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Professional Investment Services Pty Ltd v Dolan[2015] QCATA 35

Professional Investment Services Pty Ltd v Dolan[2015] QCATA 35

CITATION:

Professional Investment Services Pty Ltd v Dolan [2015] QCATA 35

PARTIES:

Professional Investment Services Pty Ltd

(Appellant)

v

Julie Dolan

(Respondent)

APPLICATION NUMBER:

APL514-14

MATTER TYPE:

Appeals

HEARING DATE:

6 and 9 March 2015

HEARD AT:

Brisbane

DECISION OF:

Dr J R Forbes, Member

DELIVERED ON:

12 March 2015

DELIVERED AT:

Brisbane

ORDERS MADE:

Leave to appeal is refused.

CATCHWORDS:

MINOR CIVIL DISPUTE – APPLICATION FOR LEAVE TO APPEAL – construction of agreement – whether indemnity clause void for uncertainty – whether arguable error shown – where no such error shown – where leave to appeal refused

Queensland Civil and Administrative Tribunal Act 2009 ss 32, 142

Androvitsaneas v Members First Broker Network [2013] VSCA 212

Associated Japanese Bank (International) Ltd v Credit du Nord SA [1989] 1 WLR 255

Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139

Bhasin v Hrynew [2014] SCC 71

Biotechnology Australia Pty Ltd v Pace (1989) 15 NSWLR 130

Custom Credit Corporation Ltd v Gray [1992] 1 VR 540

Fidelity & Deposit Co. of Maryland v. Bristol Steel and Ironworks, Inc. 722 F.2d 1160 (4th Cir. 1983)

Financial Ombudsman Services Limited v Pioneer  Credit Acquisition Services Pty Ltd [2014] VSC 172

Fox v Percy (2003) 214 CLR 118

Lend Lease Financial Planning Limited v Southcap Pty Ltd [1998] QCA 117

Meehan v Jones (1982) 149 CLR 571

Mercantile Credits Ltd v Harry [1969] 2 NSWR 248

Nudgee Bakery Pty Ltd’s Agreement, Re [1971] Qd R 24 Pickering v McArthur [2005] QCA 294

Pickering v McArthur [2005] QCA 294

S v Crimes Compensation Tribunal [1998] 1 VR 83

Sammimi v Mahboudi [2014] QCATA 204

Sino Iron Pty Ltd v Mineralogy Pty Ltd (No 2) [2014] WASC 444

Snell v Morgan [2011] QCATA 316

Strzelecki Holdings Pty Ltd v Cable Sands Pty Ltd (2010) 41 WAR 318

TransAmerica Ins. Co. v. Boomfield 401 F.2d 357 (6th Cir. 1968) 

Upper Hunter District Council v Australian Chilling & Freezing Co Ltd (1968) 118 CLR 437

W (an infant), In re [1971] AC 682

Yam Seng PTE Limited v International Trade Corp Limited [2013] 1 Lloyd's Rep 526

York Air Conditioning and Refrigeration (Australasia) Pty Ltd v The Commonwealth (1949) 80 CLR 11

APPEARANCES and REPRESENTATION (if any):

This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act).

REASONS FOR DECISION

  1. [1]
    At all material times the appellant (“Professional”) carried on business as a duly licensed financial adviser at Corporate Centre One, Bundall Road and Slatyer Avenue, Bundall, Queensland.
  2. [2]
    At all material times the respondent (“Dolan”), of Tallebudgera, was an “authorised representative” of Professional, pursuant to an agreement made between the parties on 8 December 2003, in accordance with the Corporations Act 2001.
  3. [3]
    It was a term of the said agreement[1] that:

You [Dolan] agree to indemnify us [Professional] in appropriate circumstances from any claims made against us or any losses suffered by us (including the payment of your portion of any insurance excess) as a result of any negligent or willful [sic] act or omission by you.

  1. [4]
    In the course of her employment by Professional, Dolan acted as financial adviser to three of its clients, namely Anthea and Thyrza Potter (“the Potters”) and Leanne Sanderson (“Sanderson”).
  2. [5]
    Upon complaints about Dolan’s advice, the Financial Ombudsman Service Ltd (“FOS”) awarded the Potters compensation of $57,500, and Sanderson received $150,000.
  3. [6]
    The FOS is a company that provides an external dispute resolution service for the financial services industry, as approved for that purpose by the Australian Securities and Investment Commission (“ASIC”).[2] At all material times Professional was a member of the FOS scheme.
  4. [7]
    A recommendation of the FOS is binding on parties to a dispute, provided that both accept it.[3] It is common ground that this condition was satisfied in the cases of Potter and Sanderson versus Professional.
  5. [8]
    For reasons of policy[4] Professional limited its claim for indemnity by Dolan to an amount of $20,000, with costs.[5]
  6. [9]
    The matter was heard by Mr Gordon, Adjudicator, on 9 and 28 October 2014. On the latter date he ordered that Professional’s claim be dismissed.
  7. [10]
    The dismissal was upon the ground that the indemnity term, Clause 8.3, is void for uncertainty.[6]
  8. [11]
    Another question that was considered, but not decided, is whether the claim should be dismissed because of Professional’s alleged failure, as indemnitee, to act reasonably and in good faith towards its indemnitor.[7] In other words, is there an implied term in commercial contracts generally[8] that parties, in exercising their rights and performing their duties, must act  reasonably and in good faith towards each other? Here it was suggested (but disputed) that Professional neglected that duty by failing to give Dolan any, or any adequate opportunity, to put her case to the FOS. The suggested duty has been recognised in the United States[9] and Canada[10], and has equivocal support in England,[11] but its status in the common law of Australia remains in doubt.[12] However, as this question is not part of the ratio of the decision under appeal the resolution of an interesting point may be left to higher authority.
  9. [12]
    The sole ground of the Adjudicator’s decision is that Clause 8.3 is void for uncertainty[13], and the sole ground of the application for leave is that this decision is, at least arguably, wrong in law.
  10. [13]
    The primary decision focuses upon three words in the subject clause[14], namely: in appropriate circumstances. Do they render the clause legally unenforceable?
  11. [14]
    The learned Adjudicator answered that question in the affirmative:

Now that’s very strange form of wording. Is this a legally drafted document? ... [W]ho’s to say what appropriate circumstances are?[15]

My view on the words “appropriate circumstances” in Clause 8.3 is that they are meaningless and can’t be given a meaning.[16]

I’m quite clear, therefore, that this clause is not enforceable against Ms Dolan and on that basis the claim must fail.[17]

  1. [15]
    The phrase in appropriate circumstances modifies, in some unspecified way, the promise to indemnify [Professional] ... from any claims made against [it] or any losses suffered by [it] ... as a result of any negligent or willful [sic[18]] act or omission by [Dolan]. In other words, it implies that in some unstated circumstances, a negligent or even wilful act may not bring the indemnitor to heel. But what are those circumstances? How often will they arise? Who is to decide whether they do, in any particular case? In essence, what is the strength of the undefined modifier? On an objective view of Clause 8.3, can a meeting of minds on these issues be discerned?
  2. [16]
    The Adjudicator found that the parties did not arrive at a consensus sufficient to constitute a legally enforceable indemnity. That is ultimately a question of fact for the primary decision-maker[19], and, as a reasonable decision, it is not one that an appeals tribunal is entitled to revisit or “second guess”.[20] No doubt the Adjudicator recognised that the common law does its best to rescue ill-designed agreements,[21] but the melancholy fact remains that some are irredeemable.[22] The Adjudicator put Clause 8.3 in that category, and, in my view, correctly so. The position might well be different if the clause in question simply said:

You agree to indemnify us from any claims or losses suffered by us ... as a result of any negligent or wilful act or omission by you.

  1. [17]
    But that is not the case. Unfortunately for the appellant the Delphic phrase in appropriate circumstances, is the dram of eale [that] doth all the noble substance of a doubt.[23]
  2. [18]
    No reasonably arguable error has been shown. Leave to appeal must therefore be refused.

ORDER

Leave to appeal is refused.

Footnotes

[1]  Clause 8.3.

[2]  See ASIC Regulatory Guides 139 and 165.

[3]  Regulatory Guide 139.217; Financial Ombudsman Services Limited v Pioneer  Credit Acquisition Services Pty Ltd [2014] VSC 172 at [6].

[4]  Transcript of hearing (“Transcript”) 9 October 2014 page 3 lines 4-8.

[5]  As per Application filed herein on 28 May 2014.

[6]  Transcript 28 October 2014 page 56 lines 34-35, page 58 lines 9-10, page 65 lines 7-8.

[7]  Transcript 28 October 2014 page 59 lines 1-8, 24.

[8]  Contracts of insurance are an obvious exception.

[9] Fidelity & Deposit Co. of Maryland v. Bristol Steel and Ironworks, Inc. 722 F.2d 1160 (4th Cir. 1983); TransAmerica Ins. Co. v. Boomfield 401 F.2d 357 (6th Cir. 1968). 

[10] Bhasin v Hrynew [2014] SCC 71 at [63].

[11] Yam Seng PTE Limited v International Trade Corp Limited [2013] 1 Lloyd's Rep 526. 

[12] Sino Iron Pty Ltd v Mineralogy Pty Ltd (No 2) [2014] WASC 444 at [236]; Strzelecki Holdings Pty Ltd v Cable Sands Pty Ltd (2010) 41 WAR 318 at 335. It did not find favour in Androvitsaneas v Members First Broker Network [2013] VSCA 212 at [108].

[13]  The terminology of Dolan’s counsel – “ambiguous” – was corrected and reduced to a term of art by the Adjudicator: Transcript 9 October 2014 page 8 lines 23-24.

[14]  Quoted in paragraph [3], above.

[15]  Transcript 9 October 2014 lines 8-9, 24-25.

[16]  Transcript 28 October 2014 page 56 lines 34-35.

[17]  Ibid page 58 lines 9-10.

[18]  The US spelling of “wilful” suggests that Professional’s standard form may have been cobbled together from some American precedent: cf Word List of US-UK Spelling Variants Words Worldwide Limited 2009.

[19] Biotechnology Australia Pty Ltd v Pace (1989) 15 NSWLR 130 at 135 per Kirby P; Sammimi v Mahboudi [2014] QCATA 204 at [8].

[20]  An application for leave to appeal is not an opportunity to re-run the trial, or to revisit reasonable opinions or findings of fact: S v Crimes Compensation Tribunal [1998] 1 VR 83 at 91; Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 at 151; Pickering v McArthur [2005] QCA 294 at [3]; Snell v Morgan [2011] QCATA 316 at [10]; Fox v Percy (2003) 214 CLR 118 at 125-126; In Re W (an infant) [1971] AC 682 at 700.

[21] Associated Japanese Bank (International) Ltd v Credit du Nord SA [1989] 1 WLR 255 at 268 per Steyn J; Lend Lease Financial Planning Limited v Southcap Pty Ltd [1998] QCA 117; York Air Conditioning and Refrigeration (Australasia) Pty Ltd v The Commonwealth (1949) 80 CLR 11; Meehan v Jones (1982) 149 CLR 571; Upper Hunter District Council v Australian Chilling & Freezing Co Ltd (1968) 118 CLR 437.

[22]  See for other examples, Mercantile Credits Ltd v Harry [1969] 2 NSWR 248, Re Nudgee Bakery Pty Ltd’s Agreement [1971] Qd R 24 and Custom Credit Corporation Ltd v Gray [1992] 1 VR 540.

[23] Hamlet Act One, Scene IV.

Close

Editorial Notes

  • Published Case Name:

    Professional Investment Services Pty Ltd v Julie Dolan

  • Shortened Case Name:

    Professional Investment Services Pty Ltd v Dolan

  • MNC:

    [2015] QCATA 35

  • Court:

    QCATA

  • Judge(s):

    Member Forbes

  • Date:

    12 Mar 2015

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

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