Case: Manchester Unity Total Care Building Society v MGICA Ltd (1991) 6 ANZ Ins Cas 61-062
Outcome: cited
There could, no doubt, be a case where the circumstances are such that it can be taken that any reasonable insured would know that any insurer would regard them as relevant to cover of the risk proposed without the benefit of evidence from the insurer or broker. It may be that the position arrived at by September/October 2002 would fall into that category so far as PI insurance in relation to run off insurance for Tasman Investments was concerned. A fund raising that was advised to be likely to be in breach of the Corporations Law was clearly failing, with the investors likely to suffer considerable losses. In my opinion, the same cannot be said of the circumstances in March/early April 2002. The likelihood of loss on the investment was not known. The possibility of breaches of the law in relation to the fund raising was known, but that is as high as it reached at that point. That was likely to be academic if the project succeeded. The relevance of that circumstance to a particular insurer needs to be established by evidence. It is conceivable that such evidence could have been led, but it was not. For the Court to fill that gap and make a finding as to that issue would amount to speculation. I conclude that it has not been established that a failure to disclose the pleaded circumstances would have given rise to any relief in relation to the hypothetical Macquarie Underwriting policy. The same reasoning would apply in relation to the application of s 28(3) ( Manchester Unity Total Care Building Society v MGICA Ltd (1991) 6 ANZ Ins Cas 61-062). 104 I am, thus, satisfied that the proper basis for quantification of loss is to assume that a Macquarie Underwriting policy would have issued based upon the proposal it received, including Tasman Investment as an insured with a retroactive date at least back to the inception of the business in 2000. The policy would, thus, have responded to claims made in the period from March 2002 to March 2003 arising from circumstances occurring in June November 2000. Such claims would have clearly fallen clearly within the insured risk and there has been no suggestion of any relevant exception. Allowance will have to be made for the proposed deductible of $20,000 per claim. Some allowance should be made for the higher premium proposed by Macquarie Underwriting. It would not be right in principle to allocate all of that increase to the one claim by Tosich. The amount recovered of $25,608.38 should be deducted. There should also be a modest discount to reflect the possibility that a policy on appropriate terms might not have issued. All in all, the cross-claimants should recover the sum of $70,000 plus interest in relation to Tosich. 105 Little attention was paid to the claims in relation to Roach and Kotwal and no special defence was raised in relation to them. The fact that they were paid out is of no consequence as there was no relevant policy in force at the time. The only distinction is that they were made later than that by Tosich. If proper insurance had been obtained, that should not have been relevant. The quantification of these claims needs to be further considered.