Ingham v National MUtual Life Association of Australasia Ltd & Ors

[2006] HCATrans 618

[2006] HCATrans 618

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S129 of 2006

B e t w e e n -

JEFFREY TOM INGHAM

Applicant

and

THE NATIONAL MUTUAL LIFE ASSOCIATION OF AUSTRALASIA LIMITED

First Respondent

JOHN BUCKTON

Second Respondent

ACADEMY LIFE AGENTS PTY LIMITED

Third Respondent

Application for special leave to appeal

GLEESON CJ
GUMMOW J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 10 NOVEMBER 2006, AT 10.34 AM

Copyright in the High Court of Australia

__________________

MR J.M. IRELAND, QC:   May it please the Court, I appear on behalf of the applicant.  (instructed by Stacks/Goudkamp)

MR M.T. McCULLOCH, SC:   May it please the Court, I appear for the first respondent.  (instructed by Cutler Hughes & Harris)

GLEESON CJ:   Do you need an extension of time, Mr Ireland?

MR IRELAND:   I do, your Honour. 

GLEESON CJ:   Is that opposed, Mr McCulloch?

MR McCULLOCH:   No, it is not, your Honour.

GLEESON CJ:   Yes, you have that.

MR IRELAND:   Thank you, your Honour.  Your Honour, the case involves a short point about the construction of a limitation clause in a sickness and accident policy.  Your Honours have seen that the applicant, Mr Ingham, was a builder who proposed for insurance to the respondent in 1998.  The proposal document is at page 72 of the application book.  The policy was issued by the insurer with effect from 27 August 1998 and it included a special condition which is at the heart of the case.  The special condition is reproduced at page 88 of the application book. 

Your Honours, before going to the words of the special condition, may I say something about the background to the insurance contract.  These matters were disclosed by Mr Ingham in the proposal document which he completed, and that is to be found at page 72.  Mr Ingham had been self-employed for about five years, having been a licensed builder for 29 years.  He disclosed in his proposal to the respondent that 18 years previously, in 1980, he had suffered an injury to his left eye which had occurred in an accident.  As the trial judge found at page 3, line 13 of the application book:

In 1980 a piece of wood became airborne as it left a wood router, and it struck him in the left eye, resulting in loss of vision in that eye.

On the same page the judge made the following finding as to what occurred on 9 January 2001, which was after the policy had taken effect:

Mr Ingham was again struck by a piece of flying wood, this time to his right eye.  This caused such damage that there was permanent and total loss of vision in that eye.

A traumatic and immediate blindness.  Following the second injury, an operation was carried out to the left eye, the one that had been damaged in 1980, and some vision was restored.  The special condition which is critical in this matter broke into two parts.  It commences at line 29 on page 88.  The first part was concerned with the already damaged left eye and the condition read:

It is hereby understood and agreed between the Company and the Insured that no benefit shall be payable for disability or loss caused or contributed to by any disease or disorder of the left eye, including blindness.

Pausing there, your Honours, one could contemplate that that part of the special condition would be apt to cover the case which was apparently discussed with the broker at the time that the matter was proposed that because he had only one working eye at the time he proposed this insurance, in effect, the strain on that eye of the disability to the left eye might induce some disease or disorder or deterioration.  It was clear that the insurance company was exempting itself totally from any obligation to pay any benefits whatsoever.

GLEESON CJ:   Where do we most conveniently find the principal insuring clause?

MR IRELAND:   Your Honour, the principal insuring clause is at page 96.

GLEESON CJ:   Thank you.

MR IRELAND:   This is one of these plain talk policies, as they call it.  It says:

we will pay you a monthly benefit (see clause 9), if the person insured suffers:

·total disablement through injury or sickness (clause 2); or

·a specific injury (clause 4)

That is at line 18.

GLEESON CJ:   So the provision you are directing our attention to on page 88 is a qualification to what appears on page 96?

MR IRELAND:   Yes.  I have referred to what might be called the first branch of the exclusion which is designed aptly and suitably enough to prevent the existing injury to the left eye from causing anything further which leads to disability, but the critical matter is the limitation which appears in the second branch of the special condition.  This time not a total exclusion but a limitation at 180 days benefit.

GLEESON CJ:   A benefit in the nature of income protection.

MR IRELAND:   That is so, your Honour.  If your Honour goes back one page to page 87, there is tabulated in the insurance schedule the benefits.  So at line 23 your Honour sees the relevant one, associated income protection.

GLEESON CJ:   So what you are being covered for, if I can use that expression, is loss of income to the extent of the benefit?

MR IRELAND:   Correct.  The benefit here is $2,000 per month for lifetime, as your Honours see.  What the insurer has successfully argued below is that the 180‑day limitation or restriction of that benefit overtakes the lifetime entitlement.

GLEESON CJ:   What the insurer has so far successfully argued is that what you are being protected against is loss of income resulting from the disorder to your right eye over a period of 180 days.

MR IRELAND:   Yes.  Your Honour, the critical words are “disease or disorder of the right eye”, the concluding words.  Your Honours will notice the word “blindness” which is the last two words of the first branch of that is not repeated, but when one looks at the word “blindness” where it appears in the first branch of the exclusion, we say it is clear beyond doubt that the phrase “including blindness” is a reference to the disability or loss, not a reference to disease or disorder.  That means, if it is correct, that it should be read in the same way where it is referred to in the second branch of the limitation, which is the critical one.  In other words, blindness is not the disease or disorder with which this clause is concerned; blindness is the disability which is caused. 

In the Court of Appeal the phrase “disease or disorder” was construed so that the word “disorder” was said unambiguously to convey the state of affairs where there was an immediate crushing of the optic nerve:  instant blindness without any period of deterioration.  We argued and, if special leave were granted, would be putting again that the phrase “disease or disorder” is apt to describe some kind of condition which was a process of deterioration, not immediate injury, which is in the words of the insuring clause that your Honour, the Chief Justice, mentioned. 

Could I just ask your Honours, please, from our written arguments to go to page 68, where it will be seen that some dictionary definitions were quoted.  In the Oxford Dictionary, at least, there were two clear lines.  At line 22 there was the general meaning for the word “disorder”, which is “Absence or undoing of order”, a lack of order in a general sense, but there was a specific meaning which was 5 at line 23 on page 68 of the application book:

A disturbance of the bodily (or mental) functions; an ailment disease (usually a weaker term than disease and not implying structural change).

We put below that there was at least an ambiguity between those choices of meanings.  We were outflanked by the Court of Appeal in its approach because the Court of Appeal simply said there was no ambiguity.  It is that in part that raises the occasion for an application for special leave.  It is a tension that has really developed in this Court, we would respectfully say, between two approaches. 

One approach is the search for the true construction of a document, in which case all aids ultimately to interpretation may be finally put to one side.  One reads the document, one finds its commercial meaning in the context of the document and then one does not resort, it is said, to any principles of construction at all apart from the normal approach to meaning.  Your Honours might remember as long ago as 1877, Sir George Jessel put forward that view.  He said in Taylor v Corporation of St Helens (1877) 6 ChD 264 at 271:

The rule –

he means the rule of construction –

is to find out the meaning of the instrument according to the ordinary and proper rules of construction.  If we can thus find out its meaning, we do not want the maxim.

The maxim he is talking about, of course, is the maxim which is shortly referred to as the contra proferentem principle – verba cartarum fortius accipiuntur contra proferentem.  Broom says that means the words of an instrument shall be taken most strongly against the party employing them. 

Now, the value of the contra proferentem principle in its particular application to insurance policies, and especially sickness and accident policies like this, has been considered by this Court a number of times.  First in Johnson’s Case, which we refer to in our written submissions, and later in McCann’s Case in which your Honour the Chief Justice, I think, participated.  The gist of this Court’s remarks in those cases seems to be that, “We don’t like this principle.  It is a principle of last resort.  The judges can find the meaning without any fall back on ambiguity”. 

However, more recently Justice Callinan did say in Wilkie’s Case 221 CLR 522 – I am sorry, I gave your Honours the Australian Law Journal reference.  Could I just go to paragraph 48 where his Honour Justice Callinan says:

This Court (Gleeson CJ, McHugh, Gummow, Kirby, Hayne and Heydon, JJ, Callinan J dissenting) in Andar Transport Pty Ltd v Brambles Ltd recently reaffirmed the vitality of the contra proferentem rule in a case relating to the construction of an indemnity clause.

GLEESON CJ:   But it is not like the Human Rights Act in England.  It does not mean that if there is a possible way of reading the document in favour of the insured you must read it that way.

MR IRELAND:   Correct.  We accept that fully, your Honour.  All of the dicta point in that direction.  What we had in this case, we respectfully submit, was a truly viable alternative meaning and that in context, having regard to the use of the phrase “disease or disorder” in conjunction with the use of the word “blindness” in the special condition, there was, we would say, a prevailing meaning, but at least a contesting meaning for this clause which would have seen the exemption clause not reaching the distance it did with the result that the claim was eclipsed after a six‑month benefit. 

Your Honour, it is a case in which we also the Court to perhaps exercise a visitation jurisdiction because of the injustice which is, on our approach to the construction of the policy, clearly eventuated to this individual.  Those are my respectful submissions.

GLEESON CJ:   Thank you, Mr Ireland.  We do not need to hear you, Mr McCulloch.

We think there are insufficient prospects of success of an appeal to warrant a grant of special leave in this matter.  The application is dismissed with costs.

We will adjourn for a short time to reconstitute.

AT 10.47 AM THE MATTER WAS CONCLUDED