Moyle v Field
[2000] WADC 333
•18 DECEMBER 2000
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: MOYLE -v- FIELD & ANOR [2000] WADC 333
CORAM: WISBEY DCJ
HEARD: 27 OCTOBER 2000
DELIVERED : 18 DECEMBER 2000
FILE NO/S: CIV 3546 of 1998
BETWEEN: JEFFREY MARTIN MOYLE
Plaintiff
AND
ADRIAN MATTHEW FIELD
DefendantCOMMERCIAL UNION ASSURANCE COMPANY OF AUSTRALIA LIMITED (ACN 004 478 371)
Third Party
Catchwords:
Insurance - Non-disclosure and/or misrepresentation of facts material to assessment of underwriting risk - Non-disclosure of prior adverse driving history by insured - Entitlement of insurer to refuse indemnity
Legislation:
Insurance Contracts Act 1984 (Cth)
Result:
Application for indemnity refused
Representation:
Counsel:
Plaintiff: No Appearance
Defendant: Mr P J Gethin
Third Party : Ms F C Davis
Solicitors:
Plaintiff: Jackson McDonald
Defendant: Patrick Gethin & Co
Third Party : Phillips Fox
Case(s) referred to in judgment(s):
Ferrcom Pty Limited v Commercial Union Assurance Company of Australia Limited (1993) 176 CLR 332
Case(s) also cited:
Babatsikos v Car Owners Mutual Insurance Co Ltd [1970] VR 297
Burns v MMI-CMI Insurance Ltd (1995) ANZ Ins Cas 61-287
Duthie v Role H Wick & Associates (Aust) Pty Ltd (1994) ANZ Ins Cas 61-223
Ferrcom Pty Limited v Commercial Union Assurance Co of Australia Ltd (1989) 5 ANZ Ins Cas 60-909
Ferrcom Pty Limited v Commercial Union Assurance Co of Australia Ltd (1993) 112 ALR 641
Glicksmand v Lancashire & General Insurance Company (1927) AC 139
Glowick v NZI Insurance Australia Ltd [1997] SADC 3623
Itobar Pty Ltd v Mackinnon (1984) 3 ANZ Ins Cas 60-610
Manchester Unity Total Care Building Society v MGICA Ltd (1991) 6 ANZ Ins Cas 61-062
Vermeulen v SIMU Mutual Insurance (1987) 4 ANZ Ins Cas 60-812
Zurich General Accident & Liability Insurance Co Ltd v Morrison [1942] 2 KB 53
WISBEY DCJ: The defendant Adrian Matthew Field was at all material times the owner of a 1987 VL Holden Commodore sedan (the insured vehicle) which he purchased for $13,500 on 29 December 1995. Consequent upon a car insurance proposal dated 29 December 1995 (the proposal) (Exhibit 1.6) the defendant obtained comprehensive vehicle cover for the period 29 December 1995 to 29 December 1996 from the third party, Commercial Union Assurance Company of Australia Limited. The policy provided inter alia that if in the course of driving the insured vehicle the defendant caused loss or damage to the property of any person, and/or economic loss consequent thereon, the third party would indemnify the defendant in respect of resulting claims, subject to the excess provided in the policy. At the expiration of the period of cover referred to, the third party renewed the policy for a further 12 months term.
On or about 28 November 1997 the defendant was involved in an accident whilst driving the insured vehicle on the North West Coastal Highway near Binnu when it collided with and damaged the plaintiff's autobus causing resulting loss to the plaintiff. The third party has refused to indemnify the defendant.
By writ issued 16 September 1998 the plaintiff claimed damages from the defendant, and the defendant claimed against the third party indemnity under the policy. The indemnity question comes before me for determination as a preliminary issue.
In the third party statement of claim the defendant pleads the contract of insurance between himself and the third party; the accident; the claim against him by the plaintiff; and seeks indemnity in respect of the plaintiff's claim.
In its amended defence the third party puts the defendant to the proof of the ownership of the said vehicle; admits the contract of insurance and its repudiation of indemnity; and denies that it has an obligation to indemnify the defendant because of the defendant's breach of his fiduciary obligations when entering into the contract of insurance. The breach, simply put, is that prior to entering into the contract of insurance, and subsequent thereto, the defendant failed to disclose to the third party that on 25 June 1995 he was involved in a motor vehicle accident (the first accident), and that his then insurer, Western Underwriters, declined to indemnify him for his loss because he was driving with a blood alcohol level of or in excess of .05, contrary to the dictates of the Road Traffic Act. The third party maintains that had the defendant disclosed the matters aforesaid, it would not have entered into a contract of insurance with him.
The third party defence was amended at trial to allege that the defendant falsely represented to the third party that he did not have a previous conviction for driving with a blood alcohol level of or in excess of .05, and had not in the five year period prior to the proposal been involved in any accident or made an insurance claim in respect of motor vehicle damage.
In the defendant's reply to the third party's defence the defendant admits the circumstances relating to the first accident and acknowledges that he knew disclosure of those circumstances was relevant to the third party's decision to enter into the contract of insurance. The defendant alleges, however, that he informed the third party's agent David Petersen of the circumstances concerning the first accident prior to entering into the contract of insurance.
I will now turn to the evidence that bears on the issues.
Adrian Matthew Field
The defendant was born on 16 October 1972 and obtained a driver's licence upon turning 17.
He stated that in June 1995 he had an accident driving home from a football game in Chapman Valley when his car left the road and hit a tree because he moved too close to the verge upon observing an oncoming vehicle. The defendant's vehicle was comprehensively insured with Western Underwriters, and that company declined to provide indemnity because he was driving with a blood alcohol level of or in excess of .05. The vehicle was apparently written off.
The defendant stated that he purchased the insured vehicle in December 1995, and anticipating that it would be difficult to obtain insurance, went with his father to see David Petersen at Elders Insurance Agencies Midland, who the parties agree was at the relevant time the third party's agent. The defendant claimed that he advised Mr Petersen of the first accident and the fact that his insurance claim was rejected by Western Underwriters because of the alcohol factor. He stated that Mr Petersen was unsure as to whether the third party would meet a claim where its insured had a blood alcohol level of .05, and consequently rang the third party. Following the call Mr Petersen advised that the third party would not decline cover if a driver's blood alcohol level was below .08. The defendant thought that the premium quoted by Mr Petersen was high, but was satisfied when advised that was because the third party looked after country drivers. Consequently the defendant agreed to the premium quoted and was issued with a cover note. He stated that his father and he returned home where they advised his mother that insurance should not be a problem, and that the third party would indemnify him in respect of an accident claim provided his blood alcohol level was below .08. The defendant claimed that he told his mother he had advised Mr Petersen of the first accident.
The defendant was shown the proposal submitted to the third party (Exhibit 1.8) and stated that he received it in the mail, did not complete it, and as he was leaving for Northampton and "racing out the door" signed and dated it having requested his mother to complete it for him. He acknowledged in his evidence‑in‑chief that the omission of the earlier accident details on the proposal was an oversight.
As a consequence of the completion and return of the proposal, a policy issued, and as the pleadings indicate was renewed at the expiration of the initial 12 month period of cover.
The defendant stated that on 27 November 1997 at the completion of harvest he went to the Binnu wheatbins to join with the locals in a celebration. He had a couple of beers and left at about 12.15/12.30am on 28 November 1997, and was immediately involved in the accident giving rise to these proceedings. Following the accident the defendant made a claim for indemnity upon the third party and was contacted by an assessor to whom he mentioned his prior .05 conviction. The defendant identified the motor vehicle claim report (Exhibit 1.16) stating that he only signed the document. He thought that the written information on the report, and in particular par 14 referring to his earlier traffic convictions, were in his father's handwriting.
The defendant stated under cross‑examination that in 1995 he was living on a farming property at Northampton and his parents were living in Greenmount. He confirmed that following the first accident he was issued with an infringement notice for driving with a blood alcohol level in excess of .05 (Exhibit 1.2) and that Western Underwriters subsequently by letter dated 18 July 1995 (Exhibit 1.3) declined to indemnify him. He confirmed that his parents were aware of the circumstances of the .05 offence and the rejection of his insurance claim, representations having been made by the family to the Insurance Council concerning Western Underwriters' attitude.
The defendant confirmed that he purchased the insured vehicle on 28 December 1995, and claimed that Mr Petersen issued a cover note following the meeting at Mr Petersen's Midland office. He denied the proposition that he had not gone to see Mr Petersen. The defendant could not recall whether the proposal subsequently forwarded to him had a disclosure notice annexed to it, and stated that when the proposal was completed it was hand delivered to Elders' Midland office. He acknowledged appreciating the importance of advising the third party of the first accident and surrounding circumstances, and emphasised that the third party's agent, Mr Petersen, knew about these matters. He confirmed that cover was renewed for the period 28 December 1996 to 28 December 1997.
The defendant identified a facsimile transmission (Exhibit 1.17) which made reference to a conversation he had with the third party's investigator, Gavin Norbury. He accepted that he probably told Mr Norbury that his mother made a mistake in not mentioning his earlier accident and traffic conviction in the proposal. He confirmed that in providing answers to the questions put by Mr Norbury (Exhibit 1.18) there was no mention that the first accident, and matters associated therewith, had been explained to Mr Petersen, but was emphatic that he had explained that to Mr Norbury.
Rodney Gordon Field
Mr Field, the defendant's father has been a farmer for approximately 40 years, and is also involved in business. He confirmed that he was aware of the circumstances of the defendant's first accident and the .05 offence and stated that he had taken up Western Underwriters' refusal to provide indemnity with the Insurance Council of Western Australia.
Mr Field stated that as the defendant was about to purchase a vehicle, he had gone with the defendant to see Mr Petersen who had previously arranged insurance for him. He claimed that he went with the defendant to see Mr Petersen on or about 23 December 1995, and that at the meeting the defendant's previous accident, traffic infringement, and insurance difficulties were discussed; although he appeared to have some difficulty recalling the details of the discussion. He recalled that Mr Petersen rang the third party, confirmed its attitude to drink driving issues, and gave then a quote, but did not provide a cover note. Mr Field stated that following the meeting they went home and explained to Mrs Field what had been discussed with Mr Petersen.
Mr Field claimed that following the accident he endeavoured to meet with Mr Petersen, but Mr Petersen said that he had difficulty recalling their earlier meeting and had been instructed not to discuss the matter.
In cross‑examination Mr Field stated that the defendant arranged for Mrs Field to fill out the proposal form because he was leaving urgently for Northampton, and also because he did not have good handwriting. Mr Field did not take any part in completing the proposal but was responsible for completing the answers to questions 12, 13, 14 and 18 on the Motor Vehicle Claim Report (Exhibit 1.16). He assumed that the meeting with Mr Petersen would have been at the time of the purchase of the said vehicle. He felt that he might have delivered the completed proposal to the Midland office. Mr Field was emphatic that Mr Petersen, the defendant, and himself, discussed the circumstances of the defendant's first accident prior to the completion of the proposal.
Reina Field
Mrs Field, the defendant's mother, gave evidence that the proposal (Exhibit 1.8) arrived in the mail on 28 December 1995 and that because the defendant was leaving urgently for Northampton he asked her to complete it. In respect to questions in the proposal asking about the defendant's prior adverse driving history she stated that she answered in the negative because her husband and the defendant had told her of their conversation with Mr Petersen, and she assumed that the questions were seeking information only in respect to other accidents and convictions. She agreed that on reflection she should have mentioned the earlier accident and the .05 conviction because she was aware of them and of the importance of completing the proposal accurately.
When shown the photocopy facsimile transmission from Mr Norbury (Exhibit 2) she stated that she had provided the handwritten answers which suggest that the omission to mention the defendant's adverse driving history was accidental.
Gavin John Norbury
Mr Norbury, a loss adjuster, was at all relevant times employed by the third party as its investigations manager. Following the defendant's motor vehicle accident he examined the proposal and the motor claim report identifying the fact that the defendant's first accident and .05 conviction had not been disclosed in the proposal. As a consequence he made contact with the defendant, his recollection being that was at the parents' home in Gingin. The defendant told him of the circumstances of his earlier accident, and said he had not mentioned the circumstances of the earlier accident and .05 conviction in the proposal form because it was completed by his mother. He was adamant that the defendant did not mention the fact that Mr Petersen had supposedly been told of those matters prior to the proposal being completed.
Mr Norbury confirmed sending the facsimile (Exhibit 1.17) to the defendant and subsequently receiving it back completed.
David Charles Petersen
Mr Petersen was at all relevant times a sales officer at Elders Insurance Agencies Midland, and had knowledge of the third party's attitude to motor vehicle insurance underwriting. He recalled Mr Field senior calling at his office before Christmas 1995 to discuss motor vehicle insurance for the defendant. Not surprisingly he could not recall the exact details of the discussion. He was sure that the defendant was not present. Mr Petersen provided a quote for cover which included a 25 per cent no claim bonus because of the defendant's supposed accident free record, but did not issue the cover note. He was emphatic that he had not been told of the first accident and its surrounding circumstances, stating that if the first accident and the .05 conviction had been disclosed to him he would have referred the matter to the third party and would not have recommended a no claim bonus.
Mr Petersen recalled Mr Field senior discussing Commercial Union's attitude to a .05 conviction, but stated that the issue was raised on an entirely hypothetical basis.
In cross‑examination Mr Petersen confirmed that Mr Field senior rang him after the accident and mentioned the alleged discussion concerning the .05 conviction and first accident. Mr Petersen advised Mr Field that he had no recollection of such a conversation.
Carl Don King
Mr King, now an insurance consultant with Jardines Insurance and a person of considerable experience in the industry, joined the third party in 1989 and was its senior underwriter in the rural division between 1995/1998. He produced the third party's motor underwriting and operating manuals (Exhibits 1.4 and 1.5). His evidence essentially was that a person with convictions for careless driving or driving whilst affected by alcohol constituted an undesirable risk. Had he known of the circumstances relating to the defendant's first accident, and having regard to the defendant's age, he would not have accepted the risk.
Ken William McKenzie
Mr McKenzie was at the relevant time the underwriting and development manager of the third party rural division. He referred to Exhibits 1.4 and 1.5 stating that they were applicable in 1995. He confirmed Mr King's evidence that the third party would not have issued cover to the defendant had it been aware of the circumstances relating to the first accident and having regard particularly to the defendant's age, the type of vehicle to be insured, the nature of the defendant's traffic convictions, and the circumstances of the accident.
Findings of fact
The factual determination fundamental to a resolution of the controversy between the defendant and the third party is whether the defendant disclosed to the third party at any relevant time that he had prior to obtaining insurance from it been involved in the first accident occurring inter alia when he was driving with a blood alcohol level of or in excess of .05, and that as a result thereof his then insurer, Western Underwriters, rejected his claim (par 1 defendant's final submission and par 1 of third party's supplementary submission). The third party carries the burden of establishing that it had no knowledge thereof and that there was a material non‑disclosure by the defendant. Essentially it purports to do this by referring to the proposal (Exhibit 1.8), signed by the defendant on 29 December 1995, which proposal although completed by the defendant's mother, is his document. There is no reference in that document to the facts aforesaid. It is to be noted in particular that the answer to question 7 which sought information as to whether the defendant had been convicted of a motoring offence in the previous five years, refers only to a speeding conviction in April 1995. There is no mention of the .05 offence. Question 9 which enquired as to whether the defendant had been involved in an accident and claimed against an insurance company for damage during the previous five years, was answered in the negative. The evidence demonstrates clearly, and indeed it is admitted by the defendant, that the answers provided are incorrect.
The defendant states that it had been made clear to the third party's agent, Mr Petersen, that the defendant had been involved in a car accident in June 1995; that at the time he was driving with a blood alcohol level of or in excess of .05; and that he had made a claim against his then insurer which was declined. It is said on behalf of the defendant that those matters having been brought to the attention of the third party, it was not necessary, nor considered necessary, to make reference thereto in the proposal or at any relevant time thereafter.
I am quite unable to accept the evidence adduced in that regard. Having regard to the fact that the defendant had been refused indemnity because of the circumstances relating to the first accident, and if he was sufficiently concerned to specifically address with Mr Petersen the attitude that would be taken by the third party to matters of that nature, it is inconceivable that the defendant and/or his mother on his behalf would not have considered it important to record and recorded that history when completing the proposal.
It is clear from Mrs Field's evidence that she was aware of the first accident and the circumstances related thereto, and of the importance of bringing those matters to the attention of the third party. She claims, however, that when completing the proposal she did not make reference to those matters because of her belief that they had already been brought to the attention of Mr Petersen. If that was in fact her belief, one must ask why she did not also think that Mr Petersen was aware of the speeding conviction to which she specifically referred when answering question 7 in the proposal. It is also entirely inconsistent with the answers provided by her in Exhibit 2.
I do not accept the evidence of the defendant or his father as to the conversation which they say took place with Mr Petersen. Their evidence on that issue was unconvincing, and Mr Field's general demeanour when giving evidence was belligerent. I have no hesitation in accepting the evidence of Mr Petersen that he was not made aware of the defendant's relevant prior history. Such knowledge would be entirely inconsistent with the recommendation of a no claim basis and his memorandum of 10 January 1996 (Exhibit 1.10).
There can be no doubt on the evidence, and there is no issue on the pleadings, but that the defendant was cognisant of his duty to disclose to the third party the facts relating to the first accident prior to the issue of the policy and subsequent renewal. He failed to do so. In the circumstances he was clearly in breach of the duty imposed upon him by s 21 of the Insurance Contracts Act 1984. There was both non‑disclosure and misrepresentation.
Section 28 of the Insurance Contracts Act 1984 provides that where the insured under a contract of general insurance has failed to comply with the duty of disclosure and/or made a misrepresentation before the contract was entered into, both of which I find have occurred here, then pursuant to subsection (3) the liability of the insurer is reduced to the amount that would place him in the position in which he would have been if the failure had not occurred, or the misrepresentation had not been made.
I accept the evidence of Mr King and Mr McKenzie that had the true facts been brought to the attention of the third party it would have declined to enter into the contract of insurance. Their evidence accords with the documentation, and commercial sense. If the third party had so acted, it would not have been on risk.
In the circumstances and pursuant to s 28(3) it is necessary to eliminate its potential liability under the policy. Ferrcom Pty Limited v Commercial Union Assurance Company of Australia Limited (1993) 176 CLR 332. The defendant's claim for indemnity is refused.
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