| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : ROBERTS -v- TOWER AUSTRALIA LIMITED [2003] WADC 209 CORAM : REGISTRAR KINGSLEY HEARD : 10 JULY 2003 DELIVERED : 25 SEPTEMBER 2003 FILE NO/S : CIV 342 of 2003 BETWEEN : VICTOR CHRISTOPHER ROBERTS Plaintiff
AND
TOWER AUSTRALIA LIMITED (ACN 050 109 450)
Defendant
Catchwords: Practice - Application to strike out particular paragraphs of statement of claim or alternatively to provide particulars of statement of claim - Turns on own facts
Legislation: Nil
Result: Application allowed in part
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Representation:
Counsel:
Plaintiff : Mr A Stavrianou
Defendant : Ms P E Cahill
Solicitors:
Plaintiff : D'Angelo & Partners
Defendant : Jackson McDonald
Case(s) referred to in judgment(s):
Beverley v Tyndall Life Insurance Co Ltd [1999] WASCA 198
Gutteridge v Commonwealth of Australia, unreported; 586/93; BC9302579; SCQld; 25 June 1993
Kelly v New Zealand Insurance Co Ltd (1996) 130 FLR 97
Wyllie v National Mutual Life Association of Australasia, BC9703063; SCNSW; 18 April 1997
Case(s) also cited:
CIC Insurance Limited v Barwon Region Water Authority [1999] 1 VR 683
Edwards v Hunter Valley Co-op Dairy Co Ltd (1992) 7 ANZ Ins Cas 61-113
Maksimovich v Royal & Sun Life Assurance Australia Ltd [2003] WASC 46
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1 REGISTRAR KINGSLEY: The defendant, by an application filed 24 April 2003, sought orders that par 3.8 and pars 13-20 of the statement of claim be struck out or that par 21 of the statement of claim be struck out or alternatively the plaintiff provide particulars to par 21. At a hearing on 8 May 2003 the plaintiff was ordered to file and serve a minute of proposed amended statement of claim. This the plaintiff did on 11 June 2003. Accordingly the application before me is whether the plaintiff's minute of proposed amended statement of claim dated 11 June 2003 (the Minute) is one that ought to be allowed to stand.
2 The plaintiff pleads that he was the policy owner and life insured under a Policy of Income Protection Insurance. The plaintiff applied for the policy on or about 27 March 1995. Pursuant to a request by the insurer, FAI, the plaintiff supplied additional information on or about April 1995 relating to an injury to his back. 3 At par 7 of the Minute the plaintiff pleaded that on 10 May 1995 the insurer notified the plaintiff in writing that it was unable to cover the plaintiff on its standard terms but was prepared to offer cover subject to a back exclusion. The back exclusion was that no benefit was payable for any disability arising directly or indirectly from any disease, disorder or injury to the lumbo-sacral spine. Subsequent to receiving this offer in May 1995 the plaintiff made further enquiries with FAI, and by letter dated 6 June 1995, the contents of which are pleaded at par 9, the plaintiff was advised that a claim would not be denied without regard to the circumstances and that the insurer would pay a claim in circumstances where it was felt it would be unfair for the exclusion to apply. 4 The plaintiff also pleads that, before the contract of insurance was entered into, the defendant represented to the plaintiff that the policy would respond notwithstanding the back exclusion, and that a claim by the plaintiff pursuant to the contract would be dealt with without regard to the back exclusion. Particulars of these representations have been given. The plaintiff pleads that those misrepresentations were misleading and deceptive. In reliance upon the representation the plaintiff accepted FAI's offer of insurance and made and maintained payment of premiums. 5 From pars 20-32 of the Minute the plaintiff pleads a motor vehicle accident which resulted in him being totally incapable of working and pleads four insurance claims upon the defendant, and pleads the fact all four claims were rejected by the insurer. It is from the rejection of the second insurance claim on the basis of the back exclusion, which is repeated in the rejection of the third and fourth insurance claims, that the
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plaintiff pleads that the defendant has acted unfairly, unreasonably, contrary to the evidence and in breach of the contract of insurance and in breach of s 13 of the Insurance Contracts Act. 6 The defendant contends that par 11(b) of the Minute is embarrassing in that in par 10(b) the plaintiff pleads the defendant represented to the plaintiff that a claim by the plaintiff pursuant to the contract would be dealt with without regard to the back exclusion in circumstances where it would be unfair for it to apply. At par 11(b) the plaintiff pleads the representations were misleading and deceptive in that the defendant has, by letter dated 12 February 2003, and by its pleaded defence, relied upon the back exclusion. The defendant submits that the plaintiff must plead the circumstances upon which he relies to allege it is unfair for the defendant to rely upon the back exclusion. 7 In my opinion the defendant's submissions have merit. The plaintiff has identified the relevant communication at par 10(b) but has then moved to the conclusion. In my opinion the plaintiff has ignored the distinction between the actual words used in making the representation and the meaning conveyed by the words used to the plaintiff. 8 The defendant submits that par 14 of the Minute is embarrassing in that it pleads that FAI subsequently issued the contract of insurance with a risk commencement of 20 May 1995. The defendant submits that the date the plaintiff alleges the contract of insurance was issued is significant. This is because in the original statement of claim the representations were pleaded as having been made after the contract of insurance had been entered into. Having regard to the fact that the plaintiff pleads in par 13 of the Minute that it is in reliance upon the representations that the plaintiff accepted FAI's offer of insurance in my opinion the date of issuance of the contract then becomes significant. In my opinion par 14 is embarrassing. 9 As to par 16 of the Minute the plaintiff pleads he maintained payment of premiums in consideration for insurance cover including cover for disablement arising from lumbo-sacral spine injury. The defendant submits that the policy of insurance was clearly limited, whether by terms of the back exclusion or the representations. In my opinion, the case being advanced by the plaintiff is that the plaintiff entered into a contract with the defendant whereby, notwithstanding the back exclusion, the policy would respond in the event the plaintiff suffered accidental bodily injury. In my opinion the plea in par 16 of the Minute is embarrassing. It is upon the representations made by the
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defendant as to the extent of cover that the plaintiff made and maintained payment of premiums. 10 At par 24 of the Minute the plaintiff pleads that he has been capable of work in a limited extent but suffers from a continued loss of income. Some particulars are provided. The defendant submits that the particulars are inadequate in that there must be particularity how the plaintiff's ability to work full time has been limited and to identify the plaintiff's pre-injury income and income which the plaintiff alleges he has earned from June 2002 to the present. 11 The plaintiff's claim is by way of income replacement. In my opinion the material facts are that the plaintiff is limited in his capacity to work and obtain income greater than 80 per cent of his pre-injury income. I am not persuaded that par 24 of the Minute provides any embarrassment to the defendant. 12 The complaint by the defendant as to par 26-33 of the Minute is that it is necessary, in order to establish a breach of s 13 of the Insurance Contracts Act ("the Act"), to plead and prove some lack of honesty on the part of the defendant. This submission was the subject of separate written submissions delivered subsequent to the hearing. The defendant contends that s 13 of the Act does not create a conventional fiduciary relationship between insurer and insured. The defendant submits that in this unique situation, where in total and permanent disability policies the insurer is the sole adjudicator as to its own contractual liability there is the additional dimension of the obligation of good faith (Beverley v Tyndall Life Insurance Co Ltd [1999] WASCA 198). The defendant submits that the principle articulated in Beverley does not affect the general proposition in relation to s 13 of the Act that as a general rule actual dishonesty is an essential element of a plea of s 13 of the Act. 13 In the case of Kelly v New Zealand Insurance Co Ltd (1996) 130 FLR 97, the basis of the defendant's submission, the contract was one of general insurance. In Kelly dishonesty had been identified as an element which can lead to a breach of the duty of good faith. However it is not the only element that can lead to such a breach. In s 13 of the Act the requirement is that each party acts towards the other party with the utmost good faith in respect of any matter arising under or in relation to the contract. Section 12 of the Actrequires that the duty of utmost good faith must not be read down, limited or restricted in any way. In my opinion to import the notion that actual dishonesty is an essential element of a plea of breach of s 13 of the Act is in my opinion to read down, limit or restrict
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the term utmost good faith. In my opinion the authorities support the proposition there is no necessity for there to be dishonesty before a breach of the duty of utmost good faith can be made out. Authorities such as Gutteridge v Commonwealth of Australia, (unreported; 586/93; BC9302579; SCQld; 25 June 1993 (Ambrose J)) at 11 indicate that in acting with utmost good faith towards the insured with respect to their claim under an insurance policy the insurer was required to act honestly. Further, in Wyllie v National Mutual Life Association of Australasia, (BC9703063; SCNSW; 18 April 1997 (Hunter J)) even though Hunter J concluded that the insurer had failed to act reasonably, fairly or in good faith in the assessment of the insured claim there was no finding of dishonesty. 14 For these reasons pars 26-32 of the Minute are unobjectionable. I am also of the opinion that par 33 of the Minute is not objectionable. 15 For these reasons I am of the opinion that the minute of proposed amended statement of claim is not one that ought to be allowed. I will hear counsel as to the form of order and as to costs.
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