Middleton v Aon Risk Services Australia Ltd
[2008] WASCA 239
•24 NOVEMBER 2008
MIDDLETON -v- AON RISK SERVICES AUSTRALIA LTD [2008] WASCA 239
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2008] WASCA 239 | |
| THE COURT OF APPEAL (WA) | |||
| Case No: | CACV:37/2007 | 1 AUGUST 2008 | |
| Coram: | McLURE JA BUSS JA MURRAY AJA | 23/11/08 | |
| 24 | Judgment Part: | 1 of 1 | |
| Result: | Appeal allowed Notice of contention and cross-appeal dismissed | ||
| B | |||
| PDF Version |
| Parties: | DEBORAH ROBYN MIDDLETON AON RISK SERVICES AUSTRALIA LTD DAVID VERRYT |
Catchwords: | Tort Fraudulent or negligent misrepresentation Statement of fact or opinion Existence of a duty of care Causation Turns on own facts Trade Practices Whether representation misleading or deceptive In trade or commerce Turns on own facts Contract of insurance Interpretation Scope of cover Applicability of exclusions Turns on own facts |
Legislation: | Fair Trading Act 1987 (WA), s 5(1), s 10 Trade Practices Act 1974 (Cth), s 52 |
Case References: | Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 D'Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1 Dovuro Pty Ltd v Wilkins [2003] HCA 51; (2003) 215 CLR 317 Eastern Express Pty Ltd v General Newspapers Pty Ltd (1992) 35 FCR 43 Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1995) 188 CLR 241 Fox v Percy (2003) 214 CLR 118 Grey v Australian Motorists & General Insurance Co Pty Ltd [1976] 1 NSWLR 669 Henville v Walker (2001) 206 CLR 459 Hill v Van Erp (1997) 188 CLR 159 Kuwait Airways Corporation v Kuwait Insurance Co SAK [1999] 1 Lloyd's Rep 803 Little v Law Institute of Victoria (No 3) [1990] VR 257 March v E & M H Stramare Pty Ltd (1991) 171 CLR 506 Mutual Life & Citizens' Assurance Co Ltd v Evatt (1968) 122 CLR 556 Perre v Apand Pty Ltd (1999) 198 CLR 180 San Sebastian Pty Ltd v The Minister (1986) 162 CLR 340 Shahid v Australian College of Dermatologists [2008] FCAFC 72; (2008) 168 FCR 46 Smith v Land and House Property Corporation (1884) 28 Ch D 7 Stockland (Constructors) Pty Ltd v Retail Design Group (International) Pty Ltd [2003] NSWCA 84 Tepko Pty Ltd v Water Board (2001) 206 CLR 1 W J Green & Co (1984) Pty Ltd v Wilden Pty Ltd (Unreported, WASC, Library No 970186, 24 April 1997) |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE COURT OF APPEAL (WA) CITATION : MIDDLETON -v- AON RISK SERVICES AUSTRALIA LTD [2008] WASCA 239 CORAM : McLURE JA
- BUSS JA
MURRAY AJA
- Appellant
AND
AON RISK SERVICES AUSTRALIA LTD
First Respondent
DAVID VERRYT
Second Respondent
ON APPEAL FROM:
Jurisdiction : DISTRICT COURT OF WESTERN AUSTRALIA
Coram : MARTINO DCJ
Citation : MIDDLETON -v- AON RISK SERVICES AUSTRALIAN LIMITED & ANOR [2007] WADC 12
File No : CIV 1659 of 2004
(Page 2)
Catchwords:
Tort - Fraudulent or negligent misrepresentation - Statement of fact or opinion - Existence of a duty of care - Causation - Turns on own facts
Trade Practices - Whether representation misleading or deceptive - In trade or commerce - Turns on own facts
Contract of insurance - Interpretation - Scope of cover - Applicability of exclusions - Turns on own facts
Legislation:
Fair Trading Act 1987 (WA),s 5(1), s 10
Trade Practices Act 1974 (Cth), s 52
Result:
Appeal allowed
Notice of contention and cross-appeal dismissed
Category: B
Representation:
Counsel:
Appellant : Mr P Mendelow
First Respondent : Mr H J A Neal
Second Respondent : In person
Solicitors:
Appellant : Nicholas P Dobree
First Respondent : Freehills
Second Respondent : In person
Case(s) referred to in judgment(s):
Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594
D'Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1
(Page 3)
Dovuro Pty Ltd v Wilkins [2003] HCA 51; (2003) 215 CLR 317
Eastern Express Pty Ltd v General Newspapers Pty Ltd (1992) 35 FCR 43
Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1995) 188 CLR 241
Fox v Percy (2003) 214 CLR 118
Grey v Australian Motorists & General Insurance Co Pty Ltd [1976] 1 NSWLR 669
Henville v Walker (2001) 206 CLR 459
Hill v Van Erp (1997) 188 CLR 159
Kuwait Airways Corporation v Kuwait Insurance Co SAK [1999] 1 Lloyd's Rep 803
Little v Law Institute of Victoria (No 3) [1990] VR 257
March v E & M H Stramare Pty Ltd (1991) 171 CLR 506
Mutual Life & Citizens' Assurance Co Ltd v Evatt (1968) 122 CLR 556
Perre v Apand Pty Ltd (1999) 198 CLR 180
San Sebastian Pty Ltd v The Minister (1986) 162 CLR 340
Shahid v Australian College of Dermatologists [2008] FCAFC 72; (2008) 168 FCR 46
Smith v Land and House Property Corporation (1884) 28 Ch D 7
Stockland (Constructors) Pty Ltd v Retail Design Group (International) Pty Ltd [2003] NSWCA 84
Tepko Pty Ltd v Water Board (2001) 206 CLR 1
W J Green & Co (1984) Pty Ltd v Wilden Pty Ltd (Unreported, WASC, Library No 970186, 24 April 1997)
(Page 4)
1 McLURE JA: The appellant appeals from the decision of Martino DCJ dismissing her claims against the first respondent, Aon Risk Services Australia Ltd, for fraudulent and negligent misrepresentation and breach of s 52 of the Trade Practices Act 1974 (Cth) arising from statements made by the second respondent, an employee of the first respondent, in an affidavit.
2 The appellant was the beneficiary of a trust that carried on a motor vehicle service and repair business in York under the name York Motor Works and Garage (York Motors). Mr Rodney Anderson, a solicitor, provided restoration and repair services on behalf of York Motors.
3 York Motors carried on business from premises leased from York Heritage Pty Ltd (York Heritage), a company controlled by Peter Briggs. York Heritage owned a large collection of motor vehicles most of which were on display at a museum in York. In 1990 York Motors commenced restoration work on an 1899 Renault Voiturette motor vehicle owned by York Heritage. In September 1990 the Renault was moved to Mr Anderson's premises in Guildford for him to work on the restoration.
4 In early 1991 there was a dispute between York Motors and Mr Briggs concerning the terms on which York Motors occupied the leased premises. The dispute resulted in York Heritage re-taking possession of the leased premises. Mr Anderson continued to work on the restoration of the Renault from his premises in Guildford. Some time later the Renault was moved to premises in Osborne Park and later again to other premises in Osborne Park (the Osborne Park premises). In May 1993 the Renault was damaged by fire at the Osborne Park premises.
5 In December 1996 York Heritage commenced an action in the Supreme Court against Mr Anderson for delivery up of a carburettor and the Renault or their value and damages for detention (the Supreme Court action).
6 Mr Briggs also made a complaint to police that Mr Anderson had stolen the carburettor and the Renault. Mr Anderson was charged with stealing but the prosecution was discontinued.
7 Mr Anderson informed the appellant of the Supreme Court action. The appellant and Mr Anderson agreed that Mr Anderson would not join the appellant as a third party to the Supreme Court action in consideration of the appellant paying all Mr Anderson's legal expenses and any judgment entered against him in the Supreme Court action. The appellant was kept informed of progress in the Supreme Court action including
(Page 5)
- mediation conferences. The appellant and Mr Anderson discussed proposed settlement terms and the appellant agreed she would pay for Mr Anderson to reinstate the Renault provided there was no insurance covering the damage to the vehicle (ts 32 - 33).
8 The Supreme Court action was settled prior to trial. The terms of the settlement agreement between the parties were also recorded in orders made by the court dated 4 December 1998. Order 3 provides:
Within nine months of [Mr Anderson] being given access to the chassis and motors currently in police possession, [Mr Anderson] will reinstate the Renault to the condition in which it was handed over to the York Motor Works & Garage in 1990 PROVIDED THAT:
(a) [Mr Anderson] receives approval from [the appellant] to waive any workman's lien of the York Motor Works & Garage in relation to the Renault, in the absence of which there shall be an indemnity from [York Heritage] in relation to any claim by her;
(b) it is demonstrated to the satisfaction of [Mr Anderson] that there is no insurance policy covering the damage to the Renault.
9 The first respondent was the insurance broker for Mr Briggs and his companies (including York Heritage) and the second respondent handled the Briggs account. York Heritage's motor vehicles, including the Renault, were the subject of an SGIO motor fleet insurance policy for the period 30 June 1992 to 30 June 1993 (the SGIO policy).
10 The second respondent, Mr Verryt, swore an affidavit on 10 August 2000 in the Supreme Court action in which he deposed as follows:
1 I make this affidavit to confirm that no insurance policy, other than specified in paragraphs 5 and 7, covers a Renault voiturette which was housed in the York Motor Museum up to about March 1990.
2 Unless otherwise stated, the facts matters and things deposed to by me herein are within my own knowledge and belief.
3 I am the Divisional Director for AON Insurance Services and am familiar with insurances taken out by York Heritage Pty Ltd.
4 York Heritage Pty Ltd owns a number of vintage and veteran motor vehicles, which it houses at the York Motor Museum at York.
5 These vehicles are insured for damage occurring to them whilst housed at the York Motor Museum, however, they are not covered for theft or damage occurring beyond the limits of the York Motor Museum.
(Page 6)
- 6 I am informed by Mr Peter Briggs that the remains of an 1899 Renault Voiturette, a vehicle which was housed in the York Motor Museum were found in a factory unit in Osborne Park.
7 The insurance policy covering the vehicles housed at the York Motor Museum including the Renault Voiturette did not cover any damage sustained to the vehicle whilst outside the environs of the York Motor Museum, hence no claim exists under the York Motor Museum insurance program for vehicles located at the York Motor Museum with respect to this vehicle.
11 The appellant received a copy of Mr Verryt's affidavit and thereafter instructed Mr Anderson that he could commence reinstating the Renault pursuant to the settlement agreement at her cost. Mr Anderson reinstated the Renault in accordance with the settlement agreement.
12 The respondents claimed in the action that the SGIO policy did not respond to the claim because (a) the damage was caused by theft; (b) the damage occurred beyond the limits of the York Motor Museum; (c) there had been an un-notified alteration of risk contrary to general condition 2; and (d) general exclusion 16 applied because the damage occurred as a result of the lawful seizure, confiscation, nationalisation or requisition of the vehicle.
13 The trial judge concluded that: (1) the SGIO policy covered damage to the Renault occurring outside the limits of the York Motor Museum; (2) he was not satisfied the Renault was stolen; (3) neither general condition 2 nor general exclusion 16 applied to exclude the insurer from liability for the damage; (4) therefore the SGIO policy covered the damage to the Renault; (5) the statements made by the second respondent in the affidavit were not wilfully false, reckless or negligent; (6) the respondents did not owe a duty of care to the appellant; (7) the representations in the affidavit were made 'in trade or commerce'; (8) the second respondent's opinions in the affidavit were honestly held on reasonable grounds and thus were not misleading or deceptive.
14 Accordingly, the trial judge dismissed the action and entered judgment for the respondents.
Grounds of appeal, contention and cross-appeal
15 The appellant claims the trial judge erred in finding that:
1. the representation made by the second respondent in the affidavit was a statement of opinion rather than a statement of fact;
(Page 7)
- 2. the second respondent had reasonable grounds for making the representation;
3. the second respondent did not act dishonestly or recklessly in making the representation; and
4. the respondents did not owe a duty of care to the appellant.
16 The first respondent contends that the decision of the trial judge should be upheld on the further grounds that:
(a) the representation was not misleading, deceptive or negligent because SGIO was of the view that there was no cover and would not have paid the claim; and
(b) the representation did not cause the appellant's loss.
17 The first respondent contends in its cross-appeal that the trial judge erred in finding that:
(1) the theft exclusion did not apply;
(2) exclusion 16 did not apply;
(3) general condition 2 did not apply; and
(4) the representation was in trade or commerce.
Statement of opinion or fact
18 The trial judge did not identify the precise terms of the representation made by the second respondent in the affidavit, nor did he expressly consider whether the representation was as to a matter of fact or opinion. However, it can be inferred from his reasons (which are largely confined to statements of conclusion) that he regarded the affidavit as containing a statement of the second respondent's opinion. The trial judge said:
However as I have concluded that the view contained in the affidavit was Mr Verryt's opinion honestly held on reasonable grounds the making of the affidavit was not misleading or deceptive conduct: MGICA (1992) Ltd v Kenny & Good Pty Ltd (1996) 140 ALR 313 [93].
19 In order to be a representation at common law there must be a statement relating to a fact, past or present. A statement by a person as to his or her intention or statement of mind is a statement of fact and thus a representation.
20 The statement of an opinion can be a statement of fact. It is ordinarily at least a statement of fact that the person actually holds the opinion. It can also be a statement of fact that the person has reasonable
(Page 8)
- grounds for holding that opinion. It was implicit in the way the parties conducted their cases that if the representation was a statement of opinion, it (impliedly) conveyed representations of fact that the opinion was honestly held on reasonable grounds.
21 It is essential to determine the precise terms of the representation in order to determine whether it is a statement of fact or opinion which in turn determines how the representation can be falsified.
22 Whether or not a statement is one of fact or opinion depends upon all the relevant circumstances known to the representee, including the form in which the statement is made and the personal knowledge or likely personal knowledge of the person making the statement. The subject matter of the statement may also be relevant but is not necessarily determinative. Further, a person may make a statement of fact about what he or she merely believes as opinion. For example, a statement as to the value of property or the nature of its tenure may be in such form and made in such circumstances as to be a statement of fact not opinion: Spencer Bower, Turner and Handley, Actionable Misrepresentation 4th ed [31], [32] and the authorities there cited.
23 Thus, an unqualified assertion by a person who has, or is reasonably expected to have, personal knowledge of a matter may be a statement of fact not opinion. So too, a statement as to the content or general effect of a document, including a legal document, has been held to be a representation of fact: Spencer Bower, Turner and Handley at [43], [44] and the authorities there cited.
24 The appellant's case was pleaded and conducted on the basis that the representation in the affidavit (the representation) was to the effect that there was no insurance policy covering the damage to the Renault (being the damage sustained at the Osborne Park premises in May 1993). That representation clearly arises from the affidavit. However, whether or not it is to be characterised as fact or opinion is to be determined by reference to the representation in its context.
25 There are many reasons why an insurance policy would not cover particular damage including the absence of any insurance policy at all, the damage being outside the scope of the policy or because of express conditions or exclusions. The unequivocal statement in the affidavit is that there was no insurance policy covering the damage to the Renault because the only insurance policy relating to the Renault was confined to damage occurring within the limits of the York Motor Museum. I will
(Page 9)
- refer to this as the representation in its context. That was the meaning understood by the appellant [16].
26 Having regard to the assertive and unqualified form of the representation, its context, Mr Verryt's position with the insurance broker and claimed familiarity with the insurances taken out by York Heritage, the representation is properly characterised as a representation of fact. I would reach the same conclusion even if, contrary to my view, regard is not had to the context in which the representation was made.
27 The representation in its context was falsified by the trial judge's finding that the SGIO policy covering the Renault was not confined to the limits of the York Motor Museum. The representation, in isolation from its context, was falsified by the trial judge's finding that the SGIO policy covered the damage to the Renault. I would uphold ground 1.
Reasonable grounds
28 The relevant background is as follows. In 1987 Mr Verryt, acting on Mr Briggs' instructions, changed the insurance for York Heritage's motor vehicles from a fire and perils policy to a motor vehicle policy. His evidence was that when in 1987 he informed the motor vehicle underwriter at SGIO, Mr John Diprose, that he wanted to change York Heritage's policy from a fire to a motor vehicle policy, Mr Diprose said it could be done but the cover would be restricted to specified locations as it was under the fire policy. Mr Verryt asked Mr Diprose what would occur if a vehicle was moved and was advised that he would need to notify SGIO and SGIO would consider whether it would approve it.
29 By letter dated 18 December 1997 Mr Verryt advised Mr Briggs that it would be wise to formally lodge a claim with SGIO under the SGIO policy in relation to the damage to the Renault occasioned in May 1993. By letter dated 21 January 1998 Mr Briggs informed Mr Verryt that the Renault was stolen and then it was burned. In February 1998 Mr Verryt lodged a claim with SGIO under the SGIO policy for the damage to the Renault.
30 In March 1998 SGIO informed Mr Verryt and Mr Verryt in turn informed Mr Briggs that the SGIO policy did not cover theft. Mr Briggs then advised Mr Verryt in writing that 'the cause of the damage was pursuant to a fire'. Mr Verryt provided Mr Briggs' letter to SGIO.
31 In June 1999 SGIO inquired of the first respondent whether York Heritage wished to pursue the claim in relation to the Renault. By letter
(Page 10)
- dated 9 August 1999 Mr Briggs advised the first respondent that he wished to proceed with the claim.
32 In February 2000 SGIO received a report on the claim from its loss adjusters. The loss adjusters' report refers to the court order implementing the settlement agreement and confirmed that if Mr Anderson completed the restoration of the Renault, Mr Briggs would not pursue the insurance claim. Mr Verryt said he did not see this report.
33 On 18 February 2000 Mr Anderson's solicitors wrote to York Heritage's solicitors noting the failure to demonstrate that there was no insurance policy covering the damage to the Renault.
34 By letter dated 9 March 2000 from Mr Verryt to Mr Briggs, Mr Verryt advised in relation to the SGIO policy for the Renault:
I refer to our telephone conversation of 9 March 2000 and would confirm my advices to you that in respect of the above vehicle the cover that was in place was in respect of damage sustained whilst at the premises of York Motor Museum.
The damage to the above vehicle was sustained elsewhere and as such your policy of insurance would not provide indemnity for that event.
Therefore I confirm my previous advices to you that no claim exists under your insurance programme.
35 According to Mr Verryt, he had had a discussion with Mr Briggs earlier in the day in which he had given oral advice to the same effect. He also said he was unaware of why Mr Briggs wanted the letter. Mr Verryt accepted that he wrote the letter knowing that SGIO had not made a decision on the claim and there was a possibility SGIO may accept the claim and indemnify York Heritage. Mr Briggs swore an affidavit in the Supreme Court action on 8 May 2000 annexing Mr Verryt's letter of 9 March 2000.
36 On 7 August 2000 the solicitors for York Heritage wrote to Mr Verryt enclosing a draft affidavit. The letter requested the affidavit for the purpose of 'finalising this matter in the Supreme Court'. Mr Verryt had spoken to the solicitor prior to receiving the letter. His evidence of that conversation is as follows:
When Mr Whyte spoke to you on 1 August, he told you the purpose for which he required an affidavit from you, did he not?---He told me that it was required to be lodged in the court.
(Page 11)
- In court, so you knew that the affidavit was for court proceedings?---But I didn't know what it was complying with.
You didn't have a clue which court proceedings it was for?---No, I'm not saying that. I'm saying
You knew it was for the Anderson?---You've asked me a question. Please. He had informed me there was court proceedings. I was not at any point aware there was a condition in any court proceedings of the requirement for this to comply with something in a court proceeding.
I didn't ask you that, Mr Verryt?---Okay.
I'm asking you if you knew which proceedings this affidavit was required for, didn't you?---Which proceedings, yes.
Yes, and you knew that concerned Mr Briggs' company and Mr Anderson, didn't you?---Yes.
You also knew that it was required to hopefully achieve a settlement in those proceedings, your affidavit, didn't you?---In finalising the matter, yes.
In finalising the matter and bringing it to an end?---For finalising, yes (ts 289).
37 Mr Verryt was asked about his knowledge:
In writing what you did and signing that affidavit, you must have had some understanding that someone wanted to know whether or not that claim would succeed?---No, as to whether there was cover (ts 307).
38 On 10 August 2000 Mr Verryt swore the affidavit the subject of the action. It was Mr Verryt's evidence that the statements in his affidavit of 10 August 2000 were based upon his 'background knowledge' of the insurance position derived from his conversations in 1987 with Mr Diprose and was not based upon the actual terms of the SGIO policy (ts 320). However, he said that prior to swearing the affidavit he checked with the first respondent's claims department and was informed that Mr Briggs had withdrawn the insurance claim. The evidence did not establish that the claim had been withdrawn.
39 The trial judge erred in his approach to the question of whether Mr Verryt's opinion was reasonably held. He concluded that Mr Verryt's view that the SGIO policy only covered damage within the limits of the York Motor Museum was reasonable [88]. He continued:
(Page 12)
- Whether a risk is covered by a policy requires an assessment of the policy and the forming of an opinion. Whether cover under the SGIO policy held by York Heritage was limited to the locations specified is not an easy question. It is a question on which lawyers could disagree [89].
40 The trial judge determined the question of reasonableness by reference to the objective construction of the SGIO policy. On the assumption that the representation was a statement of opinion the correct question was whether Mr Verryt's view was formed or based on reasonable grounds.
41 Mr Verryt did not have reasonable grounds for an opinion that the SGIO policy only applied to damage within the limits of the York Motor Museum. He had not read the terms of the SGIO policy. He had lodged a claim with the insurer for the damage to the Renault which to his knowledge had not been rejected by the insurer. That was in the context of the insurer having drawn his attention to the fact that the policy did not cover theft. In those circumstances it was unreasonable to rely on oral advice provided years earlier in relation to a proposed policy. Moreover, even if the test of reasonableness is entirely objective, the terms of the SGIO policy did not reasonably justify an unqualified statement that the policy did not apply outside the limits of the York Motor Museum. The evidence establishes that Mr Verryt's opinion was unreasonable and it follows that the representation was negligently made. I would uphold ground 2.
Dishonest or reckless
42 The trial judge accepted Mr Verryt's evidence as to his conversation with Mr Diprose in 1987. On the basis of that conversation, the trial judge also accepted Mr Verryt's evidence that he honestly believed what he deposed to in his affidavit of 10 August. Of course the correct question is whether the relevant representation was honestly made. The trial judge's finding relates to the statements in the affidavit. Those statements include the explanation or basis for the representation that the SGIO policy did not cover the damage to the Renault. The trial judge's findings of honest belief and reasonableness are confined to the representation in its context. There is no finding, and no evidence to support it, that Mr Verryt had any belief, honest or otherwise, that the SGIO policy did not apply for the other reasons relied on by the respondents in these proceedings. The respondents cannot approbate and reprobate; they cannot insist that the appellant be confined to the representation in isolation from its context whilst relying on Mr Verryt's honesty and reasonableness by reference to the representation in its context.
(Page 13)
43 A misrepresentation is fraudulent when the representor knew it to be false, believed it to be false, did not know or believe it to be true or made it with reckless indifference to its truth or falsity. Negligence, even gross negligence, is not fraud.
44 In determining that Mr Verryt made the statements in the affidavit with an honest belief in their truth the trial judge made a credibility finding. A finding of fact by a trial judge based on the credibility of a witness may only be set aside on appeal where incontrovertible facts or uncontested testimony demonstrate that the judge's conclusions are erroneous or where it is concluded that the decision at the trial was glaringly improbable or contrary to compelling inferences in the case: Fox v Percy (2003) 214 CLR 118.
45 There was no challenge to Mr Verryt's evidence that he had not read the terms of the SGIO policy nor to his evidence of what he was told by Mr Diprose in 1987. The latter is a strong foundation for an honest belief. Challenges to Mr Verryt's evidence on matters peripheral to those issues (such as whether he or his personal assistant wrote certain letters) do not assist the appellant in satisfying the Fox v Percy test. The evidence does not compel an inference that Mr Verryt was dishonest or acted with reckless disregard of the truth. This ground must be dismissed.
Duty of care
46 This ground relates to the appellant's common law tortious claim for negligent misrepresentation. The trial judge held that the respondent did not owe to the appellant a duty of care because Mr Verryt had no knowledge, or means of knowledge, that the appellant individually or as a member of any class or group, was vulnerable to harm citing Perre v Apand Pty Ltd (1999) 198 CLR 180. The trial judge made findings that Mr Verryt had no knowledge of the appellant's involvement in the Supreme Court action or of the settlement of that action.
47 Negligent misrepresentation is a discrete category in the broad class of claims in negligence for economic loss: San Sebastian Pty Ltd v The Minister (1986) 162 CLR 340, 355; Hill v Van Erp (1997) 188 CLR 159, 170 - 171, 175; Perre v Apand [29]; Tepko Pty Ltd v Water Board (2001) 206 CLR 1 [73]. Economic loss claims have the potential to produce indeterminacy in class, time and quantum.
48 Prior to Perre v Apand, the High Court identified specific requirements that had to be proven in order to succeed in a negligent misstatement claim: Mutual Life & Citizens' Assurance Co Ltd v Evatt
(Page 14)
- (1968) 122 CLR 556; Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1995) 188 CLR 241. In Perre v Apand the High Court identified a general principle that underpins all categories of claims for economic loss. The court said that the matters upon which a duty of care depend include, inter alia, knowledge or means of knowledge of an ascertainable class of vulnerable persons who are unable to protect themselves from harm. Reasonable reliance and assumption of responsibility were characterised as indicators of vulnerability [125].
49 However, the factors identified in earlier cases on negligent misstatement remain relevant to the determination of whether a duty of care arises: Tepko Pty Ltd v Water Board. Gaudron J said in Tepko at [74] - [76]:
So far as concerns negligent misstatement, the circumstances which attract a duty of care have been identified as 'known reliance (or dependence) or the assumption of responsibility or a combination of the two.' In that context, the word 'known' includes circumstances in which reliance or dependence ought to be known. Moreover, it is not essential that the person making the statement know the precise use to which the information will be put, so long as he or she knows or ought to know that it will be used for a serious purpose.
In Mutual Life & Citizens' Assurance Co Ltd v Evatt, Barwick CJ referred to the need for there to be knowledge of a serious purpose in these terms:
'[t]he speaker must realise or the circumstances be such that he ought to have realised that the recipient intends to act upon the information or advice in respect of his property or of himself in connection with some matter of business or serious consequence.'
That approach … should, in my view, now be accepted as the test to be applied with respect to the knowledge of a person making a statement which is said to constitute a negligent misstatement.
'Reliance' as the test for the existence of a relationship that will call a duty of care into existence is not actual reliance, but reasonable reliance. In this regard, Barwick CJ observed in Mutual Life & Citizens' Assurance Co Ltd that:
'[t]he circumstances must be such that it is reasonable in all the circumstances for the recipient to seek, or to accept, and to rely upon the utterance of the speaker. The nature of the subject matter, the occasion of the interchange, and the identity and relative position of the parties as regards knowledge actual or potential and relevant capacity to form or exercise judgment will all be included in the factors which will determine the reasonableness of the
- acceptance of, and of the reliance by the recipient upon, the words of the speaker.'
50 Thus, it is not necessary to prove that the representor knew or ought to have known the precise identity of the plaintiff who relied on the information. It is sufficient that the plaintiff be a member of an ascertainable class of persons. Further, it is not necessary to prove that the representor knew the precise purpose or use to which the information was to be put.
51 The respondents knew that York Heritage had taken legal action against Mr Anderson in relation to the damage to the Renault. The respondents knew the affidavit of 10 August was required by York Heritage in connection with that action or the matters therein (ts 289). The respondents knew that someone other than their client wanted to know whether the SGIO policy covered the damage to the Renault and provided the affidavit to Mr Briggs to use for that purpose. The respondents ought to have known that the others would be those on the other side of the legal action, including those with a direct financial interest (such as an indemnifier) in the finalisation of the dispute.
52 The first respondent contended that any reliance on the contents of the affidavit was unreasonable, the appellant having taken advice from Mr Anderson's barrister as to whether it satisfied the settlement agreement. It was not suggested that Mr Anderson, his advisers or the appellant had a copy of the SGIO policy. Having regard to their actual and constructive knowledge of the use to which the affidavit was to be put and the content of the affidavit, the respondents ought to have known that the potential representees would not have access to the source documents in the respondents' possession. Finally, Mr Verryt's statements were sworn and unqualified and he was a person who would be expected to have personal knowledge of all relevant matters. In these circumstances the reliance was reasonable.
53 Having regard to the respondents' actual and constructive knowledge, their assumption of responsibility and the appellant's reasonable reliance on the second respondent's affidavit, I am satisfied the trial judge erred in concluding that the respondents did not owe the appellant a duty of care.
Notice of contention - Ground 1
54 The respondent contended that the representation as to the lack of insurance cover for the damage to the Renault was falsified by evidence
(Page 16)
- that the insurer was of the view that the SGIO policy did not cover the damage and would not have paid the claim.
55 As the representation is a statement of fact, the representation is falsified by the trial judge's finding that the SGIO policy did cover the claim. The insurers' position on that issue is irrelevant.
56 Even if, contrary to my view, the representation is a statement of opinion, the reasonableness of that opinion is determined by reference to the basis for Mr Verryt's belief. Mr Verryt did not consider the terms of the SGIO policy before asserting that it did not cover the damage to the Renault. The fact that the insurer or a person who had read the SGIO policy may have reasonably formed a contrary opinion does not render Mr Verryt's belief reasonable. Moreover, even if the objective reasonableness of the opinion is the criterion, there was no justification for making an unqualified statement of a position that was at best only reasonably arguable. I would dismiss this ground.
Notice of contention - Causation
57 The respondent contends that Mr Verryt's affidavit did not cause the appellant's loss. In the circumstances of this case that means the evidence did not establish that the appellant relied on Mr Verryt's representation to authorise Mr Anderson to re-instate the Renault at her cost.
58 The trial judge's factual findings are as follows:
… Mr Anderson provided a copy of Mr Verryt's affidavit to Ms Middleton. Ms Middleton read the affidavit. It appeared to her from the affidavit that the only cover for the Renault was while it was housed in the York Motor Museum and that no damage to the car outside the museum was covered.
Ms Middleton also discussed the affidavit with Mr Anderson. She knew that Mr David Bruns, a barrister she held in high regard, was acting for Mr Anderson in the York Heritage action. She asked Mr Anderson what was his legal representatives' advice on the affidavit. Mr Anderson informed her that Mr Bruns' had said that the affidavit was conclusive and that Mr Anderson and Ms Middleton should go ahead and reinstate the Renault.
…
As a result of Mr Bruns advice Ms Middleton was satisfied that there was no insurance cover on the Renault and authorised Mr Anderson to reinstate it at her cost [16] - [19].
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59 The appellant's evidence was that she placed reliance on Mr Verryt's affidavit in reaching the view that there was no insurance cover in place and on Mr Bruns' advice that cl 3 of the settlement agreement had been satisfied. The trial judge clearly accepted that to be the position.
60 In order to succeed in her claims in negligence and for breach of the Trade Practices Act, the appellant had to prove that the respondent's negligent act or misleading conduct caused or materially contributed to the damage the subject of the claim. The respondent's act or omission need not be the sole cause of the loss. It is sufficient if it is a cause of the loss: March v E & M H Stramare Pty Ltd (1991) 171 CLR 506; Henville v Walker (2001) 206 CLR 459.
61 Insofar as the appellant relied upon Mr Bruns' advice, that advice was also based on Mr Verryt's statements in the affidavit. Both Mr Bruns and the appellant relied on the accuracy of the statements in Mr Verryt's affidavit. On any view the evidence establishes that the appellant relied on Mr Verryt's affidavit in authorising Mr Anderson to reinstate the Renault at her cost. I would dismiss this ground.
Cross-appeal - Theft
62 It was accepted by the parties and the trial judge found that the SGIO policy did not cover theft. The trial judge was not satisfied on the evidence that the Renault was stolen. He continued:
While Mr Briggs appears to have believed it was stolen the vehicle had been provided to [York Motors] for work to be done on it. After that a dispute arose. The evidence does not satisfy me that there was an intention permanently to deprive York Heritage of the vehicle or to use it without consent [81].
63 As appears elsewhere in the trial judge's reasons, York Motors had claimed a possessory lien over the Renault. The first respondent contends that Mr Briggs made an admission that the Renault had been stolen which admission bound York Heritage in its relationship with the insurer in which event the SGIO policy did not respond to the claim.
64 Mr Briggs did not give evidence. If his statement that the Renault had been stolen constitutes an admission, it did not bind him or York Heritage and indeed was withdrawn once Mr Briggs was informed that the SGIO policy did not cover theft. Moreover, I am not persuaded that Mr Briggs made any relevant admission. Whether or not a thing has been stolen involves a matter of fact and law. There is nothing to suggest that
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- Mr Briggs had personal knowledge of all relevant matters of fact that could justify an inference of theft. This ground is without merit.
General exclusion 16
65 General exclusion 16 provides:
This Policy does not cover loss, damage, costs or legal liability:
Confiscation
16 Occurring as a result of the lawful seizure, confiscation, nationalisation or requisition of the Vehicle.
66 The trial judge said:
Nor do I consider that General Exclusion 16 prevented the damage being covered. A lien was claimed over the vehicle by Ms Middleton and her firm, but I construe the exclusion as applying to lawful seizure or confiscation by an arm of government, not to the claiming of a lien by a private person [87].
67 It is unnecessary to determine the full scope of the general exclusion. It is sufficient to say that it does not apply to a claim of an entitlement to maintain possession of a vehicle pursuant to a common law or equitable lien. I would dismiss this ground.
General condition 2
68 General condition 2 provides:
Alteration of risk
2 The Insured must notify the Insurer in writing as soon as possible after the commencement of this Policy of any changes in the Insured's Business which affect the Vehicles insured or of any other circumstances affecting the state, condition or use of any Vehicle which increases the risk of loss, destruction, damage or liability. Until the Insured obtains the Insurer's written agreement to cover the alteration of risk and agrees to pay any additional Premium required the Insurer shall not be liable for loss, destruction, damage or liability caused by or contributed to by any such alteration.
69 The trial judge concluded that general condition 2 did not apply because the evidence did not satisfy him that the risk when the vehicle was at the location at which it was damaged was greater than the risk when it was stored in York [86].
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70 The respondents' contention was to the effect that there was an increase in the risk of loss, destruction, damage or liability because Mr Briggs (York Heritage) did not know where the Renault was as at 12 December 1992 or at the time of the fire.
71 General condition 2 must be construed in light of the unchallenged finding that the SGIO policy was not limited to vehicles stored at a specified location. The trial judge's conclusion that general condition 2 did not apply is correct for a number of reasons. First, the condition only applies where there is a change of circumstances after the commencement of the policy. The SGIO policy commenced on 30 June 1992. There is no finding or evidence that Mr Briggs knew the whereabouts of the Renault prior to the commencement of the policy. Secondly, the state of knowledge of Mr Briggs (York Heritage) is not a relevant consideration. The change in circumstances must objectively affect the 'state, condition or use' of the Renault and the relevant change must increase the risk of loss, destruction, damage or liability. There was no evidence of circumstances affecting the state, condition or use of the Renault which increased the risk of loss etc. This ground should be dismissed.
In trade or commerce
72 It should be noted at the outset that there was no claim that Mr Verryt's affidavit was the subject of the immunity from civil action that attaches to the preparation or giving of evidence in court: see D'Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1 [39]. My preliminary view is that the immunity rule has no application in the circumstances of this case. The affidavit was used to satisfy a requirement of the settlement agreement between Mr Anderson and York Heritage which requirement had no direct or indirect relevance to the issues the subject of the Supreme Court action. The mere fact that the terms of the settlement agreement were (unusually one would hope) reflected in court orders would not attract immunity for the affidavit. The affidavit was not prepared for or used in legal proceedings in the sense in which that expression is ordinarily understood.
73 The trial judge, after noting that the representation had to be made 'in trade or commerce', said:
That is it must have been conduct towards a person or persons which bore a trading or commercial character: Concrete Constructions (NSW) Pty Ltd vNelson (1990) 169 CLR 594. As the statement was made for use by a client in legal proceedings to recover a loss suffered on an insured
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- vehicle it is my view that the representation did constitute conduct in trade or commerce [92].
74 As correctly identified by the trial judge, the leading case on the issue is Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594. In that case a construction worker sustained injuries at work which he claimed were caused by a foreman incorrectly informing him that certain grates were secured. The conduct of the foreman was held not to be 'in trade or commerce'. The High Court held that the reference to conduct 'in trade or commerce' is to be construed as referring only to conduct which is itself an aspect or element of activities or transactions which, of their nature, bear a trading or commercial character. It is not sufficient that it be 'in relation to' trade or commerce. In some cases the dividing line between what is and what is not conduct in trade or commerce may be unclear.
75 It is important to identify the relevant conduct in question. The representation was made by the respondents at the request of and for the use and purpose of its client (York Heritage/Mr Briggs) in relation to finalising its dispute with Mr Anderson. So much was known to the respondents. The affidavit was used to activate Mr Anderson's obligations under the settlement agreement to reinstate the Renault. That use was within the scope of the known purpose. On those facts, the respondents' representation was an element of an activity that bears a commercial character and thus was 'in trade or commerce'.
76 The case of Little v Law Institute of Victoria (No 3) [1990] VR 257, relied on by the respondents, is distinguishable. In Little, the appellant purported to rely on a representation constituted by a statement made by the secretary of the respondent to the trial judge during the course of a hearing in which the respondent sought to enjoin the appellant from practising as a solicitor. It was held that the statement was not made in trade or commerce. So too a statement made in the course of a mediation that was part of the court process was held not to be in trade or commerce: W J Green & Co (1984) Pty Ltd v Wilden Pty Ltd (Unreported, WASC, Library No 970186, 24 April 1997). The respondents' representation was made after the Supreme Court action had been settled. It was not made in the course of or for the purposes of court proceedings. See also Stockland (Constructors) Pty Ltd v Retail Design Group (International) Pty Ltd [2003] NSWCA 84 [18] - [23].
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Conclusion
77 For these reasons, I would uphold grounds of appeal 1, 2 and 4 and dismiss the notice of contention and cross-appeal. The consequence of those orders is that the appellant would succeed in her claims for negligent misrepresentation and breach of s 52 of the Trade Practices Act. It appears the parties have agreed the quantum of damages in the event the appellant was successful. I would hear from the parties as to the orders to be made to give effect to these reasons.
78 BUSS JA: Subject to the observations set out below, I agree with McLure JA, for the reasons she gives, that grounds of appeal 1, 2 and 4 have been made out, ground of appeal 3 fails, and the notice of contention and cross-appeal are without merit.
79 I have some observations in relation to:
(a) the characterisation of a statement as of opinion or fact;
(b) the ground of the cross-appeal that the SGIO policy did not cover theft;
(c) general exclusion 16; and
(d) the respondent's contention that the representation in question was not made 'in trade or commerce'.
Statement of opinion or fact
80 The form of a statement does not determine whether it is of fact or opinion. Rather, what is important is the sense in which the statement is reasonably understood. For example, a statement which appears to assert facts without qualification may nevertheless be merely of opinion if made in circumstances in which the recipient must be taken to know that the maker of the statement has inadequate knowledge or information in relation to the facts apparently asserted. Where, however, the facts are not known equally to both parties, a statement by the party with the better knowledge, which is in form an opinion, may convey a representation that the party making the statement has reasonable grounds for the opinion. See Smith v Land and House Property Corporation (1884) 28 Ch D 7, 15 (Bowen LJ). Thus, whether a statement is or conveys a representation of fact or opinion depends upon all of the relevant circumstances, including the facts known to the recipient or representee, the form and subject matter of the statement, and the actual and likely personal knowledge of the maker of the statement or representor.
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Cross-appeal - theft
81 The first respondent asserted that Mr Briggs made an admission that the Renault had been stolen and that the admission was binding on York Heritage in its relationship with the insurer and, in consequence, the SGIO policy did not respond to the claim.
82 In Eastern Express Pty Ltd v General Newspapers Pty Ltd (1992) 35 FCR 43, the Full Court of the Federal Court considered whether certain statements constituted an express admission of a proscribed purpose for the application of s 46 of the Trade Practices Act1974 (Cth). Lockhart and Gummow JJ said:
As a general proposition, an informal admission as to a matter of fact, by words or conduct which is made by a party or a privy, is admissible evidence against that party of the truth of its contents. The complexity of the construction given in the case law to the ordinary words of s 46 must mean, at the very least, that in this area what is tendered as an express admission is likely to be a statement as to matters of mixed law and fact, rather than simply of fact. In the case of alleged contraventions of s 52 of the Act, admissions by a trader in the course of cross-examination that his conduct was 'misleading' and 'deceptive' cannot be relied upon to usurp the task of the court to judge the legal quality of that conduct: see Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 12 FCR 477 at 487-488, 504.
It is unsettled whether admissions may be made of matters of mixed law and fact: see Grey v Australian Motorists & General Insurance Co Pty Ltd [1976] 1 NSWLR 669 at 675, 684-685; Jones v Sutherland Shire Council [1979] 2 NSWLR 206 at 231. In the first of these cases, Glass JA described various decisions accepting admissions by a party as to questions of mixed law and fact as having been given with no regard to principle. In his view, when a standard, measure or capacity is fixed by law, a party cannot be asked to admit a conclusion depending upon the legal standard; however, the witness may be asked to admit facts from which the conclusion of law may be drawn by the court.
In our view, that is how the pieces of evidence in issue here should be considered, the question being whether the statements provide material from which his Honour should have drawn a conclusion as to predatory purpose for the purposes of s 46. In any event, the materials with which we are dealing were received into evidence and to that no challenge was made before us (68).
83 In Dovuro Pty Ltd v Wilkins [2003] HCA 51; (2003) 215 CLR 317, Gummow J (McHugh and Heydon JJ agreeing) held that a statement made on behalf of a corporation that it had 'failed in its duty of care' involves the proposition that the facts demonstrate that the corporation failed a
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- standard fixed by law [68]. As his Honour noted, a party may undoubtedly admit the facts from which a conclusion of law may then be drawn [69]. But different questions arise where the alleged admission includes a conclusion which depends upon the application of a legal standard [70]. His Honour referred, with apparent approval, to these observations of Glass JA in Grey v Australian Motorists & General Insurance Co Pty Ltd [1976] 1 NSWLR 669:
By extorting from a party an admission that he was negligent, or that he was not provoked, or that his grandfather possessed testamentary capacity, there is added to the record something which is, not merely of dubious value, but by definition valueless, owing to the witness' unfamiliarity with the standard governing his answer (676).
85 In the present case, Mr Briggs' statement that the Renault was stolen was a conclusionary statement as to matters of mixed law and fact. The conclusion was necessarily based on his opinion as to the content and application of the legal principles which define the offence of stealing. Accordingly, his statement that the Renault had been stolen was incapable of operating as a binding admission on him or York Heritage.
General exclusion 16
86 By general exclusion 16, relevantly, the SGIO policy did not cover loss, damage, costs or legal liability occurring 'as a result of the lawful seizure … of the Vehicle'.
87 The word 'seizure', in its ordinary meaning, connotes both belligerent and non-belligerent forcible dispossession. See Kuwait Airways Corporation v Kuwait Insurance Co SAK [1999] 1 Lloyd's Rep 803, 814 (Lord Hobhouse of Woodborough; Lord Lloyd of Berwick, Lord Clyde and Lord Hutton agreeing).
88 In the present case, there was no lawful, belligerent or non-belligerent, forcible dispossession. At all material times, the Renault was in the possession of York Motors or its agents. Its claim of an entitlement to maintain possession of the Renault, based on a common law or equitable lien, was not within the notion of a lawful seizure of the vehicle.
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In trade or commerce
89 The appellant, in her statement of claim, alleged a contravention by the first respondent of s 52 of the Trade Practices Act.
90 The appellant did not invoke s 10 of the Fair Trading Act 1987 (WA). I note that the Fair Trading Act, unlike the Trade Practices Act, has an extended definition of 'trade or commerce'. Section 5(1) states, relevantly, that in the Act, except insofar as the context or subject-matter otherwise indicates or requires, 'trade or commerce' includes any business or professional activity. Also, in s 5(1), 'business' is defined to include, relevantly, a trade or profession. The extended definition of 'trade or commerce' in s 5(1) of the Fair Trading Act was considered recently by the Full Court of the Federal Court in Shahid v Australian College of Dermatologists [2008] FCAFC 72; (2008) 168 FCR 46. It is unnecessary, in circumstances where the appellant confined her pleaded case, relevantly, to an alleged contravention of s 52 of the Trade Practices Act, to consider Shahid or the extended definition in the State Act.
91 I agree with McLure JA's conclusion, and her reasons for concluding, that the relevant conduct (namely, the making of the representation that there was no insurance policy covering the damage to the Renault because the only insurance policy relating to the Renault was confined to damage occurring within the limits of the York Motor Museum) was an element of an activity that bears a commercial character, and thus occurred 'in trade or commerce'. In addition, her Honour's conclusion is supported by the following:
(a) Mr Briggs/York Heritage requested the respondents to make, and the respondents agreed to make, the representation in the context of an established and ongoing commercial relationship of insurance broker and client; and
(b) although the representation was embodied in an affidavit sworn by the second respondent and filed in the District Court action, the matters represented were the product of some intellectual effort (if not conspicuous skill) exercised in the ordinary course of the first respondent's business and the second respondent's employment in that business.
92 MURRAY AJA: I agree with the reasons of McLure JA, to which I have nothing to add.
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