Metlife Insurance Limited v Ward

[2014] HCATrans 255

[2014] HCATrans 255

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Perth  No P25 of 2014

B e t w e e n -

METLIFE INSURANCE LIMITED

Applicant

and

TERENCE ANDREW WARD

Respondent

Application for special leave to appeal

FRENCH CJ
KEANE J

TRANSCRIPT OF PROCEEDINGS

FROM CANBERRA BY VIDEO LINK TO PERTH

ON FRIDAY, 14 NOVEMBER 2014, AT 11.44 AM

Copyright in the High Court of Australia

MR G.R. HANCY:   May it please your Honours, I appear for the applicant.  (instructed by Norton Rose Fulbright Australia)

MR G.M.G. McINTYRE, SC:   May it please your Honours, I appear with my learned friend, MR J.R. BROOKSBY, for the respondent.  (instructed by Shine Lawyers)

FRENCH CJ:   Yes, Mr Hancy.

MR HANCY:   Your Honours, the proposed appeal raises administration of justice questions.  The expectation of what is the framework of an appeal determines how a party prepares for the hearing and how its case is presented.  Litigants and their legal representatives prepare and present in the expectation that, absent fair notice, the appeal will be determined according to the framework that is defined by the contents of the grounds of appeal, the findings of fact or evidence that the parties have identified as relevant and the written submissions.

FRENCH CJ:   Well, you have got an appeal by way of rehearing and the focus of your complaint, or part of your complaint, seems to be on the reference to the DSM manual, is that right?

MR HANCY:   It is on the reference to three things.  It is the approach that the Court of Appeal majority took in overturning a finding of the primary judge that the respondent to this application was not suffering from an illness for the purposes of the policy.  The way the majority went about it was different from the way in which the respondent presented its case on appeal.  The respondent did not seek to have the court reject the evidence of any witness in favour of other evidence, did not seek to have the court weigh evidence, particularly about diagnostic categories, and it did not seek to have the court make its own inquiry into diagnostic criteria in the DSM‑IV‑TR.

That was the framework of the appeal and all of that in the context of specific rules in a practice direction and in the Supreme Court Rules that control in this jurisdiction how parties are to prepare for and present evidence‑based appeals.  A choice had been made by the respondent to present its appeal based on findings and not on any of the matters that I have just identified.

KEANE J:   So do you say that it was not open to the Court of Appeal to consider the findings of primary fact made by the trial judge in light of the material in the DSM‑IV?  Reference to the DSM‑IV was entirely forbidden to them, is that the proposition?

MR HANCY:   No, the position is that reference to the DSM‑IV and rejection of the evidence of a witness and the weighing of evidence to lead to the result of overturning a primary finding was not open to them without notice because that did not occur, because that is not the way in which the appeal was presented to the court.  What the court did, it did not just go off and look at the DSM‑IV‑TR.  We would not have had a problem in its ability to deal with that if it had been properly presented and properly argued, but it was not; but they did that.

They also went about an examination of the expert evidence of a psychiatrist, Dr Spear, which they rejected, even though there was no seeking a rejection by the respondent.  They then went off, and then having done that, reviewed and weighed the expert evidence based on a summary of what they thought the expert evidence was in the context where these sort of issues had been dealt with prior to the hearing, where the applicant here had endeavoured to find out whether this was going to be an evidence‑based appeal or not, and the outcome of the events that occurred prior to the hearing was that it was not.

The appeal was presented on the basis that there were certain findings of fact made by the trial judge about what were called “the plaintiff’s symptoms”.  Your Honours may have noticed that Justice Pullin thought that was perhaps an elevated description of the respondent’s feelings, but their case in preparing for the appeal, and in the appeal, was that you could just look at these findings and conclude from looking at the findings that they constituted an illness.  That was the way the case was presented.  It was not presented in the manner in which the evidence was approached by the majority.  We do not say that they could not have done it; we say they could have done it on proper notice with the proper procedures followed, but that did not happen.

It is pretty important in a weighing of evidence case because the Court of Appeal itself has identified that it is important; if a party wants to raise an evidence ground and wants to challenge a finding of fact based on review of evidence, then it has to present to the court in a schedule, or in submissions, details of all of the evidence that supports what their contention is about that fact, as well as all of the evidence that is against them.  The other party is then provided with an opportunity to respond to that and say whether or not they have provided and referred to all of the relevant evidence, then counsel for both parties have to sign off that the practice direction, 7.4, has been complied with.

In addition to that, in the Supreme Court Rules, there is a requirement that relevant evidence and relevant transcript are to be set out in written submissions.  These issues were addressed between the parties before trial, and that is dealt with in Mr Smith’s affidavit, and the outcome of it all was this was not going to be an evidence‑based appeal; it was not going to be a review of evidence appeal, there was not notice given that it was going to be an appeal where the evidence of any witness, let alone the expert psychiatrist, Dr Spear, was going to be challenged with a request that it be rejected in favour of other evidence.

That is the issue here.  It is the notice question, putting us on notice about what the appeal was, what its framework was.  We present on one basis, and then after the hearing of the appeal the majority decide, without notice, the case on a different basis.  That is the concern that we have.  That, we say, raises an issue of administration of justice, both generally and also in this particular case.  It is, at the very least, relevant in a general sense to preparation and presentation of appeals generally in this State and it may be relevant to preparation and presentation of appeals in other States.

Your Honour Justice Keane correctly made the point this is an appeal by way of rehearing.  That matter seems to now be dealt with in the Supreme Court Rules, which you do not have but, not surprisingly, they say an appeal to the Court of Appeal will be by way of rehearing unless another written law provides otherwise.  So we are accepting, for the purposes of this application, that the power as it was at the time CSR v Della Maddalena was decided is a plenary power.

But what we are contending is it is not unrestricted so that it can be exercised without fair notice to parties that the appeal is going to be addressed in a different manner than that foreshadowed by the framework that has been created by the grounds of appeal ‑ the findings of fact in the reasons, the evidence that the parties have identified as relevant and the written submissions ‑ all of that in the context of specific requirements in the rules and practice direction about how an evidence‑based appeal is to be dealt with.  That is the general question that we are concerned with.  There is, of course, as your Honours will see a dissent by Justice Pullin who would have found in favour of the applicant.  There are other questions that the case ‑ ‑ ‑

KEANE J:   Does Justice Pullin provide any support for the view that the argument advanced by the appellant – now the respondent – at the hearing of the appeal was not open in terms of fairness?

MR HANCY:   Justice Pullin, at page 101 of the application book ‑ ‑ ‑

KEANE J:   Paragraph 111, I notice, his Honour concludes:

The trial judge did not err when he found ‘the plaintiff’s symptoms’ did not amount to an ‘illness’, that therefore there was no ‘disability’ –

MR HANCY:   Can I take your Honours back to pages 98 and 99?  The approach that his Honour took was that he correctly identified that this was a primary findings of fact appeal, so it was, effectively, a Warren v Coombes type of situation.  It was not a challenge to primary facts case.  So what his Honour has done is he has identified primary facts and he has set out a number of them, starting at about 37, paragraph 99 on page 98.  Then over to 99 through to item (f) you will see, importantly, what the trial judge found was that during the relevant period ‑ which was what this dispute was all about, the period of claimed incapacity and entitlement to payments ‑ the major depressive disorder was “in remission”.  So that was the finding.  Then he has added:

None of those findings are challenged.

So that includes the finding that it was in remission.  That is totally contrary to the approach taken by the majority because they have after the event treated that question as being one that was in issue in the appeal, but his Honour did not because that is certainly, we contend, the case.

There was reference in the hearing of the appeal to partial remission of a major depressive disorder, but no amendment to the ground of appeal, and certainly it was the impression of counsel at the time that it was not an issue that we were there to address.  That is his Honour’s view.  His Honour has not expressly addressed the issue of unfairness that we are agitating here, but this really exemplifies it.  This approach to the appeal was the one that the applicant thought it was turning up to court to address, not a different sort of appeal that from the applicant’s perspective emerged after the hearing and without notice.

So if I can go back also to the point you made about do we say the court could not deal with the DSM‑IV‑TR.  The answer is yes, if it is properly presented and we have notice of it and a chance to have argument about it and address it, because the arguments may well have been addressed in a way that would have affected the outcome.

If I could just give you some examples?  It is not apparent whether her Honour Justice McLure misunderstood fully the evidence of Dr Spear because she seemed to think that no one had seen the respondent as a psychiatrist or medical specialist before his payment ceased.  Well, that was not so; Dr Spear had.  Before payment ceased and before employment ceased, Dr Spear considered that the major depressive disorder was in remission, that is, he did not have a mental illness.

Her Honour seems to have thought he only formed that view after payment ceased and after the employment had ceased.  We may have argued if the issue had been raised on appeal – I am only to a degree speculating as a possibility here because the issue did not arise – that major depressive disorder in partial remission is not a disorder, by reference to the criteria that her Honour has set out in her reasons at page 86 of her judgment.

We might have contended that – we might have explored at trial, if it had been a case conducted this way at trial, that with the expert evidence whether major depressive disorder in partial remission is a disorder.  The way the case was approached at trial was essentially that the applicant relied on the DSM‑IV‑TR because it was prepared to concede that major depressive disorder ‑ ‑ ‑

FRENCH CJ:   Yes.

MR HANCY:   ‑ ‑ ‑ major depressive disorder under the American diagnostic criteria was a mental illness, but something falling short of that was not.  The respondent’s position was not that it relied on the DSM‑IV‑TR at all, whether a major depressive disorder or a major depressive disorder in partial remission, but rather that it did not matter what label you put on it.  You just looked at the symptoms and you could conclude from looking at the symptoms that that is an illness.

Had this issue been raised we might have referred the court to more of the evidence of Dr Spear, not merely the parts that her Honour extracted.  In addition, the more extensive evidence in the trial judge’s reasons, we may have gone to reports and transcript.  We may have referred and probably would have referred the court to the evidence of the general medical practitioner, Dr Downing, who her Honour did not refer to who also had a view at one point that the condition was in remission.

We may have taken the court to the diagnostic elements of major depressive disorder, which are at pages 70 and 71 of the application book, and contrasted those with the findings as to what the plaintiff’s symptoms were.  When that exercise is done there appear to be only two possible matches, and they are fatigue and diminished ability to concentrate.  As to the first, both the trial judge and Justice Pullin consider that they were the types of subjective feeling that everyone might experience as they grow older.  As to the reported problem of concentration, the evidence did not necessarily suggest that that was always there.  So there was quite a different approach that may have been taken to the way in which the appeal was prepared.  The material that was provided to the court ‑ ‑ ‑

FRENCH CJ:   Now, if you were to get special leave and if you were to succeed on the appeal, I notice that one of the orders you seek is remitted to the District Court.  I do not quite understand what the basis for that is. 

Presumably, if you were to succeed on the absence of a fair hearing, it would go back to the Court of Appeal, would it not?

MR HANCY:   Yes, I think so, yes.

FRENCH CJ:   All right, yes.  We will hear from Mr McIntyre.

MR HANCY:   For the moment, those are my submissions.

FRENCH CJ:   Thank you.  Now, Mr McIntyre, a lot of your submissions seem to go to what the Court of Appeal can do on a rehearing and the approach it took to various issues on the merits of the case, but the gravamen of the application goes to the denial of fair hearing which is mentioned briefly at paragraph 37.  I wonder if you could rather focus on that ‑ paragraph 37 of your response.

KEANE J:   Last page of the record.

MR McINTYRE:   Yes, your Honour.  I rather took it that the issue of denial of a fair hearing arose out of the general process by which the Court of Appeal dealt with the matter and that it was said generally that, having dealt with it in that way, there was a denial of fair hearing because, as my learned friend has said this morning, they say that they did not have any warning of the way in which the Court of Appeal was going to deal with the matter.

Now, the grounds of appeal in the Court of Appeal are set out in a couple of places in the book but at page 74 the first time.  Ground 1 was the principal ground which is the matter in issue here.  It is cast in fairly general terms that:

The learned trial judge erred in law and fact in concluding that the Plaintiff’s symptoms, while the Group Income Protection Insurance Policy Contract . . . issued to PricewaterhouseCoopers Services Pty Ltd as Trustee for the . . . Trust (“PWC”) was in force, did not constitute an illness within the terms of the Policy.

It was really a question of the proper interpretation of that policy, and it was a question of drawing inferences from the primary facts.  My learned friend is right to say that we did not challenge any of the primary findings of fact or, indeed, any of the evidence.  What we said this case was about, and what we say it is still about, is the question of drawing inferences from the primary facts found by the trial judge and applying those primary facts with the interpretation of the terms of the insurance policy.

It is important to recognise that the Court of Appeal upheld each of the grounds which are set out in the grounds of appeal ‑ did not need to deal with ground 5 effectively, dealt with grounds 2 and 3 together as if they were one because they are dealing with a similar issue.  The key ground was ground 1, and if you go to page 83 of the application book, paragraph 30 of President McLure’s judgment, you will see how the court dealt with the matter.  It refers to the way in which the court identified the issues in relation to ground 1.  Firstly, Justice McLure says that the appellant, which is the party I was representing:

interpreted the trial judge’s reasons to mean that the sole basis for the finding of no Illness was that some of the plaintiff’s symptoms were attributable to his personality type.  When the court suggested there may be a separate and independent basis, namely that the appellant’s major depressive disorder was in remission, the appellant contended the trial judge should have found that the disorder was in partial remission.  Although not expressly raised in the ground of appeal, the parties joined issue on that subject.

That is a key to the way that the Court of Appeal then dealt with the matter.  They understood that the parties were apprised of that being an issue arising out of ground 1 in the appeal, and then Justice McLure goes on to set out her reasons as to why that ground should be upheld.  We say that it does not go beyond drawing appropriate inferences, and then having drawn those inferences, it became appropriate for Justice McLure to then consider what was the appropriate result based on the findings of the trial judge.

We say that she did not ever go beyond what the trial judge found as principal facts based on the evidence, she just drew different conclusions by way of inference from those which the trial judge drew.  For example, over at page 85 of the application book, having recited earlier on in the page what the trial judge found, she said, at paragraph 36:

The trial judge does not identify the particular symptoms said to be attributable to the appellant’s personality type or why the other symptoms attributable to his major depressive disorder were not a disorder and therefore not an Illness.  If the distinction is relevant, such an omission would be a serious failure to provide adequate reasons.

However, I am satisfied that the distinction is not relevant.  The insurer must take an insured as it finds him or her, including their personality types and features –

et cetera.  What her Honour was doing was looking at what the trial judge found by way of primary findings, and drawing different inferences and different conclusions from those which the trial judge found.  She goes on at paragraph 38:

Further, it can be inferred that the trial judge did not regard the issue of partial or full remission as relevant to his finding of no Illness.  That inference is based on his failure to give a reasoned explanation for his conclusion that the appellant’s major depressive disorder was in remission.  The only evidence to that effect came from Dr Spear.

So there having reached the conclusion that the trial judge has come to the wrong inferences based on the primary facts in the way in which he has interpreted the insurance policy, she then considers what the facts are – the quotation at about lines 20 through to 30 is from a part of the transcript, part of which his Honour the trial judge quoted from.  She then, at paragraph 39, refers to the DSM‑IV‑TR.  It is correct that that is an activity of judicial notice in the sense that her Honour is considering what the content of that document is.  It is a scientific document.  The Court of Appeal was entitled to consider that, whether or not the other parties had referred to it specifically.

FRENCH CJ:   It is a classificatory document, is it not?  It sets out a taxonomy of various conditions, be they disorders or diseases, with criteria.

MR McINTYRE:   That is right, yes.  It is the kind of thing which has been referred to in the past.  At paragraph 25 of our written submissions I have referred to the case of Jaensch v Coffey where his Honour Justice Deane “referred to legal articles and medical journals, reports, bulletins” et cetera “in explaining the causes of psychiatric injury”.  So it is not an unusual thing for a court to do at appellate level and to consider documents of that kind.  It is on that basis that Justice McLure comes to the conclusion that she does at paragraph 41, saying:

Having regard to Dr Spear’s repeated diagnostic inconsistency and the fact that the trial judge did not accept Dr Spear’s explanation of the plaintiff’s symptoms, the overwhelming weight of the evidence is that during the relevant period the appellant suffered a major depressive disorder in partial remission –

That is the conclusion she reaches after looking at what his Honour, the trial judge, considered as part of the evidence and the findings of fact which she made, she has just drawn different inferences from the inferences which the trial judge drew.

KEANE J:   Not only that, Mr McIntyre, what her Honour has done is in paragraph 30 identify basically your ground 1 of your notice of appeal,

addressed that, concluded that ground in your favour and then gone on to address a second basis for sustaining the decision of the primary judge advanced, no doubt, by the other side and decided that against them.  But that is hardly something that can be laid at your door as a complaint in terms of fairness because all her Honour has done is address and reject an alternative basis for sustaining the primary judge’s conclusion.

MR McINTYRE:   I am happy to agree with that, your Honour.  Yes.  Her Honour has given this a thorough consideration, as an appeal court is entitled to do, and we would say that ‑ ‑ ‑

FRENCH CJ:   Well, I do not think we need to get into the question of what is the function of an appeal court on a rehearing.  You have set that out in your written submissions.  So if we can keep the focus on the fair hearing issue which is really at the centre of Mr Hancy’s argument.

MR McINTYRE:   Yes, your Honour.  Well, perhaps there is a complete answer in the exchange I just had a moment ago, and it also comes out of the fact, as Justice McLure indicates at paragraph 30, that this issue of whether the appellant’s major depressive disorder was in remission was a matter which was raised in the course of the hearing and was the subject of some discussion.  My learned friends cannot now complain that her Honour has articulated a detailed set of reasons as to why she would reach the conclusion that she did, even though perhaps they might not have been precisely matters which were discussed in complete and absolute detail during the course of the hearing.  Unless there is anything that your Honour thinks I have not addressed ‑ ‑ ‑

FRENCH CJ:   Yes, thank you, Mr McIntyre.  Yes, Mr Hancy.

MR HANCY:   Your Honours, there was no joinder of issue as her Honour put in her reasons.  The expression “partial remission” was referred to at the trial and it was raised in argument on the hearing of the appeal with the suggestion that the plaintiff’s symptoms might fall within that prescription, but it was not raised as a ground of appeal or in argument that that solved the problem, that their primary argument, which is that the symptoms themselves constituted an illness, is solved simply by putting that label on it.

In the trial a psychologist was cross‑examined about the term “partial remission” ‑ and this is in the reasons of the trial judge at page 27 of the application book, paragraph 108 ‑ but that was for the purpose of showing that there was not major depressive disorder because that was accepted by the applicant as an illness.  It was not done for the purpose of saying that major depressive disorder in partial remission is an illness.  She accepted – you will see in the middle of that paragraph:

‘the descriptor “partial remission” means that all of the symptoms have not yet abated for a long enough –

Now, that does not amount to an illness.  On the hearing of the appeal, yes, the term was used, but not in argument in the way that paragraph 30 of her Honour’s reasons would suggest, and your Honours should have received a copy of the transcript in case this did become necessary to refer to it, but this exchange occurred at pages 58 and 59 between Mr Murdoch for the applicant and Justices Pullin and McLure.  Justice Pullin at 58 said:

I understood you to say that the plaintiff’s case at trial was, in essence, that there were two major depressive episodes or, alternatively, if there wasn’t a second major depressive episode, that the symptoms that he had in 2011 were residual symptoms or symptoms that were a partial remission of the original serious depressive episode ‑

Mr Murdoch responded, without completing the answer ‑

That, your Honour, is correct.  That is how I read it and I would ‑ ‑ ‑

Well, Mr Murdoch, of course, was not the trial counsel and that was not the way in which the case was conducted.  But it went on.  Justice McLure then correctly pointed out ‑

It has only arisen because of the way the appellant put its case in opening this morning ‑ ‑ ‑

. . . 

McLURE P:   ‑ ‑ ‑ for the first time.

MURDOCH, MR:   Yes.

McLURE P:   And when I asked to say what the illness was, because it’s crucial.

MURDOCH, MR:   Yes.  And so that’s not an issue that we think that we’re dealing with.

McLURE P:   Yes.

That is the correct statement of the applicant’s position before the appeal, notwithstanding that there were references to the term “partial remission” on the hearing of the appeal and during the trial.

FRENCH CJ:   Thank you, Mr Hancy.

In our view, having regard to the grounds of appeal below and the way in which the issues were approached by the Court of Appeal, the prospects of success of an appeal if special leave were granted are not sufficient to warrant the grant of special leave.  Special leave will be refused with costs. 

The Court will now adjourn to reconstitute.

AT 12.17 PM THE MATTER WAS CONCLUDED