Reported Decision: (2007) 14 ANZ Insurance Cases 61-724 New South Wales Court of Appeal CITATION: Caldwell v J A Neilson Investments Pty Ltd [2007] NSWCA 3 HEARING DATE(S): 22/09/06 JUDGMENT DATE: 23 February 2007 JUDGMENT OF: Mason P at 1; Hodgson JA at 4; Ipp JA at 30 DECISION: Appeal dismissed with costs CATCHWORDS: INSURANCE - insured denied indemnity for accident which occurred on property he was leasing to agist stock - whether insurance agent was negligent - distinction between broker and agent - whether agent required to advise insured of exclusions in policy - duty of care owed by an agent to insured Abalos v Australian Postal Commission (1990) 171 CLR 167 Aneco Reinsurance Underwriting Limited (In Liq) v Johnson & Higgins Ltd [1998] 1 Lloyd's Rep 565 Chapman v Walton (1833) 10 Bing 57; 131 ER 827 Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226 Devries v Australian National Railways Commission (1993) 177 CLR 472 Ellis v Wallsend District Hospital (1989) 17 NSWLR 553 Fanhaven Pty Ltd v Bain Dawes Northern Pty Ltd (1982) 2 NSWLR 57 Fox v Percy (2003) 214 CLR 118 Goodrich Aerospace Pty Limited v Arsic [2006] NSWCA 187 Harvest Trucking Company Ltd v P B David [1991] 2 Lloyd's Rep 638 Hawkins v Clayton (1988) 164 CLR 539 CASES CITED: Hedley Byrne & Co Ltd v Heller & Partners [1964] AC 465 L Shaddock and Associates Pty Ltd v Parramatta City Council (1981) 150 CLR 225 Malec v J C Hutton Pty Limited (1990) 169 CLR 638 McNealy v The Pennine Insurance Company Limited (1978) 2 Lloyd's Rep 18 Norwich Fire Insurance Society Ltd v Brennans (Horsham) Pty Ltd (1981) VR 981 Provincial Insurance Australia Pty Ltd v Consolidated Wood Products Pty Ltd (1991) 25 NSWLR 541 San Sebastian v The Minister (1986) 162 CLR 341 Segal v Fleming [2002] NSWCA 262 State of South Australia v Johnson (1982) 42 ALR 161 State Rail Authority of New South Wales v Earthline Constructions Pty Limited (In Liq) (1999) 73 ALJR 306 Streatfield v Winchcombe Carson Trustee Co (Canberra) Ltd (1981) 1 NSWLR 519 Veljkovic v Vrybergen (1985) VR 419 Western Australia Insurance Co Ltd (The "Superhulls Cover" Case) (No 2) [1990] 2 Lloyd's Rep 434 PARTIES: Peter John Caldwell (Appellant) J A Neilson Investments Pty Ltd (Respondent) FILE NUMBER(S): CA 40168/06 COUNSEL: G C Lindsay SC/E A White (Appellant) J Maconachie QC/K E Burke (Respondent) SOLICITORS: Clark Rideaux (Appellant) Colin Biggers & Paisley (Respondent) LOWER COURT JURISDICTION: District Court LOWER COURT FILE NUMBER(S): DC 26/03 LOWER COURT JUDICIAL OFFICER: Neilson DCJ LOWER COURT DATE OF DECISION: 10/11/05 IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40168/06 DC 26/03 MASON P HODGSON JA IPP JA 23 February 2007 PETER JOHN CALDWELL v J A NEILSON INVESTMENTS PTY LTD FACTS Mr Caldwell, the appellant, carried on business as a grazier in Cooma together with his de facto spouse, Ms Kennedy. The respondent, J A Neilson Investments Pty Ltd ("Neilson"), was an insurance agent for AMP Insurance Co Ltd. and did not represent any other insurer. Ms Kennedy asked Mr Neilson, the principal of Neilson, to obtain an insurance policy for her and Mr Caldwell's business. Previously, Mr Caldwell and Ms Kennedy were insured under a policy issued by CGU Insurance Ltd. They wished to obtain cheaper alternative insurance. There was a dispute between the parties as to what was said and what documents exchanged hands at the meeting between Ms Kennedy and Mr Neilson. In particular, Ms Kennedy claimed that she requested Mr Neilson to provide her with a policy that was "as good, if not better" than the CGU policy. Mr Neilson denied that such a request was made. Ms Kennedy also claimed that she left with Mr Neilson the CGU policy document setting out the terms of that policy. Mr Neilson denied having received such document. The AMP policy issued by Neilson to Mr Caldwell and Ms Kennedy contained an exclusion clause limiting public liability cover to claims arising out of Mr Caldwell's occupation of a farming property known as "Pusha Park" near Cooma. The previous CGU policy did not contain such a limitation. While the AMP policy was in force, Mr Caldwell became liable in negligence to Mrs J M Campbell arising out of his occupation of a property known as "Monument Paddock". By reason of the exclusion clause, the AMP policy did not respond to Mr Caldwell's claim for indemnity against his liability to Mrs Campbell. Mr Caldwell sought damages from Neilson in relation to AMP denying his claim. He claimed that Neilson negligently failed to obtain for him an insurance policy that was as good as the CGU policy under which he was previously insured. He further claimed that Neilson was negligent in not warning him about the exclusion clause in the AMP policy. Neilson admitted that it did not obtain insurance cover for Mr Caldwell that was as good as his previous cover under the CGU policy. However, Neilson denied that it was under any duty to do so. Neilson also admitted that it did not warn Mr Caldwell or Ms Kennedy about the exclusion clause but contended that that omission did not amount to negligence. Neilson denied that any negligence on its part caused Mr Caldwell loss. At trial Neilson DCJ dismissed Mr Caldwell's action. His Honour found that Ms Kennedy did not request cover "as good, if not better" than the CGU policy, and that she did not give Mr Neilson the CGU policy document. Mr Caldwell appeals against his Honour's decision. Held per Ipp JA (Mason P agreeing): i. The trial judge was not shown to have failed to use or palpably misuse his advantage, or made findings inconsistent with incontrovertible facts or acted on glaringly improbable evidence or made findings contrary to compelling inferences. ii. The principles set out in Goodrich Aerospace Pty Limited v Arsic [2006] NSWCA 187 are not applicable to this case. Neilson DCJ did not make any errors that could be said to be "fundamental" to his Honour's ultimate decision and the probabilities do not tend persuasively to support one party rather than another. iii. His Honour was not bound to accept the evidence of Ms Kennedy merely because it was not subject to cross-examination. Ellis v Wallsend District Hospital (1989) 17 NSWLR 553 iv. The trial judge's finding that Ms Kennedy requested insurance "to replace the cover previously provided by CGU" is to be understood as a finding that Mr Neilson was asked to provide cover from the AMP in accordance with the categories and amounts reflected in the CGU schedule (subject to the differences that were discussed with Ms Kennedy) at a premium less than that paid to CGU and which could be paid in monthly instalments. Mr Neilson was not required to provide a policy that provided cover in accordance with the same terms as the CGU policy. v. Generally, a broker is the agent of the insured, not the insurer. An insurance agent, generally, is the agent of the insurer and not the insured. Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226 vi. Neilson owed no duty to Mr Caldwell in the capacity of a broker. The agreement by the agent of an insurer to obtain for the insured a policy from the insurer does not, without more, result in the assumption of a duty of care on the part of the agent. An agent or an employee of an insurer, when asked to provide a particular category of insurance cover to a prospective customer, assumes no greater duty to the customer than does a person who sells any product having technical qualities beyond the knowledge or understanding of the general public. vii. The mere act of completing the proposal form on behalf of the prospective insured does not require the agent to take reasonable steps to give advice about the quality, extent and conditions of the cover being sought. viii. It is not appropriate to describe the scope of the duty of care imposed on an agent, each time an agent agrees, on behalf of an insurer, to offer insurance cover to a prospective insured, as being the degree of care and skill which any insurance agent of ordinary produce and ability might be expected to show in the situation. This would be imposing a wider duty than the circumstances warrant. ix. Neilson DCJ erred in his finding that agistment of stock by Mr Caldwell was irrelevant to the proposed risk for which he sought insurance cover. There are many forms of agistment and it is too broad a statement to say that any form of agistment would be irrelevant to the risk. Streatfield v Winchcombe Carson Trustee Co (Canberra) Ltd (1981) 1 NSWLR 519 x. The views of the expert witness must be taken into account in considering whether Mr Neilson was required to ask about agistment properties and whether he was required to inform Ms Kennedy of the limited nature of the AMP public liability cover. Provincial Insurance Australia Pty Limited v Consolidated Wood Products Pty Limited (1991) 25 NSWLR 541 xi. There were a multitude of exclusions under the AMP policy that were notionally capable of limiting AMP's liability under the categories of insurance covered by the policy. Although the exclusion limiting public liability cover to occurrences arising out of Mr Caldwell's occupation of Pusha Park now, in hindsight, appears important, it is likely that, at the time the policy was issued, all the exclusionary provisions would have been regarded as potentially important. xii. The existence of the other exclusionary provisions demonstrates the practical difficulties that would have faced Mr Neilson if he were required to warn Ms Kennedy of all exclusions in the policy that could have an impact on the cover provided. It could not reasonably have been expected of him, as an agent of AMP, to undertake such an exercise. Mr Caldwell's case is based on impermissible hindsight reasoning. xiii. Neilson DCJ did not err in holding that Mr Neilson was not negligent in failing to ask Ms Kennedy whether Mr Caldwell had stock on properties other than Pusha Park and in failing to warn him about the particular exclusion. xiv. Based on the factual evidence and findings made by Neilson DCJ the elements of causation have not been satisfied. ORDERS Appeal dismissed with costs IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40168/06 DC 26/03 MASON P HODGSON JA IPP JA 23 February 2007 PETER JOHN CALDWELL v J A NEILSON INVESTMENTS PTY LTD Judgment 1 MASON P: I agree with Ipp JA. 2 The appellant (through its agent Ms Kennedy) dealt with Neilson in its role as an agent for AMP Insurance Co Ltd, not as a broker. The limited scope of an insurance agent's duty of care was not breached by Mr Neilson's failure to enquire whether the proponent "had any other locations" apart from Pusha Park. Merely because that was Mr Neilson's usual practice did not enlarge the scope of the relevant duty or establish that his silence was negligent. 3 Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 was not, in my view, engaged. The appellant can point to no misstatement on Neilson's part. Nor can he show that Neilson ought to have realised that he (or Ms Kennedy) was relying on Neilson to provide more information than was actually imparted concerning the matter that, in hindsight, is now seen as critical (see Mutual Life & Citizens' Assurance Co Ltd v Evatt (1968) 122 CLR 556 at 571). 4 HODGSON JA: The circumstances giving rise to this appeal and the issues it involves are set out in the judgment of Ipp JA. I disagree with Ipp JA in the result, but the reasons for my disagreement are in a small compass, and in my judgment I will focus on those reasons. 5 I agree with Ipp JA's account of the basic facts; and I agree with him that, for the reasons he gives, grounds are not made out for setting aside the primary judge's findings on the basic facts, in particular, the primary judge's finding not accepting that Ms Kennedy requested cover "as good or better" than that provided by CGU or that she gave Mr Neilson a copy of the CGU policy. 6 I also agree with Ipp JA's discussion of the duties owed by insurance brokers, and of the distinction between a broker and an agent and the duty of care owed by an agent, and with his comments on Veljkovic v Vrybergen [1985] VR 419. However, for reasons I will give, in my opinion a duty of care was attracted in the circumstances of this case, and was breached. 7 As noted by Ipp JA, the primary judge found that Ms Kennedy "requested insurance over Pusha Park, insurance to replace the cover essentially provided by CGU, showing to Mr Neilson the CGU renewal notice which was not taken up by Ms. Kennedy". 8 It is clear that, at the second meeting between Ms. Kennedy and Mr. Neilson, they went through the AMP proposal form, and Ms. Kennedy provided the information that Mr. Neilson inserted. 9 This form is headed "CommonSense Insurance Contract for the Farmer", and commences with a table with boxes calling for the insertion of details of "Full Name/s of Applicant", "Postal Address", "Type of Farming", "Name/s and Addresses of Mortgagees (if any)", "Property Name/s and location" and "Period of Insurance". In these boxes, Mr. Neilson had written respectively "P.J. Caldwell & J.A. Kennedy", "'Pusha Park', Rose Valley Rd. Bunyan (via Cooma)", "Grazing", [blank], "'Pusha Park', Rose Valley Rd. Bunyan (via Cooma)" and "From 30/11/1999 to 30/11/2000 400pm". 10 There follow questions concerning other insurance, claims and so on, including a question "Is the business having difficulty meeting its immediate obligations or those in the foreseeable future"; and then tables concerning various types of cover being sought, and the amount of cover. The tables concerning "Farm Dwellings", "Farm Dwelling Contents", "Farm Property" and "Public Liability" were completed. 11 In the table concerning Public Liability, the form states "Show the Liability Covers required with", and there follow four categories, namely "General Farm Liability", "Host Farming", "Private Airfield Liability" and "goods in Custody" with a number of boxes for ticking. The only box ticked was for General Farm Liability in the sum of $2 million. Provision in the table for advising number of working properties, employees and casual employees was left blank. 12 The form also refers to the applicant's duty to disclose "every matter that you know, or could reasonably be expected to know, is relevant to our decision whether to accept the risk of the insurance, and if so on what terms". As noted by Ipp JA, Ms. Kennedy agreed that, after the form was filled in, Mr. Neilson informed her that if at any stage there were any changes she should inform AMP so that those changes could be noted on the policy. 13 Evidence was given for the appellant by Mr. Hoffman, to the effect that it was common for graziers in the Cooma area to "agist" their stock on properties other than their own. Mr. Neilson's evidence in chief was that he had farmers that had insurance policies where agistments were listed on the policy; and in cross-examination, he accepted that it was his practice to ask farmers requesting insurance "Do you have any other situations?". Mr. Neilson was unable to remember whether he asked Ms. Kennedy this, and Ms. Kennedy's evidence was that she was not asked such a question. 14 Although it was not until July 2001 that the Monument Park property was leased, the fact was that the business was using property other than Pusha Park at the time that the proposal was signed. The business had a lease over the Cooma Rifle Range. It appears that the business had cattle on other properties also, but it does not seem clear from the evidence what the nature of the arrangement in relation to those properties was, in particular whether or not it was such that it could be said the business was in occupation of those properties. In my opinion, there is no reason why Ms. Kennedy, if asked, would not have provided information at least about Cooma Rifle Range. Although there was no explicit finding by the primary judge, in my opinion the inevitable inference is that the question was not asked; and I note that Ipp JA says "It does not seem" that Ms. Kennedy was asked about other properties. 15 It is clear that Ms. Kennedy was requesting insurance for farm property and a farm business. She was asking for categories reflected in the CGU renewal notice, one of which was identified as "Business Liability"; and it is clear that that was the category intended to be replaced by the AMP category "Public Liability". That is, it is clear that the relevant cover being requested was public liability in respect of a farm business. 16 It was the fact that farmers in the area commonly had cattle on properties other than their own farm property, either by some kind of agistment arrangement (which may or may not have involved "occupation" of that property) or by some kind of lease or similar arrangement. Mr. Neilson had farmers with insurance policies disclosing "other situations". For farmers having livestock on other properties in circumstances that amounted to occupation by the business of those properties, a public liability policy in respect of their farm business which excluded liability arising in connection with occupation of other land would be very seriously deficient. As noted by Ipp JA, the AMP policy did contain such an exclusion. 17 It is true that the AMP policy, like all insurance policies, contained a multitude of conditions and exemptions; and there is force in the comment that, with the wisdom of hindsight, any condition or exemption which was fatal in a particular case could be seen as extremely important. However, in my opinion, a public liability policy for a business, which excluded cover in respect of liability incurred at some location where the business is carried on, is deficient in a way that is fundamentally different from any possible deficiency associated with the types of conditions and exemptions that could reasonably be expected in an insurance policy. 18 Previous policies held by the appellant's business did not have such an exclusion; and, in my opinion, it is not something for which a person seeking to insure a farm business would be on the lookout. I note that the AMP proposal makes no reference to the area of the situation, or even the number of livestock on the farm, so it contains nothing to alert the farmer making a proposal to the importance of the precise extent of the property on which livestock may be situated. 19 The circumstance that the entry placed in the proposal next to "Property Name/s and locations" was the same as that next to "Postal Address" does not seem to me to indicate a positive assertion by Ms. Kennedy that she was only seeking insurance concerning Pusha Park and activities carried on there. In my opinion, it is plain that she was seeking insurance for a farm business, it being the fact that this farm business was conducted on and from Pusha Park; and so in circumstances where the question of "other situations" was not raised, in my opinion it is not surprising that she identified Pusha Park as the "Property Name/s and location". 20 Ms. Kennedy was seeking advice, concerning insurance to replace CGU's "Business Liability" insurance, from Mr. Neilson, as a person familiar with AMP's policies. It is true that Mr. Neilson was agent for AMP alone, and could only provide an AMP policy. However, the AMP's policy had a very significant pitfall in relation to giving public liability cover to a farming business carried on and from a particular property, if that business happened to involve occupation of any other property, as farming businesses not infrequently did. In those circumstances, in my opinion, it was incumbent on Mr. Neilson to enquire, as was his usual practice, as to whether the business "had any other locations"; and if told that it had, to advise of the exclusion. The duty is of the kind discussed in Hedley Byrne & Co. Limited v. Heller & Partners [1964] AC 465, and not one arising from Mr. Neilson's position as an agent. 21 It follows from my earlier discussion that Mr. Neilson breached that duty by not asking Ms. Kennedy whether the business had any other locations, and not advising of the exclusion. 22 The question then is, did the appellant prove causation of loss? An affirmative answer requires two steps: a finding that, when asked the question and given the advice, Ms. Kennedy would have disclosed other locations, and paid any additional premium required; and a finding that, after the Monument Park property was leased and before the accident, the appellant would have disclosed to AMP the occupation of Monument Park and paid any additional premium. 23 I have no hesitation in relation to the first of those steps. I have already indicated my view that, if asked about other locations, Ms. Kennedy would have disclosed at least the Cooma Rifle Range. It is true that Ms. Kennedy and the appellant had shown some slackness in renewing their policy, but there is no reason to doubt Ms. Kennedy's evidence that she regarded public liability insurance as important; and, in my opinion, at least unless the premium difference was large, there is no reason to doubt she would have required inclusion of at least Cooma Rifle Range in the policy. In circumstances where the question of what Ms. Kennedy would have done is hypothetical because of Mr. Neilson's breach of duty, and where information about increased premiums is within his knowledge and not within the appellant's knowledge, in my opinion there was an evidentiary onus on Mr. Neilson, if he wished to submit that Ms. Kennedy would have been deterred from including further locations by larger premiums, to lead evidence of what the premium differential would have been. 24 The second step is more questionable. That is, would the appellant and/or Ms. Kennedy, between the time Monument Park was leased in July 2001 and the time of the accident on 24 July 2002, have disclosed to AMP the leasing of Monument Park? The insurance with AMP was renewed in November 2000, and again in November 2001. The slackness in relation to renewal of insurance in 1999 is a factor to be taken into account; but so also is the circumstance that it is necessary to consider the hypothetical situation only because of Mr. Neilson's breach of duty of care directed at avoiding risks of the kind which in fact eventuated. In those circumstances, in my opinion it is not appropriate to lean in Mr. Neilson's favour in assessing the clarity and forcefulness with which the issue would have been brought to the attention of Ms. Kennedy and the appellant if Mr. Neilson had fulfilled his duty of care, or in assessing the degree of appreciation of the issue that would have been brought home to Ms. Kennedy and the appellant in that event. 25 Having regard to those considerations, I would infer on the balance of probabilities that, had the duty of care not been breached, the leasing of Monument Park would have been disclosed to AMP at least by the time of renewal of the policy in November 2001; and as before, I would infer that the appellant would have paid any additional premium that may have been required. 26 There are two further questions to be considered in relation to damages. 27 First, is this a case where recovery should be limited to a percentage of the loss suffered, on the basis that it is not 100% certain that the loss would have been avoided if the duty of care had been fulfilled? In my opinion, the answer is no. No damage was suffered, and therefore no cause of action arose, until the injury occurred in July 2002. Until then, there was merely the chance of a loss, and there never was in this case the loss of a chance: cf. Segal v. Fleming [2002] NSWCA 262 at [20]-[27] and cases there cited. A loss, giving rise to a cause of action, has to be proved on the balance of probabilities, and when so proved, it is taken as established as certain. It is only then that considerations discussed in Malec v. J.C. Hutton Pty. Limited (1990) 169 CLR 638 come into play. 28 Second, is this a case where it is necessary to consider, not merely whether a plaintiff has established each fact on which the plaintiff relies on the balance of probabilities, but also whether the plaintiff has established the combination of all such facts on the balance of probabilities? If a plaintiff needs to establish two facts to establish liability, and if the probability of each of these facts is entirely independent of the probability of the other, and if the probability of each of these two facts is 0.6, the probability of their combination is 0.36. As I pointed out in my article "The Scales of Justice: Probability and Proof in Legal Fact Finding" (1995) 69 ALJ 731, courts generally look for proof on the balance of probabilities of each fact and each element that the plaintiff relies on; and generally this is appropriate, because the Court is not performing a mathematical operation, because the probabilities of various facts are generally not independent, and the combining of weighted probabilities of all facts and all alternatives, making allowance for the inter-dependence of probabilities and these alternatives, would be impossibly complex. However, in cases where a plaintiff requires many facts to be established, it may be appropriate, having found each fact on the balance of probabilities, to take a broad view as to whether one is satisfied on the balance of probabilities of the totality. Doing so in this case, I think all factual elements of the appellant's case, apart from the last, are very strongly established; and I am sufficiently confident of the last element to be satisfied of the totality, on the balance of probabilities. 29 So, in my opinion, the appeal should be allowed, and a verdict given for the appellant for damages to be assessed. The respondent should pay the appellant's costs of the appeal, and have a Suitors' Fund certificate if otherwise entitled; and the costs at first instance should be determined by the judge assessing damages. 30 IPP JA: Mr Caldwell's claim against Neilson 31 This appeal concerns a claim for damages in negligence by an insured against his insurer's agent. The insured is the appellant, Mr Caldwell, who, together with his de facto spouse, Ms Kennedy, carried on business as a grazier near Cooma. The agent is the respondent, J A Neilson Investments Pty Ltd ("Neilson"). Since 1989, Neilson, through Mr Neilson, who controlled the company, carried on business in Cooma as an agent for AMP Insurance Co Ltd. Neilson did not represent any other insurer. 32 In November 1998, Neilson arranged for AMP to issue to Mr Caldwell and Ms Kennedy a composite policy of insurance, which included a public liability section. While the policy was in force, Mr Caldwell became liable in negligence to Mrs J M Campbell arising out of his occupation of a property known as "Monument Paddock". By reason of an exclusion clause applicable to the public liability section, the AMP policy did not respond to Mr Caldwell's claim for an indemnity against his liability to Mrs Campbell. Mr Caldwell thereupon brought proceedings against Neilson claiming damages arising out of the failure of the AMP policy to respond to his claim. 33 At trial, although Mr Caldwell's claim was based on a number of grounds, he relied, principally, on two propositions. The first was that Neilson negligently failed to obtain for him an insurance policy as good as a CGU Insurance Ltd policy under which, previously, he had been insured. The second was that Neilson negligently failed to warn him that the AMP policy contained the exclusion clause. The exclusion clause limited public liability cover to liability arising out of Mr Caldwell's occupation of a property (known as "Pusha Park") that he owned and farmed near Cooma. 34 Neilson admitted that it did not obtain cover as good as that under the previous CGU policy, but denied that there was a duty on it to do so. Neilson also admitted that it did not warn Mr Caldwell (or Ms Kennedy) about the exclusion clause but contended that that omission did not amount to negligence. 35 Neilson denied that any negligence on its part caused Mr Caldwell loss. It also denied that Mr Caldwell had proved that he had sustained any loss due to its negligence. 36 Neilson DCJ dismissed Mr Caldwell's action. In doing so, his Honour did not deal with damages. 37 Mr Caldwell appeals against his Honour's decision and persists in his contention that Neilson negligently failed to obtain an insurance policy as good as the CGU policy and that it negligently failed to warn him about the exclusion clause. Mr Caldwell's insurance history 38 In 1988, Mr Caldwell and Ms Kennedy acquired Pusha Park, a grazing property of some 50 hectares. In consequence, they obtained that year a policy of insurance from Union Insurance Company Limited. The Union Insurance policy covered farm dwellings, contents, valuables (including specified valuables which comprised various saddles), farm property, "paddock risk and agistment", business liability, theft and road transit. Business liability cover was limited to $1,000,000 and to liability "happening in connection with the Business carried on at and from the Situation". "Business" was defined to mean "farmer, grazier, pastoralist or other like pursuits" and "Situation", under the policy, meant Pusha Park. 39 There was no evidence of any change in these insurance arrangements until 1998. In that year, Union Insurance was taken over by Commercial Union Assurance Company of Australia Limited and from 28 October 1998 to 28 April 1999 Mr Caldwell and Ms Kennedy were insured under a Commercial Union policy. This policy covered domestic property, including the specified saddles, farm property, farm machinery (including working dogs), theft, hay, fencing, livestock (comprising sheep and horses) and trees, business liability and road transit. The business liability cover was limited to $2,000,000 and was in respect of liability "due to an occurrence in Australia" and in connection with the business of Mr Caldwell and Ms Kennedy, including that arising from their "ownership or occupancy of any land, building or structure". 40 At some point, while Mr Caldwell and Ms Kennedy were insured by Commercial Union, CGU Insurance Limited took over that company. In consequence, CGU became their insurer under a policy that was taken out for a period of six months from 28 April 1999 to 28 October 1999. 41 The CGU policy covered domestic property, including specified valuables (the saddles), farm property, farm machinery (including two working dogs), theft, hay, fencing, livestock (including sheep and horses) and trees, business liability and road transit. The domestic and farm property cover, and the cover relating to hay, fencing, livestock and trees applied only to the "situation" which, under the policy, was Pusha Park. The farm machinery cover was in respect of loss anywhere in Australia. Business liability cover was in respect of "amounts you are legally liable to pay for personal injury or damage to property due to an occurrence in Australia … arising from … your ownership or occupancy of any land, building or structure" from which the insured business was carried on. 42 On 12 September 1999, CGU sent Mr Caldwell and Ms Kennedy a renewal notice for the period 28 October 1999 to 28 October 2000. According to the renewal notice the premium payable was $1,713.56. The premium was not paid and on 7 November 1999 CGU sent Mr Caldwell and Ms Kennedy a reminder. 43 When Ms Kennedy received the renewal notice from CGU she was not happy with the terms relating to the payment of the premium. She did nothing about the matter, however, until 28 November 1999. On that date, she discussed the matter with the CGU representative in Cooma. By then, a month had elapsed since the expiry date of the CGU policy. Ms Kennedy was not satisfied with her discussions with the CGU representative. She did not renew the CGU policy and drove directly from the CGU representative to Mr Neilson's office in Cooma, some two minutes away. 44 Ms Kennedy was able to see Mr Neilson immediately. She knew that he was an AMP agent and sold only AMP policies. She requested him to obtain certain insurance for her and Mr Caldwell. There was a dispute between the parties as to what was said at this meeting and what documents Ms Kennedy left with Mr Neilson. 45 Two days later, on 30 November 1999, Ms Kennedy called on Mr Neilson again and spent some time with him. He completed, in her presence, an AMP policy proposal relating to her and Mr Caldwell and she signed it. On that day, AMP issued the composite policy to Mr Caldwell and Ms Kennedy. 46 The AMP composite policy was a bulky document containing many terms and conditions and numerous exclusionary clauses (in these respects, the CGU policy was no different). The AMP policy did not cover all the categories of risk previously covered by the earlier policies. There were other differences. Public liability cover was reduced from $5 million (that is, under the CGU policy) to $2 million. Unlike the CGU policy, the AMP policy did not cover working dogs, sheep, horses, the specified valuables (the saddles) and road transit. The premium under the AMP policy was payable in monthly instalments whereas one lump sum payment was required under the CGU policy. The premium payable under the AMP policy was $1,028.98. This was substantially less than the premium of $1,713.56 sought by CGU (although the segment of public liability cover appears to have cost more under the AMP policy than under the CGU policy). 47 The CGU policy and the AMP policy were entirely different policy documents; the terms and conditions of each policy were not the same. A crucial difference (for the purposes of this appeal) was the exclusion clause in the AMP policy that gave rise to the litigation between the parties. The exclusion clause was in the business liability section of the AMP policy. It provided: "This policy section does not insure liability arising directly or indirectly out of or in connection with the ownership or occupation of any building or land other than land or building at the situation." As the "situation" under the policy was Pusha Park, the exclusion clause meant that the public liability cover provided by the AMP policy applied only to liability arising out of or in connection with Mr Caldwell's occupation of that property. In this respect, the AMP policy differed materially from the CGU policy, which provided public liability cover for occurrences throughout Australia. 48 There was no evidence that Mr Caldwell and Ms Kennedy read the AMP policy (or, indeed, the CGU policy). The inference to be drawn from their evidence is that they did not. They later renewed the AMP policy and the renewed policy was in force on 24 July 2002 (some 19 months later) when Mrs Campbell was injured. 49 The following points may be made from this account of the insurance cover obtained by Mr Caldwell and Ms Kennedy over the period 1988 to 1999: · For some ten years, from 1988 to October 1998, Mr Caldwell and Ms Kennedy had obtained public liability cover that was limited to liability "happening in connection with" their grazing business carried on at, and from, Pusha Park. · For a period of one year, from 28 October 1998 to 28 October 1999, their public liability cover under the Commercial Union and CGU policies was in respect of occurrences in connection with their ownership or occupancy of any land. · The change in their public liability cover appears to have occurred simply by reason of Commercial Union's takeover of the business of Union Insurance and its provision of cover in accordance with its standard policy; the change did not occur at the request of Mr Caldwell and Ms Kennedy (and there is no evidence that they were aware of it). · The "situation" under each policy issued since 1988 was Pusha Park alone; this meant, for example, that only sheep and horses at Pusha Park were covered (until the AMP policy was issued, when they were excluded). · The AMP policy reduced the extent of public liability cover to occurrences arising out of the occupation of Pusha Park alone; Mr Caldwell and Ms Kennedy only became aware that such a change had taken place after Mrs Campbell was injured. The claim and cross-claim in the District Court 50 On 24 July 2002, when the renewed AMP policy was in force, a heifer owned by Mr Caldwell and Ms Kennedy escaped from Monument Paddock. Mrs Campbell was then driving along the Monaro Highway north of Cooma, the heifer struck her vehicle and she was injured. Other parties owned Monument Paddock but, at the time, Mr Caldwell was in sole occupation of the property under what Neilson DCJ found to be "some form of lease". Monument Paddock was a property entirely separate from Pusha Park. 51 Mrs Campbell brought proceedings in the District Court against Mr Caldwell alleging that he had negligently failed to secure the fence of Monument Paddock. Mr Caldwell cross-claimed against Neilson on the basis I have described. 52 Neilson DCJ upheld Mrs Campbell's claim against Mr Caldwell and awarded her damages of $129,014.05. In a separate judgment, his Honour dismissed Mr Caldwell's cross-claim against Neilson. Mr Caldwell's appeal is against his Honour's decision in regard to the cross-claim against Neilson. Mr Caldwell's case at trial 53 Mr Caldwell's case at trial was based, principally, on two witnesses, Ms Kennedy (who had negotiated with Mr Neilson for the issuing of the AMP policy) and Mr Hoffman (an expert in insurance practice). 54 Ms Kennedy understood that Mr Neilson was an AMP agent and sold only AMP policies. She went to him to obtain a suitable AMP policy. 55 During the course of casual conversation at the commencement of their first meeting on 28 November 1999, Ms Kennedy told Mr Neilson that Mr Caldwell was at Adaminaby "with the sheep getting ready for shearing". On occasions, Mr Caldwell worked as a farm hand shearing sheep. Ms Kennedy did not tell Mr Neilson that Mr Caldwell was shearing sheep that he was agisting. 56 As at 28 November 1999, Mr Caldwell was agisting stock at property at Adaminaby and at Valley Way. He was not the lessee of these properties. He was, however, leasing property at the Cooma Rifle Range and had put stock on that property. 57 Mr Neilson did not ask Ms Kennedy if she and Mr Caldwell agisted stock on properties other than Pusha Park or leased properties for stock-grazing purposes, and Ms Kennedy did not tell Mr Neilson of the agistment and leasing arrangements that were current. Ms Kennedy did not provide any information to Mr Neilson "with respect to requiring cover on any property other than Pusha Park". 58 Ms Kennedy testified that, when she and Mr Neilson commenced their business discussions on 28 November 1999, she told him that she had "a problem" with the insurance policy that she had received from CGU. She said that she told Mr Neilson that she wanted him "to find me a policy that was as good, if not better" than the CGU policy. According to her, he said that he would "look into it for me". She said that she left with Mr Neilson the CGU "Renewal Invitation and Renewal Schedule" (that CGU had sent her) and the CGU policy. 59 The CGU schedule set out the names of Mr Caldwell and Ms Kennedy as the insured, it described the "situation" as Pusha Park, it set out different categories of cover, the sum insured under each category and the premium payable in respect of each. The schedule said nothing about the terms and conditions that governed the cover. 60 Ms Kennedy met with Mr Neilson at his office two days later. This was their second meeting. Between her first and second visit, Mr Neilson had marked the CGU schedule and highlighted parts of it. After discussing what cover was needed, he deleted items in the CGU schedule that she considered "frivolous and not necessary". Although Ms Kennedy agreed to reduce the limit of the public liability cover, she said that she "was very adamant about the fact that I needed a good public liability". She remembered saying, "I can always rebuild a house, but we really need a very good public liability policy". 61 Ms Kennedy agreed that at that meeting she and Mr Neilson went through the AMP proposal form and she provided the information that Mr Neilson inserted. She did this in response to questions that Mr Neilson asked her. 62 The AMP standard proposal form contained a series of empty blocks in which, amongst other things, an applicant for insurance was required to insert his or her full names, postal address, the type of farming involved, and the "property name/s and location/s" and the "period of insurance." 63 The proposal form completed by Mr Neilson had the names of Mr Caldwell and Ms Kennedy filled in as the applicants, and it showed their postal address as Pusha Park, the type of farming involved as "grazing" and Pusha Park as the "property name/s and location/s". Ms Kennedy signed the proposal form towards the end of the meeting. She agreed that it was "something" that they "both worked through together". 64 Ms Kennedy agreed that, after they had gone through the proposal form, Mr Neilson informed her that, if at any stage there were any changes, she should inform AMP so those changes could be noted on the policy. 65 Mr Hoffman testified: "A rural insurance agent, especially in drought-prone Cooma would (or should) know that it is a totally common practice to agist stock on other properties whether brought about by drought conditions or sheer lack of acreage on the owned property and that the insured could face liability claims arising from any agistment arrangement he might make whether by formal contract or on a [handshake]." 66 He said: "Even if Neilson would not have known that the insured regularly used agistment for his stock, given this common practice in this type of farming, especially in the Cooma area, the very minimum Neilson should have done is to ask the specific question 'Do you ever agist stock as I must note this on the Schedule and as and when you change locations you must give me notice so that I can advise the insurer'. The policy exclusion is not aimed at a refusal to accept such risks, but requiring notice to be given for noting as a 'situation' and possibly charging premium [therefore]." Mr Neilson's version 67 When asked whether, during their first meeting on 28 November 1999, Ms Kennedy asked him to find a policy that was as good as if not better than the CGU policy, Mr Neilson said, "I don't think I could verify those words". He explained: "I think she was looking for something. She was having problems with her previous insurer. I wasn't privy to what they were. She was looking for something that was equivalent or cheaper and I think she was interested in paying on a monthly direct debit situation instead of an annual premium" 68 Mr Neilson was asked what steps he would have taken had Ms Kennedy told him she wanted a policy as good as if not better than CGU and he replied: "Well, first and foremost I would look at the schedule she provided to us. I would generate a quote through the computer system that AMP provided to us and then that would be given to her." In other words, Mr Neilson would not have understood Ms Kennedy's statement to require him to compare the terms and conditions of the two respective policies. 69 Mr Neilson said that Ms Kennedy only provided him with the policy schedule from CGU. He did not recollect any policy booklet from CGU "at all". He said that, had Ms Kennedy wanted a policy as good as, if not better than, the CGU policy, he would not have requested to see the CGU policy. He explained that he worked for the AMP alone and did not see it his duty to compare and contrast the CGU policy with an AMP policy. 70 In the two days between the first and second meetings, Mr Neilson worked out the cost of the insurance Ms Kennedy had requested. In doing so, he highlighted parts of the CGU schedule for the purpose of discussing with Ms Kennedy the various categories of insurance she wanted. 71 During the second meeting, Mr Neilson and Ms Kennedy went through the proposal form. Mr Neilson asked Ms Kennedy questions with the proposal form in front of him. He described what occurred as follows: "We proceeded to go through the particular document. The various questions were asked on the front cover as it goes down the AMP requirements and then we started to work out what sums insured that she would be comfortable with." He said that, in consequence of their discussions, there were some reductions from the cover referred to in the CGU schedule. 72 In his evidence in chief, Mr Neilson said that, as at November 1999, he had farmers on his books as insureds with agistment properties listed on their policies. In cross-examination, he said that many of the farm policies that he had arranged for farmers would refer to "other situations" but not "agistments". This answer appears to mean that, while some farmers had been provided with cover in respect of agistment properties, their policies did not refer expressly to "agistment" properties. 73 Mr Neilson said, in chief, that customers might provide information about agistments, but he did not ask them whether they agisted stock. He said that, rather, it was his general practice to elicit from farmers whether they had "any other situations" (or locations). This was consistent with his answer in cross-examination set out in the previous paragraph. Mr Neilson was not able to recall whether he had had a conversation to this effect with Ms Kennedy. 74 Mr Neilson said that, had Ms Kennedy disclosed that she and Mr Caldwell were running livestock on agistment property, he would have referred to this on the first page of the proposal in the block relating to "type of farming" and he would have put the property names and locations of the agistment properties in the block relating to "property names and locations". 75 Mr Neilson did not draw the inference from anything that Ms Kennedy said to him that Mr Caldwell was agisting sheep at Adaminaby and did not know that they were carrying on business at locations other than Pusha Park. The trial judge's findings 76 Neilson DCJ remarked that Mr Neilson's recollection of what occurred was sketchy and was largely based on his usual practice. The judge observed that, considering that the relevant events occurred almost six years before the trial, Mr Neilson's hazy memory was "completely unsurprising". He noted that at least four years had gone by before Mr Neilson was asked to recall the detail of his dealings with Ms Kennedy. 77 Ms Kennedy's recollection of the events was more sharply focused. She maintained she had a good recollection of what occurred. The judge, however, said that he did not accept her recollection "to be as acute as she would have me believe". His Honour noted that, she too, was probably first required to recollect what had occurred some four years after the events in question. His Honour said: "In the course of her giving evidence I formed, reluctantly a not favourable impression of Ms Kennedy. She was eager to argue her case as an advocate and not to give evidence impartially. I approach her evidence with caution." 78 Neilson DCJ found: "[Ms Kennedy] requested insurance over Pusha Park, insurance to replace the cover essentially previously provided by CGU showing to Mr Neilson the renewal notice which was not taken up by Ms Kennedy." 79 His Honour was not persuaded that Ms Kennedy said words to Mr Neilson to the effect that she wanted cover "as good as or better than that provided by the CGU". He found that Ms Kennedy did not give Mr Neilson the CGU policy document. In making this finding, the judge relied on a number of matters. 80 Firstly, he considered it likely that CGU sent its policy document to Mr Caldwell and Ms Kennedy on or before 12 April 1999 (when it became their insurer) and not, as Ms Kennedy said, prior to her receipt of the CGU renewal notice of 12 September 1999. Secondly, his Honour said that there would be little point in Ms Kennedy giving the policy booklet to Mr Neilson because all he was in a position to do was to issue an AMP policy. He could not match the terms and conditions of the CGU policy. Thirdly, his Honour said that had Ms Kennedy given the policy to Mr Nelson she would have done so in the course of requesting him to compare the respective terms and conditions of the two policies; a conversation to this effect would have been "unusual" and, had it occurred, Mr Neilson would have remembered it. Fourthly, "perhaps" Mr Neilson would have marked the policy document "when considering, if called upon to do so, any difference in policy wordings"; however, he had only marked the CGU schedule. Fifthly, his Honour did not accept that Ms Kennedy was concerned about a difference in policy wordings. He found that she only became interested in this issue after the indemnity issue was first discussed in 2004 in connection with Mr Caldwell's claim. His Honour said: "Ms Kennedy's concern or primary concern was to obtain a policy in which she could pay by monthly or quarterly instalments and also … reduce the quantum of the insurance premium". 81 His Honour distinguished between "agistment" of stock and the lease of property on which stock was placed. He said: "Properly, an agistment is when an owner of stock sends his stock to graze on another person's land and pays that other person a fee per head, per period, for the stock to graze on the second person's land." Agistment in this sense, his Honour considered, was to be distinguished from the situation where "a person leases another property and places his own stock on the leased property to graze". His Honour said that agistment in the sense described ought not to increase the potential public liability of the stockowner as the escape of stock so agisted would not make the owner of the stock liable for damage caused by the stock escaping, unless the owner knew or ought to have known that the fencing on the property concerned was inadequate. Moreover, if the fencing were inadequate, the bailee would be liable to indemnify the owner. Accordingly, his Honour considered that the mere agistment of stock was not a matter that needed to be disclosed to, or inquired of, by an insurance agent. 82 Neilson DCJ said in regard to Mr Neilson's omission to ask about agistment: "On[e] would have thought that the proponent for insurance would volunteer the properties in respect of which insurance was required. Whilst I accept that agistment of stock especially in drought conditions in a rural area such as Cooma is common it would not, in my view, require an agent for an insurer to seek details of agistment as it was irrelevant to the proposed risk. The proposed risk was the landholdings of the proponent and one would think that it was the duty of the proponent to disclose all the landholdings. I do not accept that it was the duty of Mr Neilson to inquire of Ms Kennedy whether she and or her de facto spouse had any other properties which should be insured. Even if they did hold other properties, for all Mr Neilson might know, they were insured by another underwriter and did not need further insurance from AMP." 83 His Honour found: "Mr Neilson made it clear that when he speaks to clients generally he always advises them to advise him of any material change in circumstances. I accept that he did so on this occasion with Ms Kennedy." 84 This finding was supported, substantially, by Ms Kennedy's agreement that Mr Neilson informed her that, if at any stage there were any changes in what she had told him, she should notify AMP so those changes could be noted on the policy. His Honour observed that when Mr Caldwell took up the lease of Monument Paddock he did not inform Mr Neilson of this fact. Mr Caldwell commenced leasing Monument Paddock not earlier than July 2001. 85 His Honour held that Neilson was not in breach of its duty of care in omitting to bring to Ms Kennedy's attention the difference in the wording of the two policies. This conclusion followed from the findings that Ms Kennedy did not tell Mr Neilson that she wanted public liability cover as good or better than that provided by the CGU policy and that she did not give Mr Neilson the CGU policy. On this basis, Mr Neilson did not know the extent of the CGU public liability cover and was not asked to compare the wording under the two policies. Generally, the judge found that Neilson had not breached its duty of care as claimed. 86 No direct evidence was led as to causation and this does not appear to have been an issue at the trial. The judge made no findings as to what Mr Caldwell would have done had Mr Neilson told Ms Kennedy about the exclusion clause in the AMP policy. 87 Mr Caldwell led no evidence as to the cost of obtaining broader cover than that provided by AMP (save for the cost of the CGU policy). The judge made no findings as to damages. The grounds of appeal 88 The grounds of appeal raised in oral argument by Mr Lindsay SC, who together with Mr White appeared for Mr Caldwell, fell into two categories. 89 First, Mr Lindsay challenged the findings that Ms Kennedy did not give Mr Neilson the CGU policy and did not request cover "as good as or better" than that provided by CGU. Implicit in this argument was the proposition that the judge should have found that Neilson was negligent in not providing such cover to Mr Caldwell. 90 Secondly, Mr Lindsay submitted that the judge erred in finding that Neilson was under no duty to warn Mr Caldwell that the AMP policy did not cover any risk arising from occupation of land other than Pusha Park. In support of this argument, Mr Lindsay submitted that the judge erred in rejecting the expert evidence of Mr Hoffman to the effect that Mr Neilson should have inquired whether Mr Caldwell occupied other land. Mr Lindsay further submitted that his Honour erred in finding that agistments did not increase the risk of an owner of stock and that agistments were irrelevant to the proposed risk to be insured. 91 Mr Maconachie QC, who together with Ms Bourke appeared for Neilson, submitted that the argument that Mr Neilson should have warned Mr Caldwell that the AMP policy did not cover any risk arising from occupation of land other than Pusha Park was not pleaded in the particulars of negligence or argued at the trial. While the particulars do not raise the argument in specific terms, it was the subject of Mr Hoffman's evidence and the issue was a live one at the trial. The challenged factual findings 92 Neilson DCJ gave detailed reasons for not accepting that Ms Kennedy requested cover "as good as or better" than that provided by CGU and that she did not give Mr Neilson the CGU policy. These reasons were based largely on his Honour's view of the credibility of the two conflicting witnesses, but his Honour explained in detail how, in his view, the findings were consistent with the probabilities. 93 The principles relating to the circumstances under which an appellate court may interfere with a trial judge's findings are well-known: see Devries v Australian National Railways Commission (1993) 177 CLR 472 at 479, Abalos v Australian Postal Commission (1990) 171 CLR 167, State Rail Authority of New South Wales v Earthline Constructions Pty Limited (In Liq) (1999) 73 ALJR 306 and Fox v Percy (2003) 214 CLR 118. Those principles are applicable to the factual findings made by his Honour. Thus, the findings in question can only be overturned if it is shown that the judge failed to use or palpably misused his advantage, or he made findings inconsistent with incontrovertible facts or acted on glaringly improbable evidence or made findings contrary to compelling inferences. 94 Mr Lindsay sought to rely on Goodrich Aerospace Pty Limited v Arsic [2006] NSWCA 187. In Goodrich, this Court set aside a judgment based on a demeanour finding, principally on the ground that the trial judge had failed to examine all material facts relevant to an important issue in the case and there had been fundamental errors in the trial judge's process of fact-finding. No such findings can be made in this case. Further, the probabilities in Goodrich were inconsistent with certain of the judge's demeanour findings. Again, that is not this case. Neilson DCJ did not make any errors that could be said to be "fundamental" to his Honour's ultimate decision. Moreover, the probabilities do not tend persuasively to support one party rather than the other. 95 The principal criticism of the judge's factual findings advanced by Mr Lindsay was that Ms Kennedy was only perfunctorily cross-examined on her evidence that she told Mr Neilson that she wanted cover as good as, if not better than, the cover provided under the CGU policy, and she was not cross-examined at all on her evidence that she gave Mr Neilson a copy of the CGU policy. 96 The matters in dispute between the two opposing witnesses were obvious. Ms Kennedy was adamant that she had asked Mr Neilson for cover as good as if not better than that under the CGU policy, and that she gave him the CGU policy. Mr Neilson did not accept that Ms Kennedy asked him to provide cover in such terms, and did not recall being given the CGU policy. It would have been difficult for counsel for Neilson to cross-examine Ms Kennedy on matters of which Mr Neilson had no memory. His Honour was not bound to accept the evidence of Ms Kennedy merely because it was not the subject of cross-examination: Ellis v Wallsend District Hospital (1989) 17 NSWLR 553 at 587 to 588. In these circumstances, it was open to the judge to make the findings that he did. 97 The other matters on which reliance was placed in support of the grounds of appeal challenging the factual findings are not of any moment. The criteria required for this Court to be able to overturn the factual findings made by the judge have not been established. The decisions that were made on these issues were essentially for the trial judge and I would not interfere in his findings. 98 I would add that, even if Ms Kennedy had said the words in question to Mr Neilson, and had given him the CGU policy, I would not find that Ms Kennedy requested Mr Neilson to provide a policy that provided cover in accordance with the same terms as the CGU policy. 99 To Ms Kennedy's knowledge, Mr Neilson was solely an agent for AMP. She therefore knew that he would not be able to obtain a policy subject to the same conditions as the CGU policy if, as was highly likely the conditions differed. Ms Kennedy had explained to Mr Neilson that she wished to replace the CGU policy with a new policy that would not require the premium to be paid in one lump sum. She desired to pay the premium in monthly instalments. She also desired to obtain a policy with a lesser premium. She did not discuss with Mr Neilson the extent of the cover and the conditions applicable, either under the CGU policy or under the AMP policy. 100 The reduction in the public liability cover under the AMP policy, the reduced overall premium payable, the removal of the specified valuables from the cover provided and the other changes to the AMP policy to which Ms Kennedy agreed are inconsistent with the notion that the AMP policy was to be as good as, if not better than, the CGU policy. 101 Neilson DCJ found that Ms Kennedy requested insurance "to replace the cover essentially previously provided by CGU showing to Mr Neilson the renewal notice". This finding, in context, is a finding that Mr Neilson was asked to provide cover in accordance with the categories in respect of which Mr Caldwell and Mrs Kennedy had previously been insured and in the amounts reflected in the schedule. It is not a finding that Mr Neilson was asked to provide cover to the same extent and in the same terms as under the CGU policy. That would have been impossible for Mr Neilson to achieve. Apart from the fact that he was solely an AMP agent, he did not – on the judge's findings – have the terms of the CGU policy before him. 102 Mr Maconachie submitted that Mr Neilson was never asked to advise on insurance, he was asked merely to provide insurance that was cheaper than and equivalent to the CGU schedule in categories of cover, subject to agreed changes. In my view, this submission is correct. The duties owed by insurance brokers 103 There is considerable authority to the effect that an insurance broker must use reasonable skill and care to ascertain its customer's needs by instructions or otherwise: see, for example, Provincial Insurance Australia Pty Ltd v Consolidated Wood Products Pty Ltd (1991) 25 NSWLR 541 at 555 to 556, Fanhaven Pty Ltd v Bain Dawes Northern Pty Ltd (1982) 2 NSWLR 57 at 62. A broker must use reasonable care and skill to procure the cover that the customer has asked for, either expressly or by implication. If the broker cannot obtain what is required, it must report in what respects it has failed and seek the customer's alternative instructions Youell v Bland Welch & Co Ltd (The "Superhulls Cover" Case (No 2)) [1990] 2 Lloyd's Rep 434 at 445, Harvest Trucking Company Ltd v P B Davis [1991] 2 Lloyd's Rep 638, Aneco Reinsurance Underwriting Limited (In Liq) v Johnson & Higgins Ltd [1998] 1 Lloyd's Rep 565 at 590. 104 McNealy v The Pennine Insurance Company Limited [1978] 2 Lloyd's Rep 18 is a helpful illustration of these principles. The plaintiff, who was a property repairer and part-time musician, instructed insurance brokers to effect comprehensive insurance on his car. The policy effected set out a list of risks that were not acceptable, including risks relating to full or part-time musicians. The plaintiff, in reply to a question as to his occupation, said that he was a property repairer. When the plaintiff was involved in a car accident, the insurer denied liability on the ground that the plaintiff was a part-time musician and this had not been disclosed to it. In an action the plaintiff brought against the brokers, Lord Denning (at 20) said: "It was clearly the duty of the broker to use all reasonable care to see that the assured, Mr McNealy was properly covered. An obvious step in the course of doing his duty would have been to say to Mr McNealy: The Pennine will not cover you if you are a full or part-time musician, a bookmaker, a jockey, or anything to do with racing. He ought to have gone through the whole list with McNealy and said: You are not going to be accepted if you are one of these categories because, if you are, the insurance company can get out of it. I am afraid the broker did not do his duty. He did not go through that list with Mr McNealy at all. He simply asked him what was his occupation and Mr McNealy said 'property repairer'. The broker ought to have gone on and asked: 'Have you ever been or are you a full or part-time musician?' And the answer would certainly have been 'Yes'. On the answer being 'Yes', the broker should have said: 'It is no good trying to insure with the Pennine. You had better go to one of the companies who are ready to insure full or part-time musicians, but that will no doubt be at a higher premium. The broker did not do that at all. In other words, he did not do all that was reasonable to see that Mr McNealy was properly covered." Shaw and Waller LJJ delivered judgments to the same effect. The distinction between a broker and an agent and the duty of care owed by an agent 105 It is to be emphasised that the principles I have recounted apply to brokers, not agents, and Neilson was an agent and not a broker. 106 In Norwich Fire Insurance Society Ltd v Brennans (Horsham) Pty Ltd [1981] VR 981, Lush J (with whom McGarvie J agreed) observed that neither the word "broker" nor the word "agent" is a term of precision. Nevertheless, as his Honour said (at 985): "[T]he broad distinction is between a person, firm or company which carries on an independent business of placing insurances upon the instructions of clients and whose basic relationship of agency is with the client, and the insurer's agent whose function is to procure persons to insure with his principal, the insurer, and whose basic relationship of agency is therefore with the insurer." 107 It has long been accepted that, generally speaking, a broker is the agent of the insured, not the insurer (Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226 at 235). It has likewise long been accepted that an insurance agent, generally speaking, is the agent of the insurer (and not the insured). Neilson was acting as the agent of AMP, not of Mr Caldwell. 108 The precise contractual relationship between a principal and agent is significant to any duty of care an agent may owe the principal: Hawkins v Clayton (1988) 164 CLR 539 at 544. Neilson had no contractual relationship with Mr Caldwell. That, of course, does not mean that Neilson owed no tortious duty to Mr Caldwell, but it does mean that Neilson owed no duty to Mr Caldwell qua broker. 109 Ms Kennedy requested Mr Neilson to obtain insurance cover from the AMP and Mr Neilson said that he would. In Veljkovic v Vrybergen [1985] VR 419, Marks J (with whom Starke and Fullagar JJ agreed) said at 422-423: "I think the principles to be applied may be simply enunciated. When the respondent asked the appellant to obtain insurance and the appellant said he would, he assumed a duty to exercise a reasonable degree of care and skill which an insurance agent of ordinary prudence and ability might be expected to show in the situation: see Tindal CJ in Chapman v. Walton (1833) 10 Bing 57 at 63; 131 ER 827 at 828. The appellant's statement that he would get the insurance could hardly be correctly described as a 'misstatement' merely because it turned out that he failed to obtain what was wanted. Authorities such as Hedley Byrne & Co Ltd v Heller & Partners [1964] AC 465; L Shaddock and Associates Pty Ltd v Parramatta City Council (1981) 150 CLR 225; … and State of South Australia v Johnson (1982) 42 ALR 161 really have little or no bearing on the problem. In saying that he would 'fix up' or 'arrange' the insurance the appellant made no misstatement of existing facts and did not give any wrong information. He simply made a promise. But in the event, if he failed to obtain what he said he would a prima facie case of negligence was made out and it was idle to venture upon the law relating to negligent misstatements". 110 In my respectful opinion, there are difficulties in the principles so expressed. 111 Marks J found that, in the circumstances stated, the insurance agent assumed a duty of care simply by agreeing to a request by a prospective customer to obtain "insurance" for him. His Honour gave Chapman v Walton (1833) 10 Bing 57 at 63 as authority for this proposition but that case concerned an action against a broker for want of proper care and skill in the execution of his duty as such. Chapman v Walton did not concern the duty of an insurance agent. The duty of care in Chapman v Walton arose by reason of the relationship of insured and broker that existed. By the broker agreeing to act for the insured, the broker assumed a duty of care. The agreement by the agent of an insurer to obtain for the insured a policy from the insurer does not, without more, result in the assumption of a duty of care on the part of the agent. 112 There is no difference, in this context, between an insurance agent (carrying on business at an office separate from that of the insurer) and an employee of an insurer, sitting behind the counter at the insurer's offices, whose task (like that of the first-mentioned agent) is to sell insurance. An employee of an insurer, when asked to provide a particular category (or categories) of insurance cover to a prospective customer, assumes no greater relevant duty of care to the customer than does a person who sells any product having technical qualities beyond the knowledge or understanding of the general public. 113 I would add that it is well-recognised that in one respect an insurance agent is regarded as the agent of the insured, and that is in completing the proposal form: see, for example, Western Australian Insurance Co Ltd v Dayton (1924) 35 CLR 355. The duties, however, of an agent in this context are limited to filling in the form accurately, in accordance with the instructions of the prospective insured. In my opinion, the mere act of completing the proposal form on behalf of the prospective insured does not require the agent to take reasonable steps to give advice about the quality, extent and conditions of the cover being sought. 114 It is conceivable that the insurer's employee or agent may attract a duty of care in the course of selling insurance, but the existence and scope of that duty will be defined by the particular circumstances, and will depend on the general law of negligence (there being no contract between the insured and the agent): see generally San Sebastian Pty Ltd v The Minister Administering the Environmental Planning and Assessment Act 1979 (1986) 162 CLR 341. 115 Accordingly, I respectfully disagree that it is appropriate to describe the scope of the duty of care imposed on an agent, each time an agent agrees, on behalf of an insurer, to offer insurance cover to a prospective insured, as being the degree of care and skill which any insurance agent of ordinary prudence and ability might be expected to show in the situation. A description in these terms might be understood as imposing a wider duty than the circumstances warrant. There may often be situations, in the circumstances to which I have referred, where an insurance agent of ordinary prudence and ability might be expected to show no degree of care and skill to the insured. An example is an agent who is merely requested to obtain for a customer a particular, nominated, policy, or a particular type of cover provided by a standard policy of the agent's principal. Without more, that agent has no duty to advise the customer that there are other cheaper or better policies available from a competitor, or that the insurer is known to be one that takes every point when a claim is made, or that the customer should take out some other category of cover, or that the policy contains a number of exclusions, or to advise the customer of the meaning and effect of the exclusions. The relevance of the evidence of Mr Hoffman 116 As I have mentioned, Mr Hoffman testified that a rural insurance agent in Cooma would know that it was common for graziers in the area to agist stock on properties other than their own. He pointed out that a grazier could face public liability claims arising from agistment arrangements. He expressed the opinion that, for these reasons, Mr Neilson should have asked Ms Kennedy whether Mr Caldwell agisted stock and should have told her to inform him "as and when [Mr Caldwell] change[d] locations". Implicit in his evidence is that Mr Neilson should have advised Ms Kennedy (or Mr Caldwell) of the exclusion in the AMP policy that limited liability to claims arising out of Mr Caldwell's occupation of Pusha Park. 117 Neilson DCJ did not accept the evidence of Mr Hoffman. One reason for him not doing so was his Honour's view that agistment of stock by Mr Caldwell was irrelevant to the proposed risk. His Honour distinguished between the lease of properties by graziers on which the graziers put their stock, and agistment, proper, whereby graziers put their stock on land occupied by others in circumstances under which the graziers had no control over the stock. 118 There are many forms of agistment (Streatfield v Winchcombe Carson Trustee Co (Canberra) Ltd (1981) 1 NSWLR 519 at 526 to 528) and it is too broad a statement, with respect, to say that any form of agistment would be irrelevant to the risk. Public liability might be incurred, for example, by a grazier who behaves negligently while visiting his stock on property agisted in the sense the judge described. In my view, Neilson DCJ erred in this respect. 119 Another ground on which the judge relied was that Mr Hoffman assumed that Mr Neilson had been given the CGU policy (and therefore should have known that the AMP policy afforded less public liability cover than that by which Mr Caldwell was previously protected). This was a relevant consideration. It is to be inferred from Mr Hoffman's testimony that he believed that Mr Neilson had been asked to provide cover in equivalent terms to that under the CGU policy. Failure, on the part of an agent, to disclose the fact of reduced cover in those circumstances would be a very different thing from merely omitting to advise a potential insured of a particular exception in a standard policy from a nominated insurer containing cover against specifically requested categories of risk. 120 Mr Hoffman's views must be taken into account in considering whether Mr Neilson was required to ask about agistment properties and whether he was required to inform Ms Kennedy of the limited nature of the AMP public liability cover. Expert evidence on this kind of issue has been regarded as important (see Provincial Insurance Australia Pty Limited v Consolidated Wood Products Pty Limited (1991) 25 NSWLR 541 at 556). It is not, however, conclusive. Particular regard must be had to the precise instructions as to the insurance sought and the other circumstances of the case. The precise instructions given to Mr Neilson 121 The evidence as to what was said by Ms Kennedy to Mr Neilson about the cover she desired was vague. This vagueness was compounded when his Honour considered that the evidence of Ms Kennedy was to be treated with caution. Although his Honour accepted the evidence of Mr Neilson, the latter had little specific memory of what occurred in his two meetings with Ms Kennedy. Mr Neilson's evidence, therefore cast little additional light on the issue. 122 Nevertheless, the judge made two important findings in this regard. The first was that Ms Kennedy requested insurance over Pusha Park. The second was that Ms Kennedy did not ask Mr Neilson to obtain insurance as good as if not better than the cover under the CGU policy. 123 The finding that Ms Kennedy requested insurance over Pusha Park is not expressly the subject of challenge in the notice of appeal. That finding is supported by the insertion in the proposal form of Pusha Park in the block relating to "property name/s and location/s". It was open to the judge to infer (as he seems to have done) that Mr Neilson asked Ms Kennedy what were the property name/s and location/s in respect of which she wanted cover, and she replied, "Pusha Park". 124 I have mentioned that, when Ms Kennedy had her meetings with Mr Neilson, Mr Caldwell was leasing the Cooma Rifle Range property for his business. He was, also, agisting his stock on other properties at the time. The judge's finding that Ms Kennedy told Mr Neilson that she wanted cover only in respect of Pusha Park is explicable on the basis that she simply did not think of the agistment and leased properties when Mr Neilson asked her for the information he needed to complete the proposal form. They may have been, to her mind, of little importance. There was no evidence as to their size and the quantity of stock that Mr Caldwell had on them. 125 I have explained that, in my opinion, the judge's finding that Ms Kennedy requested insurance "to replace the cover previously provided by CGU" is to be understood as a finding that Mr Neilson was asked to provide cover from the AMP in accordance with the categories and amounts reflected in the CGU schedule (subject to the differences that were discussed with Ms Kennedy) at a premium less than that paid to CGU and which could be paid in instalments. He was not asked to do more than that. The AMP composite policy 126 The categories of insurance covered by the AMP composite policy were "dwellings", "dwelling contents", "farm property" and "public liability". The policy comprised separate "sections" that provided for cover under these categories. 127 The definition of "contents" in the dwelling contents section excluded cover for very many items listed in a series of paragraphs numbered from (a) to (o). Other definitions in this section limited the cover further. An example of such limitations is the definition of "forcible entry" which provided that forcible entry did not mean "opening an unlocked door or window". Hence, there was no cover for loss of contents where theft occurred through an unlocked door or window. Another condition excluded loss of contents by theft or attempted theft by tenants or any person living at the "situation" with the insured's permission. Another condition excluded loss of contents by storm if the cause was one of a number of events listed in paragraphs numbered from (a) to (f). There were many other exclusionary conditions in this section. 128 Under the "farm property" section of cover there were, likewise, many exclusionary provisions. For example, loss caused by malicious acts identified in paragraphs numbered from (a) to (e) was excluded, as was loss from storm in respect of items described in paragraphs numbered from (a) to (h). An exclusionary paragraph headed "Some events and damage" provided that the section did not insure loss caused by events described in paragraphs numbered from (a) to (e). Another exclusioniary provision headed "Maintenance and defects" provided that the section did not insure damage caused by causes numbered from (a) to (g). There were other exclusions applicable to this section. A condition provided, for example, that, if the property were unattended for a continuous period of 60 days, the property would not be insured. 129 The public liability cover formed part of the "farm liability" section. This section contained exclusions listed from one to 25. The exclusion that limited the cover to liability arising out of the occupation of Pusha Park was the fourth of the 25 exclusions. 130 Thus, there were a multitude of exclusions under the AMP policy that were notionally capable of limiting AMP's liability, under the categories of insurance covered by the policy, to indemnify Mr Caldwell for loss sustained by him. Although the exclusion limiting public liability cover to occurrences arising out of Mr Caldwell's occupation of Pusha Park now, in hindsight, appears important, it is likely that, at the time the policy was issued, all the exclusionary provisions would have been regarded as potentially important. Once Mr Caldwell sustained loss, he would be likely, in hindsight, to regard any exclusion that resulted in AMP not being obliged to indemnify him for that loss as important. 131 It is difficult to isolate the exclusion, the focus of attention in this case, from the other exclusionary provisions in the policy. I do not think that the fact that it was common for graziers in the area to place stock on properties other than their own is a reason for differentiating between the exclusion which prevented Mr Caldwell from obtaining an indemnity from AMP against Mrs Campbell's claim and the other very many exclusions in the policy. 132 The existence of the other exclusionary provisions demonstrates the practical difficulties that would have faced Mr Neilson if he were required to warn Ms Kennedy of all exclusions in the policy that could have an impact on the cover provided. It could not reasonably have been expected of him, as an agent for the AMP, to undertake such an exercise. Mr Caldwell's case is based on impermissible hindsight reasoning. The scope of Neilson's duty of care 133 In written submissions it was argued on Mr Caldwell's behalf that Mr Neilson should have inferred from the CGU schedule that the business liability coverage provided by the CGU policy extended throughout Australia. This argument was put in the following way: "The CGU schedule lists 'Pusha Park' as the situation at the top of page 1, but the word 'situation' is used repeatedly throughout the CGU Schedule. Every 'Section' begins with the word 'Situation' and thereafter is a description of the extent of the cover using words ' As above ' or ' Anywhere in Australia '. The Business Liability Section 7 does not specify a 'situation', but Section 3 'Farm Machinery' does specify the situation as anywhere in Australia and the sections that follow state "as above". From this it can be inferred that the business liability coverage provided by the CGU Policy extended to 'anywhere in Australia'." The words in the schedule are capable of being understood in accordance with this submission, but only on a very close reading and careful analysis by a trained lawyer (and even then the inference is not the only one that could be drawn). It would be unreasonable to expect an insurance agent to realise from the schedule that the business liability coverage provided by the CGU policy extended "anywhere in Australia". I would not accept this argument. 134 Mr Lindsay submitted that Mr Neilson should have realised from Ms Kennedy's opening remarks at the first meeting that Mr Caldwell was at Adaminaby "with the sheep getting ready for shearing" that he was agisting property. I do not accept this. The remark was made in a different context and only casually as a throw-away, social observation made in the course of passing the time of day. There was nothing to suggest that Mr Caldwell was not working at Adaminaby as a farm hand, which he sometimes did. There is no proper basis for inferring that Mr Neilson knew or should have known that Mr Caldwell was leasing and agisting his stock on other properties. 135 As I have pointed out, the question whether Mr Neilson owed Mr Caldwell a duty of care that extended to require him to warn Mr Caldwell of the exclusion in the AMP policy must be answered by reference to the particular circumstances of the case. Those circumstances are: (a) To Ms Kennedy's knowledge, Mr Neilson was the agent for the AMP alone and Mr Neilson was not Ms Kennedy's agent. Ms Kennedy implicitly requested an AMP policy (Mr Neilson could, to her knowledge, provide no other). (b) Ms Kennedy asked Mr Neilson for insurance in accordance with the several categories and amounts reflected in the CGU schedule (subject to the differences to which she agreed), at a premium less than that paid to CGU, and which could be paid in instalments. One of those categories included public liability. (c) AMP had a standard composite farm policy that included cover for public liability. (d) The AMP policy was a bulky document providing for cover in respect of the several categories requested. The policy contained a multitude of conditions and exclusions, very many of which were notionally capable of preventing the policy responding to particular losses. (e) Ms Kennedy did not ask Mr Neilson to explain the AMP policy, she did not ask him for particular cover other than in respect of the categories in the CGU schedule, and she told him – when asked, in connection with the proposal form, about the situations and locations that she wanted insured – to put down Pusha Park. (f) Ms Kennedy agreed that she was aware of the importance of making full disclosure of having particular properties covered in the policy. This factor affects the weight to be attributed to the insertion of Pusha Park in the proposal form as the situations and locations that she wanted insured. (g) Mr Neilson knew that many graziers in the area leased properties in addition to their own so as to be able to place their stock on them and, as well, agisted their stock on the properties of others. (h) It was Mr Neilson's general practice to elicit from farmers whether they had "situations" other than the main property listed as the "situation". Save for posing the question in the proposal form relating to relevant "property name/s and location/s", it does not seem that Mr Neilson expressly asked Ms Kennedy whether she and Mr Caldwell had any "situations" other than Pusha Park. (i) It was not put to Mr Neilson that he should have advised Ms Kennedy about the exclusion clause in the AMP policy. (j) Mr Neilson told Ms Kennedy that she should advise him of any material change in Mr Caldwell's circumstances so that he could advise the AMP. Mr Neilson was not so informed when Mr Caldwell leased Monument Paddock. 136 This Court is required to make a judgment as to whether Neilson DCJ erred in deciding, having regard to the above factors, that Neilson was not required to advise Mr Caldwell of the exclusion. 137 Only two of the above factors tend to support the argument that Mr Neilson was duty bound to ask Ms Kennedy whether Mr Caldwell agisted stock on other properties or put stock on other leased properties and to warn her about the particular exclusion in the AMP policy. The first is Mr Neilson's knowledge that many graziers in the area agisted stock on properties other than their own. The second is Mr Neilson's general practice of asking farmers whether they had other "situations" other than their main property. In addition, regard must be had to the opinion of Mr Hoffman in this respect. 138 After weighing up the matters I have set out, I am not persuaded that Neilson DCJ was wrong in holding that Mr Neilson was not negligent in failing to ask Ms Kennedy whether Mr Caldwell had stock on properties other than Pusha Park and in failing to warn him about the particular exclusion. Causation 139 For the sake of clarity I should say: (a) in my view, Neilson did not owe Mr Caldwell a duty of care; (b) if it did owe Mr Caldwell a duty of care, the evidence does not establish that it breached it. 140 The evidence does not specifically address the issue as to what Mr Caldwell would have done about obtaining any other policy of insurance had Neilson warned him about the existence of the exclusion in the AMP policy. 141 Whether Mr Caldwell would have obtained another policy without any exclusion relating to public liability cover, or would have nominated Monument Paddock as a "situation" under the AMP policy, was not dealt with by the judge. 142 There are two elements of the causation inquiry that Mr Caldwell, in particular, had to establish. Firstly, he needed to prove that, had Mr Neilson warned him of the exclusion, he would have decided to pay whatever extra premium was required to obtain cover on properties, other than Pusha Park, on which he placed stock. Secondly, he needed to prove that, in response to Mr Neilson's warning about advising him (Mr Neilson) or AMP about any changed circumstances, he would have informed Mr Neilson or AMP, timeously, that Monument Paddock had to be added to the situations covered by the public liability section of the AMP policy. 143 The question of causation is a difficult one. Firstly, Ms Kennedy made it clear that she wished to obtain cheaper insurance, she had pruned the cover to achieve this, the extent to which the premium would have been increased by including all additional properties is not known, and it is by no means an inevitable inference that Mr Caldwell would have decided to increase his cover. Although Ms Kennedy said that she needed "very good" public liability cover, the judge made no finding believing her in this respect. Secondly, although Mr Neilson told Ms Kennedy to inform him of any changed circumstances, neither she nor Mr Caldwell informed him later of the lease of Monument Paddock. Thirdly, the judge found that Ms Kennedy was not concerned with differences in policy wordings. Fourthly, Mr Caldwell allowed a month to go by without renewing or replacing the CGU policy and there was no evidence that explained this omission. 144 Weighing all these matters in the balance, I am not satisfied that the element of causation has been established. Other matters 145 Neilson contended, on appeal, that the business Mr Caldwell conducted at Monument Paddock was not the "business" conducted by Mr Caldwell and Ms Kennedy at Pusha Park. Mr Machonochie, rightly, did not press this point in oral argument. 146 Neilson argued that there was insufficient evidence to determine causation and damages. Assuming, first, that Mr Neilson should have advised Ms Kennedy of the exclusion, and, secondly, that, had Mr Caldwell known of the exclusion, he would have obtained cover, the premium he would have paid for such cover should be taken as being the premium payable under the CGU policy. On that basis, damages were proved. Conclusion 147 I would dismiss the appeal with costs. ********* - 1 - 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.