Heritage Boats Pty Ltd v Honeychurch Insurances Pty Ltd

[1989] TASSC 97

Serial No. B19/1989
List “B”

COURT:  SUPREME COURT OF TASMANIA

CITATION:              Heritage Boats Pty Ltd v Honeychurch Insurances Pty Ltd [1989] TASSC 97; B19/1989

PARTIES:  HERITAGE BOATS PTY LTD
  v
  HONEYCHURCH INSURANCES PTY LTD

FILE NO:  851/1984
DELIVERED ON:  24 May 1989
JUDGMENT OF:  Wright J

Judgment Number:  B19/1989
Number of paragraphs:  10

Serial No B19/1989
File No 851/1984

HERITAGE BOATS PTY LTD
v HONEYCHURCH INSURANCES PTY LTD

REASONS FOR JUDGMENT  WRIGHT J

24 May 1989

1. The plaintiff company sues its former insurance brokers for breach of contract or negligence in failing to exercise reasonable care to ensure that an insurance policy relating to a Renault 18 GTS sedan motor car issued by the Tasmanian Government Insurance Office was renewed on 13 August 1983.

1. On or about 15 July 1984 the Renault motor vehicle was severely damaged whilst it was parked near the bottom of Jacob's Ladder at Ben Lomond. The defendant admits that it was an implied term of its engagement by the plaintiff and that it was its duty to exercise reasonable care in acting as the plaintiff's insurance broker. However, in the circumstances of the case, it denied breach of contract or negligence.

1. By a late amendment to the defence at the conclusion of the trial the defendant was permitted to raise an allegation of contributory negligence. In my opinion the decision of Crisp J. in Queensbridge Motors v Edwards [1964] Tas SR 93 should be followed and, consequently, whether the plaintiff's claim sounds in contract or tort, if the defendant can satisfy me that negligence of the plaintiff or its agent was a causative factor in the damage complained of an apportionment reducing the plaintiff's entitlement should be made in the event of my finding for the plaintiff on the claim.

1. I do not intend to review the evidence in the case in detail. The trial, including addresses, took little more than one day. I accept the evidence of Timothy Allen Stronach and Heather Margaret Stronach who gave evidence on behalf of the plaintiff company. I also accept the evidence of Lawton Gray Honeychurch, the managing director of the defendant company. Mr Lyn Dawson, a former employee of Honeychurch Insurances Pty Ltd, also gave evidence. Whilst I cannot say that I think he deliberately set out to deceive me I found his evidence unreliable in many respects and to some extent based upon rationalisation rather than memory. Where his evidence conflicts with that of Mr and Mrs Stronach I prefer their evidence.

1. I find that it was the obligation of the defendant company to notify the plaintiff company that the insurance in respect of the Renault GTS vehicle was due for renewal in August 1983, but that the defendant company did not do so. Whilst the plaintiff company had changed its address between the time of the original insurance and the renewal date the defendant company should have been aware of that. Correspondence which was placed in evidence plainly indicates that in the period before August 1983 the defendant company had written to the plaintiff company at its new address and that Mr Stronach had written a letter to Mr Dawson which bore the new address. There is also evidence of a telephone call from Mr Stronach to the defendant company's offices which plainly shows that the employee recording that message made a note of the new address and that this was placed on the plaintiff's file. Furthermore, there is evidence that Mr Dawson wrote to Mr Stronach in July, August and September 1983 attempting to remind him of the necessity to renew the relevant insurance policy. Unfortunately all three of those letters were sent to an incorrect address. There is no feasible explanation for this error apart from negligence by the defendant. The course of conduct between the plaintiff and defendant satisfies me that the defendant undertook responsibility for notifying the plaintiff when its insurances were due for renewal and I am also satisfied that if the plaintiff had been made aware that the Renault policy was about to expire it would have caused it to be renewed.

1. The only proper inference in the circumstances is that the defendant company's failure to notify the plaintiff company that the policy was due for renewal constituted actionable negligence – see Pennant Hills Restaurants Pty Ltd v Barrell Insurances Pty Ltd, Woodward J, unreported, No 5931 of 1974 (NSW) referred to in Sutton "Insurance Law in Australia and New Zealand", par5.23. There is no basis for finding that any conduct by the plaintiff company or its agents contributed to the defendant's error. However, the defendant says that the plaintiff company should have been alert to the necessity to renew its insurance cover before the date on which the Renault vehicle was damaged. The vehicle was acquired in February 1983 and its first period of insurance cover ran from 1 March 1983 to 13 August 1983. The insurance was not renewed thereafter. The defendant argues that having first registered the vehicle in March 1983, even if the plaintiff did not realise that the insurance expired before March 1984, at the very least the plaintiff should have been alive to the necessity to renew the cover as from that date. It was pointed out that the damage to the vehicle was not sustained until July of 1984, some 17 months after the insurance was initially arranged.

1. Counsel for the plaintiff pointed out that at the relevant time the insurance had not been in existence for a lengthy period and therefore the plaintiff could not be expected to have become used to the necessity to renew that insurance at a particular time each year. In my opinion both arguments have some substance, but my overall view is that the plaintiff company should be held partially responsible for the loss which it sustained. I am fortified in this conclusion by the views expressed in Morash v Lockhart & Ritchie Ltd (1978) 95 DLR (3d) 647. However, the plaintiff had never seen the actual policy of insurance and was entitled in the circumstances outlined to me by Mr Stronach and also Mr Honeychurch to place substantial reliance upon the defendant in keeping it abreast of its insurance premium responsibility and its general insurance requirements. I think that the greater proportion of liability must be borne by the defendant in these circumstances and I assess the plaintiff's share of responsibility at 20%.

1. Counsel for the defendants submitted that because the plaintiff company had no proprietary interest in the vehicle its loss, if any, was minimal. This submission ignores the reality of the situation. I find that Mr and Mrs Stronach leased the vehicle from General Credits as agents for the plaintiff company. I accept their explanation as to why they appear as lessees in the lease agreement dated 2 February 1983 with General Credits Ltd. I also accept their evidence as to the manner whereby leasing payments were made from company funds to General Credits Ltd. They held the lease in trust for the plaintiff company in my view and I find that in all relevant respects the plaintiff company had an insurable interest as lessee in the vehicle in question. The lease agreement casts an obligation upon the lessee to insure. In these circumstances it is my opinion that the lessee is entitled to recover a sum representing the insured value of the vehicle (which was agreed at $7,200), less the 20% contribution which I have assessed.

1. Mr Holt, counsel for the defendant, submitted to me that upon the pleadings in this case judgment could not be given for other than the insurable interest of the plaintiff company itself. I do not accept this submission. An amendment was made at the commencement of the trial disclosing the true nature of the plaintiff's status in relation to the vehicle. The leasing agreement with General Credits Ltd. discloses an obligation to insure the vehicle as I have already mentioned and the nature of the policy indicates an intention by the insurer and the insured to insure the vehicle to the extent of its full value. If the plaintiff recovers more than it is entitled to, vis–a–vis General Credits Ltd., it will hold that surplus in trust for General Credits Ltd (Davyoyda Estates Pty Ltd v National Insurance Co of NZ Ltd (1965) 69 SR(NSW) 381).

1. The plaintiff will have judgment for $5,760 plus costs on the scale appropriate to the amount recovered.