Summers v The National Mutual Life Association of
[2011] TASSC 69
•22 December 2011
[2011] TASSC 69
COURT: SUPREME COURT OF TASMANIA
CITATION:Summers v The National Mutual Life Association of
Australasia [2011] TASSC 69
PARTIES: SUMMERS, Geoffrey Douglas
v
NATIONAL MUTUAL LIFE ASSOCIATION OF
AUSTRALASIA (THE)
FILE NO/S: 38/2003
DELIVERED ON: 22 December 2011
DELIVERED AT: Hobart
HEARING DATE: 7, 8, 9, 14, 15, 16, 17, 20 and 21 June 2011
JUDGMENT OF: Tennent J
CATCHWORDS:
Insurance – Accident, sickness and income protection insurance – Income protection insurance – Whether plaintiff continuously unable to perform any gainful occupation.
Insurance Contracts Act 1984 (Cth), ss57, 59.
Halloran v Harwood Nominees Pty Ltd & Anor [2007] NSWSC 913; Chammas v Harwood Nominees (No 1) (1993) 7 ANZ Ins Cas 61-175; Manglicmot v Commonwealth Bank Officers Superannuation Corporation Pty Ltd [2011] NSWCA 204, referred to.
Aust Dig Insurance [1207]
Insurance – The policy – Interim cover – Interrelationship with substantive policy.
Aust Dig Insurance [1006]
REPRESENTATION:
Counsel:
Plaintiff: B W Rayment QC, M Gollan
Defendant: M O'Farrell SC, C Hanson
Solicitors:
Plaintiff: Firths – The Compensation Lawyers
Defendant: Turks Legal
Judgment Number: [2011] TASSC 69
Number of paragraphs: 183
Serial No 69/2011
File No 38/2003
GEOFFREY DOUGLAS SUMMERS v THE NATIONAL MUTUAL LIFE ASSOCIATION OF AUSTRALASIA
REASONS FOR JUDGMENT TENNENT J
22 December 2011
On 18 March 2003, the plaintiff issued proceedings against an insurer, Australian Casualty & Life Pty Ltd ("AC&L"). He claimed damages from the defendant for the defendant's failure and refusal to pay him a total disability benefit and/or a temporary disablement benefit from in or about March 1998 pursuant to policy number 3680857 ("the Policy"). The Policy was an income protection policy issued by AC&L to the plaintiff.
The proceedings
The writ issued by the plaintiff in March 2003 named AC&L as the defendant. It is accepted that the currently named defendant, National Mutual Life Association of Australasia, is responsible for any liability under the Policy which may be found to lie with AC&L. During the course of the proceedings, the plaintiff's solicitors either delivered or filed six different statements of claim. The plaintiff's position varied from document to document. The dates from which it was asserted risk commenced under the Policy changed back and forth between March 1994 and November 1993, and injuries now asserted were not at times even mentioned. The claims by the plaintiff also varied. In the final version, filed September 2010, being that upon which the plaintiff relied at trial, the plaintiff claimed payment of benefits pursuant to the Policy for a number of periods, in particular from 6 December 1993 to 9 July 1995 and 20 June 1997 to 21 January 1998.
The defendant pleaded a defence by reference to the Limitation Act 1974 in respect of a failure to pay benefits pleaded for the period 22 November 1993 to 8 June 1995. As at the commencement of the trial, the plaintiff was still apparently pursuing the claim in respect of a period between December 1993 and July 1995, notwithstanding the limitation period pleaded against him. It was not until counsel for the plaintiff opened his case at trial, that the plaintiff abandoned his claim in so far as it related to that period, accepting the claim was statute barred.
There is no dispute that, as a matter of fact, AC&L did pay benefits to the plaintiff for certain periods. These were:
-8 June 1995 to 21 June 1997, and
-21 January 1998 to 20 January 2000.
The plaintiff's claim as identified by his counsel at the opening of the trial was as follows:
(a)benefits asserted to be payable to the plaintiff pursuant to the terms of the Policy for the period 21 June 1997 to 21 January 1998 (a period of seven months), and
(b)damages in respect of the wrongful repudiation of the contract of insurance constituted by the Policy, calculated by reference to the plaintiff's unpaid entitlement to benefits from 20 January 2000 for the rest of the plaintiff's life.
It is the plaintiff's case that he has been totally disabled within the meaning of the Policy for the whole period of his claim and remains so, and will be so incapacitated for the rest of his life.
The pleadings
To understand the way in which both parties have approached this matter, it is necessary to set out the bulk of the pleadings. I will do so in table form for convenience.
"Statement of Claim
Defence
1 The plaintiff made an application and payment of premiums to the Defendant for the issuance of an Income Protection Policy on or about 11 November 1993.
1 The defendant admits the allegations of fact in paragraph 1.
2 By a policy of insurance, No: 003680857 dated 8 March 1994 and made between the Plaintiff and the Defendant (hereafter called "the Policy"), in consideration of the payment of premiums as therein prescribed, the Defendant agreed to indemnify the Plaintiff by the payment of a prescribed benefit upon the happening of certain events from 11 November 1993.
2 Save and except that the defendant denies that the date upon which the defendant agreed to indemnify the plaintiff by the policy was 11 November 1993, the defendant admits the allegation of facts in paragraph 2.
3 According to the terms of clause 2.1 of the policy, in the event of 'total disability' as defined by clause 1.2 of the policy, the Defendant agreed to indemnify the Plaintiff by the payment of a 'total disability benefit' expressed therein to be equal to the 'monthly benefit' (thereafter called 'the benefit').
3 The defendant admits the allegations of fact in paragraph 3.
4 ……….
5 ………..
6 At all material times the Plaintiff elected to receive the indexation benefit and paid increased premiums. Within approximately 3 days of the November 1993 injury the Plaintiff orally informed the Defendant's agent Peter Tubbs of the November 1993 injury and resultant disability.
6 The defendant does not admit the allegations of fact in paragraph 6.
7…….
8 Pursuant to clause 1.5 and the policy schedule, the benefits payable to the Plaintiff upon suffering total disablement were for life.
8 The defendant admits the allegations of fact in paragraph 8 subject to reference to the full and complete terms of the policy at trial.
9 …….
9………
FIRST INJURY
10 On or about 22 November 1993, the Plaintiff suffered an injury to his right shoulder as a result of which he suffered a 'total disability' according to the terms of clause 1.2 of the policy.
10 The defendant does not admit the allegations of fact in paragraph 10.
11 Despite the making of a claim and the Plaintiff's compliance with the terms of the policy, the Defendant failed or refused to pay benefits to the Plaintiff pursuant to the terms of the policy from 22 November 1993 until 8 June 1995.
11 Save and except that the defendant admits that it has not paid benefits for the period 22 November 1993 to 8 June 1995 the defendant denies the allegations of fact in paragraph 11 and says:-
(a) The injury the subject of the claim occurred before the policy commencement date as defined at 1.8 of the policy and the injury was not then an injury that the policy applied to;
(b) the defendant relies on s4 of the Limitations Act 1974 and says that the claim for the first injury is barred by the operation of statute.
12 On or about 8 June 1995 the Plaintiff underwent right shoulder surgery.
12 The defendant admits the allegations of fact in paragraph 12.
13 On or about 8 June 1995 the Defendant made payments of the benefit to the Plaintiff pursuant to the policy up until 21 June 1997.
13 The defendant admits the allegations of fact in paragraph 13.
SECOND INJURY
14 On or about 3 January 1997, the Plaintiff suffered an injury to his knees as a result of which the Plaintiff suffered an additional 'total disability' according to the terms of clause 1.2 of the policy.
14 The defendant does not admit the allegations of fact in paragraph 14.
15 On or about 28 January 1997 a further claim was made by the Plaintiff to the Defendant for benefits payable as a result of the further injury mentioned in paragraph 12 herein.
15 The defendant admits the allegations of fact in paragraph 15.
16 Despite the making of a claim and the Plaintiff's compliance with the terms of the policy, the Defendant failed or refused to pay benefits to the Plaintiff pursuant to the terms of the policy from 21 June 1997.
16 Save and except that the defendant admits that the plaintiff made a claim the defendant denies the allegations of fact in paragraph 16 and says that the plaintiff was not totally disabled within the meaning of the policy.
17 Despite the continuation of the Plaintiff's total disability and the Plaintiff's compliance with the terms of the policy, the Defendant has failed and/or refused to make payments of the benefit to the Plaintiff for the period from 21 June 1997 to 20 January 1998.
17 Save and except that the defendant admits that it has not paid the benefits for the period 21 June 1997 to 20 June 1998 the defendant denies the allegations of fact in paragraph 17 and says that the plaintiff was not totally disabled within the meaning of the policy.
18 The Defendant conceded total disablement within the meaning of the policy for the period 21 January 1998 to 20 January 2000.
18 The defendant does not admit the allegations of fact in paragraph 18.
19 Despite continuation of the Plaintiff's total disability and the Plaintiff's compliance with the terms of the policy, the Defendant failed and/or refused to make payments of the benefit to the Plaintiff for the period from 20 January 2000.
19 Save and except that the defendant admits that it has not paid benefits since 20 January 2000 the defendant denies the allegations of fact in paragraph 19 and says that the plaintiff was not totally disabled within the meaning of the policy.
THIRD INJURY
20 On or about 26 September 2002 the Plaintiff suffered an injury to his back which caused a further 'total disability' according to the terms of clause 1.2 of the Policy.
20 The defendant denies the allegations of fact in paragraph 20.
21 Following the injury mentioned in paragraph 18 herein, on or about 26 April 2003 a further claim was made by the Plaintiff to the defendant for benefits payable as a result of the further injury.
21 The defendant does not admit the allegations of fact in paragraph 21.
22 Despite the making of the further claim and the Plaintiff's compliance with the terms of the policy, the Defendant has persisted in its failure and refusal to pay benefit to the Plaintiff pursuant to the terms of the policy from 20 January 2000.
22 Save and except that the defendant admits that it has not paid benefits since 20 January 2000 the defendant denies the allegations of fact in paragraph 22 and says that the plaintiff was not totally disabled within the meaning of the policy.
23 The Plaintiff contends that while each of the three injuries have resulted in continued TD, the combined effect of the injuries result in a further entitlement to be paid TD benefits.
23 The defendant denies the allegations of fact in paragraph 23.
24 The Defendant purported to cancel the policy from 23 August 2003.
24 The defendant does not admit the allegations of fact in paragraph 24 and says:-
(a) It was an express term of the policy at Part 4 of the policy that the policy would terminate upon the plaintiff ceasing to be engaged in any gainful occupation otherwise than while in receipt of a benefit under this policy and subject to Part 2.7 leave without pay benefit;
(b) The plaintiff ceased gainful employment prior to the alleged injury of September 2002 and the defendant repeats paragraph 14, 15, 17 and 20 and says that the plaintiff was not entitled to the benefit on and from January 2000;
(c) By letter of 14 July 2003 the defendant advised the plaintiff that the policy had terminated on the basis that the plaintiff had ceased to be engaged in any gainful employment and was not in receipt of a benefit;
(d) In the premises the policy terminated on 20 January 2000;
(e) In the alternative the policy terminated on 23 August 2003.
25 The Plaintiff continued to pay premiums to the Defendant until the Defendant wrongfully cancelled the policy.
25 Save and except that the defendant admits that the plaintiff was not paid premiums since August 2003 the defendant denies the allegations of fact in paragraph 25.
26 According to the terms of clause 3.1 of the Policy, the policy is guaranteed to be renewable each year upon payment of premium.
26 The defendant admits the allegations of fact in paragraph 26.
27 According to the terms of clause 5.5(a) of the policy, no further premium will be payable whilst a total or partial disability benefit continues to be paid.
27 The defendant admits the allegations of fact in paragraph 27.
28 Since 22 November 1993 the Plaintiff complied with the terms of the policy, including those relating to the payment of premiums.
28 The defendant does not admit the allegations of fact in paragraph 28.
29 According to the terms of part 4 of the policy, the policy is terminable following the occurrence of certain events innumerate therein.
29 The defendant admits the allegations of fact in paragraph 29.
30 At all relevant times, none of the events mentioned in part 4 had occurred.
30 The defendant denies the allegations of fact in paragraph 30 and repeats paragraph 24.
31 The Plaintiff alleges that the Defendant wrongfully repudiated the policy of insurance.
31 The defendant denies the allegations of fact in paragraph 31.
32 The Plaintiff accepts the Defendant's repudiation and claims damages.
32 To the extent that paragraph 32 relies on an allegation that the defendant wrongfully repudiated the policy, the defendant denies that allegation and otherwise does not admit the balance of the allegations of fact in paragraph 32.
33 Despite the continuation of the plaintiff's total disability and the Plaintiff's compliance with the terms of the policy, the Defendant has failed, refused or neglected to make payments of the benefits to the Plaintiff for the following periods:
(a) 22 November 1993 to 8 June 1995
(b) 21 June 1997 to 21 January 1998;
(c) 20 January 2000 to date and continuing.
AND the Plaintiff claims
(a) Damages
(b) Alternatively, payments of the benefit referred to in paragraph 33 above totalling $365,961 as particularised as follows:….
33 The defendant denies the allegations of fact in paragraph 33 and denies that the plaintiff is entitled to the relief sought or at all."
How the Policy (that is policy number 3680857) came into existence
By par(2) of his statement of claim, the plaintiff effectively asserted that AC&L was "on risk" pursuant to the Policy from 11 November 1993. That was disputed. Part of the plaintiff's case is predicated on that assertion, and it is necessary therefore to consider how the Policy came into being.
In or about October 1993, Pace Tasmania Pty Ltd ("Pace"), the company then operating the Rocky Cape Tavern ("the tavern"), and with which the plaintiff was involved, was seeking to refinance borrowings secured against the tavern. It was using the services of Mr Peter Tubbs, a financial planner and credit provider. On 11 November 1993, having obtained some advice about the need for such a thing and quotes as to its cost from Mr Tubbs, the plaintiff completed an application form for, amongst other things, an income protection policy through AC&L. The plaintiff also paid an initial premium.
In his application form, the plaintiff described himself as a hotel proprietor and company director, stating he had held those positions for four years. He described his specific duties as being hotel administration and management. He said he worked 50 hours per week, and that his occupation involved 10% manual work. In response to a question whether he was self-employed, he ticked both the "Yes" and "No" boxes. He said he employed eight people. He named his employer as Pace, and provided details of that company's bank account for the purpose of a direct debit for premium payments.
On 16 November 1993, AC&L issued a document entitled Interim Insurance Cover Certificate ("IICC") to the plaintiff. The IICC provided as follows:
"interim insurance cover certificate
Name of the Insured
Mr G D Summers
Date
16/11/93
Australian Casualty & Life grants interim insurance cover to the Proposer in respect of Disability of the Insured Person named above, without any extra premium being charged. This Interim Insurance Cover is subject to the terms and conditions of Australian Casualty & Life's standard policy document for the type of policy proposed, as modified by the following conditions:
1what cover is provided?
(a) the amount of monthly cover provided by this Certificate shall be limited to the lesser of:
(i)the amount of Monthly Benefit proposed for;
(ii)$2,000; and
(iii)the amount Australian Casualty & Life would normally allow under its usual underwriting rules.
(b) The cover is only for Total Disability, caused by an Injury, which continues beyond the Waiting Period proposed for. The Total Disability must commence after the commencement of the Interim Cover and before the cessation of the Interim Cover. It should be noted that the Interim Insurance Cover does not apply where the Waiting Period is 60 days or more.
(c) The maximum benefit period under this cover will be the lesser of:
(i)the Maximum Benefit Period for Injury proposed for; and
(ii)6 months.
2commencement of interim cover
Interim Cover commences on the date the Insurance Application, together with payment of the first instalment of premium, is received at Australian Casualty & Life Head Office or Branch Office.
3duration of interim cover
(a) Subject to paragraph (b) below, the cover under this Certificate is provided until the earliest of the following times:
(i)The date on which the proposer is notified by Australian Casualty and Life of its acceptance, rejection or acceptance, subject to modification of the Insurance Application;
(ii)the date when the Certificate is cancelled by Australian Casualty and Life; and
(iii)if the Proposer withdraws the Insurance Application, the date of that withdrawal.
(b) Notwithstanding any time mentioned in paragraph (a) above, notice is
hereby given that cover under this Certificate terminates 60 days from the
date of commencement of this Certificate."
Some four months later, AC&L issued the Policy. It provided that risk commenced on 8 March 1994. There is no reference at all in the plaintiff's statement of claim to the risk commencement date of 8 March 1994 or to the existence of the interim insurance arrangement.
Interrelationship between the Interim Insurance Cover Certificate and the Policy
I will deal with this issue at this point in my reasons simply because the view I have taken informs subsequent conclusions.
A number of things become apparent from a reading of the IICC and the Policy. These are:
·the cover provided for in the former relied in part on definitions and, for example, the waiting period proposed for, in the latter;
·cover (risk) under the IICC commenced on the date the plaintiff's application for insurance and the payment of the first premium were received by AC&L's head or branch office (in this case either 11 November 1993 if Mr Tubb's office was considered a branch office, or 16 November 1993 which is the date of AC&L's receipt);
·the duration of the cover under the IICC was 60 days;
·cover (risk) under the Policy commenced 8 March 1994;
·the cover provided by the IICC related to total disability only arising from an injury, while that under the Policy related to total and partial disability arising from injury or sickness;
·the maximum benefit period under the IICC was six months, while the maximum benefit period under the Policy was five years for sickness and life for total disability resulting from an injury;
·there was no provision in the Policy which provided for the risk under it to commence retrospectively from the date of commencement of cover under the IICC.
There is no basis, having regard to the terms of the documents, to find that the IICC was simply subsumed into and became part of the Policy with a risk commencement date of 11 November 1993. They were two separate contracts.
Relevant provisions of the Policy
I have already set out the provisions of the IICC. Terms of the Policy which underpinned the plaintiff's claim also need to be set out. The Policy provided, cl 2.1(c), that Total Disability Benefits would be paid until the earlier of the expiration of the Maximum Benefit Period and the date the plaintiff was no longer totally disabled. The Policy defined "Total Disability" in cl 1.2 to mean:
"(a)during the first 2 years of a period of Total Disability, Your continuous inability to perform each and every duty of Your occupation as a result of such an Injury or Sickness;
(b)beyond the first 2 years of such period of Total Disability, Your continuous inability, as a result of the Injury or Sickness, to perform any gainful occupation for which You are reasonably suited by education, training or experience;
(c)You are under the regular care and attendance of a Doctor for such Injury or Sickness; and
(d)You are not engaged in any occupation; and for the purposes of this definition, the words 'inability to perform each and every duty of Your occupation' in paragraph (a), above, mean that You are unable to perform at least one of the duties of Your occupation necessary to producing Your Income."
Counsel for the defendant, in his written submissions, re-formatted cl (d) above in a manner which he submitted made far more sense than the way in which it appeared in the Policy. With respect I agree with the approach he has taken. The clause does not make sense otherwise.
"Injury" was defined in cl 1.4 to mean:
"injury to You caused by an accident occurring while this Policy is in force. If total Disability commences after 30 days from the date of an accident, the Total Disability will be deemed to be caused by a Sickness."
"Sickness" was defined to mean sickness or disease suffered which manifests itself while the Policy is in force.
The Policy also provided for the payment of a Partial Disability Benefit. Clause 1.7 provided as follows:
"1.7 'Partial Disability'
Means that, immediately following a period of total Disability and because of the Injury or Sickness which directly caused the Total Disability, You:
(a)are under the regular care and attendance of a Doctor;
(b)are able to perform one or more duties of Your occupation but are unable to perform all the duties of Your occupation on a full time basis; and
(c)are earning Income from Your occupation or another occupation at a monthly rate of less than 75% of Your Pre-Disability Income."
The Maximum Benefit Period provided for in the Policy in relation to an injury to the plaintiff was for life, and in relation to a sickness, five years.
The Waiting Period provided for in the Policy was 14 days. The term was defined in cl 1.13 to mean:
" … the number of continuous days, as shown in the Policy Schedule, which must elapse before benefits begin to accrue. The Waiting Period commences from the date You are first examined and certified by a Doctor as suffering Total Disability."
The Policy also provided for the manner in which concurrent disabilities would be dealt with. Clause 3.2 provided:
"Where You are Totally Disabled because of more than one Injury or Sickness, or from both, whether related or not, benefits are payable in respect of only one Injury or Sickness as We shall determine, based on medical evidence."
Clause 6.1 provided for notice of claims to be given. Written notice of a claim was required to be given within 30 days or so soon thereafter as was reasonably possible of the commencement of the Total Disability. Notice to an authorised agent was sufficient.
Another relevant provision was cl 4 relating to termination of the Policy. It provided:
"Part 4 – Termination of Policy
(a)This Policy will terminate on the earlier of:
(i) the Renewal Date following Your 65th birthday;
(ii) when You die, retire or cease to be engaged in any gainful employment otherwise than while in receipt of a benefit under this Policy and subject to Part 2.7, 'Leave without Pay Benefit';
(iii) Non payment of Premiums in accordance with Part 5.3; and
(iv) When otherwise terminated in accordance with the provisions of this Policy.
(b)If the claim continues to be paid under the Policy after the termination date, the provisions of the Policy will terminate as at that date, except for those provisions applicable to the payment and administration of that claim. Those provisions will remain in force for the purpose of payment and administration of that claim only and will immediately terminate as soon as payment of that claim ceases."
The law
The plaintiff has an obligation to satisfy the Court that he was totally disabled within the terms of the Policy, cl 1.2. That obligation relates firstly to the period 21 June 1997 to 21 January 1998, and secondly to the period 21 January 2000 and thereafter. Total disability for the purpose of cl 1.2 has a different meaning depending on whether it relates to the first two years of total disability being considered, or any period after that. In the first two years after an injury or sickness, total disability has three elements, namely:
· that the claimant has a continuous inability to perform each and every duty of "Your occupation" as a result of the injury or sickness,
· that the claimant is under the regular care and attendance of a doctor for the injury or sickness, and
· that the claimant is not engaged in any occupation.
In respect of the first of those elements, the inability means an inability to perform at least one of the duties of "Your occupation" necessary to produce "Your income".
After the first two years, total disability has three elements, namely:
· that the claimant has a continuous inability by reason of the relevant injury or sickness to perform any gainful occupation for which the claimant is reasonably suited by education training or experience, and
· the second and third elements as above for the first two years.
The Policy also makes provision for a claimant to claim benefits for a partial disability. However, the Policy does not differentiate between the first two years after an injury or sickness and the period thereafter. The elements of partial disability are:
· that the claimant is under the regular care and attendance of a doctor,
· that the claimant is able to perform one or more duties of "Your occupation", but is unable to perform all the duties of "Your occupation" on a full-time basis, and
· that the claimant is earning income from "Your occupation" or another occupation at a monthly rate less than 75% of his or her pre-disability income.
Counsel for the plaintiff submitted that, in respect of any period after the first two years, the term "gainful occupation" should be interpreted as being full-time work in a recognized occupation and not a special light duties occupation for injured workers. It should also be work that the plaintiff is likely to obtain for which his education, training and experience make him suitable. Counsel relied on an analysis of what he said was a similarly worded clause by Brereton J in Halloran v Harwood Nominees Pty Ltd & Anor [2007] NSWSC 913. In that case, the court considered the entitlement of a worker to benefits asserted to arise under a superannuation scheme as a result of a disability. The worker was required to prove to the satisfaction of the trustee that "the member has become incapacitated to such an extent as to render the member unlikely ever to engage in work for reward in any occupation or work for which he or she is reasonably qualified by education, training or experience...". A summary of the analysis by Brereton J appears at par[76] in the following terms:
"76 That phrase can be distilled into the following components.
(1) unlikely (meaning a probability of less than 50%) [White v The Board of Trustees [1997] 2 Qd R 659, 673]
(2) ever to engage (meaning on a full-time regular basis) [Riley v National Mutual Life Association [1986] 4 ANZ Ins Cas 60-684, 74063; Chammas; Nile v Club Plus Superannuation Pty Limited [2005] NSWSC 55, cf Wyllie v National Mutual Life Association of Australasia [1997] 217 ALR 324; Sayseng v Kellogg Superannuation]
(3) in any occupation or work (meaning a recognised occupation, not a special light duties job for injured workers) [Cavill Power v Royale; Dolton v State Authority Superannuation Board [1995] NSWIRC at 159 [11.1]] and being work which he is likely to be able to obtain [Chammas, Nile v Club Superannuation, [64]];
(4) for which he is reasonably qualified by education, training or experience (as at the date of assessment) [Giles, Fernance)."
This summary followed an analysis of a number of cases including Chammas v Harwood Nominees (No 1) (1993) 7 ANZ Ins Cas 61-175, a decision of Hodgson J in the Supreme Court of New South Wales.
After the decision in the present matter was reserved, the New South Wales Court of Appeal handed down a decision in a matter of Manglicmot v Commonwealth Bank Officers Superannuation Corporation Pty Ltd [2011] NSWCA 204. Both parties made written submissions as to the impact of this decision, if any, on the arguments already presented in this case. The court in that case was considering a clause in a group life policy. At par[28], Giles J set out the relevant policy term as follows:
"Total and Permanent Disablement means:
(a) suffering the loss of two limbs or the sight of both eyes or the loss of one limb and the sight of one eye (where limb means the whole hand or the whole foot), or
(b) having been absent from work through injury or illness for an initial period of six (6) consecutive months and in our opinion being incapacitated to such an extent as to render the Insured Person unable ever to engage in or work for reward in any occupation or work which he or she is reasonably capable of performing by reason of education, training or experience."
The case was not specifically dealing with the same issue as in the present case, but at pars[66] – [88] Giles J, with whom Young and Whealy JA agreed, dealt with the issue of the construction of the relevant clause. He said:
"Construction of the Hannover TPD clause
66. A central question was whether the Hannover TPD clause provided TPD benefits where the member was unfit for full time work but fit for part time work. If it did not, and on its proper construction had the same meaning in that respect as the CommInsure TPD clause with its express reference to inability to resume an occupation 'on a full time or part time basis', Senior Counsel for the appellant correctly acknowledged that 'the foundation for the action fails'.
67. As I have said, the trial judge doubted that the Hannover policy provided TPD benefits where the Fund member was able to engage in part time employment, but did not decide that matter. His Honour said at [66] that there were 'a number of reasons that undercut the argument in that the words, "unable ever to engage in or work for reward in any occupation or work ..." must necessarily be construed as connoting full time work', and after listing them said -
'[67] In my view, as at June 2003, whilst there was a prospect that the words 'full time' would have been read into the TPD clause, it is not clear that they would have been. I think that even now it is arguable that the words "full time" should not be read into the clause generally or in its application to the plaintiff. I do not need to determine whether they ought to be, because of the conclusion I have reached on the other issues in this case.'
68. The appellant relied in particular on the decision of Hodgson J (as Hodgson JA then was) in Chammas v Harwood Nominees Pty Ltd(1993) ANZ Ins Cas 61-175. The rules provided that an employee 'shall be entitled to a lump sum as a death or disablement benefit upon his death or disablement being incapacitated for further employment. ...'. The trustee had determined that the employee was not incapacitated for further employment.
69. Hodgson J said, at 77,999 -
'The first matter I need to consider is whether the defendant considered the wrong question. The crucial words in both cl 18.1 and 18.2 are the words "incapacitated for further employment". I do not think the existence in the rules of definitions of employer and employee do have the result that "employment" here should be construed to mean the particular employment of the defined employer and employee. I think the whole context of cl 18 makes it clear that employment there is to be given a wider construction. However, I do think that employment must be given a reasonable construction; and I think employment must be limited to full-time employment, and to employment which is reasonably open to the member. That is, I think, the employment must be employment which the member is capable of undertaking, having regard to his education, experience and training, or at least employment of which he could become capable of undertaking with further training which it would be reasonable for him to undertake.'
70. A claim form had used a different form of words, similar to those in the Hannover TPD clause but not the same. It was asked in the claim form whether the member had become 'incapacitated to such an extent as to render the member unlikely ever to engage in or work for reward in any occupation or work for which [he] is reasonably qualified by education, training or experience'. This form of words appears with some frequency in the cases, and I will refer to it as the common form wording. A doctor had said that the words in the claim form were satisfied.
71. Hodgson J said at 78,000, it seems because it had been submitted that the defendant may have been led to consider the wrong question by the words in the claim form -
'Turning to the question as stated on the back of the claim form, I do not think that is, in any material respect, different from the question arising from the words as I have interpreted them. The test stated there is that the member should be rendered unlikely ever to engage or work for reward in any occupation or work for which he is reasonably qualified by education, training or experience; and I think those words sufficiently indicate that the relevant employment is full-time employment, and that the question is not merely incapacity to engage in some theoretical employment, but actual likelihood of obtaining employment. And the reference to reasonable qualification, I think, appropriately encompasses the requirement that the employment should be something that the member is capable of undertaking.'
72. It will be seen that Hodgson J initially construed quite different words from the common form wording, or the words in the Hannover TPD clause or the CommInsure TPD clause. His observations on the common form wording were arguably obiter, although perhaps part of considering whether by regard to the words in the claim form the defendant had considered the wrong question. His Honour began with a 'reasonable construction' of the different words, limiting the 'wider construction' which took the words beyond the particular employment of the defined employer and employee. When taken up for the words in the claim form, however, that 'the relevant employment is full-time employment' was not limiting. It gave an extended reach to entitlement through incapacity as described in the claim form, since a member could be able to engage in part time employment although unable to engage in full time employment, but would still be entitled to TPD benefits. With respect, the reasoning to that result is not clear.
73. We were referred to other cases, in which further cases were cited. Appreciating that construction of the relevant words requires that they be seen as part of the policy as whole, and that the summary lacks that context, a brief summary of the cases is as follows.
74. Chammas v Harwood Nominees Pty Ltd was preceded by Riley v The National Mutual Life Association of Australasia Ltd (1986) 4 ANZ Ins Cas 60-684. The policy used the common form wording. Cosgrove J did not accept the submission that it was necessary to consider whether the member 'would ever work again at all, that is to say, would ever engage in part-time temporary work'. However, he upheld the employer's decision that it was not satisfied as to incapacity because the member was able to get light work in the labour market and would be likely to engage for reward in some occupation or work for which he was reasonably qualified.
75. In Wyllie v National Mutual Life Association of Australasia Ltd (1997) 217 ALR 324 the policy used the common form wording. Without express consideration of its construction, Hunter J concluded that the wording was satisfied where the incapacity was such that the member was 'limited to basic book keeping work which he does slowly, part-time and which is attended with mistakes', such that the member was 'not capable of performing that work full-time and what work he does perform requires the sympathetic understanding of those who employ him'.
76. In Beverley v Tyndall Life Insurance Co Ltd [1999] WASCA 198; (1999) WAR 327 the relevant words were 'incapacitated to such an extent as to render you unlikely to ever resume work or attend to any gainful profession or occupation for which you are suited by reason of education, training or experience'. The only occupation for which the member was reasonably suited was that of a cook or light domestic duties. Ipp J, with whom Malcolm CJ and Anderson J relevantly agreed, posed as the critical question whether the member was "unlikely ever to be capable of doing the important duties involved in her 'work' or in carrying out full-time domestic duties". There was no more detailed consideration of the construction of the words.
77. In Szuster v Hest Aust Ltd [2000] SADC 2 the policy used the common form wording. Herriman DCJ declined to follow Chammas v Harwood Nominees Pty Ltd , or to see support for Chammas v Harwood Nominees Pty Ltd in Wyllie v National Mutual Life Association of Australasia Ltd . His Honour said -
'49. I was not persuaded by that argument. Chammas' case appears to have been decided on the particular wording of the insuring clause which was quite different from that in this case, and Wyllie's case makes it clear that the proper application of that test will vary from case to case and, of course, from policy to policy. It seems to me that there may be circumstances where a capacity to undertake part-time employment is in a real sense valueless, but I do not read the insuring clause in this case as being impliedly qualified by reference to any "full-time" occupation or work.'
78. In Alcoa of Australia Retirement Plan Pty Ltd v Thompson [2002] FCA 256; (2002) 116 FCR 139 the relevant words were 'incapacitated by reason of any physical or mental sickness, injury or infirmity to such an extent as to render the Member unlikely ever to engage or work for reward in any occupation or work for which the Member is reasonably suited by education, training or experience'. R D Nicholson J considered existing authority 'inconclusive' (at [69]). His Honour directed attention to the limitation of the words 'any occupation or work' by the following words 'for which the member is reasonably suited by education, training or experience', and suggested that in that case the work for which the member was reasonably suited 'would arguably be a person wholly engaged in full-time maintenance foreman duties' (at [66]). His Honour said -
'67. When the definition is applied in this way it is seen that the characterisation of the occupation or work for which the member is so reasonably suited is itself determinative of whether or not the occupation is of a full-time or part-time character. To hold that the words referred to a full-time occupation is not necessarily to imply the words "full-time" into the definition. Rather it is to state the effect of the application of the words as they appear in the context of the factual circumstances relating to the assured.'
79. In Sayseng v Kellogg Superannuation Pty Ltd [2003] NSWSC 945 the relevant words were 'incapacitated to such an extent as to render the Insured Person unable ever to engage in or work for reward in any occupation or work which he or she is reasonably capable of performing by reason of education, training or experience'. This was materially the form of words in the Hannover TPD clause. Bryson J said at [54] that physical ability to perform work which the member did not know how to do or could not be trained to do, or to perform work which was not available, was not relevant, but that '[t]he requirement that the member be totally disabled is stringent and excludes disability from doing part-time work, again with reference to part-time work which the member can do'.
80. In Hay v Total Risk Management Pty Ltd [2004] NSWSC 94 the relevant words were 'physical or mental disablement ... to a degree which the Trustee ... considers likely to render the Member permanently incapable of obtaining or continuing in suitable employment as determined by the Trustee having regard to the Member's qualifications training and experience'. Burchett AJ said, as to a submission to the effect that the limited work the member could do could not be regarded as suitable employment, that guidance was offered by the reasoning of Hodgson J in Chammas v Harwood Nominees Pty Ltd, but (at [52]) that it was 'unnecessary to reach a view as to whether the present clause could be satisfied by some forms of part time work' because it could not be satisfied by 'such limited work as is in question here'.
81. In Nile v Club Plus Superannuation Pty Ltd [2005] NSWSC 55 the relevant words were very close to the common form wording. The reasons of Brownie AJ included -
'64. As Hodgson J pointed out in Chammas, a decision that has been followed from time to time, without anyone every apparently expressing a doubt about its correctness, and the correctness of which is not challenged now, one must consider not just the theory that someone is physically fit to do particular work, but also the actual likelihood of that person obtaining employment, meaning full time employment (or I take it, substantially full time employment, generally comparable with the plaintiff's employment before his 1996 injury) that was reasonably open to the plaintiff.'
82. In Camilleri v Australian Casualty & Life [2006] NSWDC 77 the relevant words in a definition of total disability were 'unable to perform any occupation for which he or she is reasonably suited by education, training or experience'. Rein DCJ (as Rein J then was) asked whether this meant on a full time basis. There was also a definition of partial disability, and his Honour noted at [55] that total disability focussed on ability to work full time; he concluded at [59] that -
'59. ... the clause makes no reference to "part-time" and further occupation is qualified as one "for which he or she is reasonably suited by education, training or experience" and a full time occupation is what the insured is suited for as demonstrated by the proposal. Although the context is different, I think the approach taken in Chammas to interpretation is relevant to the present problem and I respectfully adopt that approach here.'
83. In Baker v Local Government Superannuation Scheme Pty Ltd [2007] NSWSC 1173 the relevant words were 'permanently unable ... to be engaged, or to be employed, in any remunerative occupation in which ... it would otherwise be reasonable to expect the Contributor to engage'. McDougall J at [24] cited Chammas v Harwood Nominees Pty Ltd for the proposition that 'incapacity for further employment should be limited to full-time employment reasonably open to the employee', and observed at [26] that '[t]hat approach is one that is plainly available on the words of cl 5.4.1(b)'.
84. Finally, in Halloran v Harwood Nominees Pty Ltd [2007] NSWSC 913 the policy again used the common form wording, and the reasons of Brereton J included -
'47 Also like Hodgson J in Chammas , I would conclude that the reference to employment must be given a reasonable construction, limited to full-time employment reasonably open to the member, being employment which the member is capable of undertaking having regard to his education, experience and training, or at least could have become capable of undertaking with further training that it would be reasonable for him to undertake. In my view, there is significance in a context in which disability is often qualified by the adjective "total and permanent", in the circumstance that those words do not appear in clause 18.1. The degree of disablement required by clause 18.1 is less than "total and permanent", notwithstanding that "disability" is said by some of the dictionary definitions to have a connotation of permanence. Light duties, specifically for an injured worker, would not be the type of full-time employment in a regular occupation that the provision has in mind. Insofar as in the first instance decision in Sayseng, Bryson J seems to have been of the view that total and permanent disablement would not be established if there remained a capacity for part-time employment, that does not apply in the present context of clause 18.1, because of the absence of the words "total and permanent" from the present trust deed. In any event, with great respect, his Honour's view appears to be at odds with the prevailing judicial view on this topic, to which I shall return.'
85. Brereton J later referred, at [76], to the words "ever to engage" meaning on a full-time regular basis; his Honour cited for that proposition Riley v The National Mutual Life Association of Australasia Ltd, Chammas v Harwood Nominees Pty Ltd, Nile v Club Plus Superannuation Pty Ltd, Wyllie v National Mutual Life Association of Australasia Ltd and Sayseng v Kellogg Superannuation Pty Ltd. This appears to have been his Honour's return to the topic.
86. It will be noted that in Halloran v Harwood Nominees Pty Ltd Brereton J saw significance in the absence of the words "total and permanent" from the common form wording. Those words provide the context for the Hannover TPD clause: it expresses a definition of total and permanent disablement. There was no such context to the claim form in Chammas v Harwood Nominees Pty Ltd, and cl 18 in which the relevant words appeared was concerned with "disablement" without the epithets of total and permanent.
87. It does not seem to me sound uncritically to translate what Hodgson J said about limitation to full time employment to the common form wording in different contexts, or to the Hannover TPD clause. Nor has there been a consistent course of construction or application of the common form wording or variants of it.
88. The Hannover TPD clause defines total and permanent disablement . It is quite emphatic: the member must be unable ever to engage in or work for reward in any occupation or work. As further context, the member must have been absent from work for six months. Introduction of full time employment or part time employment into the wording, notions which themselves carry uncertainty (what is the standard for full time employment?) is in my view not warranted. The clause requires unfitness to work, without distinction between full time work and part time work other than by regard to the work which the member is reasonably capable of performing by reason of education, training or experience.
89. There is nothing inherently unfair or unreasonable in the Hannover TPD clause as so construed. A member who can not work even part time has a need; a member who can work part time has a different need, and one which will vary according to the work the member can perform. The premium will be struck according to the need to be met, and that is found in the terms of the policy of insurance. "
I have set out the above summary in full because it highlights that the case of Chammas, and those cases which have followed in time and relied on it, is not necessarily the last and determinative word on clauses of this nature. It highlights the need to consider each disablement clause in the context of the policy in which it appears.
The Policy in the present case was designed in the first instance to provide a policy holder with an income at a designated level in the event that he or she was unable through injury or sickness to continue the work which was producing their income at the time the Policy came into force. The plaintiff applied for the Policy at a time when he was in full-time employment. The Policy made specific provision for the plaintiff to claim a partial disability benefit where he could perform some only of the duties of the occupation he held at the time the Policy was taken out, as opposed to all of the duties on a full-time basis, and could only earn income to a level less than 75% of his pre-disability income from either his pre-injury occupation or indeed any occupation. In those circumstances, the Policy contained a formula for calculating the benefit by reference to the total disability benefit figure. This partial disability benefit was clearly designed to deal with a situation where a claimant could work part-time.
It follows in my view that the term "gainful occupation" and "any occupation" in cl 1.2(a), (b) and (d) should be interpreted as meaning full-time work.
Plaintiff's credit
The plaintiff's credit was put squarely in issue on the trial. Before dealing with any factual background, I need to comment upon my assessment of the plaintiff's credit generally. I had an opportunity to observe the plaintiff in the witness box over a number of days. He was not an impressive witness. Generally, when pressed on a topic which he realised could impact against him, he became argumentative and would not respond to questions. He was often evasive. He also became vague. At times, he had no memory of matters. At other times, when it clearly suited him, he had a good recall of events or situations. He was at all times at pains to minimise his abilities and present himself as an uneducated person, and one with no talent to do anything other than basic physical work. On every occasion where it appeared he may have had more involvement in business matters than he was prepared to admit to, he launched into involved explanations as to why it was he happened to be involved or have some knowledge, which explanations were clearly intended to suggest his presence or knowledge was almost accidental. At times, his explanations and his suggested lack of knowledge about matters were implausible and inconsistent with documentary evidence.
For these reasons, I am not prepared to accept the plaintiff's evidence on a number of subjects unconditionally. I will do so where the facts are not controversial, are uncontradicted or where they are supported by other evidence.
Claims history
On 22 November 1993, that is six days after the IICC issued, the plaintiff slipped and fell at work injuring his shoulder. The plaintiff was taken to the local hospital. Under anaesthetic, his shoulder, which had been dislocated in the fall, was re-positioned and the plaintiff was discharged from hospital. The plaintiff contacted Mr Tubbs by telephone a few days later and told him about the accident. Mr Tubbs telephoned someone at AC&L and passed on the information. The plaintiff did not complete a claim form of any description and no-one from AC&L contacted him. No benefits were paid. There was no evidence the plaintiff followed the matter up.
The plaintiff did not see his general practitioner about the shoulder injury until 14 July 1994. There was no evidence of any medical treatment being sought by the plaintiff for any problem relating to his shoulder until that date, save a passing reference to unsuccessful physiotherapy. The general practitioner, Dr Crozier, did write a letter to AC&L dated 1 November 1995 (exhibit D22) in which he described the plaintiff in the following terms after the 1993 accident:
"He was in a sling for six weeks and totally and partially disabled for three months thereafter. His work is approximately 50% manual and 50% administrative."
Dr Crozier's information could only have been as a result of a report from the plaintiff made several months after the event, given there were no consultations in the interim. The views expressed about disability in the period described could not have been based on any objective observations by Dr Crozier. The comment about the nature of the plaintiff's work is not consistent with the information provided by the plaintiff to AC&L in his November 1993 application for insurance cover.
The plaintiff was referred to Mr Einoder in relation to a subluxing shoulder joint in August 1994. There is no evidence about what treatment, if any, was given to the plaintiff following that visit. In January 1995, the plaintiff consulted a Mr Deacon as, in the words of Dr Crozier communicated to AC&L in August 1996, the plaintiff "still had considerable discomfort and episodes of sub-luxation."
It is common ground that, in January 1995, there was a significant fire at the tavern such that it could not continue operations as it had. The property insurer at the time was FAI. A claim was made by Pace pursuant to that insurance. At the time, Michael Foster and Grant Kench, then partners of a legal firm, Piggott, Wood & Baker, held a mortgage over the real estate on which the tavern was situated. They also held a charge over the assets of the company. FAI would not pay the claim and Piggott, Wood and Baker was instructed to deal with the dispute between Pace and FAI. On the advice of that legal firm, the company sought to have an administrator appointed. Mr Paul Cook was so appointed in June 1995.
The tavern's bottle shop, at least, continued to operate for a period after the fire. It was not clear from the evidence when even that closed. The evidence about what role the plaintiff performed at the tavern between 22 November 1993 and the fire in January 1995 was limited, as was evidence about what he did between the date of the fire and 8 June 1995. It must follow however that, with the closure of the tavern, the plaintiff's ability to perform the same role he had performed prior to 22 November 1993, whatever that may have been, to all intents and purposes would have ceased, irrespective of his physical capacity.
Early in May 1995, that is 18 months after the shoulder injury, AC&L received from the plaintiff a document entitled "Preliminary Claim Report" which was dated 1 May 1994. In that he described his occupation and duties as "Manager/Proprietor Rocky Cape Tavern". The plaintiff in his oral evidence suggested that it was more likely the word was "promoter" and not "proprietor". For three reasons I do not accept that. The first reason is my earlier comments about the plaintiff's credit generally. The second reason is the word looks like proprietor and not promoter. The third reason is that, in the context of what the plaintiff said his role at the tavern was, and this includes in his original application form, the word proprietor is more logical. The plaintiff described his monthly earnings as "2,712.67" and stated his employer as Pace. This form related to the shoulder injury. In that form, the plaintiff said, in response to the question, "When did you cease all work", the following, "PM 22.11.93". The next question was, "When did you first return to work?" The response was, "Part time 24.11.93". Apparently accompanying that document was another entitled "Attending Physician's Statement" dated 3 May 1995, completed by the plaintiff's general practitioner, Dr Crozier. In that, Dr Crozier said he had first seen the plaintiff in respect of his shoulder injury on 14 July 1994. I am satisfied that, having regard to the date of Dr Crozier's statement, the date upon which Dr Crozier said he first saw the plaintiff in respect of a shoulder injury and the date receipt stamp of AC&L on the plaintiff's form, the date, 1 May 1994, which appears on the plaintiff's form is incorrect and should most likely be 1 May 1995.
On 8 June 1995, a surgeon, Mr Deacon, whom the plaintiff had seen in January 1995, operated on the plaintiff's shoulder in Melbourne.
On 26 July 1995, AC&L relevantly wrote to the plaintiff in the following terms:
"I refer to your claim for benefits under the above policy and advise that your claim has been admitted from 8 June 1995, this being the date of surgery.
Unfortunately, I regret to advise that we are unable to consider a claim for the period of disablement dating back to November 1993 as it is a condition of both the policy and the interim certificate that all claims are notified within 30 days of total disability.
Enclosed please find our cheque for $2,038.00, representing total disability benefits for the period 22nd June 1995 to 21st July 1995, inclusive.
To enable further consideration of your claim, please have the enclosed progress claim form fully completed and returned to our office on 21st August 1995."
Mr Tubbs then wrote to Mr Chris Scarr, the AC&L agent in Hobart, on 15 August 1995 advising, in summary, that the plaintiff had notified him of the accident to the shoulder, he said, within two days of its occurring, and asking for the claim to be revisited in light of that.
On 18 August 1995, the plaintiff completed an "Intermediate Claim Report" which had attached to it an "Attending Physician's Supplementary Statement" dated 18 August 1995. In that document, the plaintiff stated that he ceased all work on 22 November 1993. In the same box, but under that date, he put another date being 8 June 1995.
The plaintiff completed Intermediate Claim Reports, each of which was accompanied by an attending physician's report, on 2 and 23 October, 23 November and 20 December 1995, 16 January, 27 February, 26 March, 23 April, 27 May, 27 June, 22 August, 18 September, 18 October, 19 November and 16 December 1996 and 13 January 1997 and submitted them to AC&L. The only injury referred to in any of these documents was a shoulder injury. In all of the attending physician statements, Dr Crozier said the plaintiff was either not totally disabled or was partially disabled.
AC&L wrote to the plaintiff on 13 October 1995. Relevantly, it advised as follows:
"We refer to the above claim and a letter received from Mr P Tubbs, our Agent, advising that you contacted him within 2 days of the accident occurring. We have been requested to review your claim in light of this information.
In reviewing all the information provided to date, you had not been totally disabled from work for more than 14 consecutive days since the accident as required by the policy conditions. Therefore, the assessment of your claim from 8/6/95, the date you were admitted to hospital for surgery, is correct."
On 23 December 1996 and 14 January 1997, the plaintiff was interviewed by a career counsellor, Cathy Hughes, from Warlow Mather Consulting. A copy of the report was then sent to the plaintiff. On 23 January 1997, a representative of AC&L spoke with the plaintiff. A note of the conversation appeared in AC&L's files in the following terms:
"Mr Summers phoned. Ok to pay in advance but not ok to close. I explained that we will close claim at the end of 2 years – 21/6/97. After another lengthy conversation, he accepted my explanation and thanked me for all the help I had given him.
Pay 1/2/97 to 21/6/97 and finalise."
On the same day the plaintiff had that discussion with a representative of AC&L, he wrote to a Mr Peter Sharman in relation to his claim for benefits from AC&L. It is clear from the wording of that letter that it was written after receipt of Ms Hughes' report and after the telephone discussion with the AC&L representative. In his letter to Mr Sharman, the plaintiff makes reference to the problem of sublaxating (a clear reference to the shoulder problem). There is no mention of any fresh injury. AC&L subsequently paid a lump sum to the plaintiff in accordance with the recorded note. The amount paid represented, from AC&L's point of view, a commutation of payments to 21 June 1997. Payments then ceased.
On 28 January 1997, that is five days after the conversation between the plaintiff and an AC&L representative, the plaintiff lodged a document with AC&L entitled "Preliminary Claim Report". In that document, the plaintiff stated that he had suffered a knee injury on 3 January 1997. He stated he "fell and hurt knee". He stated his employer to be Pace and that his income was approximately $32,000. He also described his occupation and duties as "Manage (Hands On)". The plaintiff also said in this form that the incident with his knee had "stopped/affected" his work capacity since 3 January. The attached doctor's statement provided that the plaintiff had first attended him on 28 January for an injury to the left knee described as "bruised medial meniscus". There is no certification in this physician's form as to any disablement as a consequence of a knee injury. Dr Crozier saw the plaintiff again on 13 February 1997 although there was no form apparently completed on that day.
At about the end of March 1997 or early April that year, the plaintiff left Tasmania and travelled overseas. He went to the Philippines and had some involvement with Amway while there. The evidence was unclear as to how long he was away. He did not see Dr Crozier again until 15 July 1997, and there was no evidence he saw any other medical practitioner in respect of either his shoulder or his left knee between February and July. The plaintiff subsequently lodged a preliminary claim report dated 15 July 1997 with AC&L, in which he stated he had ceased all work on 28 January. He also said he was still employed by Pace as a hands on manager with earnings of approximately $3,000 per month. The accompanying attending physician's report from Dr Crozier indicated the plaintiff required an arthroscopy.
By letter dated 23 July 1997 from AC&L to Dr Crozier, AC&L noted that the plaintiff had lodged a claim in respect of a knee injury. Dr Crozier responded by letter dated 18 August. He referred only to a problem with the plaintiff's left knee. He described when he first saw the plaintiff about the left knee. He said he saw the plaintiff on 13 February 1997 and that, at that time, the left knee was much better. He described the plaintiff as being almost symptomless and about to go to the Philippines on work. Dr Crozier did not see the plaintiff again until 15 July.
The plaintiff went overseas again shortly after seeing Dr Crozier in July 1997 and did not return until late December. On that occasion, he travelled again to the Philippines and also went to Japan and China. It seems clear that the plaintiff did not work for Pace in any sort of role which required him to run the tavern during 1997. This state of affairs had nothing to do with any injury he might have suffered.
AC&L stopped paying benefits as at 22 June 1997. On 8 September 1997, Dr Crozier wrote again to AC&L. He said he had seen the plaintiff on 15 July and said further:
"… I organised the relative x-rays and referred him to an Orthopaedic Surgeon, Mr Scott Fletcher. Unfortunately he was due to go the Philippines and did not have enough time to see Mr Fletcher. The letter has been prepared and when he comes back he will fetch it from the Surgery and the necessary appointment will be made."
On 16 January 1998, the plaintiff completed what was described as an initial claim form in respect of a knee injury. He referred to a "knee injury" and said that his first medical treatment by his attending doctor, Dr Crozier, was on 28 January 1997. In that form, the plaintiff described his then occupation as "Manager 'Hands On'" and his duties as "Stocking, Bar Work, Management Duties, Driving, OutSide Work, All Hotel Work". He said that at least 50% or more of his working week was spent doing manual work and that other duties included "Making Deals, Communicating With Employees, Suppliers and Debtors". This was three years after the tavern fire and when the tavern enterprise largely ceased and about six months after he had last been paid any benefits. Also on 16 January 1998, the plaintiff's doctor completed an initial claim form. According to that, the plaintiff saw him in relation to an injury to his left knee on 28 January 1997 when he fell off a log. The doctor diagnosed cartilage damage and said the plaintiff was fit for light duties not involving too much lifting, walking or long distance driving. He noted that the plaintiff was working at the time of the claim "Selling Amway".
On 21 January 1998, the plaintiff saw an orthopaedic surgeon, Mr Fletcher. Mr Fletcher reported to Dr Crozier on the same date in the following terms:
"Geoffrey has had intermittent problems with the left knee for the last twelve months or so. He has frequent giving way, occasional locking and a degree of swelling. On examination today there is no effusion but medial line joint tenderness in the left knee. From a clinical point of view, I think Geoffrey has a torn medial meniscus. I am going to place him on the waiting list for left knee arthroscopy."
For reasons which were not clear from the evidence, AC&L began paying benefits to the plaintiff again with effect from 21 January 1998. In December 1998, Mr Fletcher performed an arthroscopy on the plaintiff's left knee.
On 12 August 1999, the plaintiff completed a second Initial Claim Form. In this form, he said that he had injured both knees in a fall in the bush in January 1997. In this form, the plaintiff described his occupation as "Manager 'Hands On'". He described his usual duties as "Bar work, ...Work, Stock Work, Bottle Shop Work, Hotel Work All Areas" but added "Not since 8/6/95". He described his non-manual work as "Negotiating Deals, Phoning Suppliers". He noted that Pace had closed down. In answer to the question whether he could perform any of his work duties, the plaintiff responded "No (Because job gone)". In answer to questions about when he ceased all work, the plaintiff responded "Shoulder 8/6/95 (not worked since 8/6/99) Knee 1/ 97". In another part of the form, the plaintiff said he had not worked since he damaged both knees in January 1997.
The plaintiff's doctor, Dr Crozier, completed a medical addition to the August claim form on 13 August 1999. In that he described the relevant injury as one to both knees in January 1997 through falling off a log. He noted the plaintiff had been unable to work since January 1997 and was "Attempting to sell Amway". The description by the plaintiff and his doctor in August 1999 of an injury to both knees in January 1997 was inconsistent with the earlier claim forms completed by both, the plaintiff's report to Mr Fletcher in January 1998, and the surgery undertaken by Mr Fletcher in December 1998. There is no reference of any description to an injury to the right knee until this August 1999 claim. On 25 August 1999, AC&L wrote to Dr Crozier advising that the plaintiff had now lodged a claim in respect of injury to both knees.
Dr Crozier responded by letter dated 8 September 1999. Dr Crozier's letter was in almost identical terms to that he had written to AC&L in relation to the left knee injury. The first paragraph however said he was first consulted about the "knees" in January 1997. That was not what he had originally told AC&L. The letter goes on to describe the complaints and treatment in relation to the left knee. He then says that the plaintiff consulted him on 17 January 1998, at which time the plaintiff told him that both knees were no better. Dr Crozier also reported that he saw the plaintiff on a number of occasions between June 1998 and August 1999 about administrative forms, and each time the plaintiff mentioned his knees were still troubling him. Dr Crozier said further:
"I doubt if anything further could be performed to alleviate the knee pain. He will have to accept a more sedentary occupation not involving carrying weights, torsional knee movement or walking any significant distance.
His previous employment as a Tavern Manager involved general administration as well as physical duties such as carrying boxes in the Liquor Store. He is no longer able to perform these physical tasks.
Initially he was active in AMWAY, but the market saturation and leveraging seems to have disillusioned him and now only pays for his domestic usage.
He is articulate, gregarious and presentable and with guidance should find a niche in the market."
On 7 January 2000, Dr Crozier wrote a letter addressed to "To Whom It May Concern". It seems clear it was written at the plaintiff's request, and that it was to directly address criteria in the Policy. The letter said:
"In reply to the six questions posed by Mr Summers to me:
(1)He has been unable to perform each and every duty of his occupation as a result of his injuries to his knees and shoulder. He is unable to perform any heavy manual work as this gives him too much pain later.
(2) His continuous inability was a direct result of the injury.
(4) He has been under my regular care and attendance for these injuries.
(6)He has been unable to perform his duties on a full time basis but is able to do some of the duties on a part time basis.
(7) I consider his condition to be long term and it appears to be permanent.
(8)I do not expect his condition to improve and it will probably deteriorate with age."
AC&L continued to pay benefits until 20 January 2000. It then stopped doing so. No further benefits have been paid to the plaintiff since. On 13 April 2000, the plaintiff completed a progress claim in which he referred to two problem knees and one permanently damaged and impaired shoulder as the reasons why he could not work. His doctor completed a form at the same time. He recommended an occupational rehabilitation program and noted that the plaintiff could return to administrative work.
On 20 August 2002, the plaintiff completed a form entitled "Partial Disablement Claim Form". The claim period was noted as being from 1 December 1998 and to be ongoing. The plaintiff described his former work at the tavern as involving "Cook Room Labour, Security Labour, BarWork, Waitering, Collecting and Distributing Funds Through Out The Hotel, Booking Acts, Staff Management, Hiring Staff, Firing Staff, Banking, TAB Operator, Acquisitions and Sales, Management and Labour, Answering The Phone".
The plaintiff commenced these proceedings against AC&L in March 2003.
The plaintiff completed another form on 26 April 2003. It is not possible to tell from the photocopy tendered precisely what document this was. However, it made reference to a back injury on 28 September 2002, said to have occurred when the plaintiff's 7 year old son unexpectedly jumped on the plaintiff while he was sitting in a lounge chair. The form recorded the plaintiff had ceased all work on 8 June 1995, although in relation to the back injury only on 28 September 2002.
Correspondence obviously passed between the plaintiff and AC&L following the lodgement of this form although little was put before the Court. However, a letter dated 14 July 2003 from AC&L to the plaintiff was tendered. That letter provided as follows:
"We are in receipt of your reply dated 4 June 2003 to our correspondence of 30 May 2003 and can advise as follows.
You have stated in this correspondence that
'I worked with Pace Tasmania P/L from 1989 until 1995. I stopped working with them totally as of 8 June 1995'.
You then further state
'I haven't had an income as defined in my policy since the 8th June 1995.'
We now refer you to your policy and in particular Part 4 Termination of Policy which states
'The Policy will terminate when you die, retire or cease to be engaged in any gainful employment other than whilst in receipt of a benefit under this policy and subject to Part 2.7 "Leave without pay benefit". and
'If a claim continues to be paid under the policy after the termination date, the provisions will remain in force for the purpose of payment and administration of that claim only and will immediately terminate as soon as payment of that claim ceases.'
As your correspondence of 4 June 2003 was the first time our office was made aware that you have not been employed since 1995, we can now confirm that in accordance with your policy, your policy terminated effective 20 January 2000.
This is the date that you were last paid benefits to under your previous claim. It is also the date that the Financial Industry Complaints Service determined in their finding that no further benefits were payable under that claim as AC & L had met their maximum liability payable under that claim.
Whilst section 2.7 Leave Without Pay Benefit states you may take leave without pay for not more than 12 months, this is on the conditions that
1 You obtain our written approval for such leave and
2 The provisions of Part 4 Termination of Policy do not otherwise apply.
As this condition does not apply, we can confirm that we are unable to consider your recently lodged claim (No 836353) as you did not have a current policy at the time of your injury. As such a refund of premium applies. We now enclose our cheque totalling $4,844.15 which represents a refund of premium paid for the period 8/4/01 – 8/6/03 when incorrectly deducted.
If you wish to appeal this decision then you will need to submit your reasons in writing to this office indicating to us why you believe this decision should be reconsidered.
However, if we are subsequently unable to reach a satisfactory agreement, you have the option of contacting the Financial Industry Complaints Service (FICS). They will then be able to advise you as to whether or not they can be of assistance in this matter.
FICS can be contacted at the following address:
The Manager,
Financial Industry Complaints Service
PO Box 579, Collins Street WestMelbourne VIC 8007
We have now closed your file accordingly."
The plaintiff replied in the following terms by letter dated 31 July 2003:
"In your letter of the 14th instant you suggest I contact you if I wish to appeal your decision. I find it difficult to understand exactly what your intent would be in this regard. You have taken the extreme step in the first instant of cancelling my policy (without consultation) and then in the second instant you suggest I appeal to you. It would seem to me that you are hardly a reasonable, independent person, hardly someone to which an appeal would … appropriate. However, I will inform you of some facts and appeal the decision & require you to reconsider the decision and honour the contract to which you are a party.
· I have consistently told your company that I have not had an income as defined by the policy since the 8/June/1995. I'm glad you finally accept this fact in writing. However for you to state that the 4/June/2003 was the first time you were made aware of it is simply a lie. A quick check of my file would show this.
· I do not believe that FICS determined you had met your maximum liability for my previous injuries since I have cover for life under my policy.
· I appreciate that you finally returned the premiums that you had been stealing off me however I disagree with your reasoning. You shouldn't have been taking premiums off me as I have had a genuine claim for disability for the entire period. You should also take the opportunity to pay me the back pay for the period, which you still owe me.
· FACTS ARE: I have bilateral injuries to my knees, a badly damaged right shoulder and a recent back injury with associated pain as outlined in my recent claim form. All these injuries have current and permanent effects, rendering me totally disabled under the terms of the policy. I had a valid, paid up policy at the time of these injuries.
· The back injury is a recent injury and a new claim. My policy was valid at the time of the injury. You have no option but to pay that claim. Denying it shows you to be nothing other than a poor corporate citizen & a bully. Using the 'Stonewall' approach until one or the other of us wins or looses [sic] in court, or before FICS, is not the proper way for you to act, but certainly vindicates the argument against self-regulation.
Your attempt to cancel my policy (under Part 4 of the policy) is Ultra-Vires as it is in conflict with the insurance contracts act. You are fully aware of this thus you are just trying to con me. A point that really warrants notification to the Minister for APRA & ASIC. If you do not pay me and quickly then I will certainly be following this 'despicable act' up with them.
· I in no way accept your suggestion that my policy is cancelled. At the end of the day you will pay my claim, one way or the other."
AC&L's reply to that letter was dated 26 August 2003 and was as follows:
"We refer to your letter dated 31 July 2003. We will address each issue you have raised separately below.
1 AC&L's decision to cancel your policy
We attach a copy of the policy terms and conditions with the relevant highlighted sections for your assistance. We refer to Part 4, clause (a) (ii) and (b) and Part 2 clause 2.7 (a) of the policy. Under those provisions, given that you had not been working since the time when we last made payment on your previous claim, a period longer than 12 months, AC&L was entitled to cancel your policy. We do not consider that any action taken by AC&L was in breach of its obligations of utmost good faith or otherwise pursuant to the Insurance Contracts Act.
2 Your right to appeal our decision
We are required by the Australian Securities and Investments Commission to provide an internal dispute resolution process which is to be used prior to any complaint being heard by an external body such as FICS. We did not mean to imply anything but merely to notify you that you, and AC&L, are required by ASIC to take this step prior to taking your complaint to an external dispute resolution body or court.
3 You have previously notified us that you had not had an income since 8 June 1995
Following a FICS determination, benefits payable to you ceased on 20 January 2000. Had you notified us that you were not working for a period longer than 12 months, we would have at that time terminated your policy, and immediately ceased deducting premiums from you. At best your policy would have remained inforce until January 2001.
4 Whether FICS determined that you had met your maximum liability for previous injuries, having regard to the life cover under the policy.
We apologise for any confusion in our letter of 14 July 2003. Our reference there to maximum liability is in relation to claim number 683839, the subject of that claim and not the entire period of cover under the policy.
5 Deduction of premiums by AC&L during the period you say you had a genuine claim for disability.
FICS made a determination that following 20 January 2000, no further benefits were payable to you. In accordance with the policy, premiums were automatically to become payable again following cessation of benefits payable under a claim.
6 Your injuries are current and permanent, rendering you totally disabled, and that you had a paid up policy at the time of the injuries.
We note that you had a current policy, however because of the reasons we have given, you are not liable for compensation in respect of your injuries.
Should you be unsatisfied with our reply, you have the option of contacting the Financial Industry Complaints Service (FICS). FICS will then be able to advise you as to whether or not they can be of assistance in this matter.
Dr Hoyle then said:
"I believe that Mr Summers' physical capacity would be limited to performing some light physical duties and/or administrative office type work for up to twenty hours a week if adequately trained. However, given his previous occupational history and lack of availability of unskilled light work and untrained office administration work I think that it would be very difficult for him to acquire any gainful employment. With regards to the specific definitions of his Australian Casualty & Life policy I would say that:
a Mr Summers was unable to perform each and every duty of his occupation continuously since his shoulder reconstruction in June 1995, and that
b He has been unable to perform any gainful occupation because of the compounding effect of his shoulder injury in 1993 and bilateral knee injuries in January 1997. His back injury in September 2002, added insult to his previous injuries. Combined with his lack of qualified light manual skills (such as repairing computers) or qualified administration skills (such as a Certificate in Business) and the employment market, have prevented him performing any gainful occupation. He has been unable to perform all of his usual duties due to the shoulder injury in November 1993, and perform any gainful occupation due to a combination of the shoulder injury and the knee injury since January 1998. I would, however, qualify this by saying that he may well be able to return to some restricted part time work after suitable training."
Dr Hoyle saw the plaintiff again on 29 September 2009 and provided a third report. He said that symptoms and disabilities remained unchanged, save for symptoms of a new cervical spine injury as a result of a motor vehicle accident in May 2009. Dr Hoyle said he believed that was totally unrelated to the plaintiff's previous injuries. As to the plaintiff's knees, Dr Hoyle expressed the view that the plaintiff might benefit from further arthroscopic surgery, but that such surgery could possibly make the situation worse. Dr Hoyle expressed the view that the plaintiff was totally disabled. However, again his views were predicated on information that the plaintiff's duties at the tavern had been mainly physical, and he was a relatively uneducated and untrained individual. He said the plaintiff was unlikely to be able to perform any full-time work but could perform light desk duties for 15 to 20 hours per week with retraining. He reported that the plaintiff did not possess the skills required to perform alternative work at that particular time. In relation to this particular report, the letter of instruction sent by the solicitors, which resulted in the report was tendered. The facts the doctor was asked to assume were not all, in my view, consistent with the evidence at trial.
In his oral evidence, Dr Hoyle was asked to comment on the capacity of the plaintiff to perform certain tasks in a work environment. He agreed the use of a computer mouse "may" cause the plaintiff problems. He suggested that after an unsuccessful trial of use it would be advisable for the plaintiff to stop using it. He agreed the use of a keyboard could possibly cause the plaintiff problems. He also agreed he would not advise the plaintiff to do any prolonged standing, anything which involved a rotation of his knees, walking distances, frequent use of stairs and frequent walking on inclines. Dr Hoyle also agreed that in forming his opinions he relied on what he was told by the plaintiff and that he had been led to believe that the plaintiff's work at the tavern involved mostly physical work.
Dr John Sands (for the plaintiff)
Dr Sands was, at the time he gave evidence, a half-time consultant physician at the Launceston General Hospital and doing sporadic locums. He had been previously fully retired. At the time of his retirement, he was seeing medico-legal patients at the request of both insurers and patients. Dr Sands saw the plaintiff only once, and that was on 25 January 2001, for the purpose of a medico-legal report at the request of his solicitors.
Dr Sands said in his report:
"OPINIONS:
Prior to issuing my final report I read carefully through all your enclosures and there is a consistency between his own stories and those of his medical reporters.
1This man is suffering from the effects of recurrent dislocated shoulder where a surgical correction has not been perfected and has left him with instability of the joint and an intermittent pain syndrome with a substantial functional loss as outlined above aggravated by repeated activities.
2He has had meniscus damage and degenerative knee joint condition requiring bilateral surgery and he is left with unstable knees, locking knees and a dislocating right patella with secondary muscle wasting, a direct result of the fall of January 1997.
He has a left shoulder under threat.
The prognoses for all these injuries is for no further spontaneous improvement but rather as time goes by deterioration and development of osteoarthritis. One notes a family history of degenerative joint disease on his mother's side.
I am unaware of any other reasonable treatment that could be confidently recommended to him to improve his situation.
I am of the opinion that he is totally disabled in the terms of the policy as I understand it from the information that you provided me.
Although he clearly is capable of intellectual activity and seems to have suffered no residuum from the bends to interfere with his intellect, one has to remember that the bulk of his occupational experiences have not been intellectually based. He has had no managerial experience at a senior level at all apart from his experience with the Rocky Cape Tavern which was a financial collapse in the long run, and the big decisions there were made by his partner, an accountant, and he would not have achieved that job if had not been on a friendship basis from his partner based on their experiences in Asia.
Having said this assuming he could gain an intellectually based job it would have to one that did not depend upon repeated use of writing, typing, or computer use and this brings one into the area of unreality.
I think it absolutely unreasonable to regard him as being fit for any job that has a substantial physical component particularly one involving any degree of walking or use of his upper limbs forcefully and repeatedly.
I understand that a colleague has advised his insurers regarding a list of occupations that he could do, which I have read as supplied by you.
Although I think this list is well intentioned and the principles of it are correct, on analysis of his history and the findings that I make and I don't believe that he could cope with any of them now on the basis of either or both of his lack of experience, his own limited educational background and implied learning capacity, there are practical difficulties in retraining because of his right handedness and right arm disability and symptoms on repeated use of writing and computer key boards and the mouse, and his walking limitations. In trying to conceive of a job which he could be gainfully employed full time or major part time it would have to be one involving a sitting position and the extremely light non repeated use of the right hand and avoidance of regular record keeping and I am unable to find one that I could convincingly believe he could do long term."
In cross-examination, Dr Sands agreed that he assessed the plaintiff's capacity for work in essentially a physical occupation.
Dr Stephen Doig (for the plaintiff)
Dr Doig was an orthopaedic surgeon who saw the plaintiff at the request of his solicitors for the purpose of a medico-legal report around August 2006. In his report, he set out at some length the history he had been provided with about the plaintiff's injuries. As to the shoulder injury the plaintiff told Dr Doig that his shoulder had been stable until "about 4 years ago" which would have made it about 2002. That is not consistent with what has been said to other doctors. As to the knees, the plaintiff said he injured both knees in a fall and that subsequently the right knee and then the left knee were the subject of arthroscopic surgery. Again, this is not consistent with initial reports, although the plaintiff's description of difficulties with his knees then seems consistent with other reports. If Dr Doig was provided with any material by way of reports or scans, he does not mention it.
On examination Dr Doig described "apprehensive" tests on the plaintiff's shoulder and said they were negative. He said the shoulder was clinically stable. As to both knees, he said they were stable with no joint line tenderness. As to the back, while the plaintiff told Dr Doig he had significant damage to four discs, the plaintiff had no reports to support that. All that Dr Doig apparently saw was a CT scan done in 2003 which showed some mild disc protuberance but nothing else. The plaintiff reported his previous work had been almost all physical and Dr Doig said the plaintiff was clearly not able to do that. Dr Doig said that he agreed the plaintiff was then totally disabled, but not that he was permanently so. He said in the last paragraph of his report:
"There is little doubt in my mind that he should go back to see his treating orthopaedic surgeon to be further investigated to see if there are any further things that can be done in order to try and improve his knees and his right shoulder. This may result in a significant improvement in his physical outlook and that may also result in him improving steadily. I also consider that he would definitely benefit from a proper vocational reassessment in order to see if there are any positions that he could reasonably undertake from the position that he is in at the moment."
Dr Doig prepared a further report dated 14 July 2009. He did not see the plaintiff for the purpose of that report, but prepared it having received a lengthy letter from the plaintiff's solicitors and being asked to assume a number of facts. He said:
"I consider that he has had a continuous inability to perform any gainful occupation by which he is reasonably suited by education training or experience. He described the job in the hotel as being a physical job where he had to cart beer up from the cellar as well as being involved in crowd control. He also had to change barrels of beer and I consider that his injuries will specifically prevent him from doing that. He states quite specifically that he did not have any management skills and had no tertiary qualifications. He stated that he had no administration skills and therefore I consider that he has had a continuous inability to do his previous physical job. In my first report I stated that I felt that he did fulfil the criteria of being totally disabled. I qualified that by stating that I was uncertain as to whether this disability was permanent primarily because I felt that he should be reassessed by his treating orthopaedic surgeons to see if there is anything further that can be done. I am unaware of whether that has happened or not."
Again, the letter from the plaintiff's lawyers to Dr Doig contained statements which, to a degree, were inconsistent with the evidence at trial.
In the course of his oral evidence, Dr Doig was shown a report in relation to an MRI scan of the plaintiff's knees which it was said was done in September 2009. That suggested the plaintiff had what Dr Doig described as a significant meniscal tear on both sides. Under cross-examination, Dr Doig commented that if a person continues to have ongoing pain after an arthroscopy there are only a certain number of diagnoses that can be made. One of those was a meniscal tear which would have been amenable to further arthroscopic treatment. A longstanding tear might however cause degenerative change which was not so amenable to arthroscopy. This was in response to his having expressed surprise that the plaintiff had not been referred further to an orthopaedic surgeon.
Dr Doig also explained what an apprehension test was. He then concluded that the plaintiff's shoulder was stable. Under further questioning, it was apparent Dr Doig had been given information which emphasized the plaintiff's work role as physical. He was also not convinced that further investigations of the plaintiff's knees and shoulder might not result in something being able to be done for him.
Dr John O'Brien (for the plaintiff)
Dr O'Brien is an orthopaedic surgeon practising in Victoria. Two reports of his dated 2 June 2008 and 6 July 2009 were produced to the Court. However the plaintiff's solicitors were not able to produce the witness for cross-examination, nor was there any determination that on some basis the reports were admissible, despite his absence. It was agreed I would have them but that it was a matter for me to determine what, if any, weight I gave to them. Given the following factors, I propose to not give any weight to these reports. Those factors are:
· he saw the plaintiff on 14 May 2008, I infer for the purpose of a medico-legal report. I infer he had seen the plaintiff before in 2006 but no detail was provided as to that nor was any report provided relating to that attendance;
· the doctor was provided with a letter of instruction and documents. None of this material was identified and I have no idea what Dr O'Brien was told;
· the second report did not follow an examination and was based on a letter of instruction not tendered;
· no opportunity has been available to question him about his conclusions; and
· there are already reports and evidence from a number of other doctors, and it has not been suggested Dr O'Brien adds anything significant and unusual.
Dr Peter Stevenson (for the defendant)
Dr Stevenson is a consultant physician. He was asked by the defendant's solicitors in November 2006 to prepare a medico-legal report in respect of the plaintiff. His report is dated 8 February 2007. Dr Stevenson saw the plaintiff for the purpose of the report. In his report, Dr Stevenson referred to the shoulder injury having occurred in November 1983. No one sought to correct that, and it is clearly wrong. Given later comments, I accept it was a typographical error. Dr Stevenson was referred to some earlier reports which were never tendered to the Court. For example, he refers to findings of Dr Einoder which the Court does not have.
Dr Stevenson acknowledged that he was limited in his capacity to comment because he had not been provided with any x-rays or scans done in respect of the plaintiff, and was dependent on the plaintiff's reports. It would be fair to say that given some complaints of the plaintiff, he expressed surprise that the plaintiff had not sought further expert assessment and treatment for his various injuries. As to the shoulder he noted it had been apparently stable for several years. He found a modest limitation on movement. As to the knees, apart from slight discomfort, he could find no major problems. Little problem was observed with the back.
Dr Stevenson said the plaintiff would have some difficulty doing work which was forcible and repetitive and involved elevation of the right shoulder. However, he did not believe that would incapacitate the plaintiff from doing the job of managing a tavern. This assessment was clearly on the basis the role did not involve forcible, repetitive physical work involving the right arm. He observed however that the plaintiff was not a cripple. He said that the plaintiff was at pains to say that he did not ever do paperwork. Dr Stevenson observed that the plaintiff might not like paperwork but there seems no medical reason why he could not do it. In response to an enquiry about the type and extent of employment duties that the plaintiff might be fit for, Dr Stevenson said:
"4 The type and extent of employment duties that Mr Summers is fit for in your opinion.
He can certainly do sedentary work and probable light physical work. Again, I do not really see major impediment to management of a tavern. He appears to have a somewhat uncommitted relationship with the workforce for some years. But if his motivation is to work rather than assumption of an invalid role, I do not see any major pathology greater than I see motivated humans regularly overcome."
Dr Stevenson was asked for a further report by the defendant's solicitors after a vocational assessment was obtained. The new report is dated 15 June 2007. The doctor's views remained unchanged as a consequence of the further material with which he was provided. Dr Stevenson was extensively cross-examined about his views. He agreed he had only seen the plaintiff once and that he was limited in his ability to form opinions by a lack of material. He agreed that as far as the knees were concerned Mr Fletcher would probably be in a better position to assess the plaintiff.
Discussion in relation to medical evidence
While ultimately it may make little difference to the outcome of this matter, it is perhaps necessary to resolve the issue of whether the damage to the plaintiff's right knee constitutes an injury in respect of which the plaintiff may claim benefits under the Policy. Notwithstanding no actual complaint was made to AC&L until August 1999 that there had been damage to the right knee as well in the January 1997 fall, the plaintiff's evidence was that the right knee was damaged in that fall, he was not challenged in cross-examination as to that, by some time in 2000, the right knee was damaged to such an extent that an arthroscopy was performed on it by Mr Fletcher, and there was no suggestion to the plaintiff, or indeed anyone else, that the damage to the right knee which resulted in that second arthroscopy occurred in any other way. Further, the damage to the right knee is very similar to that to the left knee, and therefore consistent with having been caused in the same way. I accept in the circumstances that the plaintiff suffered injuries to both knees in January 1997.
The time-frame to be considered is January 2000 and following, and the medical evidence needs to be considered in the context of a man who has injured both knees at a time when he had a pre-existing shoulder problem. Counsel for the plaintiff referred to it as being like an egg shell skull type scenario.
The medical evidence may be divided into two categories (subject to some overlap in the case of Mr Fletcher), that is, those practitioners who had actually treated the plaintiff, and those who had seen him only for the purpose of medico-legal examinations after the event. The evidence in the first category consisted of letters of the plaintiff's original general practitioner, Dr Crozier, that of the plaintiff's subsequent general practitioner, Dr Markabawi, a letter from Mr Deacon and Mr Fletcher. I draw the distinction between the two categories because all the medical practitioners in the second group, save for Dr Sands, did not see the plaintiff until some years after the last of the asserted injuries, and many years after the shoulder injury. I also draw the distinction because they were heavily dependent on self-reporting from the plaintiff, the Court had in some cases none or little of the material provided to them for reporting purposes, and facts some were asked to assume were not accurate or complete.
The consequence for the Court is that it has, for example, almost no contemporaneous material for the period early 2000 and immediately following. That becomes relevant given that, as a starting point, I have to be satisfied that the plaintiff was totally disabled within the meaning of the Policy at that time. It is not sufficient for the plaintiff to say that he cannot work now for various reasons, therefore, he was totally disabled in 2000, over 11 years ago.
Leaving aside the attendances on various specialists for the purpose of medico-legal reports, as far as I have been able to tell from the evidence, the last specialist the plaintiff saw in relation to his shoulder was Mr Deacon in June 1995 and, in relation to his knees, Mr Fletcher some time in 2000 which resulted in Mr Fletcher then performing an arthroscopy on the right knee. There is no evidence Mr Deacon ever saw the plaintiff again, and it seems Mr Fletcher did not see him again until January 2007. This does seem surprising given the extent to which the plaintiff says he was disabled by his injuries.
As far as Mr Fletcher is concerned, there is no report of any description proximate in time to early 2000, nor did he give any evidence referable to that point in time, save as set out below. His evidence related effectively to his view of the plaintiff at the time of his reports and trial. His evidence was then coloured by a third injury said to have occurred to the plaintiff's back. However, he said that as at 2009:
"The view that I formed was that a combination of the knee problems, which have been consistent really from 1998 through to 2009, we had these ongoing instability symptoms and discomfort symptom together with the instability problems he had with his shoulder and the Court would know that he's had previous shoulder surgery for instability but he maintained symptoms of instability as to that and tenderness and ache. And thirdly, the low back pain, which he had since – I think 2003 or thereabouts – so that the combination of those three led m to believe that he would be unable to perform his normal labour type duties and that he would- he would operate at something less than that."
Mr Fletcher made comments about the plaintiff's managerial capacity:
"I was impressed by his brain and that he had the sort of brain that would be able to do managerial type roles, and I do note that he had no managerial experience, but I was just making the comment that he had a reasonable brain … I remember forming an opinion that he seemed to be quite a smart fellow."
In January 2001, the first of the examinations for medico-legal purposes occurred, this being by Dr Sands. This is over a year after the commencement of the period which needs to be considered. At that point, Dr Sands described the plaintiff's situation (set out in pars[142] – [144]). Apart from the plaintiff's self-reporting of symptoms and background, the only medical information Dr Sands appeared to have predated the second arthroscopy the plaintiff had done in 2000. He had no material from Mr Fletcher relating to the first arthroscopy done in 1998, save what had been reported to Dr Crozier by the plaintiff.
The timing would suggest Dr Sands saw the plaintiff within a few months of the second arthroscopy. At that time he had little hesitation in concluding that, from a physical point of view, the plaintiff was not then fit to perform work with a significant physical component. While there is no direct evidence that the situation then was the same in early 2000, about a year earlier, it is reasonable to accept that it was, and I do so. However, that conclusion by itself does not resolve the issue, given the matters about which the plaintiff has an obligation to satisfy the Court.
I will deal firstly with the period commencing January 2000 and immediately following. I accept that the plaintiff was educated to year 12 but did not satisfactorily complete that year. On his own evidence, he did not like school and could not wait to leave. At no stage thereafter has he completed or indeed even attempted any sort of further formal training of any description. At the end of 1990, having worked overseas for some time, the plaintiff commenced his role with the tavern. Up until that time, the plaintiff appears to have had little difficulty in obtaining work, even though it was invariably predominantly manual work. As to the work at the tavern, the plaintiff has, in my view, not only exaggerated the hours he worked, but also the component of those hours which was devoted to manual activity. However, whatever the precise balance of work was, there can, in my view, be little doubt that a significant portion of the plaintiff's day-to-day work at the tavern was of the manual variety. In addition, the plaintiff performed a number of tasks which were consistent with an ownership style role. He had skills, obviously self taught, which enabled him, with assistance, to negotiate deals with people who wished to use the venue for concerts and functions, provide relevant information to a valuer of the tavern for refinancing purposes, comment on the valuation prepared with obvious knowledge of valuation methods, prepare material for potential investors in the tavern, and hold himself out as a person who had sufficient interest in Pace that he was a suitable guarantor for its borrowings.
The plaintiff, in his evidence, at all times attempted to present himself as the uneducated hands on manager who only really ever did physical work, with the "real" boss, Mr Stebbings, usually having the last word on all major decisions. I do not accept that characterisation of either his own role or that of Mr Stebbings. The plaintiff could have had Mr Stebbings give evidence about a number of matters on this trial which might have put the assertions of the plaintiff beyond doubt. He did not do so. The plaintiff also had sufficient knowledge of, and involvement in, Pace that he was prepared to indemnify the liquidator to ensure the fire claim was pursued.
There was the plaintiff's involvement with Amway. While clearly he had initial plans to set himself up in business in this area, I am not satisfied, in the end, that that went anywhere such as to be able to provide the plaintiff with a full time income had he wanted it. There is also of course the plaintiff's skills in the teaching of English. I accept the type of work he did in Japan in this area would not in any way qualify him to teach in Australia.
Going back therefore to the period I need to consider, which is early 2000, and the time thereafter, the plaintiff clearly had acquired some skills of a managerial and entrepreneurial type. However, there is no evidence that, with the closure of the tavern and the removal in effect of the vehicle in which the plaintiff had gained, and was using those skills, the skills were of a type which would have enabled the plaintiff to obtain employment. I doubt, for example, whether the plaintiff's ability to spell and compose documents would have qualified him to work for an independent employer.
I am satisfied, in all the circumstances, that the plaintiff was, as at early 2000, because of the restrictions placed on his capacity to perform manual functions by his knee injuries, continuously unable by reason of those knee injuries, combined with a problem shoulder, to perform any gainful occupation for which he was reasonably suited by education, training and experience. Was he engaged in any occupation in this period? There is no evidence he was.
I conclude in all the circumstances that the plaintiff was, as at January 2000, totally disabled such as to have been entitled to have benefits continue to be paid beyond January 2000. It follows that any argument by the defendant that the Policy automatically lapsed in January 2000 by reference to cl 4(a)(ii) must fail.
The question which then arises is, for how long did this situation continue. There is the evidence of Dr Sands as to the situation as at January 2001. Having regard to that evidence, I can be satisfied that the position as to the disability of the plaintiff remained at least up until that time. There was however no medical evidence at all relating to the period between January 2001 and January 2003 when Dr Markabawi saw the plaintiff. The plaintiff saw Dr Markabawi in relation to back pain. All the Court knows is that, from time to time, the plaintiff attended the Somerset Medical Practice. That leaves the Court in the position of having to determine whether, on the balance of probabilities, the plaintiff's physical incapacity continued after January 2001 and, if so, for how long. That conclusion, if it is drawn, is one which can only be inferred from the plaintiff's situation in 2000 and perhaps that in 2003 when he saw Dr Markabawi. Dr Markabawi did not give any evidence about the plaintiff's position in 2003, save what might be said to be a retrospective general view given three years later.
The defendant conceded that the plaintiff now has pathology in both knees. However there needs to be a nexus established between the injury and physical consequences from time to time. The plaintiff told the Court he could not work from 2000 and thereafter because of his injuries. He has not supplied any taxation records for the period to 30 June 2003 which might provide some insight into what, if anything, he was doing. For example, they would have assisted with a finding the plaintiff was not engaged in any occupation, one of the criteria he needed to satisfy. The records he did supply for the period thereafter show that he commenced to receive social security benefits some time in the financial year ended 30 June 2004.
By this time the plaintiff had initiated proceedings and the defendant had written its letter of 14 July 2003. Counsel for the defendant urged me to accept that, by that letter, in the absence of an acceptance there was an automatic termination of the Policy in January 2000, AC&L gave effective and proper notice of cancellation by reference to the Insurance Contracts Act 1984 (Cth), s59. Given the basis upon which that letter could be said to amount to a notice of cancellation the defendant was entitled to give, for me to satisfied it was an effective notice, I would need to be satisfied that, as at the time, the criteria in cl 4(a)(ii) were met. The plaintiff's advice to AC&L was he was not engaged in any occupation and he was not then in receipt of benefits. However, if he was entitled to benefits, but simply not being paid, I would take the view the defendant cannot rely on cl 4(a)(ii) in those circumstances. It is therefore necessary to return to the question, was the plaintiff entitled to a total disability benefit, perhaps this time dealing with the period January 2001 to July 2003?
That conclusion, as I have already indicated, is one which can only be inferred from the medical evidence given in hindsight by medical practitioners who did not see the plaintiff until some considerable time after this period, and whose views were affected in some cases by inaccurate information, and a further claimed injury to the back. Whether the inference is open needs to be considered in the context of:
-the plaintiff's evidence he could not work because of his injuries,
-the lack of any financial records or independent evidence about what, if anything, the plaintiff was doing during this period.
On the balance of probabilities, given the medical evidence, I am satisfied the criteria contained in the definition of total disability have been met for this period as well. It follows that the letter of 14 July 2003 sent to the plaintiff could not amount to an effective cancellation of the Policy.
The next period I will deal with is that between July 2003 and March 2006. That latter date has been selected by reference to the time at which the company Salamanca Promotions was incorporated. For the same reasons I have already expressed relating to the period up to the middle of 2003, I accept the plaintiff satisfied the relevant criteria for total disability during this period and was entitled to benefits. It can be noted that in this period, there was financial information from the plaintiff as to his receipt of income in the form of social security.
Moving to the period commencing March 2006, the plaintiff still had to satisfy the Court that he was, at this time at least, continuously unable to perform any gainful occupation by reference to his injuries, and he was not engaged in any occupation. In my view, if he were capable of performing a gainful occupation and/or was engaged in an occupation, he will not have satisfied the criteria in cl 1.2 and will, as a consequence, not have been entitled to benefits.
This requires a consideration of the level of involvement of the plaintiff in the company, Salamanca Promotions. I will say at the outset that I am satisfied the plaintiff was involved in the company from its inception, and that that involvement was not simply as his father's nominee. While the evidence of Mr Markham as to the ultimate breakdown of his involvement with that company may have been coloured by animosity towards the plaintiff and his partner, there was no reason for his evidence about how the company operations began to be so coloured. That clearly paints the plaintiff as an active participant in the set-up of the company and its ongoing activities. Were I to need to rely on Mr Markham's evidence alone for conclusions as to this, I may not have been prepared to do so. However, when regard is had to the ASIC records, the evidence of the plaintiff and the evidence of Mr Langmaid and Mr McConnon, I am satisfied the plaintiff was engaged actively in the operations of the company from its inception and continues to be so.
The plaintiff's taxation records for the years ended 30 June 2006, 2007 and 2008 show no income, save for social security. There were no records for the years ended 2009 and 2010. However that is not determinative of either an inability to engage in a gainful occupation or being actually engaged in one.
The plaintiff told the Court that Mr Stebbings was going to close the company down because it was not making money. Because of my views about the plaintiff's credit regarding his involvement with the company, the fact that no evidence was led from witnesses who could have been expected to give relevant and cogent evidence about these matters (Mr Stebbings and Ms Spinks), and no evidence was led from Mr Fulton who, as a person involved in the keeping of financial records for the company would have been expected to have some idea of its financial position, I do not accept that the company was to be closed down. The plaintiff's partner's role in the company disclosed by ASIC records and her involvement in Mr Markham's demise, suggest a significant interest in the operations of the company. I do not need to be satisfied that the plaintiff is a current office holder in the company nor an employee receiving income from it. It is sufficient, in my view, to find, as I do so, that he undertakes activities on behalf of the company as and when he sees fit and has the capacity to effectively work full-time for that company.
The term "gainful occupation" in cl 1.2(b) should not be interpreted to mean only full-time employment with an employer independent of the plaintiff. To give the term such a restrictive meaning would be a nonsense. The plaintiff gained skills in his work with the tavern. Those skills should not simply be ignored on the basis an independent employer might not find them appealing. They are skills which are useful to the plaintiff in the context of the operations of Salamanca Promotions as they have been described. As a consequence of the foregoing, the plaintiff has not satisfied the Court that, at least from March 2006, he was continuously unable to perform a gainful occupation within the context of cl 1.2(b) of the Policy.
Outcome
The Policy is now at an end, and has been so since 21 September 2010 when the plaintiff accepted the purported repudiation of the contract of insurance by the defendant. As a consequence of my findings, the defendant had an obligation to pay benefits to the plaintiff for the periods January 2000 (from the date upon which it ceased to do so in that month) through to 7 March 2006, being the date of registration of the company, Salamanca Promotions. I will leave the parties to complete the calculations since, as I understand it, there is no dispute about the various rates set out in the statement of claim, and to present to the Court a memorandum of the final orders to be made to give effect to these reasons.
The only other issue is the extent, if any, to which the plaintiff is entitled to interest on the amounts I have found the defendant should have paid him. Counsel for the plaintiff articulated no basis upon which it could be said the plaintiff is entitled to interest. Counsel for the defendant submitted in his written submissions that if the Court awarded interest, it should be confined to simple interest, there being no evidence or legislative provision that would allow otherwise. Neither counsel actually referred to the impact of the Insurance Contracts Act, s57. I am not in a position to make a finding as to the precise period over which interest should be paid, if at all, and the amount, given the lack of submissions. I will leave the parties to attempt to settle that issue, and will hear further from counsel in the event they are unable to do so.
There will be liberty to apply to the parties in the event they are unable to agree as to the calculations of benefits and interest to be incorporated into any formal order and in relation to the question of costs.
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