Beverley v Norwich Union Life Australia Ltd

[2000] QSC 264

SUPREME COURT OF QUEENSLAND

REGISTRY: BRISBANE
NUMBER: 6499 of 1998

[2000]QSC 264
Plaintiff:  ELIZABETH MARY CAROL BEVERLEY
  AND

First Defendant:         NORWICH UNION LIFE AUSTRALIA LTD ACN 006 783 295

AND

Second Defendant:     PETER NESS

Plaintiff:  NORWICH UNION LIFE AUSTRALIA LTD ACN 006 783 295
  AND
First Defendant:         ELIZABETH MARY CAROL BEVERLEY
  AND
Second defendant:     VINCENT GORDON BEVERLEY

BY FIRST COUNTER CLAIM

Plaintiff:  VINCENT GORDON BEVERLEY
  AND
First Defendant:         NORWICH UNION LIFE AUSTRALIA LTD ACN 006 783 295
  AND
Second Defendant:     PETER NESS

BY SECOND COUNTER CLAIM

JUDGMENT
Williams J
Delivered the 29^th day of June 2000

1. Consequent upon the answers made by the jury to the questions submitted for their consideration, senior counsel for the plaintiffs, Elizabeth Mary Carol Beverley and Vincent Gordon Beverley, moved for judgment against the defendants Norwich Union Life Australia Ltd (“Norwich”) and Peter Ness in the sum of $190,000.

1. It should be noted that the jury was not asked to apportion liability as between Norwich and Ness, but apparently because of the wording of questions 9 and 10 they considered they were expected to do so.  The supplementary answer (exhibit 23) makes it clear that the jury determined that the Beverleys were entitled to recover 20% of $950,000 namely $190,000.  In consequence the jury’s purported apportionment of that amount as between Norwich and Ness can be ignored for purposes of the judgment.

1. Senior counsel for Norwich also moved for judgment, in the form of a declaration that Norwich had validly avoided the insurance policy in question.

1. In those circumstances it is necessary to recount briefly the history of the matter and in particular the pleadings to see what orders are called for in the light of the findings of the jury.

1. On 27 September 1995 the relevant proposal for insurance was completed by the Beverleys in the presence of Ness, and Norwich issued policy 7322744 in consequence in October 1995.  Mrs Beverley was the owner of the policy and the life insured was that of Mr Beverley.  By letter dated 5 February 1998 Norwich communicated to the Beverleys the fact that it had terminated that policy on the ground, inter alia, of non-disclosure of material facts.  The response of the Beverleys was a letter of 5 March 1998 asserting that Mr Beverley was suffering “no pre-existing medical condition”, thereby impliedly contending that there was no non-disclosure.  Norwich maintained that it had validly terminated the policy.

1. The action was commenced by writ issued 16 July 1998; Mrs Beverley was the only plaintiff and Norwich the only defendant.  The statement of claim in the action so constituted was delivered on 12 October 1998.  The principal relief claimed was a declaration that the subject policy remained in full force and effect.

1. The defence of Norwich was delivered on 6 November 1998; it included a counter-claim against both Mr and Mrs Beverley for a declaration that it had “validly avoided a policy of insurance being policy No 7322744 between the defendant on the one hand and Vincent Gordon Beverley and Elizabeth Mary Beverley on the other hand”.

1. In the statement of claim of 12 October 1998 there was no allegation that there had been any oral disclosure of any material fact to Ness as the agent of Norwich on 27 September 1995.  However, in both the reply and answer of Mrs Beverley and the defence and counter-claim of Mr Beverley, each delivered on 21 December 1998, there was an allegation that on 27 September 1995 Ness had been informed of certain facts relating to a prostate specific antigen test had by Mr Beverley shortly before the proposal was completed.  By his counter-claim Mr Beverley sought damages from Norwich based upon an alleged breach of duty by Ness in carrying out his responsibilities as the agent of Norwich with respect to the completion of the proposal on 27 September 1995.

1. On 15 April 1999 Norwich commenced third party proceedings against Ness, essentially claiming that it was entitled to be indemnified by Ness if found liable in damages to Mr Beverley.

1. By amended pleadings filed on 19 October 1999 Ness was made a defendant to the respective claims made by Mr and Mrs Beverley; each of the Beverleys by those amended pleadings sought damages against Norwich and Ness on the ground that the latter as agent of Norwich was guilty of negligence in that he breached the duty of care he owed the Beverleys with respect to the completion of the proposal on 27 September 1995.

1. A consideration of those pleadings makes it clear that the initial claim and counter-claim related to the entitlement of Norwich to terminate the policy in question on 5 February 1998.  That remained the sole claim by Mrs Beverley until October 1999 when, by amendment, a claim for damages against Norwich and Ness was made by her.  By the amendments in October 1999 Mr Beverley’s claim for damages against Norwich made in December 1998 was extended to include such a claim against Ness.

1. One of the critical issues at the trial remained the question whether or not Norwich was entitled to terminate the policy as at 5 February 1998.  A deal of evidence related solely to that question.  It is sufficient to say that the evidence of the witnesses McCulloch,  Schram, and Dr Smith, each called by Norwich, was solely related to that issue.

1. The jury, by their answers, found that there had been non-disclosure of material facts and that in consequence Norwich was entitled to terminate the policy.

1. Given the jury’s findings Norwich is entitled to a declaration that it validly avoided the policy of insurance being policy No 7322744 between it on the one hand and Vincent Gordon Beverley and Elizabeth Mary Beverley on the other hand.

1. By their answers the jury found that Ness was negligent.  Given all of the answers I would infer that the finding was that he was negligent in that he did not make further enquires of Mr Beverley before submitting the proposal to Norwich having been made aware that Mr Beverley had been subjected to some medical test.

1. On the issues raised in the collateral proceedings by the Beverleys against Norwich and Ness for damages for negligence, the Beverleys are entitled to judgment against both Norwich and Ness for $190,000 in the light of the jury’s findings.

1. The problem is to determine what order for costs should be made in those circumstances.  In my view it is clear that Norwich has succeeded on one critical issue which was fully litigated and is entitled to judgment thereon; that issue, though there was a degree of overlapping, took up at least part of the trial.  The Beverleys succeeded upon another separate and distinct issue, a separate and distinct cause of action, and again it can be said that resolving that issue occupied a considerable part of the overall time taken for the trial.

1. I have come to the conclusion that in the rather peculiar circumstances of this trial Norwich should have its declaration with costs and that the Beverleys should have their judgment for damages with costs.

1. It should also be noted that part of the case made by Norwich was that the Beverleys had made positive misrepresentations in the proposal form completed on 27 September 1995, and there was a further allegation that such representations were made knowing them to be false or recklessly not caring whether they be true or false.  Norwich, given the answers of the jury, failed on all of those issues.  However, in the light of the finding of non-disclosure of material facts, those particular findings did not affect the outcome.  Mr Williams QC for the Beverleys submitted that there had been an allegation of fraud which failed and that in consequence the Beverleys should get indemnity costs.  Given the overall conduct of the trial I reject that submission.  Counsel for Norwich in conducting the case were careful to avoid any assertion that the Beverleys were fraudulent in the derogatory sense of that term.  There was good reason for believing, as contended for by counsel for Norwich, that Mr Beverley set his mind against accepting the opinion of the doctors that he might have cancer.  In that context the real contention was that objectively one could conclude that he knowingly made a mis-statement but without the opprobrium which is usually associated with an allegation of  fraud.

1. Again in the peculiar circumstances of this case I am not persuaded that any specific order for costs should be made in the light of the jury’s rejection of the proposition that there was a mis-statement made knowingly or recklessly.

1. In the proceedings between Norwich and Ness the former claimed a declaration that it was entitled  to indemnity because the operative negligence was that of its agent for whom it was vicariously liable.  The pleading filed by Ness did not raise any defence to that claim and I can see no reason in law for refusing to grant Norwich the declaration for indemnity it seeks. 

1. The only other matter which requires my determination is that of interest.

1. Mr Williams for the Beverleys contended that interest should be allowed from 27 September 1995, the date when the proposal was completed, until date of satisfaction of the judgment.  Mr Morrison opposes that on the ground that no allegation of negligence was made until quite late; the critical allegation of negligence was not finalised until October 1999.  This aspect has caused me some concern, as I can see the force of the argument on either side.  The Beverleys have not been out of pocket and do not have to pay, for example, the premium which would have been payable if the policy had validly issued. (All monies paid by way of premium were refunded in February 1998.)  It was not until October 1999 that Norwich and Ness could realistically consider their liability in negligence because that issue had not been raised fully until then.

1. The arguments, in my view, are fairly evenly balanced, but after consideration I have decided in the exercise of my discretion to allow interest at the rate of 7% per annum from 27 September 1995 to date of satisfaction of the judgment.  

1. There will therefore be judgment in the following terms:

1.          Declare that Norwich Union Life Australia Ltd ACN 006 783 295 validly avoided a policy of insurance being policy No 7322744 between it on the one hand and Vincent Gordon Beverley and Elizabeth Mary Beverley on the other hand.

2.          Order that Elizabeth Mary Carol Beverley and Vincent Gordon Beverley pay the costs of Norwich Union Life Australia Ltd ACN 006 783 295 of and incidental to the proceeding resulting in the declaration in favour of Norwich Union Life Australia Ltd ACN 006 783 295 to be assessed on the standard basis.

3.          Judgment for Elizabeth Mary Carol Beverley and Vincent Gordon Beverley against Norwich Union Life Australia Ltd ACN 006 783 295 and Peter Ness in the sum of $190,000 with interest at the rate of 7% per annum from 27 September 1995 to the date of satisfaction of the judgment.

4.          Further order that Norwich Union Life Australia Ltd ACN 006 783 295 and Peter Ness pay the costs of Elizabeth Mary Carol Beverley and Vincent Gordon Beverley of and incidental to the proceeding for damages for negligence resulting in judgment in their favour to be assessed on the standard basis including costs reserved on 14 October 1999 .

5.          Further declare that Norwich Union Life Australia Ltd ACN 006 783 295 is entitled to be indemnified by Peter Ness with respect to any sum which it may pay to Elizabeth Mary Carol Beverley and Vincent Gordon Beverley in satisfaction of the judgment in their favour for $190,000 plus interest and assessed costs.