Metlife Insurance Ltd v Visy Board Pty Ltd

[2007] NSWSC 1481

CITATION:	Metlife Insurance Ltd v Visy Board Pty Ltd & 25 ors [2007] NSWSC 1481
HEARING DATE(S):	12 November 2007
JUDGMENT DATE :	13 November 2007
JURISDICTION:	Equity Division Expedition List
JUDGMENT OF:	Brereton J
EX TEMPORE JUDGMENT DATE:	13 November 2007
DECISION:	Rectification ordered
CATCHWORDS:	EQUITY – Rectification – Insurance policy – test for rectification – whether certainty is required as to meaning as opposed to form of omitted words – comparative weight of pre-contractual and post-contractual evidence – significance of evidence from participants or absence thereof – where contract negotiated through agent – whether evidence of principal necessary – discretionary considerations
CASES CITED:	Australasian Performing Right Association Limited v Austarama Television Pty Limited [1972] 2 NSWLR 467 Australian Gypsum Limited v Hume Steel Limited (1930) 45 CLR 54 Australian Gypsum Ltd v Australian Plaster Company Ltd (1930) 45 CLR 54 Bush v National Australia Bank (1992) 35 NSWLR 390 Fowler v Fowler (1859) 45 ER 97 Maralinga Pty Limited v Major Enterprises (1973) 128 CLR 336 Pukallus v Cameron (1982) 180 CLR 447 Sayseng v Kellogg Superannuation Pty Limited [2003] NSWSC 945 Spry, Equitable Remedies, 5th ed.
PARTIES:	Metlife Insurance Limited (plaintiff) Visy Board Pty Limited (1st defendant) Visy Paper Pty Limited (2nd defendant) Visy Board Superannuation Pty Limited (3rd defendant) Arpad Kozma (4th defendant) Colin Frewen (5th defendant) Reginald De Livera (6th defendant) Stephen Smith (7th defendant) Florian Karwacki (8th defendant) Sylvia Kleinman (9th defendant) Oscar Marconi (10th defendant) Petru Suciu (11th defendant) Thomas Hall (12th defendant) Mark Williams (13th defendant) Concetta Tedesco (14th defendant) Don Rakoci (15th defendant) Slako Gorguc (16th defendant) Shane Rogers (17th defendant) Maurice Rafidi (18th defendant) Edward Denko (19th defendant) Maria Drago (20th defendant) Milenco Baloi (21st defendant) Cane Mickovski (22nd defendant) Eyup Turkoglu (23rd defendant) Ugur Arslan (24th defendant) Gregory Sabitino (25th defendant) Ramadan Salievski (26th defendant)
FILE NUMBER(S):	SC 6399/06
COUNSEL:	I M Jackman SC (plaintiff) B G Haines (sol) (1st - 3rd defendants) R E Montgomery (4th - 26th defendants)
SOLICITORS:	Deacons (plaintiff) Holding Redlich (1st - 3rd defendants) Maurice Blackburn Cashman (4th - 26th defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BRERETON J

Tuesday 13 November 2007

6499/06 Metlife Insurance Ltd (formerly known as Citicorp Life Insurance Limited) v Visy Board Pty Limited & 25 Ors

JUDGMENT (ex tempore)

1 HIS HONOUR: The plaintiff Metlife Insurance Ltd, formerly known at Citicorp Life Insurance Ltd, was the insurer, and the first and second defendants, Visy Board Pty Limited and Visy Paper Pty Limited, were the policy owners and employers, under a Salary Continuance Insurance plan issued by Citicorp Life with effect from 1 September 1998, by which the insurer agreed, subject to the terms and conditions of the policy, upon a member (defined as an employee of the policy owners) suffering disability (as described in the policy), to pay the policy owners specified amounts of insurance which, upon receipt, the policy owner would hold on trust for the member, for so long as disability of the member continued (except during an initial waiting period) until the first to occur of various cessation events (including death, and the expiry of the benefit period defined in the Schedule to the policy). The benefit period was defined in the Schedule as "67 years". Metlife claims orders that the policy be rectified, to the intent that the benefit period be defined as “until 65 years of age or the member is earlier totally and permanently disabled”, and elaborate machinery provisions inserted. Visy Board and Visy Paper and the third defendant, Visy Board Superannuation Pty Limited (the trustee of the Visy Board Employees Superannuation Fund) submit to the relief sought. However, the relief is opposed by the fourth to twenty-sixth defendants, who are former or current employees of the Visy companies in receipt of salary continuance insurance payments.

The Group Life Policy

2 From 15 July 1992, Citicorp Life provided group life insurance to full time employees of Visy Board who were nominated by the policy owner – the trustees of the Visy Board Employees Superannuation Fund (the third defendant). Under the Group Life policy, benefits were payable in the event of death, total temporary disablement, or total permanent disablement. Total permanent disablement was defined in the following terms:

Total and Permanent Disablement shall mean:

(a) The Member suffering the loss of use of two limbs or the sight of both eyes or the loss of use of one limb and the sight of one eye (where limb is defined as the whole hand or the whole foot), or

(b) The Member having been absent from their Occupation with the Employer through Accident or illness for six consecutive months and having provided proof to our satisfaction that the Member has become incapacitated to such an extent as to render the member unlikely ever to engage in any gainful profession, trade or occupation for which the member is reasonably qualified by reason of education, training or experience.

3 Clause 4 of the Group Life policy provided as follows:

Death and TPD Benefits

If whilst this Policy is in force a Member:

(a) dies; or

(b) suffers from TPD.

then subject to the provisions of this Policy we will pay to the Policyowner the Sum insured for that Member.

4 As well as that cover under the Group Life policy, the Superannuation Fund provided salary continuance cover on a voluntary basis for employees of the Visy group.

Negotiations for Salary Continuance Insurance

5 On 27 February 1998, Buck Consultants, who were insurance brokers, requested Citicorp Life to provide rates for salary continuance insurance for all employees, as the Visy Group was considering providing such cover in lieu of the voluntary salary continuance cover.

6 On 9 March 1998, Citicorp Life replied to Buck Consultants, relevantly as follows:

Further to your letter dated 27 February 1998, I now have pleasure in setting out below our quotation for the provision of salary continuance benefits for members of the Fund.

1. Plan Design

No. Of Lives: 1,952
Total Salary: $82,232,587.13
Waiting Period: 30 & 90 days
Benefit Period: To age 65, ceasing on TDP
Insured Percentage of Payroll: 75%
Maximum Benefit: $20,000 member per month
Indexation Rate: 5% per annum (subject to
CPI maximum)

Superannuation Contribution Rate: 15%

2. Premiums

Benefit Design	No. of Lives	Sum Insured	Rate	Premium
90 day waiting period	1,952	$74,009,328.42	0.212%	$156,899.78
30 day waiting period	1,952	$74,009,328.42	0.212%	$431,474.39

The unit rate would be guaranteed from inception for a period of three years providing the number of lives does not fluctuate by more than twenty-five per cent within the guarantee period, and the benefit and waiting periods remain unchanged.

In the event the number of lives falls below 50 the unit rate will be replaced by age specific rates of premium.

The premiums quoted are net of stamp duty which would be charged to the client as a separate item.

The premiums quoted above are net of all commission and there are no additional expense or administration charges.

We would be pleased to accept premiums by 12 equal instalments subject to an additional 6% per cent of the premium quoted.

7 It is material to note that, under the heading "Plan Design", the benefit period was specified as "To age 65, ceasing on TPD".

8 By facsimile from Greg Taylor at Buck Consultants to Katy Motteram at Citicorp Life on 13 August 1998, Buck Consultants wrote:

Re: Pratt Industries employees -
As discussed, Pratt Industries will proceed with the disability plan as quoted in Stephanie's letter of 9/3/98 ie 90 percent of the earnings (as defined in the voluntary plan) payable to 65, ceasing on TPD with 5 percent CPI indexation - 90 day wait.

9 It is of significance that the reply indicated an intention to proceed with the plan "as quoted" in the letter of 9 March 1998, including "ceasing on TPD".

10 By letter dated 14 August 1998 from Ms Motteram at Citicorp Life to Mr Taylor at Buck Consultants, Citicorp Life wrote:

Further to your letter dated 13 August 1998, I now have pleasure in confirming our acceptance of the above cover, effective from either 1 September 1998 or 1 October 1998, whichever is nominated.

11 The letter also requested provision of several further documents, including "a completed group scheme questionnaire”.

12 On 25 August 1998, Mr Perry Zoelfel, the General Manager Human Relations of the Visy Group, signed a scheme questionnaire, which contains his handwriting in answer to many of the questions, and Mr Taylor's handwriting in answer to the others. I draw this conclusion from a comparison of the previously unidentified handwriting on the scheme questionnaire, to other handwriting, which is indisputably that of Mr Taylor. Those questions to which Mr Zoelfel apparently responded are marked with an "X" in pencil in the margin. I infer that the form was initially completed – as to questions 1, 9, 11, 13 and 16 – by Mr Taylor, who had the information required to answer those questions from his correspondence with Citicorp Life, and then forwarded to Mr Zoelfel at Visy Group for completion of the other questions, they being marked with an "X" in the margin to indicate where completion was required. Mr Zoelfel then completed and signed the questionnaire, which was returned to Citicorp Life. Item 13 of questionnaire asks for the benefit period to be specified. The box "To age 65" was ticked, and there was inserted in Mr Taylor's handwriting "To age 65 or earlier TPD". It follows that Mr Zoelfel signed the questionnaire containing that matter.

The SCI Policy

13 The Salary Continuance Insurance policy commenced on 1 September 1998. It defined the "benefit period" as the period stated in the First Schedule during which benefits are payable. The First Schedule, in its then form, stated the benefit period to be "65 years". Clause 4 provided as follows:

4. Disability Benefit

We will pay a Proportionate Benefit where:

(a) a Member resumes Employment after a period of Disability during which Disability or Disability by Accident Benefits were paid under this Policy;

(b) the Member receives a reduced Monthly Income; and

(c) the reduction in Monthly Income is as a result of the Member's Injury or illness requiring the member to resume Employment:

(i) in the Member's usual Occupation on a restricted basis; or

(ii) in a different occupation.

The Proportionate Benefit will be equal to the Insured Percentage of the Member's loss of Monthly Income. The Proportionate Benefit will be payable for so long as these circumstances exist subject to the expiry of the Benefit Period in respect of that Member.

14 Clause 12 provided:

12. Limitation on Amount of Benefits

12.1 We will reduce the level of any Benefit payable where during that period the Member is:

(a) in receipt of any payments made under other policies of a similar nature; or

(b) entitled to worker's compensation benefits (whether paid or not).

The reduction shall be sufficient to ensure that the Benefit payable together with the aggregate of the other payments or entitlements shall not exceed the insured Percentage of Monthly Income.

12.2 When a Member's worker's compensation entitlement is in dispute we will pay the full amount of the Benefit on a conditional basis until the dispute is resolved. If the Member is successful and is declared entitled to compensation benefits it is a condition of this Policy that the Policyowner shall repay to us that part of any Benefit which would otherwise not have been paid if not for the conditional payment. We may at any time obtain payment of this amount by off-setting it against any amounts that may subsequently become due to the Policyowner.

15 Clause 13 was as follows:

13. Cessation of Liability

Notwithstanding any other provision contained in this Policy, our liability to pay any Benefits which have not already accrued in respect of a Member shall cease upon the occurrence of the earlier of any of the following events:

a) upon the death of the Member;

b) on the day before the Member commenced duty with the Armed Services of any country;

c) upon the expiry of the Benefit Period in relation to that Member;

d) upon the Annual Review Date immediately after the Member attains the Maximum Insurable Age;

e) 30 days from the date the Member ceases to be Employed by the Employer;

f) where any premium or instalment of premium has not been paid, 30 days from the Due Date for payment of that amount;

g) upon the cancellation or termination of this Policy for any reason; or

h) any other event or matter referred to in the First Schedule or by way of Special Condition.

16 On 4 December 1998, Ms MacDonnell at Bucks wrote to Ms Motteram of Citicorp Life, having received the policy document that day. Ms MacDonnell had been involved in the earlier correspondence and was the author of the letter of 27 February 1998 requesting a quote, and the addressee of the quote of 9 March 1998. She observed that the policy document showed an incorrect definition of "monthly income". She also recorded that the First Schedule omitted to include the Superannuation Contribution Cover of an additional 15 percent. She further observed that the Automatic Acceptance Provision on page 2 of the policy stipulated that employees would be accepted for membership if carrying out their occupation on a full time basis, and that that term was not defined in the policy. Significantly, Ms MacDonnell's letter did not make any observation about the omission from the definition of the benefit period of any reference to “ceasing on TPD”.

17 Some time in December 1999, the Visy Group published a "Member Information Booklet" in respect of the Visy Industries Salary Insurance Plan. It stated, relevantly:

The monthly plan benefit will be payable up to age 65 to any member who, because of illness or injury, is unable to work for more than 30 consecutive days
...
Disability payments will cease at age 65, or upon your earlier ability to return to work, or your death. However, if your disability becomes permanent and a total and permanent disablement claim is accepted by the Superannuation Fund, then monthly disablement income payments from this Salary Continuance Plan will cease and a lump sum benefit will be paid to you from the Superannuation Fund
...
The insurance cover ceases upon the earliest of:

· 30 days after you leave the service of the company.
· when you attain age 65
· the date of your death
· the date a total and permanent disablement claim is accepted by the Pratt Industries Employees Superannuation Fund.

18 The SCI policy was terminated on 30 June 2001, when the Visy Group obtained salary continuance insurance elsewhere. In 2001, Metlife's Claims Manager, Andrew McFarlane, who was then its Group Claims Supervisor, ascertained that the First Schedule to the SCI policy omitted any reference to benefits ceasing on payment of the TPD benefit, and purported to amend the First Schedule on 11 September 2001 so as to define the benefit period as "65 years (ceasing on payment of TPD)".

Rectification of Instruments

19 The requirements of a claim for rectification were not significantly in dispute in these proceedings. For present purposes, they can be sufficiently summarised by reference to the judgment of Wilson J in Pukallus v Cameron (1982) 180 CLR 447, 452, where his Honour said that the essential principles were (1) that though there need not be a concluded antecedent contract, there must be an intention common to both parties at the time of the contract to include in their bargain a term which by mutual mistake is omitted from it; (2) that a plaintiff must advance convincing proof that the written contract does not embody the final intention of the parties; and (3) that the omitted ingredient must be compatible of such proof in clear and precise terms, so that the Court must not assume for itself the task of making the contract for the parties.

20 As to the requirement for proof of the omitted ingredient in clear and precise terms, in Bush v National Australia Bank (1992) 35 NSWLR 390 Hodgson J (as his Honour then was) said (at 407):

A further difficulty which may arise when rectification is sought on the basis of a common mistake as to the legal effect of words is that the court cannot draft an agreement for the parties, to give effect to some intention of the parties which they have totally failed to accomplish with the words they have chosen. It is necessary that the common intention be such that the court can conclude, with the appropriate clarity, both the substance and the detail of the precise variation which needs to be made to the wording of the instrument: see Pukallus v Cameron (1982) 180 CLR 447 at 452; GPI Leisure Corporation v Herdsman Investments Pty Limited (No 4), Young J, 17 August 1990, at [9]-[14]).

21 It is instructive that in this passage Hodgson J was concerned with the detail of the precise variation to be made to the wording of the instrument. In Pukallus v Cameron, which his Honour cited, three cases were mentioned as supporting the requirement for proof in precise terms of the omitted ingredient, including Australian Gypsum Limited v Hume Steel Limited (1930) 45 CLR 54, and Maralinga Pty Limited v Major Enterprises (1973) 128 CLR 336, 349. Both those cases in turn referred to the speech of Lord Chelmsford in Fowler v Fowler (1859) 45 ER 97, in which his Lordship said the claimant for rectification must establish clearly "that the alleged intention to which he desires [the instrument] to be made conformable continued concurrently in the minds of all parties down to the time of its execution, and also must be able to show exactly and precisely the form to which the deed ought to be brought”.

22 Again, this illustrates that what must be shown with precision is the form which the instrument ought to have taken – that is to say, the words which ought to have been inserted in or omitted from it. Thus precision is required as to the words to be used, rather than the meaning of those words: rectification is concerned with the form of the instrument, as opposed to its meaning. Meaning is a matter of construction, not rectification, and ambiguity in the meaning of agreed words is not a bar to rectification, if they were, in fact, the words that the parties intended to use. Any such ambiguity can be resolved by the process of construction.

Should the SCI policy be rectified?

23 The starting point is the pre-contractual evidence. The context was that there was an existing Group Life policy, covering employees for total and permanent disablement, between Citicorp Life and the third defendant Visy Board Superannuation, under which the first defendant Visy Board was also the employer. There were also in place arrangements for voluntary salary continuance insurance. What was mutually contemplated was the introduction of universal salary continuance insurance – thus the request for and provision of a quote. The request for a quote, as its name suggests, sought the terms – and perhaps more particularly the price – for that insurance. The quote, when provided, was plainly expressed to be offered on the basis of a benefit period "to age 65, ceasing on TPD". The acceptance of that quote was plainly expressed to be in accordance with the plan "as quoted" in the letter of 9 March 1998, including "ceasing on TPD".

24 The scheme questionnaire was submitted in response to the letter of acceptance, and when completed and signed by Visy’s General Manager Human Relations, specified a benefit period "to age 65 or earlier TPD". It was dated 25 August 1998, less than a week before the date on which the policy commenced, on 1 September 1998. The policy itself refers to the questionnaire, in item 2 in the First Schedule.

25 The pre-contractual correspondence therefore strongly favours the view that the parties negotiated, quoted and accepted on the basis that the benefit period would be expressed to be to age 65, ceasing on total and permanent disablement.

26 However, there is a contrary indication in the post-contractual evidence. The letter of 4 December 1998, to which I have referred, is some evidence that a person who had been involved in the negotiations for the policy did not notice any deficiency in the schedule, even though she obviously examined it with care for deficiencies.

27 On the other hand, other post-contractual communications – including correspondence between Buck and Citicorp Life in relation to, and pertaining to consideration of, claims by employees – indicate that the idea of salary continuance cover terminating upon an employee being assessed as totally and permanently disabled was then current, but it does not necessarily show that it was current at the time of the negotiations for the contract, although it can be said that there is nothing in that material – aside from the letter of December 1998 – which is inconsistent with the view that salary continuance cover would terminate on total and permanent disablement. As I indicated in a judgment given on the admissibility of evidence, however, although post contractual conduct from which an inference can be drawn that the parties had, at the time of entering into the transaction, a particular intention, is admissible, it is necessary to exercise considerable caution in the use of that evidence, because it may provide no evidence of the intention prior to and at the time of execution, but only of a later intention which may not have been in existence at the time of execution. Some of the post-contractual evidence in this case appears to involve an acceptance by Buck of a post-contractual assertion by the insurer of its position, rather than a common intention of the two. For that reason, I attribute little significance to the post-contractual evidence, other than the letter of December 1998.

28 For the opposing defendants, great reliance has been placed on the absence of oral or affidavit evidence from any person who was involved in the negotiations as to what was their intention at the time. In the context of this case, I do not find that submission compelling. The evidence that such witnesses could give of his or her intention, years after the event, would be of a subjective intention of one party (not of contractual intention, objectively ascertained), and would be coloured by their current interests – or those of their employers – in these proceedings. The contractual intent of the parties is best ascertained, not by what a witness says, years after the event, was then their subjective intention, but objectively from their communications and conduct at the time. The best evidence in this case of the parties’ contractual intention is to be found in the communications that passed between them at the time, and not what anyone might say on their behalf was subjectively their intention many years later.

29 As I indicated in dealing with an objection to the admissibility of evidence, the communications which took place at the time of the pre-contractual negotiations are not admitted in exception of the hearsay rule or for a hearsay purpose. They evidence the negotiations which actually took place, which manifest the then common intention of the parties. The quote and the response to it evidence an offer and an acceptance which, even if not intended to be contractually binding, manifest the type of consensus required to found a case for rectification, as described by Street J (as he then was) in Australasian Performing Right Association Limited v Austarama Television Pty Limited [1972] 2 NSWLR 467, 472-473.

30 It was also pressed on behalf of the defendants that in the absence of evidence from the principals – namely, an officer of the Visy Group – a case for rectification could not be proved based on what an agent – namely, Bucks – had done. I am amply satisfied that Bucks were Visy's duly authorised agent for the purposes of negotiating salary continuance insurance with Citicorp Life. The correspondence, though not containing the precise statement, "We act on behalf of the Visy Group", is captioned in such a way as reflects Bucks acting on behalf of the Visy Group. The inferences which I have drawn as to the completion of the scheme questionnaire – including Mr Taylor's handwriting on it, and the subsequent signature of it by Visy's Manager Human Relations – confirms the authority of Bucks as Visy’s representative. In any event, the ultimate issue and acceptance of the policy, and Visy’s subsequently making claims on it, is ratification of Buck's authority to negotiate that policy on behalf of Visy.

31 Reliance was placed on the judgment in the High Court of Australia in Australian Gypsum Ltd v Australian Plaster Company Ltd (1930) 45 CLR 54 for the proposition that, in the absence of evidence of communications between Bucks and the Visy Group about the benefit period provision, the plaintiff had failed to establish that the schedule was expressed in its existing form by reason of mutual mistake. However, on closer examination, Australian Gypsum is really concerned with quite a different point. In that case, terms had been added to a document by solicitors or their agents, and the document was thereafter executed by the principal without reading or adverting to the added terms. The High Court held that the draftsman – the solicitor who was acting wholly in the interests of his client – must be taken to have appreciated the effect of the terms that he inserted, and that in the absence of evidence from the principals of some communication between solicitor and principals about it, it had not been proved that what the solicitor had inserted was inserted by mistake. The Court said (at 67):

The respondent cannot establish, as it must to succeed, that down to the execution of the instrument, the appellant ... by its officers, solicitors, or agents authorised in that behalf intended that the term of sublease should not include a minimum period of four years. It, therefore, failed to prove that the instrument was expressed in its present form by reason of a mistake which was mutual.

32 It is implicit in that passage that when a contract is negotiated by a duly authorised agent, then the intention of a party’s "officers, solicitors, or agents authorised in that behalf" is relevant for the purposes of a rectification case.

33 Ultimately, the pre-contractual evidence to which I have referred very strongly favours the view that it was the common intention of the parties that the benefit period in the Schedule be expressed in terms of being "to age 65, ceasing on TPD." Although the December 1998 letter is to the contrary, its effect is by omission – what it does not refer to – rather than by any specific reference, and it is just as easily explained by Ms MacDonnell not having detected the omission as by her having accepted that it was never intended to be there in the first place. To my mind, the weight of the pre-contractual evidence is overwhelming. The parties intended to define the benefit period as ceasing on TPD.

34 That leaves the requirement for precision. At the outset, I reject the proposition that the elaborate clause for which Metlife contends in claim 2 of its Amended Summons can be inserted by way of rectification. There is no basis for thinking that the parties ever turned their mind to, or formulated a common intent that, any such elaborate clause be inserted. It is clear that what they intended was that, rather than "65 years" appearing in the Schedule, the words "age 65, ceasing on TPD" were to appear.

35 To that extent, I am satisfied that a case for rectification is made out. As I have foreshadowed, a case for rectification does not require that the parties have agreed on the meaning of the words omitted, but rather that there was agreement on the words that ought to have been in the instrument. Meaning is to be resolved by the process of construction, not rectification. Ambiguity is not equivalent to uncertainty, and is not a bar to rectification if the parties were agreed on the form that the instrument ought to have taken.

What does the rectified policy mean?

36 That then leads to the question of construction: which is the meaning of the words "age 65, ceasing on TPD" in the rectified contract? Again, context is provided by the TPD policy. By inserting the words "ceasing on TPD" the parties meant no more than "ceasing on the member becoming totally and permanently disabled”. They did not further address the content of the phrase “totally and permanently disabled”, because they did not need to: that concept was already understood by them, by reason of the pre-existing TPD policy.

37 Nor did they address the process by which TPD would be established. In distinction from the TPD policy, in which TPD was a matter which a claimant would have to prove to become eligible for a benefit, in the SCI policy TPD was a terminating event, which the insurer would have to prove to justify cessation of benefits. Accordingly, although I accept that the parties plainly had in mind the concept of total and permanent disablement under the TPD policy, they did not have in mind the process of proof referred to in that policy. They simply specified TPD, as a matter of fact, as an event of cessation. As Bryson J explained in Sayseng v Kellogg Superannuation Pty Limited [2003] NSWSC 945, contractual entitlement depends primarily on the facts, and not on the means of ascertaining them:

The grounds upon which the opinion of an insurer may be challenged are generally similar but the consequences of a successful challenge are more radical. The Court regards the reference to the insurer’s opinion, in the context of a contract of insurance, as means adopted by the parties for ascertainment of the facts to which the opinion relates: contractual entitlement depends on the facts, not, primarily, on the opinion which is the means of ascertaining them, …

38 In the context that a claimant has, in effect, the burden of proving a claim that he or she is totally or permanently disabled, it is understandable that a definition of “total and permanent disablement” would contemplate proof to the insurer's satisfaction, as does the definition in the TPD policy. The same cannot be said, however, in the context of the insurer having the onus of proving total and permanent disablement as an event of cessation. In my view, the reference in the Schedule to cessation on total and permanent disablement contemplates satisfaction of the requirements of the definition in the TPD policy objectively, rather than to the satisfaction of the insurer.

Should relief be declined on discretionary grounds?

39 For the defendants, it has been argued that relief by way of rectification should be declined as a matter of discretion. As Spry points out in Equitable Remedies, 5th ed, p 616, the discretion of the Court to decline rectification as an equitable remedy involves different considerations from those that arise in cases of specific performance (and for that matter injunctions), where ordinarily the plaintiffs are entitled to alternative relief in damages. That is because, if rectification is refused, the document remains in existence in an uncorrected form, and generally there is no available alternative relief.

40 It is clear that mere delay is insufficient, although laches and acquiescence may justify declining relief. It is not enough to justify declining relief that rectification will cause hardship or prejudice to the defendant merely because performance on his part under the rectified document is more difficult than under its original form.

41 In this case, emphasis has been placed on the circumstance that, although they are third parties to the contract, the employee defendants would have standing to sue for benefits under the contract of insurance, as Hannover v Sayseng establishes. While that is so, their entitlement to sue must be on the true contract, not on an instrument which wrongly records the terms of the contract. I also accept that if the evidence established that third parties – including the employee defendants – had in some way relied to their detriment on the contract in its unrectified form, that may have provided a powerful discretionary defence to rectification. However, there is not the slightest evidence that any of the fourth to twenty-sixth defendants did rely to their detriment on the contract in its unrectified form. The highest the evidence goes is the Member Information Booklet, but there is no evidence as to the extent of its circulation, let alone that any defendant read or relied on it. Even if it could be inferred that it was circulating amongst employees of the Visy Group, it did refer to cessation on total and permanent disablement – although in doing so, it contemplated a claim under the total and permanent disablement policy, which potentially suggests that it would arise only if an employee wished to make a TPD claim. However, in the absence of any evidence of detrimental reliance on the instrument in its unrectified form, a case for refusing relief on discretionary grounds has not been made out.

Orders

42 For the foregoing reasons, I make the following orders:

(1) Order that the Citicorp Life Insurance Group Salary Continuance Insurance Policy No CGD 8096 be rectified by substituting in the First Schedule, item 4, Benefit Period, for the matter "65 years", the matter "to age 65, ceasing on TPD".

(2) Declare that upon the proper construction of Group Salary Continuance Insurance Policy No CGD 8096, as rectified, the benefit period referred to in item 4 in the First Schedule expires on the earlier of a member attaining 65 years of age or:

(a) suffering the loss of use of two limbs or the sight of both eyes or the loss of use of one limb and the sight of one eye (where limb is described as the whole hand or the whole foot), or
(b) having been absent from his or her occupation with the employer through accident or illness for six consecutive months and having become incapacitated to such an extent as to render the member unlikely ever to engage in any gainful profession, trade or occupation for which the member is reasonably qualified by reason of the education, training or experience.

(3) Order that the summons be otherwise dismissed.

43 Prima facie, the plaintiff has substantially, though not entirely succeeded, and the opposing defendants should pay the plaintiff’s costs, but I will reserve leave to the parties to apply for some other costs order, if so minded. For that purpose, I would not regard the defendants as bearing any particular onus to set aside that order; I would embark on the costs issue afresh.

(4) Order that the 4th to 26th defendants pay the plaintiffs' costs.

(5) Reserve leave to the parties to apply to set aside order 4 and for some different costs order in its place.

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