Stevens v Colonial Mutual Life Assurance Society Ltd & Commonwealth Financial Planning Ltd

District Court of NSW|2012-07-03

Table of Contents Nature of case and background [1] - [10] Issues [11] - [13] Evidence overview and reliability of testimony [14] - [44] Facts [45] - [70] Issue 1 - Duty of care [71] - [82] Issue 2 - Avoidance of policy [83] - [106] Issue 3 - Representations and breach of duty [107] - [130] Issue 4 - Assessment of damages [131] - [132] Disposition [133] Costs [134] - [136] Orders [137]

Nature of the case and background 1These proceedings arise as a consequence of an employee of the Commonwealth Bank of Australia ["CBA"], seeking out and contacting the plaintiff, Mr Noel Stevens, a retail customer of that bank, by using details within the bank's customer data base, without prior solicitation from Mr Stevens, to target him for possible marketing of financial products available from within the array of business activities offered by the bank and other companies within the network of companies known as the Commonwealth Group of companies. 2The first defendant, Colonial Mutual Life Assurance Society Limited, trading as Comminsure, and the second defendant, Commonwealth Financial Planning Limited, are both member companies of the Commonwealth Group of companies. 3In the course of those events, Mr Stevens, who at that time already held a valid pre-existing policy of life insurance with Westpac, was persuaded by Mr Andrew Galloway (a financial planner employed by Commonwealth Financial Planning Limited, and who had internally been allocated to Mr Stevens from within the Commonwealth Group) to change his pre-existing life insurance arrangements with Westpac, by entering into a new life insurance policy with Colonial Mutual Life Assurance Society Ltd ["CML"] with the intention of then cancelling his pre-existing Westpac policy. 4Mr Galloway assisted Mr Stevens to complete the proposal for insurance with CML in a mechanised algorithmic process described as a "Write-Away" on-line underwriting system, which then accepted that proposal without any person carrying out an underwriting assessment. Thereafter, when Mr Galloway informed Mr Stevens his proposal for life insurance had been successfully processed and had been accepted by CML through that system, Mr Stevens then proceeded to cancel his pre-existing Westpac life insurance policy. 5Subsequently, when Mr Stevens was diagnosed to have a terminal illness and made a claim under the CML Comminsure policy, this insurer advised him that it had avoided the policy, due to what subsequently came to be characterised by the insurer as non-disclosures concerning health issues that were considered to have been material to the risk that was underwritten by the policy in question. 6As a result, Mr Stevens, who is presently being treated in a palliative care facility for the terminal phase of his pancreatic cancer, claims damages for the value of his cancelled policy, now valued at $298,511.00, plus pre-judgment interest. The claims are framed against each defendant alleging breaches of relevant duties of care owed by the respective defendants and for alleged misleading and deceptive conduct. 7The proceedings were initiated and conducted with some urgency in view of the illness of Mr Stevens. A short chronology of events follows. 8On or about 1 September 2011, Mr Stevens received his diagnosis of a terminal illness. On or about 10 November 2011, he made a claim for benefits under the life insurance policy issued by the first defendant. On 23 December 2011, the insurer declined his claim. On 26 April 2012, these proceedings were instituted on behalf of Mr Stevens. On 4 May 2012 an order was made expediting the hearing of the proceedings. On 11 May 2012, another Judge of this court, who is now no longer available to hear this case to conclusion by reason of his appointment to another court, took the evidence of Mr Stevens on commission at his home at a time when Mr Stevens was still sufficiently lucid to be in a position to give that evidence. The transcript of that evidence was tendered in these proceedings: Exhibit "A". 9The final hearing of these proceedings took place before me over the course of 6 days on 29, 30, 31 May, 1, 4 and 8 June 2012. Written submissions were finalised on 22 June 2012. On 25 June 2012, I was informed that Mr Stevens' condition of health had further declined, and he had therefore entered into a palliative care facility for the terminal phase of his life. 10Mr Stevens is entitled to know of the outcome of his proceedings before he dies. On that account, in delivering these reasons in a much shorter form and without inclusion of some of the references and citations that would otherwise have been customarily commensurate with the complexity of the issues to be determined, I trust my reasons adequately explain to the parties the basis for the conclusions I have reached. In reaching my conclusions, in the time available, I have given careful consideration to the evidence and to the submissions advanced on behalf of the parties, focussing the reasons for my decision on the matters that I consider to be pivotal to the outcome of the litigation.

Issues 11Before setting out the relevant facts, it is appropriate that I identify the issues to be determined in the proceedings. On the first and second days of the trial the parties were requested to identify the issues calling for decision: T3; T77. On the fourth day of the trial, the defendants provided a list of some 16 such issues: MFI "3"; T205. In my view, those issues can be conveniently distilled into the following four matters which draw the essence from that more expansive list: Issue 1 - Whether in the circumstances the defendants, or either of them, and therefore, Mr Galloway, owed the plaintiff a relevant duty of care, either under the general law or arising from relevant statutory provisions, and if so, the nature and content of such duties; Issue 2 - Whether in the course of the plaintiff submitting his proposal for life insurance to the first defendant, there were material non-disclosures on the part of the plaintiff concerning his health status and lifestyle and whether, as a result, the first defendant was justifiably entitled to avoid the policy of life insurance it had issued to the plaintiff on 13 October 2010; Issue 3 - Whether, as a result of representations made to the plaintiff by Mr Galloway, either of the defendants were in breach of any duties owed to the plaintiff, and if so, in what respects and whether the representations made to the plaintiff by Mr Galloway on behalf of the second defendant, were in any relevant sense misleading and deceptive; Issue 4 - The assessment of any entitlement of the plaintiff to damages. 12In the course of the oral evidence, issues arose as to the credibility and the reliability of testimony, particularly that given by Mr Stevens, and his daughter, Ms Teghan Couper. The reliability of the evidence of the Commonwealth Group's employed financial planner, Mr Galloway, was also challenged on behalf of Mr Stevens. That evidence stands to be assessed in the light of an absence of recollection on the part of Mr Galloway of the relevant events. Mr Galloway's evidence was based upon what were described as the usual practices he employed at the time of the relevant events, and upon the documents that had been created surrounding his dealings with Mr Stevens. 13It is therefore appropriate that those matters be given consideration in the context of an overview of the evidence before embarking on the consideration of the issues that I have identified.

Evidence overview and reliability of testimony 14On 8 May 2012 Mr Stevens swore an affidavit, which was read in the proceedings. At that time he was lucid and believed his recollection was accurate. That affidavit, which numbered some 87 paragraphs, and comprised the Exhibits marked in the series MS1 to MS8, was obviously prepared over the course of time beforehand, with the assistance of his solicitor. 15The structure of the affidavit of Mr Stevens was as follows: (a)his personal work, health and family history : paragraphs [1] to [15]; (b)his contract for life insurance with Westpac : paragraphs [16] to [19]; (c)his recollection of the events of September 2010, and of being approached by a customer service support officer which I infer was Mr Rowley from the Commonwealth Bank, his subsequent attendance at the Frankston branch of the bank at which time he was introduced to and dealt with the Commonwealth Group's financial planner, Mr Galloway, and the discussions and representations Mr Galloway had with him, which he claims induced him to change his existing life insurance arrangements : paragraphs [20] to [53]; (d)his recollection of the events of October 2010, which involved his subsequent dealings with Mr Galloway that led to the completion and ultimate submission to Comminsure, of the proposal of insurance in question in these proceedings, the completion of the related paper work, and the consequential cancellation of his pre-existing Westpac policy : paragraphs [54] to [78]; (e)the events concerning his receipt of Comminsure documents, the insurance policy in question in these proceedings, his subsequent diagnosis with pancreatic cancer, his claim on the insurance policy and the rejection of his claim on the ground that the insurer considered itself entitled to avoid the policy : paragraphs [79] to [87]; 16When Mr Stevens gave his oral evidence on commission ["EOC"] on 11 May 2012, he stated that to the best of his ability, he had satisfied himself that what he had said in his affidavit was true and correct: EOC, T3.5. 17On 11 May 2012, which was at a time when Mr Stevens was receiving morphine for pain relief via an intravenous drip, he was extensively cross-examined by Mr Jones SC. There is no suggestion that any aspect of that cross-examination was unfair. During the cross-examination Mr Stevens stated he was "really tired" and felt his head was "spinning around": EOC, T23. Mr Stevens made a number of relevant concessions in his answers to questions put to him in cross-examination. These were as follows: (a)In 2008 his doctors had counselled him to give up smoking, in circumstances where he was a heavy smoker: EOC, T4.36; (b)In 2008, in connection with his attempts to give up smoking he had been prescribed an antidepressant to help him sleep and also tried hypnotherapy for this: EOC, T4.47, T5.13; (c)In 2010 he recalled an episode of having coughed up some blood, which he ascribed to GORD: EOC, T6.40 - T6.49; (d)In the past he had been a heavy drinker of alcoholic beverages with beer being his preferred drink, which he described as comprising 8 to 10 beers per week: EOC, T7.16; (e)He distinguished an earlier period of much heavier drinking before 2009/2010, which he ascribed to his circumstances at that time, in which he had been separated from his family: EOC, T9.43 - T10.5; (f)His financial records for 2010 showed that he was expending significant amounts of money at retail liquor outlets, although he explained that this was not all for personal consumption, and included liquor that was available in his home and consumed by his friends: EOC, T13 - T19; (g)He had been diagnosed with Hepatitis C some 20 years earlier, but managed to continue with his work as a dogman on construction sites: EOC, T20.29; (h)He had told Mr Galloway, in answer to an insurance proposal question, that his health was excellent, in circumstances where he was given a choice of stating whether the condition of his health was either excellent, good, average or poor: EOC, T26.4 - T26.9. 18Significantly, during the taking of his evidence on commission, in his answers to cross-examination, Mr Stevens was unable to recall some matters that were put to him concerning his past health: EOC, T4.5; T6.19; T7.6; T28.4 - T29.1; T29.17; T30.12 - T30.31; T31.27; T32.47; T33.1; T33.20; T34.13; T35.20; T35.31; T36.5 - T37.10; T42.38; T43.2. He said he could not recall that on occasions he had been counselled by a doctor about excessive alcohol intake: EOC, T11.25 - T11.50. 19Mr Stevens specifically denied, that in 2010, he told his general practitioner that on occasions, he was consuming of the order of 10 stubbies of beer per night: EOC, T12.28. 20Mr Stevens stated that he tried to be honest in answering the questions that Mr Galloway had asked him: EOC, T27.15; T42.9. He stated that Mr Galloway had not asked him about any medical problems he had: EOC, T27.33. 21At times during cross-examination he acknowledged, not unreasonably for his circumstances of health and treatment at that time, that he had become mixed up or confused and "tongue tied" in his evidence: EOC, T5.28; T30.35; T41.45. 22Unfortunately, the evidence taken on commission was not video-taped. It was therefore difficult to gain the usual full impression of the manner in which Mr Stevens gave his evidence on 11 May 2012 as if it had been given in the course of a conventional hearing. In that regard I have taken into account that Mr Stevens gave his oral evidence in difficult and extreme circumstances, where he was receiving strong medication for pain relief, and in circumstances where at times, he was tired and confused. 23In those circumstances, out of consideration for Mr Stevens' situation, the parties agreed that no adverse comment would arise from the defendants' failure to put more comprehensive questions to him in cross-examination: Browne v Dunn (1894) 6 R 67. 24That agreement, which was fair and understandable in the circumstances, nevertheless presented obvious problems for an assessment of the reliability of Mr Stevens' testimony in circumstances where the defendants relied upon the proposition that on material matters, Mr Stevens had given evidence that was unreliable, and should not be accepted. 25The factual reliability of the evidence of Mr Stevens was challenged by reference to the evidence of Mr Galloway whose evidence was based upon his usual practice and documents rather than an actual recollection of the dealings in question with Mr Stevens. The reliability of the evidence of Mr Stevens was also challenged by reference to the evidence of Mr Cameron Patterson, who was a financial planner in the employ of the second defendant, and who sat in on the meeting between Mr Stevens and Mr Galloway in his capacity as a trainee undergoing induction on his first day on the job with CML. 26I will refer to the evidence of Mr Galloway and Mr Patterson in the context of the issues to which their evidence and the relevant documents relate. In the meantime, at this point, it is sufficient to highlight the relevant question arising from their evidence, in addition to reliability of testimony generally, to be whether, in determining which evidence given in the proceedings is to be preferred as being more likely to be correct, should general evidence of usual practice, as related by Mr Galloway in the absence of any relevant specific recollection of the events, trump the evidence of Mr Stevens as to reliability of the recollections that he has related in his evidence. 27Mr Stevens' daughter, Ms Teghan Couper, who was aged 21 at the hearing, swore an affidavit on 28 May 2012 and she also gave oral evidence at the trial. She has been her father's principal carer since the diagnosis of his terminal illness, having given up her employment as a personal assistant in order to do so. 28The substance of her affidavit and oral evidence was that during the period in which she lived with her father, from when she was aged about 10 years old (apart from a short period in 2011) her observation was that in 2010 she regarded her father as being very healthy and that he was working at heights and with machinery in his work as a dogman. She said that according to her observation her father would drink no more than 8 to 10 beers per week. She also described the longstanding practice of a named neighbour regularly consuming her father's beer supplies kept in the house. She also explained that with her father's permission, she had used his credit card for the purchase of supplies of alcoholic drinks for consumption by herself and her friends. 29Ms Couper described a material change in her father's general presentation in the period after he had sworn his affidavit on 8 May 2012, and before he gave his evidence on commission on 11 May 2012. The effect of her evidence in that regard was that she attributed that change to the circumstances in which there was a doubling of the dosage of morphine that was being administered to Mr Stevens. 30The defendants pointedly challenged the veracity of Ms Couper's evidence concerning her father's pre-diagnosis pattern of alcohol consumption: T28.28 - T28.50. The defendants' cross-examination highlighted Ms Couper's answers to questions indicating she was not aware of some details of her father's pre-diagnosis health, such as his cholesterol levels, episodes of him coughing up blood or black tar, his GORD or gastro-oesophageal reflux disease, his medication intake, his blood and other test results. 31I have given careful consideration to the evidence given by Ms Couper and I have concluded, for the reasons that follow, that the attack on her credit should be rejected. 32In coming to that view I have not overlooked the possibility that Ms Couper may possibly stand to benefit from her father's case succeeding and this could possibly have influenced the content of her evidence. I have nevertheless discounted that factor as I considered that Ms Couper gave her evidence sincerely, truthfully and in a dignified and impressive manner. 33I considered that as she was living in her father's home during the relevant time frame, she would have been in a reasonable position to observe and relate such of his patterns of drinking that she would have been able to see. I did not consider her explanations as to the pre-diagnosis alcohol purchasing patterns evident from her father's financial records and the manner in which alcohol was consumed in the house, by her father, a named neighbour, herself and her grandmother, to be implausible, or to have been given in order to deflect from a description suggestive of a much greater level of consumption by her father. 34I have allowed for the possibility that as her father, Mr Stevens may not have wanted to place Ms Couper in a position to see any at times greater level of alcohol consumption on his part than that which she had described. As this was not the subject of specific evidence, it is not a matter which was determinative of my conclusions on the issues raised. 35Significantly, both from Mr Stevens' evidence and from the evidence of Ms Couper, I considered it objectively compelling that Mr Stevens had managed to maintain responsible employment as a dogman over a considerable period of time with significant accrued sick leave, and that he had been subject to random blood alcohol testing because of the dangerous nature of his work as a dogman, Ms Couper's evidence was consistent with that fact. If Mr Stevens was in fact regularly consuming alcohol to the level suggested by the defendants, it would have been unlikely that he could have maintained his employment as a dogman without significant absences from his work over such a long period. 36In arriving at these views, I have not overlooked the content of Mr Stevens' medical records that suggested an, at times, greater level of consumption as identified in paragraph [17] above, a matter to which I shall return in connection with my consideration of Issue 2. 37In particular, those records have to be considered with the cautions identified by Basten JA in Mason v Demasi [2009] NSWCA 227, at [2] because they state conclusions rather than verbatim accounts. Accordingly, on the subject of the credit and reliability of the evidence of Ms Couper, on the subject of her father's pre-diagnosis health and level of alcohol consumption, for the reasons I have outlined above, I reject the suggestion that she gave false evidence. 38In the case for the defendants, an insurance underwriter, Mr Mark Ribchester was called to give evidence and he was cross-examined on his affidavit that was sworn on 21 May 2012. His evidence, which was in effect a retrospective underwriting assessment that indicated the proposal by Mr Stevens for life insurance would not have been accepted if the facts within the medical records had been disclosed and the first defendant would not have underwritten the risk or offered him a policy of life and trauma insurance. 39In referring to Mr Ribchester as having undertaken a retrospective underwriting assessment, that description is not intended to be a criticism of his evidence. Instead, his evidence in that regard was necessitated by the nature of the method adopted by the defendants in the form of a computerised automated "Write-Away" assessment system in which the actual proposal forwarded on behalf of Mr Stevens was assessed by a mechanical computerised process, and not by an actual underwriting person. The purpose of this evidence was to prove that a reasonable underwriter would have declined to take on the plaintiff as an insurance risk if the matters set out in paragraph [17] above, or the substance of them, had been disclosed in the proposal for insurance. 40The defendants also adduced evidence on underwriting matters in the form of two affidavits from Ms Kerri-Anne Arkins, respectively sworn on 22 May 2012 and 30 May 2012, and affidavit from Ms Gayle Kanchanapume, sworn on 21 May 2012. That evidence provided a dovetailed explanation of the evidence of Mr Ribchester. 41The 22 May 2012 affidavit of Ms Arkins explained the workings of the mechanical computerised process that comprised the CML's "Write-Away" insurance proposal system, and how certain answers to particular questions, if correctly proffered by reference to the plaintiff's medical history, would have automatically triggered or led to follow-up questions being asked on matters that were engaged by certain answers concerning health and lifestyle disclosures by persons submitting proposed forms. Nothing of significance turns on the procedural components of that evidence. 42The 30 May 2012 affidavit of Ms Arkins attached a typical pro forma questionnaire that CML would have sent to Mr Stevens' private medical attendant for completion had the contended disclosures been made in the proposal for insurance. That affidavit also annexed photocopies of the medical records that were ultimately provided by Mr Stevens' treating general practitioner following the claim being made on the policy. The relevant entries in those records will be further considered in connection with Issue 2. 43The affidavit of Ms Kanchanapume explained the circumstances and timing of the internal procedural steps taken by the insurer to avoid the policy on 23 December 2011, and the internal administrative steps that the insurer took, including the delayed despatch of a cheque to Mr Stevens' solicitor on 11 May 2012, returning the previous moneys paid by Mr Stevens under the policy. Nothing of significance turns on that evidence. 44I shall return to an evaluation of the evidence and the relevant portions of the documentary exhibits in connection with my findings of fact and my consideration of the issues calling for decision. Unless otherwise identified, in the paragraphs that follow, I set out my relevant findings of fact.

Facts 45Mr Stevens is presently aged 49 years. He left school when he was aged 16 years without completing the School Certificate. He was not academically inclined and described himself as being not good at the tasks of reading and writing. Without intending any disrespect to him, he is clearly an unsophisticated person concerning financial matters. He is divorced from his wife. He has two adult daughters. 46After leaving school his working life commenced on building sites in various capacities before he eventually obtained the necessary qualifications to enable him to work as a rigger/dogman and scaffolder. He maintained regular employment in that field. He was required to regularly undertake industry testing for the presence of drugs and alcohol, which he consistently passed. He has spent most of his working life in Victoria. In about mid-2011, he moved to NSW in order to assist with the care needs of his elderly mother. 47On 1 September 2011, after a period of feeling unwell, his symptoms were medically investigated and he was diagnosed as having terminal pancreatic cancer. 48Before the events in question in this litigation, Mr Stevens had very modest savings, a motor vehicle and an investment account with the CBA in a product called First Choice. That investment had performed poorly after what has become known as the global financial crisis. 49Mr Stevens was a long-standing customer of the CBA. He held an account in his own name at the Frankston branch of that bank in Victoria, where he had previously resided and had ordinarily conducted his limited banking business. He was a retail client of the CBA within the meaning of the Corporations Act 2001. 50Since 2003, and until 13 October 2010, Mr Stevens also held a life insurance policy with Westpac Life Insurance Services Ltd. That policy initially provided him with lump-sum life insurance in the amount of $250,000. In 2010, the insured amount had increased to the indexed lump-sum of $298,511. That policy remained in force, and was valid and effective from the time of its inception because Mr Stevens had continued to make periodical monthly payments pursuant to that policy. As a result the policy protected against the events defined within the policy. There is no valid reason to suggest, if the Westpac policy had been invoked by Mr Stevens in 2011 in the event that it had remained on foot, that it would have been avoided for material non-disclosure of any health or other relevant issues. 51In September 2010, Mr Stevens received an unsolicited call from a customer support officer of the CBA at its Frankston branch. In that call he was asked whether he wanted to attend a meeting at the bank in order to discuss his banking situation with the CBA. As he was dissatisfied with the performance of his First Choice investment, he agreed with the suggestion for a meeting, and an appointment was made for him to attend that branch for a meeting held on 27 September 2011. 52There is a relatively minor factual dispute as to whether Mr Stevens' motive for attending that meeting was to raise his concerns as to the performance of his First Choice investment with the CBA, or whether he was seeking advice including advice as to his life insurance arrangements. The effect of the evidence of Mr Stevens was that he would not have considered changing his insurance arrangements held with Westpac if he had not been approached by the CBA in the form of a sales pitch. To the extent there is a self-serving summary note to the contrary in the CBA records, I prefer the evidence of Mr Stevens on this point. It would appear from the evidence, including the evidence of Mr Patterson on general matters, that there may have been pressure on staff to seek out and write additional business in order to meet targets, which could explain the self-serving nature of the notes in question. 53When Mr Stevens attended the CBA branch at Frankston on 27 September 2010, he was taken to meet Mr Andrew Galloway who introduced himself as his allocated financial planner. That allocation was arranged internally in what was described as "a one team referral". 54During the ensuing meeting, Mr Galloway ascertained, from amongst the suite of financial products available from within the Commonwealth Group, that Mr Stevens was not amenable to further investment products or to make changes in his superannuation arrangements which were not flexible, so he was then asked about his life insurance arrangements. It was at this juncture that he revealed the existence of his life insurance policy with Westpac. During these events, Mr Stevens believed he was dealing with CBA staff. 55In the ensuing discussions on 27 September 2010, on the topic of insurance, Mr Galloway indicated to Mr Stevens that there was a suitable substitute CML or Comminsure product he could consider. Mr Galloway then went about seeking to persuade Mr Stevens of the advantage of changing to a CML or Comminsure policy, as that product also provided cover if, for example, he fell from a scaffold and sustained injury, and, significantly, I find, because it was suggested to be better for Mr Stevens if he were to have all his arrangements in the one bank. 56In that context, I accept the evidence of Mr Stevens that Mr Galloway had represented to him that he could do a better deal on the insurance policy than the existing Westpac policy. By these representations Mr Stevens agreed to consider what was being put to him and he agreed to Mr Galloway preparing some relevant paperwork on the subject of insurance for consideration at a further meeting. 57I find that this discussion did not canvass with Mr Stevens the need for him to consider possible changes in his health since he had effected the 2003 policy with Westpac, where if such changes were relevantly present, these might affect his insurability. 58These circumstances led to the completion by Mr Galloway of a Financial Needs Analysis for Mr Stevens. That analysis was then submitted to an entity within the Commonwealth Group, or more properly, within CML, entitled Para Planning for the purpose of preparing an advice largely filled with auto text but which included insurance recommendations for Mr Stevens. According to the evidence of Mr Galloway, which I accept on this point, Para Planning prepared a Statement of Advice in those terms for Mr Stevens so it could be presented to him by Mr Galloway under his own name after making minor changes of a stylistic nature: Exhibit "6". The cross-examination of Mr Galloway on this document revealed that the document was essentially of a pro forma nature, with some personalisation details inserted by Para Planning, and intended to be presented to Mr Stevens by Mr Galloway. 59Within the above process, Mr Galloway prepared a handwritten note on page 4 of the Financial Needs Analysis, which is suggestive of Mr Stevens seeking out insurance advice, a matter which he denied. I do not consider it necessary to resolve when Mr Galloway wrote that note. It is sufficient to say that it was written in accordance with his own understanding of the agenda that had unfolded concerning his meeting with Mr Stevens, and it was slanted towards ensuring that Para Planning would focus on preparing an insurance advice aimed at a sale of a CML insurance policy to Mr Stevens. 60The Statement of Advice ultimately produced by Para Planning contained a recommendation for Mr Stevens to apply to Comminsure or CML for a life policy with trauma cover. The amount of the life policy was essentially the same as that covered by the Westpac policy, but with trauma cover added, for approximately the same premium. 61The clear aim of this process was to sell Mr Stevens a CML insurance product in lieu of his existing Westpac life insurance policy. That Statement of Advice, which comprised some 19 pages, some of it being in very small print, was presented to Mr Stevens at a further meeting that was later arranged by Mr Galloway to take place on 13 October 2010. 62As to the surrounding events and contents of these meetings between Mr Stevens and Mr Galloway, and concerning the documents produced and any discussions on these documents, there is a dispute as to what was said and done. 63On the one hand, Mr Stevens has stated that he was simply asked to sign the paperwork as authorisation to go ahead and was not asked to read it. He also denied being told to carefully read the product statements before purchasing the recommended insurance with CML. He also denied being asked detailed questions concerning his health status. On the other hand, the evidence of Mr Galloway, who had no specific recollection of the events, was that he believed he had acted in accordance with his usual practice at the time, and believed he had therefore taken Mr Stevens through these documents and provided detailed advice as was required. I shall return to these matters in connection with my consideration of Issue 2 and Issue 3. 64Before doing so it is necessary to refer briefly to the evidence of Mr Patterson who was present at the meeting on 27 September 2010 as an observer in a trainee position. He kept no notes of the meeting and had no interest in the matters discussed other than for the purposes of silently observing the procedures as part of his induction into the role of financial planner. It was his first day in that capacity. 65In my view, Mr Patterson's evidence, which was expressed to be based on the best of his recollection, was necessarily a reconstructed account of the events which he agreed he had difficulty recalling. In view of that evidence, I consider that the evidence of Mr Patterson should not be used as a basis upon which to contradict the more specific evidence of the plaintiff concerning the events of the meeting on 27 September 2012, as set out in his affidavit. This was a single and isolated transaction for the plaintiff. As such, I consider he was more likely to have remembered the events more reliably and more accurately when preparing his affidavit, compared to the more general and reconstructed evidence of Mr Patterson, and the usual practice type evidence of Mr Galloway, who had no specific recollection of the events. 66The first defendant CML, and the second defendant CFP, are both wholly owned subsidiaries of the CBA. Both of these entities are part of the membership of the Commonwealth Group of companies. Each of these entities held a separate Australian Financial Services Licence issued under the Corporations Act 2001. 67CFP carried on the business of providing financial and investment advice to clients of CBA, including the retail clients of CBA, and as such held itself out as possessing expertise in providing financial, investment and insurance advice, to clients of CBA, including in this case, to Mr Stevens. 68At all material times, Mr Galloway was an investment advisor and planner, and authorised representative of the second defendant CFP. On the day in question, he was located at the Frankston branch of the CBA. His role was to provide financial and investment advice to the retail clients of CBA, including to Mr Stevens. Mr Galloway held himself out as possessing expertise in providing financial, investment and insurance advice and assistance to clients of the CBA Group, including to Mr Stevens. 69As a result of a change in position adopted in submissions on behalf of Mr Stevens, it is no longer necessary to consider in further detail the scope of Mr Galloway's role as an authorised representative of the first defendant, CML. 70I now turn to a consideration of the key issues calling for decision.

Consideration of Issue 1 - Duty of care 71The statement of claim asserts that both defendants owed Mr Stevens a relevant duty of care. In oral submissions, on behalf of Mr Stevens, Mr Campbell SC argued that Mr Galloway, and therefore the second defendant, also owed the plaintiff a duty of care, which included a fiduciary duty. In the paragraphs that follow, these propositions are evaluated. 72Insofar as the first defendant CML is concerned, for the reasons that follow, I consider that no relevant duty of care arises as alleged. 73First, the evidence discloses that Mr Galloway was neither an employee, a relevant agent, nor an authorised representative of the first defendant, CML. Secondly, although there is little room for doubt that an employee of CBA had targeted Mr Stevens for the purpose of marketing to him the financial products of the Commonwealth Group, that was a legitimate business undertaking. Of itself, this is especially so where there was no suggestion that Mr Stevens lacked legal capacity to enter into financial arrangements with a bank or insurance company, notwithstanding that he was financially unsophisticated. No relevant duty arises in such circumstances. Thirdly, insofar as Mr Galloway assisted Mr Stevens to complete a proposal of insurance to be submitted to CML, it is well settled that in such circumstances, when completing the proposal, he must be taken to be the agent of the proponent and not the insurer. 74Accordingly, apart from the duty upon an insurer to act in good faith, which is not in issue in this case, in my view, the plaintiff has not made good the assertion that the first defendant insurer, CML, owed him a relevant duty of care in the circumstances of this case. 75The position of the second defendant, CFP, is somewhat different. On behalf of his employer, Mr Galloway was seeking to sell Mr Stevens a financial product. The context of that course of conduct was that he had exhausted or excluded the possibility of selling to Mr Stevens other financial products from within the Commonwealth Group, such as managed investments and superannuation. The last item in his armamentarium of products potentially available for sale to Mr Stevens was that of life and trauma insurance. The further context was that according to the terms of his employment, Mr Galloway was only able to market insurance products from within the Commonwealth Group's range of products, in this case, insurance products offered by CML. 76In those circumstances, where it was known that any discussion of insurance products was in the context that any CML product purchased by Mr Stevens would be in substitution for an existing policy in force with Westpac, and where it was intended that if Mr Stevens was accepted by CML as an insurance risk, then he would be cancelling his pre-existing Westpac policy. I consider that in those circumstances, where, Mr Galloway understood that as a financial planner, he was providing Mr Stevens with financial advice that involved a financial benefit to his employer and a financial risk to Mr Stevens, a relevant duty of care, including a fiduciary duty, arose in the circumstances. 77I consider this to be particularly so where Mr Stevens was at the time financially unsophisticated, and the starting point of the events in question was that he was approached by an employee of the bank with the aim of seeking to market only the Commonwealth Group's financial products to him, at least so far as life insurance was concerned. By the time Mr Stevens had his first meeting with Mr Galloway it was plain that Mr Galloway, on behalf of his employer, CFP, was intending to sell some of the Commonwealth Group's financial products to him. 78In such circumstances where Mr Galloway was seeking to entice Mr Stevens into purchasing a policy of life insurance with CML, and to therefore act to his detriment in foregoing his existing rights under the Westpac policy already in force, and where Mr Galloway's employer, CFP, would receive a financial benefit from such a transaction, I consider that Mr Galloway, and therefore the second defendant CFP, owed Mr Stevens a relevant duty of care. 79The scope of that duty of care was in contention. On behalf of the defendants, Mr Jones SC argued that it was the first defendant, CML, and not Mr Galloway, who owed the plaintiff a duty of care. I see no relevant difference between the positions of CML and Mr Galloway insofar as the duty of care is concerned. 80Whilst it is true that Mr Galloway was an employee of CFP, his role was that of a financial planner who gave financial advice to Mr Stevens. He was the human interface between Mr Stevens and CML, and the one who made the relevant representations to Mr Stevens on behalf of CML. It must therefore follow that he owed the duty of care expected of a financial planner and advisor in such circumstances, notwithstanding that CML is vicariously liable for his actions as its employee. 81In my view this cornerstone issue within the claim should be resolved in favour of Mr Stevens. I conclude that Mr Galloway, and therefore the second defendant, CFP, owed the plaintiff a duty of care which included the duty to ensure the plaintiff was adequately informed of the consequences of potential material non-disclosure of health and related matters, which an underwriter of trauma and life insurance of the kind under contemplation would regard as being material to the risk, in circumstances where he was being encouraged to transact a new policy of life insurance that was intended to be followed by cancellation of the pre-existing policy, once CML had accepted the new proposal. 82I conclude that as Mr Galloway was intending to provide Mr Stevens with a Statement of Advice, and in fact he later did so on 13 October 2010 (Exhibit "6"), concomitant with that course, the claimed duty was owed to Mr Stevens. I consider that view to be confirmed by the terms of that Statement of Advice, which were expressed by Mr Galloway in the first person, and covered matters that would ordinarily be dealt with in an advice from a financial planner, for example, in addition to other recommendations, identifying the need to consider matters such as estate planning, wills, powers of attorney and testamentary trusts: Exhibit "6", page 10.

Consideration of Issue 2 - Non-disclosure and policy avoidance 83The question of whether there was a material non-disclosure on the part of Mr Stevens in submitting his proposal for life insurance can now be answered in relatively shorter terms than those canvassed during the course of the hearing, notwithstanding there was considerable evidence given and tested on the underwriting issues that emerged in the proceedings. 84In the CFP document entitled Insurance Financial Needs Analysis that Mr Galloway completed for Mr Stevens on 27 September 2010, Mr Stevens was initially given four relevant options from which to choose from in order to describe his state of health when providing his personal details. These options ranged from excellent, good, average and poor. Mr Stevens nominated the answer to that question as being "Excellent": "MS2", page 7 of 22. 85I infer from the evidence of Mr Stevens' consistent work record, his ability to maintain his employment as a dogman, and from the general terms of his evidence which I accept, that he in fact considered his health to have been excellent at that time. That view necessarily consisted of an opinion held by Mr Stevens, and was no doubt based on his experience of managing the requirements of his work, which involved physical tasks and working at heights. 86Whilst that opinion was reasonably open to Mr Stevens based on his own view of how he was managing in his life and in his work at that time, when his medical records that were tendered in this case are examined, the "Excellent" opinion he had selected with the assistance of Mr Galloway in answer to the Financial Needs Analysis document is revealed to be objectively and materially different from the viewpoint of what an underwriter would reasonably be expecting to be told of a proponent's condition of health at the time of submitting a proposal for life and trauma insurance. 87In coming to that view, I do not intend to suggest that the evidence given by Mr Stevens was anything other than honest. I accept the submission made by Mr Campbell SC on behalf of Mr Stevens that any omission of the details of Mr Stevens' health history was not intentional, deliberate, dishonest or fraudulent, but rather, consisted of an innocent non-disclosure that arose from the structure and format of the circumstances in which he found himself in his dealings with CML and with Mr Galloway. 88In that regard, the initial disclosure in the Financial Needs Analysis was focussed upon financial planning which was defined in its scope to relate to life and trauma insurance: "MS2", pages 2 and 3. The document was not a detailed health questionnaire and it provided only limited options for response on health matters which were all opinion based, referenced to the four pre-determined descriptors already identified, rather than by calling for factual descriptions on particular matters of health and lifestyle. 89The only matters within the Financial Needs Analysis document that related to matters of health and lifestyle appeared on page 7 of the document, and concerned tobacco use in the previous 12 months and whether the proponent was aware of any impediment to obtaining insurance cover, including any previously rejected insurance applications. All of those matters were answered on behalf of Mr Stevens in the negative, and it was not suggested that these answers were other than factually correct. 90A final question in that portion of the Financial Needs Analysis was whether the proponent was involved in any high risk activities that may have impacted on eligibility for insurance cover. Mr Galloway completed that question by answering in the negative on behalf of Mr Stevens. In my view, this supports Mr Stevens' contention that Mr Galloway did not canvass all matters with him when completing the paperwork. I have reached that conclusion on two bases, first, because Mr Stevens had disclosed his occupation to be that of dogman, which according to common knowledge in the community, was necessarily a high risk occupation due to the work being carried out at heights, and secondly, because I do not accept Mr Galloway's explanation that he was unaware of the details of the duties of a dogman. I consider that it was unlikely that a financial planner would not have explored that matter in such a meeting in order to determine for insurance purposes, the appropriate risk classification of the proponent's occupation. I did not consider Mr Galloway to have been naive in that regard. 91That said, I consider that this point is of little consequence to the issues in this case. This is because of the conclusion I have reached as to the medical matters that were not disclosed to the insurer by Mr Stevens, albeit innocently, and as a function of the process by which the proposal was prepared, were substantively relevant to whether or not to underwrite the risk proposed. 92Having regard to the manner in which the arguments on this issue ultimately proceeded, the material matters that I considered to have been left undisclosed in the proposal that followed the Financial Needs Analysis and Statement of Advice were Mr Stevens' history of having contracted Hepatitis C some 20 years earlier, notwithstanding that he did not appear to have been adversely affected by this in his day to day functioning as he described, and secondly, at times in his life when he found himself in personal difficulties, he at times had resorted to heavy consumption of alcohol to the extent that his medical advisor considered it appropriate to counsel him on such matters. 93These matters are set out at length and in some detail in the written submissions of Mr Jones SC between paragraphs 26 to 71. 94Without rehearsing and detailing all of the matters set out in those submissions, in essence, I am satisfied that on the basis of Mr Ribchester's evidence, that the first defendant, CML, was entitled to avoid the policy at the time when the claim was made because Mr Stevens was consuming more than 3 standard drinks per day as an average over the disclosure period; his medical records showed that he had a relevant history of raised liver function test results; he had a past history of Hepatitis C, and his medical records disclosed an episode of having coughed up blood. 95In my view this conclusion arises as I accept Mr Ribchester's evidence that had any of the above factual matters been disclosed in the proposal, this would have automatically led to the proposal being referred to him for manual assessment, which would then have led to a call for Mr Steven's medical records, if not a request for a medical assessment, which would have taken the proposal in question outside the framework of reference of the automated "Write-Away" system. 96I am satisfied that had the above matters been disclosed, a report from the plaintiff's treating general medical practitioner would have disclosed the possibility of a higher consumption rate of standard alcoholic drinks than that stated by Mr Stevens, and the factual matters comprising past raised cholesterol, raised liver function tests, Hepatitis C, episodes of gastric reflux, an episode of coughing up blood and an episode of coughing up black phlegm and the general practitioner's note stating that Mr Stevens had been counselled for heavy alcohol use. 97Whilst it was possible that Mr Stevens may not have understood at the time that he had been counselled in respect of his alcohol intake, and had therefore not disclosed that fact, this would have undoubtedly been discovered in the course of an underwriting consideration of the treating general practitioner's notes and records, and this would have almost certainly led to Mr Ribchester declining to underwrite the risk. 98The question of what a proponent for insurance is required to disclose concerning the risk is governed by the Insurance Contracts Act 1984 (Cwth), sections 21(1) and 26(1). 99In my view, a reasonable person in the position and circumstances of Mr Stevens would have been expected to know the matters outlined above: s 21(1)(b) and s 26(2) of the Insurance Contracts Act 1984 (Cwth). Each of those matters were relevant to the insurer's decision on whether or not to accept the risk: CGU Insurance Ltd v Porthouse [2008] HCA 30, at 53; Permanent Trustee Australia Limited v FAI General Insurance Company Ltd (in liq) (2003) 214 CLR 514 at 532 [32]. 100In my view, the problem of non-disclosure that has arisen in this case has occurred innocently on the part of Mr Stevens, as a function of the on-line nature of the application, and the very limited opportunity for Mr Stevens, who was unsophisticated in such matters, to fully consider and review matters calling for disclosure in that on-screen based process of making his proposal for life insurance. 101In these circumstances I have nevertheless concluded that the insurer was justified in avoiding the policy: Davis v Westpac Life Insurance Services Ltd [2007] NSWCA 175, at [82] per McColl JA, with whom Hodgson and Santow JJA agreed. 102Before leaving the matter of the non-disclosure of Mr Stevens' alcohol consumption, a relevant qualification to my findings needs to be recorded. In that regard, on behalf of the defendants, Mr Jones SC argued that the occasional references in the medical records to Mr Stevens consuming greater quantities of standard alcoholic drinks than that disclosed should be seen as a continuum rather than as isolated events. I do not accept that submission because it is inconsistent with the evidence that Mr Stevens managed the requirements of his work as a dogman, and had no difficulty with the random blood alcohol tests associated with that work. In this regard, I accept the evidence of Mr Stevens and Ms Couper in preference to the inferences sought to be drawn on behalf of the defendants from the pre and post-diagnosis clinical records tendered in these proceedings. 103I also consider that Mr Stevens' non-disclosure of past Hepatitis C infection had occurred inadvertently without intention to mislead, and occurred as a function of the process by which the proposal was submitted, with limited opportunity for reflection on matters calling for disclosure. The context of that omission was the plaintiff's honestly held belief that he was in excellent health. 104Unfortunately for Mr Stevens, these non-disclosures must be considered as being material to the nature and extent of the risk sought to be underwritten and that view justified avoidance of the policy. Accordingly, the claim by Mr Stevens against the first defendant insurer, CML, cannot succeed. 105In my view, nothing in this case turns on the fact that for a short time after the insurer sought to avoid the policy it continued to collect the monthly premiums which have subsequently been returned by cheque, although not yet banked by Mr Stevens. 106I now turn to consider whether Mr Stevens' claim of misleading and deceptive conduct has been made out.

Consideration of Issue 3 - Representations and breach of duty 107Mr Stevens claims that the process by which the proposal for insurance in question here was completed, involved misleading and deceptive conduct on the part of CFP, through the representations made to him by Mr Galloway. He also claims that as a result of reliance by him on that conduct, he has incurred a financial loss. 108The claimed loss arises because the first defendant avoided the policy, and also because in reliance on the advice he received from CML through Mr Galloway, Mr Stevens proceeded to irrevocably cancel his pre-existing life insurance policy with Westpac, thus losing the value of that policy to him. 109At the outset, it must be stated that although Mr Stevens did not read the relevant proposal and disclosure documents but simply signed them as I find to have been the case, the fact that he signed them means that he was contractually bound by them: Toll (FGCT) Pty Limited v Alphapharm Pty Limited [2008] HCA 52; (2008) 219 CLR 165. He had no real opportunity to read the proposal because it was completed on a screen and sent to Comminsure so he had no opportunity to review and reflect on its accuracy or otherwise. Mr Galloway conceded that the product disclosure documentation was a lot to read and absorb in the one meeting, perhaps too much to read with the Statement of Advice. 110That said, the fact that Mr Stevens signed the documents does not in this case undermine the claim he makes for misleading and deceptive conduct or for breach of the duty of care owed to him arising from the circumstances where he was not given a proper opportunity to consider the ramifications of the proposal document he was signing where, by proceeding with the recommendation made to him, this had the potential to materially alter and adversely affect the entitlement to make a claim on a life insurance policy transacted in such circumstances. 111On the evidence, there is no doubt that Mr Galloway, on behalf of the second defendant CML, recommended to Mr Stevens that he take out life insurance with CML, and then cancel his policy with Westpac. Similarly, there is no doubt that this recommendation was a representation made to Mr Stevens in trade or commerce. Additionally, as is evident from the subsequent actions taken by Mr Stevens, there is no doubt that he acted in reliance upon those recommendations made to him. This reliance was understood by Mr Galloway. 112At the heart of the matter concerning the representations made to Mr Stevens is the assertion which I find to have been made by Mr Galloway to Mr Stevens to the effect that it would be better for Mr Stevens to have all his business, including his life insurance policy, with the one bank, which in effect meant the Commonwealth Group, rather than having his life insurance remain with Westpac. This was asserted to have represented a better deal for Mr Stevens when it was not, and when Mr Stevens was given to understand he was getting a "like for like" policy, which, in reality, he was not. 113In my view, that representation was misleading and deceptive because it meant that Mr Stevens would be giving up a valuable asset, namely a life insurance policy that had remained in force and under which the right to make a claim in the event of innocent non-disclosure being shown was safeguarded by statute, as that policy had been in force for more than 3 years since 2003, unlike the CML policy: s 29(3) of the Insurance Contracts Act (Cwth) 1984. 114These events have arisen because the CML proposal was prepared under the computerised "Write-Away" system, where the important foundation form was not printed off for Mr Stevens to check before it was submitted to the insurer for automated acceptance. It was an important document, which, if filled out incorrectly, or with insufficient detail or disclosure, as I have found occurred in this case, the ramifications for the proponent would be potentially and foreseeably financially disastrous. This was the effect in this case because the transaction proceeded in haste, on-line, without Mr Stevens being orally advised of the need to ensure factual accuracy and where ordinary prudence suggested that the form be given careful consideration including by checking details of disclosure against factual and medical records. In this regard, I accept the specific recollection based evidence of Mr Stevens to the usual practice assumptions made by Mr Galloway as to what was said and done on the 13 October 2010 meeting. This is especially so where it was apparent, that at least in some respects, Mr Galloway had not followed his usual practice on this occasion. 115In the circumstances, the duty on the financial planner was to ensure the proponent understood the importance of the questions and provided full and considered answers to the questions, not necessarily in the context and constraints of an on-line application process that provided little or no opportunity for an unsophisticated person such as Mr Stevens to reflect on the significance and accuracy of what was being put forward on his behalf to the insurer before he signed the document and submitted it for approval. 116In these circumstances, the financial planner should have placed the best interests of Mr Stevens ahead of his employer's interests, and also his own interests insofar as potential commissions and bonuses were concerned. The financial planner with knowledge of such matters, as was the position of Mr Galloway, ought to have reflected on the process by which Mr Stevens' application for insurance was being processed. In my view, this is an ordinary incident of the fiduciary duty owed to Mr Stevens in the circumstances particularly where Mr Stevens faced the risk of having no insurance if disclosure proved insufficient. This should have been remedied by a full explanation of the risk, not just in a perfunctory manner in fine print in a disclosure document that was swamped with information. 117I consider this to have been so, particularly in the case of an unsophisticated client such as Mr Stevens. In my view, steps should have been taken to ensure that as a proponent for life insurance, Mr Stevens understood the potentially serious ramifications of the proposal process if his disclosures were not materially complete. It was incumbent upon Mr Galloway, in the system within which he was operating, to ensure that Mr Stevens was acting in his own best interests in cancelling a valid and in force life policy in favour of an uncertainty likely to be created by the constraints of the on-line proposal that was being submitted on his behalf without the opportunity for reflection and checking, in less hasty circumstances. 118In my view, the above circumstances give rise to several bases of liability.

Civil Liability Act 2002, s 5B, s 5D 119The first basis arises under the general law of negligence as affected by the Civil Liability Act 2002 ["CL Act"] where a duty of care has been relevantly breached. In this regard, I consider that the circumstances fulfil the requirements of s 5B of the CL Act 2002 to justify a finding of negligence on the part of CFP as a consequence of the events directed by Mr Galloway. 120In this regard, the foreseeability of the risk of harm from the avoidance of the policy must have been known to CFP and Mr Galloway at the time: 5B(1)(a) of the CL Act. Where there was scope for a material non-disclosure to arise due to inadequate understanding of the process, such as where the relevant form was not able to be reviewed and reflected upon in an on-line process, the risk of harm to the proponent in the form of financial loss, was not an insignificant one: 5B(1)(b) of the CL Act. In my view, given the risk to the proponent in the event of a material non-disclosure, a reasonable person in the position of Mr Galloway ought to have printed off the form or produced an equivalent hard copy for Mr Stevens to consider and complete carefully, including by taking it away if necessary in order to check medical matters, before it was submitted to the insurer: 5B(1)(c) of the CL Act. 121If the precautions of the kind described were not taken, the probability of policy avoidance in the case of an unsophisticated person was high, as was the seriousness of the consequent avoidance of the policy, and where the burden of taking the precautions identified above must be seen to have been negligible where there were no real time constraints on the process: 5B(2) of the CL Act. In my view it was insufficient discharge of the duty owed to simply place the disclosure documents before Mr Stevens for signature. As Mr Galloway conceded it was too much to read at the one time, especially in the case of someone who was known to be unsophisticated. 122Furthermore, when the requirements of s 5D of the CL Act are considered from the perspective of causation of loss, in my view it is plain that were it not for the negligence, as I found to have been the case here, it would have been unlikely that Mr Stevens would have accepted the risk of the possibility of an avoided policy by surrendering one that was perfectly good and acceptable to him and where it was within the scope of the duties of a financial planner giving an unsophisticated person advice to ensure that the person in question was being given recommendations that were in his best interests, without conflict arising with the interests of the seller of the products being recommended: 5D(2) of the CL Act. 123In confirmation of the foregoing assessment, Mr Galloway acknowledged, with the knowledge that he has obtained of such events upon an examination of the facts of this case, that the second defendant's procedures were not adequate for the occasion in some material respects, as the present case has highlighted. Whilst Mr Galloway made that concession in hindsight, I consider that it is plain that this same conclusion should have been apparent prospectively at the time he was dealing with Mr Stevens, who was a financially unsophisticated man.

Misleading and deceptive conduct 124The second basis of liability arises from what I consider to have been the misleading and deceptive nature of the conduct of the second defendant, where the insurance proposal submission procedure was likely to mislead and deceive proponents such as Mr Stevens into thinking that by complying with the process that was supervised by Mr Galloway, a valid insurance policy was being transacted, thus making it financially secure for him to surrender his existing policy. 125In this regard, I consider that when Mr Galloway told Mr Stevens that his policy proposal had been accepted by CML and he was therefore insured so he could cancel his Westpac policy, this too was misleading and deceptive conduct because the issue of disclosure had not been adequately dealt with as I have explained above, thus placing Mr Stevens in a hazardous and potentially uninsured hiatus the moment he proceeded to cancel his Westpac policy. This is particularly evident where there was no suggestion made to Mr Stevens that he should wait and consider his position within the time frame of a reasonable cooling off period before cancelling the Westpac policy. 126The conduct of the second defendant, by its representative Mr Galloway, in providing an inadequate opportunity for Mr Stevens to read and understand the disclosure documents and the statement of advice created a circumstance where it was likely, as I find to be the case, Mr Stevens was misled and deceived into thinking that he was protected by his new policy arrangements when, by reason of the limited opportunity for disclosure, it is clear that he was not. 127In my view, those circumstances of misleading and deceptive conduct that I have found, and which also involve dealings in a financial product consisting of life insurance in trade or commerce, constitute circumstances which give rise to a liability of the second defendant to the plaintiff in damages pursuant to statutory provisions aimed at protecting consumers: s 1041H(1) of the Corporations Act (Cwth) 2001; s 12 DA(1) of the Australian Securities and Investments Commission Act (Cwth) 2001. 128Furthermore, I consider that liability of the first defendant for the representations made to the plaintiff also arises under s 12DF(1) of the Australian Securities and Investments Commission Act (Cwth) 2001 because the nature and characteristics of the CML life insurance policy as represented to Mr Stevens, namely that it was better than the Westpac policy for Mr Stevens, was a misleading statement because the Westpac policy was not avoidable, as more than 3 years had passed since it was transacted: s 29(3) of the Insurance Contracts Act (Cwth) 1984. 129In contrast, thus demonstrating the misleading and deceptive nature of the statements made to Mr Stevens on behalf of the second defendant, the same could not be said of the policy offered by CML, which could be avoided in the event a material non-disclosure occurred, as was the case in the circumstances under present consideration. Given the limited circumstances that Mr Stevens had to review and consider his proposal on the computer screen before it was submitted, I consider it was likely he was misled into thinking he was covered with a life insurance policy when it was plain that he had been given an inadequate opportunity to reflect upon what constituted proper disclosure. 130I therefore find that the plaintiff should succeed in his claim against the second defendant.

Consideration of Issue 4 - Assessment of damages 131On 22 June 2012, by written submissions forwarded after the conclusion of oral submissions, it was indicated that in the event Mr Stevens is successful in the proceedings against the second defendant, Commonwealth Financial Planning Pty Limited, the quantum of his claim should be assessed as follows: (a)Damages representing the insured amount in the sum of $298,511; (b)Interest to 22 June 2012, pursuant to the Insurance Contracts Act 1984, in the amount of $11,876.85; (c)Interest from 23 June 2012, until the judgment today, at the rate of $67.29 per day. 132Accordingly, applying these elements to an assessment as of today, 3 July 2012, including 11 days of interest at $67.29 per day from 23 June 2012 until 3 July 2012, ($740.90), the plaintiff's entitlement to damages is assessed in the sum of $311,128.04.

Disposition 133The plaintiff has failed to make good his case against the first defendant CML. As a result, the first defendant is entitled to a verdict and judgment in its favour against the plaintiff. However, the plaintiff has succeeded in making good his case against the second defendant CFP, in the amount of $311,128.04.

Costs 134The normal rule is that unless there is a sound reason for making some other order, costs should ordinarily follow the outcome of the proceedings. As the plaintiff has not succeeded in making good his case against the first defendant CML, the first defendant is entitled to have its costs of defending the proceedings against it paid by the plaintiff. Similarly, as the plaintiff has succeeded in his case against the second defendant CFP, he is entitled to have his costs of making out his case against the second defendant paid by that defendant. 135In anticipation of such a result, the plaintiff has argued that such costs payable by him to the first defendant, should be paid by the second defendant. 136I consider that the plaintiff was justified in joining the first defendant to the proceedings even though ultimately he did not succeed against that defendant. The proceedings were commenced and pursued with some urgency. They arose from the plaintiff's dealings with the respective defendants from the Commonwealth Group of companies. The differential nature of those dealings did not become entirely clear until the defence was filed at the commencement of the hearing. In those circumstances, I consider that it is just and reasonable that the plaintiff's liability to pay the first defendant's costs of the proceedings be paid by the second defendant.

Orders 137I make the following orders: (1) Verdict and judgment for the first defendant on the plaintiff's claim against that defendant; (2) The plaintiff is to pay the first defendant's costs; (3) Verdict and judgment for the plaintiff against the second defendant, including interest up to the time of judgment, in the total sum of $311,128.04; (4) The second defendant is to pay the plaintiff's costs of the proceedings on the ordinary basis unless otherwise ordered, such costs to include the costs the plaintiff is liable to pay to the first defendant pursuant to order 2 above; (5) The exhibits may be returned; (6) Liberty to apply on 7 days notice if further orders are required.

Amendments 12 July 2012 - Slip rule amendment pursuant to UCPR r 36.17 Amended paragraphs: 4, 38, 78, 80, 81 and 94 16 July 2012 - The word "indemnity" should be corrected to "underwriting" Amended paragraphs: 4 16 July 2012 - The word "re-hearings" should be corrected to "rehearsing" Amended paragraphs: 94 16 July 2012 - The words "second defendant, CML," should be corrected to "second defendant, CFP," Amended paragraphs: 81 16 July 2012 - The words "employee of CML" should be corrected to "employee of CFP" Amended paragraphs: 80 16 July 2012 - The words "employer, CML" should be corrected to "employer, CFP" Amended paragraphs: 78 16 July 2012 - The word "reconstructed" should be corrected to "retrospective" Amended paragraphs: 38 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 16 July 2012

At a glance

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Judgment (15 paragraphs)

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Cases Cited (6)