Bottrell v National Mutual Life

[2007] NSWSC 458

Reported Decision: (2007) 14 ANZ Insurance Cases 90-130

New South Wales

Supreme Court

CITATION:	Bottrell v National Mutual Life [2007] NSWSC 458 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	30 April, 1, 2 & 3 May 2007
JUDGMENT DATE :	1 June 2007
JUDGMENT OF:	Hammerschlag J
DECISION:	Verdict for the plaintiff
CATCHWORDS:	LIFE INSURANCE – Income Protection Policy – Purported avoidance by insurer defendant on grounds of fraudulent misrepresentation and non-disclosure as to income and medical history – Whether misrepresentations and non-disclosure – Whether made fraudulently – Plaintiff seeks damages for repudiation of policy– Basis for calculating such damages – Determination of entitlement to benefits under policy, period over which benefits would have been received, and present value of the entitlement
LEGISLATION CITED:	Insurance Contracts Act 1984 (Cth) Insurance (Agents and Brokers) Act 1984 Life Insurance Act 1995 (Cth) Health Insurance Act 1973 (Cth) Medical Practice Act 1992 (NSW)
CASES CITED:	Permanent Trustee Australia Co Ltd v FAI General Insurance Co Ltd (2001) 50 NSWLR 679 Tyndall Life Insurance Co Ltd v Chisholm (2000) 11 ANZ Ins Cas 90-104 Lamb v Johnston (1914) 15 SR (NSW) 65 Briginshaw v Briginshaw (1938) 60 CLR 336 Robinson v Harman (1848) 1 Ex Ch. 850 Wenham v Ella (1972) 127 CLR 454 The Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 Pennant Hills Restaurant Pty Ltd v Barrell Insurances Pty Ltd [1977] 2 NSWLR 827 Luckin v Hamlin (1869) 21 LT 366 TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130 Sellars v Adelaide Petroleum N.L. (1994) 179 CLR 332
PARTIES:	Craig Peter Bottrell The National Mutual Life Association of Australasia Ltd
FILE NUMBER(S):	SC 50086/2006
COUNSEL:	B.W. Rayment QC with G.B. Beauchamp (Plaintiff) D.L. Davies SC with D.F. Villa (Defendant)
SOLICITORS:	Firths - The Compensation Lawyers (Plaintiff) Turks Legal (Defendant)

- 1 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

HAMMERSCHLAG J

50086/2006 CRAIG PETER BOTTRELL -v- NATIONAL MUTUAL LIFE ASSOCIATION OF AUSTRALASIA PTY LTD

JUDGMENT

Introduction

1 The plaintiff Craig Peter Bottrell, born 6 November 1962 and a chiropractor by occupation, sues the defendant The National Mutual Life Association of Australasia Pty Ltd (“the defendant” or “the insurer”) for damages arising out of the alleged repudiation by the defendant of an Income Protection Insurance Contract (“the policy”) which the defendant issued to him as insured on 3 January 1996. At that time the defendant traded under the name Australian Casualty & Life or AC&L.

2 The defendant resists the claim on the basis that it was entitled to and did avoid the policy for fraudulent misrepresentation or non-disclosure.

Background

3 The plaintiff qualified as a chiropractor in the United States in 1992. He obtained a Doctorate of Chiropractic from Logan College of Chiropractic, St Louis, Missouri. He practiced in Dallas, Texas and then, in 1994, moved to South Australia where, in about May of that year, he commenced work as an employee at Prospect Chiropractic Health Centre. The practice had rooms at Prospect and at Moonta. The proprietor of the practice was a Mr Braund. The plaintiff’s remuneration was calculated as a percentage of the revenue he earned by his own exertion.

4 During 1995 the possibility arose that the plaintiff might buy the practice from Mr Braund.

5 In about March 1995 the plaintiff made contact with Mr Phillip Spencer Brown, an insurance advisor, and discussed with him income protection insurance. It is common cause that Mr Brown’s activities were as agent for the defendant.

6 The plaintiff first met with Mr Brown on 20 March 1995. That day Mr Brown wrote to him with information about monthly benefit cover ranging from $5,000 to $6,000. With his letter Mr Brown enclosed a Customer Information Brochure. The brochure has numerous headings. One is entitled Partial Disability. Under it there is a reference to the monthly benefit available being limited to 75 per cent of the insured’s highest average monthly income earned in any 12 consecutive months in the 3 years before he or she became disabled.

7 On 21 September 1995, the plaintiff was injured when flying debris from a transporter truck smashed through the windscreen of his motor vehicle and struck his left arm. The evidence is that for a period of about eight weeks this injury adversely affected his ability to work as a chiropractor. The injury had the effect of delaying his plans to buy the practice from Mr Braund. He had originally planned to buy the Braund practice with effect from 1 December 1995. Instead he purchased it with effect from 1 February 1996. He made an insurance claim against the South Australian SGIC for this injury. The claim was settled.

8 With respect to the injury from the motor vehicle accident, the plaintiff consulted a general practitioner, Dr Bennett, who referred him to a surgeon, Dr Watkin. On 29 September 1995, Dr Watkin reported to Dr Bennett in terms which indicated that the consequences of the injury were not substantial. Dr Watkin reviewed the plaintiff’s situation on 12 October 1995. The plaintiff complained of hyperaesthesia in the left hand. The surgeon wrote a report dated 6 March 1996 in connection with the plaintiff’s claim against the SGIC. In it he stated, amongst others, that:

“Dr Bottrell found that it was necessary to modify his work practices to accommodate the upper limb problems. The wound appeared to be healing satisfactorily. I thought it reasonable to accommodate Dr Bottrell’s request for physical therapy with Dr Shaun Allwood (a chiropractor).”

The report also says “The injuries do not appear to be preventing the patient from resuming full employment”.

9 The plaintiff saw the chiropractor Dr Allwood 18 times over two months for ultrasound treatment to ameliorate the scarring, and according to a report from Dr Allwood (dated 10 June 2004 given in connection with the present dispute) for treatment of the lower neck and upper thoracic spine because of arm dysfunction.

10 On 20 November 1995 the plaintiff again met with Mr Brown. The meeting is of central significance in these proceedings. The plaintiff and Mr Brown have different versions of what occurred. The controversy is dealt with later in this judgment.

11 It was at this meeting that there was filled out the application form (“the proposal”) by which the plaintiff, under his signature, made application to the defendant for the policy.

12 The policy was issued by the defendant on 3 January 1996.

13 In connection with his claim against the SGIC, the plaintiff prepared a letter dated 24 February 1997 seeking to quantify the loss of income which he had suffered as a consequence of the accident. Attached to the letter is a schedule of income figures for the chiropractic practice. The letter says the following:

“You will also see a drop in figures after the accident. It has not been until the last several months that I have begun to reach a consistently similar level of income as that of the 8 weeks prior to the accident.”

14 In May and July 1998 the plaintiff suffered injury to his right hand and wrist by falls. These injuries were unrelated to the September 1995 accident. As a consequence the plaintiff has limited dorsiflexion in his wrist and experiences pain when he flexes it beyond a certain point.

15 The wrist injury led him to cease working as a chiropractor from 21 November 1998.

16 A claim was made on the defendant under the policy and it commenced paying the monthly benefit to the plaintiff on 5 December 1998.

17 The plaintiff’s unchallenged evidence is that apart from minor employment as a movie extra in 2005 and 2006 (from which he earned a total of $1,869.87 after tax), he has not worked since 1998. He has also taken no steps to retrain in any other field or to find any other work or occupation.

18 In August 2004 the defendant wrote to Mr Brown posing certain questions to assist it “in managing the client’s claim”. Mr Brown answered the questions in a letter dated 27 August 2004.

19 On 10 September 2004, that is, some six years after it commenced paying under the policy, the defendant denied liability.

20 The plaintiff’s then solicitors Russell Kennedy, responded to the defendant’s intimation of avoidance by way of a letter dated 1 October 2004.

21 The plaintiff then referred the defendant to the Financial Industry Complaints Service (“FICS”). Although the course which the processing of that complaint took is not revealed by the evidence, a submission dated 7 January 2005 was made to FICS on behalf of the plaintiff, and Mr Brown made a written statement dated 1 June 2005.

22 On 29 June 2006 the plaintiff elected to treat the defendant’s denial of indemnity as a repudiation and terminated the policy by accepting it in the summons sued out of this Court.

23 He now sues for damages being the value to him of the loss of the benefits he would, but for the defendant’s alleged repudiation, have received.

24 The defendant by cross-summons seeks recovery of all benefits made to the plaintiff under the policy less the premiums paid by him.

The relevant terms of the policy

25 The policy is in what is called “plain English”, which here appears to connote in some instances that its words are plain but its meaning is obscure. Its principal features are set out below.

26 The insurer contracted to pay, for the “life-time” of the insured, a monthly benefit of $5,000 whilst the insured was suffering total disablement within the meaning of the policy. It contracted to pay monthly business expenses of $2,500 for one year. Each benefit had a 14 day waiting period.

27 Total disablement under the policy is defined to mean if, because of an injury or sickness, the insured is:

· unable to perform at least one income producing duty of his or her occupation;

· not working; and

· under the regular care and attendance of a medical practitioner.

28 The policy also covers the case where the insured becomes partially disabled.

29 If the insured has been totally disabled for at least 14 days and then returns to some paid work – but is partially disabled, a reduced monthly benefit is payable, being the difference between what the insured earns while partially disabled and his or her pre-disability income.

30 The policy ascribes a meaning to “partially disabled” which it is necessary to set out. It is as follows:

“The person insured is partially disabled if, immediately after being totally disabled for at least 14 days, he or she is able to perform one or more duties of his or her occupation , but not all of them, or is working in another occupation and – because of the disability – the amount the person insured earns for the work he or she does is less than the amount of his or her pre-disability income. (emphasis added)

The person insured must be under the regular care and attendance of a medical practitioner.”

31 Medical practitioner is defined to mean a registered medical practitioner.

32 The policy says:

“We stop paying as soon as one of the following happens:

· The person insured stops being partially disabled

· On the first renewal date after the person insured turns 65, unless you have a lifetime injury benefit period…

· …”

33 The renewal date is 3 January.

34 With respect to partial disablement, benefits cease on the first renewal date of the policy after the insured turns 65, regardless of whether a lifetime benefit period is held.

35 One effect of these provisions, it seems, is that if the insured has a lifetime injury benefit period, and despite being able to carry out some sort of work does no work at all, his benefits endure for life, but if he does some work in an occupation or becomes able to perform one or more duties of his occupation, and therefore becomes partially rather than totally disabled, his benefits cease at 65.

36 Another effect of these provisions seems to be that if whilst being partially disabled (and being able to work) the insured does no work at all he receives the full benefit because there is no amount being earned which would otherwise reduce his monthly benefit. Only if he works and earns is his monthly benefit reduced.

37 The policy also has a “claims escalation option”, which was taken up by the plaintiff. It provides for an escalation of the monthly benefit, on a three monthly basis, by the lower of one quarter of any annual percentage increase in the CPI and one quarter of 5 per cent.

Liability

38 On the plaintiff’s claim both liability and quantum are in issue. Each will be dealt with in turn.

39 The substantive defence pleaded by the defendant is that it is entitled to avoid the policy for:

a false misrepresentations made in the proposal by the insured with the deliberate intention of inducing it to enter into the policy or made with reckless disregard as to whether they were true or not; and

b failure, either deliberate or with reckless disregard, by the insured to make proper disclosure.

40 There are two groups (with some overlap) of misrepresentations and non-disclosures alleged, one relating to the plaintiff’s income details, and the other relating to his medical history.

The proposal

41 The relevant sections of the proposal and the responses which were given, all of which are in Mr Brown’s handwriting, are as follows.

42 Section 7 of the proposal is headed “Occupation details of person to be insured”. It contains the following questions with the following answers.

“7. Occupation details of person to be insured
A. Principal occupation
Chiropractor
B.i. How long have you been in this occupation?
3 Years
ii. If self employed, how long has your current business been in operation?
18 mths +
C. Specific qualifications, if any (please detail)
BCH Science Univ GUELPH
Dr. CHIR. 1992 1987
D. Name and address of employer
SELF 6/81 Prospect Road, Prospect
E. Nature of Business
Private Practice
F. Please describe the specific duties of your occupation. ( What you do day to day)
Chiropractor”

43 Section 8 of the proposal is headed “Income details of person to be insured”. It contains the following questions with the following answers:

“8. Income details of person to be insured
A. What was your income from your principal occupation over the last 12 months?
Income is what is earned by the person to be insured’s own activity after deducting expenses necessarily incurred in earning that income before tax.
$80,000 + approx.

B. What was your income ( net of business expenses but before tax ) in the full financial year prior to that period?
$
C. If applying for Business Expense Protection, what are your current weekly expenses?
$30000 approx”

44 Section 11 of the proposal is headed “Personal statement of person to be insured”. It contains the following questions with the following answers.

“ 11 Personal statement of person to be insured
D. Details of your usual doctor
Dr. K Bennett
Address
182 Ward Street, Nth Adelaide Postcode 5006
How long have you been his/her patient?
1 year
E. Date and reason of last consultation with any doctor (emphasis added)
Sept ’95 MVA
Name and address of this doctor ( if not your usual doctor)
[Left blank]”

45 Section 13 of the proposal is headed “Medical history of person to be insured”. It contains a series of questions sequenced from A to T, each with a yes or no box to be ticked. It contains the following questions with the following answers.

“13 Medical History of person to be insured
Have you EVER had or been told you had, or received advice or treatment for:
E. Back pain, sciatica or other disorder of the back or spine including the neck (whiplash injury)?
No
O. Any other medical condition not mentioned above?
No

Q. Other than already stated, have you within the last 5 years:

(i) Had any medical examination, advice, treatment or been in hospital?

Yes
(ii) Had an ECG, X-Ray, or other test including blood test?

Yes

(iii) Used drugs or medications of any kind on a regular and/or ongoing basis?
No
S. Do you intend to seek advice or treatment for any current health problem(s)?
No”

46 Below the questions, on the same page of the proposal, there is a columnised box for the provision of details for when yes answers are given. In that box, relevantly with respect to questions Q i and ii, information was written in concerning the plaintiff’s September 1995 motor vehicle accident. One column is headed “Degree of recovery (%)”. In that column “n/a” has been written against the information about the accident. Another of the columns is headed “Full name and address of doctor or hospital if any”. In that column has been written the following: “Dr Bennett then referred to Dr D Watkins 164 Ward Street Nth Adelaide 5006”.

The defendant’s pleaded case

The income details misrepresentation allegations

47 The income details fraudulent misrepresentations alleged are that whereas “$80,000+ approx” was stated to be the “income earned by the person to be insured’s own activity over the last twelve months” and also in the full financial year prior to that period:

· in the financial year ended 30 June 1995 the plaintiff earned an income before tax of $51,238 and incurred $15,017 in expenses in earning that income; and

· in the period from 1 July 1995 to approximately 31 January 1996 the plaintiff earned an income before tax of $37,524 and incurred $12,524 in expenses in earning that income.

The income details non-disclosure allegations

48 The defendant pleads as a deliberate or reckless non-disclosure the plaintiff’s failure to disclose that in the period from 21 September 1995 until the inception of the policy on 3 January 1996 his weekly income had fallen compared to his weekly income prior to 21 September 1995, as a consequence of the injuries sustained in the motor vehicle accident of 21 September 1995.

The medical history misrepresentation allegations

49 A number of matters alleged in the defendant’s further amended commercial list response to have been fraudulent were abandoned during oral submissions by Mr Davies SC who, together with Mr D Villa of counsel, appeared for the defendant.

50 The medical history matters which remain as both alleged fraudulent misrepresentations and non-disclosures are that whereas “Dr K Bennett in September 1995 MVA” was given as the answer to the question “Date and reason of last consultation with any doctor” (emphasis added), and the answers to the neck and spine treatment question was “no”, in fact, the plaintiff had attended:

· Dr Watkin on 28 September 1995 following a referral from Dr Bennett for injuries to his left hand as a result of a motor vehicle accident on 21 September 1995;

· Dr Watkin on 12 October 1995 complaining of hyperaesthesia in the left hand. The plaintiff reported to the doctor that he found it necessary to modify his work practices to accommodate his upper limb problems; and

· Dr Allwood, chiropractor, on 13 October 1995, 14 October 1995, 16 October 1995, 18 October 1995, 20 October 1995, 23 October 1995, 25 October 1995, 27 October 1995, 30 October 1995, 1 November 1995, 3 November 1995, 6 November 1995, 10 November 1995, 17 November 1995, 23 November 1995, 1 December 1995, 2 December 1995 and 11 December 1995 for treatment of injuries suffered in the motor vehicle accident. Treatment consisted of ultrasound and soft tissue release techniques. The arm dysfunction necessitated treatment of the lower neck and upper thoracic spine with spine manipulation by Dr Allwood.

The medical history non-disclosure allegations

51 The medical history non-disclosures pleaded are the alleged failure by the plaintiff to disclose the delay of the purchase of the chiropractic practice from 1 December 1995 to 1 February 1996 because of the injuries sustained in the earlier motor vehicle accident and the modification by the plaintiff of his work practices to accommodate his upper limb problems and injuries. This alleged non-disclosure is closely associated with the income details non-disclosure allegations.

The plaintiff’s pleaded reply

52 The plaintiff replies that there are obvious incomplete answers or failures to answer questions on the proposal which result in the defendant having waived compliance with the duty of disclosure by virtue of s 21(3) of the Insurance Contracts Act 1984 (Cth) (“the Act”).

53 He pleads that, having given the defendant the name and address of Dr Watkin, the defendant, by failing to communicate with Dr Watkin to obtain a report, waived compliance with the duty of disclosure.

54 He pleads generally that he answered honestly each of the questions asked of him by Mr Brown.

55 As to the income misrepresentations, in his reply the plaintiff puts in issue that he stated to Mr Brown his income over the last twelve months was $80,000 approximately, or that in the full financial year prior to that period it was $80,000 approximately.

56 He further replies that the answers to questions 8A and 8B on the proposal were composed by Mr Brown after a discussion in which he informed Mr Brown of his proposed purchase of the practice from Mr Braund in which practice he was, to that point, working.

57 He replies further that the relevant questions were either not answered or incompletely answered and that the defendant is deemed to have waived disclosure of the “relevant matter” pursuant to s 21(3) of the Act.

58 Finally, he pleads generally that he relied upon Mr Brown to complete accurately the proposal and that to the extent to which the defendant relies upon answers to questions in the proposal incorrectly composed by Mr Brown, such reliance is precluded by the provisions of s 11 of the Insurance (Agents and Brokers) Act 1984 (Cth) as amended.

The issues

59 The issues which thus fall for determination are whether the insurer was entitled to avoid the policy and if not, the quantum of the plaintiff’s damages.

60 If the defendant was not entitled to avoid, its conduct will inexorably be a repudiation by it of its contractual obligations.

61 If it was entitled to avoid, relief on the cross-summons will also inexorably follow.

62 To establish an entitlement to avoid, the insurer must establish that:

a the alleged misrepresentations and non-disclosures (if not the subject of waiver) were made; and

b that they were made fraudulently.

The relevant statutory enactments and applicable legal principles

63 A brief reference to the relevant statutory enactments and legal principles which apply is sufficient.

64 The policy is a continuous disability policy under the provisions of s 9A of the Life Insurance Act 1995 (Cth). Such a policy is in turn a life policy under s 9 of that Act and in turn is a contract of life insurance within the definition of that term in s 11(1) of the Act.

65 Section 21(1) of the Act imposes on an insured a duty of disclosure. It provides that an 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.

66 Under s 21(2)(d) of the Act, the duty of disclosure does not require the disclosure of a matter where compliance with the duty of disclosure is waived by the insurer.

67 Under s 21(3) of the Act, where a person fails to answer or gives an obviously incomplete or irrelevant answer to a question included in a proposal form about a matter, then the insurer shall be deemed to have waived compliance with the duty of disclosure in relation to the matter.

68 It is accepted by the defendant that Mr Brown was acting as its agent in his dealings with the plaintiff. His knowledge is therefore to be imputed to the defendant: Permanent Trustee Australia Co Ltd v FAI General Insurance Co Ltd (2001) 50 NSWLR 679 at 696-699.

69 Section 29(2) of the Act, which applies to a contract of life insurance and hence the policy, provides that an insurer may avoid the contract if a failure to comply with the duty of disclosure or a misrepresentation made to the insurer before the contract was entered into was fraudulent.

70 A fraudulent misrepresentation is a representation which is false and which is made either knowingly, or without belief in its truth or recklessly, not caring whether it be true or false and with the intention that it should be acted upon by the insurer: Tyndall Life Insurance Co Ltd v Chisholm (2000) 11 ANZ Ins Cas 90-104 at 86,140.

71 A fraudulent non-disclosure is one where the insured knowingly fails to disclose a matter which he or she knows to be a matter relevant to the decision of the insurer whether to accept the risk and if so on what terms: TyndallLife Insurance Co Ltd v Chisholm at 86,141.

72 It is not enough that the insured may have acted carelessly. He or she must be shown to have lacked an honest belief in the truth of his answers. If the insured was consciously indifferent to the truth of his answers, the insured was reckless: Lamb v Johnson (1914) 15 SR (NSW) 65 at 74-75.

73 The onus of establishing fraudulent misrepresentation or non-disclosure rests on the defendant. The allegations are serious. Whilst the civil standard of balance of probabilities applies, the nature of the issue necessarily affects the process by which the requisite degree of satisfaction is obtained: Briginshaw v Briginshaw (1938) 60 CLR 336 at 362-363.

74 I turn now to whether the defendant has made out its defence.

The 20 November 1995 meeting

75 The proposal, the answers to which are alleged to be misrepresentations, was filled out at the 20 November 1995 meeting.

76 Each of the plaintiff and Mr Brown swore affidavits about what occurred. Each was subjected to stern cross-examination about his version of the meeting. The overall credibility of each was sought to be impeached by opposing leading counsel, each striving for a finding that his protagonist be accepted and the evidence of the other be rejected.

77 At the outset, it is apt to observe that the proposal is some fifteen pages long. It reflects that the plaintiff signed it on 20 November 1995. There is towards the end of it a section entitled “Declarations” which includes a declaration by the insured that he has read and understood the statements and the duty of disclosure, a confirmation that the information in the proposal is “true, accurate and complete” and a declaration that he was “not aware of any other circumstances which might affect the risk of insurance”. There is also a declaration that “If any answer is not in my/our handwriting, I/we declare that it has been written down at my/our dictation”.

78 It appears to be common cause (or at least not seriously challenged by the defendant) that when the plaintiff signed the proposal he read only the page which he signed and not the earlier parts of it where information had been written into it by Mr Brown. (Mr Davies while not agreeing, informed the Court that he did not have any instructions to put the contrary).

79 It also appears to be common cause that the answers given in the proposal, whether by way of information provided or a “yes” or “no” answer, were determined at this meeting between the plaintiff and the defendant’s agent. The defendant, through its agent, accordingly played a part in the provision of the answers to the questions to which it required answers.

80 At a general level, Mr Brown’s evidence was that it was his invariable practice to sit down with a prospective insured, read through the questions aloud and write down the answers to the questions. His evidence was further that it was his practice to explain what information an insured had to disclose to an insurer in the application form, being medical and other relevant details, because the insurer relies on this information in its decision whether to offer insurance or not, and that it was not necessary to disclose minor medical matters such as childhood visits to the doctor or dental check-ups unless such matter was recurring and of concern today. The plaintiff’s version likewise at a general level was that in substance, the answers which were given resulted from discussion between the two, Mr Brown asking questions, the plaintiff providing answers, and Mr Brown completing the proposal. He says Mr Brown did not tell him what had been written on the proposal and, to the best of his recollection, he did not read the proposal before he signed it. He says he relied on Mr Brown to prepare the answers on the proposal correctly.

81 The plaintiff says they were sitting at a desk in his treatment room. Mr Brown says that the proposal was filled out over a treatment table. The plaintiff says he showed Mr Brown photographs from the motor vehicle accident. Mr Brown denies it.

82 In the end result, and at a general level, it seems to me that the real difference between the two was that Mr Brown says, having read the questions as framed on the proposal, he wrote down the answers the plaintiff gave him, whereas the plaintiff says the answers were formulated by Mr Brown after discussion.

83 In my view in the present circumstances not a great deal turns on this difference. It is inherently probable that some questions on the proposal were read as they stood and yes and no answers provided by the plaintiff, and that some of the matters on which information was required were discussed. The form of some of the responses indicates that some matters went further than provision of a yes or no. There is, in my view, a bit each way for each witness. It is what happened with respect to the particular matters pertinent to this dispute that is significant.

84 I accordingly turn to the particular matters relied on by the defendant, dealing first with the income matters and then with the medical matters.

The income misrepresentations

85 It was accepted on behalf of the plaintiff for whom Mr Rayment QC with Mr Beauchamp of counsel appeared, that a number of the answers on the proposal are wrong answers to the questions as framed. The answers to questions 8A and 8B concerning the plaintiff’s income details are wrong. The plaintiff’s own income was somewhat less than approximately $80,000 per annum. His own expenses were less than $30,000 per annum. The plaintiff says the answers refer not to his own income but to the anticipated income of the chiropractic practice he was then about to purchase. The same applies to the $30,000 expenses figure, that is, it too refers to the business he was to buy. The answer to question 7Bii is also wrong. The plaintiff was not self employed and on that basis “18 months+” given as to how long his current business had been in operation was wrong too.

86 The plaintiff says he and Mr Brown discussed the fact that he was proposing to buy the Braund chiropractic business. He says they spoke of his intention to buy the business and about the postponement of the purchase which had been occasioned as a result of the motor vehicle accident in September 1995 and which had caused him to change his practice technique and thus to postpone the purchase. The plaintiff says that they discussed the figure of $80,000, the plaintiff conveying that he anticipated earnings from the practice would be in the order of $13,000 - $14,000 per month and that he had been informed that business expenses were about 50 per cent of gross turnover which he hoped he would be able to reduce when he took over the practice. He says that together they calculated the annual figure of $80,000. The plaintiff says he told Mr Brown that business expenses under his ownership would be less than they had been under the vendor, and that he told Mr Brown he wanted to cover regular outgoings such as the rent in the event that anything went wrong. He says that together they settled on the figure of $2,500 per month for the expenses cover.

87 Mr Brown, on the other hand, says that in March 1995 he had asked for some income details of gross income less expenses and had been given the range $80,000 – $100,000, which he quoted on. His affidavit evidence was that at the 20 November 1995 meeting he asked the plaintiff what his gross income was after business expenses for the last 12 months, and the plaintiff said words to the effect “about $80,000.00 plus approximately”. As to expenses, Mr Brown says he asked what the plaintiff’s business expenses were and he said words to the effect “about $30,000.00” (this is the figure written down in answer to question 8C in the proposal – but Mr Brown points out that the question is in fact as to weekly expenses and that he wrote down an annual figure).

88 Mr Brown says that, either at the meeting or before, he told the plaintiff that the maximum income protection insurance was 75 per cent of his income. The plaintiff denies this. His version is that at some later stage, around 1997, he asked Mr Brown if he could “bump up” his limit, at which time Mr Brown explained the 75 per cent limit and that he would have to apply for a new policy there having been internal change at the insurer which had just started limiting it to 75 per cent.

89 Mr Brown says that his understanding was that the plaintiff had owned the chiropractic practice for the 12 months prior to 20 November 1995 and that the plaintiff must have said something to him for him to have written “18 months” on the application form. His recollection was that the plaintiff did not inform him that he was an employee of the practice. According to Mr Brown, as early as March 1995 the plaintiff had indicated that the practice was his, and at the 20 November 1995 meeting, the plaintiff said he was self-employed. In his principal affidavit, Mr Brown says that to the best of his recollection the plaintiff did not inform him that he was an employee of any practice. He completed question 7B(ii) with the words “18 months +” to indicate that the plaintiff’s business had been in operation for more than 18 months.

90 The substance of the plaintiff’s explanation for the wrong answers is thus that they were talking about, and he understood them to be talking about, the new business, and that the answers he gave were framed accordingly.

91 There are a number of matters which I consider to be significant in considering whether or not the plaintiff’s evidence should be rejected so as to result in a finding that he knew he was being asked about his own income, that it was not the new business being discussed and that he knowingly or recklessly gave false answers.

92 Firstly, it is clear that there is an internal contradiction between the answer to question 7B(ii) and the answers, read together to questions 8A and 8B. The first implies that the current business had been in operation for about 18 months, the second involves a period of at least 24 months. The figure for expenses is clearly a yearly not a weekly figure.

93 Secondly, the income figure and the expenses figures are both only approximations.

94 Thirdly, Mr Brown’s answer in his 27 August 2004 response to the insurer’s question in its letter dated 9 August 2004 “How was his income determined for the period 12 months and 24 months prior to application?” was as follows:

“As far as I can recall, Dr Bottrell indicated his income as approx $80,000 plus for the prior 12 months and similar for the 12 months prior to that although that income may have been earned in Canada? I cannot recall the conversation in regard to the inclusion of $30,000 cover pa of business expenses or $2,500 per month but believe this was to cover his estimate of expenses for his new business . This may have been discussed per telephone on a previous occasion but I cannot recall.” (emphasis added).

This answer does not adequately cover the prior 24 month period. Moreover, the answer indicates uncertainty on the part of Mr Brown. It also indicates a consciousness on his part of a new business and an estimate of business expenses for it.

95 Fourthly, the objective fact is that the plaintiff was about to buy a business and the purchase had been postponed because of the injury sustained in the car accident. It was this purchase which likely gave rise to the plaintiff’s desired impetus for income protection. Nothing was put as to why there would be any inherent probability that the plaintiff would withhold the fact that he was about to purchase. In my view the probabilities favour him in this regard.

96 Fifthly, whilst the plaintiff’s evidence was not without blemish, I did not form the view that he was not giving his honest account of the events as he recalled them.

97 By the same token I consider that Mr Brown gave his honest account of the events as he recalled. However, I think the plaintiff’s version fits more easily with the probabilities and I accept it.

98 The defence of fraud has not been made out.

Income non-disclosure

99 Significant emphasis was placed on behalf of the defendant on this issue.

100 The substance of the complaint is that the plaintiff failed to disclose that the September 1995 injury had caused him to change his practice techniques and had resulted in a reduction of the income earned by his own exertion which reduction was still being felt at the time of the proposal.

101 Adverting no doubt to the significance of the credit contest, it was put for the defendant that this non-disclosure was not assuaged by anything said or done at the 20 November 1995 meeting because it does not depend upon acceptance of Mr Brown. It was put that the plaintiff conceded that he did not at any time disclose to Mr Brown or the insurer that his earnings “in the business” had dropped prior to signing the proposal and that his earnings did not in fact apparently return consistently to pre-accident levels until some time late in 1996 at the earliest because the plaintiff had in his 24 February 1997 letter to the SGIC referred to having begun to reach a consistently similar level of income only in the last several months.

102 The plaintiff’s evidence did not establish that he in terms told Mr Brown of the drop in income. However, he maintained that he told Mr Brown that there had been a delay in the purchase of the practice because of the accident and that he could not perform his practice techniques as efficiently because of it.

103 In my view it is significant that the proposal refers not only to the accident but also to the referral to Dr Watkin who had approved of the intervention of Dr Allwood.

104 Further, by November 1995 the plaintiff had substantially recovered physically. The purchase of the business was postponed to counter the effect of the injury.

105 Additionally, the proposal does not seek information concerning fluctuations in income over the period dealt with in the proposal. It is concerned with 12 month periods. Moreover, an approximation only was given.

106 Finally, I consider it more likely than not, as I have said above, that the plaintiff’s answers were given with respect to the prospective new business, so that past effects receded in significance.

107 I am not satisfied in all the circumstances, let alone comfortably satisfied, that the defendant has established that the plaintiff fraudulently failed to disclose this matter. Fraud is made of sterner stuff than what the defendant has been able to proffer.

108 The defence of fraud fails.

The medical history misrepresentations

109 It is clear that the answer given to the question as to the date and reason of “last consultation with any doctor”, namely Dr K Bennett, is wrong because the plaintiff saw Dr Watkin after Dr Bennett and also the chiropractor Dr Allwood.

110 It is also clear that the plaintiff saw Dr Allwood with respect to adjustments to his spine (described by the plaintiff as correcting the subluxation) whereas “No” was given as the answer to the question “Have you ever received treatment for back pain, sciatica or other disorder of the back or spine including the neck (whiplash injury)?”

111 So far as Dr Watkin is concerned, his name was furnished by the plaintiff together with his address. By the time of the proposal Dr Watkin had determined that the plaintiff was making satisfactory progress and had reported to Dr Allwood that he might further be helped by some local ultrasound and deep heat therapy and that he had already received good relief following adjustment of his cervical spine.

112 The plaintiff’s evidence was that his understanding of the question he was being asked (question 11E in the proposal) was not with respect to any doctor but referable to the answer he had given with respect to his usual doctor.

113 The information about Dr Bennett in the information box under question 13 refers to the accident and a date of commencement of “Illness, injury or test” as “Sept ‘95”. There is then information that Dr Bennett referred to Dr Watkin. The reference to the subsequent referral to Dr Watkin is, it seems to me, inconsistent with the answer that Dr Bennett was the last doctor seen. This, in my view, supports the plaintiff’s version that his understanding was that the last consultation question went back to his usual doctor.

114 It is also difficult to conclude that there was any deliberate withholding of any reference to subsequent attendances with Dr Watkin when the plaintiff gave Dr Watkin’s name and address, and the insurer was free to contact the surgeon.

115 The plaintiff says he told Mr Brown he had seen Dr Watkin in October 1995 and that he had seen Dr Allwood right up until the week before the meeting. He says he told Mr Brown he was seeing Dr Allwood for ultrasound treatment for the scarring. His evidence was that his understanding as to the date he had last seen a doctor was related to the question where he had given the answer “Dr Bennett”.

116 Another feature is that Mr Brown, in connection with the September 1995 injury, wrote on the proposal form in question 13 in the column “Degree of recovery (%)” the term “n/a”. The plaintiff’s evidence was that he told Mr Brown that the effects of the injury were “unresolved”. Mr Brown under cross-examination initially accepted the accuracy of the plaintiff’s version but then sought to qualify his acceptance by saying that what he meant by the term “n/a” was “not assessed”. In his statement to FICS he had said he used this term to connote a complete recovery but accepted in cross-examination that his statement was wrong. It is clear that the plaintiff was not holding out that the injury had ceased to have any effect but was making it clear, whatever the precise terminology, that the matter was not yet determined. This conduct is inconsistent, in my view, with fraudulent intent on his behalf.

117 Additionally, at the time of the proposal the plaintiff’s recovery from the injury was not, apparently, affecting his ability then to practice. In his report to the SGIC on 6 March 1996, Dr Watkin reported that by 22 January 1996 the plaintiff’s problems had generally recovered apart from hyperaesthesia in the left hand. None of this is inconsistent with the plaintiff’s evidence that he had effectively recovered. Moreover, he went ahead after 20 November 1995 with the purchase of the business.

118 I do not consider that the evidence of the plaintiff should be rejected on this question and accordingly, I do not consider that the defendant has established fraud on his part.

119 So far as Dr Allwood is concerned, I do no consider that Dr Allwood comes within the meaning of the term doctor in question 11 of the proposal. This conclusion is consistent with the terms of the policy itself which, as is referred to above, makes reference to a registered medical practitioner. Both under the Health Insurance Act 1973 (Cth) and under the Medical Practice Act 1992 (NSW) a chiropractor is not a registered medical practitioner.

120 Question 13E concerning treatment or advice for back pain etc is, however, not restricted to medical practitioners.

121 In relation to the back pain, sciatica and spine question the plaintiff says he and Mr Brown discussed this question and it was determined that they (the insurer) were actually looking for some particular pathology as opposed to everyday pain. The plaintiff played contact sports, gridiron and ice hockey, but in terms of the aches and pains of particular pathology he had none. Under cross-examination the plaintiff was taken to a report from Dr Allwood to the defendant dated 10 June 2004 in which Dr Allwood, with reference to the motor vehicle accident injury said “I used ultrasound and soft tissue release techniques to reduce the effect of post trauma adhesions in the region. The arm dysfunction and muscular necessitated treatment of the lower neck and upper thoracic spine with spinal manipulation”.

122 The plaintiff’s version is that he told Mr Brown on 20 November 1995 that he was seeing Dr Allwood. Mr Brown denies it.

123 It was put to the plaintiff that the reason he did not tell Mr Brown anything about the treatment he was receiving from Dr Allwood was because he did not think Dr Allwood was treating him for anything to do with his ability to practice as a chiropractor. It seems to me that the defendant cannot have it both ways. If it be the case that the plaintiff did not mention Dr Allwood because he did not consider it pertinent to his practice as a chiropractor it is difficult to impute to him any fraudulent intent with respect to the withholding.

124 In any event, I am not satisfied that the defendant has established that Dr Allwood was not mentioned to Mr Brown.

125 In these circumstances I am not satisfied, let alone comfortably satisfied, that the defendant has established fraud on the part of the plaintiff in this regard.

126 The defence of fraud fails.

The plaintiff’s replies to the pleaded case

127 Very little by way of submission was directed on behalf of the plaintiff to the issue of statutory waiver under s 21(3) of the Act. The proposition with respect to the Insurance (Agents and Brokers) Act (Cth) was not developed on behalf of the plaintiff in submissions.

128 Given my conclusion that the defendant’s primary case relying on fraud fails, it is not necessary to consider any issue of statutory waiver or preclusion.

The attacks on the credit of the plaintiff and Mr Brown

The plaintiff

129 It was submitted on behalf of the defendant that Mr Brown’s evidence should be preferred over that of the plaintiff where there is a contest. Apart from the oral submissions which were made, I was provided with a written submission by counsel for the defendant articulating a number of criticisms of the plaintiff’s evidence.

130 Matters sought to be relied upon to impeach the plaintiff’s credit included:

a his evidence of having being told of a change of policy at AC&L limiting income protection cover to 75 per cent of earnings when that limit appears in the information brochure given, and, according to Mr Brown, was always in place. It seems clear that at some point the 75 per cent limit was referred to. There is a difference between the two witnesses as to what was said. The terms of the brochure make it more likely, in my view, that Mr Brown did not refer to a new policy at AC&L. However, the events concerned occurred 12 years ago and the plaintiff could easily be mistaken. I do not consider that he gave deliberately false evidence;

b the circumstances concerning the plaintiff’s failure to disclose the drop in earnings caused by the September 1995 accident, together with a submission that this was a matter which the plaintiff would know was significant to the insurer. I have dealt with this issue above;

c his failure to disclose that a pre-existing injury was causing limitations on his work. I have dealt with this above;

d the fact that in the witness box for the first time, the plaintiff said he told Mr Brown he could not do adjustments in the way he did them before and that that matter was not referred to in any of the affidavits. In his statement to FICS, Mr Brown stated that in answering question 13E the plaintiff told him that on occasions he had a colleague check him as part of his maintenance of general well-being but this was preventative treatment only, consistent with his membership of the chiropractic profession and not part of a treatment regime for an existing problem. Mr Brown went on to say that he formed the view that these were similar to regular check-ups by a dentist and not related to any underlying condition likely to cause any problem in the foreseeable future. The statement in this respect, it seems to me, is inconsistent with Mr Brown’s evidence that chiropractic treatment, then being received by the plaintiff, was not referred to. It is supportive of the plaintiff’s version that it was. I do not consider that there is sufficient to warrant rejection of the plaintiff’s evidence as submitted;

e his evidence that he was not concerned about people calling him a “doctor” and had never been which was, it was submitted, not worthy of belief. He was taken to his complaint to FICS about the conduct of the insurer’s doctor who struck out “Dr” on a letter to him. This criticism of the plaintiff was unwarranted and, in my view, if it be the case that his title was struck out as he said (and there was no evidence to the contrary) his complaint would have been entirely justified; and

f his evidence that he could not see what Mr Brown was writing and did not try to do so. I do not consider his evidence to be inherently improbable, and it is a matter of minimal significance in any event.

131 The plaintiff’s evidence as I have said before, was not without blemish. There were number of inconsistencies within his oral evidence and between it and other material. It is not necessary to deal with all of them. Such inconsistencies are to be expected with respect to testimony concerning events more than a decade ago. I did not form the view that the plaintiff was not giving an honest account of the relevant events. The general attack on his honesty failed. There are, however, some aspects of his evidence with respect to quantum which I considered unconvincing and which I do not accept. They are dealt with further below.

Mr Brown

132 The credit of Mr Brown also came under heavy attack. In particular he was tested on what he had said in his statement to FICS and in his response to the insurer’s questions on 27 August 2004.

133 In his statement to FICS he said “I used the term N/A to indicate complete recovery”. These are the words which he had written in one of the columns beneath question 13 in the proposal in relation to the September 1995 accident. He conceded that this statement was wrong and testified that he intended to designate “not assessed”. He gave no adequate explanation for his original statement.

134 I consider that his version with respect to the 75 per cent limitation is to be preferred to that of the plaintiff.

135 Mr Brown’s evidence was also not without blemish. Nevertheless, I did not form the view that his evidence was other than honestly given, and I consider that the general attack on his honesty also failed.

Conclusion on liability

136 The defendant has failed to establish its defence of fraudulent misrepresentation or non-disclosure and the plaintiff is accordingly entitled to damages for repudiation.

137 I accordingly turn to damages.

Damages

The facts

138 The plaintiff’s evidence is that but for the insignificant activity he engaged in as a film extra in 2005 and 2006, he has done no work.

139 The plaintiff’s evidence is that he has not undertaken any further education or retraining at all and he is not sure whether he will do so in the future. His evidence in this regard is that he has “not really had the opportunity to think about it, to focus the finances to an education.” His evidence was that there was no money to retrain even during the period he was receiving $5,000 a month from the defendant. He was not prepared to accept that he is capable, for example, of working in a shop. His evidence was further that he has not applied for work because he spent ten years getting a Bachelor of Science and a Doctorate. His whole life has been focused on becoming a chiropractor. He has not been able to work as a chiropractor and he has no other skill. He has made no inquiries about any other job. He was not prepared to accept that he could do a “desk job”.

140 His evidence was further that he has been totally focused on day-to-day survival and was not concerned about other professions but about receiving benefits to allow him to survive.

141 I found the plaintiff’s evidence on this subject unconvincing and I do not accept it. His disability, whilst it may inhibit his chiropractic abilities, is a limited one. It was not suggested that he was otherwise unhealthy. He is a well-built man. He has a Bachelor’s degree and a Doctorate and would undoubtedly be capable of retraining and finding work. He has not been receiving payments from the insurer for some three years. All his expenses have been absorbed by the person he is living with and I do not accept that his failure to seek work or retrain is based on preoccupation with survival. He has desisted by choice, not necessity.

142 The terms of the policy, as I deal with more fully below, provide a disincentive for him to work and whether or not he does so is his choice. The Court is here concerned with the application of legal principle to facts found, not with the plaintiff’s work ethic or perhaps, more aptly, the lack of it. I consider that he has not worked because of the terms of the policy and the effect that working so would have on his position under it, particularly in the context of these proceedings.

The legal principles and approach required

143 The general rule at common law is that where a party sustains a loss by reason of a breach of contract that party is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed: Robinson v Harman (1848) 1 Exch. 850 at 855; Wenham v Ella (1972) 127 CLR 454 at 471 per Gibbs J; The Commonwealth v Amann AviationPty Ltd (1991) 174 CLR 64. For a case involving the loss of the right to have an insurer make payments for permanent incapacity extending over the life of a worker see Pennant Hills Restaurant Pty Ltd v Barrell Insurances Pty Ltd [1977] 2 NSWLR 827 at 854 and onwards.

144 Another general principle is that a plaintiff has an obligation to mitigate his damage, the onus being on the defendant to establish that he has failed to do so. There is no assertion in this case by the defendant that the plaintiff has failed to mitigate by not working when he could have.

145 The exercise involved here is accordingly to determine, upon the basis of the contracted terms by which the defendant was bound, what the present value is of the benefits the plaintiff would have received for the period he would have received them.

146 The steps required by this exercise are:

a determine what the benefit was, if any, to which the plaintiff would, under the policy, have been entitled;

b determine the period over which he would have received such benefits; and

c determine the present value of that entitlement.

The benefits under the policy

147 The policy pays $5,000 per month while the insured is totally disabled and a proportion calculated by reference to money earned when he is partially disabled.

148 With respect to permanent disablement the policy provides, relevantly, that the insurer stops paying as soon as the person insured stops being totally disabled or dies.

149 One of the ways a person stops being permanently disabled is by working, thereby becoming partially disabled. The insured becomes partially disabled (within the meaning of that term in the policy which is set out earlier in this judgment) if three things are satisfied: firstly, the person must have been totally disabled before for at least 14 days; secondly, he or she must be able to perform one or more duties of his or her occupation but not all of them or be working in another occupation; and thirdly, because of the disability, the amount the person insured earns for the work he or she does is less than the amount of his or her pre-disability income.

150 It was not put on behalf of the defendant that the plaintiff did not become totally disabled by virtue of his wrist injury. Mr Davies accepted that the requirement in the policy for total disability that the insured be “unable to perform at least one income producing duty of his occupation” was satisfied if there was one such duty he could not perform rather than there having to be not one which he could. This concession is perhaps a generous one because that construction does not sit easily with the definition of “partially disabled” which applies when the insured “is able to perform one or more duties of his or her occupation, but not all of them…”. On the construction accepted by Mr Davies, an insured could be totally and partially disabled at the same time with the same level of inhibition on his or her performance.

151 However, because of the view I have taken as to the operation of the policy, the concession makes no difference to the outcome for the reasons which follow.

152 It is not in dispute that the plaintiff could perform some of the income producing duties of a chiropractor, for example consultations and examinations. He is inhibited in doing adjustments requiring dorsiflexion.

153 It was also specifically not put in issue that the plaintiff met and would have continued to meet the requirement of being under the regular care and attendance of a registered medical practitioner.

154 On these concessions:

a he fell within the notion of totally disabled (which the insurer accepted anyway for about 6 years) for at least 14 days; and

b by virtue of being able to perform one or more duties of his occupation, sometime after the expiry of 14 days, he became partially disabled.

155 He also ceased to be totally disabled because of the work he did as an extra. Part of the requirement for total disability is to be “not working”. An insured becomes partially disabled (leaving aside ability to perform duties of his occupation) if he is working in “another occupation”. The total disability provisions differ from the partial disability provisions, one requires work in an occupation, whereas the other merely requires work. Being a film extra did not, in my view, amount to the plaintiff working in another occupation (which means the trade or calling by which the person ordinarily seeks to get his livelihood: Luckin v Hamlyn (1869) 21 LT 366) but it did amount to working.

156 There is a formula for the partial disablement benefit which results in a percentage of the total disablement benefit as the partially disabled income bears to the pre-disability income.

157 The provision operates by compensating the insured only partially but it imposes no requirement that he do any work. There is no obligation upon him to re-enter the workforce or to apply himself in any way.

158 If he does no work while partially disabled he receives 100 per cent of the benefit because the formula depends on there being a figure to be the integer to be inserted into the formula. If that figure is nil the insured gets 100 per cent of the monthly benefit.

159 Hence, the policy contains a self-evident disincentive to work unless the returns are that good that they outweigh the benefits which would be received whilst the insured remained idle.

The period of the benefits

160 The total disability benefit period is lifetime, but limited to when the person insured stops being totally disabled.

161 Under the partial disablement provisions, the insurer stops paying, relevantly, as soon as the person insured stops being partially disabled and in any event on the first renewal date after the person insured turns 65.

162 Because I have found that the plaintiff became partially disabled and ceased being totally disabled, the period of his benefits would have terminated on the first renewal date after he turned 65, which is on 3 January 2028.

163 It was urged upon me that the amount to which the plaintiff is entitled should be reduced by what I considered to be the chance that the plaintiff will work during the period which was submitted to be at least 50 per cent. (It was not put on the basis that the plaintiff might have ceased to be partially disabled.) I do not accept this submission for the following reasons.

164 The policy, as I have found, does not require the plaintiff to work and indeed provides a disincentive for him to do so. The benefit of not working (if it is a benefit) was one of the things the policy on terms devised by the defendant gave him. But for the defendant’s wrongful act he would have been entitled not to work and to receive the full benefits until age 65. It is the defendant’s wrongful act that puts him in the position of having to work whereas the empirical evidence points strongly to the probability that he would not. Also, given past objective events, I consider that if the plaintiff did not have to work because the policy entitled him to be idle it is probable he would remain in that state.

165 It was also put that there is a general principle that a plaintiff should not be overcompensated and that the damages should represent no more than the loss suffered by him in reality. It follows from this, it was put, that damages should be reduced by the amount which the court considers is likely to be earned by the plaintiff doing other work over the rest of his lifetime, which should be reflected in a percentage reduction of the verdict. It was not put that there were prospects he would cease to be partially disabled or that the benefits would have ceased before age 65.

166 The submission put is akin to invoking the concept that damages in respect of future economic loss arising out of a breach of contract should be discounted for what are “compendiously but not entirely accurately called the vicissitudes”, a notion which has been rejected: TCN Channel 9 v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130 at 159 per Hope JA.

167 This is not a loss of opportunity case of the type considered in Sellars v Adelaide Petroleum N.L. (1994) 179 CLR 332 and The Commonwealth v Amann Aviation Pty Ltd. The plaintiff here had his rights in place. The Court is not being called on to value any opportunity which he lost by reason of the defendant’s breach.

168 But for the defendant’s breach the plaintiff would have been entitled to receive the entirety of the benefit until age 65 less, according to the formula, the effect of other income earned by him.

169 I consider that there was very little prospect he would have worked before age 65 whilst in receipt of the escalating benefits under the policy and even less with a substantial lump sum in his pocket.

170 He is entitled to the present value of his future entitlements under the policy as at the date it was terminated.

The present value of the benefits

171 The plaintiff put that the damages should be calculated based on the generally accepted life tables for the life expectancy of the plaintiff which is for a further 36.1 years. There is agreement between the parties as to the outcome of the appropriate calculations on that basis.

172 However, in my view, the calculation is to be made to 3 January 2028, that is for a further 21 years.

173 The parties are agreed that the past damages, that is, to 3 May 2007 including interest is $212,708.40.

174 Utilising the tables to age 65, I arrive at the figure of $1,218,068.80 being 816.4 x $1,492 (the weekly equivalent of the monthly benefit). The calculation is however, to be made to 3 January after the plaintiff turns 65.

175 The unadjusted total is $1,430,777.20. It is to be adjusted as I have said and also adjusted to the date of judgment. There may also be need to be a minor adjustment to take account of the film extra earnings.

176 It follows that the cross-summons is to be dismissed.

177 The defendant is to pay the plaintiff’s costs of the proceedings.

178 I will stand the matter over to a date to be fixed to enable the parties to bring in short minutes reflecting the final amount` and to draw to my attention any further matters required to be dealt with.

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25/06/2007 - Judgment date added - Paragraph(s) Cover Sheet