Andrew McCabe as Executor of the Estate of Luh Puri McCabe v Royal and Sun Alliance Life Assurance Australia Ltd - [2002] WADC 19

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: ANDREW McCABE as Executor of the Estate of LUH PURI McCABE -v- ROYAL & SUN ALLIANCE LIFE ASSURANCE AUSTRALIA LTD [2002] WADC 19

CORAM: NISBET DCJ

HEARD: 26-28 NOVEMBER 2001

DELIVERED : 7 FEBRUARY 2002

FILE NO/S: CIV 1398 of 1999

BETWEEN: ANDREW McCABE as Executor of the Estate of LUH PURI McCABE
Plaintiff
AND
ROYAL & SUN ALLIANCE LIFE ASSURANCE AUSTRALIA LTD
Defendant

Catchwords:

Insurance - Life insurance - Duty of disclosure - Whether deceased made adequate disclosure - Avoidance of policy

Legislation:

Insurance Contracts Act 1984 (Cth)

Result:

Action dismissed

Representation:

Counsel:

Plaintiff: Mr M S Macdonald
Defendant: Mr M H Zilko SC

Solicitors:

Plaintiff: Macdonald Rudder
Defendant: Jackson McDonald

Case(s) referred to in judgment(s):

Summerton v SGIC Life Limited (1999) 10 ANZ Insurance Cases 90-102

Case(s) also cited:

Academy of Health & Fitness Pty Ltd v Power [1973] VR 254
Advance (NSW) Insurance Agencies Pty Ltd v Matthews (1987) 4 ANZ Ins Cas 60-813
Ayoub v Lombard Insurance Co (Aust) Pty Ltd (1989) 5 ANZ Ins Cas 60-933
Burns v MMI-CMI Insurance Ltd (formerly known as Chamber of Manufacturers Ltd) (1994) 8 ANZ Ins Cas 61-287
Canning v Farquhar (1886) 16 QBD 727
Chapman v Greater Midwest Insurance Pty Ltd [1981] 1 NSWLR 479
Commercial Union Assurance Co of Australia Ltd v Beard (2000) 11 ANZ Ins Cas 61-458
Delphin v Lumley General Insurance Ltd (1989) 6 (SR) (WA) 161
Evans v Sirius Insurance Co Ltd (1986) 4 ANZ Ins Cas 60-755
GIO General Limited v Wallace [2001] NSWCA 299
Herbohn v NZI Life Ltd (1998) 10 ANZ Ins Cas 61-410
Locker & Woolf Ltd v Western Australia Insurance Company Ltd [1936] 1 KB 408
Looker v Law Union & Rock Insurance Company Ltd [1928] 1 KB 554
Lumley General Insurance Ltd v Delphin (1990) 6 ANZ Ins Cas 60-986
Mooney v Williams (1905) 3 CLR 1
Permanent Trustee Australia Ltd & Anor v FAI General Insurance Co Ltd (1998) 153 ALR 529
Permanent Trustee Australia Co Ltd v FAI General Insurance Co Ltd (2001) 11 ANZ Ins Cas 61-491
Prime Forme Cutting Pty Ltd v Baltica General Insurance Co Ltd (1990) 6 ANZ Case 61-028
Shepherd v National Mutual Life Association of Australasia Ltd & Bob Broadley Pty Ltd (1995) 8 ANZ Ins Cas 61-233
Simon Haynes Barlas & Ireland v Beer (1945) 78 L1 L Rep 337
Summerton v SGIC Life Limited (1999) 10 ANZ Ins Cas 90-102
Suncorp General Insurance v Cheihk (1999) 10 ANZ Ins Cas 61-442
Thompson v Government Insurance Office of New South Wales, unreported; SCt of NSW; 15 June 1994
Twenty-first Maylux Pty Ltd v Mercantile Mutual Insurance (Aust) Ltd (1990) VR 919
Twenty-first Maylux Pty Ltd v Mercantile Mutual Insurance (Aust) Ltd (1989) 6 ANZ Ins Cas 60-954
United Shoe Machinery Company of Canada v Brunet [1909] AC 330

NISBET DCJ: Systemic lupus erythematosis (SLE) is,
"… a chronic, remitting, relapsing, inflammatory, and often febrile multisystemic disorder of connective tissue, acute or insidious in onset, characterised principally by involvement of the skin (see cutaneous lupus erythematosis), joints, kidneys, and serosal membranes. It is of unknown etiology, but it is thought to represent a failure of the regulatory mechanisms of the autoimmune system that sustain self‑tolerance and prevent the body from attacking its own cells, cell constituents, and proteins, suggested by the high level of a wide variety of autoantibodies against nuclear and cytoplasmic cellular components seen in affected individuals. The disorder is marked by a wide variety of abnormalities, including arthritis and arthralgias, nephritis, central nervous system manifestations, pleurisy, pericarditis, leukopenia or thrombocytopenia, hemolytic anemia, elevated erythrocyte sedimentation rate, and positive LE‑cell preparations."
(Dorland's Medical Dictionary 27th ed). The disorder is variously known as "lupus" or "SLE" and is part of a genus of like ailments commonly called "connective tissue disorders".
SLE may be a life threatening disease. There is a significant mortality associated with this disease: in the early stages the cause of death is usually the disease itself or an infective complication of its treatment. More recently, long term morbidity and mortality associated with premature vascular disease has been recognised." (Per Dr Duncan James Williamson, an expert in connective tissue disorders in the Department of General Medicine at Sir Charles Gairdner Hospital – Report to plaintiff's solicitors of 31 March 1999 – Exhibit P6.)
On 5 June 1998 the late Luh Puri McCabe died and a copy of her death certificate which came into evidence as Exhibit D4 records the cause of her death as being "Brain stem cerebrovascular accident (one week), Encephalitis, (Contributory Cause) Systemic Lupus erythematosis". Dr Williamson had been consulted in respect of the attribution of cause to the late Mrs McCabe's death.

The Insurance Contracts Act 1984 (Cth)

Section 21 of the Insurance Contracts Act 1984 (Cth) provides:
"(1) The insured has a duty to disclose to the insurer, before the relevant contract of insurance is entered into, every matter that is known to the insured, being a matter that —
(a)the insured knows to be a matter relevant to the decision of the insurer whether to accept the risk and, if so, on what terms; or
(b)a reasonable person in the circumstances could be expected to know to be a matter so relevant.
(2)The duty of disclosure does not require the disclosure of a matter:
(a)that diminishes the risk;
(b)that is of common knowledge;
(c)that the insurer knows or in the ordinary course of the insurer's business as an insurer ought to know; or
(d)as to which compliance with the duty of disclosure is waived by the insurer."

A brief history of the deceased and the formation of the policy

The deceased was born in Bali on 2 August 1958. The plaintiff was divorced from his first wife in 1982 and in 1984 went to Bali in the course of his employment and during that time used to frequent a restaurant and small hotel owned by the deceased's family where he met and later married the deceased in December 1984. At this stage she was about 26 years old. The plaintiff and the deceased had one child of their marriage, a son. The deceased had a daughter who became the plaintiff's stepdaughter. Following their marriage the plaintiff and the deceased came to Australia where the plaintiff obtained a job selling motor cars. The deceased did not enjoy good health and was diagnosed with polyarthritis in 1993 which eventually caused her to be referred to a rheumatologist, Dr Patrick Cheah, in 1995, following which she was prescribed the drug Plaquenil. She had subsequent problems in January 1997 and March 1997 and was subject to many tests and investigations. In June of 1997 Dr Cheah injected the deceased with steroids (large doses of which are a common form of treatment of SLE as Dr Williamson later testified).
Sometime in the first half of October of 1997 the defendant embarked upon a telemarketing campaign which, whilst the evidence about it was minimal, suggested to me that agents of the defendant cold‑canvassed prospective customers over the telephone inviting them to apply for life assurance cover. The deceased expressed interest and she was sent a form of application which she completed, signed and dated on 18 October 1997. A copy of this document came into evidence as Exhibit D1. It is entitled "Term Life Protection Plan application form". The original was not available, apparently destroyed after being copied to microfiche. The document, of course, speaks for itself however it is as well to record here the headings on the form, omitting details not relevant for the purposes of this judgment. The headings are: "Your details", "Your partner's details (if cover required)", "Your personal statements", "Duty of disclosure (please read carefully)", "Special request for full aids cover", "Declaration (please read and sign below)" and "Send no money – the easy way to pay your premiums (please read and sign below)".
Relevantly, the deceased disclosed her full name, address, contact telephone numbers, date of birth, place of birth, her weight, height and occupation. Under the heading "Your personal statements" there are boxes for ticking "yes" or "no" and the form leaves it unclear as to whether the deceased answered "yes" or "no" to important questions about her health. There was a small controversy during the course of the trial as to the proper interpretation of the ticked boxes, however, following the boxes there appears the statement "If you answered 'yes' to any health questions above, please give details below". There then follows a statement made by the deceased in respect of herself that she had polyarthritis which started in 1996 for which Dr Tadros was giving her medication. She then provided the full name and address of her doctor, the date of her then last consultation (16 October 1997) and under the heading "Reasons for and results of consultation" she had written "Check-up/all clear".
Under the heading "Duty of disclosure (please read carefully)" there is a statement which, whilst not word for word is, in my opinion, an entirely compliant replication of the form of statement set out in Part 2 of the schedule to the Insurance Contracts Regulations 1985. As to the heading "Declaration (please read and sign below)" the deceased evidently did not sign this part of the document when returning it to the defendant. No doubt this was because she had completed the direct debit option form of payment which comes below that in the form and which she had signed indicating that she had calculated her own premiums as a non‑smoking female of 39 years of age at $13.20 per month. The defendant received the deceased's application and noting that the declaration had not been signed returned it to her for signature and on 15 November 1997 the deceased signed the form of declaration appearing in the application. The wording of the declaration too was a subject of some controversy during the course of the trial. The opening words are as follows:
"I have read the enclosed brochure, especially the Key Features Section and my Duty of Disclosure and declare that the answers to the questions are true and that I have not withheld any information material to the insurance. …"
There thereafter followed a form of authorisation to the insurer to obtain information from "… any doctor, hospital, clinic or medical‑related facility to provide (the defendant) with information regarding my health". Thereafter, on 21 November 1997 the defendant advised the deceased that it intended to obtain a report from Dr Tadros.
On 9 December 1997 the deceased consulted Dr Kevin Dallimore, a dermatologist, to whom she had been referred by Dr Tadros her general practitioner, and Dr Dallimore on the same day reported back to Dr Tadros. This report came into evidence as Exhibit P5. Dr Dallimore gave evidence and said on a number of occasions that he was very concerned about the deceased during the course of this consultation. Dr Dallimore said that the deceased came to him basically with two complaints, one was a very itchy skin which he told her was a complaint called dermographism and then he said (TS 228):
"After completing that she had a very florid eruption on her face and ears which struck me as being completely diagnostic of lupus erythematosis and so I delved into that. I think that's why her GP sent her but that wasn't her first initial complaint and I talked to her about that and I said, 'It looks to me like you have a rash called lupus. There can be two types, one of which is just confined to the skin and one which also can affect the body.' I was concerned about her because she told me through the consultation that she was feeling unwell and had had a fever ‑ ‑ ‑
Did she say how long she'd had that fever for?---Just recent. Just recent. In the context of feeling unwell and having a fever and acute onset of a rash and I had – she had the background of having polyarthritis which she told me about and also her GP told me that she had seen a rheumatologist about it seemed to me that she had a very likely – high chance of having systemic lupus erythematosus, in other words ‑ ‑ ‑
SLE?---SLE, yes. So it wasn't just confined to the skin but also a systemic – a serious illness
Did you tell her that?---I can't recall that I actually told her that as such. I told her that I was very concerned about her, in fact, I was so concerned that I arranged some blood tests on the day to clarify the matter because sometimes you can have a combination of appearances and symptoms but it still doesn't diagnose it. You do have to do some blood tests usually to diagnose it so I arranged the relevant blood tests on the day because I was very concerned about her well‑being and I asked her to see a general practitioner in the next few days because I was very, very concerned about her because if you do have systemic lupus erythematosis, like I was concerned that she may have had, it can be very, very serious when it's an unstable condition. As to whether I actually said she actually had it, I can't recall."
Later I asked Dr Dallimore some questions about the stage at which a formal diagnosis of systemic lupus erythematosis could be made and he said (TS 230):
"I had a very high suspicion she had lupus. The rash was very distinctive and if she was unwell in that context you have to think of systemic lupus. I was very concerned about this lady. I actually – I remember very forcefully saying that she had to see a doctor in the next few days to follow up on the tests I'd done because I was concerned if they were positive, which they were, that she needed some fairly immediate treatment because if you've got lupus, systemic lupus and it's active or unstable it can be very, very threatening and she was planning to go on holiday to Bali very shortly afterwards and I was very concerned that she was going to go away to Bali in situation with her – she obviously had a high chance of having systemic lupus and that's just not the right place to be, so I actually forced upon her the impression that she did need to see her doctor before she went away so he could review the results because I had a very high suspicion that she, indeed, had systemic lupus."
Whilst it is a little unclear from the written record, Dr Tadros explained when he gave evidence that he did see the deceased after 9 December 1997 when she consulted him on 12 December when she complained of having a sore throat for two days with a "few days of increased temperature".
Notwithstanding Dr Dallimore's concerns the deceased went to Bali on 16 December 1997 and did not return until 13 January 1998. Upon her return there was no doubt but that the deceased continued to be unwell because, looking for alternative remedies she attended upon a general practitioner who was prepared to try alternative remedies for his patients, namely Dr Robert Simons, whom she consulted on 15 January 1998. Dr Simons required new patients to fill out a medical questionnaire and a copy of that completed by the deceased and dated 15 January 1998 came into evidence as Exhibit D2. On this the deceased described her chief complaint as "Skin alargee (sic) or rash/lupus?" Describing her symptoms she wrote:
"Rashes on nose and other parts body 3 month. Before treated with Plaqinal (sic) for lupus symptoms. Stopped using because no results. Caught virus (?) with high temp and vomiting lost weight after one months rest in Bali regained weight.
Now skin is itchy and rashes. No swelling of joints." (sic)
During his consultation with the deceased Dr Simons thought that the diagnosis of lupus was unclear. He said of the deceased and the plaintiff: "They thought that lupus had been diagnosed but as indicated by this question mark [on Exhibit D2] it wasn't clear to them. I think they had a positive skin biopsy done but no‑one had, as far as I know at that point, clarified the diagnosis for them or they weren't clear about it."
Dr Simons arranged for some further tests the results of which he said indicated to him that the deceased had SLE and asked whether he conveyed that to the deceased he testified: "I would imagine I did because the issue on the first occasion was the confusion around the diagnosis."
Dr Simons said that he continued to see the deceased periodically over the following month and spoke with her on 20 February 1998. The information that he had about the deceased's temperature and other information relayed to him during the course of that telephone consultation appears to have led to the deceased being taken to the Joondalup Health Campus ("JHC") where she was admitted to hospital. Dr Simons arranged for a letter of referral of the deceased to Dr Williamson to be faxed to the plaintiff. The deceased's condition was obviously bad and required immediate hospitalisation. Dr Simons' opening sentence in the letter of referral is: "Thank you for taking over Luh Puri McCabe's management in this acute situation." (My emphasis.) (Exhibit D 10.)
Before proceeding to further describe the deceased's admission to hospital I should observe that in between the deceased's first attendance upon Dr Simons and her admission to hospital, Dr Tadros supplied a medical report to the defendant of 6 February 1998. That report raises a considerable controversy in these proceedings and I shall return to it later. Suffice it to say at present that nowhere in his report does Dr Tadros describe a diagnosis of the plaintiff of lupus or SLE but it was strongly urged on me by the plaintiff that any doctor reading his report would have to make a provisional diagnosis of lupus or SLE.
Dr Williamson treated the deceased as a private patient at the JHC. He is an undoubted expert in connective tissue disorders. He said that the deceased presented with fever and joint aches and pains and a skin rash and he had a discussion with the deceased as to whether or not this was an exacerbation of her lupus and he said that she seemed familiar with the term lupus. It was not a new term to her. Dr Williamson's initial concern was that the deceased had another form of infection either complicating her lupus or quite independent of it and he needed obviously to grow some cultures before he could finally diagnose the cause of her symptoms. This he did within about 48 hours of her admission when he decided that there was no "foreign" infection (if I can use that term) and that the plaintiff's condition was an exacerbation of her lupus in consequence of which he was able to continue his treatment of her on that basis. This involved administration of high doses of steroids to which SLE is apparently reasonably amenable if administered timeously. The deceased remained in hospital for seven days. When asked why she remained that long Dr Williamson said:
"Well, first of all she was quite ill. She was extremely unwell when she came in and it took maybe 48 hours, maybe even a little bit longer, to get back the tests which excluded alternative diagnoses. She was commenced on high dose steroids which in themselves have risks, not least of which in susceptible individuals they can cause a sort of psychotic response, so it's sensible to keep people in hospital for a few days to ensure that doesn't happen." (TS 118)
The day before she was discharged from hospital the defendant wrote to the deceased advising her that her application had been accepted but at non‑standard rates. She was asked to confirm her acceptance by signing and returning a form enclosed with the letter. The next day, 27 February 1998, the deceased was discharged from JHC. The next matter of note was that on 17 March 1998 the deceased made application for life insurance to AMP Life Limited. In that form of application she gave the name of her doctor as Dr Cheah (but in the application form she described him as Dr Chia). She said that she had been a patient of Dr Cheah's for three years and had last seen him on 16 March 1998 (ie, the day before) for a check-up. She ticked yes to the questions that asked if she had had anaemia, leukaemia, haemophilia or any other blood disorder, that she had had arthritis and that in the previous five years she had "consulted, been examined or treated by, or received advice from any doctor, psychologist, chiropractor, physiotherapist, or been in a hospital or been advised to have an operation or had any tests, (blood tests), electrocardiagram, x‑rays, mammogram, pap smear, etc)". Additionally she advised that she had taken drugs and asked for further details of her answers "yes" to the questions identified above said that she had had anaemia and arthritis, been prescribed a steroid and Plaquenil and had blood tests.

Coincidentally, on the same day as the deceased made application for life assurance to AMP Life Limited, namely 17 March 1998, Dr Cheah reported to Dr Tadros that she had SLE. AMP sought a report from Dr Cheah who reported to it on 9 April 1998 that the deceased had SLE and on 22 April 1998 AMP refused the deceased's application to it for life assurance.
On 28 April 1998, her application for insurance made to AMP having been rejected, the deceased signed the form enclosed with the defendant's letter to her of 26 February 1998 and returned it to the defendant which received it on 5 May 1998. The relevant parts of that form read:
"I hereby request that the following shall be read and construed as part of and/or amending my application for insurance with Royal & Sun Alliance Life Assurance Australia Limited dated 22 October 1997.
…
I hereby declare that the above information is true and correct and that since the date of the application there has not been any material alteration in circumstance, including health, occupation, or hazardous pursuit which could affect final acceptance of the risk."
A copy of this document came into evidence as Exhibit D6.
On 11 May 1998 the defendant issued a policy of insurance to the deceased. The deceased died less than a month later, on 5 June 1998. The plaintiff made a claim on the policy on behalf of the deceased's estate which was refused by the defendant who avoided the policy on the grounds of material non‑disclosure being a failure by the deceased to advise the defendant that she had lupus or SLE, her failure to advise of her period of hospitalisation at Joondalup Health Campus and her failure to advise that she had been refused insurance by AMP Life Limited.

Pleadings and issues

In its defence to the plaintiff's claim the defendant pleads nine separate instances of the deceased's failure to disclose relevant information to it pursuant to her obligations under s 21(1) of the Act namely:
"(i)she had been suffering from the disease of systemic lupus erythematosis ('the disease') for three to four years;
(ii)she was and had for some time been receiving treatment and medication in respect of the disease;
(iii)she had consulted Dr R Agnello and Dr R Simons in respect of the disease;
(iv)she had lost a great deal of weight towards the end of 1997 and thought she might die;
(v)in the period from approximately 6 February to 20 February 1998 she had suffered fever, loss of appetite, loss of weight, nausea, joint pain and a generalised skin rash on her face, upper limbs, palms, the soles of her feet and the upper part of her chest;
(vi)she was admitted to Joondalup Health Campus on 20 February 1998 on referral by her general practitioner after the symptoms had become progressively worse;
(vii)she was diagnosed at the Joondalup Health Campus as having suffered an acute exacerbation of the disease;
(viii)she remained hospitalised at the Joondalup Health Campus for seven days before being discharged on 27 February 1998;
(ix)on or about 22 April 1998 she had been refused life insurance by another insurer, AMP Life Limited, arising from an application made by her on 17 March 1998."
During the course of the trial, these nine allegations of failure to disclose distilled to the three I have mentioned previously, namely:
1.She had failed to disclose that she was suffering from SLE or lupus.
2.She failed to disclose that she had been hospitalised for a week in February of 1998.
3.She had failed to disclose that she had been refused insurance by AMP Life Limited.
In his reply the plaintiff pleaded that at the time of making her application to the defendant the deceased had not been told that she had SLE or lupus, a diagnosis of which she was only made aware in early January of 1998. The plaintiff further pleaded that the deceased knew that the defendant was going to obtain a report from Dr Tadros and that Dr Tadros did subsequently provide the defendant with a report from which the defendant knew or ought to have known that the deceased was then suffering from SLE or, alternatively, that her symptoms were consistent with a diagnosis of SLE. The plaintiff further pleaded that her hospitalisation at the Joondalup Health Campus was in respect of an exacerbation of her lupus and, in respect of the failure to disclose the refusal of insurance by AMP Life Limited the plaintiff pleaded that the only reason the deceased sought insurance from the AMP was to obtain a lower premium.

Was the deceased excused from advising the defendant she had SLE?

The first matter that has to be determined here is when and in what circumstances did Dr Tadros come to the conclusion that the deceased had SLE. Dr Tadros testified that he had no recollection of ever telling the deceased that she had SLE and said that he was entirely reliant upon his notes as to what occurred which are silent as to whether he told the deceased that a diagnosis of SLE had been made. Obviously he considered the deceased may have had SLE because there is a note to that effect on 5 November 1997 but for a positive diagnosis Dr Tadros said he relied upon the specialist, Dr Cheah and the record discloses that Dr Cheah did not make a final diagnosis of SLE to Dr Tadros until about 17 March 1998. The defendant submits that if Dr Tadros did not know that the deceased had been formally diagnosed with SLE until March of 1998 she could not possibly have formed the opinion that Dr Tadros would have advised the defendant that she was suffering from SLE. Whilst there is merit in this submission it does not necessarily dispose of the issue in my opinion. Clearly there was an emerging picture of SLE. A number of the medical practitioners were highly suspicious of it for example, Dr Tadros, Dr Cheah, Dr Dallimore and Dr Simons all around the period before the date of Dr Tadros' report to the defendant of 6 February 1998. She had told Dr Simons on 15 January 1998 that she had been treated with Plaquenil "for lupus symptoms". In my opinion all of the evidence discloses that the deceased more than probably not had formed the opinion that she had lupus before 6 February 1998 and that she thought Dr Tadros being her general practitioner, would have thought so too.
The next issue to be resolved under this heading is whether or not Dr Tadros' report should have been read by the defendant as being a revelation of lupus. In this regard one has to ask: who is the insurer for the purposes of s 21 of the Act? Is it the mail clerk? Is it the manager of telemarketing? Is it the life underwriter? The defendant in its submissions assumed that for the purposes of this provision "the insurer" is the life underwriter but I must say that I have difficulty with that proposition. Life insurance companies routinely ask for detailed medical information from its prospective policy holders. Why should a prospective insured assume other than that the insurer will have recourse to specialist medical opinion to assess the risks associated with any disclosed medical condition? When detailed doctors' reports are sought by insurers, do insurers presume that doctors will presume that their reports will only be ready by lay people? Or is it a fair inference that where medical opinions are obtained they will be reviewed by people with sufficient skill to read and interpret them for the purpose of deciding whether or not to underwrite the risk? In my opinion where a life underwriter seeks detailed medical information from its customers the only fair inference to be drawn is that that information will be reviewed by a person with sufficient expertise to understand it, that is to say, a doctor, and in this case there is clear evidence that the defendant had recourse to medical opinion and, whilst it is after the event, the defendant's medical officer had no difficulty at all in diagnosing SLE from the information provided by Dr Tadros. As is disclosed at p 12 of Exhibit P2, the defendant's chief medical officer, Dr Anne Marie Fulop, advised the defendant on 8 July 1998 as follows:
"This woman [the deceased] disclosed polyarthritis since 1993. The GP doesn't actually mention SLE but mentions polyarthritis and connective tissue disorder. The policy was given a loading of 75%.
Opinion: There was no non‑disclosure. SLE carries a risk of stroke/death in sufferers. Policy was loaded. Pay."
Accordingly, in my opinion it is not to the point for the defendant to submit as it did that the plaintiff did not call an underwriter to say what he or she would have done if he or she had received the report of Dr Tadros and that the plaintiff was under an obligation to call such evidence. This submission depends upon the limited view the defendant takes of who is "the insurer" for the purposes of the Act.
Accordingly, in my opinion, the deceased made adequate disclosure of her condition of SLE to the defendant via the letter of her general practitioner, Dr Tadros, to the defendant dated 6 February 1998.

Should the deceased have disclosed her admission to hospital?

Where a new material fact emerges between the time of proposal and acceptance of a policy of insurance it is the duty of the insured to disclose it: Summerton v SGIC Life Limited (1999) 10 ANZ Insurance Cases 90-102 at 86,122. In my opinion the deceased's failure to advise the defendant that she had been hospitalised for a week in February of 1998 was a material non‑disclosure entitling the defendant to avoid the policy. As the plaintiff testified, the deceased had never been admitted to hospital previously apart from the birth of their child. As noted earlier in these reasons she was clearly exceptionally unwell at the time of her admission and it is not to the point to describe her admission to hospital as being by reason of a mere "exacerbation of her lupus". Lupus is a life threatening illness and an exacerbation of it requiring hospitalisation for a period of a week was a significant event of which the defendant should have been made aware by the deceased. As Mr Kennedy pointed out in his testimony, if he as a life underwriter had been advised by the deceased that she had been admitted to hospital this would have put him on notice and he would have made further enquiries and that would have revealed how unwell she was and this would certainly have affected the defendant's evaluation of its risk. Whilst it could be said that in this case, the fact of the deceased's hospitalisation would probably have had the effect of notifying the defendant that the deceased had SLE and that this was a fact of which it should have been aware by reason of the report of Dr Tadros of 6 February 1998, the fact that that hospitalisation was clearly a serious exacerbation of the deceased's SLE would have caused the defendant to reassess its risk even if it had known the deceased had SLE (as opposed to should have known).
In my opinion a reasonable person in the circumstances of the deceased could be expected to know that her hospitalisation in February of 1998 when she was so obviously very unwell would be a matter of interest to any prospective insurer contemplating issuing her with whole of life cover.
Under this head alone the defendant was entitled to avoid the contract pursuant to the provisions of s 29(3) of the Act.

Deceased's failure to disclose refusal of insurance by AMP Life Limited

As is commonly known, many proposals for insurance, marine, general and life enquire of a prospective insured as to whether or not he, she or it has ever made application for insurance which has been refused. No such question was asked of the deceased by the defendant in its form of application. Whether or not the deceased applied for insurance to the AMP in an effort to obtain a premium lower than that offered by the defendant is besides the point. She provided a much more detailed medical history to AMP Life than she did to the defendant and, additionally, notified AMP Life Limited that her treating doctor was Dr Cheah, not Dr Tadros. When AMP Life Limited declined to insure the defendant she was put in the position where not only had she not obtained a lower premium than that offered by the defendant but she had been refused insurance altogether. The only inference reasonably open on the evidence from these facts is that the deceased must have known that she was refused insurance because of perceived problems with her health making her not just a risk to be insured at a higher premium but a risk not to be undertaken at all. Her state of mind may well have been different had AMP Life Limited returned with an offer to insure at a greatly increased amount over and above that offered by the defendant but it could not be otherwise than as I have inferred it to be in a circumstance where she had been refused insurance entirely. Accordingly, in my opinion the deceased knew that the refusal by AMP Life Limited to insure her was a matter relevant to the defendant's decision whether or not to insure her and she failed to disclose it. Further, even if the inference I have drawn against the deceased as to her state of knowledge could somehow be demonstrated to have been wrongly drawn, a reasonable person possessed of the relevant facts in the circumstances could be expected to know that the refusal by AMP Life Limited to insure the deceased would have been relevant to the defendant's decision whether or not to accept the risk of insuring the deceased's life.
In my opinion this too was a material non‑disclosure by the deceased sufficient to enable the defendant to avoid the policy.

Other matters

The plaintiff pleaded and argued, albeit somewhat faintly, that the defendant waived the necessity of compliance with the duty of disclosure by the deceased by reason of it having obtained a report from Dr Tadros and informing the deceased that it had received the report and accepted risk at a higher premium because of that report but without disclosing either the content of the report or the conclusions the defendant drew from it. The plaintiff also submits the waiver also arises from the facts that it alleges that the defendant was informed by the deceased on 11 and 15 December 1997 that she was sick and the defendant led no evidence as to the substance of the advice given to it by the deceased on those days and did nothing to follow up on that advice or cross reference it with the report of Dr Tadros. For my part I cannot see how the defendant can be said to have waived compliance with the deceased's duty of disclosure to it by reason of it having obtained a report from Dr Tadros. Additionally it was not established on the evidence that the defendant was informed by the deceased on 11 and 15 December 1997 that she was sick or indeed that there was any communication between the deceased and the defendant on either of those dates or both of them. This submission arises from the plaintiff's reading of a note on the defendant's telemarketing policy receipt form which came in as part of Exhibit P2 at p 14 which the plaintiff reads as referring to telephone contact made by the defendant with the deceased by telephone on each of those dates and being informed on both occasions that the deceased was sick. I agree however with the evidence given by Mr Kennedy that in all probability all that this form does is indicate that those telephone calls were made to Dr Tadros and not the deceased but even if this was wrong there was no evidence given at all that those calls were made by the deceased. For example the plaintiff made no attempt to introduce into evidence or to illicit information such as would have shown by reference to telephone records that calls were made to the deceased's home telephone number. But in any event all of this is but an aside because in the first instance I have found that the information given by the deceased to the defendant should have enabled it to have concluded that she had lupus or SLE.
Next the plaintiff alleged that the defendant had failed to adequately inform the plaintiff of her duty of disclosure in conformity with s 22 of the Insurance Contracts Act. This submission was based on two separate premises the first being that the form of application refers to a notice of disclosure and a brochure which was not proven in evidence and it would be impossible to find that appropriate disclosure had been made without proof of the brochure and any duty of disclosure referred to in the brochure. The second is that there was no proof as to the legibility of that part of the form of application which contained information as to the duty of disclosure. With regard to the first I have very little difficulty in dealing with this argument. In my opinion on the clear wording of the application, the Act and the Regulations the form of application was more than adequate to bring to the deceased's attention her duty of disclosure to the defendant when making application for life insurance cover. As to the second I likewise have very little difficulty in dealing with this matter. The form was perfectly legible. This is not a "small print case".
Accordingly, in my opinion the plaintiff's claim must fail and the action will be dismissed.