Kon v AMP Life Ltd

[2006] NSWSC 1304

CITATION:	Kon v AMP Life Ltd [2006] NSWSC 1304
HEARING DATE(S):	27/09/06, 28/09/06, 29/09/06, 04/10/06
JUDGMENT DATE :	4 December 2006
JURISDICTION:	Equity Division
JUDGMENT OF:	Barrett J
DECISION:	Short minutes to be brought in
CATCHWORDS:	INSURANCE - income continuation insurance - construction of contract of insurance - meaning of "usual occupation" - contractual definition of "remunerative work"
CASES CITED:	Duncan v Prudential Assurance Co Ltd (1999) ANZ Ins Cas 61-433 Hooper v The Accidental Death Insurance Company (1860) 5 H&N 546; 157 ER 1297
PARTIES:	Michael Kon - Plaintiff AMP Life Ltd - Defendant
FILE NUMBER(S):	SC 4748/03
COUNSEL:	Mr M. Dempsey SC/Mr G.J. Watkins - Plaintiff Mr G. Curtin - Defendant
SOLICITORS:	DGB Lawyers - Plaintiff Mallesons Stephen Jaques - Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BARRETT J

MONDAY, 4 DECEMBER 2006

4748/03 MICHAEL KON v AMP LIFE LTD

JUDGMENT

1 The plaintiff sues upon a contract of insurance issued by the defendant and described as a policy of “income continuation insurance”. The plaintiff claims, first, a declaration that, in the events that have happened, he is “unable to work” within the meaning of clause 3 of the contract and that the defendant has breached the contract and, second, judgment for damages, interest and costs.

2 The contract is evidenced by two documents given by the defendant to the plaintiff. One is a certificate, the other a set of “rules”. The certificate commences:

“This is your Certificate. It sets out details of your policy, including who owns it, who is insured, and the amount of cover you have when this policy starts.
The rules of this policy are in the Policy Rules we sent you with the Certificate. Together, the Policy Rules and Certificate form the contract with us. Please keep them in a safe place.”

3 The contract goes on to name the plaintiff as both “Policyowner” and “Insured person” and says:

“We pay the person who owns the policy. We call that person you. The insured person is the person who must be ill or injured for us to pay.”

4 The insurance began on 29 November 2000 and is expressed to end on 31 May 2017.

5 The main operative part of the certificate is as follows:

“We pay a monthly benefit if Michael Kon is unable to work. He is unable to work if he:

· is so ill or injured that he can’t do his usual occupation, and

· is under the ongoing care of his doctor for that illness or injury; and

· does not do any remunerative work.

Please note, if Michael Kon does any remunerative work, but earns less than he did before he became unable to work, we may keep paying a reduced monthly benefit. We call this the Recovery feature . It is explained under the next heading.”

6 The “next heading” refers to payment of a reduced amount if the plaintiff does any remunerative work but earns less than he did before he became unable to work. No claim is made in the proceedings by reference to this provision and it may be left to one side.

7 The main operative part of the certificate has a parallel in the rules. Paragraph 3 says:

“We pay you if the insured person is unable to work. The insured person is unable to work if:

· they are so ill or injured that they can’t do their usual occupation; and

· they are under the ongoing care of their doctor for that illness or injury; and

· they do not do any remunerative work.

However, for some people, after they have been unable to work for 2 to 5 years, the first dot point of definition of ‘unable to work’ will change.”

8 The rules go on to explain that the two or five year limit applies only if a reference to it appears in the certificate. Since there is no such reference in this case, the limit need not be mentioned further.

9 It is also made clear by the rules that payments are monthly in arrears.

10 Of the expressions used in the main operative part of the certificate, only one is defined. There is a definition of “remunerative work” in paragraph 68 of the rules:

“An insured person is engaged in remunerative work if they are doing work in any employment, business, or occupation. They must be doing it for reward – or the hope of reward – of any type.”

11 Neither the certificate nor the rules define “usual occupation” in the sense of ascribing a particular meaning to the particular expression. But the rules do expand upon the concept of inability to “do” one’s “usual occupation”. After referring to “the definition of ‘unable to work’ … set out in rule 3 and the Certificate”, a section of paragraph 68 of the rules under the heading “Unable to work” goes on to repeat the relevant part of paragraph 3 and continues:

“To help you understand our approach, when we assess the insured person’s ability to do their usual occupation under the first dot point at the top of this page, the assessment is based on their capacity to carry out any one duty or combination of duties, which is critical to the proper performance of their usual occupation .”

12 Taken together, the certificate and the rules embody a scheme of monthly payment such that if, for a particular month, the insured person is “unable to work”, in the sense described by reference to the three cumulative conditions, a payment will be made after the end of that month. There is, however, a “waiting period” which is four weeks. The defendant is not obliged to make any payment unless “the insured person has been unable to work for the waiting period” (these words appear in the rules but are consistent also with the certificate). It follows, as I see it, that onset of a state of “unable to work” marks the beginning of the “waiting period”, that the obligation to pay becomes operative four weeks later (assuming that the state of “unable to work” then continues to subsist) and that that obligation is such that a payment becomes due at the end of each succeeding month if the state of “unable to work” has continued throughout that month.

13 There may, of course, be circumstances in which a state of “unable to work” can be seen from the outset to be permanent. A case of severe brain damage is an obvious example. In other instances, a state of “unable to work” may be of a temporary or fluctuating kind. A plumber who breaks an arm but recovers will be “unable to work” only until the break heals. If the plumber later breaks the other arm, a new state of “unable to work” will arise.

14 The plaintiff’s contention is that he became “unable to work” at a point in June 2001 and that his entitlement to payment crystallised, as it were, on 11 July 2001 at the end of the applicable “waiting period”. The defendant accepted and acted upon a claim submitted by the plaintiff in September 2001 on that basis. Payment of monthly benefits commenced accordingly. On 16 September 2002, however, the defendant notified the plaintiff by letter that his claim “no longer satisfies the policy definition for Total Disablement” and that it had “ceased your claim from 11 February 2002”. The letter went on to say:

“The reasons are:

· Based on all the evidence available to us and in particular, an Independent Psychiatrist report from Dr Lee, indicated that you are fit to return to work in your usual occupation or in any occupation for which you are suited by your education, training or experience, either on a full time or part time basis.

On an ex-gratia basis, AMP has decided to pay your claim, up to the date of this letter. A cheque will be forwarded shortly.”

15 The plaintiff’s solicitor thereafter engaged in correspondence with the defendant which, by letter faxed on 16 September 2002, confirmed the original decision. The letter also said:

“A senior medical officer and our Legal area has now reviewed the medical evidence in relation to Mr Kon’s claim and has determined, on the basis of Dr Lee’s report of 26 November, 2001 that the claim does not satisfy the policy definition of Total Disablement. Dr Lee is a senior specialist psychiatrist with considerable experience in the assessment of Major Depression and Mood Disorder. A copy of his report has been forwarded to Dr Noonan to enable him to discuss it with Mr Kon.
The reports of Dr Noonan, the General Practitioner, were considered as was Mr Kon’s acknowledgment that he continues to attend his place of work as before the lodgment of his claim.”

16 In the result, therefore, the defendant made payments to the plaintiff in an aggregate sum equivalent to the monthly amounts that would have been payable under the policy from 11 July 2001 to 7 August 2002. It is the contention of the plaintiff that he became “unable to work” in June 2001 and that he continued “unable to work” thereafter. The parties have agreed that, if the plaintiff’s contention is correct, a sum of $205,667.57 is applicable to the balance of the period from the end of the “waiting period” until trial for which payments have not been made. That balance consists of the period between 7 August 2002 and 7 October 2006.

17 On the plaintiff’s approach to the case, there is no separate treatment of individual monthly periods. The plaintiff has thus undertaken the onus of showing that he was “unable to work” throughout each and every one of the relevant monthly periods.

18 For the plaintiff to succeed in claims so formulated, he must show that, throughout that period

(a) he was “ill or injured” (“Element A”);
(b) he “can’t do his usual occupation” (“Element B”);
(c) his inability to “do his usual occupation” resulted from the extent and effects of his illness or injury (“Element C”);
(d) he was under the ongoing care of his doctor for the illness or injury (“Element D”);
(e) he did not “do any remunerative work” (“Element E”).

19 The medical evidence establishes that the plaintiff has, on a continuing basis since 2001, suffered from a depressive psychological illness for which he has been under the ongoing care of his general practitioner, Dr Noonan. He has also received specialist psychiatric treatment from Dr Durrell from time to time. Dr Synnott, a psychiatrist retained by the defendant, saw the plaintiff on an isolated occasion in 2003, and was initially of the view that the plaintiff was not ill. Upon further examination in October 2005, however, Dr Synnott was of the opinion that the plaintiff was suffering from a major depressive disorder. It is clear, in my view, that his evidence, taken as a whole, is not inconsistent with the conclusions of Dr Noonan and Dr Durrell. The onus that rests with the plaintiff in relation to Element A and Element D may be taken to have been discharged in respect of the whole of the period from 7 August 2002 to 7 October 2006.

20 That leaves for consideration Element B, Element C and Element E.

21 In addressing Element B, it is necessary at the outset to determine what the contract means when it refers to “usual occupation” and what the plaintiff’s “usual occupation” is to be taken to be. Two questions arise in relation to the relevant concept of “usual occupation”. The first is as to time: when the contract speaks of the plaintiff’s “usual occupation”, to which point of time does it direct inquiry regarding the plaintiff’s activities? The second question is as to precision with which the “occupation” must be identified.

22 As to the first question, it seems to me that the “usual occupation” is to be identified at the time of the occurrence or onset of the illness or injury said to ground the right to recover under the contract. Attention is focused on the plaintiff’s activities at the time of the illness or injury, rather than at the time of the making of the contract. The approach to construction in this case should, in this respect, be the same as that taken by Franklyn J (with the concurrence of Kennedy and Walsh JJ) in Duncan v Prudential Assurance Co Ltd (1999) ANZ Ins Cas 61-433. His Honour said, at p.74,922:

“Relevantly, ‘total disability’ is the inability of the insured, by reason of an injury which has so occurred, to perform the duties of the insured's ‘usual occupation’. It necessarily follows, in my view, that ‘usual occupation’ there referred to is that of the insured at the time of the injury. That may or may not be the insured's ‘usual occupation’ at the time of taking out the Policy. To limit the meaning of ‘usual occupation’ to that current when the Policy was taken out would render the definition of ‘total disability’ meaningless. If that occupation had ceased to be the insured's occupation at the date of the injury there would not necessary be any duty relevant to it for the purpose of the definition.”

Although the words are different, the structure of the contract before me makes the same approach appropriate.

23 I turn now to the second question: what are to be regarded as the features and incidents of the “usual occupation”? The focus must be upon the nature of the activities. The policy of insurance considered in Hooper v The Accidental Death Insurance Company (1860) 5 H&N 546; 157 ER 1297 raised the question whether the insured was wholly disabled “from following the usual business, occupation or pursuits”. Chief Baron Pollock said (at ER p.1302):

“His ‘usual business and occupation’ embrace the whole scope and compass of his mode of getting his livelihood.”

24 That, it seems to me, reflects the concept of “usual occupation” applicable to the contract with which I am concerned.

25 In light of the answers I have given to the two questions just considered, identification of the plaintiff’s “usual occupation” for the purposes of Element B involves examination of the whole scope and compass of the plaintiff’s means of getting his livelihood at the point in 2001 which marked the onset of his depressive illness. It is not necessary to identify that point with precision since the plaintiff’s remunerative activities did not undergo material change after 2000.

26 The plaintiff became an employee of Hymec Mining and Engineering Pty Ltd in 1994. That company conducted a business which involved servicing and repair of machinery mainly for the coal mining sector. The plaintiff began in a sales position. It was his function to obtain contracts and to seek out new customers. He arranged appointments and prepared marketing proposals. He travelled extensively, including to other places away from Hymec’s base in the Wollongong area, in the course of his work. His affidavit makes it clear that he worked hard and was successful. When the plaintiff joined, Hymec had three directors but no general manager or managing director. In about 1998, the plaintiff was appointed as general manager. Hymec had an annual turnover of about $5 million at that time. The plaintiff was appointed managing director in about 2000. He had responsibility for the day to day management and was the leader of a staff of about 30 permanent employees and 30 casuals. There were two full time clerks, one part time and one office manager. In about 2000, Hymec acquired the business of an electrical company, EME. The plaintiff negotiated the purchase, which included a property at Unanderra. He says that he built up that business significantly. By that time, he says, cashflow management and negotiations with banks were the major part of his job.

27 The plaintiff occupied this position as managing director of Hymec when, in late June 2001, he “suffered a breakdown at home”, to use his own words. It was that event which caused him to make a claim under the insurance contract in September 2001.

28 The particular activities and functions of the plaintiff, as managing director, were further elucidated in his cross-examination and in the evidence of two directors of the company, Mr Bartley and Mr Horton. He was the chief executive and general manager and accounting manager. He described himself in cross-examination as the “chief rainmaker, chief contact for attracting customers”. Mr Bartley described him as “a talented salesman” and “a very good salesman”, adding that he worked hard, spending 60 hours a week on Hymec’s business. In his oral evidence, Mr Bartley said:

“Q. At paragraph 5 of your first affidavit you say you had contact with him each day and observed him continuously dealing with employees, customers and potential customers. You observed that he got on well with customers?
A. Yes.

Q. Is there anything that he said or did that gave you an impression of his abilities as a salesman?
A. Yes, he'd go out, visit clients, customers, and bring work into the workshop. He also put presentations together and presented that presentation, and we were successful in receiving, winning a contract with BHP, with mechanical work, maintenance.

Q. You saw him dealing on a person to person basis with customers?
A. Yes.

Q. Did you form an opinion, on the basis of those observations, as to his capacities as a salesman?
A. Yes.

Q. What was that opinion?
A. That he was quite good, very good, and brought a lot of work into the shop.”

29 The company was obviously not a large enterprise but it was, at least in 2001, a busy one engaged in active business operations which, of their nature, entailed energetic application of effort by the plaintiff in a leadership role involving contact and interaction with customers, bankers, staff and other people.

30 The “whole scope and compass of his mode of getting his livelihood” are to be understood accordingly.

31 In further addressing Element B above, it is next necessary to decide whether, after mid 2001 when, as he puts it, he “suffered a breakdown”, the plaintiff was unable to “do his usual occupation” (“… can’t do his usual occupation”). There are three steps to this process. The first is to see what he actually did. The second is to judge whether what he actually did was “his usual occupation”. The third is to determine whether, if what he actually did was not his “usual occupation”, his failure to “do” his “usual occupation” was a result of inability to do it.

32 The evidence shows that the plaintiff stepped down as managing director of Hymec in June 2001 and that, since that time, the general management function has been exercised by Mr Horton. This has been the position both at times after mid-2001 when Hymec continued in the mining equipment servicing business and also at later times when it had relinquished that business and undertook much more modest operations related to diesel engines with a very much reduced staff. Hymec changed its name when its operations changed. It will nevertheless be convenient to continue to refer to it as “Hymec”.

33 After his resignation as managing director of Hymec in June 2001, the plaintiff initially did not work at all and did not attend in any way to the company’s affairs. In due course, however he did return to the company’s premises. He was advised by both Dr Durrell and Dr Noonan that his psychological condition would benefit from attending the premises and doing whatever work he could. In accordance with that advice, it became his habit to go there on most weekdays for somewhat less than the total of normal business hours.

34 The evidence shows that, in recent times, the plaintiff has undertaken some tasks within the Hymec office. In fact, there is evidence of his having been involved in Hymec’s affairs on several occasions after his resignation as managing director in June 2001. There are in evidence minutes of fairly regular board meetings at which reports on the plaintiff’s health were received and noted. Minutes of 28 February 2002 state that the plaintiff is “not able to return to work”. Mr Horton is reported as having suggested on that occasion that the plaintiff “spend some time with directors to overcome some of his social phobia”. On 5 March 2002, the plaintiff is recorded as having told his colleagues of advice from Dr Noonan that he be “around the directors for whatever time he could, without taking on any agitation”. The minutes of 22 March 2002 record the following:

“M. Kon coming in when he can, does odd jobs, cleans yard, paints, etc. Feeling better when here with us.
B. Horton asked M. Kon if he could fly to USA with him in April for two weeks while he is doing some work for Hymec. If so, could he see his doctor to approve the trip.
Phone call was made to Dr from the office. Dr agreed he could go, but not to take on any stressful situations.”

35 I accept that, as of March 2002, the plaintiff had begun to come to the Hymec premises “when he can” to do “odd jobs”.

36 There was a report to the meeting of 28 May 2002 of the trip to the United States foreshadowed in the 22 March 2002 minutes:

“B. Horton said M. Kon could not leave Motel Room after 3 days, would not eat out of his room, he also said M. Kon could not cope, so to avoid stressful situations he stayed in the Motel for the balance of the trip.”

37 The same minutes record the following:

“M. Kon said he could only come in now and then to Hymec until this meeting but is taken [sic] extra Efexor and could come and resume from today. Also, AMP has advised they will no longer pay. They say M. Kon no longer sick and will no longer pay. B. Horton request to pass all information to our DGB Lawyers.”

38 The documentary evidence makes it clear that the plaintiff continued to attend Hymec board meetings from early 2002, although it must be said that the minutes do not suggest that the meetings were long or onerous. Also, it appears that they only ever involved Mr Horton and Mr Bartley in whose presence the plaintiff was comfortable.

39 The documentary evidence also shows that the plaintiff signed annual returns of Hymec and associated companies on 28 January 2003. He appears to have signed tax returns as public officer (a position he retained) throughout. None of the returns was prepared by him.

40 In April 2003, the plaintiff executed a lease of premises between Hymec as lessee and an associated company as lessor. Thereafter, he played a part in drafting a new lease for a longer term that was to play a part in a proposal for the sale of the property by the associated company on a tenanted basis. It appears that the plaintiff played an active role in relation to the sale. In the period June to September 2003, he engaged in correspondence with Wollongong City Council and a service provider regarding fire safety certification for the premises, corresponded with a supplier of floor tiles and sent faxes to numerous estate agents about listing of the property for sale.

41 In August 2003, the plaintiff signed a notification to ASIC of a resolution to change a company’s name.

42 In June 2005, action was taken to wind up certain associated companies of Hymec. The plaintiff is shown to have joined with other directors in signing declarations of solvency. He is recorded as having been present at meetings of the members of the companies and as having moved the motion that the company be wound up. It is clear that the minutes were prepared in advance by outside accountants. It may safely be inferred that those present merely followed the template, having decided beforehand to cause the companies to be wound up.

43 Finally, so far as documents are concerned, I quote in full minutes of a directors meeting of 22 September 2006 and a letter subsequently written by the plaintiff to Hymec’s external accountant. The minutes are as follows:

“MINUTES OF EXTRAORDINARY MEETING OF ERP ENGINEERING PTY LTD AT UNIT 2/33 WAVERLEY DRIVE, UNANDERRA ON SEPTEMBER 22nd, 2006
PRESENT: MICHAEL KON, PAUL BARTLEY, DIRECTOR BRIAN HORTON GENERAL MANAGER AND SHAREHOLDER
Michael Kon informed the Directors & Share Holder regarding loan accounts for Bartley, Kon & Horton are all over the place.
M. Kon could not reconcile balance sheets from 2001 to 2006.
Legal firm wanted print outs. (Workings on the loan account.)
Michael found some entries in Balance Sheet (Journal) not put in and others could not be reconciled.
Request to inform accountants to hold return (tax) of ERP June 2006 return until Accountants fix problems and correct them.
Michael Kon to send letter or fax regarding above to Akele Kinnas & Co.”

44 The subsequent letter reads:

“Dear Lou,
Please refer to the attached minutes of ERP Engineering Pty Ltd, which was held on 22nd September 2006.
We the directors have found lots of errors in our returns (Balance Sheet Tax). Directors request for your firm to reconcile loan accounts etc from June 2001 to 2006.
I will be away having meetings, etc, all week from 25th September for about two weeks.
Please confirm this fax by return mail for directors’ files.
Regards,
(sgd)
Michael Kon.”

45 The letter just quoted is a letter to Mr Kinnas, a chartered accountant in private practice, who was retained by Hymec in 2003 or 2004 to prepare its accounts and tax returns. Mr Kinnas gave evidence. The initial contact with his firm was made by the plaintiff. At his request, Mr Kinnas attended at Hymec’s premises and discussed with the plaintiff, Mr Horton and Mr Bartley the accounting requirements of Hymec and some problems they were having. The plaintiff was an active participant in the discussions. Mr Kinnas or his assistant prepared accounts and tax returns for Hymec for the year ended 30 June 2004 and 2005. The necessary information was obtained from the plaintiff and a part-time bookkeeper employed by Hymec. The final draft of the accounts was then presented to and discussed with all three directors, including the plaintiff. I quote from Mr Kinnas’s cross-examination:

“Q. When you attended with your draft financials and your management letter, you, Mr Kon, Mr Bartley, Mr Horton, would, then, discuss the issues you wanted to raise?
A. That's right, we had a group discussion on the issues, yes?

Q. And did Mr Kon take part in those discussions?
A. He did.

Q. Did he ask you questions about various of the matters that you would address?
A. I am pretty sure he did, yes.
Q. Did they appear to you to be cogent, sensible questions that he asked?
A. I would say so at the time, yes.”

46 It is clear that the plaintiff has continued, at least from the first half of 2002, to play a part in the affairs of Hymec. Mr Horton accepted in cross-examination that the plaintiff managed the financial function – “such as it needs to be managed”. But he went on to explain that that side of the operations could really be handled by the personal assistant or secretary “and then given over to the accountants”; also that the plaintiff “continued to tell the personal assistant what to do”. Mr Horton also explained that the plaintiff gave instructions to the personal assistant who worked three hours on one day of the week only. It is thus clear that the financial function does not involve much, which is not surprising when it is recognised that the activities of Hymec are now very substantially contracted.

47 Another matter emerging from Mr Horton’s evidence concerned the role played by the plaintiff in the construction of a warehouse for the associated company of Hymec. I have already referred to a sale of the warehouse on a tenanted basis (see [40] above). I quote again from Mr Horton’s cross-examination:

“Q. What role did Mr Kon play in the construction of the new warehouse?
A. I believe he contacted the contractors.

Q. What did he do with the contractors?
A. Asked them to build a warehouse, I believe.

Q. Did he, to your knowledge, seek quotes from contractors?
A. Yes, I do recall looking at some quotes, yes.

Q. Did Mr Kon give you those quotes, come to you and say, "Here are some quotes I have got about a certain part of the work"?
A. Yes.

Q. And did you discuss those quotes with Mr Kon?
A. Yes.

Q. Were plans drawn up?
A. Yes.

Q. Did Mr Kon arrange for the plans to be drawn up?
A. The contractors for the shed would have drawn the plans up.

Q. Gave them to Mr Kon?
A. Yes.

Q. Which he brought to you?
A. Yes.

Q. And you had a discussion about the plans?
A. Yes.

Q. And either a DA or BA was required to be submitted to the local council?
A. I am sure it was, yes.

Q. Was Mr Kon in charge of liaising with an architect or contractor in relation to the contents of any BA or DA?
A. Yes, I believe so.

Q. The warehouse was constructed?
A. Yes.

Q. Did you have an architect?
A. No.

Q. Did you have a builder?
A. A builder, yes.

Q. And Mr Kon, he is the one who liaised with the builder on behalf of Hymec?
A. Yes.

Q. He would liaise with the builder and then report back to you and Mr Bartley about anything that needed to be discussed with his fellow directors?
A. We also directly had direct contact with the builder.”

48 Mr Horton confirmed the role played by the plaintiff in arranging the subsequent sale of the property, as well as the antecedent lease.

49 Mr Bartley also gave evidence about the plaintiff’s activities since early 2002. It is consistent with the other evidence and there is no need for separate discussion of all aspects of it.

50 I have referred to certain documentary evidence concerning the occasion in April 2002 when the plaintiff accompanied Mr Horton on a business trip to the United States: see [36] above. Further information about that event and a similar event in late 2004 or 2005 was given by Mr Horton in cross-examination:

“Q. And was that business trip a success, so far as Mr Kon is concerned?
A. Not really, no. Michael showed some aggression in some of the meetings, some of the early meetings we had, and part way during the time we were over there, he locked himself in the room and would not come out.

Q. For how long did he remain?
A. Two or three days.

Q. Have there been subsequent occasions when you invited Mr Kon to participate on business trips or undertake marketing activities on behalf of the company?
A. Yes, there was one occasion last year, I think, or late the year before, and it was a business presentation and, then, onto a social evening, and Michael could not cope with that at all. He refused to attend.
HIS HONOUR: Q. The meeting or the social event?
A. Both.”

51 Bearing in mind the whole of the evidence about the plaintiff’s activities since the early part of 2002, I return to the several steps outlined at [18] above. In the light of that evidence, it cannot be said that the things the plaintiff has done in and about the Hymec business in the period since 2002 corresponded with “his usual occupation”. The “usual occupation” is described at [28] and [29] above. The things he did from 2002 were, by contrast, of a clerical kind. It is clear that, after the onset of his illness, he was (and has remained) capable of attending to what appear to be relatively undemanding tasks by way of some supervision of the part-time bookkeeper, liaison with the external accountant, contact with the local council, a builder and estate agents, participation in what appear to have been uncontentious directors’ meetings and identification (but not resolution) of anomalies in the accounts. But the evidence about the trip to the United States and the other business/social event mentioned by Mr Horton shows that the plaintiff no longer has the capacity to act as overall manager of a business and to perform the role of “chief rainmaker, chief contact for attracting customers” or the chief sales person and client liaison. Whereas he was previously, in Mr Bartley’s words, “a very good salesman” and “a talented salesman”, he became a person who could not confront the kinds of promotional and customer interface essential to even basic ability to perform such a role. I quote part of Mr Horton’s evidence:

“DEMPSEY: Q. (By leave) In respect of paragraph 19, since Mr Kon became ill, have you noticed something about his relations or dealings with customers and suppliers for the business?
A. Yes, we found that it was prudent not to allow Michael to associate a lot with customers. He sometimes gets aggressive and sometimes gets very confrontational. He gets quite upset within himself.”

52 The intrinsic worth of the contribution the plaintiff is now making (and has made since he began attending the premises in March 2002) emerges from evidence given by both Mr Bartley and Mr Horton. Mr Bartley said:

“DEMPSEY: Q. Mr Bartley, would you employ the plaintiff to perform the tasks he currently undertakes at the company?
A. No.

Q. Why not?
A. It is a mundane job with no value there, no value to the company.”

53 Mr Horton’s evidence was that he would not employ the plaintiff to do the tasks he currently performs. The reason he gave was as follows:

“A. Well, he is virtually incapable of doing any major job. Michael comes in to do jobs that, number one, he likes to do, and number two, they are just there to keep him occupied, to keep his mind occupied, to be around Paul and myself.”

54 The evidence also shows that it is his illness that has robbed the plaintiff of his ability to be a managing director and has left him in a position where he is able to perform only clerical tasks of a relatively routine kind. In a report dated 22 November 2002, Dr Durrell said:

“Mr Michael Kon is presently unable to fulfil his former employment as a Managing Director.
His mental illness precludes him from the intellectual demands of his premorbid occupation as Managing Director. The planning organisational demands as well as the interpersonal stressors, as Managing Director, would overwhelm his mental capacities which are presently compromised by his mental illness.
These symptoms include lowered energy levels, decreased tolerance to psychosocial stresses, irritability, heightened insomnia, pervasive anhedonia, lowered libido, poor concentration, dysphoria, suicidal ideation and anxiety symptoms.”

55 Dr Durrell’s opinion remained the same in June 2005:

“Mr Kon’s chronic Mood disorder prevents him from engaging in remunerative work for which he is reasonably suited by his education, training and experience.”

56 In a report dated 23 August 2006, Dr Noonan said, referring to no less than twelve consultations between January 2003 and August 2006 (following earlier consultations from July 2001):

“On each occasion I have reviewed his depressive condition and noted that he has failed to achieve any improvement. He remains unfit to resume work in his former capacity of administration, engineering consultant and company director.
He demonstrates continuing symptoms of major depression, including a flattening off affect [sic], inability to participate in hobbies and previous interests, poor concentration, reclusive behaviour with no interest in socialising or interacting with friends, family and work colleagues, and disturbed sleep patterns. His behavioural displays and responses to questioning demonstrate significant melancholia. Furthermore, he reports a decline in his libido to the point that he has no interest in sexual activity of any nature.
He continues on SSRI/antidepressant medication of Venlafaxine HCl of 150mg.300mg. daily.
His loss of concentration and melancholia has reduced him from a creative business leader who pursued advances and change in electrical and mechanical engineering to a person who is unable to make any real contribution to his company or investments.
It is my observation and recommendation that he is unfit to do any form of remunerative work.”

57 Reverting to the list of things that the plaintiff must show to succeed in this case (see [18] above), I am therefore satisfied that he has discharged the onus of establishing what I have called Element B and Element C.

58 In expressing this opinion, I have not thought it necessary or appropriate to consider the section of paragraph 68 of the rules set out at [11] above, that is, the passage expressed to serve the purpose of helping the reader to understand “our approach” and describing how “we assess the insured person’s ability to do their usual occupation” and what the assessment is “based on”. This passage does not, in terms, assign a particular meaning to “usual occupation”. Rather, it describes the defendant’s “approach” to “assessment” of a person’s “ability to do their usual occupation”. The policy condition concerned with “usual occupation” (reflected in Element B above) is in no way predicated upon an assessment or formation of opinion by the insurer. The condition looks to two objective matters: inability to “do” the “usual occupation” and causal connection between that inability and the effects of the illness or injury. That being so – and since the passage in question is expressed to have a purpose of merely assisting the reader’s understanding of the insurer’s approach to an objective matter (as distinct from adding substantive content to the contract), I regard the passage as being of an informative rather than a contractual character.

59 Remaining for consideration is the question whether the plaintiff has established Element E at [18] above, that is, that he did not “do any remunerative work”.

60 If the word “remunerative” had here the connotation of warranting or meriting reward or capable of producing reward, the conclusion would be that the plaintiff did “remunerative work” at least from the first half of 2002 and continues to do so – in that what I have described as the relatively undemanding tasks undertaken by him for Hymec since his return to the premises in March 2002 are of such a nature that some hypothetical business in need of those services would pay to obtain them. But that is not the test. In the present context, the meaning of “remunerative work” is that emerging from paragraph 68 of the rules set out at [10] above.

61 According to the concept of “remunerative work” defined by paragraph 68, the plaintiff will be found to have done “remunerative work”, first, if he has done “work”, second, if that work has been done in any “employment, business, or occupation” and, third, if the work has been done “for reward – or the hope of reward – of any type”.

62 There can be no real doubt that the things done by the plaintiff in and about Hymec’s activities since the early part of 2002 represent “work”. It is true that his motive for going back to the premises was related to the medical advice that it would be good for him to be with his colleagues and to have something to do. But the fact remains that the several things he undertook – the things I have described as clerical functions of a relatively routine kind – are “work”, that is tasks, as distinct from pleasure, pastime or hobby. They constitute “work” of which businesses of various kinds stand in need in the ordinary course. The fact that the plaintiff may have performed such tasks or “work” only for a limited time per day and only at intervals does not detract from the nature of the activity as “work”. Hymec itself, after all, has employed a personal assistant or bookkeeper for three hours on one day per week. It could not be suggested that that person’s activity, intermittent and of short duration as it is, does not constitute “work”.

63 Returning to the criteria in paragraph 68, it is also clear, to my mind, that the “work” the plaintiff has done since 2002 was done in a “business”, being the business of Hymec. The work was not for a charity or by way of study or upon some personal project. It was work done for the purposes of Hymec’s business and for Hymec’s commercial benefit.

64 That leads to the question whether the work done by the plaintiff in Hymec’s business since 2002 has been done “for reward – or the hope of reward – of any type”. The focus here is not upon the intrinsic nature of the work – that is, whether it was of a kind that would in the ordinary course attract or produce reward. The focus is rather upon what actually happened: was the work in fact done “for reward” or “for … the hope of reward”, with “reward” understood as referring to reward “of any type”?

65 Both the documentary evidence and the evidence of the witnesses show that, from July 2001 (that is, following the resignation as managing director), Hymec ceased paying the plaintiff a salary and began paying equivalent sums to him by way of a loan. A resolution of directors of 16 August 2001 was as follows:

“Agree to set up a loan account for M. Kon from 11 July 2001 to draw as before $1,100 per week and keep it going until he returns to work.
AMP payments to be banked to Hymec Mining & Engineering bank account when funds are sent to M. Kon.
M. Kon agree [sic] to forward cheques to Hymec when he received them.”

66 Annual accounts for 2004 and 2005 prepared by Mr Kinnas reflect an increasing liability of the plaintiff to Hymec. Internal accounting records from 2003 to September 2006 are consistent with this. It was put to the plaintiff that the loan arrangement was a sham. He denied this. No similar suggestion was put to Mr Horton or Mr Bartley. I am satisfied that the loan arrangement has been implemented in the way the minutes of 16 August 2001 suggest, including by way of the plaintiff’s delivering to Hymec such cheques as he has received from the defendant. The fact that there may be difficulty in reconciling aspects of the loan account does not detract from the finding that payments to the plaintiff since August 2001 have been loans. Nor can any conclusion be drawn from the fact that the monthly loan advances appear in Hymec’s bank statements as part of a composite debit entry of $3,300 ($1,100 for each of three persons) labelled “Wages” and that there are in other banking documents references to “wages”.

67 There is a second financial matter to be mentioned. Since July 2001, Hymec has continued to make superannuation contributions in respect of the plaintiff at the same level as for Mr Horton and Mr Bartley. It has, in this way, continued without interruption the pattern that was well established during the time before July 2001 when the plaintiff performed all the functions of overall manager, chief rainmaker, chief contact for attracting customers and chief sales person and client liaison.

68 It is thus clear that, since July 2001, Hymec has continued to confer financial benefits on the plaintiff. The benefits have had three aspects: first, there has been the advantage of cash flow and cash availability arising from the monthly loan advances; second, there has been the advantage of the apparently interest-free character of the loan; and, third, there has been the advantage of assurance of future payment to the plaintiff (or, in case of death, his estate or family) by reason of the superannuation contributions. I describe the third element in these terms because the documentary evidence indicates that the superannuation is of “preserved” kind, suggesting that the funds cannot be accessed until retirement at retirement age.

69 The significant point about the financial arrangements (both the loan arrangement and the superannuation arrangement) is that they were in place immediately after the plaintiff’s resignation as managing director of Hymec in June 2001. After his resignation, there was a period of somewhat more than nine months during which he did not attend the Hymec premises at all and was not engaged in Hymec activities. The arrangement under which he began attending, on medical advice, and doing “odd jobs” began in March 2002. By that time, the loan arrangement and the continuation of superannuation were an established pattern and had been, in the one case, since August 2001 and, in the other, without interruption from before the plaintiff’s resignation as managing director.

70 After the resignation as managing director and until the commencement of the low level work in which the plaintiff has been engaged on a part-time basis since March 2002, Hymec was conferring the financial benefits I have described upon a person who was its former managing director and whose resignation from that position had been caused by the onset of an illness, recovery from which was by no means certain. The loan arrangement commenced some weeks after the resignation. It was not prompted by or referable to any work the plaintiff did or was expected to do. On the contrary, it was put in place specifically because he was unable to work and had left the position in which he had been paid a salary. It was expressed to be on the basis that it would continue “until he returns to work”. Given the context, this must be a reference to his returning to his previous position and responsibilities.

71 The superannuation arrangement was in the nature of an automatic continuation of a pre-existing practice. The continuity demonstrates that Hymec was willing to make the contributions at the same level whether the plaintiff was in office as its managing director, was performing only the low level tasks he undertook on a part-time basis from March 2002, or was not working at all (as was the position from July 2001 to March 2002).

72 In these circumstances, I am not satisfied that the financial advantages inherent in the loan and superannuation arrangements bore such a relationship to the work of a low level and part-time nature performed by the plaintiff in Hymec’s business after March 2002 as to mean that those benefits were reward “for” that work – or that the work was undertaken “in the hope of” the reward inherent in the benefits. The work that began in March 2002 was not foreseen at that time as a permanent measure. The plaintiff was to come to the premises when able and to do “odd jobs”. Whether he attended the premises or not, whether he did “odd jobs” or not and, if he did, the length of time he spent doing them had no bearing on the continuity of the financial benefits or their quantum. There was no cause and effect relationship between the low-level work and the financial benefits such as to make those benefits a reward “for” that work. Nor was the work done “in the hope of” the financial benefits. Under the arrangements, the benefits would be forthcoming whether the work was done or not.

73 The arrangements are unusual. They demonstrate what might be considered a form of largesse foreign to the thinking of any hard-headed employer. Whether they are so characterised is beside the point. Hymec is a small company owned by three individuals who are friends as well as business partners. The financial provision made for the plaintiff really represents personal generosity on the part of Mr Horton and Mr Bartley.

74 I am satisfied that, despite the existence and implementation of the arrangements with respect to loans and superannuation contributions, the low-level work the plaintiff engaged in for Hymec after March 2002 was not performed “for” or “in the hope of” the financial advantage or reward produced by those arrangements. The plaintiff has therefore discharged the relevant onus in respect of Element E referred to at [18] above.

75 It follows from my findings in respect of the several elements (Element A to Element E) which I have identified as necessary to be proved by the plaintiff that he has made out an entitlement to the relief he seeks in the proceedings.

76 I would make one final comment. Except with respect to matters of background related to his employment history, I have not relied on the uncorroborated evidence of the plaintiff. My findings about the work he did as managing director of Hymec before the onset of his illness and the work he did after returning to the premises in the first half of 2002, while consistent with the plaintiff’s own evidence, are supported by the evidence of others, particularly Mr Horton and Mr Bartley. The latter aspect is also covered by various items of documentary evidence to which I have referred. My findings about the effects and manifestations of the illness are borne out by the evidence of Mr Horton and Mr Bartley and by the medical evidence. In short, no material finding is dependent on evidence of the plaintiff.

77 I mention these matters because of submissions made on behalf of the defendant adverse to plaintiff’s credibility. There is evidence that the plaintiff did not make a full and true disclosure in certain of his tax returns and that he made a misstatement in a credit card application; also that he had not given a full and truthful account of his Hymec activities after March 2002, with some aspects appearing from discovered or subpoenaed documents not being mentioned in his affidavit. There is substance in these criticisms of the plaintiff. There are grounds for reservations about the reliability of his evidence but, as I have said, all key matters are corroborated.

78 The relief the plaintiff seeks in these proceedings will be granted. It has been indicated that the sum to be awarded should be able to be agreed. I therefore direct that agreed short minutes be filed by delivery to my Associate within seven days.

79 As to costs, there is no apparent reason why costs should not follow the event. If the defendant accepts that position, the short minutes should be framed accordingly. Otherwise, submissions on costs should be exchanged and forwarded to my Associate within 14 days.

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