Is that's the first time you've admitted that in this proceeding?

A. I've never denied it.

Q. It's not addressed in your second affidavit, is it?

A. It's a passing comment of no importance.

Q. You told Mr Bernasconi during this conversation that you'd had problems with the pool since it had been built.

A. That's not true.

Q. He told you you'd better be careful because by leaving the pool empty, there was a risk that it could pop up. Correct?

A. No, he did not. No conversation occurred.

Q. It doesn’t suit you now to admit there was a conversation of that kind, does it?

A. No conversation occurred.”

90. It was not put to Dr Flanagan that in 2010 Dr Oldfield spoke to her about the pool being empty. That was consistent with her daughter’s evidence, who was not required for cross-examination and with pool maintenance records. Her daughter’s evidence was that while still at high school in 2009 to 2011 she swam in the pool up to three times a week.

91. In his cross-examination it was put to Mr Bernasconi that he had invented events both in his affidavit and oral evidence, which suited his case, which he denied. I came to the conclusion, however, that Mr Bernasconi did give some evidence which did not truly reflect his recollection, or what had occurred. On all of the evidence he was mistaken about the pool being empty in 2010.

Dr Flanagan’s financial position

92. Dr Oldfield and Dr Flanagan separated in 2010 and in November 2011 they reached a heads of agreement about how they were going to separate their personal and professional affairs, which on her account Dr Flanagan later showed Mr Bernasconi. On his evidence he was then aware of the separation and its impact on Dr Flanagan’s financial position.

93. The 2011 agreement included the home being transferred into Dr Flanagan’s sole name unencumbered, which depended on Dr Oldfield refinancing and thus what was agreed was noted as being subject to the NAB’s and other approval. The NAB then had a mortgage over the property to secure business debts, in which Dr Flanagan was no longer to have any interest.

94. On her evidence in cross-examination Dr Flanagan was relieved when the agreement was reached and for a time not much concerned about her financial position, but this changed in 2012. She was not privy to the steps Dr Oldfield was pursuing to refinance, necessary to obtain the bank’s approval, which proved not to be readily forthcoming, and she came to be concerned about the financial viability of Dr Oldfield’s practices, given his failure to refinance.

95. In her first affidavit Dr Flanagan explained that despite what she had agreed with Dr Oldfield, she was thus under some stress. She was time poor due to a combination of factors, including the divorce; Dr Oldfield’s inability to refinance; the NAB threatening foreclosure, which would have left her and her five children with no home; having to work and take care of her patients; and supporting her children. Details of her considerable problems as the result of what was no doubt a difficult divorce process emerged in cross-examination.

96. Dr Flanagan had the advice of her accountant, as well as legal advice, but eventually came to fear that what was to be her sole asset, the unencumbered home, would be repossessed by the bank and that both she and Dr Oldfield would end up being bankrupted. On 8 March 2012 she wrote that she could not live at the financial whim of the bank and Dr Oldfield for another 18 months and was then prepared to go into receivership, having repeatedly faced losing the house and bankruptcy. In April she discussed a possible fire sale of the house, being bankrupt and having no super. But this did not transpire.

97. Amongst the many things Dr Flanagan was cross-examined about was her decision to reduce insurance for the contents of the home in 2012 from over $1million to $500,000, it was common ground, in consultation with Mr Bernasconi. On her evidence this reflected property Dr Oldfield had taken with him in 2010 and other property it was agreed in 2011 he would then take.

98. Her evidence was plausible.

99. Dr Flanagan denied that the insurance for the contents was reduced because she could not afford the considerably increased premium CGU required in 2012 for the home and contents insurance, which on her evidence Mr Bernasconi did not tell her about. Her evidence was that she had to have the property insured, that being a requirement under the loan and that she had the means to pay the CGU premium, given what she was earning, but Mr Bernasconi never told her about that premium.

100. She also insisted that her decision to reduce the contents insurance reflected the reduction in the value of the contents. In cross-examination Mr Bernasconi agreed that he had discussed what was a reasonable figure with her, but he considered that it was up to her to finally determine the sum to be insured.

101. It was not Mr Bernasconi’s evidence that as a result of the decrease in contents insurance Dr Flanagan was underinsured. Nor was there any evidence as to what Dr Oldfield insured the contents he had taken for. While Dr Flanagan agreed that most of the contents remained in the house, she explained that what Dr Oldfield took was valuable including, for example, 350 dozen bottles of wine, which had been stored in the large cellar, which she described.

102. There was also no issue that when Dr Flanagan instructed Mr Bernasconi to reduce the contents cover when she accepted the Vero proposal in March 2012, it was expected that this would result in a reduction in the premium, even though this did not eventuate. The premium initially indicated on the invoice for the Vero policy Mr Bernasconi provided was $8,204.18. It was later increased to $8,562.16. Why is not apparent, Mr Bernasconi’s explanation being that he assumed that it reflected information provided and the reduction in the cover.

103. But he did not advise Dr Flanagan that the decrease in the contents insurance would have also decreased the CGU premium.

104. Dr Flanagan had also consulted with her accountant about various life insurance covers, which she believed was no longer required, about which she was also cross-examined. She said that was because under the agreement she no longer had any responsibility for Dr Oldfield’s business debts. She denied that she could also no longer afford those premiums, pointing out that she was not the insured and thus not responsible for paying any of them, nor was she the beneficiary.

105. This was also entirely plausible.

106. Dr Flanagan was also cross-examined about arrangements which had to be made to pay considerable outstanding company taxes, the ATO having issued a garnishee notice to the bank. She explained that it had come to light that a former accountant had failed to finalise certain tax returns, she not having noticed at the time that they had not been provided for signature, with the result that repayment plans were negotiated. That may have been part of the reason why Dr Oldfield had problems with refinancing, but the evidence did not suggest that Dr Flanagan was responsible for making any of the negotiated payments.

107. On Dr Flanagan’s account, after she left the business in which she had worked with Dr Oldfield, she had an income stream on which she could live, as well as adequate cashflow to have permitted her to pay the increased CGU home insurance. She said that while initially she had only two days’ work a week in late 2011 after the heads of agreement were arrived at, this increased to five by early 2012 and her cash flow improved, as payments came in.

108. Dr Flanagan was also cross-examined about what her bank statements revealed, as well as the circumstances in which she had not paid her accountant in 2012 and did not have the pool repaired.

109. Her bank accounts showed that her income was certainly tight, especially immediately after the heads of agreement were arrived at and she left the business. That in 2012 she could not meet her outgoings, including the CGU insurance if it had been taken out, was not established, even though her credit card records, which could have shed further light on what she was spending her income on, were not produced. Over that year her financial position, more difficult than it had been before the separation, certainly improved.

110. In 2012 Dr Flanagan paid her insurance premiums, including the Vero policy, as had occurred in the past, under a funding arrangement provided by a subsidiary of Nadic. There was no suggestion that there was any difficulty in Dr Flanagan making payments due under that agreement at any time. The evidence simply does not permit the conclusion that if the CGU premium had also been funded under that arrangement in 2012, Dr Flanagan could not have paid for it, even though that would have attracted interest.

111. Dr Flanagan also explained that she came to have a dispute with her accountant in 2012 when she discovered that unbeknownst to her, he had not only performed work for Dr Oldfield which she considered involved a conflict, but that she had been charged for that work, which she had refused to pay. But she had paid some of that account.

112. That also did not establish that she could not have paid the CGU premium, or would not have been prepared to, if properly advised.

113. In the result I am not able to conclude that Dr Flanagan’s evidence about her ability to finance the CGU premium was not credible, despite the case advanced as to the insubstantial safety net Dr Flanagan then had for her personal expenses and the concerns which she undoubtedly then had about her ongoing financial situation.

114. Nor does the evidence about her financial position help establish that she had limited interest in the pool, as the defence also submitted. To the contrary, it helps explain why commercial use of the property was something which she began to consider with Mr Murray’s assistance.

115. Dr Flanagan’s evidence on all these matters must be accepted.

The planned commercial use of the property

116. Dr Flanagan said she had first begun exploring plans in 2011 for alternate income producing uses for the property, including the pool and pool structure, which she had then also mentioned to Mr Bernasconi, but which she had not actively pursued until more recently.

117. Mr Bernasconi also denied this, but it is entirely possible that it was something which he had simply forgotten. Given the early stage of her investigation in 2011, it seems quite unlikely that Mr Bernasconi would then have investigated and advised Dr Flanagan about her insurance needs, as was his evidence, given the early stages of her consideration of this possibility.

118. It was put to Dr Flanagan in cross-examination that even though she no longer pursued a pleaded claim for lost opportunity, she had no plan in 2011 to pursue such opportunities and had never intended to put the pool, which she had never wanted and was content to get rid of, to such use, having always considered it to be Dr Oldfield’s “folly”, as she had described it in the past. She accepted that she had used this description, but denied having not considered using the pool, or having no interest in it.

119. It was also argued that Dr Flanagan, who borrowed $400,000 in late 2013 and refinanced in 2014, resulted in her having an extra $290,000 available to spend, but not then having constructed a new pool and enclosure, also showed that she had no real interest in the pool. A document written by Dr Flanagan’s son in 2017 in response to a question asked by an insurance expert about the construction of the pool structure, which made no reference to the pool, was also relied on by the defence to establish this.

120. That Dr Flanagan had the pool and structure demolished and grassed over, rather than rebuilt, having unsuccessfully pursued a claim with the Mine Subsidence Board, Vero and the FOS and eventually later brought these proceedings, is all inconsistent with any lack of interest in the pool. Her evidence in cross-examination, that even though she had considered the pool to be a folly, she also considered it to be a valuable asset which she could make commercial use of, was supported by Mr Murray’s evidence, which is not undermined by the 2017 document.

121. Mr Murray’s affidavit evidence corroborated Dr Flanagan’s evidence, although he agreed he could not now remember details of conversations which he had with her in 2011. He was cross-examined, but his evidence did not detract from this conclusion.

122. Dr Flanagan had first engaged Mr Murray in 2011 to advise her on commercial uses to which the property and its assets, including the pool, could be put. He had discussed them further with her in following years, even though it was not until 2017 that Dr Flanagan actively began pursuing the development of a business plan for commercial use of the property. On his affidavit evidence the uses which he advised about were:

1. Turning the property into a bed and breakfast;

2. Operating an educational facility using the pool and pool house;

3. Turning the property into a private health facility, using the pool, tennis court and the grounds; and

4. Using the property as a private function venue, by covering the swimming pool with a temporary floor.

123. The business plan more recently prepared concentrated on educational opportunities, high teas, and a wedding venue utilising the pool building. It also made reference to the pool and a floor which could be placed over it when the pool building was used.

124. It must thus be accepted that Dr Flanagan has been considering making commercial use of the property since 2011, although it is only recently that she has begun pursuing such opportunities and that the pool and pool structure were assets which she had considered using in such ventures. They were, after all, valuable assets, as she said.

125. Dr Flanagan’s evidence that pursuit of these opportunities was adversely affected by various matters, including the damage and demolition of the pool and pool structure and the pursuit of the insurance claim, must also be accepted.

Other evidence Mr Bernasconi volunteered

126. While Mr Bernasconi was not able to answer some questions because he could no longer remember the events he was being asked about, not only was he adamant that his detailed memory of some things was accurate, he also volunteered other additional information which he had not included in his affidavit, and which had not been put to Dr Flanagan in cross-examination.

127. Some of his evidence also became contradictory.

128. No evidence was led by any of the Nadic staff who Mr Bernasconi said in cross-examination had prepared various documents he had provided Dr Flanagan, by use of its computerised system. Some documents were issued under his name, he said in accordance with Nadic’s usual practices, but others were not. He could not explain why some documents he claimed he had given Dr Flanagan were issued in the name of Mr Dallas James, Nadic’s CEO, or his son Mr Mitchell James, who also worked for Nadic, when their authenticity was raised with Mr Bernasconi in cross-examination. On his evidence they should have born his name, it being he, not they, who provided her with broking services.

129. It has been observed that “[e]xperience of the world shows that the files and other records of even the best run organisations, government and private, large and small, can usually not be treated as infallible”: Prasad v Minister for Immigration, Local Government and Ethnic Affairs (1991) 101 ALR 109; (1991) 23 ALD 183 at [122]. The evidence finally led in this case established that Nadic kept no reliable record of what documents Dr Flanagan was given. Also, that Mr Bernasconi’s evidence that he gave exhibited documents to Dr Flanagan, relying as he did on documents created in the way Mr Dallas James explained, established that his evidence was not correct.

130. The result of the challenge to the authenticity of the documents was that without objection, evidence was called from Mr Dallas James which confirmed that documents bearing his name and that of his son had not been given to Dr Flanagan. That Mr Bernasconi gave her any such documents was not established by his evidence.

425. Contrary to Dr Flanagan’s case, given the terms of that exclusion, a failure to pursue such a challenge could not have resulted in a successful claim that Dr Flanagan had failed to mitigate her loss.

Calculation

428. Had I concluded that judgment should be entered in favour of Dr Flanagan, these conclusions would have required the parties to calculate her award of damages to reflect the conclusions I have reached, as well as interest, about which there was no argument.

429. Given that I have not arrived at such a conclusion, that exercise need not be undertaken.

Orders

430. For these reasons judgment must be entered for the defendants.

431. The usual costs order under the Civil Procedure Act 2005 is that costs follow the event. In this case that is an order that Dr Flanagan bear the defendant’s costs, as agreed or assessed.

432. The parties are directed to confer and approach in the event that they wish to be heard on costs within 14 days. Otherwise they are to file final orders within that time, which will then be made.

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Amendments

04 April 2022 - 0 placed before 4 in Date of Orders

04 April 2022 - Index added to Judgment

Decision last updated: 04 April 2022