| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : BOYD -v- AUSTRALIAN CASUALTY & LIFE LIMITED & ORS [2002] WADC 264 CORAM : FRENCH DCJ HEARD : 17 OCTOBER 2002 DELIVERED : 18 DECEMBER 2002 FILE NO/S : CIV 2249 of 1998 BETWEEN : BRUCE BOYD Plaintiff
AND
AUSTRALIAN CASUALTY & LIFE LIMITED (ACN 000 333 844)
First Defendant
GEORGE ALEXANDER CURRIE
Second Defendant
ANNETTE CURRIE
Third Defendant
Catchwords: Contract - Breach of contract - Construction of contract - Disability insurance contract - Low back exclusion clause - Turns on own facts
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Legislation:
Nil
Result: Plaintiff's claim dismissed Representation:
Counsel:
Plaintiff : Mr L A Tsaknis
First Defendant : Ms P E Cahill
Second Defendant : Mr B J H Goetze
Third Defendant : Mr B J H Goetze
Solicitors:
Plaintiff : Corsers
First Defendant : Jackson McDonald
Second Defendant : Minter Ellison
Third Defendant : Minter Ellison
Case(s) referred to in judgment(s):
Nil
Case(s) also cited:
Nil
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1 FRENCH DCJ: The plaintiff's claim is for the payment of benefits pursuant to the provisions of a contract of insurance with the first defendant obtained through the brokerage services of the second and third defendants.
2 The plaintiff is a self-employed ceiling fixer. He renewed an income protection insurance contract with the first defendant on or about 1 June 1995. The original contract was for the year June 1993 to June 1994 and was arranged through the second defendant, George Currie, who was an insurance broker who carried on business in partnership with his wife, the third defendant. For the purposes of these proceedings the third defendant was in effect a "silent" partner. 3 The plaintiff claims to have suffered an injury while he was working as a ceiling fixer when he twisted his back. He claims that under a true construction of the contract he is entitled to monthly benefits for total disability for the period 8 June to 30 July 1995 and thereafter to partial disability benefits. 4 The first defendant denies that the plaintiff is entitled to any benefits because it claims that there was a "back exclusion" clause in the contract of insurance that precludes payment of benefits for any "disability or loss caused by or contributed by any disease or disorder of the lumbar-sacral spine". The first defendant also claims that if the plaintiff was entitled to benefits on a true construction of the contract he would only be entitled to partial disability payments for a period of two years from 30 July 1995.
The pleadings 5 The statement of claim sets out the plaintiff's claim to payment of disability benefits pursuant to the contract of insurance with the first defendant and the first defendant's denial of his claim on the basis that there was a low back exclusion clause in the provisions of the contract. The plaintiff seeks damages for breach of contract in payment of total disability benefits from 8 June to 30 July 1995 and thereafter for payment of partial benefits calculated under the provisions of the contract from 30 July 1995 and continuing. 6 The plaintiff alternatively claims that if the low back exclusion clause is part of the contract the first defendant has waived its right to rely on that clause because of misrepresentations made by an employee of the first defendant in September 1993. Alternatively, the plaintiff claims that the first defendant was negligent in making the misrepresentations and
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also seeks relief based on an estoppel arising because of his reliance on the misrepresentations. 7 The plaintiff's claim against the second defendant alleges that the second defendant was negligent in making misrepresentations that he could and in fact did obtain a contract of insurance for the plaintiff with the first defendant with no low back exclusion clause. The plaintiff alleges that not only did the second defendant state that he would be able to arrange such a contract of insurance but when he presented him with the low back exclusion clause which was incorporated into the contract by means of a document entitled "Revised Policy Acceptance Terms" ("RPAT document") he represented that it was in fact only a direct debit form. 8 Alternatively, the plaintiff claims that the second defendant was at all material times an agent of the first defendant so that the first defendant is liable for the second defendant's representations in relation to the contract of insurance. The plaintiff seeks relief through the remedy of estoppel on the basis of his reliance on the representations made by the second defendant acting as agent for the first defendant. 9 The plaintiff also claims that the second defendant was negligent in failing to advise the plaintiff that the cover for partial disability only extended for a period of two years. 10 The first defendant denies that the plaintiff is entitled to any benefits under the contract of insurance. It claims that the original contract of insurance made on or about June 1993 includes a low back exclusion clause which was incorporated into the contract through a RPAT document signed by the plaintiff on 11 May 1993. The first defendant also claims that if the plaintiff was entitled to the benefits under the contract the provisions of the contract provide that partial disability benefit will only continue to be payable for a period of two years. 11 The first defendant denies that there were any misrepresentations made to the plaintiff through an employee in September 1993 as it claims that the plaintiff did not make a complete disclosure of the content of the policy when he made the enquiry through his solicitor. Alternatively it is pleaded that if the plaintiff did rely upon the alleged representations it was not reasonable for him to have done so by means of an oral representation to an employee in the first defendant's customer services department. The balance of the first defendant's defence takes issue with the plaintiff in
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relation to a claim in estoppel or any claims made as a result of alleged negligence or misrepresentations by the second defendant. 12 Alternatively, the first defendant claims that if on a true construction of the contract it did not contain a low back exclusion clause then it seeks relief by means of an order rectifying the original contract to include a low back exclusion rider as that had been the common intention of the parties at the time of the original contract but was omitted by mistake. It is claimed that in the circumstances it would be inequitable for the plaintiff to rely upon the contract in the absence of a low back exclusion clause. The first defendant also claims that in the circumstances the plaintiff is estopped from denying that a low back exclusion clause was a provision of the contract. 13 In broad terms the second defendant's defence raises the same issues as the first defendant, namely that the relevant insurance contract contained a low back exclusion clause and that on the true construction of the contract the partial disability payments only extended for a period of two years. The second defendant denies making the misrepresentations claimed by the plaintiff that he could obtain an insurance contract without a low back exclusion clause and that the RPAT document was only a direct debit form. The second defendant claims that prior to the execution of the RPAT document he explained to the plaintiff that the effect of that document would be to incorporate a low back exclusion clause into the contract and ensured that the plaintiff read the RPAT document and understood its terms.
The issues 14 Although the pleadings raise issues of breach of contract, misrepresentation, negligence and estoppel the issues for consideration were significantly distilled by the conduct of the case and can be conveniently summarised as follows:-
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3. If the plaintiff was entitled to payment of benefits pursuant to the terms of the contract are the payments of partial disability benefits restricted to a period of two years. 15 There is no dispute that if the contract of insurance contains a low back exclusion clause and that is not vitiated in some way then the plaintiff would have no claim under the contract. The medical evidence establishes that the subject of the plaintiff's claim is a low back condition within the definition of that exclusion clause, namely "disease or disorder of the lumbar-sacral spine, vertebrae…intervertebral discs, nerve ends or support musculature". This is consistent with the evidence of Dr Will, the plaintiff's treating orthopaedic specialist, and is not disputed by the plaintiff.
The evidence 16 The plaintiff gave evidence that he was a ceiling fixer by trade with approximately 30 years experience. He stated that he had had difficulties with his back prior to the date of the relevant incident on 8 June 1995. He had had a couple of car accidents in 1983 and 1989. Although he had seen an orthopaedic surgeon in relation to the motor vehicle accident in 1989 he said that he sustained soft tissue damage only. He stated that there was an incident of lower back pain in June 1988 when he hurt his back putting up a sheet of plaster and had consulted a doctor. However he described that injury as minor. In early 1990 he stated that he fell off scaffolding and hurt his back and was referred to an orthopaedic surgeon Dr Batalin. He agreed that he had a history of back trouble but stated that it was not significant and that in June 1995 he was 100 per cent fit and had no problems with his back. 17 The plaintiff had a number of income protection insurance policies prior to 1992. Each of those policies contained a "low back exclusion" clause as a consequence of the plaintiff's advice to the insurance company of his previous incidents of low back pain or injury. In fact in 1986 he had a policy with the first defendant that included a low back exclusion clause. The plaintiff allowed this policy to lapse and subsequently applied to another insurer Norwich Insurance but did not continue with the application. He first spoke to the second defendant, George Currie, in November 1992 regarding an income protection policy with the first defendant. He stated that the second defendant came to his house to discuss the policy and he advised him that he did not want a policy that included a low back exclusion clause. He stated that the second defendant
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left a pamphlet in relation to income protection insurance with him and that was subsequently filled out by the second defendant with information and assistance from the plaintiff on 9 November 1992. On that date he gave the second defendant a cheque for payment of an initial premium on that policy and he received a receipt which included an interim insurance cover note. 18 A few months later the plaintiff stated that he received the policy document that contained a schedule that indicated that the insurance contract included a low back exclusion clause. He stated that he was very angry about that and immediately contacted the second defendant and advised him in an angry way that he did not want the policy and that the second defendant could "stick it up his arse". He said that the second defendant replied that he would fix it up and not to worry about it. He stated that the second defendant came round to see him in 1993. The evidence of the second defendant and the documentation indicates that this was in April. The plaintiff advised that the second defendant filled in another proposal form and confirmed that it would not have a low back exclusion clause included in it. The plaintiff stated that also because of "all the drama" he thought that he might take the opportunity of increasing the level of his cover taking it up to $2,800 per month from the previous limit of $2,000 per month. A proposal form in those terms was filled out and he wrote out a cheque for $94.42 as first instalment of the premium. He received a receipt which had an interim insurance cover certificate on the reverse and that was dated 8 April 1993. The plaintiff stated that he did not give Mr Currie his bank account details at that stage and that there was no discussion as to how the premiums were to be paid. The plaintiff was positive that he did not sign documents for a direct debit arrangement at that time. 19 Approximately one month later the plaintiff stated that the second defendant came round to see him and told him that the policy had "gone through" but that the plaintiff needed to sign a direct debit form. He stated that the second defendant slid across a piece of paper and stated "here sign this" so he signed it. He said that there was no discussion between himself and the second defendant regarding that document and he did not read it. Nor did he see it again until after he had lodged a claim in 1995. 20 The plaintiff received policy documents in the mail in June or July together with a document entitled "A Simple English Statement". He stated that a document entitled Additional Benefits Rider, replacing some clauses in the contract concerning payment of benefits, may have come
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then but he was not sure. He stated that he did not read them intensely but just looked through them casually and looked to check if the back exclusion clause was not included in the policy and it was not. The schedule simply said that it was a replacement policy. 21 The second defendant's account of what occurred is significantly different from the plaintiff. 22 George Currie, the second defendant, is an insurance agent who at the relevant time operated in partnership with his wife who is named as the third defendant but who had no part in any of the relevant dealings. In 1992 the second defendant had an agency agreement with the first defendant and met the plaintiff as a result of a telemarketing system promoting income protection policies. The second defendant's first contact with the plaintiff was on a building site in Belmont where he spoke to him briefly about income protection insurance and gave him a brochure for a policy that had been structured for persons working in the housing industry. He stated that his usual practice was to explain the policy in general terms, namely that it was a life time accident policy with a two or five year sickness benefit scheme. He said that he would also usually explain the waiting periods. Subsequently the second defendant prepared some figures based on information from the plaintiff and filled out an application form. He said that the income policy application form had a provision for a direct debit authority and he believed it was part of p 12 of the application form and was in the form of a tear off section. He believed that this was filled out in this case but could not specifically recall. The application was subsequently submitted to the first defendant and a policy issued with a low back exclusion clause in the schedule. The second defendant stated that a few months later he was contacted by the plaintiff for the purposes of increasing the benefits paid under the insurance policy. He thought that the plaintiff contacted him in approximately April 1993 but said that there was no mention of any dissatisfaction with the policy because of a back exclusion clause. The second defendant went to the plaintiff's home to arrange the second policy and was advised by the plaintiff that he wished to increase the benefits payable under this policy as his income was increasing. He increased the benefits payable to the amount of $2,800 per month which corresponded to 75 per cent of his stated income. The second defendant stated that he subsequently received a RPAT document from the first defendant. He stated that the RPAT document comprised a change in the actual terms that the company was prepared to offer the client. He explained that usually it is medically related but it could be due to a number of things, for example, such as the fact that the earnings are not sufficient to justify
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the benefit claimed. When he received the RPAT document he took it out to the plaintiff and explained to him that he had terms which were similar to the previous policy namely a back exclusion clause. The second defendant does not specifically recall the plaintiff's response but stated that the document was signed by him and denies that at any stage he advised the plaintiff that the document was not what it appeared to be. He did not represent that it was a direct debit form, or was in any way connected with payment of premiums under the policy. The second defendant stated that he took the RPAT document back from the plaintiff's house and forwarded it to the first defendant. He did not leave a copy of that document with the plaintiff but believed that he would have left the pro-forma letter and letter of comfort that accompanied the document with him as that was his usual practice. 23 The plaintiff stated that on advice from his father he sought legal advice from Denis McLeod & Co, solicitors, regarding the content of the policy. He stated that when he had an appointment with an employed solicitor, Angela Komninos, he took all of the documentation that he had in relation to the policy. He asked the solicitor to check and to make sure that the second policy did not have a back exclusion clause in it. He stated that he received confirmation from her that the current second policy did not contain a back exclusion clause. 24 The solicitor employed at Denis McLeod's office, Angela Komninos, gave evidence in relation to her consultation with the plaintiff and the advice that she had given. She stated that the purpose of the plaintiff's attendance was to find out if his new replacement policy had a back exclusion clause. She stated that the plaintiff brought in the original policy and the replacement policy and other documents and correspondence in his possession. She did not see the RPAT document nor did the plaintiff advise her of its existence. She stated that when she perused the new policy it did not refer to a back exclusion clause so she made enquiries with the office of the first defendant. She said that she spoke to a customer service officer whose name was Melina and that she asked if a second policy incorporated all the terms of the current insurance policy that the plaintiff had with the first defendant. She stated that she was advised by the representative of the first defendant that the policy "stood alone" and did not incorporate terms of the previous policy. She advised that she did not quote the plaintiff's name or policy number with the representative from the first defendant nor did she enquire as to whether he was subject to a low back exclusion clause with his insurance arrangements with the first defendant. Ms Komninos also advised that she did not tell the representative of the first defendant that the plaintiff
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wanted to ensure that he had no back exclusion clause in relation to his current insurance contract with the first defendant. Ms Komninos' advice is confirmed in a letter dated 27 September 1993 (Exhibit 31) sent to the plaintiff. Ms Komninos confirmed that the plaintiff had advised her that the reasons for taking out a new policy with the first defendant was to increase his insurance premiums.
1. Did the contract of insurance contain a low back exclusion clause? 25 The low back exclusion clause contained in the RPAT document is a term of the contract of insurance between the plaintiff and the first defendant. Although the plaintiff contends that the contract consists only of the application and the policy document together with the additional benefits rider and the policy information statement this ignores the terms of the policy document and the terms of the RPAT document. The RPAT document itself, signed by the plaintiff, clearly states that it operates as a request to the first defendant to issue the policy on the basis that it will include a low back exclusion clause. Like the application form it is therefore incorporated into the contract. In addition the policy document itself specifically incorporates a document such as the RPAT document. Clause 7.5 of the policy document provides as follows: "7.5 Contract of insurance This policy, including the application, any schedule, notice or endorsement issued by us in relation to the policy, constitutes the entire agreement between the parties and any prior arrangements, agreements, representations or undertakings are superseded. No modification or alteration of any clause of this policy will be valid except in writing signed by us." 26 The RPAT document is arguably part of the application in as much as it constitutes an additional term of the offer made to the first defendant. If that is not the case then it would certainly come within the usual meaning of "notice or endorsement issued in relation to the policy". That the exclusion clause in the RPAT document is therefore included in the contract of insurance is also confirmed by the pro-forma letter and explanatory statement that accompanied the RPAT document and was provided to the plaintiff by the second defendant just prior to the plaintiff signing the RPAT document. Although the second defendant could not specifically recall handing over and explaining those accompanying letters that was his usual practice at the time. In examination-in-chief he
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stated that at that time the RPAT document came with a covering letter addressed to the client applying for insurance together with an explanatory document or letter of comfort immediately behind or underneath the RPAT document. A copy of that pro-forma letter and explanatory form was tendered as Exhibit 46 in these proceedings. Although the plaintiff submitted that it was significant that the original letter was not tendered on the evidence of the second defendant that was the document that was left with the plaintiff. Given that it was a pro-forma letter and standard explanatory document it is unlikely that any copy retained by the first defendant would refer to the plaintiff by name. Despite the fact that the second defendant could not specifically refer to the original of the accompany documents that were given to the plaintiff with the RPAT document I am satisfied on the balance of probabilities on the basis of the evidence of the second defendant and the implication arising from the content of Exhibit 46 that those accompanying documents were provided to the plaintiff at the time he signed the RPAT document. On a number of occasions during cross-examination the second defendant explained that the RPAT document was in effect "sandwiched" between the single page pro-forma letter which would have had the plaintiff's name and address on it and the information document consisting of two pages. 27 It is apparent from the pro-forma letter that the RPAT document operates as a counter offer submitted by the first defendant to the plaintiff and once accepted by him becomes incorporated into the contract of insurance. The letter explains that the first defendant is unable to accept the plaintiff's recent proposal for insurance (namely the application) because of information contained in the proposal. This refers to the information that had been provided by the plaintiff about his pre-existing back condition. The letter makes it clear that the revised acceptance is in effect a modification of the terms of the contract of insurance which would otherwise have included only the application and the terms in the policy document. 28 This explanation is further expanded in the accompanying information document that explains that the revised acceptance terms are changes to the terms of cover offered by the first defendant. The document explains that these changes are due to either health concerns or hazardous pastimes or occupations. It states that the terms may take the form of an additional premium or a particular exclusion. The document then goes on to explain why the revised acceptance terms are necessary. Although it is quite clear from the RPAT document itself that it is an exclusion clause that is incorporated into the policy and becomes part of
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the contract of insurance before the policy issues and takes effect the explanation in the pro-forma letter and the accompanying documents removes any possibility of any misunderstanding or misinterpretation of the nature of the document. However, I note from the plaintiff's counsel's cross-examination of the second defendant it seems that he has been misled by the use of the words "revised policy" and thought that it was referring to a policy already issued. The nature of the questions put to the second defendant indicate that the plaintiff's counsel has failed to understand what I find to be the clear terms and clear import and effect of the RPAT document, namely that it operates so as to include a low back exclusion clause in the contract. 29 In the first contract of insurance entered into between the plaintiff and the first defendant in November 1992 the low back exclusion clause was incorporated by means of a reference to that clause in the schedule to the policy. There was no evidence that any document such as the RPAT document was presented to the plaintiff. He made his proposal to the first defendant by completing the application form which includes disclosure of his pre-existing back condition. The policy document that subsequently issued contained a reference to the low back exclusion clause in the policy schedule and on the following page contained a provision entitled "Low Back Exclusion Rider". This provision states that the rider is to be read with and forms part of the policy to which it is attached and specifically sets out the exclusion clause in the same terms as the exclusion clause the subject of these proceedings. When the plaintiff made an application for a replacement policy in April 1993 he made a proposal by completing an application form and the RPAT document was later provided to him as a discrete document under cover of the pro-forma letter and accompanied by the explanatory statement referred to above. When the policy document issued there was no reference in the schedule to a low back exclusion clause. The only notation in the schedule are the words "Replacement Policy". However, the fact that there is no reference in the schedule does not change the fact that the low back exclusion clause was incorporated into the contract of insurance by virtue of that clause being contained in the RPAT document which was signed by the plaintiff and is incorporated into the contract pursuant to the provisions of cl 7.5 even if it could be said that it was not incorporated as being part of the application of proposal. In the circumstances the fact that there was no reference to the exclusion clause in the schedule does not alter that fact. Whether the omission of the reference to the low back exclusion clause in the schedule to the June 1993 policy schedule was an oversight or not is not apparent from the evidence. It may be that the first defendant
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employed a different practice in June 1993 by specifically sending out the exclusion clause under cover of the RPAT document and having it signed by the applicant for insurance. The system adopted in the previous policy did not require any endorsement by the plaintiff. But even if the omission was an error on the part of the first defendant that does not affect the operation of the RPAT document.
2. If a low back exclusion was part of the contract was it vitiated in any way by representations made by the first or second defendant either before or after the contract was entered into? 30 The plaintiff was not at any stage labouring under the impression, mistaken or otherwise, that when he applied for an insurance policy he would obtain a policy free from a low back exclusion clause. The evidence in this case strongly supports the inference that when the plaintiff received the policy documents in June 1993 he was surprised that there was no reference to a low back exclusion clause in the policy schedule. It may be that at that point he had overlooked or even forgotten that he had signed the RPAT document and that it was incorporated as a provision into the contract of insurance that he had with the first defendant. The fact that he may have overlooked or forgotten about that document does not mean that it did not continue to contain a provision of the contract of insurance. The plaintiff must have been anticipating an insurance contract with a low back exclusion clause and thought that he had somehow received an opportunity or a windfall when he discovered it was not referred to in the schedule. 31 It seems likely that having arrived at the conclusion that the first defendant had mistakenly failed to include an exclusion clause the plaintiff attempted to have his hopes confirmed by obtaining advice from solicitors. It may also be the case that the obtaining of a solicitor's advice was an attempt to somehow strengthen the plaintiff's position by obtaining the appropriate response from the first defendant and having that confirmed in writing by the solicitors. This is the only explanation of the plaintiff's action in contacting McLeod & Co in 1993 and obtaining the advice from Ms Komninos referred to above. If the plaintiff was at that stage of the opinion that he had a contract of insurance without a low back exclusion clause but needed confirmation all he had to do was contact the first defendant and enquire about the status of his policy by simply asking if there was a low back exclusion clause operating in his case. The reason he did not do that was that he would have been aware of the fact that if a mistake had been made it would be immediately rectified by the first
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defendant. While it is hard to see that the plaintiff would have been in a position to organise for Ms Komninos to confine her enquiries to asking if the previous policy was somehow incorporated into the June 1993 policy, that was in fact what occurred. While it may be that the plaintiff did not advise Ms Komninos of the existence of the RPAT document because he had overlooked it or forgotten about it, the fact remains that the enquiry made to the first defendant was not on the basis that the plaintiff wanted to know if his current insurance policy contained a low back exclusion clause. The advice obtained from the first defendant's officer was simply that there were no terms of the initial policy incorporated into the second policy. The advice that the policy was a "stand alone" policy and did not incorporate terms of the previous policy is not an advice that the plaintiff's insurance contract did not include a low back exclusion clause. This is evident from the contents of the letter of advice sent by Ms Komninos to the plaintiff. If the plaintiff's purpose in obtaining advice from the solicitors was ingenuous it seems strange that he did not advise Ms Komninos that he had initially been issued with a policy containing an exclusion clause that he had objected to and had thereupon requested a replacement policy without such a clause. On the contrary, the letter confirms that Ms Komninos was advised that the reason the plaintiff was seeking a replacement policy was to increase the level of benefits. 32 I am satisfied that there is nothing in the conduct of either of the defendants that at any stage misrepresented the true state of affairs to the plaintiff. I accept the evidence of the second defendant that the plaintiff requested a second policy not because he was angry at the inclusion of a low back exclusion clause in the policy issued in November 1992 but because he wished to increase his benefits. This was the evidence of the second defendant and is confirmed by the surrounding circumstances. The plaintiff had been issued with a policy in November 1992 that contained a low back exclusion clause. He must have expected that as it is consistent with his previous experience of income protection insurance in the light of his pre-existing back condition. He disclosed that to the first defendant at the time of the application for the November 1992 policy. I do not accept the plaintiff's account that he was surprised or angry when he received the first policy with the exclusion clause nor that he contacted the second defendant to complain and to arrange for a new policy without such a clause. The second defendant denied that at any stage he represented to the plaintiff that he could obtain a policy without an exclusion clause. It makes no sense for the second defendant to say that he could obtain a policy when he would have known that that was not possible. The first defendant brought the RPAT document around to the
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plaintiff with the accompanying letter and explanatory statement. The terms of the RPAT document are clearly shown on the single page even on a cursory examination. The plaintiff signed the document and of course would not in the circumstances have been surprised at its contents. To suggest that it was somehow slipped over to him in an attempt to disguise its contents either deliberately or otherwise, and that the plaintiff thereupon executed it thinking that it was a direct debit form, is completely implausible. The plaintiff's account of this transaction is not only inherently incredible but lacked coherence and was inconsistent with the surrounding circumstances. It is obvious that the plaintiff's evidence in this regard was an attempt to concoct an explanation for the unavoidable consequences of his execution of the RPAT document. This is confirmed by the fact that the plaintiff's claim that the second defendant misrepresented the RPAT document was not made until some time after he began to pursue this claim with the first defendant. There is no mention of misrepresentation or of the plaintiff's alleged mistake in relation to the RPAT document in the original statement of claim prepared in relation to these proceedings in 1996 (see Exhibit 45). The plaintiff's explanation that he was not privy to the preparation of a legal document is at odds with the fact that his lengthy correspondence with the first defendant after he was sent a copy of the signed RPAT document makes no mention of his claim that he signed the document in the mistaken belief that it was a direct debit form and in some of the correspondence no reference is made to the plaintiff not understanding the nature of the document that he had signed. Although there is reference to his belief that the document was to confirm the premium rates or was a document signed "as a matter of course" it is apparent that the plaintiff's position in relation to his execution of the RPAT document has not been consistent. In circumstances where the nature of the document is obvious those inconsistencies are not minor variations of detail. 33 Although no direct debit form was produced and the representative called from the plaintiff's bank did not have a copy of any direct debit form in relation to premium payments from his bank account it is clear that the monthly premiums were deducted from the plaintiff's account. The original of the application form (original Exhibit 7) in its contents page lists a bank/credit card authority on p 11 and p 12 of the application form. It is apparent that that is the top half of p 11 and p 12 of the policy with the interim insurance cover certificate and the conditional receipt comprising the bottom parts of p 11 and p 12. This is apparent from a comparison of Exhibit 55 and the original of Exhibit 7, namely the original application form dated 8 April 1993. Despite the fact that the
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bank does not hold any direct debit form an inference can be drawn that a direct debit form was completed by the plaintiff and torn off at the appropriate perforated edge when the application form was handed in to the first defendant. This is confirmed by the second defendant's evidence that the policy would not issue until appropriate payment arrangements had been put in place for monthly payment of the premiums.
3. The extent of partial disability benefits payable if the plaintiff had been entitled to any payment of benefit under the contract 34 Although my findings that the contract of insurance included a low back exclusion clause and that there were no misrepresentations made by either defendant is sufficient to dispose of the whole of the plaintiff's claim I propose to deal with the issue of what payments he would have been able to obtain in the absence of a low back exclusion clause. 35 The plaintiff claims that on 8 June 1995 he suffered an accident at work while twisting his back when applying a trowel to a ceiling. He described this action as "normal sort of movement". He said he felt a sharp pain in his back and went home to see if he could recover. He saw his doctor, Dr Robert Will a couple of days later as he had an appointment with him regarding some muscular problems he had at the time. 36 The evidence of Dr Robert Will, a rheumatologist, is inconsistent with the plaintiff's account. In a letter dated June 2 1999 addressed to the plaintiff's previous solicitors, Dr Will said that the plaintiff first reported right buttock and lateral thigh pain in June 1999 and advised that he awoke with it and that it persisted. In a report dated 25 July 2002 Dr Will described the incident in June 1995 in more detail. He said that the plaintiff told him that he awoke with the pain and was not aware of anything that precipitated it. In cross-examination the plaintiff attempted to avoid the impact of these comments by suggesting that Dr Will had misinterpreted his statements about waking up with the pain the following morning after the incident at work and said that he did advise Dr Will that he twisted his back at work. When further pressed on this obvious inconsistency he replied that "it didn't matter anyway" as the insurance covers him whether he was injured at work or not. 37 Dr Will did not recall the plaintiff telling him of an incident at work precipitating the onset of sciatica in June 1995 and had no notes to that effect. In his various reports Dr Will described the plaintiff's relevant back condition as a right lower lumbar radiculopathy caused by a disc prolapse. He stated that it is sometimes difficult to separate events
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leading to injury, such as the sciatica leg pain and the underlying pathology in the disc because they interact. However, he agreed in cross-examination that if a relatively minor movement gave rise to a disc prolapse it is more likely that it is the result of a underlying degeneration of the spine rather than the result of some external agent. He also confirmed that he received a report from the Perth Radiology Clinic in June 1995 confirming the disc prolapse and referring to the fact that it had been present in scans performed in 1992. He agreed that the plaintiff's back condition could be characterised as a disease or a disorder of the lumbro-sacral spine. 38 I am satisfied that the plaintiff's low back condition for which he has claimed under the insurance arises from the pre-existing degenerative condition he had in his spine that led to the disc prolapse that caused the symptoms that he "woke up with" on or about June 8 1995. The plaintiff's account of a twisting injury while he was at work is inconsistent with the advice he gave to Dr Will. I am satisfied that Dr Will has not misinterpreted or incorrectly reported the plaintiff's advice to him. As with many areas of his evidence I do not find the plaintiff to be a credible witness. Despite the fact that he had disclosed previous incidents of a low back condition in his insurance applications he made a transparent attempt to gloss over this by obtaining a letter from Dr Will on June 10 1997 stating that he "had no back trouble until 8 June 1995". This letter was not signed by Dr Will but was altered somewhat to produce a similar letter dated 18 June 1997 to the effect that he had no "evidence of a significantlow back pain syndrome until 8 June 1995". In cross-examination Dr Will stated that he recalled that the content of the letter dated 10 June 1997 did not come from him and referred to a handwritten note to the copy of the letter on his file from his receptionist that the plaintiff had asked for this to be typed up for him. Although this is only a minor detail it is consistent with the plaintiff's constant attempts to distort the true picture by bending the details of some of the facts to best suit his position. 39 The finding that the plaintiff's low back condition is a result of a degenerative disease rather than something caused by the application of force is consistent with Dr Will's evidence and also consistent with the plaintiff's medical history. 40 Under the terms of the contract of insurance injury is defined as: "bodily injury…caused by an accident occurring while this policy is in force and resulting directly and independently of all other causes in loss covered by this policy." If total disability commences after 30 days from
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the date of an accident the total disability will be deemed to be caused by a sickness. 41 Sickness is defined in the policy document as "sickness or disease suffered while a policy is in force". In the policy schedule it is stated that the plaintiff has a maximum benefit period of lifetime for disability caused by injury with a maximum benefit period of two years for disability caused by sickness. 42 The provisions contained in the schedule are confirmed by the definition of "maximum benefit period" in the policy that states that the maximum benefit period for injury is applicable if the loss is caused by injury and the maximum benefit period for sickness is applicable if the loss is caused by sickness. 43 I am satisfied that these terms of the contract of insurance are unambiguous and would have been clearly understood by the plaintiff. In cross-examination he stated that the second defendant explained to him that there was a choice of a policy for two years, five years, or lifetime for sickness. He stated that he told the second defendant that he wanted cover for injury for lifetime and two years for sickness. He stated that he thought that a two year period for sickness would be sufficient as on previous occasions he had been very sick and had only been off work for six months. Although the plaintiff may not have anticipated that he would suffer long term disability as a result of a sickness or disease in his spine he was well aware that his lifetime cover under the contract of insurance was only for disability caused by an injury. 44 I am also satisfied that there is no ambiguity or any misrepresentations made as to the period of two years for payment of partial disability under the policy. As the plaintiff's claim is for payment of partial disability benefits if the contract of insurance had not been subject to a low back exclusion clause he would only have been entitled to payment of partial benefits for a period of two years as from 30 July 1995. The plaintiff's statement of claim states that he suffered a period of total disability on 8 June 1995 to 30 July and a period of partial disability as from 31 July 1995. Partial disability is relevantly defined as "an inability to perform all the duties of an occupation on a full time basis and earning income less than 75 per cent of free disability income". The provisions of the policy also provide that partial disability must follow at least 30 consecutive days of total disability. Total disability is defined as "a continuous inability to perform each and every duty of an occupation".
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45 Under Part II of the policy document par 2.2 sets out the terms in which partial disability benefits will be paid. The benefits are to be paid monthly in arrears and calculated as a proportion of the nominated monthly benefit in accordance with a formula. The period of payment of partial disability benefit is set out in the following terms:
"2.2(c) The partial disability benefit will continue to be payable until the earlier of: (i) the expiry of a maximum benefit period; (ii) the date you are no longer partially disabled; (iii) the renewal date following your 65th birthday and (iv) two years from the date of commencement of partial disability." 46 The plaintiff submits that the policy is ambiguous because the limitation on the period of partial disability benefit is not set out in the schedule as there was a reference only to maximum benefit period. In the circumstances of this case it is argued that the partial disability benefit limitation should be construed contra proferenten as against the first defendant. This submission ignores the reality of the provisions of the policy and attempts to construct an ambiguity by focusing on the provisions of the schedule. When the provisions of the policy are read as a whole there is no ambiguity. In effect the plaintiff is attempting to select provisions of the policy that suit his claim while deliberately ignoring provisions that do not. 47 The plaintiff has submitted that at no stage was he advised by the second defendant that there was a limit of two years for partial disability. It was pointed out that the second defendant could not recall whether he had said anything to the plaintiff about a limit of two years and the plaintiff was led to believe by that silence and his reading of the documentation that his cover for partial disability was lifetime. While the plaintiff may not have taken the time or trouble to read the provisions of the policy and was therefore not aware that partial disability payments could only be payable for a period of two years this does not alter the fact that the terms of the contract specifically limit payment to that period. While that may not be apparent upon a cursory perusal of the policy it is clearly revealed upon closer reading. In addition the policy was accompanied by a simple English statement. At p 8 of that statement a paragraph under the heading "Partial Disability" states that the partial
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disability benefits are payable for up to the balance of the maximum benefit period to a maximum of two years. While the second defendant does not specifically recall explaining to the plaintiff that partial benefits would only be paid for two years I do not accept the plaintiff's submissions that the second defendant misrepresented the true position. In addition I do not find that there was any negligence or misrepresentation on the part of either defendant on the basis that the documentation or the policy did not adequately set out the limitation. 48 The plaintiff did not state that he had any discussions with the second defendant as to the length of time he would be entitled to receive partial disability benefits under the contract. On the contrary, in cross-examination he admitted that he was not concerned about partial disability at all. He explained that he thought his only risk was one of total disability as a result of some work related accident. In circumstances where the plaintiff has not expressed any concern about the length of partial disability payments and has every opportunity to read the unambiguous contents of the policy there is no negligence demonstrated in any failure on the part of the second defendant to bring those provisions to the attention of the plaintiff. The plaintiff chose not to apprise himself of the terms of the policy by failing to read it. He cannot then turn around and claim that it should be construed contrary to its terms simply because it does not suit him. I therefore find that if the back exclusion clause did not preclude the plaintiff from obtaining any benefit payments under the contract he would only be entitled to partial disability benefits for the maximum period of two years following his entitlement to total disability benefits. In the circumstances there is no need to consider further issues raised by the first defendant in relation to the quantum of the plaintiff's claim based on his income.
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