FEDERAL COURT OF AUSTRALIA

Reilly v Australia and New Zealand Banking Group Limited (No 2) [2020] FCA 1502

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to rule 16.21 of the Federal Court Rules 2011 (Cth), the following parts of the statement of claim be struck out:

(a)    paragraphs 48 and 73 of the statement of claim in so far as they seek relief in respect of ANZ Loan Protection policies the premiums for which were paid before the date that is 6 years prior to the commencement of the proceeding; and

(b)    paragraphs 70 and 71 of the statement of claim.

2.    Pursuant to rules 8.21 and 16.53 of the Federal Court Rules 2011 (Cth), the applicants have leave to file and serve an amended originating application and amended statement of claim in the form of Annexures A and B to the interlocutory application dated 7 August 2020 save that:

(a)    the amended statement of claim is to be amended to reflect paragraph 1 of these orders; and

(b)    leave is not granted in respect of proposed paragraph 3B of the originating process.

3.    The applicants pay 50% of QBE’s costs of the interlocutory applications dated 17 July 2020 and 7 August 2020.

4.    The applicants pay the respondents’ costs thrown away by reason of the amendment of the statement of claim.

5.    By 4.00pm on 2 November 2020, the parties file any proposed consent orders in relation to opt out notices and discovery or, in the absence of agreement, each party file their proposed orders together with a written submission of no more than 5 pages.

6.    There is liberty to apply on 3 days' notice.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

O’BRYAN J:

Introduction

1    This is a representative proceeding commenced by the applicants on 28 February 2020 under Part IVA of the Federal Court of Australia Act 1976 (Cth) (FCA Act) against:

(a)    Australia and New Zealand Banking Group Limited (ANZ), the first respondent;

(b)    OnePath Life Limited (OnePath Life), previously known as ING Life Limited, the second respondent;

(c)    OnePath General Insurance Pty Limited (OnePath General), previously known as ING General Insurance Pty Ltd, the third respondent; and

(d)    QBE Insurance (Australia) Limited (QBE), a wholly owned subsidiary of QBE Insurance Group Limited, the fourth respondent,

in relation to certain consumer credit insurance policies issued to ANZ’s customers between 1 January 2010 and 30 June 2019 (relevant period). Until 31 May 2019, OnePath Life and OnePath General were subsidiaries of ANZ.

2    The applicants commenced this proceeding on their own behalf and on behalf of all persons who at any time in the relevant period acquired at least one consumer credit insurance policy with respect to a credit card issued or a personal loan advanced by ANZ and have suffered loss or damage by reason of the contravening conduct of the respondents, and/or at whose expense the respondents were unjustly enriched, as pleaded in the statement of claim. The applicants’ claims are based on four primary causes of action:

(a)    against each of the respondents, misleading or deceptive conduct in contravention of s 12DA(1) of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) (which I will refer to as the misleading conduct claim);

(b)    against ANZ, contravening s 961B and 961G of the Corporations Act 2001 (Cth) (Corporations Act) when providing advice to the applicants and group members about the consumer credit insurance policies (which I will refer to as the inappropriate advice claim);

(c)    against each of the respondents, unconscionable conduct in contravention of s 12CB of the ASIC Act (which I will refer to as the unconscionable conduct claim); and

(d)    against each of the respondents, restitution of the premiums paid to them by the applicants and group members purportedly on the ground of mistake (which I will refer to as the restitution claim).

3    Principally, the applicants seek to recover, for themselves and on behalf of group members, the amount of the premiums charged to them in respect of the acquired consumer credit insurance policy plus any interest charged on the premium (where the premium was typically debited to the applicable credit card or personal loan account). In respect of each of the causes of action other than the inappropriate advice claim, the applicants seek to recover such amounts that were charged at any time within the relevant period – that is, on and after 1 January 2010. In respect of the inappropriate advice claim, the applicants seek to recover such amounts that were charged at any time within the 6 year period prior to the commencement of the proceeding in conformity with s 961M of the Corporations Act – that is, on and after 28 February 2014.

4    On 3 April 2020, I made timetabling orders for the completion of pleadings and initial discovery: Reilly v Australia and New Zealand Banking Group Limited [2020] FCA 436.

5    On 17 July 2020, QBE filed an interlocutory application seeking an order pursuant to rule 16.21 of the Federal Court Rules 2011 (Cth) (FC Rules) striking out certain paragraphs of the statement of claim relevant to the claims against QBE. Further or alternatively, QBE sought an order pursuant to section 31A of the FCA Act and/or rule 26.01 of the FC Rules that summary judgment be given in its favour in respect of certain allegations. The application was supported by two affidavits affirmed by Richard Glenn Harris on 17 July 2020 and 14 August 2020. Mr Harris is a partner of the firm Gilbert + Tobin, the solicitors acting for QBE. I will refer to QBE’s application as the strike out application, while recognising that orders for summary judgment are also sought.

6    The proceeding concerns two types of consumer credit insurance policies issued during the relevant period: the ANZ Credit Card Insurance policy which insured certain liabilities under credit cards issued by ANZ, and the ANZ Loan Protection policy which insured certain liabilities under personal loans advanced by ANZ. The claims made against QBE, and which are the subject of its strike out application, concern the ANZ Loan Protection policy. That policy was issued by OnePath Life and QBE, with QBE insuring the following categories of risks: Disability and Involuntary Unemployment. For the purposes of this application, an important difference between the ANZ Credit Card Insurance policy and the ANZ Loan Protection policy is that insurance premiums are paid monthly for ANZ Credit Card Insurance but are only paid once, at the time of acquiring the policy, in respect of ANZ Loan Protection.

7    In connection with its application for summary judgment under s 31A of the FCA Act and/or rule 26.01 of the FC Rules, QBE also sought an order pursuant to s 33ZB of the FCA Act that the summary judgment be binding on all group members who acquired an ANZ Loan Protection policy issued by QBE.

8    In response to QBE’s application, on 7 August 2020 the applicants filed an interlocutory application seeking leave to file an amended originating application and an amended statement of claim which were annexures to the interlocutory application. The applicants’ proposed amendments did not resolve QBE’s objections. Accordingly, the parties filed written submissions addressing the proposed amended originating application and amended statement of claim and, at a hearing on 25 August 2020, I heard argument on both interlocutory applications. I note for completeness that the amended originating application and amended statement of claim which were annexures to the interlocutory application contained formatting errors. The applicants provided the Court with a version that corrected the formatting errors on 20 August 2020.

9    By its strike out application, QBE raised three objections to the proposed amended statement of claim in so far as it relates to the claims against QBE in respect of the ANZ Loan Protection policy. First, in respect of the misleading conduct claim and the unconscionable conduct claim, QBE says that the applicants cannot at law recover loss or damage incurred earlier than 6 years prior to the commencement of the proceeding (that is, prior to 28 February 2014). Second, QBE says that the restitution claim does not disclose a cause of action recognised at law and must fail. Third, QBE says that the pleading of the unconscionable conduct claim is vague and embarrassing.

10    For the reasons that follow, I accept the first and third contentions advanced by QBE, but reject the second.

11    In parallel to these interlocutory applications, the parties have conferred and reached substantial agreement in relation to a form of orders concerning opt out notices and discovery. The parties have provided the proposed orders to the Court, together with a short submission addressing two issues concerning the opt out notices and discovery on which the applicants and QBE disagree. The proposed orders are modelled on the form of orders I recently made in another proceeding that has been brought against Westpac Banking Corporation raising materially the same issues: Kemp v Westpac Banking Corporation (No 2) [2020] FCA 1392. I have not ruled on the issues in dispute, or made orders in respect of opt out or discovery, as my conclusions on the matters addressed in these reasons may affect the appropriate form of orders on opt out (particularly the contents of the opt out notice) and discovery. Accordingly, I will give the parties a further 14 days to confer in relation to those orders, to take account of this decision.

Pleading disputes in representative proceedings

12    The early history of representative proceedings under Part IVA of the FCA Act was marked, if not marred, by protracted pleading disputes. On occasions, the Court has indicated its impatience with unnecessary pleadings disputes: see for example Bright v Femcare Ltd (2002) [2002] FCAFC 243; 195 ALR 574 at [160] per Finkelstein J. Nevertheless, the Court will not shy away from addressing points of law at an early stage of a proceeding where doing so best promotes the overarching purpose in s 37M of the FCA Act to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible.

13    It is commonly the case that claims made against a respondent in a representative proceeding will be based on more than one cause of action. If one of the causes of action is based on a doubtful proposition of law, but all of the causes of action are based on the same alleged factual circumstances, the Court may well decline to decide the contested question of law at an early stage. If a trial of the alleged factual circumstances will proceed in any event on other causes of action, the overarching purpose will usually be promoted by determining all legal issues in the one trial. However, where the different causes of action are based on different alleged facts, or concern similar alleged facts but different time periods, the overarching purpose may be promoted by determining the contested legal question at an early stage. Early determination may reduce costs for both the applicant and the respondent.

14    Cost considerations have particular application in the context of representative proceedings. The costs of such proceedings can be large because they typically involve claims brought on behalf of a large number of group members based on wide-ranging events. Even more significantly, though, representative proceedings may be brought on behalf of different categories of group members, sometimes referred to (informally) as sub-groups. In this proceeding, for example, claims are made on behalf of all group members who allegedly acquired consumer credit insurance policies and suffered loss by the respondents’ unconscionable conduct, as well as on behalf of sub-groups of group members: those who allegedly acquired consumer credit insurance policies after being misled by the respondents (the misled group members), or after receiving inappropriate advice (the advised group members), or who were mistaken about certain attributes of the policies (the mistaken group members). Further, claims are made on behalf of group members, and the three sub-groups, who acquired policies and paid premiums on and after 28 February 2014 (that is, within the 6 year period prior to the commencement of the proceeding) and on behalf of those who acquired policies and paid premiums from 1 January 2010 until 27 February 2014. Some of those claims may succeed, and some may fail. In the context of a representative proceeding, difficult questions may arise as to the manner in which the costs of the proceeding are dealt with in connection with a judgment of the Court under s 33Z or the approval of a settlement under s 33V of the FCA Act, and particularly whether compensation awarded to successful group members may be indirectly diminished by the treatment of the costs of the overall proceeding.

15    In the present case, the first and second contentions advanced by QBE raise points of law. Further, the contentions relate to sub-groups of the group members. The first contention relates to group members who acquired an ANZ Loan Protection policy and paid premiums between 1 January 2010 and 28 February 2014. The second contention relates to an alleged sub-group of mistaken group members who acquired an ANZ Loan Protection policy. As the Full Federal Court observed in Medibank Private v Cassidy (2002) 124 FCR 40 (Medibank Private) (at [12]), “it is undesirable that unnecessary costs be incurred and that the hearing time of the Court be unnecessarily taken up by the trial of issues that would not arise if the Court does not have power to grant the relief sought in relation to such issues”. QBE submitted that deferring those questions to trial will result in substantial costs being incurred in the course of discovering documents, and preparing evidence, in respect of a time that is up to 10 years ago, costs that would be avoided if the questions were determined in its favour now. That is to the benefit of both QBE and, for the reasons given above, potentially to group members also. I accept that submission. I consider that it promotes the overarching purpose to determine QBE’s strike out application immediately. While the third contention is a more general pleading complaint, it is convenient to determine it with the other contentions.

Relevant legal principles

Strike out and leave to amend

16    There was no real dispute between the parties as to the legal principles governing the applicants’ application to amend the originating process and statement of claim and QBE’s application to strike out certain of the claims made. In the present case, the principles to be applied in both applications are effectively the same.

17    Rule 16.21 of the FC Rules provides that a party may apply to the Court for an order that all or part of a pleading be struck out on the ground that the pleading is (amongst other things) evasive or ambiguous; likely to cause prejudice, embarrassment or delay in the proceeding; or fails to disclose a reasonable cause of action. In relation to ambiguity, the function of pleadings is to state with sufficient clarity the case that must be met by a defendant; in this way, pleadings serve to define the issues for decision and ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her: Banque Commerciale S.A., en liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 at 286, 296, 302-3. A pleading is embarrassing when it is susceptible to various meanings, or contains inconsistent allegations, or in which alternatives are confusingly intermixed, or in which irrelevant allegations are made that tend to increase expense: Shelton v National Roads and Motorists’ Association Ltd (2004) 51 ACSR 278; [2004] FCA 1393 at [18] (Tamberlin J). A pleading fails to disclose a reasonable cause of action where it is “obviously untenable that it cannot possibly succeed”, “manifestly groundless” or “so manifestly faulty that it does not admit of argument”: General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129 (Barwick CJ).

18    The Court will not grant leave to amend a pleading under r 16.53 of the FC Rules if the amendment would be futile in the sense that it discloses no reasonable cause of action and is therefore liable to be struck out if it had appeared in the original pleading: Allstate Life Insurance Company v Australia and New Zealand Banking Group Ltd (1995) 58 FCR 26 at 36.

19    In Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 (Wardley), the plurality of the High Court (Mason CJ, Dawson, Gaudron and McHugh JJ) expressed the strong view that it is undesirable for certain types of limitation questions to be decided in interlocutory proceedings. Their Honours stated (at 533):

We should, however, state in the plainest of terms that we regard it as undesirable that limitation questions of the kind under consideration should be decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases. Generally speaking, in such proceedings, insufficient is known of the damage sustained by the plaintiff and of the circumstances in which it was sustained to justify a confident answer to the question.

20    Wardley was concerned with the limitation period in s 82(2) of the Trade Practices Act 1974 (Cth) (TPA), which is the statutory equivalent to s 12GF(2) of the ASIC Act, relied on by the applicants in this proceeding in respect of the misleading conduct claim and the unconscionable conduct claim. Section 82(2) provides that an action under s 82(1) may be commenced at any time within 6 years after the day on which the cause of action that relates to the conduct accrued. A cause of action under s 82(1) accrues when loss or damage is sustained by conduct done in contravention of a relevant provision of the TPA (now called the Competition and Consumer Act 2010 (Cth) (CCA)). Thus, to apply the limitation period in s 82(2), it is necessary to determine when loss or damage was sustained by the contravening conduct. That question may involve questions of fact, as well as questions of law, as illustrated in Wardley. It is when factual findings may be necessary in order to apply the limitation period in s 82(2) that it is inappropriate to determine such question on an interlocutory basis.

21    However, the same caution need not apply where the nature and incidence of the alleged loss and damage is clear and the application of the limitation period turns upon a question of law. As the Full Federal Court (Davies, Burchett and Hill JJ) observed in Jobbins v Capel Court Corp Ltd (1989) 25 FCR 226 at 231, “where it is clear that an applicant cannot succeed upon the case pleaded because s 82(2) will be a complete answer to the claim, the court should not merely defer the inevitable”. An example of such a case is Mayne Nickless Ltd v Multigroup Distribution Services Pty Ltd (2001) 114 FCR 108 which raised similar issues to those raised on the applications in this case, namely the relationship between ss 82 and 87 of the TPA (the statutory equivalents of ss 12GF and 12GM of the ASIC Act). The Full Federal Court (Wilcox, French and Drummond JJ) observed in relation to the primary judge’s decision to hear and determine a limitation question as a preliminary point (at [28]):

In this case, however, the decision to hear and determine the limitation point separately was within the reasonable discretion of the judge seised of the management of the case. The question was one whose resolution did not depend upon contested matters of fact, nor even upon contentious characterisation of undisputed fact. It was a question of law about the relationship between two statutory provisions: ss 82 and 87(1).

Summary judgment

22    In relation to QBE’s application for summary judgment, the applicants submitted in writing that, in a class action, group members’ claims should not be summarily dismissed before they have had an opportunity to opt out. In that respect, the applicants noted that, under s 33ZB of the FCA Act, a judgment in a representative proceeding binds the group members who are described in the judgment (or are affected by it) “other than any person who has opted out of the proceeding under section 33J”.

23    Neither party addressed that question in argument. Nor was I referred to any authority on the question. Plainly, the right of a group member to opt out of a representative proceeding is an important right. If the group member does not opt out, their rights may be affected by judgments made in the proceeding: Mobil Oil Australia Pty Ltd v State of Victoria (2002) 211 CLR 1 at [38]-[40] (Gaudron, Gummow and Hayne JJ). For that reason, s 33J(4) provides that, except with the leave of the Court, the hearing of a representative proceeding must not commence earlier than the date before which a group member may opt out of the proceeding. In that context, I understand the word “hearing” to mean a trial of some or all of the claims made in a representative hearing (which usually begins with an initial trial of some or all of the common questions). Section 33J(4) protects group members from having issues, which might be determinative of their claim, decided on a final basis without being given the opportunity to opt out (or without the leave of the Court): Dyczynski v Gibson [2020] FCAFC 120 at [340] (Murphy and Colvin JJ). I would not understand the word “hearing” in s 33J(4) to mean an interlocutory hearing. Frequently, the Court will determine a range of interlocutory matters before opt out notices have been given. That includes strike out applications. The question raised by the applicants’ submissions is whether the Court should determine an application for summary judgment before opt out notices have been given.

24    If the defence to a pleaded claim is based solely on a question of law, an application to strike out the pleaded claim and an application for summary judgment on the pleaded claim may have much in common. Both are interlocutory decisions (in relation to a summary judgment, see s 24(1D)(b) of the FCA Act) and both applications assume the pleaded facts but contend the pleaded claim cannot be sustained at law. Nevertheless, as stated by Lindgren J in White Industries Australia Ltd v Federal Commissioner of Taxation (2007) 160 FCR 298 at [47] (which statement was referred to with approval by French CJ and Gummow J in Spencer v Commonwealth of Australia (2010) 241 CLR 118 (Spencer) at [23]):

The central concern of both O 20 r 2(1)(a) and s 31A is different from that of O 11 r 16, which empowers the Court to strike out pleadings. For example, evidence may disclose that a person has or may have a “reasonable cause of action” or “reasonable prospects of success”, yet the person’s pleading does not disclose this. In such a case O 11 r 16 empowers the Court to strike out the pleading but O 20 r 2(1)(a) would not empower the Court to order a stay or dismissal, and s 31A(2) would not empower the Court to give judgment for the respondent against the applicant. A failure after ample opportunity to plead a reasonable cause of action may suggest that none exists and therefore that the applicant has no reasonable prospects of success, but the existence of a reasonable cause of action and the pleading of a reasonable cause of action remain distinct concepts.

25    In Spencer, French CJ and Gummow J continued (at [24], citations omitted)):

The exercise of powers to summarily terminate proceedings must always be attended with caution. That is so whether such disposition is sought on the basis that the pleadings fail to disclose a reasonable cause of action or on the basis that the action is frivolous or vexatious or an abuse of process.

26    In the present case, I have not found it necessary to decide whether and in what circumstances the Court should determine an application for summary judgment in a representative proceeding before group members have had an opportunity to opt out. The proceeding is at a relatively early stage. It is preferable to decide the issues raised by QBE as a matter of pleading. It may be that group members have an arguable claim that is not presently stated by the amended statement of claim. The applicants should have the opportunity to re-plead, if there be a basis to re-plead.

The pleaded case of the applicants

27    The following is an overview of the allegations made in the applicants’ proposed amended statement of claim which are relevant to the applications to strike out and to amend.

The parties (Section A, paragraphs 1 to 8)

28    The first applicant, Tracey Reilly, was issued with a consumer credit insurance policy with respect to an ANZ credit card she held between February 2012 and July 2014, and was issued with a consumer credit insurance policy with respect to an ANZ credit card she held between February 2015 and January 2019.

29    The second applicant, Catherine Galli, was issued with a consumer credit insurance policy with respect to her ANZ personal loan in or around March 2016.

30    ANZ carries on a banking business throughout Australia, and has been the holding company of ANZ Life Assurance Company Pty Ltd (ANZ Life), which provides life insurance, investment life insurance and annuity products. Until 31 May 2019, ANZ was the holding company of each of OnePath Life and OnePath General.

31    OnePath Life (previously named ING Life Limited) carries on the business of providing life insurance, investment life insurance and annuity products.

32    OnePath General (previously named ING General Insurance Limited) carries on the business of providing general insurance products.

33    QBE is a wholly owned subsidiary of QBE Insurance Group Limited and carries on the business of providing general insurance products.

The financial products (Section B, paragraphs 9 to 19)

34    The financial products that are the subject of the proceeding are two consumer credit insurance policies the issue of which was arranged by ANZ: ANZ Credit Card Insurance and ANZ Loan Protection.

35    ANZ Credit Card Insurance provided insurance benefits towards liabilities arising under credit cards issued by ANZ. The insurance was issued between 1 January 2010 and 27 February 2011 by ANZ Life and OnePath General and, after 28 February 2011, by OnePath Life and OnePath General. In general terms, ANZ Life and OnePath Life insured the following categories of risks under the ANZ Credit Card Insurance policy: Life, Accidental Death, Total and Permanent Disability and Critical Illness. OnePath General insured the following categories of risks: Disability, Involuntary Unemployment, Family Trauma and Stolen Card/Inconvenience.

36    ANZ Loan Protection provided insurance benefits towards liabilities under personal loans advanced by ANZ. The insurance was issued by OnePath Life and QBE. In general terms, OnePath Life insured the following categories of risks under the ANZ Loan Protection policy: Life, Accidental Death, Total and Permanent Disability and Critical Illness. QBE insured the following categories of risks: Disability and Involuntary Unemployment.

37    OnePath Life, OnePath General and QBE are referred to collectively in the proposed amended pleading as the “Insurers”).

38    The policies had standard terms that were set out in product disclosure statements. At all relevant times, ANZ knew, and was involved in setting, the terms of the policies.

39    ANZ Life, OnePath General and QBE respectively authorised ANZ to arrange the issue of the policies on their behalf and, as a consequence, ANZ acted as the agent of those insurers. I note that paragraphs 9A and 9B of the proposed amended pleading appear to contain an error in that they omit reference to OnePath Life. However, the particulars to the allegation in paragraph 9A indicate that the applicants also intend to allege that OnePath Life authorised ANZ to arrange the issue of the policies on its behalf. I will proceed on the basis of that apparent intention.

40    At all relevant times, all policy-related matters under the ANZ Credit Card Insurance policies were administered by ANZ and all policy-related matters under the ANZ Loan Protection policies were administered by QBE.

41    The issuing of the policies ceased on or about 30 June 2019.

42    Each of the policies was a financial product within the meaning of s 12BAA of the ASIC Act and s 764A of the Corporations Act and:

(a)    their issue constituted the provision of financial services within the meaning of s 12BAB of the ASIC Act by the Insurers (as the case may be); and

(b)    the arranging of their issue constituted the provision of financial services within the meaning of s 12BAB of the ASIC Act by ANZ.

43    Further, the conduct of ANZ in arranging the issue of the policies to the applicants and group members on behalf of the Insurers (as the case may be) was, by reason of s 12GH(2) of the ASIC Act, engaged in also by the Insurers.

Acquisition of policies and payment of premiums (Section C, paragraphs 20 to 23)

44    The applicants and group members acquired one or more of the Polices during the relevant period (that is, between 1 January 2010 and 30 June 2019).

45    At all relevant times since 1 January 2010, the premiums on the policies:

(a)    were paid by the applicants and group members from around the time of inception of each policy;

(b)    were automatically debited against their credit card or personal loan (as the case may be); and

(c)    accrued interest (which was charged by ANZ).

46    The respondents earned substantial revenue and made substantial profits from the policies and were therefore motivated to issue and arrange or distribute as many policies as possible.

No material value allegations (Section D, paragraphs 24 to 29)

47    The policies were of no material value to, or were unsuitable for, or conferred no material benefits on, the applicants and group members by reason of the following five matters:

(a)    the claims ratio, being the amount paid overall to policyholders as a proportion of the total insurance premiums for the policies, which is alleged to have been low in comparison to certain benchmarks;

(b)    the proportion of claims declined by the insurer or withdrawn by the insured;.

(c)    the fact that ANZ has had a financial hardship policy under which, relevantly, customers with credit cards and/or personal loans who were in financial hardship (including unemployment, sickness, reduced employment or marital breakdown) could apply to ANZ for financial assistance;

(d)    the fact that the applicants and a significant proportion of group members held separate life insurance cover, total and permanent disability insurance cover and/or income protection insurance cover, including through their superannuation fund; and

(e)    the terms of the policies contained various exclusions that applied to the first applicant and a proportion of group members.

ASIC Reports on consumer credit insurance (Section E, paragraphs 30 to 36)

48    Each of the respondents were aware of each of the following ASIC reports at or around the time when it was issued:

 (a)    ASIC report 256 titled ‘Consumer credit insurance: A review of sales practices by authorised deposit taking institutions’, which was issued on 19 October 2011;

 (b)    ASIC report 361 titled ‘Consumer credit insurance policies: Consumers' claims experiences’, which was issued on 31 July 2013; and

(c)    ASIC report 622 titled ‘Consumer credit insurance: Poor value products and harmful sales practices’, which was issued on 11 July 2019.

49    In December 2017, ASIC required the respondents to undertake an independent review of their consumer credit insurance sales practices for the five-year period from January 2013 to December 2017, and the respondents undertook that review and provided the findings to ASIC.

Sale system allegations (Section F, paragraphs 37 to 40)

50    During the relevant period, the policies were sold by ANZ through sales channels including online, in branch, direct mail and telephone sales.

51    ANZ received a reward for arranging the policies:

(a)    directly by receiving a sales commission of 20% of the premiums paid (net of government charges) under the policies; and

(b)    indirectly (until 31 May 2019), through its ownership of OnePath Life, OnePath General and ANZ Life, which were paid 80% of the premiums (apart from the portion of premiums paid to QBE on ANZ Loan Protection policies).

52    From at least 28 February 2011, the policies were sold by ANZ under a general advice model.

53    The applicants and at least some of the group members were sold the policies in the following circumstances:

(a)    without their consent;

 (b)    without them being fully or sufficiently informed of the exclusions to the cover applicable to them;

(c)    without them being fully informed that the cover was optional or separate to their credit card, flexi loan or personal loan application; and

(d)    without them being provided with an opportunity to first review the terms of the relevant policy.

Misleading conduct allegations (Section G, paragraphs 41 to 48)

54    During the relevant period, the applicants and a proportion of group members (referred to as the misled group members):

(a)    were informed by ANZ, prior to acquiring or agreeing to acquire the relevant policy, that they needed to take out the policy, in order to obtain the credit card or personal loan; and/or

 (b)    were not informed, sufficiently or at all, prior to acquiring or agreeing to acquire the relevant policy, that they were acquiring the policy or that the policy was optional,

which conduct is alleged to be misleading and deceptive in contravention of s 12DA(1) of the ASIC Act.

55    In reliance on and/or induced by ANZ’s misleading or deceptive conduct, the applicants and the misled group members acquired the policy.

56    By reason of s 12GH(2) of the ASIC Act, ANZ’s misleading or deceptive conduct was engaged in also by:

(a)    OnePath Life – with respect to ANZ Loan Protection Polices and (since 28 February 2011) with respect to ANZ Credit Card Insurance policies;

(b)    OnePath General – with respect to ANZ Credit Card Insurance policies; and

(c)    QBE – with respect to ANZ Loan Protection policies.

57    By reason of ANZ’s misleading or deceptive conduct, the applicants and the misled group members have suffered loss and damage which includes the premiums paid for the policy acquired by them and interest charged on the premium.

Inappropriate advice allegations (Section H, paragraphs 49 to 53)

58    The second applicant and some group members who acquired the policy in branch or over the telephone acquired the policy within the 6 year period prior to the commencement of the proceeding (referred to as the advised group members) did so following a recommendation or statement of opinion by one or more ANZ representatives that they should purchase the policy, and/or that they would benefit from purchasing the policy, in circumstances:

(a)    that could reasonably be regarded as being intended to influence them in making a decision in relation to the policy; and

 (b)    where a reasonable person might expect the relevant ANZ representatives to have considered their objectives, financial situation and needs,

and, by reason of the matters comprising the no material value allegations, the sale system allegations and the misleading conduct allegations:

(c)    the ANZ representatives did not act in the best interests of the second applicant and the advised group members in relation to the advice and thereby contravened s 961B of the Corporations Act; and/or

(d)    it would not be reasonable to conclude that the advice provided by the ANZ representatives was appropriate to the second applicant and the advised group members, had the ANZ representatives satisfied the duty under s 961B to act in their best interests, and the ANZ representatives thereby contravened s 961G of the Corporations Act.

59    By reason of the ANZ representatives’ contraventions of ss 961B and/or 961G of the Corporations Act, the second applicant and the advised group members have suffered loss and damage, recoverable under s 961M of the Corporations Act, which includes the premiums paid for the policy acquired by them and interest charged on the premium.

Unconscionable conduct allegations (Section I, paragraphs 54 to 73)

60    From at least October 2011:

(a)    ANZ knew, or ought to have known, that the policies;

(b)    OnePath Life knew, or ought to have known, that the policies;

(c)    OnePath General knew, or ought to have known, that the ANZ Credit Card Insurance policies; and

(d)    QBE knew, or ought to have known, that the ANZ Loan Protection policies,

had no material value to, or were unsuitable for, or conferred no material benefits on, the applicants and group members.

61    The applicants and group members acquired the policies in circumstances where:

 (a)    ANZ was in a stronger bargaining position than the applicants and group members, both generally and specifically in relation to financing and insurance products;

 (b)    the Insurers were in a stronger bargaining position than the applicants and group members, both generally and specifically in relation to insurance products;

(c)    the applicants and group members were not given any opportunity to negotiate the terms of the policies;

(d)    ANZ and the Insurers were not willing to negotiate the terms of the policies;

(e)    the Insurers had a contractual right to vary unilaterally the terms of the policies; and

(f)    the applicants and group members were not given an adequate opportunity to consider whether the policies were suitable for them.

62    The applicants and group members were required to pay higher premiums for the policies than was reasonably necessary for the protection of the legitimate interests of the Insurers.

63    ANZ benefited as a result of the policies in that it was assured the satisfaction of any debt owed under the credit cards or personal loans in the event of the death of the applicants or group members.

64    The applicants and group members were not able to understand the policy documents.

65    Unfair tactics were used by the respondents, or persons acting on behalf of the respondents, in arranging the issue of the policies (with the applicants presently relying on the misleading conduct allegations).

66    The applicants and group members could not acquire any other credit insurance policy for their ANZ credit cards and ANZ personal loans other than the policies.

67    The applicants and group members could have acquired, from other suppliers, similar policies with better claims ratios for credit cards or personal loans (financed by other financiers).

68    Under the Code of Banking Practice, ANZ was obliged to provide effective disclosure of information to the applicants and group members and ANZ failed to do so in the ways stated above (particularly in respect of the sales system allegations and misleading conduct allegations).

69    Under the General Insurance Code of Practice:

(a)    during the relevant period, OnePath General and QBE were obliged to ensure that their sales processes were conducted in a fair, honest and transparent manner; and

 (b)    since 1 July 2015, OnePath General and QBE were obliged to take reasonable steps to ensure that their and their employees’ and authorised representatives’ communications with group members were in plain language,

and they failed to do so in relation to the policies whether by them or by ANZ on their behalf.

70    By reason of the allegations made in the proceeding generally, in arranging the issue of the policies to the applicants and to the group members or in administering the ANZ Credit Card Insurance policies, ANZ engaged in conduct which was, in all the circumstances, unconscionable, in contravention of s 12CB of the ASIC Act.

71    By reason of the allegations made in the proceeding generally, in arranging the issue of the policies to the applicants and group members or in administering the ANZ Credit Card Insurance policies, in the circumstances of the no material value allegations, the sale systems allegations, the misleading conduct allegations and the inappropriate advice allegations, and where ANZ knew or ought to have known that the policies had no material value or conferred no material benefits, ANZ engaged in a system of conduct or pattern of behaviour (within the meaning of s 12CB(4) of the ASIC Act) which was unconscionable, in all the circumstances, in contravention of s12CB(1) of the ASIC Act.

72    By reason of s 12GH(2) of the ASIC Act, ANZ’s unconscionable conduct was engaged in also by:

(a)    OnePath Life – with respect to ANZ Loan Protection Polices and (since 28 February 2011) with respect to ANZ Credit Card Insurance policies;

(b)    OnePath General – with respect to ANZ Credit Card Insurance policies; and

(c)    QBE – with respect to ANZ Loan Protection policies.

73    By reason of the allegations made in the proceeding generally, in issuing or giving effect to the provisions of the policies with respect to the applicants and to the group members, the Insurers engaged in conduct which was, in all the circumstances, unconscionable, in contravention of s 12CB of the ASIC Act.

74    By reason of the allegations made in the proceeding generally, in issuing or giving effect to the provisions of the policies with respect to the applicants and group members in the circumstances of the no material value or benefit allegations, the sale systems allegations, the misleading conduct allegations and the inappropriate advice allegations, and where the Insurers knew or ought to have known that the policies had no material value or conferred no material benefits, the Insurers engaged in a system of conduct or pattern of behaviour (within the meaning of s 12CB(4) of the ASIC Act) which was unconscionable, in all the circumstances, in contravention of s12CB(1) of the ASIC Act.

75    By reason of the respondents’ contraventions of s 12CB of the ASIC Act, the applicants and group members have suffered loss and damage which includes the premiums paid for the policy acquired by them and interest charged on the premium.

Mistake allegations (Section J, paragraphs 74 to 75)

76    During the relevant period, the applicants and at least some group members (referred to as the mistaken group members) acquired the policies and paid the premiums under them under one or more of the following causative mistaken beliefs:

(a)    that they were required to take out the relevant policy in order to obtain the credit card or personal loan or that the policy formed part of (and was not separate to) their credit card or personal loan, as the case may be; or

 (b)    that the relevant policy had material value to them.

77    At all relevant times the respondents:

(a)    were aware that circumstances existed which indicated that the applicants and mistaken group members were acquiring their respective policies under the mistaken beliefs; and

(b)    chose to leave the applicants and the mistaken group members under the mistaken beliefs in acquiring or agreeing to be issued with their respective policies.

78    By reason of those matters, the policies issued to the applicants and the mistaken group members are liable to be set aside for unilateral mistake.

79    By reason of the unconscionable conduct allegations, the policies issued to the applicants and the mistaken group members are liable to be declared void as a result of the unconscionable conduct of the respondents.

80    By reason of the misleading conduct allegations, the policies issued to the applicants and the mistaken group members who are also misled group members are liable to be declared void as a result of the misleading or deceptive conduct of the respondents.

81    By reason of the inappropriate advice allegations, the policies issued to the second applicant and the mistaken group members who are also advised group members are liable to be declared void as a result of the inappropriate advice provided by the First Respondent’s representatives.

82    By reason of the matters set out in one or more of the mistake allegations above:

(a)    the respondents have had and received by them, to the use of the applicants and mistaken group members, the respective premiums paid by them under the policies; and

(b)    further or alternatively, the respondents have been unjustly enriched at the expense of the applicants and the mistaken group members,

and the respondents are liable to make restitution of those sums to the applicants and the mistaken group members.

First issue: limitation period applicable to the ASIC Act claims

83    The misleading conduct claim and the unconscionable conduct claim are brought by the applicants under Subdivisions C and D of Division 2 of Part 2 of the ASIC Act. Relief is sought under Subdivision G. Two provisions within Subdivision G expressly address compensatory relief: ss 12GF and 12GM.

Uncontroversial principles

84    The following principles concerning ss 12GF and 12GM in the ASIC Act, and their statutory equivalents in ss 82 and 87 of the CCA and s 236 and 238 of the Australian Consumer Law (being Schedule 2 to the CCA) (ACL), are well established and were accepted by the parties.

85    First, s 12GF(1) establishes a statutory right to recover loss or damage suffered by a person by reason of conduct of another person done in contravention of a provision of Subdivision C (which includes the prohibition against unconscionable conduct) and Subdivision D (which includes the prohibition against misleading or deceptive conduct). Section 12GF(1) provides as follows:

A person who suffers loss or damage by conduct of another person that contravenes a provision of Subdivision C (sections 12CA to 12CC) or Subdivision D (sections 12DA to 12DN) may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention.

86    Second, the statutory right to recover loss or damage under s 12GF(1) is subject to a 6 year limitation period. Section 12GF(2) provides as follows:

An action under subsection (1) may be commenced within 6 years after the day on which the cause of action that relates to the conduct accrued.

87    A cause of action under s 12GF(1) accrues when loss or damage is suffered: Wardley at 525 (Mason CJ, Dawson, Gaudron and McHugh JJ), at 536 (Brennan J) and at 539 (Deane J).

88    Third, s 12GM(1) empowers the Court to make various remedial orders, including orders to pay compensation and orders declaring a contract void, in a proceeding instituted under (or for an offence against) Division 2 of Part 2 of the ASIC Act where the Court finds that a person who is a party to the proceeding has suffered, or is likely to suffer, loss or damage by reason of conduct of another person that was engaged in in contravention of a provision of Division 2. Section 12GM(1) provides as follows:

Without limiting the generality of section 12GD, if, in a proceeding instituted under, or for an offence against, this Division, the Court finds that a person who is a party to the proceeding has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in in contravention of a provision of this Division, the Court may, whether or not it grants an injunction under section 12GD or makes an order under section 12GF, 12GLA or 12GLB, make such order or orders as it thinks appropriate against the person who engaged in the conduct or a person who was involved in the contravention (including all or any of the orders mentioned in subsection (7) of this section) if the Court considers that the order or orders concerned will compensate the first‑mentioned person in whole or in part for the loss or damage or will prevent or reduce the loss or damage.

89    Section 12GM(7) provides as follows:

Without limiting the generality of subsections (1) and (2), the orders referred to in those subsections include the following:

(a)     an order declaring the whole or any part of a contract made between the person who suffered, or is likely to suffer, the loss or damage and the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct, or of a collateral arrangement relating to such a contract, to be void and, if the Court thinks fit, to have been void ab initio or at all times on and after a date before the date on which the order is made;

(b)     an order varying such a contract or arrangement in such manner as is specified in the order and, if the Court thinks fit, declaring the contract or arrangement to have had effect as so varied on and after a date before the date on which the order is made;

(c)     an order refusing to enforce any or all of the provisions of such a contract;

(d)     an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to refund money or return property to the person who suffered the loss or damage;

(e)     an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to pay to the person who suffered the loss or damage the amount of the loss or damage;

(f)     an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct, at his or her own expense, to supply specified services to the person who suffered, or is likely to suffer, the loss or damage;

(g)     an order, in relation to an instrument creating or transferring an interest in land, directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to execute an instrument that:

(i)     varies, or has the effect of varying, the first‑mentioned instrument; or

(ii)     terminates or otherwise affects, or has the effect of terminating or otherwise affecting, the operation or effect of the first‑mentioned instrument.

90    Fourth, s 12GM(1) is not subject to an express limitation period. However, the Court’s power to grant relief under s 12GM(1) is expressly dependent on there being a proceeding instituted under Division 2 of Part 2 of the ASIC Court. By the terms of s 12GM(1), an applicant cannot commence a proceeding seeking relief under that section. The applicant must commence the proceeding seeking other relief under Division 2 of Part 2 of the ASIC Act. In that way, the Court’s power to grant relief under s 12GM(1) is subject to any limitation period that applies to the other relief that is sought. If that other relief is a claim for damages under s 12GF(1), the 6 year limitation period in s 12GF(2) will apply in respect of relief sought under s 12GM(1). If that other relief is an injunction under s 12GD(1), no limitation period will apply in respect of relief sought under s 12GM(1). The foregoing principles were established by the High Court in Sent v Jet Corporation of Australia Pty Ltd (1986) 160 CLR 540 in respect of s 87 of the TPA. The case principally concerned s 87(1A) of the TPA which, as discussed further below, differed to some extent from its present form in the CCA (and which is replicated in s 12GM(1A) of the ASIC Act). Nevertheless, the High Court construed s 87(1A) in light of s 87(1). In respect of s 87(1), the High Court observed (at 543):

Sub-section (1) of s. 87 confers on the Court authority to make a compensatory order in favour of a person if two conditions are satisfied. The first is that the person is "a party to the proceeding", that is, a proceeding instituted under or for an offence against Pt VI. The second is that the person "has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in ... in contravention of a provision of Part IV or V". The first condition would be devoid of content if the right to seek relief under s. 87(1) were acquired simply by making an application for relief under that sub-section. The "proceeding" to which the sub-section refers is a proceeding other than a proceeding for relief under that sub-section. The relief which might be granted to a party under sub-s. (1) is therefore ancillary or additional to the relief which the Court might grant in the proceeding under other provisions of Pt VI, although the power to grant relief under sub-s. (1) is not dependent on the granting of relief under other provisions of that Part.

and concluded (at 545-6):

It follows that (a) when a person has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in in contravention of a provision of Pt IV of the Act, the Court may make a compensatory order under s. 87(1) if that person is a party to a proceeding instituted under a provision of Pt VI other than s. 87 or for an offence against Pt VI in respect of that conduct; … Although s. 87 contains no time limitation, the proceeding on which the power to grant relief under s. 87 depends will be barred if it is instituted outside the time, if any, limited for instituting that proceeding.

91    Subsequent decisions of this Court have affirmed the principle that, if proceedings are commenced under the relevant statute seeking relief for which no limitation period applies, such as injunctive relief, relief may also be sought under the ancillary relief provision (s 87(1) of the CCA, s 238(1) of the ACL and s 12GM(1) of the ASIC Act). The leading case is Mayne Nickless in which the applicant sought relief under Part VI of the TPA against Mayne Nickless Limited, TNT Australia Pty Limited, Ansett Transport Industries (Operations) Pty Limited and J McPhee & Son (Australia) Pty Ltd alleging that those companies had entered into anti-competitive contracts and arrangements in breach of ss 45 and 46 of the TPA. The applicant sought an injunction under s 80, damages under s 82(1) and other relief under s 87(1). The respondents raised as a preliminary question whether the Court had power to grant relief under s 87(1) in respect of loss suffered earlier than the limitation period that applied to s 82(1). The Full Federal Court (Wilcox, French and Drummond JJ) confirmed that (at [53] and [55]):

53. The power in s 87(1) can only be exercised in a proceeding instituted under or for an offence against Pt VI of the Act. The language of the subsection presupposes the existence of a proceeding claiming relief based upon some other provision of Pt VI. The power it confers is in aid of the jurisdiction defined by s 86 read with the other provisions of Pt VI. … no time limitation is specified in relation to the exercise of the powers confirmed by s 87(1). That is because the subsection provides for ancillary relief. In an action in which it is invoked the only relevant time limitations are those which affect the proceedings, under some other provision of Pt VI, in which orders under s 87(1) are sought.

…

55. The question whether a claim for relief under s 87(1) is affected by a time limitation is entirely dependent upon the question whether the proceedings in which it is raised are so affected. In the case of proceedings for injunctive relief under s 80 there is no time limitation albeit discretionary considerations may arise in relation to undue delay in seeking that relief.

92    The principles have been applied in many cases including Dorfler v ANZ Banking Group Ltd (1991) 103 ALR 699 at 702 (Spender J), Eckford v Six Mile Creek Pty Ltd (No 2) [2019] FCA 1307, [309]-[312] (Rares J) and Paciocco v Australia and New Zealand Banking Group Limited [2014] FCA 35; 309 ALR 249 at [369] (Gordon J) (part of which was overturned on appeal, but not on this point).

93    Fifth, s 12GM(2) also empowers the Court to make remedial orders of the same kind as under s 12GM(1) on the application of a person who has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in in contravention of a provision of Division 2, or ASIC acting on behalf of such a person or persons. Unlike s 12GM(1), s 12GM(2) operates as a stand-alone provision and is not ancillary to an application made under another remedial provision: Mayne Nickless at [53]. However, by s 12GM(5), an application under s 12GM(2) is subject to a 6 year limitation period.

Relief sought by the applicants under the ASIC Act

94    The applicants framed their originating process and statement of claim in the apparent belief that s 12GM(1) of the ASIC Act afforded a free standing right to compensatory relief that was not subject to any limitation period. In respect of the misleading conduct claim and the unconscionable conduct claim, the applicants sought relief in respect of loss suffered within the 6 year statutory limitation period under s 12GF(1) and 12GM(1) and, in respect of loss suffered earlier than that period, under s 12GM(1) (paragraphs 48 and 73 of the statement of claim). That view of the relief available under s 12GM(1) was erroneous. On the original basis on which the applicants commenced the proceeding, the power of the Court to grant relief under s 12GM(1) is enlivened by the proceeding under s 12GF(1) which is subject to a 6 year limitation period. It followed that the right to relief under s 12GM(1) was subject to the same limitation period, if asserted by the respondents. In its defence to the statement of claim, QBE pleaded the 6 year limitation period in s 12GF(2) as a defence to the misleading conduct claim and the unconscionable conduct claim made on behalf of group members who acquired an ANZ Loan Protection policy or paid a premium for such a policy earlier than 28 February 2014. The applicants accept that, for the purposes of s 12GF(2), the causes of action under the ASIC Act in respect of the ANZ Loan Protection policy accrued when the premium was charged.

95    Following the issue of QBE’s strike out application, and in an effort to avoid that time limitation on the misleading conduct claim and the unconscionable conduct claim, the applicants proposed two amendments to their originating process and statement of claim.

96    The first proposed amendment is to add a claim for injunctive relief in the following terms:

3A.     An injunction pursuant to s 12GD of the ASIC Act restraining the First to Third Respondents from charging or continuing to charge premiums under the policies, or interest in relation to premiums paid.

3B.     An injunction pursuant to s 12GD of the ASIC Act requiring:

(a)     the Second and Fourth Respondents to refund the amounts they received from the First Respondent, with respect to ANZ Loan Protection policies issued to the Second Applicant and Group Members; and

(b)     ANZ, in turn, to refund those amounts to the Second Applicant and Group Members.

97    The applicants explained in oral argument that paragraph 3A concerns the ANZ Credit Card Insurance policy (which affects the claims against ANZ, OnePath Life and OnePath General) while paragraph 3B concerns the ANZ Loan Protection product (which affects the claims against ANZ, OnePath Life and QBE). As noted earlier, premiums for the ANZ Credit Card Insurance policy are paid monthly, whereas the premium for the ANZ Loan Protection policy was paid once at or about the time the policy was acquired. Paragraph 3A seeks to restrain ANZ, OnePath Life and OnePath General from continuing to charge premiums in respect of the ANZ Credit Card Insurance policy. An injunction in that form would have no utility in respect of the ANZ Loan Protection policies previously issued because no further premiums are to be charged. As such, the injunctive relief sought under paragraph 3A does not concern QBE. In the absence of submissions from ANZ, OnePath Life or OnePath General opposing the amendment, I will allow the amendment to include paragraph 3A.

98    In an effort to formulate injunctive relief in respect of the ANZ Loan Protection policy, the applicants seek leave to amend the originating process to include proposed paragraph 3B which seeks orders for the refund of amounts paid in respect of the ANZ Loan Protection policy. The applicants contend that the Court has power to make such an order under s 12GD of the ASIC Act, while QBE disputes that s 12GD allows such an order. Those arguments are considered below.

99    The second amendment proposed by the applicants is to seek an order setting aside the policies in the following terms:

5A.     An order setting aside the Policies issued to the Applicants and the Mistaken Group Members.

100    That proposed order was supported by proposed amendments to the statement of claim alleging that the policies issued to the applicants and the mistaken group members are liable to be declared void as a result of the misleading and deceptive conduct and unconscionable conduct of the respondents. In oral argument, the applicants initially submitted that they were entitled to seek an order under s 12GM(1) setting aside the relevant policies (including those for which premiums were paid prior to 28 February 2014), and then maintain a claim in restitution to recover the monies paid pursuant to the policies for which the relevant limitation period was governed by the Limitation of Actions Act 1958 (Vic) (Limitation Act). In that respect, the applicants relied on s 27 of that Act which postponed the applicable limitation period where the action is for relief from the consequences of mistake. The starting point for that submission was flawed. For the reasons already explained, the applicants cannot seek relief under s 12GM(1) in respect of loss suffered earlier than 12 February 2014 if the proceeding under the ASIC Act is based upon s 12GF(1), because the limitation period in s 12GF(2) applies to the proceeding. In the course of argument, the applicants accepted that that was the case.

101    Accordingly, for the purposes of the relief sought against QBE, the relevant question is whether s 12GD of the ASIC Act empowers the applicants to seek the relief in proposed paragraph 3B of the originating process.

Section 12GD of the ASIC Act

102    Section 12GD of the ASIC Act relevantly provides as follows:

(1)     If, on the application of the Minister, ASIC or any other person, the Court is satisfied that a person has engaged, or is proposing to engage, in conduct that constitutes or would constitute:

(a)     a contravention of a provision of this Division; or

(b)     attempting to contravene such a provision; or

(c)     aiding, abetting, counselling or procuring a person to contravene such a provision; or

(d)     inducing, or attempting to induce, whether by threats, promises or otherwise, a person to contravene such a provision; or

(e)     being in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of such a provision; or

(f)     conspiring with others to contravene such a provision;

the Court may grant an injunction in such terms as the Court determines to be appropriate.

(2)     If an application for an injunction under subsection (1) has been made, the Court may, if the Court determines it to be appropriate, grant an injunction by consent of all the parties to the proceedings, whether or not the Court is satisfied that a person has engaged, or is proposing to engage, in conduct of a kind mentioned in subsection (1).

…

(5)     The power of the Court to grant an injunction restraining a person from engaging in conduct may be exercised:

(a)     whether or not it appears to the Court that the person intends to engage again, or to continue to engage, in conduct of that kind; and

(b)     whether or not the person has previously engaged in conduct of that kind; and

(c)     whether or not there is an imminent danger of substantial damage to any person if the first-mentioned person engages in conduct of that kind.

(6)     The power of the Court to grant an injunction requiring a person to do an act or thing may be exercised:

(a)     whether or not it appears to the Court that the person intends to refuse or fail again, or to continue to refuse or fail, to do that act or thing; and

(b)     whether or not the person has previously refused or failed to do that act or thing; and

(c)     whether or not there is an imminent danger of substantial damage to any person if the first-mentioned person refuses or fails to do that act or thing.

…

103    As observed by the Full Federal Court in ICI Australia Operations Pty Ltd v TPC (1992) 38 FCR 248 (ICI), the power to grant injunctions under s 80 of the TPA (a statutory equivalent of s 12GD of the ASIC Act) has a public interest character, in that the conduct to which the injunction may be directed is regarded as being contrary to the public interest (in this case, misleading or deceptive conduct and unconscionable conduct) (at 256 per Lockhart J and 268 per French J). Undoubtedly, as observed by Merkel J in Australian Competition and Consumer Commission v Z-Tek Computer (1997) 78 FCR 197 (Z-Tek) at 202, the width of the power conferred by provisions such as s 12GD and its public interest character give the Court great amplitude in determining appropriate injunctive orders in a particular case. However, the power is not unlimited and is at least confined by reference to the scope and purposes of the Act: OD Transport Pty Ltd v WA Government Railways Commission (1987) 13 FCR 500 at 508 (French J). An illustration of an implied limit to the power is given by the decision of the Full Federal Court in Medibank Private. In that case, the ACCC (through its Chief Executive Officer, Mr Cassidy) alleged that Medibank had engaged in misleading or deceptive conduct in contravention of s 12DA(1) of the ASIC Act and sought orders under s 12GD requiring Medibank to compensate persons who had been misled by Medibank's representations and who had purchased a particular health package from Medibank. Such persons were not parties to the proceeding. The Full Court concluded that s 12GD did not empower the Court to order compensation in favour of a person who is not a party to the proceeding, because the legislative history showed that s 87(1) (the statutory equivalent to s 12GM(1)) had been amended with the intention of confining compensatory relief to persons who were parties to the proceeding. The Full Court explained (at [32]):

Section 12GD(1) of the ASIC Act, in its present form, looked at in a vacuum and without regard to the legislative history of s 80 of TP Act and without regard to s 12GM of the ASIC Act and the corresponding history of s 87 of the TP Act, might literally authorise the Court, if it determined it to be appropriate, to make orders as claimed in orders 10, 11 and 12 of the further amended application. However, the history briefly outlined above indicates that it is demonstrably clear that that was not the intention of the Parliament, and that it would be contrary to the purpose of the TP Act as a whole, for s 80 to be interpreted in that way. Such an interpretation would give rise to a capricious and irrational scheme. The effect of such a construction would be that certain of the provisions of s 87 would be quite otiose and would have no work to do. When a statute confers both a general power, not subject to limitations and qualifications, and a special power, subject to limitations and qualifications, the general power cannot be exercised to do that which is the subject of the special power: see Leon Fink Holdings Pty Ltd v Australian Film Commission at 678.

104    The applicants contend that s 12GD empowers the Court to make a refund order as sought in proposed paragraph 3B of the originating process. They relied on the width of the power conferred by s 12GD and its public interest character, referring to Australian Competition and Consumer Commission v Pacific National Pty Ltd [2020] FCAFC 77; 378 ALR 1 at [343]–[344], as well as ICI at 256 (Lockhart J) and Z-Tek at 202 (Merkel J). The applicants relied particularly on the fact that s 12GD(6) expressly contemplates that the Court may grant a mandatory injunction requiring a person to do an act or thing. They argued that there is no reason to read down the plain words of the section. The applicants submitted that the statutory context does not limit the Court’s power by implication. While the power to order damages under s 12GF(1) or compensation under s 12GM(2) are subject to a 6 year limitation period, s 12GM(1) is not subject to any such limitation. In any event, the grant of relief under s 12GD and 12GM(1) is discretionary and the applicants and group members would ultimately need to persuade the Court that the discretion to grant relief should be exercised in their favour. Further, s 12GM(1) is expressed to be without limitation to the generality of s 12GD.

105    While I accept that the Court’s power to make orders under s 12GD is broad, I do not accept that the section empowers the Court to make a refund order in the form of proposed paragraph 3B of the originating process. In my view, to construe s 12GD in that manner would subvert the remedial framework in Subdivision G of Division 2 of Part 2 of the ASIC Act, a conclusion that is supported by the decision of the Full Federal Court in Medibank Private.

106    The remedial framework in Subdivision G has been set out above. In short, s 12GF allows a person to recover loss or damage incurred by reason of a contravention of, relevantly, the prohibitions against misleading or deceptive conduct and unconscionable conduct, subject to a 6 year limitation period. Section 12GM(2) allows a person who has suffered, or is likely to suffer, loss or damage by conduct in contravention of those prohibitions to seek a range of remedial orders including an order directing the person who engaged in the contravening conduct or a person who was involved in the contravention to refund money or return property (see s 12GM(7)(d)) or to pay the amount of the loss or damage (see s 12GM(7)(e)), again subject to a 6 year limitation period. Section 12GM(1) also empowers the Court, in a proceeding otherwise commenced under Division 2, to grant the same relief in favour of a person who is a party to the proceeding who has suffered, or is likely to suffer, loss or damage by conduct in contravention of those prohibitions. The ancillary relief afforded by s 12GM(1) is not subject to an express time limitation, but is dependent upon the proceeding having been otherwise validly commenced under Division 2 and will be subject to any time limitation that applies to the proceeding to which it is ancillary.

107    Recognising that they are unable to seek damages under s 12GM(1) on behalf of group members in respect of ANZ Loan Protection policies acquired before 28 February 2014 on a stand-alone basis, the applicants have sought to craft a form of injunctive relief under s 12GD to which the relief sought under s 12GM(1) can attach. However, there is no ongoing contravening conduct to restrain. The premiums for the ANZ Loan Protection policies were paid on a once off basis at about the time the policies were issued and the relevant respondents have ceased supplying the ANZ Loan Protection policies. In those circumstances, the applicants propose a mandatory injunction which is, in effect, an order to refund the premiums paid under the policies. While the apparent purpose of seeking such relief under s 12GD is to provide a legal foundation for the damages claim under s 12GM(1), the proposed refund order under s 12GD somewhat perversely supplants the damages claim under s 12GM(1). If such an order could be made under s 12GD, the express limitation periods that apply to ss 12GF(1) and 12GM(2) could be readily avoided by the device of seeking a mandatory payment order under s 12GD, thereby circumventing the apparent intention of Parliament that compensatory relief is generally subject to a 6 year limitation period.

108    In response, the applicants relied on the following observations of the Full Federal Court in Mayne Nickless in respect of the statutory equivalents in the TPA (at [56]-[57]):

56. It may be true to say that the absence of any time limitation under s 87 itself, in relation to claims for damages under s 87(1), renders the time limit imposed by s 82(2) too easily avoidable. It may also be said that this construction detracts from the logical consistency of Pt VI. So much may be accepted but does not provide a basis for writing into s 87(1) words that are not there. Indeed, to import into the subsection a time limitation on claims for damages under it would be to introduce an element inconsistent with its character as providing relief ancillary to a primary cause of action. The same is true of any attempt to import by analogy or otherwise the time limits imposed on claims for relief under s 87(1A) by s 87(1CA).

57. There are, in any event, significant differences between the relief which may be awarded under s 87(1) and that which is recoverable under s 82. The primary difference is that the relief awarded under s 87(1) is discretionary. In the exercise of that discretion, a court would be entitled to have regard to whether the subsection had been invoked merely to overcome a time problem in proceedings that could, absent that problem, have been brought under s 82. The answer to the question whether proceedings have been brought on that basis may be informed by the extent to which the primary injunctive relief would be of any utility. If the primary injunctive relief were to be refused on discretionary grounds, including lack of utility, then there would be a real issue as to whether any award for damages should be made particularly where the case is one in which a claim under s 82 would have been out of time.

109    However, those observations of the Full Court are not directed to the issue in question in this proceeding, being the breadth of the power to grant injunctive relief under s 12GD of the ASIC Act (equivalent to s 80 of the TPA). It is to be accepted, following Sent and Mayne Nickless, that no limitation period applies to the relief that may be granted by the Court under s 12GM(1), including compensatory relief. However, such relief can only be granted in a proceeding otherwise commenced under Division 2 of Part 2 of the ASIC Act, where the relief available under s 12GM(1) is subject to any limitation period that applies to the proceeding. It is also to be accepted that, where a proceeding has been validly commenced seeking injunctive relief under s 12GD, no express limitation period will apply to the relief available under s 12GM(1) (although, as the Full Court recognised in Mayne Nickless, if the injunctive relief were to be refused on discretionary grounds, compensatory relief under s 12GM(1) might be refused as a matter of discretion where it is sought outside of the 6 year limitation period that applies to s 12GF). The question that is raised in this proceeding is whether s 12GD empowers the Court to grant a mandatory injunction in the nature of a refund order.

110    In support of the breadth of the injunctive power under s 12GD, the applicants also placed reliance on the recent observation of Gordon J (in dissent) in Smethurst v Commissioner of Police [2020] HCA 14; 376 ALR 575 (Smethurst) (at [177]) that a “mandatory injunction, long recognised by the law, will go where the defendant “is ordered to undo the wrong he has done, and give the [plaintiff] complete relief by putting him in the position in which he was before the injury was committed”. In my view, Smethurst does not assist the applicants’ argument as to the proper construction of s 12GD and the determination of whether a refund order is within the power conferred by s 12GD having regard to its statutory context, as the High Court was considering the grant of an injunction in equity’s auxiliary jurisdiction. While statutory injunctions have undoubtedly been created from the equitable foundation, and equitable principles may continue to be relevant to the exercise of a court’s discretion to grant a statutory injunction, the proper construction of the statutory power is not determined by the breadth of equitable relief: see ICI at 256 (Lockhart J) and at 263-268 (Gummow J).

111    As referred to earlier, in Medibank Private the Full Federal Court construed s 12GD having regard to the principle of statutory construction referred to in Leon Fink Holdings Pty Ltd v Australian Film Commission (1979) 141 CLR 672. In that case, Mason J said (at 678, citations omitted):

It is accepted that when a statute confers both a general power, not subject to limitations and qualifications, and a special power, subject to limitations and qualifications, the general power cannot be exercised to do that which is the subject of the special power. In Anthony Hordern and Sons Ltd. v. Amalgamated Clothing and Allied Trades Union of Australia Gavan Duffy C.J. and Dixon J. said:

"Extensive and unfettered as the authority of the Court of Conciliation and Arbitration to award preference in settlement of a dispute might have been in virtue of its general power, yet, when s. 40 expressly gives a special power, subject to limitations and qualifications, surely it must be understood to mean that the Court shall not exercise an unqualified power to do the same thing. When the Legislature explicitly gives a power by a particular provision which prescribes the mode in which it shall be exercised and the conditions and restrictions which must be observed, it excludes the operation of general expressions in the same instrument which might otherwise have been relied upon for the same power."

112    The power conferred on the Court by ss 12GF(1), 12GM(1) and 12GM(2) to make compensatory orders, whether for the payment of loss and damage or a refund, are subject to specific limitations and qualifications. Each of ss 12GF(1) and 12GM(2) are subject to a 6 year limitation period. While s 12GM(1) is not subject to an express limitation period, the power to make an order under s 12GM(1) is enlivened by a proceeding being commenced under another provision of Division 2 (or for an offence against Division 2). That is a limitation upon, or qualification to, the power conferred by s 12GM(1). If s 12GD were construed to empower the Court to make a refund order effectively without limitation, the limitations and qualifications to the powers in each of ss 12GF(1), 12GM(1) and 12GM(2) would have no work to do.

113    This conclusion is also supported by the legislative history of s 80 of the TPA, which is the statutory equivalent to s 12GD of the ASIC Act. As explained by the Full Federal Court in Medibank Private (at [26] and [36]-[45]), s 80 was substantially amended in 1983 (by the Statute Law (Miscellaneous Provisions) Act (No 1) 1983 (Cth), and following the decision of the High Court in Thomson Australian Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150). As amended, s 80(1) took a form that closely resembled s 574(1) of the Companies Act 1981 (Cth) (the forerunner of the present s 1324 of the Corporations Act 2001 (Cth)). Following public consultation on the exposure draft of the 1981 Companies Bill, the proposed s 574 was amended to include subsection (8), which was in almost identical terms to s 68 of the Supreme Court Act 1970 (NSW), the equivalent of the Chancery Amendment Act 1858 (UK) (Lord Cairns Act). Section 574(8) of the Companies Act 1981 (Cth) has become s 1324(10) of the Corporations Act 2001 (Cth) which provides:

Where the Court has power under this section to grant an injunction restraining a person from engaging in particular conduct, or requiring a person to do a particular act or thing, the Court may, either in addition to or in substitution for the grant of the injunction, order that person to pay damages to any other person.

114    As the Full Federal Court observed in Medibank Private, when s 80 of the TPA was amended in 1983, the Parliament conferred on the Court the power to grant mandatory as well as prohibitory injunctions, in terms similar to s 574 of the 1981 Companies Act. Significantly, however, the Parliament did not include within s 80 of the TPA a provision in the same terms as s 574(8) of the 1981 Companies Act. The Full Court concluded that (at [45]):

If the power given by s 1324(1) authorised an order for damages in favour of any person, there would have been no necessity for s 1324(10). Thus, the language found in s 1324(1), which is to all intents and purposes the same as the language of s 80(1) of the TP Act (s 12GD(1) of the ASIC Act), was not intended, of itself, to authorise the Court to order damages in a proceeding in favour of any person who was not a party to the proceeding. That supports the conclusion that the Parliament did not intend, by the language of s 80(1) or of s 12GD(1), to authorise the Court to order damages in a proceeding in favour of any person who was not a party to the proceeding.

115    Indeed, even the breadth of the power to award damages in s 1324(10) of the Corporations Act must be read conformably with other statutory limitations in the Corporations Act concerning entitlement to compensation: McCracken v Phoenix Constructions (Qld) Pty Ltd (2012) 2 Qd R 27 at [27] (Fraser JA) (with whom White JA and Applegarth JA agreed).

Conclusion

116    For those reasons, in my view s 12GD of the ASIC Act does not empower the Court to make an order in the form of proposed paragraph 3B of the originating application. I therefore refuse leave to amend the originating process to include that paragraph. It also follows that paragraphs 48 and 73 of the statement of claim should be struck out in so far as they seek the recovery of loss and damage in respect of ANZ Loan Protection policies the premiums on which were paid more than 6 years prior to the commencement of the proceeding.

Second issue: restitution and mistake

Preliminary observations

117    The second basis on which the applicants seek to bring a claim against QBE on behalf of group members in respect of ANZ Loan Protection policies acquired more than 6 years prior to the commencement of the proceeding is on the grounds of “restitution for mistake”. The expression “restitution for mistake” is the heading given to a set of allegations, and proposed allegations, at the end of the statement of claim at paragraphs 74 to 75.

118    The primary motivation for including these allegations appears to be a wish to rely on the extended limitation period afforded by s 27 of the Limitation Act. Section 27 provides (relevantly):

Where, in the case of any action for which a period of limitation is prescribed by this Act —

(a)     …

(b)     …

(c)     the action is for relief from the consequences of a mistake—

the period of limitation shall not begin to run until the plaintiff has discovered … the mistake … or could with reasonable diligence have discovered it…

119    As explained below, the original allegations at paragraphs 74 to 75 were based on a confusion of legal principles concerning the role of mistake in the law of restitution and the law of contract. The proposed amended allegations have sought to address the problems that existed in the original allegations. Despite retaining the heading “restitution for mistake”, the claims are not based on the recognised category of restitution for a payment made under a mistake of fact or law (as discussed in David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 (David Securities)). Rather, under the proposed amendments, the applicants seek to set aside the policies in equity on the basis of unilateral mistake or under statutory remedies in respect of the misleading conduct claim, unconscionable conduct claim and inappropriate advice claim, and then seek restitution of the premiums paid under the policies that have been set aside.

120    In respect of the claim to restitution, the applicants allege that the respondents are liable to make restitution of the premiums paid on two purported bases: the first is money had and received and the second is “unjust enrichment”. It is uncertain what the applicants mean by the reference to unjust enrichment. As was made clear by the majority of the High Court in David Securities (at 378-9), unjust enrichment is not a definitive legal principle according to its own terms but is a unifying legal concept (see also Roxborough v Rothmans of Pall Mall Australia Limited (2001) 208 CLR 516 at [70]-[74] (Gummow J), Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635 (Lumbers) at [85] (Gummow, Hayne, Crennan and Kiefel JJ) and Mann v Paterson Constructions Pty Ltd [2019] HCA 32; (2019) 373 ALR 1 (Mann) at [199] (Nettle, Gordon and Edelman JJ)). If the policies are liable to be set aside on the bases alleged by the applicants, the claim to restitution is for money had and received by reason of a failure of consideration (for the payment of the premiums): see Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498 (Equuscorp) at [31] (French CJ, Crennan and Kiefel JJ) and Mann at [168] (Nettle, Gordon and Edelman JJ). The additional reference to “unjust enrichment” appears to add nothing to the claim.

The original mistake allegations

121    The original allegation (in paragraph 74 of the statement of claim) is that the applicants and at least some group members (referred to as the mistaken group members) acquired the policies and paid the premiums under them under one or more of the following causative mistaken beliefs:

(a)    that they were required to take out the relevant policy in order to obtain the credit card or personal loan (as the case may be); or

(b)    that the relevant policy had material value to them.

122    The applicants alleged (in paragraph 75) that, by reason of those mistakes:

(a)    the respondents have had and received by them, to the use of the applicants and mistaken group members, the respective premiums paid under the policies; and

(b)    further or alternatively, the respondents have been unjustly enriched at the expense of the applicants and the mistaken group members,

and the respondents are liable to make restitution of those sums to the applicants and the mistaken group members.

123    Those allegations do not disclose a reasonable cause of action. As a general principle, there can be no recovery of a contractual payment on the grounds of mistake unless the contract is void or otherwise set aside. That principle was stated by Goff J in Barclay Bank Ltd v W.J. Simms Son & Cooke (Southern) Ltd [1980] QB 677 at 695:

Of course, if the money was due under a contract between the payer and the payee, there can be no recovery on this ground unless the contract itself is held void for mistake (as in Norwich Union Fire Insurance Society Ltd v Wm J. Price Ltd [1934] A.C. 455) or is rescinded by the plaintiff.

124    That passage has been cited with approval by a majority of the High Court in David Securities at 376 (Mason CJ, Deane, Toohey, Gaudron and McHugh JJ) and more recently by the Full Federal Court in Workpac Pty Ltd v Rossato [2020] FCAFC 84; 378 ALR 585 (Workpac) at [783]-[785] (White J) and [959]-[961] (Wheelahan J, Bromberg J agreeing at [265]). As recently explained by Kiefel CJ, Bell and Keane JJ in Mann at [14], “[r]estitutionary claims must respect contractual regimes and the allocations of risk made under those regimes”. This is a well-established principle: see also Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 256 (Deane J); Pan Ocean Shipping Co Ltd v Creditcorp Ltd; The Trident Beauty [1994] 1 WLR 161 at 164–6 (Goff LJ); Lumbers at [47] (Gleeson CJ); Equuscorp at [64] (French CJ, Crennan and Kiefel JJ). There are what might be regarded as exceptions to the general principle. As noted by French CJ, Crennan and Kiefel JJ in Equuscorp at [26], relief may be granted in respect of benefits provided under an existing contract depending upon how the claim fits with the contract, referring to Lumbers at [79] per Gummow, Hayne, Crennan and Kiefel JJ and Roxborough at [108] per Gummow J. However, it is not necessary to explore the circumstances in which restitutionary relief may be available in respect of contractual payments in the present case.

The proposed amendments

125    In apparent recognition that their original allegations did not disclose a reasonable cause of action, the applicants have proposed two categories of amendments to the statement of claim. The amendments seek to state a basis on which the policies should be set aside, enabling the applicants and group members to recover the premiums paid and interest charged in restitution.

126    The first category of amendment is to plead that the policies issued to the applicants and the mistaken group members are liable to be set aside in equity on the basis of unilateral mistake. To support that claim for relief, the applicants propose to amend the description of the alleged mistake. The proposed amended allegation (at paragraph 74) is that the applicants and at least some group members (again, referred to as the mistaken group members) acquired the policies and paid the premiums under them under one or more of the following causative mistaken beliefs:

(a)    that they were required to take out the relevant policy in order to obtain the credit card or personal loan (as the case may be) or that the policy formed part of (and was not separate to) their credit card or personal loan (as the case may be); or

(b)    that the relevant policy had material value to them.

127    The applicants propose to add a further (necessary) allegation (at paragraph 74A) that, at all relevant times, the respondents:

(a)    were aware that circumstances existed which indicated that the applicants and mistaken group members were acquiring their respective policies under the mistaken beliefs; and

(b)    chose to leave the applicants and the mistaken group members under the mistaken beliefs in acquiring or agreeing to be issued with their respective policies.

128    The applicants allege (at propose paragraph 74B) that, by reason of the matters set out in paragraphs 74 and 74A, the policies issued to the applicants and the mistaken group members are liable to be set aside for unilateral mistake. The applicants then seek restitution for the premiums paid (at paragraph 75).

129    QBE argues that those proposed allegations cannot sustain a claim to set aside the policies in equity on the ground of unilateral mistake. QBE also argues that the proposed allegations that QBE had knowledge of the mistake are defective and the allegations do not raise common issues capable of determination in a representative proceeding. Those arguments are considered below.

130    The second category of amendment is to plead that the policies issued to the applicants and the mistaken group members are liable to be declared void as a result of:

(a)    the unconscionable conduct of the respondents (proposed paragraph 74C);

(b)    the misleading or deceptive conduct of the respondents (proposed paragraph 74D); and

(c)    the inappropriate advice provided by ANZ’s representatives (proposed paragraph 74E).

131    In the course of argument, the applicants made clear that the second category of amendments are intended to cross-refer to the misleading conduct allegations, unconscionable conduct allegations and inappropriate advice allegations respectively. The claim to avoid the policies is made under the respective statutory remedies. As already noted above, the applicants initially contended that, pursuant to those claims, the applicants would be entitled to set aside policies acquired more than 6 years prior to the commencement of the proceeding. The applicants argued that, having set aside the policies under the applicable statutes, the applicants and group members would then be entitled to recover the premiums paid and interest charged in restitution, and could rely on s 27 of the Limitation Act in respect of policies acquired prior to 28 February 2014.

132    The applicants’ contentions with respect to the second category of amendments suffered from two serious flaws. First, as noted earlier, the claim to avoid the policies under the respective statutory remedies is subject to the statutory limitation periods that apply to those claims. For the reasons given earlier, I consider that the applicable limitation period for the misleading conduct claim and the unconscionable conduct claim in respect of the ANZ Loan Protection policies is 6 years (and the applicants’ accept that the same limitation period applies to the inappropriate advice claim). During argument, the applicants ultimately accepted that the proposed allegations in paragraphs 74C to 74E are subject to the statutory limitation periods that apply to those claims. For that reason alone, the second category of amendments did not extend the applicable limitation period. Secondly, it is difficult to see how s 27 of the Limitation Act would have assisted the applicants in any event. Section 27 applies where the action is for relief from the consequences of a mistake. The misleading conduct claim, unconscionable conduct claim and inappropriate advice claim are not actions for relief from the consequences of mistake. They are claims for relief from the consequences of contraventions of the relevant statutory norms. Nor is the claim in restitution based on mistake: it is a claim for money had and received. The proposed amendments appear to be based on the notion that a misleading conduct claim, unconscionable conduct claim or inappropriate advice claim brought by a person who also holds one of the alleged mistaken beliefs becomes an action for relief from the consequences of a mistake. In my view, the notion is misconceived. Superimposing an allegation of a mistaken belief over a statutory claim does not convert the claim to one for the relief from the consequences of mistake. That is not to say that the second category of amendments should be disallowed. The paragraphs simply plead that the policies should be set aside by reason of the statutory contraventions. It is open to the applicants to claim that relief, but the claim does not affect the applicable statutory limitation periods.

133    Therefore, the principal question to be determined is whether the first category of amendments disclose a reasonable cause of action based on unilateral mistake and whether the cause of action can be brought in a representative proceeding.

Unilateral mistake in contract

134    As discussed in Carter on Contract at [22-01], contracting parties’ decisions and actions are often influenced by some mistake which may relate to the perceived benefits, characteristics or value of property, goods or services bought or sold. If a party’s mistake is caused by a misrepresentation made by the other party, there will often be a remedy at law. Absent a misrepresentation, though, only a limited range of mistakes will have legal consequences.

135    In contractual dealings between parties, mistaken beliefs can relate to various aspects of the transaction (the identity of the contracting party, the subject matter of the contract, the contractual terms or a fact or circumstance which is the motivation for or cause of a party entering into the contract) and may be held by one party only (usually referred to as unilateral mistake) or both parties (usually referred to as common mistake) or each party holds a different mistaken belief (usually referred to as mutual mistake): see for example Heydon on Contract at [15.40] – [15.60]; Carter on Contract at [22-010] – [22-030]; Chitty on Contracts, 33rd Ed, at [3-001] – [3-002].

136    The circumstances in which a contract may be voidable in equity on the basis of unilateral mistake are limited. The traditional position has been that, absent misrepresentation or some form of unconscionable conduct, a party to a contract is not entitled to avoid the contract on the basis that the party was mistaken as to a matter that did not form part of the contractual obligations (for example, the perceived value of the property, goods or services being sold or some characteristic of the property, goods or services), even if the other party knows that the first party holds a mistaken belief. So in Statoil ASA v Louis Dreyfus Energy Services LP [2008] EWHC 2257; 2 Lloyd’s Rep 685 (Statoil), Aikens J said at [88]:

If one party has made a mistake about a fact on which he bases his decision to enter into the contract, but that fact does not form a term of the contract itself then, even if the other party knows the first is mistaken as to this fact, the contract will be binding. That was the effect of the decision of the Court of Queen’s Bench, on appeal from the County Court, in Smith v Hughes (1871) LR 6 QB 597, see particularly at page 604 per Cockburn CJ, and page 607 per Blackburn J. The correctness of that decision and the analysis in it has never been doubted.

137    Smith v Hughes (1871) LR 6 QB 597 is often referred to in this context. The case concerned the sale of oats intended for horse feed. The plaintiff (a farmer) offered to sell oats to the defendant (a racehorse owner and trainer) and provided a sample to the defendant. The defendant agreed to buy the oats at an agreed price. After the oats were delivered, the defendant refused to pay because the oats were new rather than old and the defendant had contracted in the belief that he was buying old oats. The defendant contended that the plaintiff had represented that the oats were old, but that contention failed before the jury. The relevant facts upon which the judgment proceeded were stated by Cockburn CJ in the following terms (at 602): “…nothing was said on the subject of the defendant's manager desiring to buy old oats, nor of the oats having been said to be old; while, on the other hand, we must assume that the defendant's manager believed the oats to be old oats, and that the plaintiff was conscious of the existence of such belief, but did nothing, directly or indirectly, to bring it about, simply offering his oats and exhibiting his sample, remaining perfectly passive as to what was passing in the mind of the other party. The question is whether, under such circumstances, the passive acquiescence of the seller in the self-deception of the buyer will entitle the latter to avoid the contract. I am of opinion that it will not.” Cockburn CJ expressed the relevant principle as follows (at 603-4):

I take the true rule to be, that where a specific article is offered for sale, without express warranty, or without circumstances from which the law will imply a warranty - as where, for instance, an article is ordered for a specific purpose - and the buyer has full opportunity of inspecting and forming his own judgment, if he chooses to act on his own judgment, the rule caveat emptor applies. If he gets the article he contracted to buy, and that article corresponds with what it was sold as, he gets all he is entitled to, and is bound by the contract…

…

Now, in this case, there was plainly no legal obligation in the plaintiff in the first instance to state whether the oats were new or old. He offered them for sale according to the sample, as he had a perfect right to do, and gave the buyer the fullest opportunity of inspecting the sample, which, practically, was equivalent to an inspection of the oats themselves. What, then, was there to create any trust or confidence between the parties, so as to make it incumbent on the plaintiff to communicate the fact that the oats were not, as the defendant assumed them to be, old oats? If, indeed, the buyer, instead of acting on his own opinion, had asked the question whether the oats were old or new, or had said anything which intimated his understanding that the seller was selling the oats as old oats, the case would have been wholly different; or even if he had said anything which shewed that he was not acting on his own inspection and judgment, but assumed as the foundation of the contract that the oats were old, the silence of the seller, as a means of misleading him, might have amounted to a fraudulent concealment, such as would have entitled the buyer to avoid the contract. Here, however, nothing of the sort occurs. The buyer in no way refers to the seller, but acts entirely on his own judgment.

138    The leading case on unilateral mistake in Australia is Taylor v Johnson (1983) 151 CLR 422 (Taylor). In that case, the parties entered into a written contract for the sale of two adjoining pieces of land, each of about five acres, for a total price of $15,000. The vendor subsequently refused to proceed on the ground that when she executed the contract she believed that it provided for a price of $15,000 per acre. The NSW Court of Appeal, overturning the trial judge’s factual finding, concluded that the purchaser believed that the vendor was probably mistaken as to what the contract stipulated as the price, and set aside the contract. The High Court affirmed that decision. The majority (Mason ACJ, Murphy and Deane JJ) stated (at 432):

The particular proposition of law which we see as appropriate and adequate for disposing of the present appeal may be narrowly stated. It is that a party who has entered into a written contract under a serious mistake about its contents in relation to a fundamental term will be entitled in equity to an order rescinding the contract if the other party is aware that circumstances exist which indicate that the first party is entering the contract under some serious mistake or misapprehension about either the content or subject matter of that term and deliberately sets out to ensure that the first party does not become aware of the existence of his mistake or misapprehension. What we have said is sufficient to demonstrate the broad basis of support which the authorities provide for that proposition. Moreover, and perhaps more importantly, it is a principle which is best calculated to do justice between the parties to a contract in the situation which it contemplates.

139    The majority based the applicable principle, as stated above, in the ordinary jurisdiction of equity to set aside an instrument where it would be unconscientious for one of the parties to enforce it against another observing (at 431, citations omitted):

Special circumstances will ordinarily need to be shown before it would be unconscientious for one party to a written contract to enforce it against another party who was under a mistake as to its terms or its subject matter. In Solle v. Butcher Denning L.J. gave, as examples of such special circumstances, the case where the mistake of the one party has been induced by a material misrepresentation of the other and the case where "one party, knowing that the other is mistaken about the terms of an offer, or the identity of the person by whom it is made, lets him remain under his delusion and concludes a contract on the mistaken terms instead of pointing out the mistake".

140    QBE submitted that the type of unilateral mistake that was recognised in Taylor as founding a right to rescission in equity sat within a narrow compass. It had to be a “serious mistake” about the contents of the contract in relation to a “fundamental term”. QBE argued that there is no authority in Australia or the United Kingdom that a mistake as to the factual circumstances of the transaction or motive of the party seeking rescission (in the absence of misrepresentation) is sufficient to establish an entitlement to equitable relief. QBE further submitted that this is settled law as recognised in the leading texts on contract law in Australia and the United Kingdom, referring to J D Heydon, Heydon on Contract at [15.270]; Carter, Contract Law in Australia, 7th Edition at [20-49]; and Chitty on Contracts, 33rd Edition, [3-002], [3-025]. In Chitty, the principle is expressed as follows (at [3-025]):

It is not sufficient that one party knows the other has entered the contract under a mistake of some kind. The mistake must relate to the terms of the contract. If it relates, for example, to what is the subject matter that is being bought and sold (i.e. as to its contractual description), the mistake is to the terms and may prevent there being a contract; but if the mistake is merely to the quality or the substance of the thing contracted for, it will be a mistake as to the facts (or “an error in motive”) and it is well established that an error in motive will not avoid a contract. … There is no equitable jurisdiction to set the contract aside where one party has made a unilateral mistake as to a fact or state of affairs which is the basis upon which the terms of the contract are agreed, but that assumption does not become a term of the contract [referring to Statoil].

141    The applicants submitted that the Court cannot rule out at this stage that the operative mistakes alleged in the proposed amended paragraph 74 come within the principle of unilateral mistake as articulated in Taylor. The applicants say that it is incorrect to characterise the alleged mistakes merely as mistakes about the facts which motivated group members to take out the policies. They say that the alleged mistaken belief that group members were required to take out the policy in order to obtain the loan and that the policy formed part of the loan were serious mistakes or misapprehensions about the contents and/or subject-matter of the terms of the contract. They also say that the alleged mistaken belief that the policies had a material value to group members is also a mistake about the subject-matter of the contract.

142    In my view, the circumstances in which a contracting party may be afforded equitable relief on the basis of a unilateral mistake known to the other party are not as fixed or settled in Australian law as QBE contends. Three observations can be made.

143    First, as the reasons of the majority in Taylor make clear, the principle on which the case was decided was stated narrowly. The majority did not decide that the principle so stated marked out the boundaries or limits of equitable relief for unilateral mistake. In the usual way, such boundaries will be determined case by case.

144    Second, the principle stated in Taylor may give rise to difficult questions of application which may depend upon specific factual findings. The applicants allege that certain group members acquired the policies in the mistaken belief that they were required to take out the policy in order to obtain the loan and that the policy formed part of the loan. The applicants argue that that is a serious mistake about the contents and/or subject-matter of the terms of the policy. That may or may not be so. The alleged mistake would appear to relate to the terms of the loan rather than the terms of the policies, but the applicants do not seek any relief in respect of the underlying loans. Be that as it may, in my view it would be inappropriate to rule that the allegation does not disclose a reasonable cause of action. It may be that, when all facts are considered, the circumstances are found to come within the principle stated in Taylor. The second allegation, that the policies had a material value to group members, is more difficult to bring within the principle stated in Taylor. The proposed particulars to that allegation, referring to paragraph 49 of the statement of claim, appear to be incorrect. The correct reference would appear to be paragraph 29 which alleges that the policies were of no material value. The basis for the no material value allegations, which is set out earlier in these reasons, involves a number of alleged facts and circumstances that are external to the terms of the policies save in one respect. The applicants also rely on certain exclusions contained within the policies. Depending on the facts ultimately found at trial, the applicants may establish that certain group members were mistaken as to those exclusions which may then bring the allegation within the principle in Taylor.

145    Third, and perhaps an elaboration on the first and second observations, there is a vast difference between a contract for the sale of oats by sample, or even the sale of land by description, and the sale of an insurance policy, particularly in a consumer context. The subject matter of an insurance policy is not a physical object capable of being inspected, but contractual promises. A mistake about the perceived value of the insurance policy may in fact be a mistake about the terms of the policy. While in Smith v Hughes, the court applied the principle of caveat emptor to a sale of oats by sample to a racehorse owner, that principle may have far less force in the context of an insurance policy sold by a bank to consumers in connection with a credit card or consumer loan. As observed recently by Allsop CJ in Australian Securities and Investments Commission v Australia and New Zealand Banking Group Limited (No 3) [2020] FCA 1421 at [17], in the reality of life consumers dealing with banks pursuant to standard form contracts frequently “take what they get”. It is conceivable that the principle as stated in Taylor, or as developed, could apply to circumstances in which persons seeking consumer credit formed a mistaken belief that credit insurance was compulsory (or was a part of the credit contract) or that the insurance would provide cover in their personal circumstances and the bank arranging the sale of the insurance, and the insurer, were aware that the consumer held those mistaken beliefs.

146    QBE also submitted that the proposed allegations that QBE had knowledge of the alleged mistake (proposed paragraph 74A) are defective. In that regard, QBE observed that it is not alleged that QBE had any actual knowledge of the relevant circumstances indicating the unilateral mistake of all mistaken group members. Instead, it is said that ANZ had that state of mind and that ANZ’s knowledge can be attributed to QBE because “ANZ acted as the agent of those insurers, as set out in paragraph 9B above”. QBE argued that this appears to be an allegation that ANZ’s knowledge can be attributed to QBE in accordance with common law agency principles. To establish that allegation, the applicants would need to show that the relevant information (affording knowledge of the mistaken beliefs) was acquired by ANZ in the course of carrying out a transaction on behalf of QBE and that ANZ had a duty to disclose that information to QBE: Sargent v ASL Development Ltd (1974) 131 CLR 634 at 659. QBE argues that it is impossible to understand on the pleading how the applicants intend to prove this.

147    I do not accept QBE’s submission. Proposed paragraph 74A alleges that each of the respondents, including QBE, was aware that circumstances existed which indicated that the applicants and group members acquired the policies under the alleged mistaken beliefs. It can be accepted that that allegation must be particularised (see r 16.43 of the FC Rules). By way of particulars, the applicants have stated the basis on which they say that ANZ had the requisite knowledge and then state that ANZ’s knowledge is attributable to the other respondents because, in arranging the issue of the policies, ANZ acted as their agents. The applicants have also expressly reserved the opportunity to provide further particulars after discovery. In my view, the applicants have provided sufficient particulars to sustain the allegation at this early stage of the proceeding and before discovery (cf Sadie Ville Pty Ltd v Deloitte Touche Tohmatsu [2017] FCA 1202 at [64] (Moshinsky J); Imobilari Pty Ltd v Opes Prime Stockbroking Ltd [2008] FCA 1920; 252 ALR 41, [37]-[41] (Finkelstein J)). Procedural fairness usually requires that the applicants are held to their particulars. Therefore, it will be incumbent on the applicants to provide any further particulars they wish to rely upon in due course and before the respondents are required to file evidence.

148    Finally, on this aspect of the pleading, QBE submitted that the unilateral mistake claim (in so far as it relates to the ANZ Loan Protection policy) should be confined to the second applicant’s personal claim as the claim does not present any substantive common issues of fact or law, as required by s 33C of the FCA Act. QBE observed that, in the proposed amended originating application, the applicants do not list any of the factual or legal issues arising on the unilateral mistake claim as common questions. QBE argued that it is difficult to think of a cause of action that is less suitable for determination in a representative proceeding. The whole basis of the jurisdiction is the subjective understanding of the individual claimant and the respondents’ knowledge of that understanding. The claim is therefore inherently idiosyncratic and individually fact-dependent.

149    While QBE’s concern has substance in a practical sense, I reject the contention that the unilateral mistake claim does not satisfy the requirements of s 33C(1) of the FCA Act. That section provides as follows:

Subject to this Part, where:

(a)     7 or more persons have claims against the same person; and

(b)     the claims of all of those persons are in respect of, or arise out of, the same, similar or related circumstances; and

(c)     the claims of all of those persons give rise to a substantial common issue of law or fact,

a proceeding may be commenced by one or more of those persons as representing some or all of them.

150    A claim is not the cause of action pleaded: King v GIO Australia Holdings Ltd (2000) 100 FCR 209 at [23]-[24] and at [34]-[35] per Moore J. As explained by Lindgren J in Australian Competition and Consumer Commission v Giraffe World Australia Pty Ltd (1998) 84 FCR 512 at 523, the provisions of Part IVA make clear that “claims” have an existence independent of, and antecedent to, the commencement of the proceeding. The requirements of s 33C are threefold: that 7 or more persons have claims against the same person; that the claims are in respect of, or arise out of, the same, similar or related circumstances; and that the claims give rise to a substantial common issue of law or fact.

151    In the present case, the unilateral mistake claim readily satisfies the first two conditions. The policies had standard terms and were offered by ANZ on those terms to a large number of consumers in connection with its credit card and personal loan facilities. While each transaction with a consumer is in one sense an individual transaction, the nature of large-scale consumer transactions is that there is a high degree of standardisation in the product sold, the circumstances of sale and the sales processes. In relation to the third condition, in my view the unilateral mistake claim gives rise to common issues of law and fact that are substantial. As to facts, a substantial common question is whether the policies had material value to the applicants and group members. The answer to that question depends on many factual allegations that are common to the applicants and group members. As to law, a substantial common question is whether the facts as alleged can sustain a claim for equitable rescission of the contracts on the ground of unilateral mistake, as discussed above. For those reasons, the claim satisfies s 33C.

152    As I have noted, though, QBE’s concern about the individuality of the unilateral mistake claim has substance in a practical sense. The cause of action requires the Court to find that an individual claimant held the alleged mistaken beliefs and that one or more of the respondents were aware of that fact. Findings made by the Court in relation to the individual claims of the applicants or sample group members may or may not lead to a resolution of the claims of all group members. However, it is too early in the proceeding to form any judgment about such matters. It is possible that the evidence will cause the Court to infer that group members inevitably held certain beliefs that were mistaken, and infer that the respondents were aware of that fact. It is also possible that the evidence will not rise to that level. Part IVA provides the Court with ample procedural powers to progress the claims of represented persons as a group or as individual claims as is considered appropriate as the proceeding progresses (see particularly ss 33N, 33Q and 33R).

Conclusion

153    For the reasons set out above, I will give the applicants leave to amend paragraphs 74 to 75 of their statement of claim as proposed. In making those amendments, I will also give the applicants leave to revise the particulars, or include particulars, as necessary to clarify the allegations made.

Third issue: unconscionable conduct

154    QBE submitted that the unconscionable conduct claim at paragraphs 67 to 73 of the statement of claim should be struck out in their entirety or, in the alternative, insofar as they are alleged against QBE. QBE contends that the pleading of that claim does not sufficiently put QBE on notice of the case it has to meet and has the potential to cause confusion as to the scope of issues in dispute with consequent impacts on further interlocutory steps such as discovery. In that respect, QBE relied on the statements of Bromwich J in Olson v Keefe (No 3) [2018] FCA 2001 at [22]-[23] that, in a claim alleging unconscionable conduct, it is not enough to plead a set of facts and a bare conclusion that what has taken place is unconscionable; it is necessary to plead what particular conduct or part of the conduct is said to be unconscionable and why. As Allsop CJ explained in Australian Securities and Investments Commission v Australia and New Zealand Banking Group Limited [2019] FCA 1284; 139 ACSR 52 (in the context of a concise statement) at [4]: “In a coherent way, anchored in the facts, the plaintiff should explain why the facts stated lead to the conclusion contended for. This may require a degree of reasoned or argued articulation.”

155    I do not consider that the unconscionable conduct claim should be struck out in its entirety. However, I accept QBE’s submission that parts of the claim made against it have been pleaded in an unsatisfactory way that does not meet the requirements of a proper pleading of such a claim.

156    As set out earlier, a large part of the allegations in the statement of claim are directed to the conduct and knowledge of ANZ in connection with the sale of the policies. That is not surprising, as ANZ offered the policies for sale in connection with its offer of credit cards and personal loans. Relevantly, QBE was not directly involved in the sale of the ANZ Loan Protection policy, although of course it was the insurer for certain of the risks under that policy and can be assumed to have known the terms of that policy (in so far as the terms related to the risks insured by QBE and the benefits provided in respect of the occurrence of those risks).

157    At paragraphs 67 and 68, the applicants allege that ANZ engaged in unconscionable conduct in the following terms:

67. By reason of the matters referred to in paragraphs 5 to 66 above, in arranging the issue of the policies to the Applicants and to the Group Members, further or alternatively in administering the ANZ Credit Card Insurance policies, ANZ engaged in conduct, in trade or commerce and in connection with the supply, or possible supply, of financial services, which was, in all the circumstances, unconscionable, in contravention of s 12CB of the ASIC Act.

68. Further or alternatively, by reason of the matters referred to in paragraphs 5 to 66 above, in arranging the issue of the policies to the Applicants and to the Group Members, further or alternatively in administering the ANZ Credit Card Insurance policies, in circumstances where:

(a)    the policies had no value, or no material value, and/or were unsuitable, for, further or alternatively no benefits, or no material benefits, to the Applicants and Group Members, as alleged in Section D above;

(b)     the policies were sold in the manner alleged in Sections F, G and H above;

(c)     ANZ knew or should have known of the matters alleged in paragraph 54 above,

ANZ engaged in a system of conduct or pattern of behaviour (within the meaning of s 12CB(4) of the ASIC Act) which was unconscionable, in all the circumstances, in contravention of s12CB(1) of the ASIC Act.

158    ANZ has made no complaint about those allegations. As most of the allegations in paragraphs 5 to 66 concern ANZ’s conduct or knowledge, I consider that the allegations appropriately state the case that is sought to be made against ANZ.

159    In paragraphs 69 to 71, the applicants alleged that the insurers, OnePath Life, OnePath General and QBE, engaged in unconscionable conduct. It is necessary to address each paragraph in turn.

160    Paragraph 69 is in the following terms:

69. By reason of the matters set out in paragraph 19 above, ANZ’s unconscionable conduct was engaged in also by:

(a)    OnePath Life – with respect to ANZ Loan Protection Polices and (since 28 February 2011) with respect to ANZ Credit Card Insurance policies;

(b)    OnePath General – with respect to ANZ Credit Card Insurance policies;

(c)    QBE – with respect to ANZ Loan Protection policies.

161    It can be seen that the allegation in paragraph 69 is wholly dependent on the allegation in paragraph 19 which alleges that the conduct of ANZ in arranging the issue of the policies on behalf of OnePath Life, OnePath General and QBE (as the case may be) was, by reason of s 12GH(2) of the ASIC Act, engaged in also by those insurers. Thus, the allegation in paragraph 69 is that the alleged unconscionable conduct of ANZ is to be attributed to QBE (and the other insurers) by force of s 12GH(2) of the ASIC Act. I consider that there is no lack of clarity in that allegation. The allegation has been denied by QBE in its defence. The matters in dispute are whether and to what extent ANZ acted as agent for QBE and whether s 12GH(2) has the effect in law alleged by the applicants.

162    Paragraphs 70 and 71 are in the following terms:

70. Further or alternatively, by reason of the matters referred to in paragraphs 5 to 66 above, in issuing, further or alternatively in giving effect to the provisions (including continuing to charge premiums) of, the policies with respect to the Applicants and the Group Members, OnePath Life, OnePath General and QBE engaged in conduct, in trade or commerce and in connection with the supply, or possible supply, of financial services, which was, in all the circumstances, unconscionable, in contravention of s 12CB of the ASIC Act.

71. Further or alternatively, by reason of the matters referred to in paragraphs 5 to 66 above, in issuing, further or alternatively in giving effect to the provisions (including continuing to charge premiums) of, the policies with respect to the Applicants and the Group Members, in the circumstances where:

(a)    the policies had no value, or no material value, and/or were unsuitable, for, further or alternatively no benefits, or no material benefits, to the Applicants and Group Members, as alleged in Section D above;

(b)     the policies were sold in the manner alleged in Sections F, G and H above;

(c)     OnePath Life, OnePath General and QBE knew or should have known of the matters alleged in paragraph 54 above,

OnePath Life, OnePath General and QBE engaged in a system of conduct or pattern of behaviour (within the meaning of s 12CB(4) of the ASIC Act) which was unconscionable, in all the circumstances, in contravention of s12CB(1) of the ASIC Act.

163    In my view, those paragraphs suffer from three defects in so far as they purport to state a case against QBE.

164    First, both paragraphs fail to draw an adequate connection or explanation of why all of the matters alleged in paragraphs 5 to 66 of the pleading support a conclusion that QBE has engaged in unconscionable conduct. Some of those paragraphs concern objective facts, such as the terms of the policies, which can be assumed to have been known by QBE. Some of the paragraphs concern alleged facts, such as the absence of material value, that are also alleged to be have been known by QBE. However, many of the matters alleged in paragraphs 5 to 66 concern the conduct of ANZ where there is no allegation that QBE was involved in or aware of the conduct (apart from reliance on s 12GH(2), which is the underpinning for paragraph 69). This includes in particular the sales system allegations, the misleading conduct allegations and the inappropriate advice allegations. The pleading fails to explain why those allegations, which concern the conduct of ANZ, are relevant to QBE and result in QBE’s conduct being unconscionable.

165    Second, both paragraphs allege, but do not explain, why giving effect to the provisions of the policies by QBE involved unconscionable conduct. While the pleading includes “continuing to charge premiums” as an instance of alleged giving effect, that allegations is not applicable to the ANZ Loan Protection policy because the premiums for that policy were charged once only. It is entirely unclear whether the “giving effect” allegation is intended to refer to the payment of benefits under the policy or the refusal to pay benefits in accordance with the policy terms and, assuming it is the latter, how compliance with the terms of the policy is unconscionable (separately from issuing the policy).

166    Third, paragraph 71 refers to the allegations in Sections F, G and H (which are the sales system allegations, the misleading conduct allegations and the inappropriate advice allegations) as circumstances supporting the allegation that QBE engaged in a system of conduct or pattern of behaviour (within the meaning of s 12CB(4) of the ASIC Act) which was unconscionable. Similarly to the first point, it is entirely unclear why those allegations, which concern the conduct of ANZ, are relevant to QBE and result in QBE’s conduct being a system of conduct or pattern of behaviour which was unconscionable.

167    For those reasons, in my view paragraphs 70 and 71 are both vague and embarrassing in that they fail to state with sufficient clarity the case that must be met by QBE and there appear to be allegations that are irrelevant to QBE, tending to increase expense. I regard the defects as sufficiently serious to warrant striking out those paragraphs, while giving the applicants the opportunity to re-plead.

Conclusion

168    In conclusion, I will order that the following parts of the statement of claim be struck out:

(a)    paragraphs 48 and 73 of the statement of claim in so far as they seek relief in respect of ANZ Loan Protection policies the premiums for which were paid before the date that is 6 years prior to the commencement of the proceeding; and

(b)    paragraphs 70 and 71 of the statement of claim.

169    However, I will give leave to the applicants to file an amended originating process and amended statement of claim in the form of Annexures A and B to the amendment application save that:

(a)    those documents are to be amended as referred to in the preceding paragraph (and otherwise in accordance with these reasons); and

 (b)    I refuse leave in respect of proposed paragraph 3B of the originating process.

170    As to costs, QBE was successful on two of the three issues raised (the limitation period and the unconscionability pleading). While it was ultimately unsuccessful on the third issue (the restitution claim), its original complaint about the pleading was correct and the pleading required amendment. In all the circumstances, I consider that the appropriate order is for the applicants to pay 50% of QBE’s costs of the strike out application and the amendment application and pay the respondents’ costs thrown away by reason of the amendment of the pleading.

Associate:

Dated:    19 October 2020