Court of Appeal Supreme Court New South Wales Medium Neutral Citation: O'Farrell v Allianz Australia Insurance Ltd [2015] NSWCA 48 Hearing dates: 6 March 2015 Decision date: 13 March 2015 Before: Basten JA at [1]; Macfarlan JA at [52]; Gleeson JA at [53] Decision: (1)Set aside the judgment of the District Court given on 20 November 2013 and the orders made on that date. (2)In place of those orders, order that the appeal to the District Court filed on 29 April 2013 be dismissed and the plaintiff (Allianz) be ordered to pay the costs of the defendant, Phillip Gordon O'Farrell. (3)Order that Allianz pay Mr O'Farrell's costs in this Court. Catchwords: ADMINISTRATIVE LAW – judicial review – appeal to District Court from decision of Consumer, Trader and Tenancy Tribunal – decision on a question with respect to a matter of law – whether the district Court erred in law in identifying error on part of Tribunal – whether failure by Tribunal to use precise statutory language demonstrated error of law – whether District Court exceeded jurisdiction in making findings of fact – Consumer, Trader and Tenancy Act 2001 (NSW), s 67 APPEAL – decision on a question with respect to a matter of law – whether party bearing onus can rely on 'no evidence' ground - Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 applied INSURANCE – comprehensive motor vehicle policy – insured's duty of disclosure – whether insurer clearly informed insured about general nature and the effect of duty before contract entered into – whether obtaining signed insurance proposal sufficient compliance by insurer – whether insurer able to rely on alleged non-disclosure to avoid liability under policy WORDS AND PHRASES – "matter relevant to the decision of the insurer" – "clearly inform" – Insurance Contracts Act 1984 (Cth), ss 21, 21A and 22 Legislation Cited: Consumer Claims Act 1998 (NSW), s 13 Consumer, Trader and Tenancy Tribunal Act 2001 (NSW), s 67 Contracts Review Act 1980 (NSW), s 9 Insurance Contracts Act 1984 (Cth), ss 21, 21A, 22, 28, 29A Insurance Laws Amendment Act 1998 (Cth), Sch 1, item 78. Insurance Contracts Regulations 1985 (Cth), regs 2B, 3, 5; Sch 1, Pt 3 Supreme Court Act 1970 (NSW), ss 69, 75A Cases Cited: Allianz Australia Insurance Ltd v Cervantes [2012] NSWCA 244; 61 MVR 433 Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 Boele v Rinbac Pty Ltd [2014] NSWCA 451 Craig v South Australia [1995] HCA 58; 184 CLR 163 Edyp v Brazbuild Pty Ltd [2011] NSWCA 218 Kostas v HIA Insurance Services Pty Ltd [2010] HCA 32; 241 CLR 390 Lumley General Insurance Ltd v Delphin (1990) 6 ANZ Insurance Cases ¶60-986 McCann v Nationwide Consultants Pty Ltd [2013] NSWDC 205; 17 DCLR (NSW) 209 Muldoon v Church of England Children's Homes Burwood [2011] NSWCA 46; 80 NSWLR 282 Permanent Trustee Australia Co Ltd v FAI General Insurance Co Ltd [2001] NSWCA 20; 50 NSWLR 679 Permanent Trustee Australia Co Ltd v FAI General Insurance Co Ltd (In liq) [2003] HCA 25; 214 CLR 514 Qantas Airways Ltd v Gubbins (1992) 28 NSWLR 26 Suncorp General Insurance Ltd v Cheihk [1999] NSWCA 238; 10 ANZ Insurance Cases ¶61-442 The Craftsmen Restorations & Renovations Pty Ltd v Boland [2011] NSWCA 147 Texts Cited: Insurance Laws Amendment Bill 1997 (Cth), Explanatory Memorandum, par 117 Category: Principal judgment Parties: Phillip Gordon O'Farrell (Applicant) Allianz Australia Insurance Ltd (First Respondent) District Court of New South Wales (Second Respondent) Representation: Counsel: Mr P Batley (Applicant) Mr N E Chen/Mr R Perla (First Respondent) Solicitors: Steven O'Connor, Legal Aid NSW TurksLegal (First Respondent) File Number(s): 2014/136102 Decision under appeal Court or tribunal: District Court Date of Decision: 20 November 2013 Before: Lerve DCJ File Number(s): 2013/132577 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Judgment 1. BASTEN JA: In May 2010 the applicant, Phillip Gordon O'Farrell, obtained a comprehensive motor vehicle insurance policy from the respondent, Allianz Australia Insurance Ltd ("Allianz"). In October 2010 the motor vehicle was stolen. The applicant made a claim under the policy. On 10 February 2011 Allianz gave notice that it would disavow the policy and seeks its cancellation, on the basis of a failure on the part of the applicant to comply with his duty of disclosure. The matters not disclosed were, broadly speaking, two sets of convictions for offences arising out of brawls. 2. The applicant brought proceedings in the Consumer, Trader and Tenancy Tribunal seeking an order for payment of the value of his vehicle, assessed at $20,000. On 31 March 2013 the Tribunal upheld his claim and ordered Allianz to pay the sum of $20,000 immediately. 3. Allianz appealed from this decision to the District Court, pursuant to s 67 of the Consumer, Trader and Tenancy Tribunal Act 2001 (NSW), as then in force. An appeal pursuant to that provision was available where "the Tribunal decides a question with respect to a matter of law", against that decision. On 20 November 2013 Judge Lerve allowed the appeal, set aside the orders of the Tribunal and dismissed the application to the Tribunal. The applicant now seeks to challenge the decision of the District Court. 4. There is no appeal against such a decision of the District Court. [1] The challenge is brought by way of summons in the supervisory jurisdiction of this Court, pursuant to the Supreme Court Act 1970 (NSW), s 69. As has been noted before, the jurisdiction conferred by s 69 has been treated as constrained by the principles governing relief available under the old prerogative writs, although these have now been abolished. [2] That would require identification of errors of law on the face of the record, or jurisdictional error. 5. Neither the summons nor the submissions in this matter went beyond identifying grounds said to be errors of law on the part of the District Court. There were three such errors relied upon, two involving misconstruction of the Insurance Contracts Act 1984 (Cth) and one a complaint that the District Court had exceeded its functions in engaging in fact-finding. It is convenient to treat the first two grounds as asserting error of law on the face of the record, which may include the initiating process, the orders and the reasons for judgment. [3] 6. Before turning to those grounds, it is convenient to note that the first ground identified in the summons alleged error of law on the part of the District Court in failing to find that the summons constituting the appeal to that Court did not identify "any decision of the Tribunal on a question with respect to a matter of law". 7. It was not in doubt that the applicant had raised the pleading issue as a preliminary point at the hearing in the District Court. However the judge had not dealt with it as a preliminary point and the parties appear to have been content to allow the hearing to proceed. In this Court, the applicant did not press that ground as, by itself, entitling him to relief. Accordingly, it is not necessary to consider whether the preliminary point should have been upheld: it is, however, fair to say that the grounds of appeal raised by Allianz in the District Court did not, for the most part, identify with any degree of precision errors of law within the terms of s 67. Nor did Allianz' submissions accurately advise the judge as to the limits of the District Court's jurisdiction. Relevant provisions of Insurance Contracts Act 1. To understand the scope of the dispute it is desirable to set out the relevant provisions of the Insurance Contracts Act, the District Court having found error of law on the part of the Tribunal in failing to use the precise words of the legislation. The structure and purpose of the legislative scheme may be summarised as being: (a) to impose on the prospective insured a duty of disclosure, which is capable of waiver by the insurer; (b) to provide for the insurer to ask specific questions and to provide for the consequences of failing to ask (and correctly answer) such questions; (c) to require that the insurer give notice to the insured of the scope of the duty, and (d) to identify circumstances in which the insurer will be taken to have waived the duty. 1. The key provisions are as follows: 21 The insured's duty of disclosure (1) Subject to this Act, an insured has a duty to disclose to the insurer, before the relevant contract of insurance is entered into, every matter that is known to the insured, being a matter that: (a) the insured knows to be a matter relevant to the decision of the insurer whether to accept the risk and, if so, on what terms; or (b) a reasonable person in the circumstances could be expected to know to be a matter so relevant. (2) The duty of disclosure does not require the disclosure of a matter: (a) that diminishes the risk; (b) that is of common knowledge; (c) that the insurer knows or in the ordinary course of the insurer's business as an insurer ought to know; or (d) as to which compliance with the duty of disclosure is waived by the insurer. (3) Where a person: (a) failed to answer; or (b) gave an obviously incomplete or irrelevant answer to; a question included in a proposal form about a matter, the insurer shall be deemed to have waived compliance with the duty of disclosure in relation to the matter. 21A Eligible contracts of insurance—disclosure of specified matters (1) This section applies to an eligible contract of insurance unless it is entered into by way of renewal. Note: Section 21B applies in relation to the renewal of an eligible contract of insurance. Position of the insurer (2) The insurer is taken to have waived compliance with the duty of disclosure in relation to the contract unless the insurer complies with either subsection (3) or (4). (3) Before the contract is entered into, the insurer requests the insured to answer one or more specific questions that are relevant to the decision of the insurer whether to accept the risk and, if so, on what terms. (4) … (5) If: (a) the insurer complies with subsection (3) or (4); and (b) the insurer asks the insured to disclose to the insurer any other matters that would be covered by the duty of disclosure in relation to the contract; the insurer is taken to have waived compliance with the duty of disclosure in relation to those matters. Position of the insured (6) If: (a) the insurer complies with subsection (3); and (b) in answer to each question referred to in subsection (3), the insured discloses each matter that: (i) is known to the insured; and (ii) a reasonable person in the circumstances could be expected to have disclosed in answer to that question; the insured is taken to have complied with the duty of disclosure in relation to the contract. (7) … Definition (9) In this section: eligible contract of insurance means a contract of insurance that is specified in the regulations. … 22 Insurer to inform of duty of disclosure (1) The insurer shall, before a contract of insurance is entered into, clearly inform the insured in writing of the general nature and effect of the duty of disclosure and, if section 21A applies to the contract, also clearly inform the insured in writing of the general nature and effect of section 21A. Note: If the insurer wishes to rely on section 21B during the transition period (within the meaning of section 21B) in relation to the renewal of an eligible contract of insurance, the insurer must also comply with subsection 21B(2) before the contract is renewed. (2) If the regulations prescribe a form of writing to be used for informing an insured of the matters referred to in subsection (1), the writing to be used may be in accordance with the form so prescribed. (3) An insurer who has not complied with subsection (1) may not exercise a right in respect of a failure to comply with the duty of disclosure unless that failure was fraudulent. 1. Although the general duty is identified in s 21, nothing turned on the precise language of that section. Thus, for the purposes of s 21(1), Allianz did not seek to identify any matter which the applicant knew to be relevant to any decision that Allianz might make, nor any matter which a reasonable person in the applicant's shoes would be expected to know to be relevant. Except for the effect of waiver, subss 21(2) was also not directly in dispute. Nor was subs 21(3) engaged, for reasons which will become clear shortly. 2. With respect to s 21A(1), it was common ground that the comprehensive motor vehicle policy was "an eligible contract of insurance". [4] The critical question was whether s 21A(3) had been engaged. 3. On one view, the resolution of this case turned upon satisfaction by the insurer of the requirements of s 22. Thus, if Allianz did not "clearly inform" the applicant of the general nature and effect of the duty of disclosure and of s 21A, it could not "exercise a right" in respect of a failure to comply with the duty of disclosure. (There was no allegation of fraud in the present case.) 4. One way of satisfying the duty to inform the prospective insured of the nature and effect of the duty is to give a notice in accordance with a form prescribed in the regulation. [5] There was a live issue before the Tribunal as to whether s 22(1) had been complied with. That was, at least in part, a question of fact. 5. The relationship of ss 21 and 21A was not the subject of argument and may be addressed cursorily. It was described in the Explanatory Memorandum to the legislation introducing s 21A [6] in the following terms: [7] "Generally, insurers obtain information by asking insureds to complete proposal forms. Many proposal forms, however, contain vague or open-ended questions which require the insured to anticipate or interpret the real meaning or extent of the questions and the type of information the insurer is seeking. Consumers, particularly in the case of domestic and personal lines of insurance, frequently lack the knowledge and awareness to fully understand those issues which may be of significance to an insurer. On the other hand, the insurer has the experience and knowledge to identify the information it reasonably requires in order for it to be able to make an assessment of a risk. The new section 21A is designed to redress this imbalance and improve the capacity of an insured to comply with the duty of disclosure by requiring an insurer to ask specific questions in respect to a proposed contract of insurance, in default of which the insurer is deemed to have waived the duty of disclosure." 1. Section 21A thus sought to reduce the uncertainty created by s 21. Significantly, the insured will have complied with the duty if he or she answers a question by disclosing matters which are known to the insured and which a reasonable person could be expected to disclose in answer to that question. [8] Principles applicable by Tribunal 1. The proceedings before the Tribunal were governed by the Consumer Claims Act 1998 (NSW), s 13 of which provides that the Tribunal "must make such orders as, in its opinion, will be fair and equitable to all the parties to the claim." The Tribunal is then required to take into account the kinds of factors relevant to the relationship of the parties to each other identified in the Contracts Review Act 1980 (NSW), s 9(2). [9] However, it was not suggested that the Tribunal was not bound to apply the provisions of the Insurance Contracts Act. Any suggestion that the Tribunal was required to act otherwise than in accordance with law would run counter to the existence of a right of appeal from the Tribunal's decision with respect to a question of law. [10] 2. A factor of some significance to the resolution of the present dispute was the burden of proof. If, as a matter of law, the burden lay on Allianz to demonstrate that it was entitled to decline payment on the grounds of a failure by the applicant to comply with his duty of disclosure, there was certainly nothing in the terms of s 13(2) of the Consumer Claims Act to deny the application of that principle before the Tribunal. It is not in doubt that Allianz bore the burden of proving compliance with its obligations under s 22 of the Insurance Contracts Act. [11] Principles applicable in District Court 1. The fact that Allianz bore the burden of proof with respect to the application of s 22 had significance for the appeal to the District Court. Because that appeal was limited to questions of law, Allianz could only succeed on a factual issue if it could establish that there was no material before the Tribunal upon which a tribunal, acting reasonably, could reach the conclusion to which it came. However, as explained by Glass JA in Azzopardi v Tasman UEB Industries Ltd, [12] "[t]he party saddled with the onus … cannot assume in his favour that the evidence is or ought to be accepted since this trenches upon the liberty of the tribunal of fact to accept or reject any evidence." Needless to say, Allianz could not complain of an adverse factual finding if there was "no evidence" to support the finding which it sought; however, even if there was "no evidence" pointing to a contrary conclusion, the Tribunal was entitled to reach the contrary conclusion because it did not accept Allianz' evidence. In order to apply the principle in this case, it is necessary to identify the manner in which the Tribunal dealt with the operation of s 22(1). Proceedings before the Tribunal 1. The Tribunal's conclusion with respect to s 22(1) was succinctly stated in two paragraphs, which read as follows: "7. There is … no satisfactory evidence before the Tribunal to establish that the Respondent [Allianz] properly advised the Applicant, before the subject insurance contract was entered into, of the general nature and effect of his duty of disclosure in compliance with s 22 of the Insurance Contracts Act 1984, or of the general nature and effect of s 21A of that Act. 8. Accordingly, the Respondent cannot rely on the non-disclosure of previous convictions by the Applicant in seeking to deny payment of the claim." 1. Earlier in its reasons, the Tribunal had noted that the applicant had insured the motor vehicle (later stolen) through Lloyd Walker Insurance Brokers in Dubbo. Allianz' evidence was presented through an affidavit of its Technical Development Manager, Mr Nick Vernon. He referred to the broker as "his broker", indicating that the broker was the applicant's agent. Nevertheless, the case appears to have been run on the basis that the questions put to the applicant by the employee of the broker involved a request by Allianz to the applicant to answer questions. The young woman through whom the proposal was negotiated was not called to give evidence but there was an email exchange between a person in the broker's office and Allianz. The applicant gave evidence by affidavit as to his recollection of the events in the broker's office. Allianz' evidence included a letter from the applicant responding to questions asked in the course of Allianz' subsequent investigations. The Tribunal accepted the evidence of the applicant, who was not cross-examined. 2. In order to establish error of law on the part of the Tribunal, Allianz was not restricted to the "record" of the Tribunal. It was entitled to present the material before the Tribunal in order to identify in the District Court the nature of the alleged error on the part of the Tribunal. The affidavit of the applicant before the Tribunal, set out his conversation with the agent in the following terms: "16. She told me what my premium would be …. 17. I agreed to take out the policy with Allianz. 18. She had a policy questionnaire in front of her which she had printed out. 19. She didn't ask me questions off the computer screen, she looked at this sheet and made notes on it by hand. 20. She told me 'I will log it into the computer later'. 21. She asked me 'Had I ever been insured through Lloyd Walker?' and 'Have you ever had any insurance refused?' I answered 'No'. 22. I don't recall her saying anything about 'Duty of disclosure'. 23. I recall she asked about my driving history. She asked 'Have you had any speeding fines?' 24. I answered 'Yes, I have had a negligent driving offence, DUI and a number of speeding fines.' 25. She didn't say about 'five years or ten years'. 26. She did not ask about criminal convictions. 27. I paid the yearly premium then and there by cash. Annexed hereto and marked 'A' is a copy of the documents I was given by Lloyd Walker Insurance Brokers when I took out the Policy." 1. The applicant then acknowledged that upon payment of the premium he received a "tax invoice" which included details of his policy and the premium, together with a stamp indicating the premium had been paid. There was also a note, apparently stamped on the front of the document stating: "YOUR DUTY OF DISCLOSURE PLEASE READ IMPORTANT NOTICE OVERLEAF". 1. The elements of the premium included a "broker fee" which may have indicated that the agent was an agent for the applicant, not Allianz. The second page of the document annexed to the affidavit, described by the applicant as the back of the tax invoice, included 11 headings with information under each. The second heading read "YOUR DUTY OF DISCLOSURE". However, no reliance appears to have been placed on this document either before the Tribunal or in the District Court as constituting compliance with s 22 of the Insurance Contracts Act. That was, perhaps, because it was only provided to the applicant after he had entered into the contract of insurance. 2. Mr Vernon annexed to his affidavit a copy of a "Motor Insurance Proposal", being a five page document signed on the last page by the applicant. Whether it was the questionnaire which the agent had before her when she asked the applicant questions is unclear: the document in evidence appeared to have been completed on a computer. The first page of the document contained a number of "Important Notices" including a paragraph commencing "Your Duty of Disclosure". At least before this Court, Allianz submitted that the notice contained on the proposal complied with the permissible form in Sch 1 of the Insurance Contracts Regulations. It did not. However, without identifying why that was so, it is necessary to address the factual issue confronting Allianz in the District Court. 3. True it was that s 22(1) required that Allianz provide the requisite information "in writing" to the applicant. However, Allianz was bound by the factual finding of the Tribunal, in the following terms: "4. There is an affidavit from the Applicant stating what he was told and asked. There is no direct evidence from the Respondent about these matters, but instead there is an email from an employee of the broker stating what questions would have been asked, which is attached to an affidavit of the Respondent's Technical Manager Nick Vernon. 5. The Tribunal prefers the evidence of the Applicant over that of the Respondent as to what he was asked and what he was told at the time of effecting the insurance." 1. Allianz accepted that it was bound to accept that the agent did not ask about criminal convictions, as opposed to driving offences, which were disclosed. While it is true that the applicant's statement with respect to reference to the duty of disclosure was more ambivalent, involving a lack of recollection of anything said to that effect, it was open to the Tribunal to find that the applicant was not clearly informed of the matters identified in s 22(1) and s 21A before entering into the contract. That finding must encompass the conclusion that the applicant's attention was not directed to the language on the first page of the proposal form at the time he was asked to sign the final page, or at any previous point in time. 2. Recognising this difficulty, Allianz focused upon the supposed effect of signing the proposal at the end of the document, about halfway down the fifth page. Page 5 commenced with a "Declaration for all vehicles". The declaration contained considerable verbiage, which is not irrelevant to the understanding likely to have been obtained of its effect, if it were read (as to which there was no evidence). It contained the following: "Declaration for all vehicles I declare that I have: ● received a copy of the Policy Document (Product Disclosure Statement); ● read the information concerning the Duty of Disclosure; ● read the information concerning the Privacy Act 1988 …; and ● answered every question fully and frankly; and ● either completed this proposal form personally, or if it has been completed by somebody else, I have checked that the questions have been fully and accurately answered … I realise that if I have not complied with my Duty of Disclosure, my claim may not be met. …." 1. Allianz did not rely upon the signing of this document as giving rise to an estoppel. In this respect, its position was legally correct: a prospective insured cannot waive his rights under the Act. However, that left Allianz with a signed proposal providing some evidence of the applicant having had his attention drawn to the duty of disclosure and having read it, but nothing more. Whether, in those circumstances, Allianz had clearly informed the applicant as to the matters set out in the statement (assuming for present purposes that they constituted an adequate description of the general nature and effect of the duty of disclosure) was a factual issue. The Tribunal not having accepted Allianz' evidence in that regard, Allianz failed to satisfy its burden of proof with respect to compliance with s 22(1). It follows that it cannot rely upon any breach of the duty of disclosure to refuse payment under the contract unless some question of law arose for determination in the District Court. Reasoning of District Court 1. Having set out some of the factual background and identified the nature of the appeal, the primary judge turned to the alleged errors of law. He noted Allianz' submission that there were in effect two categories of errors, identified in the following terms: (a) "no evidence on which the Tribunal could have made the decisions in para 6 and para 7", and (b) misstating the relevant test. 1. Each of pars 6 and 7 of the Tribunal's reasoning was expressed in terms of the Tribunal's failure to be satisfied as to matters required to be established by Allianz. According to the conventional statement of principle by Glass JA in Azzopardi, these could not have given rise to errors of law based on a total lack of supportive evidence. 2. So far as the misstatements of the statutory tests were concerned, one related to par 6 in the Tribunal's reasons, which has not yet been identified and which is not critical to the outcome of this application. The second matter directly affects the determinative conclusion reached by the Tribunal as to the operation of s 22. The primary judge identified the submission and his conclusion in the following terms: "Mr Perla, on behalf of [Allianz] … argues that the member misstated the test in s 22 of the Insurance Contracts Act by the use of the expression 'properly advised' as opposed to 'clearly inform.' I indicated to Mr Perla in the course of taking submissions that really is a matter of semantics and, when viewed together, those two expressions mean, for all practical purposes, the same thing. Nevertheless however it is unfortunate that the proper test was not used and, if necessary, I would also find that the use of the words "properly advised" is also a misstatement of the relevant test." 1. This reasoning lacks internal coherence. A court or tribunal does not commit an error of law simply by failing to use precise statutory language on all occasions on which a test is being considered and applied. The question is whether the Tribunal understood and applied the statutory test. If, as the primary judge fairly noted, he had used language which was for all practical purposes the same thing, there was no error of law. 2. Allianz submitted in this Court that the formulation to "properly advise" was "qualitatively different" from the language of the statute which was "clearly inform". This argument was reiterated but not elaborated on in oral submissions. On the assumption that its underlying premise of difference is accepted, the effect of the submission requires explanation. 3. On the contrary assumption, made by the primary judge, that there was no difference in meaning, the judge misconceived his function. That may well have been because Allianz did not adequately articulate the decision with respect to a matter of law which it was challenging. If, as appears likely, the relevant decision in the application of s 22(1) involved an implicit decision as to the meaning of "clearly informs", the judge's opinion that the test applied did not differ materially from that required by the statute demonstrates that his power to intervene was not engaged. If Allianz were right in saying that the statutory language was nevertheless not applied by the Tribunal, that might constitute a discretionary ground for refusing the applicant relief, although the argument was not articulated in those terms. 4. The point fails in any event because the primary judge was correct in finding that, in practical terms, the language used by the Tribunal did not depart from the meaning of s 22(1). In Suncorp v Cheihk, Stein JA referred to the language of s 22(1) in the following terms: [13] "I also accept that 'inform' means to 'make known' [14] …. The adverb 'clearly' is a plain English word and its ordinary meaning would convey the need for some precision in the making known of the relevant duty." 1. As further explained by Giles JA in Suncorp v Cheihk, the statutory language does not involve a term of art, but rather requires a fact-specific analysis of the language of the notice given, the context in which it is to be found in the insurer's documentation and the circumstances in which the documentation was provided to the prospective insured. Giles JA stated: "38. … The contents of the note had to be made known to the respondent, and had to be made known to him clearly. Clarity was required not only in the contents of the note by which information was conveyed but also by the manner in which the note conveying the information was made known. A note in a document without attention appropriately drawn to it would not suffice, even if the contents of the note were adequate to state the general nature and effect of the duty of disclosure. … 40. It will always be a question of fact and degree, but the purpose of s 22 is to ensure that the insured is informed of the significant and important matters of his duty of disclosure and the consequences of failure to comply with the duty of disclosure, so that his insurance cover will not be imperilled by ignorance of those matters. The insured is to be informed clearly. Both the purpose of s 22 and its terms call for insistence on a proper standard of information giving." 1. In referring to "a proper standard of information giving", Giles JA was seeking to explain how the statutory language operated, adopting a purposive approach to construction. The primary judge in the present case was correct in concluding that the formulation "properly advised" did not demonstrate a misapprehension as to the statutory test. Factual reassessment 1. Having identified what he understood to be errors of law, the primary judge then embarked upon a reassessment of the material before the Tribunal. The justification for the exercise appears to have been that, once error of law was identified, the Court was entitled to address the facts in order to provide the appropriate relief. Thus, concluding that the applicant was clearly informed at the relevant time as to his duty of disclosure, the District Court set aside the orders of the Tribunal and also made an order dismissing the application to the Tribunal. The Court purported to "enter a verdict" for Allianz, language which has no ready application in the context of a statutory appeal limited to a question of law, but may reveal a misunderstanding as to the entitlement of the Court to make findings of fact. 2. Because the reasoning set out above requires the setting aside of the District Court judgment based on an error of law with respect to the Tribunal's decision as to the operation of s 22, it is not necessary to consider the Court's reassessment of the factual material. Nevertheless, it should be noted that in this additional respect the Court exceeded its jurisdiction. The power of the Court turned upon the operation of s 67(3) of the Consumer, Trader and Tenancy Tribunal Act, which provided that where the court upheld an appeal it might "make such order in relation to the proceedings in which the question arose as, in its opinion, should have been made by the Tribunal". The primary judge relied on the explanation of that provision given by Gibson DCJ in McCann v Nationwide Consultants Pty Ltd, [15] in a passage discussing the reasoning of this Court in Edyp v Brazbuild Pty Ltd [16] and in The Craftsmen Restorations & Renovations Pty Ltd v Boland. [17] Gibson DCJ concluded that the Court had power to "accept additional evidence on appeal" and engage in "some fact-finding", the boundaries of which were not settled. [18] 3. The most expansive view of the powers of the Court on an appeal under s 67 to determine factual matters for itself is to be found in the reasoning of French CJ in Kostas v HIA Insurance Services Pty Ltd. [19] The Chief Justice discussed the possible operation of s 75A of the Supreme Court Act as potentially applying to an appeal under s 67. [20] His observations were expressly qualified as being matters not necessary for final determination. [21] The Chief Justice did, however, contemplate that s 75A(6) might enable the appellate court to "draw inferences from facts found by the Tribunal or to find facts on materials before the Tribunal which were not in dispute." [22] As Allsop P noted in The Craftsmen, [23] there is an outstanding question as to the extent to which the reasoning of the Chief Justice in Kostas requires a relaxation of the constraints identified in a series of judgments of this Court preceding Kostas. The resolution of those questions are not necessary and should, therefore, not be addressed in this case. There is, however, no support in the qualified language of French CJ in Kostas for the exercise undertaken by the primary judge involving the resolution of contested factual issues. Other issues 1. Allianz successfully challenged in the District Court a passage in the Tribunal's reasons which, in common with other issues, need not be resolved. At par 6, the Tribunal had stated: "The Tribunal is not satisfied, having considered the evidence provided, which includes the underwriting guidelines of the Respondent, that the actual prior convictions of the Applicant were matters which were material to the risk to be covered by the Applicant [sic - Respondent?]." 1. This passage appeared in the reasoning of the Tribunal after reference had been made to the dispute as to what questions were put by the agent to the applicant. The Tribunal rejected Allianz' submission that all of the questions identified in the proposal were put to the applicant and accepted that he was asked only about his driving history and not about criminal convictions. The relationship of a criminal conviction to the risk to be covered under the proposed policy can arise under three statutory provisions. Allianz contended that the application of a purely "objective" test, as revealed in par 6, revealed legal error. 2. Having set out ss 28, 22 and 21A, the primary judge noted: "Nowhere in the legislation … does appear the expression, 'matters which were material to the risk covered by the applicant'. In those circumstances I am of the opinion that the member, in coming to that conclusion in para 6 of his decision, made an error of law as to the test to apply." 1. Both parties assumed that the Tribunal was referring to the operation of s 21A. Under that provision, the insurer is taken to have waived compliance with the duty of disclosure unless it complies with one of the two following subsections. There was no suggestion of compliance with subs (4); accordingly, there was a question as to whether, before the contract was entered into, Allianz had requested the applicant "to answer one or more specific questions that are relevant to the decision of the insurer whether to accept the risk". 2. The point for present purposes was not the difference between relevance and materiality, which was another semantic point, but whether s 21A(3) was concerned with questions which were relevant to the actual decision to be made by the particular insurer or, as Allianz submitted was the Tribunal's approach, an abstract question of relevance to a prudent insurer. In support of a finding of legal error, Allianz relied on the reasoning of this Court in Permanent Trustee Australia Co Ltd v FAI General Insurance Co Ltd, [24] for which support was found in the High Court in the judgment of Gummow and Hayne JJ. [25] 3. It is true that the "prudent insurer" test applicable under the general law which preceded the Insurance Contracts Act, no longer applies under the Act. However, the High Court reversed the decision of this Court in Permanent Trustee, and the passage relied on was in the judgment of the dissenters. The point of difference between the reasoning of this Court and the minority, on the one hand, and the reasoning of the majority, on the other, was squarely concerned with this issue. The majority, reading s 21 as a whole, concluded that the matter to which the disclosures must be relevant was to be characterised by reference to the decision of the insurer whether to accept the risk. The reasoning continued: [26] "Assessment of the risk, ie the insurance hazard, is susceptible to objective ascertainment." 1. The inter-relationship of ss 21 and 21A (the latter not being considered in Permanent Trustee because it was an amendment having no application to the case) gives rise to questions which were not addressed in this case and need not be determined now. There is a further issue: assuming that a general question about convictions was asked and assault convictions were not disclosed, can the insured argue that, although asked a specific question, a reasonable person in the circumstances could not be expected to have disclosed such convictions (on the basis that they were seen to be irrelevant to the decision of the insurer with respect to the particular risk)? It is at least doubtful whether, unless expressly so informed, the multitude of reasonable car owners in the community would treat criminal convictions arising out of a minor brawl in a pub as relevant to the risk insured under a comprehensive motor vehicle policy. 2. The better view may be that the Tribunal correctly undertook the exercise required by s 21A(6), on the basis that relevance to risk could be objectively assessed (in keeping with the reasoning of the High Court in Permanent Trustee), but that the issue arose with respect to a decision to be made by the particular insurer (which would explain the Tribunal's reference to Allianz' underwriting guidelines). Conclusion 1. For the reasons given above, the conclusion of the Tribunal that Allianz had not satisfied s 22(1) of the Insurance Contracts Act was not attended by legal error. The contrary finding of the District Court revealed a misapprehension as to the nature and scope of its jurisdiction under s 67 of the Consumer, Trader and Tenancy Tribunal Act. The decision of the District Court must therefore be set aside. 2. Because Allianz had not complied with s 22(1) it was not entitled to exercise any right it might otherwise have enjoyed with respect to a failure on the part of the applicant to comply with the duty of disclosure: s 22(3). It followed that the decision of the Tribunal ordering Allianz to pay the amount owing under the policy should have been affirmed. 3. In these circumstances, this Court should make the following orders: (1) Set aside the judgment of the District Court given on 20 November 2013 and the orders made on that date. (2) In place of those orders, order that the appeal to the District Court filed on 29 April 2013 be dismissed and the plaintiff (Allianz) be ordered to pay the costs of the defendant, Phillip Gordon O'Farrell. (3) Order that Allianz pay Mr O'Farrell's costs in this Court. 1. MACFARLAN JA: I agree with Basten JA. 2. GLEESON JA: I agree with Basten JA. ********** Endnotes 1. See Muldoon v Church of England Children's Homes Burwood [2011] NSWCA 46; 80 NSWLR 282 (Campbell JA and Young JA, Macfarlan JA agreeing). 2. See, eg, Allianz Australia Insurance Ltd v Cervantes [2012] NSWCA 244; 61 MVR 433 at [9]; Boele v Rinbac Pty Ltd [2014] NSWCA 451 at [8]. 3. Supreme Court Act, s 69(4) and Craig v South Australia [1995] HCA 58; 184 CLR 163 at 182-183. 4. Section 29A(9); Insurance Contracts Regulations 1985 (Cth), reg 2B(1) and reg 5. 5. Insurance Contracts Act, s 22(2); Insurance Contracts Regulations, reg 3(1)(c) and Sch 1, Pt 3. 6. Insurance Laws Amendment Act 1998 (Cth), Sch 1, item 78. 7. Insurance Laws Amendment Bill 1997 (Cth), Explanatory Memorandum, par 117. 8. Section 21A(6)(b). 9. Consumer Claims Act, s 13(2). 10. See the analogous reasoning in Qantas Airways Ltd v Gubbins (1992) 28 NSWLR 26 at 29G (Gleeson CJ and Handley JA). 11. See Lumley General Insurance Ltd v Delphin (1990) 6 ANZ Ins Cas ¶60-986 at 76,565, applied in Suncorp General Insurance Ltd v Cheihk [1999] NSWCA 238; 10 ANZ Ins Cas ¶61-442 at [14] (Stein JA) and [37] (Giles JA) (Meagher JA agreeing with both). 12. (1985) 4 NSWLR 139 at 156D-F. 13. At [14]. 14. Being the ordinary meaning accepted by Wallwork J (Malcolm CJ and Rowland J agreeing) in Lumley v Delphin at 76-571. 15. [2013] NSWDC 205; 17 DCLR (NSW) 209 at [10]-[13]. 16. [2011] NSWCA 218. 17. [2011] NSWCA 147. 18. McCann at [13]. 19. [2010] HCA 32; 241 CLR 390. 20. Kostas at [26]. 21. Kostas at [27]. 22. Kostas at [30]. 23. At [3]. 24. [2001] NSWCA 20; 50 NSWLR 679 at [31], [32] (Handley JA, Meagher and Powell JJA agreeing). 25. Permanent Trustee Australia Co Ltd v FAI General Insurance Co Ltd (In liq) [2003] HCA 25; 214 CLR 514 at [65] (relied on by Allianz) and [70]. 26. At [32] (McHugh, Kirby and Callinan JJ). 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: 13 March 2015