Annette v The National Mutual Life Association of Australasia Ltd
[2008] NSWSC 1288
•4 December 2008
CITATION: Annette v The National Mutual Life Association of Australasia Ltd [2008] NSWSC 1288 HEARING DATE(S): 29 September 2008
JUDGMENT DATE :
4 December 2008JURISDICTION: Equity Division JUDGMENT OF: Young CJ in Eq DECISION: Plaintiff entitled to part of the claims and refund of premiums. CATCHWORDS: INSURANCE [11]- Insured plaintiff makes numerous claims under income protection policy- Defendant insurer paid some claims but not others- Clause 15 of the policy provides that the policy automatically ends within its 12 month operation period if insured is no longer employed in full-time paid work- Defendant continued to accept renewal premiums after the plaintiff had ceased full-time work- Held that no claim is payable after such time but premiums ought to be refunded. CATEGORY: Principal judgment PARTIES: Edwin Annette (P)
The National Mututal Life Association of Australasia Ltd (D)FILE NUMBER(S): SC 5755/03 COUNSEL: Plaintiff in person
R A Cavanagh (D)SOLICITORS: Plaintiff in person
Turkslegal (D)
IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
YOUNG CJ in EQ
Thursday 4 December 2008
5755/03 – ANNETTE v THE NATIONAL MUTUAL LIFE ASSOCIATION OF AUSTRALASIA LTD
JUDGMENT
1 HIS HONOUR: The plaintiff sues for money allegedly due under an income protection policy which he took out with a company then known as Australian Casualty and Life Ltd on 7 June 2000.
2 That company went into liquidation and it is pleaded that on or about 29 November 2000, the company’s assets and business were transferred to The National Mutual Life Association of Australasia Ltd (“NMLA”) on the basis that NMLA would hold Australian Casualty and Life Ltd indemnified in respect of any judgment or award against it.
3 Counsel inform me that by virtue of a scheme under Part 9 of the Life Insurance Act 1999 (Cth), the Federal Court made an order which had that effect. No one gainsays the effectiveness of that order in the present case.
4 The policy which the plaintiff took out was called a “Seniorguard”. It provided for income protection against accident and sickness for one year with a 30 day waiting period.
5 The wording of the policy under the heading Part B read as follows:
“ PART B CIRCUMSTANCES IN WHICH WE WILL PAY YOU
If the person insured is totally disabled – and can’t work
- 2. If the person insured is totally disabled, we will pay you the monthly benefit. The person insured is totally disabled if, because of an injury or sickness, he or she is:
* unable to perform at least one income producing duty of his or her occupation;
- * under the regular care and attendance of a medical practitioner .
When we pay
- We don’t start paying you as soon as the person insured is disabled. You have to wait for the period set out in box 5 in the Schedule …
We stop paying as soon as one of the following happens:
When we stop paying
* the person insured stops being totally disabled;
* the first renewal date after the person insured turns 75;
* the benefit period for the cause of the total disability ends;
* the person insured dies.
- The benefit period is the maximum period we will pay you for any one claim for total disability. For the purposes of total disability, the benefit period begins when you are first entitled to be paid for total disability …”
6 Box 5 in the schedule which is referred to in clause 2 describes the policy as a Seniorguard policy, date began 7/6/2000, date end 6/6/2014, benefit amount $4150, benefit period for injury 1 year, benefit period for sickness 1 year, waiting period 30 days.
7 Clause 15, with its heading read as follows:
“ PART G ENDING THIS POLICY AND CHANGING COVER
We can end this policy
- 15. We can end this policy on each renewal date of your policy. Before we do that, we will send you a written notice of our intention not to renew the policy. If the notice is delivered to you, it will take effect on the third business day after it is received by you … We can also vary the terms of your policy at each renewal date…”
8 The plaintiff says that on 8 August 2000, he suffered an injury which made him completely unable to perform his duties at work. He claimed benefit under the policy from 7 September 2000. The plaintiff also says that on 1 January 2001 he became sick and was also unable to perform work.
9 The plaintiff’s initial injury was because of a ruptured hernia. This was operated on successfully and would not have stopped Mr Annette working after September 2000. However, the plaintiff then developed retrograde amnesia. It is basically an inability to concentrate that has left him unemployable since then, though he has had many other health problems since then.
10 The plaintiff claims $4,150 per month for each month from 7 September 2000 to 6 September 2006, that is, six years at $4,150 per month which totals $298,800 plus interest.
11 The defendant says that it admitted liability from September 2000 to August 2001 and has paid. It says it has also paid an additional nine months.
12 It is common ground that the plaintiff last paid premiums on the policy in June 2003 and that the policy was not renewed after June 2004.
13 There is not the slightest doubt that the defendant did pay monies to the plaintiff. First it would seem that on 28 February 2001, the defendant paid the plaintiff $12,450. This cheque was sent with letter which said:
- “We are pleased to enclose our $12,450.00 cheque, outside the terms and conditions of your policy and without admission of liability.”
14 The letter noted that the payment was made in respect of claim number 774604. That was a claim submitted on 7 September 2000.
15 Mr Annette argued that as this was a “without prejudice” global payment it should not be taken as a part payment of what was due to him under claim 774604. I reject this argument. The only basis for any payment to him by the insurer was that claim.
16 By letter of 7 June 2001, the defendant also in respect of claim 774604 sent 18 cheques totalling $36,989.99.
17 There is somewhere else in the material evidence that the amount sent was actually $37,072. This last amount would seem that a total of $49,572 was paid in respect of claim 774604, namely 12 months at $4,131 per month, why $19 per month was deducted is not clear.
18 Claim 774604 was the first claim that Mr Annette made and was for the first 12 months’ disability.
19 There is little doubt from the file that the insurer considered that there must be something amiss when an insured takes out a policy in June 2000 and makes his first claim in August 2000, and with that suspicion in the minds of the clerks who are employed by the insurer, the insurer was not at all keen to make any payments at all. I am firmly of the view that such suspicion was ill-founded.
20 The second claim, which was paid, was made on 12 February 2002 and is numbered 814426. It claimed that there was an injury on 20 August 2001 as a result of problems with a prostate for which Mr Annette was admitted to Gosford Hospital and then there were consequential problems as a result of that stay in hospital.
21 Eventually, after it would seem some intervention of an insurance ombudsman and on 20 December 2007, the insurer gave Mr Annette a further cheque of $57,000 being made up of $37,350 (which appears to be nine months’ disability payment) plus $19,650 interest.
22 Doubtless Mr Annette was happy to receive that money, but it must be said that when one takes out an income protection policy, a five to six year delay in payment is hardly what the insured expect.
23 Mr Annette has lodged 11 claims under the policy, which can be summarised as follows:
1. 7 September 2000 - No 774604 (paid)
2. 12 June 2001 – No 798850
3. 13 August 2001 – No 804104
4. 12 February 2002 – No 814426 (paid in 2007)
6. to 11. Claims made on and after 30 November 2004.5. 2 August 2002 – No 830331
24 I list claims 6 to 11 globally because the policy was not renewed after June 2004 and it is difficult to see how the insurer can be liable.
25 Essentially, claim No 6 was in respect of cognitive amnesia. The defendant says these are the same symptoms that the plaintiff had been complaining about since 2000 and were the subject of the payment of the initial claim. Claim No 7 was in respect of depression and anxiety said to be first experienced in 2001. Claim No 8 alleged that the plaintiff was suffering from hemochromatosis. Claim No 9 is where the plaintiff fell over in the garden and struck his head in April 2005 resulting in loss of memory, depression and anxiety. Claim No 10 was another hernia operation in January 2006 and claim No 11 was because of a tumour in the left testicle diagnosed in December 2006.
26 Mr Annette said that here we have a simple income protection policy. He was never paid for the retrograde amnesia. He had a huge toxic shock in hospital. He had golden staph in 2001. He was suffering throughout the period and was entitled to receive benefits even today and under the terms of the policy, he reckons that the insurer was not entitled to cancel the policy. Although he would only be paid one claim at a time, he was at liberty under the policy to make as many claims as he liked.
27 The policy provided that it automatically ended when the insured is not employed in full time paid work. This, in fact happened in the year 2000. However, the insurer continued to receive premiums through to June 2003. Mr Annette says that the latter part of clause 15 of the policy reads as follows:
- “Also, the policy automatically ends on the earliest of the following times:
· the person insured permanently retires from the work force;
· the person insured isn’t employed in full time paid work. However, we won’t end the policy if the person insured isn’t working while you are receiving the benefit …
- If we end the policy for any of these reasons, you can no longer make a claim under the policy.”
28 However, in my view, what the second bullet point means is that the policy will automatically end within its 12 month operation period, but if the benefits are being paid, it will continue on until the end of the operation period. However, it does not mean that the policy will necessarily be renewed so long as benefits are being paid. In my view, that part of clause 15 does not operate to permit claims to be made after June 2004.
29 Accordingly, I reject claims 6 to 11.
30 Mr R A Cavanagh of counsel who appeared for the defendant, submitted that the policy was not guaranteed renewable, but was renewable on an annual basis, with the right of the defendant to refuse to renew. Each year there was a renewal; there was in effect a new policy and a new benefit period. However, that benefit period could not extend past June 2004.
31 I find great problems with claims made before June 2004. It is necessary, therefore, to look at claims 2, 3 and 5 a little more deeply.
32 I should note that there is no pleading to the effect that the insured was already completely unable to work as at the date the renewed policies took effect in September 2001, 2002 and 2003. The company billed and received the premiums for these years. There has never been any offer to return the premiums.
33 Claim 814426 was made for a disability suffered on 20 August 2001.
34 Claims 2 and 3 are also for the year commencing on 7 June 2001 and ending on 6 June 2002. Even if these were otherwise in order, they could only result in a payment of three times $4,150. Claim 2 was in respect of amnesia. This does not appear to have been otherwise paid. If this were allowed for $12,450 there would be no need to deal with claim 3 which was head injury due to depression for a fall on 24 July 2001.
35 This then leaves claim 5 which occurred in the period 2002 to 2003. The claim was in respect of “renal colic [sic] depression and anxiety and cognitive impairment and anxiety”. It seems to cover much the same area as claim 2.
36 The case is a very odd one. The plaintiff misunderstands the effect of the policy. Had the insurer behaved as one might have expected, it would not have renewed the policy on its first annual renewal date and it would have been protected from further claims. However, what it did was to accept three further renewal premiums, each, it would seem, of $2,192.32. It then acknowledged that there was a liability for payment to the insured for a fresh disability after the end of the first 12 months, even though at all times the insured had never worked at all since August 2000.
37 There is no reason why any of the premiums should have been accepted in the two years 2002-2003 or 2003-2004, no claims were made. Although I am applying a broad brush approach, it seems to me that it is appropriate, in view of all the facts of this case, that the premiums be refunded. Accordingly, doing the best I can, the plaintiff is entitled to be paid by the defendant $24,410, being $12,450 for the year 2001-2002, refund of premiums for two years at $4,384 and interest of $7,576.
38 The plaintiff was appearing for himself so there are no professional costs, but he is entitled to disbursements.
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