George Edwin Coverdale v National and General Insurance Co Limited No. SCGRG 93/422 Judgment No. 4224 Number of Pages 5 Insurance Evidence

[1993] SASC 4224

COURT IN THE FULL COURT OF THE SUPREME COURT OF SOUTH AUSTRALIA KING CJ(1), MILLHOUSE(2) AND DEBELLE(3) JJ

CWDS
Insurance - accident and sickness insurance - Bodily injury resulting in disablement - construction of policy - indemnity not extending to death.
Evidence - documentary evidence - parol evidence rule - evidence of statements of intention in negotiations leading to issue of insurance policy not admisible to resolve ambiguity. Codelfa Constructions Pty Ltd v State Rail Authority of NSW (1981-82) 149 CLR 337 at p.352, applied.

HRNG ADELAIDE, 5 October 1993 #DATE 10:12:1993
Counsel for appellant:     Mr N G Rochow
Solicitors for appellant:    Rogers Branch and Co
Counsel for respondent:     Ms C Francas
Solicitors for respondent: Andersons Barker Gosling

ORDER
Appeal dismissed.

JUDGE1 KING CJ This is an appeal against a judgment of the Magistrates Court dismissing an action for the recovery of monies alleged to be due on a policy of insurance. 2. The appellant is the administrator of the estate of the insured under the policy. On 3rd April 1990 the deceased suffered bodily injury in a motor vehicle accident being a "ruptured aorta and upper servical spine trauma" and died on the same day. 3. On 3rd October 1986 the deceased had applied for and obtained a personal loan from the National Australia Bank in the sum of $28,500. There was a discussion between the deceased and the Manager of the Christies Beach Branch of the National Australia Bank in the course of which the Manager suggested that the deceased should take out consumer protection insurance. The Manager completed a "Loansafe Insurance" policy with National and General Insurance Co Limited. He signed the policy for the company and the deceased also signed. That is the policy which is the subject of the action. 4. Section One of the policy deals with the events insured against as follows:
    "SECTION ONE - THE EVENTS
    1.1 Bodily injury caused solely and directly by violent
    accidental, external and visible means and resulting (WITHIN
    twelve calendar months of the occurance of such bodily injury)
    solely and directly and independently of any other cause in
    total and continuous disablement from engaging in or attending
    to usual profession, business or occupation as certified by a
    legally qualified medical practitioner approved by the Company
    so long as such continued disablement is certified by such
    medical practitioner.
    1.2 Total and continuous disablement from engaging in or
    attending to usual profession, business or occupation caused
    solely and directly and independently of any other cause by any
    illness which shall require the Insured to be regularly treated
    by a legally qualified medical practitioner, approved by the
    Company so long as such continued disablement is certified by
    such medical practitioner." 5. Section Two deals with the compensation payable under the policy and is as follows:
    "SECTION TWO - THE COMPENSATION
    2.1 An amount calculated as from the date of the disablement
    referred to in Clause 1.1 at the rate of one thirtieth of the
    monthly payments under the Contract for each day of disablement,
    provided that the Company shall not be liable for the first
    fourteen days thereof.
    2.2 An amount calculated as from the date of the disablement
    referred to in Clause 1.2 at the rate of one thirtieth of the
    monthly payments under the Contract for each day of disablement,
    provided that the Company shall not be liable for the first
    fourteen days thereof." 6. Section Three deals with exclusions. It is necessary to refer to only one such exclusion which is as follows: "The insurance shall not apply to any event which is directly attributable to or consequential upon intentional self-injury or suicide (whether felonious or not) or any attempt thereat." 7. Section 4.5 is as follows:
    "This insurance shall automatically terminate on the date
    on which the first of the following shall happen:-
    (i) The Period expires: or
    (ii) The Insured attains the age of 65: or
    (iii) The Contract is paid in full by actual payment or the
    transfer of liability in another contract whether at the end
of the Period or on a prior date." 8. The case for the plaintiff at trial was that the deceased suffered bodily injury within the meaning of the policy and was therefore entitled to recover the amount outstanding on the loan at the date of the deceased's death, namely $19,454.34. The respondent denied that death resulting from bodily injury was within the risk insured against. 9. The learned Magistrate considered that there was an ambiguity in the language of the policy. He resolved the perceived ambiguity by admitting evidence of the conversation between the deceased and the Bank Manager immediately preceding the preparation and signature of the policy. He found that in that conversation the deceased had indicated her intention to insure against disability during her lifetime and had indicated that she did not desire the policy to cover death. His Honour resolved the perceived ambiguity by reference to that conversation and rejected the appellant's claim. 10. I think that the evidence of that conversation was wrongly admitted. The principles of law governing the admission of oral evidence to assist in the interpretation of a written contract are stated by Mason J in Codelfa Construction Pty Ltd v State Rail Authority of NSW (1981-82) 149 CLR 337 at p.352 as follows:
    "The true rule is that evidence of surrounding
    circumstances is admissible to assist in the interpretation of
    the contract if the language is ambiguous or susceptible of more
    than one meaning. But it is not admissible to contradict the
    language of the contract when it has a plain meaning. Generally
    speaking facts existing when the contract was made will not be
    receivable as part of the surrounding circumstances as an aid to
    construction, unless they were known to both parties, although,
    as we have seen, if the facts are notorious knowledge of them
    will be presumed. It is here that a difficulty arises with
    respect to the evidence of prior negotiations. Obviously the
    prior negotiations will tend to establish objective background
    facts which are known to both parties and the subject matter of
    the contract. To the extent to which they have this tendency
    they are admissible. But in so far as they consist of
    statements and actions of the parties which are reflective of
    their actual intentions and expectations they are not
    receivable. The point is that such statements and actions
    reveal the terms of the contract which the parties intended or
    hoped to make. They are superseded by, and merged in, the
    contract itself. The object of the parol evidence rule is to
    exclude them, the prior oral agreement of the parties being
    inadmissible in aid of construction, though admissible in an
    action for rectification." 11. For reasons which I shall shortly state I do not consider that there is an ambiguity in the language of this policy. Even if there were such an ambiguity, oral evidence of the kind admitted by the learned Magistrate would not be admissible. The evidence admitted was not evidence of surrounding circumstances. It was evidence of statements of the parties indicating their actual intentions and was therefore not receivable. 12. It is necessary to examine the language of the policy in order to determine its true meaning. When it is subjected to careful scrutiny, it yields a meaning which, to my mind, is not ambiguous. The insured event which is in question in this case is that described in Section 1.1. That event is disablement of a type which meets five tests: 1. It must totally preclude the insured from engaging in or attending to his usual profession, business or occupation. 2. It must be continuous. 3. It must result from bodily injury. 4. It must be certified by a medical practitioner. 5. Its continuation must be certified by a medical practitioner. 13. When these components are examined it is apparent that the event insured against is the disablement of a living person and that the relevant disablement continues only while the insured is living. I suppose that in the strictly literal sense death can be regarded as producing "disablement", but despite the argument addressed to us by counsel for the appellant, I do not consider that the words "total and continuous disablement", used in a policy of insurance, are apt to describe death. That the expression is not used to describe death in this policy, is confirmed by the fact that the clause contemplates certification of the disablement by a legally qualified medical practitioner. The idea of a medical practitioner certifying a dead person as disabled because he is dead is absurd. Moreover the clause contemplates a continuum of certified disablement. That notion can only apply to a living person. The argument for the appellant, in my opinion, founders upon a proper analysis of the event insured against. It is not bodily injury per se. It is a continuing disablement resulting from bodily injury. That continuing disablement must necessarily be the disablement of a living person. In a word the policy is a disability policy; it is not a death policy. 14. Counsel sought to make something of the exclusion of suicide. He argued that the exclusion of death in one form implies the non-exclusion of death in other forms. I think that that argument involves a misunderstanding of the exclusion. The exclusion applies not only to suicide but to any attempt thereat and to other self-inflicted injury. What is excluded is a period of disability caused by self-inflicted injury. If there is no intention to kill, the excluded event is covered by the expression "self-injury". 15. If there is an intention to kill but the self-injury does not achieve that intention, the situation is covered by the reference to attempted suicide and what is excluded is the period of disability resulting from that attempt. If the intention is achieved by the death of the insured, the situation is covered by the reference to suicide. What is excluded in that last mentioned situation is any period of disability in the interval between the self-injury and the consequent death. 16. Counsel also sought to make something of the fact that clause 4.5 makes no reference to the termination of the policy on death. If, however, the language describing the event insured against does not include death, there is no significance in the omission of death as a terminating event. 17. In my opinion the language of this policy is clear. It insures against disability during life. It is not apt to cover death. The appellant's action was therefore properly dismissed and I would dismiss the appeal.

JUDGE2 MILLHOUSE J I agree.

JUDGE3 DEBELLE J I agree with the reasons of the Chief Justice that this appeal should be dismissed. The nature of the cover provided by the contract of insurance should have been more clearly expressed in the contract. The issues in this action could have been avoided had the contract contained a clause expressly stating, say, that the contract did not cover death immediately resulting from injuries received. Nevertheless, it must be concluded that, when the contract of insurance is read as a whole, it provides cover for disablement caused by bodily injury and not provide cover when bodily injury immediately results in death.