J.J. Savage v Blakney [1970] HCA 6; (1970) 119 CLR 435 at 442-443

1. In this application Robert Flynn Taylor (the applicant) claims against CGU Insurance Ltd (the respondent) damages for breach of contract or, in the alternative, damages for breach of the provisions of the Trade Practices Act 1974 (the TPA).

2. The applicant relies upon a minute of amended application filed on

30 July 2004, wherein he claims damages pursuant to section 82 of the TPA for misleading and deceptive conduct in breach of section 52, 51A and 51AC of the TPA, and in the alternative damages for breach of an agreement made on or about 21 December 1998.

3. The background in this matter is relatively straightforward. The applicant had been engaged in a business known as "Q Services", carrying out professional surveillance and investigation inquiries and had commenced work as an inquiry agent with Meridien Services (Meridien) on 5 June 1996 as an inquiry agent specialising in covert surveillance. He had then applied for an inquiry agent licence, which ultimately he obtained in January 1997.

4. Whilst employed at Meridien Services the applicant claims to have been engaged for a minimum of 40 hours and up to 70 hours (sometimes more) per week. Meridien had insisted that the applicant be employed by his own company, and he then became a shareholder and employee of a company known as "Melusina Pty Ltd" (Melusina).

5. The respondent at all material times carried on business as an insurance company.

6. In brief terms, it would appear that the applicant left Meridien to work for the respondent and did so on or about 29 December 1998. That followed, according to the applicant, discussions between him and representatives for the respondent on or about 22 December 1998. The gist of the complaint by the applicant is that he believed that upon joining the panel of surveillance operators conducted by the respondent that he would be allocated two jobs per week. This did not eventuate and the claim by the applicant against the respondent, as indicated, arises either by way of breaches of the TPA and/or breach of contract. The applicant claims, in his minute of amended application, damages being lost fees he would have received from the respondent had he received two jobs per week during a 91-week period. During that period of 91 weeks the applicant received only 43 jobs, for which he claims fees were paid of $46,879, leaving an average fee of $1090.21 per job. It is argued that had the applicant received 182 jobs then that would have generated fees of approximately $198,418. The loss claimed was therefore $151,539. He further claimed what is described as a lost opportunity to benefit from the work and profit and to grow his business. That would have occurred had he received a regular supply of work.

7. The applicant relied upon affidavits sworn by him on 15 April 2004 (exhibit A1) and 30 November 2004 (exhibit A2). The applicant gave evidence and was cross-examined. He otherwise relied upon an affidavit of Mark Robert Brett Bandy sworn 9 August 2004 (exhibit A3).

8. The respondent relied upon a book of documents described as "respondent's trial bundle documents" (exhibit R1). Although there was some dispute as to whether or not the documents set out in that exhibit had been tendered absolutely, I am satisfied that in the circumstances the documents were tendered absolutely and, though relied upon to a greater extent by the respondent, does no more than provide to the court with relevant discovered documents and in some instances otherwise reproduce documents which were exhibits to affidavit material. The respondent tendered as an exhibit the applicant's 1999 diary (exhibit R2). The respondent relied upon affidavits sworn by Martin Robert Green on 11 June 2004 (exhibit R3), 19 November 2004 (exhibit R4) and 30 November 2004 (exhibit R5). Mr Green gave evidence and was cross-examined. The respondent further relied upon the affidavit of David Alan Slatter sworn 29 June 2004 (exhibit R6). Mr Slatter gave evidence and was cross-examined.

9. In essence, the applicant's complaint arises in circumstances where he claims to have had regular and substantial work offered to him by Meridien Services since June 1996. He claimed that employment was quite stressful and that he was subject to constant pressure, as the work was always subject to "good results". He was pressured to take on and complete more hours of work, despite working extensively for Meridien. He claims he seldom had a proper weekend off whilst working for Meridien, due to the work load. His complaint arises in circumstances where, having made inquiries concerning the possibility of working with another organisation, he ultimately became aware of an opportunity to undertake what are described as "factual investigations" as distinct from "covert surveillance" in an attempt to gain favour of the respondent and perhaps take up an opportunity to become part of a selection process for a new service provider panel to be established by the respondent. He ultimately made a submission for the panel and was invited to attend the selection process/testing day conducted by Mr Green of the respondent at the respondent's offices on 17 December 1998.

10. Whilst the applicant worked for Meridien he undertook work with a colleague and friend, namely Mr Bandy. Before the applicant submitted details to Mr Green of the respondent, he claims to have discussed a proposal with Mr Bandy that if the applicant could get onto the respondent's panel then, as I understand it, the work would be shared between the applicant and Mr Bandy. The applicant claims that Mr Bandy indicated he would seriously consider the proposal if he were able to get onto the respondent's panel with a guarantee "of enough work to keep us both financially happy".

11. The applicant claims that when he first met with Mr Green on 17 December 1998 he was advised that the respondent would be selecting four companies for the respondent's panel. According to the applicant, companies number 1 and 2 share the majority of the work, number 3 company "picking up some bits and pieces", whilst number 4 company would be used as "a backup in case of emergency only". A discussion about the amount of work apparently occurred, and the applicant claims that he advised Mr Green that "two jobs per week for two operatives would be a minimum to start off with". He otherwise claims to have told Mr Green that both he and Mr Bandy had been with Meridien for over two years and had completed many surveillance jobs for the respondent during that time. The applicant claims that when asked about whether he would continue to work for Meridien he told Mr Green that if he was selected onto the respondent's panel as number 1 or number 2 company and given a minimum of two jobs per week that he would resign from Meridien, as would Mr Bandy, and provide services "solely to CGU".

12. It is clear up to that point, even accepting what the applicant has stated, that in my view there has simply been a discussion of what may be proposed in terms of work allocation should the applicant be selected as part of the respondent's panel.

13. It is noted that the applicant's allegations concerning reference by Mr Green to companies number 1, 2, 3 and 4 was denied. Mr Green has stated that his role was to simply ensure that companies selected had appropriate qualifications and experience. He claims - and this does not appear to have been seriously challenged - that he had no role in determining how much work, if any, would be allocated to the companies selected. The allocation, according to Mr Green, of the work by the state branches was a matter for each branch and its individual claims officers. Mr Green denied asking the applicant how much work he wanted, if he was to be selected, and did not recall the applicant making any statements about how many jobs per week he would like. He claims that he did not ask the applicant whether he intended to resign from Meridien Services. Mr Green asserted in his affidavit material that he never had a policy of designating service providers with priorities such as number 1 or number 2, and throughout his eight years of employment in the insurance industry had always advised service providers that there is no guarantee of any work and there would never be a guarantee of a minimum number of jobs per week or for any other period. He did not believe the applicant stated that he intended to provide services solely to the respondent.

14. It is common ground that the applicant's membership on the panel would be for a period of 12 months, after which a review would be conducted. It seems to be further common ground that in this case, upon review, the applicant was advised that he would be on the panel for a further 12 months.

15. There does not appear to be any dispute that on 21 December 1998 Mr Green telephoned the applicant to advise that he had been selected on the respondent's panel. It is in dispute as to whether he was advised that he would be "number 2 company". Otherwise it is not disputed that Mr Green advised the applicant to contact Mr David Slatter, who was then the Western Australian state claims manager of the respondent and the purpose of the meeting was to arrange work details.

16. It is noted that up to 21 December 1998 there did not appear to be any agreement in writing. On 22 December 1998 the applicant attended the respondent's offices and met with David Slatter. It is on that date that a significant issue arises as to whether or not representations were made, as it is that date that the applicant asserts that a contract was entered into between him and the respondent. It is useful to set out in full the relevant paragraph from the applicant's affidavit, namely exhibit A1, where he states the following:-

23. On 22 December I attended CGU's offices and met with David Slatter. The meeting lasted about 35 minutes, during which time we spoke about how David was planning on retiring soon, my experience in the industry and other general insurance-related matters. When I advised him that I had been working at Meridien for the last two and a half years, I noted that he appeared concerned and surprised. He asked me if Ian French knew that I had been selected onto the panel, and I responded that he did not because I had not made a final decision as to whether I would be leaving Meridien yet. David then asked me how many surveillance jobs from his department I needed to be financially viable. I said a minimum of two jobs per week to start off with. He responded, 'There wouldn't be a problem with that at all.' He then asked me how much I would charge per hour, and I told him $35 per hour, to which he said, 'Very good' ... (emphasis added).

17. In his affidavit sworn 29 June 2004 Mr Slatter denied promising the applicant any number of surveillance jobs or saying, "There wouldn't be a problem with that at all." Both in his affidavit and oral evidence before the court Mr Slatter was adamant that he would not make a promise of that kind. He claims that he never promised a minimum number of jobs to any provider, even providers he knew and with whose work he was familiar. He had no such prior knowledge of the applicant, nor of the quality of his work. He otherwise deposed that he did not personally allocate the work of providers. The list of approved providers, including solicitors, factual investigators and surveillance investigators, was given to claims technical officers and it was their responsibility to appoint someone from that approved list as they saw fit. Mr Slatter claimed that any discussions as to which panel member should be appointed for a particular job would have been dealt with by either the supervisors or claims controller, and Mr Slatter would only become involved if there was a problem requiring managerial input. He further claimed that around this time there was a merger between Commercial Union Insurance and NZI Insurance, to form the respondent company, and a decision had been made to reduce workers compensation booking business by around 50 per cent, as it was felt that the combined exposure to workers compensation was too high compared to other business. A reduction of claims would also reduce proportionately the amount of available work for members of the respondent's panel of surveillance operators. Accordingly Mr Slatter claims he did not know at that time how many claims the respondent would receive in any week, and of those how many would require surveillance. He was not then in a position to predict "in any given week there would be two jobs available for the whole panel".

18. It is clear on the evidence that a significant threshold issue to be determined is whether or not words were uttered by the respondent's representative of the kind alleged by the applicant. It should be further noted that in any event the allegation, according to the applicant's material, is not that there was a specific promise he would be guaranteed two jobs per week, but rather in response to a need by him to be financially viable he had indicated that a "minimum of two jobs per week to start off with" would be appropriate, to which he claimed the response by Slatter was, "There wouldn't be a problem with that at all."

19. In my view a proper interpretation of applicant's evidence and memory of events, which I note is denied, the exchange between the applicant and Mr Green in my view represents no more than a discussion between parties as to a proposed arrangement. It is difficult to conclude that at the meeting on 22 December 1998 the parties entered into a contract, and moreover that it was a term of the contract that the respondent would provide to the applicant two jobs per week. The discussion was not that precise. Membership of a panel of surveillance investigators, whilst providing an opportunity for work, does not of itself guarantee a minimum number of jobs to be allocated.

20. In the present case I prefer the evidence of Mr Slatter in relation to background circumstances and the extent of his knowledge and memory of events. I accept his evidence that he at no stage guaranteed a minimum of two jobs per week, and further accept that he did not say to the applicant that, "There wouldn't be a problem with that at all," in reference to the request for two jobs per week to start off with.

21. In any event, even if I were to accept the applicant's version of the conversation, it is clear that any suggestion of two jobs per week was qualified with the expression "to start off with". It is vague and cannot in my view possibly constitute a clear term of a contract. I am satisfied and find in the circumstances that all that occurred on 22 December 1998 was confirmation that the applicant had been placed upon the appropriate panel, which then gave him the opportunity of obtaining work from the respondent as determined by claims officers from time to time, according to volume of work then available and decisions made based upon other variables, which according to the evidence before the court would include the number of files requiring investigation and the locality where the investigation was to be conducted.

22. In the circumstances the nature of the discussion, even on the basis of the applicant's evidence which as I have indicated I do not accept, would still not amount in my view to evidence which would justify a conclusion that statements were made which could properly be regarded as promissory or that in the circumstances it was intended that the party would act upon the statement and did act upon it (see J.J. Savage v Blakney [1970] HCA 6; (1970) 119 CLR 435 at 442-443).

23. Further evidence was given during the hearing by the applicant that shortly after the discussion on 22 December 1998 he had made inquiries with other insurers, and the diary produced (exhibit R2) indicates that the applicant, as early as January 1999, had received jobs from other insurers, which in my view leads to a conclusion that at that stage the applicant was not prepared to provide services solely to the respondent. I further find that his conduct is inconsistent with the allegation that he was so prepared to act solely for the respondent and/or that there has been an agreement with a term providing for a minimum of two jobs per week. Had that occurred as asserted by the applicant then it would be unlikely in my view for him to be seeking work with other insurers within two months of the alleged contract.

24. Further evidence is relevant in terms of explaining the nature of the agreement between the applicant and the respondent which resulted in the applicant being placed on the respondent's panel of surveillance investigators. A letter dated 9 April 1999 from the applicant to the respondent clearly expresses concerns by the applicant at the lack of work provided by the respondent to the applicant. In that letter the applicant states the following:-

Following on from our recent conversation we now feel that the situation has not improved and in fact, has become worse. You may recall that I explained to you that we were concerned at the lack of work being forwarded on to us via the workers compensation department here in WA. We have previously raised the matter with Mr David Slatter but he has only side-stepped the issue by stating time and time again that the decision to issue jobs to panel members rests with individual Claims Officers, and in fact he 'has no idea of how many, what and to whom the jobs were issued to'.

To a certain extent we understand what he is saying, but on the other hand we feel he has been compromised by the fact that he has built up a close relationship with Meridien Services, and as a result of this relationship his attitude to our involvement on the panel is somewhat tainted and whenever we have addressed our concerns regarding the lack of work, he has done the 'Pontius Pilate' to us and 'washed his hands' on the situation.

25. In the same letter the applicant refers to what he describes as satisfactory performance of jobs allocated to him by the respondent and that a period of 35 days passed without receiving a job and though conceding that he accepted there would be "quiet periods", that during that particular period it would not be the case. He claims that in the 12 weeks since the selection onto the panel he had received nine jobs, whilst in the same period Meridien Services received what he describes as "a very ample amount of work which no doubt you could verify if need be". It is clear from that correspondence that the major concern in the applicant is not receiving a fair share of the allocated work and noting that his previous employer, also a panel member, seems to be receiving more work than the applicant.

26. Of significance to the present claim, however, is the following extract from the same letter, where the applicant states,

... I telephoned Mr Slatter again to express my concerns regarding this situation. He again began by stating that it was not his decision as to how much, how often and to whom the work was issued to. I replied that whilst I accepted this point in part, as he was the manager of the department, he was the person that I expressed our concerns to. Furthermore, I stated that when we (Mr Slatter and myself first spoke - just prior to your confirmation that we had been appointed to the panel), Mr Slatter voiced his grave concern that both myself and Mr Bandy had previously been subcontracting to Meridien Services and that this could cause serious problems between the relationship between himself and Meridien. This issue (so we were led to believe) was settled between yourself and Mr Slatter, but unfortunately for us, so far as Mr Slatter was concerned, it was always going to be a problem. Notwithstanding this point, Mr Slatter agreed that our fair request for two jobs per week to start off with was well within the claims department capabilities. (emphasis added)

27. The words emphasised in the extract from the letter from the applicant to the respondent dated 9 April 1999 reveal in my view the vague nature of the representations and/or term of contract as alleged. On a proper reading of those words it is clear to me, and I so find, that there is a degree of confusion in the mind of the applicant between the clear representation of a minimum of two jobs per week on the one hand and a mere request from the applicant for two jobs per week "to start off with" in the circumstances. The mere fact that it is clear in the material before the court and not seriously contested that the respondent had a capacity to provide two jobs per week to a particular panel member does not advance the applicant's case further. The mere capability of a department to provide the two jobs per week does not of itself confirm that there was an agreement to the effect that the applicant would in fact be provided with a minimum of two jobs per week in accordance with either representations or a term of a contract. If on the other hand the respondent did not even have the capacity to provide two jobs per week to each panel member, then that may have been a relevant factor to take into account as to whether or not any representation of a kind guaranteeing two jobs per week could have been made in the circumstances. However, in the present case that is not in issue. What is in issue is whether or not the words uttered could be characterised as the representations and/or term of the contract as alleged by the applicant, and in my view the extracts from the letter to which I have referred - that is the words emphasised - do no more than accurately reflect that it was the desire of the applicant or request to be provided with two jobs per week to ensure viability. It is equally clear to me, however, that in the circumstances the applicant had not abandoned any other work. As he demonstrates in his diary entries, within two months of being placed on the respondent's panel he was still seeking and obtaining work from other sources.

28. Further correspondence in my view confirms the true nature and extent of the discussion between the parties as not amounting to representations of a kind which are actionable under the TPA or could possibly form a term of a contract. It is instructive to note that in a letter dated 25 May 2000 from the respondent to the applicant the following appears,

... I would like firstly to state that, CGU Insurance is not in the practice of promising any external company they will, or will not, receive 'X' amount of investigations per week. Your position on the CGU external investigation panel does not guarantee any work, it merely places you in the position to receive work, if or when, the need arises.

I would like to apologise for any promises made by CGU employees. However, I don't think it appropriate for you to rely solely on CGU Insurance to supply work. Whilst your company has only received 33 surveillance instructions, I would suggest that there are other companies who are not on the panel, who would only be too happy to receive this amount of work.

29. The applicant in response to the letter from the respondent dated 25 May 2000, in a letter dated 27 June 2000, states the following:-

I understand and agree with you regarding Q Services' position on the investigation panel. Being on any panel does not guarantee any work, but rather places you in a position whereby work can be allocated to you if and when the need arises. However, if you take into consideration Mr Slatter's initial comments regarding how providing two jobs per week to us would not be a problem (prior to him being aware that we were ex-Meridien subcontractors) and the subsequent downturn in the actual number of jobs allocated to us, then it is natural for us to feel somewhat aggrieved by the situation due to obvious factors which have already been explained. We understand that this situation will not change whilst Mr Slatter is the state manager and we accept that we will have to wait for a new state manager who, after a review, will be fair and just in their appraisal of the quality of external service providers and the subsequent allocation of work.

30. In the same letter the applicant states the following:-

Finally, your comments regarding us receiving only 33 surveillance instructions and that there are other companies that would be only too happy to receive this amount; we are extremely grateful for all the work that has been given to us via the Perth claims department. As I have already stated, we have a very good relationship with the few claims officers that have given us work and they are very pleased with the quality of reports and videos they have received.

We reiterate that we are grateful for any work that we receive from the claims department and will continue to provide professional competent service in the field of covert surveillance and investigations. ...

31. In the same letter the applicant was critical of Mr Slatter, though acknowledging what was described as the apology given by the respondent to the applicant in its letter dated 25 May 2000.

32. It is noted in the exchange of correspondence that again the applicant, asserts that at its highest Mr Slatter had indicated that providing "two jobs per week would not be a problem". That is not the same as indicating to a panel member that he would be guaranteed an allocation of a minimum of two jobs per week. It is doing no more in my view than indicating a capacity to provide two jobs per week and is simply part of the discussions which would take place between the parties. As I have indicated earlier in this judgment, however, I do not accept the applicant's evidence that the words were uttered by Mr Slatter as alleged by the applicant, but further I again stress that even if they were uttered they do not constitute in my view a sufficient basis upon which the applicant could assert that those words became a term of any contract and/or the basis upon which a claim could be founded for breaches of the TPA as alleged.

33. I am further strengthened in that view by the evidence of Mr Bandy who, when considering the issue of any ongoing allocation of two jobs per week, clearly indicated that he did not expect the two jobs per week to continue for a period of the next 12 to 18 months, due to the variables which would be applicable in the allocation of work by the respondent's panel members referred to earlier in this judgment, including the number of investigations required and the locality of those investigations. Whilst I accept that both the applicant and Mr Bandy may have been reluctant to abandon their work with Meridien prior to becoming involved with the respondent, it does not suggest the applicant told him anything more than "words to the effect that he would receive a minimum of two jobs per week", in response to which Mr Slatter alleged that he said, "I don't see any problems with that." As I have indicated, I find it improbable that Mr Slatter would have uttered those words but even if he did, they are not sufficient to permit the application to succeed.

34. As I have found that the representation was not made in terms as alleged by the applicant, it follows that there can be no basis upon which the claim can succeed, relying upon either s.51A or 52 of the TPA, and nor in the circumstances could I conclude that the respondent has been guilty of unconscionable conduct in breach of s.51AC of the TPA.

35. In the circumstances I am satisfied there has not been any misleading and deceptive conduct on the part of the respondent, as I have found that there has not been any misrepresentation of the kind alleged. Even if, as indicated earlier, I were to accept the applicant's version of events in relation to the conversation between himself and Mr Slatter, that of itself would not constitute in my view misleading and deceptive conduct as it would do no more than demonstrate that the respondent had a capacity to allocate two jobs per week to the applicant who by his own conduct, in seeking other work from other insurers and in correspondence to which I referred, clearly provides evidence and circumstances which do not support the conclusion that the respondent has engaged in misleading and deceptive conduct or that the applicant himself has been misled or deceived.

36. It follows for the reasons given that the application should be dismissed with costs. It is noted the respondent does not pursue the counterclaim and accordingly it would follow the counterclaim should be dismissed.

I certify that the preceding thirty-six (36) paragraphs are a true copy of the reasons for judgment of McInnis FM