ALLIANZ AUSTRALIA LTD v WENTWORTHVILLE REAL ESTATE PTY LTD & 2 ORS

Court of Appeal (NSW)|2004-03-01|Before: Mason P, Sheller JA

BACKGROUND The first respondent (Starr Partners) managed a rental property owned by Mr and Mrs Khoury. A tenant of the property, Mr Hudson, sued the Khourys in negligence after he fell in the shower and cut himself on a glass screen. The Khourys filed a cross claim against Starr Partners. The matter was ultimately settled with the Khourys and Starr Partners agreeing to each pay half of the agreed sum of damages.

The current proceedings are a claim by Starr Partners against their insurer, Allianz, for indemnities against the liability incurred in the settlement. Allianz sought to deny liability primarily on the basis of Exclusion (k) which stated:

Except as expressly provided for in the extensions, this Policy shall not indemnify the Insured in respect of any claim against the Insured: For any alleged or actual bodily injury or property damage…

In addition, the insurer sought to invoke what it claimed to be a separate and wider exclusion clause found among the "Important notes" to various insurance documents.

HELD per Mason P (Sheller JA and Pearlman AJA agreeing): Appeal dismissed with costs.

The primary judge was correct to conclude that the claim fell outside Exclusion (k). The claim by Starr Partners was one for contribution/indemnity against economic loss. Mr Hudson's claim against the Khourys was for bodily injury but the Khourys' claim against Starr Partners was not of that character.

The "Important note" was not a term of the policy and in any event, the submission founders by application of the contra proferentem principle.

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40496/03

MASON P SHELLER JA PEARLMAN AJA

ALLIANZ AUSTRALIA FINANCE LTD v WENTWORTHVILLE REAL ESTATE PTY LTD trading as STARR PARTNERS (WENTWORTHVILLE) & ORS JUDGMENT

1 MASON P: Mr and Mrs Khoury owned premises at Wentworthville. On 14 May 1996 their tenant, Mr Hudson injured himself when he slipped in the shower, struck a glass screen and cut his arm badly. In 1997 Mr Hudson sued the Khourys in negligence in the District Court (Proceedings No DC 1104/1997). 2 Wentworthville Real Estate Pty Ltd, trading as Starr Partners (Wentworthville) (hereafter "Starr Partners") had managed the property for the Khourys for some time, pursuant to a written management agreement dated 14 February 1996, apparently between Mr Khoury and Starr Partners (cf Blue 75). Mr Hudson pleaded in his Statement of Claim against the Khourys that Starr Partners were the Khourys' agent and that they had promised at the time he entered into the tenancy that a crack in the shower screen would be repaired immediately. 3 On 12 May 1998 the Khourys filed a Cross Claim against Starr Partners in the 1997 proceedings. The nub of their pleaded complaint was that Starr Partners had failed to notify them of the crack in the shower screen reported by their prospective tenant and had failed to have a proper system of repairing and rectifying defects in premises under management. 4 Initially, the Khourys sought contribution and/or indemnity pursuant to s5 of the Law Reform (Miscellaneous Provisions) Act 1946. Subsequently, the Khourys' Cross Claim was amended to include a contractual claim for full indemnity based upon breach of an implied term in the management agreement that Starr Partners would exercise reasonable care and skill in managing the premises. 5 Starr Partners denied liability to the Khourys in their Defence to Cross Claim. They also responded to the Amended Cross Claim that raised breach of contract by filing a Cross Claim of their own (against Mr Khoury) seeking indemnity pursuant to cl 12 of the management agreement. That clause stipulated that Mr Khoury would indemnify Starr Partners against all actions, claims etc made against Starr Partners in the course of, or arising out of, the proper performance or exercise of any powers, duties or authorities under the management agreement. 6 Mr Khoury responded by alleging that cl 12 could not be relied on by Starr Partners to excuse their own acts of negligence or breach of the management agreement. He cited Roads and Traffic Authority v Scroop (1999) 28 MVR 233 [at 236-7] in his Defence to the Second Cross Claim. He also denied that Mr Hudson's claim arose out of the proper performance and/or exercise of the powers of Starr Partners under the management agreement. 7 The 1997 proceedings were referred to arbitration pursuant to the Arbitration (Civil Actions) Act 1983. In an award dated 3 April 2000, the arbitrator found Mr Hudson entitled to succeed in his claim against the landlords, assessing damages at $191,907 plus agreed out of pocket expenses. He found the Khourys 40% responsible for Mr Hudson's damages and Starr Partners 60% responsible, largely because Starr Partners had failed to advise the Khourys of complaints about the shower screen and because they had agreed with Mr Hudson that they would see to its repair. 8 The arbitrator's apportionment as between the Khourys and Starr Partners related to the Khourys' cross claim for contribution under the 1946 Act. The arbitrator had rejected Starr Partners' claim for full contractual indemnity, because he accepted the Khourys' reliance upon Scroop's Case. 9 The Khourys and Starr Partners applied to have the matter reheard in the District Court. On the date of the hearing, 21 August 2000, a settlement was reached by which Mr Hudson's damages were agreed at $100,000, half of which was to be paid by each of the Khourys and Starr Partners. The parties to the 1997 proceedings entered into Terms of Settlement. Clauses 1A , 1B, 1C and 8 provide: By consent and without admission of liability: 1A. That the cross defendant to the first cross claim be joined as a 2nd defendant. 1B. Verdict for the plaintiff in the sum of $50,000 inclusive of costs as against the 1st defendant. 1C. Verdict for the plaintiff in the sum of $50,000 inclusive of costs as against the 2nd defendant. ... 8. Cross claims be dismissed with no order as to costs. 10 No amendments to the pleadings were made before this settlement was agreed and entered. 11 The current proceedings were commenced in the District Court in 2000 (No DC 102091/2000). So far as presently relevant, they are a claim by Starr Partners against their insurer, Allianz for indemnities against the $50,000 liability incurred in settlement of Mr Hudson's personal injury claim and the legal costs of $39,302 incurred in the earlier proceedings. 12 Starr Partners had a professional indemnity policy issued on behalf of Allianz, described in the pleadings as the "MMI Policy". Its term was from 8 January 1998 to 8 January 1999. The insurer agreed to indemnify the insured against legal liability for any claim first made against it during the period of cover and reported to the insurer during that period in respect of any civil liability, howsoever incurred in the course of Starr Partners' profession as estate agents. The Policy also covered costs and expenses incurred with the written consent of the insurer in the defence or settlement of any such claim. 13 Allianz accepted that the facts fell within the Insuring Clause of the MMI Policy, but relied upon the exclusion clauses pleaded in par 6 (b) (i) (ii) and (iii) of its Defence. These subparagraphs relied upon Exclusion Clause (k), a provision in the proposal form, and the stipulation in Insuring Clause 2 about the insurer's written consent being required before legal costs could be incurred. It was not disputed that the claim was first notified by Starr Partners to the insurer in May 1998, ie within the period of the insurance. 14 We were informed that no separate issue remains about the lack of written consent as to the legal costs incurred by the insured. 15 Liability was primarily denied on the basis of Exclusion (k) which stated: Except as expressly provided for in the extensions, this Policy shall not indemnify the Insured in respect of any claim against the Insured: (k) For any alleged or actual bodily injury or property damage.... 16 The insurer also invoked what it claimed to be a separate and wider exclusion found among the "IMPORTANT NOTES" to each of the Insurance Quotation, the Application Form (or proposal) and the Invoice for the premium submitted to Starr Partners. Each document contained a statement in similar form: The policy will NOT cover you for any liability involving bodily injury or property damage- public liability insurance should be arranged to cover this risk which may be an exposure if you manage property for others. 17 Questions relating to the scope of insurance cover were agreed to be separately determined. The matter came before Rein DCJ. 18 The insurer submitted that the words "for... bodily injury" in Exclusion (k) should be read as meaning "in respect of" or "involving" bodily injury. It sought to bolster this submission in various ways by reference to the language of the note in the proposal and the other extrinsic documents. 19 Judge Rein SC rejected this submission. He referred to a number of decisions interpreting a similar phrase in different contexts. His Honour drew particular support from two decisions, Unsworth v Commissioner for Railways (1958) 101 CLR 73 and Rolls Royce Industrial Power (Pacific) Ltd v James Hardie & Co Pty Ltd (2001) 53 NSWLR 626. 20 The learned judge then turned to the characterisation of the claims brought by the Khourys against Starr Partners. He observed that there were two claims brought, each of quite a different character to the other. The first (in point of time) was the claim for contribution under s5 of the 1946 Act. The second was a claim in contract, "admittedly arising out of bodily injuries suffered by a tenant of the Khourys but nevertheless a claim in relation to a breach of the management agreement".

21 The judge held that neither of these claims fell into the category of a claim "for bodily injury" if a narrow and literal view of those words was taken. His Honour saw no reason to read the words expansively, they being part of an exclusion in a policy that offers extensive cover for professional liability. If it were necessary to resort to the contra proferentem principle, this presented further difficulty for Allianz. The insurer's contentions based upon the proposal and the circumstances surrounding entry into the insurance contract were also rejected. 22 In this Court, the appellant insurer submits that the primary judge erred in characterising the claim against Starr Partners as two claims, according to the two causes of action eventually pleaded in the Amended Cross Claim by the Khourys against Starr Partners. 23 It is submitted that the court must look at the substance of the claim, not the legal tag or tags which may be attached to it to signify the cause(s) of action, to determine whether the claim attracts indemnity under the policy. The manner in which a claim is framed against the insured will not be decisive as to whether liability falls within cover. 24 This legal proposition should be accepted. It is supported by the authorities cited by the appellant (see West Wake Price & Co v Ching [1957] 1 WLR 45 at 55-6, Elders Ltd v Swinbank [1999] FCA 798 at [97]-[107], State of New South Wales v AXA Insurance Australia Ltd [2002] NSWCA 63. See generally Nigel G Rein, "Liability Policies: The Relationship of the Claim against the Insured and the Insured's Claim on the Insurer" (1994) 6 Ins LJ 193). The primary judge did not overlook these principles when he explained why the claim fell outside the exclusion even if one considered each of the legal bases upon which it was ultimately pleaded in the Khoury's Cross Claim. 25 The appellant is also correct to observe in its written submissions (par 15) that a purely literal meaning cannot be given to Exclusion (k) because, strictly speaking, no claim is ever for bodily injury. The exclusion must be taken to be referring to a claim for compensation for bodily injury for which the person against whom the claim is made has legal responsibility. 26 But at this point the appellant's submissions run into the sand.

(a) Reliance upon Exclusion (k) 27 Three grounds of appeal contended in various ways that the judge erred in construing Exclusion (k) and holding that it did not apply to the claim made upon Starr Partners and notified by it to the insurer within the period of insurance. 28 The Policy defines "Claim" to mean the demand made by a third party against the Insured. 29 The appellant submits that the Khourys' claim was in substance one "for" alleged or actual bodily injury. Mr Hudson, who undoubtedly suffered such injury, had claimed against the Khourys on the basis of their agent's negligence. The Khourys in turn sought to pass the burden of their liability back to Starr Partners on two alternative legal bases. One of them, being the claim for statutory contribution or indemnity, required proof that Starr Partners was a tortfeasor that would, if sued, have been liable to Mr Hudson (see Law Reform (Miscellaneous Provisions) Act 1946, s5(1)(c)). 30 In my view, the primary judge was correct to conclude that the claim made upon Starr Partners and notified to its insurer in 1998 fell outside Exclusion (k). 31 From start to finish, the Khourys sought contribution and/or indemnity with respect to their liability towards Mr Hudson. 32 Granted that the claim against Starr Partners sought to pass on legal responsibility to compensate for the bodily injuries suffered by Mr Hudson, more was needed to make such a claim emanating from the Khourys one that was "against the Insured … for any alleged or actual bodily injury" (emphasis added). 33 The primary judge was correct to apply by analogy the reasoning in Unsworth and Rolls Royce in concluding that the claim notified by Starr Partners to its insurer fell outside the exclusion. 34 In Unsworth, the High Court held that a claim for contribution against a joint or concurrent tortfeasor pursuant to legislation similar to s5 of the Law Reform (Miscellaneous Provisions) Act 1946 was not a claim "to recover damages or compensation in respect of personal injury" within s121 of The Railways Acts 1914 to 1955 (Qld) which capped the damages recoverable by plaintiffs for personal injury resulting in death. Fullagar J explained (at 86) that: … the proceeding was not, in my opinion, an action to recover damages or compensation. The proceedings to which those words refer are, I think, proceedings taken to enforce liability for acts or omissions which are wrongful as against the person taking those proceedings. Proceedings to obtain contribution in pursuance of the new statutory right given by The Law Reform Act are not such proceedings. See also per Taylor J at 91. 35 Both Fullagar J and Taylor J relied in turn upon Nickels v Parks (1948) 49 SR (NSW) 124. In Nickels, Jordan CJ said (at 129, emphasis added): There are two points of view from which a proceeding by a defendant to recover the contribution provided for by s5(1)(c) and (2) may be regarded, whether it be an independent proceeding or a third-party proceeding as provided for by s3. It may be said that (in relation to the facts of the present case), whichever form the proceeding takes, in substance it is an action charging the Commissioner with having negligently done or omitted something under a relevant Act and claiming to be on that account entitled to recover from him a sum of money. Or it may be said that it is an action to recover from the Commissioner a contribution or indemnity the right to which is conferred upon the defendants by statute provided that three factors be established by them, first that a person injured by a tort committed by them is entitled to damages from them for the tort, second that the Commissioner was liable to the injured party for the same tort, and third that the circumstances are such that it is just and equitable that the Commissioner should by contribution or indemnity relieve them in respect of their liability to the injured person. It is the latter point of view which commended itself to the Court of Appeal in Tuckwood v Rotherham Corporation [[1921] 1 KB 526] . It was there pointed out, in circumstances completely analogous to those of the present case, that the negligence of a corporation occupying the position of the Commissioner in the present case gave no cause of action in tort against the corporation to the person claiming contribution from it. True, proof of negligence on the part of the corporation was an essential part of the claimant's cause of action, which qua the claimant, was not an action for neglect or default by the corporation in performance of a statutory duty. It follows from this decision that, although in a proceeding to obtain contribution from the Commissioner it will be necessary for the defendants to establish as one ingredient of their cause of action against him that he by his servants was guilty of negligence in performance of his statutory duties, the action is not one against him for negligence in the performance of those duties. It is one to recover a contribution provided for by statute because he has injured, not the claimant, but somebody else, in the negligent performance of his statutory duties. 36 In Rolls Royce, this Court applied Unsworth. A plaintiff who contracted mesothelioma as a result of exposure between 1958 and 1961 sued his employer Rolls Royce and recovered substantial damages. Rolls Royce sought, in addition to contribution under s5 of the 1946 Act, damages for breach of contract in relation to the sale of asbestos products by James Hardie to Rolls Royce. The Dust Diseases Tribunal extended the time for bringing this claim, relying upon s60G of the Limitation Act 1969. That provision applies to "a cause of action... founded on negligence, nuisance or breach of duty, for damages for personal injury.... ". "Breach of duty" is defined expansively in s11 of the Limitation Act to include breach of a contractual duty. This Court overturned the decision of the Tribunal on this point. Stein JA (with whom Fitzgerald AJA and DaviesAJA agreed on this point) said (at 635-7):

Unsworth v Commissioner for Railways (1958) 101 CLR 73 is of some assistance. Fullagar J (at 86) noted a submission of the appellant that his claim for contribution was not an action to recover damages in respect of personal injury within the meaning of the relevant legislation. His Honour said that the submission was right. He added (at 87) that: "... the natural reading of the words 'action brought to recover damages or compensation in respect of personal injury' is to read them as referring to personal (i.e. physical) injury to the plaintiff himself or herself. ..." 49. Taylor J said (at 91): "The next question is whether the appellant's claim against the commissioner was 'an action to recover damages in respect of personal injury'. Clearly it was not. ..." 50. Unsworth , although distinguished in Genders v GIO (1959) 102 CLR 363 and GIO v Crittenden (1966) 117 CLR 412 in circumstances where a claim is made under an insurance policy indemnifying the claim "in respect of" damage from personal injury, has been applied. See, for example, Smart J in Yates v Costain Australia Ltd (1989) 18 NSWLR 312 at 315 and earlier by Isaacs J in Spain v Metropolitan Meat Industry Board [1971] 1 NSWLR 91 at 99 - 100.

While Unsworth deals with different legislation and not with the present question of an action for damages for breach of contract under the Limitation Act , some assistance is derived from the approach of Fullagar and Taylor JJ by analogy with the present case. Genders and Crittenden on the other hand are concerned with when "for" may be read as equivalent to "in respect of" accidental bodily injury. I do not see that these authorities assist in the present context. Section 60G is concerned with claims for damages "for" personal injury not "in respect of" personal injury.

Ackbar v CF Green & Co Ltd [1975] 1 QB 582 although from England, is also helpful. The plaintiff, who was injured while a passenger in his own motor vehicle, sued his insurance brokers for damages for breach of contract for failing to obtain insurance. It was held that the measure of damages claimed did not consist of or include damages for personal injury. Croom-Johnson J noted that the claim was in contract and was a derivative one. The legislation under consideration, the Limitation Act 1939 (UK) , contains words which, although different, are analogous to s 60G. At 588 his Honour posed the question: What is this action all about? The answer was that it was about an alleged breach of contract as a result of which the plaintiff lost the chance to recover his loss from the driver. That was not damages in respect of personal injuries. …. 57. In any event, even if the claim in contract is for "breach of duty", it is still a claim for damages for breach of contract and not a claim for damages for personal injury. The injury to Rolls Royce was the economic loss suffered by reason of the breach of contract. It was not an action for damages for personal injury. The words "for damages for personal injury" require the identification of the loss for which the damages are claimed. When this is done, it is clear that the loss is an economic one and not damages for personal injury.

[The High Court reversal of this decision, in Amaca Pty Ltd v New South Wales (2000) 77 ALJR 1509, did not affect the reasoning in this passage.] 37 The appellant sought to distinguish these three cases because the statutory characterisation issues involved in each of them related to an "action" of a particular description (Nickels, Unsworth) or a "cause of action" of a particular description (Rolls Royce). We were referred to Devlin J's observation in West Wake (at 57) that: … if you identify a claim as something that has to be paid … it must be something that is capable of separate payment: you cannot pay a cause of action.

The observation is true, but the suggested point of distinction cannot be established. 38 There is obviously a distinction between an action (or cause of action) and a claim. But it has no bearing on the present issue. The Policy offers indemnity against "legal liability for … claims" having a particular character. The word "liability" will have different denotations, depending on context, but is core meaning is that of legal liability (see Orica Ltd v CGU Insurance Ltd [2003] NSWCA 331 at [20]-[32] per Spigelman CJ, [67]-[71] per Mason P). The Policy refers to "legal liability for claims" in the Insuring Clause. The claim made against the Khourys in May 1998 and promptly notified by them to their insurer was of this nature. 39 When one turns to Exclusion (k) the same type of "claim" is being addressed. The inquiry becomes whether that claim has an additional character, namely whether it is "for any alleged or actual bodily harm". 40 The reasoning in Unsworth, Nickels and Rolls Royce offers a compelling analogy with regard to this latter characterisation issue. 41 Rein DCJ observed that cases like Genders and Crittenden were distinguishable because they deal with legislative contexts where a more expansive approach was indicated. His Honour was correct in this (see also Rolls Royce at [50], set out above). 42 In Genders, there had been a collision between a motor car and a motor cycle. The cycle rider and his pillion passenger were each killed, the cycle rider dying first. The wife of the pillion passenger sued the driver of the car under the Compensation to Relatives Act 1897 (NSW). The driver of the car sought contribution under the Law Reform (Miscellaneous Provisions) Act 1946 from the personal representative of the cycle rider. The High Court held that this statutory contribution claim fell within the third party insurance cover held by the deceased driver. The statutory third party insurance gave cover "against all liability … incurred by the owner and/or the driver in respect of the death of or bodily injury to any person caused by or arising out the use of the motor vehicle". Dixon CJ, McTiernan, Taylor and Windeyer JJ held that the indemnity given by the insurance policy extended in terms to the whole liability of the insured driver or owner in respect of the death or bodily injury. It therefore should be understood as covering every part of it, however that liability may be enforced, ie whether directly or indirectly (at 380). Menzies J pointed out that Nickels and Unsworth were distinguishable because the description in the statutory third party policy was wider than any of those with which the cases cited were concerned (at 387). 43 In Crittenden, the statutory third party insurance gave cover against "all sums for which [the owner] or his estate shall become legally liable by way of damages in respect of such motor vehicle whether for accidental bodily injury (fatal or non-fatal) to any person". The High Court held that the language of this cover was such that the expression "for accidental bodily injury" was broadly equivalent to "in respect of bodily injury". The decision therefore does not assist the insured in the present case. Indeed, the Court acknowledged that if the word "for" had stood alone (in the phrase "for accidental bodily injury") there would be difficulty in construing the phrase as extending beyond a claim directly at the suit of the injured party (see per Taylor J at 425-16, per Menzies J at 421). The insurance cover in Crittenden extended more widely for reasons that included the context of a statutory third party insurance scheme as well as implications drawn from the presence of the words "fatal or non-fatal" in the critical part of the insuring clause. These factors led the Court to construe "for" as having a meaning equivalent to "in respect of". 44 The appellant's submission fails to grapple adequately with the context of the exclusion itself. One is dealing with a claims made and notified policy where the focus of attention is the position of the insured. The claim made on the insured in 1998 and notified by the insured in 1998 was a claim by the Khourys for contribution or indemnity against the burden of a separate claim made upon them by Mr Hudson. 45 The circumstances in which Starr Partners were joined as the defendant in Mr Hudson's action did not change this. Here, the line of cases relied upon by the appellant actually harms its position. Those cases emphasise the need to look at the substance of the claim in the context of deciding whether the policy responds. The Exclusion expressly focuses upon the claim "against the Insured" and requires consideration of the character of that claim. If it is a claim "for any alleged or actual bodily injury" there is no indemnity. 46 The joinder of Starr Partners as a defendant in the 1997 proceedings was made for the first time as the Terms of Settlement were being formulated on 21 August 2000. It was a convenient way of effecting apportionment as between two parties each of whom had the undoubted capacity to meet Mr Hudson's agreed damages. Mr Hudson had no need to assert or prove a cause of action directly against Starr Partners, and he never amended his pleading to do so. True it is that the Khourys' claim for contribution under the 1946 Act proceeded on the basis that Starr Partners was a tortfeasor who would if sued be liable to Hudson. In one sense, the joinder of Starr Partners as a defendant and the entry of a verdict against it made the managing agent a "tortfeasor liable" (cf James Hardie & Coy Pty Ltd v Seltsam Pty Ltd (1998) 196 CLR 53). But the substantial character of the claim that had been notified two years earlier did not change by reason of the way that the Terms of Settlement were cast. 47 A claim by Mr Hudson upon Starr Partners in 2000 would have been outside the Policy if only because it was made outside the period of cover. But this was not the basis upon which the insurer sought to avoid liability, not that I am implying that it would have succeeded had it done so. The claim that Starr Partners notified in 1998 remained outside the Exclusion because it remained one for contribution/indemnity against the economic loss of the Khourys' meeting Mr Hudson's claim. Mr Hudson's claim against the Khourys was for bodily injury, but the Khourys' claim against Starr Partners, however formulated, was not of that character.

(b) Reliance upon the Note in the Proposal 48 As indicated, each of the Quotations made to Starr Partners on 6 January 1998, the Application Form (or proposal) signed by Starr Partners on that day and the Invoice for the premium from Trans-West Insurance Brokers dated 9 January 1998 contained an "IMPORTANT NOTE" stipulating that: The policy will NOT cover you for any liability involving bodily injury or property damage- public liability insurance should be arranged to cover this risk which may be an exposure if you manage property for others. 49 Ground 3 of the notice of appeal contends that the primary judge erred in holding that these words in the proposal were not incorporated into the Policy. 50 Judge Rein SC said: So far as the argument that the application form was made a part of a policy, I do not accept this contention. The policy stated that the insured had made a proposal and the reference to an agreed basis must in my view be read as an incorporation of particulars and statements by the insured, not a description by the insurer of how it understands a clause in the policy to operate. 51 The party responsible for those "NOTES" was the broker. Since, however the broker was acting pursuant to authority to quote for business and to issue policies on behalf of the insurer when Starr Partners dealt with it (cf Blue 48), the "IMPORTANT NOTES" should be treated as inserted by the insurer's agent and with its authority (ostensible at least). 52 The insurer points to the phrase "involving bodily injury or property damage" (emphasis added) and submits that this is arguably a more liberal connector than "for … bodily injury or property damage" in Exclusion (k). The analogous reasoning in Genders and Crittenden is thus invoked afresh. 53 This contention strikes me as an attempt by the insurer to rely upon its agent's representation as to the effect of the policy to defeat the terms of the Policy itself. In other contexts, this might be misleading or deceptive conduct within the ambit of s52 of the Trade Practices Act 1987 (Cth). The contention becomes even less attractive when linked to a submission that there were possibly two different policies, one being the Policy issued, the other being an earlier, inconsistent contract formed upon acceptance of the premium (whose terms were to be drawn from the notes on the proposal and invoice, read with the insurer's "usual" Policy conditions but capable of overriding them if inconsistent). The insurer cited Randelll v Atlantic Insurance Co Ltd (1985) 80 FLR 253 at 267, Goodwin v State Government Insurance Office (Qld) (1991) 6 ANZ Ins Cas ¶61-064 at p77,167 and Shepherd v National Mutual Life Association of Australasia Ltd (1995) 8 ANZ Ins Cas ¶61-233 at p75, 615. 54 As it turns out, the insurer's invocation of the "IMPORTANT NOTE" does not avail it as a means of reading up Exclusion (k), for several reasons. First, the stipulation is no more than what it purports to be, namely a "NOTE" from the insurer's agent that purports to draw attention to a gap in the Policy. Indeed the "NOTE" is accurate in so far as Exclusion (k) has work to do in relation to an estate agent. One can hypothesise situations involving visitors to the premises of the agent who injure themselves due to the state of the agent's premises. Claims upon the agent emanating from such persons would definitely be excluded from the Policy, due to Exclusion (k). Non sequitur that Exclusion (k) is to be interpreted otherwise than according to its own terms. 55 Secondly, there is nothing to make the "IMPORTANT NOTE" a term of the Policy. In terms, it merely draws the would-be insured's attention to a particular state of affairs. It is a representation made by the insurer's agent in the transaction. It does not purport to modify or even interpret the Policy. 56 Thirdly, the insurer's attempt to incorporate the NOTE though the Policy's Preamble fails as a matter of plain construction. Relevantly, that Preamble states: Whereas the Insured, (as defined in this Policy and named in the Certificate of Insurance) has made to MMI General insurance Limited (ACN 000 122 850) ("the Company"), a written proposal containing particulars and statements which it is agreed are the basis of the contract and are to be considered as incorporated into the contract….

57 This purports to make the Insured's "particulars and statements" in the written proposal the basis of the contract of insurance and to incorporate them into that contract. These "particulars and statements" include information provided by the insured, including information that is to be read with portions of printed forms on which it is provided. But by no stretch of the imagination could they include information provided on behalf of the insurer that, at the highest, the insured "notes". 58 Fourthly, the submission founders by application of the contra proferentem principle (McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579 at 602). At best for the insurer, the language of the NOTE is ambiguous in its impact upon the sharper wording of Exclusion (k). There is nothing to show why such ambiguity should be resolved in the insurer's favour. 59 The appeal should be dismissed with costs. 60 SHELLER JA: I agree with Mason P. 61 PEARLMAN AJA: I agree with Mason P. **********

Last Modified: 04/14/2004 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

Trade Practices Act 1987(Cth)

CITATION : ALLIANZ AUSTRALIA LTD v WENTWORTHVILLE REAL ESTATE PTY LTD & 2 ORS [2004] NSWCA 100 HEARING DATE(S) : 1 March 2004 JUDGMENT DATE : 2 April 2004

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