Longbottom v Nulis Nominees (Australia) Ltd
[2020] WASC 260
•25 JUNE 2020
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
CITATION: LONGBOTTOM -v- NULIS NOMINEES (AUSTRALIA) LTD [2020] WASC 260
CORAM: REGISTRAR WHITBY
HEARD: 22 JUNE 2020
DELIVERED : 25 JUNE 2020
FILE NO/S: CIV 2376 of 2019
BETWEEN: STEVE RUSSEL LONGBOTTOM
Plaintiff
AND
NULIS NOMINEES (AUSTRALIA) LTD
First Defendant
MLC LTD.
Second Defendant
Catchwords:
Practice and Procedure - Application for further discovery - Order 26 r 6 RSC - Order 26 r 7 RSC - Inherent jurisdiction of the Court - Relevance of comparable insurance policies - Whether discovery orders oppressive
Legislation:
Insurance Contracts Act 1984 (WA), s 29
Rules of the Supreme Court 1971 (WA), O 1 r 4B, O 26 r 1, O 26 r 6, O 26 r 7
Result:
Plaintiff's application for further discovery dismissed
Category: B
Representation:
Counsel:
| Plaintiff | : | Gary David Cobby SC |
| First Defendant | : | No appearance |
| Second Defendant | : | Patricia Cahill SC & Rachel Cosentino |
Solicitors:
| Plaintiff | : | Slater and Gordon Ltd (Melbourne) |
| First Defendant | : | No appearance |
| Second Defendant | : | Clyde & Co (Melbourne) |
Case(s) referred to in decision(s):
Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175
Bauer Tonkin Insurance Brokers v CIC Insurance (1996) 9 ANZ Ins Cas 61‑298
Cazaly Iron Pty Ltd v Minister for Resources [2007] WASCA 60
Compagnie Financiere du Pacifique v Peruvian Guano Co (1882) 11 QbD 55
CVW Group Holdings Pty Ltd v Addison [2011] WASC 267
Mulley & Maney v Manifold [1959] HCA 23; (1959) 103 CLR 341
Perpetual Trustees Company Ltd v Burniston [2012] WASC 26
Tay Bok Choon v Tahansan Sdn Bhd [1987] 1 WLR 413
Youlden Enterprises Pty Ltd v Health Solutions WA Pty Ltd [2005] WASC 60
REGISTRAR WHITBY:
This is the plaintiff's application for discovery orders. The plaintiff is seeking orders requiring the second defendant to discover all applications for insurance policies which are comparable to the insurance policies between the plaintiff and the second defendant and all documents accepting, avoiding, varying or refusing those applications.
The plaintiff's occupation was a laboratory analysist. The plaintiff says that, from May 2015, he suffered major depressive disorder with lower mood, anhedonia, suicidal ideation, poor motivation and poor sleep. As a result the plaintiff alleges that he became totally disabled and entitled to claim total and permanent disablement and income protection benefits pursuant to a policies of insurance with the second defendant (insurance policies).[1]
[1] Plaintiff's further amended statement of claim filed 5 December 2019 par 12.
The second defendant alleges that it was entitled to avoid the insurance policies and not pay the plaintiff's claims because of certain representations that the plaintiff made which resulted in the plaintiff failing to comply with duties of disclosures under the relevant legislation. The second defendant says that if the second defendant had known of certain matters it would not have entered into the insurance policies on any terms.[2]
[2] Second Defendant's amended defence and counterclaim filed 12 November 2019, pars 7 (t) – (v).
The plaintiff says that the second defendant is required to discover applications by other persons for comparable insurance policies (and documents accepting or refusing those applications) on the basis that they are relevant to whether or not the second defendant would have entered into the insurance policies with the plaintiff on any terms.
The second defendant says that the relevance of other insurance applications is not established by the plaintiff. Even if they are relevant, the second defendant says that the relevance is so limited that, when compared with the burden of providing discovery, those discovery orders should not be made.
Plaintiff's application for discovery
The plaintiff seeks an order requiring the second defendant to discover the following documents:
(a)all applications to the second defendant in the period 22 July 2013 to 22 January 2014 (both dates inclusive) for cover under a policy of life insurance:
(i)that disclosed the proposed life insured had used drugs or suffered depression, gambling addiction or personal, work related, emotional or financial stress; or
(ii)in respect of which the second defendant at all times discovered that the life insured, or proposed life insured had used drugs or suffered depression, gambling addiction or personal, work related, emotional or financial stress,
and all documents relating to the acceptance or refusal thereof, or avoidance, non-avoidance or variation of any resulting cover or policy.[3]
[3] The terms of the discovery order sought are set out in the Affidavit of Annemarie Gambera affidavit affirmed on 7 June 2020 [19]. At the hearing of the application the terms of the order were orally amended by senior counsel for the plaintiff without objection.
The evidence
The plaintiff relies upon the affidavit of Annemarie Gambera affirmed 7 June 2020 (Gambera affidavit). [4]
[4] The affidavit of Annemarie Gambera affirmed 19 June 2020 was not read into evidence.
The second defendant relies upon the affidavit of Suzanne Oliver sworn 16 June 2020 (Oliver affidavit).
Further discovery – legal principles
It is first necessary to identify the court's jurisdiction to make an order for discovery in the terms sought by the plaintiff.
Order 26 r 6 of the Rules of the Supreme Court 1971 (WA) (RSC) provides:
6.Order for information as to particular documents.
(1)Subject to rule 7 the Court may at any time, on the application of any party to a cause or matter, make an order requiring any other party to make an affidavit stating whether any document specified or described in the application or any class of document specified or described is, or has at any time been, in his possession, custody or power, and if not then in his possession, custody or power when he parted with it and what has become of it.
(2)An order may be made against a party under this rule not withstanding that he may already have made or been required to make a list of documents or affidavit under rule 1 or rule 7.
(3)An application under this rule must be supported by an affidavit stating the belief of the deponent that the party from whom discovery is sought under this rule has, or at some time had, in his possession, custody or power the document or class of document specified or described in the application and that it relates to one or more of the matters in question in the cause or matter.
The second defendant says the Gambera affidavit does not comply with O 26 r 6(3) because it does not (a) include a statement of belief that the documents sought in the plaintiff's application are or have been in the second defendant's custody, possession or power or (b) make out a prima facie case as to the content of such documents,. The second defendant says that the jurisdiction of the court pursuant to O 26 r 6 is not enlivened.
In the absence of evidence that the plaintiff holds the belief that the documents sought in the application are or have been in the second defendant's custody, possession or power, I do not have discretion under O 26 r 6(1) to make the discovery orders sought: Perpetual Trustees Company Ltd v Burniston [2012] WASC 26 [17] (Burniston).
A further source of the court's jurisdiction to make discovery orders is Order 26 r 7 RSC:
7.Orders as to discovery
(1)An application for an order under this rule may be made at any time by -
(a)a party whose request under rule 1 for discovery has not been satisfied; or
(b)a party who has been requested under rule 1 to give discovery, whether or not the party has complied with the request
(2)An affidavit in support of the application is not necessary.
(3)On an application, or at any time of its own motion in any proceedings, the Court, having regard to Order 1 rule 4B, may -
(a)order any or all of the parties to give discovery at that stage or at some specified future stage of the action;
(b)as to the documents to be discovered by any party -
(i)order that discovery be given of only those specified documents or specified classes of document;
(ii)order that discovery be given of only those documents that are directly relevant to any specified matter in question or to all matters in question;
(iii)order that discovery be given of all documents relating to any specified matter in question or to all matters in question;
(c)make orders as to which parties are to be given discovery by any specified party;
(d)order that any or all of the parties not give discovery at that stage of the action, or at all;
(e)order any or all parties to make, file and serve an affidavit verifying the party's list of documents discovered.
(4)For the purposes of this rule if a party is ordered to give discovery, the party shall, subject to the order, make and serve, a list of the documents that are or have been in the party's possession, custody or power.
The second defendant submits that an application under O 26 r 7 can only be made in circumstances where a request for general discovery has been made pursuant to O 26 r 1 RSC. The second defendant says that, given that there was no such request made (rather there was an order for general discovery made by the District Court by order of Registrar Melville dated 14 December 2017), the court's jurisdiction to make an order pursuant to O 26 r 7(3) has not been enlivened.
The second defendant's interpretation of O 26 r 7 is very narrow one. Given the broad discretion that the court has to make orders, pursuant to O 26 r 7(3), '[o]n an application, or at any time of its own motion' (emphasis added), it is arguably too narrow. However, given that there is a third source of jurisdiction – the inherent jurisdiction of the court, it may not be necessary for the plaintiff to satisfy the requirements of O 26 r 7 in any event.
The third source of jurisdiction to which I referred in the preceding paragraph is the court's inherent power to make an order for further and better discovery (Burniston [19] and CVW Group Holdings Pty Ltd v Addison [2011] WASC 267 [22] – [23]).
The onus is upon the party seeking further discovery to satisfy the court that the orders should be made. A discovery order should only be made in the inherent jurisdiction of the court if the court has reasonable grounds for being fairly certain that there are other relevant documents which ought to have been discovered: Youlden Enterprises Pty Ltd v Health Solutions WA Pty Ltd [2005] WASC 60 [3] (Youlden); Burniston [27].
In Burniston at [29], Edelman J identified three requirements that must be satisfied by a party seeking discovery orders pursuant to the inherent jurisdiction of the court:
(1)the court has reasonable grounds for being fairly certain that the documents sought (or the class of documents sought) are in existence;
(2)those documents sought are relevant; and
(3)those documents ought to have been disclosed.
There is no dispute that the documents sought exist. The issue on this application is whether or not the documents are relevant.
Documents are considered relevant where they may either (a) advance a party's case or damage his or her opponents case; or (b) lead to a train of enquiry that would either advance a party's case or damage his or her opponent's case: Compagnie Financiere du Pacifique v Peruvian Guano Co (1882) 11 QbD 55, 63; Mulley & Maney v Manifold [1959] HCA 23; (1959) 103 CLR 341, 345.
In order to assess whether documents are relevant or not, the court must have regard to the pleadings and the conduct and admissions of the parties: Youlden [5].
The pleadings – matters in issue
It is important to set out in full the relevant paragraphs of the pleadings in order to determine the matters in issue. The next step is then to ascertain what documents are relevant to those matters in issue.
By par 7 of the further amended statement of claim dated 5 December 2019, the plaintiff pleads:
7.At all material times, there was an Income Protection Platinum policy of insurance numbered 93043693 effected by the plaintiff with the second defendant pursuant to the Rules [of the Fund] and under which insurance was in force in respect of the plaintiff as life insured against disablement ('the policy').
In response, par 7 of the second defendant's amended defence dated 12 November 2019 pleads:
7 (a)… on or about 22 October 2013, it [the second defendant] issued the following policies under which the plaintiff was a life insured:
(i)Policy numbered 93043691 (Super Policy), owned by MLC Nominees Pty Limited (MLC Nominees), providing life and Total and Permanent Disablement (TPD) cover to the plaintiff as the life insured;
(ii) Policy number 93043692 (TPD and Critical Illness Policy) providing TPD and critical illness cover to the plaintiff as life insured and policy owner; and
(iii) Policy number 93043693 (IP Policy) providing Income Protection cover to the plaintiff as life insured and policy owner;
(collectively the Policies);
(b)… [The second defendant] entered into the Policies following the plaintiffs application to the second defendant for life, TPD, critical illness and income protection insurance made on or about 10 September 2013 (Application);
Particulars
The Application was made electronically using the system referred to as RiskFirst Rapid. The plaintiff's answers were recorded in a document entitled 'Underwriting Report'. A copy of the Application can be inspected at the second defendant's solicitor's offices by prior appointment.
(c) … the Application was completed by the plaintiff's advisor David Pettit, on instructions from the plaintiff;
(d) … the plaintiff represented that he had not, in the last 5 years, used any drug not prescribed by a doctor (Drug Representation);
(e)… the plaintiff answered 'yes' to a question asking whether he had ever had or sought advice about a mental health disorder;
(f) … through his answers to further questions asked as a result of his answer to the question referred to in paragraph 7(e) of this defence, the plaintiff represented that:
(i) He had experienced depression, including major depression or dysthymia;
(ii) The nature of his disorder was bereavement/grief reaction
(iii)It was a single episode of bereavement/grief reaction occurring between September 2005 and December 2008;
(iv) He had no persisting stress factors;
(v) Between September 2005 and December 2008, he was prescribed Lexapro to treat his symptoms;
(vi) He received no other treatment;
(vii) He had to take one business day off work because of his condition;
(viii) Another general practitioner had treated him for the condition;
(ix)Banksia Medical Centre in Esperance had provided his treatment;
(x) He had never been hospitalised or needed treatment as an inpatient; and
(xi) He had never tried to take his own life;
(Application Mental Health Representations)
(g) … the plaintiff also represented that:
(i) He had not sought advice or treatment from a doctor or health professional for any illness or injury that he had not already told the second defendant about in the Application.
(ii) He did not, at the time of the completing the Application, have any condition not already mentioned in the Application.
(iii) He was not contemplating taking any medical advice, test, investigation or treatment not already mentioned in the Application;
(iv) He did not have any symptoms of a condition not already mentioned in the Application
(Other Medical Condition Representations)
(h) … in the course of making the Application the plaintiff declared he had read the following statements and agreed and acknowledged that, amongst other things:
(i) The information provided in the Application was true and correct;
(ii) He had read and understood the MLC Insurance and MLC Insurance (Super) Product Disclosure Statement, which he received in Australia; and
(iii) He had read and understood the duty of disclosure and he understood that the duty of disclosure continued until Stage 2 of the Application was fully completed and the second defendant accepted the Application and issued a policy;
(Declarations)
(i) …, in the course of preparing the Application, the plaintiff's advisor made the following declarations:
(i) The advisor had completed the Application in the presence of the life insured and all policy owners;
(ii) The life insured and all policy owners had each read and made the declarations and authorisations;
(iii) To the best of the advisor's knowledge the details in the Application were true and complete;
(iv) The plaintiff had been provided with a quotation;
(v) The advisor had alerted the plaintiff to the information about Riskfirst Rapid in the Important Notes section of the quotation and confirmed the plaintiff had read that information;
(Advisor Declarations);
(j) … as a result of the plaintiff's answers to questions in the Application, including the Application Mental Health Representations, the second defendant required the plaintiff to undergo a paramedical examination, the results of which were reported to second defendant;
PARTICULARS
The paramedic examination was conducted by June Korol of Lifescreen. The results of the plaintiff's paramedical examination were in writing, contained in a document entitled 'Lifescreen Paramedical Confidential Report' dated 3 October 2013. …
(k) … during the paramedical examination, the plaintiff represented that:
(i) He was diagnosed with depression in 2005;
(ii) His symptoms and diagnosis of depression were a result of a traumatic motor vehicle accident in which there were two fatalities;
(iii) He had a counsellor in Albany who he could talk to whenever he needed to;
(iv) He had recovered from his depression;
(v) He was contemplating seeking ongoing counselling;
(vi) He took medication initially until 2007;
(Paramedical Mental Health Representations);
(l) … as a result of the Paramedical Mental Health Representations, the second defendant conducted a telephone interview with the plaintiff to request further information from the plaintiff concerning his mental health;
PARTICULARS
The telephone interview was conducted by Ray Purcell, an underwriter employed by the second defendant, on or about 17 October 2013. Mr Purcell's notes of this conversation are in writing. …
(m) … during the telephone conversation with the second defendant, the plaintiff made the following representations:
(i) The plaintiff was involved in a motor vehicle accident in which his best friend was killed;
(ii) The counsellor referred to in the Paramedic Mental Health Representations was known to the plaintiff through the plaintiff's father;
(iii) The plaintiff's counsellor was available to the plaintiff for him to talk to should he feel the need;
(iv) The last time the plaintiff consulted his counsellor was in the last quarter of 2012;
(v) The reason for the plaintiff's last consultation with his counsellor was on the event of his deceased friend's birthday;
(vi) The plaintiff did not have any ongoing appointments with the counsellor.
(Telephone Mental Health Representations)
(n) … that on 18 October 2013 the plaintiff signed an Amendment to Application in which he made the following declarations:
(i) He acknowledged that he was still under a duty of disclosure as set out in the Application;
(ii) There had been no change in his health, occupation, pastime or financial circumstances since completing the proposal for insurance.
(Amendment Representations)
(o) … the effect of the Drug Representation, Application Mental Health Representations, the Other Medical Condition Representations, the Paramedic Mental Health Representations, the Telephone Mental Health Representations and the Amendment Representations was to represent:
(i) The plaintiff's symptoms of depression were caused by his involvement in a motor vehicle accident;
(ii) The plaintiff's symptoms of depression were confined in time to the period from 2005 to 2008;
(iii) The plaintiff had recovered from his symptoms of depression;
(iv) The plaintiff had available to him counselling, should he need it;
(v) The plaintiff had last received counselling in the last quarter of 2012;
(vi) The plaintiff had sought counselling in the last quarter of 2012 as it was the birthday of his best friend who died in a motor vehicle accident;
(vii) At the time the plaintiff experienced symptoms of depression and at other times, he did not use drugs not prescribed by his doctor;
(viii) At the time the plaintiff received counselling and at other times, he did not use drugs not prescribed by his doctor;
(ix) He had no other mental health condition; and
(x) He had no other symptoms of a mental health condition;
(Material Mental Health Representations);
(p) … as a result of the Material Mental Health Representations, the second defendant agreed to enter into the Policies with the plaintiff and the MLC Nominees;
(q) … in making the Drug Representation, the plaintiff failed to disclose and/or misrepresented the true nature of his drug use in that:
(i) Prior to 21 June 2012 he had used drugs, including cannabis, methamphetamine, cocaine and ecstasy;
(ii) On 9 February 2012 he was referred to Michelle Long, psychologist;
(iii) On 15 February 2012 Michelle Long assessed the plaintiff as having symptoms of depression and anxiety in the moderate range and that addictive behaviour was significant factor in poor mood function;
(iv) On 15 February 2012 the plaintiff consulted Michelle Long who recorded '↑substance use and gambling;
(v) When treated by Michelle Long the plaintiff had recently taken cocaine and ecstasy.
(r) … in making the Material Mental Health Representations, the plaintiff failed to disclose and/or misrepresented the true nature of his mental health disorder in that:
(i) It was not confined to the period of time from 2005 to 2008;
(ii) The plaintiff's history of symptoms of and treatment for depression began in 2004;
(iii) The plaintiff had not recovered from his symptoms of depression;
(iv) The plaintiff's depression was also related to his gambling disorder, financial stress, work related stress and general life stressors;
(v) The plaintiff had a history of substance use combined with his symptoms of depression and other mental health disorders;
(vi) The plaintiff had received treatment for addictive behaviour associated with his symptoms of depression;
(vii) The plaintiff received counselling to cope with psychological stresses caused by his work and living circumstances, gambling addiction, financial stress and work related stress, unconnected to his motor vehicle accident;
(viii) The plaintiff had been convicted of two counts of dangerous driving causing death and on 13 June 2007 he was sentenced to a term of imprisonment of three years and four months;
(ix) At the time of his trial the plaintiff was diagnosed with post-traumatic stress disorder by Dr Shub, psychiatrist;
(x) After his release from prison the plaintiff developed a gambling problem;
(xi) On 8 June 2012 the plaintiff advised his then employer, RSM Bird Cameron, that he had a gambling problem and had been getting ongoing help for it;
(xii) The plaintiff had a gambling addiction which started when he was 13 years old for which he consulted Michelle Long, psychologist;
(xiii) The plaintiff consulted Michelle Long on 15 February 2012, 1 March 2012, 28 April 2012, 10 May 2012, 22 May 2012, 7 June 2012 and 21 June 2012 in respect of his gambling addiction and financial stress;
(xiv) As at 23 May 2012 the plaintiff had incurred $250,000 of gambling debt and had sought treatment from Michelle Long for his gambling addiction and financial stress. Michelle Long referred the plaintiff to Banksia Medical Centre for review;
(xv) The plaintiff did not seek treatment from Michelle Long or any other psychologist in September, November or December 2012;
(xvi) The plaintiff's last consultation with a psychologist or Michelle Long was not related to the birthday of his best friend who died in the motor vehicle accident;
(xvii) Prior to the Application the plaintiff was experiencing financial stress caused by (but not limited to) incurring personal debt including:
(A)$10,000 under a credit card issued by ANZ on or about 8 May 2013;
(B) $10,000 under a credit card issued by HSBC on or about 13 June 2013;
(C) $9,500 under a credit card issued by Bankwest on or about 8 July 2013;
(D) $15,000 cash advance obtained from ANZ on 23 September 2013;
(E) a debt owed to a bookmaker
(s) … in making the Amendment Representations, the plaintiff failed to disclose and/or misrepresented the true nature of his mental health disorder, his financial circumstances and his occupation in that:
(i) He was experiencing personal and work related stress by reason of the following:
(A) On 16 October 2013 the plaintiff was informed by Bell Stratton & Murdoch that he was taking excessive personal leave, his absences from work impacted on productivity and any further absences from work required medical certification;
(B) On 16 October 2013 the plaintiff was informed by Bell, Stratton & Murdoch that it would not enter into a third three month probationary period with him;
(C)The plaintiff did not attend employment with Bell, Stratton & Murdoch on 21, 22, 23 or 24 October 2013;
(ii) He was experiencing emotional stress and financial stress in that:
(A) he had $80,000 in debt, he was stressed about his financial situation, he felt very anxious and depressed, he thought about ways out and had a gambling problem;
(B) he had been issued with a warning at work regarding termination of his employment;
(t) … as a result of the matters set out in paragraph 7(q) to (s), the plaintiff:
(i) Failed to comply with the duty of disclosure pursuant to section 21 of the Insurance Contracts Act 1984;
(ii) Alternatively, made misrepresentations to the second defendant before the Policies were entered into.
(u) … if the second defendant had known of the matters pleaded in paragraphs 7(q) to (s) above, it would not have entered into the Policies on any terms;
(v) … as a result of the matters pleaded in paragraphs 7(t) to (u) above, the second defendant was entitled to avoid the Policies within three years of the Policies being entered into pursuant to section 29(3) of the Insurance Contracts Act 1984 (the Act);
Section 29(1) ‑ (3) of the Insurance Contracts Act 1984 (WA) provides:
(1)This section applies where the person who became the insured under a contract of life insurance upon the contract being entered into:
(a)failed to comply with the duty of disclosure; or
(b)made a misrepresentation to the insurer before the contract was entered into;
but does apply where:
(a)the insurer would have entered into the contract even if the insured had not failed to comply with the duty of disclosure or had not made the misrepresentation before the contract was entered into; or
(b)the failure or misrepresentation was in respect of the date of birth of one or more of the life insureds;
(2)If the failure was fraudulent or the misrepresentation was made fraudulently, the insured may avoid the contract;
(3)If the failure was not fraudulent or the misrepresentation was not made fraudulently, the insurer may, within 3 years after the contract was entered into, avoid the contract.
For the purposes of this application, the following matters are in issue on the pleadings:
(a)whether the second defendant would not have entered into the insurance policies on any terms had it been aware of the matters pleaded in par 7(q) to par 7(s) of the amended defence; and
(b)whether the second defendant would have entered into the insurance policies even if the plaintiff had not failed to comply with the duty of disclosure or had not made the misrepresentations.
Relevance of documents sought to be discovered
Plaintiff's submissions
The plaintiff says that the documents are relevant to the issues because they go to what the insurer did in practice in relation to other applications similar to the plaintiff's application for the insurance policies.
The plaintiff referred to the following passage from Bauer Tonkin Insurance Brokers v CIC Insurance (1996) 9 ANZ Ins Cas 61‑298 (Bauer), in which the issue was whether an insurer was entitled to avoid a policy for non‑disclosure of material facts, per Nyland J at 298:
…[a]ccordingly, if the first respondent is entitled to the relief claimed, the onus is upon it to show that it, induced by the non-disclosure, had acted in a certain way and that had full disclosure been made of the matters referred to in the pleadings, it would have acted in another way. That is, the first respondent would have to establish that, this being the case, it would have never entered into the contract of insurance. Mr Trim argued that as part and parcel of the evidential picture, the manner in which the first respondent had dealt with similar proposals for insurance in the past therefore was critical. Mr Howard, who appeared for the second respondents on the hearing of the appeal, supported the application and endorse what Mr Trim had to say about these matters.
Mr Muecke, who appeared for the first respondent, submitted that the issue was whether the officers of the first respondent, who were responsible for issuing the policies to the second respondents, would have issued them if there had been full disclosure of the particular matters which were not disclosed by the second respondent. He argued that it had never been pleaded by the first respondent that it would never issue a policy where a proponent disclosed a criminal offence, or a major loss or some minor loss. He said that the office practice of the first respondent had been sufficiently established by the underwriting policy and procedural manual which had already been discovered and which he conceded were relevant. Mr Muecke therefore opposed the discovery of the documents referred to in the application.
The learned author Insurance law in Australia (Sutton, 1991, 2nd edn, Law Book Co) in considering the issue relating to non-disclosure or misrepresentation under s28(3) [of the Insurance Contracts Act 1984 (Cth)], said at para 3.103 at 194:
No doubt many insurers will assert that had they known the true facts they would never have entered into the contract of insurance, but a court is likely to insist on cogent evidence to this effect based on the particular insurer's officer practice, rather than rely on the ipse dixit of the insurer concerned". Indeed, evidence as to the particular insurer's office practice seems to be the only way in which the court can ascertain what that insurer's position would have been if the non-disclosure or the misrepresentation had not occurred.
This issue was also the subject of discussion in Principles of Insurance Law in Australia and New Zealand (Kelly and Ball, 1991, Butterworths). In considering the s28(3) defence, the learned author said at para 3.297 at 139:
The insurer bears the onus of proving that it would only have entered into the contract on different terms or for a different premium, or would not have entered the contract at all. In proving that the claim should be reduced, an insurer may not be likely to choose the premium or the contract most favourable to the insured. In such a case, the insured may need to rely on discovery of similar contracts to establish the terms on which the insurer would have been prepared to accept the risk. (emphasis mine)
… I accept Mr Trim's argument that the evidence of the insurer's practice is at the heart of the s28(3) issue and, as such, it is relevant to the issues in dispute. The appellant should therefore be entitled to discovery of documents which go to that issue.
The plaintiff says that the documents it seeks to be discovered are directly relevant because they will demonstrate the office practice of the second defendant at the relevant time in relation to refusing or accepting comparable insurance policies and the terms upon which the second defendant would, or would not, have been prepared to accept the risk of insuring the plaintiff.
Second defendant's submissions
The second defendant accepts that determination of the issues involves a question of what the second defendant's office practice was in dealing with applications similar to the plaintiff's application in September/October 2013.[5] Therefore, the second defendant has discovered, informally, relevant general underwriting manuals and mental health guiding principle.[6]
[5] Second defendant's outline of submissions in opposition to the plaintiff's application for discovery filed 16 June 2020, par 12.
[6] Oliver affidavit, Annexures SO2 and SO3.
However, the second defendant submits that the documents themselves are not relevant to the matters in issue for the following reasons:
(a)the documents are not sufficiently similar to the plaintiff's application for the insurance policies;
(b)the question is whether the plaintiff ought to have disclosed all of the matters pleaded in par 7 of the amended defence and counterclaim, not whether he ought to have disclosed any of them;
(c)discovery of applications that only disclose one or some of those matters are not relevant to the issues;
(d)given all of the matters unique to the plaintiff's application, it is highly unlikely that there are any comparable insurance policy applications made to the second defendant at the relevant time; and
(e)discovery of the documents sought would only disclose the outcomes of a large number of insurance applications where the applicant had disclosed a history of mental health, drug use, gambling or financial stress.
The second defendant submits that Bauer is authority for the proposition that the insurer's office practices are relevant, but that the court is not confined to looking at other applications for insurance and drawing inferences from those. Further, the second defendant says that the particular documents sought in Bauer are distinguishable from those sought by the second defendant in this application because the Bauer documents disclosed matters similar to those not disclosed by the insured, while the documents sought in this application would not be similar because they would not disclose all of the matters relevant to the application by the plaintiff.
In order to be relevant, the second defendant submits, an application would have to disclose that the applicant suffered from the same conditions as the plaintiff and to the same degree, those being:
(a)long standing depression that commenced in 2004 and continued intermittently until the date of the application;
(b)receiving psychological counselling for a depressive condition for 15 ‑ 19 months before the application;
(c)receiving counselling for depression and anxiety the day before cover incepted for a longstanding gambling problem;
(d)prior diagnosis of post-traumatic stress disorder;
(e)incurring $250,000 worth of gambling debt and $45,000 worth of credit card debt;
(f)experiencing personal and work related stress due to instability of employment at the time of the application; and
(g)using recreational drugs such as marijuana, cocaine and ecstasy.[7]
Determination of relevance
[7] Oliver affidavit, par 15.
In my view, applications that disclose all of the matters that the second defendant plead the plaintiff ought to have disclosed would be relevant to the matters in issue. Applications which disclose only a mental health issue or only a gambling issue or only a drug use issue or only a personal or financial stress issue (or only some, but not all, of those issues) are not relevant. The second defendant does not put in issue whether it would have been prepared to insure the plaintiff if he had disclosed one or some of those matters, only where he did not disclose all of those matters.
The plaintiff however, does not seek orders for discovery of only those documents which disclose all of those matters, he seeks discovery of all documents which disclose any one of those matters. Those documents are not relevant to the matters in issue.
Even if I am wrong about that and the plaintiff can establish that the documents are relevant, discovery orders do not automatically follow. There is still the issue of oppression and whether discovery orders ought be refused on that basis. I will consider this in the event that the documents may be considered relevant.
Is the discovery sought oppressive?
Any order for further and better discovery is discretionary and the discretion must be exercised having regard to the objectives of case management and the just resolution and determination of litigation: O 1 r 4B RSC; Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175.
Even if documents are relevant, one of the matters to be considered in exercising discretion to order discovery is whether the production of those documents would be oppressive or the utility of those documents would not justify the burden placed upon the second defendant in providing that discovery: Cazaly Iron Pty Ltd v Minister for Resources [2007] WASCA 60 [7].
The second defendant relies upon the following matters deposed in the Oliver affidavit as support for its submission that an order for discovery of the documents would be oppressive and disproportionate to the utility of those documents:
(a)the documents sought include group insurance policies. The second defendant has a large group business which comprises approximately 430 group policies with hundreds of thousands of members. While the second defendant is able to run a list of all the applications in the second defendant's group during the relevant period, the list will take some time to run so it was not able to be run before the hearing of this application;[8]
(b)in relation to its retail book, the second defendant received 7,770 applications during the relevant period (4,019 online, 3,751 paper);[9]
(c)in addition to application forms, there are other documents relevant to the applications including medical history, medical reports and paramedical examinations;[10]
(d)in order to identify applications which disclose depression, gambling, personal, work or financial stress or drug use, each application would have to be manually reviewed;[11]
(e)it is likely to take between 15 ‑ 20 minutes to review each application and associated documents, which equates to one person taking between 278 and 370 days to complete the review;[12]
(f)there were 565 claims that were lodged during the relevant period. It would take 30 ‑ 40 minutes to review each claim, which equates to one person taking between 282 and 377 days to review the claims;[13]
(g)based on the expectation that at least a quarter of the applications will involve disclosure of mental health issues, it is likely that there will be in excess of 2,000 documents discovered;[14] and
(h)given that the applications and associated documents contain personal information, all identifying information would need to be redacted which would take an additional 5 ‑ 10 minutes per document.[15]
[8] Oliver affidavit, par 17.
[9] Oliver affidavit, par 19.
[10] Oliver affidavit, par 20.
[11] Oliver affidavit, par 21.
[12] Oliver affidavit, pars 22, 23.
[13] Oliver affidavit, par 26.
[14] Oliver affidavit, par 27.
[15] Oliver affidavit, par 28.
The plaintiff says that the Oliver affidavit does not assist with forming a view as to how oppressive discovery would be for the second defendant as it is too vague, doesn't disclose what records are kept and what needs to be done to complete discovery and provides estimates of time based upon no discernible information.
The plaintiff has not sought to adduce any affidavit evidence in response to the Oliver affidavit. This is not surprising given that the evidence is wholly within the knowledge of the second defendant. However, in the absence of cross examination of Ms Oliver or a credible denial of Ms Oliver's evidence in opposing affidavits, the facts deposed to in the Oliver affidavit are undisputed and are to be accepted.[16]
[16] Tay Bok Choon v Tahansan Sdn Bhd [1987] 1 WLR 413.
In any event, on an application for discovery orders, it is entirely appropriate that the affidavit evidence adduced by the discovering party gives an impression of the magnitude of the task to be undertaken. It may not be possible to give a precise description of how the task will be undertaken and how long it will take – indeed to provide such a description may in and of itself be oppressive.
There is nothing implausible about the description of the discovery task deposed to by Ms Oliver. Given the number of policies that the second defendant has and the nature of the documents sought, it is plausible and probable that the task is a large one. Given the limited relevance of the documents (at best), the discovery orders sought are oppressive. The burden outweighs the benefit of the discovery of those documents.
Therefore, discovery of the documents sought, even if they are of limited relevance, is oppressive and the utility of those documents does not justify the burden a discovery order would place on the second defendant.
Orders
For the reasons outlined, I propose to make the following orders:
1.The plaintiff's application for discovery orders dated 7 June 2020 be dismissed.
2.The plaintiff pay the defendant's costs of the application, to be taxed if not agreed.
The parties may seek to be heard in relation to the terms of the final orders.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
KC
Associate to Registrar Whitby8 JULY 2020
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