AIA Australia Ltd v Richards (No 3)

Link copied
Case Copied 38 min read

FEDERAL COURT OF AUSTRALIA

AIA Australia Ltd v Richards (No 3) [2017] FCA 1069

File number: NSD 1853 of 2016
Judge: ALLSOP CJ
Date of judgment: 11 September 2017
Catchwords: INSURANCE – insurance contract providing for total disablement benefits – allegations of fraudulent claims made by respondent under contract – right to prospectively cancel insurance contract for sufficiently serious breach of contract – recoverability of investigation costs – summary judgment entered in favour of applicant
Legislation:

Evidence Act 1995 (Cth), s 69

Federal Court of Australia Act 1976 (Cth), s 31A

Insurance Contracts Act 1984 (Cth), ss 11, 13, 56, 59A

Federal Court Rules 2011 (Cth), rr 10.49, 39.05

Explanatory Memorandum, Insurance Contracts Amendment Bill 2013 (Cth)

Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters. Opened for signature 15 November 1965. 658 UNTS 163 (entered into force 1 November 2010)

Cases cited:

AIA Australia Ltd v Richards [2017] FCA 84

AIA Australia Ltd v Richards (No 2) [2017] FCA 539

Alexander Raymond Walton v The Colonial Mutual Life Assurance Society Ltd [2004] NSWSC 616

AMP Financial Planning Pty Ltd v CGU Insurance Ltd [2004] FCA 1330; 139 FCR 223

AXA General Insurance Ltd v Gottlieb [2005] EWCA Civ 112; Lloyd’s Rep IR 369

Britton v Royal Insurance Co (1866) 4 F&F 905; 176 ER 843

European Bank Ltd v Evans [2010] HCA 6; 240 CLR 432

Hadley v Baxendale (1854) 9 Ex 341; 156 ER 145

Manifest Shipping Co Ltd v Uni-Polaris Shipping Co Ltd [2001] UKHL 1; [2003] 1 AC 469

Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8; 236 CLR 272

Versloot Dredging BV v HDI Gerling Industrie  Versicherung AG [2016] UKSC 45; [2017] AC 1

Enright I & Merkin R, Sutton on Insurance Law (4th ed, Thomson Reuters, 2015)

Date of hearing: 3 August 2017
Date of last submissions: 8 August 2017
Registry: New South Wales
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: Commercial Contracts, Banking, Finance and Insurance
Insurance List
Category: Catchwords
Number of paragraphs: 74
Counsel for the Applicant: Ms R Francois
Solicitor for the Applicant: William Roberts Lawyers
Counsel for the Respondent: The Respondent did not appear

ORDERS

NSD 1853 of 2016
BETWEEN:

AIA AUSTRALIA LTD (ABN 79 004 837 861)

Applicant
AND:

VINCENT BRIAN RICHARDS

Respondent

JUDGE:

ALLSOP CJ

DATE OF ORDER:

11 SEPTEMBER 2017

THE COURT ORDERS THAT:

1.The applicant file a schedule of claimed payments and investigation expenses incurred after February 2016 totalled to a judgment sum calculating any pre-judgment interest payable up to a date 7 days after filing in order for judgment to be ordered as of that date.

2.The respondent pay the costs of the applicant on an indemnity basis, payable on a lump sum basis of $110,000.

3.The applicant serve a copy of these reasons and the orders made on the respondent by email to his last known email address, pointing out the existence of r 39.05(a) of the

CaseChat AU logo

Keep reading for free

Create a free CaseChat account to read AIA Australia Ltd v Richards (No 3) and more:

  • Read every judgment in full
  • Ask AI and get answers linked to paragraphs
  • See how each paragraph was cited in later cases
  • Download judgments as PDF or Word
Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details
Case
[2017] FCA 1069
Decision Date

CaseChat Overview and Summary

In the case of AIA Australia Ltd v Richards (No 3), the applicant, AIA Australia Ltd, sought summary judgment against the respondent, Mr. Richards, regarding his claims under a total disablement insurance policy. The dispute centred on whether Mr. Richards had fraudulently claimed benefits under the policy by falsely stating that he was totally disabled and unable to work due to his injuries. AIA Australia Ltd argued that Mr. Richards had been performing other occupations and was capable of performing his usual occupation, and thus his claims were fraudulent. The case was heard in the Federal Circuit Court of Australia.

The primary legal issues that the court needed to address were whether Mr. Richards had breached the insurance contract by making fraudulent claims and if AIA Australia Ltd had the right to prospectively cancel the insurance contract for such a breach. Additionally, the court needed to determine if AIA Australia Ltd could recover the investigation costs incurred during the investigation of Mr. Richards’ claims. The court also had to consider whether the applicant was entitled to summary judgment based on the evidence presented.

The court found that the evidence provided by AIA Australia Ltd established that Mr. Richards had indeed made fraudulent claims under the policy. The court accepted that the evidence, including the claim forms, investigation reports, and correspondence between the parties, was admissible and sufficient to support the applicant’s claims. The court concluded that Mr. Richards had breached the insurance contract by making false representations regarding his total disablement and inability to work. Furthermore, the court found that AIA Australia Ltd had the right to prospectively cancel the insurance contract due to the sufficiently serious breach by Mr. Richards. Lastly, the court held that AIA Australia Ltd was entitled to recover the investigation costs as they were necessary expenses incurred in the course of investigating the fraudulent claims.

In light of these findings, the court granted summary judgment in favour of AIA Australia Ltd. The court ordered that AIA Australia Ltd file a schedule of claimed payments and investigation expenses incurred after February 2016, along with any pre-judgment interest, to facilitate the calculation of the judgment sum. The court also ordered Mr. Richards to pay the costs of AIA Australia Ltd on an indemnity basis, payable in a lump sum of $110,000. Finally, the court directed AIA Australia Ltd to serve a copy of the reasons and the orders made on Mr. Richards, drawing his attention to the relevant rule in the Federal Court Rules 2011 (Cth).

Orders

Orders of the court

1. The applicant file a schedule of claimed payments and investigation expenses incurred after February 2016 totalled to a judgment sum calculating any pre-judgment interest payable up to a date 7 days after filing in order for judgment to be ordered as of that date.

2. The respondent pay the costs of the applicant on an indemnity basis, payable on a lump sum basis of $110,000.

3. The applicant serve a copy of these reasons and the orders made on the respondent by email to his last known email address, pointing out the existence of r 39.05(a) of the Federal Court Rules 2011 (Cth).

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

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

In the alternative to these claims under the contract, the applicant pleaded that it is entitled to recovery of the payments made on the basis that they are moneys had and received paid under a mistake of fact. Evidence The evidence filed by the applicant in support of its application for summary judgment was primarily contained in Exhibit LW-01 to the affidavit of Lloyd Williams, affirmed 21 July 2017. It consisted primarily of copies of claim forms submitted by the respondent, the results of investigations undertaken on the applicant’s behalf and correspondence between the applicant and the respondent following the conclusion of those investigations. I accept that the representations in the documentation of the investigations undertaken are admissible on the basis that they are contained in business records of the applicant insurer within the meaning of s 69 of the Evidence Act 1995 (Cth). The applicant sought to establish a number of things from the evidence, so as to justify the grant of its application for summary judgment. First, it sought to establish the claims made by the respondent, and the representations made. It then sought to establish that a person it identified through its investigations as providing acupuncture and other alternative health services overseas was the respondent. It then sought to use the evidence to show that this person was, from at least January 2016 intending to perform another occupation and capable of performing his usual occupation and that from at least August 2016 he was actually performing another occupation and capable of performing his usual occupation. The applicant drew upon certain alleged admissions made to it by the respondent in aid of establishing these matters. It was submitted by the applicant that the admissions linked the evidence together to prove that the respondent’s “Second Stage Claims” under the policy were fraudulent, with the result that the applicant was entitled to the relief that it sought. Within that framework, I now turn to examine the evidence that was placed before me.Claims under the policy As noted above, the evidence before me was that the respondent lodged claims for benefits under the policy from 28 March 2003 through to 10 October 2016. The allegations against Mr Richards in this proceeding concern the “Second Stage Claims” made over the period from 5 February 2016 to 10 October 2016. The claim forms for the entirety of both periods were before me in evidence on this application. In the final claim lodged for this period, for the period 18 September 2016 to 17 October 2016, the respondent recorded his residential address in Riga, Latvia. (It should be noted that on several of the other forms for the “Second Stage Claims” he recorded addresses in Wolverhampton, United Kingdom and in Sweden.) It was stated in the form dated 10 October 2016, when asked if the respondent had a “Return To Work Plan”, “I will not return”. The answer “No” was ticked in response to the question, “Did you perform, either paid or unpaid, any of the duties of your usual (or any other) occupation during this claim period?”. The response to a request to “…list all the duties of your usual occupation you were unable to perform in this claim period …” was provided as “all” and the reason for being unable to perform all duties was recorded as “pain, stiffness, depression”. It was stated that daily activities over the period were limited to studying languages, “light exercise (stretching)” and “TV” and “reading”. His daily restrictions that prevented him from working were again listed as “pain, stiffness, depression”. He answered “Yes” to the question “Do you confirm that your continued Total Disablement, either paid or unpaid, is due solely and directly to your injury/sickness?” and stated the period of Total Disablement as being from 2002 to “present”. He also stated that he “Never!” expected to resume his usual duties.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.