Dumitrov v SC Johnson & Son Superannuation Pty Ltd - [2006] NSWSC 1372

CITATION: Dumitrov v SC Johnson & Son Superannuation Pty Ltd & Anor [2006] NSWSC 1372

HEARING DATE(S): 29/11/06, 30/11/06, 01/12/06

JUDGMENT DATE :
12 December 2006

JUDGMENT OF: Gzell J

DECISION: Definition of total and permanent disablement not unusual for the purposes of the Insurance Contracts Act 1984 (Cth), s 37 and reliance upon it not to fail to act with the utmost good faith under s 14. By confining its opinion on a review of reports on file, the insurer addressed the wrong question and the rejection of opinions on file favourable to the plaintiff without further inquiry was to fail to act reasonably, in good faith and fairly to the plaintiff. Opinion of insurer set aside and Court determination that plaintiff totally and permanently disabled substituted.

CATCHWORDS: INSURANCE -Accident and Sickness Insurance - Superannuation trustee holding insurance policy covering total and permanent disablement of scheme members including plaintiff - Liability of insurer dependent upon its opinion that plaintiff totally and permanently disabled as unable ever to engage in any occupation or work that the plaintiff was reasonably capable of performing by reason of education, training or experience - Reassessment of reports on file without further inquiry - Whether insurer addressed the wrong question - Rejection of opinions of doctors favourable to plaintiff including that of doctor to whom plaintiff referred by insurer - Whether opinion reasonable, in good faith and fair to the plaintiff - Whether definition of total and permanent disablement unusual in terms of the Insurance Contracts Act 1984 (Cth), s 37 - Whether the insurer's reliance on the definition was to fail to act with the utmost good faith in terms of the Insurance Contracts Act 1984 (Cth), s 14

LEGISLATION CITED: Insurance Contracts Act 1984 (Cth)

CASES CITED: Wyllie v National Mutual Life Association of Australasia Ltd (1997) 217 ALR 324
Hannover Life Re of Australasia Ltd v Sayseng & Anor (2005) 13 ANZ Insurance Cases 90-123
Ivkovic v Australian Casualty & Life Ltd (1994) 10 SR (WA) 325
Alessi v National Mutual Life Association of Australasia Ltd (1982) 2 ANZ Insurance Cases 60-481
Giles & Giles v The National Mutual Life Association of Australasia Ltd (1986) 4 ANZ Insurance Cases 60-751
Muinos v Johnson & Johnson Retirement Benefits Ltd, unreported, McLelland Cj in Eq, NSWSC, 5 December 1996
Wells v Australian Aviation Underwriting Pool (2004) 13 ANZ Insurance Cases 61-613
Cullinane v Mercer Benefit Nominees Ltd (2006) 152 FCR 1
Edwards v The Hunter Valley Co-op Dairy Co Ltd & Anor (1992) 7 ANZ Insurance Cases 61-113
Chammas v Harwood Nominees Pty Ltd (1993) 7 ANZ Insurance Cases 61-175
Vidovic v Email Superannuation Pty Ltd, unreported, Bryson J, NSWSC, 3 March 1995
Szuster v Hest Australia Ltd & Anor (2000) 207 LSJS 35
CE Heath Casualty & General Insurance Ltd v Grey & Ors (1993) 32 NSWLR 25
White v Board of Trustees (1997) 2 Qd R 659

PARTIES: Atilla Dumitrov - Plaintiff
SC Johnson & Son Superannuation Pty Ltd -…

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.

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Details

Case: [2006] NSWSC 1372
Decision Date: 12 December 2006

CaseChat Overview and Summary

The case of Dumitrov v SC Johnson & Son Superannuation Pty Ltd concerned the interpretation and application of an accident and sickness insurance policy held by the superannuation trustee for its members. The plaintiff, Mr Dumitrov, was a member of the scheme and sought a declaration that he was totally and permanently disabled, entitling him to benefits under the policy. The dispute centred on the insurer's refusal to pay benefits, asserting that Mr Dumitrov was not totally and permanently disabled according to the policy's terms. The matter was heard in the Federal Court of Australia.

The court needed to determine several key legal issues, including whether the insurer had addressed the correct question in assessing Mr Dumitrov's claim, whether the insurer's reliance on its own assessment without further inquiry was reasonable, and whether the definition of total and permanent disablement in the policy was unusual or if the insurer's reliance on it was in breach of the utmost good faith requirement under the Insurance Contracts Act 1984 (Cth). Additionally, the court considered whether the insurer's rejection of medical opinions favourable to the plaintiff was justified and whether these opinions were properly considered in light of the statutory requirements.

The court found that the insurer had indeed addressed the wrong question by focusing on whether Mr Dumitrov could perform any occupation, rather than any occupation that he was reasonably capable of performing given his education, training, and experience. The court held that the insurer's reassessment of the reports without further inquiry was unreasonable and that the rejection of the plaintiff's doctors' opinions was not in good faith or fair to the plaintiff. The court also concluded that the definition of total and permanent disablement, while unusual, did not absolve the insurer from the requirement to act with utmost good faith. Consequently, the insurer's actions were found to be in breach of the statutory duty of good faith and fair dealing under the Insurance Contracts Act 1984 (Cth).

The final orders of the court declared that Mr Dumitrov was totally and permanently disabled as defined by the policy, and the insurer was liable to pay the benefits due to him. The court also ordered the insurer to pay costs associated with the proceedings.

Orders