LOW -v- ROMARO [2023] WASCA 155 (26 October 2023)

Respondents' claim as formulated prior to 2022 amendments

1. The claim by Mr Romaro and Pikachu as formulated in the SoC had the following elements which the appellants generally denied:
   1. Mr Low made three representations at the meeting on 29 September 2008 on which Mr Romaro relied in signing the AXA forms and in allowing the AXA policies to replace the ING policies. This included a representation that there were 'no medicals or anything like that required' and that AXA would 'do a complete takeover of your policy from ING'. Mr Low also indicated that he could finish filling out AXA's personal details form for Mr Romaro.[11]
   2. Had he not changed his policies, Mr Romaro would have claimed and received $1 million for the prostate cancer diagnosis under his ING policy.[12]
   3. By making the representations at the meeting on 29 September 2008, Mr Low breached the fiduciary duty and duty of care which he owed to the respondents and engaged in misleading or deceptive conduct.[13]
   4. Mr Low's breach of duty and misleading or deceptive conduct caused reasonably foreseeable loss and damage to Mr Romaro and Pikachu.[14]
   5. AMP was liable for Mr Low's conduct under the Corporations Act 2001 (Cth) and the Australian Securities and Investments Commission Act 2001 (Cth), and Cyberside was vicariously liable for that conduct as Mr Low's employer.[15]

1. The appellants' original defence denied that Mr Romaro would have recovered $1 million under the ING policy,[16] and also pleaded that he and Pikachu breached their duty of disclosure to ING under s 21 of the Insurance Contracts Act 1984 (Cth) by not disclosing medical matters.[17] It was pleaded that, had Mr Romaro and Pikachu complied with their duty of disclosure, ING would not have been prepared to enter into a contract of life insurance with Mr Romaro.[18] It was also pleaded that, had they made a claim under the ING policies, ING would have avoided the contracts under s 29 of the Insurance Contracts Act.[19]
2. Amendments to the defence filed on 11 February 2020 added pleas that Mr Romaro represented to ING that he did not have any of the relevant medical conditions and that this was fraudulent conduct for the purposes of s 29 of the Insurance Contracts Act.[20]
3. On 15 July 2022, Mr Romaro and Pikachu amended the SoC (Amended SoC). The amendments introduced an allegation that Mr Low made certain representations in the First Advice and at a meeting on 21 September 2007 which Mr Romaro and Pikachu relied upon in entering into the ING policies.[21] The Amended SoC alleged that Mr Low breached his duty to exercise reasonable care and skill in providing the First Advice and in completing the application form to be submitted to ING.[22] It was also alleged that the advice breached Mr Low's duty to act impartially when giving advice and making recommendations and to avoid his personal interests and duties owed to Cyberside conflicting with his duty owed to Mr Romaro and Pikachu.[23] These breaches of duty were alleged to cause loss and damage to Mr Romaro and Pikachu, for which Mr Low, AMP and Cyberside were liable.[24] It was also pleaded that representations in the First Advice and at the meeting on 21 September 2007 constituted misleading or deceptive conduct which caused loss and damage to the respondents.[25]
4. By chamber summons dated 30 September 2022, the appellants applied to strike out the new pleadings referred to at [14] above.
5. By chamber summons dated 19 October 2022, the respondents applied for leave to amend the writs of summons issued in each of the consolidated proceedings. This was done in response to the appellants' contention that the pleadings based on representations in the First Advice and at a meeting on 21 September 2007 in relation to the ING policies were outside the scope of the indorsements of claim on the writs of summons.
6. The proposed amendments to the indorsement of claim on one of the writs is reproduced at [3] of the master's reasons. The effect of that amendment was to make it beyond argument that the allegation referred to at [14] above was within the scope of the indorsement of claim.

1. The competing applications were argued before the master on 31 January 2023. On 28 June 2023, the master published reasons in which he concluded that the appellants' strike out application should be dismissed and that the amendments to the indorsements on the writs of summons, while not required, would be permitted.[26]
2. The master characterised the effect of the amendments made to the defence on 11 February 2020 as follows:[27]

Effectively what the [appellants] said was that the [respondents] had failed to make proper disclosure to ING Insurance and therefore the ING Insurance policy would not have responded if those policies had still been in place and the [respondents] had made a claim. That being so, even if the claim was made out against the [appellants] it would not sound in damages. If the [respondents] could not have succeeded in a claim against ING Insurance under the terms of its policy, then it was neither here nor there that they could not claim against AXA.

1. The master characterised the amendments made to the statement of claim on 15 July 2022 in the following terms:[28]

Effectively what they said was that they could have claimed under the ING policies and material was pleaded which supports that assertion.

1. The master rejected the appellants' submission that the amendments raised new matters which were not mentioned in the indorsement of claim and which were statue barred. After identifying the nature of the respondents' claim in the original indorsement, the master said:[29]

It was always open to the [appellants] to raise as an issue the prospect that the ING policies would not respond. But from the outset they knew as a consequence of the way the indorsement of claim was drafted, one of the features of the [respondents'] case was that the measure of damage was dependent upon the ING policy responding. Any material facts which go to establishing that the ING policies would have responded fall within the ambit of the indorsement of claim.

1. The master concluded that the respondents' amended pleadings were within the scope of the original indorsement. However, for the avoidance of doubt, the respondents would be allowed to amend the indorsements if they wished to do so. The master said that the parties should confer as to the formal orders.
2. On 12 September 2023, formal orders were made granting leave to the respondents to amend the writs of summons and dismissing the appellants' application to strike out amendments to the statement of claim.

1. On 13 September 2023, the appellants filed an appeal notice which sought leave to appeal against the master's orders. The appellant's case filed on 22 September 2023 contains two grounds of appeal:
   1. The Court erred in law in failing to consider whether, and find that, the proposed amendments to the indorsement of writ and statement of claim ought not be permitted because they would introduce new causes of action relating to events, which occurred in 2007 and are described in paragraphs 3(a) and 3(b) of the amended indorsement of claim, at a time when those causes of action were clearly statute-barred.
   2. If, which is denied, it was open for the Respondents to amend their indorsements of writ, the Court erred in law by failing to address a necessary issue, being whether it was in the interests of justice for the Respondents to be allowed to make those amendments and/or to amend their statement of claim in circumstances where:

2.1 the amendments are raised very late, having regard to the time that has passed since relevant events (including [Mr Romaro] taking out the MLC policy in 2003 and the transfer of cover from MLC to ING in 2007) and also the stage of the proceedings;

2.2 the Appellants would be significantly prejudiced by the amendments;

2.3 the Respondents have not proffered a satisfactory explanation for the delay in advancing the new causes of action; and

2.4 given the Respondents commenced this action in 2014, the amendments would have a negative impact on the Court and other litigants.

1. The appellants' written submissions in support of the grounds of appeal acknowledge, with respect correctly, that the grant of leave to appeal in this case would be an 'extraordinary step'.[30] They contend that the grant of leave to appeal is justified in this case because of the significant errors in the primary decision and the prejudice they will face if the decision is left unreversed.[31]
2. The appellants identify four reasons why leave to appeal should be granted:[32]
   1. The primary decision was wrong in a number of material respects as a result of the master having mischaracterised the nature of the proposed amendments.
   2. If the decision is left unreversed, the appellants will be prejudiced by the difficulties they will inevitably face in investigating and defending a case which rests upon events that took place so long ago.
   3. The primary proceedings have been on foot for almost a decade. If the decision remains in place, the parties (and the court) will need to go almost back to the start, with new pleadings, witness statements and potentially expert evidence all being required.
   4. Given the relatively straightforward nature of the appeal, any delay to the resolution of the respondents' claim will be kept to a minimum. The proposed appeal should be relatively short and should be ready to be heard as soon as the court can accommodate a hearing of a couple of hours.

1. We summarised the general principles governing the grant of leave to appeal from interlocutory procedural decisions in Arvind Pty Ltd v Lamers.[33] That summary is repeated below for ease of reference.
2. The principles governing the grant of leave to appeal from an interlocutory decision are well established. The object of the requirement for leave is to reduce appeals from interlocutory orders as much as possible. Generally, leave should not be granted unless the decision below is plainly wrong or is attended by sufficient doubt to justify the grant of leave and a substantial injustice would be done if it remains undisturbed.[34] That said, the discretion is broad and these considerations are not applied as if they were rigid or exhaustive criteria. The ultimate touchstone is whether leave to appeal is in the interests of justice.[35]
3. In Waller v Waller, Martin CJ observed:[36]

The requirement that interlocutory appeals be subject to the grant of leave of the Court of Appeal is no mere technicality or procedural nicety. It is a substantive restriction upon the pursuit of interlocutory appeals which is designed to enhance the interests of justice. Those interests will not be well served if the parties to litigation and the limited resources of the court are distracted from the determination of substantive rights and interests by an unnecessary and inappropriate focus upon interlocutory issues. The grant of leave to appeal from an interlocutory determination is therefore restricted to those exceptional cases in which the decision in question is not only plainly wrong or attended with sufficient doubt to justify the grant of leave, but also in which a substantial injustice would be done if the decision remains in place. It would defeat the purpose of the restriction upon interlocutory appeals if there were to be any departure from the strict satisfaction of these requirements.

In particular, the injustice that must be demonstrated must be properly characterised as 'substantial'. If every infraction of a party's procedural rights were to be regarded as a 'substantial injustice', this aspect of the requirements for the grant of leave would become meaningless, as virtually every erroneous interlocutory decision will involve an infraction of a party's procedural rights. Accordingly, the notion of 'substantial injustice' looks to the substantive rights of the party adversely affected by the order under review, and requires that party to demonstrate that the effect of the order will go beyond mere inconvenience and procedural disadvantage.

This court adopted those observations in Kelbush.[37]

1. Also relevant to the present application for leave to appeal is that the primary orders involved a question of practice and procedure. The decision to permit amendments involved the exercise of a discretion. The reasons why there must be a tight rein on interlocutory appeals against the exercise of discretion on a point of practice and procedure are well‑established. As was said by Jordan CJ in Re the Will of FB Gilbert (Dec):[38]

[T]here is a material difference between an exercise of discretion on a point of practice or procedure and an exercise of discretion which determines substantive rights. In the former class of case, if a tight rein were not kept upon interference with the orders of Judges of first instance, the result would be disastrous to the proper administration of justice. The disposal of cases could be delayed interminably, and costs heaped up indefinitely, if a litigant with a long purse or a litigious disposition could, at will, in effect transfer all exercises of discretion in interlocutory applications from a Judge in Chambers to a Court of Appeal.

1. In our view, leave to appeal should be refused on the basis that the appellants have not demonstrated that a substantial injustice would be done if the master's decision remains undisturbed, even assuming that the master's decision is wrong.
2. The appellants' principal contention is that the respondents' claim for relief based on a breach of duty or misleading or deceptive conduct by Mr Low in the First Advice and at a meeting on 21 September 2007 are clearly statute barred, and that the amendments should not be allowed for that reason. Allowing the amendments to stand does not prejudice the appellants' ability to plead and pursue a limitation defence to that effect at trial.[39] If the appellants' contention is correct, then they will succeed at trial on that issue. The circumstance that the appellants will be put to the burden of defending the claim at trial does not constitute substantive prejudice for the purpose of the general principles governing the grant of leave to appeal from interlocutory decisions.
3. At the hearing of the application for leave to appeal, counsel for the appellant expressed concern that the master's finding that the Amended SoC did not introduce a new cause of action would preclude the appellants from pleading a limitation defence or relying on such a defence at trial. Counsel for the respondents quite properly, and in our view correctly, conceded that the master's decision does not prevent the appellants from pleading and relying on a limitation defence at trial.
4. Nor are we satisfied that the alleged prejudice to the appellants in defending a claim based on events that occurred long ago constitutes substantive prejudice for those purposes. The appellants will not be prejudiced if they are correct in contending that they have a clear limitation defence. On the other hand, if, contrary to the appellants' submissions, the claim has been brought within the limitation period, then there is no obvious basis for shutting the respondents out from pursuing that claim due to prejudice caused by delay.
5. Further, the circumstances in which Mr Romaro obtained the ING policies were always a necessary aspect of the proceedings. The respondents initially pleaded that, had it still been in force, Mr Romaro's ING policy would have responded to the claim. The appellants denied that this was the case due to material non-disclosure of Mr Romaro's medical conditions. Resolving that dispute will require an examination of the circumstances in which Mr Romaro obtained the ING policies irrespective of whether the amendments to the statement of claim are permitted to stand. The discussions between Mr Low and Mr Romaro prior to the ING policies being taken out are relevant background to those circumstances. The advice given by Mr Low at that time is also relevant background against which the subsequent advice given prior to the respondents taking out the AXA policies is to be assessed.
6. It is true that the primary proceedings have progressed at a glacial pace. There is nothing in the nature or complexity of the claim which explains why it has taken so long to bring the case to trial. However, both parties appear to have been content to allow the matter to proceed in this dilatory manner. Little substantive progress has been made since 2020 other than in relation to amendments to pleadings. While some adjustments to past preparation may need to be made to accommodate the new claim, we do not accept that by allowing the amendments to stand the parties would be placed back to square one. Further, the debates about amendments appear to have stalled any other progress in the primary proceedings. The pendency of this appeal is likely to foster that inactivity. The parties' inertia in the primary proceedings provides no basis for this court to expedite the hearing of this appeal. The grant of leave to appeal is more likely to delay than advance the ultimate resolution of the dispute even if the appeal were ultimately to be allowed.
7. Having regard to the above matters, and even assuming favourably to the appellants that the master made the errors asserted by the grounds of appeal, we were of the view that it was in the interests of justice to refuse leave to appeal and dismiss the appeal. We made orders accordingly. Costs followed the event.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

[1] SoC pars 1 ‑ 3 and 7; Defence pars 1 ‑ 3 and 7 ‑ 9.

[4] SoC pars 9 ‑ 10; Defence pars 11 ‑ 12. While the pleadings refer to different dates, the differences are not material for present purposes.

[6] SoC pars 14 ‑ 15, 21 ‑ 22; Defence pars 18 ‑ 19, 26 and 28.

[16] Defence par 36, denying SoC par 29.

[26] Romaro v Low [2023] WASC 209 (primary decision).

[30] Appellants' submissions, par 5. See also par 59.

[32] Appellants' submissions, pars 59 ‑ 63.

[33] Arvind Pty Ltd v Lamers [2020] WASCA 47 [15] ‑ [17].

[34] Kelbush Pty Ltd v Australia and New Zealand Banking Group Ltd [2016] WASCA 14; (2016) 49 WAR 374 [80] ‑ [81]; Wilson v Metaxas [1989] WAR 285, 294.

[35] The State of Western Australia v Bond Corporation Holding Ltd (1991) 5 WAR 40, 57.

[36] Waller v Waller [2009] WASCA 61 [9] ‑ [10].

[37] Kelbush [81] (Mitchell J; Martin CJ & Buss JA agreeing).

[38] Re the Will of FB Gilbert (Dec) [1946] NSWStRp 24; (1946) 46 SR (NSW) 318, 323 (as adopted in Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170, 177).

[39] Belgravia Nominees Pty Ltd v Lowe Pty Ltd [2017] WASCA 127; (2017) 51 WAR 341 [46].