Catriona Smith v OnePath Life Limited - [2020] NSWSC 1185

Supreme Court

New South Wales

Medium Neutral Citation: Catriona Smith v OnePath Life Limited [2020] NSWSC 1185
Hearing dates: 3, 4 August 2020
Decision date: 02 September 2020
Jurisdiction: Equity - Commercial List
Before: Hammerschlag J
Decision:
Summons dismissed.

Catchwords:
INSURANCE LAW – Insurance Contracts Act 1984 (Cth) – Life insurance policy where the insured gave false answers to questions about his use of drugs – Whether he failed to comply with his duty of disclosure or made misrepresentations – Whether such failure was or the misrepresentations were fraudulent – Whether the insurer would have entered into the policy in any event – Whether the insurer was entitled to avoid the policy – HELD – The insured fraudulently failed to comply with his duty of disclosure and fraudulently made misrepresentations – HELD – The insurer would not have entered into the policy and legitimately avoided it.

Legislation Cited:
Insurance Contracts Act 1984 (Cth), ss 21(1), 26(2), 29(1)-(2)

Cases Cited:
Briginshaw v Briginshaw (1938) 60 CLR 336
CGU Insurance Ltd v Porthouse (2008) 235 CLR 103
Lamb v Johnson (1914) 15 SR (NSW) 65
Permanent Trustee Australia Limited v FAI General Insurance Company Limited (In Liq) (2003) 214 CLR 514
QBE Underwriting Ltd as managing agent for Lloyds Syndicate 386 v Southern Colliery Maintenance Pty Ltd [2018] NSWCA 55
Stealth Enterprises Pty Ltd t/as The Gentlemen’s Club v Calliden Insurance Limited [2017] NSWCA 71
Tyndall Life Insurance Co Ltd v Chisholm (2000) 11 ANZ Ins Cas 90-104

Category: Principal judgment
Parties: Catriona Smith – Plaintiff
OnePath Life Limited – Defendant
Representation:
Counsel:
J E Sexton SC with H J A Neal – Plaintiff
J Gleeson QC with S J Walsh – Defendant
Solicitors:
StevensVuaran Lawyers – Plaintiff
Moray & Agnew – Defendant

File Number(s): 2017/366808

JUDGMENT

HIS HONOUR: The late Peter Larcombe (to whom I shall refer as Peter, with no disrespect intended) committed suicide on 19 August 2016 by jumping from the roof of a parking structure at 9800 South La Cienega Boulevard, Los Angeles, California.
A dearth of evidence was adduced about the circumstances of Peter’s death. The death certificate records him as never married and living in Dubai. He had a bodyguard and was embroiled in a significant controversy surrounding an alleged major fraud. There were allegations that he had stolen millions of dollars.
Peter was a cocaine user, a drinker and a smoker. Occasionally, he used drugs other than cocaine.
On 21 November 2014, that is, some 19 months before he died, Peter took out a life insurance policy (the Policy) with the defendant (or the insurer). The policy amount, after indexation, is $2,625,000. [1]
1. At the same time, Peter applied for and the insurer issued a total and permanent disability policy, which the insurer issued with a multiple sclerosis exception.
The plaintiff, to whom he was married, and to whom I shall refer as Catriona, is the nominated beneficiary under the Policy.
She has claimed under it. The insurer has declined cover, saying…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Keep reading for free

Create a free CaseChat account to read Catriona Smith v OnePath Life Limited and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2020] NSWSC 1185
Decision Date: 02 September 2020

CaseChat Overview and Summary

Catriona Smith has brought a claim against OnePath Life Limited, seeking damages for the alleged failure of OnePath to honour a life insurance policy. The dispute revolves around the insured individual’s failure to disclose his use of drugs, which he claimed were not pertinent to the policy. The Federal Court of Australia was tasked with determining whether the insured breached his duty of disclosure and whether such breach constituted a fraudulent misrepresentation. The court was also required to assess whether OnePath would have entered into the policy regardless of the non-disclosure and whether the insurer was justified in avoiding the policy.

The primary legal issues before the court involved the interpretation and application of the Insurance Contracts Act 1984 (Cth). The court needed to ascertain whether the insured's failure to disclose his drug use amounted to a breach of his duty of disclosure and whether such a breach, if fraudulent, warranted the avoidance of the policy. Furthermore, the court had to determine whether OnePath would have issued the policy if the true facts about the insured's drug use had been disclosed. The court also had to consider whether the insurer had legitimately avoided the policy in light of the fraudulent non-disclosure.

In examining the case, the court found that the insured had indeed fraudulently failed to comply with his duty of disclosure and had made fraudulent misrepresentations. The insured's deliberate omission of material facts concerning his drug use was deemed significant enough to mislead OnePath. The court held that OnePath would not have entered into the policy had it known the truth about the insured's drug use. Consequently, the court ruled that OnePath was entitled to avoid the policy due to the fraudulent misrepresentations and the failure to disclose material facts. The court determined that the avoidance was legitimate, given the fraudulent nature of the insured’s actions.

The final orders of the court were that OnePath Life Limited was not liable to pay the death benefit to Catriona Smith, as the policy was validly avoided. The court's decision affirmed that fraudulent non-disclosure and misrepresentations could justify the avoidance of a life insurance policy under the relevant legislation.

Orders