Patane v Associated National Life Insurance No. DCCIV-99-459

PATANE v ASSOCIATED NATIONAL LIFE INSURANCE
[2000] SADC 60

Judge Lowrie
Civil

The plaintiff is aged 48, a bricklayer by trade, who had been carrying on such occupation since 1972. In May 1985, the plaintiff entered into a policy of insurance entitled “Income Continuation Insurance Policy” with the first defendant. The second defendant is the agent of the first defendant. A photocopy of the policy is attached to this judgment. As appears from the policy, in the event of the plaintiff suffering a disability within the terms of the policy, he is entitled to receive a monthly, or proportionate, benefit for the period specified in the policy.
The plaintiff suffered an injury to his shoulder in late 1995, made a claim on the policy and received monthly benefits. In 1996 the plaintiff suffered an injury to his back, claimed and received some monthly benefits. In January 1997 the plaintiff slipped and fell whilst working on a building site injuring his lower back and shoulder. He sought medical advice. The plaintiff, because of this injury, made a further claim for monthly benefits.
The defendant acknowledged and admitted the claim and paid the insurance benefits to the plaintiff. The defendant requested that the plaintiff attend Dr Harold Schaeffer for a general examination in February 1998. Dr Schaeffer reported to the defendants that in his opinion the plaintiff was able to continue with his full-time work in the foreseeable future. The defendants in view of that opinion refused to make any further monthly payments to the plaintiff.
The plaintiff commenced these proceedings seeking relief, namely:
“20.(a)... a declaration that a contract of insurance pursuant to the policy referred to in paragraph 7 herein exists between the plaintiff and the first defendant.
(b)    a declaration that a Policy of Insurance number D5005965 exists between the first defendant and the plaintiff.
(c)... a declaration that the plaintiff is suffering from a disability as referred to in paragraphs 10, 11, 12, 13, and 14 herein within the meaning of the said policy.
(d)    a declaration that the defendants have in breach of the said policy of insurance failed to properly pay benefits to the plaintiff in respect of his total and permanent disability.
(e)... the sum representing the benefits under the said policy pursuant to Basic Benefits set out in the ‘Schedule for Income Continuation Insurance’ contained in the said policy to date and continuing plus interest including compound interest calculated in such manner as the Court deems just.
(f)     in addition thereto damages for breach of contract and breach of duty of good faith.
(g)... exemplary damages.”

PLEADINGS

The statement of claim expands my brief summary by alleging that on 12 November 1995 the plaintiff suffered an injury to his right arm and shoulder in the course of his work. On July 1996 he suffered an injury to his lower back and groin, again at work. Further, on 13 July 1996, the plaintiff suffered an injury resulting in a strained lower back and groin and by reason of such injuries was totally disabled to perform normal duties for a period of some two months. The plaintiff alleged that because of the combined effect of the injuries he was for all practical purposes totally and permanently disabled and therefore precluded from any work duties.
The plaintiff further pleaded that on 28 August 1996 by reason of his injuries a claim was lodged with the defendants and the plaintiff was paid benefits until he returned to part-time work on 13 February 1997 and continued to receive benefits until 9 February 1998. The plaintiff alleged that by reason of his disabilities he was only able to a limited extent to engage in his own occupation and suffered a loss of income greater than 25% of his average income since January 1997.
The plaintiff alleged that he was denied further benefits in February 1998 after his attendance on Dr Schaeffer.
The plaintiff further alleged that the defendants had erred in their assessment and ought to have accepted that he was totally and permanently disabled as from 18 January 1997, and, continuing within the meaning of his Income Continuation Insurance Policy.
The plaintiff sought declarations that the policy was on foot at the relevant time, that he was suffering from a disability within the meaning of the policy, that the defendants had breached the policy by not making payments to him and sought the declaration as outlined above.
Both defendants were represented by the one solicitor, and, while conceding much of the factual background as alleged in the statement of claim pleaded that the plaintiff had recovered from the injuries which he had suffered and was fit to work as a bricklayer.
The defendants denied that the plaintiff was entitled to bring a claim for benefit under the said policy on the basis that the plaintiff had either wholly recovered from his alleged injuries by at least the date on which the benefits ceased, being 9 February 1998, or, alternatively has not since that date satisfied the criteria for eligibility for proportionate benefits pursuant to the policy.

INSURANCE POLICY

As appears from the definition of “Basic Benefits” the policy provides for a monthly benefit of $2,222 in the event of disability and expires on 1 May 2011. The policy document then outlines under the headings “Benefit Provisions and Definitions” what is in effect a definition section of the various words used in the policy.
The definitions which have been the subject of much comment in this case, are as follows:
“Disability - shall, if the Person Insured has not changed his occupation from that stated in the Schedule, mean that the Person Insured is totally unable, due solely to sickness or accident, to engage in or attend to that occupation, but shall otherwise mean that the Person Insured is totally unable due solely to sickness or accident
(i).... during the first two years of any period of such disability - to engage in or attend to his occupation, and
(ii)during the remainder of such period of disability - to engage in any occupation for remuneration or profit for which the Person Insured could be reasonably considered qualified by his general experience and training
provided always that Disability shall not exist for the purpose of the Policy during any period in which the Person Insured for remuneration or profit engages in any occupation.
.....
Sickness - shall mean any sickness or disease suffered during the currency of this Policy and resulting in Disability.
....
Income - shall mean income from full time engagement in the Person Insured’s occupation consisting of salary and the net profits of any business carried on by the Person Insured (whether alone or as a partner with any other person) in that occupation and includes fees paid for the personal services of the Person Insured to any Company trust or partnership less any expenses incurred in providing such personal services.
Average Income - shall mean the average monthly income earned by the Person Insured in his occupation during the twelve months prior to Disability.
Loss of Income - shall mean the difference between the Person Insured’s Average Income and his remuneration during any period in respect of which a Proportionate Benefit (see General Provisions and Conditions No. 5) is payable, provided that such difference results solely from the Person Insured having suffered Disability.
....
Loss - shall mean (for the purposes of General Provisions and Conditions No. 1)
(i) with reference to hand, arm, foot and leg - loss by amputation, and
(ii)... with reference to thumb and forefinger - complete severence through or anterior to the metacarpophalangeal joints.”
The policy then contains 17 numbered conditions. Under paragraph 1, the policy defines “Loss” and “Complete Bone Fracture” and under paragraph 5, “Proportionate Benefit” as follows:
“Proportionate Benefit
A Proportionate Monthly Benefit will be paid in accordance with the following provisions if the Person Insured, immediately following a period during which a benefit has been paid for Disability -
(i).... is able only to a limited extent to engage in his own or any occupation for remuneration or profit, and
(ii)does so with the written approval of the Company, and
(iii).. thereby suffers a Loss of Income of 25% or more of his Average Income.
The Proportionate Monthly Benefit shall be such proportion of the Monthly Benefit as the Insured Person’s Loss of Income bears to his Average Income.
No Proportionate Monthly Benefit shall be payable within ten years of the Expiry Date of the Period of Insurance stated in the Schedule.”

EVIDENCE

The plaintiff, his wife, Liliana, his son, Adriano, who has now completed his apprenticeship as a bricklayer with his father, and elder son, Carmine gave evidence. He also called a significant body of medical evidence concerning the nature of his injuries and resultant permanent disabilities, including Dr Mark Fisher, general practitioner, and Mr Osti, orthopaedic surgeon.
The defendants called Dr Schaeffer, neurosurgeon, Dr Gary Champion, a consultant physician/rheumatologist, and a number of investigators who from August 1999 have, over long periods, filmed the plaintiff carrying out the tasks of a bricklayer.

HEARING

This case commenced in January. During the early part of the plaintiff’s cross-examination it was apparent that surveillance of the plaintiff had occurred. I was then told by counsel for the defendants there were six video tapes of film for something in excess of 20 hours of the plaintiff working. Defendants’ counsel intimated that in fact there was a summary tape of approximately 2 hours. The matter was then adjourned to enable plaintiff’s counsel and myself to peruse such film and so arrangements could be made for the films to be viewed by the medical experts.
Some further preliminary matters subsequently occurred and the hearing of the matter resumed on 10 April 2000 when cross-examination of the plaintiff and the medical evidence was completed.

Plaintiff’s Evidence

The plaintiff was born on 9 April 1952. He completed his schooling in Italy and came to Australia with his family in 1972. He married in 1976 and has two sons, Carmine 22 and Adriano 20, and a daughter, Tina 16. The plaintiff said that in 1972 he commenced working with his father as a bricklayer and received his relevant licence qualifications in 1975. He continued working with his father until 1984. His father then retired from their venture and since 1984 he has carried on trade as a bricklayer either by himself or with friends in an active manner. He said before 1997 he may well have worked 7 days a week.
I have no doubt the plaintiff was a very able and competent bricklayer and worked long hours in his trade.
The plaintiff, who was about, in my estimate, 5’ 10” in height with a muscular build, said that in the late 1970s he was the State hammer throwing champion, and, consequently developed further fitness with his athletic pursuits.
The plaintiff said during 1995 he suffered a shoulder injury and missed some time from work. He had previously effected his income continuation insurance policy with the first defendant, and, made a claim under the policy and received benefits. He said he thought he received benefits for several months.
The plaintiff said that his son, Adriano, commenced work with him in June 1995. Adriano did not finish year 10, but was anxious to commence work with his father and was apprenticed as a bricklayer. He said Adriano attended trade school and became a qualified bricklayer in 1998 and has continued work in the family partnership. The partnership of the plaintiff and his wife carried on under the name of “Ortija Bricklaying” and later “A, L & A Patane”.
In 1996 the plaintiff suffered a back injury and thought he was away from his work for several months. He again made a claim on his policy and received benefits, but, in time, resumed his normal work.
The plaintiff said that in January 1997 he was working on a hillside at Eden Hills. It had rained and the site was wet and muddy. He was carrying angle iron on his shoulder and slipped. He felt pain in his shoulder blade and lower back. He said they were building a three storey house. He attended the doctor and a physiotherapist and was away from work for approximately a month. Apart from his own general practitioner he attended Dr Fisher and xrays were taken of his back. He then made a claim for benefits under his insurance policy and was paid monthly sums.
The plaintiff said he resumed work in about March 1997 and was only able to average two or three days per week. He said at that time Adriano was with him and they were employing casual labour. He said when he got back to work he was not able to do a full day’s work. He said his working life seemed:
“Most of the time start fairly late, work for a couple of hours, then by the time it would have been lunch, rest for a while, and sometimes I could, sometimes I could work for another hour or so.”
This compared with his prior fit life as a bricklayer when he would commence work at 6.00am or 6.30am.
The plaintiff said he recalled in March or April 1997 working at Eastwood on two homettes and, whereas before he would lay 100 bricks an hour, with his problems he felt he was only laying “about 30, 20, 30” bricks per hour, but continued with contracts because he was anxious to keep continuous work for his son. He continued his bricklaying activities at a reduced rate.
The plaintiff produced a schedule of jobs that he and his son had been involved with and completed from January 1997 until late 1999. In the main it was small housing. He outlined the days that he had worked and also times when he was struggling. He admitted that his performance was not satisfactory and “I wouldn’t employ myself”. He said as an estimate he thought he was probably working at about 25% of his prior efficiency.
The plaintiff said that during this time his main medication was Panadeine Forte. He had reached a stage where he was using “a bit too much” and his concern for his son continued as “he should be going out on his own and earn good money, proper money that he should be earning”.
The plaintiff said that in the early years of the partnership with his wife the partnership was known as “Ortija Bricklaying”. He carried on this partnership from about 1987 to 1996. However since 1996 he has carried on in partnership with his wife and his son, Adriano, under the name of “A, L & A Patane”.
He confirmed that the relevant tax returns had been prepared by a tax agent. He said he would simply provide the tax agent with details of his income and expenditure and returns would be prepared which both he and his wife signed. Copies of the tax returns for the years ending 1994 to 1999 were tendered.
My summary of the same is as follows:

TAX

PARTNERSHIP INCOME			INDIVIDUALS - DISTRIBUTION
DATE	Gross	Net	Antonio	Liliana	Adriano
30/6/94	Note:.... Total “business” income (sales deducted $59,428) 108,742	37,354	18,677
30/6/95	68,314	12,919	6,460	6,460
30/6/96	77,897	35,660	17,830	17,830
30/6/97	Bricklaying 14,969 PSP 37,150 Sick Acc 23,299 76,666 (Paid Adriano - $15,983)	36,684	18,342	18,342
30/6/98	Bricklaying 68,932 Sick & Acc 25,722 ** 94, 654	80,026	** 25,722	27,145	27,161
30/6/99	123,530	89,053	29,684	29,684	29,685

The summary confirmed the plaintiff’s evidence of the initial husband and wife partnership which shared the net profit equally until 30 June 1997. In that year the partnership paid Adriano $15,183 for his work. In the year ending 30 June 1998, the defendants had paid under the policy the sum of $25,722 which was applied directly to the plaintiff, his wife and Adriano then sharing the remaining net income. For the year ending 30 June 1999, the partners equally shared the net income. The increase in gross income for the years ending 30 June 1998 and 30 June 1999 was noted.
The plaintiff viewed his restriction as permanent and ongoing.

Plaintiff’s cross-examination

The plaintiff was cross-examined in detail about his work effort on many sites and confirmed that his injuries restrict his bricklaying work particularly when he bends over repeatedly, but, he would do it with pain and “as much as I can”. He said his performance had become less and less and slower, not only with bending, but with twisting, and that the continual laying of bricks caused the onset of these problems. He said he does not mix concrete as a labourer carries out that task. He said occasionally he used a wheelbarrow, but not often. He would try this. He admitted that at times he would endeavour to prepare scaffolding.
The plaintiff was then shown the videos of his activities at building sites.
The plaintiff agreed that the first film of him was on 3 September 1999 doing bricklaying work at Walkerville. He commenced at about 7.37 in the morning. There were various segments until approximately 14.30. It initially showed the plaintiff setting out the brick courses and then laying bricks. The plaintiff was erecting a brick fence.
When the matter resumed, the plaintiff confirmed that he had seen all of the films of himself carrying out bricklaying work. He agreed after the Walkerville job he carried out work at a residential house at Hove and at Klemzig in August 1999. Subsequently he worked on houses at Malvern and Hughes Street, Unley.
The plaintiff confirmed he was filmed doing work at Belt Street Klemzig which showed him bending forward and turning. He said he would try not to straighten up because he found that more painful. Again on 3 September 1999 he was filmed at the property at Belt Street, Walkerville building a fence. That film showed him bending and laying bricks. He said he bent slower than he normally would if he was without pain. That film also showed him unloading a wheelbarrow from a tray-top vehicle. The plaintiff pointed out that at various times his left hand was resting on his knee for support.
The plaintiff recalled working on the brick veneer units at Hughes Street, Unley which included stone face work. That film finished at about 1.28pm that day showing the plaintiff laying stone at waist height.
The plaintiff agreed that on Tuesday 31 August, Wednesday 1 September and Thursday 2 September 1999 he did bricklaying work at the Klemzig units. The film showed him loading a cement mixer and a 44-gallon drum onto a trailer. He then drove to the job at Hove. He said that he believed on this occasion the labourer due to accompany him to do that job was not available so he decided to proceed by himself and loaded the equipment.
The plaintiff was filmed on 23 November 1999 carrying out similar bricklaying work. That film commences at about 7.58am. He explained that on this occasion he was using a thin veneer stone which is attached to the face brickwork and at times he was laying the face stones at head level. There were times when the plaintiff, somewhat precariously, was standing on a milk crate reaching up to head level to apply the face stones.
The plaintiff was asked a number of questions about base material for the preparation of his tax returns, and, he summarised at one stage his answers by saying that he gave the details to accountants with words like “do my tax, don’t make me pay tax that’s all”.
The plaintiff was asked about the opinion of Dr Schaeffer that in February 1998 he was fit to return to work had any impact on that income and he replied that in his opinion it was due to the increase in rates for bricklaying. He said he also believed his son was becoming a competent and faster bricklayer and this combined with the increase in rates and less breaks between jobs contributed to this substantial increase. The plaintiff said they received an increase of $400 to $500 per thousand bricks. Previously he said the increase in 1999 was from $450 to $550.

He was then asked:
“Q. Is there any work of a bricklayer you cannot do.
A. No.”
The plaintiff went on to mention that the films did show him a number of times putting his left hand on his knee which he did to support his back and said he would do that most of the time. He confirmed that the initial video showed him preparing and laying bricks for the fence which was small of about 200 or 400 bricks. He said previously he would have taken one day to finish that job, but not at the present time. He said his overall speed on that job reflected his problems as he was working at about one-third of his earlier abilities.
He said with the job at Hughes Street, when he was placing the face stone on the wall, Adriano was selecting the stones, preparing the mortar, passing stones and mortar to him as well as assisting with the scaffolding.
The plaintiff said in re-examination that he was placing the face stones on the job at Unley as he regarded that as easy work with his son doing all of the strenuous work at that site.
The plaintiff in re-examination said he had prepared his own summary tape of the film. He pointed out at Hughes Street, Unley where at a stage he was squatting, he felt that on this job he was certainly taking it easy doing some pointing work. He said he would endeavour to get into a position which would cause him less pain and also pointed out that on this job he was having long breaks because of his back problems. At one stage when he moved from the milk crate to get mortar, he said that movement embarrassed him and said “it looks like my father, very slow and painful”. He considered that a normal type of movement of his in recent years. He viewed the manner in which he got down from the scaffolding as a rather careful approach and said three or four years prior to that time he would have jumped off that scaffolding without any difficulty.
The plaintiff said that the film of 25 November 1999 showed him going to the office of Dr Schaeffer and the manner in which he approached` and leant on the car showed that he was in some pain.
The plaintiff late in his cross-examination produced what appeared to be a diary, a document which should have been discovered, containing daily reference to work sites. In view of the nature of the diary I allowed the plaintiff to be recalled and cross-examined on this material. Mr Patane described it as a book in which he recorded payments to sub-contractors and labourers. When a reference in the book was made to “A” it could mean “Antonio” and that he was on the job. “A and A” in the diary meant he and his son, Adriano, were on site.
The book commenced in October 1998 when initials AAA appear in daily periods. The plaintiff was evasive to many questions about the initials. There are entries which reflect cash moneys. At one stage the plaintiff said his accountant was pressing him to record something and “you know, but it’s very rough, that reflects me being disorganised”. There are words “Festa” which meant holiday and “Pasqua” which meant Easter. He said he started to use the book as a phone book and there are names and phone numbers in the back of the book which are Adriano’s entries. Mr Patane said he had never given this book to his accountant as it was simply a record for himself and he thought it played no part in his case.
The book or diary does show his regular attendance at work sites from October 1998 through to 5 April 2000.

Plaintiff’s Wife

The plaintiff’s wife confirmed that there are three children of their marriage, the two boys, Carmine and Adriano, and a daughter, Tina, who is now 16. Mrs Patane recalled that when she first met her husband he was working with his father as a bricklayer. He had over the years thereafter worked with his father in partnership and as well with a man, Dominic. Mrs Patane confirmed that her husband had worked long hours often leaving home at 6.00 to 6.30am, returning after sundown and seven days each week. She said as her sons grew up they really enjoyed working with their father on building sites. She said the plaintiff never took holidays.
Mrs Patane confirmed that Adriano was apprenticed to her husband after leaving school at 15. She was aware of the nature of their partnership and said she assisted in collating material to assist her husband in his work and banking.
Mrs Patane confirmed the physical active nature of her husband in earlier years. He played much sport including his athletic pursuits and said she regarded her family as being a very closely knit family who all enjoyed each other’s company.
Mrs Patane remembered an occasion when the plaintiff hurt his shoulder and went to a physiotherapist. She was subsequently aware of the injury to his back in 1997 and the nature of these court proceedings.
Mrs Patane was vague about many details. She explained to me that she had recently been in very poor health and was clearly under much medication. However, Mrs Patane remembered when the plaintiff hurt his back and was off work for a considerable period and attended a surgeon, Dr Schaeffer. She described the plaintiff as “not the person I had married”. She described him as being “aggro”, often in pain and taking many pain killers. Mrs Patane remembered an occasion in 1997 when the plaintiff hurt his back and her son brought him home and he went to bed. She recalled that he went to the Ashford Hospital in August 1998 and thereafter was off work, but subsequently started part-time work.
Mrs Patane said it was her view that her husband had never made a complete recovery and after each problem he seemed to be “a bit slower and a bit worse” as he got older.

Adriano Patane

Adriano confirmed his involvement with his father in the bricklaying business. He left school at 15 and joined his father. He said before this he had often worked with his father, brother and grandfather on building sites. However, in mid-1995 he commenced his apprenticeship and since that time has qualified as a bricklayer. He was now a member of the family partnership.
He said he remembered his father hurt his back, he thought, in July 1996, but kept working. He also remembered an incident early in 1997 when they were working at Eden Hills and his father was carrying an angle grinder when he doubled up and bent over. He said his father was trying to act like he was all right, but he knew that something was wrong. The plaintiff was thereafter off work.
He said his father returned to work, but he was not as quick as he was on past occasions. He said it looked as though his father was “struggling”. He said his father’s work effort after the Eden Hills accident had deteriorated and thought about half his performance abilities had been lost.
Adriano remembered a problem which occurred in August 1998 when he said he noticed some difficulty with his father and said “What’s wrong” and he said “I can’t move”. Adriano then took him to the Ashford Hospital and thereafter he said he did not regard his father as doing very much bricklaying. He thought on average his father might work a couple of hours a day and the rest of the time stand around and “tell us what to do”.

Carmine Patane

Carmine Patane is the plaintiff’s oldest son. He said in recent times he has been assisting his father and brother in their bricklaying partnership. He has been able to observe his father’s work performance over the years and felt at the present time compared with say 1995 he only had about 10% of his capacity. He said he sees him regularly and described him as “a grumpy old man”.

Carmine Paolino

Mr Carmine Paolino, a young man now aged 36, gave evidence and said from about the year 1990 had been on building sites in a labouring capacity assisting the plaintiff. He said the plaintiff could lay bricks “like a machine”. He said he saw the plaintiff lay 2,000 bricks in one day. He said he was on a site about three years’ ago when the plaintiff slipped and was lying in mud with a piece of angle iron on his shoulder. He said he gained the impression that the plaintiff was saying there was nothing wrong. He assisted in getting the plaintiff to his feet.
He viewed the plaintiff as rather a proud man.
He has observed the plaintiff since this time and said he views him as a different person. He observed him working for half an hour or an hour and then stopping virtually doing little compared to his past work performance. He said he had also assisted him in the last two months when they were doing some rough brick work and he would work for half an hour or so and then sometimes be a spectator.

MEDICAL EVIDENCE

The medical evidence called by the plaintiff was that of Dr Mark Fisher and the orthopaedic surgeon, Mr Osti.

Dr Fisher

Dr Fisher has been in general practice for 18 years. He attended the plaintiff and prepared reports in September 1998 and May 1999.
Dr Fisher first saw the plaintiff in March 1997 when his complaints related to pain in the upper back and lower neck which existed for several months. He perused xrays which had been taken some five years earlier. He noted the xrays of the spine revealed degenerative change to the C4/6 and C6/7 levels. He also perused the results of a CT scan which was performed in July 1996 as arranged by Mr Patane’s general practitioner. He noted multilevel disc degeneration at significant levels of the L3/4, L4/5 and L5/S1. As a result of the xrays and his own examination Dr Fisher was of the view that the degenerative disease existed in most of the plaintiff’s spine.
Dr Fisher referred the plaintiff to Mr Orso Osti, an orthopaedic surgeon. Mr Patane had also been referred to Mr Osti by his own general practitioner, Dr Humphreys.
Dr Fisher had no doubt in accepting the genuineness of the plaintiff’s pain complaints supported as it was by the radiological evidence. He felt that bricklaying would contribute further to the plaintiff’s problems and could not cope with full-time work, but might be able to undertake such work for limited periods. Dr Fisher considered that by the time he again examined him in May 1999 bricklaying for him was not an option and if he continued with this occupation it would contribute to further worsening of his condition to the point where he would be in quite a significant degree of pain and restriction in any other employment that he might then want to consider.
Dr Fisher was also aware of the findings and the views of Mr Osti which no doubt he accepted as the same were similar to his own.
Dr Fisher said that he had this year observed the film showing the plaintiff working on building sites. He said he reached the view that while the film did show excerpts of him bricklaying it showed him bending and lifting over limited periods and he did not change his prior view. He said his view was always that Mr Patane had admitted to him that he was anxious to do his work and would try and attend work sites.
Dr Fisher was cross-examined in detail particularly on what appeared in many of the films of Mr Patane’s work efforts. He eventually answered:
“On the video there appear to be no restriction. The only comments I would make about that are firstly, and I think I said in my report, he did make the statement to me that he was on site quite often eight to 10 hours a day, but was only working or able to work approximately three or four hours a day. That’s not too far outside the number of hours you’re suggesting. Secondly, this type of condition which is degenerative and inflammatory, quite often does warm up when they become active, so for a period of time they do become more active as they warm up, just like when you have a stiff knee that warms up. So I wouldn’t be surprised that for a period of time he was able to do that work actively. That doesn’t necessarily change my opinion that it’s not contributing to a long-term deterioration of the condition, I still believe it would, and it doesn’t also demonstrate repeated hours and repeated days in a row of trying to maintain this type of activity.”

Mr Osti

Mr Osti gave evidence of his examinations and views of the plaintiff’s condition. He confirmed that he had prepared three reports on 3 December 1999, 22 December 1999 and most recently on 6 April 2000.
He confirmed that he first saw the plaintiff on 13 March 1998. He arranged for him to undergo a CT scan and xrays. When he received that material he then wrote to Dr Humphreys, the treating general practitioner. Mr Osti confirmed that when he first saw the plaintiff in early 1998 from the material that he had then, he felt that he had symptomatic spondylosis and requested that further xrays be undertaken of his spine. He recommended that:
“As far as work is concerned I would expect Antonio to cope with light physical tasks at work on a full time basis although he would be unsuitable to work in a capacity where he is required to bend forward repetitively, lift repetitively over 15 kilograms and perform repetitive overhead work.”
Mr Osti noted that when he first saw Mr Patane he said he believed that he was working 20 hours per week but with difficulties.
He subsequently saw the plaintiff on 3 December 1999 when he advised that “he continued to suffer from low back pain slightly worse towards the right side and associated with irradiation of pain along the left thigh and the left knee”. He confirmed that the plaintiff was continuing to work helping his son in the bricklaying business on a part-time basis, but had difficulty performing any physical task which required repetitive spinal movement.
Mr Osti noted that the CT scan of the lumbar spine performed at his request on 18 March 1998 had demonstrated significant degenerative change at both L4-5 and L5-S1 segments although he thought Mr Patane was fit to work in a light to moderate physical capacity on a part-time basis, but would have difficulty with working full-time in his prior occupation.
Mr Osti summed up the problem with the plaintiff’s back as saying it simply meant that it was from the wear and tear to the lower two hinges on his back and no doubt reflected the nature of his occupation which he had carried on for many years. Certainly he felt he was clearly unfit to work with his pre-injury capacity and performing all duties of a bricklayer in an unrestricted fashion.
Mr Osti confirmed that he had seen the film showing Mr Patane working for periods performing heavy duties, laying bricks at ground level and at various heights, which was relatively heavy work, but did not change his overall view and opinion of Mr Patane. In fact he said the difficulty for him would be that working in that manner he would be exposed to a much higher likelihood of exacerbating and aggravating his degenerative back condition.
Mr Osti had also perused the reports of Dr Schaeffer who said that the plaintiff was not incapacitated for work. He felt this was based substantially on his perception of Mr Patane’s presentation being clouded by what he referred to as a “significant degree of functional overlay”. Mr Osti rejected Dr Schaeffer’s opinion.
He had also noted the views of Dr Champion who would appear had in recent times changed his view or assessment of the plaintiff. He said at no time did he view the plaintiff as having any degree of functional overlay.
Mr Osti was cross-examined at length about his observations of the plaintiff’s work effort in the various films, but this did not in any way change his opinion of the plaintiff. In cross-examination Mr Osti was asked questions concerning allegations of the plaintiff’s disabilities or impairments. At one stage he was asked:
“Q,... Dealing with what you saw, we can say that the film showed that he had good function of his back.
A.That he had, in my opinion, only a mild impairment. That means that his back was not perfect but not severely affected by a significant or substantial impairment like a problem, or organic or objective problem.
Q...... Your basis for having the opinion that he had a mild impairment is the underlying degenerative condition of which you are aware.
A.And the results of my examination on two occasions.
Q...... Which showed a mild impairment of movement.
A.Of movement, yes.
Q...... Which doesn’t necessarily translate into an incapacity for work.
A.Not necessarily, no. Sort of like without being too pedantic, the difference between impairment and disability; impairment is something like the loss of an arm, and disability is what you can or can’t do without an arm. If you lose an arm but you can still play a piano, you say the disability is modest. People with significant impairment may still be coping. In the case of Mr Patane, one would say that he had a modest impairment, and the disability is in question, or the degree of disability is in question. In my opinion, I believe Mr Patane did have a disability, and that the disability was that he would have had difficulties in working as a bricklayer full-time.”
The defendants called Dr Schaeffer and Dr Champion.

Dr Schaeffer

Dr Schaeffer outlined that he has practised as a neurosurgeon since 1957. In February 1998, on a referral from the claims manager of the second defendant, Dr Schaeffer examined the plaintiff with obviously much material provided by the defendant. Subsequently, in a detailed letter of report dated 9 February 1998, his views were as follows:
“1.... Degenerative changes of the spinal column of mild to moderate degree. These changes are not disproportionate to the average man in his age group.
2.He is not undergoing any specific medical treatment, and I do not believe that further active treatment is required. It seems that he takes occasional pain medication.
3...... In spite of his allegations I have not found any evidence to suggest that he is physically unfit for his normal duties as a brick-layer on a full-time basis. I do not believe that he will damage his back by continuing to work.
4.I am satisfied as to his prognosis in relation to continuing full-time brick-laying work in the foreseeable future. I believe that it is perfectly reasonable to reassure him in these terms. I am unable to make any specific comment as to his alleged prostate condition as this does not fall in my field of medicine. It is, however, possible that this aspect may be creating some anxiety in relation to his future.”
Dr Schaeffer commented that he examined the plaintiff and felt that he had an excellent range of mobility in all segments of his spinal column. In his report he said as follows:
“He advised that his x-rays had been mislaid. However, he did bring an x-ray report dated the 24th March 1997. The report indicates some minor degenerative changes affecting the cervical and thoracic region consistent with his age. The report also indicates the existence of diffuse idiopathic spinal hyperostosis. This is usually considered to be an incidental radiological finding and not a cause of significant disability.
I observed from the correspondence that a CAT scan of the lumbar spine had been done on the 16th July 1996 and that this had revealed annular disc bulging at L4/5 and L3/4 with some prominence at L4/5. However, no evidence of focal disc herniation or nerve root compression is suggested.”
It is apparent that the plaintiff had given to Dr Schaeffer a copy of the Benson Radiology reports, first of all an xray report of the cervical and thoracic spine dated 24 March 1997 and a CT scan of the lumbar spine of 16 July 1996.
During his examination-in-chief Dr Schaeffer commented that the reports indicated the existence of “diffuse idiopathic spinal hyperostosis” and viewed that finding as not a cause of significant disability.
Dr Schaeffer also confirmed that he had examined the plaintiff in November 1999. In summary, he thought there were some allegedly “bizarre” features such as his apparent inability to keep still when lying on his back. He then commented:
“There is no doubt that he is presenting in a markedly non-physical manner and I remain unconvinced as to the existence of any significant disability or loss of working capacity.”

He felt he was fit to resume normal duties as a bricklayer.

He again reported on 5 February 2000 that he had viewed what he called “highlights” of tapes and felt that these observations in that detailed letter supported his opinion.
In cross-examination Dr Schaeffer agreed that in his file was a summary of surveillance notes which he had received as well as a copy of a report from another orthopaedic surgeon of July 1997, a Mr Robin Jackson. This report from Mr Jackson was apparently arranged by the defendants. He was aware that Mr Jackson in his report referred to the xray evidence, as provided, “that Mr Patane has significant degenerative changes throughout his spinal column and, in particular, he has disc degenerative disease of a multi-level type”. When I asked Dr Schaeffer if he had read this he said “I probably did, because I do read or at least scan all other medical reports, so I guess that I read it”. Clearly he did not accept the views of Mr Jackson.
Dr Schaeffer did not agree with Mr Jackson’s view that the plaintiff had widespread degenerative disease of the spinal column. He said he had “diffuse idiopathic spinal hyperostosis” which was not as widespread a degenerative condition and said “I think that Mr Jackson commits an error when putting so much weight on these radiological appearances”. It was an interesting comment because on the report of the CT scan of 16 July 1996 at the foot, which is easy to overlook, was the comment by the radiologist, Dr David Donovan, which said:
“COMMENT: Multilevel disc degeneration.”
Dr Schaeffer was then asked:
“Q. How would you describe multilevel disc degeneration.
A. As such.
Q...... You have given a basis for disagreeing with Mr Jackson. You haven’t used the words ‘multilevel disc degeneration’. Does your explanation cover that.
A.No, because it’s my opinion that the radiological findings are not due to multilevel disc degeneration but due to diffuse idiopathic spinal hyperostosis, which is a different appearance.
HIS HONOUR
Q.When Bensons, in regard to their interpretation of their CAT scan in July 1996, commented that this man had multilevel disc degeneration, you disagree with that, do you.
A...... Could you refer me to Bensons report?
Q.You have got it there. It’s the report of 16 July 1996; you referred to it in your letter of 9 February 1998, or I think you did.
XXN
Q.Yes, it’s on p.3: ‘I observed from the correspondence that a CT scan of the lumbar spine had been done on 16 July 1996 and this had revealed annular disc bulging’.
A...... The term is not mentioned, at least I can’t see it.
HIS HONOUR
Q...... Yes it is. That’s the copy I was given of that CAT scan. I’m referring to the comment.
A.In this report the radiologist doesn’t mention ‘diffuse idiopathic spinal hyperostosis’.
Q...... He mentions ‘multilevel disc degeneration’.
A.I’m speculating here. Perhaps they are using one term when another would be more appropriate.
Q...... Are you saying the radiologist is wrong.
A.I think it’s one of these issues which is, to some extent, semantic. The semantics are important. In fact, in middle aged people, there are many with multilevel disc degeneration which have a good prognosis.
Q...... I accept that. A moment ago you didn’t describe this man as having multilevel disc degeneration, when that’s what the radiologist said he had.
A.I didn’t remember the report.
Q...... You have made an error there.
A.I suppose I made an error in forgetting what the radiologist said.
Q...... Now that you have refreshed your mind from that, what is your opinion now.
A.Well, of course, you have to remember that I have only seen X-ray reports. I have never seen the X-rays, not to my recall. What I am wondering is - obviously I got the term ‘diffuse idiopathic spinal hyperostosis’ from somewhere. There must be another radiological report that differs from that report over here.
Q...... A CAT scan certainly, from what I understood, is a better diagnostic tool that an X-ray
A.What is?
Q...... A CAT scan.
A.A CAT scan is more useful for diagnosing disc herniations. A plain X-ray is more useful for diagnosing the abnormalities affecting the bones itself. A CAT scan can be useful for that as well. A CAT scan is for focal disc degeneration.
Q...... This obviously is a radiologist who has the X-rays and says this man has multilevel disc degeneration; do you agree with that.
A.I have not seen the X-rays.
Q...... You disagree.
A.I’m neither agreeing, nor disagreeing.
Q...... In view of that report, does it change your evidence.
A.No, it doesn’t change my evidence. My evidence in relation to his overall condition remains the same as what it was before.
Q...... Even though you now admit you have now learnt the radiologist says he has multilevel disc degeneration, and, indeed, in July 1996.
A.As I mentioned before, this could be, to some extent, a semantic difference. Some radiologists might use the term multilevel disc degeneration. Other radiologists might use the term diffuse idiopathic spinal hyperostosis. I can’t take that any further than that.
Q...... You say you got your multilevel diffuse -
A.Diffuse idiopathic spinal hyperostosis.
Q...... You said you got that somewhere from a report.
A.Yes, certainly. I wouldn’t have plucked it out of thin air.”

Dr Champion

The defendant also called Dr G Champion a rheumatologist at the Ashford Specialist Centre at Ashford. He examined the plaintiff at the request of the defendants’ solicitors in July 1999. He was also then in a position to peruse reports of Dr Fisher and Mr Osti. He said he arrived at the opinion that the plaintiff had degenerative lumbar disc disease and it was unlikely that he would be able to continue with bricklaying on a part-time or full-time basis. He based this on workers involved in heavy manual work do have an increased incidence of degenerative disease. In assessment terms he felt the plaintiff had a 25% loss of function of his spine.
He again examined the plaintiff in November 1999 and took a detailed statement.
Despite Mr Patane having radiological evidence of degenerative disease and his earlier opinion following the initial consultation that the plaintiff was significantly disabled he said he observed that the muscles were well-developed around the lumbar spine and he had good movement. Dr Champion felt that there was unlikely to be a significant disability in his lumbar spine as in contrast with his earlier opinion and consequently his view was that the plaintiff was fit to carry on working as a bricklayer.

100 Dr Champion has subsequently seen the films and that has reinforced his opinion.

Dr Champion went on to explain that he was conscious of recent published works, particularly a book by a colleague who had made a study and organised radiographs of Pitjantjatjara people as well as Europeans and surveys on back pain. He also said he was in agreement with the views of Dr Schaeffer. He was asked particularly about the views of Mr Jackson and he said:
“It’s important but I’ll qualify it by saying that orthopaedic surgeons may have a different view regarding the spine than what conservative rheumatologists do. Conservative means non-operative.”

102 His view was that even accepting significant degenerative changes in his spinal column that does not necessarily apply disability. He was asked about his change of view and he said:

“Yes, I admit that I changed my opinion. I came about my opinion for a number of reasons. One was the history that was provided to me and remember as doctors we rely almost entirely on the history. 80% of the time a diagnosis is made from the history, 10% from the physical examination and 10% from the investigations. So one’s relying on the history. I’d been influenced by reading Dr Fisher’s report and I know Dr Fisher and I regard him in high esteem and I’d also seen the reports, the radiographic reports and given all those three factors, I came to the conclusion I did but I was mainly influenced by the history and subsequently, I changed my opinion. I did a 180 degree turn and I admit that.”

103 Dr Champion said he placed much reliance on the video surveillance film as well as his further examination and that caused him to change his mind.

104 Dr Champion had never seen the reports of Mr Osti. He agreed that, having perused Mr Osti’s reports, they were consistent with his first opinion.

MEDICAL EVIDENCE - SUMMARY

105 I accept the evidence without qualification of Dr Fisher and Mr Osti. Probably that comment is an understatement. It is apparent when one examines their evidence and their reports, that both doctors approached their task in a proper and exemplary manner, indeed, both directing that radiological evidence be obtained so they could consider their evidence in a professional diagnostic manner. This was not the approach of Dr Schaeffer. It appears from Dr Champion’s evidence, although he reached certain views initially, I believe he erred in changing his opinion because of observations of the film which, no doubt, played a vital part in his change of heart.

106 However, from the evidence of Dr Fisher when the plaintiff presented to him for examination he did have copies of the Benson Radiology diagnostic reports of 24 March 1997 and 16 July 1996, bearing in mind he was examining the plaintiff as at September 1998. Dr Fisher as indeed Mr Osti have paid much attention to the findings of particularly the CT scan of the lumbar spine. The comments showed that the plaintiff had multilevel disc degeneration in his spinal column.

107 Dr Fisher accepted, as I do, the plaintiff’s nature of his work complaints and the outline of his efforts to endeavour to continue in his bricklaying trade which was clearly causing him much difficulty. I have no doubt that his view was accurate that the plaintiff would be better in other than the bricklaying industry to undertake alternate activities of a lighter physical nature. He was quite correct when he said that the plaintiff:

“.... had made a very significant effort to return to his work despite suffering significant symptoms ..... He has probably worked a lot more than I have recommended and although this is to his credit, it is also to his physical detriment.”

108 I accept that is an accurate summary, and, indeed, he maintained that opinion in his further report of May 1999 and in evidence before me.

109 Mr Osti clearly is an experienced orthopaedic surgeon. He was thorough and scientific and, as one would expect, after his initial assessment he arranged for the plaintiff to undergo a further CT scan. I would have thought that goes without saying before endeavouring to give a diagnosis of this man. Any practitioner would want as of 1998 or 1999 to upgrade the radiological evidence. Mr Patane had presented to the specialists in this early period his reports of March 1997, the CT scan of July 1996 and the xray of March 1997. The CT scan of July 1996 mentioned the multilevel disc degeneration. One would have thought any practitioner as evidenced by Mr Osti would want to know the position in 1998 or 1999 and if there had been any further disc degeneration and compare a current CT lumbar spine scan with that of the 1996 scan. Indeed this was the approach of Mr Osti. It was a careful approach one would have expected and recommended before reaching his diagnosis.

110 Mr Osti described the CT scan of March 1998 as showing significant degenerative changes. This may well have been the words in the radiologist’s report and clearly this was a base apart from his own physical observation in arriving at his view. It was his view that the plaintiff was fit for light to moderate physical capacity on a part-time basis and certainly the strenuous activities of a bricklayer was well beyond his capacity.

111 Dr Schaeffer’s report was almost perfunctory. He examined the plaintiff, looked at the 1996 and 1997 radiological reports and then I believe from the cross-examination of Dr Schaeffer he completely overlooked the very important comment on the CT scan of July 1996 as showing “multilevel disc degeneration”. His evidence on this topic speaks for itself. If he did see it he ignored it. The probabilities are that he missed the comment, or, overlooked that comment. He may well have taken his own personal view of the plaintiff and, observing his physique, for some reason rejected his explanations or his history and said he was fit for work. In respect of Dr Schaeffer the least he should have done at his initial interview before arriving at such a dogmatic opinion was to upgrade the radiological evidence. This seems to never have occurred to him. I found his explanation of overlooking the very relevant comment on the first CT scan “bizarre”.

112 Clearly he had received much material direct from the insurer. He had the important task to consider the plaintiff’s disabilities and work capacity. The very early radiological evidence was presented. I would have thought it incumbent on Dr Schaeffer to arrange for up-to-date reports, a course followed by Mr Osti. However, Dr Schaeffer, in my view, not only ignored or overlooked the very important radiological finding, but took no steps to cause any further investigatory steps, and then blandly said the plaintiff was fit for work.

113 I reject his evidence entirely.

As appears from these reasons, Dr Champion was initially aware of the views of another orthopaedic surgeon and came to the view similar to that of Dr Fisher and Mr Osti. However, clearly subsequent viewing of the film played a major role in him completely changing his opinion. With respect to Dr Champion, I find some of the reasons for his change of mind particularly the “recent studies” he referred to, to be not only unusual but in my view unacceptable. I cannot rely on such evidence.

115 I have no doubt whatever in accepting the evidence of both Dr Fisher and, more importantly, Mr Osti. Their conclusions of this man is that he is not fit, nor will he ever be in the future, because of his degenerative spine, to carry on the job of a bricklayer.

THE INVESTIGATORS

116 The defendant called three investigators, the principal investigator, Mr Wiles, who was responsible for most of the filming of the plaintiff and to a lesser extent, Mr Cooke and Mr McDonald.

117 Mr Wiles confirmed that he and his fellow employees, Messrs Cooke and McDonald, were employed by IFB Investigations Pty Ltd to film the plaintiff during the course of his work duties. Mr Wiles confirmed that while the camera was operating it was his practice to make notes of various events which he regarded as relevant, and, observed during the course of that filming. It was very much the thrust of Mr Wiles’ evidence of him observing the plaintiff carrying on his bricklaying activities in a normal manner for part or portion of the days that he was so filmed.

118 Mr Wiles outlined that the plaintiff was filmed from a van in which the observer sat and operated the camera. He said on most days the camera was on continuously, but at all times he would sit behind the camera and at times make notes. He said eventually his firm produced about 20 hours of film and he approximated that he had been involved in 14 to 15 of those hours and the other employees the remainder. At the foot of each frame it shows the date and time of the film. It can be identified from that source as well as his notes.

119 Mr Wiles said he first attended at the plaintiff’s home at Grange on 16 August 1999. The plaintiff left home and travelled to premises at 5 Belt Street, Walkerville. He was present at that site from 8.30 to 10.00am and from 2.25 to 3.00pm. On this date he said he was unable to take film of the plaintiff because he was working inside the premises, however, he did observe the plaintiff stacking bricks on this day.

120 He confirmed that he was the operator of the film on 3 September 1999. On that occasion the plaintiff was involved in the building of a brick front fence and Mr Wiles was about 100 metres away from the work site. At this time he commenced filming at about 7.05am when the plaintiff worked to the lunch break, but stopped on occasions to talk to another male person. It may have been the owner or builder. The plaintiff left the site at 4.30pm. During that day he said the plaintiff worked throughout the day.

121 He said he again observed the plaintiff on 6 September 1999 when he returned to the site and loaded a cement mixer. He subsequently observed the plaintiff working at the Hove site on 8 September 1999 and then further on 23 November 1999 when he observed him at Hughes Street, Unley. He said the plaintiff arrived at Hughes Street, Unley at about 8.00am, arranged some scaffolding and laid veneer stone on the front wall of the house. He continued this work until about 8.50am then climbed down and had a cigarette, returned at about 9.00am occasionally bending down to get mortar and on occasions squatted or sat on a crate whilst he did work in the vicinity of the lower part of the scaffolding. Eventually they had a lunch break at 12.00 and returned at 12.15 to continue laying veneer stone work. He again continued until 3.00pm. He said he observed the plaintiff on the site the following day at about 7.22am although he had some breaks during the work, he was placing the veneer type stone on the front of the building as well as standing on milk crates doing this task. He continued with this work until about 1.18pm.

122 Mr Wiles also outlined the other occasions on which he had filmed the plaintiff and the nature of his work activities.

123 Mr Cooke gave evidence of his involvement in filming the plaintiff. He first filmed the plaintiff at premises at Leighton Avenue, Klemzig on 31 August 1999. He commenced filming him at that site at 7.54am. The plaintiff was mainly working inside so he ceased taking any film. However, he did take further footage at 11.21 and 11.27 of the plaintiff doing outside work. He left at 12.30. He returned to the premises the following day and made some observations. At about 9.30 he took evidence of him doing bricklaying work between the units.

124 He gave evidence of the other occasions where he had endeavoured to film the plaintiff.

125 Mr McDonald outlined his involvement in filming and notes that he had made.

FINDINGS

126 I observed the plaintiff giving his evidence and being vigorously cross-examined over many days. I have assessed him as genuine in his pain complaints, and, accept the difficulties that he has had in carrying out his work as a bricklayer. I accept that the plaintiff prior to 1996 was an extremely hardworking and very competent bricklayer. He was a man who was also obsessed with fitness and this resulted in him being able to carry out all the tasks involved in and about bricklaying for long hours. The plaintiff carried out all of these tasks with an exceptional ability. However, the onset of his degenerative back problems has caused him difficulties. I believe one witness was accurate when he said he was “rather proud and clearly loath to admit his health problem” which reflected on his inability to carry out his duties as he had in the past and loath to concede his problems. An added dimension was the introduction of his son into the business and reluctance to concede his back problems. Hence in this stage his daily attendance at jobs endeavouring to in some way cope with the tasks and ignoring the medical reports that if he continued to so act his condition would deteriorate. I doubt if the plaintiff was much concerned about his future, but, preoccupied with his daily tasks. The plaintiff is not like some who would simply stop working and say “I can’t cope”. The plaintiff has even to the present time endeavoured in a limited way to carry on his job.

127 I accept the genuineness of his complaints and disagree with any question that there was any functional overlay present in his presentation.

128 There is always cause for some concern when there is filming of a plaintiff appearing to undertake work in a normal manner. I have now viewed the films many times. The films show him working as follows:

31 August 1999, for about half an hour,
01 September 1999, various segments on that day,
03 September 1999, from 7.37am until approximately 15.28pm,
06 September 1999, a little over an hour,
07 September 1999, for something over an hour,
08 September 1999, for something over 2 hours,
14 September 1999, for a short period,
23 November 1999, odd segments from 7.58am until about 14.44pm,
24 November, 1999, around 2 hours,
25 November 1999, segments, and,
30 November 1999, for a short period.

129 What is apparent on 3 September 1999 is the plaintiff placing his hands on his knee to assist him, resting his hand on his left leg when resuming his standing position as well as resting his hand on his right leg, and placing his hand on his left leg and bending providing assistance for his activities in that manner. The plaintiff at times rests and also gets off scaffolding in a rather careful manner. He said these actions were not the manner that he previously worked and represent his adjusted manner to cope with his ongoing difficulties.

130 I accept the views of Dr Fisher and Mr Osti who have viewed these films and interpreted them in the manner that I have described. The films caused me in no way to other than accept the plaintiff’s evidence of his ongoing disabilities and his inability to cope in the manner that he had in the past with his bricklaying trade and believe the problem is deteriorating.

INCOME CONTINUATION INSURANCE POLICY

131 As appears from this policy, its relevant provisions fall under two headings. The first is headed “Benefit Provisions and Definitions” and the second under the heading “General Provisions and Conditions”. The definition of the word “disability” was in the following terms:

“Disability - shall, if the Person Insured has not changed his occupation from that stated in the Schedule, mean that the Person Insured is totally unable, due solely to sickness or accident, to engage in or attend to that occupation, but shall otherwise mean that the Person Insured is totally unable due solely to sickness or accident
(i).... during the first two years of any period of such disability - to engage in or attend to his occupation, and
(ii)during the remainder of such period of disability - to engage in any occupation for remuneration or profit for which the Person Insured could be reasonably considered qualified by his general experience and training

provided always that Disability shall not exist for the purpose of the Policy during any period in which the Person Insured for remuneration or profit engages in any occupation.”

132 It is noted that in this definition the words are “totally unable due solely to sickness or accident”.

133 “Income” is defined as follows:

“Income - shall mean income from full time engagement in the Person Insured’s occupation consisting of salary and the net profits of any business carried on by the Person Insured (whether alone or as a partner with any other person) in that occupation and includes fees paid for the personal services of the Person Insured to any Company trust or partnership less any expenses incurred in providing such personal services.”

134 “Average income” is defined as follows:

“Average Income - shall mean the average monthly income earned by the Person Insured in his occupation during the twelve months prior to Disability.”

135 “Loss of income” is defined as follows:

“Loss of Income - shall mean the difference between the Person Insured’s Average Income and his remuneration during any period in respect of which a Proportionate Benefit (see General Provisions and Conditions No. 5) is payable, provided that such difference results solely from the Person Insured having suffered Disability.”

136 The conditions of the policy are set out and numbered 1 to 17 under the heading “General Provisions and Conditions”.

137 The first condition deals with the “Injury Provision” and refers to the words “Loss or Complete Bone Fracture”, “Loss” and “Complete Bone Fracture” are then specifically defined.

138 “Proportionate Benefit” is defined in Clause 5 as follows:

“Proportionate Benefit
A Proportionate Monthly Benefit will be paid in accordance with the following provisions if the Person Insured, immediately following a period during which a benefit has been paid for Disability -
(i).... is able only to a limited extent to engage in his own or any occupation for remuneration or profit, and
(ii)does so with the written approval of the Company, and
(iii).. thereby suffers a Loss of Income of 25% or more of his Average Income.

The Proportionate Monthly Benefit shall be such proportion of the Monthly Benefit as the Insured Person’s Loss of Income bears to his Average Income.
No Proportionate Monthly Benefit shall be payable within ten years of the Expiry Date of the Period of Insurance stated in the Schedule.”

139 On my initial reading of the policy I raised the issue with counsel as to whether the provisions of the policy only related to injuries arising out of loss and complete bone fracture as defined in the policy. The only mention to spine was under the heading “complete bone fracture” and it said “Spine, resulting in Paraplegia or Quadriplegia” and provided for benefits for the maximum amount of 60 months

140 My concern was that a degenerative back condition would not fall within the meaning of the policy. However, counsel for the defendants conceded that the plaintiff’s claim had always been viewed as falling under Clause 5 of the General Provisions and Conditions being a “proportionate benefit” and to succeed in his claim the plaintiff must establish the criteria as set out in Clause 5.

FINDINGS

141 The plaintiff effected his income continuation insurance policy in May 1985 and I assume maintained the same to the present day.

142 The plaintiff’s deteriorating back condition has prevented him from carrying out his trade as a bricklayer as he has in the past and given rise to a series of claims for monthly benefits under the policy.

143 His fall at work in 1997 resulted in a significant impairment in his ability to carry out his work. I reject the finding of Dr Schaeffer of 9 February 1998 and view the plaintiff then as now as only able to carry out his bricklaying activities to a limited extent. I accept the medical evidence that to continue to try and carry out such work would be to his own detriment.

144 From such findings it follows that any claim he has under the policy at this stage must fall under the “proportionate benefit” provision. Under Clause 5 there are a number of pre-claim conditions to be established prior to benefits, namely:

“A Proportionate Monthly Benefit will be paid in accordance with the following provisions if the Person Insured, immediately following a period during which a benefit has been paid for Disability - “

145 The plaintiff did suffer his total disability in 1997, but gradually returned to work.

“(i).. is able only to a limited extent to engage in his own or any occupation for remuneration or profit, and”

146 The plaintiff has at all times admitted his limitations but endeavoured to work.

“(ii). does so with the written approval of the Company, and”

147 I assume that approach to work was sanctioned by the defendants.

“(iii)thereby suffers a Loss of Income of 25% or more of his Average Income.”

148 The plaintiff’s income rests solely on his taxation returns. The returns simply show a totality of earnings. There was no base material to show the source of income from distinct jobs. The plaintiff said he simply provided the figures to his accountant and the breakdown or accuracy of the same have never been questioned. The plaintiff said he only declared sub-contractors who were paid by cheque. The plaintiff did not record any cash payments. Clearly, “cash” payments either to sub-contractors or, importantly, to himself. The plaintiff said if the sub-contractor was paid cash “we lose him”.

149 Defence counsel has submitted that the tax returns are completely erroneous and relied on the plaintiff’s admissions of the nature of his work, and, for instance, pointed out that there was no record of employing any sub-contractors in 1998 which must be incorrect. The plaintiff’s own admission on Exhibit P5 would support defence counsel’s argument of the non-disclosure of cash payments for income tax purposes.

150 Counsel has submitted that the tax returns are wholly unreliable and cannot be tendered in establishing a basis of loss. Whilst I consider the returns are lacking in exact detail and are inaccurate in establishing the totality of income, I think the same must be viewed as establishing a minimum level of the plaintiff’s income and I cannot totally reject the same.

151 The initial definitions provided that income in full-time employment consists of income from both “salary and the net profits” of any business.

152 “average income’ is defined as:

“Average Income - shall mean the average monthly income earned by the Person Insured in his occupation during the twelve months prior to Disability.”

153 This is then related in the proportionate benefit clause to a “Loss of Income of 25% or more of his Average Income”.

154 It appears from the summary the plaintiff after his injury in January 1997 made a claim under the policy and the defendant admitted such claim and paid him a monthly benefit under Clause 5 until February 1998 when Dr Schaeffer considered that he was not suffering any medical disability and was able to carry out his bricklaying trade.

155 In view of my findings, placitum (iii) of Clause 5 has to be determined. The only relevant evidence of the plaintiff’s earnings are his taxation returns.

156 I propose to consider the same for the two periods as at 30 June 1998 and 30 June 1999. There is no evidence for any further period.

First period - 30 June 1998

157 The tax returns show that as at 30 June 1998 the plaintiff’s income for taxation purposes was the sum of $25,722, being the monthly benefits or proportionate benefits received from the defendants which roughly equates to 12 monthly payments of $2,222 with, no doubt some cost of living adjustment

158 It would follow that as at 30 June 1998 the plaintiff was entitled to receive his monthly benefits and consequently the defendants are liable to pay such benefits from the date of cessation, namely February 1998 to 30 June 1998.

Second period - 30 June 1999

159 The plaintiff’s tax returns show his income from the new partnership with his wife and son as one-third of the net profit namely the sum of $29,684. This income was indeed significantly more than he had ever received in prior years.

160 The question to be determined is “has the plaintiff in this period suffered a loss of income of 25% of his “average income””. “Average Income” is defined as related back to the income in the prior 12 months to disability. For the year ending 30 June 1998 his taxable income was solely from the defendants’ payments. If “prior to disability” is to be given any weight one may have to resort to the year ending 30 June 1996 as the last period in which the plaintiff earned income without disability. His net income that year was $17,830. I do not consider that I can for this exercise consider the gross income as clearly the plaintiff was the sole contributor of income with his wife having a very minor bookkeeping role. I note “net” profit is mentioned in the definition of income. The plaintiff’s income from his partnership for the year ending 30 June 1999 was $29,684. If this is accurate the plaintiff has failed to prove a loss of 25% of his average income for this yearly period.

161 Plaintiff’s counsel has submitted that this “type of family partnership” is not one which should be taken into account when interpreting the policy and rather I should look at the work effort of the plaintiff as the sole income provider until the advent of his son and in construing the policy I should look at the gross income coming from his sole efforts in the years 1996 through until 1999.

162 I do not believe the policy should be so interpreted. In any event, if it does, this proposition can only relate to the years ending say 1994 until 1996. Adriano was a significant contributor in the year ending 1997. His net income for the year ending 30 June 1999 was indeed substantially more than 75% of his income for those years.

163 Defendants’ counsel has mounted strenuous criticisms of the lack of basic evidentiary material to establish the true income position. I accept those submissions. No doubt, if I had this detailed material it may well show an accurate position and, indeed, be supportive of a loss of income. However, I have no such material, only the tax returns which show a gross income from unknown sources. However, I accept the same as showing a minimal source of income.

164 In view of these findings the plaintiff has failed to qualify for any monthly benefit for the year ending 30 June 1999.

Third period - 1 July 1999 to date

165 No evidence has been placed before me as to the plaintiff’s income in this period. Consequently, I am unable to make any declaration for this period.

166 I note that no proportionate monthly benefit is payable within 10 years of the expiry date of the policy.

167 I therefore make the following declarations:

A declaration in terms of 20(a), (b) and (c) of the statement of claim.
A declaration that the defendants wrongfully terminated the proportionate monthly payments to the plaintiff on 9 February 1998 and that the plaintiff is entitled to receive the same until 30 June 1998.
A declaration that the plaintiff is not entitled to receive the proportionate monthly benefits from 1 July 1998 to 30 June 1999.

168 I will hear parties on the form of the order and costs.

[2000] SADC 60

23 May 2000