FEDERAL COURT OF AUSTRALIA A & D Douglas Pty Ltd v Lawyers Private Mortgages Pty Ltd [2005] FCA 574 A & D DOUGLAS PTY LTD ACN 008 404 180, GRAHAM LESLIE ANDERSEN and HILARY ANDERSEN, YVONNE ELLEN ANDREW, DAVID WILLIAM ARMSTRONG, CHERYL LYNETTE BACKWELL and PHILIP ASHLEY RYAN (as executors of the Estate of ELSIE EDITH BACKWELL), HEINRICH BAUER and SABINE BAUER, DONALD BENGSTON, WILLIAM MALCOLM BRYDEN and MARGARET ANNE BRYDEN, FIONA MARY CAMPBELL (as trustee of the F CAMPBELL SUPERANNUATION FUND), FREDRIKA JANE CARSON, ROBERT JOHN CHARLES MCINTYRE (as executor of the Estate of ALAN STANSFIELD CHENEY), JAMES DAVID CLADINGBOEL and MARIAN ELSIE CLADINGBOEL, KENNETH BARRY DUNCAN and JOAN EDITH DUNCAN (as trustees of the DUNCAN FAMILY SUPERANNUATION FUND), LYNETTE KAY HAMATY, KEITH EDWARD HOLMES (as trustee of the MELZTNER TRUST), PATRICK FYSK HOWDEN, JILLIAN ANNE HUGHES, INFOTEC M.S. PTY LTD ACN 003 954 523, JOHN FRASER KENNEDY and VIVIAN JESSICA KENNEDY, MICHAEL COLLIN MELLISH, WADE RICHARD MELLISH, ERIC JAMES MITCHELL and JULIE ANNE MITCHELL (as trustees of the MITCHELL RETIREMENT FUND), RONALD JOHN MOHR and MARGARET STEWART MOHR, ALLAN JOHN MORRISON and PATRICIA JOY MORRISON (as trustees of the A & P MORRISON PENSION FUND), DELIA MURDOCH, BRIAN CHRISTIAN NIELSEN, KAREN ROSE PARKER, PETER JOHN PERRING, KEITH PRINCE, ROBERT RITORZE, NICOLA SCOTT, NARELLE VIDA SHALLARD (as trustee of the C & N SHALLARD SUPERANNUATION FUND), IAN ARCHIBALD STEWART and DOROTHY STEWART, WARREN GEORGE TROTMAN and CARMEL MYNETTA TROTMAN (as trustees of the WGCM TROTMAN SUPERANNUATION FUND), W J & A M LUKE PTY LTD ACN 000 884 266, GRAHAM ROBERT WATT and PATRICIA ANNE WATT, ANNIE CATHERINE WEBB, DIETER HOLMAN (in his own right and as Executor of the Estate of MILDRED HOLMAN) and ALICE JOYCE TANGEY (in her own right and as Executor of the estate of Kevin Herbert Tangey) v LAWYERS PRIVATE MORTGAGES PTY LTD ACN 010 556 751 AND JONATHON JAMES McCARTHY, BRUCE MICHAEL DURIE, PHILIP ASHLEY RYAN and IAN ALEXANDER NEIL AND ST PAUL INTERNATIONAL INSURANCE COMPANY LIMITED AND QBE INSURANCE (AUSTRALIA) LIMITED ACN 003 191 035 QUD 115 of 2003 DOWSETT J 12 APRIL 2005 BRISBANE IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QUD 115 OF 2003 BETWEEN: A & D DOUGLAS PTY LTD ACN 008 404 180 FIRST APPLICANT GRAHAM LESLIE ANDERSEN and HILARY ANDERSEN SECOND APPLICANTS YVONNE ELLEN ANDREW THIRD APPLICANT DAVID WILLIAM ARMSTRONG FOURTH APPLICANT CHERYL LYNETTE BACKWELL and PHILIP ASHLEY RYAN (as executors of the Estate of ELSIE EDITH BACKWELL) FIFTH APPLICANT HEINRICH BAUER and SABINE BAUER SIXTH APPLICANTS DONALD BENGSTON SEVENTH APPLICANT WILLIAM MALCOLM BRYDEN and MARGARET ANNE BRYDEN EIGHTH APPLICANTS FIONA MARY CAMPBELL (as trustee of the F CAMPBELL SUPERANNUATION FUND) NINTH APPLICANT FREDRIKA JANE CARSON TENTH APPLICANT ROBERT JOHN CHARLES MCINTYRE (as executor of the Estate of ALAN STANSFIELD CHENEY) ELEVENTH APPLICANT JAMES DAVID CLADINGBOEL and MARIAN ELSIE CLADINGBOEL TWELFTH APPLICANTS KENNETH BARRY DUNCAN and JOAN EDITH DUNCAN (as trustees of the DUNCAN FAMILY SUPERANNUATION FUND) THIRTEENTH APPLICANTS LYNETTE KAY HAMATY FOURTEENTH APPLICANT KEITH EDWARD HOLMES (as trustee of the MELZTNER TRUST) FIFTEENTH APPLICANT PATRICK FYSK HOWDEN SIXTEENTH APPLICANT JILLIAN ANNE HUGHES SEVENTEENTH APPLICANT INFOTEC M.S. PTY LTD ACN 003 954 523 EIGHTEENTH APPLICANT JOHN FRASER KENNEDY and VIVIAN JESSICA KENNEDY NINETEENTH APPLICANTS MICHAEL COLLIN MELLISH TWENTIETH APPLICANT WADE RICHARD MELLISH TWENTY-FIRST APPLICANT ERIC JAMES MITCHELL and JULIE ANNE MITCHELL (as trustees of the MITCHELL RETIREMENT FUND) TWENTY-SECOND APPLICANTS RONALD JOHN MOHR and MARGARET STEWART MOHR TWENTY-THIRD APPLICANTS ALLAN JOHN MORRISON and PATRICIA JOY MORRISON (as trustees of the A & P MORRISON PENSION FUND) TWENTY-FOURTH APPLICANTS DELIA MURDOCH TWENTY-FIFTH APPLICANT BRIAN CHRISTIAN NIELSEN TWENTY-SIXTH APPLICANT KAREN ROSE PARKER TWENTY-SEVENTH APPLICANT PETER JOHN PERRING TWENTY-EIGHTH APPLICANT KEITH PRINCE TWENTY-NINTH APPLICANT ROBERT RITORZE THIRTIETH APPLICANT NICOLA SCOTT THIRTY-FIRST APPLICANT NARELLE VIDA SHALLARD (as trustee of the C & N SHALLARD SUPERANNUATION FUND) THIRTY-SECOND APPLICANT IAN ARCHIBALD STEWART and DOROTHY STEWART THIRTY-THIRD APPLICANTS WARREN GEORGE TROTMAN and CARMEL MYNETTA TROTMAN (as trustees of the WGCM TROTMAN SUPERANNUATION FUND) THIRTY-FOURTH APPLICANTS W J & A M LUKE PTY LTD ACN 000 884 266 THIRTY-FIFTH APPLICANTS GRAHAM ROBERT WATT and PATRICIA ANNE WATT THIRTY-SIXTH APPLICANTS ANNIE CATHERINE WEBB THIRTY-SEVENTH APPLICANT DIETER HOLMAN (in his own right and as Executor of the Estate of MILDRED HOLMAN) THIRTY-EIGHTH APPLICANTS ALICE JOY TANGEY (in her own right and as Executor of the estate of Kevin Herbert Tangey) THIRTY-NINTH APPLICANTS AND: LAWYERS PRIVATE MORTGAGES PTY LTD ACN 010 556 751 FIRST RESPONDENT JONATHON JAMES McCARTHY, BRUCE MICHAEL DURIE, PHILIP ASHLEY RYAN and IAN ALEXANDER NEIL SECOND RESPONDENTS ST PAUL INTERNATIONAL INSURANCE COMPANY LIMITED FIRST CROSS-RESPONDENT QBE INSURANCE (AUSTRALIA) LIMITED ACN 003 191 035 SECOND CROSS-RESPONDENT JUDGE: DOWSETT J DATE OF ORDER: 12 APRIL 2005 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. Paragraphs 4, 5 and 6 of the affidavit of Mr Ryan, filed on 4 October 2004 be excluded from the evidence in these proceedings. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QUD 115 OF 2003 BETWEEN: A & D DOUGLAS PTY LTD ACN 008 404 180 FIRST APPLICANT GRAHAM LESLIE ANDERSEN and HILARY ANDERSEN SECOND APPLICANTS YVONNE ELLEN ANDREW THIRD APPLICANT DAVID WILLIAM ARMSTRONG FOURTH APPLICANT CHERYL LYNETTE BACKWELL and PHILIP ASHLEY RYAN (as executors of the Estate of ELSIE EDITH BACKWELL) FIFTH APPLICANT HEINRICH BAUER and SABINE BAUER SIXTH APPLICANTS DONALD BENGSTON SEVENTH APPLICANT WILLIAM MALCOLM BRYDEN and MARGARET ANNE BRYDEN EIGHTH APPLICANTS FIONA MARY CAMPBELL (as trustee of the F CAMPBELL SUPERANNUATION FUND) NINTH APPLICANT FREDRIKA JANE CARSON TENTH APPLICANT ROBERT JOHN CHARLES MCINTYRE (as executor of the Estate of ALAN STANSFIELD CHENEY) ELEVENTH APPLICANT JAMES DAVID CLADINGBOEL and MARIAN ELSIE CLADINGBOEL TWELFTH APPLICANTS KENNETH BARRY DUNCAN and JOAN EDITH DUNCAN (as trustees of the DUNCAN FAMILY SUPERANNUATION FUND) THIRTEENTH APPLICANTS LYNETTE KAY HAMATY FOURTEENTH APPLICANT KEITH EDWARD HOLMES (as trustee of the MELZTNER TRUST) FIFTEENTH APPLICANT PATRICK FYSK HOWDEN SIXTEENTH APPLICANT JILLIAN ANNE HUGHES SEVENTEENTH APPLICANT INFOTEC M.S. PTY LTD ACN 003 954 523 EIGHTEENTH APPLICANT JOHN FRASER KENNEDY and VIVIAN JESSICA KENNEDY NINETEENTH APPLICANTS MICHAEL COLLIN MELLISH TWENTIETH APPLICANT WADE RICHARD MELLISH TWENTY-FIRST APPLICANT ERIC JAMES MITCHELL and JULIE ANNE MITCHELL (as trustees of the MITCHELL RETIREMENT FUND) TWENTY-SECOND APPLICANTS RONALD JOHN MOHR and MARGARET STEWART MOHR TWENTY-THIRD APPLICANTS ALLAN JOHN MORRISON and PATRICIA JOY MORRISON (as trustees of the A & P MORRISON PENSION FUND) TWENTY-FOURTH APPLICANTS DELIA MURDOCH TWENTY-FIFTH APPLICANT BRIAN CHRISTIAN NIELSEN TWENTY-SIXTH APPLICANT KAREN ROSE PARKER TWENTY-SEVENTH APPLICANT PETER JOHN PERRING TWENTY-EIGHTH APPLICANT KEITH PRINCE TWENTY-NINTH APPLICANT ROBERT RITORZE THIRTIETH APPLICANT NICOLA SCOTT THIRTY-FIRST APPLICANT NARELLE VIDA SHALLARD (as trustee of the C & N SHALLARD SUPERANNUATION FUND) THIRTY-SECOND APPLICANTS IAN ARCHIBALD STEWART and DOROTHY STEWART THIRTY-THIRD APPLICANTS WARREN GEORGE TROTMAN and CARMEL MYNETTA TROTMAN (as trustees of the WGCM TROTMAN SUPERANNUATION FUND) THIRTY-FOURTH APPLICANTS W J & A M LUKE PTY LTD ACN 000 884 266 THIRTY-FIFTH APPLICANTS GRAHAM ROBERT WATT and PATRICIA ANNE WATT THIRTY-SIXTH APPLICANTS ANNIE CATHERINE WEBB THIRTY-SEVENTH APPLICANT DIETER HOLMAN (in his own right and as Executor of the Estate of MILDRED HOLMAN) THIRTY-EIGHTH APPLICANTS ALICE JOY TANGEY (in her own right and as Executor of the estate of Kevin Herbert Tangey) THIRTY-NINTH APPLICANTS AND: LAWYERS PRIVATE MORTGAGES PTY LTD ACN 010 556 751 FIRST RESPONDENT JONATHON JAMES McCARTHY, BRUCE MICHAEL DURIE, PHILIP ASHLEY RYAN and IAN ALEXANDER NEIL SECOND RESPONDENTS ST PAUL INTERNATIONAL INSURANCE COMPANY LIMITED FIRST CROSS-RESPONDENT QBE INSURANCE (AUSTRALIA) LIMITED ACN 003 191 035 SECOND CROSS-RESPONDENT JUDGE: DOWSETT J DATE: 12 APRIL 2005 PLACE: BRISBANE REASONS FOR JUDGMENT 1 Objection is taken to pars 4, 5 and 6 of the affidavit of Mr Ryan filed on 4 October 2004. Those paragraphs relate to the level of loss incurred in the course of the conduct by the respondent of its money-lending business from some time in 1995 until some time after the events giving rise to these proceedings. It is said that this evidence goes to an issue raised by the second respondent, namely, non-disclosure, at the time of renewal of the relevant insurance policy, of circumstances concerning the way in which the first respondent's business was conducted. 2 The respondent's case seems to be that losses in individual transactions incurred over that period were within what might be called acceptable parameters for the industry, and that it therefore follows that disclosure of the relevant information was not necessary because non-disclosure of it has not, in fact, caused any additional loss to the insurer. This is said to be a factor relevant to assessing the response which the insurer would have taken had disclosure of these circumstances been made at the appropriate time. 3 As I understand it, the decision as to whether or not disclosure ought to have been made is to be taken having regard to the likely conduct of the insurer at the time of renewal. If that is so, then I fail to see how evidence of circumstances, some of which occurred after the decision to renew, can be in any sense relevant. In any event, the mere fact that no loss was suffered, or that only minimal loss was suffered, as a result of conduct which the insurer otherwise considered to be likely to increase its risk would be unlikely to affect the insurer's decision. Questions of good luck and judgment would obviously be involved. 4 It is simply impossible to say that evidence of this kind could have been relevant to the insurer's decision at the time of renewal. In those circumstances, I consider that pars 4-6 should be excluded. I certify that the preceding four (4) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett. Associate: Dated: 6 May 2005 Counsel for the Applicants: Mr P E Hack SC Mr P J Roney Solicitor for the Applicants: Australian Securities & Investments Commission Counsel for the Respondents: Mr P J Dunning Ms E Longbottom Solicitor for the Respondents: McCarthy Durie Ryan Neil Counsel for the First Cross-Respondents: Mr P Applegarth SC Mr M T Brady Solicitor for the First Cross-Respondents:: Minter Ellison Counsel for the Second Cross-Respondents: Mr H B Fraser QC Mr K A Barlow Solicitor for the Second Cross-Respondents:: Clayton Utz Date of Hearing: 12 April 2005 Date of Judgment: 12 April 2005