Kschammer v Moffatt & Ors No. DCCIV-94-1319 Judgment No. D3533

[1996] SADC 3533

Court

DISTRICT COURT OF SOUTH AUSTRALIA

Reasons of His Honour Judge Lunn

Hearing

04/12/96.

Catchwords

PRACTICE AND PROCEDURE Application by plaintiff for leave to interrogate - r57.01(1) - issues on which interrogation may be permissible not sufficiently defined as pleadings defective - pleading of conclusion of facts and not of primary facts as required by r46.04(1)(b) - evasive denials by defendant - negative pregnants pleaded contrary to r47.04 - effect of documents improperly pleaded - lack of particularity in pleadings - appeal against Master's order refusing leave allowed - leave to apply again after repleading.

Representation

Appellant JAMES KSCHAMMER:
Counsel: MR M FRAYNE - Solicitors: MOLONEY &; PARTNERS

Respondent ANDREW JAMES MOFFATT &; ORS:
Represented by: NO APPEARANCE

Respondent AUSTRALIAN MUTUAL PROVIDENT SOCIETY:
Counsel: MR M BELL - Solicitors: KNOX &; HARGRAVE

DCCIV-94-1319

Judgment No. D3533

16 December 1996

On Appeal from MASTER KELLY

(Civil)

KSCHAMMER v MOFFATT & ORS (1st defendants) and AUSTRALIAN MUTUAL PROVIDENT SOCIETY (2nd defendant)

Civil

Judge Lunn

Appeal against a Master's decision refusing the plaintiff leave to interrogate the 2nd defendant

The plaintiff was previously employed by Top Australia Ltd ("Top"). The 1st defendants were the trustees of a Superannuation Fund established for the benefit of the employees of Top. The plaintiff is a member of the Fund. The trustees took out an insurance Policy ("the Policy") with Australian Mutual Provident Society ("AMP"). The plaintiff asserts that he is entitled to claim directly against AMP under the Policy, but AMP denies this. The plaintiff suffered injuries during the course of his employment by Top. The present action is about a dispute concerning his entitlements against the trustees and/or AMP arising out of such injuries.

The plaintiff sought discovery of documents from AMP relating to its reasons for having refused his claim for benefits under the Policy. On 15 May 1996 His Honour Judge Kitchen held that a number of those documents were subject to legal professional privilege and thus they have not been disclosed to the plaintiff. (Judge Kitchen saw the contents of those documents in the course of the hearing before him, but I have not seen them.) On 27 June 1996 the plaintiff applied for leave to interrogate AMP and submitted a draft set of interrogatories inquiring in detail into how AMP had dealt with the plaintiff's claims and why they had been rejected. Master Kelly refused leave to interrogate on 17 September 1996 and published brief ex tempore reasons. The plaintiff now appeals against that decision.

The issues to which any interrogatories could be directed are to be identified by the pleadings between the plaintiff and AMP. In order to decide whether leave to interrogate is justified under Rule 57.01(1) it is necessary to identify precisely what are the issues which require to be determined in the action before considering whether it is just that the plaintiff should be permitted to interrogate on them. However, a number of significant defects in the relevant pleadings of both parties make it impossible to ascertain with sufficient precision what are the issues between them to which the proposed interrogatories could be directed. My reasons for this necessitate a close analysis of those pleadings.

What I say hereafter about relevant documents is taken from the pleadings. I have not seen the documents. In a number of instances the plaintiff has improperly pleaded that he will refer to a document at trial "for its full force and effect". This is contrary to the mandatory requirements of r46.05(1): see "Civil Procedure South Australia", volume 1, para r46.05.1. I assume that the effect of any document, insofar as it is relevant, has been expressly pleaded as is required by r46.05(1).

In the Policy is a definition of "total and permanent disablement" which is defined in part as:

".... means disablement resulting from an illness, accident or injury .... as a result of which .... such injured person has been continually absent from his employment for a period of at least six consecutive months .... and (the AMP) has determined that it is unlikely he will ever be able to engage in any regular remunerative work for which he is reasonably fitted by education, training or experience."

The last part of that definition is particularly significant in the context of the present application. Whether there is "total and permanent disablement" is not just an objective determination of the physical condition of the plaintiff and its sequelae for him, but also incorporates an element of what the AMP has determined about it. While the law imposes certain obligations of good faith and reasonableness upon an insurer in such a determination the actual determination of the insurer is relevant and the Court cannot automatically substitute its own view of what should have been determined for that which was actually determined by the insurer: Edwards v The Hunter Valley Co-op Dairy Co Ltd, (1992) 7 ANZ Insurance Cases 61-113. However, "temporary total disablement" is defined in purely objective terms and without any subjective element of the AMP being incorporated into it.

Paragraph 13 of the Statement of Claim pleads:

"As a result of the plaintiff's injuries he has suffered total and permanent disablement .... pursuant to the terms of the Policy and is thereby entitled to a total and permanent disablement benefit."

The AMP's defence merely pleads a bald denial of this paragraph. Rule 46.04(1)(b) requires the plaintiff to plead in a summary form "the material facts on which (he) relies" and including sufficient particulars. Paragraph 13 is a plea of a conclusion about facts rather than of the primary facts that are necessary to reach that conclusion. It is thus an embarrassing pleading. What it should have expressly pleaded was the facts constituting each of the component elements contained in the definition of "total and permanent disablement". This would presumably have included a plea that the AMP either had made the necessary determination within the definition or facts which as a matter of law absolve the plaintiff from having to establish compliance with that part of the definition.

The AMP's pleading to paragraph 13 is clearly an improper evasive denial. The mere fact that the plaintiff has put forward an embarrassing pleading does not release a defendant from its obligations to plead to the substance of the allegations under r46.12(2). If it lets a defective pleading of the plaintiff stand, it has got to take the consequences. A proper pleading to paragraph 13 of the Statement of Claim has to deal specifically with each of the separate elements in the definition of "permanently and totally disabled". It is not for me to speculate on what the AMP might have pleaded if it had complied with r46.12. The upshot of all this is that I have no real idea of what, if any, issues need to be resolved at the trial concerning whether the AMP had, or should have, made the necessary determination within the definition of "total and permanent disablement". However, because of differences in the definition of "temporary, total disablement" similar deficiencies in paragraph 14 of the Statement of Claim do not have the same implications.

Paragraph 21 of the Statement of Claim pleads:

".... (the AMP has) wrongfully refused to pay to the plaintiff a total and permanent disablement benefit.

PARTICULARS

(a) The plaintiff met the criteria for the payment of the total and permanent disablement benefit .... pursuantto the terms of the Policy.

(b) The decision to decline the claim was unreasonable in all the circumstances;

(c) (The AMP) failed to take into account adequately or at all the medical reports obtained in relation to the claim;

(d) (The AMP) failed to permit the plaintiff to put any additional evidence to support his claim or answer any adverse report obtained by the defendant;

(e) (The AMP was) in breach of (its) fiduciary duty to the plaintiff in that (it):

(i) did not consider the correct question,

(ii) did not act in good faith."

This paragraph 13 is again an example of the pleading of a conclusion of facts rather than the primary facts. Subparagraph (a) is merely a plea of duty and is unnecessary: Rupcic v Baulderstone Pty Ltd (1987) 46 SASR 99. Subparagraph (b) is embarrassing in that it does not make it clear whether "the decision to decline the claim" is the determination under the definition of "total and permanent disablement" and it does not give sufficient particularity of what are "all the circumstances". Whether the decision was unreasonable is a conclusion which the Court has to reach based on facts which are properly disclosed by the pleadings. Subparagraph (c) does not properly identify what medical reports should have been taken into account or the respects in which they were not taken into account. The plaintiff may well be making a rod for his own back by couching this plea in a negative form.

Subparagraph (d) again lacks proper particularity of what additional evidence is referred to, how the plaintiff attempted to put it before the AMP and how he was not permitted to answer any adverse report. Subparagraph (e)(i) and (ii) are couched in negative terms which may make it difficult for the plaintiff to prove the breaches by inferences from evidence of other matters which have not been expressly pleaded. Insofar as paragraph 21 lacks particularity the onus under the present rules is on the plaintiff to plead with the necessary particularity and it is not for a defendant to have to request it if r46.04(1)(f) has not been complied with: Norris v McNair (1992) 167 LSJS 389.

The AMP's plea to the whole of paragraph 21 was again a bald denial which was clearly evasive and improper. It also had the effect in respect of subparagraphs 21(c), (d) and (e), and possibly (b), of creating negative pregnants which are prohibited by r47.04. Insofar as the AMP wished to plead any of that it did take the medical reports into account, that it did permit the plaintiff to put additional evidence before it, that it did consider the correct question and that it did act in good faith it must plead those matters positively and with proper particularity.

The same comments apply to paragraph 22 of the Statement of Claim which is in similar terms relating to the claim for "temporary, total disablement" and the bald denial to it. The upshot is that in relation to paragraphs 21 and 22 I have no idea what are the issues which the Court will be called upon to determine at the trial in relation to the actions of the AMP in refusing to pay benefits claimed.

It is pleaded in the Defence, and admitted in the Reply, that the Policy contained a clause 5:

"In the event of .... total and permanent disablement or temporary, total disablement of an insured person any amount of group life insurance in respect of him shall not be paid until proof of .... total or permanent disablement or temporary total disablement (as the case may be) has been furnished to the satisfaction of (the AMP)."

Paragraph 23 of the Defence pleads:

"(The AMP) says that it has not been furnished with proof to its satisfaction that the plaintiff is totally and permanently disabled or temporarily totally disabled within the meaning of the said Policy of insurance."

Again it is a plea of a conclusion of fact rather than of the primary facts from which the conclusion is to be drawn. A proper plea would be to set out what has been furnished to the AMP and then to assert that that does not satisfy clause 5 of the Policy.

The Reply merely denies paragraph 23 of the Defence which again creates an improper negative pregnant by making it a plea that the plaintiff has furnished proof to the satisfaction of the AMP. If that is the plea, it must be asserted positively. If the plaintiff wishes to rely on the matters pleaded in paragraphs 21 and 22 of the Statement of Claim in answer to this plea under clause 5 of the Policy, those matters should be reiterated, albeit by cross reference, in the Reply as the issue is not necessarily the same as that raised by the subjective elements of the definition of "total and permanent disablement." Again I have no real idea of what issues the Court will be called upon to determine in relation to any alleged non-compliance with clause 5.

As was made clear in Barber v Nominal Defendant (1989) 153 LSJS 8 interrogatories are not to be permitted to make good defects in pleadings or to act as a substitute for proper pleading and particularity. From the general tenor of the argument on the appeal I gained the impression that because the AMP had claimed privilege for documents relating to why it had rejected the plaintiff's claim, the plaintiff was concerned that he might be ambushed at trial by some point about a subjective element of the AMP of which he had not previously been aware. Rule 46.12(4) is generally intended to prevent such an ambush occurring. Insofar as disclosure of the AMP's line of defence is concerned that is to be dealt with by proper pleadings and not by answers to interrogatories. The proposed interrogatories are of the old fashioned "kitchen sink" variety which seek to explore every aspect of what the AMP did in considering the claims and rejecting them. The purpose of r57.01(1) was to do away, wherever possible, with those type of expensive and cumbersome interrogatories. Under the current practice any interrogatories which may be allowed should usually be directed to specific issues and would normally be fairly brief. I would be reluctant to allow the interrogatories of the length and detail proposed unless I was satisfied that AMP was not bona fide in its pleading in not making admissions or in not properly identifying issues.

I accept that the Master was incorrect in his reasons in stating that the case would be decided upon the medical evidence and the credit of the plaintiff. There are issues relating to the AMP's dealings with the claim. As the Master proceeded on an incorrect basis I must assess the plaintiff's application afresh based on all the proper considerations. For the reasons already given I do not consider that the issues to which the interrogatories are directed have been satisfactorily identified by the pleadings. As both parties have been at fault in their pleadings I do not consider it is proper to dismiss the plaintiff's application because the issues are not sufficiently defined. I intend to give the parties a further opportunity to replead the issues and to give leave to the plaintiff to apply to a Master for further leave to interrogate if he so wishes on the issues identified by the new pleadings.

I make the following orders on the appeal:

1. That the appeal be allowed.

2. That the plaintiff file a fresh Statement of Claim, the AMP file a fresh Defence and the plaintiff file a fresh Reply. (I will hear the parties on the time limits for this.)

3. Liberty to the plaintiff, if so advised, to apply again to a Master under r57.01(1) for leave to interrogate on the issues as defined by the further pleadings.

4. Further consideration of the application of 27 June 1996 adjourned sine die.

I will hear the parties on costs.