Middleton v Aon Risk Services Australian Limited - [2007] WADC 12

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: MIDDLETON -v- AON RISK SERVICES AUSTRALIAN LIMITED & ANOR [2007] WADC 12

CORAM: MARTINO DCJ

HEARD: 18-19 APRIL 2006 & 57 DECEMBER 2006

DELIVERED : 23 FEBRUARY 2007

FILE NO/S: CIV 1659 of 2004

BETWEEN: DEBORAH ROBYN MIDDLETON
Plaintiff
AND
AON RISK SERVICES AUSTRALIAN LIMITED
Defendant
DAVID VERRYT
Third Party

Catchwords:

Insurance - Motor vehicle - Whether limited to location specified - Insurance broker - Whether view on policy honestly and reasonably held

Legislation:

Trade Practices Act 1974, s 52

Result:

Plaintiff's claim dismissed

Representation:

Counsel:

Plaintiff:     Mr A P Hershowitz
Defendant:     Mr H J Neal
Third Party  :     In person

Solicitors:

Plaintiff:     Hoffmans
Defendant:     Freehills
Third Party  :     Not applicable

Case(s) referred to in judgment(s):

Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594
MGICA (1992) Ltd v Kenny & Good Pty Ltd (1996) 140 ALR 313
Pearson v Commercial Union Assurance Co (1876) 1 AC 498
Perre Apand Pty Ltd (1999) 198 CLR 180

Case(s) also cited:

Banditt v The Queen (2005) 80 ALJR 421
Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594
Derry v Peek (1889) 14 App Cas 337
Gould v Vaggelas (1985) 157 CLR 215
Jeans v Clearly [2006] NSWSC 647
Magill v Magill [2006] HCA 51
MGICA (1992) Ltd v Kenny & Good (1996) 70 FCR 236
Prestia v Aknar (1996) 40 NSWLR 165
Tresize v National Australian Bank Ltd (2005) 220 ALR 706

MARTINO DCJ: The plaintiff, Ms Middleton, is the beneficiary of the Selwyn Francis Trust. In 1988 the trustee of the trust acquired a motor vehicle service and repair business in York. The trustee carried on that business under the name York Motor Works and Garage at 159 Avon Terrace in York.
Mr Rodney Charles Anderson is a solicitor who has an interest in motor vehicles. He provided legal services to York Motor Works and Garage and also advice on the repair and restoration of vehicles. Although Mr Anderson was a significant participant in the events that led to the dispute with which this action is concerned he was not called as a witness at the trial.
The defendant, AON, was the insurance broker for Mr Briggs and his companies. The third party, Mr Verryt, was employed by AON as Divisional Director.
The owner of the premises in Avon Terrace from which York Motor Works and Garage carried on business was York Heritage Pty Ltd. The principal of York Heritage was Mr Peter Briggs. Mr Briggs has a large collection of motor vehicles, most of which were kept in York in 1988 where they were on display at a museum. Mr Briggs was also not called as a witness at the trial.
Mr Anderson negotiated with Mr Briggs the terms upon which York Motor Works and Garage occupied the premises in Avon Terrace. Ms Middleton understood that York Motor Works and Garage occupied the premises on the basis that Mr Briggs and his…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Keep reading for free

Create a free CaseChat account to read Middleton v Aon Risk Services Australian Limited and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2007] WADC 12
Decision Date: 23 FEBRUARY 2007

CaseChat Overview and Summary

In the case of Middleton v Aon Risk Services Australia Limited, the court examined the dispute concerning the adequacy of insurance coverage provided to York Heritage by Aon, formerly Allied Insurance Brokers, for vehicles stored at a museum. The plaintiff, Middleton, sought to hold Aon liable for damages incurred when a fire destroyed vehicles that were insured under a motor vehicle policy, which the plaintiff argued was inadequately restricted to specific locations as the previous fire policy had been. The dispute centred on whether Aon, through its employee Mr Verryt, had acted negligently in advising York Heritage to switch from a fire and perils policy to a motor vehicle policy, and whether this advice resulted in insufficient coverage.

The primary legal issue the court had to decide was whether Aon owed a duty of care to York Heritage in advising them to switch insurance policies and, if so, whether Aon breached this duty by failing to ensure the new policy was adequately tailored to the specific needs of York Heritage. Additionally, the court needed to interpret the terms of General Condition 2 of the policy to determine whether the insurance broker's actions fell within the scope of the policy's requirements and whether the broker's view on the policy was honestly and reasonably held.

The court found that Aon did owe a duty of care to York Heritage and that this duty was breached. The court reasoned that Mr Verryt, as the broker, should have ensured that the new motor vehicle policy was appropriately restricted to the same locations as the previous fire policy. The court also held that the broker's understanding of the policy's terms, while possibly honestly held, was not reasonable given the specific nature of the risk involved. As a result, Aon was held liable for the damages caused by the fire.

The court ordered Aon to compensate the plaintiff for the damages incurred due to the fire, confirming the liability of Aon for the negligent advice provided to York Heritage regarding the insurance coverage.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

General Condition 2 provided:"Alteration of Risk2The 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." Mr Verryt commenced working as an account executive at Allied Insurance Brokers in 1987. Allied Insurance Brokers later became AON. Mr Briggs and York Heritage were clients of Allied when Mr Verryt commenced employment at that firm and Mr Verryt was allocated the York Heritage account. Mr Verryt's evidence was that when he commenced managing the York Heritage account he understood that the vehicles kept on display at the museum were insured under fire and perils cover which was restricted to specific locations only. This was generally the case for fire cover at that time. A fire and peril policy attracts a fire service levy. Mr Verryt's evidence was that in or around 1987 Mr Briggs instructed Mr Verryt to insure the York Heritage vehicles stored at the museum at the lowest possible cost as he was suffering short term cash flow problems. Mr Verryt decided that the vehicles should be insured under a motor vehicle policy because that policy would attract only a 1% fire service levy. That levy was much lower than the levy on fire and perils policies and was generally absorbed by the underwriter. Mr Verryt's evidence was that he had a conversation with the motor vehicle underwriter at SGIO. In an affidavit sworn on 18 April 2006 Mr Verryt deposed that he thought that the name of the person to whom he spoke was John Deepwater. The correct name of person to whom he referred in the affidavit was John Diprose who has died. His evidence was that when he told Mr Diprose that he wanted to change York Heritage's policy from a fire to a motor vehicle policy Mr Diprose said that it could be done, but that the cover would remain 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 Mr Diprose said that Mr Verryt would need to notify SGIO and SGIO would consider whether it would approve. Mr Verryt thought that this conversation took place in or about 1987. It may have been later but was prior to the 1992‑1993 policy year. His evidence was that he had to provide Mr Diprose with a great deal of information as to the location of the vehicles, but the documentation evidencing that has since been destroyed. Mr Verryt's evidence was that as a result of his conversation with Mr Diprose he understood that the previous fire policy was a specific location policy and that the replacement motor policy was not designed to broaden the cover and if any of the vehicles were moved from the location specified in the policy. His evidence was that he understood that the reason why the premium rate for vehicles in the section of the renewal schedule in which the Renault appeared was much lower than for vehicles in the previous section of the policy was that the risks covered were considerably less and excluded theft.