Inglis v Narre Warren Super Bowl Pty Ltd & Assurity Pty Ltd
[2015] VCC 951
•23 July 2015
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMON LAW DIVISION | Revised Not Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-10-02605
| NICOLE INGLIS | Plaintiff |
| v | |
| NARRE WARREN SUPER BOWL PTY LTD (ACN 083 858 173) | Defendant |
| and | |
| ASSURITY PTY LTD (ACN 010 622 929) | Third Party |
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JUDGE: | HIS HONOUR JUDGE LACAVA | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 17 and 18 November 2014 | |
DATE OF JUDGMENT: | 23 July 2015 | |
CASE MAY BE CITED AS: | Inglis v Narre Warren Super Bowl Pty Ltd & Assurity Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2015] VCC 951 | |
REASONS FOR JUDGMENT
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Subject: NEGLIGENCE
Catchwords: Plaintiff injured on 21 June 2007 at premises owned and operated by defendant – plaintiff fell from a podium while dancing – insurance cover for defendant had been arranged by the third party for the period 30 March 2007 to 30 March 2008 – defendant incurred substantial costs compromising the plaintiff’s claim and made a claim under the insurance policy – the third party insurer declined the claim on the basis that the insurance policy did not cover events occurring in a “nightclub” – the defendant claimed the third party, as its insurance broker, breached its duty of care by failing to secure an insurance policy that provided adequate cover for reasonable and foreseeable risks – the Court held that the third party failed to exercise proper care and skill in carrying out the instructions given to it by the defendant – the Court held that the third party breached the duty it owed to the defendant in contract and tort
Legislation Cited: Wrongs Act 1958 (as amended), s14B
Cases Cited:Provincial Insurance Australia Pty Ltd v Consolidated Wood Products Pty Ltd (1991) 25 NSWLR 541
Judgment: Judgment for the defendant against the third party on the third party notice for damages to be assessed
CONTRIBUTORY NEGLIGENCE – Court satisfied case for alleged contributory negligence by third party against defendant not made out.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | No appearance | Slater & Gordon |
| For the Defendant | Mr P W Lithgow | Ascot Solicitors |
| For the Third Party | Mr K G M Howden | Lee & Lyons Lawyers |
HIS HONOUR:
1 The plaintiff commenced this proceeding against the defendant seeking compensation for injury she claimed she suffered on premises owned and operated by the defendant. The defendant had understood that it was insured for the risk of injury to the plaintiff but its insurer denied liability under the insurance policy. The plaintiff then joined the third party, its insurance broker, to the proceeding.
2 The plaintiff and the defendant compromised the plaintiff’s claim. The defendant paid the plaintiff $80,000 inclusive of her claim and costs, and claims to have incurred substantial legal costs of its own in the cause with the plaintiff.
3 This is the judgment on liability issues arising in the third party proceeding. On 17 November 2014, I ruled, splitting the defendant’s claim against the third party. In the circumstances set out in my Ruling delivered ex tempore, I ruled that I would first decide the liability issues arising from the claim by the defendant against the third party. If the defendant succeeds on those issues, I ruled I would deal with the question of damages and quantum at a later time.
4 For the reasons that follow hereafter, the defendant must succeed on the claim it makes against the third party.
5 It is necessary to understand the way in which the plaintiff brought her claim against the defendant.
6 The defendant is a company that operates the business of bowling alleys at various locations. As its name suggests, one such location is at premises at 14-22 Lauderdale Drive in Narre Warren (“the premises”).
7 In her Amended Statement of Claim, the plaintiff alleged that at about midnight on 21 June 2007, she was dancing on a podium at the premises from which she fell and suffered injury. The plaintiff described the podium as a “movable podium adjacent to a bar” and, she pleaded that at the time she was “dancing” adjacent to the bowling alleys and tables.
8 The plaintiff pleaded that she was injured because, in the circumstances, the defendant was negligent and/or the defendant breached a duty of care towards her to prevent foreseeable risk of injury contrary to s14B of the Wrongs Act 1958 (as amended).
9 In its Defence, the defendant pleaded that at the relevant time, the premises was operated as a “pool hall, in respect of which live entertainment was played on the weekends, with a supply of alcohol being made available to customers”. The Defence also pleaded that the premises was known as “Club 1422” but that it was operated as a “Pool Hall” but not as a “Night Club”.[1]
[1]Plaintiff’s Court Book (“PCB”) 11 [2f] and [2g]
10 The defendant thought that it was insured against the kind of risks raised by the plaintiff’s claim. A general liability policy to cover its risk had been previously arranged and the defendant retained the third party, an insurance broker, for this purpose.
11 The third party arranged the insurance cover in the form of what is described as a “Broadform Public & Products Liability” policy for the period 30 March 2007 to 30 March 2008. The insurer was Lloyd’s of London.[2] The third party issued an invoice for the costs of the cover that attached a schedule of insurance. That schedule provided for a description of what is termed “occupation” in the following terms, “Ten Pin Bowling Alleys – Including Licensed premises, Property Owner/Occupiers Liability – Pool Hall Venues”.[3]
[2]Exhibit C, PCB 38
[3]Exhibit C, PCB 39
12 The schedule provided for “Major Exclusions – Refer to policy wording for full list of policy exclusions”.
13 At some point, Lloyd’s issued what is described as “Lloyd’s Certificate of Insurance” for the period covered by the policy. Relevantly, the certificate gave details that describe the names of the various individuals and companies insured, and noted that the coverage was for “Legal Liability in Respect to Ten Pin Bowling Alleys Including Licensed Premises Including Property Owners/Occupiers Liability”.[4] The certificate described the “Policy Wording” as “Ten Pin Bowling Alleys Version Jan 07”.[5]
[4]PCB 47
[5]PCB 47
14 No such version of the policy was produced by either party in this proceeding. A version of the policy wording went into evidence as exhibit 8 but I am not satisfied it was the version of the policy wording as at January 2007.[6] In my view, nothing turns on this issue. A version of the policy wording as at June 2007 was in the plaintiff’s court book.[7]
[6]Defendant’s Court Book (“DCB”) 68.11
[7]PCB 50, Definition of “Nightclub” is at clause 41.2 of this version – PCB 61
15 The case was fought on the bases that whatever the wording of the version of the policy applicable at the time of the plaintiff’s injury, the policy provided for an exclusion from coverage where the event giving rise to the claim occurred in a “Nightclub”.[8]
[8]DCB 68.12, Clause 7.6
16 “Nightclub” is defined by the wording of the policy and, using the wording in exhibit 8, it is defined in the following terms:
“‘Nightclub’ shall mean the following:-
For the purposes of this insurance policy a nightclub is defined as a nightclub where:-
1) Where a premises is licensed as such
Or
2)The premises is not licensed as a nightclub but where dancing is regularly undertaken and the venue is arranged in such a manner as to offer permanent dancing and musical entertainment.
For the avoidance of doubt, in deciding whether any venue would be excluded under this policy, if the venue conducts three or more of the following activities it is excluded.
1. charges an entrance fee
2.employs bouncers or employs security personnel to manage the entrance to the dance premises
3. has special lighting
4. is marketed as a nightclub
5.has insufficient natural light to be able to walk around the premises freely and without difficulty
6. has a permanent sound system
7. has sound proofing
Regardless as to whether or not any venue operates under the licence of a hotel or motel or other licensed premises such operation is not covered under this policy.”
17 After the defendant was notified of the plaintiff’s claim against it, a claim was made on the insurer under the policy. The claim was declined by the insurer on the basis that it was not a risk covered by the policy. The insurer asserted that the injury to the plaintiff was excluded from cover because, at the time the plaintiff was injured, the premises were being used as a “nightclub” as defined by the policy.
18 The premises was not, and never has been, licensed as a “nightclub”. The position taken by the insurer to deny liability under the policy could therefore only relate to the second or, alternative part of the definition of “nightclub” in the policy.
19 In its claim against the third party, the defendant pleads that it retained the third party as its insurance broker and, that the third party owed it a duty of care to exercise reasonable care and skill in relation to securing insurance cover. The duty of care is said to arise as a condition of the retainer and/or at common law.[9]
[9]PCB 17 and 18
20 The defendant pleads that the third party breached its duty of care by failing to secure an insurance policy for the defendant that adequately covered it for all reasonable and foreseeable risks to patrons inherent to carrying out the operation of the defendant’s business.[10]
[10]PCB 19
21 The third party admits that it was an implied term of its retainer by the defendant to exercise reasonable care and skill in securing insurance coverage in accordance with the instructions provided to it by the defendant.[11] It pleads that it owed the defendant a duty of care “to exercise reasonable care and skill as the Defendant’s Insurance Broker” which required it “to place Insurance Cover in accordance with the Defendant’s instructions”.[12]
[11]PCB 20 [4]
[12]PCB 21 [5]
22 The third party denies that it breached its duty of care to the defendant or that it was negligent. The third party pleads that in arranging the insurance, it first asked the defendant for details of its business and incidental activities that were carried on at the premises. In response, it pleads that the defendant instructed it that the premises was “a Bowling Alley, that also operated as a pool hall with occasional entertainment”.[13]
[13]PCB 21 [11]
23 The third party also pleads contributory negligence on the basis that if it is found to be liable to the plaintiff, any damages should be reduced on account of the defendant’s contributory negligence, which it pleads arises from an alleged failure by the defendant to “provide any or any proper instructions in respect to the business” being operated at the premises or from failing “to have a proper understanding of the business” or from “failing to read and appreciate the terms of the policy … to satisfy itself that the insurance obtained provided cover for the risk sought”.[14]
[14]PCB 22 [12]
24 There is no real dispute between the parties as to the legal duty owed by an insurance broker to its client.
25 In Provincial Insurance Australia Pty Ltd v Consolidated Wood Products Pty Ltd,[15] Kirby P said, inter alia:
[15](1991) 25 NSWLR 541 at 555
“The principles of law applicable to this head of claim are not in doubt:
1. The duty in law of a broker who is engaged to secure insurance on behalf of a client is ‘having undertaken to obtain insurance [to] exercise proper care and skill in carrying out the assured's instructions’: see Fanhaven Pty Ltd v Bain Dawes Northern Pty Ltd [1982] 2 NSWLR 57 at 62; applying Colinveaux's The Law of Insurance, 3rd ed (1970) at 226; see also, A L Shaddock & Associates Pty Ltd v Parramatta City Council (1981) 150 CLR 225. The duty is owed by contract but also in tort: cf Kelly & Ball (at 217f); see Brickhill v Cooke [1984] 3 NSWLR 396 at 401 and Punjab National Bank v De Boinville (English Court of Appeal, 4 June 1991, unreported);
2. The foregoing duty does not extend to expounding the law to the insured. But it does extend to pointing out legal pitfalls which might arise in the course of effecting a valid insurance cover and in securing cover for the B risk necessary to the insured's disclosed or ascertained needs: see Geoffrey W Hill & Associates (Insurance Brokers) Pty Ltd v Squash Centre (Allawah North) Pty Ltd (Court of Appeal, 2 October 1990, unreported);
3. To decide what a reasonably careful insurance broker would have done in particular circumstances, it is normally necessary that expert evidence be given upon the basis of which the court may reach its conclusion. … .
4. However, where the default of the broker relied upon by the insured is so rudimentary and obvious, expert evidence of broker practice will not be necessary. The rudimentary failure of a broker to take a step which was obviously necessary and prudent will entitle the court to reach its own conclusion of negligence. This was the case in Geoffrey W Hill & Associates;
5. It is especially important that an insurance broker should go through with the insured the list of exceptions in the policy secured. This should be done in order to afford the insured, who may fall within an exception, the opportunity to request deletion of the exception upon payment of a higher premium or cover with another insurer: McNealy v Pennine Insurance Co Ltd [1978] 2 Lloyd’s Rep 18 at 20; and
6. The insured must prove that it is a breach by the broker of its duty of care to the insured which caused the loss complained of. Usually this involves proof that the insurance policy obtained by the broker does not cover the risks that have occurred and that proper care and skill would have ensured that a policy was obtained which did cover those risks: cf Gokora Pty Ltd v Montgomery Jordan and Stevenson Pty Ltd (1986) 8 ATPR 40-722 at 47,911.”
26 It is necessary to analyse the evidence in order to decide what instructions were given by the defendant insured to the third-party broker. The defendant called Mrs Lorraine Sampson, a director and shareholder of the defendant. She gave evidence that at the relevant time in 2007, the defendant was the owner of three and, the operator of four, bowling centres located respectively at Narre Warren, Greensborough, Epping and Altona. The defendant did not own the Altona centre but operated it.[16]
[16]Transcript (“T”) 17
27 Mrs Sampson said the Narre Warren Centre was located at premises at 1422 Lauderdale Road and was known as the “Narre Warren Bowl”. She said the premises in fact consisted of two premises joined together, with access from one to the other. The bowling section had 24 indoor bowling lanes, together with two pool tables, amusement machines, a bar, a meeting room, a café and a pro-shop.
28 In the building next door, but adjoining, there are located 27 pool tables, amusement machines, a bar, coffee machine and juke box. At the relevant time, the part of the building occupied by the 27 pool tables was called “Shooters”.[17]
[17]T17-18
29 Mrs Sampson was asked about the hours during which the business operated. She said, inter alia:
Q: What hours is the bowling centre open?‑‑-
A:Nine till late we say because it could finish at, you know, 10.30, it could finish at 12, depending if we have got lock-in, which we have a DJ and disco lights and things like that, and people bowl and dance. So we just say nine till late. The pool hall, that operated - originally operated from 10 o’clock ‑ ‑ ‑
Q: In the morning?‑‑-
A:10 o’clock in the morning. It’s got a 3 am license. Then it was - it was dead in the morning, so we started opening it at 3 o’clock in the afternoon until three in the morning.”[18]
[18]T18-19
30 Exhibit A is the Planning Permit that relates to the premises which was issued in March 2000. It provided for the premises to operate until 3.00am on Thursdays to Saturdays.
31 Mrs Sampson gave evidence of other activities carried on in the section of the premises that was the pool hall. She said the defendant hired various other forms of entertainment ranging from DJs or a band to a bucking horse. The purpose was to increase patronage at the premises.[19]
[19]T20
32 She said that when there was live entertainment at the premises, security was engaged. On Thursdays to Saturdays, an entrance fee of $5.00 was charged.[20] Mrs Sampson gave evidence that the defendant, from time to time, put on what she described as “lock ins” at the premises. She described what this meant in the following way:
[20]T20
Q:“Did you also at times have lock-ins?‑‑-
A:Lock-ins we have at the bowling centre where people pay $25 and they might come in from 8 o’clock to 12 o’clock. I mean it’s very common, a lot of bowling centres, to try and bring people in again. So we have lock-ins in a bowling centre. They pay $25 at the door, they can bowl for three or four hours, as long as they like, and we normally have a DJ in there and obviously the blue lights and things like that, like a disco thing again. So that’s common practice in most ‑ ‑ ‑
Q:Is that different from a normal arrangement of tenpin bowling?‑‑-
A:Yes, normal arrangement is the lights are on and people just come and bowl, because again in that you’ve got legs too, so they need to see and things like that. But again, like every business, you try and bring the open playing and things like that, and you try and give them something different and extra that they can do.”[21]
[21]T21-22
33 Mrs Sampson said that in late 2006 or early 2007, the defendant had a previous insurer arranged through other parties. She went to a gathering of bowling proprietors in Queensland where she was introduced to the third party, having been told that the third party had specialised in arranging insurance cover for bowling centres generally.[22] She said she contacted the third party and spoke with Peter Roberts and told him she would like to talk to him “about insurance on bowling centres”. At the time, she was in Melbourne, and he in Queensland. Contact was a telephone conversation.[23]
[22]T23
[23]T24
34 Mrs Sampson gave evidence she told Mr Roberts that she (meaning herself and companies and trusts controlled by her and her family) had four bowling centres and two pool halls connected to the bowling centres.[24] She said she provided to Mr Roberts details about the number of bowling lanes in the bowling centres, and the fact that they each served liquor and had liquor licenses. She also gave evidence she explained to Mr Roberts that other activities were carried out at the Centres.[25] She said:
[24]T24
[25]T25
Q:“Did he ask you any other details about ‑ ‑ ‑?‑‑-
A:Well, I explained to him that I’ve got two pool halls because it’s all in the one building, just with partition - a wall partition in it and I said I’ve got 27 pool tables, a 3.00 am licence and I specified that 3.00 am licence, live entertainment, you know, disco lighting, amusements machines, the normal thing that we have.
Q:Did you tell him this about each of the four centres you were then operating?‑‑-
A:I told him with the two - for the Altona one and the Narre Warren because that’s the only two that had the pool halls in them.
Q:Did he ask you anything else about the centres? Ask you about turnover?‑‑-
A:Look, turnover was asked because obviously I had to get the building insured, the loss of income insured in case they went up and things like that, and I specified - and he’s got the figures there anyway - with the Narre Warren one I said it’s about 1.5 million turnover for the bowling centre and allow 1 million for the pool hall, so that was my most expensive one that I insured for 2.5 million loss of income.[26]
Q:Did he ask you any other questions that you can recall?‑‑-
A:No. We had a discussion. I remember saying that the pool hall I was very - I said we’ve got live entertainment in there, I said, but my licence, and I sent him a copy of the licence, is not a nightclub licence, it’s a live entertainment. There’s a difference. I said, you know, it’s like going to a restaurant and they have live entertainment. I said we’ve got live entertainment. We’ve got security.”[27]
[26]T25
[27]T26
35 On 15 March 2007, Peter Roberts of the third party sent an email to Mrs Sampson entitled “Insurance Submission 2007/2008”.[28] The email gave particulars of the terms of insurance cover the third party proposed and gave two premium options. Under the section dealing with public liability, the email described the business operated by Mrs Sampson through her companies in this way: “Operators of Tenpin Bowling Centres – Operators of Licensed Venues – Property Owner and/or Occupiers”. This submission was prepared by Mr Roberts after his telephone discussions with Mrs Sampson and in terms it tends, in my opinion, to confirm the evidence she has given as to what she told Mr Roberts about the various business she then operated.
[28]Exhibit B, PCB 33-37
36 On 29 March 2007, Mrs Sampson responded to Mr Roberts, providing a list of the names of her various companies and trusts.[29] This list eventually found its way into the policy schedule.[30]
[29]Exhibit B, PCB 33
[30]See Exhibit C, PCB 39
37 On 30 March 2007, Peter Roberts emailed Mrs Sampson advising, inter alia, “all covers have been effected as per our discussions and your instructions”.[31] In that email exchange, Mr Roberts does not draw Mrs Sampson’s attention to any policy exclusions.
[31]Exhibit B, PCB 33
38 On or about 3 April 2007, the third party sent its tax invoice for the insurance cover arranged by it.[32] The invoice purported on its face to be a “Schedule of Insurance” and to be accompanied by seven (7) other enclosures including “5) Policy Wording”.[33]
[32]Exhibit C, PCB 38-42s
[33]PCB 41
39 The “Schedule of Insurance” referred to “Major Exclusions – Refer to policy wording for full list of policy exclusions”.[34] Mrs Sampson was asked specifically by me whether or not she was provided with the terms and conditions of the policy. Her answer was perfectly frank. She said:
Q:“Were you ever provided with - before you took out the insurance, were you provided with the terms and conditions of the policy?‑‑-
A:Look, I tried to find it and I couldn’t find it. I know I got the bills and they were emailed to me. I looked everywhere to find that. I’m not saying I didn’t get it but I looked everywhere to find that and I couldn’t find it, because it’s going back to 07, so ‑ ‑ ‑.”[35]
[34]PCB 40
[35]T29
40 The Schedule of Insurance also described the occupation of the insured in the following way: “Tenpin Bowling Alleys including licensed premises”.[36]
[36]PCB 39
41 The Tax Invoice appears to have been sent by the third party to the defendant under cover of a letter also dated 3 April 2007. That letter was entitled “Bowling Centre Insurances” and went into evidence as exhibit D.[37] The letter says, inter alia: “Details of your cover, including sums insured and any applicable excesses are set out on the schedule attaching to the enclosed invoice.”[38] With regard to the covers for public liability, the letter informed the defendant, inter alia: “The policy has been placed in accordance with information supplied”.[39]
[37]PCB 43
[38]PCB 43
[39]PCB 43
42 The letter also purports on its face to have a number of enclosures, some of which appear to replicate what is referred to as an enclosure in the schedule and invoice which were also enclosed with the letter.[40] I consider it most unlikely that the enclosures referred to on the schedule and invoice were ever sent, since the invoice was itself an enclosure with the letter of 3 April 2007. Importantly, the letter of 3 April 2007 does not purport to have enclosed a “policy wording”. The closest it gets is to purport to have enclosed “Product Disclosure Statements”.[41] There are no such documents in evidence and there is no evidence as to what, if anything, those documents said about exclusions.
[40]Compare PCB 41 with PCB 44
[41]PCB 44
43 Having regard to what is disclosed by the documents produced, I consider it most unlikely that the defendant was ever provided with a copy of the policy wording at all and therefore the terms of actual policy exclusions were never revealed to it or explained to Mrs Sampson. It is certainly the case that a copy of the policy wording was not provided prior to the insurance being placed by the third party. The defendant paid the premiums when due on the policy arranged by the third party in each of the years from 2007 to 2011.
44 On about 27 April 2009, Slater & Gordon, acting on behalf of the plaintiff, wrote to the defendant advising it of its instructions to act and to claim damages from the defendant. The defendant then lodged a claim under the policy which was denied after investigation by the insurer’s agent, Proclaim Management Solutions. The letter denying liability dated 28 January 2010 setting out the reasons for the denial of the claim also went into evidence as exhibit G.[42] A subsequent letter dated 11 March 2010 from the insurer’s agent recommended the defendant treat the claim as a “prudent uninsured”.[43]
[42]PCB 84
[43]Exhibit H PCB 87
45 In cross-examination, Mrs Sampson was adamant that she had told the third party, through Mr Roberts, that she had live entertainment at the premises. She said that is why she had forwarded the Planning Permit to Mr Roberts, the Planning Permit having referred to that fact where it permitted the use of the premises as a “Place of assembly (Live Entertainment)”.[44] Mr Howden, who appeared as counsel for the third party, put to Mrs Sampson that she did not provide a copy of the Planning Permit to Mr Roberts. She disagreed with the suggestion, adding:
[44]T45 and see permit at PCB 25
A:“I faxed him everything I could possibly because I said live entertainment. He asked me all the question, I gave him - I gave him exactly what I gave every insurance company, and said live entertainment, pool hall, all this.
Q:Ms Sampson what I am putting to you is that you did not provide this document, the two pages from the City of Casey, that being the letter and the planning permit, to Mr Roberts until after the insurer had denied liability and you were trying, in December 2010, to get Mr Roberts’ assistance to persuade the insurer to reconsider its decision?‑‑-
A:You’re right in one respect. I did supply my second copy of this at that time. But originally I supplied him a copy of this, and then again, when we were having the thing with the insurance, I supplied it to him again.”[45]
[45]T46-47
46 When pressed again about whether she had provided a copy of the Planning Permit to Mr Roberts later in the cross-examination, Mrs Sampson was again adamant that she had done so:
Q:Thank you. So if Mr Roberts gives evidence that did not happen 2007, he is incorrect is he?‑‑-
A:I would’ve done it.
Q:Did you check with Barbara?---
A:Because as I said, I spoke to Peter two, three times, four times tops and a lot of communication was between Barbara.
Q:So you are saying you sent it to Barbara, do you?‑‑-
A:I sent it to the office. I don’t know who got it. But I sent it to the office and I would’ve ‑ ‑ ‑
Q:When did you send it?‑‑-
A:And you see I’ve got attention Peter Roberts on there – so pointing out to placed with Assembly.
Q:The note, ‘Attention Peter Roberts’, is equally consistent with you having sent it to him for the first time in December 2010, isn’t it?‑‑-
A:No it doesn’t necessarily mean that because I would’ve sent it when I first got insurance with him and then I would’ve sent it to him again saying, ‘There it is again’.
Q:So as of December 2010, Mr Roberts was taking further instructions from you and endeavouring to persuade the insurer to change its mind?‑‑-
A:Yes.
Q:But ultimately the insurer did not change its mind, did it?‑‑-
A:Yes.”[46]
[46]T82-83
47 It was put to Mrs Sampson that she did not tell Mr Roberts in March 2007 that she hired DJs at the premises from time to time. She again denied the suggestion, and was adamant that she had done so:
Q:“You did not, when engaging Mr Roberts in March 2007, tell him that you ever hired DJs at this business did you?‑‑-
A:Yes, I did. Live entertainment includes DJs, bands. That’s what live entertainment is. Duos. That’s what live entertainment is.
Q:Mr Roberts’ evidence will be that when you mentioned live entertainment he asked you what sort of entertainment that was and you indicated duos?‑‑-
A:DJs, bands, live entertainment, that’s all part of it.”[47]
[47]T47
48 Mrs Sampson was pressed in cross-examination about what she had told Mr Roberts about the nature of the business carried on at the premises. She maintained that she had made it quite clear to Mr Roberts that the premises ran as a bowling alley and pool hall, with live entertainment in the evenings from Thursday to Saturday. She conceded her recollection about what she might have said about the frequency of live entertainment was not good.
Q:“You accept you told him occasional live entertainment?‑‑-
A:I told him live entertainment. That’s why I gave him the thing. Live entertainment. You know, it might’ve been - we might’ve had a live - if it was a long weekend, you might say, ‘Okay, we might have this on a Friday - on a Monday night because, you know, Tuesday’s a holiday’. Just live entertainment to try and - you know, I don’t know why we’re – it’s live entertainment.
Q:The question is the frequency, madam. How often did you tell him? How often that live entertainment was involved in this business?‑‑-
A:Look, as I said to you, I only ‑ ‑ ‑
Q:Did you tell him anything?‑‑-
A:Spoke to Peter three - two, three, four times. That was in the beginning. Sent him the paperwork. I didn’t communicate with Peter every day or whatever. Most communications were done with Barbara. My opinion was I told them everything, sent them a copy of the licence, tried to cover everything, and my - this is what I told all my other insurance brokers but I ‑ ‑ ‑
Q:If we go back to March 2007. What did you say to him about the extent to which you had live entertainment in this business?‑‑-
A:I said live entertainment. I’m not going to say I said one night or two nights. I can’t remember back that - I said live entertainment. That’s why I sent him the licence. I’d be lying if I said I said to him one night or three nights or six nights. Can you remember seven years ago? I can’t. But it was live entertainment. And ‑ ‑ ‑
…
Q:What did you tell him about that live entertainment?‑‑-
A:I truly don’t believe he asked. He said, ‘What have you got?’ and I told him live entertainment. I don’t ‑ ‑ ‑.”
HIS HONOUR:
Q:“No. Counsel just wants to know what you told Mr Roberts?‑‑-
A:Yeah. I - no, I said ‑ ‑ ‑
Q:Just approximately, just in summary form if you can?‑‑-
A:Yeah. I said live entertainment. I truly don’t believe he asked what have I got there, all right.”[48]
[48]T51-55
49 Again, when pressed on what she had said to Mr Roberts, Mrs Sampson insisted that she had told him that there was live entertainment at the premises and she thought he did not ask her about what form it took.[49] She said she could not recall if she told Mr Roberts that there was live entertainment at the premises at least three nights per week.[50]
[49]T55
[50]T56
50 When asked about exhibit C, which was the Tax Invoice and Schedule of Insurance from the third party which referred to the “policy wording” as being an enclosure, Mrs Sampson conceded that she may have received it. She could not recall having received the document. She said she had looked everywhere for all the documents she had and she could not find a copy of the policy wording.[51] It was not put to her that in fact the document that was exhibit C was actually an enclosure to exhibit D, the letter of the same date, which referred to a different set of enclosures which did not make any reference to the policy wording but referred instead to a product disclosure statement.
[51]T57-58
51 The third party tendered two letters written by Mr Roberts to Mrs Sampson in February and March of 2010 after the insurer had denied liability under the policy. Mrs Sampson acknowledged receiving them.[52] Those letters and what became exhibit 4, in my opinion, do not assist in resolution of the issues in this case.
[52]Exhibits 2 and 3 at PCB 94-96
52 Peter Roberts gave evidence for the third party. He is an insurance broker by profession and a director of the third party which carries on business in Queensland as an insurance broker. He said he has worked as an insurance broker since 2001.[53] He said the third party had between thirty-five and forty clients who carried on the business of tenpin bowling.
[53]T88
53 On or about 13 March 2007, he said he returned a telephone call from Mrs Sampson, whom he said was “looking to get a quotation”. He said “we went through some details about the information of what she currently had ultimately to go and get a quote”.[54]
[54]T90
54 He was asked what he remembered about his conversation with Mrs Sampson. He said that he was told by Mrs Sampson that there was only occasional live entertainment which consisted maybe of one or two people playing guitar:
A:“There was a pool hall associated to the tenpin bowling that had occasional live entertainment and that that took the form of maybe one or two people playing guitar at any given time.
Q:Was there any discussion of the frequency with which such entertainment occurred?‑‑-
A:It could be Fridays and Saturday evenings, that was the extent of it. And asked if there was anything else as far as other occupation or activities there, nothing else was divulged.[55]
[55]T91
55 Mr Roberts said he also discussed the turnover of the business and that the premises were licensed with Mrs Sampson.[56]
[56]T92
56 Many of Mr Roberts’ answers were predicated with words such as “we would’ve” or similar words, and he often, in answers, referred to what the normal practice of his company would have been.[57] He said he could not recall anything further of his initial conversation with Mrs Sampson but said he would have had discussions about some further matters:
Q:“Do you recall anything else of your conversation with Ms Sampson concerning these premises in March 2007?‑‑-
A:No. We would’ve asked general other information around claims history, duty of disclosure, as far as being bankrupt, or any of those sorts of things which is normal practice and then we would’ve probably finished up by saying we’ll go away and get quotes and submit them to you.”[58]
[57]Example T93, L13
[58]T93
57 He referred to his notes taken of the initial conversation with Mrs Sampson which were in the third party court book at page 50. In relation to the premises, he noted that Narre Warren had 24 lanes and was licensed. His note also reads “Pool Bar / Live Entertainment – Security - $1M Bar Sales - $1.5M Bowl”.
58 Mr Roberts was asked about his notes. His evidence differed from what was actually contained in his notes. In my view, his evidence on this point was significant:
Q:“NW, that presumably stands for Narre Warren?‑‑-
A:Yes.
Q:The notation 24 lanes, what does that ‑ ‑ ‑?‑‑-
A:It means the number of actual physical tenpin bowling lanes at the location.
Q:Then there’s a note, ‘Yes, licensed’?‑‑-
A:M’mm.
Q:Then ‘Pool, bar/live entertainment’?‑‑-
A: Yeah.
Q: What does that relate to?‑‑-
A:The fact that it was a pool bar with - as I said earlier, the advice that we had, there was occasional live entertainment in the form of people playing guitar.
Q:Then the word ‘security’?‑‑-
A:Security was at the property.
Q:What does that ‑ ‑ ‑?‑‑-
A:Security, like bouncers or people there at the property.
Q:Then $1m, is that b-a-l or b-a-r sales?‑‑-
A:Sorry, that’s bar, that’s my writing.
Q:That’s your R?‑‑-
A:Yeah.
Q:So that's bar sales.”[59]
[59]T94
59 The evidence is significant, because the note made by Mr Roberts confirms the evidence of Mrs Sampson, namely, she said she told him that the defendant had live entertainment, was licensed and had security. It is also significant, because it demonstrates, in my view, the witness’s endeavour in his evidence to shift away from his note by qualifying the note about “live entertainment” by suggesting he was told that this entertainment was only “occasional” and, consisted only of one or two people playing guitars. The notes made contemporaneously with the conversation do not record a conversation now related by the witness. In my view, they record a conversation closer to the version given by Mrs Sampson.
60 Mr Roberts gave evidence that after his initial discussion with Mrs Sampson by telephone, he obtained a quotation for her insurance requirements, and that was provided to her by email two days later, on 15 March 2007.[60]
[60]T96
61 Mr Roberts was shown exhibit C, which is the copy tax invoice. The effect of his evidence about this document was that he had no reason to believe that the policy wording was not sent to the insured.[61] His evidence did not address the fact that the list of enclosures referred to in the invoice differ from the list of enclosures referred to in the letter to the insured from his office of the same date, which does not refer to the policy wording but rather the product disclosure statement as an enclosure.[62] When the witness was asked about exhibit D and the reference in it to enclosures, he said the reference to the invoice would have been a reference to the tax invoice, and a reference to the product disclosure statement would have been a reference to the policy wording.[63] I do not accept this evidence. I formed the strong view that when giving this evidence, the witness was just reconstructing from the documents and failed to appreciate that the list of enclosures referred to in exhibit C differed from the list of enclosures in exhibit D. The strong likelihood, in my view, is that exhibit D was the only document sent to the defendant on 3 April 2007 and it had enclosures that included the tax invoice (exhibit C) and a product disclosure statement, but not a policy wording. No document described as a “product disclosure statement” was produced in evidence.
[61]T97
[62]Exhibit D, PCB 43-44
[63]T98-99
62 I have earlier said that I am not satisfied that the version of the policy wording issued to the defendant has been produced. I would have expected that it would have been a fairly simple thing for the third party to have produced the correct version of the policy wording given that the certificate of insurance issued by the underwriter on 20 August 2007 specifically provided for the policy wording to be “Ten Pin Bowling Alleys Version Jan 07”.[64]
[64]See exhibit F, PCB 47
63 In his evidence before me, Mr Roberts was quick to say that the document that became exhibit 8 was the document referred to as enclosure 5 in the invoice, exhibit C. I do not accept that evidence. Exhibit 8 does not have any indication on it that it is the “Ten Pin Bowling Alleys Version Jan 07”. As I said earlier, not much turns on the point, because its common ground that various versions of the policy had the “night club” exclusion. To my mind however, the point to be made from this evidence is the willingness of the witness to tell me that exhibit 8 is what was sent to the defendant when the weight of the evidence suggests to me that was not the case. This is the evidence given by Mr Roberts:
Q:“And then at 68.11 do you recognise that document?‑‑-
A:Yes, it’s a tenpin bowling alley policy wording.
Q:Is that the document referred to at Item 5 in the invoice?‑‑-
A:Yes.”[65]
[65]T98
64 Mr Roberts said he disagreed with the evidence of Mrs Sampson that she had provided him with a copy of the Planning Permit for the premises in March 2007. He said he only received it from her around 6 December 2010, when he asked her for it at a time when he was trying to get the insurer to change its decision not to indemnify under the policy. He said that had he received the Planning Permit in March 2007, the fact that it permitted “live entertainment”, rather than occasional live entertainment, “we probably (sic) have asked more questions, yes”.[66] He elaborated as to what his understanding was of the plaintiff’s business at the time he placed the insurance:
[66]T100
MR HOWDEN:
Q:“So at the time that you placed this policy through until the plaintiff’s injury became known what was your understanding of the extent of entertainment undertaken in this business?‑‑-
A:That there was a tenpin bowling centre and attaching to that was a pool hall that had occasional live entertainment, and that occasional live entertainment was on a Friday and Saturday night and it was restricted to one or two people playing guitars. That was the extent of it. There was no inference of DJ’s, discos, mechanical bull rides, foam parties or anything else like that.”
HIS HONOUR:
Q:“You would have security?‑‑-
A:We had security, yeah.”[67]
[67]T101
65 It can be readily seen that this evidence of Mr Roberts differs markedly from the note that he made of his conversation with Mrs Sampson where he recorded the premises were “licensed” and had “live entertainment” and “security”. In his note made at the time of the conversation, Mr Roberts made no reference to the live entertainment being either occasional or being confined to Friday and Saturday evenings, and it does not make any reference to people playing guitars.
66 Mr Roberts said that had he been made aware of the extent of the defendant’s activities at the premises, he would have checked it with the insurer to ascertain the extent those activities might affect the amount of premium and, if the insurer was unwilling to provide the cover, he would have gone to the insurance market to get another insurer to quote.[68]
[68]T101
67 As to the exclusions in the policy, Mr Roberts gave evidence that he did not draw the exclusions to the attention of Mrs Sampson and, he said he would not normally have done so.[69]
[69]T102
68 In cross-examination, Mr Roberts agreed that in placing the insurance for the defendant, it was clear that the defendant was seeking insurance to cover all aspects of its business at the premises and it was important for him to understand what that business was.[70] When pressed on his conversation with Mrs Sampson in cross-examination, Mr Roberts gave evidence that Mrs Sampson told him that light entertainment was carried on at the premises. Again, this evidence differs from his note, where he did not qualify the expression “live entertainment” in any way:
[70]T106
Q:“And in relation to Narre Warren she told you a number of things in particular, didn’t she?---
A:Yes.
Q:She told you it was licensed premises?---
A:Yes. She told you it had a pool bar or pool hall?---
Q:Yes.
Q:Did you make any further enquiries about that?---
A:Yes.
Q:What further enquiries did you make?---
A:About what other activities were there potentially at the centre.
Q:What did she tell you?---
A:To which she said we have light entertainment in the form of on Fridays and Saturday evenings potentially a person coming in and playing a guitar.”
HIS HONOUR:
Q:“What did she say?---
A:She said we could have on a Friday or Saturday night people there playing the guitar.”
MR LITHGOW:
Q:Did she tell you they had live entertainment?---
A:Yes, that’s the definition of live entertainment, yes.
Q:Did she use the words live entertainment?---
A:Yes, to which I asked the question what is live entertainment to which I got the answer it was a person playing a guitar or maybe a duo playing guitar.
Q:She didn’t tell you about DJs?---
A:No.
Q:She didn’t tell you about live bands?---
A:No.
Q:She didn’t tell you about other activities?---
A:No.
Q:Are you sure about that?---
A:Yes.”[71]
[71]T107-108
69 Mr Roberts gave evidence in cross-examination that he was aware of the presence of the nightclub exclusion in the policy. He said that nothing that Mrs Sampson said to him about the activities at the premises was likely to raise an issue under the exclusion.[72] When pressed further, he conceded that there were a number of things that he was told that clearly should have raised a flag with him but at no time did he raise with Mrs Sampson any concern that the nightclub exclusion could apply.[73]
[72]T110
[73]T113-114
70 Mr Lithgow pressed Mr Roberts on his recollection of his telephone discussions with Mrs Sampson. He put to him that he has no clear recollection of what was said and that his evidence is a reconstruction based on what he would have done. This exchange ensued:
MR LITHGOW:
Q:Now, the situation is that you only had some dealings with Mrs Sampson in March and other dealings were with your assistant, is it Barbara Smith?---
A:Yes.
Q:Do you recall how many times you dealt with Mrs Sampson yourself?---
A:In 2007?
Q:Yes?---
A:There would have been a few phone calls, say two or three, hard to say, might have been half a dozen times, maybe more.
Q:Two or three phone calls suddenly becomes half a dozen times?---
A:No, I said in 2007, reflecting back it was probably three or four initially when we set the policy and maybe there might have been some others beyond that.
Q:What were the others?---
A:Three or four, let’s go with three or four then.
Q:So we’ve gone from - - -?---
A:Okay, we'll go with three then, whatever you would like to say, if you want to go with three we’ll go to three.
Q:Well, it’s your evidence?---
A:That’s right, and I said three then, I think it’s more but I can’t be specific about that so let’s go with three.
Q:Have you any recollection of this or is it just all cobbled together what must have happened, what might have happened?---
A:The three initially would have been the return phone call which is documented, would have been a further one after I sent the email and there was one I'm sure of when we actually got the instructions to proceed, so it was at least three.
Q:At least three, okay. You see, because when you look at the evidence you gave yesterday in answer to my learned friend's question, I put it to you, you really don't have much idea in a direct recollection of what happened, what do you say to that?---
A:Sorry?
Q:I’m going to put to you, you do not have much idea of a direct recollection of what happened in March 2007?---
A:In what way?
Q:Well, you have cobbled together what you think probably would have happened from your usual dealings with clients?---
A:I’m confused, so you’re saying I didn’t have three phone calls?
Q:I’m saying you do not have a direct recollection of your dealings with Mrs Sampson in 2007, March 2007 in particular?---
A:I believe I do.”[74]
[74]T120-122
71 The transcript does not do justice to the witness’s manner during this exchange in which he appeared to be me to be argumentative and combative and prepared to say anything to disagree with the cross-examiner. After the passage that I have set out above, Mr Lithgow further cross-examined the witness, suggesting that his answers were based on what he or his company would have done rather than evidence of recollection of what was said. The witness, in my view, was evasive in his answers. I formed the strong view that he had no direct recollection of his conversation with Mrs Sampson where she told him of the activities at the premises, and that his evidence was an attempt at reconstruction.
72 In this proceeding, I prefer the evidence of Mrs Sampson to the evidence of Mr Roberts, and I act on her evidence. In the giving of her evidence, I found Mrs Sampson to be straightforward and frank, and very willing to make appropriate concessions. Mr Roberts, on the other hand in my view, both in evidence-in-chief and in cross-examination, prefaced what he said with the words “we would have” or similar. The transcript is replete with such examples and it was very clear to me that Mr Robert’s evidence, especially in relation to his telephone conversation/s with Mrs Sampson, was a reconstruction and not based upon his recollection of what was said. This resulted in much of his evidence as to the first conversation that he had with Mrs Sampson being inconsistent with the actual contemporaneous note of the conversation. His evidence was an attempt to qualify what he had noted, so that the expression “live entertainment” in his evidence became “occasional live entertainment” or “light entertainment”.
73 Further, in the giving of his evidence, Mr Roberts was at times argumentative and combative. He only grudgingly made any concession, and he was very uncomfortable in the witness box when being tested by cross-examination.
74 I find that Mrs Sampson spoke with Mr Roberts by telephone on or soon after 13 March 2007. Mrs Sampson requested the third party to provide a quote for insurance to cover the buildings and the premises for insurance including public liability cover. Mrs Sampson told Mrs Roberts about the four premises at which her businesses were conducted, and in respect of the premises, she advised him it consisted of a 24-lane bowling alley and a pool hall with a licensed bar until 3.00am. I find Mrs Sampson told Mr Roberts the pool hall section of the premises was used for live entertainment on Thursday to Saturday evenings and that the business employed security staff and charged an entrance fee. I am satisfied Mrs Sampson gave Mr Roberts figures disclosing the turnover of the bowling alley and the bar sales. I am also satisfied Mrs Sampson did not qualify the kind of live entertainment carried out in any way. She did not say the live entertainment was either occasional nor light or consisting of only one or two people playing guitar.
75 I am satisfied on the evidence of Mrs Sampson that she sent a copy of exhibit A, the Planning Permit, on two occasions. The first was in March 2007 to show she had a permit for live entertainment at the premises and, the second occasion was in April 2010, when Mr Roberts asked her to send it to him in order to assist with approaches he was then making to the insurer after it had refused to indemnify the defendant under the policy.
76 Both Mrs Sampson and Mr Roberts said that from time to time in March 2007, Mrs Sampson would have spoken with Mr Robert’s secretary, Barbara. She was not called as a witness by the third party and no explanation was given for not calling her as a witness. I infer her evidence would not have assisted the case of the third party.
77 On all of the evidence, I am satisfied the third party was told the premises were licensed and included a bar in the pool room where live entertainment was provided and there were substantial bar sales, with the premises having a late licence. I am also satisfied the third party was told security was employed and an entrance fee charged.
78 In my opinion, having regard to the information that was provided to the third party, it failed to exercise proper care and skill in carrying out the instructions given to it by the defendant, because the insurance policy that it arranged left the defendant exposed to being uninsured, because the premises could be classified as a “nightclub” within the meaning of the policy. In my opinion, the third party breached the duty that it owed the defendant, both in contract and in tort. At no time did the third party point out to the defendant the possibility that the premises might be excluded from cover because of the nightclub exclusion.
79 In my view, in the circumstances of this case, the failure of the third party here to comply with its duty of care to the defendant, both in contract and in tort, was so rudimentary and obvious that it is not a matter where I would have been assisted by expert evidence on the question of what a reasonable insurance broker should have done in arranging insurance cover given the instructions provided by the defendant.
80 I find that because the third party failed to exercise proper care and skill in carrying out the defendant’s instructions to obtain full public liability cover for it, the defendant was left uninsured in the circumstances giving rise to the plaintiff’s claim, and this has resulted in the defendant suffering loss and damage. The amount of damages is yet to be assessed but includes any settlement and costs paid to the plaintiff.
81 I am satisfied that no case for the alleged contributory negligence by the defendant is made out here. The defendant left the question of arranging its full public liability cover to the third party and relied upon it to do so. The third party did not at any time draw the defendant’s attention to the nightclub exclusion despite the full instructions that it was given. The third party was the party with full knowledge of the facts and the exclusion clause and it did not explain that clause in any way to the defendant. Further, I am not satisfied that a copy of the policy wording was given to the defendant at or around the time the policy was first taken out. The third party may have provided a disclosure document but there is no evidence as to what that document contained on this issue. The claim in contributory negligence must fail.
82 There will be judgment for the defendant against the third party on the third party notice for damages to be assessed.
83 I will hear the parties on costs.
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