SWF Hoists and Industrial Equipment Pty Ltd v State Government Insurance Commission

Re: S.W.F. HOISTS and INDUSTRIAL EQUIPMENT PTY LTD
And: STATE GOVERNMENT INSURANCE COMMISSION
No. V G165 of 1989
FED No. 402
Trade Practices - Negligence - Limitation of Actions
(1990) 6 ANZ Insurance Cases 61-002

COURT

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
Von Doussa J.(1)

CATCHWORDS

Trade Practices - whether misleading or deceptive conduct - whether false or misleading representation concerning the existence of a right - representation that a package of insurances would cover a worker whilst performing his employment in another State - worker killed whilst performing services in another State - respondent rejected claim for worker's compensation - whether statements about insurance statements of fact or of law - whether misleading or deceptive conduct confined to representations of fact - whether breaches of contractual warranty.

Negligence - duty of care of insurer - reliance by insured on experience and expertise of insurer admitted - failure to provide full cover against all normal commercial risks - employees of insured travelling interstate to perform part of their employment - failure to warn that insurances did not indemnify insured against legal liability to pay compensation under interstate workers' compensation legislation.

Limitation of Actions - actions for breach of contractual warranty, for negligence and for damages for contraventions of Part V of the Trade Practices Act - application to plead statutes of limitation made at trial - failure by respondent to provide indemnity insurance against legal liability - accrual of causes of action - whether loss or damage suffered when insurer declined indemnity - whether loss or damage suffered when insured incurred uninsured liability.

Trade Practices Act 1974, ss.4, 52, 53, 82

Limitation of Actions Act 1936 (S.A.), s.35

Workers Compensation Act 1971 (S.A.), s.11

Workers Compensation Act 1916-1983 (Qld), ss.8, 9, 19A

HEARING

ADELAIDE

#DATE 3:8:1990

Counsel for the applicant: Mr R.C. White

Solicitor for the applicant: Daenke O'Donovan

Counsel for the respondent: Mr H.G. Rowell

Solicitor for the respondent: Stratford and Co.

ORDER

Judgment be entered for the applicant for $53,463.22.

Respondent pay the applicant's costs of the proceedings.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

The applicant seeks damages for contraventions of s.52 and 53 of the Trade Practices Act 1974 ("the TPA"), for breaches of contractual warranty, and for negligence. The conduct of the respondent relied on by the applicant concerns representations made in May and June 1982 by Mr Black, an agent of the respondent, about the scope and adequacy of insurance cover offered by the respondent to the applicant in a package of insurances which the applicant later accepted.

At all material times the applicant carried on business in South Australia as a manufacturer and installer of cranes.
The respondent is established by the State Government Insurance Commission Act 1970 (S.A.) as a body corporate with the power to carry on the business of general insurance in South Australia. It is a major insurer in South Australia. At relevant times it was authorised to insure employers against liability arising under the provisions of the Workers Compensation Act 1971 (S.A.).
The claim arises as a worker employed by the applicant was killed in the course of his employment in Queensland on 4 March 1983, and the insurances issued by the respondent did not cover the legal liability of the applicant arising under the Queensland Workers Compensation Act 1916-1983.
The applicant alleges that the respondent represented that the insurances offered by it would cover the legal liability of the applicant in the events which happened. The only policy included in the insurances which gave indemnity against the applicant's liability as an employer was in terms that indemnified the applicant against liability for personal injury to an employee "while engaged in the service of the Insured in the business abovementioned, carried on in the State of South Australia" arising "either under the Workers Compensation Act, 1971-1979 or the Wrongs Act, 1936-1959...or at Common Law". The indemnity in respect of workers' compensation was thus limited to liability under the provisions of the South Australian legislation (to which the policy referred). Important to the understanding of the issues in the case is s.11 of the Workers Compensation Act 1971 (S.A.) which provides:

11.(1) Where any employer, who resides or has a place of business in the State, employs in the State a worker-

(a) whose employment is carried on in the State and partly in one or more other States or Territories of Commonwealth, and that employment necessarily involves a journey or journey between the State and another State or Territory of the Commonwealth;

...

and personal injury is caused to the worker outside the State, this Act shall apply and have effect in all respects as if that injury had been caused to the worker within the State.

(2) Nothing in this section shall be construed as entitling a worker to receive compensation for the same injury under this Act and the corresponding enactment of another State or Territory."

Under the provisions of the Queensland Workers Compensation Act the applicant was called upon to pay to the Workers' Compensation Board of Queensland, and did pay, the sum of $41,463.22 in respect of compensation paid to the dependents of the deceased.
The respondent denies that the representations made by its agent were false, or misleading or deceptive, and also pleads that the applicant's claims are barred by limitation periods imposed by the Trade Practices Act, and by the Limitation of Actions Act 1936 (S.A.). These are the grounds on which the claims have been defended. No point has been taken as to the constitutional validity of s.52 and s.53 of the Trade Practices Act in their application to the respondent in the conduct of its insurance business not extending beyond the limits of the State of South Australia.
The applicant denies that the claims are out of time and alternatively seeks an extension of time under s.48 of the Limitation of Actions Act in respect of the causes of action which arise under the general law.
The respondent did not seek to raise the limitation defences until the commencement of the trial when leave to amend the defence was sought. Only very short notice of the proposed amendments was given to the applicant. Nevertheless as the applicant did not allege that any injustice would be suffered by it if leave to amend were granted, I allowed the amendments: see Clough and Rogers v. Frog (1974) 48 ALJR 481.
Save in respect of one topic, the relevant facts are not in dispute. The topic in dispute concerns the information which the applicant gave to the respondent about the employment of the deceased workman during the negotiations leading up to the applicant's acceptance of the package of insurances.
In early 1982 the applicant's only office and factory premises were situated at Lot 1, Eastern Parade, Gillman in South Australia. The applicant's operations were not large. It had an office staff of three people and employed about ten to twelve tradesmen who included four supervisors. The applicant manufactured about fifty cranes each year, of a kind which were installed in the factory premises of the purchasers. The majority of the cranes, although manufactured in South Australia, were sold and delivered to factory sites in Queensland and in New South Wales. The practice of the applicant was to send one or more of its experienced supervisors to the customer's site to install and commission each crane. The process of installation and commissioning, depending on the nature of the particular crane, could take between one to two days up to two to three weeks. In the case of interstate deliveries, employees from the South Australian factory would travel interstate to perform the installation and commissioning. During 1982, the applicant was intending to erect a factory in Queensland to manufacture and supply cranes to meet the demand in the Eastern States.
The deceased workman was first employed by the applicant in December 1981. He had previously been a resident of New South Wales where, as an independent contractor, from time to time he had been engaged by the applicant to carry out work on the applicant's behalf in that State. In late 1981 the deceased informed the applicant that his marriage had broken up, and he was looking for employment. He was employed by the applicant in South Australia, and came to South Australia to take up that employment. He worked at the Gillman factory of the applicant until about March 1982 when he was sent by the applicant to Queensland. His duties in Queensland were to attend to the installation and commissioning of cranes as and when they were delivered to customers in Queensland or New South Wales, and at other times to supervise the erection of the applicant's factory in Queensland. The applicant at that time, and throughout the period until the deceased's death, did not have an office in Queensland. The deceased received his instructions from time to time from the applicant's office in South Australia. His pay was processed in Adelaide, and paid by the applicant by two cheques into bank accounts in South Australia. The applicant understood that the proceeds of one of these cheques would be forwarded through the bank to the deceased's dependants, but had no precise understanding of any arrangements which the deceased may have made in respect of his pay. It was left to the deceased to make his own accommodation and travel arrangements whilst in Queensland and in New South Wales. There was no standing arrangement for the deceased to return to South Australia at any particular time, and in fact he only returned to South Australia once, in about October 1982, before his death. The Queensland factory was still in the course of construction when the deceased was killed.
In May 1982 the applicant contacted the respondent enquiring about insurance. This led to Mr Black, an inspector employed by the respondent at its Port Adelaide office, visiting the applicant's premises. The visit occurred in the latter part of May 1982. On this occasion a lengthy discussion took place between Mr Black, the managing director of the applicant Mr Carter, and Miss Cohrs (now Mrs Conlon) who was the applicant's office manager, receptionist and bookkeeper. Mrs Conlon took little part in the discussion. Mr Carter explained to Mr Black that he was dissatisfied with his present insurance arrangements. He expressed interest in placing all the applicant's insurances, and his personal insurances, with the respondent. It is common ground that he said that he wished to have all his insurances with one company so that he could deal with one person, and desired to have a complete cover with no grey areas. It is admitted on the pleadings that Mr Carter sought from Mr Black advice and information as to the kind of insurance required by the applicant to provide insurance for, among other risks, the applicant's legal liability to its employees. It is admitted that such advice was given by the respondent, partly by Mr Black orally at the May meeting, partly at another meeting between the same three people on or about 30 June 1982 when the written quotation for the package of insurances was delivered to the applicant, partly in the written quotation itself, and partly by implication. In particular it is admitted that "Black advised Carter that the range of policies proposed by him would give a full cover to the Applicant against all normal commercial risks subject only to the proviso that when the Applicant's factory in Queensland was completed and operational, workers compensation insurance with the appropriate Queensland authority would then be required."
Further it is admitted on the pleadings that the respondent was an expert in the provision of insurance effected under the Workers Compensation Act 1971 (S.A.), and that it held itself out as an expert in the provision of advice and information relating to insurance of that kind. It is admitted that the applicant relied on the knowledge of the respondent, relied upon its skill and judgment and expertise, and that the respondent owed a duty of care to the applicant in respect of that advice.
It is also admitted on the pleadings that in order to induce the applicant to enter into the insurances with the respondent the respondent represented and warranted by the terms of the written quotation, that the respondent offered to the applicant the type and kind of insurance, including insurance for the applicant's legal liability to its employees, that suited the applicant and met the applicant's needs for insurance, and that by accepting the offer the applicant would have insurance covering the deceased in his employment with the applicant performed, inter alia, in Queensland.
However, the respondent pleads that the representations and warranties, and the advice which it gave, were based on information given orally by Mr Carter to Mr Black. Here lies the area of factual dispute between the parties. In the defence, the respondent says that Mr Carter informed Mr Black that the applicant had a number of employees some of whom, from time to time, were required to carry out their employment partly in South Australia and partly in other States or Territories of Australia; that one of its employees (the deceased) was employed in South Australia and went to Queensland from time to time for the purpose of supervising the establishment of a factory in that State; and that the statements made by Mr Carter were to the effect that the employment of the deceased by the applicant in Queensland was of a temporary nature and not such that his place of employment was Queensland, but was in fact and law in South Australia. In particular it is pleaded in para 7(b) of the defence:

"(i) That Carter advised Black that the deceased was employed in South Australia;

(ii) That the deceased travelled to Queensland for the purpose of supervising the construction of the factory premises;

(iii) That the deceased returned to South Australia at regular intervals;

(iv) That at that stage the deceased's position in Queensland was not a permanent one and that he was employed by the Applicant in South Australia;

(v) That the Applicant did not tell Black that it had a motor vehicle based in Queensland."

It is now common ground that Mr Black was informed by the applicant that it had two motor vehicles based in Queensland, but the respondent maintains that the first four items of information were given by Mr Carter to Mr Black. The respondent contends that if that information were correct, the advice which it gave, and the provision of the Employers' Liability policy giving indemnity in respect of legal liability under the Workers Compensation Act 1971 (S.A.) fulfilled the insurance requirements of the applicant. It is the respondent's case that the various employees of the applicant, including the deceased, would be entitled to compensation under s.11 of the Workers Compensation Act 1971 (S.A.), if injured in the course of their employment whilst in another State; and for this reason that the insurances issued by the respondent complied with the representations and warranties which were made. In particular the respondent asserts in para 10.3 of the defence:

"On the basis of the said information and advice given by Carter to Black:-

(a) The Applicant did not require other or separate insurance under the Queensland Workers Compensation Act or similar legislation.

(b) The Applicant did not need further, other or separate insurance with respect to the liability of the Applicant for the death or injury of the deceased while performing his duties, inter alia, in Queensland.

(c) The offer (i.e., the written quotation) did include insurance of the Applicant in relation to the performance by the deceased of his employment with the Applicant in, inter alia, Queensland as the Applicant had represented such employment to be to the Respondent."

The participants in the relevant conversations, Mr Carter, Mrs Conlon, and Mr Black, gave evidence. I am satisfied that they gave an honest and frank account of their recollections of what was said, but as the conversations were about eight years ago, it is hardly surprising that their recollections are imperfect. Mr Black kept notes at the time, and participated in correspondence with his head office about the risk, but unfortunately both the notes and the correspondence have been mislaid. Neither Mr Carter nor Mrs Conlon made notes. Mr Carter gave evidence about conversations on three occasions which he considered to be relevant to the proceedings. Two occasions were the meetings in May and June 1982, and the other was a meeting which he had with Mr Black and his immediate superior, Mr Ainsley, in about May 1983 after the respondent informed the applicant that it would not be indemnified in respect of any claim arising from the death of the deceased. I am satisfied that these three meetings occurred. However Mrs Conlon does not remember the meeting in June 1982, and Mr Black does not remember the meeting in 1983.
It seems probable that the name of the deceased was not mentioned specifically in any of the discussions, but it is common ground that there was discussion about an employee of the applicant who was in Queensland at the time of the May 1982 meeting. Mr Carter has given evidence that he explained that the applicant was building a factory in Queensland; that the applicant was not using a builder, but was sending people from Adelaide to Queensland for various aspects of the construction; and that the applicant "had a guy in Queensland" supervising the installation of the factory and carrying out commissioning work and service work in Queensland and in New South Wales. No further details of the employment of the deceased, or of other employees who travelled interstate (apart from the amount of remuneration) were given by Mr Carter, and none was asked for by Mr Black. Otherwise Mr Carter denied that the information alleged by the respondent was given.
Mr Black in his evidence basically supported the allegations pleaded in the defence as to the information given to him by Mr Carter. He added that Mr Carter told him the man in Queensland was married, lived in Adelaide and had his family in Adelaide, and that he was travelling backwards and forwards between the two States at weekends.
Mrs Conlon gave evidence. Her evidence tends to support that of Mr Carter, but her recollections are so dim that I do not consider it would be safe to accord much weight to her evidence. There is a real risk that more recent discussion over this case may have unwittingly influenced her recollections.
As between the evidence of Mr Carter and Mr Black, I generally prefer the evidence of Mr Carter. After hearing their evidence I was left with the impression that Mr Carter's recollections were better than those of Mr Black. Mr Black on many occasions couched his answers in terms which revealed that he was reconstructing from what he now thinks was likely to have happened, and was not speaking from direct recollection. I am confident Mr Black was doing his best to assist, and the frankness of his answers was to his credit, but the answers revealed the process of reconstruction I have mentioned. It is unlikely that Mr Carter would have told Mr Black that the deceased was a married man with a family in Adelaide, and that he regularly returned to Adelaide. The true position was to the contrary.

Mr Black acknowledged in his evidence that when he was told that employees of the applicant travelled interstate he was not sure what the insurance position would be, and that it would be necessary to refer to his head office for advice. He did not draw any distinction between the deceased's situation and that of other employees. I think it is probable that he assumed that as the employees who travelled interstate for installations commuted between Adelaide and the installation site, the deceased also did so. This assumption was not a reasonable inference from the statement that the applicant "had a guy in Queensland".
I hold that the information which the applicant gave to the respondent about the deceased's presence in Queensland was as Mr Carter has described. I am satisfied on the balance of probabilities that the respondent was not informed that the deceased regularly returned to South Australia, that he had a family in South Australia, that he lived in South Australia, or that his position in Queensland was described as not a permanent one. Mr Black was however told that the deceased had been employed in South Australia and was paid through the office in South Australia.
I have already noted that it is admitted in the pleadings by the respondent that Mr Black told Mr Carter orally that the suitability of the cover given by the policies recommended was "subject only to the provision that when the Applicant's factory in Queensland was completed and operational, workers compensation insurance with the appropriate Queensland authority would then be required".
In the written quotation which offered the insurance package the following statement is made by the respondent "

"With regard to Employees interstate, we advise that should their employment become permanent with the state they are working, S.W.F. Pty. Ltd. would require employers liability cover completed in accordance with that states requirements. In the case of permanent employees in Queensland, an employers liability cover would have to be taken out within Queensland to cover the company's liability in accordance with the Queensland Workmens Compensation Act. This cover could be arranged through the Queensland Government Insurance Office.

The factory under construction in Queensland when completed could be included under your Fire Insurance schedule and for a Sum Insured of $70,000 would realise a premium of $195-30 per annum."

This statement introduces the notion that employers' liability insurance would be required in another State should an employee's employment become permanent in that State. The concept of permanence in this context is anything but easy, but when the written statement is taken with the admitted oral advice, the advice from the respondent would reasonably be understood to mean that at least until the factory in Queensland became operational the applicant did not need to take out employers' liability insurance in Queensland to cover the applicant's liability under the Queensland Workers Compensation Act in respect of the deceased. This was the applicant's understanding of the advice received.
When the deceased was killed the applicant immediately reported the death to the respondent. By letter dated 29 April 1983 the respondent informed the applicant:

"We have now received legal advice that this matter does not come within the scope of the South Australian Workers Compensation Act.

In view of our legal advice we regret that we are unable to accept the claim."

The reference to "the claim" in this letter is to be construed as meaning that the respondent would not indemnify the applicant. There is no evidence that at this time the dependants had notified a claim against the applicant to the respondent. At some stage - the date is not established - Mr Carter was informed by telephone by the deceased's sister that a claim was being made by the dependants. However it seems the next formal communication which the applicant received after the respondent's letter of 29 April 1983 was a letter dated 13 December 1985 from the Workers Compensation Board of Queensland which referred to an application made to the Board for compensation by the sister as legal representative for the deceased's children. The Board requested the applicant to complete an Employer's Report form, and to supply information about the deceased's employment. Correspondence ensued between the applicant and its solicitors and the Board. In a letter dated 28 May 1986 the Board informed the applicant that:

"On 2nd May, 1986 in a letter from the State Government Insurance Commission of South Australia it was confirmed that claims had been lodged with that office by both S.W.F. Hoists and Industrial Equipment Pty Ltd and by the deceased's workers sister Miss J Mair on behalf of the estate for the benefit of the workers two children. The letter also confirmed that the claims were denied under Section 11 of the South Australian Workers' Compensation Act. Our preliminary investigations indicate that the deceased could be deemed to be a Worker under our Act and should the claim be accepted the sum of $40,640.00 plus reasonable funeral expenses may be paid."

By letter dated 19 August 1987 the Crown Solicitor in Queensland formally claimed from the applicant $41,423.60 which the Board had paid in respect of the deceased's death pursuant to the Queensland Workers Compensation Act. It is agreed that the Board accepted the dependants' claim, and paid out this sum, on 3 March 1987. The applicant repaid this sum to the Board by cheque dated 17 June 1988.

In my opinion even if the facts concerning the deceased's employment were as the respondent alleges in para 7(b) of the defence, the advice and the insurances provided by the respondent failed to give full cover to the applicant against all normal commercial risks, and in particular against the risk of liability to pay workers' compensation to employees injured in the course of their employment whilst performing work outside South Australia.
The fundamental criterion of the application of Workers Compensation Acts in the different States and Territories of Australia is that injury occur within the territorial limits of the State or Territory whilst the worker is there performing his employment: Beazley v. Ryan (1935) VLR 135, Mynott v. Barnard (1939-1940) 62 CLR 68, Dykes v. Dunn (1958) VR 504, Busico v. Century Insurance Co. Ltd (1969) 14 FLR 189.
After the decision in Mynott v. Barnard the various workers compensation Acts in Australia were amended to provide a degree of extraterritorial operation so that the legislation applied to workers who suffered injury whilst outside the State in question in certain circumstances. Section 11 of the Workers Compensation Act is such a provision. To ensure that the extraterritorial extensions are within legislative competence the provisions apply only where there is a nexus between the legislating State and the circumstances in which the legislation is expressed to have extraterritorial operation. The degree of attachment to the territory of the legislature varies, but the nature of the attachment usually concerns the employer having a place of business within the State. Helmers v. Coppins (1961) 106 CLR 156 which considered he New South Wales Workers Compensation Act 1926 provides another example besides s.11 of the South Australian Act.
However, although the various statutes have been amended to extend the benefits of the legislation to workers injured outside territorial boundaries, those amendments do not, and cannot, limit the operation of the laws of the place where the injury occurs. Those laws apply according to their terms. In the result, a worker employed in one State who is injured performing his employment in another State will probably be entitled to recover compensation under two statutes. The statute of the place where the injury happens will apply; and the statute of the State where the worker is employed may also apply. Sub-section 11(2) of the South Australian Act is a recognition of this possibility.
The Queensland Workers Compensation Act, sub.s.9(1), which creates an entitlement in an injured worker to recover compensation is expressed in general terms:

"A worker who has received an injury arising out of or in the course of his employment (and, in the case of the death of the worker, his dependants) shall, subject to this Act, receive out of the Workers' Compensation Fund compensation in accordance with this Act."

Under that section, a worker injured whilst performing his employment in Queensland is entitled to recover compensation pursuant to sub.s.9(1), and that is so even though the worker may have been employed outside Queensland, and be only temporarily in Queensland in the course of his employment. The position was correctly summed up in the CCH Australia Limited Guidebook to Workers Compensation in Australia, 1st Ed., (1978) at para 46-760:

"Foreign nationals temporarily employed in Queensland have entitlements to workers' compensation under the Act. The employers are also obliged to insure such employees under the Act. The same situation exists in respect of employers from other States who send employees temporarily to work in Queensland."

This statement is repeated in later editions.

With workers employed in South Australia going interstate to carry out installation work, and in the case of the deceased, other duties as well, the applicant, to have a full cover against all normal commercial risks, required to be insured against legal liability arising under the workers' compensation legislation in the other States or Territories to which the workers travelled. The insurance provided by the respondent failed to give this cover, and the advice of the respondent on which the applicant relied failed to inform the applicant of the position. The applicant should have been so advised.
At a practical level, in many cases advice and insurances of the kind given by the respondent to a client in a position like that of the applicant might not lead to difficulty if one of the client's workers suffered injury whilst in another State or Territory. The benefits under the Workers Compensation Act 1971 (S.A.), particularly in mid-1982, were generally as high, and in some instances were higher, than the benefits payable under corresponding legislation in other places. A worker employed in South Australia who suffered injury in another State in circumstances to which s.11 applied, would probably be satisfied to receive benefits paid on the employer's behalf under the South Australia legislation. Similarly in the case of a worker killed whilst interstate, the dependants, probably residents of South Australia, would be likely to accept benefits paid under the South Australian Act. The notional client, if made aware of these practical considerations, might choose not to incur the cost of insuring in every other State. But here the applicant was not made aware of these matters.
In the present case, had the respondent not rejected the claims, first by the applicant for indemnity, and then by the dependants for compensation, it is most unlikely that the applicant would have suffered any loss. Had the dependants been paid compensation in accordance with the benefits under the South Australian Act on the footing that the deceased came within the provisions of s.11, compensation would not then have been payable to them under the Queensland Act by virtue of proviso (a) to sub.s.9(2) thereof.
On the findings which I have made that the respondent, through its agent, was informed that the applicant had a worker in Queensland whose duties included the supervision of installations of cranes and the erection of the proposed factory in Queensland, the need for advice as to the correct position became all the more necessary. Whilst at a practical level the risk of loss to the applicant with the insurances provided might be unlikely in the event of injury to one of the other workers, the risk was higher in the case of the deceased. It will be necessary to say more about the application of s.11 of the Workers Compensation Act to the deceased in relation to the limitation defence, but at this stage it is sufficient to observe, as the events which give rise to the claim demonstrate, that there was a likelihood that serious contention could arise whether a worker in the position of the deceased fell within s.11, or would continue to do so if he remained for any length of time in Queensland.
The accuracy of the advice tendered by the respondent involved questions of law concerning the operation of the Workers Compensation Act and compensation legislation in other States. Insurers and insurance brokers are required in the ordinary course of their business to have knowledge of aspects of the law which regulate insurable risks, the liabilities which can arise from the eventuation of those risks, and the types of insurance cover which can be issued to protect against them. See Fanhaven Pty Ltd v. Bain Dawes Northern Pty Ltd (1982) 2 NSWLR 57 at 65. In the present case the respondent admits that it held itself out as an expert in the provision of advice and information relating to insurance effected under the Workers Compensation Act. One submission advanced by counsel for the respondent is that the advice given by the respondent was as to a question of law, and, as such, does not amount to an actionable misrepresentation if it were wrong. Further, upon the authority of an observation of Deane and Fitzgerald JJ. in Taco Company of Australia Inc. v. Taco Bell Pty Ltd and Ors (1982) 42 ALR 177 at 202 it is contended that even if the advice were wrong it does not amount to misleading or deceptive conduct for the purposes of s.52 of the TPA as it does not contain or convey a misrepresentation of fact. It is further contended that, absent a false representation of fact, there can be no contravention of s.53 of the TPA.
In my opinion these contentions should be rejected. The distinction between fact and law is often very difficult to draw, and the distinction in any event becomes one of academic interest only if the representation involves mixed questions of law and fact. The representations on which the applicant relies include the representations (admitted in the pleadings) that the package of insurances would give a full cover to the applicant against all normal commercial risks, and would cover the deceased in his employment performed in Queensland. As events turned the insurances did not produce this result. In my opinion these representations constituted representations of fact. In effect, the respondent said to the applicant "in this package there is a policy which will cover you if the deceased is injured or killed whilst performing his employment in Queensland". There was no such policy, and the statement to the contrary is one of fact. The explanation for the misrepresentation in all probability involved a mistake or misunderstanding as to the law by the respondent, but the admitted representations were in my opinion nevertheless representations of fact. Alternatively, the representations amounted to statements as to the private rights of the applicant depending on the application to the applicant's business of law relating to workers' compensation and to the meaning of the respondent's policies, matters well known to the respondent but barely known to the applicant. As such, the statements amounted to representations of fact: see MacKenzie v. Royal Bank of Canada (1934) AC 468 at 475-476 and The West London Commercial Bank v. Kitson and Ors (1884) 13 QBD 360 especially at 363 per Bowen L.J.
In the Taco Bell case it was not material for the court to consider whether conduct could be misleading or deceptive for the purposes of s.52 if it contained or conveyed an error of law, nor was it necessary for the decision to draw a distinction between misrepresentations of fact and some wider form of conduct. In Henjo Investments Pty Ltd v. Collins Marrickville Pty Ltd (1988) 79 ALR 83 the Full Court did not confine the notion of "conduct" in s.52 to circumstances which constitute a representation of fact. Lockhart J. (with whom Burchett and Foster JJ. agreed), at p 93 said:

"Misleading or deceptive conduct generally consists of representations, whether express or by silence; but it is erroneous to approach s 52 on the assumption that its application is confined exclusively to circumstances which constitute some form of representation. The section is expressed briefly, indeed tersely, in plain and simple words which, if I may be forgiven for repeating them, say simply: 'a corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive'. There is no need or warrant to search for other words to replace those used in the section itself. Dictionaries, one's own knowledge of the developing English language and ordinary experience are useful touchstones, but ultimately in each case it is necessary to examine the conduct, whether representational in character or not, and ask the question whether the impugned conduct of its nature constitutes misleading or deceptive conduct. This will often, but not always, be the same question, as whether the conduct is likely to mislead or deceive."

In the circumstances of this case where the applicant has made it known that it relies on the advice and expertise of the respondent, for the respondent to make the statements which it did as to the suitability of the proposed insurances and the cover which the insurances would give in relation to the deceased, and to other workers, whilst they were performing their employment in other States, amounted to conduct which was misleading or deceptive or likely to mislead or deceive. As the respondent held itself out as an expert in matters of insurance, and actually gave advice in relation to the position in Queensland, in my opinion the oral and written statements of the respondent would amount to conduct that was misleading or deceptive or likely to mislead and deceive within the meaning of s.52 even if the statements are correctly to be characterised as statements of law. The statements were made by a corporation in trade or commerce. I consider the applicant has established a contravention of s.52 by the respondent.
The applicant also relies upon sub.ss.53(aa) and (g) of the TPA which provide:

"53.(aa) falsely represent that services are of a particular standard, quality, value or grade; ...

(g) make a false or misleading representation concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy."

The definition of services in sub.s.4(1) includes rights, benefits, privileges or facilities that are, or are to be, provided, granted or conferred under a contract of insurance. A false or misleading statement by an insurer, through its agent, as to the cover which a policy will provide can constitute a contravention of sub.s.53(g). The statement is one concerning the existence of a right. See Gates v. City Mutual Life Assurance Society Limited (1982) 68 FLR 74 at 89, and on appeal (1983) 68 FLR 101 and (1985-1986) 160 CLR 1. In my opinion the admitted representations that the package of insurances would, if accepted, cover the deceased in his employment with the applicant performed in Queensland was wrong, and therefore false or misleading within the meaning of sub.s.53(g). A contravention of that paragraph is established.
It is a difficult question whether the representations, which I have found to be false, which were made about the cover provided by the package of insurances related to the particular standard or quality, of the contracts of insurance. Cases where the interpretation of the expression "a particular standard" in sub.s.53(a) has been considered are discussed in Gardam v. George Wills and Co. Ltd (No. 1) (1988) 82 ALR 415 at 422-424. As the applicant has otherwise established its entitlement to damages, it is unnecessary to explore this question.

I consider the applicant also succeeds with the claims based on breach of warranty and in negligence.
Contrary to the admitted warranty, in circumstances not materially different from those disclosed by the applicant to the respondent during negotiations, the insurances provided by the respondent did not provide suitable cover in respect of death or injury to the deceased in his employment performed in Queensland.
A duty of care by the respondent to the applicant is admitted as are the facts that the applicant relied on the respondent's advice and that the respondent held itself out as an expert in the provision of advice and information relating to insurance under the Workers Compensation Act 1971 (S.A.): see generally San Sebastian Pty Ltd and Anor v. Minister Administrating the Environmental and Planning Act 1979 and Anor (1986-1987) 162 CLR 340 at 354-355. The advice actually given also related to the requirement for workers' compensation insurance in Queensland, and no reservation was made by the respondent as to any want of experience on its part in giving that advice. The advice was not correct. The duty of care was broken: see Norwest Refrigeration Services Pty Ltd v. Bain Dawes (W.A.) Pty Ltd and Anor (1984- 1985) 157 CLR 149, Fines Flowers Ltd v. General Accident Assurance Co. of Canada (1977) 81 DLR (3d) 139 esp. at 143, 146, and McCann v. Western Farmers Mutual Insurance Co. and Ors (1978) 87 DLR (3d) 135. The respondent was negligent in failing to do what it had been instructed to do, to provide a full cover against normal commercial risks: see Mitor Investments Pty Ltd v. General Accident Fire and Life Ass. Corp. Ltd and Anor (1984) WAR 365 at 373-374.
On the issue of damages the respondent contended that the applicant had not proved that it suffered any loss by reason of the respondent's conduct. It was submitted that the applicant had not proved that it would have taken out insurance in Queensland, or in any other State, even if the respondent had advised it that an employee injured whilst performing his employment in another State could claim compensation under the legislation of the other State rather than under s.11 of the South Australian legislation. It was argued that it would have been too expensive for the applicant to take out policies indemnifying it against liability to pay compensation under the relevant Acts in each of the States to which the applicant sent employees. It was agreed that had the applicant taken out insurance under the Queensland Workers Compensation Act it would have incurred an annual premium in respect of the earnings of the deceased of $1,000; and that a similar amount was payable by the applicant to the respondent as the premium levied on the wages paid to the deceased in South Australia. No evidence was led by either side as to the costs which would have been incurred by the applicant had it taken out other policies in respect of other States. I am satisfied on the balance of probabilities that had the applicant been advised that the insurances issued by the respondent would not give cover against a claim made under the legislation in other States by employees injured whilst in those States, the applicant at least would have taken out additional insurance to provide against injury occurring to an employee in Queensland where the deceased was stationed. Mr Carter was expressing concern in his discussions with Mr Black that the applicant should have complete cover with no grey areas, and it is unlikely that he would have allowed that risk to remain uninsured. Such a policy would have been required once the factory in Queensland was completed and the applicant employed people in Queensland. Had the true position been made known I am satisfied that the applicant would have taken out such a policy in 1982. It is not suggested that the insurance was not available: cf Gates v. City Mutual Life Assurance Society Limited (1983) 68 FLR 101 at 104.
In my opinion the applicant has proved that it suffered loss and damages as a result of the impugned conduct of the respondent on which it relied. I assess the damages as follows:

Payment made by the applicant to the Workers' Compensation Board of Queensland $41,463.22 less premium that would have been paid in Queensland $ 1,000.00 $40,463.22

The applicant's cheque for payment to the Board was cleared through its bank account on 6 July 1988. The applicant is entitled to interest from that date until judgment. The money has been paid out by the applicant which thereby lost the use of it. In accordance with the principles of Hungerfords and Ors v. Walker and Ors (1988) 84 ALR 119 the applicant is entitled to compound interest as a head of damage. I allow $13,000 in respect of interest giving a total assessment of $53,463.22. The applicant is entitled to judgment for this sum subject to the respondent's alternative plea that the claims are statute barred.
In relation to the claim for damages for breach of warranty, the respondent contends that time began to run when the breach occurred. That breach happened when the misrepresentations were made in May and June 1982. The six year time limit provided by s.35 of the Limitation of Actions Act (S.A.) had expired before these proceedings were commenced on 15 May 1989. With this submission I agree. See Gibbs v. Guild (1881-1882) 8 QBD 296 at 302. I consider the claim based on the breach of warranty cannot be maintained unless an extension of time is obtained under s.48 of the Limitation of Actions Act (S.A.).
The claims based on negligence and on contraventions of ss.52 and 53 of the TPA stand on a different footing. The relevant time limitation for a claim for damages in negligence, being a cause of action in tort, is governed by the following provisions of s.35 of the Limitation of Actions Act (S.A.):-

"35. The following actions namely:- ...

(c) actions founded on tort:

...

shall...be commenced within six years next after the cause of action accrued and not after."

The entitlement to damages for the contraventions of ss.52 and 53 of the TPA which the applicant seeks to enforce arises under s.82 of the TPA. That section relevantly provides:

82.(1) A person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV or V may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention.

(2) An action under sub-section (1) may be commenced at any time within 3 years after the date on which the cause of action accrued.

(3) ..."

In an action in negligence, the cause of action does not accrue until the plaintiff has suffered damage. The essential ingredients of a cause of action in negligence are a duty of care owed, a breach of that duty, and the happening of material harm or injury suffered or occasioned to the interests of the party to whom the duty is owed: Lochgelly Iron and Coal Co. v. McMullan (1934) AC 1 at 25 per Lord Wright, Williams v. Milotin (1957) 97 CLR 465 at 474 and DoCarmo v. Ford Excavations Pty Ltd (1983-1984) 154 CLR 234 at 245 per Wilson J. This straightforward proposition in its application to a statute of limitations may in some cases require further elaboration, for example there must also be a person who is capable of suing to enforce the cause of action: Hawkins v. Clayton (1987-1988) 164 CLR 539 at 562, 602. But for the purposes of this case the crucial question is when was material harm occasioned to the interests of the applicant.
The respondent submits that the applicant suffered material harm which completed its cause of action in negligence not later than 2 May 1983 when the applicant received the letter dated 29 April 1983 from the respondent saying that it did not "accept the claim" under the policy. This event was a few days more than 6 years before the proceedings were commenced. The applicant on the other hand submits that material harm was not occasioned to it until either the day on which the Workers' Compensation Board of Queensland acquired against the applicant the right to recover the compensation paid to the deceased's dependants, or the day on which the applicant actually paid the Board. It is submitted that both these events were within three years of the commencement of the proceedings so that not only the claim in negligence but also the claims under the TPA are not statute barred.
Counsel did not draw any material distinction between the accrual of the cause of action in negligence and the accrual of a cause of action under s.82 of the TPA in respect of the contraventions of ss.52 and 53. Counsel accepted that an entitlement under s.82 arises only when loss or damage occurs: see Arcadi v. Colonial Mutual Life Assurance Society Limited (1984) ATPR 40-473 at 45,454, Fenech v. Sterling (1983) 51 ALR 205 at 221, and James v. ANZ Banking Group Limited (1985) 64 ALR 347 at 392-393. In light of the conclusions which I have reached it is not necessary to consider whether there may be a distinction. If I had taken a different view as to when material harm was first occasioned to the applicant, it would have been necessary to consider how far and in what circumstances the orthodox view (see Sutherland Shire Council v. Heyman and Anor (1984-1985) 157 CLR 424 at 489-494 per Brennan J.) which has been applied in actions in negligence, that there is only one cause of action for a breach of duty which is complete as soon as damage is first suffered by the party to whom the duty of care is owed, has application to s.82. Section 82 provides that a person who suffers loss or damage by proscribed conduct "may recover the amount of the loss or damage by action". It is not inconsistent with the language of the section that where conduct causes several discreet losses which occur at different times that the right to recover the amount of each loss accrues only when the particular loss occurs: see Arcadi v. Colonial Mutual Life Assurance Society Ltd at 45,454, Elna Australia Pty Ltd v. International Computers (Aust.) Pty Ltd (No. 2) (1987) 16 FCR 410 at 420 and Keen Mar Corporation Pty Ltd v. Labrador Park Shopping Centre Pty Ltd (1988) ATPR 40-853 at 49,195.
It is not sufficient to found a cause of action either in negligence or under s.82 of the TPA that there be a potentiality of loss: Vulik v. Bilinsky and Ors (1983) 2 NSWLR 472 at 484-485; Ikin v. Same and Lamborghini Tractors of Australia Pty Ltd (1985) ATPR 40-595 at 46,823.
A discussion by the Full Court of Victoria in Van Win Pty Ltd v. Eleventh Mirontron Pty Ltd and Ors (1986) VR 484 provides a helpful illustration of the difference between potential damage and actual damage. The facts before the Court were complicated, but in essence a building contractor sued the proprietor of a dwelling house under construction (Van Win) for progress payments. The proprietor refused to pay alleging defects in the contractor's work. The proprietor in a counter-claim against the contractor and others joined the City of Kew as a party alleging that it issued a building permit for plans and specifications which were deficient. The City of Kew by third party proceedings claimed damages from a consulting engineer, Ramchen, to whom it had referred the plans and specifications, and from whom it had received advice that a home built in accordance with the plans and specifications would be structurally adequate. The City of Kew alleged that the advice was negligently given. Ramchen applied to strike out the third party proceedings on the ground that they were statute barred. Ramchen argued that the City of Kew's cause of action for damages for negligence arose when the suspended concrete floor slab and areas of brickwork in the dwelling house cracked; this occurrence took place outside the limitation period. On the other hand it was contended on behalf of the City of Kew that its cause of action had not arisen and would not arise until its liability to the proprietor, Van Win, was determined in the action, and that consequently time would commence to run against it from that happening. The Full Court said, at p 489-490:

"By para 14(b) of its statement of claim, the City of Kew pleaded damage resulting from Ramchen's breach of duty in this qualified form, 'the City of Kew has or may suffer loss and damage'. Adjoined to para 14 are particulars of damage as follows:-

'(a) All and any damages recovered by Van Win against the City of Kew;

(b) The costs of the City of Kew defending Van Win's counterclaim.'

Thus the injury or harm for which the City of Kew claims damages is financial loss consequent upon Ramchen's negligence. A claim for damages in tort to compensate for financial loss only and caused by negligence is actionable in an appropriate case: Caltex Oil (Australia) Pty. Ltd. v. The Dredge 'Willemstad' (1976) 136 CLR 529; 11 ALR 227. In addition, damages are recoverable by a party for loss suffered as a result of acting in reliance upon a negligent misstatement of fact: L. Shaddock and Associates Pty. Ltd. v. Parramatta City Council (1981) 150 CLR 225; 36 ALR 385. Yet the gist of an action in tort is damage: Williams v. Milotin. The relevant questions in the present proceedings are first, does it appear from the statement of claim that the City of Kew suffered material harm or injury to its interests by Ramchen's negligent misstatements, and secondly, if so, when did that harm or injury accrue to it?... As already observed, professional advice given negligently resulting in damage to property will found an action in tort for damages. The damage pleaded and particularized by the City of Kew is financial loss, which it will incur by its liability to satisfy any judgment for damages recovered against it by Van Win and the costs of defending the counterclaim. Thus the damage alleged being in futuro, the pleading does not disclose any material injury suffered or harm occasioned to the City of Kew's interests. At its highest, the claim made by the City of Kew is for inchoate damage which might subsequently be suffered by it. Consequently, damage being the gist of an action in tort to recover damages, the City of Kew's cause of action against Ramchen has not yet arisen. Indeed, in the event of Van Win failing in its counterclaim for damages against the City of Kew or discontinuing those proceedings, the City of Kew would not suffer damage. Consequently, its cause of action against Ramchen may never crystallize. If it were to commence, by separate action, a claim for damages against Ramchen and proceed to litigate its claim before Van Win's counterclaim were determined, the City of Kew's action would fail.

Thus, on its face the pleading contained in the City of Kew's statement of claim does not disclose a cause of action."

In the present case the claim of the applicant is also for economic loss. I do not consider that the applicant suffered harm or injury to its interests at the time when the respondent said in its letter of 29 April 1983 that it would not accept the claim. At that stage the applicant could not have sued the respondent for damages. There was then a potentiality for loss but no more. If the deceased's dependants made no claim the applicant would suffer no loss. Furthermore, it was possible at that time that the dependants would press a claim in South Australia under the Workers Compensation Act 1971 (S.A.) against the applicant relying on s.11. Had the dependants done so, and had the claim succeeded, the applicant would have suffered no loss as clearly such a claim would have fallen within the cover given by the insurances issued by the respondent, and it can be assumed that the respondent would have paid the claim. It is by no means clear that if the dependants had pressed such a claim that it would not have succeeded.
There have been two decisions by the Industrial Court of South Australia, which has jurisdiction under the Workers Compensation Act (1971) (S.A.) to settle disputes, dealing with para 11(1)(a): Spehar v. D.C. and M. McDonald (1974) 41 SAIR (Part 2) 1244 and Razum v. Softwood Holdings Limited (1979) 46 SAIR (Part 2) 551. These cases concerned workers whose interstate journeys occurred daily. In each case, a judge of the court construed the word "employment" appearing in para.11(1)(a) to refer not to the carrying out of any one specific physical act in pursuance of a contract of service, but rather to the whole range of service of a worker under his contract of service. If that construction is adopted, then it is arguable that the whole range of the deceased's service under his contract of service was carried on partly in South Australia and partly in one or more other States. The applicant clearly had a place of business in South Australia. The contract of employment between the deceased and the applicant entered into in December 1981 was made in South Australia. If that contract was still subsisting at the date of death the requirements of the section would appear to be fulfilled. Employment under that contract was partly carried out in South Australia (up to March 1982) and partly in other States (Queensland and New South Wales after March 1982). The respondent argues that before the deceased's death occurred his employment in Queensland became permanent and that s.11 could therefore no longer apply to him. This submission involves the proposition that the original contract of employment was varied or superseded with a new one under which the whole range of services of the deceased were to be performed outside the State of South Australia. If the contract were superseded the making of the new contract might not meet the description that the "employer...employs in the State, a worker", but this point was not explored in argument. There is force in the respondent's argument that a worker originally within the scope of s.11 who is sent interstate for an indefinite period could become employed in the other State and cease to be within s.11. This possibility was acknowledged under similar legislation by Rainbow J. in Turner v. The Colonial Sugar Refining Co. Ltd (1961) WCR (NSW) 259. In that case however the employer was a large national employer, with places of business in each State, which had a practice of "transferring" employees from one State to another. The facts are very different here. Until the factory in Queensland was completed, and a branch of the applicant's business was established there, in no realistic sense could the deceased transfer his employment from South Australia. Here there is no evidence that the original contract of employment the engagement in South Australia - was ever varied or replaced with another: see Christianos v. Rohrlach (1981) 55 ALJR 681. If this line of argument is correct, then the dependants could have succeeded had they gone ahead with a claim against the applicant under s.11. However the respondent has not attempted to justify its advice to the applicant on this basis, nor could it be heard to do so as the respondent, without reference to the applicant, took it upon itself to reject the dependants' claim under s.11.
At the time when the applicant received the letter from the respondent dated 29 April 1983 the applicant came under no liability to make a payment. The only liability to make a payment which the applicant incurred in respect of the death of the deceased arose under the Queensland Workers Compensation Act. It is necessary to refer briefly to the scheme of that Act. I have earlier set out s.9. An injured worker (and in the case of the death of the worker, his dependants), is given a right to receive compensation out of the Workers' Compensation Fund. The right to compensation is not one which exists against the employer. The employer is by s.8 obliged to insure with the Board, and the Act imposes the responsibility of paying compensation from the Workers' Compensation Fund on the Board. Section 8, in relevant respects, provides:

"8(1) Every employer shall be legally liable to pay the compensation which this Act prescribes a worker employed by him shall receive out of the Workers' Compensation Fund in accordance with this Act.

Every employer shall insure himself and keep himself insured with the Board against all sums for which, in respect of injury to any worker employed by him, he may become legally liable by way of

(a) compensation under this Act;

...

(5) Where any employer has failed to comply with the requirements of this section in respect of any worker employed by him and moneys are paid to such worker from the Workers' Compensation Fund, the Board may

recover the amount so paid from such employer in the manner hereinafter provided. Every such amount may be so recovered by the Board whether or not the employer concerned has been proceeded against for an offence under this Act in respect of his failure to comply with this section."

The mode of recovery referred to in sub.s.8(5) is to be found in s.19A which provides:

"Every premium payable under this Act when it becomes due and payable, and every amount recoverable by the Board by virtue of this Act in respect of compensation paid to an uninsured worker, shall be deemed to be a debt due to Her Majesty and payable to the Board, and shall be recoverable by complaint under this Act."

In my opinion the applicant first suffered material injury or harm when the obligation created by sub.s.8(5) and s.19A arose. At that point the potentiality of loss eventuated. The right of recovery for which sub.s.8(5) provides is in respect of "the amount so paid". The obligation to pay the amount of the compensation to the Crown does not accrue, by the terms of sub.s.8(5), until the Board makes payment. Payment is a condition precedent to the right created by the statute: cf Attorney General v. Arthur Ryan Automobiles Ltd (1938) 2 KB 16. Until payment to the dependants of the deceased occurred, the applicant was under no obligation to the Crown, and under no liability to make a payment under the provisions of the Queensland Workers Compensation Act.
I consider the applicant first suffered harm in the relevant sense when it came under a legal liability to make payment to the Board. This occurred when the Board accepted the claim and made payment to the dependants on 3 March 1987, within three years of the commencement of the action.
In my opinion the claims in negligence and under the TPA are not statute barred. This conclusion makes it unnecessary to consider the claim by the applicant for an extension of the time limits imposed by the Limitation of Actions Act (S.A.).
There should be judgment for the applicant for $53,463.22.

[1990] FCA 402

03 AUGUST 1990