Sagacious Legal Pty Ltd v Wesfarmers General Insurance Ltd (No 4)
[2010] FCA 482
•18 May 2010
FEDERAL COURT OF AUSTRALIA
Sagacious Legal Pty Ltd v Wesfarmers General Insurance Ltd (No 4)
[2010] FCA 482
Citation: Sagacious Legal Pty Ltd v Wesfarmers General Insurance Ltd (No 4) [2010] FCA 482 Parties: SAGACIOUS LEGAL PTY LTD v WESFARMERS GENERAL INSURANCE LIMITED File number: NSD 509 of 2009 Judge: RARES J Date of judgment: 18 May 2010 Corrigendum: 28 June 2010 Catchwords: INSURANCE – MOTOR VEHICLE INSURANCE – insured’s duty of disclosure – misrepresentation by insured – duty of disclosure under s 21 of the Insurance Contracts Act 1984 (Cth) – proposal for policy of insurance – proposed form contained question about all cancellations of license and a limited question concerning convictions and offences in prior 3 years – whether limitation applied to specific question in proposal form as to any cancellations of licence – alleged ambiguity – non disclosure of cancellation of driver’s licence more than 3 years earlier – whether failure by insured to comply with duty of disclosure or misrepresentation – whether ambiguity or waiver by insurer of further compliance by insured
INSURANCE – exclusions in policy of insurance – insurance claim for indemnity value of car arising from motor vehicle accident – exclusion of liability where the driver is “under the influence of intoxicating liquor” – meaning of “under the influence of intoxicating liquor” – question of fact and degree based on the evidence – exclusion of liability where driver had a blood alcohol level in excess of the legal limit in the period up to 2 hours after the occurrence of the event – whether s 37(5) of Road Transport (Safety and Management) Act 1999 (NSW) rendered exclusion void
EVIDENCE – admissibility – s 37(2) of the Road Transport (Safety and Management) Act 1999 (NSW) made result of blood analysis under Div 4 inadmissible as evidence for the purposes of any contract of insurance – sample of blood received by analyst in container with broken seal – whether result of analysis of blood inadmissible for all purposes, or capable of being evidence that the driver’s blood contained a particular level of alcohol – effect on person of level of alcohol in blood not self-evident from result of analysis – Held: result was evidence only of the blood alcohol level not of how level of alcohol affected particular driver – results of analysis not made inadmissible by s 37
EVIDENCE – admissibility – discretion to reject blood analysis results under s 135 of the Evidence Act 1995 (Cth) – whether probative value of analysis substantially outweighed by the danger that it was misleading or unfairly prejudicial – possibility of tampering with sample with seal broken when received by analyst not excluded – requirement for a seal precaution for criminal proceedings under Road Transport (Safety and Management) Act 1999 (NSW) for the purpose of protecting accused – certificate relevant in civil proceeding as evidence of the result of analysis of the driver’s blood – concentration of alcohol in driver’s blood sample could only be proved by analysis
PRECEDENT – ratio decidendi and obiter dicta – ratio decidendi is general rule of law propounded as the reason for the decision – remarks not necessary to the decision do not form part of its ratio and are obiter dicta
Words and Phrases: under the influence of intoxicating liquor
Held: insured breached duty of disclosure and made misrepresentation by non-disclosure of previous licence cancellation – insurer entitled to rely on both exclusions
Legislation: Evidence Act 1995 (Cth) ss 56(1), 135, 140
Insurance Contracts Act 1984 (Cth) ss 21-28, 28(3), 57
Judiciary Act 1903 (Cth) ss 39B(1A)(c), 79
Road Transport (Safety and Traffic Management) Act1999 (NSW) ss 23(1), 33(6), 37, 37(2), 37(5), 37(6)
Traffic Act 1909 (NSW) s 4E(13)Cases cited: Acama Pty Ltd v Ellis (2010) 263 ALR 576 applied
Advance (NSW) Insurance Agencies Pty Ltd v Matthews (1989) 166 CLR 606 applied
Agtrack (NT) Pty Ltd v Hatfield (2005) 223 CLR 251 referred toAttorney-General (Queensland) v Australian Industrial Relations Commission (2002) 213 CLR 485 applied
Bank of New South Wales v Commonwealth (1948) 76 CLR 1 applied
Bitumen and Oil Refineries (Australia) Ltd v Commissioner for Government Transport (1955) 92 CLR 200 applied
Briginshaw v Briginshaw (1938) 60 CLR 336 applied
CAL No 14 Pty Ltd v Motor Accidents Board (2009) 239 CLR 390 applied
Campomar Sociedad Limitada v Nike International Limited (2000) 202 CLR 45 applied
Communications, Electrical, Postal, Plumbing & Allied Services Union of Australia v Australian Competition and Consumer Commission (2007) 162 FCR 466 applied
Chapman v Luminis Pty Ltd [No 2] (2000) 100 FCR 229 referred to
Cory v Club Motor Insurance Agency Pty Ltd [1969] VR 189 referred to
Ex parte King; re Blackley (1938) 38 SR (NSW) 483 applied
Forbes v Australian Associated Motor Insurers Ltd (1990) 12 MVR 165 applied
Ford v SGIC General Insurance Ltd [2000] SASC 206 applied
Gala v Preston (1991) 172 CLR 243 referred to
LNC Industries Ltd v BMW (Australia) Ltd (1983) 151 CLR 575 applied
London Jewellers Ltd v Attenborough [1934] 2 KB 206 at 222 applied
Louden v British Merchants Insurance Co Ltd [1961] 1 All ER 705 referred to
Mair v Railway Passengers Assurance Co (Ltd) (1877) 37 LT 356 applied
McBride v Monzil (2007) 164 FCR 559 considered
McNamara v Consumer Trader and Tenancy Tribunal (2005) 221 CLR 446 applied
Noonan v Elson [1950] Qd R 215 applied
NRMA v McCarney (1992) 16 MVR 34 distinguished
O’Toole v Charles David Pty Ltd (1990) 171 CLR 232 applied
Paric v John Holland (Constructions) Pty Ltd (1985) 62 ALR 85 applied
Permanent Trustee Australia Ltd v FAI General Insurance Company Ltd (In liq) (2003) 214 CLR 514 applied
Plasteel Windows Australia Pty Ltd v CE Heath Underwriting Agencies Pty Ltd (1990) 19 NSWLR 400 applied
Precision Plastics Pty Ltd v Demir (1975) 132 CLR 362 distinguishedRe Tyler; Ex parte Foley (1994) 181 CLR 18 applied
Rejfek v McElroy (1964) 112 CLR 517 applied
State Government Insurance Commission v Laube (1984) 37 SASR 31 applied
Territory Insurance Office v Lemmens (1995) 118 FLR 103 applied
The Queen v Toohey; Ex parte Northern Land Council (1981) 151 CLR 170 applied
Woolcock St Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515 appliedREFERENCES
G W Paton and G Sawer: Ratio Decidendi and Obiter Dictum in Appellate Courts (1947) 63 LQR 461
Julius Stone: Precedent and the Law (1985) at 123Dates of hearing: 8, 9, 10, 11, 12 March 2010, 15 April 2010, 4 May 2010 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 161 Counsel for the Applicant: MBJ Lee Solicitor for the Applicant: Slater & Gordon Counsel for the Respondent: P Braham Solicitor for the Respondent: Hicksons FEDERAL COURT OF AUSTRALIA
Sagacious Legal Pty Ltd v Wesfarmers General Insurance Ltd (No 4)
[2010] FCA 482CORRIGENDUM
1.On the cover sheet of the judgment, “Westfarmers General Insurance Limited” has been changed to read “Wesfarmers General Insurance Limited”.
2.On the orders page of the judgment, “Westfarmers General Insurance Limited” has been changed to read “Wesfarmers General Insurance Limited”.
3.On the first page of the Reasons for Judgment, “Westfarmers General Insurance Limited” has been changed to read “Wesfarmers General Insurance Limited”.
I certify that the preceding three (3) numbered paragraphs are a true copy of the Corrigendum to Reasons for Judgment herein of the Honourable Justice Rares. Associate:
Dated: 28 June 2010
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 509 of 2009
BETWEEN: SAGACIOUS LEGAL PTY LTD
ApplicantAND: WESFARMERS GENERAL INSURANCE LIMITED
Respondent
JUDGE:
RARES J
DATE OF ORDER:
18 MAY 2010
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The proceedings be dismissed.
2.The applicant pay the respondent’s costs.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 509 of 2009
BETWEEN: SAGACIOUS LEGAL PTY LTD
ApplicantAND: WESFARMERS GENERAL INSURANCE LIMITED
Respondent
JUDGE:
RARES J
DATE:
18 MAY 2010
PLACE:
SYDNEY
REASONS FOR JUDGMENT
On 16 January 2008, at about 7 pm Lana O’Shanassy was driving home in a Mercedes Benz E55 motor vehicle along Range Road, Mittagong in the Southern Highlands of New South Wales. She had been drinking alcohol. Her car left the roadway at a speed above 80 kilometres per hour. It hit two trees and rolled over onto its roof coming to rest against a third tree on the side of the road. Mrs O’Shanassy was held by her seat belt upside down in her seat. Her right foot was facing backwards pinned between parts of the damaged underside of the car.
The car was so extensively damaged that it was a write off. The car’s owner was Sagacious Legal Pty Ltd, the incorporated legal practice of her husband, Paul,. It promptly made a claim for $173,000, the indemnity value of the car, on its insurer, then called Lumley General Insurance Ltd. Mrs O’Shanassy had been convicted twice before, in 1999 and 2002 for driving with in excess of the prescribed concentration of alcohol in her blood and she had been disqualified from holding a driver’s licence for 18 months and 12 months respectively.
The insurer refused indemnity in early December 2008 on three bases that constituted the principal issues in these proceedings. The insurer contended that:
(1)in September 2004 Sagacious had made a misrepresentation in connection with obtaining insurance for the car or breached its duty of disclosure under s 21 of the Insurance Contracts Act 1984 (Cth) in its proposal for insuring the car. This was because the insurer was not made aware of the cancellation or suspension of Mrs O’Shanassy’s driver’s licence in 1999 or of her conviction that led to this;
(2)the policy had excluded its liability for the loss because, either:
(a)Mrs O’Shanassy was driving the car “under the influence of intoxicating liquor”; or
(b)an analysis of her blood taken within two hours of the accident contained a percentage of alcohol that exceeded the legal limit prescribed in the law of New South Wales.
The third issue, (2)(b), raised questions about the circumstances in which Mrs O’Shanassy’s blood was both obtained later on the evening of 16 January 2008 and subsequently analysed. There was also a question whether s 37(2) of the Road Transport (Safety and Traffic Management) Act 1999 (NSW) (“the Road Transport Act”) prohibited the results of any analysis of her blood being admissible at all or in proceedings to which the Evidence Act 1995 (Cth) applies. I will deal with each of the three issues below.
JURISDICTION
This matter has been in federal jurisdiction since at least the time of the insurer’s refusal of indemnity. It involved rights and liabilities under a contract of insurance that owed their existence to a federal law, namely the Insurance Contracts Act: cf Agtrack (NT) Pty Ltd v Hatfield (2005) 223 CLR 251 at 262-263 [29], [32] per Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ. As Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ explained in LNC Industries Ltd v BMW (Australia) Ltd (1983) 151 CLR 575 at 581:
“When it is said that a matter will arise under a law of the Parliament only if the right or duty in question in the matter owes its existence to a law of the Parliament that does not mean that the question depends on the form of the relief sought and on whether that relief depends on federal law. A claim for damages for breach or for specific performance of a contract, or a claim for relief for breach of trust, is a claim for relief of a kind which is available under State law, but if the contract or trust is in respect of a right or property which is the creation of federal law, the claim arises under federal law. The subject matter of the contract or trust in such a case exists as a result of the federal law.”
The insured pleaded a claim for interest under s 57 of the Insurance Contracts Act, thinking that this enlivened the jurisdiction of this court. However, that jurisdiction was attracted well before the pleading. This is because the controversy between the parties, from at least the time of the insurer’s refusal to indemnity, involved the extent of the insured’s compliance with its duty of disclosure under the Act, whether it had made a statement in or in connection with a policy of insurance with respect to Mrs O’Shanassy’s driving record that was a misrepresentation and whether the insurer was entitled to avail itself of its rights under s 28 of the Act to refuse indemnity or limit the extent of its liability. It was thus a matter arising under a law made by the Parliament, and so in the general federal court civil jurisdiction conferred on this Court by s 39B(1A)(c) of the Judiciary Act 1903 (Cth).
THE STATUTORY SCHEME
Part IV of the Insurance Contracts Act, in which ss 21-27 are contained, is a statutory code that replaced the common law in relation to non-disclosure, misrepresentations and incorrect statements by insureds before entry into a contract of insurance: Advance (NSW) Insurance Agencies Pty Ltd v Matthews (1989) 166 CLR 606 at 615 per Mason CJ, Dawson, Toohey and Gaudron JJ. In contrast to ss 21, 26(1) and (2) operate on statements made in connection with a proposed contract of insurance.
Importantly, the Insurance Contracts Act is concerned with relevance of some particular matter to an objective assessment of the risk proposed for insurance. The decision whether a particular matter should be disclosed is a decision about the relevant risk: Permanent Trustee Australia Ltd v FAI General Insurance Company Ltd (In liq) (2003) 214 CLR 514 at 531-532 [32].
Additionally ss 24, 26 and 27 of the Insurance Contracts Act are relevant in determining whether or not Sagacious made a misrepresentation in the 2004 proposal. Likewise s 21 is relevant on the question of whether Sagacious was in breach of its duty of disclosure. Although those sections use expressions that had a well settled meaning at common law, they must be construed in their context as part of the Insurance Contracts Act: Permanent Trustee 214 CLR at 531-532 per McHugh, Kirby and Callinan JJ. An insurer has an interest in the individual history and claims record of each person who seeks insurance with that insurer and, in a case like this, of each nominated driver for whom the insured seeks cover: Advance (NSW) Insurance 166 CLR at 616. The duty of disclosure in s 21 is informed by this understanding.
Section 21 of the Insurance Contracts Act provided:
“21 The insured’s duty of disclosure
(1)Subject to this Act, an insured has a duty to disclose to the insurer, before the relevant contract of insurance is entered into, every matter that is known to the insured, being a matter that:
(a)the insured knows to be a matter relevant to the decision of the insurer whether to accept the risk and, if so, on what terms; or
(b)a reasonable person in the circumstances could be expected to know to be a matter so relevant.
(2)The duty of disclosure does not require the disclosure of a matter:
(a) that diminishes the risk;
(b)that is of common knowledge;
(c)that the insurer knows or in the ordinary course of the insurer’s business as an insurer ought to know; or
(d)as to which compliance with the duty of disclosure is waived by the insurer.
(3) Where a person:
(a) failed to answer; or
(b) gave an obviously incomplete or irrelevant answer to;
a question included in a proposal form about a matter, the insurer shall be deemed to have waived compliance with the duty of disclosure in relation to the matter.”
The Act defined “proposal form” in s 11(1) as including:
“… a document containing questions to which a person is asked to give answers (whether in the document or not), where the answers are intended (whether by the person who answered them, by the insurer or by some other person) to be used in connection with a proposed contract of insurance.”
The effect of a deemed waiver in s 21(3) and of any misrepresentation by Sagacious must be considered in the context of ss 24, 26 and 27 of the Act which, relevantly provided:
“24 Warranties of existing facts to be representations
A statement made in or in connection with a contract of insurance, being a statement made by or attributable to the insured, with respect to the existence of a state of affairs does not have effect as a warranty but has effect as though it were a statement made to the insurer by the insured during the negotiations for the contract but before it was entered into.
26 Certain statements not misrepresentations
(1)Where a statement that was made by a person in connection with a proposed contract of insurance was in fact untrue but was made on the basis of a belief that the person held, being a belief that a reasonable person in the circumstances would have held, the statement shall not be taken to be a misrepresentation.
(2)A statement that was made by a person in connection with a proposed contract of insurance shall not be taken to be a misrepresentation unless the person who made the statement knew, or a reasonable person in the circumstances could be expected to have known, that the statement would have been relevant to the decision of the insurer whether to accept the risk and, if so, on what terms.
…
27 Failure to answer questions
A person shall not be taken to have made a misrepresentation by reason only that the person failed to answer a question included in a proposal form or gave an obviously incomplete or irrelevant answer to such a question.”
These provisions are relevant because of the important protection given to the insurer by s 28. An insurer may have its liability in respect of a claim reduced under s 28(3) if it has not avoided a contract of insurance entered into in circumstances where the insured either failed to comply with the duty of disclosure or made a misrepresentation to the insurer before the contract was made. The reduction in liability will be to the amount that would place the insurer in the position it would have been in had the failure to disclose not occurred or the misrepresentation not been made. There is no issue that Mrs O’Shanassy would not have been covered by the insurer as a driver of the car. The insurer would not have accepted the risk of Mrs O’Shanassy being a nominated driver had Sagacious disclosed her 1999 conviction or cancellation of her driver’s licence.
STANDARD OF PROOF
The insured argued that because the insurer’s defence raised allegations of criminal misconduct against Mrs O’Shanassy it had the onus of proving that she had committed the acts alleged. It contended that she was entitled to the benefit of the presumption of innocence.
These proceedings are civil proceedings and the standard of proof, as the insured accepted, required the insurer to prove its case in accordance with s 140 of the Evidence Act 1995 (Cth) which provides:
“140 Civil proceedings: standard of proof
(1)In a civil proceeding, the court must find the case of a party proved if it is satisfied that the case has been proved on the balance of probabilities.
(2)Without limiting the matters that the court may take into account in deciding whether it is so satisfied, it is to take into account:
(a) the nature of the cause of action or defence; and
(b) the nature of the subject matter of the proceeding; and
(c)the gravity of the matters alleged.”
In Communications, Electrical, Postal, Plumbing & Allied Services Union of Australia v Australian Competition and Consumer Commission (2007) 162 FCR 466 at 479-482 [29]-[38] Weinberg, Bennett JJ and myself explained the operation of s 140 in the context of a party bearing an onus of establishing a serious allegation of a contravention of the law. I have adopted that explanation and approach in assessing the evidence in this matter. In my opinion, the insurer had to establish that the circumstances appearing in the evidence gave rise to a reasonable and definite inference, not merely to conflicting inferences of equal degrees of probability, that Mrs O’Shanassy had either driven under the influence of intoxicating liquor or had a blood alcohol level over the legal limit in the period up to two hours after the accident: see esp: CEPU 162 FCR at 482 [38]. I have also applied this approach in assessing the question of whether the insurer has established any breach of a proposing insured to satisfy the duty of disclosure in s 21 of the Insurance Contracts Act or that any insured made a misrepresentation in or in connection with any relevant contract of insurance.
I have given weight to the presumption that Mrs O’Shanassy was innocent of any criminal conduct alleged against her and that exactness of proof that she was not innocent is required, as Dixon J explained in Briginshaw v Briginshaw (1938) 60 CLR 336 at 363. In arriving at my findings, I have weighed the evidence having regard to s 140 of the Evidence Act, the approach identified in CEPU 162 FCR at 479-482 [29]-[38] and the authorities that the Full Court applied and considered there.
THE MISREPRESENTATION CASE
The insurer pleaded that Sagacious’ proposal for the 2004 policy falsely represented that:
(a)the only driving conviction for Mrs O’Shanassy in the five years to September 2004 was for not wearing a seat belt;
(b)she had not during that five year period been charged or convicted in connection with any intoxicating liquor or drug.
THE NON-DISCLOSURE CASE
The insurer also pleaded that Sagacious had failed to disclose Mrs O’Shanassy’s driving record in its September 2004 proposal in circumstances where it knew, or a reasonable person in its position would be expected to know, that her 1999 conviction and licence cancellation would be a matter relevant to the decision of the insurer to issue the policy.
THE CIRCUMSTANCES IN WHICH THE CAR WAS INSURED
(a) The role of Prestige Car Insurance
Mr O’Shanassy was a solicitor. He completed a proposal form for Sagacious, as owner of the car, on 30 September 2004. The proposal form had been prepared by an underwriting agency, Prestige Car Insurance Pty Limited. The chief executive of Prestige was Raymond Woodlands.
Prestige had a binder with Lumley under which it was authorised to enter into contracts of insurance with insureds, on Lumley’s behalf, to insure prestige vehicles with values between $40,000 to $500,000 and certain other special categories of vehicles. Prestige and Lumley agreed each year on the terms on which Prestige could write policies. They set these out in an operations manual that was updated each year. Debbie Jacks was the chief underwriter at Prestige. Only Mr Woodlands and Ms Jack had authority under the binder and within Prestige to accept any driver as a risk where that driver had one conviction for driving under the influence of intoxicating liquor, or with in excess of the prescribed concentration of alcohol (described compendiously in the operations manual as a “DUI offence”) or if his or her licence had been suspended or cancelled. Prestige’s operations manual provided that it had to decline any driver as a risk where the driver had more than one conviction for a DUI offence or had had his or her licence suspended or cancelled more than once.
(b) The Paul O’Shanassy disclosure
Mrs O’Shanassy’s second conviction for driving with a middle range reading in excess of the prescribed concentration of alcohol in her blood (i.e. between 0.08 and less than 0.15 grams of alcohol in 100 ml of blood). That conviction and her disqualification from holding a driver’s licence for 12 months occurred on 2 April 2002. After the disqualification period had ended Mrs O’Shanassy was issued with a driver’s licence again on 11 April 2003.
On 28 April 2003, Prestige faxed a driver’s declaration to Mr O’Shanassy. He then had a policy for another Mercedes Benz ML55 car that he had insured in his own name on 24 April 2002. He was the only driver nominated in the proposal form that he had completed and provided to Prestige on 13 May 2002, no doubt because his wife’s licence had been cancelled very recently. The policy was again underwritten by Lumley and had been due for renewal on 24 April 2003.
Mr O’Shanassy completed most of the details in the driver’s declaration before giving it to his wife to complete the balance. Both signed and dated the driver’s declaration on 28 April 2003. Relevantly, the driver’s declaration nominated Mrs O’Shanassy as an additional driver and contained the following information in relation to her driving history (the written answers are in italics):
“B.Have you had insurance or driving licence declined, cancelled, or special terms imposed?
3 yrsWhere YES provide details below Yes [P] No [ ]
Please provide details if answered YES to any of the above.
Mid Range PCA Charge 2 April 02
CLAIMS/ACCIDENTS (PLEASE STATE NIL IF NO CLAIMS)
DATETYPE OF OFFENCE (IN LAST 3 YEARS)
Mid Range PCA 2 April 02”
On 29 April 2003, Mrs O’Shanassy faxed back to Prestige’s Ms Jacks the completed drivers declaration and a covering letter that read:
“Please find attached completed Driver’s Declaration form. As per your instruction during our phone conversation this morning, I have listed any offences/claims within the last 3 years for each of the questions on the form.
Can you please advise immediately if you require further information. I would appreciate if you could confirm my status as a nominated driver effective today as my husband is ultra conservative!!”
Mrs O’Shanassy had corrected the date on the driver’s declaration that her husband had written in the first reference to the 2002 offence. Significantly, as Mrs O’Shanassy said in evidence, Mr O’Shanassy was aware of her 1999 offence when he filled in the form. Although she corrected the date from 15 to 2 April 2002 for the mid range offence, Mrs O’Shanassy said that she and her husband did not discuss the 1999 offence or the possible need to disclose it at this time. I do not believe that evidence. Mrs O’Shanassy was precise enough to correct the date of her most recent offence. Given the circumstances, in which this driver’s declaration was completed and sent to Prestige, I am wholly unpersuaded that the question of what they were to do about Mrs O’Shanassy’s 1999 conviction and licence cancellation was not discussed between them at this time. For the reasons I will give, I did not find Mrs O’Shanassy to be a satisfactory or reliable witness.
On the morning of 29 April 2003, before returning the driver’s declaration, Mr and Mrs O’Shanassy telephoned Mrs Jacks on a speaker phone from their home. Mrs O’Shanassy had had previous dealings with Mrs Jacks about insurance premiums and claims. She said that her husband asked her to contact Mrs Jacks “…to find out if the section about the type of offence section, where ‘mid-range PCA’ was written by my husband had a time period attached to it”. Mrs O’Shanassy gave various accounts of this conversation in her evidence. In chief she said:
“I rang Ms Jacks on the morning after this document was signed, and I asked her - I don’t remember the exact words, but they were words to the effect, Debbie, we’ve completed this form, however, this area above where it says Please provide details, if answered yes to any of the above, doesn’t say whether it needs to be within three years as it does say at the bottom. Can you please clarify how many years we have to go back here.
And what - did she say anything in response? --- She said, Yes, it has to be three years, and that’s where I’ve written it on the side.
When did you write the words three years on this form? --- Sorry, can you repeat
that?”
Did you write the words three years on the form at the same time that you were speaking to Ms Jacks? --- Yes.” (emphasis added)In cross examination, Mrs O’Shanassy said:
“And you rang Debbie Jacks. Correct? --- Yes.
And you said to her, I suggest, words to the effect of, Do I only need to disclose three years of offences or claims. Correct? --- Yes.
You didn’t mention in your conversation with Mrs Jacks anything about insuring - I beg your pardon, you didn’t mention with Mrs Jacks anything about having a driving licence, declined, cancelled or special terms imposed? --- No.
You’re agreeing with me? --- Yes.
And Mrs Jacks said to you something to the effect of, You only need to disclose three years of offences and claims? --- Yes.
Which is precisely what’s contained in the bottom section of the form on page 18 under the heading - next to the heading Type of Offences. Correct? --- Yes.”
However, when questioned in cross-examination whether she had mentioned anything to Mrs Jacks about section B of the driver’s declaration, Mrs O’Shanassy said that she had asked Mrs Jacks about how many years’ history she had to disclose there. This account of the conversation accorded with the letter Mrs O’Shanassy had faxed to Ms Jacks on 29 April 2003 shortly after the conversation. She gave this evidence about the discrepancy between her letter and her evidence:
“You didn’t think, in that letter, did you, to make it clear that you were interpolating a three year limitation on your disclosure of licence cancellations, did you? --- Sir, I think that’s badly written. I think I would not have to have called her about the last section of the form because its very clear.
Yes? --- I was calling her about the earlier section in the form and that’s what I’m referring to in this.
Yes. And that’s precisely the proposition I was putting to you earlier, Mrs OShanassy. Nothing that Mrs Jacks said to you in that conversation was not already patently obvious from looking at the form? --- That is not true. I needed clarification on the middle section of the form.
Why didn’t you make any mention of the middle section of the form when you wrote the covering letter to the facsimile? --- Well, it was badly worded, but I was referring to the middle section of the form because the lower section needs no clarification. It says - - -
It is certainly badly worded if that was the conversation that occurred, isn’t it? If your evidence of the conversation, the second version you have given in my cross examination, if that is the correct version, then that cover sheet was very badly worded, wasn’t it? --- I suppose, yes.
Because it tends to conceal the true - what you now say is the true nature of your conversation with Mrs Jacks, and it rather suggests that your conversation with Mrs Jacks was no more than confirming what is patently obvious on the form; correct? --- No, sir.” (emphasis added)
I do not accept that last denial. Mrs Jacks was an impressive and honest witness. Mrs Jacks firmly rejected the suggestion put to her in cross-examination that it was possible that she had informed Mrs O’Shanassy on the telephone that the driver’s declaration needed only to give details of any cancellation of a driver’s licence for the last three years. As she explained, if there had been more than one cancellation, Prestige was not authorised to, and so could, and would, not accept the risk under its binder with Lumley. And only Mrs Jacks and Mr Woodlands were authorised to consider whether to accept risks involving just one such cancellation. Mrs Jacks said that she would not have told any enquirer that the disclosure in relation to cancellation or suspension of a licence could be given or confined to the last three years.
I find that Mrs Jacks did not tell Mrs O’Shanassy that she need disclose cancellations only for the last three years. I am satisfied that no such conversation took place. Rather I accept that a conversation that accorded with the text of Mrs O’Shanassy’s letter occurred. I find that Mrs O’Shanassy never raised in that conversation, directly or indirectly, whether she had to make any disclosure about any cancellation of her licence. I do not believe her evidence to the contrary. I am satisfied that had she done so Msr Jacks would have told her that all cancellations had to be disclosed whenever they had occurred.
Sagacious, however, relied on what Mrs Jacks had said about the handwritten notation of “3 yrs” next to section B on the driver’s declaration. She said that “… the form had actually been altered, [so] we would have asked the person that had completed it to nominate anything else that had occurred, because the question wasn’t limited to three years”. Sagacious contended that no later document showed that any clarification had been sought of the nature that Mrs Jacks identified. Hence, it argued, the insurer had waived any obligation on Sagacious’ part to provide any further information.
The driver’s declaration had been returned with the covering letter immediately after Ms Jacks had spoken with Mrs O’Shanassy. The fax was addressed to Mrs Jacks. Given its subject matter, I am satisfied that the fax was given to Mrs Jacks when Prestige received it and she considered that it accorded with what had been discussed earlier that morning.
The covering letter explained that the notation of “3 years” was being limited only to disclosures of “offences/claims”. It did not refer to a cancellation of Mrs O’Shanassy’s licence. The conversation earlier that day had dealt only with the issue of claims and offences, and had not touched on question B. That conversation would have been fresh in Mrs Jacks’ mind when she received a fax of the letter and the driver's declaration. The answer about the 2002 suspension was given in respect of question B. In one sense that question may indirectly have referred to offences, in that a driver’s licence would be cancelled as a consequence of the commission of an offence. However, the driver’s declaration form also had two further separate sections, one for details or claims and another for convictions. The letter merely stated that Mrs O’Shanassy had “… listed any offences/claims within the last 3 years for each of the questions on the form.” These were direct questions relating to claims (which had no temporal limit) and convictions (which had a temporal limit of “in the last 3 years”). And, for the three prior years, the disclosure of offences and claims was correct.
But, as Mrs O’Shanassy recognised in the witness box, the letter was “badly worded” to achieve, what I find to have been the intention of her husband and her, namely to avoid disclosing the 1999 offence and licence cancellation. That intention is the obvious explanation for his wife’s telephone enquiry of Mrs Jacks, orchestrated by Mr O’Shanassy, and the confirmatory letter. Had the conversation referred expressly to question B then Mrs Jacks would not have told Mrs O’Shanassy that she need only disclose for the previous three years. The relevance to the insurer of the earlier 1999 conviction and cancellation in deciding to accept the risk was obvious to both Mr and Mrs O’Shanassy. That is why she sought to deny that they had discussed it before the telephone call to Mrs Jacks. Their conduct toward Prestige and Mrs Jacks was disingenuous and lacking in integrity.
I am satisfied that Mr and Mrs O’Shanassy misrepresented Mrs O’Shanassy’s driving record to the insurer on 29 April 2003 by omitting reference to the 1999 offence and cancellation of her driver’s licence. I am not satisfied that Mr or Mrs O’Shanassy believed that he or she did not have to disclose those matters. This is because she and her husband never raised them in her discussion with Mrs Jacks or in the letter or driver’s declaration.
I am not satisfied that Mr or Mrs O’Shanassy held a belief that the answer given to question B was all that the insurer required. I accept the insurer’s submission that the careful wording of the conversation, letter and the driver’s declaration were all designed to enable Sagacious, and Mr and Mrs O’Shanassy, to avoid disclosing the 1999 conviction and associated cancellation, so as to not alert Mrs Jacks and the insurer to those matters. A reasonable person in the circumstances would not have held that belief for the purposes of s 26(1) of the Insurance Contracts Act. The answer given to question B was untrue because of that omission. And I am satisfied that Sagacious, Mr and Mrs O’Shanassy, or a reasonable person in their position could be expected to have known that this omitted information would have been relevant to the decision of the insurer to accept the risk of her being a nominated driver for the purposes of s 26(2).
In answering question B, Sagacious misrepresented, by omission, the 1999 cancellation of Mrs O’Shanassy’s driver’s licence. The insurer accepted Mrs O’Shanassy as a nominated driver as a result of that untrue representation.
Additionally, Sagacious argued that s 21(3) of the Insurance Contracts Act deemed the insurer to have waived compliance with the insured’s duty of disclosure in relation to question B. The Act defined “proposal form” in s 11(1) as including:
“… a document containing questions to which a person is asked to give answers (whether in the document or not), where the answers are intended (whether by the person who answered them, by the insurer or by some other person) to be used in connection with a proposed contract of insurance.”
I do not accept that the insurer was deemed to have waived compliance by Sagacious with the duty of disclosure when Prestige received the fax containing the letter and driver’s declaration on 29 April 2003. The answer to question B was not obviously incomplete or irrelevant in the context provided by the letter and the telephone conversation. In that context the letter addressed the handwritten notation “3 yrs” next to question B. A reasonable reading of that material in the circumstances, and the reading Mr and Mrs O’Shanassy intended it to convey, was that she had no offences other than the 2002 one, no claims, and importantly that the 2002 offence was the only occasion on which her licence had been cancelled.
Accordingly, I am satisfied that if Mr and Mrs O’Shanassy had made a true representation or a proper disclosure of Mrs O’Shanassy’s 1999 conviction and cancellation of her driver’s licence, Mrs Jacks and Prestige would have rejected her as a nominated driver on 29 April 2003.
(c) The Fukura Proposal
Mr O’Shanassy completed a proposal form for insuring a Range Rover vehicle in the name of another of his companies, Fukura Pty Limited, on 27 May 2003, about 4 weeks after the above driver’s declaration. That proposal form, relevantly, contained the following disclosures (the handwritten responses are in italics):
“b – Have you or any nominated driver:
… (ii) Had any motor accident, fire damage or theft happen in the last 5 years Yes( X ) No ( ) …
(iv) Been convicted of/or charged with any motoring traffic offence or been issued with any infringement notice in the last 5 years, including with intoxicating liquor or drug
Yes( X ) No ( ) (v) Been charged or convicted in connection with intoxicating liquor or drug
Yes( X ) No ( ) (vi) Had any motor licence cancelled, endorsed or suspended in the last 5 years
Yes( X ) No ( ) (vii) Having regard to “YOUR DUTY OF DISCLOSURE” at the beginning of this proposal is there any other matter or information which may be relevant to our acceptance of this proposal such as previous loss or damage, previous claims, damage or injury to third parties on their property whether insured or not; criminal convictions or charges pending or bankruptcy or winding up proceedings for any party to this insurance
Yes( ) No ( X )
FOR EVERY QUESTION ANSWERED “YES” PLEASE GIVE FULL DETAILS BELOW INCLUDING COST, INSURER, DATES AND FULL NAME
…Question No: b(ii)
Full Name: Lana R O’Shanassy
Details: (a) Claim on (your reference 8019) insurance Policy 6 DOM/3725081(b)PCA mid range charge 2 April 02 and see Drivers Declaration on above policy dated 28/4/03” (emphasis added)
Sagacious argued that the reference to the driver’s declaration was sufficient to discharge its duty of disclosure. It did this on the basis that the declaration either had provided a complete disclosure of what the insurer had required or was an obviously incomplete answer to the enquiry about the previous 5 year period in questions (b)(iv) and (vi) because the driver’s declaration had only dealt with the previous 3 years.
The answers to questions (b)(iv), (v), (vi) and (vii) omitted any reference to Mrs O’Shanassy’s 1999 conviction and the cancellation of her driver’s licence. Those answers were statements made in connection with a proposed contract of insurance within the meaning of s 26(2). They were untrue and amounted to a misrepresentation. The insured has the onus of establishing its belief if it seeks to rely on s 26(1): Plasteel Windows Australia Pty Ltd v CE Heath Underwriting Agencies Pty Ltd (1990) 19 NSWLR 400 at 407G-408B per Samuels JA, Meagher JA agreeing.
Mr O’Shanassy did not give evidence of his belief. He was also the controlling mind and amenuensis of Sagacious and Fukura in completing the proposals.
Sagacious argued that s 27 assisted it because the information it had provided was “obviously incomplete and put the insurer on inquiry”. It contended that by failing to inquire, as with s 21(3), the insurer had waived any right to rely on the incomplete answer.
I reject that argument. Fukura’s reference to the driver’s declaration was not necessarily incomplete. For all the insurer knew the 2002 offence and cancellation were full and complete answers to questions (b)(iv) and (vi): ie nothing else had occurred in the previous five years. And for similar reasons to those I have given in respect of the driver’s declaration, those four answers made an untrue representation within the meaning of ss 24 and 26 of the Act that the only conviction and cancellation of Mrs O’Shanassy’s driver’s licence had occurred in 2002. The answers to the Fukura proposal conveyed falsely and in clear terms that, relevantly, Mrs O’Shanassy, as a nominated driver had had no other convictions or cancellations of her driver’s licence in the previous 5 years other than the 2002 conviction and cancellation.
(d) The Sagacious 2004 proposal form
Mr O’Shanassy had had previous dealings with Prestige and had arranged two other policies for cars owned by himself and by Fukura. Sagacious nominated Mr O’Shanassy and Mrs O’Shanassy as drivers of the car in its 2004 proposal form. The last page of the proposal form had a section dealing with accident claims and personal details. Mr O’Shanassy completed these so that Sagacious 2004 proposal provided the following relevant information (the written answers are in italics):
“PLEASE ANSWER EACH QUESTION BY STATING “YES” OR “NO” AS THE CASE MAY BE
...b Have you or any nominated driver:
…
(iv) Been convicted of/or charged with any motoring traffic offence or been issued with any infringement notice in the last 5 years, including “on the spot fines” YES (P)
NO ( )
U(v) Been charged or convicted in connection with intoxicating liquor or drug YES ( )
NO (P)
(vi)
…
Had any motor licence cancelled, endorsed or suspended in the last 5 years YES ( )
NO (P)
FOR EVERY QUESTION ANSWERED “YES” PLEASE GIVE FULL DETAILS BELOW INCLUDING COST, INSURER, DATES AND FULL NAME
Question No: (iv) (iv)
Full Name: Paul Shanassy Lana O’Shanassy
Details: Speed camera
15 kms speed
not produce licenceNo wearing seat belt U Please note disclosures provided under separate cover provided by Prestige C Insurance in the names of Paul O’Shanassy
Fukuda Pty LtdI/We hereby declare:
I/We have read “Our Duty of Disclosure” at the beginning of this proposal form.
I/We have not withheld any information likely to affect acceptance of this insurance.
To the best of My/Our knowledge and belief every question has been answered fully and frankly.”
Mrs O’Shanassy’s first conviction for driving with in excess of the prescribed concentration of alcohol in her blood was for a high range reading (i.e. in excess of 0.15 grams of alcohol in 100 ml of blood: see s 8A of the Road Transport Act). That conviction and her disqualification from holding a driver’s licence for 18 months was imposed on 13 July 1999 and, so, happened more than five years before Mr O’Shanassy signed the proposal on 30 September 2004. Thus, the answers to questions b(iv) and (vi) were correct. However, the negative answer to question b(v) had to be understood in the context of the earlier two disclosures referred to in the asterisked note that Mr O’Shanassy had written on the proposal form.
(e) A further request for information by Prestige
On 7 December 2004, Prestige sent Sagacious an information request concerning its proposal for the car. The request appears to have been the third one made by Prestige for the information it sought. It referred to the receipt of the proposal form but said that:
“…. To enable us to process this proposal would you please provide the information requested below.
PLEASE CLARIFY NUMBER OF TRAFFIC OFFENCES INCURRED BY EACH DRIVER IN PAST THREE YEARS. THANK YOU”
On 5 January 2005, a junior employee of Prestige made a handwritten notation on the copy of the request that she had spoken to Mr O’Shanassy to chase up the information. This notation also made a reference to 17 January. There was no evidence of any response to this request but Prestige effected the insurance and renewed it up to the accident.
Sagacious argued that the request revealed that the insurer had informed Sagacious that the insurer only wanted information on traffic offences for the past three years rather than the five years sought in question (b)(iv). Sagacious also contended that the insurer had not discovered adequately its records of what had been disclosed to it in order to obtain the policy the subject of these proceedings.
I am not satisfied that the insurer’s discovery or retention of its and Prestige’s records omitted any presently relevant matter. I accept that the information request should be construed as limiting question (b)(iv) to a period of three years. However, the unlimited scope of question (b)(v) was not affected by that request. Prestige and the insurer had not dispensed with, or qualified, Sagacious’ obligation to reveal the 1999 conviction in answer to question (b)(v).
There was no evidence that the 1999 conviction and cancellation had ever been disclosed by Sagacious, Fukura, or Mr or Mrs O’Shanassy, or that the insurer had waived any obligation that these matters be disclosed. I am satisfied that Sagacious was aware at all times before 16 January 2008 that the insurer did not know of the 1999 conviction and cancellation. This is because Mr O’Shanassy had been careful not to answer accurately questions in the Sagacious and Fukura proposals and the drivers declaration that may have revealed his wife’s 1999 conviction and the associated cancellation of her driver’s licence while giving the incorrect impression that all the questions relevant to her driving record had been fully answered.
Sagacious had answered question (b)(v), by saying that no nominated driver had ever been charged with, or convicted in connection with, intoxicating liquor or drug but qualified the answer with the asterisk. That took the insurer to Mr O’Shanassy’s and Fukura’s earlier disclosures relevantly made in 2003 of Mrs O’Shanassy’s 2002 offence. Moreover, questions (b)(iv) and (vi) related to a range of the previous five years. So, the affirmative answer to question (b)(iv) in relation to Mrs O’Shanassy related, first, expressly to her not wearing a seat belt. Secondly, by implication, it also referred to the 2002 offence that had been disclosed in another context, namely the letter of 29 April 2003 in relation to Mr O’Shanassy’s policy and the false answer to questions (b)(iv), (v) and (vi) in the Fukura proposal. The 2004 form for Sagacious’ proposal expressly sought a disclosure in answer to question (b)(v) that was unlimited as to time.
The answers to questions (b)(iv), (v) and (vi) in the Fukura proposal were untrue to the knowledge of Mr O’Shanassy and, through him, Fukura and Sagacious. A reasonable person in his position would have been expected to know that the answers concealed from the insurer, Mrs O’Shanassy’s 1999 conviction for a very serious driving offence and her licence cancellation. These concerned a significant matter that was obviously relevant to the insurer. This was because, first, it had used a new fixed time period of five years, not three years. Secondly, it expressly separated the inquiry about any conviction for intoxicating liquor to an unlimited time in an unambiguous question. Thirdly, a reasonable person in Sagacious’ and Fukura’s position would have understood from the questions that the two convictions in three years indicated that Mrs O’Shanassy was a driver who posed a substantive risk of re-offending. I have no doubt that Mr O’Shanassy was aware, and certainly a reasonable person in his position in the circumstances could have been expected to have known, that the new questions, with the longer time period were relevant to the risk that the insurer was being asked to accept. He was a solicitor. He had sat silently next to his wife during her conversation with Mrs Jacks in April 2003. I infer that he was seeking to avoid disclosing her earlier offence for fear that the insurer would reject his wife as a nominated driver.
The responses in the proposal forms and driver’s declaration given by Mr O’Shanassy, and in the latter case by his wife, were complete and unambiguous on their face. They did not reveal the truth. And question (b)(v) reasonably construed in both the Sagacious and Fukura proposals sought a disclosure unlimited as to any time period. There was no hint in the letter of 29 April 2003 and the accompanying driver’s declaration that Mrs O’Shanassy had any other conviction or licence cancellation in connection with intoxicating liquor. The open ended question in the driver’s declaration was about cancellation of her licence. That enquiry was also the subject of the new questions (b)(vi) that set a five year period in each of the subsequent Fukura and Sagacious proposals.
The request for information made by Prestige on 7 December 2004 in relation to the Sagacious 2004 proposal was directed to clarifying the answer to question (b)(iv) by limiting the scope of its enquiry to the previous three years, instead of the five years sought in the proposal form. And question (b)(iv) referred to “any motoring traffic offence”. Prestige’s request of 7 December sought clarification of the number of “traffic offences incurred by each driver in the past three years”. It did not refer to the distinct disclosure sought, and falsely answered, in the response to questions (b)(v) and (vi) concerning convictions “in connection with intoxicating liquor” (which extended the inquiry beyond, but did not exclude, traffic offences) and cancellations of licences.
Question b(v) was, like questions b(i), (vii) and (viii), not limited to traffic or motor offences. It applied generally. The subjects of the enquiries posed in questions (b)(i), (vii) and (viii) such as the proponent’s and other nominated driver’s mental and physical health, general criminal history, specific criminal history relating to drugs and alcohol and financial position can readily be seen to be relevant both to an insurer’s assessment of the risk and its decision to accept a proposal. The questions in section (b), other than question (b)(iv), did not refer to traffic offences. Thus, the information request of 7 December 2004 would have been understood by Sagacious, or a reasonable person in its position, as limited to seeking clarification only of the unclear answer to question b(iv).
I am not satisfied that the insurer waived compliance by Sagacious with its duty of disclosure by making the request of 7 December 2004 or that Sagacious held any belief that it had made an accurate representation in respect of Mrs O’Shanassy’s 1999 conviction and associated cancellation of her driver’s licence in the answers to questions (b)(v) and (vi). Mr O’Shanassy knew, and a reasonable person in the circumstances would have known, that these matters were relevant to the insurer’s decision whether or not to accept the risk of his wife being a nominated driver.
CONCLUSION ON THE FAILURE TO DISCLOSE AND MISREPRESENTATION DEFENCE
Had the falsely answered questions in the driver’s declaration and Fukura proposal been answered accurately, Prestige would have been aware of the 1999 convictions and associated cancellation of Mrs O’Shanassy’s driver’s licence. And had question b(v) been answered correctly in the Sagacious 2004 proposal form, Mrs O’Shanassy’s 1999 conviction would have been revealed to the insurer. In either case, Prestige would have rejected her as a nominated driver because its binder with Lumley did not allow it to cover a driver with more that one DUI offence or driver’s licence cancellation. And, it follows that the insurer would have known of those matters and rejected Sagacious’ inclusion of her as a nominated driver in the 2004 proposal and the subsequent renewals of its policy. It is entitled to reduce its liability to nil under s 28(3) of the Insurance Contracts Act.
THE POLICY
Lumley, through Prestige Car Insurance, accepted Sagacious’ 2004 proposal and issued a policy. That was renewed in 2005, 2006 and 2007. Sagacious did not correct any of the misrepresentations and breaches of its duty of disclosure that I have found before the 2007 renewal. That renewed policy was in force at the time of the accident. The policy provided that there were several general exceptions that relevantly were:
Other circumstances not covered by your Contract of Insurance
….Driver is under the influence of drugs or alcohol Loss, damage, liability and/or compensation for damage caused whilst the Insured Vehicle or any motor vehicle covered by your Contract of Insurance is being driven by or is in the charge of any person under the influence of intoxicating liquor or of any drug.
Driver is has [sic] a blood alcohol level over the legal limit in the period up to 2 hours after event Loss, damage, liability and/or compensation for damage caused whilst the Insured Vehicle or any motor vehicle covered by your Contract of Insurance is being driven by or is in the charge of any person in whose blood the percentage of alcohol is in excess of the legal limit as prescribed by the law in the relevant State or Territory, as indicated by analysis of the person’s breath or blood taken within 2 hours of the occurrence of the event giving rise to such loss, damage or liability.
(emphasis added)
THE ACCIDENT
There is no dispute that during the afternoon of 16 January 2008, Mrs O’Shanassy drank some alcohol. But, there were significant issues about exactly when and how quickly she drank it, and how much she had consumed.
Mrs O’Shanassy had consumed some alcohol at Mittagong RSL Club. From there, she drove her car towards her home. Mrs O’Shanassy gave evidence that she did not feel that her facilities were impaired in any particular way when she was driving home. She said that when she saw the other car she put her foot on the brake and then felt the tyres “sort of loosen on the road”. She said this sensation also happened on the gravel driveway at her home. She said that all she recalled occurring before the accident was raising her right arm to protect her face and head. Next she said: “I remember waking up and being upside down with my seat belt on”. She also said that she smelt petrol. She asserted that because someone told her that that petrol was leaking she feared that the car was going to blow up and continued: “I just lost it. I thought I was going to die” by being burnt alive in the car. She claimed that the next thing she remembered was waking up at Liverpool Hospital days later. She said that she had a few “glazed memories” of rescue workers and one person in the car.
At about 6.55 pm Manuel Tavares was driving his car along Range Road towards Mittagong. He was with his wife Maria, who was in the rear seat. The road was dry and the weather overcast. They came over a small crest on a left hand sweeping bend in a section of road with double dividing lines. There was some gravel on the opposite side of the roadway that had washed down from a private driveway. They saw a silver Mercedes. Mrs Tavares said, and I accept, that the Mercedes was speeding as it came towards their car from the opposite direction. As the cars passed Mr Tavares realised that something was wrong. He looked in the rear view mirror and saw the Mercedes’ passenger side wheels leave the main roadway. Mrs Tavares turned and watched. They saw the Mercedes knock down a tree, go over another tree and roll over, coming to rest, after hitting a third tree at the side of the road, upside down on its roof with the rear boot positioned over a metre above the ground pinned against a tree trunk. A tree was lying on top of the car. The front of the Mercedes was smashed inwards with very extensive damage and the bonnet pushed upwards. The photographs of the damage to it suggest that the accident occurred at considerable speed.
Mr Tavares stopped his car and turned back. As he did so, Mrs Tavaras rang the emergency number on her mobile phone and requested that the ambulance and police attend the scene. Mr Tavares got out of the car and arrived quickly at the upturned car, followed soon after by his wife. Mr Tavares immediately asked the lady in the upturned car if she was alright. She said she was. She asked for help. He tried to help Mrs O’Shanassy to get out of the car but he could not. She told him that her leg was stuck. At Mrs O’Shanassy’s request Mrs Tavaras telephoned her husband. Mrs Tavares said that while the lady in the car answered their questions, she seemed to be upset.
Both Mr and Mrs Tavares did not smell any petrol. Although Mrs Tavares said that she was concerned about the car exploding because it was upside down, she stated positively, and I accept, that she did not smell petrol. No other witness expressed concern about any risk of an explosion. Any such risk would have passed away rapidly after nothing happened following the crash. There was no fuel leak. No other witness except Mrs O’Shanassy said that he or she smelt petrol. I reject Mrs O’Shanassy’s evidence that she had smelt petrol or was in the condition she exhibited on the evening of 16 January 2008 because of her panic at the thought that she might be at risk of an explosion from leaking fuel.
Monique Berry, a neighbour who lived on Range Road drove to the scene immediately after the accident. She also spoke to Mrs O’Shanassy who said that she wanted her phone to speak to her husband and her lawyer. Ms Berry smelt alcohol coming from inside the car and saw that two empty VB “stubbie” bottles of beer were lying beside the car. They had been dislodged from inside it during the accident.
Jim Farrell, an ambulance paramedic of 31 years experience was the first emergency services officer to attend at the scene of the accident. He received instructions to attend at 7.01 pm. He arrived at the scene at 7.12 pm. He immediately approached the Mercedes, and saw the driver inside. She was upside down held in her seat by her seatbelt. Mr Farrell got inside the car. He immediately smelt alcohol. He gave this evidence of their first conversation in which he said Mrs O’Shanassy spoke in a very controlled but level voice:
“What did you say to her? --- I introduced myself as to who I was and where I was from, and I asked her her name.
And what did she say? --- And she said, Mrs O’Shanassy.
And what did you say? --- And I said, Well, I’m here to see what injuries you’ve got. And I don’t remember the exact words, but words to that effect, and she said, Are you going to get me out of the vehicle? And I said, Well, the rescue squad will be here shortly, but in the meantime I need to examine you, assess your injuries, and treat you. And she said, If you’re not getting me out of the vehicle, I want you out of the vehicle.
And what did you say? What did you do? --- I said, We probably need to go through this again, and I introduced myself again, told her who I was, and again she said her name was Mrs O’Shanassy, and if I wasn’t going to get her out of the vehicle, I was to get out of the vehicle.”
More fundamentally, s 4E(13)(a) is in substantially different terms to s 37(2). First, s 37(2) refers to the results of any analysis of blood “under Div … 4”, whereas s 4E(13) referred to the results of breath analysis. Secondly, s 37(2) refers only to the results of an analysis, and does not extend, as s 4E(13) did, to the fact that the person had undergone a breath test or been convicted of an offence under s 4E. The second reading speech of the Minister for Transport shows (Hansard, Legislative Assembly NSW, 4 December 1968 p 421) that s 4E(13) was included in the Traffic Act at the request of the NRMA to protect comprehensive insurance cover held by the driver. The Minister said:
“Simply stated in terms of this clause, the fact that a person is involved in any proceedings associated with this bill will not be admissible as evidence, so far as an insurance policy is concerned, to prove that he was under the influence of intoxicating liquor.”
The explanatory note to the Road Transport (Safety and Traffic Management) Bill stated:
“Clause 37 limits the extent to which evidence of a breath test, breath analysis or blood or urine analysis under the Part and related facts is admissible in insurance cases to prove intoxication or drug use.
The proposed section substantially re-enacts the provisions of sections 4E(13), 4G(12) and (13) and 5AB(5) and (6) of the Traffic Act 1909.”
The parties were not able to identify any explanatory material for either the differences in wording in s 37(2) when it was enacted or any particular purpose in the enactment of s 37. The parties did not refer to any case that has considered s 37 in the present context. It is difficult to see any public policy rationale to justify why s 37(2) was enacted when it allows a contract of insurance to exclude liability of the insurer if it otherwise proves that the driver was under the influence or otherwise affected by intoxicating liquor. I must have regard to the public policy – whatever it is – that only the results of an analysis under Div 4 of the Road Transport Act sufficient to warrant a criminal conviction and the potential incarceration of a driver, should not be admissible to prove that a driver was under the influence of intoxicating liquor for the purpose of an insurer (other than a compulsory third party liability insurer) establishing an exclusion from its liability.
Mildren J in Lemmens 118 FLR at 105 held, like Handley JA, that an analogue of s 4E(13) did not preclude the admissibility of the result of a breath analysis for the purpose of showing the fact of the driver’s blood alcohol level exceeding a level sufficient to constitute an offence, thus enlivening the applicability of an exclusion in a policy of insurance.
The insurer argued that the words “at any time” in s 37(2) negated this construction. It contended that those words would be otiose if the prohibition in the section were construed to refer to any physiological effect at all. I reject that argument. The analysis of blood taken at a particular time indicates that at the moment when the sample of blood was taken, the person had a particular blood alcohol level. That level can be used, as the pharmacological expert witnesses did in their evidence tendered at the trial, to demonstrate the blood alcohol level that the person would be likely to have had at an earlier time. Hence, the words “at any time” in s 37(2) have the purpose of prohibiting such evidence.
The word “affected” is defined in the Macquarie Dictionary, as the insured argued, as including the meanings, “influenced injuriously, impaired”. The Oxford English Dictionary defines one sense of “affected” as meaning “acted on, influenced, or moved either physically or materially”. That source also suggested that an earlier usage of the words as meaning “affected or tainted by disease” had merged in the meaning I have just set out.
Relevantly, the prohibition against admissibility in s 37(2) is in respect of the results of an analysis of blood being evidence that the person was affected by intoxicating liquor. The collocation of other prohibitions in s 37(2) suggests that the sense in which “affected” is used in the section is “influenced injuriously” or “impaired”, as in the Macquarie Dictionary definition.
However, s 37 does not make the results of an analysis of blood inadmissible for all purposes. In particular, the ordinary and natural meaning of the section does not exclude the admission of the results as evidence of the concentration of alcohol in the person’s blood at the time that the analysed sample was taken. Those results are not evidence that the person was under the influence of alcohol, or affected in any particular or general way by it or that he or she was incapable of driving or exercising effective control over the vehicle. Rather, the results are evidence that the person’s blood contained a particular level of alcohol. But, the effect on the person of that level of alcohol in the person’s blood as shown in the analysis result is not something that is self-evident, however high or low the reading is. Also, that result does not indicate anything, in itself, about the effect, or even presence, of any alcohol in the person’s blood at an earlier time.
Importantly, s 37 does not contain the broader prohibition in its statutory precedessor, s 4E(13), against the admissibility of the fact that a person had undergone an analysis of his or her breath or blood. That additional prohibition, coupled with the prohibitions against use of the results of the analysis (now in s 37(2)) and the fact of a conviction based on the analysis (now in s 37(5)(b)) may have given some support to the view of Cripps JA in McCarney 16 MVR 34. However, as s 37(3) shows, the use of the analysis that is excluded from evidence, is to establish any effect on the driving ability of the person. The section does not preclude establishing the effect of alcohol on the person by evidence other than the results of the analysis.
Here, the insured’s policy excludes liability if the result of the analysis shows a blood alcohol concentration of a particular character provided that the blood sample was taken within two hours of the accident. The exclusion operates because of the objective fact that the result of such an analysis shows the person’s blood sample has that character. The exclusion operates irrespective of whether the person was in any way affected by alcohol at the time of the accident; indeed, it can operate where the person had not had any alcohol in his or her blood at the time of the accident, but had consumed it afterwards and, as a result, either not been prosecuted or convicted for driving in excess of the prescribed concentration of alcohol in his or her blood. Thus, the wording of the exclusion does not attract the avoiding operation of s 37(5).
This construction of s 37 is reinforced by s 37(6) which entitles an insurer to exclude liability for other reasons. The ordinary and natural meaning of s 37, read as a whole, does not render void the exclusion in the insured’s policy that operates in respect of the results of the driver’s blood analysis.
Here, the seal on the vial was not intact when Mrs O’Shanassy’s blood sample was received by the analyst. That did not necessarily have the consequence that the analyst’s certificate did not provide results of an analysis under Div 4. This is because the chapeau to s 33(6) is phrased distributively. It allows the analyst to certify as to one or more of the matters in pars (a)-(f) in s 33(6), including the concentration of alcohol in the sample (s 33(6)(e)) even if the analyst did not certify as to the seal being unbroken when he or she received the vial (s 33(6)(c)). Indeed, on a literal reading of s 33(6) in such a case, the analyst’s certificate would be prima facie evidence of the matters in pars (g)-(i) of s 33(6). Thus, an analyst’s certificate that did not certify that the seal was unbroken would still be prima facie evidence that the sample had not been tampered with before it was received by the analyst: see s 33(6)(i).
I am of opinion that s 37 does not make the results of the analysis of Mrs O’Shanassy’s blood inadmissible as evidence of her blood alcohol level at the time that the sample was taken.
It is unnecessary to express a final view on the insurer’s additional argument that s 37 is not picked up as a surrogate federal law by s 79 of the Judiciary Act 1903. It contended that this was because von Doussa J had held in Chapman v Luminis Pty Ltd [No 2] (2000) 100 FCR 229 at 252 [70] and see too at 252 [81], 253 [84], that s 56(1) of the Evidence Act 1995 is comprehensive as they key provision controlling admissibility of evidence and delimits the sources of exceptions to that provision, being the other provisions of the Evidence Act. As a matter of comity, I would be inclined to follow what von Doussa J held there.
DISCRETION TO REJECT THE BLOOD ANALYSIS RESULTS
The insured also argued that the analyst’s certificate should be rejected or given little or no weight because:
·it should have been excluded under s 135 of the Evidence Act. This was because its probative value was allegedly substantially outweighed by the danger that it was misleading and it was unfairly prejudicial because the seal had been broken in circumstances where the possibility of tampering had not been excluded;
·the certificate was made admissible by the Road Transport Act only as evidence to prove an offence under s 9 of that Act and not for other purposes;
·the certificate addressed the ultimate issue on the policy exclusion in respect of driving under the influence of intoxicating liquor.
First, I do not consider that I should reject the certificate as evidence under s 135 of the Evidence Act. While the seal was not intact at the time that the analyst received the blood sample, on the balance of probabilities and having regard to s 140 of the Evidence Act, there is no reason to think that the sample was contaminated. No witness who had the opportunity to do so, was asked whether he or she had broken the seal or contaminated the sample. There was no evidence or suggestion of who might have intended to or had a motive to engage in the malign activity of alerting the blood sample, let alone that anyone had intact behaved in that manner.
Dr Ogden, with whose evidence on this point Prof Starmer agreed, said that it would be very difficult to tamper with the sample in a way that was effective. However, Prof Starmer, in a supplementary affidavit said that the receipt by the analyst of the vial with a broken seal meant that it was impossible to be absolutely sure that the sample had not been contaminated whether deliberately or accidentally. He said that this possibility of contamination “… renders the result of the analysis of such a sample unsafe”.
I am not persuaded that the mere and unproven possibility of tampering because the seal was unbroken when the analyst received the sample is a sufficient reason in the circumstances of this matter to reject the results of the analysis or to give them little or no weight. The requirement for a seal is a cautionary one, properly insisted on by the legislature to protect the interests of persons accused of crimes and the integrity of the analysis. But, as Dr Ogden said, with Prof Starmer’s agreement, in order to adulterate the vial deliberately, a malefactor would have required specialised equipment and considerable expertise that was available to few people. I am satisfied that the possibility of deliberate tampering is, in the circumstances of this case, very remote. Additionally, the possibility of innocent tampering is also so highly unlikely that I am satisfied that the results are likely to be very reliable as an analysis of Mrs O’Shanassy’s actual and uncontaminated blood. Sagacious advanced no intelligible reason why anyone would have contaminated the blood or how, in the course of its being conveyed from the hospital to the analyst someone would have opened the vial and tampered with its contents. For the purposes of ss 135 and 140 of the Evidence Act I am satisfied that the results of the analysis are accurate and that the blood analysed was Mrs O’Shanassy’s uncontaminated sample taken by Dr Chan at 20:45 on 16 January 2008: CEPU 162 FCR at 481 [35].
Moreover, having regard to the fact that Mrs O’Shanassy had been drinking a number of double whiskies and two stubbies of beer found at the scene for at least two hours before the accident, the analysis result, of a relatively significant reading well in excess of the legal limit, is inherently likely to be accurate on the pharmacological evidence.
Secondly, the insured accepted that the certificate recorded the analysis of the blood in the vial as received by the analyst. While it may or may not have been admissible under the Road Transport Act, the certificate is relevant as evidence of the results of the analysis of Mrs O’Shanassy’s blood taken less than two hours after the accident provided that it is proved that the blood had not been tampered with and was hers.
Thirdly, the only way in which the concentration of alcohol in Mrs O’Shanassy’s blood sample could be proved is by an analysis, such as is referred to in the certificate. That result would be relevant to make out the exclusion on which the insurer relied.
For these reasons, I am not satisfied that the admission of the analysis into evidence would be unfairly prejudicial to the insured or otherwise ought be excluded under s 135.
CONCLUSION ON ADMISSIBILITY OF CERTIFICATE
I am of opinion that I should admit the certificate as evidence that, as it records, the sample of Mrs O’Shanassy’s blood taken at 20:45 on 16 January 2008 had a concentration of alcohol of not less than 0.124 grammes of alcohol in 100 millilitres of blood. I am comfortably satisfied that this accurately reflected the alcohol concentration in her blood less than two hours after the accident. It follows that the insurer has established that the exclusion in the policy dealing with the driver’s blood alcohol level has been enlivened.
The analysis is also suggestive that at the time of the accident, Mrs O’Shanassy was under the influence of intoxicating liquor. The expert pharmacological evidence suggests that, based on the relatively high concentration of alcohol in the sample of Mrs O’Shanassy’s blood, if she started drinking at about 5 pm or 6 pm and continued until just before the accident, her blood alcohol concentration would have been in the following ranges at the time of the accident:
Drinking from Approximate Consumption
Pure Alcohol Victoria Bitter beer at 4.8% a.b.v. Wine at 12.5% a.b.v. Spirits at 40% a.b.v.
5.00 pm 60 to 77 gm 4 to 5¼ stubbies 605 to 776 ml 189 to 243 ml 6.00 pm 56 to 68 gm 4 to 4¾ stubbies 564 to 686 ml 176 to 214 ml (one standard whiskey is about 8 to 9 grams of pure alcohol)
Blood alcohol concentration at time of collision
Drinking from: Minimum Maximum Likely
5.00 pm 0.069% 0.131% > 0.11% 6.00 pm 0.049% 0.113% > 0.09%
But even this observation does not necessarily assist in evaluating the degree to which she, as an individual, was affected. The expert pharmacological evidence was careful to emphasise that it is not possible to generalise from studies what effect any particular blood alcohol level would have on an individual. This accords with the approach the courts have adopted: Acama 263 ALR at 590 [62]; Laube 37 SASR at 32-33. Nonetheless, given my finding that Mrs O’Shanassy had been drinking double whiskies during a period of at least two hours before the accident, the two stubbies of beer at some time that afternoon, her behaviour at the scene and the pharmacological evidence, I am satisfied that the analysis of 0.124 is probative of her being under the influence of intoxicating liquor at the earlier time of the accident. I find that she was under that influence then.
CONCLUSION
For these reasons, these proceedings should be dismissed with costs.
I certify that the preceding one hundred and sixty-three (163) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares. Associate:
Dated: 18 May 2010
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