Supreme Court New South Wales Medium Neutral Citation: Ahern v Aon Risk Services Australia Ltd [2015] NSWSC 19 Hearing dates: 02-04 February 2015 Decision date: 05 February 2015 Jurisdiction: Common Law Before: Harrison J Decision: Evidence admitted Catchwords: EVIDENCE – tendency – whether evidence rebutting assertion of reliance admissible as non-tendency evidence Legislation Cited: Evidence Act 1995 Category: Procedural and other rulings Parties: Marshall Ahern (First Plaintiff) Estelle Therese Clancy (Second Plaintiff) Aon Risk Services Australia Ltd (First Defendant) Trent Uno Pty Ltd (Second Defendant) Leo Di Paolo (Third Defendant) Representation: Counsel: A J McInerney SC and J Watson (Plaintiffs) D L Williams SC and R D Glover (Defendants) Solicitors: Fraser Clancy Lawyers (Plaintiffs) James Tuite & Associates Lawyers (Defendants) File Number(s): 2012/203106 Judgment 1. HIS HONOUR: By their further amended statement of claim filed on 23 September 2013, the plaintiffs seeks damages for losses occasioned by them following the partial destruction by fire of their house at 11 Awaba Street, Mosman and some of its contents on 29 June 2006. The property was significantly underinsured and the plaintiffs contend that that was the result of a failure by their insurance broker Mr Di Paolo to advise them properly concerning what would have been adequate cover. The plaintiffs were paid the full amount of the cover for both the house and the contents but maintain that they are entitled in these proceedings to recoup the shortfall. 2. The proceedings have been case managed. Directions for the filing and service of affidavits have been made. Despite those directions, Mr Di Paolo sought yesterday to file and to read two affidavits dated 2 February 2015. It will be apparent that that was the first day of the hearing before me and well outside the regime for the service of evidence with which the parties had been directed to comply. I rejected the affidavits in a separate judgment. I indicated, however, that I would not foreclose the defendants' ability later to apply to refer to or to cross-examine upon, or indeed to tender, some or any of the material deposed to by Mr Di Paolo in the rejected affidavits. 3. In the events that have occurred, Mr Williams SC for the defendants has sought to cross-examine Mr Ahern about whether or not he took steps after the Mosman fire to amend the insurance cover over a property owned by him in Roseville, in order to test Mr Ahern's earlier evidence about what he knew concerning the level of cover that had been provided over the Mosman property and the extent to which he followed the advice of Mr Di Paolo or relied upon him in that respect. That issue was put fairly in issue by Mr Ahern's earlier evidence that if he had been told by Mr Di Paolo at any time prior to the fire that his insurance cover for the Mosman property was inadequate, he would have increased it in accordance with any advice that Mr Di Paolo may have given him in that regard. 4. Mr McInerney SC for the plaintiffs objected to the cross-examination about this topic, and to the tender of any evidence concerning it, on a number of bases. First, the evidence was late, did not comply with the evidence directions and therefore caused him prejudice. Secondly, the evidence was an attempt by the defendants to establish a tendency on the part of Mr Ahern in circumstances where there had been no attempt to comply with the provisions of s 97 of the Evidence Act 1995. Thirdly, the evidence was either irrelevant having regard to the fact that it post-dated the fire or fourthly was unfairly prejudicial because its probative value was substantially outweighed by its prejudicial effect. 5. Mr Williams contended that the evidence was not tendency evidence at all but was in fact evidence that he was entitled to lead to rebut Mr Ahern's evidence that Mr Di Paolo's breach of duty was the cause of his loss. Mr Williams sought by the evidence concerned to demonstrate that Mr Ahern did not in fact take or follow or rely upon Mr Di Paolo's advice even after the fire so as to demonstrate that he could not be accepted when he asserted to the contrary. He also contended that there was no unfair prejudice to Mr Ahern because in the final analysis the evidence went to a matter wholly within Mr Ahern's knowledge, being whether or not he had sought to increase the insurance cover over the Roseville property after the Mosman fire. Mr Williams wished in due course to contend that such conduct demonstrated Mr Ahern's recognition and understanding of the concept of underinsurance, which Mr Ahern has consistently denied, and his refusal to accept Mr Di Paolo's advice about the adequacy of cover for Roseville notwithstanding. Mr Williams foreshadowed a submission that Mr Ahern's evidence about how he would have acted if properly advised by Mr Di Paolo could not be accepted when Mr Ahern did not follow or act upon Mr Di Paolo's advice in October 2006. 6. It is regrettable that the evidence concerning the events of 6 October 2006 did not come to light earlier, or were not recognised by anyone on either side to have some potential significance in these proceedings. Ms Joanne Scott, the solicitor for the defendants, has sworn an affidavit dated 4 February 2015 setting out the way in which the events of 6 October 2006 came to be recognised or identified as having such potential. It is fair to say, in my opinion, that insufficient attention was given to these events, possibly because they did not immediately appear to inform anything that had occurred prior to the Mosman fire, and only later came to be identified as having some relationship to the case on causation upon which Mr Ahern now seeks to rely. I am satisfied, however, that the circumstances outlined and identified by Ms Scott in her affidavit satisfactorily explain the apparent failure to include the material concerning the 6 October 2006 events in an affidavit prepared and served in timely compliance with the relevant directions. 7. The defendant first sought to tender what amounts to a diary note contained in a book maintained by Mr Di Paolo as part of his business. Part of the recorded note is in these terms: "MARSHAL (sic) AHERN #06HI63544400 -RANG MARSHAL TO OBTAIN UPDATE ON CLAIM -CONCERNED ABOUT COVER ON ROSEVILLE -TO OBTAIN ALTERNATE (sic) QUOTATIONS 1 BLDG $650,000 2145.10 PA 2 CONTS $40,000 $60,000 2260.88 PA $80,000 2324.11 PA CAROLYN (API) 3.25pm CURRENT $BLDG $160,000 CON 37,000 $1116.63" 1. It is instructive at this point to observe that Mr Ahern has been cross-examined extensively upon his understanding of, among other things, the relationship between the sum insured, or what is otherwise also referred to in policy renewal forms as the value of the property, on the one hand, and the maximum amount that he was entitled to recover under the policy upon total destruction of the property, on the other hand. Mr Ahern consistently denied that he understood that the sum insured represented the effective limit of the insurer's liability to him in such circumstances. The question of whether or not Mr Ahern is believed in that respect is likely to be one calling for determination by me in these proceedings. The ultimate significance of my conclusions in that respect remains to be seen. 2. It is also instructive to note that Mr Ahern denied calling Mr Di Paolo on October 2006 to get quotes for increasing the sums insured on the Roseville property: see transcript 135-6 as follows: "Q. You came to realise, I suggest, that Roseville was likely to be significantly under insured? A. No. Q. You knew that by at least October of 2006, didn't you? A. October 2006, Roseville was considerably under insured. Q. Yes? A. No. Q. You came to realise Roseville was considerably under insured, didn't you? A. I don't even know if I know today when I lapsed the cover of Roseville that it was significantly under insured. Q. You lapsed the cover soon after you sold the property? A. Yes. Q. You sold in about 2009? A. Yes. Q. How much did you sell it for? A. About a million dollars. Q. In 2006, following the fire, you rang Mr Di Paolo to get quotes for increasing the sums insured on Roseville, didn't you? A. No." 1. With respect to the issue of any prejudice that flows from the introduction of the 6 October 2006 events as an issue in the proceedings, the fact is that Mr Ahern denies that he spoke to Mr Di Paolo as alleged. He is in the circumstances not prejudiced, and certainly not unfairly prejudiced, by cross-examination upon an event that he clearly was able to deny. Mr Di Paolo will undoubtedly in due course seek to lead evidence and be cross-examined about what he says were the conversations with Mr Ahern concerning the adequacy of cover for Roseville after the fire at Mosman. That evidence seems to me to be likely to inform a consideration of the question of whether or not Mr Ahern's assertions that he would have taken and followed Mr Di Paolo's advice to increase the cover on the Mosman property should be accepted and is relevant to a fact in issue in the proceedings. I do not consider that Mr Ahern will be subjected to any unfair prejudice by the reception of the evidence and certainly none that substantially outweighs its potential probative value. 2. Nor am I satisfied that the evidence is essentially or exclusively evidence of tendency that the defendant is seeking to introduce under colour of some other category so as to subvert or avoid the constraints of s 97 of the Evidence Act. In my opinion the defendants have clearly identified the way in which this (and other similar) evidence is relevant so as to demonstrate that it does not involve tendency reasoning or to prove the existence of some tendency. This evidence is plainly directed to comparing and assessing Mr Ahern's assertion that he would have taken and followed Mr Di Paolo's advice to increase the insurance over Mosman if it had been given, at a time when he had not been subjected to the disastrous consequences for him of the fire there, with what will be asserted is a corresponding refusal to take or to follow cognate advice from Mr Di Paolo concerning levels of insurance cover for Roseville when he had by then emphatically been armed with an understanding of the realities and consequences of underinsurance. If Mr Ahern is to be permitted to give evidence of what he would have done, so as to consummate a causation case against the defendants, it seems to me to be beyond argument that the defendants should correspondingly be entitled to compare that evidence with what he has done or said in comparable circumstances. 3. Moreover, Mr Ahern has consistently said in his evidence that he always followed and relied upon Mr Di Paolo's advice concerning his levels of cover for both properties and for his business insurance requirements. There are manifold examples of this. His evidence was unambiguously to the effect that he put his trust in Mr Di Paolo and relied upon him without question to protect his interests. The evidence to which objection is taken is clearly admissible for the purpose of attempting to rebut Mr Ahern's assertions that he never or rarely took an independent stance on such matters. Without at this stage of the trial wishing to delve into the issues joined between the parties on the pleadings, the material that the defendants wish to adduce may also be relevant to contributory negligence. 4. I confirm in these circumstances that the diary note and the recording of the conversations are admissible and have been marked as exhibits in the proceedings. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 11 March 2015