Nangami v TAL Life Limited (Ruling)
[2013] VCC 583
•27 May 2013 (Revised)
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE CIVIL DIVISION | Revised Not Restricted Suitable for Publication |
DAMAGES AND COMPENSATION LIST
GENERAL DIVISION
Case No. CI-12-02037
| MICHA NANGAMI | Plaintiff |
| v | |
| TAL LIFE LIMITED (formerly TOWER AUSTRALIA LTD) (ACN 050 109 450) | Defendant |
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JUDGE: | His HONOUR JUDGE MISSO | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 24 May 2013 | |
DATE OF RULING: | 27 May 2013 (Revised) | |
CASE MAY BE CITED AS: | Nangami v TAL Life Limited (Ruling) | |
MEDIUM NEUTRAL CITATION: | [2013] VCC 583 | |
RULING
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Subject:PRACTICE AND PROCEDURE
Catchwords: Application to amend Defence to plead fraud – application made on 24 May 2013 – trial scheduled for 4 June 2013
Legislation Cited: Insurance Contracts Act 1984 (Cth), s21(1)(a) and s21(1)(b); Civil Procedure Act 2010, s29(2), Parts 2.1, 2.2, 2.4 and 4.1
Cases Cited:AON Risk Services Australia Limited v Australian National University [2009] 239 CLR 175; Cement Australia Pty Ltd v Australian Competition and Consumer Commission (2010) 187 FCR 261; Hitchens v Zürich Australia Ltd [2011] NSWSC 1198
Ruling: The summons is dismissed.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr P Bingham | Maurice Blackburn |
| For the Defendant | Mr Hanson | Turks Legal |
HIS HONOUR:
Introduction
1 By a Summons dated 1 May 2013, the defendant seeks the leave of the Court to amend its Defence substantially in the form of Exhibit “PSM-1” to the affidavit of Mr Peter St Quintin Murray, Solicitor, sworn 1 May 2013. The application was resisted by the plaintiff.
2 Mr P Bingham of counsel appeared for the plaintiff, and Mr C Hanson of counsel appeared for the defendant.
3 The affidavit material relied upon by Mr Bingham and Mr Hanson is as follows:
· the affidavit of Mr Murray referred to above.
· The affidavit of Mr Tom Cobban, Solicitor, affirmed 16 May 2013.
The proceeding
4 I have gleaned the following from the pleadings and the affidavit material:
· The Writ is dated 3 May 2012. The copy in the file does not bear a date on which it was filed.
· The only procedural orders made in this proceeding, as far as I can ascertain from the file, were made on 4 September 2012 based upon Minutes of Proposed Consent Orders dated 13 July 2012. The orders provide, among other things, for a trial date on 4 June 2012 with an estimate of 5 to 7 days.
· The plaintiff secured an “Accelerated Protection-Ordinary” policy numbered 9007 1056 from the defendant. The policy, among other things, provided the plaintiff with benefits as for total and permanent disability.
· The plaintiff ceased work on 12 August 2009 because of medical conditions which she contracted.
· The medical conditions have allegedly rendered the plaintiff unlikely to be able to work in any occupation within the meaning of the policy entitling her to benefits for total and permanent disability.
· Furthermore, the plaintiff alleges that by reason of the medical condition, she is entitled to an income protection benefit.
· The defendant filed a Defence dated 9 July 2012, in which it took issue with the claim as pleaded by the plaintiff. It is unnecessary for me to describe the Defence in any great detail except to say that in combination with the Statement of Claim, it defined the issues which the Court would be required to determine.
· The plaintiff filed and served and Affidavit of Documents dated 7 November 2012. The defendant took discovery of those documents which it considered relevant.
· The plaintiff filed and served a Supplementary Affidavit of Documents dated 4 April 2013.
· By a letter dated 12 April 2013, the defendant requested that the plaintiff discover some of those documents. The plaintiff provided those documents on 16 April 2013. Among those documents were three medical reports which the defendant contends confirmed its opinion that the plaintiff was guilty of fraudulent non-disclosure and/or fraudulent misrepresentation, entitling it to avoid the policy pursuant to s29(2) of the Insurance Contracts Act 1984 (Cth).
The relevant documents
5 Mr Hanson submitted that the documents which confirmed the defendant’s opinion that the plaintiff was guilty of fraudulent non-disclosure and/or fraudulent misrepresentation are set out in the letter of Turks Legal to Maurice Blackburn dated 23 April 2013:[1]
“A medical report prepared by Mr Peter Scott, Senior Consultant Surgeon, dated 12 April 2012, in which Mr Scott states that the plaintiff's ‘last job was with Cotton On Pty Ltd as a fashion designer for two years until she resigned because of development of problems in about 2009 of nervousness and tremor and sweating and weakness and some hoarseness of voice and some diarrhoea and gradual protrusion of the eyeballs …’
A medical report of Dr Emmanual Nnopu of the Gateway Plaza Family Medical Practice dated 2 February 2013 where in he states that the plaintiff’s ‘incapacity commenced since January 2009’.
A medical report from Dr Natalie J Harrison of the St John of God Specialist Centre dated 4 February 2013. Dr Harrison states that the plaintiff’s ‘diagnosis of Graves’ thyrotoxicosis was first made in February 2010, although her symptoms predated this by around 12 months …’.”
[1]Exhibit “PSM-15”
6 Mr Hanson submitted that the defendant concedes that it was in possession of material which pointed to the plaintiff being guilty of fraudulent non-disclosure and/or fraudulent misrepresentation, but it was not prepared to take the step of pleading fraud, because it did not consider that it could sufficiently particularise such a serious allegation, and it was cognisant of its responsibility pursuant to Part 4.1 of the Civil Procedure Act 2010 to certify that it had read and understood the overarching obligations and paramount duty referred to in Part 2.1 and Part 2.2.
7 Mr Murray made the point in his letter dated 23 April 2013 as follows:
“ … Although it may have been apparent, at the outset of these proceedings, that certain matters relating to your client’s medical history were not disclosed in her application for insurance, we did not consider there to be sufficient probative evidence upon which to sustain any allegations of fraud.
As you are well aware, allegations of fraud are not made lightly and we have duties as practitioners to have an appropriate evidentiary foundation for alleging fraud or dishonesty.”
8 Mr Cobban replied by letter dated 24 April 2013 as follows:
“ It is clear that your client was in possession of material which raised the issue of non-disclosure in relation to our client prior to these proceedings being commenced, in particular:
1)Item 91 of your client’s Affidavit of Documents, which is an e-mail exchange between employees of your client on 17 August 2011, outlines that the issue of non-disclosure ought to be investigated in relation to our client;
2)Item 147 of your client’s Affidavit of Documents, which is a document titled Referral Retail Claims Committee, provides comment on a recommendation based on a review of the material available in relation to our client’s claim. The recommendation notes the onset of many of the conditions which now form the basis of the allegation of non-disclosure including sore throat, bowel problems and mental health issues. The Committee recommendation also states that non-disclosure should be looked at as a parallel issue.
3)Item 148 of your client’s Affidavit of Documents, which are minutes of a meeting of the Retail Review and Decision committee dated 6 September 2011, note that ‘there are issues relating to medical non-disclosure which need to be further investigated’.
We note your client’s position is that the reports of Mr Peter Scott dated 12 April 2012, Dr Emmanual Nnopu dated 2 February 2013 and Dr Harrison dated 4 February 2013, form the basis of your client’s need to amend its Defence, however, it is clear that there was nothing in these three reports which is novel to the issues in dispute.
Mr Scott’s comment that our client developed problems in about 2009, Dr Nnopu’s comments that our client’s incapacity commenced since January 2009 and Dr Harrison’s comments that our client’s symptoms pre-dated the ultimate diagnosis in February 2010 by approximately 12 months, are all conclusions which are not remarkable in the context of this claim.
For instance, Professor Nicholson’s reports dated 1 May 2010, 6 August 2010 and 23 January 2011, which were all available to your client prior to the commencement of these proceedings, provided a history of our client’s illnesses consistent with the comments of Mr Scott, Dr Nnopu and Dr Harrison … .”[2]
[2]Exhibit “TTC3”
9 Furthermore, Mr Cobban referred to the fact that the defendant had access to the clinical records of the Forrest Hill Medical Centre, from where Dr Nnopu practices, having subpoenaed those records. According to Mr Cobban, the defendant had access to those clinical records on 24 January 2013.
10 I cannot determine whether the defendant had sufficient material in its possession to succeed with the defence of fraudulent non-disclosure and/or fraudulent misrepresentation at an earlier and opportune time, but the correspondence demonstrates clearly enough that the defendant did have a body of material in its possession which demonstrated the potentiality of a defence of fraudulent non-disclosure and/or fraudulent misrepresentation.
11 The pleading of fraud is not something which should be done lightly, and in particular, given the sanctions which await the less than prudent and wise practitioner who pleads fraud who subsequently contravenes the provisions of the Civil Procedure Act 2010 and faces the sanctions provided for in Part 2.4.
The Insurance Contracts Act 1984 (Cth)
12 Mr Hanson referred me to the relevant provisions of the Insurance Contracts Act 1984 (Cth), and in particular, to s21, which provides, among other things, of a duty imposed on the insured to disclose to the insurer matters relevant to a decision by the insurer whether to accept risk or not, and s29, which provides a defence to the insurer where there has been fraudulent non-disclosure and/or fraudulent misrepresentation.
13 Mr Hanson referred me to s29(3), which provides that the insurer can avoid the contract within three years after the contract was entered into. However, that provision does not apply in this proceeding. What does apply is ss(2), which provides that if the insured fails to comply with her duty of disclosure or made a misrepresentation, and that failure was fraudulent or the misrepresentation was made fraudulently, the insurer may avoid the contract.
14 Both Mr Hanson and Mr Bingham agreed it is essentially for the insured to disclose two categories of matters, those categories being matters which the insured knows to be relevant to a decision of the insurer whether to accept the risk, and if so, on what terms, and matters which a reasonable person in the circumstances could be expected to know to be a relevant matter.
15 The Proposed Amended Defence relies upon a collection of matters on which the defendant proposes to adduce evidence at the trial to demonstrate that the plaintiff was in breach of her duty of disclosure, and that if she had disclosed the matters referred to in s21(1) they would have been considered so material as to affect the defendant’s decision to accept the risk posed by the plaintiff, and if so, on what terms.
16 Furthermore, the Proposed Amended Defence pleads that the non-disclosure of those matters is of such moment as to amount to fraudulent non-disclosure and/or fraudulent misrepresentation entitling it to a complete defence to the plaintiff proceeding.
The pleading
17 Mr Bingham submitted that there are two reasons why I should refuse leave to the defendant to amend its Defence: firstly, the pleading is defective in many respects, and secondly, the defendant had its chance to properly investigate the viability of the defence it now wishes to raise, and that the medical material from Mr Scott, Dr Nnopu and Dr Harrison do not inform the defendant of anything more than it already knew.
18 Mr Bingham undertook a rather surgical approach to the pleading which I propose not to take. I propose to look at the pleading in a rather more general manner to determine what it is that s29(2) requires the defendant to plead looking through the prism of what is relevant to be disclosed by the plaintiff pursuant to s21(1).
19 I think the essentials to be pleaded by the defendant are:
· Each matter relevant to the decision of the insurer whether to accept the risk.
· What a reasonable person could be expected to know to be a matter which is relevant to the insured in determining whether it should accept the risk.
· Once each of the foregoing matters have been pleaded, then there must be a pleading of which of those matters are said to be fraudulent, distinguishable from which of those matters are said to be misrepresentation made fraudulently.
· Then, there must be a pleading of the basis upon which the alleged fraud or misrepresentation made fraudulently entitled the insurer to avoid the contract.
20 The first substantive attack made by Mr Bingham on the Proposed Amended Defence is that there is no link between paragraph 25 and 26.
21 To understand that attack it is necessary to examine paragraph 23, which pleads that the plaintiff completed an application form on 12 June 2009 which contained a section entitled “Risk Assessment questions for Micha Nangami”. The relevant questions are then set out. Paragraph 24 sets out the relevant answers given by the plaintiff to those questions.
22 Paragraph 25 pleads:
“Further, in making the Representations the plaintiff represented to the Defendant that the Representations were true and correct (the Warranties).”
23 Paragraph 26 pleads:
“In fact, the Representations were false and untrue.”
24 Subjoined to paragraph 26 are particulars (a) to (i), which set out symptoms, medical conditions and the symptoms of those medical conditions. Stopping there, Mr Bingham submitted that the defendant must plead the matters which are relevant to the duty of disclosure in s21(1)(a) or (b). It has not done so, because the pleading must be accompanied by a pleading of which of the matters were relevant to the decision of the insurer or which the plaintiff would be expected to know as a relevant matter in the making of that decision by the insurer.
25 Mr Bingham made particular reference to the particulars subjoined to paragraph 26: for example, in particular (b), there is a reference to the plaintiff suffering an “itchy foot” in some clinical records. He submitted that what is relevant must be seen through the particulars of the medical conditions which the plaintiff says entitles her to the benefits under the policy. They are particularised as follows:
“… She suffered from Graves’ Disease in 2009 associated with consumption of soy milk. She suffered weight loss, weakness, shortness of breath, itching rash, agitation problems, hair loss, headaches and various other symptoms … .
She underwent total thyroidectomy surgery on 5 October 2010. She then suffered hypothyroidism complicated by thyroid associated ophthalmopathy with proptosis causing blurred vision and preventing driving. She also suffered chronic diarrhoea. She underwent further surgery on 10 November 2011 and was diagnosed as suffering from endometriosis and interstitial cystitis.”
26 I think the point is well made. The defendant cannot simply plead a range of medical conditions without pleading those which are matters relevant to the decision of the insurer or would be expected of a reasonable person to be relevant matters. It is trite to say that the purpose of the pleading is to demonstrate so much of the facts which permit an understanding of how it is said that there has been a contravention of the civil law entitling specific relief. A general pleading which does not achieve that end fails to meet the requirements of Rule 13, and from a commonsense point of view, does not permit the target of the pleading to understand the case that she needs to meet, which is the very purpose which underwrites rules and conventions governing pleadings.
27 Mr Bingham then dealt with paragraphs 28 and 29 by submitting that the defendant has not set up a pleading in the preceding paragraphs to so boldly allege that the failure to disclose the matters pleaded in paragraph 26 amounted to a breach of the duty of disclosure. He submitted that there are no particulars provided to demonstrate the basis upon which it can be said that there was such a misrepresentation or fraud. He submitted that it was insufficient to simply give particulars referring to previous sections of the Insurance Contracts Act 1984 under paragraph 28, and to refer to preceding paragraphs as particulars, because it then puts the plaintiff to the task of determining what are properly particulars of what is alleged.
28 Mr Bingham lastly dealt with paragraphs 30 and 31, which take up s21(1)(b), pleading what a reasonable person could be expected to know is a relevant matter. He made the same criticism of the pleading as he did of paragraphs 28 and 29. He added that paragraph 31 pleads that had the defendant been aware of the matters pleaded in paragraph 26 that it would not have entered into the policy with the plaintiff “on those terms”. Mr Bingham asked, rhetorically, what terms these might be.
29 Mr Hanson replied to the submissions made by Mr Bingham. He commenced by referring to the particulars under paragraph 5 of the Statement of Claim as being very general, and inviting a pleading of the same kind. However, that is not to the point. The defendant could have challenged the Statement of Claim, but it has not done so and has therefore declared its intention to meet those allegations as pleaded.
30 Mr Hanson lastly submitted that the pleading does demonstrate that there is material in the possession of the defendant now which confirms that it has a defence pursuant to s29(2) of the Insurance Contracts Act 1984.
AON Risk Services Australia Limited v Australian National University
31 Mr Hanson expended some time referring to AON Risk Services Australia Limited v Australian National University,[3] and also to Hitchens v Zürich Australia Ltd[4] relevant to the defence pursuant to s29(2) of the Insurance Contracts Act 1984 which should be litigated at the same time as the principal proceeding brought by a plaintiff.
[3][2009] 239 CLR 175, and also to Cement Australia Pty Ltd v Australian Competition and Consumer Commission [2010] FCAFC in which the Full Court dealt with 30 relevance of AON Risk and its application
[4][2011] NSWSC 1198
32 There can be no doubt that this application has been brought very late. The trial date is less than two weeks away. It raises, firstly, the question of the adequacy of the pleadings, which I will dispose of shortly, and whether a party should be shut out where that party could have taken steps to properly inform itself of a defence at a much earlier stage.
33 I am very conscious not to undervalue or misstate what was said in AON Risk Services Australia Limited v Australian National University, but I see that what was said by the High Court, in the various judgments, to be a warning to litigants that the sparse resources of courts and the necessity to prosecute litigation in accordance with the Civil Procedure Act 2010 must be given primacy over blithely permitting an amendment on the footing that the amending party obtain an adjournment and cover the prejudice of the other party by paying its costs.
34 As the judge in charge of the Damages and Compensation List, I am acutely aware of the fact that there is a small compliment judges expected to deal with a large volume of litigation in the List. Therefore, the parties must apply themselves seriously to the task of ensuring that the prosecution of the proceeding is conducted expeditiously to meet the advantage given to litigants in the County Court, which is the provision of a trial date when the first orders are made so that the parties are in no doubt that there is a every chance that the proceeding will be heard on a pre-ordained date.
35 Currently, if a cause is adjourned in June 2013, it will not be listed again until May 2014. The resources of the County Court cannot deal with matters any more expeditiously than that. Here is one potent reason why case management demands that litigants be ready in anticipation of the trial date they have been given.
Disposition
36 It is most unfortunate that the defendant chose to bring an application of this kind so late. The balance favouring the defendant is that there will be injustice if the defendant is not entitled to plead and rely upon a defence open to it. If leave is denied, then it may suffer irreparable prejudice because it will not be able to bring a separate proceeding based upon the defence it now wishes to rely upon.
37 I am troubled by the submissions made by Mr Hanson that it was when the further discovery was made that the defendant had additional evidence to more comfortably make the decision to plead the defence it now wishes to rely upon. Inherent in that submission is an acknowledgement that the defendant had the indicia for the defence in its possession, but was tentative in pleading it.
38 Whilst I think the submissions made by Mr Hanson are correct, that fraud should not be pleaded without a reasonable basis, it seems to me that what the defendant needed to achieve before pleading fraud was to determine whether there was a basis for it, but not necessarily whether it was meritorious. Although I am reluctant to say much more, it seems to me that the defendant probably had the necessary indicia to plead the defence before it obtained the further discovery.
39 However, I do not propose to dismiss the summons on that basis. I think a judge has to be very cautious in denying leave to a party to amend pleadings where the pleadings need to be reformulated so that the true case can be put by the parties can be litigated. If a party wishes to amend at a late stage then if the application to amend has any chance of success, the pleading must be very precise and must be accompanied with very exact particulars and any additional discovery which the pleadings would suggest would ordinarily be required.
40 The pleading of the amendment in its present form leaves the plaintiff in the position of having to divine from it the links between a number of paragraphs and the ultimate assertion that the defendant has a sound basis upon which to apply to avoid the policy.
41 Therefore, I propose to dismiss the Summons. That does not prevent the defendant from re-pleading the defence and applying to the judge at trial for leave.
42 One other matter which I think is pertinent to raise is that a party pleading a defence or a reply is not required to plead to particulars. For example, many of the allegations made by the defendant should have been pleaded as separate paragraphs rather than as particulars. For example, the pleading that the plaintiff had pre-existing medical conditions in a separate paragraph will draw a direct response in a reply which will define the issue effectively.
Orders
43 I order that the Summons be dismissed, and that the defendant pay the plaintiff’s costs to be assessed by the Costs Court, in default of agreement.
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