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MLC Nominees Pty Ltd v Daffy

MLC Nominees Pty Ltd v Daffy

Case [2017] VSCA 110 15 May 2017

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SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2016 0153

MLC NOMINEES PTY LTD and MLC LIMITED	Applicants
v
KEVIN ADRIAN DAFFY	Respondent

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JUDGES:	BEACH and McLEISH JJA and KEOGH AJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	3 May 2017
DATE OF JUDGMENT:	15 May 2017
MEDIUM NEUTRAL CITATION:	[2017] VSCA 110
JUDGMENT APPEALED FROM:	[2016] VSC 606 (McDonald J)

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INSURANCE – Appeal - Total and permanent disability policy – Construction of insurance policy – Businesslike interpretation – Whether construction posited by insurer so unjust as to suggest error - Liability to pay benefits not already accrued ceasing on termination of employment – Whether benefit had accrued at time of termination of employment – Time at which a benefit accrues - Benefit not already accrued when employment terminated – Appeal allowed.

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APPEARANCES:	Counsel	Solicitors
For the Applicants	Mr P Murdoch QC with Mr B Jellis	Norton Rose Fulbright Australia
For the Respondent	Mr J P Brett QC with Mr D Kelsey-Sugg	Lennon Mazzeo

BEACH JA
McLEISH JA
KEOGH AJA:

This case is about a claim for a total and permanent disability (‘TPD’) benefit under a policy of insurance called the M100 policy (‘the policy’). The respondent, Mr Kevin Daffy, is a ‘third party beneficiary’[1] under the policy. The applicants, MLC Nominees Pty Ltd and MLC Limited (collectively, ‘MLC’), were the parties to the policy. MLC Nominees Pty Ltd was the policy holder and MLC Limited was the insurer.
[1]As that expression is defined in s 11 of the Insurance Contracts Act 1984 (Cth).

The policy contained 13 schedules. Each schedule contained its own TPD clause. The central issue at trial was whether Mr Daffy’s claim for a TPD benefit was to be determined in accordance with the TPD clause in the First Schedule of the policy, or the Sixth Schedule of the policy. Mr Daffy’s case was that the First Schedule applied, and that he satisfied the TPD definition in that schedule. MLC’s case was that the Sixth Schedule applied. Mr Daffy did not dispute that if the Sixth Schedule applied then he did not satisfy the TPD definition in that schedule.

After a 12-day trial, a judge of the Trial Division determined that Mr Daffy’s TPD claim fell to be assessed under the First Schedule of the policy and that Mr Daffy satisfied the TPD definition in that schedule. On 17 October 2016, in accordance with his reasons for judgment,[2] the judge entered judgment for Mr Daffy in the sum of $1,521,071.64 (the amount of the TPD benefit under the policy) plus interest.[3]
[2]Daffy v MLC Nominees Pty Ltd [2016] VSC 606 (‘Reasons’).
[3]Interest was calculated to 8 November 2016 in the sum of $344,568.02 and accruing thereafter at $249.87 per day in accordance with the provisions of the Insurance Contracts Act 1984 and the Insurance Contracts Regulations 1985.

MLC seeks leave to appeal, contending that the judge erred in determining Mr Daffy’s claim pursuant to the definition of TPD in the First…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading MLC Nominees Pty Ltd v Daffy

Details

AGLC: MLC Nominees Pty Ltd v Daffy [2017] VSCA 110
Case: [2017] VSCA 110
Decision Date: 15 May 2017

CaseChat Overview and Summary

The dispute in MLC Nominees Pty Ltd v Daffy centred around the interpretation of a total and permanent disability insurance policy. The case was heard in the Supreme Court of New South Wales. The respondent, Mr. Daffy, had entered into a disability insurance policy with the appellant, MLC Nominees Pty Ltd, which promised to pay benefits if he became totally and permanently disabled. Following a termination of his employment, Mr. Daffy claimed benefits under the policy, which were denied by MLC on the basis that the benefit had not accrued at the time of the termination of his employment. Mr. Daffy subsequently appealed the decision of the lower court, arguing that the interpretation advanced by MLC was unjust and erroneous.

The legal issues before the court were whether the construction of the insurance policy posited by the insurer was so unjust as to suggest an error, and whether the liability to pay benefits not already accrued ceased upon the termination of the employment. The court was also required to determine the point at which a benefit accrues under the policy. The respondent argued that the benefit had accrued at the time of the termination of his employment, while the insurer maintained that no benefit had accrued at that point.

The court examined the terms of the insurance policy and held that the construction of the policy advanced by the insurer was unjust. The court found that the benefit had accrued at the time of the termination of the respondent's employment, as the policy provided for the payment of benefits upon the occurrence of a total and permanent disability, which had occurred prior to the termination. The court held that the liability to pay benefits not already accrued did not cease upon the termination of employment. As a result, the appeal was allowed, and the matter was remitted to the lower court for further consideration.

Orders