Robinson v Brennan and Powell Pty Ltd

[1999] NSWCA 85

CITATION:	ROBINSON & ANOR v BRENNAN & POWELL PTY LTD [1999] NSWCA 85
FILE NUMBER(S):	CA 40813/97
HEARING DATE(S):	11 March 1999
JUDGMENT DATE:	4 May 1999
PARTIES :	Arthur and Joy Robinson - A Brennan & Powell Pty Limited - R
JUDGMENT OF:	Priestley JA at 1; Sheller JA at 2; Giles JA at 27

LOWER COURT JURISDICTION:	District Court
LOWER COURT FILE NUMBER(S) :	2349/94
LOWER COURT JUDICIAL OFFICER:	Sinclair DCJ

COUNSEL:	L G Foster SC/T A Alexis - A N C Hutley SC/M F Murphy - R
SOLICITORS:	Murray Stewart & Fogarty - A Colin Biggers & Paisley - R
CATCHWORDS:	NEGLIGENCE - CONTRIBUTORY NEGLIGENCE - APPORTIONMENT OF DAMAGES - WHEN APPORTIONMENT REVIEWABLE ON APPEAL - DEMONSTRABLE APPEALABLE ERROR - COSTS
CASES CITED:	Davies v Swan Motor (Swansea) Ltd [1949] 2 KB 291 at 326 Podrebersek v Australian Iron & Steel Pty Ltd (1985) 59 ALJR 492
DECISION:	Appeal allowed

THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40813/97
DC 2349/94

PRIESTLEY JA
SHELLER JA
GILES JA

ROBINSON & ANOR v BRENNAN & POWELL PTY LIMITED

The appellants were managing agents for the body corporate of the Harbord Village Shopping Centre. The public liability insurers for the shopping centre were NZI Insurance Limited, under a policy which expired on the 11 August 1992.

On 20 July the respondent began negotiations with the appellants to obtain the insurance business of the shopping centre. A quote was given in August, which was rejected for being higher than that offered by REI. The respondent came back with another quote which was accepted, and the respondent arranged cover for the shopping centre from 2 September 1992.

On 18 August 1992, a worker in the shopping centre fell and was injured as a result of the negligence of the body corporate. She began proceedings to recover damages and her claim was settled for $100,000. The defendant body corporate had joined the appellants as a third party and the respondent as a second third party, claiming against each any amount that may be due to the plaintiff and its costs.

Sinclair DCJ held that there was a gap in the public liability cover of the body corporate on 18 August 1992 as a result of the appellant’s negligence, and further, that the respondents were under a duty of care to warn the body corporate of the possibility that a gap in insurance cover could occur. He ordered that the appellants and the respondents fully indemnify the body corporate, ascribing the appellants with 80 percent responsibility and the respondent with 20 percent. He further ordered that the appellants pay the costs of the body corporate in defending the action

The apportionment of liability and the order as to costs were challenged on appeal.

Held:
By Sheller JA, Priestley and Giles JJA agreeing:
(1) The trial judge held that the appellants negligence was a greater culpability, the degree of departure from the standard of care of the reasonable person, and of greater relative importance in causing the damage than the acts or omissions of the respondent. It is not the task of a superior court to substitute a different apportionment because it may prefer it. What must be demonstrated is an appealable error, and in the present case no such error is apparent. Podrebersek v Australian Iron & Steel Pty Limited (1985) 59 ALJR 492 at 493-4 applied.
(2) There is no reason why the respondent should not be ordered to contribute to the costs of the body corporate in defending the action in the District Court.

Cases cited:
Davies v Swan Motor (Swansea)Limited [1949] 2 KB 291
Podrebersek v Australian Iron & Steel Pty Limited (1985) 59 ALJR 492

ORDERS

1. Appeal allowed.

2. Set aside paragraph 4 of the judgment of the District Court of 31 October 1997 and in lieu thereof substitute the following:
4. The defendant recover against Brennan & Powell Pty Limited $100,000 and Brennan & Powell Pty Limited pay the defendant’s costs of the action between the plaintiff and the defendant and the costs of the third party proceedings between the defendant and Brennan & Powell Pty Limited.
3. Add the following paragraphs to the judgment:
4A. A & J Robinson & Associates recover against Brennan & Powell Pty Limited $20,000 being a just and equitable contribution towards the loss suffered by the defendant and Brennan & Powell Pty Limited pay to A & J Robinson & Associates 20 percent of the amount of the defendant’s costs of the action between the plaintiff and the defendant paid by A & J Robinson & Associates to the defendant pursuant to paragraph 1 of the judgment.
4B. Brennan & Powell Pty Limited recover against A & J Robinson & Associates $80,000 being a just and equitable contribution to wards the loss suffered by the defendant and A & J Robinson & Associates pay to Brennan & Powell Pty Limited 80 per cent of the amount of the defendant’s costs of the action between the plaintiff and the defendant paid by Brennan & Powell Pty Limited to the defendant pursuant to para 4 of the judgment.
4. Otherwise confirm the judgment.
5. The appellants to pay the respondent’s costs of this appeal.

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THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40813/97
DC 2349/94

PRIESTLEY JA
SHELLER JA
GILES JA

Tuesday, 4 May 1999

ROBINSON & ANOR v BRENNAN & POWELL PTY LIMITED

JUDGMENT

1 PRIESTLEY JA: I agree with Sheller JA.
2 SHELLER JA: The appellants, Arthur Robinson and Joy Robinson trading as A & J Robinson & Associates, were the managing agents of the proprietor of Strata Plan 23069 (the body corporate) which was the registered proprietor of land and commercial premises known as the Harbord Village Shopping Centre (the shopping centre). NZI Insurance Australia Limited (NZI) was the body corporate’s public liability insurer of the shopping centre, under a policy due to expire on 11 August 1992. The policy was not renewed.
3 On 14 July 1992 NZI’s agent REI (NSW) Insurance Brokers Pty Limited (REI) forwarded a renewal invoice for the insurance to the appellants. On 20 July 1992 the respondent, Brennan & Powell Pty Limited (Brennan & Powell) insurance agents, through one of its principals, Mr Brennan, began negotiations with the appellants to procure the body corporate’s insurance business for the shopping centre. Early in August Mr Brennan submitted to the appellants a verbal quote for the insurance which was higher than that offered by REI. This was not accepted. Mr Brennan went away to obtain a lower quote. Subsequently he came back to the appellants and gave another verbal quote which the body corporate accepted. Mr Brennan then arranged the cover through Brookvale Insurance Brokers with Corporate Home Unit Underwriting Agency Pty Limited, which issued a new public liability policy for the period from 2 September 1992 to 2 September 1993.
4 On the morning of 18 August 1992 Mrs Aneke McLean fell and was injured in the shopping centre as the result of the body corporate’s negligence. Her employer telephoned the appellants’ office that day and reported the accident. Mrs McLean began proceedings against the body corporate which came before Sinclair DCJ in July 1997. On the first day her claim was settled with the defendant for $100,000 inclusive of costs. The settlement was accepted by all other parties as reasonable.
5 The defendant body corporate had joined the appellants as a third party and the respondent as a second third party claiming against each judgment for any amount that might be found due from it to the plaintiff, for the amount of any costs it might be adjudged to pay the plaintiff and for the amount of its own costs in defending the action. The defendant’s claim against the appellants was based on a breach of the terms of a written agreement dated 31 March 1988 to undertake the day to day management of the body corporate including the maintenance and renewal of insurance policies, and on negligence in failing to ensure that the defendant had a current public liability insurance policy. The defendant’s claim against the respondent was based on negligence in failing to advise the defendant or its agent to ensure insurance cover was maintained or to organise on behalf of the defendant temporary cover until such time as the respondent had obtained an acceptable and competitive quote. The appellants filed a fourth party notice against the respondent for contribution towards or indemnity for any verdict recovered against them by the defendant but the respondent made no equivalent claim against the appellants. Another third party claim and a cross-claim are of no relevance to this appeal. In his reasons for judgment given on 31 October 1997 Sinclair DCJ dealt with all these claims.
6 His Honour found there was a gap in the body corporate’s insurance cover on 18 August 1992 which was the result of the appellants’ negligence in failing to ensure that the body corporate defendant had appropriate insurance cover on that date. Accordingly, on the third party claim by the defendant against the appellants he found a verdict against the appellants in the sum of $100,000 and ordered the appellants to pay the defendant’s costs of the action between the plaintiff and the defendant and the costs of the third party proceedings between the defendant and the appellants.
7 On the second third party claim by the defendant against the respondent his Honour was of the opinion that in the circumstances the respondent was under a duty of care to warn the defendant of the possibility of a gap in the insurance cover occurring. He accepted that the primary responsibility lay with the appellants, the managing agents, but nevertheless was satisfied that the respondent was in breach of a duty of care to which it was subject at the relevant time and that this was a contributing factor to the lack of insurance cover on 18 August 1992. He found a verdict against the respondent in the sum of $100,000 and on the appellants’ fourth party notice a verdict against the respondent in the sum of $20,000, being a just and equitable contribution towards the loss suffered by the defendant. He ordered the respondent to pay the costs of the third party proceedings between the defendant and the respondent and ordered each party to pay its own costs of the fourth party claim but made no order requiring the respondent to pay or contribute to the defendant’s costs of the action between the plaintiff and the defendant.
8 The appellants appeal against the apportionment of $20,000 on the basis that it was too low and against the failure to order that the respondent contribute the whole or part of the defendant’s costs of the action brought against it by the plaintiff. The respondent did not press its cross-appeal.
9 The parties’ arguments were put skilfully and with admirable brevity. To understand them it is necessary to say more about the facts the trial Judge found.
10 The negotiations between the appellants and the respondent about insurance were conducted between Mr Brennan on behalf of the respondent and Mr Robinson and Mr Callaghan, who was the strata manager the appellants employed and had the management of the shopping centre, on behalf of the appellants. Mr Robinson had some previous experience as an insurance agent and had derived commission from brokers such as REI for insurance placed with them.
11 The invoice for renewal of the existing insurance which REI forwarded to the appellants on 14 July 1992 stated, inter alia:
“Your policy is due for renewal for the period stated hereunder. Please forward your remittance within 14 days to ensure continuity of cover.”

The period stated was from 11 August 1992 to 11 August 1993.

12 Mr Callaghan said that he first met Mr Brennan on 20 July 1992. Mr Brennan spoke to him about quoting for the insurance. Both were aware that the existing public liability cover expired on 11 August. According to the trial Judge Mr Callaghan said that Mr Brennan asked him to delay the existing insurance renewal so that he would have an opportunity to submit a quotation. There was no evidence to support this finding though I do not think this affects the outcome of the appeal. Mr Callaghan agreed to consider a quote and thereafter Mr Brennan sought a proposal from Brookvale Insurance Brokers.
13 On 17 August 1992 after Mr Brennan had returned and then gone away to obtain a lesser quote, REI forwarded to the appellants a “Final Reminder” which stated, inter alia:
“We do not appear to have received your remittance for the policy detailed below. Please remit within 7 days or the policy will lapse accordingly.”
14 On 19 August the “Final Reminder” was received in the office of the appellants. Mr Callaghan took it to Mr Robinson and was instructed to contact REI and seek an extension of time for one month. At that time Mr Callaghan and REI were negotiating about a revision of the terms for renewal of the NZI policy. On 19 August 1992 REI did not grant an extension but issued a cover note. The cover note has not been produced but REI’s records noted “S/P 23069 due 11/8 pending renewal”. The cover note was said to be for a period of seven days. On 24 August REI faxed to Mr Callaghan a confirmation of revised renewal terms. The premium payable for renewal of the NZI policy was not paid.
15 On 27 August Mr Robinson wrote to members of the Council of the body corporate and informed them:
“Renewal of the building replacement policy is now due. Two quotations have been received…….

Would Council please advise this office as to which company they would prefer to place Body Corporate insurance business with.”
The quotations were those provided by REI and the respondent.

16 In finding that the respondent was negligent the trial Judge accepted the following propositions from the written opinion of Barry E Capelin which was admitted without objection. Mr Capelin was not required for cross-examination and was accepted as suitably qualified to express the opinions he did. Mr Capelin said:
“In the event that an insurance consultant is tendering for business and they are aware that the policies of insurance will expire prior to the commencement date of the coverage they are arranging they should draw to the client’s attention the lack of cover between the expiry date of the policies and the commencement date of their new policies. In this matter Brennan & Powell Pty Limited I believe should have suggested how coverage could have been maintained during the negotiation period. After all A & J Robinson had agreed to provide extra time for them to improve their quotation.”

Mr Capelin said that upon winning the business an insurance consultant had an obligation to use his best endeavours to ensure his new client had no uninsured period. His Honour found these propositions to be “commonsense and eminently reasonable”.

17 On this appeal the finding of negligence against the respondent was not challenged. Mr Foster SC, who appeared for the appellants, submitted, in effect, that if the respondent had warned the appellants that the existing insurance would expire before the date of any new coverage, the appellants would have arranged for cover and the body corporate would have been insured against its liability to the plaintiff for the accident on 18 August 1992. Mr Foster stressed that there was no reason for the appellants not to renew the insurance other than to give the respondent the opportunity to provide a better quotation. There was no suggestion of any other reason why renewal would have been delayed. To adopt the language of some of the cases, the “causative potency” (a phrase conceived by Denning LJ, as he then was, in Davies v Swan Motor (Swansea) Limited [1949] 2 KB 291 at 326) of the respondent’s conduct was substantially greater than that of the appellants. Also to be brought into account was the blameworthiness of the respondent’s conduct. The respondent, it was said, asked the appellants to be allowed to quote for the insurance and then sought to improve its quotation thereby going beyond the date when it knew the existing policy expired.
18 Mr Hutley SC, for the respondent, began by reminding us that it is not the task of this Court to substitute a different apportionment because it may prefer it. Essential to the success of the appeal is the demonstration of appealable error. For present purposes it is sufficient to refer to what the High Court said in Podrebersek v Australian Iron & Steel Pty Limited (1985) 59 ALJR 492 at 493-4:
“A finding on a question of apportionment is a finding upon a ‘question, not of principle or positive findings of fact or law, but a proportion, of balance and relative emphasis, and of weighing different considerations. It involves an individual choice or discretion, as to which there may well be differences of opinion by different minds’. British Fame (Owners) v Macgregor (Owners) [1943] AC 197 at 201. Such a finding, if made by a Judge, is not lightly reviewed.”
19 The body corporate employed the appellants, so it was agreed, to effect its insurance. They were negligent in failing to have cover in place on 18 August 1992. They had arranged the insurance that was to expire on 11 August 1992. They were put on notice by the renewal notice of 14 July that their remittance was required to ensure continuity of cover after 11 August 1992. Mr Callaghan said that at all times he was eager to maintain the insurance in force but did not tell Mr Brennan at their first meeting that the existing cover was from 11 August. He knew that Mr Brennan was not covering them from that date and believed such cover was automatically provided by REI even though the premiums had not been paid on time. He said he did nothing about maintaining cover until 17 August and he did not ask Mr Brennan to obtain cover for the period of any gap. The appellants did not renew the insurance when they were informed about the accident on 18 August 1992, even though they received the final reminder on 19 August offering to renew the policy from 11 August.
20 Judge Sinclair found that on 19 August 1992 when the final reminder was received in the appellants’ office, Mr Callaghan took it to Mr Robinson and was instructed to contact REI and seek an extension of time for one month. He did not arrange for the premium to be paid to REI. At that time he was apparently negotiating with REI to revise the terms of renewal. He was aware that the commencement date on the memorandum prepared for the body corporate for the respondent’s policy was 2 September 1992 but he did not have any concern about it at that time.
21 There seems little doubt that the appellants proceeded on the basis that they were covered by the existing NZI insurance policy at least until 19 August and thereafter by the cover note. What was critical and apparently escaped their notice was that, as his Honour found, unless they paid the premium as required by the final reminder or, possibly, obtained an extension of the period allowed for such payment by it, the body corporate was not covered by a public liability policy between 11 August and the date of the cover note. Mr Hutley submitted that this was, to use the language in Podrebersek, a greater culpability, ie degree of departure from the standard of care of the reasonable person, and of greater relative importance in causing the damage than the acts or omissions of the respondent. Judge Sinclair clearly thought so. I am not persuaded that in reaching this conclusion he erred. Mr Hutley stressed that the respondent was not an insurance adviser but an insurance agent seeking to do business. As Mr Brennan said in evidence maintaining the insurance was the duty and care of the appellants. Insurance was already in place. The respondent could not ask the competing insurer to place cover if it was not going to receive the insurance business.
22 The appellants’ appeal against the amount of the apportionment should be dismissed. However, there seems no reason why on the fourth party claim the respondent was not ordered to contribute to the defendant’s costs of the action between the plaintiff and the defendant which the appellants were ordered to pay.
23 During argument it was pointed out that para 4 of the judgment as entered provides for the defendant to recover against the respondent “$20,000 being a just and equitable contribution towards the loss suffered by the defendant”. This is slip. It does not accord with the verdict the trial Judge found for the defendant against the respondent in the sum of $100,000. The formal order, which contained no order for contribution on the fourth party notice, may have been seen as overcoming the absence of any third party claim by the respondent against the appellants for contribution. This has now been dealt with by the parties agreeing as evidenced in a letter from the respondent’s solicitors, Colin Biggers & Paisley, of 21 April 1999 that the orders below should have been relevantly as follows:
“1. Judgment for the defendant against both A & J Robinson and Brennan & Powell Pty Limited for $100,000.

2. Contribution and indemnity orders for A & J Robinson for 20 per cent or $20,000 against Brennan & Powell Pty Limited and contribution and indemnity orders for Brennan & Powell Pty Limited against A & J Robinson for 80 per cent or $80,000.”

24 No doubt these amendments could have been made in the District Court but in the circumstances it is more convenient that this Court substitute a fresh paragraph 4 and add new paragraphs to deal with contribution in the judgment.
25 In substance the appellants fail on this appeal except in so far as they are entitled to recover a contribution towards the order that they pay the defendant’s costs of the action between the plaintiff and the defendant. On its face that looks like an oversight by the trial Judge which might have been corrected at the time he gave judgment. In my opinion, the appellants should pay the respondent’s costs of the appeal.
26 I propose the following orders:
1. Appeal allowed.

2. Set aside paragraph 4 of the judgment of the District Court of 31 October 1997 and in lieu thereof substitute the following:
4. The defendant recover against Brennan & Powell Pty Limited $100,000 and Brennan & Powell Pty Limited pay the defendant’s costs of the action between the plaintiff and the defendant and the costs of the third party proceedings between the defendant and Brennan & Powell Pty Limited.
3. Add the following paragraphs to the judgment:
4A. A & J Robinson & Associates recover against Brennan & Powell Pty Limited $20,000 being a just and equitable contribution towards the loss suffered by the defendant and Brennan & Powell Pty Limited pay to A & J Robinson & Associates 20 percent of the amount of the defendant’s costs of the action between the plaintiff and the defendant paid by A & J Robinson & Associates to the defendant pursuant to paragraph 1 of the judgment.
4B. Brennan & Powell Pty Limited recover against A & J Robinson & Associates $80,000 being a just and equitable contribution towards the loss suffered by the defendant and A & J Robinson & Associates pay to Brennan & Powell Pty Limited 80 per cent of the amount of the defendant’s costs of the action between the plaintiff and the defendant paid by Brennan & Powell Pty Limited to the defendant pursuant to para 4 of the judgment.
4. Otherwise confirm the judgment.
5. The appellants to pay the respondent’s costs of this appeal.

27 GILES JA: I agree with Sheller JA.

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