RESOLUTION OF THE APPEAL
52As Optus submitted and Atradius accepted, Atradius had the legal onus of satisfying the Court that it would not have issued the subject insurance policy if the relevant misrepresentation/non-disclosure had not occurred and that s 28(3) of the Insurance Contracts Act therefore applied to defeat Optus' claim. Nevertheless, as Meagher JA pointed out in this Court's earlier judgment (see [44] above), Optus had an evidentiary burden of establishing that it would have provided information to Atradius to attempt to explain the position in relation to the BXP payment plans. In my view this evidentiary burden extended to identifying the content of the information that Optus would have provided.
53The term "evidentiary burden" or "evidential burden" may be used in a number of different senses. In Strong v Woolworths Ltd [2012] HCA 5; 246 CLR 182, Heydon J described the sense relevant to the present case as follows:
"53. In the second sense, 'evidential burden' refers to circumstances in which a plaintiff calls evidence sufficiently weighty to entitle, but not compel, a reasonable trier of fact to find in the plaintiff's favour. There is then said to be an 'evidential burden' in the sense of a 'provisional' or 'tactical' burden on the defendant: if the defendant fails to call any or any weighty evidence, it will run a risk of losing on the issue - that is, a risk that at the end of the trial the trier of fact will draw inferences sufficiently strong to enable the plaintiff to satisfy the legal (ie persuasive) standard of proof. The 'provisional' or 'tactical' burden raises the question whether a defendant should as a matter of tactics 'call evidence or take the consequences, which may not necessarily be adverse'" (citation omitted).
54This evidentiary burden was referred to by the plurality in Purkess v Crittenden [1965] HCA 34; 114 CLR 164 at 168 as "the burden of proof in the sense of introducing evidence". Their Honours instanced its operation by referring to the earlier decision in Watts v Rake [1960] HCA 58; 108 CLR 158 in the following terms:
"We understand that case to proceed upon the basis that where a plaintiff has, by direct or circumstantial evidence, made out a prima facie case that incapacity has resulted from the defendant's negligence, the onus of adducing evidence that his incapacity is wholly or partly the result of some pre-existing condition or that incapacity, either total or partial, would, in any event, have resulted from a pre-existing condition, rests upon the defendant" (ibid).
55Their Honours went on to say, with reference to Watts v Rake:
"It was, in effect, pointed out that it is not enough for the defendant merely to suggest the existence of a progressive pre-existing condition in the plaintiff or a relationship between any such condition and the plaintiff's present incapacity. On the contrary it was stressed that both the pre-existing condition and its future probable effects or its actual relationship to that incapacity must be the subject of evidence (i.e. either substantive evidence in the defendant's case or evidence extracted by cross-examination in the plaintiff's case) which, if accepted, would establish with some reasonable measure of precision, what the pre-existing condition was and what its future effects, both as to their nature and their future development and progress, were likely to be. That being done, it is for the plaintiff upon the whole of the evidence
to satisfy the tribunal of fact of the extent of the injury caused by
the defendant's negligence" (ibid).
56In the present case, Atradius led evidence that if Mr Magee had known of the payment plans entered into between Optus and BXP, he would not have approved issue of the subject trade credit policy to Optus in the absence of Optus satisfying him of certain identified matters. Optus ran the risk that if it did not lead evidence of matters that it would have put before Atradius to attempt to persuade it to issue the policy notwithstanding the existence of the payment plans, the Court might accept Mr Magee's evidence and conclude that Atradius' defence succeeded. Understandably, Optus sought to guard against this possibility by calling (through Mr Naven and Mr McQuade) evidence that it would for this purpose have submitted identified material to Atradius. In the absence of evidence that Atradius would in August 2007 have had access to further material that Optus was not able to access in 2012 for the purpose of the present proceedings, the material in Mr Naven and Mr McQuade's affidavits represented the ambit of the material required to be considered by the Court when determining whether Atradius had discharged its legal burden of making good its defence.
57Optus adduced the evidence from Mr Naven and Mr McQuade referred to in [26]-[30] and [35] above. Mr Naven's evidence (the primary judge and the parties accepted that Mr McQuade's evidence added nothing significant to Mr Naven's evidence) identified the additional information that he would have sought to acquire to enable preparation and presentation to Atradius of an analysis of BXP's financial position. This included information that he would have requested from BXP. In his affidavit, Mr Naven went on to assume that BXP would have provided him with two identified financial statements (see [28] above). Likewise, he said that he would have sought information about BXP and Optus' trading history. He then identified the information contained in Ms Hookey's report as that which would have satisfied his enquiry (see [29] above).
58Contrary to Optus' submission on appeal, the primary judge was in my view entitled to treat the information that would have been obtained by Atradius for the purpose of considering the significance or otherwise of the Optus/BXP payment plans as that identified by Mr Naven. As I have said, Optus had an evidentiary onus to identify the information that it would have provided to Atradius. It sought to do this through Mr Naven and Mr McQuade. I do not consider that Optus can reasonably contend that there was, or may have been, other information that Atradius might itself have obtained from BXP (or elsewhere) that might have impacted on Atradius' decision. In preparing its case, Optus had the opportunity to obtain from BXP or its former officers, whether by way of subpoena or otherwise, such information as might have been relevant. Atradius was entitled to present its case on the basis of the information that Optus identified.
59In my view the primary judge was correct to conclude that Mr Naven's evidence represented "the best case that Optus could put forward to persuade Atradius to accept the risk, in the light of the (hypothetically disclosed) existence of three payment plans ... " (Judgment [116]). I am fortified in that conclusion by the absence of questions put to Mr Magee in cross-examination suggesting that there might have been available other identified information that might have affected his conclusion.
60Optus submitted that the fact that Mr Magee did not say in his second statement of evidence that the third (and presumably also the second) of the conditions he had stipulated in his first statement (see [24] above) would have remained unsatisfied in the hypothetical situation, notwithstanding the submission of material to the effect of Mr Naven and Mr McQuade's analyses, meant that that condition (or those conditions) should be regarded as satisfied (written submissions, [24]).
61However, the affidavits of Mr Naven and Mr McQuade did not expressly address those conditions and it was not suggested to Mr Magee in cross-examination that either the second or third condition (or indeed the first) would have been satisfied. The position was thus that Mr Magee had stated in his first statement of evidence that satisfaction of the conditions was essential, Optus' evidence at best addressed the questions only indirectly and in his amended first and second statements Mr Magee maintained his position that the policy would not have issued. Mr Magee's evidence, at least so far as it related to those conditions, could not fairly be rejected in the absence of it being put to him in cross-examination that the conditions would have been satisfied and the reasons why that was so.
62At times in its submissions, Optus appeared to suggest that the report prepared by Mr Choo, the officer of Atradius responsible for monitoring the position of BXP (see [11] above), contained information favourable to Optus' position that was not in the affidavits of Mr Naven or Mr McQuade. However this submission, even if correct, cannot assist Optus because the relevant material was not put to Mr Magee in cross-examination with reasons as to why, contrary to Mr Magee's evidence, it would have caused him in August 2007 to approve the issue of the trade credit insurance policy to Optus.
63It follows that Optus' submission that the primary judge erred in excluding from consideration "the effect of any interaction between Ms Shaw, Mr Athaide, Mr Choo [on the one part] and BXP [on the other part]" (written submissions, [21(b)]) should be rejected. That interaction could only have been of significance to support Optus' case to the extent that it produced additional information that might have impacted on Atradius' decision. However, as I have said, if such information existed and might have been obtained by Atradius in August 2007 upon inquiry of Optus, it was for Optus to bring it forward in the proceedings. It was not for Atradius to prove the negative, that is, that no such further information would have been forthcoming.
64The other error in the primary judge's approach asserted by Optus in its written submissions is that that approach assumed "an exchange of information directly between [Mr Magee] and Mr Naven, without the input of Ms Shaw, Mr Athaide, Mr Choo and the [Local Credit Committee which] would never have occurred" ([21(a)]).
65This submission was supported by Optus' oral submission that, in order to discharge its legal onus, it was necessary for Atradius to lead evidence not only as to what the outcome of its deliberations would have been but also as to the process by which that outcome would have been achieved. It said that this was necessary because Mr Magee gave evidence that he would have had regard to the views of the other persons just referred to. Thus Optus contended that if there would have been "input" from other people material to the decision-maker's conclusion, it was necessary for the insurer to prove what that input would have been.
66These submissions were supported by reference to evidence that Mr Magee gave in cross-examination to the effect that he would have had regard to "input" from Mr Choo, Mr Athaide and the Local Credit Committee (see [40] above). However, in my view the effect of Mr Magee's evidence, when read as a whole, was that it was essentially for the provision of information and the analysis thereof (if Mr Magee did not himself undertake that analysis) that Mr Magee would have looked to these subordinate officers. It was not suggested to Mr Magee in cross-examination that if he had had as much information as they had and had the opportunity to analyse it that he would have allowed their views, or the view of one of those persons, to prevail over his own. It does not accord with common sense to contemplate that when Mr Magee was fully informed he would allow the views of his subordinates, on an issue assigned by the company structure to him as the senior credit underwriter, to prevail over his own.
67That is not to minimise the role of the subordinate employees. In many cases they would no doubt have provided information in the form of a summary upon which the senior officer would act with the assistance of the subordinates' views. In the absence of cross-examination providing a basis to conclude otherwise, common sense suggests that if in such a situation a subordinate's view differed from the senior officer's prima facie view, the senior officer would want to be apprised of the full set of facts founding the subordinate's view, so as to enable the senior officer to reach his or her own final conclusion.
68The hypothetical situation that Mr Magee dealt with in his evidence was analogous because he stated what his decision would have been upon the basis of the material identified by Mr Naven and Mr McQuade, which can be taken to be the whole of the material that favoured approval of the policy. It is a fair inference that if the issue had come to him as a result of advice from his subordinates recommending that the policy issue notwithstanding the payment plans, Mr Magee would have ensured that he had all of the information that they had and then made his own decision. The questions put to him in cross-examination did not postulate such a situation and nothing he said in cross-examination suggested that he would have acted otherwise in such a situation.
69Mr Magee accepted the proposition put to him in cross-examination that he was "heavily dependent upon the technical skills of [his] team to analyse the current information, being the accounts, plus any further information which might arise before the risk actually incepted" (Transcript p 273). This was consistent with his utilisation of his subordinates in many, if not most, situations to save him the time and effort of analysis. It did not involve an acceptance by Mr Magee that he did not have the skills to analyse the information himself if, as occurred for the purposes of his evidence, it was all put before him in detail. Indeed, his experience and seniority strongly suggested otherwise. The same comment may be made about his acceptance shortly thereafter in cross-examination of the proposition that the Local Credit Committee was "much better placed to assess [the] risk than [he], given their knowledge of the local conditions" (Transcript p 274).
70Mr Magee also accepted in cross-examination propositions that he was "not going to second guess the decision of the Australian Local Credit Committee" and that "if the Local Credit Committee of Australia remained comfortable with the risk in the light of any further information, that would have been a very significant factor in [his] thinking" (Transcript pp 273-4: see [40] above). However, neither these questions nor any others put to Mr Magee addressed the question, to which I have suggested above (see [66]) that there is a common sense answer, of whether Mr Magee would have accepted his subordinates' recommendations, if in conflict with his own prima facie view, without ensuring that he was apprised of the full facts upon which those recommendations were made and acting upon his own view after consideration of those facts.
71Contrary to Optus' submission, it was not incumbent upon Atradius to prove each step that would have been taken within its organisation in the hypothetical circumstance that s 28(3) of the Insurance Contracts Act required to be addressed. Section 28(3) does not specify any particular mode of proof that need be adopted by the insurer. It is sufficient for it to prove on the balance of probabilities what the outcome would have been in the hypothetical circumstance. Atradius did this.
72Optus submitted that the primary judge inferred that the evidence of Mr Athaide, Mr Choo and the members of the Local Credit Committee would have assisted Atradius' case, whereas he should have inferred, in accordance with the principles stated in Jones v Dunkel [1959] HCA 8; 101 CLR 298 at 308, 312 and 320-1, that it would not have assisted Atradius. Optus referred in this regard to Judgment [116], [119] and [120].
73However, the point that his Honour made in those paragraphs was that, by reason of the evidentiary onus on Optus to identify the information that would have been available to Atradius and Optus' attempt to discharge that onus through Mr Naven and Mr McQuade's evidence, the affidavits of those witnesses should be regarded as putting forward Optus' best case in this respect. As I have held (see [59] above), this approach was correct. It follows that there was no room for an inference that any of the subordinate officers might have been able to obtain any further relevant information to produce to Mr Magee.
74The primary judge did not, as Optus appeared to suggest, assume or infer that the subordinates would have recommended against issuing the policy. Nor did his Honour assume or infer that they would have recommended that the policy be issued. Rather, his Honour did not draw any positive inference about what their recommendations would have been. This was in conformity with Jones v Dunkel as he proceeded upon the basis that their evidence would not have provided positive assistance to Atradius' case, yet did not infer that their evidence would have been adverse to that case (Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11; 243 CLR 361 at [64]).
75There remained the question of whether, the principle in Jones v Dunkel apart, Atradius discharged its legal onus of proof despite not calling those subordinate officers to give evidence. However, as I have already indicated (see [66]-[68] above), its calling of Mr Magee as the ultimate decision-maker was sufficient to discharge that onus. The sufficiency of Atradius taking that course is able to be tested, as I have done, by asking whether, on the evidence as called, recommendations of the subordinates that the policy issue would, or might on the balance of probabilities, have led to Mr Magee making a different decision to that to which he deposed. My reasoning above indicates that that question should be answered in the negative.
76For the reasons I have given, Optus' two grounds of appeal (see [7] above) should be rejected. As to ground (a), the fact that Atradius did not call Mr Magee's subordinates to give evidence did not preclude it from discharging its onus of proving that s 28(3) of the Insurance Contracts Act was applicable. As to ground (b), the primary judge did not act contrary to the principle in Jones v Dunkel by inferring that the evidence that Mr Magee's subordinates would have given, if called to give evidence, would have assisted Atradius' case. As a result, the appeal should be dismissed with costs.
77MEAGHER JA: This appeal should be dismissed with costs for the reasons given by Macfarlan JA.
78SACKVILLE AJA: I agree with the orders proposed by Macfarlan JA and with his Honour's reasons.