Harry v Colonial Mutual Superannuation Pty Ltd

[2010] VCC 335

IN THE COUNTY COURT OF VICTORIA Revised

Not Restricted

AT MELBOURNE
CIVIL DIVISION

COMMERCIAL LIST - EXPIDITED CASES DIVISION

Case No. CI-09-05039

PAULINE CASEY HARRY	Plaintiff
v
COLONIAL MUTUAL SUPERANNUATION PTY LTD and THE COLONIAL
MUTUAL LIFE ASSURANCE SOCIETY LIMITED	Defendants

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JUDGE:	HIS HONOUR JUDGE ANDERSON
WHERE HELD:	Melbourne
DATE OF HEARING:	30 April 2010
DATE OF JUDGMENT:	4 May 2010
CASE MAY BE CITED AS:	Harry v Colonial Mutual Superannuation Pty Ltd & Anor.
MEDIUM NEUTRAL CITATION:	[2010] VCC 0335

REASONS FOR JUDGMENT

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Catchwords: Practice and procedure – Application to amend defence – Proximity to trial date – Likely futility of proposed defences – Prejudice to the plaintiff – Exercise of discretion.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr D. G. Robertson	Mahons with Yuncken and Yuncken
For the Defendants	Mr C. Hanson	Turks Legal
HIS HONOUR:

1           This case is set down for hearing on 17 May 2010 in the Expedited Cases Division of the Commercial List. The second defendant now seeks leave to file and serve an amended defence to raise two additional defences.

2           The proceeding was commenced on 23 October 2009. The claim by the plaintiff is made on behalf of herself and her children. The plaintiff’s husband died on 22 July 1991 and the claim is in respect of an insurance policy on the life of her late husband

which carries benefits of $684,519. The first defendant is a superannuation fund. The insurance policy was issued by the second defendant to the first defendant. Any benefits under the policy must be paid to the first defendant which has an absolute discretion as to how the benefits are paid to the dependents of the life insured (the plaintiff and her children).
3	insurance policy had been cancelled in about October 2002 as a consequence of the failure by the life insured to pay premiums under the policy and to respond to a notice

The second defendant filed a defence on 22 December 2009 asserting that the the plaintiff on 12 January 2010. The reply asserts that the steps required by the Life Insurance Act 1995 before a policy of life insurance may be cancelled were not followed by the second defendant.

4           The second defendant foreshadowed in a letter dated 3 March 2010 that, “In addition

to the other matters raised in my client’s defence, the plaintiff’s claim will be subject

to an argument in relation to the Limitation of Actions Act (Vic) 1958”. A draft
amended defence was served on the plaintiff’s solicitors on 6 April 2010. The present
application was made by a summons filed 16 April 2010.

5           The application to amend the defence is opposed by the plaintiff on the following bases:

a.	no explanation was given for the second defendant’s failure to include the further defences in its original defence;
b.	it would be futile to grant the application to amend because the proposed defences could not possibly succeed;
c.	if the defences were allowed, there would be prejudice to the plaintiff as inevitably the trial date would need to be vacated.

6           The only explanation given for the further defences not being included in the original defence was provided obliquely in the defendants’ solicitors’ letter dated 3 March 2010. The letter states that the writer’s opinion, that the limitation’s defence was available, had followed “after recent review of this matter”.

7           The proposed defences the second defendant wishes to raise are:

a.	that the life insured had “elected to treat the policy as duly cancelled, alternatively lapsed, alternatively forfeited”;
b.	that the proposed cause of action was not brought within six years of it becoming apparent to the plaintiff that the second defendant would not reinstate the insurance policy and it would remain cancelled.

8           The defence of election is alleged to have arisen as a result of requests made during January 2003 that the policy of insurance be reinstated notwithstanding the non- payment of premiums. The second defendant asserts that this action on behalf of the life insured constituted an election to seek reinstatement of the policy rather than allege that the procedures required by the Life Insurance Act 1995 had not been followed and that, as a result, the policy had not been cancelled.

9           In my view, the proposed defence is misconceived and there is insufficient reference to the factual basis in the proposed amended pleading to justify the assertion of such a defence. It could not be said in the present case that, by requesting a reinstatement of the insurance policy, the life insured was evincing an intention to abandon any

rights to rely upon the second defendant’s alleged failure to follow the processes set
out in the Life Insurance Act.

10         Defendants’ counsel referred to a passage in the judgment of Mason CJ in The Commonwealth v Verwayen (1990) 170 CLR 394 at 406-407 where Mason CJ said: “Abandonment of a right occurs only where the person waiving the right is entitled to

alternative rights inconsistent with one another, such as the right to insist on

performance of a contract and the right to rescind for essential breach”. In my view
the proposed defence, particularly as pleaded, has no prospect of success and
amendment of the defence to include the pleading should not be permitted.

11         The further defence included by the second defendant in the proposed amended plea, is a limitation defence. The pleading depends upon an assertion that the rights of the life insured and/or the plaintiff arose on some date between about 22 January 2003 and 11 April 2003 when the second defendant asserted to solicitors, acting for the life insured and/or the plaintiff, that the life policy had lapsed or ceased and would remain cancelled.

12         The plaintiff submits that this proposed defence is also misconceived and it would be futile to allow the amendment. The plaintiff relies upon two matters:

a.

The plaintiff submits that pursuant to clause 1.1 of the life insurance policy the defendant within one calendar month after the second defendant was provided with proof of certain matters, including the death of the life insured and information relating to the status, age and identity of the person providing the material. The present defence effectively admits the plaintiff’s pleading in this regard and the fact that the relevant information was provided by the plaintiff to the second defendant on about 20 February 2007. The cause of action pleaded by the plaintiff relies upon the failure by the second defendant to pay the policy benefits to the first defendant within one month of the provision of information required by the policy in February 2007.

b. Life Insurance Act

The plaintiff says that s.216 of the 1995, relating to proceeding as “unclaimed money” and effectively provides a procedure which, if followed, would result in the payment of the policy benefits to the first defendant on behalf of the dependents of the life insured.

13         The cause of action by the plaintiff is broadly for breach by the second defendant of its obligations under the insurance policy to pay the policy benefits to the first defendant. The first defendant is joined in the action because, once the policy benefits were paid, it would then have the responsibility to decide in what manner the policy benefits should be paid to the dependents of the life insured. The second defendant wishes to assert, by raising the proposed amended defence, that any cause of action the plaintiff may have, based on the policy of insurance, must have arisen at the latest between January and April 2003, at the time the second defendant made it clear that it regarded the policy as cancelled or lapsed.

14         This is not the way the plaintiff pleads her claim, which is based upon a specific breach of clause 1.1 of the insurance policy. This clause only became operative one month after the provision of information by the plaintiff to the second defendant on about 20 February 2007. The plaintiff submitted that the proposed defence is based upon a misunderstanding of the way in which the plaintiff pleads her case. On the other hand, if the proposed limitation defence had been included in the original defence, I consider that an application to strike out that defence would have been unlikely to have succeeded. Whilst the test I must apply at this stage is different and there are discretionary matters to consider, I must first determine whether the proposed defence is arguable.

15 I consider that the interpretation of s.216 of the Life Insurance Act 1995 relied upon by the plaintiff raises issues which ordinarily would be required to be determined at trial rather than on a strike out application. The more substantial issue is whether it is

permissible for the second defendant to raise alternative dates as to when the cause
of action accrued, based upon a more general reading of the plaintiff’s case than
clause 1.1 of the insurance policy. This would, in my view, ordinarily be a matter
which the defendant would be given the opportunity of raising at trial rather than
being summarily determined.

16         The plaintiff says that if the amendment were allowed in relation to the proposed limitation defence, it is likely that the trial date of 17 May 2010 would need to be vacated. However, the only specific matter relied upon by the plaintiff was that she

may have an alternative claim against the first defendant based upon the first
defendant’s failure to insist that the second defendant pay the policy benefits to it. I
consider that the amendments required to the plaintiff’s Statement of Claim to make
that alternative claim would be relatively minor as the present paragraphs 21 and 22
allege a demand on or about 20 February 2007 that the first defendant enforce the
policy against the second defendant, and in paragraph 22 an allegation that the first
defendant failed to take any action to enforce the policy.

17         When I reserved my decision, I directed that the defendants provide discovery of all documents relevant to the proposed amended defences, including correspondence between the first and second defendants after February 2007. In my view, it is not

likely that any substantial prejudice will be suffered by the plaintiff if the second
defendant is permitted to raise the limitation defence in the way it has been pleaded
in the proposed amended defence.

18         There are other general matters of discretion I must consider in determining the application. No adequate explanation has been given as to the failure by the second defendant to include the limitations defence in its original pleading. The case has been issued in the Expedited Cases Division of the Commercial List. It is expected that cases in the Division will be brought to trial as quickly as possible and with the least expenditure of costs proportionate to the issues in dispute. However, it is generally appropriate that all matters in dispute between parties are resolved at trial and to deny that opportunity to a party may cause injustice.

19         Whilst I have significant reservations about the merits of the proposed limitation defence, I consider it more appropriate that the issue be determined at trial after there has been a full and thorough examination of the issues in dispute. I would, however, have been loathe to permit the proposed limitation defence to be introduced

by amendment at this stage if it had meant that the trial on 17 May 2010 were to be vacated and, because of further investigations or similar matters, the case could not be relisted in the near future. In such circumstances, the plaintiff would, in my view, suffer a significant prejudice.

20         However, on the basis that the proposed re-pleading of the plaintiff’s claim against the first defendant and issues of discovery of documents from the defendants concerning the limitations amendment and any consequential amendment to the reply can be resolved in the next few days without affecting the trial date, I consider that it is appropriate to permit the second defendant to have leave to amend its defence in accordance with the draft included with the letter from the defendants’ solicitors to the plaintiff’s solicitors dated 6 April 2010, save for paragraph 35.

Certificate

I certify that these 6 pages are a true copy of the reasons for decision of His Honour

Judge Anderson delivered on 4 May 2010.

Dated: 4 May 2010.

Hannah Christensen

Associate to His Honour Judge Anderson