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Johnson v American Home Assurance Co

Johnson v American Home Assurance Co

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HIGH COURT OF AUSTRALIA

BRENNAN CJ,
McHUGH, GUMMOW, KIRBY AND HAYNE JJ

ANDREW WINN JOHNSON APPELLANT

AND

AMERICAN HOME ASSURANCE COMPANY RESPONDENT

Johnson v American Home Assurance Company [1998] HCA 14
4 March 1998
P29/1997

ORDER

Appeal dismissed with costs.

On appeal from the Supreme Court of Western Australia

Representation:

M J McCusker QC with R J L McCormack for the appellant (instructed by Dwyer Durack)

C J L Pullin QC with G I K Macnish for the respondent (instructed by Cocks Macnish)

Notice: This copy of the Court’s Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS

Johnson v American Home Assurance Company

Insurance – Construction of policy – Whether "permanent total loss" of foot – Some use of injured foot with orthotic aids – No total loss.

Words and Phrases – "Permanent total loss".

BRENNAN CJ. I agree with Hayne J. The appeal should be dismissed.

McHUGH J. I agree with the judgment of Hayne J.

GUMMOW J. The appeal should be dismissed. I agree with the reasons of Hayne J.

KIRBY J. The ninety-first Psalm reflects the common human fear of injury to the foot. The Psalmist promises rescue from various misfortunes. The angels, we are assured, will take charge over the righteous[1]:
"They shall bear thee up in their hands, lest thou dash thy foot against a stone."
[1]Psalms, 91:12.
Unfortunately, angels did not intervene to protect the appellant's foot. But he had an insurance policy. This case concerns his attempt to obtain earthly rescue from the insurer. The question is whether the courts below misconstrued the policy. It provided coverage, in certain circumstances, for "permanent total loss of use ... of [a foot]". The insurer says that if, as a practical matter, use of the foot for mobility could be restored by the use of an insert in the shoe of the insured (an "orthotic"), the injury would necessarily fall outside the cover. The insured contends that the sole "loss of use" to be judged is that of the foot, as a foot. In issue is which construction of the policy is correct. Upon the resolution of that question depends the insured's entitlement to pursue his claim.
In the Supreme Court of Western Australia, the primary judge[2] upheld the insurer's construction. He dismissed the insured's claim. The Full Court[3] unanimously confirmed that decision. Now, by special leave, the insured appeals to this Court.
[2]Steytler J. See Andrew Winn Johnson v American Home Assurance Company unreported, Supreme Court of Western Australia, 16 November 1994.
[3]Andrew Winn Johnson v American Home Assurance Company unreported, Full Court of the Supreme Court of Western Australia, 15 August 1996 (Kennedy, Rowland and Anderson JJ).
An insured suffers a serious foot injury
Mr Andrew Johnson ("the insured"), was injured on 16 February 1991 when he was camping in the south-west of Western Australia. He took hold of a rope which was tied to a branch of a tree adjacent to a…

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: [1998] HCA 14
Decision Date: 4 March 1998

CaseChat Overview and Summary

In *Johnson v American Home Assurance Company*, the High Court of Australia considered an appeal concerning an insurance policy. The dispute centred on whether the insured had suffered a "permanent total loss of use of one limb," specifically his foot, as defined by the policy. The insurer contended that the insured's ability to use his foot, even with orthotic aids, meant the loss was not total.

The primary legal issue before the court was the construction of the insurance policy, particularly the phrase "permanent total loss of use of one limb." The court had to determine whether the use of orthotic devices to mitigate pain and facilitate function negated a finding of "total" loss of use of the foot. The insured argued that the loss should be assessed based on the practical and effective use of his foot as a foot, asserting that the use of orthotics was irrelevant to this assessment.

The High Court, affirming the Full Court's decision, reasoned that the policy's requirement of "total" loss necessitated considering the actual functional capacity of the insured's foot. The court found that the insured's ability to walk, stand, bear weight, and squat, even with the assistance of orthotics, demonstrated that he retained practical use of his foot. The court held that the use of orthotics was akin to using analgesics to manage pain and did not render the residual use of the foot insignificant. Therefore, the loss of use was not "total" within the meaning of the policy. The appeal was dismissed with costs.

Orders

Orders of the court

Appeal dismissed with costs.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

BRENNAN CJ HUGH J GUMMOW J KIRBY J HAYNE J

Provision is made, under event number 19, for the payment of a sum for "Permanent Partial Disability not otherwise provided for under Events 5 to 18 inclusive". The amount payable in such circumstances is described as "Such percentage of the Capital Sum Insured as We in Our absolute discretion shall determine and being in Our opinion not inconsistent with the Compensation provided under Events 9 to 18 inclusive". Whether this provision applies in the circumstances of the insured's loss, need not be considered. It was not the matter in dispute between the parties. That dispute arose from the insured's contention that his "foot", taken in isolation, was so damaged that he has suffered "permanent total loss of use of one limb", being the foot at or above the ankle. The insurer contested that interpretation. So far, it has done so with success.Decisions of the Supreme Court As a result of the video film, taken when the insured was unaware, the primary judge concluded that the insured had "yielded to the temptation of exaggerating the effects of his injury"[4]. Nevertheless, this was immaterial to the construction of the policy. According to that construction it was permissible (as the insurer had argued) to measure the "use" which the insured had of his damaged limb, bringing into account the aid provided by the orthotics. Once "so aided", it was clear that the insured was able to make use of his foot and similarly to put his ankle to use. The primary judge concluded[5]:"[T]he fact that the use of the foot might often lead to pain ... does not, I think, detract from the fact that the foot is being put to 'use' for the purposes of the policy. I do not consider that, even allowing for the fact of pain, and for the use of the inserts, the use to which the plaintiff has put, and continues to put, his foot could be said to be so 'unreasonable' or 'impractical' as not to amount to a 'use' at all".[4]Per Steytler J, at 11.[5]Per Steytler J, at 11-12. The Full Court noted the "central thrust" of the insured's argument that the loss to be measured was the "practical and effective use of his foot 'as a foot'"[6] and that the use of orthotics was immaterial. However, their Honours were unconvinced[7]:"With the benefit of those aids, he has the practical use of his foot which enables him, and at all material times enabled him, to walk, to stand, to bear weight, to walk backwards and to squat. The function of the foot is much more than the 'peg' which the appellant described. To ignore the uses referred to is to ignore the requirement in the policy that the loss should be 'total' before the insured is entitled to payment for the loss of use of a limb. We cannot accept that the loss of use was 'total' within the meaning of the policy while the appellant was able to achieve all that he could by the simple expedient of using an insert to support his injured foot. ... [T]he restriction in the use by the appellant of his foot was both mechanical and due to pain. The use of the inserts reduced the pain by supporting the appellant's foot. In one sense, this use is little different from the use of analgesics."[6]Full Court judgment at 13.[7]Full Court judgment at 14.

Ratio Decidendi

Legal Principle Established

Established by: BRENNAN CJ, HUGH J, GUMMOW J, KIRBY J, HAYNE J

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