HEARD : 31 JANUARY, 1 & 2 FEBRUARY 2005, 12 MAY 2005

BETWEEN : GIO GENERAL INSURANCE LTD (ACN 002 861 583)

Workers' compensation - Claim for premiums due under policy of insurance - Workers' Compensation and Rehabilitation Act 1981 - Whether Court has jurisdiction - Construction of express terms - Mistake - Effect on contract - Equitable principles - Counterclaim for overpayment

Declarations and Attestations Act 1913

Employers' Indemnity Policies (Premium Rates) Act 1990

Interpretation Act 1984

Workers' Compensation and Rehabilitation Act 1981

Plaintiff's claim allowed in the sum of $111,978.58

Associated Japanese Bank (International) Ltd v Credit du Nord SA [1988] 3 All ER 902

Attwood v Lamont [1920] 3 KB 571

Australia & New Zealand Banking Group Ltd v Westpac Banking Corporation (1988) 164 CLR 662

Coleman v Mellersh [1850] EngR 774; (1850) 2 Mac&G 309

Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd [1994] HCA 61; (1994) 182 CLR 51

David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48; (1992) 175 CLR 353

Goldsoll v Goldman [1915] 1 Ch 292

Hitchcock v Giddings (1817) 146 ER 418

Huddersfield Banking Co Ltd v Henry Lister & Son Ltd [1895] 2 Ch 273

McCrae v Commonwealth Disposals Commission [1951] HCA 79; (1951) 84 CLR 377

Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221

Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516

Solle v Butcher [1949] 2 All ER 1107

Svanosio v McNamara [1956] HCA 55; (1956) 96 CLR 186

Taylor v Johnson [1983] HCA 5; (1983) 151 CLR 422

Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd [1978] HCA 42; (1978) 139 CLR 410

1 CRISFORD DCJ: The plaintiff ("GIO") is a provider of insurance and an "approved insurance office" within the meaning of s 5 and s 161 of the Workers' Compensation and Rehabilitation Act 1981 ("the Act"). As such it is able to issue and renew policies of insurance to an employer against any liability to pay compensation to its workers.

2 The defendant ("Mammoth") is an incorporated body. It is the main trading entity for the Caratti group of companies. It is an employer as defined by the Act. Its head office is at 517 Great Eastern Highway Redcliffe. The operations of the various Caratti companies are coordinated from this location. The company has operated throughout Western Australia.

3 GIO agreed to insure Mammoth for its liability to pay compensation under the Act to any worker employed by it. The agreement was brokered by Mammoth's agent, Denboer & Associates ("Denboer").

4 GIO agreed to insure Mammoth for the year 20 July 2000 to 20 July 2001 ("the initial term") for a premium of $35,978.25. Mammoth duly paid this premium.

5 An adjustment to the premium was made based on information provided by Mammoth as to the actual wages it paid its workers. The adjusted total premium was $92,021.58. A balance of $56,043.33 is still alleged to be owing.

6 GIO agreed to insure Mammoth for the year 20 July 2001 to 20 July 2002 ("the further term") for a premium of $45,959.55. Mammoth duly paid this premium.

7 An adjustment to the premium was made based on a new estimate of wages to be paid. The adjusted total premium was $107,004.01. A balance of $61,044.46 is still alleged to be owing.

8 The total amount alleged to be owing on the two adjusted premiums is $117,087.79. This is the amount claimed by the plaintiff in the writ of summons filed on 23 August 2002 in the District Court of Western Australia at Perth.

9 GIO says it provided the agreed insurance. There was a valid and binding contract and it is entitled to receive the premiums.

10 Mammoth's position is that during the relevant terms its insurance premiums were wrongly calculated. This occurred inter alia through a mistake in the provision of information to GIO by Denboer which resulted in the incorrect industry classification being applied.

11 It says that because of the mistake or error in the categorization of its business an incorrect premium rate was applied. It has paid over and above what it should have paid. The correct rate was substantially lower.

12 It seeks a refund of what it says is an overpayment of premiums in the sum of $40,915.59. It says the contract of insurance allows for an adjustment in such circumstances. Further the plaintiff should not be able to benefit unjustly as a result of the mistake.

13 Generally, Part VIII of the Act governs premiums and their application.

14 The Act provides a system by which the premium rates to be charged by an insurer to an employer are to be fixed. The fixing of rates to apply is determined according to certain criteria set out under s 151 of the Act.

15 Importantly, the premium rates are set by the Premium Rates Committee ("the Committee") depending on the category of business in which the employer is engaged. Different categories of business have different insurance risks.

16 Under s 152 a loading is chargeable by the insurer on top of the recommended premium rate. This loading is generally not to exceed 100 per cent of the rate itself.

17 The percentage loading charged on top of the premium rate for the business category is open to negotiation between the insurer and the employer. This loading will depend upon any prior claims history and the employer's general performance or standing within its industry category.

18 Relevantly in the circumstances of this case, the premium rates used by GIO are to be found in the West Australian Government Gazettes No 116 at 21 June 2000 and No 80 at 17 April 2001. These rates are set under the Employers' Indemnity Policies (Premium Rate) Act 1990.

19 The Australian and New Zealand Standard Industrial Classification ("ANZSIC") Code is used to identify the industry classification and division.

20 ANZSIC division A classification is Agriculture, Forestry and Fishing. It includes at 01220 grain-sheep and grain-beef cattle farming which had the following recommended premium rates:

21 To be contrasted with this, ANZSIC division L classification is Property and Business Services. It includes at 77120 commercial property operators and developers which had the following recommended premium rates:

22 Each gazette gives some information on the application of the premium rates:

"...

The recommended premium rate shall be applied to the aggregate amount of wages, salaries or other remuneration paid to an employer's workers, in accordance with the provisions of section 160 of the Workers' Compensation and Rehabilitation Act 1981.

For premium rating purposes, all premiums for a particular industry will be calculated on the same rate. Only one rate will apply for each establishment. An establishment is defined as a unit covering all the operations of a company conducted at or from a single location. If an employer conducts more than one industry at the same single location, the classification of the employer's predominant industry (based on gross remuneration) shall apply.

... ."

23 It is the general practice that at the commencement of a policy an estimate of wages to be paid for workers for the relevant 12 month insurance period is provided. The premium rate for the appropriate industry category is applied to the estimate of wages along with any loading and statutory charges of GST, stamp duty and fund levy.

24 At the end of each year the employer is to provide a statement of the actual wages paid for the period of insurance. Any adjustments can be done and the premium may need to be recalculated. If the wages are higher than the estimate an additional premium is charged and if the actual wages are lower a refund may be applicable.

25 Under s 154 of the Act an appeal procedure is set out. This procedure may become relevant upon the issuing of a policy or upon the renewal of it. An employer who is dissatisfied with the manner in which the insurer has classified its business or occupation may, in accordance with the provisions of the section, apply to the Workers' Compensation and Rehabilitation Commission ("Commission") for the matter to be dealt with on appeal.

26 Notice of its intention to appeal is to be given by the employer one month after the classification is given to it or such further time as the Commission will allow.

27 Notwithstanding any notice of appeal the employer is not relieved of its obligation to pay the premium as assessed by the insurer who in turn is to issue or renew the policy.

28 It is of course desirable that an employer who is simply dissatisfied with the industry classification allocated to it exercise its right of appeal to the Commission. The Commission constituted by qualified members are well placed to consider all issues relating to industry classification. It is likely to be dealt with in a timely fashion and contemplates insurance cover still being available and paid for.

29 However, from a consideration of the Act and in particular s 154, it does not appear in its terms to confer exclusive jurisdiction upon the Commission to deal with disputes arising in relation to the industry categories chosen by an insurer or to the premiums it assesses.

30 There is nothing to suggest that any challenge to the industry classification or the determination of the premiums to be charged cannot be the subject of a challenge in a court of competent jurisdiction.

31 I accept the view that s 56 of the Interpretation Act 1984 supports that the right of appeal to the Commission "may be exercised or not" at the discretion of the insured. It does not foreclose other avenues of possible redress.

32 I find as a matter of statutory interpretation that this Court is an appropriate forum to deal with the matters raised by the parties. This is so, especially taking into account the arguments which have arisen in relation to contractual issues and any relief, equitable or otherwise, that may flow. These issues are far wider than the issues contemplated by s 154 of the Act.

33 Sometime in mid 2000 Denboer approached GIO for its terms in relation to workers' compensation insurance for Mammoth.

34 In order to obtain the terms information was provided by Denboer in a facsimile transmission sent on 17 July 2000 ("the July letter"). The July letter was ostensibly sent to a Steve Bergin at GIO from a Jim Guilfoyle of Denboer. Neither person was called to give evidence. Despite Mammoth disputing the truth of the content of some of the information provided in the July letter it is not suggested that the information was not provided on that date by its agent Denboer in order to seek terms of insurance cover.

35 The information provided was that Mammoth's wages to its workers were $240,000 and that approximately 55 per cent of those wages derived from sheep farming. The remaining wages were said to be derived from roadworks including gravel stockpiling as a subcontractor for Main Roads WA.

36 Mammoths predominant industry based on gross remuneration was said to be sheep farming.

37 The State underwriter at GIO during the relevant period of time was Anthony John Vidler ("Vidler"). He gave evidence that it was part of his duties to assess the premiums for insurance policies. On the basis of the information presented in the July letter sent by Denboer he made a decision that the relevant industry was that of sheep farming - ANZSIC Code 01220. It was decided that one code only would apply. The relevant premium rate was 6.38 per cent. A loading of 39.5 per cent was added. The overall rate was 8.9 per cent.

38 Thereafter a "new premium quotation" was sent to Denboer on 20 July 2002. That formal quotation for Mammoth set out the relevant ANZSIC Code and description of the activity and the wages upon which the rate was calculated. The quotation was consistent with the detail provided by Denboer three days earlier. Cover was requested by Denboer.

39 On or about 21 July 2000 GIO was notified that the estimated wages were $350,000 not the original $240,000 advised. The premium for the purpose of the contract of insurance was then revised.

40 Isaac Ellison ("Ellison") had been the accountant for the Caratti group of companies since June 1988. He gave evidence he had been involved in arranging the company insurances for "quite a while". It was he who engaged Denboer to find an appropriate workers' compensation quotation for Mammoth. He gave evidence that the original wages figure of $240,000 was quoted by him. He also stated he was the only one from Mammoth to provide Denboer information in relation to these particular insurances.

41 He came to the realisation that $240,000 was too low and he accordingly advised Denboer to amend the amount to what he believed to be a reasonable figure of $350,000. He gave evidence that it was reasonable based on the size of the subdivisional operations that were going on at the time. He gave evidence that "in those days the subdivisional works were slowly growing ...".

42 John Michael Caratti ("Caratti") was the site foreman of Mammoth. His evidence was that in the year preceding the two years the subject of this action his family's business was predominantly in the area of farming.

43 It was not in issue that the actual contract of insurance comprised three documents - A standard form workers' compensation policy as at 15 July 2000 to which was attached the employer's indemnity policy No WA 019104 schedule dated 12 October 2000 and the workers' compensation insurance proposal form.

44 The policy document set out the current edition of the contract terms. Of particular importance to this contract were cl 15, 16, 17 and 19:

Adjusting the premium when the period of insurance ends

15. You must give us a complete account of all the wages you paid, how many workers you had and the value of all your contracts and subcontracts, during the period of insurance.

16. You have one month after this policy ends to do this.

17. We will then adjust the premium payable if this policy ended before the end of the period of insurance, or if this information is different to the information we used to work out the premium when this policy started. We will tell you what the adjusted premium is, and refund you any excess you paid. However, if the adjusted premium is more than you actually paid, you must pay us the difference, and you have one month to do this. In any case you must pay at least the minimum premium (see your schedule for what this is).

You must give us notice if your circumstances change

19. You must give us written notice as soon as practicable after you became aware that there has been a material change in any of the information you gave us in the proposal for this policy.

45 The schedule to the policy stated the business as farming and the premium as $35,978.25. This premium was paid. The schedule noted that the premium was subject to adjustment as provided by the regulations.

46 The third part of the contract of insurance, the workers' compensation insurance proposal, was the subject of much discussion at the trial. There were two such documents produced in evidence. One was identified by John Reginald Bowen ("Bowen") the technical underwriter of GIO and the other by Ellison. Both were completed by Ellison on behalf of Mammoth and signed and dated 25 July 2001 on the last page. Both forms were identical save and except for one page.

47 Ellison did not supply the industry code or business description in the box provided in the form. However, he provided a handwritten description of the industry and services provided:

"Farming operations, administration/workshop functions, property development and subdivisional works, subcontracting works."

48 The difference in the two documents relates to p 3 requiring detail of the expected wages of all workers.

49 Bowen gave evidence that the proposal document received by GIO contained information that 15 permanent workers with Mammoth were expected to be paid estimated gross total wages of $350,000. That particular page, unlike the remaining pages of the proposal document, had a discrete stamp on it dated 9 August 2000 with the name Denboer & Associates on it.

50 Ellison identified a proposal form that contained different information on p 3. The information contained on that document was that 12 permanent workers were expected to be paid estimated gross total wages of $300,000. Additionally on that p 3 there were 10 contactors noted as involved in property subdivisional works with an estimated total value of contracts worth $200,000.

51 Ellison gave evidence that the total wages he had estimated of $300,000 included the $200,000 related to property subdivisional works. The $200,000 was part of the $300,000. The 10 contractors were part of the 12 permanent workers.

52 Ellison also gave evidence that he had been contacted by Denboer to clarify that particular page. As a result of the clarification he had completed a fresh blank page and it had been provided to Denboer separately.

53 He accepted in cross-examination that the form had gone backwards and forwards one or two times in order to get it correct. The proposal form with the amended page was received by GIO. There is no evidence to show the original proposal form completed by Ellison prior to the amendment ever went further than the office of Denboer.

54 Bowen's evidence confirmed GIO's receipt of the amended form in that he said the wages figure used as an estimate for the further term was based upon the information provided in the proposal of wages estimated as $350,000 in the contract for the initial term.

55 I find the proposal with its p 3 amended to form part of the insurance contract.

56 By letter dated 25 June 2001 GIO wrote to Denboer offering to renew the policy of insurance for the further term. The basis upon which renewal was offered was ANZSIC code 01220 in relation to farming operations. The terms were based on the previous year's wages as then estimated to the insurer of $350,000.

57 Vidler was again involved in setting that rate. The applicable gazetted premium rate had changed. It was 6.04 per cent. There was an increase in the negotiated loading to apply. Four insurance claims were made in the initial term. A loading of 75 per cent was added. The overall rate was said to be 11.095 per cent.

58 Vidler was referred to an internal GIO document which contained the workings forming the basis for the renewal of the further term. On it the Government Gazette rate is indicated as 6.34 per cent with a loading of 75 per cent. The 11.095 per cent overall was calculated.

59 A renewal application signed 26 July 2001 was completed by Ellison and Allen Bruce Caratti ("A B Caratti"), a director of Mammoth.

60 A B Caratti declared in front of Ellison a person authorised under the Declarations and Attestations Act 1913 that the nature of Mammoth's business as originally stated had not changed. The wages actually paid in the initial term and those estimated to be paid in the further term were set out in the schedule attached. These wages were considerably higher than the original estimates.

61 On the basis of the actual wages paid during the initial term and the estimate of wages for the further term the premiums were adjusted upwards accordingly. The actual wages paid in the initial term were said to be $895,195 rather than $350,000. The estimated wages for the further term increased from $350,000 to $800,000.

62 On 23 November 2001 Denboer sent to GIO two closing advice tax invoice forms. One form related to the initial term and the other related to the further term. Each form noted an amendment had been endorsed to the schedule of the policy. The initial term included the actual wages paid and the further term set out the new estimate of wages likely to be paid.

63 As at February 2002 the adjusted premiums on both policies had not been paid.

64 In early February 2002, Denboer reinforced with Mammoth that there were outstanding invoices relating to the premiums which needed to be paid. It is clear from notations made by Ellison on communications from both Denboer on 4 February 2002 and GIO on 19 February 2002 and from his own correspondence to Denboer of 6 February 2002 he was of the view that the estimate of wages provided by him to Denboer for the first period of insurance was $550,000 or $500,000 and not $350,000.

65 However, in cross-examination Ellison said that his notations were made as a result of his confusion. His evidence was he had forgotten about the amended proposal page of 9 August 2000 for wages of $350,000 rather than the $500,000 in the original proposal. As a result of his forgetting that amendment the notations and subsequent queries made in February 2002 were made in error.

66 GIO was seeking payment and wrote to Mammoth to that effect on 19 February 2002. On 14 June 2002 Bowen took steps to explain to Ellison the basis upon which the premiums had been varied.

67 In his evidence-in-chief Ellison was asked about this point in time:

"Now, at this stage were you aware of an issue which might cast the claim for this adjustment into doubt, at this stage?---Yes, I do believe there was some query between myself and Denboer & Associates about the classification of the various sections of the proposal of the insurances ... Yes.

Did that arise as a result of this correspondence?---It intensified, I would say, as a result of this because we then looked further into it and it would appear that there was some error."

68 Despite this apparent awareness of a possible error, Ellison on behalf of Mammoth, on 2 July 2002 offered to pay the outstanding account of $117,087.79 by monthly instalments of $10,000. This offer was rejected by GIO's solicitors, Corsers, on 3 July 2002.

69 The writ of summons was issued in the District Court of Western Australia in Perth on 23 August 2002.

70 In a letter of 25 March 2003 Caratti raised the issue of a misclassification of Mammoth's predominant industry. The letter enclosed schedules detailing wages paid for company activities. The schedules indicate land development/subdivision to be 82.69 per cent (2001) and 84 per cent (2002).

71 The schedules were prepared by Ellison sometime between July 2002 and December 2002. He was asked the basis upon which they were prepared. He answered he went through books of records and employees records, "so to speak", and he prepared some schedules after discussing with his immediate superior, Caratti, into which category employees would fall. When he was again questioned about the source of his knowledge as to the category in which an employee worked he confirmed that he would have to discuss that with Caratti because he personally was not really aware of the particular category. He stated he was never involved with actual payments to workers and did not draw cheques.

72 In evidence Caratti stated the bulk of the business of Mammoth in the two relevant years was land development and subdivision. He detailed the particular subdivisions it was involved in. He detailed wages paid to workers involved in these works compared to the payment of wages in relation to farming activities and administration. Group certificates for those years were produced. These certificates set out the amount of wages earned but not in to which area the wages were earned. The only evidence in that regard came from Caratti himself. The certificates for the year ending 30 June 2001 designated the payer as Robinswood Pty Ltd trading as Bella Guarda 1977 and not Mammoth.

73 Ellison gave an explanation the year ended 30 June 2001 was a transitionary year. The group employer was in fact Mammoth Investments as of 1 July 2000.

74 He indicated that whilst it was intended that this change be made it did not actually happen until later so the group certificates for that year were simply prepared in the name of the existing registered employer for the group.

75 Caratti accepted Mammoth was involved in wheat, sheep and cattle farming at Yuna north east of Geraldton between 20 July 2000 and 20 July 2002 but he said it was land development and subdivision that was its predominant industry. Caratti was of the view that Ellison and the broker Denboer made an error - "a terrible mistake made unintentionally". He said Mammoth had never done gravel stockpiling on a subcontract basis for Main Roads WA.

76 The evidence of Ellison and Caratti was that traditionally the group had operated various farms including those styled Yuna, Bella Guarda, and Young River Station. In his evidence each stated the only farm in operation by Mammoth during the two relevant terms of insurance cover was Yuna, west of Mullewa.

77 Caratti was asked in cross-examination about the company's previous operations at Young River Station in Esperance.

"When did the company stop operating that one?---Young River Station is broken up into Torinup, Stewart Downs and Mikara. We leased out Young River in - I think it was late 1999/2000 to E.G. Green & Sons from Harvey.

So that's before this relevant year? Before 20 July 2000?---I think it was. I would have to double check the lease agreement.

The second part of Young River?---Torinup and Stewart Downs are around about the same time. It all happened around about the same time.

Yes, so by 20 July 2000, you weren't operating any farm in Esperance?---That's right.

You weren't employing anyone in Esperance?---I think that's right, yes."

78 At a later stage he became absolutely certain there was no farm operating except at Yuna.

79 During the initial term of insurance two claims of relevance were made.

80 The first related to an accident which took place on 8 February 2001 at Bella Guarda farm at Marvel Loch. The claim was for Peter Wayne Drayton, ("Drayton") a farm hand. The GIO employees report form had been partially completed by Ellison. He had filled in the type of business as agricultural operations, inserted the workers' compensation insurance policy number and signed the form.

81 Drayton had not been included in any of the employee schedules prepared by Ellison. There was no group certificate for him. Ellison's explanation was that Drayton was a subcontractor and he had been doing some work in that guise at Bella Guarda. He had been delegated to go there by Kevin Johnson ("Johnson") who was the group's farm supervisor. Drayton was to help out at an auction of farm equipment.

82 In cross-examination he conceded that as a subcontractor the insurance claim should not have been submitted to GIO and that any costs associated with the injury should have been met by Drayton. He accepted that it should not have been claimed. He admitted he had signed the claim form and put it through as a claim.

83 Whilst admitting the claim should not have been made his evidence was that Johnson had told him to put it through. He followed those instructions.

84 A second claim was made in relation to Young River Station in Esperance in relation to an accident of Douglas William Hellewell, ("Hellewell") a truck driver/operator, on 6 January 2001. Caratti gave evidence Hellewell was assisting to move cattle off a leased farm. It was not done earlier because of calving.

85 On 31 March 2003 during the course of and for the purpose of the proceedings Caratti swore an affidavit. He initially accepted the content to be true and correct. He deposed:

"... in relevant years the appellant employed persons at its farming operations at Esperance and Yuna. The farms had six employees and two administration staff. The farms produced grain, sheep and cattle."

86 His explanation was that the affidavit was wrong and that the reference to the farm in Esperance should not have been included. He also gave evidence that the reference to six employees at the farm was wrong and the reference to two administration staff was wrong.

87 In his correspondence of 25 March 2003 some five days prior to swearing the affidavit Caratti had again indicated that Mammoth was involved in wheat, sheep and cattle farming at both Esperance and Yuna.

88 Has the plaintiff proved on the balance of probabilities there is a valid and binding contract of insurance for the two terms?

89 The defendant's attack on whether there is such a contract rests on its contention that the wrong industry classification was applied in the calculation of the premiums. It says that at law a common mistake was made. It is necessary to consider that contention. It says the application of the wrong classification has undermined the whole contract making it's operation illegal. It has resulted in an overpayment to GIO by Mammoth.

90 The ANZSIC classification applied was 01220 grain-sheep and grain-beef cattle farming. The initial basis for this was the content of the July letter.

91 The proposal form which formed part of the insurance contract was incomplete. Ellison failed to insert the ANZSIC code and specific description of Mammoth despite the fact the code and specific description allocated had been provided to Mammoth in documents sent by GIO in relation to its new premium quotation.

92 The full description of the business in the proposal as detailed by Ellison differs to some extent with the content of the July 2000 letter. However, there is nothing contained in the actual proposal to suggest that farming operations was not the main operation of Mammoth or indeed the constant operation of Mammoth.

93 In the proposal received by GIO there was nothing to suggest property development and subdivisional work was being carried on to any greater extent than the farming operations or administration/workshop functions.

94 It is necessary in the context of the industry classification to consider the evidence of Ellison and Caratti.

95 Ellison gave his evidence in a mostly confident manner. He was clear about what he considered Mammoth's predominant industry to be at the time of obtaining an insurance quotation in July 2000, namely property development and subdivision. However, during the course of the evidence it became apparent he had a variable memory.

96 In February 2002 he had made two handwritten notations on relevant documents and had sent correspondence which clearly indicated he had no recollection at all of the amendment he made in August 2000 to the insurance proposal on p 3 despite his evidence the amendment was made in order to ensure things were correct.

97 His evidence at trial was that in the initial p 3 of the proposal the $300,000 estimate of gross wages included the figure of $200,000 allocated to contractors. This does not marry with his notations which suggest the original wage estimate was in the vicinity of $500,000. This is more consistent with the $200,000 for property subdivisional work being added to the $300,000 and not being an all inclusive figure. This is also consistent with property and subdivisional work not being the predominant industry of Mammoth at that time.

98 His notations indicate and his letter of 6 February 2002 infers an estimate well in excess of $350,000. He said these notations arose through confusion and forgetfulness.

99 He gave evidence that Dominic Lupis ("Lupis") the principal of Denboer was his primary point of contact. Lupis stated that although initial approaches to GIO in relation to the insurance policy were as a result of information provided to Denboer by Ellison, the information was not provided to Lupis personally.

100 Lupis gave evidence that all documentation in relation to this particular policy had mysteriously disappeared.

101 Caratti indicated in his correspondence of 25 March 2003 that the mistake in relation to the industry classification arose partly out of Ellison's mistake. Ellison stated Denboer had never been provided with information inconsistent with subdivisional land work being the predominant industry. He accepted he was the only one dealing with Denboer over the workers' compensation insurances. It was he who had provided the figure of $240,000 used in the July letter.

102 Ellison had prepared schedules indicating the breakdown of wages and the industry in which the wages had been paid. The information was based by and large upon information provided by Caratti. These schedules were prepared between mid and late 2002 at a time when Ellison said he was aware of possible error to the industry classification. These schedules were not supplied to GIO until March 2003, well after the commencement of proceedings. In addition, an admission of liability and an offer to pay the premiums outstanding was made by Ellison on 2 July 2002, again according to Ellison when he was aware of likely error.

103 No source documents such as wage records were ever produced to support the schedules provided. There were no group certificates provided for those who had been the subject of workers' compensation claims. The Court was left not really knowing what the workers did and whether the group certificates and schedules were representative of all the workers of Mammoth. The schedules were amended during the course of proceedings to include the two workers the subject of compensation claims.

104 Prior to the two terms of insurance Caratti gave evidence the predominant industry for the group of companies was that of farming. At that time the company was involved in a number of farms. It is unclear from the evidence when the nature of the group's operations changed, if ever. Caratti was initially uncertain about the dates of the farm leases although it was clearly a subject upon which documentary evidence was available. Two insurance claims made during the initial term involved work on farms, albeit with some explanation as to the circumstances. The fact of the claims is a concern.

105 Lupis, given his experience in the insurance industry, was asked to comment on adjustments to premiums paid or to be paid on the basis of an industry category which changes as a result of a change in activities during an insurance period. Lupis indicated it was rare that activities would change. He indicated he did have some knowledge of such happenings but the only example he could give was that of Mammoth changing from an agricultural based income to a land division income. He could cite no other instances.

106 It had never been the position of Mammoth that there was a change in the industry category during the course of either term. Its position has been that during the terms it was always predominantly involved in land and subdivisional work.

107 The renewal application form dated 26 July 2001 for the further term of insurance was signed by A B Caratti and witnessed by Ellison. It declares the nature of the business as originally stated had not changed. The schedule to the policy states the business to be farming. That renewal application form sets out the actual wages paid for the initial period. The number of employees was 26 and the wages were $895,195. There is no detail provided by Mammoth as sought in the form for the class of employees, the class of work performed, contractors and subcontractors and working contractors.

108 On the face of it there were simply 26 workers within the meaning of the Act and these 26 workers were paid $895,195. On the basis of this information there was an adjustment to the premiums in accordance with cls 15, 16 and 17 of the contract contained within the policy document. The adjustment to the premium was in accordance with the information provided by Mammoth. The adjustment was confirmed by Mammoth on 23 November 2001.

109 The further term ended on 21 July 2002. There was never a like wages declaration made by Mammoth in respect of the further term.

110 Despite apparent knowledge by Mammoth of a likely material change in the information upon which the policy was based as early as June 2002 and the preparation of schedules before the end of 2002 GIO was never alerted to this as required by cl 19 of the insurance contract.

111 Forms and schedules filled in by Ellison were incomplete or carelessly completed. There were simple mathematical errors in the schedules.

112 Ellison was responsible for forwarding an insurance claim for Drayton to GIO. It was accepted that Drayton was a subcontractor and responsible for his own expenses. Ellison had been told by the farm supervisor Johnson to make the claim and he complied with this request despite knowing it was inappropriate. I formed the view that Ellison was likely to serve his employer or his work superiors despite the fact that the action may well be inappropriate or plainly wrong. Coupled with his carelessness and faulty memory I have great difficulty accepting any of his evidence.

113 It would have been of little inconvenience to provide source documents to show just how Mammoth operated. Documents such as a farm leases and wage records were said to be available and given the inconsistencies in the evidence became of crucial importance.

114 I did not find Caratti to be a credible or a convincing witness, despite having a very ready and apparently simple explanation for the inconsistencies. I do not accept the schedules accurately reflect the situation at Mammoth. Documents prepared closer to or at the time the contracts were entered into suggest a different situation.

115 I do not accept on the evidence before me that at the time the insurance contract was entered into the predominant industry of Mammoth was property development or subdivision. There is nothing that persuades me the nature of its predominant industry was anything but farming.

116 It therefore follows that, on the balance of probabilities I am satisfied that a valid and binding contract was entered into. That contract was renewed for a further term. There are unpaid premiums the calculations for which are not in dispute.

117 Despite a number of different legal concepts put to me by the defendant as to how this agreement could and should be construed, in the end, on the facts it is my view that the application of basic contractual principles adequately covers the situation.

118 At the end of the trial the actual mathematical workings in relation to the premiums were not attacked save and except as to the application of the wrong industry risk category.

119 However, an issue not raised at trial became apparent to the Court in considering the evidence. It relates to the premium rate applied to the further term. The relevant Gazette rate is 6.04. However, a rate of 6.34 was applied by GIO.

120 As a result of my findings as previously set out I conclude there was no lack of agreement about the renewal for the further term or its terms and conditions - these being the premium rate set out in the Government Gazette with a 75 per cent loading. However, in the formal mathematical workings used to ascertain the premium rate a mistake was made in the figure used. It was made at the time of the actual renewal of the contract. The objective evidence which I accept supports that each party shared a common intention but that intention was not recorded accurately.

121 In these circumstances I intend to rectify this mistake common to each party. I will invoke the equitable jurisdiction of this Court and apply the doctrine of rectification to the contract insofar as it relates to the further term. Without the application of this doctrine the plaintiff will be, as a result of an inflated premium rate being applied, unjustly enriched.

122 As a result of an invitation to the parties to provide further submissions the amount of the unpaid premium in relation to the further term is calculated as follows:

1. The defendant pay to the plaintiff damages in the sum of $111,978.58.

2. The defendant pay to the plaintiff interest on the sum of $111,978.58 pursuant to s 32 of the Supreme Court Act from 29 July 2002 to payment or judgment.