Harding v EIG Ansvar Ltd [2000] FCA 46 (20 January 2000)

Last Updated: 3 February 2000

FEDERAL COURT OF AUSTRALIA

Harding v EIG Ansvar Ltd [2000] FCA 46

WORKPLACE RELATIONS - review of contract of employment - whether contract harsh or unfair - whether sufficient period of notice of termination of contract - where contract for services, made between insurance company and insurance agent.

Workplace Relations Act 1996 s 127A, s 127B

Finch v Herald & Weekly Times Limited (1996) 65 IR 239 referred to

Minister for Youth & Community Services v Health & Research Employees Association of Australia, NSW Branch (1987) 22 IR 59 distinguished

PETER ALLAN HARDING v EIG ANSVAR LIMITED

QG 135 of 1998

SPENDER J

20 JANUARY 2000

BRISBANE

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QG 135 OF 1998

BETWEEN:	PETER ALLAN HARDING Applicant
AND:	EIG ANSVAR LIMITED Respondent
JUDGE:	SPENDER J
DATE OF ORDER:	20 JANUARY 2000
WHERE MADE:	BRISBANE

THE COURT ORDERS THAT:

The contract for services, made between the applicant and respondent, and dated 26 October 1998, be varied so that, upon termination of the contract, the insurer pay to the agent the sum of $5,000.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QG 135 OF 1998

BETWEEN:	PETER ALLAN HARDING Applicant
AND:	EIG ANSVAR LIMITED Respondent

JUDGE:	SPENDER J
DATE:	20 JANUARY 2000
PLACE:	BRISBANE

REASONS FOR JUDGMENT

1 In this application, Peter Allan Harding seeks review of a contract under s 127A of the Workplace Relations Act 1996 ("the Act"), and consequential orders under s 127B of the Act. The initial application was made on 26 October 1998 in relation to a contract for services as an insurance agent which Mr Harding entered into with Ansvar Australia Insurance Limited , subsequently renamed EIG Ansvar Limited ("Ansvar"). That contract is dated 11 February 1998.

2 Section 127A of the Act has as its heading "UNFAIR CONTRACTS WITH INDEPENDENT CONTRACTORS: COURT'S POWERS". Section 127A(2) provides:

"127A(2) Application may be made to the Court to review a contract on either or both of the following grounds:

(a) the contract is unfair;

(b) the contract is harsh."

3 For the purposes of this section, "contract" is defined by s 127A(1) as meaning:

"(a) a contract for services that:

(i) is binding on an independent contractor; and

(ii) relates to the performance of work by the independent contractor, other than work for the private and domestic purposes of the other party to the contract..."

4 Subsection 4 of s 127A provides:

"127A(4) In reviewing the contract, the Court may have regard to:

(a) the relative strength of the bargaining positions of the parties to the contract and, if applicable, any persons acting on behalf of the parties; and

(b) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, a party to the contract; and

(d) whether the contract provides total remuneration that is, or is likely to be, less than that of an employee performing similar work; and

(e) any other matter that the Court thinks relevant."

5 Subsection 5 provides:

"127A(5) If the Court forms the opinion that a ground referred to in subsection (2) is established in relation to the whole or part of the contract, it must record its opinion, stating whether the opinion relates to the whole or a specified part of the contract."

Subsection 6 provides:

"127A(6) The Court may form the opinion that a ground referred to in subsection (2) is established in relation to the whole or part of the contract even if the ground was not canvassed in the application."

6 Finally, s 127B(1) provides:

"127B(1) If the Court records an opinion under section 127A in relation to a contract, it may make one or more of the following orders in relation to the opinion:

(a) an order setting aside the whole or part of the contract, as the case may be;

(b) an order varying the contract.

7 Pursuant to s 127A(5), I have formed the opinion that the part of the contract, in this case, cl 15.1, that refers to a 30-day notice period, is unfair.

8 The matter was before me first for interim relief on 4 December 1998. In relation to that application for interim relief, Mr Harding had, in an affidavit, deposed that the basis for his application for interim relief was his belief that:

"...the term in the contract allowing the Respondent to terminate on one month's notice is unfair and/or harsh because:

(a) It enables the respondent to appropriate to itself my agency business without paying for it.

(b) It prevents me from obtaining ongoing commission on renewals of policies.

(c) It enables the Respondent to terminate the contract without cause.

(d) I have been and continue to be a high performing Ansvar agent with many commendations from the Queensland State Manager of Ansvar."

9 On 4 December 1998, I declined the application for interim relief sought by Mr Harding. In the course of giving my reasons, I noted, at p 2:

"The present application for interim relief places the court in somewhat of a quandary. That comes about because s 127A contemplates an application to review a presently subsisting contract on the grounds that it is unfair or harsh. At the moment the contract of services between Ansvar and Mr Harding is on foot, and it is competent for the court to make orders under s 127B in relation to it. The difficulty arises if, before this matter proceeds to final relief, the contract for services between Mr Harding and Ansvar comes to an end. It seems to me that the submissions on behalf of Ansvar that the application for interim relief ought be dismissed on the basis that damages will provide an adequate remedy in all the circumstances is an acknowledgment that, even if between now and when the matter comes to a final hearing the contract comes to an end, it is still competent for the court to make orders varying the contract, and to order Ansvar to pay to Mr Harding any sums which, in the court's opinion, ought to be paid pursuant to the contract so varied.

It is acknowledged by Mr Stewart of counsel on behalf of Ansvar, at least implicitly in his submissions, that if the court were, on the ground advanced by Ansvar, to refuse the application for interim relief, the Court would have power to vary the contract, notwithstanding that the contract had been terminated at the time of the final hearing, and also, either pursuant to the Act or in the general jurisdiction of the Court associated with its jurisdiction under the Act, to make orders compensating Mr Harding in conformity with the contract as varied."

I said at p 3 of my reasons:

"The case has been conducted by Ansvar, and my decision in respect of interim relief has been substantially influenced by the stance of Ansvar that on the final hearing of the application it would be competent for the court to order to pay to Mr Harding any moneys properly due to him pursuant to the contract, as varied as the court thinks it should be."

10 Mr Harding, in an affidavit of 12 November 1998, indicated that he commenced working as an agent for Ansvar on 24 July 1996. He said:

" The respondent has a practice of renewing the contract with its agents (and resetting commission rates) at the beginning of each calendar year. Pursuant to this practice, my agency was renewed in early 1997 and 1998."

11 It is the agency agreement executed on 11 February 1998 between Mr Harding and Ansvar which is the agreement that governs the relationship between Mr Harding and Ansvar and which is the subject of this application. In relation to that contract, the clauses presently relevant are cll 11.4, and 15.1 to 15.6. They are as follows:

"11.4 The Agent shall not be entitled to commission fees or other amounts on any renewal or extra premium arising after the termination of this Agreement or if the insured writes to the Insurer directing that another intermediary is to act for the Insured.

...

15.1 This Agreement shall continue until terminated by either of the parties giving to the other party thirty (30) day (sic) notice in writing of its intention.

15.2 This Agreement may be terminated upon a breach by the Agent of any of the terms of this Agreement provided that the Insurer gives the Agent written notice of its intention.

15.3 This Agreement can be terminated immediately by the Insurer giving written notice to the Agent if:

(i) in the Insurer's opinion, the Agent, or any of its officers or employees has been guilty of malpractice or misconduct;

(ii) a petition for winding up is presented against the Agent;

(iii) the Agent makes an (sic) compromise arrangement with its creditors or commits an act of bankruptcy.

15.4 Upon termination of this Agreement the agency shall cease without prejudice to the rights of either party in connection with anything which occurred between them prior to the termination.

15.5 As soon as this Agreement is terminated the Agent shall immediately:

(i) pay to the Insurer all monies received and owing to the Insurer;

(ii) return (at the Agent's expense) all material supplied by the Insurer to the Agent.

15.6 As soon as practicable after the termination of this Agreement, an account for business outstanding as at the termination date shall be prepared, adjusted and settled by the parties."

12 In my reasons for declining to grant interim relief, I said:

"Clause 11.4 is highly relevant to the question of whether the contract is harsh or unfair. It is competent for an agent to transfer to another agent entitlement to payment for renewals. This entitlement will not survive termination of the contract unless there has been a transfer prior to that termination by the operation of cl 11.4. In an affidavit of 24 November 1998, Mr Harding says -

"...

3. The commission paid to me by Ansvar for the 12 month period from 1 July 1996 to 30 June 1997 was $2,224.81.

4. The commission paid to me by Ansvar for the 12 month period from 1 July 1997 to 30 June 1998 was $8,666.06, i e, a 290% increase on the previous year.

5. The commission paid to me by Ansvar for the 12 month period from 1 December 1997 to 30 November 1998 was $12,241.51.

6. For the period July to September 1998 inclusive the average monthly increase in commission from new business and endorsements, less cancellations, was $898.

7. The number of new Policies which I secured for the period January to October 1998 inclusive was 181. This compares with 96 new Policies secured during the same period in 1997 ie an 89% increase."

13 I have to say those figures seem inconsistent with the amounts contained in the report of Mr McNamara, which is directed to the quantification of Mr Harding's claim.

14 On the evidence before me, the value at which a portfolio may be transferred from one agent to another appears to be of the order of the current annual value of the commission being gained.

15 On 24 December, after my declining to grant interim relief, on the basis that damages would be an adequate remedy should the applicant succeed on the final hearing of his claim, an amended application was filed. That amended application sought that the agency agreement in question be varied by deleting cll 11.4 and 15 and replacing them with the following clauses:

"11.4 The Agent shall not be entitled to commission fees or other amounts on any renewal or extra premium if the insured writes to the Insurer directing that another intermediary is to act for the insured, or arising after the termination of this Agreement unless the termination is made pursuant to Clause 15.2(b), in which case commissions on renewals of policies are to be paid as if the Agreement had not been terminated.

15.1 The Agent can terminate this Agreement by giving thirty (30) days notice to the Insurer in writing of Agent's intention.

15.2 The Insurer can terminate this Agreement by giving thirty (30) days notice to the Agent in writing of its intention if:

(a) it is not economically viable for the Insurer to retain the Agency, or

(b) if the Insurer terminates all agency agreements.

15.3 This Agreement can be terminated upon a breach by the Agent of any of the terms of this Agreement provided that the Insurer gives the Agent written notice of its intention, but if the breach can be remedied, the Insurer must first notify the Agent in writing and give thirty (30) days notice for the breach to be remedied to the Insurer's satisfaction.

15.4 This Agreement can be terminated summarily by the Insurer giving written notice to the Agent on the grounds that:

(i) the Agent, or any of its officers or employees has committed serious malpractice or an act of serious misconduct.

(ii) The Agent has made a compromise arrangement with its creditors or has committed an act of bankruptcy.

provided that such notice may not be given unless and until the Insurer has given the Agent a proper opportunity to be heard in respect of the alleged basis for termination.

15.5 Upon termination of this Agreement the agency shall cease without prejudice to the rights of either in connection with anything which occurred between them prior to the termination.

15.5A As a result of the termination of the contract by notice taking effect on 4 December 1998, the Insurer pay to the Agent the sum of $350,000.00 being in full satisfaction of the agent's rights pursuant to Clause 11.4 of this agreement and in compensation to the agent for the breach on the part of the Insurer of Clauses 15.2, 15.3 and 15.4 of this agreement."

16 It is to be noted that the proposed variations to the contract make no provision for termination without cause on any notice at all. It seems to me plain that it should be competent for either party to terminate the agency agreement on reasonable notice, and the real question in this case is whether, in the particular circumstances of this contract at the time of its execution, the provision in cl 15.1 was harsh or unfair.

17 By the statement of claim filed on 24 December 1998, it was alleged that the agency agreement was unfair or harsh by reference to the following matters:

"6. The unfairness and harshness of the contract is constituted inter alia by the following matters;

(a) The contract allows for termination of an individual agency without cause on 30 days notice (cl 15.1);

(b) The contract allows for termination for breach by the agent without allowing the Agent the opportunity to remedy the breach (cl 15.2);

(c) The contract may be terminated for malpractice or misconduct in the insurer's opinion without the agent having a right to be heard and irrespective of the seriousness of the conduct (cl 15.3);

(d) The agent is not entitled to any commission for business introduced by him or her after termination of the contract (cl 11.4);

(e) The agency business contracted by an agent acquires a capital value, which upon termination of the agency agreement, is forfeited to the full and immediate advantage to the Respondent;

(f) The business generated by the Applicant is of high order and was growing rapidly and the contract makes no provision for compensation to the Applicant;

(g) The contract makes no provision for compensating the inevitable impact on the Applicant's professional reputation in the insurance industry and his future job prospects;

(h) The contract was negotiated in a situation of an inequality of bargaining power."

18 I had, in declining interim relief, said:

"I indicate briefly that in my opinion there is a serious question as to whether the contract between Mr Harding and Ansvar is unfair or harsh. In particular, it is arguable, and there is a serious question to be tried as to whether a period of 30 days' notice without cause is, in the circumstances of the insurance agency contract, unfair or harsh. That question seems to me to be plainly a serious question to be tried when one has particular regard to the circumstance that unless there is something in place in respect of entitlement to renewal premiums, on the termination of the contract the agent loses any such entitlement."

19 In the defence filed 22 January 1999, the conditions for the application of the relevant sections were admitted, in particular that the applicant is an independent contractor and the respondent is a constitutional corporation, in that it is a trading corporation formed within the limits of the Commonwealth, and was a party to the relevant agreement.

20 Ansvar's defence denied that the agency agreement was unfair or harsh. In particular, paragraph 3 of the defence pleaded that the respondent -

"... does not admit that the agency business obtained by the applicant pursuant to the agency agreement acquired a capital value, which upon termination of the agency agreement became forfeited to the full and immediate advantage of the respondent."

21 Paragraph 5 of the defence pleaded:

"Further or alternatively if the agency agreement is harsh or unfair, the respondent -

...

(b) says that all that would be required to place the agency agreement on such a footing would be to extend the duration of notice that must be given before the agency agreement may be terminated pursuant to clause 15.1 to three months."

22 The agency agreement initially was terminated as a result of a letter dated 19 October 1998 by Mr Seymour, the State Manager (Queensland) of Ansvar, to Mr Harding. That letter said:

"Dear Peter

Re: Ansvar Agency Agreement

For some time we have been having discussions in relation to your Agency with various letters from you being quite critical of Ansvar. During our discussions at this mornings (sic) meeting between yourself, Sean Tunny and myself it became clear that it would be in the best interests of all concerned if your Agency Agreement with Ansvar was terminated.

As discussed at our meeting we have been concerned for some time about your attitude to the company which is at odds with the Ansvar culture. You have been very forthright with your criticism of the company without trying to understand what Ansvar is setting out to achieve. Your marketing approach is in a different direction to where we wish to position Ansvar and this is demonstrated by your advertisement in the Christian Resources Trust.

In relation to your advertising we believe that you have contravened Section 10 (1) of the Insurance (Agents and Brokers) Act 1984 and in addition you are not complying with Section 3.1 of the General Insurance Code of Practice. We are not aware that you are a registered Insurance Broker or that you have any other Agencies with other Insurance Companies. If you have relationships with Brokers or with other Insurance Companies would you please advise them that you no longer hold an Agency with Ansvar Australia Insurance Ltd.

Would you please note that under clause 15.1 of the Agency Agreement between yourself and Ansvar Australia Insurance Ltd we provide you with 30 days notice of Termination of the Agreement from Tuesday 20 October 1998. On termination Mr Sean Tunny will visit you to pick up all documentation belonging to Ansvar."

23 Notwithstanding the complaints that are mentioned in the letter, it is plain that the respondent was relying on the provision in cl 15.1 of the agency agreement, and was not seeking to terminate the agency agreement on any other basis, in particular for misconduct. It is agreed between the parties that in fact the agency agreement came to an end pursuant to notice on 4 December 1998.

24 It is the unfortunate fact that the final hearing of this application was conducted by both sides as if the application was a claim for unfair dismissal. Much of the material canvassed in the course of the evidence on the final hearing was quite irrelevant to the question of whether the contractual arrangements were unfair or harsh, which are, after all, the only issues that fall to be determined on this application.

25 I ought to refer particularly to two matters. The first is the affidavit of Michael Francis McNamara, filed 24 December 1998. Mr McNamara is a registered tax agent and a practising accountant, and is the author of a report concerning the claimed economic loss suffered by Mr Harding as a result of his termination by Ansvar. In that report, Mr McNamara made the assumptions referred to there, namely, Peter Harding was employed by Australia Post on an annual salary of $45,000, and in July 1996, he accepted a voluntary redundancy, and it was his intention to attain the same level of income through alternative sources. It is said, under the heading "Facts", that Mr Harding secured an agency with Ansvar in July 1996. It is then said, under the heading "Level of income is as follows":

Year	Amount	Extrapolated
96/97	2,225 (7 months)	3,814
97/98	8,663	8,663
98/99	5,616 (5 months)	13,479

26 Mr McNamara's report states that in October 1998 Mr Harding had discussions with a Paul Chataway "...with a firm view of purchasing his register". The basis of the calculation by Mr McNamara was that Mr Harding was working 10 hours a week, extrapolated to gross $13,479 over a full year, and netting $9570 per annum, after allowing 29 per cent for overheads. Notwithstanding that extrapolation, there is a further extrapolation, based on extrapolating the figures for 10 hours per week to 50 hours per week.

27 On those two bases, Mr McNamara says:

"In (sic) would be expected that PH [Mr Harding] would reach practicable attainable capacity of 50 hours per week within the next 6 to 12 months. Thus (sic) being the case PH's [Mr Harding's] income would be $67,395 and net $47,850.

It is clearly evident that the same level of income would be achieved as in his previous employ (sic) at Australia Post and achieve his income goal as an agent for Ansvar.

The capital component of PH [Mr Harding's] register would have been $67,395 being one dollar of capital value for every revenue dollar.

In summary PH's [Mr Harding's] losses are as follows:

1. Income for 5 years $235,250.

2. Capital loss for register $67,395.

-------------

$306,645

=======

28 Reference is then made to Avis, Garry Leonard & Ors v Australian Mutual Provident Society [1996] NSWIRComm 166.

29 I make a number of observations in relation to Mr McNamara's report. I reject the basis of his extrapolations. They are wildly optimistic, and, in my opinion, would not have been achieved.

30 Secondly, on any view of the matter, I am concerned here with a situation utterly different from the case referred to by Mr McNamara. There, enormous capital sums had been loaned and were recalled at very short notice. The nature of the commitment that was involved in the life insurance agency that was involved in that case was not even in the same field of discourse as the matters that we are concerned with here. None of the significant incidents of that case have any bearing at all on the questions that the Court has to answer on this present application. The fact that the actual amounts earned were of the order of, at most, $13,000 a year, after what is, after all, two and a half years of development, puts paid to any suggestion that there would have been an annual income of $67,395. Moreover, there is absolutely no basis for expecting that the contract would have and must have remained on foot for five years.

31 In my opinion, there is nothing unfair or unjust in a provision in a general insurance agency contract for termination without cause on reasonable notice. The notice required has to be such as to permit an agent to realise the capital value of what has been termed "his register". The evidence, which I accept, indicates that the value of the register for transfer to another agent is $1 of capital value for every revenue dollar.

32 The second aspect of the case on behalf of Mr Harding I ought to mention as indicating a fundamental misconception of the nature of the powers of the Court on the present application is a further submission filed on behalf of the applicant under cover of a letter of 6 August 1999. This submission was forwarded after I had indicated that I would receive any further submissions that the parties wished to make in respect of legal matters which had not been sufficiently covered in the submissions made orally. However, this further submission does not come from the counsel for Mr Harding on the application, who had made extensive submissions, both orally and in writing and, indeed, had included further submissions after the oral hearing, but rather, by Mr Harding's solicitor, his brother.

33 The submission commences:

"Having proper regard to the content and tone of Exhibit "JDS 7" of Mr Seymour's affidavit of 30 November 1998, it is not reasonably possible to come to the conclusion that it was written by Mr Tunny as he clearly stated in his evidence at the hearing on 3 August 1999."

After a number of further references, the submission is made:

"It is respectfully submitted that consideration should be given to referring the transcript and exhibits to the relevant authorities with a view to the possibility of perjury charges being laid against Mr Tunny."

34 The basis for this submission seems to be the claim that when the contents of Mr Harding's letter and Mr Seymour's letter to Mr Harding of 15 September 1998 are carefully compared with the contents of the exhibit "JDS7":

"...the likelihood is that Mr Seymour did in fact refer Mr Harding's letter to Ansvar's headquarters in Melbourne, and that Exhibit "JDS 7" is actually the response sent to Mr Seymour by a senior officer in Melbourne in relation to both letters."

35 That "likelihood" is, in my opinion, not made out. The submission does indicate the closeness to the proceedings of the author of that submission, and how the nature of this application has assumed the focus of unlawful dismissal.

36 I approached the question of whether this contract is harsh or unfair by looking at the situation when the contract was made. In Finch v Herald & Weekly Times Limited (1996) 65 IR 239, North J had occasion to consider the legislative history of these sections and discussed, at some length and in a useful way, the criticisms that had been advanced in the question of whether the grounds were non-judicial in nature, the requirements of s 127A(5), and various other matters, on an application under those sections.

37 Section 88F(1) of the Industrial Arbitration Act 1940 (NSW), is in a relevantly different form to s.127A. I respectfully agree with North J that the observations of McHugh JA, as he then was, in Minister for Youth & Community Services v Health & Research Employees Association of Australia, NSW Branch (1987) 22 IR 59 do not apply to s 127A. Section 127A is concerned only with unfairness and harshness at the time the contract was made. Considerations of unfairness or harshness, or unconscionability, or against the public interest, do not at any time later than when the contract was made, apply in a consideration of an application under s 127A

38 It was submitted by counsel on Ansvar's behalf that the present agreement was in the form adopted by the Insurance Council of Australia, a body representative of government, controlling private and general insurance in Australia. The evidence of Mr Wegner and Mr Hansen, general insurance agents who gave evidence before me, suggests that the form of the agreement, and in particular the provision for 30 days' notice without cause to either party, is of universal application in the general insurance industry. I do not accept that the fact that this contract is in the form adopted by the Insurance Council of Australia determines the question of whether any of its provisions, in the circumstances of the parties at the time of its execution, were harsh or unfair.

39 It was submitted on Ansvar's behalf that the evidence of Mr Wegner and Mr Hansen suggests that had Mr Harding enquired, he would have learnt not only that it was a standard term in the industry that an insurer would be able to terminate an agreement on 30 days' notice, but that this regularly happened. Mr Hansen said in evidence:

"Every agent would know if they had any sense that a company can be sold or decide that they don't want you to be an agent."

40 It was submitted on Ansvar's behalf that when Mr Harding became an agent he did so after ample opportunity to examine the contract, he availed himself of that opportunity, and that he was aware that the contract provided for termination without cause on 30 days' notice.

41 I do not accept that there was a significant inequality of bargaining power or undue influence at the time of the execution of the contract in question at the present time. However, one has to have regard to the particular circumstances of Mr Harding and Ansvar at the time of signing of this contract, as against the contractual provisions, in determining whether any one of them is unfair or harsh.

42 The question of notice the subject of cl 15.1, is intimately bound up with what I regard as the other relevant complaints by Mr Harding, which are expressed in 6(d) and (e) of paragraph 6 of the statement of claim.

43 The failure of Mr Harding to sell his register during the period of notice which Ansvar gave him for the termination of his agency agreement, for the dollar equivalent of renewal premium income, or to attempt to become an agent for other insurers to which the policies might be switched at Mr Harding's urging, were said on behalf of Ansvar to be simply poor business decisions by Mr Harding, and did not make the 30 days notice provision unfair or unjust.

44 It was submitted that, in entering into this contract, Ansvar was entitled to assume that Mr Harding would behave rationally and take up agencies with other insurers. Had he done this, it was said, upon termination of the contract he would have been able to try to convert his clients to policies of other insurers with whom he had agencies, thereby retaining the commission. The evidence of Mr Wegner and Mr Hansen suggested, so it was said, that it was likely that he would have had a high degree of success had he attempted to do this.

45 In response to the submission that paragraph 6(d) in the statement of claim, which alleges that the contract's omission to provide that Mr Harding receive compensation in respect of commission on premiums paid to Ansvar on policies arranged by him which are received after the termination renders the contract unfair or harsh, and constitutes an arrogation by Ansvar to itself of the commission element of future premiums, Ansvar says that that was neither the purpose, nor need it have been the effect, of the clause in the agency agreement. Unfortunately for Ansvar, the clause says what it says.

46 While it is true that this contract was made at a time when agents commonly entered into agencies with a number of insurers, the fact was that, to the knowledge of Ansvar, Mr Harding acted solely for Ansvar. It was submitted by Ansvar that he had been encouraged to follow the course of adopting further agencies with other insurers and chose not to do so. I do not accept that this was so. The fact was that he was and had been solely an agent of Ansvar, and this Ansvar knew was likely to be the situation for the currency of the contract which is the subject of the present application.

47 In my opinion, the failure by Mr Harding to enter into agency agreements with other insurers during the currency of the agreement with Ansvar does not convert contractual provisions, if unfair in the context of a sole agency, into contractual provisions that are fair.

48 I accept that the announced increase in premiums and the changes to the discounts given for policies where higher excesses were taken, which were the subject of the February 1998 agreement, were of grave concern to Mr Harding, and although contrary to his protestations, I think price was a highly significant factor in the sales pitch which he adopted in the sale of Ansvar policies.

49 I accept that the changes were of such concern to Mr Harding that on two occasions he made threats to leave Ansvar, and that shortly prior to the meeting on 19 October 1998, Mr Harding told Mr Tunny that if the changes proposed by Ansvar were implemented he would lose a lot of his clients.

50 It was submitted on Ansvar's behalf that not only was there the possibility of Mr Harding terminating the agency agreement, but also his unacceptably high claims to loss ratio raised the prospect that his rate of commission in the future would be reduced, and it was therefore submitted that, in the circumstances, the stream of commission from existing policies was tenuous.

51 However, the fact that there were factors in the course of the contract which might bring the quantum of the commission element of future premiums into some doubt is not relevant to the central question, namely, whether the contractual provisions were harsh or unfair at the time the contract was entered into. That argument cannot assist Ansvar on the question of whether the contract's omission to provide compensation for lost commission renders the contract unfair or harsh.

52 In response to the claim that the termination had the effect of depriving Mr Harding of the asset, being what is described as his "agency business" whilst simultaneously acquiring the benefit of this for Ansvar, it was submitted that that was neither the purpose of cl 15.1, nor need it have been the effect of the termination. It was submitted that had Mr Harding put in place agencies with other insurers, he would have been able to try to convert his customers to other policies, thereby retaining the real asset, namely, his relationship with the clients. Further, another alternative open to him was to sell his portfolio of clients to another Ansvar agent. The evidence indicated that this was frequently done, and that by this method Mr Harding might recoup the real worth of his asset as determined by the market for it.

53 It was submitted:

"It may also be thought that the period of notice was too short to permit the orderly marketing of Mr Harding's portfolio of clients."

It was suggested, from the evidence from Mr Seymour, that there was no obstacle to that list being sold even now. However, it is a little bit unreal to put too much weight on that circumstance, given the chronology of the litigation and what, in fact, Mr Harding did. It is necessary to refer to a letter which Mr Harding sent to all of his approximately 300 clients, and which is Exhibit 7 before me.

54 I think the view to be derived from Mr Harding's evidence is that he had not attempted to sell his portfolio of clients because he believed that he had nothing to sell. The letter which he forwarded to his clients is in the following terms:

"It is with the greatest regret that I need to inform you that my Agency with Ansvar Insurance came to an end last Friday (December 4).

On October 20 the Queensland State Manager of Ansvar advised me that my Agency was being terminated with 30 days notice. To try and preserve my position and reputation, I have been forced to take the matter to the Federal Court. The Interim Order of the Court preventing the termination of my Agency expired last Friday. Although the Judge found there was a serious question to be tried in relation to my termination, he was not prepared to extend the Order until the final hearing of the matter which is likely to take place in February 1999.

What this means Bob is that the Ansvar State Office (Ph: 1800 654 592) will now be providing you with all administrative support and assistance. Your Ansvar Policy or Policies remain fully operative.

When your Ansvar Policy or Policies come up for renewal, you may care to check with an insurance broker that the premiums remain competitive. I can recommend Reasure Pty Ltd - Licensed Insurance Brokers because I have found that they provide an excellent service. Their phone number is 07 3371 9788.

It has been a pleasure being your Ansvar Agent, and your support has been truly appreciated."

55 The penultimate paragraph of that letter seems to indicate that there was a view by Mr Harding that he had nothing of value in his relationship with his clients. He indicated that he recommended Reasure Proprietary Limited as an insurance broker with whom his clients might deal when the Ansvar policies come up for renewal. My view, which seems to be consistent with the evidence of the other general insurance agents who gave evidence in these proceedings, is that this letter was singularly inept to protect the interests of Mr Harding in his "client register".

56 Notwithstanding my view that Mr Harding was remiss in looking after his own interests, I think it fair to conclude first that, in the case of this agent, whose sole insurer was Ansvar, the 30 days' notice was unfairly short and required a premature disposal in a very short timeframe of the asset value in the clients register by a person who was not experienced in the ways of conducting a general insurance agency.

57 Notwithstanding that the evidence does not establish what in fact his premium income was for the year prior to the termination of his policy, I think on the evidence that a fair estimate is in the order of $10,000 to $12,000. There is very little evidence as to what damage in fact has been suffered by Mr Harding as a result of what I hold to be the unfairly short period of notice of termination of the agency agreement without cause. Much of that difficulty of course is from the conduct of Mr Harding, and the impressions and views that he entertained.

58 Notwithstanding my acceptance of the criticisms of his conduct, I do think it right to order the payment of a sum, which I assess only in a broad-brush way, as being the loss caused by the unfairly short notice period in the agency agreement. I acknowledge that the figure of $5000 which I assess is somewhat arbitrary, being about half or perhaps a bit less than half, of the premium income in the year prior to the termination of the agency agreement.

59 When regard is had to the fact that Ansvar did forward to Mr Harding some amounts in respect of premium renewals after termination of the agency, I think there is a recognition that Mr Harding is entitled to something in respect of those matters, and notwithstanding there has been no real attempt to sell his register to another Ansvar agent, nor any attempt to secure the switching of his client's business from Ansvar to another insurance agency, I ought to order that, by way of compensation for the unfair term of notice in the contract, Ansvar pay to the applicant $5000.

60 I therefore order that Clause 15 of the contract for services, made between the applicant and respondent on 26 October ´1998, be varied so that, upon termination of the contract, the insurer pay to the agent the sum of $5,000.

61 I make no order as to costs.

I certify that the preceding sixty-one (61) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Spender.

Associate:

Dated: 20 January 2000

Counsel for the Applicant:	J A Logan
Solicitor for the Applicant:	Harding Lawyers
Counsel for the Respondent:	M McP Stewart
Solicitor for the Respondent:	Quinlan Miller & Treston
Date of Hearing:	3 August 1999
Date of Judgment:	20 January 2000