Maksimovic v Royal & Sun Alliance Life Assurance Australia Ltd - [2003] WASC 46

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: MAKSIMOVIC -v- ROYAL & SUN ALLIANCE LIFE ASSURANCE AUSTRALIA LTD & ANOR [2003] WASC 46

CORAM: ACTING MASTER DIXON

HEARD: 24 JANUARY 2003

DELIVERED : 20 MARCH 2003

FILE NO/S: CIV 2991 of 2001

BETWEEN: NEDELJKO MAKSIMOVIC
Plaintiff
AND
ROYAL & SUN ALLIANCE LIFE ASSURANCE AUSTRALIA LTD (ACN 008 413 545)
First Defendant
ROYAL & SUN ALLIANCE FINANCIAL SERVICES LTD (ACN 001 698 228)
Second Defendant

Catchwords:

Pleadings - Basis for striking out - Income protection policy - Obligation to exercise utmost good faith - Existence of a fiduciary relationship - The insurer as constructive trustee

Legislation:

Insurance Contract Act, s 13

Rules of the Supreme Court, O20 r 8, O 20 r 19

Result:

Various paragraphs of the amended statement of claim struck out

Category: B

Representation:

Counsel:

Plaintiff:     Mr T Mijatovic
First Defendant             :     Mr J Lin
Second Defendant         :     Mr J Lin

Solicitors:

Plaintiff:     TRM Legal Services
First Defendant             :     Jackson McDonald
Second Defendant         :     Jackson McDonald

Case(s) referred to in judgment(s):

Banque Keyser Ullman SA v Skandia (UK) Insurance Co Ltd (1987) 2 WLR 1300
BP Refinery (Western Port) Pty Ltd v Shire of Hastings (1977) 16 ALR 363
Edwards v The Hunter Valley Co‑op Dairy Co Ltd (1992) 7 ANZ Cases 77,531
Henry v Associated Indemnity Incorporation (1990) 217 Cal App 3d 1405
Hungerford v Walker (1991) 71 CLR 125
Kelly v New Zealand Insurance Co Ltd, unreported; FCt SCt of WA; Library No 960125; 6 March 1996
Kimberley Downs Pty Ltd v Western Australia, unreported; SCt of WA; Library No 6414; 25 August 1986
Muschinski v Dodds (1985) 160 CLR 583
Pizzale v Gumina Enterprises Pty Ltd, unreported; SCt of WA; Library No 940390; 29 July 1994
State Farm Fire & Casualty Co v Superior Court (1989) 216 Cal App 3d 1222
Young v Holloway (1895) P 87

Case(s) also cited:

Dimitrijevic v Mercantile Mutual Life Insurance Ltd & Telfer, unreported; SCt of WA; Library No 970724; 18 December 1997
Queensland v Pioneer Concrete Pty Ltd (1999) ATPR 41-691
Ron Hodgson (Trading) Pty Ltd v Belvedere Motors (Hurstville) Pty Ltd [1971] NSWLR
Speidel v Plato Films Ltd [1961] AC 1090

ACTING MASTER DIXON: This action arises out of an injury suffered by the plaintiff on 7 July 1997 and his resultant claim pursuant to an income protection policy entered into by him with the first defendant.
The defendants have, by an application dated 23 September 2002 applied to strike out various paragraphs of the amended statement of claim dated 3 September 2002. The matter has been complicated somewhat by the plaintiff filing, in response to that application, a minute of proposed reamended statement of claim dated 9 October 2002 ("the minute") and a further minute of reamended statement of claim dated 24 October 2002 ("the further minute"). The application was argued by reference to those minutes and not the amended statement of claim. I propose dealing with the matter by reference to the further minute, the minute and the amended statement of claim so as to determine whether the plaintiff should be allowed to amend in terms of the minutes and whether parts of the amended statement of claim should be struck out.
Before doing so, it is appropriate that I set out the facts of the matter as drawn from the plaintiff's pleadings. They are as follows:
(a)The plaintiff was employed by "Twinside Retaining Walls and Fences" as a labourer.
(b)The plaintiff and the first defendant entered into a policy of insurance dated 7 March 1997. Pursuant to that policy the first defendant was to pay to the plaintiff monthly benefits in the event of the plaintiff becoming "totally disabled" as defined in the policy.
(c)It seems that pursuant to an order made in the Federal Court on 31 August 2000, various policies of insurance were transferred from the first defendant to the second defendant. The defendants say that the plaintiff's policy is one of those policies and therefore any liability to make the payments sought attaches to the second defendant. Because of uncertainty in this respect the claim is made against both defendants. For the purposes of these reasons I will not distinguish between the defendants and will simply refer to them as "the defendants".
(d)On 7 July 1997 the plaintiff injured his back in the course of his employment thereby, according to the plaintiff, rendering him totally disabled in terms of the policy. Apart from a brief period of light duties work, the plaintiff has not worked since the accident.
(e)Notice of a claim under the policy was given to the defendants by the plaintiff's former solicitors by letter on or about 19 November 1999. An "initial claim form" was provided to the defendants on 20 July 2000.
(f)Pursuant to the policy the plaintiff was not entitled to any payments from the defendants whilst he was receiving any other disability income payments. The plaintiff received other disability income payments from 7 July 1997 until 12 November 1999 when the plaintiff says that he then became entitled to benefits under the policy.
(g)In breach of the contract of insurance the defendants have "failed, neglected or refused to pay or approve the claim of the plaintiff …".
On these facts the claim appears to be relatively straightforward, turning on the terms of the policy and whether the plaintiff can establish that he is or was totally disabled pursuant to its terms. In the various versions of the statement of claim, the plaintiff pleads a claim based on the terms of the policy, the occurrence of the injury, the plaintiff's total disability and the defendant's failure to meet the claim. For pleading purposes none of that is controversial and the defendants do not take issue with those parts of the pleadings.
The objections raised by the defendants relate to various additional matters and in particular, whether the plaintiff was in a fiduciary relationship with the defendants by virtue of which he was owed certain duties which have been breached, whether the defendants or either of them are "constructive trustee of the rights of the plaintiff" by virtue of which certain duties were owed by them which have been breached, and whether the defendants had a discretion in the matter that they failed to exercise correctly.
Before dealing with these issues, it is appropriate that I set out briefly the circumstances in which pleadings or parts of them may be struck out. The application itself seeks to have various paragraphs of the amended statement of claim struck out on the grounds that they disclose no reasonable cause of action, that they are frivolous or vexatious, or that they may prejudice, embarrass or delay the fair trial of the action, for the reasons set out in the schedule to the application. It is clear that the defendants have simply adopted the terms of O 20 r 19 of the Rules of the Supreme Court.
A statement of claim will be struck out on the grounds that it fails to disclose a reasonable cause of action only in cases where the case advanced is not arguable. Care must be exercised in this respect so as to ensure that the plaintiff is not improperly deprived of his or her opportunity to have the matter go to trial. It is also important to avoid stifling the development of the law by summarily rejecting claims where there is a reasonable possibility that, as the law develops, it will find that a cause of action will lie. These propositions are clear from Kimberley Downs Pty Ltd v Western Australia, unreported; SCt of WA; Library No 6414; 25 August 1986.
An action is clearly frivolous if it is obviously unsustainable and an abuse of the process of the Court - Young v Holloway (1895) P 87 at 90. As regards the circumstances in which a pleading may cause prejudice, embarrassment and delay, according to Cairns: Australian Civil Procedure, 3rd ed, page 194:
"Prejudice, embarrassment and delay in pleading is a single concept, used in relation to pleadings which do not state the allegations sufficiently clearly against the opposite party. The opponent is left in doubt about what is alleged. Such pleadings are said to be embarrassing and to delay and prejudice the fair trial of the action."
I will now deal with the issues raised by the plaintiff in respect of the fiduciary relationship said to exist between the plaintiff and the defendants and whether the defendants are in the position of constructive trustees.

The fiduciary relationship

Paragraph 15A of the further minute pleads as follows:
"15ABy virtue of the matters pleaded in paragraphs 1-15 above, the parties had a relationship of insured and insurer, customer and supplier or protector and protectee such that the parties were:-
15A.1in a proximate relationship
15A.2in an unequal bargaining position
15A.3the plaintiff was in a position of special disadvantage vis a vis the defendants.(sic)
15A.4in a fiduciary relationship (sic)"
Paragraph 17 of the minute pleads as follows:
"17By reason of the matters specified in paragraphs 5-16B hereof inclusive the defendants or either of them as the case may be assumed the obligations of a fiduciary, or alternatively ~~and~~ became constructive trustee of the rights of the plaintiff ~~under the contract of insurance or otherwise~~."
Paragraph 18 then pleads as follows:
"18.In the event that the plaintiff suffered an injury making him totally disabled as defined in paragraph 6 above, the defendants or either of them were under a fiduciary duty or a duty as constructive trustee owed to the plaintiff:-
18.1to do all such acts and things necessary to preserve to the plaintiff his rights or alternatively pursuant to the contract of insurance.
18.2To determine, resolve or make an opinion that the plaintiff was totally disabled as defined in paragraph 6 above.
18.3To pay the monthly benefits due under the contract of insurance to the plaintiff on a monthly basis until the expiry of the payment period."
Paragraph 39 of the minute then pleads breaches of the defendants' duties either as fiduciary or constructive trustee as a result of which, according to par 40 of the minute, the plaintiff has suffered loss and damage in the form of a loss of monthly benefits payable pursuant to the policy.
The defendants say that they are not in a fiduciary relationship with the plaintiff. They acknowledge owing the plaintiff a duty of utmost good faith pursuant to s 13 of the Insurance Contract Act, however, they say, this does not give rise to a fiduciary relationship. They say, in addition, that the matters pleaded by the plaintiff could not in any event give rise to a fiduciary relationship. In support of their arguments I was referred to Edwards v The Hunter Valley Co‑op Dairy Co Ltd (1992) 7 ANZ Cases 77,531. In that case McLelland J referred to the obligations owed by the insurer to the plaintiff, who was a member of the defendants' staff superannuation plan. Under that plan the plaintiff was entitled to payments in the event of total and permanent disability. McLelland J at 77,536 considered the insurer's obligations under the policy, finding that:
"Those obligations were contractual and not fiduciary. Zurich was an insurer, not a trustee … Furthermore, in the exercise of powers affecting the interests both of itself and the claimant, Zurich was under a duty of good faith and fair dealing which required it to have due regard to the interests of the claimant …"
I was also referred by the defendants to Banque Keyser Ullman SA v Skandia (UK) Insurance Co Ltd (1987) 2 WLR 1300, in which Steyne J at first instance held that in the particular circumstances of that case, no fiduciary duty was owed by the defendant insurer to certain banks. No basis is set out for that conclusion and so I think that little can be drawn from it.
The plaintiff has not provided any authorities for the proposition that simply by reason of the entry into a contract of insurance, an insurer is in a fiduciary relationship with its insured, other than by reference to general propositions of law regarding the circumstances in which a fiduciary relationship may arise. The point was made in this respect by counsel for the defendants that nowhere has it been held that such a fiduciary relationship exists between an insurer and an insured.
It is clear that the defendants owed the plaintiff a duty of the utmost good faith. As was said by Owen J in Kelly v New Zealand Insurance Co Ltd, unreported; FCt SCt of WA; Library No 960125; 6 March 1996.
"At common law contracts of insurance are described as contracts uberrimae fidei or contracts of good faith. The precise definition of the term 'good faith' depends on the legal context in which it is used. In the context of insurance, Sutton in Insurance Law in Australia (2nd ed) says that the phrase '… basically encompasses notions of fairness, reasonableness and community standards of decency and fair dealing.' In the New Zealand High Court decision of Vermulen v SIMU Mutual Insurance Association (1987) 4 ANZ Ins Cas 60‑812 the duty of good faith was described as having the essential element of honesty.
By s 13 of the (Insurance Contracts) Act the common law duty of good faith is now implied in every contract of insurance. Section 13 provides:
'A contract of insurance is a contract based on the utmost good faith and there is implied in such a contract a provision requiring each party to it to act towards the other party, in respect of any matter arising under or in relation to it, with the utmost good faith.'
By virtue of s 12 of the Act the duty in s 13 is an overriding duty which must not be limited or restricted in any way."
It is the case that "an obligation to exercise good faith is at the core of fiduciary relations" - see Ipp J in Pizzale v Gumina Enterprises Pty Ltd, unreported; SCt of WA; Library No 940390; 29 July 1994. It may also be that duties similar to those pleaded by the plaintiff as arising from the suggested fiduciary relationship could be said to arise by reason of the duty of utmost good faith. However, it does not follow that, in the context of insurer and insured, the existence of the obligation to exercise good faith means that the plaintiff and the defendants are in a fiduciary relationship. American authorities suggest in this respect that "the relationship between an insurer and an insured is akin to a fiduciary relationship. The insurer is bound to conduct itself with the utmost good faith for the benefit of its insured" – see State Farm Fire & Casualty Co v Superior Court (1989) 216 Cal App 3d 1222 at 1226 and also Henry v Associated Indemnity Incorporation (1990) 217 Cal App 3d 1405 at 1418
This, it seems to me, sets out the true position. By reason of the relationship of insurer and insured the parties are in a relationship that is only "akin" to fiduciary relationship. They are not in a fiduciary relationship itself.
I have already pointed out that a plea in a statement of claim will only be struck out as disclosing no reasonable cause of action if the proposition sought to be pleaded is not arguable. In my view the existence of a fiduciary relationship between the plaintiff and the defendants is not arguable and therefore I would not allow any proposed amendments that seek to plead the existence of such a relationship. I would also strike out those paragraphs of the amended statement of claim that plead such a fiduciary relationship or which are based on the existence of such a relationship.

The defendants as constructive trustee

Paragraph 15B of the further minute, as further amended by me as requested in the course of the hearing of the application, pleads as follows:
"15BBy virtue of the matters pleaded in paragraphs 1‑15 and 20‑22 above, the defendants came into possession or acquired powers or rights over the funds, income protection insurance payments, entitlements or monthly benefits due to the plaintiff as constructive beneficiary such that the defendants or either of them by implication of law and fact became constructive trustees of those said powers and rights over the said funds, income protection insurance payments, entitlements or monthly benefits."
I have already set out par 17 and 18 of the minute which plead in this respect that by reason of par 5 to 16B, the defendants became constructive trustee "of the rights of the plaintiff" and by reason thereof, owed certain duties to the plaintiff which, by par 39 of the minute, they breached in the manner set out therein, thereby causing loss and damage to the plaintiff, as pleaded in par 40 of the minute.
I should say at the outset that I see no basis for the plaintiff to argue that the defendants were in the position of constructive trustee as regards the plaintiff. I do not understand quite how this relationship is said to arise and nor do I understand what is meant by the pleas that the defendants were constructive trustee "of the rights of the plaintiff" or of "powers and rights" over what appear to be the premiums paid by the plaintiff and the plaintiff's entitlements under the policy.
In Muschinski v Dodds (1985) 160 CLR 583, Deane J considered at some length the circumstances in which a constructive trust may be found to exist. At 614 his Honour said:
"Viewed in its modern context, the constructive trust can properly be described as a remedial institution which equity imposes regardless of actual or presumed agreement or intention (and subsequently protects) to preclude the retention or assertion of beneficial ownership of property to the extent that such retention or assertion would be contrary to equitable principle".
His Honour went on to say at 615 that:
"The fact that the constructive trust remains predominantly remedial does not, however, mean that it represents a medium for the indulgence of idiosyncratic notions of fairness and justice. As an equitable remedy, it is available only when warranted by established equitable principles or by the legitimate processes of legal reasoning, by analogy, induction and deduction, from the starting point of a proper understanding of the conceptual foundation of such principles …"
At 616 his Honour said that:
"Such equitable relief by way of constructive trusts will only properly be available if applicable principles of the law of equity require that the person in whom the ownership of property is vested should hold it to the use or for the benefit of another. That is not to say that genuine notions of fairness and justice have become irrelevant to the content and application of equity. They remain relevant to the traditional equitable notion of unconscionable conduct which persists as an operative component of some fundamental rules or principles of modern equity …"
Finally, also at 616, his Honour stated:
"Once its predominantly remedial character is accepted, there is no reason to deny the availability of the constructive trust in any case where some principle of the law of equity calls for the imposition upon the legal owner of property, regardless of actual or presumed agreement or intention, of the obligation to hold or apply the property for the benefit of another …"
It seems to me that in asserting that the defendants were in the position of a constructive trustee, the plaintiff has fallen into the trap of treating the constructive trust as "a medium for the indulgence of idiosyncratic notions of fairness and justice". As I have pointed out, this is essentially a contract claim based upon the defendants' alleged failure to pay to the plaintiff benefits due pursuant to a policy of insurance. I do not see that there is any principle of the law of equity that would, in these circumstances, call for the imposition on the defendants of an obligation to hold or apply property to the benefit of the plaintiff. Apart from anything else, it is not the case that there is property vested in the defendants that should be held by them for the use or benefit of the plaintiff. The plaintiff has paid premiums to the defendants and, should he succeed in the action, will be entitled to receive moneys from the defendants. There could be no basis for finding that any such benefits are held on trust by the defendants for the plaintiff.

It follows that, in my view, the plaintiff has no reasonable cause of action in relation to those pleas that allege that the defendants were constructive trustees. I would not allow any proposed amendments that seek to plead the existence of such a relationship. I would also strike out those paragraphs of the amended statement of claim that plead such a relationship or which are based on the existence of such a relationship.
I will now consider those various paragraphs of the minutes in terms of which the plaintiff seeks to amend and of the amended statement of claim, as it presently stands, that the defendants seek to strike out.

Paragraph 15A of the further minute

I have already dealt with this paragraph in the context of whether the plaintiff and the defendants were in a fiduciary relationship. In light of the conclusions reached in that respect I would not allow the plaintiff to amend in terms of par 15A.

Paragraph 15B of the further minute

Again, in light of the views that I have reached regarding the plea that the defendants were in the position of a constructive trustee, I would not allow an amendment in these terms.

Paragraph 15C of the further minute

It is pleaded in the further minute as follows:
"15CIt was an implied term in the contract of insurance that the defendants or either of them would decide or form an opinion as to whether the plaintiff was totally disabled as specified in par 6 above in either declining or granting the claim of the plaintiff for payment of the monthly benefits under the contract of insurance and such decision or opinion would be based on medical evidence provided to the defendants or either of them."
The plaintiff has not set out the facts and circumstances which form the basis of this implied term. Whilst that defect may be able to be cured by the provision of particulars, I do not think it appropriate to give leave to amend in terms of a paragraph which, as presently pleaded, is deficient. Furthermore, and more fundamentally, I do not consider that the implication of such a term is arguable. As I understand the suggested term, it is said that:
(1)the defendants were obliged to determine or form an opinion as to whether the plaintiff was totally disabled in terms of the policy in either accepting or refusing the claim; and
(2)that such decision would be based upon medical evidence provided to the defendants.
It is accepted that:
"For a term to be implied, the following conditions (which may overlap) must be satisfied:
(1)it must be reasonable and equitable;
(2)it must be necessary to give business efficacy to the contract so that no term will be implied if the contract is effective without it;
(3)it must be so obvious that it 'goes without saying';
(4)it must be capable of clear expression;
(5)it must not contradict any express term of the contract."
(BP Refinery (Western Port) Pty Ltd v Shire of Hastings (1977) 16 ALR 363 at 365).
The implication of such a term could not, in my view, satisfy that test. I do not think it could be said that it is necessary to give business efficacy to the contract or to put it the other way around, that the contract is ineffective without it. Nor that I think it could be so obvious goes without saying. The issue this matter is whether the plaintiff is or was disabled in terms of the policy. A term that the defendants would decide or form an opinion as to whether the plaintiff was totally disabled based upon medical evidence provided to them is irrelevant to the matters in issue.

Paragraph 17 of the minute

I have already set out this paragraph in full. For the reasons set out above I would not allow the plaintiff to amend in those terms and would strike out this paragraph of the amended statement of claim.

Paragraph 18 of the minute

I have already set out this paragraph in full. It pleads the duties owed to the plaintiff by the defendants either by reason of their being in a fiduciary relationship with him or by reason of their being a constructive trustee. Again, for the reasons set out above, I would not allow the plaintiff to amend in those terms and would strike out this paragraph of the amended statement of claim.

Paragraph 19 of the minute

By this paragraph the plaintiff pleads that:
"19.~~Due to the matters specified in paragraph 18 above,~~ the defendants or either of them as the case may be are bound to consider whether its discretion should be exercised and it must give real and genuine consideration to this, which it has not done, in determining:-
a.to do all such acts and things necessary to preserve to the plaintiff his rights.
b.that the plaintiff is totally disabled as defined in paragraph 6 above.
c.to pay the monthly benefits due under the contract of insurance to the plaintiff on a monthly basis until the expiry of the payment period."
In the amended statement of claim it is pleaded that the defendants' obligations in this respect arose "due to the matters specified in par 18 above". As is apparent, however, the plaintiff seeks to remove the reference to par 18 in the minute.
I have a number of concerns regarding this paragraph. The first is that it is confusing and difficult to understand and to that extent is embarrassing. The second is that if the reference to par 18 is deleted then plaintiff has not set out the basis for the discretion said to be held by the defendants. As such I do not understand how the discretion referred to in par 19 is said to arise. The third concern is that in any event, I can see no basis for the plaintiff asserting that the defendant had any discretion in relation to the plaintiff's claim. If the plaintiff has a good claim under the policy then the defendants must meet that claim. They have no discretion in the matter. It may be in this respect that the plaintiff is confusing the policy held by him with policies of the type referred to in Edwards v The Hunter Valley Co‑op Dairy Co Ltd. In that case the Zurich policy contained a definition of total and permanent disability which required a degree of incapacity that caused the claimant to be absent from work for six consecutive months and which would "in the opinion of Zurich Australian Life Insurance Ltd after consideration of such medical or other evidence as it may require" render the claimant incapacitated into the future. Since the policy required Zurich to form an opinion on the deceased and its own liability, McLelland J found that Zurich was obliged to consider and determine whether to form that opinion and was obliged to act reasonably in considering and determining that matter.
In the present case there is nothing pleaded to suggest that the defendants were obliged to form any opinion. The issue is simply whether the plaintiff is or was disabled in terms of the policy. I follows that issues concerning the way in which the defendants considered the claim and the exercise of a discretion in that respect do not arise.
Finally in this respect, even if the deleted words "due to the matters specified in par 18 above" are reinstated, the plea cannot stand as I have found that par 18 has no basis and should be struck out.
It follows that I would not allow the plaintiff to make the amendments to par 19 set out in the minute and would also strike out par 19 of the amended statement of claim.

Paragraph 24 of the minute

It is pleaded that:
"24.The defendants or either of them as the case may be wrongly failed to determine or form the opinion that the plaintiff was ~~unlikely ever to resume work or~~ unable to work in his usual occupation of a labourer or in another occupation for more than ten hours per week."
This plea proceeds on the basis that there was a breach of an obligation on the part of the defendants to determine or form a certain opinion as to the plaintiff's disability. This seems to me to be quite irrelevant to the issue of whether the plaintiff is or was in fact disabled in terms of the policy. Further, to the extent that this plea is based upon par 15C of the further minute that sets up the obligation to make a determination or to form an opinion as to the plaintiff's disability, I have already indicated that I would not allow the plaintiff to amend in those terms.
It follows that I would not allow the plaintiff to make the amendments sought to par 24 as set out in the minute and would also strike out par 24 of the amended statement of claim.

Paragraphs 30 - 36 of the minute

By these paragraphs the plaintiff pleads, in effect, that other insurers, namely GIO Insurance Ltd and National Mutual Life Association of Australia Ltd, determined that the plaintiff was totally disabled and in light of that, met claims by the plaintiff and paid moneys to him. By par 34, the plaintiff pleads that the determinations made by those insurers were based on medical evidence "provided to the defendants in this action by way of discovery and which the defendants were obliged to obtain or consider …". There follows a list of medical reports. By par 35 it is pleaded that an additional report was obtained from a Dr Radosh Milanovic dated 26 December 2001 that dealt with various matters. It is then said by par 36 that in breach of the contract of insurance, the defendants have failed to consider that evidence which would "had it been considered, have qualified the plaintiff for payment of the monthly benefit since 12 November 1999 on the basis that he was totally disabled as defined under the contract of insurance".
Again I have a number of difficulties with these paragraphs. As I understand the plaintiff's position, as confirmed by the plaintiff's counsel at the hearing of the application, the plaintiff relies upon these matters as some sort of similar fact evidence. As I understand it, the plaintiff says that the fact that these other insurers took the view that the plaintiff was totally disabled on the basis of these reports is evidence that the plaintiff is or was totally disabled and that he should have been treated as such by the defendants.
Pursuant to O 20 r 8 of the Rules of the Supreme Court and subject to certain exceptions, none of which apply here, "every pleading must contain, and contain only, a statement in a summary form of the material facts on which the party pleading relies for his claim … but not the evidence by which those facts have to be proved …". The approach taken by these other insurers to the plaintiff's claims is not a material fact. I doubt that it could even be evidence of a material fact as the view taken by other insurers as to the extent of the plaintiff's disability is not of itself evidence that he was so disabled. It is irrelevant to the plaintiff's claim. It follows that I would not allow the plaintiff's proposed amendments to par 32, 33 and 34 and would strike out those paragraphs. Par 35 is meaningless on its own once the earlier paragraphs are struck out and I would therefore strike it out.
Par 36 of the minute pleads a breach by the defendants in failing to consider the medical reports referred to in par 34. The difficulty I have with this paragraph, aside from any difficulties resulting from the striking out of par 32 to 35, is that it is not pleaded that the defendants were under any obligation to consider reports provided by the plaintiff, whether on the making of the claim or upon the giving of discovery in this action. As I have said repeatedly, the obligation on the defendants was to meet the claim if the terms of the policy were satisfied. In light of this, par 36 cannot stand either in terms of the amended statement of claim or as proposed in the minute.

Paragraph 37 of the minute

This paragraph pleads that:
"37.Further, the defendants or either of them as the case may be, in breach of the contract of insurance, having once determined or formed the opinion that medical evidence provided to it of and concerning the plaintiff's eligibility for paying of monthly benefits on the basis that the plaintiff was totally disabled was unreliable, failed to obtain medical opinion, alternatively, failed to consider medical opinion provided by the plaintiff."
I would strike out this paragraph on the grounds that there is nothing pleaded to the effect that the defendants were obliged to obtain medical opinion or to consider medical opinion provided to them by the plaintiff, other than perhaps by par 15C of the further minute. As I have said, I would not allow the plaintiff to amend in those terms. The obligation on the defendants was to pay the benefits in the event that the plaintiff is or was totally disabled in terms of the policy. As such I would not let the plaintiff amend in terms of the minute and I would strike out this paragraph in the amended statement of claim.

Paragraph 39 of the minute

This paragraph pleads breaches of fiduciary duties owed by the defendants to the plaintiff and/or a constructive trustee. In light of the views I have reached already, I would not let the plaintiff amend in terms of the minute and I would strike out this paragraph from the amended statement of claim.

Paragraph 41 of the minute

By par 41 the plaintiff pleads that:
"41.Further and in the alternative and pursuant to the matters pleaded in paragraphs 1-40 above the plaintiff claims against the defendants or either of them as the case may be, as a person to whom it issued the contract of insurance and being totally disabled within the meaning thereof, is entitled to the monthly benefit thereof until the expiry of the payment period or otherwise as determined by this Honourable Court."
I do not understand this paragraph. By par 40 the plaintiff pleads that by reason of the defendant's breach of the policy he has suffered loss. That loss is particularised as including monthly benefits under the policy in specified amounts to 22 March 2003 and from that date to 6 January 2022 "to be assessed". Paragraph 41 is said to be "further and in the alternative", presumably to par 40. Aside from the fact that par 41 does not make sense, it is simply not clear what is intended and what its effect is. In my view it is embarrassing. As such I would not let the plaintiff amend in terms of the minute and I would strike out this paragraph from the amended statement of claim.

Paragraph 42 of the minute

Par 42 pleads as follows:
"42.If, which is denied, the defendants or either of them as the case may be, have ~~has~~ properly decided that the plaintiff does not fall within the definition of 'totally disabled', then the defendants or either of them as the case may be ought still exercise their discretion to pay to the plaintiff a 'partial disability' benefit as defined in the contract of insurance as follows:-
a.The defendants or either of them as the case may be will pay a lower monthly amount to the plaintiff if he is partially disabled if
i.The plaintiff has been totally disabled for at least 14 days in a row during the waiting period
ii.As a result of his disablement, the plaintiff is unable to earn as much as before before his total disablement, and
iii.The plaintiff is under the regular care of a registered doctor.
b.In the event that the circumstances specified in 42 a above are established then the defendants or wither (sic) of them pay each month for partial disability the monthly amount for total disablement as specified in paragraph 6 above less 75% of the plaintiff's earnings while he is partially disabled."
There is nothing to prevent the plaintiff from pleading an entitlement to benefits based upon a partial disability in the event that the plaintiff is not found to be totally disabled. However, the paragraph, as it stands and as the plaintiff wishes to amend it, refers to the defendants "properly deciding" that the plaintiff is not totally disabled and exercising a discretion to pay benefits to the plaintiff based upon a partial disability as defined in the contract of insurance. What the defendants may decide, whether properly or not, is not relevant as the matter turns on whether, in fact, the plaintiff was partially disabled in terms of the policy. Furthermore, based upon subpar (a) and (b), it is not the case that the defendants have any discretion in the matter. In the event that the plaintiff falls within the partial disability definition and satisfies the terms of the policy generally, then he is entitled to such benefits.
I would not let the plaintiff amend par 42 as sought in the minute and would strike out the paragraph. I would, however, let the plaintiff replead the relevant terms of the contract and the plaintiff's entitlement thereunder so at to set up a claim in the alternative based on a partial disability.

Paragraph 43 of the minute

The plaintiff pleads the following by par 43:
"43.If, which is denied, the defendants or either of them as the case may be, have properly decided or formed an opinion that the plaintiff ~~that the plaintiff does not fall within the definition of~~ is not 'totally disabled' as specified in paragraph 6 above, then the defendants ought to pay the monthly benefit for that period commencing 12 November 1999 until such time that (sic) determination was made or formed by the defendants or either of them as the case may be.
Particulars
43.1In the absence of any determination or opinion from the defendants that the plaintiff was not totally disabled, the plaintiff was to be considered as being totally disabled prior to any such determination.
43.2The onus rests on the defendants to establish that the plaintiff was not totally or partially disabled as specified in paragraph 6 and 42 above."
This paragraph is unsatisfactory for a number of reasons. First, it proceeds on the basis that the decision or opinion of the defendants as to the plaintiff's disability is relevant. It is not. The issue is whether in terms of the policy, the plaintiff was or is totally disabled. Secondly, and more importantly, it seems to be suggested that in the event that the plaintiff is or was not totally disabled, then the defendants ought to have paid the relevant benefit to the plaintiff until such time as the defendants determined that he was not totally disabled. This plea appears to proceed on the basis that in the absence of any determination being made, the plaintiff was to be considered disabled, the onus being on the defendants to establish that he was not totally or partially disabled. I see no basis for the making of such a plea. There is nothing in the terms of the pleaded agreement that would justify such a plea and nor do I see any basis for suggesting that the onus was on the defendant to disprove the plaintiff's claim for total or partial disability.
I would not let the plaintiff amend in terms of the minute and would strike out par 43 of the amended statement of claim.

Paragraphs 44 and 45 of the minute

The plaintiff pleads the following in par 44 and 45:
"44Had monies been paid by the defendants or either of them as the case may be to the plaintiff as and when they fell due for payment of the monthly benefit, the plaintiff would have invested them in income earning properties.
Particulars
44.1The plaintiff has not been paid the monthly benefit.
44.2If the plaintiff had been paid the monthly benefit, the plaintiff would have invested the same in the purchase of real property or bonds of appreciable value in excess of that of 6% per annum.
44.3Due to the non‑payment of the monthly benefit, the plaintiff has lost the opportunity to gain a larger return or investment amount in excess of that of 6% per annum pursuant to section 32 of the Supreme Court Act (WA).
44.4Real property in the said State has appreciated in excess of but say 10% per annum in the last 12‑24 months on average.
45By reason of the defendant's' failure to pay the plaintiff and due to the matters pleaded in paragraph 44 above the plaintiff has suffered further loss and he claims interest at 10% per annum or as assessed by the Court for his loss of revenue or income thereby due to the matters pleaded in paragraph 44 above or otherwise from the date he gave notice of the claim to the first defendant until judgement or payment.

Paragraph (g) of the prayer for relief then claims interest on the judgment sum at 6 per cent pursuant to s 32 of the Supreme Court Act "or alternatively any greater sum as the Court thinks fit pursuant to par 44 and 45 above …"
It is not clear as to the basis upon which this claim is put. It was said in Hungerford v Walker (1991) 171 CLR 125 that where money is wrongfully withheld from a party in breach of contract, a loss is sustained "in the form of the cost of being deprived of money which would have been invested at interest" - per Mason CJ and Wilson J at 143.
However, in order to understand the basis upon which such a claim proceeds, it is necessary to appreciate that there is:
"… a crucial distinction between an order that interest be paid upon an award of damages and an actual award of damages which represents compensation for a wrongfully caused loss of the use of money and which is assessed wholly or partly by reference to the interest which would have been earned by safe investment of the money or which was in fact paid upon borrowings which otherwise would have been unnecessary or retired. On the one hand, there is no common law power to make an order for payment of interest to compensate for the delay in obtaining payment of what the Court assesses to be the appropriate measure of damages for the wrongful act. If such interest is to be awarded at common law, it must be pursuant to statutory authority. On the other hand, there is no acceptable reason why the ordinary principles governing the recovery of common law damages should not, in an appropriate case, apply to entitle the plaintiff to an actual award of damages as compensation for a wrongfully and forseeably caused loss of the use of money".
(per Brennan and Deane JJ at 152).
In my view the plaintiff has overlooked this distinction in the way in which the claim for such interest is pleaded. By par 44 and 45 the plaintiff appears to claim damages to compensate him for the loss of interest pursuant to Hungerford v Walker, whereas par (g) of the prayer for relief, in claiming interest on the judgment sum at 6 per cent pursuant to s 32 of the Supreme Court Act "or alternatively any greater sum as the Court thinks fit pursuant to par 44 and 45 above …" appears to be a simple claim for interest to be paid upon an award of damages.
It is not clear therefore as to the basis upon which the pleas under par 45 and 46 are made and therefore, they are embarrassing. I would not allow the plaintiff to make the amendments sought in the minute to par 45 and 46 and would strike out those paragraphs in the amended statement of claim.

Paragraph 46 of the minute

The plaintiff pleads the following by par 46:
"46. The monthly benefit due to be paid to the plaintiff by the defendants or either of them as the case may be was due to be paid from 12 November 1999 to the expiry of the payment period which pursuant to paragraph 12 and 13 above, is to cease on 6 January 2002."
It is not clear what is intended by the insertion of this paragraph though I note from the plaintiff's written submissions that it seeks to make it clear that "the plaintiff is claiming for injunctive/declaratory orders into the future is (sic) to the end of the Policy expiry date (2022). The policy provides for benefits to the plaintiff until 2022 and as such a claim to enforce that contract into the future and prevent further breaches by the defendants is valid."
According to par 6 of the minute, the plaintiff is entitled to certain benefits payable monthly should he become totally disabled. He will be totally disabled in terms of the policy should he be unable to work in his usual occupation for more than 10 hours per week and not be working more than 10 hours a week in any other occupation. By par 21 of the minute he says that the injury that he has suffered has rendered him totally disabled. By par 38 he says that in breach of the policy, the defendants have failed to pay to him any benefits.
In my view this is a claim that proceeds on the basis that so long as the plaintiff is totally disabled he is entitled to the payment of monthly benefits. There is nothing pleaded that provides a basis for a plea that the plaintiff is entitled to the payment of benefits into the future and in particular, to 2022. It is not a case where, for example, the terms of the policy are such that it may be pleaded that by reason of a total and permanent disability there is an entitlement to payments into the future or a lump sum payment.
In light of this I would not let the plaintiff amend in terms of par 46 of the minute.

Prayer for relief (a)(2) of the minute

The plaintiff seeks a declaration that "… it was unreasonable for the defendants or either of them as the case may be to form any opinion or determination other than that the plaintiff was totally disabled within the meaning of the contract of insurance". I would strike out this paragraph of the prayer for relief on the grounds that the reasonableness or otherwise of the defendant's actions and any opinion formed or determination made are irrelevant to the proceedings. I have already set out why I believe this to be the case.

Prayer for relief (a)(3) of the minute

The plaintiff seeks a declaration that "the plaintiff is entitled to the benefit of the monthly benefit since 12 November 1999 to date". The defendants sought to strike out this paragraph on the grounds that there is no basis for the plaintiff to claim payments beyond the date of the issue of the writ. In the course of argument the defendants' position was that they had no difficulty with that part of the prayer for relief so long as it does not seek a declaration as to an entitlement to payment of a monthly benefit to 6 January 2022. I do not understand par (a)(iii) to seek payment of monthly benefits to 6 January 2022 and therefore would not strike it out.

Prayer for relief (a)(4) of the minute

The plaintiff seeks a declaration that "the plaintiff is entitled to the payment of the monthly benefit to 6 January 2022". That is the date that the plaintiff’s entitlement to payments under the policy ceases. For the reasons set out in relation to par 46 of the minute, I do not consider that the plaintiff, even if successful in showing that he is or was totally disabled in terms of the policy, would be entitled to a declaration as his entitlement to monthly benefits to January 2022. I would strike out this paragraph of the prayer for relief.

Prayer for relief (a)(5) of the minute

The plaintiff seeks a declaration that "the defendants or either of their decision (sic) that the plaintiff was not totally disabled be set aside on the ground that it was wrong". I would strike out this paragraph of the prayer for relief on the grounds that such a declaration is simply irrelevant to the matter. As I have said, the issue is whether the plaintiff is or was disabled in terms of the policy, hence the declaration sought to that effect in par (a)(i) of the prayer for relief

Prayer for relief (a)(6) of the minute

The plaintiff seeks a declaration "that the defendants or either of them as the case may be do all such things or acts necessary to enable the plaintiff to receive his entitlements or the monthly benefit under the contract of insurance".
Again, such a declaration is unnecessary. If the plaintiff obtains a declaration as to his disability, as sought in par (a)(i) of the prayer for relief, and an order that the benefits due under the policy be paid to the plaintiff, as sought in par (a)(iii) of the prayer for relief, then he will have the relief required. I would strike out this paragraph of the prayer for relief.

Prayer for relief (b) of the minute

By par (b) of the prayer for relief the plaintiff seeks "an order that the defendants or either of them as the case may be do pay to the plaintiff such sums as the Court may find due to the plaintiff pursuant to the contract of insurance or otherwise". In their submissions the defendants object to the words "or otherwise". I would strike those words out on the grounds that I see no basis for a claim other than pursuant to the contract of insurance.

Prayer for relief (c) of the minute

The plaintiff seeks an order that :
"(c)In the event that this Court determines that the defendants or either of them as the case may be have ~~has~~ acted unreasonably in not forming an opinion or making a determination that the plaintiff is totally disabled or grants the declarations specified herein, a mandatory injunction compelling the defendants or either of them to pay to the plaintiff such sum or sums due to him calculated on the premise that the plaintiff was totally disabled on 7 July 1997 or such later date as the Court might fix to the date of the expiry of the payment period being 6 January 2022 or otherwise."
I would strike out this paragraph of the prayer for relief out on the grounds that it proceeds on the basis of the Court making a finding that the defendants have acted unreasonably in not forming a particular opinion or making a particular determination. As I have said, the defendant's actions in this respect, whether reasonable or otherwise, are not relevant to the matter. Furthermore, I see no basis upon which the Court would make an order involving the issuing of a mandatory injunction compelling the defendants to make any payments found to be due and owing.

Prayer for relief (d) of the minute

The plaintiff seeks "damages for breach of the contract of insurance or alternatively for breaching its duty pursuant to paragraph 39 hereof". As I understand it, the defendants' objection is to the reference to par 39 which pleads breaches the duties owed by the defendants to the plaintiff by reason of the fiduciary relationship or because the defendants were in the position of a constructive trustee. I would allow the plaintiff to further amend the statement of claim so as to claim "damages for breach of the contract of insurance". I would not allow the plaintiff to amend to claim, in the alternative, damages for breach of the duties set out in par 39 as I propose striking out that paragraph.

Prayer for relief (e) of the minute

The plaintiff seeks "a review of the defendant's (sic) exercise of its discretionary power as trustee described in par 17, 15 19, 39 hereof pursuant to the provisions of s 94 of the Trustees Act 1962". I would strike out this paragraph of the prayer for relief on the grounds that it is based on the notion that the defendants were in the position of a constructive trustee.

Prayer for relief (f) of the minute

The plaintiff seeks "alternatively an order that the defendants or either of them as the case may be exercises its discretionary power to determine that the plaintiff was totally disabled". I would strike out this paragraph of the prayer for relief on the grounds that it assumes that the defendants had a discretion in determining whether the plaintiff was totally disabled. As I have already indicated, the defendants have no discretion in the matter and therefore this paragraph of the prayer for relief cannot stand.

Prayer for relief (g) of the minute

I have already dealt with this paragraph in the context of the plaintiff's claim for interest at the sum of 10 per cent. For the reasons already given, I would strike out the words "or alternatively any greater sum as the Court thinks fit pursuant to paragraphs 44 and 45 above".

Conclusion

In light of these matters I would not let the plaintiff amend in terms of the further minute. As regards the minute I would not allow any of the amendments sought to be made in respect of par 17, 18, 19, 24, 32, 33, 34, 36, 37, 39, 41, 42, 43, 44, 45 and 46. Nor would I allow the amendments sought to be made to par (c) and (g) of the prayer for relief. I would, however, allow the proposed amendments that delete the previous par 16 and make some minor amendments to a new par 16, amend par 23 and 40 and amend par (d) of the prayer for relief so as to include a claim for damages for breach of the contract of insurance. As regards the amended statement of claim, I would strike out par 17, 18, 19, 24, 30, 31, 32, 33, 34, 35, 36, 37, 39, 41, 42, 43, 44, 45, 46 and par (a)(2), (a)(4), (a)(5), (a)(6), (b), (c), part of (d) (insofar as it seeks damages by reference to par 39), (e), (f) and part of (g) of the prayer for relief. Consequential amendments will also have to be made to par 40 to take into account the striking out of par 35, 36, 37 and 39.
The final matter that I would raise concerns the future conduct of this matter. As I have been at pains to point out, it is my view that this is a relatively straightforward matter, turning on whether the plaintiff can establish that he is or was totally or partially disabled in terms of the policy. If he is able to establish this and if the terms of the policy are otherwise satisfied, then he will be entitled to receive benefits under the policy. The effect of my decision as set out in these reasons will be to limit the plaintiff to such a claim. It may be, however, that the plaintiff will decide that pleas similar to those made to date based on the defendants being in a fiduciary relationship with him or being in the position of a constructive trustee, may be made by reference to the duty of utmost good faith owed by the defendants to the plaintiff. I must say that in my view, such a course would serve no purpose other than to complicate unnecessarily what is a relatively straightforward matter. As was acknowledged by the plaintiff's counsel in the course of the hearing, if the plaintiff can show that he is disabled in terms of the policy he will win. If he cannot, then he will lose. It seems to me that to plead additional causes of action which will not assist the plaintiff in advancing his claim but which will add to the costs of the action and the length of time that the matter will take to get to trial and at trial would be of questionable benefit to the plaintiff.