NRG Victory Australia Limited v Hudson
[2003] WASCA 291
•28 NOVEMBER 2003
NRG VICTORY AUSTRALIA LIMITED -v- HUDSON [2003] WASCA 291
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2003] WASCA 291 | |
| THE FULL COURT (WA) | |||
| Case No: | FUL:85/2002 | 10 OCTOBER 2003 | |
| Coram: | STEYTLER J PARKER J MILLER J | 28/11/03 | |
| 19 | Judgment Part: | 1 of 1 | |
| Result: | Appeal dismissed | ||
| B | |||
| PDF Version |
| Parties: | NRG VICTORY AUSTRALIA LIMITED GEOFFREY HUDSON |
Catchwords: | Insurance Life insurance contract Appeal against District Court decision Total and permanent disability cover Insured previously diagnosed with post-occupational dermatitis Correct test for fraud under s 28(2) and s 29(2) Insurance Contracts Act 1984 (Cth) Whether insured's material non-disclosure to answers in application form were fraudulent Turns on own facts |
Legislation: | Insurance Contracts Act 1984 (Cth), s 21, s 29, s 26 |
Case References: | Australian Casualty and Life Ltd v Hall (1999) 151 FLR 360 Bahr v Nicolay [No 2] (1988) 164 CLR 604 Burns v MMI-CMI Insurance Ltd (1994) 8 ANZ Ins Cas 61-287 Twenty-First Maylux Pty Ltd v Mercantile Mutual Insurance (Australia) Ltd [1990] VR 919 Von Braun v Australian Associated Motor Insurers (1998) 135 ACTR 1. , Herbohn v NZI Life [1998] QSC 122 Plasteel Windows Aust Pty Ltd v C E Heath Underwriting Agencies Pty Ltd (1989) 5 ANZ Ins Cas 60-926 Tyndall Life Insurance Co Ltd v Chisholm (2000) 11 ANZ Ins Cas 90-104 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE FULL COURT (WA) CITATION : NRG VICTORY AUSTRALIA LIMITED -v- HUDSON [2003] WASCA 291 CORAM : STEYTLER J
- PARKER J
MILLER J
- Appellant
AND
GEOFFREY HUDSON
Respondent
Catchwords:
Insurance - Life insurance contract - Appeal against District Court decision - Total and permanent disability cover - Insured previously diagnosed with post-occupational dermatitis - Correct test for fraud under s 28(2) and s 29(2) Insurance Contracts Act 1984 (Cth) - Whether insured's material non-disclosure to answers in application form were fraudulent - Turns on own facts
Legislation:
Insurance Contracts Act 1984 (Cth), s 21, s 29, s 26
(Page 2)
Result:
Appeal dismissed
Category: B
Representation:
Counsel:
Appellant : Mr A J Power
Respondent : Mr B L Nugawela
Solicitors:
Appellant : Deacons
Respondent : S C Nigam & Co
Case(s) referred to in judgment(s):
Australian Casualty and Life Ltd v Hall (1999) 151 FLR 360
Bahr v Nicolay [No 2] (1988) 164 CLR 604
Burns v MMI-CMI Insurance Ltd (1994) 8 ANZ Ins Cas 61-287
Twenty-First Maylux Pty Ltd v Mercantile Mutual Insurance (Australia) Ltd [1990] VR 919
Von Braun v Australian Associated Motor Insurers (1998) 135 ACTR 1. ,
Case(s) also cited:
Herbohn v NZI Life [1998] QSC 122
Plasteel Windows Aust Pty Ltd v C E Heath Underwriting Agencies Pty Ltd (1989) 5 ANZ Ins Cas 60-926
Tyndall Life Insurance Co Ltd v Chisholm (2000) 11 ANZ Ins Cas 90-104
(Page 3)
1 STEYTLER J: I have had the advantage of reading, in draft, the reasons for decision of Parker J. I agree with them.
2 The trial Judge found that, at the time at which the applicant completed the "member application form" provided to him by the respondent insurer, his skin problems had settled and he considered that he had recovered from the dermatitis previously suffered by him. He did not consider that he had post-occupational dermatitis at the time of filling out the form. Consequently, when he filled in the answer to question (i)(c) on Part B of the form (which required him to say whether it was true that he had not received medical advice that he had a medical condition which was going to affect his ability to carry out the normal duties of his occupation), he believed that it was correct to say that this proposition was true in his case. Indeed, as the trial Judge found, the respondent had not received medical advice that he had a medical condition which was going to affect his ability to carry out the normal duties of his then occupation as a "packer, fork and loader driver".
3 The trial Judge also accepted that the respondent did not consider that post-occupational dermatitis was a disease, with the consequence that, when he filled in the answer to question (iii)(e) on the form (which required him to say whether it was true that he had never had a neck, back or shoulder injury or disease with the consequences there described), he believed that it was correct to say that that proposition, too, was true in his case.
4 Finally, in this respect, the trial Judge accepted evidence given by the respondent essentially to the effect that he did not remember completing the member application form (which he was required to complete on becoming a permanent employee) and did not realise that he had insurance cover until some five years later, when the administrators of the insurance fund notified him of that fact.
5 Like Parker J (and the trial Judge), and for the reasons given by Parker J, it seems to me that a fraudulent misrepresentation for the purposes of section 29(2) of the Insurance Contracts Act 1984 "is one made with an absence of actual and honest belief in its truth: it is a deliberate decision by the assured to mislead or conceal something from the insurer, or recklessness amounting to indifference about whether this occurs": Sutton, Insurance Law in Australia, 3rd ed, par 3.138 and Von Braun v Australian Associated Motor Insurers (1998) 135 ACTR 1.
(Page 4)
6 There was quite plainly no such fraudulent misrepresentation in this case, given the findings of fact made by the trial Judge to which I have earlier referred.
7 That conclusion is not altered by the trial Judge's finding that the dermatitis was in fact a disease of the kind described in the form or by his finding that the respondent "knew or could reasonably be expected to know" that the existence of his skin condition was relevant to the appellant's decision whether to accept his application for increased cover. I should add, as to this latter finding, that it seems to be clear, from the trial Judge's reasons read as a whole, that, notwithstanding that his Honour used the composite phrase "knew or could reasonably be expected to know", he found that the applicant did not in fact know of the relevance of his skin condition to the appellant's decision. This seems to me to follow from his findings that the respondent believed that he no longer had dermatitis, that he was fit for the work undertaken by him, that he had answered the questions asked of him honestly and that he was not even aware, until very much later, that he had any insurance cover. Nor is the conclusion altered by the fact that the respondent was, by virtue of s 21 of the Act, under a duty to disclose that condition to the appellant. The position remains that, on the trial Judge's findings of fact, the respondent did not make any deliberate decision to mislead or conceal anything from the respondent and was not guilty of recklessness amounting to indifference about whether that occurred.
8 Indeed, for the reasons given by Parker J, the trial Judge made no error in concluding that, by virtue of s 26(1) of the Act, the respondent was not, in the circumstances found, to be taken to have made a representation at all. That section provides that:
"(1) Where a statement that was made by a person in connection with a proposed contract of insurance was in fact untrue but was made on the basis of a belief that the person held, being a belief that a reasonable person in the circumstances would have held, the statement shall not be taken to be a misrepresentation."
9 On the trial Judge's findings of fact the respondent undoubtedly held a belief in the truth of his answers. Also, it was, for the reasons given by Parker J, open to the trial Judge to find, as he did, that that belief was one which a reasonable person would have held in the circumstances. While, as I have mentioned, the trial Judge had earlier found that the respondent could reasonably be expected to know that his skin condition was relevant
(Page 5)
- to the appellant's decision whether or not to accept his application for increased cover, that does not mean that it was not open to his Honour to find that a reasonable person in the respondent's position would have answered the specific questions asked of him in the same way as was done by the respondent.
10 I would consequently dismiss the appeal.
11 PARKER J: This is an appeal against the decision of Williams DCJ in the District Court, by which the appellant insurance company was found not entitled to avoid liability in respect of a total and permanent disability cover under a contract of life insurance with the respondent.
The facts at trial
12 The facts giving rise to the trial were sufficiently summarised by the learned trial Judge. The respondent, who was born in 1959, left school at the age of 15 years of age. He commenced employment in September/October 1990 as a spray painter for Total Corrosion Control Pty Ltd ("Total Corrosion"). He started to develop a rash and swelling on the exposed parts of his body, namely forehead, neck and wrist, and consulted his general practitioner, Dr Lagan, who diagnosed post-occupational dermatitis caused by exposure to epoxy-based products.
13 The respondent ceased working in November 1990 due to the ongoing nature of his condition which was exacerbated when exposed to heat. The condition required consultation with physicians and various medications. It did improve over time such that he recommenced work in late 1992. In his evidence at trial, the respondent acknowledged that he was aware that his skin condition made it likely he would have to avoid hard physical work and work outdoors in direct sunlight for the rest of his life, as well as exposure to epoxy-based products. He was also aware that he had been advised to work in an air-conditioned environment.
14 The respondent had not worked for approximately two years when he commenced working again in October 1992 for Brightshine Cleaning Services. In February 1993 the respondent found fresh employment with Heat Containment Industries ("HCI"). He informed HCI that he was unable to work with epoxy-based products, but did not tell HCI that he had to avoid hard physical work, exposure to sunlight or that he should work in an air-conditioned environment. The respondent was working as a loader, forklift driver and packer in large sheds which were not air-conditioned, but were well-ventilated. He was not exposed to direct sunlight. Initially employed on a casual basis, his employment was made
(Page 6)
- permanent in May 1993. The respondent was working 10-12 hours per day, six days per week.
15 On 9 June 1993 in association with being employed on a permanent basis, the respondent completed an application form for membership of the Superannuation Trust of Australia. In fact, this was in the form of an insurance policy, the respondent being the re-insurer. When completing the required member application form, the respondent’s response, by way of a tick in a box in the form, to two of the questions contained in Part B of the form, which pertained to an extension of the basic cover under the policy by two additional units of cover, was as follows:
"PART B
(i) I have not received medical advice that:
…
(c) I have a medical condition which is going to affect my ability to carry out the normal duties of my occupation
THIS STATEMENT IS TRUE √
(iii) I have never had any of the following:
…
(e) neck, back or shoulder injury or disease which
(i) has required more than 2 weeks off work;
(ii) has recurred more than twice;
(iii) which is still causing me trouble
THIS STATEMENT IS TRUE √"
17 In October-November 1993, the respondent began to develop a rash which subsequently spread over his body. On 7 January 1994 he saw
(Page 7)
- Dr Lagan, and he has not worked since that time. He had not had reason to consult a doctor about his skin condition between August 1992 and January 1994. The respondent made a claim on his policy on 31 August 1998, and the appellant accepted that the respondent was totally and permanently injured. The respondent was paid the first two units of his cover, but was declined payment of the second two units. The appellant claimed that the respondent had fraudulently misrepresented his medical condition on the member application form.
18 Evidence at trial from the underwriting and claims manager for the appellant insurer was that, consistent with company policy, because the Respondent had answered "yes" (by his ticks) to all questions in part B of the form, no further medical evidence was sought by the appellant. It was stated in evidence that had it been made known that the respondent had been off work for two years with dermatitis, the application would have been declined.
Grounds of the appeal
19 In summary, the Appellant now seeks to have the judgment set-aside on the following grounds:
1. The learned trial judge having found that;
1.1 Incorrect completion of the forms involved misrepresentation;
1.2 The respondent (plaintiff) was under a duty to disclose his previous medical condition;
1.3 The respondent (plaintiff) knew or could reasonably be expected to know that his previous medical condition was relevant to the appellant (defendant’s) decision whether to accept his application for increased cover;
his Honour erred in failing to find that such misrepresentations were fraudulent within the meaning of s 29(2) Insurance Contracts Act 1984 (Cth).
2. The learned trial Judge erred in finding that a lack of fraudulent intent made the misrepresentation not fraudulent.
Notice of contention
20 The respondent has filed a Notice of Contention pursuant to O 63 r 9 of the Supreme Court Rules (WA) that the learned trial Judge’s decision be affirmed on the ground that the learned trial Judge erred in fact and law
(Page 8)
- in finding that answers (i)(c) and (iii)(e) in Part B of the member application form constituted misrepresentations on the part of the respondent, and further erred in concluding that the respondent had misrepresented his medical condition on the member application form.
The issue
21 Section 21 of the Insurance Contracts Act 1984 (Cth) (the "Act") provides that:
"(1) Subject to this Act, an insured has a duty to disclose to the insurer, before the relevant contract of insurance is entered into, every matter that is known to the insured, being a matter that –
(a) the insured knows to be a matter relevant to the decision of the insurer whether to accept the risk and, if so, on what terms; or
(b) a reasonable person in the circumstances could be expected to know to be a matter so relevant.
(2) …
(3) …"
- Section 29 provides:
"(1) This section applies where the person who became the insured under a contract of life insurance upon the contract being entered into –
(a) failed to comply with the duty of disclosure; or
(b) made a misrepresentation to the insurer before the contract was entered into,
but does not apply where –
(c) ….
(d) ….
(2) If the failure was fraudulent or the misrepresentation was made fraudulently, the insurer may avoid the contract.
(3) ….
(Page 9)
- (4) …."
22 The findings of the learned trial Judge (at par 21 - par 25) that answers by the respondent to questions (i)(c) and (iii)(e) in Part B of the application form were false and thus constituted a material non-disclosure are not in contention before this Court, nor that in answering both questions for the purpose of extending his life insurance policy, the respondent was subject to a duty of disclosure under s 21(1) of the Act. Furthermore, the respondent has acknowledged that his skin condition, and the consequences that flowed from it, were relevant to the appellant’s decision to increase his insurance cover. In essence then, what the appellant must establish in the present appeal is that the respondent, having the duty of disclosure provided in s 21(1) to disclose his skin condition, which he knew, or should have known was relevant to the appellant's decision whether to extend the cover under the policy, should have been found by the trial Judge to have failed fraudulently to so disclose the skin condition, within the meaning of s 29(2) of the Act.
Fraudulent misrepresentation
23 Since the Act is silent as to the particular requirements of fraud under the Act, it is necessary to seek guidance from the common law. The case of Von Braun v Australian Associated Motor Insurers (1998) 135 ACTR 1 is advanced by the appellant as authority for the correct test for fraud under the Act. This case involved misrepresentation as to a vehicle’s purchase price under a policy of general insurance. An insured plaintiff overstated the price he paid for the vehicle to the defendant insurer, and it was subsequently stolen.
24 Observing at [48] – [49] that:
"48. At one time any false statement supporting a proposal to an insurer could have given the insurer the option of avoiding liability under the policy - see eg. Hoare v Bremridge(1872) 8Ch. App 22.
49. However such contracts are now regulated by the Insurance Contracts Act 1984 (Cth)."
- and at [78]:
"It is clear to me that the plaintiff had some purpose in mind in suggesting that the cash price was more than the minimum net benefit in fact received by the dealer."
(Page 10)
- Higgins J went on to consider the particular requirements of fraud for the purposes of relief under s 28(2) of the Act which is in terms identical to s 29(2). He said at [81] – [84]:
"81. The definition of fraud for the purposes of this subsection seems to me to be the same as was adopted in Scott v Metropolitan Police Commissioner [1975] AC 819. That is, it is fraudulent to dishonestly deprive a person of something he or she would be entitled to, but for the fraud. That may include the deprivation of a relevant advantage.
82. The High Court decision of Peters v R (1998) 151 ALR 51; 72 ALJR 517 indicates that 'fraud' must include a violation of the ordinary standards of honesty and a knowledge that the economic interests of the alleged victim are imperilled. The element of 'knowledge' was clearly lacking here. However, Peters was a criminal case. The concept of fraud under consideration was that embraced by a 'conspiracy to defraud'.
83. In contract law a 'fraudulent' misrepresentation or concealment is one made deliberately with knowledge of its untruth and which, in fact, is misleading. The concept of fraud in contract law derives from the leading case of Derry v Peek (1889) 14 App Cas 337. There 'fraud' was defined for the purposes of an action of deceit as the making of a false representation knowingly, or without belief in its truth, or recklessly, without caring whether it be true or false (per Lord Herschell at 374)…
84. In Brown Jenkinson & Co Ltd v Percy Dalton (London) Ltd [1957] 2 QB 621, shipowners had made a deliberate misrepresentation of fact in a bill of lading. They intended that it should be acted upon. They did not foresee that such reliance would cause detriment to the defendants. It was held, nevertheless, that the tort of deceit had been committed. It was unnecessary that loss be foreseen by the defendant.
85. In my view, it is in that sense that the Insurance Contracts Act uses the expression 'fraudulent' or 'fraudulently'." (emphasis added)
(Page 11)
25 The appellant also referred the Court to the case of Burns v MMI-CMI Insurance Ltd (1994) 8 ANZ Ins Cas 61-287. This case involved non-disclosure and misrepresentations by a plaintiff with respect to previous claims in an application for house insurance. At 76,187 Hansen J expressed the view that:
" … it is clear that a deliberate withholding of information of the type mentioned in s 21(1) would constitute fraudulent disclosure and, in my opinion that is the case. That is enough to determine the case under s 21(1)(a) although I think it also covers paragraph (b)."
26 The appellant asks this Court to apply the test in VonBraun and to find that, in light of the findings of the learned trial Judge that the respondent had in fact received medical advice that he had post-occupational dermatitis, a condition that was going to affect his ability to carry out the normal duties of his occupation, and that his condition had in fact required more than two weeks off work, the respondent had answered both questions fraudulently. It is submitted that he did not have an actual and honest belief to the contrary, and that no reasonable person could have done so in the circumstances. I would observe that the appellant appeared to read par 83 of the decision in Von Braun in isolation without recognising that par 83 is to be read with par 81 to fully understand the notion of fraud which Higgins J contemplated. I quote a little later par 86 and par 87 of Higgins J's reasons which provide significant further insight into his Honour's reasons.
27 The respondent contends that the findings made were open on the evidence. Further, it is advanced that the appellant relies on a construction of the Act that would operate such that once a material failure to disclose is proved, only knowledge or constructive knowledge of materiality must be established to establish "a fraudulent mind" on the part of the insured to avoid the contract under s29(2) of the Act. The respondent says that this could not be the intention of the Act, and to support this proposition points to s 26 of the Act which deals subjectively with misrepresentations. Preceding the provisions for remedies for non-disclosure and misrepresentation provided under Part IV of the Act, s 26 provides that:
"(1) Where a statement that was made by a person in connection with a proposed contract of insurance was in fact untrue but was made on the basis of a belief that a reasonable person in the circumstances would have held,
(Page 12)
- being a belief that the person held, the statement shall not be taken to be a misrepresentation."
28 The respondent further argues that the cases indicate that there must be evidence of fraudulent intent on the part of the insured, and cites passages in Von Braun which follow on immediately from the passages relied on by the appellant:
"86. Section 28 already defines the necessary relationship between the misrepresentation and the insurance contract to entitle the insurer to relief. The question as to whether it was made 'fraudulently', will be answered in favour of the insurer if such misrepresentation was made by an insured who knew that it was false or had no actual belief in its truth, or recklessly, without caring if it be true or false, with the intention that the misrepresentation should be acted on in whatever fashion the insurer might choose...
87. Thus, for a misrepresentation to be fraudulent, the proponent needs to be aware only that the statement is false and intend the insurer to accept and act upon it as true…" (emphasis added)
29 The respondent also points to the use of the expression "deliberate withholding" in the passage cited from Burns to further support it’s proposition that more than knowledge of material non-disclosure is required, arguing that this imports a requirement of intention or purpose for a finding of fraud.
30 The respondent also relies on the decision of the Queensland Court of Appeal in Australian Casualty and Life Ltd v Hall (1999) 151 FLR 360. That case concerned a proposal for a policy of Professional Income Replacement. In answering "no" to a series of questions in an application form similar to the one presently being considered, the insured did not disclose that she had received advice or treatment with respect to a variety of symptoms. Shepherdson J, with whom McMurdo P and Thomas J agreed, accepted from the decision of Bahr v Nicolay [No 2] (1988) 164 CLR 604, per Mason CJ and Dawson J at 614, that fraud involves an element of dishonesty or moral turpitude. That led the Court to conclude, in the circumstances of that case, that a deliberate decision by the insured not to disclose information which was the subject of the duty to disclose pursuant to s 21(1)(b) of the Act, was not fraudulent within the meaning
(Page 13)
- of s 29(2). In that case the insured was not shown, herself, to have known the matter to be relevant to the decision of the insurer, but a reasonable person in the circumstances could be expected to know the relevance, ie s 21(1)(b). That being so, it was the Court's view that reckless indifference so as to constitute fraud had not been established. This decision indicates, in my view, that a deliberate non-disclosure in breach of the duty of disclosure created by s 21(1) does not necessarily, of itself, constitute fraud. The actual decision turned on the state of mind of the insured. It serves to illustrate, in my view, the difficulty of ignoring the intent or purpose of the maker of a representation, at least in a context to which s 21(1)(b) applies, as the maker might not appreciate the materiality to the insurer of the matter deliberately not disclosed.
31 Reference was also made to the decision of Brooking J in Twenty-First Maylux Pty Ltd v Mercantile Mutual Insurance (Australia) Ltd [1990] VR 919 where his Honour noted at 925-926 that the meaning of "fraudulent" in s 28(2) is not clear. His Honour at 926 said:
"A possible view is that fraud will be established if the case falls within para (a) of s 21(1) and in addition the insured failed to make the disclosure because he believed that if he did make it the insurer might either decline the risk or accept it only on special terms."
- Without deciding whether the passing of that test was essential, his Honour found it had been satisfied on the facts of that case and gave his decision on that basis. The "belief" postulated by Brooking J involves the intent or purpose of the maker of the misrepresentation.
32 In his reasons for decision, the learned trial Judge applied the statement of the law to be found in Sutton, Insurance Law in Australia, 3rd ed, par 3.138, which is in the following terms:
"A fraudulent misrepresentation is one made with an absence of an actual and honest belief in its truth: it is a deliberate decision by the insured to mislead or conceal something from the insurer, or recklessness amounting to indifference about whether this occurs." (emphasis added)
33 In formulating that statement Sutton refers essentially to the cases mentioned in these reasons, and purports to directly draw on the decision of Von Braun (supra). This statement appears to me inherently to reflect the relevance of the maker's purpose or intent.
(Page 14)
34 Notwithstanding this, the appellant does not seek to challenge the view of the law taken by the trial Judge. The appeal is advanced by the appellant on the basis that it involves only questions of fact. For the reasons indicated I have the view that, in truth, there is an underlying question of law. In the circumstances, it is sufficient for the purposes of this appeal for me to indicate that it is my present view that the statement in Sutton fairly summarises the notion of fraud for the purposes of s 28(2) and s 29(2) of the Act. I proceed on that basis.
35 The respondent was never specifically cross-examined on his state of mind at the time he answered the two relevant questions by ticking the boxes. The closest one finds to this is the evidence of a conversation between the respondent and the plant manager, Mr Dirk Leers, some months after the respondent started work at HCI. The respondent said that he did discuss with Mr Leers that he had suffered dermatitis, had problems with epoxy-based products, had been off work for two years and that he was concerned with the risks to his health. He said he also told Mr Leers that he considered his problems had settled, and that he was fully recovered from the dermatitis. The respondent said in his evidence that he did not have post-occupational dermatitis at the time he filled out the form, and did not consider the condition to be a disease in the context of question (iii)(e). Furthermore, he testified that he understood question (i)(c) to refer to his occupation at the time of his application. It was the respondent's evidence that he believed that any limitations on his capacity to work related only to work as a spray-painter, not as a loader/forklift driver which was his permanent work at the time that he completed the application form. He said that it was for these reasons that he did not indicate the skin condition on the application form, or disclose any limitations on his capacity to work. In the course of his cross-examination at trial, the respondent also stated that were he required to fill out the form again, he would still answer the two material questions as he did on the form although he would add an addendum to the form, even though the form makes no provision for an addendum to clarify those answers. He would do this because of what he now knows.
36 It was the finding of the learned trial Judge that in respect of the tick in answer to question (i)(c):
"23. I therefore concluded that he misrepresented to the defendant that he had not received medical advice, that he had a medical condition which was going to affect his ability to carry out the normal duties of his occupation."
(Page 15)
- And that in respect of the answer to question (iii)(e):
"25. … I concluded therefore that the [respondent] had represented to the defendant that he never had a neck disease which has required more than 2 weeks off work, has recurred more than twice and was still causing him trouble."
38 With respect to the issue of non-disclosure, his Honour further found:
"Furthermore, I am of the view that the [respondent] was under a duty to disclose these matters to the [appellant]. I am satisfied that the [respondent] knew or could reasonably be expected to know that they were relevant to the [appellant's] decision whether to accept his application for increased cover."
- In this passage his Honour found on this basis that the duty to disclose, for which s 21(1) provides, operated in this case. It is to be noted that, with respect to each of the two answers, his Honour saw the respondent's breach of the duty to be in the nature of a misrepresentation of the true position. However, his Honour was not able to find whether the case came within s 21(1)(a) or s 21(1)(b), but was satisfied that it must have come within one or other of those provisions.
39 While the appellant invites this Court to accept from the record that the finding should have been made by his Honour that each answer was a deliberately false answer of a matter the respondent knew to be relevant to the decision of the insurer, ie s 29(1)(a), I am not persuaded that this Court should take that step in respect of either answer. It appears to me that the findings made by his Honour were properly open to him and that we are not in a position to change them merely on the basis of the transcript of the evidence.
40 Given these findings, his Honour was persuaded, and in my respectful view correctly so, that this was a case to which s 26(1) had application. I repeat that this provides:
"26(1) Where a statement that was made by a person in connection with a proposed contract of insurance was in
(Page 16)
- fact untrue but was made on the basis of a belief that the person held, being a belief that a reasonable person in the circumstances would have held, the statement shall not be taken to be a misrepresentation."
41 His Honour found that in respect of both of the answers in issue, s 26(1) was satisfied in this case, ie that while the answer was in fact untrue in each case, it was made by the respondent on the basis of a belief the respondent held, being a belief that a reasonable person in the circumstances would have held. Hence, by virtue of s 26(1), neither of the answers is to be "taken to be a misrepresentation".
42 In his consideration of the facts in this regard, his Honour accepted the respondent's evidence that at the time he completed the member application form in June 1993 his skin condition had settled and the respondent considered he had recovered, ie he did not consider that he had post-occupational dermatitis at the time of filling out the form. His Honour further accepted from the evidence that the appellant had last seen a doctor with respect to the dermatitis on 27 August 1992, that he had commenced work with a cleaning contractor in September or October 1992 and was in that employment until February 1993, when he commenced work with Heat Containment Industries ("HCI"), a position which became permanent in May 1993. In that position he had qualified as a forklift driver and he was performing duties involving forklift driving, loading and packing, which was performed indoors in a large well-ventilated shed and occupied him for 10 – 12 hours per day, six days per week.
43 Despite the work which he had constantly performed since September-October 1992, his Honour accepted that at the time he completed the application form on 9 June 1993, the respondent had had no problems with his skin or with his sweating, and had lost no time at work. It was his Honour's finding that it was not until October-November 1993 that the respondent "started to get a rash all over his body", which led to him seeing a doctor in January 1994. In view of the findings of fact made by his Honour, which are not challenged on this appeal and which were clearly open on the evidence, his Honour accepted the appellant's evidence and found –
• In relation to the answer to question (i)(c) that the respondent "did not receive medical advice that he had a medical condition which was going to affect his ability to carry out the normal duties of his then occupation, that is as a packer, forklift and loader driver", and
(Page 17)
- • In relation to the answer to question (iii)(e) the respondent "did not consider that post-occupational dermatitis was a disease".
44 In my respectful view, his Honour's finding that s 26(1) was satisfied in each of these circumstances, ie that the respondent gave his answers on the basis of the beliefs that have been indicated, and that each of them was a belief that a reasonable person would have held in the circumstances, was fairly and properly open to his Honour. No error in law or fact has been demonstrated in these respects. That being so, strictly, there is no reason or need to turn to the question whether the misrepresentations were made fraudulently in respect of the two answers, within the meaning of s 29(2) of the Act. By force of s 26(1) neither of the material answers made by ticking the two relevant boxes on the form is to be taken to be a misrepresentation. The appeal should fail on this basis alone.
45 The learned trial Judge, however, also considered the issue whether the answers were fraudulent within the meaning of s 29(2). As I have just indicated, given the operation of s 26(1) in this case, strictly, there are no misrepresentations on which s 29(2) can operate. Nevertheless, as his Honour held both that s 26(1) was satisfied, and that the relevant answers were not fraudulent within the meaning of s 29(2), I should deal with the appellant's submissions in respect of fraud.
46 In addition to the factual findings I have set out in respect of s 26(1), his Honour also accepted in respect of the question of fraud evidence that the respondent did not appreciate until 1998 that the form he completed, which he was required to complete in association with his becoming a permanent employee of HCI, was for insurance cover. So it was that he did not, as his Honour found, "make any claim under the insurance policy and he was not aware that he had insurance cover, until 1998, when the administrator to the fund wrote to him advising him of that fact".
47 The issue raised by the submissions for the appellant is that, having found the respondent had a duty to disclose his dermatitis or skin condition, and that the respondent knew or ought to have known (in that a reasonable person in the circumstances could be expected to know) that this was relevant to the appellant's decision whether or not to extend the insurance cover by the two additional units, his Honour should have found that the respondent's failure to disclose the condition in answering the two questions, or at least one of them, was fraudulent. That is to say, in the appellant's submission, that the two answers, or at least one of them, were made with an absence of actual or honest belief in the truth of the answers indicated by the ticks, or with reckless indifference as to the truth.
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48 In development of this it is the appellant's submission that as the respondent knew he had received medical advice that he had the skin condition and that it was going to affect his ability to carry out the normal duties of his occupation, or if the respondent knew that he had a neck disease that required more than two weeks off work and had recurred more than twice or was still causing him trouble (ie the several subparts of question (iii)(e)), then he could not have had an actual and honest belief to the contrary.
49 What has been said already substantially deals with the issues of fact. With respect to question (i)(c), while the respondent had received medical advice in earlier years that his skin condition would have affected his ability to carry out the normal duties of his occupation at that time as a spray painter, in that his skin would react to epoxy-based products and that sweating would cause an eruption of the condition, by June 1993 he had changed occupations. He had by then worked for some three-quarters of a year in different work, including through a summer. The duties of his new permanent job did not involve exposure to epoxy-based substances and while aspects of the work induced some sweating, there had been no sign of any problem with his skin. For these reasons, the respondent considered his condition to be cured and, in any event, he understood the duties of his new (by June 1993 permanent) position not to involve sweating to a degree which had any consequences for his skin. He had not had any medical advice to the contrary, indeed he had not had need to consult a doctor since the previous August. It was his appreciation the question (i)(c) that it referred only to the "normal duties of my occupation", being his new occupation, not his former occupation as a spray-painter.
50 Given the evidence, I am quite satisfied that it was open to the learned trial Judge to accept that the question was completed correctly with a tick according to the beliefs of the respondent which I have identified in these reasons.
51 With respect to the various sub-question posed by question (iii)(e), each of these is introduced and conditioned by the words "neck, back or shoulder injury or disease". It is clear that the skin condition had affected the skin over a number of parts of the respondent's body including his neck. His Honour also accepted the medical evidence that the skin condition was in truth a disease.
52 It appears to me, however, in the circumstances revealed by the evidence in this case, to be a genuine factual issue whether the
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- respondent, or a reasonable person in his position, might honestly hold the view that the skin condition was not a disease within the context and meaning of the question. Even, were it appreciated to be a disease, there is a further issue whether it would be seen to be a disease of the neck, or indeed of any other particular part of the body. While it clearly affected the skin over the neck, and elsewhere, it might well not be understood to be a disease of the neck. It was the evidence of the appellant in this case that he did not regard his skin condition as a disease. That was accepted by the learned trial Judge. He found that as a matter of fact. In my view, it was well open to his Honour to accept this evidence and its truth. It must be remembered that the respondent did not have the knowledge and understanding of a doctor of the scope of the concept of a disease, but only the appreciation of an ordinary worker.
53 Leaving aside the operation and effect of s 21, that, by virtue of the beliefs of the applicant identified earlier, the two material statements represented by the two ticks he inserted on the squares in the application are not to be taken as a misrepresentation, it is necessary to examine the question of fraud on the basis that it is the finding in fact that the forms were completed by the applicant in the honest understandings that have been identified.
54 Given those understandings it is apparent, in my view, that in this case the appellant has satisfied the trial Judge that in completing the application form he was not seeking or intending to mislead, or to conceal something from, the insurer, within the meaning of the statement of the law as to fraud which his Honour applied, and which is not questioned in this appeal, and which I have accepted.
55 For the factual reasons already canvassed he ticked the two boxes to confirm the truth of the statements (i)(c) and (iii)(e) in the belief that they were true. It cannot be said, therefore, that he was reckless as to the truth or that he showed indifference to whether the insurer would be misled, or whether something would be concealed from the insurer by virtue of the answers.
56 For these reasons the appeal fails and should be dismissed.
57 MILLER J: I have had the opportunity of reading in draft the reasons for judgment of Parker J. I agree with those reasons and agree that the appeal should be dismissed.
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