National Mutual Life Association of Australasia Limited v Chris Poulson Insurance Agencies Pty Ltd (No 4)

[1998] TASSC 11

11/1998

PARTIES:  NATIONAL MUTUAL LIFE ASSOCIATION

OF AUSTRALASIA LIMITED

v

CHRIS POULSON INSURANCE
AGENCIES PTY LTD (No 4)

TITLE OF COURT:  SUPREME COURT OF TASMANIA
JURISDICTION:  ORIGINAL
FILE NO/S:  1648/1991
DELIVERED:  20 February 1998
HEARING DATE/S:  9, 11, 12, 13, 16, 17, 18, 19, and 20 February 1998
RULING OF:  Slicer J

CATCHWORDS:

Evidence - Admissibility and relevancy - Opinion evidence - Ultimate issue to be determined.

Aust Dig Evidence [54-64]

REPRESENTATION:

Counsel:
             Plaintiff:  D J Habersberger QC, G G McArthur
             Defendant:  M W D White QC, R J Oliver, G L Sealy
Solicitors:
             Plaintiff:  Page Seager
             Defendant:  Piggot Wood & Baker

Judgment category classification:
Court Computer Code:  
Judgment ID Number:  11/1998
Number of pages:  6

Serial No 11/1998
File No 1648/1991

NATIONAL MUTUAL LIFE ASSOCIATION OF AUSTRALASIA LIMITED
v
CHRIS POULSON INSURANCE AGENCIES PTY LTD (No 4)

REASONS FOR RULING  SLICER J

20 February 1998

The defendant seeks to lead evidence from a senior and experienced insurance consultant as to his opinion concerning certain practices and forms of conduct pertaining to the relationship of a life insurance company and a contracted agent.  The evidence sought to be led includes opinion as to the propriety of conduct and the likely effect of such conduct on the relationship between company and agent.  The evidence is said to be relevant to the existence and extent of terms to be implied within the contract and the characteristics of a fiduciary relationship claimed to exist between the parties.

Objection is taken on a number of bases which include:

1. The evidence sought to be led goes to the ultimate issue to be decided by the Court.

1. The evidence is that of the opinion of the witness rather than that referable to a standard or custom within the industry.

1. The evidence purports to assess the subjective reaction of an agent to conduct or omission on the part of the corporation, rather than usage or practice.

1. The evidence seeks to establish a standard or norm without reference to any criteria accepted within the industry.

1. Some of the evidence purports to be an examination of a document and an assessment of its implications and effect.

Although greater flexibility has been afforded to the rules concerning the reception of opinion evidence in non-jury civil cases (Ancher, Mortlock, Murray and Woolley Pty Ltd & Ors v Hooker Homes Pty Ltd (1971) 2 NSWLR 278, Milirrpum & Ors v Nabalco Pty Ltd and The Commonwealth of Australia (1971) 17 FLR 141), evidence ought not be regarded as opinion evidence if its real purport is advocacy of a particular position (Clark v Ryan (1960) 103 CLR 486).

Some of the objections relate more to the form of the question, but since the evidence was taken "de bene esse", it is convenient to consider the answers given in determining admissibility.  The appropriate tests are those laid down by the High Court in Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) (1986) 64 ALR 481, Clark v Ryan (supra) at 486 and Transport Publishing Company Pty Ltd v Literature Board of Review (1956) 99 CLR 111.

The relevant passages of evidence to which objection is taken are set out below, and, since different considerations apply to the varying questions and answers, particular rulings given in relation to each.

I Evidence and Rulings

"In relation then to the policies that the life company brings forward in that relationship for them to sell when they're tied, would you indicate what dependency or otherwise developed from the agent's point of view as to the quality of those policies? ... Well naturally they expect the contracts to be competitive, to be supported and the company always, in its attempts to support, stood behind the contract and its terms and conditions.  And that would be a normal expectation.  And I mean that really would apply across the industry too in the multi-agency.  That just doesn't apply to a sole agency situation.  That the life office would be expected and without question that the contract would be supported."  [At transcript 772 - 773]

A portion of the evidence will be excluded.  Evidence of a normal expectation that "the life office would be expected and without question that the contract would be supported" is not opinion evidence.  It is a purported answer as to a legal consequence, it purports to be a conclusion applicable in all cases without any statement of assumptions or qualifications and expresses a subjective response to a state of affairs.  Evidence which involves unstated assumptions as to either disputed facts or propositions of law intrudes into the area of responsibility of the judicial tribunal responsible for the determination of the issue (Arnotts Limited v Trade Practices Commission (1990) 97 ALR 555). The expectation that the contracts would be competitive is a truism and opinion evidence adds little to the defendant's case. As a statement it is unobjectionable. But evidence that a life company's support of a particular policy would be the "normal expectation" of an agent goes far beyond the assumptions made by the witness. For example, would a "normal expectation" be one held where the continued marketing or continuance of a policy detrimental to corporation and agent alike be regarded by an agent as warranting long-term support by the company? The evidence will be excluded.

II

"Right.  Now, in this relationship - what was the industry standard or norm in relation to the integrity which could be expected, in the first part, from the life company, and the second part, from the agent? ... Well, the life company, obviously, in terms of their letter of appointment, had factors there that the agent would represent them honestly and ethically and all those sorts of normal situations and all business arrangements as regards the property of the organisation.  And the expectation of the agent was inevitably that the company would provide contracts that were satisfactory to market and would support him in those activities on an ongoing basis."  [At transcript 775]

The second passage will be excluded.  The expectation of an agent is not proper opinion evidence.  It is a generalised conclusion seeking not to establish custom or accepted conduct within the industry but an advocacy of a position.  It is impossible to ascertain, from either the question or answer, what is meant by "support him in those activities on an ongoing basis".  The first part of the answer is a truism and the second meaningless.  The last sentence of the transcript will be excluded.

III

"And are you able to say whether the relationship involved any aspect of reliance, mutual reliance, between the two parties? ...  Well, particularly, with the sole agency system, when you are marketing as a sole - you have a sole supplier, the upmost - the old insurance term of utmost good faith and integrity is certainly - are given.  Because that is what the agent is out there talking to his clients about.  You are dealing with this company, I deal with this company exclusively for these reasons.  They will support me, they will support this situation.  I believe that this is the best contract for you.  So, without doubt, that agent expects and gives loyalty to the company - and expects the same in return.

All right. ... It is the nature of the arrangement." [At transcript 775]

The answer given is no more than a statement that there exists within the industry a relationship of good faith and integrity.  The return of loyalty can be assumed by reference to the nature of the relationship and does not intrude into the particular question requiring determination.  The evidence will be admitted.

IV

"MR WHITE QC:  (RESUMING)  You were about to address beyond what his Honour has identified.  There is the commercial aspects.  Some aspects of general accepted standard of conduct in the industry, is that not so? ...  That's right.  Again, from my experience in the industry, companies support the contracts that their agents sell.  And particularly in the tied agency system.  There is an inbuilt understanding or an understanding that that will be the case, by the nature of their arrangement with that company."  [At t780]

The evidence is that of custom, that is, as a matter of practice, life companies support the product marketed by them.  The objection to "inbuilt understanding" adds nothing to the answer and though objectionable in its own right is subsumed by the wider context of the answer.  The evidence will be admitted.

V

"MR WHITE:  (RESUMING EXAMINATION DE BENE ESSE)  Could I ask this, Mr Russell, just before we adjourn - would you expect a memo like that, by a Tasmanian Manager, to be communicated to the agent in the circumstances we've just discussed? ... Um -

By the Manager? ...  Well having read that memo, that's dynamite.  I mean I certainly wouldn't expect it to be communicated in that form or there'd be obviously a very serious problem with the Tasmanian agency force.  But the actions that are proposed should certainly be communicated to the agency force because there are very real financial issues attached to it.  And in, I believe any sole agency situation that you would have with major Life offices, it would only be right and just and normal that -

...

WITNESS:  If there was open and honest communication there that would be the case.  As I understand it if this wasn't disclosed, that this action was about to be taken, that certainly is a sad reflection on how the relationship was seen by Mr Smith in the normal standards of relationship with the Life office and its tied agency force."  [At transcript 801]

The opinion of the evidence as to the nature and implication of the document will not be admitted.  The relevance and import of a representation in an application for insurance can be properly received as opinion evidence where the significance and effect of a term on the party affording insurance is in issue.  As McCarie J said in Yorke v Yorkshire Insurance Company [1918] 1 KB 662 at 670:

"Expert evidence with respect to the materiality of a fact has been freely admitted in recent years by the experienced judges who have administered, and are now administering, justice in the Commercial Court.  The practice I conceive is settled:  see per Mathew J in Herring v Janson; Arnould on Marine Insurance, 9th ed, s 626; per Hamilton J in Scottish Shire Line v London and Provincial Marine and General Insurance Co; see also Associated Oil Carriers v Union Insurance Society of Canton, per Atkin J, which is also well reported as to the evidence in 33 Times L R 328.  I conceive that no sound distinction can be drawn between cases of marine insurance as distinguished from life, fire, or other heads of insurance business:  see, for example, Macgillivray on Insurance Law, p 315; Smith's Leading Cases, notes to Carter v Boehm, 12th ed, vol 1, pp 570 et seq."

However, here the witness is commenting on the requirement to disclose the contents of an internal administrative document and of its likely effect on an agent.  It was not of the nature of a representation which induced the agent to take any particular step or enter into a form of relationship.  The document should speak for itself and ought not be interpreted by the witness.  Evidence which is no more than a commentary upon the conduct of another on identified issues is, without more, not of a nature such as to satisfy the test required for the characterisation of opinion evidence (O'Brien v Gillespie & Others (1996) 41 NSWLR 549, Allstate Life Insurance Company v Australia and New Zealand Banking Group Ltd (No 33) (1996) 137 ALR 138). The effect of the document or its contents on the Tasmanian agency force is not within the province of the witness and the terminology "right and just" is referable either to the function of the court, or limited to the personal value-laden opinion of the witness. The second part of the answer is dependent upon an assertion and the conclusion as to the nature of the relationship between an officer of the plaintiff company and the defendant constitutes advocacy. The evidence will not be admitted.

VI

"Now Mr Russell, I was asking you your opinion as to what you saw the effect if the contractual relationship between the company, the life company, and the agent included some aspect whereby the life company was free to bring to an end policies after they had been sold by the agent? ...  That would be totally - obviously totally out of court, other than the life office always has the right to discontinue a line of contracts but support those contracts in the way they were presented to the client first and through the agent.  In other words, they can stop a line, open up a new fund, do things like that, but they - in all the discussions with the agent those contracts will be supported to their normal conclusion.  In other words they'll stay on the books and they'll receive bonuses and they'll be serviced and all the normal things will happen.  So it just - it would not happen that you would say that a life office would cause contracts to be wound up without reference to the agency force and to all the parties involved."  [At transcript 803 - 804]

Some of the material contained within the answer is unobjectionable but becomes meaningless if the remaining portions are removed.  But to conclude, "that would be totally - obviously totally out of court" does not constitute opinion evidence, whilst the addition of the claimed opinion:

"So it just - it would not happen that you would say that a life office would cause contracts to be wound up without reference to the agency force and to all the parties involved",

does no more than address the ultimate issue to be determined by this Court.  The questioner asked the witness to comment on the effect on a contractual relationship in the event that a different term was comprised in the original agreement.  The context can be seen in the light of preceding questions and exchanges occurring between counsel and the bench.

VII

"Could I come back to the question of the contract which an agent in the industry in a tied relationship would normally enter into with the Life company.  Bearing in mind you've said that you've drawn attention to the fact that for a Life company to bring about an end to policies which have already been sold was highly unusual to use a term, would you consider that this question would normally be discussed when the agent and the company executives were discussing the terms of the contract under which the agent went into it? ... Right at the start when he was - You mean his contract with the association?

Yes.  The agent's contract with the Life company? ... It would be such an unusual matter that really I don't think it would be discussed as such about a company actually taking that sort of action because it would be assumed that that would not happen quite frankly.  I certainly wouldn't discuss that sort of action in talking to a new agent.  That just wouldn't cross my mind.

And in the light of your long experience in the industry, could you give your opinion as to the likely effect on the relationship -

HIS HONOUR:  Oh -

MR WHITE QC:  - if it was established that a company -

HIS HONOUR:  Which relationship?  Between two human beings?  He is giving expert opinion now on the effect of the relationship between a manager and an agent who don't like each other, or do like each other, or don't trust each other, or have had a falling out, or, what?  What am I being asked to do?  Receive evidence of his opinion of the inter reaction of two human beings involved in a contract?

MR WHITE QC:  No, your Honour.  I was talking about the relationship in the contract between the agent and the life company.

HIS HONOUR:  So it's effect on a contractual term between them?

MR WHITE QC:  No.  I am talking about the effect upon what the parties may do and in particular the agents may do and I was just about to put the rest of the proposition.

HIS HONOUR:  The reaction of a human being who is an agent upon receipt of certain information?  Look, I think we will just solve this another way.  You just ask any questions you like, I will get the transcript, when I have got the transcript and the answers I will take the transcript away, I will analyse each word, each question and make a ruling.  Go on, please.

MR WHITE QC:  (RESUMING)  Thank you.

HIS HONOUR:  The questions contain their own vices.  They are too wide, they contain value judgments implicit in the question, and it makes it impossible then to discern from the answer those questions and issues that I am being asked to determine.  You go on, I will analyse the transcript word by word and then you will get your answer.  After we have all looked at the transcript."  [At transcript 802 - 803]

The defendant's case in its counter-claim is based on the existence of a fiduciary relationship and the claim that there exists an implied term within the contract.  The implied term is said to arise both by operation of law and through the conduct of the parties in the light of their existing contractual relationship.  The evidence excluded cannot go to the question of law unless it evidences custom or a code of conduct referable to some identified standard within the industry.  Evidence expressing the witness' opinion as to what would be expected in a given situation, or the implications to be drawn from an agency relationship, does not satisfy the required tests.  Much of the evidence excluded does not purport to be referable to a code of conduct or resolutions of agreements reached within the industry, but instead amounts to an opinion by a witness as to the reasonableness or otherwise of particular conduct referable to particular circumstances.  In so far as it is claimed to be admissible by reference to existence of an implied term created or evidenced by conduct, it remains objectionable.  It is the relationship and conduct of the parties to this action which are the issues.  As such, the evidence, when considered in this regard, seeks to intrude into the determination of "the ultimate issue".  A useful compilation of the principles governing the reception of this form of evidence is stated by Sir Richard Eggleston in his "Evidence, Proof and Probability" 2nd ed, the analysis of which was approved by the Full Court of the Federal Court of Australia in Arnotts Limited v Trade Practices Commission (supra) at 594 - 596. The relevant passage states at 147 - 148:

"What the rule really means is that an expert must not express an opinion if to do so would involve unstated assumptions as to either disputed facts or propositions of law.  Thus an expert who says 'In my opinion this accident was caused by ...' in a case where the facts are disputed is assuming the right to make a decision as to which of the parties is telling the truth, and is therefore usurping the function of the tribunal.  Similarly, if a valuer is called in a case where the 'unimproved value' of a property is in issue, and there is uncertainty as to the meaning of the term as a matter of law, the expert should not say 'In my opinion the unimproved value is ...' without stating on what the interpretation of the term his opinion is based."

In so far as the witness attempting to comment on the correctness or otherwise of particular conduct (as for example the effect of the memorandum), the following statement by Eggleston (supra) at 154:

"This is the area in which experts find themselves in the greatest trouble.  It is of course not permissible for the expert to take over the role of advocate from counsel in the case - the law does not allow unqualified people to act as barristers, except in special courts like the industrial tribunals or the small claims courts.  But the expert has a legitimate role of advocacy in that, having expounded to the tribunal the rules applicable to the case (these may not even be in dispute), his evidence may then consist of argument as to the conclusions that should be drawn from the facts, interpreted in the light of those rules.  The difficulty arises because the expert often finds it difficult to distinguish between arguments on the assumption that the 'facts' put forward by his side are the correct ones, and telling the judge or jury which facts they should accept as true.  If he makes his assumptions clear, there is no objection to his arguing what the consequences of accepting those assumptions should be; but he is not to do the jury's fact-finding for it, where this depends on accepting one or the other set of contradictory witnesses",

is apposite.

The evidence identified will not be admitted on the trial.