Galaxy Homes Pty Ltd v The National Mutual Life Association of Australasia Ltd - [2013] SASCFC 34

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
GALAXY HOMES PTY LTD v THE NATIONAL MUTUAL LIFE ASSOCIATION OF AUSTRALASIA LTD
[2013] SASCFC 34
Judgment of The Full Court
(The Honourable Justice Anderson, The Honourable Justice Peek and The Honourable Justice Stanley)
3 May 2013
INSURANCE - LIFE INSURANCE - THE POLICY - CONSTRUCTION
INTERPRETATION - GENERAL RULES OF CONSTRUCTION OF INSTRUMENTS - GENERAL MATTERS
The apellant company Galaxy Homes Pty Ltd is appealing a decision which dismissed its claim on an insurance policy against the respondent, National Mutual Life Association of Australasia Limited - the life insurance policy was taken out by Galaxy on the life of its managing director - part of the policy included a terminal illness benefit in which the insured can request payment of the life benefit immediatly where the insured has a "terminal illness" as defined - the insured was diagnosed with advanced metastatic melanoma soon after the policy was cancelled, and made a claim under the terminal illness benefit - this claim was rejected by the insurer - the earlier decision dismissed the apellant's claim on the basis the insured did not establish it had a "terminal illness" as defined in the policy - it was held it was not conclusive the insured's illness "will result" in death within 12 months - the appellant appeals this decision.
Held: The appeal is dismissed - the judge correctly analysed the wording of the policy condition - the insured's illness did not meet the standard imposed by the words "will result in the death of the person insured within 12 months, regardless of any treatment that might be undertaken".
McArthur v Mercantile Life Insurance Company Limited [2002] 2 QLR 197; Tower Australia Ltd v Farkas (2005) 64 NSWLR 253, applied.
McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579; Hector Steamship Company v V O Sovfracht, Moscow [1945] KV 343; Lord Inglewood v Inland Revenue Commissioners [1983] 1 WLR 366; Kuru v The State of New South Wales (2000) 236 CLR 1, considered.

GALAXY HOMES PTY LTD v THE NATIONAL MUTUAL LIFE ASSOCIATION OF AUSTRALASIA LTD
[2013] SASCFC 34
Full Court: Anderson, Peek and Stanley JJ
THE COURT
Introduction

The appellant company Galaxy Homes Pty Ltd (“Galaxy”) acts as trustee of the Galaxy Homes Unit Trust and is appealing a decision from a judge of this court. The respondent National Mutual Life Association of Australasia Limited (“National Mutual Life”) is an insurer which issued a life insurance policy on 23 February 2011.
The policy was taken out by Galaxy on the life of its managing director, Mr Eden. The policy provided a life insurance benefit in the event of Mr Eden’s death but it also provided as part of the life cover a terminal illness benefit. In the event of there being a terminal illness the insured could request payment of the life benefit immediately.
Terminal illness is defined in the policy as follows:
Terminal illness means any illness which, in our opinion, will result in the death of the person insured within 12 months, regardless of any treatment that might be undertaken. Our decision will be based on medical evidence provided to us by the person insured’s doctor, and any other medical evidence that we may require.
The policy was in existence between 23 February 2011 and 11 November 2011 when it was lawfully cancelled by Galaxy. After the policy was cancelled Mr Eden was diagnosed with an illness and the argument is as to whether the illness was terminal within the definition in the policy.
Mr Eden was diagnosed with incurable metastatic melanoma after the policy was cancelled but it is not in dispute that he first suffered symptoms of that illness during the currency of the policy.
The four stages of melanoma were set out by the judge at [50]:
Stage I melanoma is characterised by tumour thickness and the presence and number of mitoses and ulcerative status. There has to be no evidence of regional lymph node or distant metastasis. There are two subclauses of Stage I melanoma …
Stage II melanoma is characterised by tumour thickness and ulceration status. There must be no evidence of regional lymph nodes or metastasis.
Stage III melanoma is characterised by the level of lymph node metastasis. There must be no evidence of distant metastasis.
Stage IV melanoma is characterised by the location of distant metastasis and the level of the lactatedehydroginase level (LDH). Stage IV can be divided into classifications A, B or C. Type A is where the tumour has metastasised to distant skin, subcutaneous layers or lymph nodes with a normal serum LDH. Stage IV(B) is where the tumour has metastasised to the lungs and the serum LDH is normal. Stage (IVC) is where the tumour has metastasised to organs other than the lungs and the LDH is normal or where there are distant metastases with an elevated LDH.
(Footnotes omitted)
The most favourable medical evidence from experts called in the trial from the plaintiff’s point of view appears to be that at about the time the policy was cancelled or during the currency of the policy, Mr Eden had the disease of metastatic melanoma and had, on the expression of one of the experts, a 67% chance of dying within 12 months. This was the view expressed by Professor Brown.
The judge formed the view that Galaxy could not recover under the policy because it had not been established on the medical evidence that the illness sustained by Mr Eden “will result in the death of the person insured within 12 months”.
The judge determined that the words, “will result in the death of the person insured within 12 months regardless of any treatment that might be undertaken”, required a degree of certainty which he described as “approaching absolute certainty”.
The only issue in the appeal on the appellant’s grounds of appeal was decided in the second hearing before the judge. In the first hearing, after preliminary arguments, the judge decided in favour of Galaxy and therefore proceeded to interpret the policy. National Mutual Life had argued preliminary points to the effect that the insurance plan had been ended by the cancellation of the policy and this foreclosed any claim. It further argued that it was relevant to look at the situation which prevailed at the time of trial, namely that Mr Eden was still alive. It was also argued that Mr Eden had a pre-existing medical condition and that this had not been disclosed to the insurer and that therefore the insured could not rely on the policy. Finally, the insurer argued that the insured was only entitled to the terminal illness benefit if the opinion of the insurer was formed during the policy period. All the points above were decided in favour of the insured and are the basis of the notice of contention filed in the appeal.
The issue on the appeal therefore is whether Mr Eden suffered a terminal illness as defined in the policy of insurance. The benefit to which Galaxy contends it is entitled is the sum of $4 million. Galaxy’s case is solely one of construction. It involves interpreting the policy of insurance to give the words used their ordinary and fair meaning.
At the hearing of the appeal Mr Eden is still alive. In the circumstances of his present poor state of health the Court has decided to deliver judgment with its reasons on the appeal. We have not dealt with the notice of contention and the points raised therein in these reasons. The Court has formed the view that the appeal should be dismissed.
The High Court has emphasised that while there can be no universal rule it is desirable intermediate courts of appeal consider whether to deal with all grounds of appeal, not merely any ground that is decisive of the appeal: see Kuru v The State of New South Wales (2008) 236 CLR 1 at [12]. We consider this approach applies also to grounds raised by a notice of contention. In this case, however, having considered the matter we are satisfied good reason exists not to deal with the grounds raised by the notice of contention. It is important that Mr Eden be allowed as much time as possible to get his affairs in order and make provisions in his will based on our decision.
If Galaxy were to succeed in an appeal to the High Court then it may be necessary for the High Court to remit, for further determination, the issues raised in the notice of contention. We take this unusual course in the interests of allowing Mr Eden as much time as possible to consider his appeal rights, financial position and testamentary wishes as stated above.
Background
It is convenient to set out the statement of agreed facts from the first reasons of the judge appealed from. See Galaxy Homes Pty Ltd v National Mutual Life Association of Australasia Ltd [2012] SASC 141 - judgment delivered 20 August 2012:
[8]The parties filed a Statement of Agreed Facts in the following terms.
1.     On 24 February 2011, the defendant (“NMLA”) issued Life Insurance Policy No. 500370015 (“the policy”) to the plaintiff (“Galaxy Homes”) insuring the life of Peter Eden (“Life Insured”).
2.     A copy of the policy wording is Annexure A. The terms of the policy included the following:
[thereafter various policy provisions are set out].
3.     The Terminal Illness Benefit available under the Policy is $4,000,000.
4.     By letter dated 11 November 2011, Galaxy Homes asked NMLA to cancel the Policy effective immediately. A copy of this letter is Annexure B.
5.     On 17 November 2011, NMLA wrote to Galaxy Homes confirming that the policy was cancelled. A copy of this letter is Annexure C.
6.     On 27 April 2012, Galaxy Homes lodged a claim (“Claim”) for the ‘Terminal Illness Benefit’. A copy of the Claim is Annexure D. In the Claim, the Life Insured stated, amongst other things:
6.1The exact nature of his illness is “Melanoma Cancer Stage 4”; and
6.2He first attended St Andrews Hospital for this illness on 27 December 2011 and was seen by Dr David Walsh.
7.     A medical certificate was included with the Claim which was completed by Dr Walsh. A copy of the medical certificate is Annexure E. In it, amongst other things, Dr Walsh:
7.1gave a diagnosis of Metastatic Melanoma;
7.2said the date of the diagnosis was 28 January 2012; and
7.3gave the opinion that he expected the life insured to live for 6 months.
8.     With the Claim Form, Galaxy Homes provided a medical report to Dr Walsh dated 20 April 2012. A copy of the medical report is Annexure F. In the report, Dr Walsh stated, among other things:
The issue you are raising in the letter are essentially two. Peter has Stage IV metastatic melanoma. I believe that this meets the criteria of Terminal Illness. The 5-year survival for all patients with metastatic melanoma is less than 6%. Unfortunately, the majority of patients in this situation would be dead within 6-12 months.
The second issue is the onset of what stage Peter would have developed metastatic melanoma. Certainly, the tumours that I discovered in his abdominal cavity in December 2011 would have been present for at least 6 months. The symptoms relation to them would have been variable.
In terms of preparing this letter I have contact with Peter and he has confirmed that he had abdominal pain consistent with early but incomplete small bowel obstruction dating back to at least September 2011. At that point he did not make the connection between abdominal pain and his previous subcutaneous melanoma.
9.     The NMLA rejected the Claim by letter dated 28 May 2012. A copy of the said letter is Annexure G. The letter stated, among other things:
It is clear from the medical evidence that Dr Walsh could only make a certification of your client’s life expectancy after his diagnosis of Stage IV Intra-Peritoneal Disease (Metastatic Melanoma) on 28 January 2012. Given the medical evidence and the plan’s terms and conditions stated above, we find that your client is not eligible to make a claim as the plan ended on 17 November 2011, some 2 months before your client was diagnosed with Stage IV Intra-Peritoneal Disease (Metastatic Melanoma) on 28 January 2012 and subsequently some 5 months before your client was certified by Dr Walsh expecting him to live for 6 months on 24 April 2012.
The judge also sets out further agreed matters in his reasons at [9]:
[9]The parties also filed a document headed Agreed Statement of Issues which is in the following terms:
AGREED CHRONOLOGY
1.The Life Insurance Policy No. 500370015 (“the Policy”) issued by the defendant to the plaintiff on 24 February 2011 on the life of Peter Eden (“the Life Insured”) was cancelled (and hence brought to an end within the meaning of clause H.1) on 17 November 2011.
2.The Life Insured was first diagnosed with Stage IV metastatic melanoma on 28 January 2012.
3.The plaintiff first made a claim (“the Claim”) for a Terminal Illness Benefit under clause D.1.2 of the Policy on 27 April 2012.
4.The defendant did not and could not therefore form any opinion prior to 17 November 2011 as to whether the Insured [sic] had an illness that would result in the Insured’s death within 12 months, regardless of any treatment that might be undertaken (within the meaning of “terminal illness in clause 1.3).
The judge’s reasons
The judge described the policy as an occurrence-based policy. His Honour held that “the insured is entitled to rely on any event or occurrence that satisfies the insuring clause and which “occurs” at any time during the policy period”.
His Honour examined the expert medical evidence in detail. For the plaintiff there was the evidence of Mr Eden’s treating surgeon, Mr Walsh, and a consultant physician in medical oncology, Professor Brown. Professor Fox was also a consultant physician in medical oncology and gave evidence for the defendant. Each of the experts who gave evidence was highly qualified.
In his reasons the Judge summarised the opinions of the experts. The evidence relied on by the experts depended to varying degrees on their reliance on statistics available from published papers and articles in medical journals, together with their own expertise.
The judge described Mr Walsh’s opinion as to the prognosis of Mr Eden as
… at its highest for the Insured that Mr Eden had six to nine months to live as at and from the date of diagnosis, 28 December 2011.
His Honour comments that this prognosis would have been the same regardless of whether the prognosis was made as at August 2011 or 17 November 2011. This was the case with all three experts.
Professor Brown relied upon studies and statistics in forming his opinion in the report of 10 September 2012 that Mr Eden’s chance of surviving seven months would have been about 50% and his chance of surviving 12 months would have been about 33 per cent. He stated later that it was his opinion that the likelihood of Mr Eden surviving 12 months, whether from August 2011, November 2011 or December 2011 was 33%.
Professor Fox formed the opinion that if he had examined Mr Eden in August 2011, or on 17 November 2011, he would have said that there was a survival of 12 months or more. This is clearly not supportive of the case for the insured. Without going into detail, his Honour found for several reasons related to Professor Fox’s use of information from September 2012 and in particular the fact of Mr Eden’s continuing survival, that Professor Brown’s opinion should be preferred.
The judge’s detailed analysis of the evidence of each of the medical experts is in our view an accurate summary of their opinions.
The judge found at [46]:
The prognosis given by Mr Walsh and Professor Brown each fell well short of an opinion that, as at 17 November 2011, Mr Eden had an illness that will result in his death within 12 months.
His Honour then proceeded to construe the words used in the policy of insurance. His Honour said at [51] and [52]:
[51]Ultimately, the question before me is one of construing the words used, in the context of the insuring and definition clauses and in the context of the policy as a whole. The insured must prove, on balance of probabilities that Mr Eden’s circumstances fell within the insuring clause. The terminology used in the present case, “will result”, consists of unusually rigid language for a policy of this type. In McArthur v Mercantile Mutual Life Insurance Company Ltd, more flexible language was used. The definition of permanent disability required a finding, inter alia, that the insured “was likely never to [work again]”; not an uncommon formulation in policies of this type. Again, the task before the court was to determine, on a balance of probabilities, whether an historical fact had been established. The fact concerned the prognostic character of the plaintiff’s condition, as a time earlier or no later than the court’s consideration of the issue. The plaintiff needed to establish, on balance, that he had been, in fact, “disabled or incapacitated to such an extent as to render [him] likely never to [work again]”. Here, unlike in the present case, the prognostic character of the plaintiff’s condition, to be proved, itself contained an element of probability (“likely”). The prognostic character called for had an element of flexibility built in to it but it was that character, as a whole, which had to be proved as an historical fact, on balance.
[52]Tower Australia Ltd v Farkas also concerned a claim for a terminal illness benefit although in many respects the form of, and terminology used in, the policy was materially different from that in the present case. In Tower Australia the insuring clause under consideration required a finding that the insured had “an illness or condition which is highly likely to result in death within 12 months”(emphasis supplied). At face value, the language used fell somewhere between that used in McArthur, “likely never …” and that used in the present case “will result”.
In the Tower Australia case, Bergin J was the trial judge. She said of the words “highly likely” that:
I am satisfied that the term “likely” means a real and not remote chance and that in this context “highly likely” moves, as Tower submitted, into the realms of probability. It is not necessary to speak in percentages – the test is that the likelihood of death in 12 months is high, or, put another way, in all probability death will result in 12 months.
The “diagnosis” of the terminal illness is the event that entitles the payment of the death benefit. For the cancer to qualify as a terminal illness under the Tower Term conditions, there had to be an “assessment” or an evaluation or judgment, that the cancer would be highly likely to result in the plaintiff’s death within 12 months.
(Footnotes omitted)
In considering the appeal from Her Honour’s decision the Court of Appeal said inter alia at [55]:
When a judge or jury decides an issue “on the balance of probabilities” this may occasionally involve application of mathematics associated with the probability theory. But the vast majority of cases entail much more. Even when the issue is the existence or non-existence of a past event the reality is that the decision-maker arrives at a state of reasonable satisfaction having regard to the seriousness of the issues involved, the evidence gathered or not gathered, intangibles such as assessment of the credibility of witnesses, as well as the broad “possibilities” (see generally The Hon Mr Justice D H Hodgson, “The Scale of Justice: Probability and Proof in Legal Fact-finding” (1995) 69 Australian Law Journal 731).
The present case called for satisfaction to the level of high likelihood. I agree that this involved more than mere probability. It is however necessary to bear in mind that the matter at issue was predictive in the sense of involving proof of a future possibility as distinct from an historical fact. Furthermore, the matter to be predicted was considered by the experts and the court as offering a choice between two possibilities: death within 12 months from the disease or continued existence thereafter. (The possibility of death from other causes within 12 months was not expressly adverted to and it appears to have been subsumed in the “continued existence” category). This binary focus meant that, to the extent that it is meaningful to speak of a 60 per cent degree of satisfaction that death would occur, a 60 per cent “likelihood” that death would not occur. Any attempt to transfer such crude mathematics to the evaluative exercise of determining “high likelihood” needs to bear in mind that the evaluative question would need to be applied to a 60:40 ratio with the 20 per cent gap that this entails. These considerations really point up the non-mathematical aspect of the central issue, but they assist in explaining why I would affirm Bergin J’s conclusion in the instant matter.

The judge then correctly stated the issue in our view before reaching his conclusions at [59] and [60] His Honour said:
[59]In my view, perhaps harsh as it may appear, the insurer has taken steps to ensure (and the parties have agreed) that the prognostic character that must be established has an element approaching absolute certainty about it; something more and significantly more than likely or indeed, highly likely.
[60]In this context it should be remembered that the insured has made a claim not for the “life benefit” but for an acceleration of the payment of the life benefit. Ordinarily, were the life insurance plan here to have been annually renewed, the insurer would expect to be called upon, in the short to medium term, to pay out the life benefit upon death of a life insured in Mr Eden’s position. In the unusual circumstances of this case, the insurer was never going to be liable to pay the life benefit as a result of the death of Mr Eden. Bearing in mind that life insurance plans such as the present, unless cancelled by the insured or by the insurer (but only on quite limited grounds), are renewed on an annual basis, it makes some sense for any entitlement to an “acceleration” of the life benefit ordinarily payable on death to be strictly confined. In my view, the insurer in this case has done that by the use of the word “will” as opposed to other alternatives which allow for significantly less certainty about the content of any relevant prognosis and which, in a practical sense, would have served to expand the operation of the Terminal illness insuring clause.
The judge then proceeded to deal with the other arguments raised by the insurer as to why the policy did not respond to the situation of Mr Eden’s diagnosis. As we have said earlier, because the decision we have reached is to confirm the decision of the learned trial judge, we will not at this stage deal with those arguments raised in the notice of contention.
Arguments on Appeal
The appellant in its written submission contends:
… that the natural, and correct, interpretation of the definition requires the Court (standing in the place of the Respondent) to determine whether on the balance of probabilities Mr Eden will die within 12 months.
Mr Doyle SC for the appellant argued that the definition was really posing the question: is the illness such that it will result in death within less than 12 months?
He submitted that the definition was merely requesting an opinion from the medical fraternity as to their expectation or prognosis. He argued that the word “will” was not intended to import some standard of certainty or near certainty.
Mr Doyle submitted that there will on the judge’s interpretation of the definition only be rare cases where a medical practitioner is prepared to give an opinion to the extent that it is a near certainty that someone will die within 12 months. To that extent he submitted it was not a true bargain between the parties and created an unjust result.
Mr Doyle analysed the policy as providing three potential types of cover. The first cover is the life plan, which also includes the advanced claim for a terminal illness, and the second and third types of cover, which were not taken out in this instance, involved a total permanent disability cover on the one hand or a trauma insurance plan on the other hand.
Mr Doyle submitted that the insurance contract should be given a businesslike interpretation as it is a commercial document entered into between two parties at arm’s length. He conceded that, on principles of construction, if the contract of insurance had only one clear meaning the Court could not reject that meaning simply because the result appeared to be unfair. Mr Doyle contended, however, that this was not such a case and that there were alternative constructions and that therefore the Court should avoid a construction which results in an unjust result. He invoked the principle of contra proferentem in aid of his argument.
Mr Doyle argued that the use of the word “will” in the definition is used as a matter of grammar to denote the future tense. He submitted that it was not used as an aid to interpreting the degree of certainty or probability as to whether the particular event would occur. He submitted that the learned trial judge was incorrect in that he used the word “will” not only for a reference to the future, but also to determine a degree of certainty in relation to the medical prognosis. He submitted that the interpretation of the trial judge effectively meant that the insurer must be absolutely certain that Mr Eden will die within 12 months to enable the terminal illness benefit to operate.
In simple terms, Mr Doyle’s argument is that the word “will”, as it is used in the policy, simply relates to the future and that so much is obvious because any prognosis or statement of one’s opinion is of necessity as to a future state of events. By its very nature, he argues, a prognosis is an expectation for the future.
Mr Doyle referred to the two decisions discussed by the judge in some detail. In McArthur v Mercantile Mutual Life Insurance Company Limited [2002] 2 QLR 197 the language used in relation to a permanent disability definition was that the insured “was likely never to work again”. In that case Mr Doyle argued the definition containing the word “likely” specifically addressed the degree of certainty required and nominated that it was one of likelihood. He contrasted that situation with the present case.
He also referred to Tower Australia Ltd v Farkas (2005) 64 NSWLR 253 where the relevant words in the policy were:
… an illness or condition which is highly likely to result in death within 12 months.
Mr Doyle emphasised the use of the words “highly likely” in this definition. Again, he submitted that the relevant clause in the policy of insurance specifically addresses the degree of certainty. In both cases he submitted that the terms are defined with a degree of certainty. This is quite different from the present case.
Mr Doyle submitted that the insurer in this matter, had it intended the definition to mean something approaching certainty as found by the judge, could easily have inserted appropriate words. Mr Doyle submitted that the absence of any such words is significant. He submitted that without any words importing in to the prognosis something approaching certainty, a mere prognosis as to the future without a standard cannot be converted into a situation of near certainty.
In summary, therefore, on the issue of the interpretation of the clause in the insurance policy, Mr Doyle submits that his client should win in either of two ways. First, that the use of the word “will” is to denote future tense and nothing more and therefore the trial judge was wrong, and second that if it is merely referring to a question of prognosis then he submits that the evidence should have been interpreted in favour of his client because the prognosis fits the definition.
In relation to the contra proferentem rule, Mr Doyle contends there are two interpretations open on the ambiguous wording. Once that threshold has been passed and in a situation where there is an ambiguity then the clause should be construed against the insurer as the party responsible for the drafting and generation of the document. Mr Doyle submits that the Court should be slow in construing a policy that, despite the absence of clear words to denote certainty is interpreted in such a way as to amount to near certainty.
The respondent points out in its written outline of submissions that the argument advanced by Mr Doyle both in the written submissions of the appellant and before this Court is solely a construction argument. Mr Gleeson SC relies upon the principle that an insurance policy must be interpreted to give the words used in the policy their ordinary and fair meaning: see McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579. Mr Gleeson also argues that the contra proferentem rule does not operate in these circumstances, because there is no ambiguity.
Mr Gleeson points to the language used in other definitions within the insurance policy to the effect that, when required to describe the likelihood of an event occurring, the policy does so in express terms. He points particularly to the definition of total and permanent disablement in clause D.2.1 of the policy where the words “unlikely to work” and “unlikely to perform domestic work” are included in the definition as sub clauses A and D.
In relation to Mr Doyle’s argument about the future tense of the word “will” Mr Gleeson points to the fact that of necessity because it is a claim for a terminal illness benefit, it must make reference to the future. He submits that the plain language used in the policy “will result in the death” is an emphatic statement. He says it imposes a test as high as can be imposed. He said it suggests “what is inevitable”: Hector Steamship Company v V O Sovfracht, Moscow [1945] KV 343 at 348 and “imports a degree of certainty” and Lord Inglewood v Inland Revenue Commissioners [1983] 1 WLR 366 at 371.
Mr Gleeson compared the language used in the above cases with that used in Tower Australia and McArthur. He submits that an analysis of the authorities above and Tower Australia and McArthur illustrate how the words should be interpreted in this matter as approaching that degree of certainty.
Consideration
Looking at the medical evidence on its face it is clear that the insured was faced with difficulty in establishing that Mr Eden will die within 12 months regardless of whatever treatment he has. The doctors, that is, Mr Walsh and Professor Brown, do not go that far and simply use plain English to express their opinions. The opinions we have set out in these reasons in our view fall short of proving on the balance of probabilities that Mr Eden would die within 12 months. That is unless the word “will” is used solely to reflect a future event and not to indicate some degree of certainty.
“Will” in our view means what it says. It does connote a degree of certainty in its ordinary and natural meaning. It is not merely referring to the fact of a prognosis for the future. The nature of the policy and the advanced life benefit for terminal illness means that the word “will” should be looked at in that context. It may be, as Mr Doyle submitted, that it is only on a rare occasion that a medical practitioner will be able to express an opinion in those terms but in our view that is what was intended when the contract of insurance was entered into.
The decisions in both McArthur and Tower are both supportive of the construction found by His Honour. That construction is reinforced by construing the policy as a whole. Different words would have been used had the construction contended for by Mr Doyle been intended. Those types of words were used elsewhere in the policy. The insurers in both decisions referred to, chose specific words to express the degree of certainty that was required. The insurer here has chosen the word “will” and therefore in our view raised the bar above “likely” and “highly likely”. In other words, a requirement of very high probability, approaching certainty, was intended.
It is the whole of the first sentence of the definition which is important. It is not simply a question of whether a person will die within 12 months, the insured must prove that this outcome will occur “regardless of any treatment that might be undertaken”. That whole sentence and the connection between “will” and “regardless of any treatment” is important and supportive of the interpretation of the judge. It shows in our view that even a theoretical recovery from the most expensive and rare treatment is to be taken into account.
It is our view that the construction is also based on the commercial setting of the insurance contract. As His Honour says [at 60], as set out earlier in these reasons, it is not a claim for the “life benefit” but for an acceleration of a payment for that benefit. For the reasons explained by His Honour the insurer has used the word “will” to confine the insured’s entitlement. It is intended to be a benefit available only on a restricted basis.
For the reasons we have given, the commercial sense for an entitlement to advanced benefit for a terminal illness to be limited, and the use of different expressions elsewhere in the policy, mean that the word “will” is to be construed strictly. While the interpretation reached by the judge is unfortunate for the insured in the circumstances of this case, it is nevertheless the proper construction in interpreting this commercial document which does not allow for any ambiguity. This matter does not call for the use of the contra proferentem rule.
Conclusion
For these reasons we would dismiss the appeal on the construction point. The judge appealed from has correctly analysed the wording of the policy condition and is correct in his conclusion as to the meaning of the words “will result in the death of the person insured within 12 months, regardless of any treatment that might be undertaken”. The matters raised in the Notice of Contention can await another day, should that situation arise.