BMW Australia Finance Limited v Miller & Associates Insurance Broking Pty Ltd [2009] VSCA 117

BMW Australia Finance Limited v Miller & Associates Insurance Broking Pty Ltd [2009] VSCA 117 - VSCA 2009 case summary — Zoe

[230]

It is broadly true that an application in an action under s 52 cannot recover damages unless he establishes that he acted on or was influenced by the conduct contravening the section: Mister Figgins Pty Ltd v Centrepoint Freeholds Pty Ltd [1981] FCA 15; (1981) 36 ALR 23 per Northrop J at 48. The issue of the applicant's reliance upon such conduct is however more complex than such a formulation indicates. The trial judge noted the similarity between conduct constituting deceit at common law and conduct contravening s 52, and referred to the principles which determine whether there has been inducement in actions for deceit. These principles were reviewed by Wilson J in Gould v Vaggelas [1984] HCA 68; (1985) 157 CLR 215 at 236. His Honour there observed that the inference that the applicant relied upon a material representation calculated to induce him to enter a contract might be rebutted by showing that 'whether he knew the true facts or not he did not rely upon the representation'. His Honour noted that the representation made 'need not be the sole inducement. It is sufficient so long as it plays some part even if only a minor part in contributing to the formation of the contract.' In Neilsen v Hempston Holdings Pty Ltd (1986) 65 ALR 302 at 313, a case which concerned an action for damages under s 52 where misleading statements had been made to the applicant as to the occupancy rate of a motel, Pincus J held that the causal chain allowing recovery of damages under s 52 of the Trade Practices Act was not broken even where the applicant had failed to take reasonable care of his own interests by undertaking a proper investigation of the figures presented. These decisions support the view that recovery under s 52 is founded by the applicant's actual reliance upon the misleading or deceptive conduct of the respondent although that conduct was not the only factor in the applicant's decision to enter a particular agreement, and although the applicant did not seek to verify the representations or did so inadequately and so failed to discover their falsity.[42]

[253]

55. I accept the evidence of Mr Reynolds and Mr Jones that their reading of this bundle of documents disclosed to them that the commercial prospects of Consolidated Timber were such that it represented a good credit risk, especially for a short term loan of the kind now in contemplation. Their further evidence that they treated the policy as having nothing to do with the proposed loan presents more difficulties. Mr Reynolds said that he read the policy and that he understood from it that St George Bank was involved in the policy as a co-assured and that the bank would stand ahead of BMW in any queue for repayment in the event of default. Mr Jones appears to have derived the same impression from the document. It was of interest only in as much as it showed that Consolidated Timber had a link with the bank. He did not understand the document to be a copy of the underlying policy referred to in the HIH certificate.

56. I find that, when each of these BMW managers received the bundle, they read the contents but they paid little regard to the policy and none at all to its detailed terms. By this time they were contemplating the preparation of a loan quotation based on the same policy as that underlying the abandoned loan of 2 October. They had, in the way I have described, erroneously satisfied themselves of the cancellability of the underlying policy for the October loan and their examination of the actual policy provided in the bundle in November was cursory. They noted that the front page showed the interest of St George Bank and they may have turned to the certificate of insurance on p. 9 of the policy where this appears again. Their brief examination of this page reassured them that it was the same policy as that referred to in the HIH certificate without noting the different policy number and the other differences which a more careful and interested reading might have disclosed. They may have seen that the policy was called a Cost of Production Policy, but I do not think that this would have meant anything to them. In short, the actual policy was of little interest to them given what had gone before and given their strong motive to make a fresh loan, if at all possible. Their principal interest in the bundle of documents lay in the financial information which it contained. Their lack of any careful attention to the policy is consistent with their conduct in many aspects of the transaction. It represents a further disaster on the road to BMW's ultimate loss.

[255]

67. The short answer to this representation allegation is that the HIH certificate, properly understood, did not convey the represented fact. At best, from BMW's point of view, it created an uncertainty as to this. The fact that BMW drew the conclusion that it did was a product of its own carelessness or wishful thinking. And in any event, by the time the loan was made in December, BMW had the very policy which its officers might have read and understood or sought advice upon if they were minded. In short, BMW was the author of its own misfortune.

68. The position with respect to the non-disclosed fact is similar. The question whether a failure to provide information amounts to misleading and deceptive conduct must depend upon the circumstances attending the non-disclosure. One of the circumstances here is that both the brokers and the lender were experienced in their respective fields and were known by the other to be so. Although the brokers' position might have an aspect of ambiguity, it, on behalf of its client the borrower, has a commercial interest adverse to the lender. In these circumstances, the lender either makes up its mind on the material submitted or asks for more information. Furthermore, in a case such as the present, where it asks for details of the underlying policy, it cannot be heard to complain where the broker provides a copy of the policy itself, presumably on the basis that the lender will read it and make its own assessment. And if the policy provided to the lender is inconsistent with material earlier provided, such as the HIH certificate in this case, it is for the lender to evaluate this or to seek further information.

69. I conclude that, on 12 December 2000 when the loan was approved, BMW had in its possession an accurate statement of the nature of the policy upon which it made the loan. If, contrary to my finding, a fair reading of the HIH certificate in October would have led Mr Reynolds and Mr Jones to the positive conclusion that the policy was cancellable, this was dispelled by the information contained in the bundle of documents delivered in November.

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