Plaintiff v First Defendant

INSURANCE - Credit risk insurance - Whether the proponent for insurance failed to make adequate disclosure of its buyer's past payment performance - Whether the proponent knew or a reasonable person in the circumstances would have known that particular aspects of its buyer's past payment performance were matters relevant to the insurer's decision whether to accept the risk - Significance of questions asked by the insurer in the proposal form - Insurance Contracts Act 1984 (Cth), ss 21, 28.

1 Leading Synthetics Pty Ltd, the plaintiff, supplies synthetic resins to its customers who process that material into plastic containers, particularly cups and bottles. Signum Specialities Pty Ltd was one such customer. In 2007 and 2008 it purchased product from Leading Synthetics on 60 day payment terms. In November 2008 Signum was placed into liquidation, owing Leading Synthetics approximately $2.265million.

2 In late 2007, around the time when the global financial crisis was unfolding, Leading Synthetics instructed the first defendant, its insurance broker trading by the name 'Austbrokers', to seek a policy of insurance against the risk that Signum might fail to pay money due under its trading account. Between January and May 2008 Austbrokers negotiated with the second defendant, Atradius Credit Insurance NV, a credit risk insurer, to place cover for that risk up to an amount of $800,000.

3 It is common ground that by 28 April 2008, when Austbrokers agreed on behalf of Leading Synthetics that the policy should commence from 1 April as requested by Atradius, all the essential terms of the contract of insurance had been agreed. Nevertheless, a few days earlier Atradius had sent Leading Synthetics a document titled 'Indication of Terms' which stated:

These terms are provided without commitment on the part of Atradius until such time we provide you with written confirmation that we are on risk for your transaction and agree to issue a policy.

4 Atradius says it never provided such written confirmation nor agreed to issue a policy and, on that basis, denies that any binding agreement came into force.

5 On 5 May 2008 the broker sent Atradius an email setting out its understanding of the status of six different credit risk covers it was in the process of negotiating on behalf of Leading Synthetics, and requesting Atradius' confirmation that it was of the same understanding. In relation to the Signum credit risk the broker wrote: 'Cover placed awaiting outcome on others prior to processing.' Although Atradius engaged in further email communications with the broker in May concerning other risks, it did not address the Signum cover again. Neither did the broker follow it up. No policy was prepared; no invoice was sent; no premium was paid. There the matter lay until November when warnings of Signum's impending failure arose.

6 Later, Leading Synthetics made a claim on Atradius for indemnity against its loss from the default of Signum, to the extent of $800,000, but that claim was denied by Atradius on the footing that no policy existed.

7 Leading Synthetics brings this proceeding against Atradius for the indemnity, alleging that a contract of insurance was made, alternatively that Atradius is estopped from denying such a contract because of its conduct following the 5 May email. Austbrokers supports Leading Synthetics in those arguments because, if Leading Synthetics does not have the benefit of such cover, it claims damages against Austbrokers for having failed, in breach of retainer or negligently, to put cover in place.

8 Apart from denying the contract and the estoppel, Atradius raised two additional grounds for denial of Leading Synthetics' claim. Neither of those further grounds, if they preclude the cover, provide Leading Synthetics with a basis for claim against its broker. The first is that, in breach of s 21 of the Insurance Contracts Act 1984 (Cth) ('the Act'), Leading Synthetics failed to disclose matters to Atradius alleged to be relevant to its decision whether or not to accept the risk. Those matters concern the lengthening trend of Signum's payments, beyond its 60 day trading terms, in late 2007 and early 2008. Atradius contends that, under s 28 of the Act, it is entitled to have its liability reduced to nil because it would not have entered the risk had those matters been disclosed.

9 Atradius' second additional ground relies upon the existence of a small but long-outstanding debt for wooden pallets provided by Leading Synthetics to Signum in 2002. A 'receivable' of $957 for the pallets remained in the books of account of Leading Synthetics at the time of the negotiations for the policy, and at the time of Signum's liquidation. Atradius relies on one of its usual policy terms that suspends cover for losses resulting from goods despatched to the customer when, at the time of despatch, payment of any receivable is still overdue after its 'maximum extension date' (in this case, 120 days from invoice).

10 The whole $2.265million debt existing at the time of Signum's insolvency was incurred from product despatched while the $957 pallet 'receivable' was more than 120 days overdue for payment. Leading Synthetics denies that the $957 amount was, in reality, a 'receivable' or that the policy provision operated in the way Atradius contended.

(1) Was a contract of credit risk insurance made in or about April 2008?

(2) Is Atradius estopped from denying the contract was made?

(3) Is Atradius entitled to any reduction of liability due to non-disclosure?

(4) Was cover suspended because of the outstanding pallet 'receivable'?

(5) Is Austbrokers liable to Leading Synthetics for failing to effect insurance?

Was a contract of credit risk insurance made in or about April 2008?

12 Because Atradius conceded that by 28 April 2008 all the essential terms of a credit risk contract of insurance had been agreed, the only real issue in dispute about the existence of a contract was whether there was intention to create legal relations.

13 The parties agreed on the relevant legal principles for determining whether such an intention had been established. First, what is relevant is not the subjective intentions of the parties, but their intentions judged upon an objective basis - that is, not what one party intended to convey, or the other thought was conveyed, but what each party by words and conduct would have lead a reasonable person in the position of the other party to believe.[1] Secondly, in making that objective determination, the court normally considers what was known to both parties, what was (or was not) written, said and done between them before and after the alleged contract, and the evident commercial circumstances, including the nature and purpose, of the transaction.[2]

14 Atradius argued that, judged objectively, the parties did not intend to be bound by the consensus they had reached about terms on 28 April 2008, or at any later time. In so arguing Atradius focused on three principal matters: first, the transaction which the parties had concluded before the Signum negotiation, a policy concerning a US buyer called Resilux America LLC; secondly, the nature of credit risk insurance and, in particular, the inferences that should be drawn from the known fact that insurers are required to monitor the risk on an ongoing basis; and, thirdly, the details of the negotiation for the Signum risk against that background, before and just after 28 April.

15 Atradius' argued that the experience of the parties in the Resilux transaction in January 2008 established an understanding, common to both of them, of the necessity of there being a written confirmation by Atradius that it was 'on risk' before any binding credit risk contract was in force. This knowledge, it argued, was critical to bear in mind when determining the objective intention of the parties in the Signum transaction a few months later.

16 Atradius offers a number of different structures for credit risk insurance. An insured may obtain a 'whole of turnover' policy, in which all of its credit risks are insured; a 'single risk' policy, in which its exposure to a single buyer is insured; or a multiple risk policy, in which its exposure to several nominated buyers is insured. In each case, a limit, called a credit limit, may be fixed so that the insurance only covers up to a set amount of the credit exposure. The standard terms for a single risk or multiple risk policy are the same.

17 In November 2007 Brendan Peck, a broker with Austbrokers, sought and obtained a quote from Atradius for single risk cover for one of Leading Synthetics' American buyers, Resilux. The quote was provided by Jonathan O'Doherty, 'Senior Manager, New Business', employed by Atradius. Peck and O'Doherty were later the main individuals involved in negotiating the Signum transaction. There was no dispute that knowledge held by Peck was, relevantly, knowledge held by Leading Synthetics. It appears that the Resilux transaction was the first dealing Austbrokers had with Atradius in relation to any insured.

18 In response to that request, and upon relatively scant information provided by Peck, O'Doherty sent a single page document headed 'Indication of Terms' which began: 'We thank you for the opportunity to quote on your business and provide our non-binding indication of terms'. The parties agree that this form of document, referred to in the proceeding as an 'NBI' (non-binding indication) and also used in the Signum transaction, constitutes an invitation to treat and not a formal offer to contract. After the sentence set out earlier in these reasons,[3] and under the heading 'Non-Binding Indication', the text continued that if the recipient wished to proceed it would have to submit a completed proposal. Beneath that information were spaces for Atradius to insert various details which, if a policy was concluded, would be listed in the policy schedule, together with pricing information. Specimen terms of the policy were attached.

19 When, on 4 January 2008, Peck wrote requesting cover effective that day, an officer from Atradius responded by enclosing a proposal form and the wording of a standard-form 'request to issue an Atradius policy' letter which, she said, both 'need to be filled in and signed prior to the policy being set to LIVE'. On 7 January 2008 Peck returned the proposal form and letter, both signed by Leading Synthetics, with a covering email saying 'please go on risk and I will send in closing'.[4]

20 On 10 January Peck sent his client, Leading Synthetics, a document confirming cover was placed by way of ' our covernote' with premium stated to be $15,000. However, on 17 January a series of emails revealed some confusion between Peck and O'Doherty over the premium that had been discussed. O'Doherty wrote, 'please give me the OK to set the policy to live on the specimen wording & pricing (USD $18k)...'. On 21 January he agreed to abide the $15,000 premium because it was their first deal and he said he hoped there would be more business. He concluded an email that day saying, 'I will get the final documentation going now' to which Peck replied 'I will get our final closing to you this week'.

21 That same day Atradius sent Leading Synthetics a copy of the policy, including a policy number and completed schedule, with a covering letter stating the policy was enclosed 'as confirmation that your cover commences as set out in the attached policy document'. The policy start date was 1 January 2008. A little over 2 weeks later, on 5 February, O'Doherty sent Peck an email attaching what he described as 'our on-risk letter'. The attached letter stated, '[w]e...confirm that we are on risk for your transactions as at 01.01.2008...'. O'Doherty said that different departments of Atradius are responsible for sending out policies and 'on-risk' letters.

22 As I have said, Atradius relied upon this sequence of communications and events to establish a common understanding about the necessity of Atradius confirming in writing that it was on-risk and agreed to issue a policy before a contract of insurance was effected. I will return to this in due course.

23 The second principal matter Atradius emphasised was the fact that, as known to Leading Synthetics, credit risk insurance involves ongoing monitoring by the insurer of the credit worthiness of the insured's buyers. From that fact Atradius argues that the reasonable person would infer that, before the insurer went on risk, it would need to set up systems to monitor the new buyer and, therefore, only be prepared to go on risk when it had done so. In other words, the circumstance of that monitoring was put forward as supplying a logical reason why a credit risk insurer would not want to go on risk until it said, in effect, it was ready to do so.

24 Peck agreed that he knew that credit risk insurers monitored insured's buyers on an ongoing basis. There was also evidence of emails between Atradius and Austrbrokers, on behalf of Leading Synthetics, concerning the need to obtain financial information about other buyers for other credit risk proposals in the early months of 2008.

25 In my view, this particular feature of the background is not especially helpful for determining the objective intention of the parties in the Signum transaction. There was no evidence of it being common knowledge between the parties that an insurer could not embark upon such a policy until it had set up all its monitoring machinery. Nor do I think that a reasonable person, with the knowledge of Peck, would infer that an insurer could not do so. Furthermore, mere knowledge by a prospective insured that an insurer had to attend to its own internal processes before being bound by a contract would not generally enable that prospective insured to discern the difference between a communication by which that insurer intended to signify it was bound, from one that did not carry that intention.

26 I turn then to the third principal matter argued by Atradius: the specific negotiations concerning the Signum risk.

27 Leading Synthetics first sought a quote from Austbrokers for insuring the Signum risk in December 2007. Peck initially obtained a quotation from QBE for annual premium of $29,150 on the basis of a single risk, a credit limit of $800,000 and an annual turnover of $5m. Before informing Leading Synthetics of QBE's quotation he asked O'Doherty for his price on the same assumptions. O'Doherty emailed back in January 2008 with an estimated premium of only $10,000. Peck factored that amount up to $15,000 when informing the finance manager at Leading Synthetics, T.C. Chew, of the quotation, to allow for GST, stamp duty and the fact that it was only indicative.

28 Nearly 2 months later, on 17 March 2008, Peck sent Chew a formal quotation of $14,500 for the Signum cover with Atradius. Meanwhile, Peck had been negotiating on Leading Synthetic's behalf, with Atradius, on a number of other potential buyer-risks. There was some consideration given to obtaining a price on a 'whole of turnover' policy which Peck thought might be cheaper given the number of buyers for whom single risk policies were being sought.

29 Another month later, on 21 April 2008, Chew emailed Peck instructing him to insure Signum 'for amount $800,000 terms 60 days with Atradius (premium quoted $14,500) immediately.' Peck forwarded Chew's email to O'Doherty, adding 'please cover Signum..and send over the quote and letter for insured to sign'. O'Doherty emailed Peck first thing the next day, 22 April, with a blank proposal form and standard-form ' request to issue' letter with a further reduced price of $14,000 inclusive of GST. Peck emailed the documents to Chew on 23 April.

30 On 24 April O'Doherty emailed Peck the NBI for the proposed Signum policy. It was in the same form as I have described for the Resilux transaction. It contained the same statements under the heading 'Non-Binding Indication' as set out above about there being no commitment without written confirmation of being on-risk and agreement to issue a policy. The only incomplete term was the policy start date. Early the next day, Friday 25 April 2008, Peck sent Atradius the completed and signed proposal and request to issue letter on behalf of Leading Synthetics.

31 The wording of the request to issue letter is quite important. Apart from adding the date and the proponent's own name, the standard form letter required the offeror to make only two alterations of substance. One was to choose between two optional sentences about buyers whose accounts were overdue or who were in financial difficulty. The other was to complete the requested policy commencement date. Leading Synthetics nominated 22 April 2008. For present purposes, the letter contained these important statements:

Further to our recent negotiations, we wish Atradius Credit Insurance NV to effect cover on the basis of the Terms provided and agreed to by us, and on the Credit Limit Indications agreed to date.

We request that the policy commences from 22nd April 2008 and will apply to deliveries and/or services rendered, on and after this date.

...

Please advise us that you are 'on risk' as from the requested policy commencement date and of our policy number without delay.

32 O'Doherty, who had been away on the previous Friday, responded to Peck first thing on Monday morning, 28 April:

Thank you for your information on the single risk deal for Signum Specialities received today.

Please confirm that the client can commence from 01.04.2008 as they have the 22.04.2008 noted on their request to issue a policy.

33 Between 28 April and 5 May Peck and O'Doherty exchanged numerous emails about other risks then under negotiation, and about things that still had to be done for them. There was no mention of Signum. It is evident that communications between O'Doherty and Peck were quite fast moving and there were a number of transactions in a state of flux. Additionally, O'Doherty was due to finish with Atradius on 23 May and he had a good deal of business to try and conclude. In an email to Peck on 2 May O'Doherty sought clarification about one transaction he appeared to have forgotten, and added that he and Peck 'really need to sit down and talk through these to put some shape on our outstanding workload'.

34 That email drew Peck's response of 5 May in these terms:

In relation to Leading Synthetics we have the following limits in the pipe works.

Resilux America LLC - Cover Placed.

Signum Specialities Pty Ltd - Cover placed awaiting outcome on others prior to processing.

HP Packaging Pty Ltd - Cannot offer Cover due to financials.

Niagara Bottlers - Have now provide you with contact details of client as you could not provide limit without speaking to them.

Tri-Delta Plastics - Obtaining contact details from the insured as you could not provide a limit without contact them for financials. Once contact details are to hand we will forward to you.

This is my understanding can you please confirm this is your understanding also.

35 Although there were a number of emails that followed, dealing in turn with Nigara Bottlers and another possible transaction, and a quotation for the US buyers as a 'book', there was no further mention of Signum.

36 Drawing these threads together, Atradius argued that its email of 28 April would not convey to a reasonable person in the position of Leading Synthetics, with the knowledge of the Resilux transaction and the nature of credit risk insurance generally, that Atradius was willing to be bound to the contract of insurance. It argued that, objectively evaluated, the parties did not intend to be bound unless Atradius confirmed in writing it was on risk for the transaction which, it said, it had not done.

37 I accept that Atradius had conveyed to Leading Synthetics, and a reasonable person in its position would have understood, that Atradius did not wish to be bound by contract until it confirmed in writing it agreed to go on risk. But I do not accept that a reasonable person would necessarily have understood that Atradius must employ some particular form of words to convey that message.

38 Indeed, the experience of the Resilux transaction would have demonstrated to the reasonable observer that was not so. Peck's emails of 4, 7 and 10 January (referred to above) are not necessarily consistent, and possibly inconsistent, with him holding the view that cover would only begin to operate when written confirmation was received from Atradius. Various expressions were used at different points in time by Atradius to refer to the moment when it would be or was on risk, namely 'the policy set to live', 'confirmation your cover commences', and 'confirm we are on risk'. It was the second of those expressions, in the letter of 21 January, and not the 'on risk' letter of 5 February which Atradius identified as the signal that the Resilux contract was in force.

39 A critical feature of the context of the Signum transaction was the sense of urgency which characterised the final stage of negotiation. Leading Synthetics made known its need for immediate cover. Atradius complied with its request for urgency by promptly providing the proposal, request to issue letter and NBI. On 25 April Leading Synthetics' request to issue letter contained an offer to contract upon terms already agreed, only requiring Atradius to accept the one outstanding term, the commencement date. Atradius counter-offered a different date which was immediately accepted by Leading Synthetics.

40 Atradius argues that it is wrong to regard agreement to the remaining term as amounting to confirmation Atradius was willing to go 'on risk'. If that was enough to conclude the agreement, it says, there would never have been any point in stipulating there could be no commitment until Atradius had also confirmed it was on risk. Atradius emphasised it had been at pains to make it clear that consensus alone was not enough.

41 This argument overlooks the special nature of the last remaining term to be agreed, and the context of urgency in this particular case. The request-to-issue letter (the wording of which was drafted by Atradius) concluded by Leading Synthetics asking that Atradius advise it was 'on risk as from the requested policy commencement date'. The identification of an agreed policy commencement date and the confirmation of being on risk were then intertwined.

42 When O'Doherty responded at his first opportunity by asking that Leading Synthetics agree to commence the contract on a different date, a reasonable person in Leading Synthetic's position would understand that Atradius was saying, in effect, 'we are not prepared to go on risk on the day you propose, but we will go on risk on this new date if you agree'. The rapid responses of Atradius to Leading Synthetic's various communications, in the context of the cover being requested on 21 April 'immediately', convey the message that it was cooperating to put cover into place immediately. In my view, the emails of 28 April served two purposes - they constituted the completion of agreement on all terms, and also the insurer's advice that risk commenced.

43 For these reasons I find that a contract of insurance was concluded between Atradius and Leading Synthetics on 28 April 2008 upon the terms set out in the specimen policy and the NBI of 24 April, supplemented by the agreement that 1 April be the commencement date.

44 The broker argued 28 April as the commencement date for contract. Leading Synthetics argued that it could either be 28 April or 5 May, or even 9 May when Atradius failed to say in an email on that date that it had a different understanding to the one set out by Peck in his 5 May email. The better view is that the contract was concluded on 28 April. If it was not concluded on 28 April, Peck's 5 May email could hardly stand as the insurer's confirmation it was on cover, and mere silence to that 5 May email (in its response of 9 May) did not do so either.[5]

45 The 5 May email assumes much greater significance in the argument on estoppel, to which I now turn.

Is Atradius estopped from denying the contract was made?

46 Both the broker and Leading Synthetics rely on an estoppel. The species of estoppel invoked is equitable estoppel as described in Waltons Stores (Interstate) Ltd v Maher.[6] Each rely on an assumption they say was engendered by Atradius' failure to respond to the 5 May email.

47 Essentially, they allege that (1) Peck and Chew assumed that insurance had been placed; (2) Atradius induced that assumption; (3) Leading Synthetics refrained from obtaining other insurance because of its assumption; (4) Atradius knew (or ought to have known) that it would do so; (5) Leading Synthetic's failure to obtain other insurance has caused it detriment; and, (6) Atradius has failed to avoid it suffering that detriment.

48 These six allegations reflect the six elements for equitable estoppel spelt out by Brennan J in Waltons Stores.[7] Of those elements only three were in dispute: namely, whether Chew or Peck actually assumed that insurance had been placed, whether Atradius induced that assumption, and whether Atradius knew or ought to have known that Leading Synthetics would refrain from obtaining alternative insurance. Atradius otherwise conceded allegations (3), (5) and (6) above.

49 I deal first with the question whether Peck and Chew assumed that insurance had been placed on and after 5 May 2008.

50 Atradius argued that, despite Peck and Chew saying in the witness box that they did assume insurance had been put in place, I should not accept that evidence. It points to a number of factors. It argues that Peck did not inform Chew that insurance was in place, which is inconsistent with the claimed belief. Because of the Resilux transaction, and the NBI, it says Peck would have known there could be no cover without an 'on risk ' letter. Further, it argues, Peck and Chew would not believe insurance was in place without a policy, schedule or invoice having been issued. It points to Peck's first email to Atradius on 10 November 2008, when the problem arose, which it claims is inconsistent with Peck believing insurance existed. Finally it argues that the fact that Leading Synthetics first sued Austbroker for failing to effect insurance, and only added a claim against Atradius later when Austbroker defended the proceeding, is inconsistent with a belief that cover had been effected.

51 Peck gave evidence that he did assume that cover was in place for Signum before 5 May and, in my view, he was not sufficiently shaken in cross-examination on his evidence for me to disbelieve him.

52 Further, the 5 May email itself confirms that Peck held that assumption. A lot of attention was, naturally, given to the words of his email and the juxtaposition of what was said about Signum and what was said about other risks. Atradius contrasted the unqualified statement about Resilux, 'cover placed', with the qualified statement about Signum, 'cover placed awaiting outcome on others prior to processing'. However, it seems clear to me that whatever steps Peck might have thought needed to be undertaken before the policy would be actually produced, he believed that Atradius was on risk for Signum. Peck said he believed that other buyers could simply be added to the Signum policy if those buyers were to be insured. Although Atradius challenged him on that belief, I see no reason not to accept it.

53 Atradius' argued that the words used for Signum in the 5 May email meant that cover was 'ready to go' but was awaiting the outcome of other risks before being put in place. As submitted by Austbrokers, Atradius' argument means that one needs to read the words 'cover placed' as meaning 'cover not placed' - a meaning one would hesitate to adopt. The words of the email corroborate Peck's evidence that he believed that insurance cover was in place for the Signum risk on 5 May.

54 And, for reasons I have largely explained when dealing with the contract issue, I do not think that the absence of an explicit 'on risk' letter must preclude acceptance of Peck's belief that insurance was in place. As I have pointed out, Peck's conduct and communications in the Resilux transaction did not demonstrate that he understood that a particular form of confirmation from Atradius was critical before cover was bound. Just as a reasonable person was likely to have concluded that cover was in place following the emails of 28 April, I find that Peck actually reached that conclusion himself.

55 Chew also said he believed insurance was in place. Although Peck himself could not recall informing Chew that cover was in place, Chew said that Peck did tell him, albeit that he could not state the precise conversation. That is hardly surprising. The events were approximately three years old at the time of trial and, without a written record, none of the parties were likely to recall precise details of particular conversations without there being something particularly memorable. Chew was cross examined about his belief and his recollection of Peck telling him insurance was in place. His version of events was not undermined, and his later conduct in allowing Leading Synthetics to continue to trade heavily with Signum and not pursuing any other cover for the risk, when it had been an urgent requirement to obtain such cover, is not easily explicable except by reference to the belief he claimed.

56 Should I find that later events demonstrate that Peck and Chew did not maintain their belief?

57 It is true that Peck did not attend to steps that would be expected after insurance was arranged: that is, following up the delivery of the policy, invoicing his client for premium and passing it onto the insurer. The challenge put to him about the absence of these steps relied upon a syllogism, for example: 'if you had believed there was insurance you would have sent an invoice; you did not send an invoice; therefore you did not believe there was insurance.' This formulation is not convincing, nor is it logically watertight. Another possible, and in my view more plausible, explanation for Peck not sending an invoice, was the one he in fact gave - that is, he forgot. Peck frankly admitted his oversight in not following up the various things which he had to do, and that explanation was plausible.

58 The same applies to variations of the same syllogism which Atradius put to both Peck and Chew in relation to the absence of the policy. On Chew's part, he was in the process of negotiating to arrange a number of insurances, and he had a broker looking after the task who, in due course, would be expected to obtain and send all relevant documents. With the passage of time particular documents could easily be overlooked which is what I find occurred in the case of the Signum policy.

59 I do not consider that the conduct of either Chew or Peck in November 2008, when it was discovered that Signum was likely to be insolvent, contradicted their belief that insurance was in place. Atradius was most concerned about the diffident email Peck sent to Atradius on 10 November in which he did not positively assert the existence of a policy. However, a few days earlier he had a conversation with Chew in which he had advised Chew to make a claim against Atradius in relation to Signum. The email of 10 November is not inconsistent with Peck's asserted belief but, rather, portrays a somewhat embarrassed broker pointing out to Atradius the likely explanation why no policy documents existed to support the contract that was made.

60 Finally, in the face of more direct evidence of the relevant parties' beliefs, I do not regard the fact that Leading Synthetics initially chose not to sue Atradius as being particularly persuasive against those beliefs. Leading Synthetics was in the position of not knowing precisely what occurred in exchanges between its broker and Atradius and, in my view, it is understandable that it might initially sue its broker given there was no evidence of the policy it claimed to have obtained.

61 The character of the inducement assumes a critical role in evaluating the claimed estoppel. Equity comes to relief when one party has played such a role in causing another to adopt an assumption, and to then act detrimentally because of it, that it would be unfair or unjust if the first party were left free to ignore it.[8] The role played by the inducing party in the adoption of the assumption influences the assessment of unconscionability, the avoidance of which is the foundation of the relief.

62 In that context Atradius emphasised that caution needs be exercised when the conduct of the defendant, relied upon as inducing the assumption, is silence.[9] It argued that it is often the case that silence will not be sufficiently clear or unambiguous to amount to conduct that would attract the relief; even more so when silence is in response to an ambiguous statement.[10]

63 Bearing in mind those observations and principles, I am nonetheless of the view that O'Doherty's silence in the face of Peck's 5 May email did induce Peck, and by him Leading Synthetics, to assume that the Signum cover was 'placed'. The 5 May email was not, as Atradius argued, 'hopelessly ambiguous'. The words 'cover placed' could only bear one sensible meaning and, in the circumstances that preceded it, only a careless reading of it would lead to a different conclusion.

64 It was not simply the absence of disagreement to Peck's stated understanding that induced the assumption that O'Doherty shared Peck's view about the Signum risk. It was also the fact that O'Doherty specifically addressed the other issues raised in that email in later communications, but conspicuously did not ever return to the issue of Signum. It was known to both that Leading Synthetics wanted Signum cover urgently and that O'Doherty was anxious to get all matters cleared up quickly because he was about to leave the company. The absence of any dissent, in those circumstances, implicitly represented that O'Doherty shared Peck's understanding that the Signum cover was in place.

65 Accordingly, I find that O'Doherty's silence in response to the statement concerning Signum in the 5 May email did induce the relevant assumption.

66 Closely related to the issue of whether one party induced the assumption by the other is whether the inducing party knew or ought to have known that the other would be induced by the conduct to adopt and act upon the assumption. The question whether the inducer's later departure from the assumption is unconscionable is related to the character of the conduct that induced the assumption. In turn, that assessment is influenced by the extent to which the inducer knew or, arguably, ought to have known the consequences of the conduct.

67 An issue of principle arises on the facts of this case. There is some uncertainty whether it is necessary to establish that the inducing party 'knew or intended' that the other party would adopt and act upon the assumption, as Brennan J said in Waltons Stores, or, as Deane J said in Verwayen, that the inducer 'knew... or clearly ought to have known' [11] that would be the consequence.

68 The Victorian Court of Appeal grappled with the distinction in New Zealand Pelt Export Co Limited v Trade Indemnity NZ Limited.[12] Nettle JA, with whom Ormiston JA and Hansen AJA agreed, ultimately did not have to decide the point because his Honour took the view that actual knowledge was established in that case. Nevertheless, after referring to the apparently divergent views of Brennan J and Deane J, his Honour said:

I add, however, that if it were necessary to make a choice, there are at least three reasons to prefer Deane J's formulation. In the first place, it is more consistent with the observations of Mason, CJ and Wilson, J in Walton Stores v Maher, that the principle which underlies High Trees estoppel is that the courts will grant relief to a plaintiff who has acted to his detriment on the basis of a basic assumption in relation to which the other party has played such a part in the adoption of the assumption that it would be unfair or unjust if left free to ignore it. That view accords with the broad general ground of estoppel that where one of two innocent parties must suffer, the loss should fall on him by whose indiscretion it was occasioned.[13] [Citations Omitted]

I do not set out the other two reasons which Nettle JA relied upon. For present purposes, it is enough to highlight his Honour's observation that unfairness or injustice might arise from the 'indiscretion' of one party.

69 In my view the preference expressed by Nettle JA, with the concurrence of the other members of the court, should, with respect, be adopted. The facts of this case make it clear why it is consonant with the underlying principle of guarding against unconscionable conduct to do so, as I will explain.

70 I am not convinced that O'Doherty did believe that either Peck or Chew knew that insurance was placed. On the other hand, he clearly should have known, and a reasonable person would have known, that Peck and Chew did hold the relevant assumption. If he had read the email carefully and had thought about the transaction history more carefully, he would or should have come to that conclusion. I have already discussed why that is so. In summary, a reasonable person would have realised that Peck and Chew believed cover was in place because Chew had wanted the insurance immediately, Atradius had responded immediately to the remaining commencement date issue on 28 April, and the 5 May email used the word 'placed'.

71 In the witness box O'Doherty was forced to say that he read the words 'cover placed' as meaning that 'cover was placed to an extent but ...'. The broker rather pointedly mocked that proposition as meaning one could have 'a bit of cover'.

72 Although I was urged to find that O'Doherty was dishonest and was seeking to cover up the fact that he really did understand that the insured thought they were covered, I think it more likely that he misunderstood the meaning of the 5 May email and, in a rush to get all of his business tidied up by 23 May, he simply did not pay enough attention either to that email or to the previous course of dealings he had with Peck about the Signum insurance. When giving his evidence he was clutching at straws to find a reasonable explanation as to why he did not appreciate in 2008 that the email meant the broker thought cover was in place. The fact that he was driven to such an implausible construction of the sentence, when giving evidence, rather highlights the unreasonableness of any alternative construction to the one propounded by the broker and the insured.

73 I was also urged to find that a copy of the 5 May email from Atradius' file, which had O'Doherty's contemporaneous ticks and crosses marked on it, indicated, because of the particular distribution of those marks, that in 2008 he had recognised that cover was in place for Signum. Again, I do not find this persuasive. Although O'Doherty himself prevaricated about the meaning of those ticks, I am not persuaded he did so dishonestly or that he did so in order to cover up dishonesty. I think it more likely that the ticks in 2008 meant no more than he had done all that he needed to do from an underwriter's point of view, and not necessarily that he agreed with the proposition in relation to Signum that cover was in place.

74 It follows that, although I do not find that O'Doherty knew that Leading Synthetics was relying upon the assumption that cover for Signum was in place, he clearly ought to have known. In my view, it makes little difference when assessing the unconscionability of Atradius' failure to honour the contract it caused Leading Synthetics to believe was in place, whether Atradius actually knew that Leading Synthetics assumed its existence, or merely ought to have known of that assumption, but, through its own carelessness, did not know.

75 It is difficult to see why Atradius' conduct is any less unconscionable, after it caused a proposed insured to act to its detriment, only because it paid so little attention to what was said that it carelessly missed what it clearly should have seen, and so failed to comprehend what the proposed insured actually meant.

76 For these reasons I find that the estoppel is made out.

Is Atradius entitled to any reduction of liability due to non-disclosure?

77 Section 21 of the Insurance Contracts Act provides:

(1) Subject to this Act, an insured has a duty to disclose to the insurer, before the relevant contract of insurance is entered into, every matter that is known to the insured, being a matter that-

(a) the insured knows to be a matter relevant to the decision of the insurer whether to accept the risk and, if so, on what terms; or

(b) a reasonable person in the circumstances could be expected to know to be a matter so relevant.

...

(a) failed to answer; or

(b) gave an obviously incomplete or irrelevant answer to, a question included in a proposal form about a matter, the insurer shall be deemed to have waived compliance with the duty of disclosure in relation to the matter.

78 Section 28 provides:

(1) This section applies where the person who became the insured under a contract of general insurance upon the contract being entered into-

(a) failed to comply with the duty of disclosure; or

(b) ...

...

(3) If the insurer is not entitled to avoid the contract [as is the case here]... the liability of the insurer in respect of a claim is reduced to the amount that would place him in a position in which he would have been if the failure had not occurred or the misrepresentation had not been made.

79 Principles relevant for determining whether there has been a non-disclosure by Leading Synthetics in the present case include that:

• The insured's duty of disclosure continues up to the date when the contract was entered[14] - in this case, 28 April 2008;
• The subject matter that must be disclosed is, first, limited to matters 'known to the insured' - that is, not what it should have known,[15] or should have inferred from other facts,[16] or might have suspected or merely believed;[17]
• In considering what matter the insured knows, or a reasonable person in the circumstances would know, to be relevant to the decision of the insurer, the inquiry is focused on the particular insurer making the decision;[18]
• In assessing what a reasonable person in the circumstances would know was relevant, questions asked or not asked by the insurer in the proposal form can be an important guide;[19]
• Matters relevant to the insurer's decision to 'accept a risk' does not invite inquiry upon the broader matter of the commerciality of the contract, or individual or emotional reactions to the question, but more narrowly on an assessment of the particular insurance hazard which is more susceptible of an objective assessment.[20]

80 Atradius argued that Leading Synthetics knew the recent payment history of Signum, and knew or ought to have known that a declining trend in timely payment revealed by that history was a matter that would be relevant to the decision of Atradius whether to accept the Signum risk.

81 The payment history said to be relevant was the growing period of delay between the date of invoice and payment in the period between January 2007 and April 2008. That payment history is shown on the table below. What is to be borne in mind is that Signum's permitted credit terms were 60 days, and the 'maximum extension period' proposed under the insurance was a further 60 days, that is, making a total of 120 days after invoice.

82 The payment history was as follows (with two of the more important invoices highlighted):

83 In final submissions, Atradius contended that, at 28 April 2008, Leading Synthetics would have known:

(a) The November invoice (18647) had been paid a little more than 60 days beyond terms;

(b) The December invoice (18680) was nearing 60 days beyond terms and would not be paid until it was beyond 60 days;

(c) The January 2008 invoice (18724) was already nearing 30 days overdue;

(d) No payments had been made in February 2008; and

(e) From March 2008 Signum had commenced making its payments by instalments.

84 It was put to Chew that he knew each of these matters and knew they would be matters relevant to Atradius' decision whether or not to accept the Signum risk. Chew denied knowing at any time before 28 April 2008 that any Signum payment had exceeded 60 days beyond usual terms. His evidence was that he had always believed they had been paid within 120 days of invoice, albeit that the November invoice had been very close to that mark.

85 However, the table above reveals that the November 2007 payment had been made one or two days over the 120 days, depending upon how the calculation is made. It is also apparent that the December invoice was, in late April 2008, going to be made very close to, if not just over, 120 days.

86 When examining the accounts it is evident that invoices were raised, and payments were generally made, at the beginning and end, respectively, of calendar months. I think it not only plausible, but probable, that for these purposes Chew reckoned calendar months as the average equivalent of 30 day periods and, observing that Signum had generally maintained its payments on or before the end of the relevant calendar months, he honestly believed Signum had not exceeded 120 days. In any event, there was such little margin in it, and it having only occurred once, I am unable to conclude that he actually knew of an occasion of any payment exceeding 120 days.

87 The real question is whether Chew knew, or a reasonable person in the circumstances would have known, that Signum's payment performance up to 31 March 2008, assuming (as I do) a belief that the November invoice had been paid just within 120 days but not over it, to be a matter relevant to Atradius' decision to accept the Signum risk.

88 Chew (and thus Leading Synthetics) knew that the insurer was particularly concerned with debts outstanding more than 60 days beyond the due date (ie. 120 days after invoice). This knowledge stemmed from two sources: first, because Leading Synthetics had specifically requested that the Signum insurance be quoted on the basis of a maximum extension period of 60 days (being 60 days beyond the usual trading terms); and, secondly, because by its proposal form Atradius expressly asked the proponent to answer this inquiry: 'Please complete the following details if the company has any bad debts or outstanding amounts older than 60 days after the due date'.

89 While questions asked or not asked in the proposal form are a guide to an insured (and a reasonable person) as to those matters in which the insurer is likely to be interested when making its decision, they do not necessarily set the boundaries of what a reasonable person would know to be relevant to the insurer's decision. For example, even though the insurer may not ask in the proposal: 'is the buyer's payment behaviour demonstrating any serious deterioration or otherwise signalling the development of payment difficulties?' - generally, the reasonable proponent for credit risk insurance is likely to understand that either of those two circumstances would be relevant to the insurer in deciding whether or not to take on insurance risk.

90 On the other hand, a proponent of insurance who understood that the policy provided for automatic stoppage of cover if, after inception, the buyer failed to make a payment more than 60 days after the due date (as was the case with Atradius' policy), might reasonably think that the insurer would feel itself protected even if the buyer's trading behaviour was showing some signs of deterioration in the recent past.

91 Bearing these matters in mind, and having regard to Chew's evidence and responses to cross-examination, I am not persuaded that Chew knew that the fact that Signum had traded (or was trading) close to or on the margins of 60 days after the due date in one or two recent instances, to be a matter relevant to Atradius' decision whether to accept the risk or as to the terms of doing so. Nor do I think that a reasonable person in the circumstances would have thought it to be so relevant.

92 It is true that the evidence showed that the past 10 or 11 months of payments consistently exceeded the 60 day trading terms, that there had been a failure to make a payment in February, and the most recent two payments were then at or about 120 days. But, because it was not revealed in the evidence what the trading history had been prior to January 2007, it was not all clear that any systemic trend of payment deterioration was developing by April 2008. That only became clear in the following months. Without some specific measure of payment performance being defined, it is asking a lot of a proponent for credit risk insurance to divine the particular perception of payment deterioration or difficulty with which a particular insurer may be concerned.

93 In this context it is of particular significance that the insurer asked questions on this very topic of payment performance but confined its attention to whether there were any debts outstanding more than 60 days after the due date.

94 Chew, and the reasonable person, would in my view have understood that the insurer had drawn a line at 60 days after due date as marking the point at which it might develop a concern which might lead it not to offer insurance. An insured has to make a decision based upon some criteria as to what it thinks the insurer would be interested in. It cannot be open ended. In my opinion it was quite reasonable in the circumstances for the insured to regard the 60 days after due date as being the defined point at which the insurer interest was triggered. It does not assist Atradius' case that its proposal contained the 'catch-all' question: 'is there any additional information you should disclose to us to help us to assess the risk?' It merely begs the question posed by s 21(1) of the Act.

95 Even if I had been persuaded the payment history ought to have been disclosed, in my view the insurer has not discharged its burden in persuading me that it would have declined the insurance had it been informed of the features of the trading history which are now evident. I agree with submissions made by Leading Solutions that there was a healthy degree of 'hindsight' being applied by the insurer in saying now that it would have declined insurance for that reason.

96 I also accept that it is more likely that O'Doherty, rather than his superior Mary Ibrahim, would have made the decision to accept or decline insurance had these matters been disclosed, just as he did in the case of Resilux. This would make it all the more likely that insurance would have been accepted despite disclosure of the payment history depicted above.

97 As he frankly conceded, O'Doherty was keen to place business and get policies for his employer and perhaps had a less prudential attitude than did Ibrahim. An insurance officer in his position would have weighed such risks as were revealed by the payment history against other factors including the long trading history between Leading Synthetics and Signum; the apparently good financial position of Signum; the fact that Leading Synthetics was seeking to place insurance for a number of its buyers with Atradius, a number of which were still in the pipeline; and the protection afforded to Atradius by the automatic stoppage of cover clause (to which I will refer in greater detail shortly). Finally, even if it was Ibrahim who made the decision I am not persuaded by her evidence that she would have declined the policy either.

98 I should mention that Atradius pleaded, but did not press, an argument that Leading Synthetics ought to have disclosed Signum's failure to pay the 2002 pallet debt. In my view it was correct not to press that argument. The pallet debt assumes greater importance to the issue to be discussed next.

99 In conclusion, on the non-disclosure issue I do not accept that Leading Synthetics failed to comply with its duty of disclosure under s 21 of the Act so as to engage the remedy for Atradius under s 28 to have its liability reduced. In any event, even had I concluded Leading Synthetics had failed in its duty to make disclosure I would not have found that it entitled Atradius to any reduction of liability because Atradius would likely have accepted the risk on the same terms if compliant disclosure had been made.

Was cover suspended because of the outstanding pallet 'receivable'?

100 In April and May 2002 Leading Synthetics raised a number of invoices against Signum that, as at April 2008, remained unpaid. Chew's evidence in relation to these invoices was as follows:

In 2002 Signum Specialities owed Leading Synthetics $957. Leading Synthetics on occasion charged its customers for use of wooden pallets on which its resins are delivered. If the pallets are returned, then the charges are reversed. To my knowledge this is a common process. Signum Specialities has been charged the total sum of $957 because it has not returned some pallets. I was never aware of this small charge but I now know that Leading Synthetics wrote it off in June this year (2010). The company went into liquidation [sic] it was apparent that Leading Synthetics was never going to get either its money or its pallets back.

101 One of the applicable terms of Atradius' credit risk policy provided:

Automatic Stoppage of Cover

Cover shall not apply in respect of any loss you may sustain in relation to goods despatched or, in the case of work or services, invoices submitted after the date of any of the following circumstances of Automatic Stoppage of Cover:

(a) Payment of any receivable is still overdue from the Buyer at the expiry of the maximum extension period specified in the Policy Schedule. As soon as such receivable is paid, cover shall be reinstated for goods despatched or, in the case of work or services, invoices submitted after the date of payment, provided no other circumstance of Automatic Stoppage of Cover applies.

(b) You have placed for collection amounts owing to you from the Buyer. As soon as these amounts are paid, cover shall be reinstated for goods dispatched or, in the case of work or services, invoices submitted after the date of payment, provided no other circumstances of Automatic Stoppage of Cover applies.

(c) The Buyer's Insolvency or

(d) We withdraw the Credit Limit Decision for the Buyer or withdraw cover in respect of the country of the Buyer."

[Emphasis added]

102 The 'maximum extension period' is a value to be found in the policy schedule. In this case, the parties had agreed that value to be 60 days. Another use for that value in the policy was in connection with the permitted extensions of time for payment the insured could allow the buyer, under this provision:

Extending the due date for payment

If the need arises, you may agree to or allow extensions of the original due date of payment for a receivable provided that these extensions do not exceed the maximum extension period specified in the Policy Schedule, which is calculated from the original due date of payment for the receivable.

103 The insured was required to notify Atradius, within 30 days, if payment of any receivable was overdue from the buyer at the expiry of the maximum extension period, unless that receivable was paid within those 30 days.

104 It therefore seems apparent that the object of paragraph (a) of the Automatic Stoppage of Cover provision was to prevent an insured who had the benefit of the credit risk insurance from continuing to supply product to a buyer, at the insurer's risk, while at the same time abandoning normal prudential practices such as refusing to supply the buyer until trading terms were normalised.

105 Atradius argued that a clear application of paragraph (a) meant that, because the pallet debts of 2002 were unpaid at the commencement of the policy in 2008, no cover existed for any receivable arising upon the supply of product to Signum thereafter until such time as the pallet debt was paid. So, it argued, because the 2002 invoices for $957 remained unpaid, the $2.265million debt for product supplied from May 2008 onwards was not covered by the insurance.

106 Leading Synthetics met that argument with the following three propositions:

(a) The 2002 invoices did not give rise to a genuine 'receivable' because those invoices were purely notional, the charges were to be reversed if the pallets were returned and there was no genuine expectation that the money would ever be paid;

(b) Properly construed with the objects of the insurance in mind,[21] the Automatic Stoppage of Cover provision did not apply to the 2002 pallet debts; and

(c) Section 54 of the Act operates, in the circumstances, to preclude the insurer from refusing to pay the claim in reliance upon the provision.

107 Dealing with the first, although it may be possible in certain circumstances for an insured to establish that a debt from a customer, carried in the books of the insured, was not a genuine receivable, I do not think that the evidence in this case enables me to reach that conclusion. Chew did not say that he did not expect the money to be paid. The inference from his statement that, if the pallets were returned, the charges would be reversed, tends to suggest that the charge remained due and payable until such time as the pallets were returned.

108 On the other hand, I accept the second argument that, properly construed, this provision does not have the operation for which Atradius contended. It is settled law that a policy of insurance is a commercial contract to be given a business like interpretation taking into account the commercial circumstances which the document addresses and the objects which it is intended to secure.[22]

109 I have identified above the mischief that I believe paragraph (a) of the provision is directed to prevent. The fact that a proposed insured has allowed a debt from a buyer to remain long-outstanding, before inception of the policy, is not a manifestation of that mischief - that is, it does not bespeak any abandonment of prudential standards because the debt has become insured. The insurer has its remedies in relation to such unpaid debts through its requirements for disclosure in a proposal, and otherwise by its remedies for misrepresentation or non-disclosure under the Act. Moreover, if Atradius' interpretation is accepted it would mean that, despite having accepted the risk in circumstances where no misrepresentation or actionable non-disclosure arises, the insurer can nonetheless deny the insured the benefit of the very cover it has contracted to provide.

110 These considerations of commercial object and purpose suggest that the proper interpretation of clause (a) of the Automatic Stoppage of Cover is to confine the meaning of 'receivable' to a receivable that first arises after the commencement of the policy. That is to say, the clause only operates upon future receivables and not past receivables.

111 Further support is gained for that interpretation from the text of the clause itself. The stoppage of cover only operates if a receivable is still overdue from the buyer at the expiry of the maximum extension period. The expression, 'maximum extension period', only has meaning under the terms of the policy. Until the cover commences there is no 'maximum extension period' for any receivable incurred in the past. It makes no sense to speak of such a period for a receivable outside the context of the policy. Accordingly, it is implicit in the text that stoppage of cover only operates when some receivable to which the notion of a 'maximum extension period' applies, is still overdue at the expiry of that period. In my view, consonant with the objects of the clause, notions of 'maximum extension period' can only apply to receivables that arise from product supplied after policy inception because it is only such receivables to which that period can have a meaning. Such a construction means that the clause does not apply to the 2002 pallet invoices.

112 If I am wrong on this interpretation there remains the question whether s 54 of the Act operates to preclude Atradius from denying cover in this case. Arguably, it was the omission by Signum to pay the $957 debt, after the policy was entered, that enabled Atradius to refuse to pay Leading Synthetics' claim, and that s 54(1) and (6)(a) were engaged. Further, it is unlikely that the failure by Signum to pay the $957 for the 2002 pallet debt could reasonably be regarded as causing or contributing to the $2.265million loss incurred from the supply of product between May and November 2008. Therefore it is arguable that no part of Atradius' liability should be reduced because its interests have not been prejudiced as a result of Signum's failure to pay the $957.

113 Leading Synthetics did not plead its reliance upon s 54 of the Act. Little attention was given in submissions to the argument and no authority was cited. In those circumstances, and having reached the decision I have on construction of the relevant provision, I do not find it necessary to determine this particular issue.

114 For those reasons I reject Atradius' argument that the Automatic Stoppage of Cover provision applies.

(a) The contract of credit risk insurance was made between Atradius and Leading Synthetics on 28 April 2008;

(b) Even if that were not so, Atradius is estopped from denying that such a contract of insurance was made;

(c) Atradius is not entitled to any reduction of liability due to the alleged non-disclosure of matters pertaining to Signum's payment performance; and

(d) Cover under the policy was not suspended due to the outstanding pallet receivable.

116 In those circumstances the liability of Austbrokers for loss sustained by Leading Synthetics does not arise.

117 It only remains for me to determine the quantum of the indemnity. It is not disputed that the policy provided that the amount payable was the insured percentage (90 percent) of the insured loss ($800,000), a total of $720,000. From that sum there needs to be deducted the amount Leading Synthetics would have had to pay by way of premium, GST, stamp duty and commission. Although the totality of that sum was never actually quantified in the documents between the parties I find that sum to be $15,000. Accordingly, I assess Leading Synthetics' net loss to be $705,000.

118 I will hear the parties on the question of interest and costs.

[1] Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165, 179 [40]

[2] Challenge Charter Pty Ltd v Curtain Bros (Qld) Pty Ltd [2004] VSC 1, [95] (Gillard J); Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833; (2001) 117 FCR 424, [364] (Allsop J); ABC v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540, 550 (Gleeson CJ).

[3] Paragraph [3] above.

[4] 'Closing' being a reference to a broker's statement in settlement of the transaction.

[5] Challenge Charter Pty Ltd v Curtain Bros (Qld) Pty Ltd [2004] VSC 1, [106].

[6] [1988] HCA 7; (1988) 164 CLR 387 ('Waltons Stores').

[8] Commonwealth v Verwayen (1990) 170 CLR 394_,_ 445 (Deane J); Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387, 404 (Mason CJ and Wilson J).

[9] Moratic Pty Ltd v Lawrence James Gordon [2007] NSWSC 5, [29].

[10] Woodhouse AC Israel Cocoa Ltd SA v Nigerian Produce Marketing Co Ltd [1972] AC 741, 775-6

[11] Commonwealth v Verwayen (1990) 170 CLR 394_,_ 445 (Deane J).

[12] [2004] VSCA 163; (2004) 13 ANZ Ins Cas 61-626.

[14] Prime Forme Cutting Pty Ltd v Baltica General Insurance Co Ltd (1990) 6 ANZ Ins Cas 61-028.

[15] DellaVedova v H I H Casualty & General Insurance (1997) 9 ANZ Ins Cas 61-383; Prime Forme Cutting Pty Ltd v Baltica General Insurance Co Ltd (1990) 6 ANZ Ins Cas 61-028; Advance (New South Wales) Insurance Agencies Pty Ltd v Matthews (1987) 4 ANZ Ins Cas 60-813, 74,998;

[16] Midaz Pty Ltd v Peters McCarthy Insurance Brokers Pty Ltd (1998) 10 ANZ Ins Cas 61-394, [1999] 1 Qd R 279.

[17] Permanent Trustee Australia Ltd v FAI General Insurance Co Ltd (1998) 10 ANZ Ins Cas 61-408, 74,525 (Hodgson J); Permanent Trustee Australia Ltd v FAI General Insurance Co Ltd (in liq) [2003] HCA 25; (2003) 214 CLR 514; Australian Casualty & Life Ltd v Hall (1999) 151 FLR 360.

[18] Burns v MMI-CMI Insurance Ltd (formerly known as Chamber of Manufacturers Ltd) (1994) 8 ANZ Ins Cas 61-287; Permanent Trustee Australia Ltd v FAI General Insurance Co Ltd (in liq) [2003] HCA 25; (2003) 214 CLR 514, 544 [70].

[19] Ayoub v Lombard Insurance Co (Aust) Pty Ltd (1989) 97 FLR 284, 296; Thompson v GIO (NSW) Insurance (Unreported Supreme Court of New South Wales, Rolfe J, 15 June 1994) 64. Ayoub v Lombard Insurance Co (Aust) Pty Ltd was cited with approval in Permanent Trustee Australia Ltd v FAI General Insurance Co Ltd (in liq) [2003] HCA 25; (2003) 214 CLR 514.

[20] Permanent Trustee Australia Ltd v FAI General Insurance Co Ltd (in liq) [2003] HCA 25; (2003) 214 CLR 514, 532 [32].

[21] McCann v Switzerland Insurance Australia Ltd [2000] HCA 65; (2000) 203 CLR 579.