Baneth v Asteron Life Limited
[2005] VSC 369
•21 September 2005
7
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 4962of 2004
| RONALD GEORGE BANETH RON BANETH PTY LTD (ACN 007 441 009) | Plaintiffs |
| v | |
| ASTERON LIFE LIMITED (ACN 001 698 228) (FORMERLY ROYAL AND SUN ALLIANCE FINANCIAL SERVICES LIMITED) | Defendant |
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JUDGE: | SMITH J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 12, 15, 16 and 17 August 2005 | |
DATE OF JUDGMENT: | 21 September 2005 | |
CASE MAY BE CITED AS: | Baneth v Asteron Life Limited | |
MEDIUM NEUTRAL CITATION: | [2005] VSC 369 | |
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Insurance – disability policy – “total disability” – “usual occupation” – hearing loss – psychiatric factors.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr R. Stanley QC and Mr J. de Koning | Richmond & Bennison |
| For the Defendant | Mr M. Shand QC and Mr M. Settle | McMahon Fearnsley |
HIS HONOUR:
The proceeding
By Policy No. 70021772, the defendant issued an income protection insurance policy to the second plaintiff, Ron Baneth Pty Ltd, as the policy owner, providing income protection in the event of the disablement of the first plaintiff, Ronald George Baneth. On 1 April 2001, the plaintiffs made a claim on the policy seeking the monthly benefit payable in the event of total disablement of Mr Baneth. The defendant rejected that claim. The plaintiffs bring this proceeding seeking declarations as to the entitlement of the plaintiffs under the policy and the payment of sums allegedly owing to date under the policy.
The policy
The policy commenced on 15 September 1992 and has an expiry date of 15 September 2013. The policy provides the following relevant cover,
“2. EXTENT OF COVER
2.1TOTAL DISABILITY BENEFIT
If as a result solely of an Injury or Sickness you become Totally Disabled whilst this Policy is current, we will pay the Monthly Benefits specified in the Schedule but subject to the Conditions and Exclusions set out below. We will also pay the Monthly Benefit with respect to any Total Disability resulting solely from any injury or sickness which you have disclosed to us prior to the Commencing Date and with respect to which we have agreed to extend cover…….”
The monthly benefit provided under the policy was $3,000 which was subject to an automatic increase in cover of 5 per cent per annum compound on each anniversary of the commencing date.[1] The policy contained provisions activating that entitlement.
[1]Clause 3.1.
The policy contained the following relevant definitions:
“1. DEFINITIONS
For the purposes of this policy the following important definitions apply;
1.1 ….
1.2‘YOU/YOUR’ is the person insured named in the schedule. If the policy owner named in the schedule is not the person insured, all benefits will be payable to the policy owner.
1.3‘TOTALLY DISABLED’ means that you are unable to work in your usual occupation for more than ten hours per week.
1.4‘PARTIALLY DISABLED’ means that you are working in any occupation but, directly because of a Sickness or injury, you are only able to work to a limited extent such that your Net Monthly Earnings are less than your Pre-Disability Earnings.
1.5‘SICKNESS’ means sickness, disorder or disease which first becomes evident after the Commencing Date.
1.6‘INJURY’ means bodily injury caused by accidental means occurring after the Commencing Date.
1.7 ………”’
In relation to the definition of "Totally Disabled", it was common ground that a person's inability to work in his or her normal occupation for more than 10 hours per week was not to be judged by reference to an isolated week or month but imported an assumption of continuous or regular engagement in that occupation. It was also common ground that the definition of "Sickness" encompassed psychiatric disabilities.
At the time the policy was taken out, Mr Baneth was conducting a business through the second plaintiff, Ron Baneth Pty Ltd. In later years it was conducted at Bluff Road in Sandringham in shop front premises. At all relevant times, Mr Baneth conducted the practice on his own and did not have a secretary. He answered all telephone calls and handled all contact with the client. His practice had specialised into primarily a taxation practice but also involved a small amount of audit work and, in later years, a small amount of financial planning work. The business had built up and was very successful and busy. He had taken out previous income protection policies before taking out the present policy with the defendant.
The disability
It appears that towards the end of 1997 Mr Baneth and his wife and sons, while on holidays at Wilson’s Promontory, became aware that he was suffering hearing problems. In February 1998, he went to an audiologist, Mr Harrison, who tested his hearing. The conclusion reached at that stage was that he had moderate high frequency sensory neural hearing loss bilaterally and with some slight asymmetry at 6 to 9 kHz. Mr Harrison recommended that Mr Baneth seek a medical opinion. It appears, however, that it was not until January 1999 that he attended his GP concerning his hearing problems. He was still continuing with his work without major concern at that stage.
In February 1999 Mr Baneth was referred to an ear, nose and throat specialist, Mr Redhead. He conducted further tests. Mr Redhead advised that his hearing was deteriorating, that the condition was inoperable and that he should get hearing aids. Mr Baneth attended the National Hearing Centre on 28 May 1999 where he was assessed and given advice as to possible hearing aids. In July of that year, he was fitted with hearing aids for both ears at a cost of $7,000. He thereafter continued to attend the National Hearing Centre seeking and obtaining assessments, advice and assistance with his hearing aids. He was, however, having increasing problems in performing his work notwithstanding the assistance of hearing aids. The plaintiffs’ case is that these difficulties increased to the point where he had to cease to work in the business.
It is common ground that Mr Baneth has suffered a significant loss of hearing in both ears and that the loss of hearing has worsened over time. As at 27 February 1999, the loss was calculated at 10.3% according to the NAL 1988 scale. On 2 May 2001 it was calculated at 12.1% using the same scale. Thus there was a recorded worsening over the period of time between initial discovery of hearing problem and the cessation of the business. That hearing loss has continued to the point that as at 19 July 2005 it was 17.6%. I note that the loss on the left side is worse than that on the right and that Mr. Baneth is right-handed and so when taking phone calls relating to work, it was necessary that he hold the phone in his left hand and to his left ear. I note also that the testing was done with Mr Baneth not wearing any hearing aids.
The critical issues
To succeed in the present claim on the policy, the plaintiffs must establish that at the time the claim was made, and ever since, Mr Baneth has been “totally disabled” within the meaning of the policy and that this has resulted from “sickness” as defined in the policy. Mr Baneth’s hearing disorder comes within the definition of “sickness” – as do his psychiatric problems discussed below.
As noted above, the definition of “totally disabled” requires that the person insured be “unable to work in your usual occupation more than ten hours per week.” I interpret that composite phrase to have the effect that what must be established by the policy owner in claiming the benefits under the policy is that Mr Baneth was unable to work in his usual occupation at all or, if he was able to work in it, was not able to work for more than ten hours per week. Obviously a critical question to be answered is what was Mr Baneth’s “usual occupation.” The plaintiffs provided the following description:
“As at 9 March 2001 Mr Baneth’s usual occupation for the purposes of the policy is that of an accountant –
(1)engaged in the conduct of a one-man practice with 900 or so clients;
(2)preparing taxation returns (95 per cent) and performing audit work (5 per cent);
(3)dealing with his clients on a face-to-face basis or by telephone;
(4)normally working 50 or more hours per week.
The defendant argued for a narrower description and contended that Mr Baneth’s usual occupation for the purpose of the policy is:
‘that of an accountant principally (95 per cent) preparing taxation returns and also performing some audit work (5 per cent).’
In my view, the description suggested by the plaintiffs is too broad and that by the defendant too narrow. Bearing in mind the ten hour element in the definition, the number of clients and the hours of work per week should not normally be included in the definition. In addition, I have come to the conclusion that the methods employed in conducting the usual occupation which may be capable of variation should also not normally be part of the description. It seems to me, however, that it is part of the description of Mr Baneth’s usual occupation that he was engaged in conducting a “one-man practice”. After all it was that aspect in which the second named plaintiff, the policy owner, was particularly interested. Accordingly, I incline to the view that his “usual occupation” should be described as that of an accountant engaged in the conduct of a one man practice preparing tax returns (95 per cent) and performing audit work (5 per cent).
In view of the fact, however, that the submissions made by the parties addressed the evidence and issues from the narrower perspective of the defendant's description, I propose to determine the case on the basis of that description. I note, however, that applying what I suggest is the appropriate description of the "usual occupation", it is my view that Mr Baneth was unable to engage in his “usual occupation” in March 2001 and has remained in that situation.
Parties’ submissions
Counsel for the plaintiffs submitted that the actions of Mr Baneth before and after March 2001 can only be explained on the basis of his hearing loss and consequential disabilities. Counsel referred to the fact that as at March 2001, Mr Baneth was 51 years old and otherwise in good health running a very successful accountancy business which he had built up over 17 years. He had between 700 and 900 clients. He was achieving gross revenues of $100,000 per annum. He loved his work and his work was very important to him and he had been intending to continue to work in the business until he reached normal retiring age . He tried to continue in his practice for several years after he became aware of his hearing loss problem and sought assistance from experts including the provision of state-of-the-art hearing aids. In March 2001, however, he ceased to conduct the practice and, immediately took steps to sell the business and thereafter did little or no tax or auditing work.
His counsel submitted that this was not something Mr Baneth would have done if he could have avoided it. It is put that plainly he could no longer do his usual work. Counsel further submitted that the defendant had not been able to put forward any sensible reason to explain these events notwithstanding that the evidence and admissions revealed significant investigation of the case by the defendant. Counsel submitted that there was an attempt to suggest in cross examination that there was a "plan" but at no time was it ever put to Mr Baneth that in some way he was engaged in a scam or an attempt to defraud the defendant. Counsel further submitted that there was an obvious explanation for Mr Baneth's decisions, namely his hearing problem and the consequential psychiatric problems. Counsel submitted that this analysis is supported strongly by the evidence of Mr Baneth and his wife which should be accepted together with the overwhelming weight of the expert testimony.
Counsel for the defendant submitted that the question to be determined is whether Mr Baneth was unable to work in his usual occupation for more than 10 hours per week at the time he made his claim under the policy on 1 April 2001 and thereafter. Counsel submitted that at that time, and since, Mr Baneth has not satisfied that test. Counsel emphasised the need to focus on the tasks performed in his usual occupation and not on the way those tasks were done.
Counsel for the defendant submitted that it was clear on the evidence that Mr Baneth conducted most of his work face-to-face with clients free of background noise in his office other than the hum of the computer which he used for the purpose of completing tax returns in the presence of clients. Counsel submitted that he had the choice always as to the people for whom he acted and he had control over the numbers of people for whom he acted. He had the capacity to continue in all aspects of his usual occupation but with reduced hours and reduced clientele.
Counsel for the defendant also submitted that whatever difficulties arose in his work from the hearing disabilities, they could be met by either a change of approach or by technology or both. For example, Counsel submitted that he could use e-mail and facsimiles transmissions and argued that that this was also a desirable thing to do because it provided a written record for auditing work. Counsel also referred to the evidence concerning the national relay telephone service for people with hearing disabilities. I will discuss these issues in more detail below.
Counsel for the defendant also challenged the plaintiffs’ argument based on a comparison of Mr Baneth's conduct before and after March 2001, by submitting that the reality was that Mr Baneth had been able to work 50 hours per week or more up to 9 March 2001 but claimed to be unable to work at all thereafter. Counsel was not submitting that there was anything fraudulent but argued that Mr Baneth had plainly been sufficiently healthy to engage in his usual occupation up to 9 March and that it would follow that he could not demonstrate a lack of capacity to work more than 10 hours per week thereafter in that occupation. Counsel also submitted that his conduct of the negotiations and sale of the practice were not indicative of any significant distress or incapacity and there had been no evidence from the purchaser of the business that the working files were unsatisfactory[2] in any way noting that work in progress was handed over. Counsel submitted that the inference should be drawn that the business was being conducted satisfactorily up to 9 March 2001 and that it was more likely than not that Mr Baneth was able to continue to work in his usual occupation more than 10 hours per week.
[2]I note that the issue does not appear to have been raised in cross-examination.
The defence submission about Mr Baneth’s conduct before and after 9 March 2001, assumes he was working satisfactorily before 9 March 2001. I am satisfied, however, that he was struggling badly. The submission also ignores or rejects the evidence of Mr Baneth, which I accept, that he had hoped that, when he resumed at the start of 2001, the heavy telephone demands of his clients who were trying to come to terms with the new goods and services tax would be significantly less and that he would be able to cope. What he found, however, was that they were not less and as a result, because of his hearing difficulties, he was not able to cope. I am also satisfied that it was that which was the immediate trigger for his decision to cease to carry on the business and pass his clients on to those who could give the service that he felt he could not give. Accepting this evidence, it establishes that, at that time, he did not have the capacity to work in his usual occupation (in the narrow sense). It does not, of course, follow that he did not in the future have that capacity or that in other circumstances he would not have that capacity. Those issues are to be resolved by consideration of other matters.
As to Mr Baneth’s conduct in the sale of the business, the speed and informality point to an emergency and inability to cope. This conclusion is supported by the evidence of the purchaser discussed further below in consideration of the evidence concerning the termination of the business.
Counsel for the defendant also raised some more specific issues relating to particular areas of evidence.
(a) Early medical opinions
Counsel submitted that it was significant that, in 2001, the treating doctors were not prepared to express opinions about Mr Baneth's working capacity . In putting this argument, counsel relied upon certain reports provided to the defendant in early 2001 by Doctor Dillon, the general practitioner, and the specialist Mr Redhead. Dr Dillon, however, appeared to be deferring to Mr Redhead. Mr Redhead did not express an opinion. But he, like the other medical experts, was ultimately not qualified to express an opinion as to whether Mr Baneth was capable of continuing to work in his usual occupation for more than 10 hours per week within the meaning of the policy.
(b) Letter to Banking Ombudsman
Writing to the Banking Ombudsman on 29 April 2001, complaining, inter alia, about Privacy Act breaches, Mr Baneth stated:
“I was to be the accountant to this business [his wife’s business], as I am an accountant in public practice, but the breach caused my partner’s solicitor to refuse to have me as their accountant.”
Accepting that that statement reflected his then state of mind and intention, it reveals that he had not then given up the hope of practicing as an accountant and had hoped to be the accountant to the pharmacy business that his wife was seeking to join. It does not mean that he could do the work. The work involved, in any event, would have been different to the taxation, auditing and financial advice work that he had been doing in the past. He would not have been working in his usual occupation.
(c) Letter to ASIC
Counsel also relied upon Mr Baneth’s response to a letter dated 12 March 2004 from ASIC requiring him to complete and return his outstanding registered auditor’s triennial statement. Mr Baneth replied with a handwritten letter dated 29 March 2004, in which he made the following comments by way of explanation:
“I have been a full-time carer for my mentally ill son for three years. The situation has been extremely difficult. Now things have changed unfortunately.
I have done some audit work and I have attended all the required training by my society. I intend to continue in a small way.
Please remit the penalty in these circumstances.”
In the letter he also commented that he “had to work p/t from home”.
Cross-examined about these matters he acknowledged that his assertion that he had been a full-time carer for his mentally ill son for three years was untrue. At the time he wrote the letter, however, they were experiencing great difficulties because of their son’s psychiatric state and his breaches of the law. I accept his frank acknowledgment of the inaccuracy of his statement and his genuine discomfort and disappointment in himself about it. At that time, however, he was correct in saying he did have some auditing clients-namely, the Historic Racing Association and Warrington Fire Research Australia. Counsel for the defendant also placed reliance upon his assertion in the letter to ASIC that he was intending to continue doing auditing work. But it is clear from the letter that he was referring to doing it in a small way and that is consistent with his evidence that the auditing work he did involved very few hours per week and only a few weeks in the year.
(d) Concentration span
Counsel for the defendant also challenged the evidence of Dr Dineen, an audiologist, that he would not be surprised if Mr Baneth would have trouble concentrating after 15 to 20 minutes because of his hearing disabilities. It was said that this was shown to be wrong by consideration of Mr Baneth's ability to concentrate for a number of hours in the courtroom while giving evidence. Counsel submitted that the environment in his office would probably have been better than that in the courtroom.
I accept the submission of counsel for the plaintiffs, however, that Dr Dineen in fact was speaking about a complex listening environment when referring to the limited concentration span and said that that was not applicable to the court room environment. Dr Dineen went on to say
“It’s an issue that you were lateral thinking that you were drawing upon context, visual information, ambiguous sounds you are hearing, your knowledge of semantics and tactics of speech and you are bringing that all together to make an informed judgment about what you are hearing, to interpret what you are hearing, and that is tiring. It takes a lot of processing effort by the individual and the more difficult the listening environment the more rapidly you tire.”
He did say, however, that he would have expected in the court room context that Mr Baneth would over time tire and have increasing difficulty. He did accept the proposition put to him in cross-examination that, assuming Mr Baneth was able to answer questions in the witness box for a period considerably longer than 15 or 20 minutes without showing a lapse in concentration or difficulty in understanding and answering questions then that would inform him about his capacity to cope with his hearing impairment in situations of a like kind. He was not, however, prepared to generalise from that to Mr Baneth’s capacity to hear in other listening environments because the complexity of those environments ranges enormously.
In my view, Mr Baneth had to concentrate very hard in the witness box and had difficulty from time to time because of background noise[3] and because counsel spoke too softly for him to be able to hear (although audibly to everyone else). In my view it was an endurance test for him. In any event his court performance did not provide a means of comparing his hearing capacity for conversations that would have taken place with him as an accountant because, among other things, there was little or no use of figures in the questioning in the court hearing and he could see the persons speaking.
[3]eg, from people entering and leaving the court or from counsel shuffling papers.
Both parties relied on expert evidence. The defendant called as a witness, Mr Hooper. He said that looking at the measured degree of hearing disability, Mr Baneth had a capacity to work in his usual occupation more than 10 hours per week. The evidence of another expert Mr Thomas called as a witness by the plaintiff, although engaged by the defendant to examine Mr Baneth, was challenged by the defendant and I will refer to his evidence and that of Mr Hooper in due course in considering in more detail the medical evidence. Counsel also directed arguments to challenge the interpretation of the evidence of the psychologists and psychiatrists.
The outstanding major issues require consideration of the circumstances in which Mr Baneth ceased to work in the business, his subsequent work history and his present condition and the expert evidence relied upon by the parties.
The circumstances of and surrounding the cessation of the business
I have referred above to the discovery of the hearing disability and the medical history up to March 2001. Some aspects require elaboration.
As noted above, in May 1999 Mr Baneth was assessed for hearing aids and was supplied with hearing aids regarded as the best available at the time. He found, however, that the hearing aids were not overcoming his hearing problems. He was finding that he was having difficulty understanding the all important financial data from his clients. Statements about numbers were particularly difficult because they generally would not have any context to help him understand what was being said.
I accept that he kept going back to the National Hearing Centre to have the hearing aids adjusted to help him hear his clients' instructions when dealing with them face-to-face. He could not get a satisfactory outcome and as a result found that taking instructions from clients face-to-face was taking considerably longer because of the need to double-check everything that was said to him. Having no secretary, he relied upon an answering machine to take messages from clients. He found it increasingly difficult to understand the messages, particularly the names of the callers. Further, he said that ladies’ voices, particularly those with an Asian accent (usually from the Australian Tax Office) were even more difficult to understand. The problem was so severe that he had to ask other people in the building to leave their work and help him by writing down the messages. On occasions his wife had to assist in this way.
In the year 2000, he also had to deal with clients' problems associated with the introduction of the GST and the required business activity statements. He had to assist clients who would telephone him as they struggled with the new tasks and the new software they had to use. His clients were ringing him all the time seeking help and advice.
By the end of 2000 his hearing was getting worse and his hearing difficulties were making him very frustrated. He also found that after he had been using the hearing aids at work during the morning, his hearing ability deteriorated so that in the afternoon he did not hear as well. In addition, he had problems at audit sites with background noise from fans like computer fans which made it difficult for him. By the end of the day he was really struggling.
At the end of the year 2000, he went away on his annual vacation hoping that he would be able to cope early in the New Year when his clients would be attempting to finalise their BAS statements that were due by 28 February 2001. He had hoped that the volume of aural work would be less but found that it was no different. He would come into the office early and find many messages on his voice mail. As he put it,
" I had no idea who was calling and I had no idea how I was going to get back to them."
Eventually in early March 2001 he broke down crying. He went to see a doctor Dr Dillon who told him he had to stop working. I accept that at that time he was confused and did not know whether he would be able to continue his work in any capacity . Perhaps the most accurate description he can give of the circumstances at the time is that contained in the claim form which he filled out on 1 April 2001. In answer to the question whether his responsibilities had changed in the last 12 months, he stated the following –
"Many more telephone calls due to constant queries and calls by myself to ATO for clients. It doesn't stop and I can't hear and make out the subject matter calls in and calls out."
Asked to describe his current symptoms he stated --
"I have $7,000 aids since May June 99 the very best available for two years and they help in lectures and quiet offices but still background noise and even Telstra Hearing Aid phones (volume control only) don't help. I tried with the BAS to visit clients at their premises and there's more noise there and it's just not working. I'm not understanding the subjects that I am being asked and with the aids after two years all day use, I have to keep double checking the issues. I can't function in my current occupation."
He immediately set about trying to find a buyer for the business. Around Easter, he entered into an oral agreement, sealed by a handshake, with Mrs Barbara Barton proprietor of the business, Independent Business and Accounting. I accept that he was not in any condition to negotiate or sign a detailed written agreement and handed the matter over to his solicitors. A formal agreement was not signed until much later in the year.
I accept the evidence of Mrs Baneth that through the year 2000 and in early 2001 Mr Baneth tried very hard with the hearing aids and voicemail and tried to ensure one to one conversations so that he could cope but he found he was missing details. He became very anxious and upset and stressed and depressed. She confirmed that she used to go in and write up the answering machine messages for him. Mrs Baneth referred to a hopelessness and a terrible distress that he could not hear sufficiently to do the work that he loved so much. It was at that point that he decided to sell the business. I accept that evidence and her evidence that Mr Baneth having decided to sell the business tried to finish unfinished work but was unable to do that and in fact handed over a lot of unfinished work to the purchasers.
The purchaser of the business, Mrs Barton, confirmed that the deal was struck on a handshake in late April, early May, and the actual hand over of work occurred shortly afterwards. I accept her evidence that it was part of the agreement that Mr Baneth would assist in the transfer of the business but he was unable to cope. He tried to assist at the Port Melbourne office of the purchaser on half days for about three or four weeks but he could not cope. I also accept Mrs Barton’s evidence that she would not have employed Mr Baneth at that time because of his hearing difficulties, the frustration and stressed behaviour they caused and the fact that he was not “a well man”.
I am satisfied that by March 2001 he reluctantly came to the conclusion that his hearing had deteriorated to such an extent that he could not do his work. I accept that the dramatic change in his working life was mirrored by similar dramatic change in his social life.
Subsequent work
Mrs Barton confirmed that it was part of the agreement that Mr Baneth was to retain a few audits but it seems that the only audit he was doing recently was that of Warrington and he no longer does that.
After the sale of the business, the only work Mr Baneth did was some auditing work in places that were quiet and where there was no significant time pressure and the client' s work was of high-quality and ethical. Over the last few years he has done auditing work for Warrington Fire Research Australia, a one-day audit for Historic Car Racing Association and has done work assisting Hit Productions by making reports for them to use in applications for government funding. At the present time, however, he does no tax or auditing work. He does some bookkeeping work for his wife in her pharmacy business but does not do it as well as he did.
I accept that he has not worked again in the areas of accounting work in which he had previously been engaged.
Present condition
It is clear that his hearing disabilities have worsened. Late last year he acquired another hearing aid involving new technology but I am satisfied that it has not provided any satisfactory improvement in his capacity to handle conversations particularly those involving figures
I accept Mrs Baneth's evidence that at the present time, while Mr Baneth is managing much better with antidepressants[4], he still remains anxious and more impatient. He is unable to cope with pressure and has lost confidence in his capacity to work satisfactorily in tax accounting and auditing. Over the last two to three years he has from time to time concealed household bills by collecting them and placing them in a drawer. He could not cope with them. She has also found that he has not been able to give her professional assistance such as was involved in checking a new business lease. She asked him earlier this year to check a new lease. His advice to her had always been to check that the landlord paid the land tax. He read the lease, told her that it was fine but later she found there was a clause saying that she had to pay the land tax and not the landlord. He is panicked by deadlines and she has found that if it she wants him to do something she cannot give him a timeframe but must wait for a few weeks for him to do it. It should be noted that a further major stress was imposed upon the Baneth family and in particular Mr Baneth when their son who has been diagnosed with bipolar disorder was charged with a number of criminal offences in 2003.
[4]The medication commenced in February 2004 and was prescribed by a psychiatrist (142).
Expert evidence
I accept the evidence that a given percentage of hearing loss as measured by techniques such as audiograms affects people differently. Much depends upon the environment in which the person is attempting to understand what is said and the levels of stress and frustration. Much also depends upon the ability to see the speaker and lip read and the opportunity to draw, from the context of what is said, the meaning of sounds heard. Mr Baneth was denied the former in any telephone conversation. This was made worse for him because of the high number of telephone conversations involved female voices of a higher frequency and with foreign accents. In addition, as most of his conversations concerned figures and dates, he was deprived of any useful context. I also accept that the hearing loss throughout has been of such an order that intense concentration has been required to ensure that information was accurately heard and recorded and that as the hearing got worse, the task became more difficult and more tiring and the hearing deteriorated. I have referred above to Dr Dineen’s description of the process. The report of another audiologist, Danielle Williamson,[5] described the problem in the following way:
“People with a hearing loss often find communication a strain because of their need to concentrate so hard to get the message. This can create tension throughout the body leading to fatigue and a further communication break down.”
[5]28 February 2002.
Different views have been expressed by some of the experts about the likely capacity of Mr Baneth to carry out accountancy work having regard to the readings recorded on those occasions when his hearing was tested. Such expert views, however, give limited assistance. In some instances, the experts relied essentially on what they were told by Mr Baneth. In other instances, however, experts focused, understandably, on their respective disciplines so that they focused either on the physical measured deficit or the psychiatric features. As acknowledged by Dr Millhinch, an expert audiologist, there can be a psychiatric component exacerbating the situation. I accept that the latter can have a real impact on the capacity of a person to hear and understand and be an important factor in determining the ultimate capacity of an individual to hear and understand. The psychiatric component is in fact of particular significance for Mr Baneth.
The psychiatric aspect is also of particular significance in assessing the expert opinions. For example, counsel for the defendant relied upon the opinion of Mr Hooper, a specialist ear, nose and throat surgeon who interviewed Mr Baneth at the request of the defendant on 19 July 2005. He expressed the opinion that Mr Baneth is presently “able to work 10 hours a week as an accountant providing that he wears binaural hearing aids”. He properly qualified that proposition by the phrase “from the point of view of hearing alone”. In other words, in expressing his opinion he did not take into account any of the psychiatric impact of the hearing loss on Mr Baneth.
Neither party called psychiatrists to give evidence. Each relied on reports that they had prepared. The three principle psychiatric experts were Dr Strauss, (engaged by the defendant for advice) Dr Weissman (engaged by the plaintiff for advice) and Dr Simons who has treated the plaintiff in recent times for his psychiatric problems.
I am satisfied that Dr Strauss, who assessed Mr. Baneth in October 2004, failed to appreciate fully the significance of the impact of Mr Baneth’s childhood. This led him to dismiss any suggestion of psychiatric illness disabilities having developed at the time Mr Baneth ceased to conduct his business and to attribute his anxiety and depression at the time of his examination to his son’s ill-health and difficulties. He did, however, note that Mr Baneth had “marked obsessional traits in his personality” and that his “insight was a little limited”.
Dr Weissman saw him closer to the critical events in October 2002. He explored his past more fully. He recorded a detailed history of the impact of the hearing difficulties upon him particularly in 2000 and 2001. He described Mr Baneth’s situation as one where the hearing difficulties “became overwhelming”. He recorded that he began to feel very stressed, anxious and depressed because of his hearing problems and difficulties and their effect on his work. He also recorded that Mr Baneth could not sleep properly, had mind chatter and worries, felt guilty about his clients, stopped eating properly, developed kidney stones from dehydration and stopped exercising and socialising. He also recorded that Mr Baneth had physical and emotional difficulties dealing with the selling of the practice. He noted that at the time of the examination there had been some improvement in the emotional state but he still felt depressed at times, his morale and spirits were much better in the recent months, his sleeping had improved but he still suffered from sleep disturbance because of stress and worries. His appetite was limited and he still felt guilty about his clients. His energy and motivation was now mildly diminished. He remained socially withdrawn and his concentration was poor and his sex drive had “gone”. Dr Wiseman was of the opinion that
“Mr Baneth experiences mild mixed depressive symptoms as a consequence of his hearing loss. In other words, this represents a secondary or reactive psychiatric condition or impairment. His symptoms and signs satisfy the diagnostic criteria for an Adjustment Disorder with depressed and anxious mood, and mixed emotions, of milk severity.”
Because of his lack of information in critical areas, Dr Strauss was understandably dismissive of the significance of the psychiatric problems of Mr Baneth and expressed the view that from a psychiatric point of view Mr Baneth was capable of working as an accountant for in excess of 10 hours per week. Dr Weissman, however, took the view that from a psychiatric perspective Mr Baneth was fit only to resume work on a partial basis in doing his pre-injury duties. He based this on the stress flowing from the amount of time needed to spend communicating with clients or the Australian Taxation Office face to face or by telephone. He too, however, had only limited contact with Mr Baneth and as a result did not fully appreciate the significant long term psychiatric effects of Mr Baneth’s childhood.[6] In the end, it seemed to me that the report of Dr Simons, the treating psychiatrist, is the most instructive because of her far more extensive contact with Mr Baneth. This gave her a superior understanding of his psychiatric problems.
[6]I note that Mr Baneth did not give evidence about the events of his childhood and youth upon which the psychiatrists relied but neither party objected to the admissibility of the statements of the psychiatrists about those matters and I proceed on the basis that any objections they may have had were waived.
It appears that Mr. Baneth was the only child of a loveless and bitter marriage. By the time he was three he believed his mother began having other relationships. He was sent off early to pre-school. His home life was not nurturing. He felt closer to his father but for a time his father worked in the United States – a source of major disappointment and anger. His father offered his mother a divorce but she declined. Conflict between his parents continued until his father suicided in 1963. Mr. Baneth was then approximately 16 years of age. Not long afterwards his mother’s boy friend moved into the house. His mother refused to pay his fees at Brighton Grammar School. He left school and worked in the public service. At 17 years he moved out on his own, living in impoverished circumstances. He completed his VCE through night classes and went to University. His mother moved to the United States and has shown little interest in Mr. Baneth or his family and they now have no contact.
Dr Simons described the affect of Mr Baneth's childhood as leaving him
".. with deep feelings of insecurity and lack of trust in authority figures. In their own way, each of his parents failed him and he remains anxiously hyper-vigilant that he will be betrayed, mistreated or neglected by authority figures. Life events that have echoes of these emotional paradigms are likely to produce significant decompensation in him. Mr Baneth has spent time discussing incidents of this nature. These have included the audits by the Australian Taxation Office which he regarded as inappropriate, the Treasury questioning of his management of GST calculations and the situation at a Scout Unit where a fellow leader was charged with sexual offences.
The current litigation is experienced by Mr Baneth in a similar light. He sees the authority figure of the insurance company in whom he placed his trust for his times of need as being uncaring and neglectful. This is extremely stressful for him and the prolongation of the case represents ongoing emotional trauma."
Her conclusion was -
"Mr Baneth has felt alone and unsupported all his early life. This places him in a position of great vulnerability. Failing hearing represented a major threat to his sense of competence and in addition to its obvious physical and practical impact would have created in him an anxiety state which led to depressed mood…"
Finally, reference should be made to the reports of the ear, nose and throat surgeon Mr Thomas the specialist engaged by the defendant to assess the plaintiff. He examined him twice, first in November 2001 and later in November 2004.
(a) Examination November 2001
Among other things he commented that Mr Baneth had suffered significant bi-lateral sensory-neural hearing loss. He also expressed the opinion that the degree of hearing loss was sufficient to make it difficult for Mr Baneth to function in a noisy environment but he believed that, because the hearing levels at lower frequencies were preserved, Mr Baneth would benefit greatly from the use of a hearing aid. As to the effect on his ability to work he expressed the opinion that the hearing loss would account for difficulties and additional stresses in dealing with the demands of a busy practice but that the hearing loss “per se” should
“not preclude him from being able to work in an office and should not preclude him from being able to communicate on a telephone”.
He stated that he was unaware of the particular stresses involved with work as an accountant but expressed the opinion that there are many other people in the community with a similar level of hearing loss who are able to continue to work in an office environment. He queried whether the hearing aids were appropriate and declined to express an overall prognosis but stated that he would anticipate that the hearing levels should be reasonably stable in the future. (101, 102).
(b) Examination November 2004
On this examination, Mr Thomas revised his opinions. He found that there had been a progression of hearing loss and expressed the opinion that:
". . . Mr Baneth is genuinely unable to work in his usual occupation for more than 10 hours per week. I believe that he does suffer significant anxiety and other psychiatric problems as result of his inability to hear properly."
He went on to say in answer to specific questions put to him by the defendant’s solicitors,
“1 & 2In practical terms this hearing loss makes it difficult for him to discriminate speech, particularly in the presence of background noise. His reported symptoms of difficulty in functioning in the workplace is consistent with the clinical findings.
3.I believe that he is unable to work at his usual occupation as an accountant for more than 10 hours per week. This particularly applies for employment in the context of his own business given the stresses associated with maintaining a business. I am really unable to comment on his motivation to rehabilitate himself and return to employment but I believe he cannot return to his previous level of employment. . .
……………
6.The prognosis is poor in that his hearing levels will not improve and they are likely to gradually deteriorate further and I believe that he is unable to work more than 10 hours per week as an accountant.
Assessment of evidence of work and medical history
I am satisfied that the lay and expert evidence in combination leads to the conclusion that as at March 2001, and ever since, Mr Baneth has not been able to engage in his usual occupation as narrowly defined. This has been the result of the significant and deteriorating hearing loss and the impact of that and the stresses associated with it on someone emotionally and psychologically very vulnerable resulting in significant anxiety and depression. As a result, he has been unable to function at the level required to engage in that occupation.
But before reaching any final conclusion, there remains the issue referred to above that was raised for the defendant - whether Mr Baneth’s hearing difficulties could have been addressed by changing his approach to his clients to one of written and not oral communication and, where oral communication was needed, by relying on the National Relay Service. Alternatively, it was put they could have been addressed sufficiently by such techniques to enable him to work for more than 10 hours per week in his usual occupation.
Alternative techniques to enable Mr Baneth to continue in his usual occupation
The use, feasibility and desirability of written communication was the subject of evidence by Mr Stannard, a witness called by the defendant. Mr Stannard, is an accountant who appears to prefer written communication to face to face communication or telephone communication.
On the face of it, it might be thought that these alternatives provided the answer for Mr Baneth and would have allowed him to continue to work as a tax and auditing accountant for more than 10 hours per week. But I am satisfied that the need for significant direct oral and telephone communication cannot be excluded and would normally be a part, and a significant part, of communication between the tax and auditing accountant and the client and with the Australian Tax Office. It should be noted that Mr Stannard described two types of accounting staff – those that go and see the client and those who should not go and see the client and are called “back room people”.[7] In addition, Mr Stannard could not deny that in his practice they did actually meet clients although they tried to discourage it. Accepting, as I do, that oral communication to a significant degree would have been inevitable, Mr Baneth would have been faced with the same problems of the combined effect of his hearing difficulties and its emotional and psychological consequences.
[7]Plainly, Mr. Baneth in his work was both.
As to the use of the National Relay Service, it is slow and cumbersome. The service provides an operator between the person with the disability and the other person with whom the disabled person wishes to communicate. The operator will normally communicate with the disabled person by a telephone typewriter. The system is funded. There is a protocol for conversation – “GA” for “go ahead” and “SK” for “stop keying”. I consider it unlikely that clients would be willing to use such a service because of its slowness and the need to disclose their private financial details to a third person – even though there are privacy protections in place.
I also note that none of these alternatives would enable Mr Baneth to cope with the difficulties of an Australian Tax Office audit meeting in which more than one person would be present and he would be attempting to help his clients cope with the questions posed by the officers of the Australian Tax Office. These had happened in the past and would have been an ever present concern through the period from 2000 to the present. Over that period he would have to have accepted that they were likely to be an aspect, however limited, of any future work by him as a taxation and auditing accountant. He could try to choose clients unlikely to be audited but could never be sure. Thus, whatever steps might have been taken, he would have had to live with the underlying anxiety and stress of the possibility.
Ultimately, however, the various alternatives suggested by the defendant could not remove the anxiety and stress associated with the reality that he could no longer be confident in the accuracy of his hearing. They would not remove the issues which had and continued to cause him to believe that he should not work in his usual capacity. It was a combination of hearing loss and his resulting anxious and depressed state that brought about that situation and prevented him working in his usual occupation.
Conclusion
In the end, as was submitted by his counsel, one should look at the man himself. Mr Baneth's life and work history points to a person of drive who has overcome significant obstacles to obtain an education and achieve his success in the accountancy profession. He loved his work and gained great satisfaction from it. He is someone for whom work is very important. I am satisfied that he is someone who would have continued to work as a tax accountant and auditor on a part-time basis if he could have done so. The fact that he has not, in my view, can only be satisfactorily explained on the basis that he cannot continue in his previous occupation and that is the result of factors beyond his control – the combined operation of significant and increasing hearing loss and the emotional and psychological effect of that loss.
I am satisfied that as at the date of the claim made by him under the policy on 1 April 2001 Mr. Baneth was totally disabled within the meaning of the policy. I am also satisfied that he has remained in that situation as his hearing continued to deteriorate and the emotional and psychological consequences have continued to play their part.
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