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

TRADE PRACTICES - Misleading or deceptive conduct - Causation - Whether premium funder who funded a policy that was not cancellable suffered any loss or damage by the conduct of insurance broker - Whether loss and damage suffered by conduct within meaning of s 82 of the Trade Practices Act 1974 (Cth) where negligent conduct of officers was a cause of loss and damage - s 82 Trade Practices Act 1974 (Cth).

NEGLIGENCE - Whether insurance broker owed insurance premium lender a duty of care to provide accurate information on the nature of the policy to be funded - Whether duty of care breached - Whether premium funder suffered loss and damage as a result of the breach of duty of the insurance broker - Contributory negligence of officers of premium funder.

1 I have had the advantage of reading in draft the reasons for judgment of Robson AJA. I am indebted to his Honour for his full exposition of the circumstances of this matter and his analysis of applicable principles. Unfortunately, I am unable to agree with his conclusion that the appellant, BMW Australia Finance Ltd, established its claim under the Trade Practices Act 1974 (Cth). That is because, although, in my opinion, it proved that the respondent, Miller & Associates Insurance Broking Pty Ltd, engaged in misleading or deceptive conduct, it failed to prove (upon an assumption that this Court should deal with the causation issue) that the respondent's conduct was causative of its loss and damage. Further whilst I am prepared to assume, for argument's sake, that the respondent owed a common law duty of care to the appellant, which duty it breached, I consider that the appellant did not establish that such breach was a cause of loss and damage. I also consider - it is antecedent to the causation question - that upon the assumptions which I am prepared to make the appellant's contributory negligence was very considerable.

2 Upon the question whether, in the claim brought under the Trade Practices Act, the respondent engaged in misleading or deceptive conduct, it is necessary to consider the conduct of the respondent viewed as a whole, against the background of all surrounding circumstances. Those circumstances include what the respondent knew of the appellant and its business.

3 The following matters are pertinent: First, there was plain evidence that the cancellability or otherwise of insurance funded by a premium funding loan was of very considerable importance to a funder, a circumstance which should be taken to have been known to the respondent.[1] This is not to say that premium funding loans were not made by the appellant in respect of non-cancellable insurance. But, emphasising the relevance of the circumstance, the appellant took out credit risk insurance, inter alia, if it funded non-cancellable insurance.[2]

4 Second, when providing quotes in September and December 2000, the appellant sought full policy information. It may be said, speaking generally, that the provision of such information would be likely to disclose whether or not the insurance was cancellable. But there is a question as to what precisely was meant by the term 'full policy information'. Would it be satisfied by provision of a copy of the policy? If so, did that imply that BMW would make its own assessment whether the policy was cancellable? Or would the requirement be satisfied only by information which in terms specified whether or not the insurance was cancellable?

5 Third, the learned trial judge inferred that the respondent knew that the policy in respect of which funding was sought was a cost of production policy, and non-cancellable. On the assumption that there was no direct evidence of those matters, in my opinion his Honour was right to draw those inferences.

6 It would be surprising if a broker did not know the nature of insurance in respect of which its client was seeking premium funding. In any event, in November 2000 the respondent sent a bundle of documents including a copy of the cost of production policy to the appellant. Whatever significance the appellant's employees attached to the copy policy, the reasonable inference is that the respondent sent it to the appellant as revealing the insurance which was to be funded.

7 But in fact I consider that there was direct evidence which suggested that, as early as August 2000, Miller was aware that its client held cost of production insurance; and that, albeit in another connection, there was a problem with that insurance. So much appears from the respondent's letter to its client dated 15 August 2000. Further, the insurance there referred to was surely the insurance provided by the copy policy to which I referred above. That insurance, it was accepted at trial, was the insurance to which the so-called 'HIH certificate' referred. Again, whilst the HIH certificate suggests that the client had retained a broker other than the respondent to obtain the insurance, this is not to say, and it is inconsistent with the respondent's apparent state of knowledge as at August 2000, that the respondent did not know before September 2000 that the insurance in respect of which premium funding was being sought was cost of production insurance.

8 It was one thing for Miller to have known that the insurance which was to be funded was a cost of production policy. It is another matter whether Miller knew that such a policy was non-cancellable. A conclusion that it did so depended upon inference. As I said earlier, the respondent knew that cancellability of insurance was important to a premium funder. Even if it could be assumed that the respondent did not know at the outset of its discussions with BMW that a cost of production policy was non-cancellable, it seems very improbable that it did not know the position by the time that the HIH certificate was sent to the appellant, still less that it did not know the position when the copy policy was forwarded. As Robson AJA points out, the respondent did not go into oral evidence at trial in an attempt to dispel the inference which in my opinion would otherwise arise.

9 Fourth, the information initially provided to the appellant about the pertinent insurance was provided 'after the event'. That is, it followed acceptance of the September loan application. The acceptance was in error, but it was made. The information belatedly sought and provided was the HIH certificate.

10 Fifth, and contrary to the conclusion reached by Robson AJA, I consider that the HIH certificate did not itself represent that the insurance which was to be funded was either property insurance or - the very likely corollary if it had been property insurance - that the policy was cancellable.

11 The learned trial judge accepted the evidence of Messrs Reynolds and Jones that, having read the certificate, they respectively concluded, taking several careless leaps, that the insurance was a property insurance, and was cancellable. Even assuming that his Honour's finding was tenable, it does not answer the question whether the document was misleading by representing that such was the situation.

12 The matters which were the subject of cross-examination of Messrs Reynolds and Jones concerning the certificate (the form of which I append as schedule A to these reasons) are referred to by Robson AJA at [106]-[111] and [123]-[125]. To my mind, those matters show that the HIH certificate was at least ambiguous as to the nature of the insurance or insurances in respect of which funding was sought. I say 'insurances' because on one view the insurance was partly professional indemnity cover and partly some kind of insurance related to four identified properties.

13 The cross-examination of those witnesses also bears upon his Honour's acceptance of their stated belief as to the nature of the relevant insurance. Of this, more later.

14 Sixth, the copy policy which was part of the documentation inferentially sent by the respondent to the appellant in late November 2000 was in fact the policy to which the HIH certificate referred. But it is another question whether there was reason for Messrs Reynolds and Jones to believe that it was the policy underlying the HIH certificate.

15 If they had so believed, it would be difficult to say, if the provision of the HIH certificate in context had constituted misleading or deceptive conduct, that this was not an antidote - that bearing also upon the issue of causation. But in my opinion their evidence, which was to the general effect that they did not link the policy with the HIH certificate, was credible. It was credible for the reason assigned by the learned trial judge that is:

... 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.

16 Putting the belief of Messrs Reynolds and Jones aside, if one assumes that the HIH certificate did create a misleading impression, I consider that the copy policy provided in late November 2000 did not correct such impression. The insured on the HIH certificate and on the certificate referable to the policy did not coincide, the policy numbers differed, the period of insurance (at least as stated on the two certificates) differed, there was no reference in the later-provided certificate which could be interpreted as providing professional indemnity cover, and, if the HIH certificate could be understood to refer to property insurance, the policy provided to the respondent in November 2000 plainly did not do so.

17 Seventh, there being no plain connection between the HIH certificate and the copy policy, it can be concluded that the respondent never positively informed the appellant that the insurance which was to be funded was a cost of production policy, or that the policy was non-cancellable. In that connection, I add, the respondent had pleaded by its defence that the appellant's employee Jones had been informed by a Mr Dick that the underlying insurance was non-cancellable. Mr Dick did not give evidence.

18 In my opinion, then, the question whether the respondent engaged in misleading or deceptive conduct is not answered in the appellant's favour by reference to the text of the HIH certificate, or in the respondent's favour by reference to the provision of a copy of the cost of production policy to the appellant in late November 2000. Rather, the question is whether it should be concluded that

(1) the provision of what I consider was an ambiguous HIH certificate in circumstances where Miller knew that it was important to the appellant that a policy which was to be funded was cancellable; and

(2) Miller's failure between early October 2000 and early December 2000 to positively inform the appellant, where objectively the HIH certificate was ambiguous, that the underlying insurance was in respect of cost of production and was non-cancellable

19 The learned trial judge dealt with the matter differently. He found that the HIH certificate did not convey as a fact a representation that the insurance was cancellable property insurance. I respectfully agree. He further found that in any event the appellant had 'the very policy' in its hands by the time that the December loan was made, this dispelling any assumed representation by the certificate to the contrary. I agree with his Honour that the appellant had 'the very policy' in its hands when the December loan was made. But I respectfully disagree with his conclusion that it dispelled any misleading representation that might have been conveyed by the HIH certificate. That is because, for reasons which I have previously given, there was no evident connection between the insurance the subject of the HIH certificate and the insurance the subject of the later-provided policy. So, contrary to his Honour's approach, the issue of what might be called contextual silence becomes critical.

20 The principles concerning contextual silence are set out by Robson AJA at [145]-[147]. Applying them to this case, the only document in the appellant's hands before the December loan which unequivocally related to the underlying insurance was the HIH certificate. It was ambiguous. It neither plainly identified the insurance as ordinary property insurance, nor plainly identified the contrary. Miller knew that it did not relate to ordinary property insurance, and should be taken to have known that the insurance was non-cancellable. It knew the importance of insurance being cancellable to a premium funder. Those circumstances meant, in my opinion, that it was misleading for Miller to stay silent and not communicate to the appellant a relevant situation which the HIH certificate tended to obfuscate. It cannot be said, for the reasons which I have stated, that provision of the copy policy satisfied the requirement that the uncertainty be cleared up.

21 I said earlier that the precise meaning of the term 'full policy information' admitted of different conclusions. On a view most favourable to the respondent, it could mean that it would have been enough for the respondent to provide a copy of the relevant policy, or to provide an unambiguous certificate of insurance, leaving it to the appellant to decide whether to provide funding. But the precise meaning of the term need not be decided; because even giving it a meaning favourable to the respondent, the respondent did not provide the appellant with a copy of what it identified as the relevant policy, but did provide the appellant with an ambiguous certificate of insurance.

22 In my opinion, then, Miller did engage in conduct which contravened s 52 of the Trade Practices Act.

23 The learned trial judge found that the respondent had not engaged in misleading and deceptive conduct. Thus, no question arose whether misleading or deceptive conduct was causative of the appellant's loss and damage. Nonetheless, in fact the appellant entered into the December loan agreement, and the judge made a finding why it did so. He found, in effect, that Reynolds and Jones had committed their employer to the agreement in circumstances of (1) personal difficulty which arose from botched entry into, and exit from, the October loan; and (2) wishful thinking that the documents provided to them in late November established the financial strength of the borrower.

24 Strictly, the judge did not deal with the causation issue which would arise upon a finding that the respondent had engaged in misleading or deceptive conduct. There is a question whether this Court should do so, particularly when it has not seen or heard Reynolds or Jones. The point is emphasised by the reasons for judgment of Robson AJA. His Honour places particular emphasis on the evidence of those witnesses that they would not have committed their employer to the contract had they believed, in effect, that the insurance was not cancellable. For reasons which I will later explain, I do not agree with his Honour that much could be made of that evidence. But the conclusion which his Honour has reached at least depends upon an assessment of the credibility of the two men; and this Court is imperfectly equipped to make such an assessment - although it is able to conclude, for reasons to which I will later refer, that the credit of each of them was impaired.

25 In my opinion, the preferable course would be to remit the proceeding for determination of the causation issue. But since my overall conclusion is in the minority, and since the particular evidence of Messrs Reynolds and Jones can at least be tested by reference to objective circumstances, I will address the issue.

26 In my opinion, the appellant failed to establish causation. I so conclude notwithstanding that it is sufficient that the misleading or deceptive conduct was but one of multiple causes of loss and damage, not necessarily a major or predominant cause;[3] that it was sufficient if the appellant's loss and damage was materially contributed to by the respondent's breaching conduct.[4]

27 The relevant evidence of Messrs Reynolds and Jones fell into two broad categories. First, their inevitable concessions about their bungling conduct, which offered an explanation why the cancellability or otherwise of the underlying insurance became irrelevant to acceptance of the December loan application. Second, their insistence that they would not have approved the application had they known that the insurance was non-cancellable. That evidence fell to be assessed in the context of objectively ascertainable circumstances.

28 In my opinion, those circumstances, mostly conceded by the two witnesses, strongly suggest that entry into the December agreement was wholly uninfluenced by consideration whether the underlying insurance was cancellable or not. I do not regard their protestations to the contrary as persuasive.

29 The objectively ascertainable and conceded circumstances were as follows:

(1) The two September quotations were expressed to be subject to receipt, inter alia, of 'full policy information'.

(2) Notwithstanding non-provision of such information in the loan application which was first faxed and then posted by the client to BMW on 2 October 2000, the application was accepted.

(3) Acceptance was by administrative error. But it had substantial implications. Reynolds had authority to approve premium funding up to $500,000 for a cancellable policy, but only $300,000 for a non-cancellable policy. Further, if funding was to exceed $1 million, a credit risk insurer had to approve it, likewise two of Reynold's superiors. Neither Reynolds nor Jones knew the nature of the insurance, still less whether it was or was not cancellable, when the loan was approved. Further, the premium funding which the appellant agreed to provide was far beyond the authority of Reynolds, even further beyond Jones' authority, and it made without required approval. Again, the approval of a credit risk insurer had not even been sought.

(4) Neither Reynolds nor Jones brought what had happened to their superiors' notice. Neither did either of them seek to retreat from the erroneous acceptance. Rather, they took steps which ought to have been taken before the application was approved: they made a credit check of the insured, they contacted, via a broker, BMW's credit risk insurer, and they sought details from the respondent of the underlying insurance.

(5) Concerning the second of those matters, the evidence of Messrs Reynolds and Jones did not coincide, as the learned trial judge noted.[5] It is clear, in any event, that Jones sent to BMW's credit risk broker, NCI, a 'new limit/limit increase application' seeking the approval of HIH (which coincidentally was the appellant's credit risk insurer) to cover a premium loan of $3.8 million to the respondent's client.

There is reason to conclude that the application was genuine. It was pursued by NCI up to 19 October, at which time NCI reported that HIH, being fully exposed to the respondent's client, had declined to insure the risk.

Jones' conduct in seeking credit risk insurance is explicable as disclosing an intention to proceed with the loan which had been inadvertently agreed to whilst minimising any potential for harmful consequences by insuring against the risk.

(6) As to the third of the matters mentioned above, Jones gave evidence that he spoke to Merton on 5 October 2000 and asked him for

details of the insurance to be funded ... either some policy, a certification or some information, an invoice

That enquiry, to my mind, was a work of considerable desperation. It suggests that Jones wanted something which could be said to meet the description 'full policy information', but that he was not in fact very particular about what was provided.

(7) On 9 October 2000 Miller faxed the HIH certificate to Jones.

(8) Each of Reynolds and Miller sighted the HIH certificate.

Reynolds gave evidence that he formed the view that the insurance was property insurance, which suggested to him that the policy was cancellable. In cross-examination he said that he had either not read or had seen no significance in various anomalies in the certificate. The judge below accepted that Reynolds formed the view of which he gave evidence, essentially by several careless leaps. Accepting so much, in my opinion for Reynolds to have formed that belief having regard to the content of the certificate bespeaks a man looking (I do not say consciously) for a solution to an intractable problem.

Jones gave evidence that he believed, based upon the HIH certificate, that the insurance was property insurance and cancellable. In cross-examination he stated, in effect, that once he had seen a number of properties identified on the certificate, he took the insurance to be property insurance. He either did not notice or did not apprehend the significance of the anomalies apparent on the face of the certificate. He gave a poor explanation why, if he believed that the insurance was property insurance, he persisted with the application for credit risk insurance.

Again, the judge below accepted that Jones formed the view of which he gave evidence. If one was to give Jones the benefit of the doubt in that connection - and in my opinion the doubt is great - I do not accept that the belief was rational. As with Reynolds, I consider that it bespeaks a man desperate to find a solution to a serious problem.

(9) Notwithstanding their proposed belief that the loan was to be made in respect of property insurance, and was cancellable, Reynolds and Jones purported to extricate the appellant from the October loan agreement.

Reynolds gave two reasons for doing so: (1) The name of the insured on the HIH certificate differed from the name of the borrower; (2) the quotation which was accepted differed from the initial quotation in that the earlier quotation had provided for three draw-downs and the latter for two.

Those reasons were wafer-thin. The learned trial judge exposed some of their weaknesses in his reasons for judgment.[6] It may also be remarked that the two draw-down quotation which the borrower accepted provided for a much greater credit charge than the three draw-down quote which was made at the outset.

Whatever were Reynolds' asserted reasons for extricating the appellant from the October loan, he did not confide them to his superiors, to the respondent, or to the borrower. Rather, Jones communicated with Merton. Jones gave these reasons for what BMW said it was doing: (1) BMW was not happy with the term of the loan; (2) There had been a change between the first and second quotations; (3) The borrower was a new company.

Those reasons were a contracted version, for the most part, of the reasons which Jones stated in evidence informed his decision. Thus: (1) under the quote which had been accepted, there were two drawn-downs, not three. This created a bigger risk for the appellant. (2) The term of the loan - 30 months - exposed the appellant to a greater risk than the usual 12 months loan; (3) NCI could not obtain credit risk insurance; (4) The broker and borrower were new to the appellant.

In Jones' case, again, the learned trial judge analysed improbabilities in the evidence why it was BMW had purported to extricate itself from the October loan.[7]

All in all, the reasons stated by Reynolds and Jones why BMW had acted as it did were not only for the most part a poor justification, they could not sensibly have led either Reynolds or Jones to a belief that a loan agreement had not been concluded in early October 2000. One question which, depending upon the answer, might have told to the contrary was whether the insured and the borrower were one and the same. But that question had been answered, and the answer gave the appellant no assistance.

The only credible explanation for the purported retreat from the October agreement, in my opinion, is that Reynolds and Jones were trying to avoid the risk of adverse consequences of the earlier bungling. Even accepting their stated belief that the underlying insurance was cancellable, the loan which had been agreed to was far in excess of authority, was for a long period and was with a new client. Further, credit risk insurance was unavailable.

(10) The immediate upshot of the appellant's decision to extricate itself from the agreement was that it returned a first payment made by the borrower, whilst the insured was unable to make the first draw-down.

(11) The insured then attempted, it appears, to obtain funding from two other premium lenders. Evidently, it was unsuccessful Reynolds came to learn of these events.

(12) By mid November 2000, then, the insured was in a difficult position. It had a cost of production policy which necessitated substantial, regular payments of premium. It had attempted to obtain a premium funding loan from three lenders. It had apparently succeeded with the appellant, but the success had turned to rejection. Several later attempts had failed. The insured's attempts to obtain premium funding and its inability to meet monthly repayments to the appellant in early 2001 imply that its financial situation must in fact have been difficult in late 2000. That is so whatever was the apparent import of the documents sent to the appellant in late November 2000.

It is scarcely surprising, in the circumstances, that Miller attempted to revive negotiations with the appellant in November 2000, and that it did so with an implied threat - that is, that its client had consulted solicitors; and that the solicitors had advised that a contract had been made in early October 2000.

(13) The appellant, by Reynolds and Jones, responded favourably to Miller's overtures. Why would they not have done so when (1) Reynolds believed that a contract had been entered into in early October 2000; (2) Jones probably had a similar belief - his evidence on the question was inconsistent; (3) the contract had been made despite BMW not having necessary facts in its possession; (5) the credit risk insurer had declined to accept the risk; (6) Reynolds and Jones had made an inept attempt to extricate BMW from the contract; (7) all of these events had taken place unknown to Reynolds' superiors; (8) There was prospect of re-negotiating the loan on terms less disadvantageous to BMW.

(14) The bundle of documents containing the copy policy was sent to the appellant in late November 2000. The learned trial judge concluded that financial material concerning the insured which was contained in the bundle was very positive. Further, the bundle contained a document by which directors' guarantees were offered.

Reynolds and Jones were provided with other material which suggested that the borrower was an entity of substance. Merton advised that a bank offer had given a favourable reference:

Client is honest and reliable and monthly instalments can be supported by cash flow and contracts in place.

A company search done at Jones' request on 7 December 2000 did not disclose any unfavourable circumstances.

(15) A new quotation dated 7 December 2000 was prepared. The amount of the proposed loan was the same as before - $3,975,000. The number of monthly instalments was ten, in lieu of the earlier 30. The monthly repayments, obviously, were much greater; and the total credit charge was much less.

The quotation contained the statement that 'This quotation is subject to approval and receipt of completed contract and full policy information'. No such information was provided; but the quotation was accepted, and the parties thereafter acted on the basis that it was an operative agreement.

(16) The amount of the loan which was agreed once again greatly exceeded Reynolds' authority. Again, he said nothing about it to his superiors. The loan did, however, have some very positive features from his standpoint (and that of Jones): (1) it removed the risk of legal proceedings being brought in respect of the October agreement, a matter which must have come to the superiors' attention; (2) because of the duration of the loan, the risk of something going wrong was nominally reduced; (3) the loan was made against the background of financial material which suggested that the risk of something going wrong was at least small; (4) two Directors gave guarantees. In all, the agreement had the hallmarks, superficially, of an answer to the problems which Reynolds and Jones had created for themselves.

(17) It is notable, however, that various problems which Reynolds and/or Jones claimed to have perceived in the October 2000 agreement remained: (1) albeit that the period of intended loan was shorter, now there were not three or two drawn-downs, but only one. (2) The name of the insured on the HIH certificate and the name of the borrower still did not coincide; (3) credit risk insurance had not been secured, and no attempt was made to secure it. Any attempt would doubtless have been futile having regard to the role of HIH as insurer of the borrower and as the potential credit risk insurer; (4) the broker and the borrower were still new to the appellant.

(18) In a letter signed by Jones which accompanied the quotation, the appellant requested -

Guarantee and indemnity (TBA)

Assets and liabilities statements (TBA)

Nonetheless, the agreement was concluded when only two of six directors had given guarantees, and when asset and liability statements pertaining to those directors alone had been provided. The vast percentage of the asserted net worth of the two individuals, I add, was in shares. The shareholdings were not detailed, and it can be assumed that they were insubstantial, for the guarantees proved to be worthless.

(19) In the letter to which I have just referred, Jones asked for 'a company structure, if available'. This was provided on a single sheet of A4 paper on 12 December 2000. Reynolds was told by Merton, apparently later on, that one of four properties shown on the chart as being owned by the 'consolidated corporate structure' had been sold. It was, on its face, one of the properties referred to in the HIH certificate.

(20) The loan was approved on 12 December 2000. An application approval was signed by Reynolds and Jones. The approval was on a form appropriate to an amount of less than $100,000, yet the amount financed was $3,975,000. Below the signatures of Reynolds and Jones were printed their names and the limit of their respective authorisations. The document was misleading - because on its face it related to an application well within Reynolds' authority; and it was signed by Jones and Reynolds although it specifically stated the limits of their authority. This document alone shows the extent to which they were prepared to act dishonestly.

(22) A 'welcome letter', dated 20 December 2000 and this time signed by Jones, was sent to the borrower.

(23) When the borrower soon became unable to pay the monthly instalments, Reynolds did not attempt to cancel the policy - which was what should have been expected if he had believed that the insurance was property insurance, and cancellable. But that probably does not tell against his asserted belief, because it was at about this time that the difficulties of HIH became apparent.

(24) Reynolds and Jones continued to conceal what they had done from their employer until late 2001. In the interim, Jones, purported on his employer's behalf to 'reinstate' the October loan, this meaning that much smaller monthly repayments were required. But that did no good.

30 The sequence of events which I have set out in my opinion tends very strongly in favour of a conclusion that the asserted belief of Reynolds and Jones that the insurance was cancellable had nothing to do with the December loan being made. That is so although, stripped of those circumstances, it would not have been commercially sensible for the loan to be made if the insurance was not cancellable, or at least if credit risk insurance was unavailable. The plain facts are that Reynolds and Jones got themselves into a fix by a series of actions in October 2000. Their attempt to retrieve the situation by extricating BMW from the October agreement backfired. They then came under more pressure from the borrower and the broker. Being too readily satisfied of the financial worth of the borrower, they took the risk of entering into a new loan, which they no doubt hoped would be repaid satisfactorily in a short time.[8] They, or one of them prepared a misleading document - that is the application approval which was signed on 14 December 2000. They both signed it. They were prepared to conceal their errors and misdeeds from their superiors - not once, but repeatedly.

31 It is in this context, as I see it, that the evidence of Reynolds and Jones that they would not have committed their employer to the December agreement had they not believed that the insurance was cancellable falls to be considered.[9] As they were really compelled to do, each of them conceded that other circumstances played a very large part in their action; but each of them asserted that their particular belief was operative in their decision.

32 It may be that each of the men brought themselves to believe, at least when litigation ensued, the truth of what they said; but I do not accept that it represented the probabilities of the situation. Evidence of such a kind has an element of reconstruction about it. Although different, it has about it something of the 'what I would have done had I been informed about the risk' evidence which is often enough given in medical negligence cases. In such cases, of course, the plaintiff addresses a hypothetical situation, for the complaint is that certain information was not given. The plaintiff gives evidence what he or she would have done had the information been provided. By contrast, in this case, the appellant's witnesses gave evidence to the opposite effect - that is, that the respondent acted in a particular way and that this was a cause of the appellant acting to its detriment. But similar features of self-serving reconstruction are present in both situations. In the present case, there being obvious reasons why Reynolds and Jones might have acted as they did which had nothing to do with their asserted belief that the insurance was cancellable, the potential for self-serving reconstruction was strong; for the men were saying, in substance, that despite other obvious causative circumstances, a particular circumstance weighed with them which represented a vestige of adherence to proper procedures. In that connection, it was not of much moment that one of them no longer worked for the appellant at time of trial. Each of them remained in the insurance industry in a managerial position

33 The problems attendant upon evidence of the 'what I would have done' kind have been recognised. In Rosenberg v Percival,[10] McHugh J said this:

... in determining whether a patient would have undertaken surgery, if warned of a risk of harm involved in that surgery, a court asks whether this patient would have undertaken the surgery. The test is a subjective test. It is not decisive that a reasonable person would or would not have undertaken the surgery. What a reasonable person would or would not have done in the patient's circumstances will almost always be the most important factor in determining whether the court will accept or reject the patient's evidence as to the course that the patient would have taken. But what a reasonable person would have done is not conclusive. If the tribunal of fact, be it judge or jury, accepts the evidence of the patient as to what he or she would have done, then, subject to appellate review as to the correctness of that finding, that is the end of the matter.

34 In the same case, Gummow J stated that giving particular weight to 'the objective assessment' should not be pressed too far.[11] Even so, his Honour's words of caution did not sit uncomfortably with what was said by McHugh J.

35 In the present case, given that the analogy is incomplete, the objective circumstances tell against the reliability of the evidence of Reynolds and Jones that they would not have committed their employer to the December contract had they believed the insurance to be non-cancellable. Quite apart from the objective circumstances, they were men who by their own admission had repeatedly acted with disregard for company procedures, had concealed matters from their employer, and had acted quite deceptively in the preparation and signature of the application approval form for less than $100,000. Their credit was impaired. Further again, although the learned trial judge did not have to deal with the question of causation, he accepted that the men held the belief which they stated, and yet he concluded that they concluded the December contract for other reasons.

36 Assuming that the respondent fell under a common law duty of care to the appellant which required it to provide the appellant with accurate information as to the nature of the insurance in respect of which premium funding was sought, it breached the duty. But I am unable to agree with Robson AJA, even if the respondent's negligence had been causative of the appellant's loss and damage - and I cannot accept that it was, for the reasons which I have given in connection with the Trade Practices Act claim - that the contributory negligence of the appellant should be assessed at only 40 percent. Unlike Robson AJA, I consider that the HIH certificate did not plainly convey that the insurance was property insurance, and was thus cancellable. Rather, it was ambiguous, and if Reynolds or Jones had exercised any care, they should have appreciated that fact and initiated enquiries. But they read the certificate superficially, and - because the circumstances progressively became more difficult for them - never clarified the situation. Their culpability (and thus the culpability of their employer) was in my opinion very substantial. Even if causation could be established, their carelessness was important in bringing about the appellant's loss and damage. I would assess contributory negligence at not less than 50 per cent. Since I am in the minority, I will be no more specific.

38 To recover damages under the Trade Practices Act 1974 (Cth), BMW Australia Finance Limited ('BMW') was required to prove that:

(a) its employees (James Reynolds and Cameron Jones) believed that the insurance premium loan was sought to finance a cancellable property insurance policy;

(b) the respondent, Miller & Associates Insurance Broking Pty Ltd ('Miller'), misled BMW about the nature of the policy; and

(c) the loss suffered by BMW was caused (at least in part) by Miller's misleading or deceptive conduct.

39 So far as (a) is concerned, the learned trial judge implicitly found that Mr Reynolds and Mr Jones believed that the insurance policy was cancellable. I agree with Robson AJA, for the reasons he gives, that the evidence justified that finding.

40 So far as (b) is concerned, I agree with Robson AJA that the provision of the HIH certificate to BMW was misleading. Miller was aware that the cancellability of the policy was of primary importance to a premium lender and, consequently, to BMW. The evidence supports the inference that Miller was aware that the policy was a non-cancellable cost of production policy. The HIH certificate was provided in response to a request from BMW that details of the insurance be provided. It referred to 'properties insured and limits'. I agree with Robson AJA that the reference to the four specified properties suggested that the policy provided property insurance, though other features of the HIH certificate would have led a careful lender to make further enquiries.

41 I also agree with Ashley JA and Robson AJA that Miller's provision of the policy shortly before the December loan did not correct that false impression. The bundle of documents sent by Miller to BMW was not accompanied by any covering letter indicating that the cost of production insurance policy contained in that bundle was the same as the insurance policy covered by the HIH certificate, which Mr Reynolds and Mr Jones believed to be cancellable. There was no reason for them to think that was the case, because the HIH certificate insured a different party to that insured under the policy provided in December, the policy numbers were different and the cost of production policy did not refer to specified properties.

42 Having regard to Miller's awareness that policy cancellability was of central importance to a premium lender, the reference to 'property insured' in the HIH certificate and Miller's knowledge that the policy for which the loan was sought was non-cancellable, I consider that Miller's silence about this matter was, in the context of the parties' relationship, misleading.

43 The question raised by (c) is whether BMW's loss was caused by Miller's misleading conduct. As the authorities cited by Robson AJA show, it is unnecessary to demonstrate that the misleading conduct was the sole cause of the loss suffered by BMW, provided it made a material contribution to that loss.[12] After careful consideration, I agree with Robson AJA that Mr Reynolds and Mr Jones approved the loan because of their belief that the policy was cancellable, although other factors also played a part in their decision.

44 Having established that BMW believed that the loan was to be used to finance a cancellable policy, and that that belief was brought about by the misleading conduct of Miller, the evidentiary onus moved to Miller to rebut the inference that the loss suffered was in fact caused by its misleading conduct.[13]

45 As Mr Reynolds and Mr Jones necessarily conceded, their approval of the December loan without making proper enquiries about the nature of the policy was careless. In my opinion, however, there is insufficient evidence to refute the inference that BMW's loss was caused by Miller's misleading conduct. The evidence does not support an inference that Mr Reynolds and Mr Jones would have agreed to the December loan (even if they had realised that the policy was non-cancellable) to avoid scrutiny of conduct which breached BMW's lending policies, or because they believed that they were already contractually bound to make the loan.

46 I take that view for the following reasons. First, the Consolidated Timber Holdings Ltd loan application of 2 October 2000 was accepted as the result of an administrative error. Despite that error, Mr Jones sought further details about the nature of the insurance policy for which a premium funding loan had been provided; he did not simply go ahead with the loan.

47 I consider that Mr Jones's evidence that he asked Mark Merton for details of the policy to be funded, 'either some policy, a certification or some other information, an invoice', simply followed the practice then adopted by BMW, and was not evidence of desperation to do a deal to cover up the previous administrative mistake. Mr Reynolds testified that if the insurance broker accepted a quotation, the application form would be sent to the broker for signature and that BMW would 'require a copy of the policy or a copy of the schedule or the invoice to show us what we were actually funding'. Mr Jones said in cross-examination that it was the practice for the broker to 'confirm the policy by way of an invoice' and that

[i]n most cases we would only get that invoice or certificate, we wouldn't get all the policy wording, so we relied on the broker who was selling the insurance - they would tell us this is what the insurance is, here's the invoice, this is who you have to pay and when you have to pay it, and that's what we relied on.

48 Secondly, the HIH certificate provided a basis for Mr Reynolds' and Mr Jones' belief that the premium loan was for a cancellable property insurance policy, although a careful reading of the certificate would have put them on enquiry as to whether this was the case. As I have said, that belief in relation to the December loan was not corrected by the later provision of the cost of production insurance policy.

49 Thirdly, although Mr Reynolds ran the risk of being exposed as having acting outside his authority in approving the October agreement, he and Mr Jones decided not to proceed with that agreement in late October. That was the case even though they considered that BMW might be bound by the agreement. Such conduct provides objective support for the inference that neither man was prepared to entirely disregard BMW's interests to cover up their mistakes.

50 Fourthly, the application approval form signed by Mr Jones and Mr Reynolds on 14 December 2000 indicates that the policy had a 'cancelable [sic] component', but did not refer to any non-cancellable component. When Mr Jones was asked why he had put a tick in the box indicating that the insurance was cancellable he said '[p]roperty insurance was a cancellable type of insurance, so I noted it as that'.

51 Fifthly, Mr Reynolds said in his evidence-in-chief that he always believed that the policy was cancellable, he did not know that this was not the case until about December 2001, and he would not have approved the December loan if he had realised it was not cancellable.

52 In cross-examination Mr Reynolds conceded that he should have asked to see the policy and that he had exceeded the limit on his authority to approve loans to protect the reputation of himself and his staff. He also conceded that his belief that BMW might be contractually bound by the October loan was 'a big part' of his reason for approving the December loan. However he was not shaken in his evidence that he would not have approved the loan if he had known it was non-cancellable. His evidence in cross-examination that '[w]e relied on the brokers' reinforces the inference that Miller's misleading conduct was a cause of BMW's loss.

53 Sixthly, Mr Jones also testified that he believed that the policy provided cancellable property insurance on the basis of the HIH certificate, and that he did not realise that the policy which was in the bundle of documents provided before approval of the December loan was the policy covered by the HIH certificate. He denied that he had told John Dick that the policy did not contain a cancellation clause. The respondent did not call Mr Dick as a witness to substantiate its claim that Mr Jones knew the policy was not cancellable.

54 Mr Jones said in his evidence-in-chief that the fact that the insurance was cancellable was important because

[i]t was our main security. If the borrower failed to repay, we would have been able to cancel that policy via the broker with HIH and obtain a refund. He maintained that position in cross-examination.

55 Like Mr Reynolds, Mr Jones conceded that he and Mr Reynolds were looking for a way to do the December deal, but testified that the loan was made on the basis that the policy was cancellable.

56 I agree with Ashley JA that Mr Reynolds and Mr Jones had an incentive to downplay the part that their belief that BMW might be contractually bound to the October loan played in their decision to make the December loan. However, both Mr Reynolds and Mr Jones conceded that in making the December loan they were partly motivated by their wish to overcome their previous problems.

57 In my view, that is not a sufficient reason to reject their evidence that they would not have approved the loan if they had been aware the policy was non-cancellable. The various concessions made by Mr Reynolds reinforce the credibility of his evidence on that point.

58 I also agree with Robson AJA, for the reasons his Honour gives, that Miller is liable in negligence to BMW, and that BMW's contribution to its own loss should be assessed at 40 per cent.

60 The appellant, BMW Australia Finance Limited (BMW), lent $3,975,000 to Consolidated Timber Holdings Limited (CTHL) under an insurance premium loan. CTHL paid three instalments on the loan but fell into default. BMW obtained default judgment against CTHL for $3,222,471.70 plus interest and costs, but nothing has been recovered from CTHL or from two of its directors who provided guarantees to BMW.

61 The respondent, Miller & Associates Insurance Broking Pty Ltd (Miller), was retained by CTHL as its broker to procure the loan. Miller worked in conjunction with another broker, Insurance Finance Australia Pty Ltd (IFA). BMW claims Miller is liable for its loss, which was agreed at $2,797,691.55 plus interest accruing. BMW's claims are under ss 51A, 52 and 53 of the Trade Practices Act 1974 (Cth), contract, tort and breach of fiduciary duty. Its claims were heard and dismissed in the Trial Division of this Court. BMW appeals on all claims save breach of fiduciary duty.

62 Section 52 affected a significant change in commercial responsibilities. In substance it imposed strict liability on parties in trade or commerce not to engage in misleading or deceptive conduct. The provision effectively excluded consideration of intention, negligence, duty of care and the like. Thereafter, parties were strictly responsible to ensure they did not mislead or deceive their customer or trading partners. In this case Miller as broker failed to clearly inform BMW of the nature of the insurance policy to be finance where Miller knew that whether or not the policy was cancellable was of critical importance to BMW. Miller supplied information to BMW which led BMW to believe it was cancellable, when it was not. The appeal raises the issue of whether Miller engaged in conduct that was misleading or deceptive or was likely to mislead or deceive in contravention of s 52 and, if so, whether BMW suffered loss or damage by such conduct.[14] The trial judge found Miller did not. I believe it did and BMW did suffer damage by such conduct.

63 For the reasons that follow, I would allow BMW's appeal on the misleading or deceptive conduct claim. BMW also appeals against the dismissal by the trial judge of its negligence claim. I would allow the appeal. BMW appeals on its contractual claims. I would dismiss that appeal.

64 The appellant relies on seventeen grounds of appeal relating to misleading or deceptive conduct and one each on the contract and negligence claims. The grounds relate to a variety of matters such as the failure of Miller to call evidence, the relevance of negligence on the part of BMW officers and particular factual findings that led the judge to conclude that Miller did not engage in misleading or deceptive conduct and if it did, BMW did not suffer loss and damage by such conduct. On the hearing of the appeal, BMW argued that the trial judge erred in these ultimate conclusions. The duty of this Court on this appeal is to decide the case, the facts as well as the law, for itself. In so doing, it must recognise the advantages enjoyed by the judge who conducted the trial.[15] In these reasons I concentrate on the ultimate conclusions reached by the trial judge but in doing so I have had regard to each of the individual grounds of appeal. I now set out the relevant facts which are taken from the trial judge's reasons.

65 In 2000, the National Insurance Manager of BMW was James Mark Reynolds. Previously, he had been employed by the Bank of Melbourne, where he came to know another employee of the bank, Mark Merton. After they left the bank, the two men moved into the field of insurance premium loans. They remained business colleagues and friends. In 2000, Mr Merton was managing director of the broker, IFA. Mr Reynolds was assisted in his work by Cameron Robert Newton Jones, who then held the position of Manager, Insurance Products. The Premium Funding Department of BMW comprised these two men, as well as an employee, Joanne, an insurance consultant, and Caitlyn Warnecke, a junior trainee. Mr Reynolds' immediate superior was Horst Kolo, the managing director of BMW. The BMW Premium Finance Department conducted business of about $300 million per annum, with loans varying from $1500 to $60 million. Prior to the matter at issue, Mr Merton had introduced a large number of clients to BMW. Further, IFA had obtained loans from BMW which it used itself to make premium loans.

66 In August 2000, Miller was acting as brokers for Plantation Management Corporation Ltd ('MCL'). BMW was informed PMCL was in the process of being taken over by CTHL. Miller was retained to obtain on behalf of its client a premium loan in respect of a cost of production policy insuring PMCL and St George Bank with HIH. Miller was aware that these policies were credit insurance policies and insured insolvency risks. It knew they were not property insurance.

67 Miller retained the services of IFA and, in particular, Mr Merton to seek to have the premium on the cost of production policy financed by BMW. In late September 2000, Mr Merton telephoned Mr Reynolds seeking a quotation for a premium of $3,975,000 for CTHL. The loan was to be disbursed by three payments in October of each of 2000, 2001 and 2002 and repaid by the borrower by thirty monthly instalments. Mr Merton informed Mr Reynolds that another broker, Miller, was involved in the transaction and that this was a broker who was well established overseas but was a fairly new company in Australia.

68 In response to this inquiry, Mr Reynolds prepared a written quotation dated 20 September 2000. At the foot of this quotation there is a box containing the following:

This quotation is subject to approval and receipt of completed contract and full policy information.

69 Mr Reynolds gave evidence of the manner in which BMW processed such a loan application. He said BMW would prepare a quotation which would be sent to the broker and, if acceptable to the client, the broker would advise BMW. BMW would then send to the broker a loan application form which, when executed, became the loan agreement. Before the loan was made, BMW would typically require an executed application form, a copy of the policy or the policy schedule or an invoice to show what was the underlying policy, and also a direct debit form for periodic withdrawals from the borrower's bank account for the payment of the instalments. Finally, BMW would expect to receive in advance the first instalment. When these documents were in hand, the normal practice was for BMW to carry out credit and corporate investigations and, if satisfied, the loan would be approved and the broker advised accordingly. The sum advanced would then be sent to the broker.

70 On 25 September 2000, BMW sent to the brokers a standard form letter setting out the details of the proposed loan and enclosing a form of loan application and a direct debit authority for execution and return. There was no request in the letter for details of the policy. As matters eventuated, the proposed loan was varied. Mr Jones prepared a second quotation dated 26 September 2000. The quotation increased the broker's commission from 1per cent to 2 per cent so that it became $79,500. This commission was payable to the brokers by BMW in addition to the $3,975,000 required. It was added to the instalments payable, which then included principal interest and commission. In addition to its commission, Miller was to be paid a success fee of $110,000 by its client, CTHL. The words in the box at the foot of the second quote were similar to those in the first as follows:

This quotation is valid for 21 days subject to approval and receipt of completed contract and full policy information.

71 The second quote was accepted by CTHL. Mr Jones sent to Miller another standard form letter setting out the details of the new loan and enclosing a loan application and a direct debit authority for execution. These, together with a cheque for $151,085.51, representing the first repayment and stamp duty, were to be returned to BMW. Again, no details about the policy were requested by BMW.

72 On Monday 2 October, CTHL directly faxed to BMW a copy of the completed loan application with a request that the memorandum of acceptance be provided as soon as practicable. The fax concludes with the paragraph:

We await your further comment. In the interim, should you require any further particulars please do not hesitate to contact the writer.

73 On the same day, the executed loan application was sent by post to BMW. In the application form there is printed in the box for insurance details the words 'as per schedule.' There was no schedule to the application and no details of the insurance were sought or provided at that stage. On 2 October 2000, Ms Warnecke had a conversation with Mr Michael Norton-Smith of CTHL and sent to CTHL what was called a 'Welcome Letter.' This is a BMW standard form letter setting out the details of the approved loan. The letter was dated 2 October 2000. The letter commenced:

We would like to take the opportunity to welcome you as a valued customer of BMW Services and confirm that your contract has been accepted by our office on 30 September 2000 under the agreed payment schedule.

74 Ms Warnecke had no authority to accept the CTHL application. At that stage, no person with the appropriate authority within BMW had investigated the loan application or approved it. Mr Jones was away on leave for a few days and Mr Reynolds was unaware that the letter had been sent. The letter was sent as a result of what was called 'an administrative error.' The welcome letter was sent direct to the borrower. On 4 October CTHL forwarded a copy to its broker, Miller. The sum of $151,085.51 was paid on 4 October 2000 to BMW by direct transfer.

75 Mr Jones became aware of the welcome letter when he returned from leave on Wednesday 4 October 2000. He brought the matter to the attention of his superior, Mr Reynolds. The trial judge found that the two men appreciated that they had a problem, although in their evidence before him they appeared a little uncertain as to their understanding of the extent of this problem. He said that they vacillated between one position that BMW was legally committed to this loan and the other position that, although no contract had been made, BMW, the borrower and its brokers might have been placed in a difficult position. He found that whatever was their understanding, they were aware that Ms Warnecke's act, and perhaps their insufficient supervision of her, had placed BMW in a delicate situation.

76 Mr Reynolds only had authority within BMW to approve a premium loan up to a maximum of $500,000. An application for a loan for more than that required him to obtain the approval of Mr Crookes, a director of the firm. Even in such a case, where the loan exceeded $1 million and the policy was non-cancellable, BMW procedures required approval of its own credit risk insurer and the signatures of both Mr Crookes and Mr Kolo. As it happened, its credit risk insurer was HIH. The trial judge found that Mr Reynolds did not know the nature of the policy for which the loan was sought and he was aware that he required at least a signature of Mr Crookes before approval could be given. Despite this position, Mr Reynolds and Mr Jones did not bring the matter to the attention of Mr Kolo or Mr Crookes. They did not seek to extricate BMW from the loan, they did not draw to the attention of the borrower or its brokers the fact that the letter of 2 October 2000 was a mistake and that the borrower should not presume that the loan application had been or would be accepted. Rather, to the contrary, the welcome letter which had been faxed to CTHL on 2 October was later sent by registered post to the company. Further, the first instalment received from CTHL on 4 October was banked by BMW and put into its suspense account.

77 Messrs Reynolds and Jones then set in train the inquiries which they would normally have undertaken before accepting the loan. The first inquiry was directed to Credit Advantage Ltd to obtain information on the creditworthiness of the borrower. This was received on 4 October and was of some comfort. It disclosed that CTHL had paid up capital of $20 million and nothing adverse was known about its credit rating. They also made inquiry of National Credit Insurance Brokers Ltd (NCI), which handled BMW's credit risk insurance policy with HIH. This policy covered premium loans for non-cancellable policies only. The trial judge found that Mr Reynolds understood that this policy was in respect of non-cancellable policies only, but that some time earlier HIH had covered some cancellable policies as well. He found Mr Jones, on the other hand, believed that this credit risk policy also covered loans for premium with cancellable policies, but in 2000 the practice of BMW was not to approach HIH for credit risk insurance in respect of cancellable policies.

78 In any event, on Thursday 5 October 2000, Mr Jones sent to NCI a 'New Limit/Limit Increase Application,' seeking approval of HIH to cover a loan to CTHL of $3.8 million.

79 On 5 October 2000, Mr Jones contacted Mr Merton asking for details of the policy. The transcript of Mr Jones' evidence is as follows:

Q: What did you say to Mr Merton about that?

A: That we need details of the insurance to be funded and - - -

Q: And what did Mr - I'm sorry?

A: Yes, either some policy, a certification or some information, an invoice.

Q: What did Mr Merton say to you when you asked him that?

A: That he would provide it to me, he would need to go to Millers, they were the brokers who would arrange the cover.

80 Miller responded on Monday 9 October 2002 by sending a fax enclosing a copy of HIH certificate of insurance number 99NK28949 (the HIH certificate). The terms of the fax to Mr Jones were as follows:

Following a conversation between Mark Merton and yourself I enclose a copy of the Certificate of Insurance issued by HIH in respect of the insurance.

Please note that the Plantation Management Corporation Limited is in the course of being acquired by [CTHL]. If required a copy of the Heads of Agreement can be provided. Contracts are currently being finalised.

If you need anything further please let me know.

81 The HIH certificate, which the trial judge found is the form appropriate to a professional indemnity policy, disclosed that the insured is PMCL and that the policy was issued on 30 September 1999, providing cover from 16 September 1999 to 15 September 2004, a period of 60 months. The amount payable for the cover is $4,458,750 including $3,750,000 for the premium. The balance is made up of $386,250 in stamp duty and $412,500 in GST. At the trial, focus was directed to the type of cover and the risk insured. In the HIH certificate there is a box entitled '4. Profession.' Beside this title is the word 'Miscellaneous.' The box recites that the limit of indemnity is $12 million and that this represents 100 per cent of the whole risk. It states there is nil excess applicable. Below the box numbered number four on the HIH certificate there is another box entitled 'Endorsement Details.' In this box there are two numbered entries. The second is concerned with reinsurance. The first entry reads as follows:

1. Properties insured and limits

Corowa - 600 HTRS @ $12 million

Dalby - 500 HTRS @ $10 million

Coffs Harbour - 60 HTRS @ $1 million

Little Billabong - 100 HTRS @ $2 million

82 The trial judge stated that the case for BMW is that this fax, including the HIH certificate, was understood by Mr Reynolds and Mr Jones, in the circumstances, as indicating that the policy was one of property insurance and that it was therefore cancellable. They believed therefore it provided good security for the loan of $3.95 million which had been approved on 2 October and for a later loan in the same amount made in December 2000 in substitution for the October loan.

83 The trial judge found that both Mr Reynolds and Mr Jones said that they had this understanding both when they received this fax and when they approved the December loan.

84 On Thursday 12 October 2000, Mr Jones spoke to Gina Meth of NCI, Adelaide, who was considering the BMW application for credit risk cover. When she asked about the underlying insurance, the trial judge said Mr Jones responded that he was not sure, but that he had an invoice or a certificate and, further, the policy 'could be for four properties.' (Gina Meth did not give evidence). On the following day, 13 October 2000, she again spoke with him telling him that she could not find the policy quoted and sought more information. Mr Jones said he would forward something in writing, but he did not do so.

85 On 19 October 2000, NCI formally responded to the BMW application of 5 October to the effect that credit risk cover would not be given. The reason provided was that HIH had already an exposure to CTHL in the sum of $12 million and that it considered itself fully exposed to that company. The trial judge noted that it might have been significant that NCI's reasons for declining the risk did not include any assertion that they could not identify the policy, that the policy did not exist or that it was a cancellable policy. The only reason given was that the underwriter was fully exposed.

86 In late October, BMW declined CTHL's loan application of 2 October or withdrew from it. Mr Jones said the decision not to proceed was a joint one made between him and his superior, Mr Reynolds. It fell to Mr Jones, however, to communicate this decision to CTHL. In late October 2000, Mr Norton-Smith of CTHL was in frequent contact with Mr Jones, wanting to know what was happening about the loan. Mr Jones told him to contact his broker. At this time, Mr Jones spoke to Mr Merton. He told him that BMW was not proceeding with the matter and that he, Merton, should try to place the loan elsewhere. He told Mr Merton that the reason for this was that BMW was not happy with the term of the loan, that there had been changes from the original quotation and that CTHL was a new company. There was no request by either party to open negotiations for a loan on a different basis.

87 On 6 November 2000, BMW refunded to CTHL the instalment component of the payment and on 17 November the stamp duty component together with interest.

88 Some time later, Mr Merton again approached Mr Reynolds with an inquiry as to whether there was any basis for renegotiating the transaction. Mr Reynolds said he told Mr Merton that this might be possible, but on the basis of a ten month loan and conditional upon more information about the borrower being provided. Mr Reynolds fixed the date of this conversation as being some weeks prior to 7 December 2000. This was the initial contact which led to the granting of the December loan, which is said to have been entered into as a consequence of the misleading and deceptive conduct of Miller.

89 A few days after this, a bundle of documents was delivered by mail to BMW. There was no covering letter or other explanation as to its contents. The trial judge inferred that it was sent by the brokers in order to provide some detailed support for the proposed loan which was then under discussion. The witnesses were unable to fix the date of receipt of this bundle, other than to say that it was prior to 7 December 2000, the date on which Mr Jones made a further Credit Advantage inquiry regarding CTHL and the date on which a fresh quotation was prepared and sent to Mr Merton.

90 At this stage, the BMW officers were aware that CTHL had consulted its lawyers as to its rights under the first accepted loan application of 2 October. Mr Reynolds, at least, was at this time of the opinion that a contract had been entered into. The trial judge found that it would have been apparent to Mr Reynolds and Mr Jones that, even if it should in due course appear that no binding agreement had been entered into in October, their conduct in permitting the loan to be accepted and their failure to inform their directors would be the subject of potentially embarrassing scrutiny. The trial judge found this provided a powerful motive for them to attempt to achieve a successful renegotiation of the loan. The bundle included an undated fax from Mr Merton to Mr Reynolds referring to the readiness of a named officer of the Westpac Bank on the Gold Coast to give a positive financial reference about CTHL. The remaining documents in the bundle comprised financial statements and information about the financial status and expectations of CTHL and associated companies and their trading plans for the future. The trial judge found that this was understood by Mr Reynolds as demonstrating that the proposed borrower was a company of substance. The trial judge also referred to the fact that there was no evidence that the reference was ever checked out.

91 The documents also contained an offer to support the loan by directors' guarantees. This offer was made in response to a request by Mr Reynolds that guarantees be provided. There were in fact six directors shown on the Credit Advantage report of 7 December and in due course guarantees were given by two. Mr Reynolds said that this was unusual. Mr Jones said that the guarantees were given 'to further shore up our position.'

92 The bundle contained two insurance documents. The first was a copy of a cost of production insurance policy number 9936NK28736 issued by HIH to St George Bank Limited and PMCL. This was clearly not property insurance. It covered the risk to PMCL of investors not meeting their obligation to maintain plantations because of their insolvency and the risk to St George Bank of PMCL failing to meet its obligations to the bank because of its insolvency. The period of indemnity as defined in clause two of the policy is 60 months from the date of advance by the bank or the date of repayment of money to the bank. The policy was not cancellable at least without the consent of the bank. There was no dispute between the parties that this in fact was the policy referred to in the HIH certificate.

93 The second insurance document consisted of an incomplete Miller quotation slip given in respect of a cost of production policy. The proposal was for a three year policy for $10 million in excess of $25 million. The trial judge found that this policy, if issued, may have constituted a second layer over the policy which was included in the bundle. The trial judge accepted the evidence of Mr Reynolds and Mr Jones that their reading of the bundle of documents disclosed to them that the commercial prospects of CTHL were such that it represented good credit risk, especially for a short term loan of the kind then in contemplation.

94 Accordingly, on 7 December 2000, Mr Jones prepared a fresh quotation on the basis of a single draw-down of $3.975 million and ten repayments of $421,188.65. CTHL submitted a loan application dated 8 December supported by two directors' guarantees. On 12 December, CTHL provided a chart setting out the group's corporate structure of which it was a member. On this document, Mr Reynolds had recorded information given to him by Mr Merton that one of the four properties mentioned in the HIH certificate, that at Corowa, which represented nearly 50 per cent of the total value of the properties shown on the HIH certificate, had been sold. The trial judge found this was a record of what Mr Merton told him some time after the chart was received on 12 December. The trial judge found that Mr Reynolds did not appear to have been troubled by this or was not aware of the implications upon the value of the policy as security offered to BMW.

95 On the same day, 12 December 2000, the loan application was approved by BMW. This was communicated to Miller. The approval document itself is dated 14 December and signed off by Mr Jones and Mr Reynolds. Again, this was an acceptance which was well beyond the authority of those signatories.

96 The first repayment was deducted from the payment of the loan to Miller on 15 December 2000. Only two further payments were made; in January and February 2001. In March 2001, CTHL was unable to make the repayment then due. It sought from BMW a moratorium and later, that the loan be renegotiated.

97 In May 2001, Mr Jones, at the request of the borrower, wrote a letter to CTHL in which he stated that 'As requested we have reinstated the original loan agreement signed on 2 of October 2000 of 30 instalments by $149,893'. On that basis, it was necessary for the borrower to pay only $85,470 to cover the arrears due under the reinstated October loan. It seems that this arrangement, too, was entered into without reference to and without the authority of Mr Crookes or Mr Kolo. CTHL was unable to comply with this new arrangement. Late in 2001, the situation was disclosed at last to Mr Crookes and Mr Kolo. On 17 October 2001, Mr Crookes sent a letter of demand to CTHL. It was not complied with. Nothing was obtained from the guarantors. According to Mr Reynolds, it was at a meeting a month or two later that he first discovered that the HIH policy was non-cancellable. It is now convenient to turn to the detail of the issues raised on the misleading or deceptive conduct claim.

98 In substance, BMW pleads that between about 8 December 2000 and 20 December 2000, BMW agreed with CTHL to lend it $3,975,000 and paid, pursuant to the agreement, $3,552,618.85 to Miller at CTHL's direction and also paid commission totalling $87,500 to Miller and IFA.[16] BMW alleges that prior to the loan agreement being entered into in December 2000, Miller made certain representations[17] and each of them were false.[18] BMW alleges it entered into the agreement and made the payments in reliance on one or more of the false representations made by Miller.[19]

99 BMW alleges that if it had known the representations were false, it would not have entered into the loan agreement and made the payments to CTHL, Miller and IFA.[20] BMW alleges the representations were made in trade and commerce,[21] that, by reason thereof, Miller engaged in conduct that was misleading or deceptive or was likely to mislead or deceive in contravention of s 52(1) of the Trade Practices Act 1974[22] and that, by reason thereof, BMW suffered loss and damage.[23]

100 Miller alleges Cameron Jones knew or ought to have known on or before 30 October 2000 and prior to BMW entering into the December loan agreement that the HIH policy was non-cancellable. Miller also alleges that prior to 7 December 2000, Miller knew or assumed that BMW was aware the HIH policy was not cancellable and that Mr Jones informed John Dick of Miller and Mr Merton that BMW was unable to comply with its obligations to provide loan funds to CTHL pursuant to the first loan contract because the 'Cost of Production' insurance policy did not contain a cancellation clause. I infer that Miller's allegation that Mr Jones knew the insurance was non-cancellable is based on this allegation. Although this allegation was made in the defence, Miller did not call Mr Dick or Mr Merton to substantiate it.

101 Miller does not allege Mr Reynolds knew the policy was non-cancellable. Rather, Miller alleges that if the representations were made, BMW did not rely or did not reasonably rely on them. In particular, Miller alleges that if the representations were made, BMW, as a prudent lender adopting prudent lending practices, did not rely (or alternatively did not reasonably rely) upon the representations in circumstances where:

(i) BMW was or ought to have been in possession of a copy of the HIH policy;

(ii) BMW knew or ought to have known that the HIH policy was neither assignable nor cancellable;

(iii) BMW knew or ought to have known that PMCL and St George Bank Limited were the insured parties under the HIH policy;

(iv) BMW knew or ought to have known that the HIH policy had already been obtained and/or that the premium for the HIH policy had already been paid;

(v) BMW knew or ought to have known that the HIH policy did not enable the insurer to pay any refund of premium on cancellation of the policy to the premium fund lender;

(vi) the plaintiff did not institute any or any adequate investigations and/or obtain due diligence and/or obtain professional legal or accounting advice or input upon the credit history and creditworthiness of CTHL and other matters going to CTHL's capacity to meet the loan;

(vii) BMW knew or ought to have known that the policy did not provide for insurance cover over properties by reason of fact that there is no reference on the copy certificate of insurance to the cover being in respect of 'fire and perils' or 'industrial special risk', nor is there reference to 'fire services levy'; and

(viii) BMW knew or ought to have known that the policy was not a standard property insurance policy by reason of the fact that BMW knew or ought to have known that the premium (as stated on the HIH certificate) of $3,750,000 was unusually large for the limited indemnity stated on the copy certificate of insurance.

102 Thus in summary, Miller denies the representations were made, alleges that, if they were made, BMW (through Mr Jones) was not misled by the representations; or alternatively did not rely or did not reasonably rely on the representations.

103 There was no issue between the parties that BMW entered into the loan agreement as alleged and suffered loss and damage which the parties agreed amounted to $2,797,691.55 as at 8 March 2001.

(1) Whether BMW entered into the agreement in the belief the insurance was cancellable and the nature of the insurance was property insurance;

(2) whether, if so, BMW's belief that the insurance was property insurance and thus cancellable was caused by conduct of Miller that was misleading or deceptive or likely to mislead or deceive;

(3) or whether that belief was entirely caused by BMW's own negligence and failure to analyse the information they had been given by Miller or could have obtained;

(4) whether, if BMW had not believed the insurance was property insurance, it would still nevertheless have made the loan;

(5) whether the damage suffered by BMW was caused by the conduct of Miller;

(6) whether the damage suffered by BMW was caused by its own carelessness and wishful thinking.

BMW alleges at least thirteen representations. The essence of these alleged representations is that Miller represented to BMW that the nature of the insurance to be premium funded was property insurance whereas in fact it was cost of production insurance. Before turning to the trial judge's findings on these issues, it is useful to consider the evidence of Messrs Reynolds and Jones.

105 Mr Reynolds gave evidence that at all times prior to the December loan agreement being reached, he believed the insurance was property insurance and cancellable. He said he formed that view from the HIH certificate. His evidence was that his belief the insurance was property insurance was significant as it suggested to him the policy was cancellable. He said that belief was 'extremely important' as BMW would have security. Mr Reynolds said he would not have approved the loan if it was unsecured. He confirmed this view at the end of his cross-examination where he said:

At no stage would I have advanced that amount of money having an unsecured loan.

106 Under cross-examination, Mr Reynolds was taken to several aspects of the HIH certificate which, according to Miller, indicated that BMW knew, or ought to have known, the insurance was not property insurance or may not be property insurance. He was taken to the signature of Greg Brown as managing director of HIH Professional Indemnity Pty Ltd. It was suggested that it was unlikely that HIH Professional Indemnity Pty Ltd would provide property insurance. Mr Reynolds said he could not recall reading that section and, in any event, he was not aware that HIH Professional Indemnity Pty Ltd did not offer property insurance.

107 He was taken to item 4 on the HIH certificate, which said 'Profession Miscellaneous'. Mr Reynolds said he did not see any mismatch between the policy being a property insurance policy and the reference to profession miscellaneous.

108 Mr Reynolds was taken to the period of the insurance which ran from 16 September 1999 to 15 September 2004. He was asked if he realised that some thirteen months of the policy had elapsed. Mr Reynolds said that he only noted the completion date at that time.

109 Mr Reynolds was taken to the absence of any levy for fire services. He said he did not notice that at the time.

110 Mr Reynolds accepted that the premium of almost $1 million per year for cover of $12 million was 'very high' for property insurance. Mr Reynolds accepted the policy was not a standard policy.

111 Mr Reynolds agreed that he had read the covering fax that came with the HIH certificate and had seen that there was an offer there by the borrower to provide further information. Mr Reynolds accepted that, given the matters that had been put to him, he should have made further inquiries. He said, however, that that was not the view that he held in December 2000. Mr Reynolds accepted that he should have looked at the actual wording of the policy and made inquiry as to whether the policy was cancellable.

112 On the other hand, Mr Reynolds was never challenged on his evidence that he formed the view from reading the HIH certificate that the insurance was property insurance and therefore cancellable. At most, Miller's case was that if he had noticed the matters pointed out to him, they would have raised doubts that the insurance was property insurance or that he should have made inquiries. As it was, he did not notice the things pointed out to him or draw the inferences suggested by Miller.

113 Mr Reynolds conceded that the request for details from Mr Merton made by Mr Jones was just tidying up the paperwork.

114 I turn now to the state of mind of Mr Reynolds in December 2000. Mr Reynolds conceded that he believed that BMW had been contractually bound to the lender by the October welcoming letter. He said he was prepared to and did approve the December loan even though it exceeded his authority. Mr Reynolds said he did so to avoid embarrassment to himself and to his staff. Mr Reynolds conceded he believed that BMW was contractually bound, and that was a big part of the reason for his approving the loan in December 2000. He conceded he had been told by Mr Merton that CTHL would sue on the October arrangement unless some accommodation was reached with them.

115 Mr Reynolds was taken to aspects of the December loan that had previously raised his concerns. He had given reasons for not proceeding with the October loan, including the confusion as to the insured and the repayment terms. He conceded that the December loan terms were no better and that there was still confusion about the difference between the borrower and the name of the insured. Mr Reynolds said he had been reassured by the additional financial information on the borrower.

116 Mr Reynolds was also taken to the fact that he had been informed that one of the properties which constituted 50 per cent of the value of the properties had been sold. He said he did not consider that the borrower would no longer need the premium initially sought.

117 He was taken to the fact that he became aware that other premium lenders had been approached, but had not proceeded with the loan. It was suggested to him that he should have been concerned that the borrower had not been able to borrow from other premium lenders. Mr Reynolds was also cross-examined on the failure of BMW to pursue the guarantors. He could not explain why and, in re-examination, it appeared that the pursuit of the guarantors took place after he left BMW.

118 Despite extensive cross-examination, it was not expressly put to Mr Reynolds that he did not believe the insurance was property insurance and was cancellable at the time the loan agreement was made. It was put to him, however, that he realised the policy in the bundle of documents sent to BMW in late 2000 was the policy to which the certificate pertained. Mr Reynolds denied this and at all times maintained the view that he did not draw any link between the insurance documents in the bundle and the HIH certificate. He pointed out the difference in the policy number.

119 The thrust of Miller's case was that Mr Reynolds agreed to the loan to protect his reputation and avoid BMW being sued. He agreed that this was a big part of the reason why he approved the loan and it was his decision to approve the loan. Nevertheless, Mr Reynolds said he would not have approved the loan if the insurance policy was other than cancellable. He also said, in answer to a question from the trial judge, that 'at no stage would I have advanced that amount of money having an unsecured loan.'

120 Mr Reynolds was not troubled that some fifteen months of the policy expired at the time of the loan or that the money was paid to the broker.

121 As indicated above, it was not seriously put by Miller that Mr Reynolds actually knew that the policy was not property insurance. Mr Reynolds was not seriously challenged on his statement that he would not have advanced the loan moneys if he believed the loan was unsecured.

122 Mr Jones gave evidence that at all times prior to the December loan agreement being reached, he believed the insurance was property insurance and cancellable. He was of the view that as it was cancellable it was BMW's main security for the loan. He said he formed that view from the HIH certificate. He said he would not have approved the loan in December if it had only been secured by the guarantees of the directors and if he did not believe BMW had a cancellable property policy underwritten by HIH.

123 He was cross-examined about his request for information. He was asked whether he said words to the effect 'I need to know the details of the insurance for the premium funding, do you have an invoice?', and he agreed that was the substance of what he said. He was taken to the offer in the fax to provide any further information. He conceded that the period of insurance was unusual and, although he had done hundreds of property insurance loans, he had not ever had one where the period exceeded twelve months. He was asked whether that caused him to wonder if this in fact was a property policy, but he responded 'not since I had seen the properties insured written on it.'

124 He was taken to the segment of the certificate signed by Mr Brown on behalf of HIH (Professional Indemnity). He said that he did not recall seeing that, he only looked at the points that he was interested in and he did not see any problem by the reference to professional indemnity. He did agree that professional indemnity is a different class of insurance to property insurance. He was taken to the reference in Item 4 to 'Profession Miscellaneous' and he said he did not specifically remember reading that entry. It was put to him that such an entry was inconsistent with property insurance, which he did not agree with. It was put to Mr Jones that the reference to 'Professional Indemnity' indicated the form had been prepared for the purpose of a professional indemnity policy. Mr Jones was not prepared to accept that, but said that the thing that stood out to him was the property and not the professional indemnity in brackets. He said that the notation 'PI' did not mean anything to him now and it would not have then.

125 Mr Jones was questioned on the premium for the insurance and he said it did not cause him concern at the time.

126 Mr Jones agreed that he had made application to NCI, BMW's broker, for the premium loan to be covered under BMW's own insurance policy. It was put to him that BMW's policy only covered loans on policies which were non-cancellable. Mr Jones said at the time he was not aware of that. He said that he thought they were both covered. He said that when he applied to NCI he did not have information on the policy. He was challenged on why he did not withdraw the application to NCI once he had received the certificate and formed the view that the insurance was property insurance. Again, he said that it was a new broker with a new company and he saw no harm in leaving the application there. He recalled and agreed that he had had conversations with Gina Meth of NCI. He agreed that he had been informed that NCI were unable to locate the policy from the certificate and that he agreed to put something in writing, but he did not because some six days later he received word from NCI that HIH had rejected the application.

127 Mr Jones was challenged on the fact that in March 2001 no claims had been made on HIH to cancel the policy on which the premium loan was made. Mr Jones said that at that stage he still understood it was property insurance. Again, he was referred to the conversation with Gina Meth of NCI. She reportedly had said, although she was not called, that Mr Jones had told her the policy could be for four properties. Mr Jones said he could not recall exactly what he said to Gina.

128 Mr Jones was cross-examined on whether or not he believed that BMW was bound by the October loan. He agreed that he understood there was a deal and there was potential for a claim to be made by CTHL. He had been informed by Reynolds that Merton had informed him that CTHL had consulted their lawyers and that he understood there was a threat of legal action. Initially he said his own state of mind was that he believed they had entered into a contract with CTHL. Towards the end of his cross-examination he resiled from that and said that in December he did not believe BMW was in fact bound by the welcome letter but felt BMW could have been sued.

129 Mr Jones said that he was informed by Mr Reynolds that 'this is the way I would like you to put it together.' He said they were looking at ways of being able to do the deal. He agreed it was a potentially big problem and he agreed that neither Mr Crookes nor Mr Kolo knew, and that if they did find out, they would be extremely displeased. He said that in substance Mr Reynolds said to him 'We've got to find a way to do this deal.'

130 As to the package of material, he said that nothing had changed in his view come December to alter his view about the cancellability of the policy.

131 In the defence, Miller alleged that Mr Jones knew that the policy was not cancellable and they relied upon a conversation allegedly had with Mr Dick. This conversation was put to Mr Jones and he, without equivocation, denied it, saying it was not correct. Despite the conversation being central to Miller's defence, Mr Dick was not called to contest Mr Jones' evidence on this point.

132 Mr Jones said he did not turn his mind to what the policy in the bundle of documents (the production policy) was insuring. He said that if it had been relevant to 'his policy' he would have hoped to have got it in October. Mr Jones said it did not occur to him that the production policy may be the policy being financed. Mr Jones was pressed on whether he knew that Mr Merton had received a copy of the welcome letter and was aware BMW had agreed to make the loan. He said he did not turn his mind to that but as he asked Mr Merton to provide details of the insurance, he expected him to do so.

133 Section 52 provides:

A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or likely to mislead or deceive.

134 Section 82(1) provides, insofar as it is relevant:

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

135 Before examining the misleading or deceptive conduct claim it is useful to set out some of the legal principles developed in the case law that ought to be borne in mind.

(a) A distinction is drawn between a representation to identified individuals and a representation to the public.[24]

(b) The conduct of the defendant must be viewed as a whole.[25]

(c) Whether or not conduct amounts to a representation is a question of fact to be decided by considering what was said and done against the background of all surrounding circumstances.[26]

(d) As to representations made to an individual, it is necessary to analyse the relevant conduct in relation to the applicant alone, bearing in mind what matters of fact each knew about the other as a result of the nature of their dealings, or which each is to be taken to have known.[27]

(e) A corporation that has acted honestly and reasonably may nevertheless be rendered liable to pay damages if its conduct has in fact misled or deceived or was likely to mislead or deceive.[28]

(f) In order for conduct to contravene s 52, it is not necessary for the conduct to be the sole cause of a person being misled or deceived.[29] In Henjo Investments Pty Ltd v Collins,[30] Lockhart J said, after reviewing Mr Figgins Pty Ltd v Centrepoint Freeholds Pty Ltd,[31] Gould v Vaggelas[32] and Neilsen v Hempston Holdings Pty Ltd[33]:

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.[34]

(g) It is sufficient that the conduct was a cause of the loss or damage sustained, in the sense that it materially contributed to the loss or damage.[35]

136 As indicated above, the offending conduct need not be the only cause of the plaintiff's loss and damage. Thus, if, as in this case, a cause of entering into the loan agreement was to avoid embarrassment and being sued, the statutory nexus between the offending conduct and the damage may be still maintained.

137 The trial judge found that BMW was the author of its own misfortune. The authorities have consistently emphasised that where misleading and deceptive conduct is established the negligence of the plaintiff will not deny the plaintiff relief where the plaintiff is able to establish that he has acted on or was influenced by the offending conduct. In Sutton v AJ Thompson,[36] the Full Court of the Federal Court of Australia (Forster, Woodward and Wilcox JJ) said, after referring to the principles of law restated by Wilson J in Gould v Vaggelas,[37] which related to the common law action of deceit, as follows:

(i) Notwithstanding that a representation is both false and fraudulent, if the representee does not rely upon it he has no case.

(ii) If a material representation is made which is calculated to induce the representee to enter into a contract and that person in fact enters into the contract there arises a fair inference of fact that he was induced to do so by the representation.

(iii) The inference may be rebutted, for example, by showing that the representee, before he entered into the contract, either was possessed of actual knowledge of the true facts and knew them to be true or alternatively made it plain that whether he knew the true facts or not he did not rely on the representation.

(iv) the representation 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.

138 The Full Court, after reciting those principles, went on to say:

In this formulation, the possibility that a foolish person might be misled by some representation which no normal person would take seriously, is covered by the exclusion of representations which are not 'calculated to induce' entry into the contract - the test is objective, but must take into account the respective positions of the parties, including such matters as their knowledge of each other through previous dealings and their respective familiarity with the subject-matter of the contract.

Similarly, if a person is so determined to enter into a contract that he is not in truth influenced by some false representation made to him, he clearly has no case. But there is nothing in the principles cited, or in any other authority which has been brought to our attention, to suggest that a person who has been misled into entering into a contract, by false representations of a type which were likely to produce that result, and in fact did so, can be deprived of his remedy because of his failure to check the accuracy of those representations: see, to the contrary Neilsen v Hempston[38] and Collins Marrickville Pty Ltd v Henjo Investments Pty Ltd[39].[40]

139 In Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No.1),[41] the Full Court of the Federal Court of Australia (Lockhart, Burchett and Foster JJ) said in relation to the issue of reliance upon the misleading conduct as follows:

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]

140 In Argy v Blunts & Lane Cove Real Estate Pty Ltd,[43] after referring to Sutton v AJ Thompson Pty Ltd[44] and Henjo Investments v Collins Marrickville Pty Ltd[45] Hill J said as follows:

A case may perhaps be imagined where an applicant is so negligent in protecting his own interest that there will be a finding of fact that the representation complained of was not in the circumstances a real inducement to his entering into a contract. In such a case, the element of causation between misrepresentation and damage will have been severed by the intervention of the negligence of the applicant. However, in my view, the present cannot be said to be that case.[46]

141 A separate issue arises, however, in considering whether BMW was careless in believing the representation. In Henville v Walker,[47] Gleeson CJ said:

It will commonly be the case that a person who is induced by a misleading or deceptive representation to undertake a course of action will have acted carelessly, or will have been otherwise at fault, in responding to the inducement. The purpose of the legislation is not restricted to the protection of the careful or the astute. Negligence on the part of the victim of a contravention is not a bar to an action under s 82 unless the conduct of the victim is such as to destroy the causal connection between contravention and loss or damage. The respondents knew the purpose for which their representations were being relied upon by the appellants. The Full Court accepted that the making of the representations amounted to engaging in misleading or deceptive conduct in trade or commerce. There was no warrant for a conclusion that the negligence of the appellants in relation to the feasibility study was the sole cause of the decision to undertake the project.

For there to be the necessary causal relationship between a contravention of s52, and loss or damage, so as to satisfy the requirements of s82(1), it is not essential that the contravention be the sole cause of the loss or damage. As Brennan J pointed out in Sellars v Adelaide Petroleum NL, where the making of a false representation induces a person to act in a certain manner, loss or damage may flow directly from the act and only indirectly from the making of the representation; but in such a case the act 'is a link - not a break - in the chain of causation'. In the present case there were two concurrent causes of the imprudent decision to buy the land and undertake the development project. The conduct of the respondents was one of those causes. That is enough.[48]

142 The Court also held that a plaintiff's claim under s 82 should not be reduced because the loss or damage could have been avoided by reasonable care. McHugh J (with whom Gummow J agreed) said as follows:

Nothing in the common law, in s 52 or s 82 or in the policy of the Act supports the conclusion that a claimant's damages under s 82 should be reduced because the loss or damage could have been avoided by the exercise of reasonable care on the claimant's part. There is no ground for reading into s 82 doctrines of contributory negligence and apportionment of damages. No doubt, if part of the loss or damage would not have occurred but for the unreasonable conduct of the claimant, it will be appropriate in assessing damages under s 82 to apply notions of reasonableness in assessing how much of the loss was caused by the contravention of the Act. But that proposition is concerned with the items that go to the computation of the loss. As I have pointed out, nothing in the judgments of the courts below shows that there was any unreasonable conduct on the part of Mr Henville in incurring costs or raising revenue.[49]

143 McHugh J accepted that 'in exceptional cases, where an abnormal event intervenes between the breach and damage, it may be right as a matter of commonsense to hold that the breach was not a cause of damage. But such cases are exceptional'.[50]

144 Section 82(1B) of the Trade Practices Act now requires a court to reduce the damages awarded if any of the loss suffered was a result of the claimant's own failure to act reasonably. Section 82(1B) was introduced by the Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004 (Cth) Sch 3, s 5. The section commenced on 26 July 2004 and does not apply to this case.

145 BMW alleges that it had a reasonable expectation that Miller in responding to BMW's request would provide accurate information about the insurance but did not do so.[51] Silence or omission may, having regard to all the circumstances, constitute misleading or deceptive conduct. The relevant principles may be summarised as follows:[52]

(a) The issue for the court to consider is whether, having regard to all the relevant circumstances, there has been conduct which is misleading or deceptive or likely to be misleading or deceptive.[53]

(b) Mere silence or non-disclosure will not by itself amount to misleading or deceptive conduct. Silence, when combined with other factors, may constitute misleading or deceptive conduct.[54]

(c) The circumstances must give rise to the 'reasonable expectation' that if some relevant fact exists, it would be disclosed.[55]

(d) There does not need to be a common law duty to reveal relevant facts for silence to be misleading or deceptive.[56] But if such a common law duty exists, silence will almost definitely amount to misleading conduct.[57]

(e) The silence need not be intentional for it to give rise to a liability under s 52.[58]

(f) Where a party claims to have been misled by a failure to make full and true disclosure, that party bears the onus of proving how what was not said was likely to mislead or deceive.[59]

146 In relation to (c), in Winterton Constructions Pty Ltd v Hambros Australia Ltd[60] Hill J stated:

If the circumstances are such that a person is entitled to believe that a relevant matter affecting him or her adversely would, if it existed, be communicated, then the failure to communicate it may constitute conduct which is misleading or deceptive because the person who ultimately may act to his or her detriment is entitled to infer from the silence that no danger or detriment existed.

147 In relation to (d), a common law duty may arise where there is a contract of the utmost good faith, where the parties are in a fiduciary relationship, or where previous communications between the parties gave rise to a duty to add to or correct what had earlier been said.[61] Such a duty was found to exist in Henjo Investment Pty Ltd v Collins Marrickville Pty Ltd [No 1][62] where there was a deliberate concealment by one contracting party of information known to be important to the other. The court, however, should be slow to find a special relationship giving rise to a duty to speak in the case of commercial dealings between parties negotiating at arm's length.[63]

148 The trial judge made findings about BMW's state of mind in October 2000 as follows:

I am at this point concerned, not so much as to how a prudent lender might view the HIH certificate or, indeed, what is its true interpretation. It is whether I should accept that Mr Reynolds and Mr Jones when they read the certificate on 9 October 2000 in fact read it as referring to a cancellable policy, as they said. My assessment of Mr Jones is that he is not a careful man and that he does not have a good understanding of insurance policies. The events of which the witnesses spoke are now seven years passed and there was in my view a good deal of reconstruction on the part of both of them. I do not find that either of them understood the policy to be non-cancellable. If they had thought this, it would have been high on the list of reasons given to the borrower for not proceeding with the loan in late October. I find that neither of them subjected the HIH certificate to a careful analysis; they saw the word 'properties' and jumped to the erroneous conclusion that the policy concerned property. From this, they passed over the question as to what was the risk insured and made the further leap to the conclusion that the policy was cancellable. Neither of these conclusions was warranted by the terms of the document or by the practice of reasonable or prudent premium lenders. Their conclusions were driven by their keenness to put the loan in place, if at all possible, and by their generally careless attitude. In my view, had they been pressed at the time, they would have truthfully answered an inquiry as to the cancellability of the policy that the policy was an unusual one and that they could not be sure and, further, that it was probably cancellable.

149 BMW contends that at the time of the loan it was still under the belief that the insurance to be financed was property insurance. Miller contends that the provision of the policy dispelled any misunderstanding BMW may have had.[64] Further, Miller contends that even if the policy did not dispel any misunderstanding BMW may have had, that was due to Messrs Reynolds and Jones resolving to make the loan irrespective of whether or not it was property insurance or cancellable.[65] Accordingly, it is said that Messrs Reynolds and Jones were oblivious to the terms of the policy provided.

150 As indicated above, Mr Reynolds and Mr Jones gave sworn evidence that, if they had believed it was not property insurance, they would not have made the loan. The trial judge did not expressly state whether he rejected or accepted this critical evidence. It is useful to examine how the trial judge dealt with these issues.

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.

151 Pausing at this point, the trial judge appears to find that in December 2000 both Mr Reynolds and Mr Jones believed the insurance being financed was cancellable property insurance and that they did not view the information in the bundle as relevant to the nature of the insurance being financed.[66] I agree the evidence leads to those conclusions. The trial judge went on to conclude that the certificate did not convey the represented fact and the position with respect to the non-disclosed fact is similar. (I assume his reference to the non-disclosed fact is the non-disclosure by Miller that the nature of the insurance was to insure losses in the event of insolvency of the investors or losses by its financing bank in the event of the insured's insolvency). He said:

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.

152 As can be seen, the trial judge finds in the alternative that if the certificate did convey the policy was cancellable, 'this was dispelled by the information contained in the bundle of documents delivered in November.' I take this to be a finding that if the November bundle is taken to be included in the impugned conduct, the conduct of Miller was not misleading or deceptive.

153 The trial judge was required to consider the whole of the conduct of Miller prior to BMW entering into the loan agreement on or about 12 December 2000, in considering whether Miller engaged in conduct that was misleading or deceptive or likely to mislead or deceive. In substance, the trial judge found that if the finance managers were proceeding under the mistaken belief the insurance was property insurance and thus cancellable, that was not a belief caused by conduct that was misleading or deceptive or likely to mislead or deceive, but rather their mistaken belief was due to their own failure to read the documents provided to them by Miller or their failure to make further enquiry in respect of those documents.

Did Miller engage in misleading and deceptive conduct?

154 In my opinion, the first issue to be addressed is, did Miller represent to BMW that the insurance was property insurance. If it did, the question then arises, did BMW form the belief, by reason of that representation, that the insurance was property insurance. Further, if BMW did form that belief, was it a material cause of it making the loan. The fact that there were indicators or information provided to BMW that might have indicated to it that the insurance was not, or might not in fact, be property insurance are relevant in assessing whether or not Miller did represent that the insurance was property insurance. If, despite those matters, Miller did represent that the insurance was property insurance, the negligence of BMW in not making inquiries and its failure to appreciate the significance of those matters is not relevant to the issue of whether there was misleading or deceptive conduct and whether or not BMW was misled. However, as McHugh J said, the negligence might, in an exceptional case, be such that the breach is found not to be a cause of the damage.

155 I accept, as the trial judge appears to have, that the evidence established that at the time Mr Reynolds and Mr Jones approved the December loan, they believed that the insurance was property insurance and was cancellable.[67] I also find that Mr Reynolds believed that BMW was contractually bound and that was a big part of the reason for his approving the loan in December 2000. Nevertheless, in my opinion the evidence did establish that Mr Reynolds' and Mr Jones' belief that the insurance was property insurance was a cause of them approving the loan and, in particular, that if they had formed the view that the insurance was not property insurance but was a cost of production insurance and was therefore not cancellable, they would not have approved the loan.

156 I turn to the defence that BMW had information which should have suggested to it that the policy was not property insurance or it failed to make reasonable inquiries that should have been made as to the nature of the insurance.

157 Both Mark Merton of IFA and Messrs Reynolds and Jones of BMW were experienced in premium lending. It was acknowledged by Miller that Miller (and by that I include IFA) knew that cancellability of the policy was 'the most important thing to a premium lender' and thus to BMW.[68] Miller also acknowledged that it would not have expected a lender (and thus BMW) to agree to a loan unless it knew the details of the insurance and, in particular, the nature of the insurance to be funded. Apart from these concessions by Miller, I can only infer what Miller knew about BMW from the evidence led by BMW and the documents as Miller did not call any witnesses.

158 BMW contends the trial judge erred in not addressing the fact that Miller knew the nature of the insurance was a production policy when it sent to BMW the HIH certificate annexed to its fax.[69] BMW contends that Miller's withholding from BMW what it knew about the nature of the policy is relevant in characterising Miller's conduct as misleading or deceptive or likely to mislead or deceive. The authorities on silence or omission support this contention, with which I agree.

159 The trial judge found that at best from BMW's point of view, the HIH certificate created uncertainty and the fact that BMW drew the conclusion that it did was a product of its own carelessness or wishful thinking.[70] If the certificate did create uncertainty, which I do not accept, that was due to the conduct of Miller in failing to inform BMW what it knew of the nature of the insurance as BMW had asked. Not only did Miller not tell BMW the nature of the insurance, which it well knew, but it sent BMW a document on the basis that the document would convey to BMW the nature of the insurance. The fact that BMW drew the inference that the insurance was property insurance, when the document sent by Miller, in response to a request for a document that disclosed the nature of the insurance, referred to the 'properties insured and limits', is not unreasonable. As indicated elsewhere, carelessness is no defence to conduct that is otherwise misleading or deceptive or likely to mislead or deceive.

160 In addition to Miller being aware of the importance of BMW knowing the details of insurance, including its nature, BMW included in both quotations provided prior to provision of the HIH certificate that the quotation was subject to obtaining full policy information. The loan application form made provision for the inclusion of insurance details. It is in that context, that Mr Jones' discussion with Mr Merton on 5 October 2000 must be viewed. I have set out the evidence on that conversation above. What was asked for by Mr Jones was details of the insurance and in that context his reference to a policy, certificate or invoice was merely to the form in which those details could be provided. In response to that request made in those circumstances, Miller provided the HIH certificate and the facsimile. Miller did not inform BMW that the insurance was a cost of production insurance policy nor that it was not cancellable. On the contrary it provided a document that communicated the insurance was property insurance. BMW submits that the certificate on its fact referred to 'properties insured and limits' and then went onto specify the properties by name, location, acreage and specific money amounts.

161 There were certain matters on the certificate that Miller contends would have put BMW on inquiry or alerted it to the fact that the insurance was not property insurance. Miller refers to the signature by Greg Brown as managing director of HIH (Professional Indemnity) Pty Limited; Item 4 where 'Miscellaneous' was inserted beside 'Profession'; the period of the insurance from 16 September 1999 to 15 September 2004 and that thirteen months had elapsed; the absence of any fire services levy; the high premium being charged relative to the insurance coverage and the policy not being a standard property insurance policy.

162 Taking all those matters into account, and in particular that in the circumstances the certificate did in fact mislead Messrs Reynolds and Jones, and the fact that, as a consequence of the inquiry for details of the insurance, Miller did not provide any other information on the nature of the insurance nor in particular did it inform BMW that the insurance was a cost of production policy (as it will knew), I consider that the conduct of BMW did convey that the nature of the insurance was property insurance.

163 Accordingly, in the context, by reason of Miller's silence or omission of information requested BMW was entitled to and did assume that the details it sought were communicated in the HIH certificate. In the absence of any further information, BMW was entitled to and did conclude that the nature of the policy was property insurance. As indicated above, it is necessary to analyse the relevant conduct in relation to BMW alone bearing in mind what matters of fact each knew about the other as a result of the nature of their dealings, both omission and commission, or which each is taken to have known.[71]

164 The trial judge held that the HIH certificate, properly understood, did not convey the represented fact that the policy was cancellable. I assume the trial judge treated cancellable and property insurance as being one and the same in the circumstances. The trial judge said, at best from BMW's point of view, the certificate created an uncertainty as to this. In circumstances where details of the insurance had been requested of the broker, I do not believe that the certificate created any uncertainty.

165 In my opinion, at this stage, Miller had engaged in conduct that was misleading or deceptive or likely to mislead or deceive. BMW's claim, however, relates to Miller's conduct up to and immediately prior to BMW entering into the loan agreement in December 2000. Towards the end of November 2000, Mr Reynolds asked Mr Merton for financial information about the borrower and, as a consequence, was given a bundle of documents that contained financial information and, as it happens, a copy of the actual policy of insurance being financed along with a quotation slip in respect of a cost of production policy. The trial judge inferred the bundle was sent by the brokers. There was no covering letter explaining the relevance of the documents provided or that in addition to financial information the actual policy to be financed was enclosed. The bundle of documents did not change the beliefs of Mr Reynolds and Mr Jones that the insurance being financed was property insurance.

166 As indicated above, there have been cases where the Court has considered whether or not a person's failure to take reasonable care may lead to a finding that the misleading and deceptive conduct has not been a cause of the damage suffered.[72] The question still arises, however, in this case whether or not immediately prior to the loan being made, Miller had engaged in conduct that was misleading or deceptive or likely to mislead or deceive. When one adds to the conduct discussed above surrounding the HIH certificate, the conduct of supplying the bundle of papers in response to the request for financial information from the borrower, the issue remains whether considering the whole of that conduct in all the circumstances the conduct was misleading or deceptive or likely to mislead or deceive.

167 In my opinion, in all the circumstances and having regard to all Miller's conduct, including the omission of information, Miller's conduct was misleading or deceptive or likely to mislead or deceive. Miller did not inform BMW that the bundle included a copy of the insurance to be financed. In circumstances where Miller had already led BMW to believe the insurance was property insurance, it was quite reasonable of BMW to believe the policy included in the bundle went to the borrower's financial position. The policy terms went to the borrower's financial position. The policy number was different to the HIH certificate. The policy indicated that if the investors were unable to pay the costs they were obliged to contribute because of their own insolvency, the company was insured. On the other hand, in circumstances where BMW had been led to believe that the policy being financed was property insurance, it was quite reasonable for it not to realise that the bundle of documents providing financial information about the borrower included the actual policy, which was completely different to and contrary to the policy that BMW had been led to believe by Miller was the policy being financed. In other words, in circumstances where Messrs Reynolds and Jones believed that they were financing a property policy, because that is what they had been informed of by Miller, it is not unreasonable for them not to draw the conclusion that the actual policy was a cost of production insurance policy.

168 The trial judge found that the brief examination of page 9 of the cost of production policy in the bundle-the certificate of insurance-'reassured [Mr Reynolds and Mr Jones] 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 careful reading would have disclosed.'[73] The trial judge earlier noted that 'it was agreed before me that, notwithstanding the different policy number, this was in fact the policy referred to in the HIH certificate.'[74] BMW contends that this admission was made as to the fact, but not that Mr Reynolds or Mr Jones knew that at the time.[75] BMW contends the trial judge's findings that Mr Reynolds and Mr Jones knew the certificate of insurance in the bundle referred to the same policy in the HIH certificate was not established on the evidence and arose from a mistaken understanding of the concession or more importantly what could be inferred from it. I agree.

Did BMW suffer loss and damage by conduct of Miller in contravention of s 52?

169 As indicated above, the offending conduct need not be the only cause of BMW's loss or damage. It is sufficient if it played a part in BMW's loss or damage, even if it is only a minor part.[76] Did BMW suffer damage by conduct of Miller in contravention of s 52? As indicated above, both Mr Reynolds and Mr Jones gave sworn evidence that if they had believed the insurance was not property insurance, they would not have made the loan. The trial judge did not expressly state that he rejected Mr Reynolds' or Mr Jones' evidence on this critical issue.

170 Miller did not submit that Mr Reynolds was aware the insurance was not property insurance when he agreed to the loan. Miller does allege in its defence Mr Jones did know the policy was not property insurance.[77] Counsel for Miller did put it to Mr Jones that in December 2000 he did not hold the view that the policy was cancellable. He denied that. Miller's defence relied on a conversation with Mr Dick in support of that contention but did not call Mr Dick. Miller submits that 'a big part' of the reason that Mr Reynolds wanted to complete the loan was because he realised that by virtue of the welcome letter of October 2000, BMW was contractually bound to pay loan funds. As for Mr Jones, Miller relies on the following cross-examination of him:

Q: You believed in December 2000 that BMW was on the hook for the first deal and had to find some way to redo the deal, that was your belief?

A: Yes, we still had the underlying policy, that hadn't changed.

Q: So your answer is yes?

A: Yes.

171 As noted above, Mr Jones later qualified the evidence to assert his belief the matter was not clear. In my opinion, the defence raised by Miller boils down to the contention that BMW was so determined to enter into the loan contract that it was not in truth influenced by the representation made to it by Miller that the insurance was property insurance. In my opinion, in circumstances where the most important thing to a premium lender is knowledge of the nature of the insurance, I am not prepared to reject the sworn evidence of Mr Reynolds and Mr Jones that they would not have entered into the loan agreement or authorised the loan agreement if they had been aware that the insurance was not in fact property insurance as they believed. In accordance with the authorities that I have referred to, it is irrelevant that Mr Reynolds failed to make inquiries or was careless in not making inquiries about the contents of the bundle of documents. The relevance of his failure to make inquiries about the bundle of documents is that it may be evidence to establish that he was so determined to enter into the contract that he was not influenced by the representation of Miller. However, despite the negligence of Mr Reynolds and Mr Jones in not making inquiries about the bundle of documents and also taking into account the admissions by Mr Reynolds that a large factor in his decision to agree to the loan was his desire to avoid embarrassment to himself and his staff and to avoid the risk of being sued by the borrower, I consider that he and Mr Jones were influenced by the false representation.

172 Miller submits that BMW's failure to make inquiries about the policy included in the bundle of documents and BMW's brief perusal of the bundle means that the damage suffered by BMW was not caused by the conduct of Miller, but rather caused by the carelessness of BMW and BMW's desire to make the loan. In my opinion, this submission overlooks the fundamental matter known to both Miller and BMW, that cancellability was the most important thing to a premium lender. Miller's conduct had led BMW to the view that the policy was property insurance and thus cancellable. In my opinion, the evidence is clear that unless BMW believed the insurance was property insurance and thus cancellable, the loan would not have been made.

173 In those circumstances, in my opinion, the trial judge erred in finding the misleading and deceptive claims of BMW Finance failed. I would order that judgment for the defendant be set aside, that the appeal be allowed and that judgment should be entered for the plaintiff in the sum of $2,797,691.55 as at 8 March 2001 with interest thereon.

174 In BMW's written submissions it submits that Miller knew and intended the certificate would confuse BMW. Miller contends this case was abandoned at trial.[78] As it is, I have accepted BMW's contentions without attributing any intention to confuse to BMW. I do not need to consider therefore this issue.

175 If I am wrong on this issue, I now deal with the negligence and contract claims.

176 BMW appeals against the trial judge's decision that Miller did not owe BMW a duty of care in the circumstances and that BMW had not established any breach of duty.

177 Essentially, BMW claims that at all times material:

• Miller knew or ought to have known that BMW would, or it was probable that BMW would, rely, inter alia, on the representations and Miller's expertise as an insurance broker in determining whether or not to enter into the loan agreement with CTHL.

• Miller assumed responsibility for, inter alia, making the representations to BMW.

• Miller had a professional interest in BMW making a loan to CTH.

• Miller foresaw, or ought reasonably to have foreseen, that BMW would suffer loss and damage if Miller failed to exercise due care and skill in responding to BMW's request and in making the representations.

• Miller owed a duty of care to BMW to exercise due care and skill as an insurance broker in its dealings with BMW and in responding to BMW's request for details of the insurance.

BMW alleges that in breach of the duty of care Miller owed to BMW, it acted negligently and failed to exercise due care and skill. Particulars of the breach of duty of care include failing to inform or warn or adequately inform or warn BMW that the insurance referred to in the HIH certificate was or might be inconsistent with the only policy which it knew was being proffered as security for a loan to CTHL; and failing to inform BMW that the insurance was not property insurance, that it was not cancellable and that the insurance policy was a 'cost of production policy.'

178 The trial judge said the following about the negligence claim:

71. The other BMW finance claims are subsidiary to the Trade Practices Act claim and they meet the same fate for similar reasons. The relationship between BMW Finance and Miller and Associates is not one which gives rise to a duty to exercise due care and skill in its dealings as broker. If for no other reason, there is no vulnerability in BMW Finance in the sense that this is a requirement of such a duty in the cases.

72. Nor are the suggested breaches of duty made out. Insofar as it is said that Miller and Associates did not make inquiry as to the nature of the underlying policy, I proceed on the basis, as mentioned in argument, that the broker knew the nature of the policy. A prudent broker would make it his business to have this knowledge. There is no evidence that Miller and Associates did not; it called no evidence to suggest that my inference is unwarranted. The other suggested breaches simply set out again the complaint of failing to inform BMW Finance of the insufficiency of the proffered security. I reject these allegations for reasons given.

179 BMW submits that the trial judge failed to give proper weight to the evidence that BMW, as a premium funding lender, placed heavy reliance on insurance brokers to provide proper details of the underlying insurance. It submits there was clearly a situation of vulnerability and dependence upon the part of BMW. BMW refers to and relies on the observations of Kirby J in Dovuro Pty Ltd v Wilkins where Kirby J said the relevant question was "whether, in all the circumstances of the case, it is reasonable to impose a legal duty of care of the postulated character upon the alleged tort feasor."[79]

180 In Mutual Life and Citizens Assurance Co Ltd v Evatt,[80] Barwick CJ said:

It seems to me, therefore, that whenever a person gives information or advice to another, whether that information is actively sought or merely accepted by that other upon a serious matter, and particularly a matter of business, and the relationship of the parties arising out of the circumstances is such that on the one hand the speaker realizes or ought to realize that he is being trusted, particularly if he is thought by the other to have, or to have particular access to, information or to have a capacity or opportunity to exercise judgment or both as to the matter in hand, to give the best of his information or advice as a basis for action on the part of the other party and it is reasonable in the circumstances for the other party to seek or accept and in either case to act upon that information and advices the speaker, choosing to give the information or advice in such circumstances, comes under a duty of care both to utilize with reasonable care the information and sources of information at his disposal and to employ with reasonable care what capacity he has for judgment in relation to the matter and to exercise reasonable care in the expression of what he is prepared to convey by way of information or advice.[81]

181 In L Shaddock & Associates Pty Ltd v Parramatta City Council (No.1),[82] Mason and Aickin JJ applied Barwick CJ's statement of principle.[83] In San Sebastian Pty Ltd v The Minister,[84] the High Court confirmed that demonstrating reliance is a cornerstone of viability for negligent misstatement.[85] The Court further said as follows:

When the economic loss results from negligent misstatement, the element of reliance plays a prominent part in the ascertainment of a relationship of proximity between the plaintiff and the defendant, and therefore in the ascertainment of a duty of care.[86]

182 In Esanda Finance Corporation Ltd v Peat Marwick Hungerfords,[87] Brennan CJ set out the knowledge the defendant must have or ought to have to raise a duty of care to use reasonable care in making a statement or giving advice. He said:

The uniform course of authority shows that mere foreseeability of the possibility that a statement made or advice given by A to B might be communicated to a class of which C is a member and that C might enter into some transaction as the result thereof and suffer financial loss in that transaction is not sufficient to impose on A a duty of care owed to C in the making of the statement or the giving of the advice. In some situations, a plaintiff who has suffered pure economic loss by entering into a transaction in reliance on a statement made or advice given by a defendant may be entitled to recover without proving that the plaintiff sought the information and advice (48). But, in every case, it is necessary for the plaintiff to allege and prove that the defendant knew or ought reasonably to have known that the information or advice would be communicated to the plaintiff, either individually or as a member of an identified class, that the information or advice would be so communicated for a purpose that would be very likely to lead the plaintiff to enter into a transaction of the kind that the plaintiff does enter into and that it would be very likely that the plaintiff would enter into such a transaction in reliance on the information or advice and thereby risk the incurring of economic loss if the statement should be untrue or the advice should be unsound. If any of these elements be wanting, the plaintiff fails to establish that the defendant owed the plaintiff a duty to use reasonable care in making the statement or giving the advice.[88]

183 In R Lowe Lippmann Figdor & Franck v AGC Ltd[89] Brooking J, with whom Gobbo and Tadgell JJ agreed, held that in 'a case like the present, there being no other combination of circumstance present sufficient to impose a duty of care, that duty will not arise unless the defendant made the statement with the intention mentioned.'[90] That intention was 'of inducing the plaintiff, or members of a class including him, to act or refrain from acting in a particular way in reliance on the statement.'[91] In the case the plaintiff AGC had asked a potential borrower's auditors for the audited accounts, which were negligently audited. There was no pre existing relationship between AGC and the auditors.

184 Brooking J said that the need in those circumstances to establish intention was established by the High Court in San Sebastian Pty Ltd v The Minister.[92] Brooking J's decision was cited with approval by McHugh J in Esanda Corporation Finance Ltd v Peat Marwick Hungerfords[93] and applied by the Court of Appeal in Bentley v Wright & McNamara.[94]

185 McHugh J summarised the position of intention and negligent misstatement in Esanda Finance Corporation Ltd v Peat Marwick Hungerfords[95] as follows:

Thus, the position in Australia to date with respect to liability for pure economic loss caused by negligent misstatement is that, absent a statement to a particular person in response to a particular request for information or advice or an assumption of responsibility to the plaintiff for that statement, it will be difficult to establish the requisite duty of care unless there is an intention to induce the recipient of the information or advice, or a class to which the recipient belongs, to act or refrain from acting on it... Nevertheless, the decisions have all emphasised that a lack of intention to induce the plaintiff to act or refrain from acting is not necessarily fatal to a plaintiff's claim because other factors may be present that obviate the need for such an intention.[96] [97]

186 Silence may amount to negligent misstatement. In Banque Keyser Ullmann SA v Skandia (UK) Insurance Co Ltd[98] the English Court of Appeal (Slade, Lloyd and Ralph Gibson LJJ) asked the question whether a mere failure to speak could give rise to liability in negligence under the Hedley Byrne principles. The Court answered:

In our view it can, but subject to the all important proviso that there has been on the facts a voluntary assumption of responsibility in the relevant sense and reliance on that assumption.

This principle of the law of negligent misstatement was affirmed by the Court of Appeal of the Supreme Court of Victoria in Bentley v Wright & McNamara.[99]

187 Turning to the facts of this case, in my view, BMW did establish that Miller owed a duty of care to BMW in responding to BMW's request for details of the insurance as alleged by BMW.

188 As indicated above, BMW pleads that at all material times, Miller foresaw or ought reasonably to have foreseen, that BMW would suffer loss and damage if Miller failed to exercise due care and skill to BMW's request and in providing the certificate of insurance and the accompanying memorandum to BMW without disclosing the details of the insurance to be financed. In my view, BMW has established the duty of care.

189 Miller did not give any evidence to refute the evidence of Mr Reynolds and Mr Jones that BMW relied on the broker to provide accurate details of the insurance to be financed. Miller was aware of the true nature of the policy. It knew or ought reasonably to have known that if BMW sought information it was because BMW did not have the information and BMW was relying on Miller to provide the information. Miller knew or ought reasonably to have known that BMW was likely to rely on the information in making the decision to fund the premium.

190 If it is necessary to find an intention on the part of Miller that BMW relied on the information to make the decision to proceed with the loan, in view of the relationship between broker and funder I infer that Miller intended BMW to act on the information in making the decision to proceed with the loan. In view of the relationship between broker and funder, it is possible such an intention need not be established in any event.

191 Miller knew or ought reasonably to have known that BMW risked incurring economic loss if the information was untrue or misleading. In this case BMW sought information that Miller knew was of the utmost importance to BMW in making the decision whether or not to fund the premium : that is the nature of the insurance to be financed.

192 Mr Alistair Mitchell, an experienced and competent insurance broker, gave expert evidence on the relationship between brokers and premium lenders. He said a prudent broker would have disclosed to a premium lender the 'material' facts relating specifically to a cost of production policy. More generally he said, 'Most premium funders are heavily court[ed] by insurance brokers as a means to gain business and so they are looking to the broker not only for the business opportunity but if there is something unusual about it, they expect the broker to inform them.' His evidence supports the view that the relationship between an insurance broker and a premium funder is one where to the broker's knowledge the premium funder relies on the broker to provide accurate details of the insurance to be funded in making the decision to fund the premium and the broker intends the funder to so rely. Having regard to the way business is done between a broker and a premium funder, such a position of responsibility and reliance seems entirely logical and reasonable to me.

193 Both Mr Reynolds and Mr Jones said they relied on the broker to provide them with accurate information about the policy to be funded. In so far as I am asked to infer that Miller understood and intended that reliance was placed on it by BMW, then I am more readily willing to draw such an inference through the failure of Miller to call any evidence including evidence of an industry expert to rebut such an inference. I do draw the inference that Miller knew or ought reasonably have known that BMW was relying on Miller to provide accurate information on the details of the insurance to be funded for the purpose of BMW making the decision whether or not to fund the premium and intended BMW to so rely.

194 Did Miller breach that duty of care? In my view the evidence establishes that it did. Miller failed to provide details of the insurance when it put the proposal to BMW and when it was specifically asked for details of the insurance. The insurance was a cost of production policy which was an unusual policy. Mr Reynolds and Mr Jones had no experience of such a policy. Miller did not inform BMW that the policy was a cost of production policy, rather it gave BMW a certificate which communicated the policy was property insurance. In my opinion, Miller did not exercise reasonable care in failing to provide accurate information to BMW about the policy to be funded and in responding as it did to BMW's request for details of the insurance.

195 As indicated above, the request for the information from Merton occurred after the initial loan contract had been agreed to as Miller knew, but before the moneys were advanced and before BMW had details of the insurance. Miller contends that in the circumstances, Miller was entitled to believe that BMW knew the nature of the policy as Miller knew that whether or not the policy was cancellable was of critical importance to BMW and Miller would have assumed that BMW would not have approved the loan unless it knew the nature of the policy. I am not prepared to draw that inference when Miller chose not to give evidence. Secondly, the argument merely confirms the duty of Miller to exercise reasonable care in informing BMW of the nature of the policy when BMW asked. The information sought was of critical importance to BMW in deciding whether to advance the moneys or seek to avoid the loan. Miller knew that BMW was asking for information that was of critical importance to BMW in deciding whether or not to fund the premium. Miller did not exercise reasonable care in answering BMW's request for details of the policy by not telling BMW the true nature of the policy and giving BMW a certificate that purportedly informed BMW of the true nature of the policy but which rather communicated the policy was something other than what it was.

196 Miller pleads that BMW has suffered no loss or damage by the conduct of Miller. In my opinion, BMW did suffer loss and damage and this loss and damage was reasonably foreseeable if Miller failed to exercise due care and skill in informing BMW of the true nature of the insurance and responding to BMW's request for details of the insurance. Miller also pleads that if BMW did suffer loss and damage, then the loss and damage was caused or materially contributed to by BMW's own negligence. In my opinion, BMW did exercise a lack of care in its decision to enter into the loan. As Miller contends, there were matters on the certificate and the bundle of documents that a person exercising reasonable care may have followed up. I have already referred to the desire of Mr Reynolds to make the loan and the failure of Mr Reynolds and Mr Jones to follow normal procedures in approving the loan.

197 In Podrebersek v Australian Iron & Steel Pty Ltd[100] the High Court approved the statement in British Fame (Owners) v Macgregor (Owners)[101] that apportionment is a finding upon a 'question, not of principle or of positive findings of fact or law, but of proportion, of balance and relative emphasis, and of weighing different considerations. It involves an individual choice or discretion, as to which there may well be differences of opinion by different minds.' The High Court said that making an apportionment 'involves a comparison of culpability, that is the degree of departure from the standard of care of a reasonable man, and of the relative importance of the acts of the parties causing the damage.'[102] In Portland Aluminium Pty Ltd v Husson[103] Chernov JA, with whom Maxwell P and Neave JA agreed, said:

The approach to be adopted in making an apportionment between the parties of their respective share in responsibility for the injury is conveniently summarised in Podrebersek v Australian Iron & Steel Pty Ltd[104] and Liftronic Pty Ltd v Unver.[105] It requires a comparison both of culpability and the relative importance of the acts of the parties in causing the injury, requiring the whole of the relevant conduct of each of the negligent parties to be subject to comparative examination. The tasks involve matters of proportion, balance and relative emphasis[106] and are, in this regard, similar to the exercise of a broad discretion.[107] [108]

See also the discussion of Whelan J in Sali v Metzke and Allen on apportioning damage flowing from the negligence of two tort feasors.[109]

198 Applying those principles, in the circumstances I find that Miller's culpability was significant compared to BMW's. By far the most important cause was the negligent conduct of Miller. BMW's own negligence did contribute to the loss it suffered. It is unnecessary for me to repeat all the matters leading up to the loan. Bearing all those matters in mind in my judgment I would assess BMW's contributory negligence at 40 per cent.

199 Accordingly on the negligence claim I would allow the appeal and I would enter judgment on the negligence claim for BMW for $2,797,691.55 less 40 per cent plus interest accruing.

200 BMW appeals against the trial judge's decision to dismiss BMW's claim in contract, and in particular his finding that no such contract existed and that BMW had not established any breach of contract.

201 BMW alleges that BMW and Miller agreed that in consideration of BMW agreeing to pay Miller a commission if BMW made a loan to Miller, Miller would introduce BMW to CTHL as a borrower for an insurance premium funding loan. BMW alleges that there were terms of the agreement that Miller would provide details of the insurance in respect of which the loan was to be made and disclosed to BMW all information about the insurance that would be relevant to BMW in determining whether to make the loan. BMW alleges these terms were implied. BMW alleges breach in that Miller did not provide the details of the insurance sought by BMW.

74. Finally, there is the claim in contract. This depends upon the fact that the brokers' commission was agreed to be paid by BMW Finance. Any such agreement must be seen in the light of the fact, which was accepted before me that the broker was retained by the borrower. This is the fundamental relationship affecting the conduct of the broker. If there is a contract between the broker and the lender as well, it cannot be taken to prevail over the other; it must be to introduce to the lender a borrower with whom a contract of loan was subsequently entered into. In any event, the suggested breaches of contract are merely repetitions of the allegations of non-disclosure which I have dealt with.

203 In my opinion, if there was a contract between BMW and Miller, it was no more than a contract to pay commission if BMW made a premium loan to a borrower introduced to BMW by Miller. It is not necessary to give commercial efficacy to such a contract, to imply terms about the accuracy of information provided by Miller to BMW to effect the loan. I reject this ground of appeal.

204 Miller contends that the judgment from which the appeal is brought should be affirmed on the ground that BMW did not suffer loss by entering into a contract with Consolidated Timber Holdings Limited in December 2000 because it had entered into a binding contract with that company on 2 October 2000.

205 In my opinion, the ground raised in the notice of contention fails. If there was a contract between BMW and the borrower, it was terminated by consent. In October, BMW advised Miller that it had decided not to make the loan and repaid to the borrower the first instalment. The borrower accepted the moneys and demanded interest. The December loan agreement was on different terms to the 4 October agreement.

[1] Merton of IFA, which was taken to be as one with the respondent, was experienced in the field of insurance premium loans.

[2] This is not to say that the respondent knew of that fact.

[3] Indeed, on occasions, in the context of s82 of the Trade Practices Act, reference has been made to the dictum of Wilson J in Gould v Vaggelas [1984] HCA 68; (1985) 157 CLR 215, 236 - a case laid in deceit - that a representation need not be the sole inducement in sustaining the loss, that it is enough if 'it plays some part if only a minor part'. See, for example, Henville and anor v Walker and anor [2001] HCA 52; (2001) 206 CLR 459, 493, [107] (McHugh J). In Gould, Brennan J framed the relevant question as being whether 'the representation alone, or with or notwithstanding other things that accompanied it, was a real inducement, or one of the real inducements to the plaintiff to do whatever caused the loss': Ibid 250-251.

[4] I & L Securities Pty Limited v HTW Valuers (Brisbane) Pty Limited [2002] HCA 41; (2002) 210 CLR 109, 126 [56]-[57] and 130 [62] (Gaudron, Gummow and Hayne JJ).

[5] [2007] VSC 379, [26].

[6] [2007] VSC 379 [42].

[8] Commercial sense was notably lacking at this point.

[9] Reynolds said that 'at no stage' would he have advanced 'that amount of money having an unsecured loan'; and that he would 'not have approved an unsecured deal'. Jones gave evidence that 'we had a cancellable property policy underwritten by HIH'; and asked whether he would have sought to find a way to do the deal had he believed differently, he answered 'no'.

[10] [2001] HCA 18; (2001) 205 CLR 434, [24].

[12] See [135] of Robson AJA's judgment below and Steutel v Kimple Pty Ltd [2005] VSCA 312, [49] (Chernov JA).

[13] Sutton v AJ Thompson Pty Ltd (in liq) (1987) 73 ALR 233, 240 (Forster, Woodward and Wilcox JJ) referring to the principles stated by Wilson J in Gould v Vaggelas [1984] HCA 68; (1984) 157 CLR 215, 236.

[14] Trade Practices Act 1974 (Cth) s 82.

[15] Warren v Coombes [1979] HCA 9; (1979) 142 CLR 531 (Gibbs ACJ, Jacobs and Murphy JJ), 552; see also Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 and generally the discussion by Dodds-Streeton JA in Kelso v Tatiara [2007] VSCA 267; (2007) 17 VR 592, [65]-[95]; see also generally on the nature of appeals in Dwyer v Calco Timbers Pty Ltd [2008] HCA 13; (2008) 244 ALR 257.

[16] Amended Statement of Claim (ASC) 8.

[24] Campomar Sociedad, Limitada v Nike International Ltd [2000] HCA 12; (2000) 202 CLR 45, [98]-[107] (Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ); see also Butcher v Lachlan Elder [2004] HCA 60; (2004) 218 CLR 592, [36] (Gleeson CJ, Hayne and Heydon JJ).

[25] Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; (1982) 149 CLR 191, 199 (Gibbs CJ).

[26] Taco Co of Australia Inc v Taco Bell Pty Ltd [1982] FCA 136; (1982) 42 ALR 177, 202 (Deane and Fitzgerald JJ) cited with approval by the High Court of Australia in Campomar v Nike International [2000] HCA 12; (2000) 202 CLR 45, [100] (Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ).

[27] Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592, [37] (Gleeson CJ, Hayne and Heydon JJ).

[29] 10th Cantanae Pty Ltd v Shoshana Pty Ltd (Sue Smith Case) (1987) 79 ALR 299, [325] (Gummow J).

[30] [1988] FCA 40; (1988) 39 FCR 546.

[31] [1981] FCA 15; (1981) 36 ALR 23.

[32] [1984] HCA 68; (1984) 157 CLR 215.

[33] (1986) 65 ALR 302.

[34] [1988] FCA 40; (1988) 39 FCR 546, 558-559.

[35] I & L Securities v HTW Valuers [2002] HCA 41; [2002] 210 CLR 109, [57] and [62] (Gaudron, Gummow and Hayne JJ); see also Steutel v Kimple Pty Ltd [2005] VSCA 312, [49] (Nettle JA (with whom Ashley JA agreed).

[36] (1987) 73 ALR 233.

[37] [1984] HCA 68; (1984) 157 CLR 215, 236.

[38] (1986) 65 ALR 302, 309.

[39] (1987) 72 ALR 601.

[40] (1987) 73 ALR 233, 240-241.

[41] [1988] FCA 40; (1988) 39 FCR 546.

[42] [1988] FCA 40; (1988) 39 FCR 546, 558.

[43] [1990] FCA 51; (1990) 26 FCR 112.

[44] (1987) 73 ALR 233.

[45] (1988) FCR 546.

[46] [1990] FCA 51; (1990) 26 FCR 112, 138.

[47] [2001] HCA 52; (2001) 206 CLR 459.

[51] Amended statement of claim: [6H], [6I] and [11 G].

[52] The principles were summarised by Hammerschlag J in Gary Sydney v AMP [2008] NSWSC 1164, [142]-[147].

[53] Demagogue Pty Ltd v Ramensky [1992] FCA 557; (1992) 39 FCR 31, 32 (Black CJ).

[54] Demagogue Pty Ltd v Ramensky [1992] FCA 557; (1992) 39 FCR 31, 32 (Black CJ).

[55] Kimberley NZI Finance Ltd v Torero Pty Ltd (1989) ATPR (Digest) 53, 193 (46-054) (French J), 53,195; Demagogue Pty Ltd v Ramensky [1992] FCA 557; (1992) 39 FCR 31 (Black CJ) 32; and (Gummow (with whom Cooper J agreed), 41; Warner Elders v Elders Rural Finance Ltd [1993] FCA 117; (1993) 41 FCR 399; and Winterton Constructions v Hambros Australia Ltd [1992] FCA 582; (1992) 39 FCR 97 (Hill J), 114.

[56] Commonwealth Bank of Australia v Mehta (1991) 23 NSWLR 84 (Samuels JA), 88.

[57] Kimberley NZI Finance Ltd v Torero Pty Ltd (1989) ATPR (Digest) 53,193 (46-054) (French J), 53,195.

[58] CCP Australian Airships Ltd v Primus Telecommunications Pty Ltd [2004] VSCA 232; (2005) ATPR 42-042 (Nettle J), [34]; Gary Sydney v AMP [2008] NSWSC 1164.

[59] Fraser v NRMA Holdings Ltd (1995) 55 FCR 452 (Black CJ) and (von Doussa and Cooper JJ), 467.

[60] [1992] FCA 582; (1992) 39 FCR 97, 114.

[61] Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 12 FCR 477; Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd [1988] FCA 40; (1988) 39 FCR 546 (Lockhart J), 556-557.

[62] [1988] FCA 40; (1988) 39 FCR 546.

[63] Halton Pty Ltd v Stewart Bros Drilling Contractors Pty Ltd (1992) ATPR 41-158, (Palmer JA), 40,153.

[64] Further amended defence [7(d) and 7(e)] and [16(b)].

[66] As indicated above, the trial judge had found that in October 2000 that 'had Mr Reynolds and Mr Jones been pressed at the time they would have truthfully answered an inquiry as to the cancellability of the policy that the policy was an unusual one and that they could not be sure and, further, that it was probably cancellable.' Judgment [34].

[67] Apart from their sworn evidence, the application for approval signed by both Mr Reynolds and Mr Jones of 14 December 2000 records that the policy was cancellable. ABv3 C120.

[68] The quotation is from the submission of Miller's counsel.

[69] Ground of appeal 3. BMW relies on the letter of Henning (who sent the fax to BMW) to Darling of 25 August 2000 which fully describes the production policy. ABv3 C2.

[71] Butcher v Lachlan Elder Realty [2004] HCA 60; (2004) 218 CLR 592 [37].

[72] See Taco Co of Australia Inc v Taco Bell Pty Ltd [1982] FCA 136; (1982) 42 ALR 177; Elders Trustee & Executor Co Ltd v EG Reeves Pty Ltd [1987] FCA 332; (1987) 78 ALR 193; Argy v Blunts & Lane Cove Real Estate Pty Ltd [1990] FCA 51; (1990) 26 FCR 112.

[76] I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; (2002) 210 CLR 109, [33] (Gleeson CJ) and [57] (Gaudron, Gummow and Hayne JJ).

[78] Respondent's written submissions 22 October 2008, [31].

[80] [1968] HCA 74; (1968) 122 CLR 556.

[82] [1981] HCA 59; (1981) 150 CLR 225.

[84] [1986] HCA 68; (1986) 162 CLR 340.

[85] Ibid 357 (Gibbs CJ and Mason, Wilson and Dawson JJ).

[87] [1997] HCA 8; (1997) 188 CLR 241; see also R Lowe Lippman Figdon & Franck v AGC (Advances) Ltd [1992] VicRp 93; (1992) 2 VR 671 and Derring Lane Pty Ltd v Fitzgibbon [2007] VSCA 79; (2007) 16 VR 563, 567 (Ashley JA).

[88] [1997] HCA 8; (1997) 188 CLR 241, 252. See also (McHugh J), 274-275.

[89] [1992] VicRp 93; [1992] 2 VR 671

[92] [1986] HCA 68; (1986) 162 CLR 340.

[93] [1997] HCA 8; (1997) 188 CLR 241, 274.

[94] [1997] 2 VR 175 (Tadgell JA (with whom Charles and Callaway JJA agree), 180.

[95] [1997] HCA 8; (1997) 188 CLR 241, 275.

[96] As Brennan J observed in San Sebastion (1986) 162 CLR at 371, to hold otherwise would be to render 'the tort of deceit otiose'; cf R Lowe Lippmann [1992] VicRp 93; [1992] 2 VR 671, 679 (Brooking J).

[97] [1997] HCA 8; (1997) 188 CLR 241, 275.

[98] [1990] 1 QB 665.

[99] [1997] 2 VR 175 (Tadgell JA (with whom Charles and Callaway agreed), 181.

[100] [1985] HCA 34; (1985) 59 ALR 529, 532.

[101] [1943] AC 197, 201.

[103] [2007] VSCA 209; (2007) 18 VR 112.

[104] [1985] HCA 34; (1985) 59 ALR 529 (Gibbs CJ, Mason, Wilson, Brennan and Deane JJ), 530-534.

[105] (2001) 179 ALR 321 (Gleeson CJ), 233; 75 ALJR 867, 868.

[106] Podrebersek v Australian Iron & Steel Pty Ltd [1985] HCA 34; (1985) 59 ALR 529, 530-534.

[107] See Moore v Scolaro's Concrete Constructions Pty Ltd (In liq) (Callaway JA), [8]-[9].

[108] A_lcoa Portland Aluminium Pty Ltd v Husson_ [2007] VSCA 209; (2007) 18 VR 112 (Chernov JA), 136-137 [86].

[109] [2009] VSC 48, [289]-[296].