Framar Money Management Pty. Ltd v Territory Insurance Office; John Villias Kelton; Baillieu Bowring Marsh and McLennan Pty. Ltd

• Jurisdiction: Northern Territory
• Court: Supreme Court
• Judge: O'Leary C.J.
• Judgment Date: 24 November 1986
• Neutral Citation: [1986] NTSC 52
• Docket Number: No. SC 428 of 1983
• Date: 24 November 1986

[1986] NTSC 52

IN THE SUPREME COURT OF THE NORTHERN TERRITORY OF AUSTRALIA

O'Leary C.J.

No. SC 428 of 1983

Framar Money Management Pty. Ltd.

and

Territory Insurance Office; John Villias Kelton; Baillieu Bowring Marsh and McLennan Pty. Ltd.

Counsel for Plaintiff: K.R. Murray QC, P. Roberts and D. Campbell

Counsel for First Defendant: D. Mildren QC, J.D. Philbrick and C.R. McDonald

Counsel for Second and Third Defendants: T.I. Pauling QC and T.F. Coulehan

Cases applied:

De Maurier (Jewels) Ltd v Bastion Insurance Co Ltd (1967) 2 Ll LR 500

Hepburn v A. Tomlinson (Hauliers) Ltd. (1966) AC 451

Larratt v Bankers and Traders Insurance Co Ltd 41 SR (N.S.W.) 215.

Cases followed:

Asfarand Co. v Blundell and Anor (1896) 1 QB 123

Australian Provincial Assurance Association Ltd. v Producers and Citizens Co-Operative Assurance Co. of Australia Ltd. (1932) 48 CLR 341

Davies v National Fire and Marine Insurance Co. of New Zealand (1891) AC 489

Laws Holdings Pty. Ltd. v Shortand Ors. (1972) 46 ALJR 563

Roumeli Food Stores (NSW) Pty Ltd v The New India Assurance Co Ltd (1972) 1 NSWLR 227

Cases referred to:

Carter v Boehm 3 Burr 1905

Franklin v Manufacturers Mutual Insurance Ltd 36 SR (N.S.W.) 76

Greenhill v Federal Insurance Co. Ltd. (1927) 2 KB 65

Guardian Assurance Co. Ltd. v Condogianis 26 CLR 231

Hutton v Royal Exchange Assurance (1971) NZLR 1045

Khoury (M.and S.) v Government Insurance Office of New South Wales 54 ALR 639

Kodak (A'sia) Pty. Ltd. v Retail Traders Mutual Indemnity Insurance Association 42 SR (N.S.W.) 231

Maynard v Goode 37 CLR 529

Thomson v Weemsand Ors. (1884) App Cas 671

Tramways Advertising Pty. Ltd. v Luna Park (NSW) Ltd. 38 SR (N.S.W.) 632

Yorkville Nominees Pty. Ltd. (In Liquidation) v Lissenden 63 ALR 611.

Supreme Court Rules O.23 r.15.

Costs — Plaintiff successful against one defendant, but unsuccessful against others — Whether a proper case for Bullock Order.

Insurance — Fire Policy — Property destroyed — Claim for indemnity — Payment refused — Whether plaintiff had insurable interest — Related and associated companies — ‘Goods Policy’.

Insurance — Fire Policy — Property destroyed — Claim for indemnity — Whether non-disclosure of material facts — Principles applicable — Onus of proof — Whether insurer elected to affirm policy.

Insurance — Whether policy a ‘basis’ policy — Representations in proposal — Truth of condition precedent to liability — Whether condition precedent to liability to pay or to policy becoming operative at all — Whether material misrepresentation.

Practice and procedure — Failure to plead estoppel or waiver — Supreme Court Rules — Effect of non-compliance with the rule —

JUDGE1

1 This is an action brought by the plaintiff, Framar Money Management Pty. Ltd., to recover from the first defendant, Territory Insurance Office (‘the T.I.O.’) moneys alleged to be due from it under a policy of insurance, and further or in the alternative, to recover from the second and third defendants, John Villias Kelton (‘Kelton’) and

2 Baillieu Bowring Marsh and McLennan Pty. Ltd. (‘Baillieu Bowring’) damages for an alleged breach by them of their duty to the plaintiff as its Broker (and his employer) in arranging insurance for the plaintiff on certain of its assets.

3 By its Statement of Claim, the plaintiff alleges against the first defendant that by an agreement made in or about July 1982, the first defendant agreed, in consideration of the payment to it by the plaintiff of certain premiums, to insure certain property of the plaintiff and/or its related and/or subsidiary companies against loss or damage by fire. It further alleges that the first defendant thereupon issued Policy No. 1015834 to cover that risk for the period from 9 July 1982 to 9 July 1983, that on 31 August 1982 the property covered by the policy was destroyed by fire, that a claim was made by the plaintiff on the first defendant for payment under the policy, and that the first defendant has refused to make any payment to the plaintiff. The plaintiff, therefore, claims from the first defendant the sum of $554,206.84, being the amount alleged to be due under the policy.

4 By its Defence, the first defendant does not admit the agreement for insurance alleged to have been made in or about July 1982. It admits, however, that it issued Policy 1015834 to cover the interests of the plaintiff and its related or associated companies, but says that the period of insurance was from 7 September 1982 to 3 October 1982, and not for the period alleged by the plaintiff. Further, the first defendant admits the destruction by fire of the property on 31 August 1982, but raises the following matters by way of defences -

• (a) That the plaintiff had no insurable interest in the property insured, that property, so it is alleged, being ‘the property of “Frank Martino of the Australian Caterer”, a business name the registered owners of which are Francesco Antonio Martino and Maria Rosaria Martino’.

• (b) That, if the property destroyed by the fire was covered by the policy, and if the plaintiff and/or its related or associated companies had an insurable interest in it, it was a term of the policy that the truth of the statements and answers in the proposal should be conditions precedent to any liability of the T.I.O. to make any payment under the policy, and the answers to questions 4 and 5 in the proposal were not true. Therefore, it is said, the first defendant is not liable to make any payment under the policy.

• (c) That, if the property destroyed by the fire was covered by the policy and the plaintiff had an insurable interest in it, the plaintiff failed to disclose to the first defendant all material facts relating to the proposed insurance, as it was under a duty to do, whereupon the first defendant became entitled to, and did, avoid the policy by letter to the plaintiff dated 24 August 1983.

5 No matters are raised by the plaintiff by way of reply to the defence, though having regard to the way in which the action was conducted and the evidence put before the court, I would have expected that there would be a reply raising waiver or estoppel, or both. I will refer to this matter later in these reasons.

6 I will deal first with the case by the plaintiff against the first defendant.

7 The first question to be considered is whether a contract of insurance was effected between the plaintiff and the first defendant, and, if so, for what period of time and what were its terms. It was admitted on the pleadings that the first defendant issued a policy of insurance (No. 1015834) to cover the interests of the plaintiff and/or its related and/or its subsidiary companies for their respective rights and interests in certain property situated at Ranger Uranium Site, Jabiru in the Northern Territory, but the first defendant claimed that the policy was only for the period commencing 7 September 1982 until 3 October 1982. In the end, however, it conceded that the policy in fact took effect (as it obviously did) from 9 July 1982, and was therefore in existence at the time of the loss, i.e., 31 August 1982. Furthermore, although this was not admitted on the pleadings, the first defendant conceded that a contract of insurance initially came into effect on 9 July 1982 as a result of an arrangement made between a Mr Swan on behalf of the first defendant, and Kelton as Broker for the plaintiff.

8 The next matter raised by the first defendant, in its defence, is that the plaintiff, Framar Money Management Pty. Ltd., had no insurable interest in the property insured. To answer this question, as well as other questions that must be considered later, it will be convenient if I now set out the background to the dispute, and make some review of the evidence.

THE FACTS

9 Since about the year 1973 Francesco Antonio (Frank) Martino (‘Martino’) and his wife, Maria Rosaria Martino, have carried on a business of providing catering and associated services for construction camps in various remote parts of Australia. Initially, the business was conducted under the business name of the Australian Caterer, but on 24 June 1980 that firm was incorporated as the Australian Caterer Pty. Ltd. On 3 December of that same year another company, Framar Money Management Pty. Ltd. (the plaintiff), was also incorporated to carry on some part of Mr and Mrs Martino's business activities. Again, at some time after that, and before the end of the financial year ending 30 June 1981, as a result of advice given to them by a person calling himself ‘Dr. Peter Clyne, International Tax Attorney’, Mr and Mrs Martino had a series of other companies incorporated, nine in all, and they transferred various parts of their business operations to those companies. The object of all those arrangements was, of course, to minimise their liability for tax. Mr and Mrs Martino were, and are, the sole directors and shareholders of all those companies.

10 At some time about 1978, the Australian Caterer (to use an expression which, I think, is generally descriptive of Mr and Mrs Martino's business activities) was awarded the contract to provide the catering and other services for Ranger Uranium Mines (‘Ranger’) near the township of Jabiru. It was a very extensive contract which included, in addition to catering services, the provision of a Wet Mess and Supermarket, Town Garbage Disposal, Laundry facilities, a Picture Theatre, a swimming pool, a Library, a Post Office and Banking facilities and a Takeaway Food Shop. At its peak, some 1500 people were engaged in the construction workforce and were being serviced by the Australian Caterer. The construction camp was about 6 or 7 kilometres from the actual Mine Site, and about 12 kilometres from East Jabiru township. The camp was in two parts, the Wages Camp and the Staff Camp. The Wages Camp was at Boonjinni, and the Staff Camp at Koonjimba. Martino...