Syddall v National Mutual Life Association of Australasia Ltd
[2011] QSC 389
•9 December 2011
SUPREME COURT OF QUEENSLAND
CITATION:
Syddall v National Mutual Life Association of Australasia Ltd [2011] QSC 389
PARTIES:
ERIC ALBERT SYDDALL
(plaintiff)
v
NATIONAL MUTUAL LIFE ASSOCIATION OF AUSTRALASIA LTD (ACN 004 020 437)
(defendant)FILE NO:
BS 5170 of 2006
DIVISION:
Trial Division
PROCEEDING:
Trial
ORIGINATING COURT:
Supreme Court of Queensland
DELIVERED ON:
9 December 2011
DELIVERED AT:
Brisbane
HEARING DATE:
29, 30 November, 1, 2, 3, 6, 7, 8, 9, 10, 13, 14, 17 December 2010
JUDGE:
Daubney J
ORDERS:
1.The plaintiff’s claim is dismissed.
2.I will hear the parties as to costs.
CATCHWORDS:
INSURANCE – THE POLICY – OTHER MATTERS - where the plaintiff contends the defendant breached the terms of the policy - where the plaintiff seeks a wide range of relief - where the plaintiff contends the defendant repudiated the policy of insurance - where the plaintiff contends the defendant, by declining the claim, repudiated the contract of insurance - where the plaintiff submits the defendant had failed to act with utmost good faith - whether the plaintiff has established an entitlement to the indemnification he sought under the policy - whether the three elements for total disablement are present - whether the defendant is entitled to avoid the policy of insurance - whether the plaintiff has made misrepresentations - whether the plaintiff failed to comply with his duty of disclosure - whether the insurer would have entered into the policy - whether the plaintiff’s claim was fraudulent
Insurance Contracts Act 1984 (Cth), s 11, s 21, s 26, s 29,
s 31, s 56, s 84
Australian Associated Motor Insurers Ltd v Tiep Thi To (1999) 151 FLR 384, cited
Atton v National Mutual Life Association (2007) NSWSC 310, considered
Bottrell v National Mutual Life (2007) NSWSC 458, cited
du Boulay v Worrell & Ors [2009] QCA 63, cited
Green v AMP Life Ltd 13 ANZ Ins Cases 90-124, cited
Judd v Suncorp Insurance & Finance (1988) 5 ANZ Ins Cases 60-832, cited
Morais v Minister of Immigration (1995) 54 FCR 498, cited
Plasteel Windows Australia Pty Ltd v CE Heath Underwriting Agencies Pty Ltd (1999) 5 ANZ Ins Cases 60-926, cited
Robertson v Graham [2010] QSC 215, cited
Robertson v Hollings [2009] QCA 303, citedTyndall Life Insurance Co Ltd v Chisholm (2000) 11 ANZ Ins
Cases 90-104, cited
To v AAMI Ltd (2001) 3 VR 279, cited
Zurich Australian Insurance Ltd v ContourMobel Pty Ltd (1990) 6 ANZ Ins Cases 60-984, citedCOUNSEL:
The plaintiff appeared on his own behalf
B O’Donnell QC with R Treston for the defendantSOLICITORS:
The plaintiff appeared on his own behalf
Cooper Grace Ward for the defendant
As at January 2001, the plaintiff held an income protection insurance policy with Australian Casualty & Life (“ACL”). Pursuant to a scheme for the transfer of ACL’s life insurance business, which was approved by the Federal Court of Australia on 29 November 2002, the defendant assumed all of the obligations of ACL under its income protection policies, including the policy held by the plaintiff.
In January 2001, the plaintiff made a claim on the income protection policy as a consequence of an incident which had occurred in November 2000. According to the “Initial Claim Form” dated 16 January 2001 which the plaintiff signed and lodged with ACL, he was injured on 27 November 2000. He described the details of the occurrence of the injury:
“I was carrying roofing materials around the property. It felt as though I had hurt my left shoulder but also had pain in the centre of my back.”
In the initial claim form, the plaintiff disclosed his attending doctor as
“Dr B Lynam”, said that his first treatment was on 5 January 2001, and that the treatments administered were “x-rays – manipulation – anti inflammatory drugs”.
In response to the question on the claim form as to what treatment he was currently having, the plaintiff responded “anti inflammatory drugs”.
The plaintiff affirmed in the claim form that the severity of his condition varied: “with continued movement, the condition worsens and leads to migraine headaches and pains across my left shoulder area”.
In response to the question “Can you perform any of your work duties?”, the plaintiff answered “Yes”. He then answered questions confirming that he had not worked at all since the incident on 27 November 2000.
Question 1 on the claim form sought the plaintiff’s personal details. The plaintiff described his occupation as “plumber”. The succeeding questions and answers included the following:
“2.OCCUPATIONAL DUTIES: WHAT WORK DO YOU ACTUALLY DO IN YOUR OCCUPATION?
GENERAL PLUMBING – ROOFING
3.DO YOU USUALLY WORK FROM HOME? PLEASE PROVIDE DETAILS: HOME BASED – SELF EMPLOYED – (DO NOT HAVE A BUSINESS PREMISES)
5.WHAT DUTIES, APART FROM MANUAL LABOUR, DO YOU USUALLY PERFORM IN YOUR OCCUPATION:
BOOK KEEPING –
11.GROSS MONTHLY EARNINGS: $4,000.
12.EMPLOYER’S FULL NAME AND ADDRESS: SELF EMPLOYED – 24 REILLY RD NAMBOUR
13.IF SELF EMPLOYED
A.ARE YOU A SOLE TRADER? √
B.NUMBER OF FULL TIME EMPLOYEES? SELF ONLY”
On 22 January 2001, an ACL claims consultant wrote to the plaintiff acknowledging receipt of the claim form, stating that ACL had made an assessment of the plaintiff’s claim and advising:
“The medical evidence indicates that the condition for which you are claiming is osteoarthritis of the thoracic spine. As you know, sickness cover under your policy provides a lifetime benefit period. In the event that liability for your claim is admitted, benefits will be payable fortnightly in arrears from the end of the 30-day waiting period once all relevant information has been received and assessed.
To assist us in further assessing your claim, we have written to Dr Brett Lynam. Upon receipt of this report, your claim will receive our further attention. Would you also kindly confirm in writing your occupational details. Please specifically advise the period you worked as a computer programmer and insurance agent and the approximate date on which you recommenced work as a plumber after ceasing work as a computer programmer. Please also advise whether you continue to work as an insurance agent and whether you are currently receiving any income from this occupation.”
On 22 January 2001, ACL wrote to Dr Lynam seeking further information, including a prognosis for recovery and return to full time work.
On 25 January 2001, the plaintiff wrote to ACL, to the attention of Ms May Chung:
“Dear May
I have a policy with AC&L, No. 10462463 and have been told of a claim reference no. 785592. On the 27th November 2000 I hurt my back whilst picking up and carrying some goods. I thought at first that I had pulled a muscle in my back and that a good rest would solve the problem.
After a week or so I was in a lot of pain and needed to see someone about it. There is a Dr M. Moeliker in Nambour who is a Chiropractor, through the treatment that I was given by Dr Moeliker I was able to gain a great deal of relief from the pain and migraines. As December passed I was still having a great deal of trouble and felt that I was not then able to work and needed to put in an application for some financial relief from the policy. I was told that I would need to get a certificate from a G.P. to put in with the claim.
I have since seen Dr Boon and then in his absence, Dr Lynam here in Nambour but the treatment that I received there left me in a great deal of pain and with a stiff neck and increase in the frequency of migraine headaches which took about a week and a half to get back even close to the level it was prior to the doctors visit. I felt I was unable to go back to that doctor because of the pain that I was left in and my concern for perhaps even more serious problems with my back (the problem is in around the spine just between the shoulder blades). Even without the back pain – the migraines and associated visual problems are bad enough but then to add the back problems is more than I care for.
When I spoke to AC&L last week I was told that I would need to be under the care of a G.P. and not just the Chiropractor. Accordingly I have found a different doctor but need to travel to Maroochydore to receive the treatment. I trust this is OK as the Dr Lynam had not indicated that he could do any more whereas the current doctor (Dr Colin Rigg B.Med.Sci.BM.BS) feels that we should have been doing Ultrasound and Heat treatment and wants me there each day then following on with the Chiropractic work and exercises to try and rehabilitate the back.
My concern is now in the financial area as my stopping work at the end of November also means there is no longer any money coming in. Is my period out of work able to start form the end of November and then count December as the qualifying period. I am needing to outlay the money for the lounge as I desperately need the back and neck support ($4,500) as well as the Chiropractic work and the x-rays etc that Dr Moeliker wants.
Thank you for your assistance”
On 29 January 2001, the plaintiff wrote again to ACL, this time in response to ACL’s letter of 22 January 2001. The plaintiff said in this letter:
“Re: your letter of the 22nd Jan 2001, the questions as to the specific dates that I worked with the insurance work will be difficult to establish. I believe that period would have covered from early 1993 to mid 1993 and was in association with ‘Brad Davies Financial Services’. I believe his contact details to be:
Bradley Davies
8 Woodroffe Terrace
Little Mountain (Caloundra) Qld.
Ph: 07 5448 2041 Mob: 0408 919 432
At that time I was starting to deal with computer databases and was to work with Brad keeping records and doing the insurance work in association with Brad & ‘Brad Davies Financial Services’. Unfortunately I was not the ‘sales person type’ and was not able to continue with that.
The only qualification I have is my trade certificate for plumbing and gas-fitting which I commenced in 1973. My only option was to return to this line of work. In the matter of this claim I was doing a roof replacement (plumbing) for a customer at her house the job being completed on the 27th November 2000.
My hobby is Amateur Radio in which I have dealt with computers and associated electronic systems. I am self taught in a particular computer data base system called ‘Paradox’ which uses a system called ‘ObjectPAL’ which is ‘object-based Paradox Application Language’. Unfortunately over the years I have not found a demand for this though my current thoughts are to try and advance in this area. I spoke to a counsellor who has suggested that if I am unable to continue with physically based work, my aptitude would lend itself to studying programming. As yet I have not taken the next step to enquire with a university to find out about positions for the next intake which will be mid year as I am not certain of ‘where I’m at ...’ and wanted to find something else other than ‘osteoarthritis of the spine’, it is a bit scary even if not life threatening.
Thanking you”
On 30 January 2001, ACL sent a fax to the plaintiff asking for further information, including the contact details for Dr Moeliker and Dr Rigg and for income tax returns for the 1994, 1995 and 1996 financial years to support the plaintiff’s monthly benefit claim.
The plaintiff responded with a fax dated 30 January 2001, saying:
“Re: your fax of the above, date, as I have already indicated to you, the questions as to the specific dates of work would be difficult to establish. I gave you the contact details for ‘Brad Davies Financial Services’, with whom I was working at that stage and through whom I took out the policy.
Please find also enclosed the contact details for Dr Moeliker. None of the other doctors that I have visited have been able to give another finding as to the source of my problem.
The letter you said was posted on the 22nd was post marked the 28th Jan so it is difficult to answer you questions if they are not sent to me.
I feel that there has been a show of you wanting to avoid making payment on this policy and feel that all this is most unreasonable.
You have been sending me requests of payments for all these years and I have made the payments promptly and if full including all the increases you have put forward in-spite of the policy being a fixed premium which attracted higher initial payments than the normal policy.
At this point I am not at all impressed with your avoidance after having happily taken my premiums or my own situation as far as my health goes.
You have taken my premiums, it is my understanding that what work I went into was not of concern and that my policy stayed fixed for what it is until I reach retiring age at which point it ceases to function.
Please deal with this as quickly as possible.”
Dr Lynam responded to ACL’s request for information with a report dated
30 January 2001, in which he said:
“In response to your letter dated the 22nd January this year, received here on the 29th January this year, I provide the following report.
This patient has consulted several Doctors of the surgery over the past twelve months. He first visited for his current problem on 5th January 2001 when he attended Dr Boon. Dr Boon’s notes state that he had left-sided upper back pain which he had for some six weeks after carrying roofing material. His notes state that he was tender over the upper left thoracic facet joint. Dr Boon provided some heat to the area followed by some gentle mobilisation on the facet joint and provided a prescription for Celebrex (an anti-inflammatory) for the problem.
I next consulted the patient on the 9th January 2001. My notes state that he was still tender and was experiencing pain of the lower trapezius muscle on the right and left, but more so on the right. He stated that he had received no real relief with manipulation and had seen a Chiropractor on one occasion who provided some relief but the problem was persisting. He felt he was unable to work at present because of his inability to lift. He stated that the cause of his problem was from approximately 50 trips carrying roof sheeting on his head with his arms held above his head over a distance of some 30 to 40 metres on a job site, some six weeks prior to the 5th January 2001. I arranged for Diagnostic Imaging in the form of a Chest X-Ray and a Thoracic Spine X-ray.
I have included a copy of the report of this Thoracic Spine X-Ray, however it essentially says there is some minor degenerative changes in the lower thoracic spine.
During his visit on January 10th 2001 I noted that he had two visits in early 2000, that was the 19th January and the 24th January, when he complained of inter-scapular pain and headaches. He was consulted on these occasions initially by Dr Nordland and subsequently Dr Herdy. He was treated at this time with some Analgesia in the form of Panadeine Forte.
For this reason I suggested that he had an aggravation on this occasion of a pre-existing minor osteo-arthritis of his thoracic spine.
My advice was that he attend a local Physiotherapist for treatment and return to self-employment as soon as he was able based on the findings and the treatment from the Physiotherapist. He was referred to Kim Dwyer at Blackall Terrace Physiotherapy. I have had no correspondence from the Physiotherapist as yet.
I provided him with a completed Australian Casualty & Life Insurance Form stating that since he was a self-employed plumber and gas fitter that whilst this condition remained painful he would be unsuited to his usual duties. He would however certainly be suited to clerical type duties of a light, non-heavy lifting nature.
The patient’s history provides the date of initial disability, which was some five weeks prior to the 5th January 2001. He did not present here until the 5th January 2001 so we have no documentation prior to that.
His prognosis based on the radiological evidence of only minor changes in his thoracic spine is that with appropriate physiotherapy and a mobilisation program along with home exercises he should be able to return to his usual duties at some time in the near future.
As stated I have had no further correspondence from the Physiotherapist I referred him to nor have I had further consultations with the patient. As a result of that I am unable to comment on his current activity levels and on his current psycho-social situation.
I have no further data to add however I believe this answers to the questions raised in your correspondence.”
On 5 February 2001, the plaintiff sent ACL a fax providing some information from his chiropractor, Dr Moeliker. On 7 February 2001, the plaintiff wrote several faxes to ACL in which he complained about its handling of his claim to date. In one of the faxes dated 7 February 2001, he said:
“I am not making a claim for permanent disability. At this point now if I do not receive some ongoing treatment for rehabilitation, it may be a lot longer than a couple of months before I am without the problem and while I am suffering from this pain and the associated problems including migraine headaches, I am not able to do much about rebuilding my access to income. I would have also though that it would have been in your best interests to fund the physiotherapy to have it continue rather than to let the problem magnify itself and maybe become a more permanent problem, those also seem the thoughts of Dr Lynam.”
On 8 February 2001, the plaintiff, in response to queries from ACL concerning his employment history, sent ACL a fax stating:
“May Chung
Policy: 10462463 Claim: 785592
With reference to the discussion with Lisa, I will contact:
Raymond Kronk of Steelway Engineering
Cnr Mark Road & Helen Street
CALOUNDRA, QLD. 4551
ph: 5491 2732 fax: 5491 8468
I had been working as firstly an employee with the responsibilities of ‘Office Administration’ and latter as a subcontractor covering the same area as well as writing a ‘Database System’ for them on which they ran their business. I believe that this period as a contractor (self employed) was for 1992 & 1993. After that I was working both for myself in that area as well as for Brad Davies Financial Services doing ‘Insurance Sales’ and ‘IT’ associated work for Brad.
I am not sure of the sequence of events that lead to the policy change in 1995, there was a lot of things happening. I thoughts are that in that period I was working with Brad and that there was a change made to the policy to change it from a monthly payment and to increase the rates to give it a fixed premium (+CPI)???
At that point I should have been registered with AC&L as an agent, so if you need to question that you may need to talk to someone at AC&L!
At this stage I won’t bother about Brad Davies Financial Services P/L as I feel you can confirm through your own records of my being registered as an agent with AC&L. If you wish to speak to Brad Davies you have my permission for him to pass on any information he may have regarding my details.
As soon as I get a response from Steelway Engineering I shall forward a copy to you.
I have attached a list of some payments received from Steelway Engineering as a contractor (self employed person) to show at least some of the figures I had claimed to be earning. It has been extremely difficult to compile all the figure back through the bank so there may be other amounts that have not been associated with Steelway Engineering. I am sorry that I am not able to readily provide information as I have no paperwork back from 1998 and only some electronic records as the paper records were borrowed by another party to hide their share of my income.”
On 9 February 2001, the plaintiff sent a further fax to ACL enclosing a reference from Mr Kronk of Steelway Engineering, which stated:
“TO WHOM IT MAY CONCERN
Eric Syddall subcontracted to Steelway Engineering as Office Administrator for a number of years prior to 1995. While holding this office he performed various duties which included developing a Computer Database System for our own use. Although he has updated this program since, a lot of the basic concepts still exist today.”
On 9 February 2001, ACL wrote to the plaintiff enclosing a cheque for $1,934 representing total disability benefits for the period 4 February 2001 to
18 February 2001 and a progress claim form for completion and return by the plaintiff.
On 13 February 2001, the plaintiff sent a facsimile letter to ACL in which he said:
“Australian Casualty and Life
G.P.O. Box 5339, Sydney NSW 2001
ph: 1300 366 066 fax: 02 9223 9193 Policy: 10462463 Claim: 785592Lisa Filachoni
Dear LisaI have received some correspondence from AC&L today referring to the incident date. I have been told that AC&L are not going to allow the payment of the benefit for the full period. I would like to ask you to reconsider this decision, as I explained to AC&L when asking about financial records etc, I do not have records that go back prior to 1997/8 when most of my belongings and paper records were taken. I was able to provide you with some information as to my source of income for the period from 1993 onwards only as I have some electronic records the other party was not aware of.
As I do not have copies of insurance policies and alike I was unable to determine just what was required. In this I was not able to correctly fulfil the ‘quoted conditions’ but feel that I have done my best to provide to you all the relevant information and find a solution to the problem where the doctors didn’t. When I first asked AC&L about changing Doctors and seeing someone who could help me – I was told ‘Sure – of course, there is no point making it worse’ but even then there was no mention of ‘Registered Medical Practitioner’ to help me avert this situation.
My seeing the ‘Registered Medical Practitioners’ has only resulted in aggravation of the problem and I am now told, by their incorrect treatment, could have caused permanent nerve damage. The treatments prescribed by the ‘Registered Medical practitioners’ has so far not assisted in any way while each visit led only to more pain and less mobility, I have done my best whilst using my own resources to find out what the problem is and how to best solve it.
I am concerned that whilst I have reduced my resources I will be hindered from getting the treatment that has been helping me the most and this will prolong the problem unreasonably.
I realise that from the date of the incident on the 27 November to the 5th December 2000 I did not see anyone about the problem and would not expect you to consider that time be included in the qualifying period. At that point I thought I had only pulled muscles and that complete rest would have resolved it. It did not and I consider myself lucky I did not visit the ‘Registered Medical practitioner’ then in having seen their abilities in this area since. Four doctors (3 GP’s 1 Specialist/Radiologist) have told me that there was no more they could do and that because of the site of the problem, I was going to be stuck with it.
Thank you for your time.
Eric Syddall”
Ms Chung of ACL responded to the plaintiff with a fax dated 13 February 2001, saying:
“Dear Mr Syddall,
We refer to your query in regards to the date incurred or date we assessed the claim form.
We have contacted Dr M Moeliker today to confirm the consultation dates. We have been advised that you initially saw him on 5/12/00 and again on 02/02/01, 05/02/01 and 08/02/01. As advised by the secretary Dr Moeliker is a chiropractor and not a registered medical practitioner. We would like to quote the following clause out of the policy for your reference on the basis that we have assessed your claim from the 05/01/01.
If the person insured is totally disabled – and can’t work
2. If the person insured is totally disabled, we will pay you the monthly benefit. We pay you at the end of each month for which you are entitled to be paid. The person insured is totally disabled if, because of an injury or sickness, he or she is:
·unable to perform at least one of the duties of his or her occupation which is necessary to produce income
·not engaged in any occupation; and
·under the regular care and attendance of a registered medical practitioner. The registered medical practitioner cannot be you or your family member, business partner, employee or employer, nor can it be the person insured or his or her family member, business partner, employee or employer.
We will be also in contact with Steelway Engineering to have them clarify the exact date that you commence work with them and the nature of work performed.
Should you have further enquiries, please do not hesitate to contact our office.
Regards
May Chung
Claims Consultant”
The plaintiff then lodged with ACL a progress claim form dated 4 March 2001. In the part of the form he completed, the plaintiff said, inter alia, that the disability which prevented him from returning to work was “back pain”, and that his return to work was delayed because he had nerve damage in or around the spine. The progress claim form also contained an “attending doctor’s statement” signed by
Dr Lynam giving a diagnosis of “cervical spondylosis (mild) with referred pain”. In describing any complication or conditions which may prolong the disability,
Dr Lynam said “mild degenerative change in cervical spine may limit long term full mobility”. Dr Lynam said that, since his last examination, the plaintiff had shown “gradual slow improvement”, but confirmed that the plaintiff was still unable to work because of the condition.
ACL continued to make total disability benefit payments to the plaintiff while the matter was being investigated. In early April, the plaintiff was referred to
Dr Peter Winstanley, orthopaedic surgeon, for examination at the request of ACL. Dr Winstanley provided a report dated 10 April 2001. I will refer to
Dr Winstanley’s report in further detail later in this judgment. It is sufficient for present purposes to note that in his report dated 10 April 2001, Dr Winstanley considered that the plaintiff’s clinical presentation was consistent with an aggravation of underlying degenerative change present within his cervical and thoracic spine area, that the cervical spine symptomology had improved but the plaintiff still had ongoing symptomology associated with the thoracic spine, and that at the date of the report the plaintiff’s condition had not stabilised. Dr Winstanley’s opinion at that time was that the plaintiff’s condition was such that it would prevent him from performing his normal occupational activities as a general plumber.
Dr Winstanley stated:
“In my opinion, the patient would be unfit from obtaining heavier type work activity. The patient may be able to perform some lighter type activities, but this would depend on the nature of such condition. In my opinion, his condition is such that he would benefit from treatment of a muscle rehabilitation program and work hardening program. This could be performed through the Noosa Rehabilitation Program at the Noosa Hospital.
In my opinion, following a muscle rehabilitation program, the patient should be able to return to his occupation. He should avoid heavier type activity. In the longer term, it would be best for this patient to return to lighter type activities which may require re-education and retraining to allow him to perform this activity. There is no indication at the time of review that the patient required further investigation, nor is he a surgical candidate. The patient did not have any inappropriate signs.”
ACL had Dr Lynam’s and Dr Winstanley’s reports reviewed by
Dr Anthony Christie, occupational physician, who expressed the view that the plaintiff needed some physiotherapy. Dr Christie was of the view that the plaintiff should be fit to return to full duties in a month from the date of Dr Christie’s review on 18 April 2001, and that the plaintiff would be fit for light duties at that time.
On 3 May 2001, ACL wrote to the plaintiff in the following terms:
“Dear Mr Syddall,
RE: INSURED NAME: Mr Eric Syddall
POLICY NUMBER: 010462463
CLAIM NUMBER: 785592Thank you for attending the medical examination with Dr Winstanley on 9th April 2001.
Both Dr Winstanley and Dr Lynam consider that you are fit to perform those duties of a computer programmer/database administrator. For this reason, we are denying your claim and wish to advise that no further benefits are payable on your claim.
If you wish to discuss this matter further, please contact the writer on (02) 9367 2032.
Yours sincerely
May Chung
Claims Consultant – CLAIMS DEPARTMENT”
On 8 May 2001, the plaintiff sent a fax to ACL stating:
“In response to your letter dated 3rd May 2001 referring to the medical examination, and the cessation of payments under my policy I feel that this is not a correct action for AC&L to be taking.
At the time of taking out the policy I was not a ‘Computer programmer/administrator’, I was working as an insurance salesperson for (amongst others) AC&L which is reflected by me being noted as the agent on the policy.
In my understanding I am at liberty to change my means of income at any point without an effect on my policy. You were notified earlier that I was no longer working with the administration area which was prior to December 1993 and that I had returned to ‘plumbing’ after finding that I was not able to adapt to the ‘Insurance Salesperson Work’.
Since 1994 I have been paying my premiums as a ‘Plumber’ and they have been accepted as such, when I had the accident on the 27th November 2000 I was working as a ‘Plumber’.
I request that you immediately resume my cover under this policy and in response to this matter I request that you sent your response to me via facsimile due to the incredible delays AC&L have already made in dealing with this matter.”
Further correspondence ensued between the plaintiff and ACL, including correspondence which led to the plaintiff referring his complaints against ACL to the Financial Industry Complaints Service.
By the present proceeding, the plaintiff has sued the defendant seeking a wide range of relief on a multiplicity of bases against the defendant. On its face, the plaintiff’s further amended statement of claim includes claims for:
(a) damages for breach of contract and/or breach of trust;
(b) damages for negligence;
(c) damages for breach of the policy of insurance;
(d) exemplary damages;
(e) loss or guarantee of being consistently insured;
(f) loss of policy death benefits;
(g) loss of enjoyment of life;
(h) damages on behalf of his wife and children;
(i)damages for loss of chattels, house, equity, property rental income and interest.
I will itemise the various heads of damages that he has claimed more particularly later in this judgment. I should observe, however, that by the end of the trial, the plaintiff seemed to be limiting his case to one of breach of contract, although continuing to allege that the defendant had acted towards him with a lack of good faith.
The defendant denied that it had failed to act with utmost good faith. The cases advanced by the defendant were:
(a)that the defendant stopped paying the plaintiff benefits because the plaintiff was not totally disabled within the meaning of the insurance policy;
(b)the plaintiff made a number of misrepresentations to ACL prior to taking out his original income protection policy in 1993 and the income protection policy under which the claim was made in 1995, and that these misrepresentations were made fraudulently, entitling the defendant to avoid the income protection policy of insurance pursuant to s 29(2) of the Insurance Contracts Act 1984 (Cth) (“ICA”).
The plaintiff was legally represented when this proceeding was first instituted in 2006. For most of the interlocutory history of the proceeding, however, and for the entirety of the trial, the plaintiff represented himself. Considerable leeway was given to the plaintiff in his conduct of the trial. He was, for example, permitted to re-open his case on several occasions to lead further evidence in an attempt to minimise the impact of evidence adduced by the defendant which tended to undermine the plaintiff’s credibility. At the end of the day, however, this case is to be decided on the admissible evidence which was adduced by the parties. The plaintiff, albeit self-represented, is in no different position from any other litigant before the Court, including the defendant. In that regard, it is of assistance to recall the observations of Muir JA in du Boulay v Worrell & Ors:[1]
“[69]It may be that self-represented litigants should be afforded a degree of indulgence and given appropriate assistance. But if a self-represented person wishes to litigate, he or she is as much bound by the rules of Court as any other litigant. Those rules exist to facilitate efficient, fair and cost effective litigation. The Court’s duty is to act impartially and ensure procedural fairness to all parties, not merely one party who may be disadvantaged through lack of legal representation. The other party to the litigation is entitled to protection from oppressive and vexatious conduct regardless of whether that conduct arises out of ignorance, mistake or malice.”
[1][2009] QCA 63.
See also the observations of Keane JA in Robertson v Hollings[2] and White J in Robertson v Graham.[3]
[2][2009] QCA 303 at [11].
[3][2010] QSC 215 at [38].
The policy of insurance
The appropriate starting point is to identify the policy of insurance which the plaintiff contends was breached by the defendant, and which the defendant says it is entitled to avoid.
The plaintiff’s relationship as an insured with ACL commenced in 1993 when he applied through an insurance agent, Mr Brad Davies, for an income protection policy.
On 18 January 1993, the plaintiff completed and signed an application form for a “Premier Income Protector” policy with ACL. He applied for lifetime benefits for both accident and sickness, with a waiting period of 14 days. The monthly benefit sought was income protection of $1,600 per month. In Part 5 of the application form the plaintiff provided his “Occupation Details”, and gave the following responses:
(a) That his principal occupation was “computer operator/programming”;
(b) That he had been in that occupation for one year;
(c) That he had no specific qualifications;
(d) That he was self-employed;
(e) That the nature of the business was “data processing”;
(f) That the specific duties of his occupation were “data processing”;
(g) That he worked 43 hours per week;
(h) That his occupation did not involve manual work;
(i) That he was self employed;
(j) That he did not work at his place of residence;
(k) That he did not have a second occupation.
In Part 6 of the application form, the plaintiff provided his “Earnings Details”:
(a)In response to the question “What were your earnings from your principal occupation (net of business expenses but before tax) over the last 12 months?”, the plaintiff answered “$26,000”;
(b)In response to the question “What were your earnings in the full financial year prior to that period?”, the plaintiff responded “$24,000”.
In Part 8 of the application form, the plaintiff was asked about his “Family History”. The form asked: “Has any near relative had any hereditary disorders such as diabetes, mental illness, haemophilia, heart disease, Huntington’s Chorea, polycystic kidney disease or died before age 60?”. The plaintiff answered “Yes” and gave the following details:
“Father: died aged approx 60 years – lung cancer/smoking”
Part 9 of the application form required the plaintiff to give personal health details. In response to the question asking details of his usual doctor, the plaintiff responded “No usual doctor”. In response to a question asking the date and reason of his last consultation with any doctor, he responded:
“1989 – sprained ankle – clinic – Landsborough. No recurrent problems.”
Part 10 of the application form required the plaintiff to give details of his medical history. The form asked whether the plaintiff had ever had or been told that he had or received advice or treatment for a range of specified medical disorders. The plaintiff answered “No” to all of these, including a question as to whether he had received advice or treatment for “mental or nervous disorder (e.g. stress, depression), fainting, epilepsy, paralysis, brain disorder”. The plaintiff also answered “No” to the question whether he had, within the last five years “had any medical examination, advice, treatment or been in hospital”.
ACL accepted the plaintiff’s application, and issued policy no 289613, being a “Premier Income Protector” policy providing for monthly injury and sickness benefits of $1,600.
The plaintiff renewed this policy in 1994.
In June 1995, the plaintiff applied to ACL for an increase in his income protection policy. He completed and signed an application form for that purpose on
15 June 1995. By that time, the plaintiff had started working as an insurance agent. In the application form dated 15 June 1995, the plaintiff sought a Premier Income Protector policy with lifetime accident and sickness benefit periods, and a waiting period of 30 days, to provide personal income protection cover of $3,000 per month.
In answer to question 12 on this application form, which required him to provide “Occupation details of person to be insured”, the plaintiff said:
(a) His principal occupation was “computer programmer”;
(b)He had been in that occupation for four years and his current business had been in operation for four years;
(c)He was self employed;
(d)The nature of his business was “computer/data base management”;
(e)The specific duties of his occupation were described as “programming”;
(f)He worked “40 +” hours per week;
(g)His occupation did not involve manual work;
(h)He worked at his place of residence, and the work he performed at home was described as “programming – outside work system analyst”.
The plaintiff also responded in the application form that he had a second occupation. He described the duties and details of earnings from the second occupation as:
“Insurance agent. $3,000.00 per month to date started Dec 94”.
The application form also sought the plaintiff’s income details. The questions asked, and answers provided by the plaintiff (printed below in bold) were as follows:
“13 Income details of person to be insured
A. What is the income earned by the person to be insured’s own activity of his/her principal occupation over the last 12 months?
Income is what is earned by the person to be insured’s own activity after deducting expenses necessarily incurred in earning that income but before tax.
$48,000.00 B.What was your income (net of business expenses but before tax) in the full financial year prior to that period?
$32,000.00 C.If applying for Office Overhead/Business Expenses cover, what are your current monthly expenses?
$N/A. (Please also refer to Section 21, Office Overhead Questionnaire.)”
In response to questions concerning his insurance history, the plaintiff answered that the ACL income protection policy providing for a monthly benefit of $1,600 was to be replaced. He also gave details of a claim he had made in 1993.
In response to questions about the plaintiff’s family history, the plaintiff disclosed “Father – lung cancer (smoking) pneumonia”.
As with the previous application form, the plaintiff was also asked whether he had ever had or been told he had or received or treatment for a range of medical conditions. He answered all of these in the negative, including “mental or nervous disorder”.
On 15 June 1995, the plaintiff also signed an “Appointment of Agent” document, which he subsequently sent to ACL. This “Appointment of Agent” document stated:
“We hereby notify that we have instructed Eric A Syddall to attend to our financial and investment portfolio. Details are as follows:
Eric Syddall Financial Services
60 Flaxton Drive
PO Box 141
Mapleton Qld 4560Would you please ensure that all information, including client correspondence held by your company in relation to our policies or investments, are transferred or released to Mr Syddall.
Specifically to policy 289613
Yours faithfully
[Signed by the plaintiff]”
This “Appointment of Agent” document is date stamped as having been received by ACL on 27 June 1995.
On 26 June 1995, under the letterhead of “Eric Syddall Financial Services”, the plaintiff wrote to ACL as follows:
“To Australian Casualty & Life
Customer Service: New Business
From: Eric Syddall 458984
Please find enclosed 3 proposals for income protection, along with two cheques for the full amount of the years premiums on each of the proposals.
1. Peter Bailey, DOB 150958, $2,150.00 mth benefit, 14 Day wait, $1,005.19 premium) cheque
2. Ian Dalton, DOB 291057, $2,150.00 mth benefit, 14 Day wait, $1,179.30 premium) $2,184.40
3. Eric Syddall, DOB 010756, $3,000.00 mth benefit, 30 Day Wait, $990.52 premium) $990.52
For any further information on these proposals please contact me, with any developments please keep me advised.
Total of cheques $3,175.01
Thanking you”
The number 458984 was the plaintiff’s ACL agent number.
This letter was date stamped as having been received by ACL on 27 June 1995, and the application form signed by Mr Syddall on 15 June 1995 was similarly date stamped as having been received by ACL on 27 June 1995. It is clear that the application form that I have described at length above was sent to ACL under cover of the letter from the plaintiff dated 26 June 1995.
Having received the plaintiff’s application form, on 30 June 1995 ACL cancelled policy no 289613 and issued a new income protection policy to the plaintiff, being policy no 10410025.
On the 1995 application form, the “intermediaries” (i.e. insurance agents) who were entitled to be paid commission in respect of the sale of this policy were shown as the plaintiff and Mr Davies. The new business split between them was nominated on the application form to be 70 per cent for the plaintiff and 30 per cent for
Mr Davies, and the plaintiff was to receive 100 per cent of the renewal commission.
It appears that this nomination of Mr Davies to receive 30 per cent of the commission was an error. Mr Davies, in the course of his evidence before me, said that he had “absolutely no idea” as to why he would receive a split of that commission, because the plaintiff was his own agent at the time. It is clear enough from the contemporaneous documents that this error in the allocation of commission was picked up within ACL, and Mr Chris Harvey, who was then the Queensland manager of ACL, gave instructions for the situation to be rectified so that the plaintiff would receive all of the commission.
On 8 August 1995, Mr Harvey sent a memo to the underwriting section of ACL stating:
“10410025 – E Syddall
This is agent’s own policy & should show agency credit of 100% to A/n 458984 – E Syddall.
In order to correct this agency dept have advised we will need to cfi policy 10410025 & issue a new policy with agent showing A/n 458984 100%.
Can you please arrange for this to be done & ensure that it does not get entered as replacement business as this will create commission problems.”
Ms Debra Jeon, who was employed as a senior underwriter with ACL and then with the defendant until November 2004, gave evidence before me. Ms Jeon has not worked for the defendant for many years. In her evidence, Ms Jeon explained, by reference to contemporaneous records, that policy no 10410025 was keyed into ACL’s computer system as a replacement business with the commission on the new business being split 70 per cent to the plaintiff and 30 per cent to Mr Davies. She referred to Mr Harvey’s instruction for the plaintiff to receive 100 per cent of the commission, and said that because of computer restrictions at the time, when a policy was entered as a replacement it could not be changed once it had been entered as new business. The only way that Mr Harvey’s request could be processed was to “cancel from inception” the policy that was in force as at
8 August 1995, i.e. policy no 10410025, and issue a new policy. She explained that this was the only way of overcoming the computer system restriction at the time, and was “purely to change the commission, the way the commission is paid”. She referred to a “request for re-key by underwriting” document, which requested her to re-key policy no 10410025, and specified the “reason for re-key” as “reopen with agent E Syddall – 458984 100%”.
By reference to the file, Ms Jeon confirmed that policy no 10410025 was “cancelled from inception” for the purposes of amending the payment of commission, and that policy no 10462463 was issued in order to correctly allocate the commission to the plaintiff.
The notion that the plaintiff was to receive 100 per cent of the commission in respect of the policy taken out in 1995 was confirmed in the plaintiff’s original statement of his evidence in chief, in which he said:[4]
“I applied to have my policy moved to my agency portfolio and for an increase in my insurance cover. The insurance increase was granted and a policy issued and in the same process 100 per cent of the commission was also allocated to me.”
[4]At paragraph 12.
In the course of the trial, after the defendant’s underwriting witnesses had given evidence concerning the circumstances under which policy no 10462463 was issued in replacement of policy no 10410025, the plaintiff sought and was granted leave to reopen his case to give further evidence. His further evidence in chief was in the form of a statement in which he said:
“2.The commission for policy 010410025 had already been set by AC&L about 4.7.1995 to 100%. With what I had learned as an agent with inter alia AC&L especially during June and July 1995 displeased me and I did not want to stay in the insurance business.
3.On about 8.8.1995 after discussion with and AC&L member, possibly Chris Harvey, there was to be a new policy issued:
(a)As I was not to be paid ongoing commission for the new policy and was leaving insurance, it is my belief there was no need for the previous policy 010410025 to be cancelled for the purpose of defining agent’s commissions but to create new business free of policy 010410025.
(b)The effective life of the application form for policy 010410025 as an AC&L document had expired on the 21.7.1995 and could not be used to initiate a new policy applied for in August. I was therefore requested to complete a new application form for the proposed August 1995 policy.
(c)I do not have a copy of the application form but neither do I have a copy of the actual policy. The policies existence is confirmed only by the defendant.”
Under cross-examination, the plaintiff continued to aver that he had signed a further application form in August 1995. His evidence on this, however, was at odds with numerous prior statements that he had made, including an affidavit made by him in this proceeding on 9 May 2007, in which he said:
“10.When the [1995] policy was first implemented the agent information was incorrect and was placed under my name and Brad Davies. The commission split and that the policy was to be entered as a new policy and not as an upgraded policy was later corrected on or about 08.08.1995 by Chris Harvey for Underwriting with AC&L.”
The plaintiff’s evidence on this point was quite unconvincing. In parts of his evidence under cross-examination he stated that he had a precise recollection of answers which he gave in the form which he says was lodged in August 1995. On the other hand, in the evidence in chief the plaintiff had given at the outset of the trial he had said “I only have a vague memory of what happened in 1995”, and confirmed under cross-examination in relation to this further evidence that his memory was vague. Indeed, under cross-examination he went so far as to concede that, from disclosure of the underwriting file, he had drawn a conclusion that he must have filled out the supposed August 1995 application some time before
8 August 1995.
The first allegation of the plaintiff having made an application in August 1995 occurred in his Amended Statement of claim dated 8 September 2008. In further and better particulars of that pleading, the plaintiff purported to give detail of exactly what answers he had given to questions in the August 1995 application and which questions he had left unanswered. His particulars stated that on the
August 1995 application form he had:
(a)given his principal occupation as insurance sales and said that he had been in the occupation for six months, and that he had no second occupation;
(b)left all of the income and medical history questions blank;
(c)he had left the number of hours he was working blank;
(d)he left the question about whether his occupation involved manual work blank.
The plaintiff’s pleaded case shifted somewhat when, in the further and better particulars of his statement of claim which he provided on 9 September 2008, he asserted that there was an agreement, which was partly written and partly oral, between him and ACL that policy no 010410025 would be “cancelled from inception” and that:
“The Plaintiff and AC&L entered into the agreement to Cancel from Inception policy number 010410025 as the Plaintiff decided to leave the insurance industry and cancel that policy, AC&L instead offered to Cancel from Inception policy number 010410025 and issue a new policy as New Business with no bindings on the earlier policies/applications if the Plaintiff continued the policy premiums. The purpose was not to appoint 100% premium renewal commissions as I was already entitled to that under policy number 010410025 and further I received no further commission payments from AC&L for the new policy.”
These further and better particulars by the plaintiff dated 9 September 2008 are also notable for his allegation that the date on which he ceased working as a computer programmer/database administrator was about December 1994 for others and about June 1995 for himself, and his assertion that:
“The occupation or occupations of the Plaintiff as at early August 1995 was insurance agent whilst building computers was a hobby and in late August 1995 was plumber and building computers was still a hobby.”
There is, however, simply no evidence to support these contentions by the plaintiff. On the contrary, the contemporaneous documentation is completely consistent with the defendant’s explanation as to the circumstances and reasons for the cancellation of policy 010410025 and the issuing of policy 010462463. It is also consistent with the evidence previously given by the plaintiff on affidavit.
I do not accept the plaintiff’s evidence that he has a precise recall of contents of an application form from August 1995. Given his concession as to the vagueness of his memory of the events of that year, it is not credible to suggest that he recalls the details of questions answered and not answered on a form which, even on his own evidence, he had not seen for 15 years. In the course of the cross-examination on his further evidence on this topic, the plaintiff was asked about a letter he had written to the defendant’s solicitors on 29 June 2007 in which he made no mention of the alleged August application form, and the following evidence was given:
“Mr Syddall, if you had completed an application in August 1995, that would have been a fine time to have raised it, wouldn’t it? -- That is an awful long time ago and I am not experienced in this and my state of health is not quite 100 per cent. The drugs that I take just to be able to sit down here are enough to get me confused.
You’ve complained of this before in this Court that the drugs that you take affect your memory, Mr Syddall; is that right? -- I have, yes.
You have, in fact, told his Honour on the very first day that your memory of events in 1995 is vague. Do you remember that evidence? -- I remember hardly anything, that’s correct.”
Despite this evidence, only a dozen or so questions later the plaintiff stoutly asserted that he had a precise recollection of his response to the question on the alleged August 1995 application even though he had not seen the form for 15 years and even though his memory was vague.
This is one of the areas of evidence in which the plaintiff completely lacked credibility. Others will be mentioned below. Moreover, it is clear why the plaintiff advanced this story about there having been another application form in
August 1995:
(a)to the extent that he did not answer questions on the supposed August 1995 application form, he could rely on s 21(3) of the ICA, which provides to the effect that if an insured fails to answer a question on a proposal form the insurer is deemed to have waived compliance with the matter. Importantly, in this regard, the plaintiff contended that he had left the answers to questions concerning his past income blank, and he would thereby have been able to claim relief from the duty to disclose in relation to those matters;
(b)similarly, his story about the new policy being written with “no bindings” would, if accepted, have relieved him from the consequences of misrepresentations he had previously made.
The plaintiff’s conduct in advancing this story about the August 1995 application form for these purposes only reinforces my findings as to his lack of credibility.
After the plaintiff had given this further evidence, leave was given for the defendant to recall Ms Jeon. In her evidence, she confirmed that if there had been an application form completed by the plaintiff in August 1995, she would have expected to have seen that application in the file which had been produced to the Court.
I do not accept the plaintiff’s version that he filled out and lodged a further application form in August 1995. It is, in my view, abundantly clear from the contemporaneous documentation that policy no 10462463 was issued in order to accommodate the request that the plaintiff be paid 100 per cent of the commission on that policy. I also accept that this policy was issued pursuant to the application form signed by the plaintiff on 15 June 1995. Moreover, I am quite satisfied, having had the opportunity to see and hear the plaintiff give evidence and form an opinion as to the credit-worthiness of the plaintiff, that the version of events advanced by the plaintiff in respect of the supposed August 1995 application form was evidence tailored by the plaintiff to seek to avoid the consequences of misrepresentations he had made in the June 1995 application form (details of which will be discussed later in this judgment).
The terms of the income protection policy which the plaintiff held as at the time of his claim in January 2001 were not in issue. It was written as a “plain English” policy. Under the heading “B. CIRCUMSTANCES IN WHICH WE WILL PAY YOU”, the policy relevantly provided:
“If the person insured is totally disabled – and can’t work
If the person insured is totally disabled, we will pay you the monthly benefit. We pay you at the end of each month for which you are entitled to be paid. The person insured is totally disabled if, because of an injury or sickness, he or she is:
·unable to perform at least one of the duties of his or her occupation which is necessary to produce income
·not engaged in any occupation; and
·under the regular care and attendance of a registered medical practitioner. The registered medical practitioner cannot be you or your family member, business partner, employee or employer, nor can it be the person insured or his or her family member, business partner, employee or employer.”
Under the sub-heading “When we stop paying”, the policy provided, relevantly, that “We stop paying as soon as ... the person insured stops being totally disabled”. The policy further provided:
“The cause of total disablement
We will decide whether the person insured’s total disablement is caused by an injury or a sickness, based on medical evidence.
‘Injury’ means accidental bodily injury and ‘sickness’ means sickness or disease. However, if the person insured’s total disablement does not start until 30 days after the date of an injury, we will treat the cause as a sickness.”
It is clear enough, as a matter of construction, that all three of the elements specified in the dot points under the definition of total disablement need to exist in order for a person to be “totally disabled” under this policy.
In respect of the first element, the reference to the insured’s “occupation which is necessary to produce income” is a reference to the person’s occupation at the time of the making of the claim. This may not necessarily be the same occupation as the person was engaged in at the time the policy was taken out. In that regard, the term “occupation” in the context of the first element refers to the employment, trade or business in which the insured was habitually engaged and by which the insured earned their livelihood at the time of the incident.[5]
[5]Bottrell v National Mutual Life Association (2007) NSWSC 458 at [155]; Morais v Minister of Immigration (1995) 54 FCR 498 at 50.
The reference in the second element to “Not engaged in any occupation” is clearly not confined either to the occupation disclosed as the insured’s occupation when the policy was taken out or indeed the insured’s occupation at the time the claim was made.
As to the third element, I respectfully agree with the observation of Gzell J in
Atton v National Mutual Life Association:[6]
“The phrase “under the regular care and attendance of a medical practitioner” connotes, in my view, more than one visit to a doctor. Regular care connotes repetitive medical assistance and regular attendance connotes a series of appointments.”
[6](2007) NSWSC 310 at [24].
However, it is also clear that once any one or more of the three elements cease, then the insured ceases being “totally disabled”. In the present case, the defendant argued that:
(a)in respect of the first element, the plaintiff’s occupation at the time of the claim was not that of a “plumber” but was that of a computer consultant, and that the evidence did not support a claim that the plaintiff was unable to perform at least one of the duties of his occupation of computer consultant;
(b)the plaintiff had been engaged in “any occupation” since November 2000, i.e. computer work on a regular basis;
(c)the plaintiff has not demonstrated that he has been under the regular care and attendance of a registered medical practitioner since November 2000.
(d)The plaintiff’s claim was made fraudulently, within the meaning of that term in s 56 of the ICA, and the defendant was entitled to refuse payment on the claim.
IS THE DEFENDANT ENTITLED TO AVOID THE POLICY?
Before determining whether the defendant can resist the plaintiff’s claims under the policy, it is appropriate to determine whether the defendant is entitled to avoid the policy. If it is, then that is the end of the plaintiff’s case.
It seems to me that, on the sequence of events which I have described, there was, strictly speaking, a new policy of insurance taken out by the plaintiff as a consequence of his 1995 application. An alternative view, however, may be that the 1995 application merely resulted in a variation of the policy which had been issued in 1993. It is, therefore, appropriate to examine the circumstances surrounding both the 1993 and 1995 applications.
The defendant’s contentions are that:
(a)in both his 1993 and 1995 application forms, the plaintiff made misrepresentations about his income, his occupation and his medical history;
(b)if the plaintiff had disclosed the truth, particularly in relation to his income and his occupation, neither the 1993 nor the 1995 proposals would have been accepted by the defendant;
(c)the plaintiff fraudulently failed to comply with his duty of disclosure in both 1993 and 1995;
(d)regardless of whether the policy in force as at the date of the claim was issued in 1993 or 1995, the defendant is entitled to avoid the contract of insurance which was in force as at January 2001, and there is no reason for the Court to disregard the avoidance.
Section 21(1) of the ICA provides:
“(1) Subject to this Act, an insured has a duty to disclose to the insurer, before the relevant contract of insurance is entered into, every matter that is known to the insured, being a matter that:
(a) the insured knows to be a matter relevant to the decision of the insurer whether to accept the risk and, if so, on what terms; or
(b) a reasonable person in the circumstances cold be expected to know to be a matter so relevant.”
The requirement under s 21(1)(b) extends to requiring disclosure of matters known to the insured which a reasonable person in the circumstances would know were relevant to the insurer, even if the insured did not know they were relevant.[7] Under the ICA (as it stood in 1995), the policy in question was a “continuous disability insurance contract”, as that term was then defined in s 11(5) of the ICA, and was therefore a “contract of life insurance” under the then definition of that term in
[7]Zurich Australian Insurance Ltd v Contour (1990) 6 ANZ Ins Cases 60-984.
s 11(3). As at the time the policy was entered into, s 29 of the ICA provided:
“29. (1) This section applies where the person who became the insured under a contract of life insurance upon the contract being entered into –
(a) failed to comply with the duty of disclosure; or
(b)made a misrepresentation to the insurer before the contract was entered into, but does not apply where –
(c)the insurer would have entered into the contract even if the insured had not failed to comply with the duty of disclosure or had not made the misrepresentation before the contract was entered into; or
(d)the failure or misrepresentation was in respect of the date of birth of one or more of the life insureds.
(2) If the failure was fraudulent or the misrepresentation was made fraudulently, the insurer may avoid the contract.
(3) If the insurer would not have been prepared to enter into a contract of life insurance with the insured on any terms if the duty of disclosure had been complied with or the misrepresentation had not been made, the insurer may within 3 years after the contract was entered into, avoid the contract.
(4) If the insurer has not avoided the contract, whether under sub-section (2) or (3) of otherwise, he may, by notice in writing given to the insured before the expiration of 3 years after the contract was entered into, vary the contract by substituting for the sum insured (including any bonuses) a sum that is not
SP less than the sum ascertained in accordance with the formula -----, where –
Q
S is the number of dollars that is equal to the sum insured (including any bonuses);
P is the number of dollars that is equal to the premium, or to the sum of the premium, that the insurer would have been likely to have charged if the duty of disclosure had been complied with or the misrepresentation had not been made.(5) In the application of sub-section (4) in relation to a contract that provides for periodic payments, ‘the sum insured’ means each such payment (including any bonuses).
(6) A variation of a contract under sub-section (4) has effect from the time when the contract was entered into.”
In the present case, the defendant relies on s 29(2), and contends that it is entitled to avoid the contract of insurance (whether entered into in 1993 or 1995) because of fraudulent non-disclosure or fraudulent misrepresentation by the plaintiff. In the context of an insurance contract, a fraudulent misrepresentation is one which is false and which is made either knowingly, or without belief in its truth, or recklessly not caring whether it be true or false and with the intention that it should be acted on by the insurer.[8]
[8]Tyndall Life Insurance Co Ltd v Chisholm (2000) 11 ANZ Ins Cases 90-104; Plasteel Windows Australia Pty Ltd v CE Heath Underwriting Agencies Pty Ltd (1999) 5 ANZ Ins Cases 60-926.
Evidence about the plaintiff’s income
Before turning to consider whether the 1993 and 1995 application forms contained misrepresentations, it is convenient to review the evidence concerning the plaintiff’s income. The most reliable source of evidence for this purpose is the tax returns lodged for the plaintiff and his family trust.
Year ended 30 June 1991
The plaintiff’s tax return for this year disclosed receipt of unemployment benefits totalling $4,621 and net non-primary production income of $1,319. His total taxable income was $108.
On his tax return, the plaintiff listed his occupation as “plumber/gas fitter”, although in evidence the plaintiff was equivocal about whether he was still working as a plumber at that time.
Year ended 30 June 1992
The plaintiff’s tax return for this year disclosed the receipt of unemployment benefits totalling $2,443 and a loss from his plumbing and gas fitting business of $6,599. His tax return also disclosed that he was paid gross income of $15,235 by Steelway Engineering. The “salary and wage occupation code” on this tax return recorded “plumber/gas fitter/computer ope”, although in evidence the plaintiff said that in this year he was not plumbing because he “didn’t have time to do plumbing when I was working for Steelway Engineering”.
Year ended 30 June 1993
The plaintiff’s personal tax return for this financial year showed him receiving gross income of $14,412 from Steelway Engineering.
This tax return also claimed a net non-primary production loss of $6,995. According to the tax return, the plaintiff was engaged in the business of “plumber and gas fitter” under the name “Eric Syddall”, in which business he received income of $2,894 against which he deducted business expenses totalling $9,889, leading to a net loss for the year of $6,995. In evidence, the plaintiff denied that he had worked as a plumber during this year, said that these entries were carried over from the previous year, and said that the tax return, prepared by his tax agent, was inaccurate.
In any event, the plaintiff’s total taxable income for that year was disclosed as $4,578.
It was during this financial year that the plaintiff’s family trust (of which the plaintiff was trustee) was established. According to the 1993 tax return for the family trust, the main business activity of the trust was “program development”. It disclosed gross business income of $5,301 and a net profit of $4,705. Under the business declaration, the business name of the trust estate’s main business was listed as “Computer Business Systems”. The statement of distribution records distributions from the trust to a number of beneficiaries, but nothing to the plaintiff.
Year ended 30 June 1994
In the plaintiff’s 1994 tax return, the only income recorded for this financial year was social security benefits totalling $2,068. The tax return did not record any occupation for the plaintiff, nor did it contain any entries concerning a business.
The 1994 tax return for the family trust records business income of $61,350, but expenses (predominantly repairs and maintenance) of $63,892, yielding a net loss for the trust of $2,542. This tax return otherwise gave no detail as to the nature of the business conducted by the trust.
Year ended 30 June 1995
The only income disclosed in the plaintiff’s personal tax return for this year was social security benefits totalling $7,151. The tax return otherwise contained no information concerning the plaintiff’s occupation.
The family trust tax return for the 1995 year is almost blank. It discloses no income nor any business conducted by the trust.
Year ended 30 June 1996
Again, the only income disclosed in the plaintiff’s personal tax return for this year was income from social security benefits totalling $7,406. The return did not disclose any business or other income.
The family trust return for this year is almost blank and discloses no income. The only information on it was a code number describing the “main business activity” of the trust. This code number was identified as being the code for “computer programming services”. The plaintiff agreed in evidence that this code was applicable to the trust for that year.
Year ended 30 June 1997
The only income disclosed on the plaintiff’s personal tax return for this year was $7,404 in social security payments. No occupation was recorded.
On the family trust tax return, gross income of $18,884 was declared with expenses of $23,082, yielding a loss of $4,238. The same business code was used on the tax return, i.e. that for computer programming services.
Year ended 30 June 1998
The plaintiff’s personal tax return for this year records his occupation as “farm hand”. The only income disclosed was $8,692 in social security benefits and $685 from work as a farm hand.
The family trust return for this year records the same business code, and discloses income of $11,718, with expenses of $18,647, yielding a loss of $6,931.
Year ended 30 June 1999
The only income disclosed on the plaintiff’s personal tax return was $8,391 in social security benefits. No occupation was noted.
The family trust’s tax returns for this year described its main business activity as “program development and plumbing”. The return disclosed gross income of $37,314 and expenses of $54,181, yielding a loss of $16,867. This return also recorded the business name of the trust’s main business as “Computer Business Systems”. The business address of that business was recorded as the same as the plaintiff’s residential address.
Year ended 30 June 2000
Again, the only income disclosed on the plaintiff’s personal tax return was $8,521 in social security benefits. No occupation was noted.
On the family trust tax return, the main business activity was again recorded as “program development and plumbing”. The gross income for this year was $41,092 with expenses of $42,511, yielding a loss of $1,419. The tax return also recorded the business name of “Computer Business Systems”, operating from the same address as the plaintiff’s residence.
Year ended 30 June 2001
The plaintiff’s personal tax return for this year revealed the plaintiff’s home address as an address in Hong Kong. I observe here that it is the same address as that which appeared on a website for the business “AK Computers”, which advertised itself as “specialized software – quality computers – tuition – service”. The relevance of this will become apparent later.
The only income disclosed on the plaintiff’s personal tax return for this year was $5,771 in social security benefits.
The family trust tax return for this year described the trust’s main business activity as “computer consultancy services N.E.C.”. The trust return showed gross income of $51,678 with expenses of $46,827, yielding a profit of $4,851. In this return, however, the business name of the trust’s main business was disclosed as
“AK Computers”, but with its business address as the plaintiff’s former Australian residence.
Year ended 30 June 2002
The plaintiff’s home address on his personal tax return for this year was again the Hong Kong address. The only income disclosed was $8,777 in social security benefits.
In the family trust tax return, the main business activity was described as “computer consultancy services N.E.C.”, and the business name was “AK Computers”. This return showed gross income of $33,473 with expenses of $28,788, yielding a profit of $4,685.
Plaintiff’s evidence on the tax returns
When cross-examined on these tax returns, the plaintiff was patently unbelievable and evasive. When it suited him to adopt figures, he did so. For the most part, however, he sought to deny the accuracy of the figures and factual statements in the tax returns and, whilst grudgingly conceding that he was the source of information for the tax agent to prepare the returns, he went so far on several occasions as to deny having signed, or even sighted, the returns before copies were obtained by the defendant in the course of third party disclosure from the Australian Taxation Office in this proceeding. On several occasions, the plaintiff agreed to produce further documentation to demonstrate the inaccuracy of the tax returns, but he failed to do so.
Having observed the demeanour of the plaintiff while being cross-examined, and having forming an adverse view as to his credibility as a witness, and also having regard to the facts that:
(a)the tax returns are the only contemporaneous written documents which provide a record of the plaintiff’s earnings in his own name and the earnings under the family trust, and
(b)the earnings disclosed on the tax returns align with the contemporaneous records of social security payments, which were in evidence before me,
I accept the accuracy of the tax returns for the purposes of demonstrating the truth about the earnings of the plaintiff and his family trust during the financial years referred to above.
Completing the 1993 application form
In his statement of evidence in chief, the plaintiff said (at para 9):
“In about January 1993 an insurance agent (Brad Davies) came to my place of work and sold me insurance cover. I was working at Steelway Engineering at the time, was standing on the business side of the counter. My base wage when I started was $400 per week which is about $21,080 per year but I was regularly getting around $600 per week with overtime which is about $31,680 per year and on some occasions I received about $1,000. The AC&L insurance policy sale was transacted over the counter at work and I answered questions to the best of my ability given the situation and how good I was feeling with my new life. Stating my wages was not a quote from a group certificate but an estimate on the fly. As $600 a week is $31,680 per year and were wages not business profit with materials or other costs to be deducted I consider $26,000 a safe amount for the 1993 policy.”
Mr Davies gave quite a different version of events. In evidence before me,
Mr Davies said:
(a)In 1993, Mr Davies and the plaintiff lived in the same estate at Little Mountain, and the plaintiff was a neighbour of one of Mr Davies’ existing clients;
(b)The plaintiff contacted Mr Davies and asked for an idea of the cost of income protection insurance;
(c)Mr Davies subsequently went to the plaintiff’s home to discuss options
(Mr Davies thought they looked at both life insurance and disability insurance);
(d)Mr Davies left the documentation with the plaintiff for the plaintiff to read. The plaintiff did not want to complete everything that evening. Mr Davies left the documentation with the plaintiff, and came back either the next day or a few days later to collect it;
(e)Mr Davies was shown the 1993 application form signed by the plaintiff, and confirmed that it was his usual practice to make sure that the client filled out the form in their own handwriting. Mr Davies identified the only handwriting on the form that was his as his signature, phone number and notation of commission split;
(f)When asked whether the plaintiff had completed the application form when he returned to collect it, Mr Davies said:
“Well, I think I picked it up, so it would have been completed, yes.”
Under cross-examination, this version of the circumstances of the completion of the 1993 application form was put to the plaintiff. Again, his evidence lacked credibility and he was evasive. It is sufficient to refer to the following passage of his evidence:
“How you came to know Mr Davies? -- I came to know Mr Davies because he came to the Steelway Engineering office, just selling insurance. I didn’t know Brad Davies before that.
I suggest that it was through a mutual acquaintance, someone who was Mr Davies’ nextdoor neighbour who knew you, and you contacted Mr Davies in order to arrange insurance cover? -- I don’t know.
And he visited you at your home? -- No.
Then at Ridge Road, Little Mountain, and he discussed policy options with you. That’s right, isn’t it? -- I don’t know. I don’t believe so.
Especially taking out a disability policy of insurance? -- I have no recollection of the knowledge of anyone that lived next to Mr Davies.
Well, my question was discussing policy options with Davies at your home. Would you mind answering that question? -- I don’t believe so. I believe we discussed that at Helen Street In Caloundra.
You discussed the option of taking out disability insurance? -- On that occasion? At Steelway Engineering, I believe so, yes.
And he left with you an AC&L application form? -- I don’t remember.
And you asked him a lot of questions about aspects of the insurance policies that might be available to you? -- I would imagine so.
He returned to your home several days later and you had either partially completed the form or fully completed the form? -- No idea.
To the extent it wasn’t completed when he arrived, you completed it with him in his presence? -- Got no idea.
But in your own handwriting? -- I’ve got no idea of the occasions.”
The plaintiff did, however, confirm that he decided how to answer each question on the form, saying:
“Brad Davies wouldn’t have had any information on my income, no.”
Having assessed this evidence, I find:
(a)The circumstances of the completion and signing of the 1993 application form was as described by Mr Davies;
(b)The plaintiff personally completed the information disclosed on the form;
(c)The application form was left with the plaintiff for him to complete at his leisure; it was not completed “on the fly” while standing at a counter at Steelway Engineering.
Representations on the 1993 application form
Representation concerning earnings
On his 1993 application form, the plaintiff described his “principal occupation” as “computer operator/programming”, and said he had been in this occupation for one year.
In answer to the question “What were your earnings from your principal occupation (net of business expenses but before tax) over the last 12 months?”, the plaintiff answered “$26,000”.
In answer to the question “What were your earnings in the full financial year prior to that period?”, the plaintiff answered “$24,000”.
This application form was signed by the plaintiff on 18 January 1993.
The first question clearly directed attention to the period January 1992 – January 1993. An examination of the plaintiff’s tax returns for the two financial years which that period straddles (i.e. the year ended 30 June 1992 and the year ended
30 June 1993) make it clear that the plaintiff’s earnings over that 12 months period from his occupation of “computer operator – programming”, which on his evidence he was only performing at that time for Steelway Engineering, was nothing like $26,000 for the 12 months prior to 18 January 1993. Even if one includes the income for the business of “program development” earned by the family trust during the 1993 financial year, the total of the income derived from Steelway Engineering over the two complete financial years was $34,948. It is simply not credible that the plaintiff’s income for the 12 months from January 1992 to
January 1993 was $26,000 or anything like it.
Even if, as the plaintiff seemed to suggest in certain parts of his evidence, he mistook the question as requiring him to give his earnings from his principal occupation over the financial year which preceded the form being completed, it is clear that his income from Steelway Engineering during the 1992 financial year was nothing like the $26,000 represented on the application form.
Mrs Syddall confirmed that she did not have any skills in computer program development or computer troubleshooting. The extent of her involvement in the work carried out by the business “AK Computers” was as a typist. She had never done any computer programming work for any of the customers to whom the plaintiff had provided computer services.
Mrs Syddall was cross-examined on the fact that the invoice for the sale of the computer software to Mr Kronk’s business had been issued in her name. She said that she could not give a reason for that having been done, but said it was nevertheless a joint decision of her and the plaintiff to issue the invoice in her name. In re-examination, Mrs Syddall said that she thought that it was done this way because she was the one earning the income and it was to “keep everything easy and simple”.
Mrs Syddall’s evidence is clearly supportive of the position advocated by her husband so far as the extent of his disability is concerned. It sits ill, however, with the surveillance evidence and the opinions of the specialist medical practitioners. Having had the opportunity to observe Mrs Syddall give evidence, I am inclined to significantly discount the weight that I put on her evidence so far as it goes to the question of the nature and extent of the plaintiff’s disabilities.
Conclusion on the medical and other evidence
The preponderance of the medical evidence, particularly that of the medical specialists who saw the video surveillance evidence, supports my own assessment of the degree of the plaintiff’s disability. I find that the plaintiff does not have anything like the level of physical disability which he has sought to portray in this case. At worst, in November 2000 he suffered an aggravation of some mild
pre-existing degeneration to the cervical and thoracic spine. This aggravation would have settled within a short period of time, measured at most in weeks.
The three elements necessary for the payment of benefits
On the basis of my assessment of the evidence set out above, my findings in relation to the elements which would have entitled the plaintiff to claim for monthly benefits can be stated briefly.
In respect of the first element, the plaintiff’s occupation as at November 2000 was not that of “plumber”. His occupation was that of a computer programmer/operator. The nature and extent of the disability suffered by the plaintiff in the incident in November 2000 did not render the plaintiff unable to perform at least one of the duties of the occupation of computer programmer/operator.
As to the second element, the plaintiff was engaged, both before and after the incident in November 2000, in the occupation of computer programmer/operator.
In respect of the third element, it was admitted on the pleadings that the plaintiff was under regular medical care until 11 March 2002. There was also the evidence of Dr Dominey about medical care from late 2009. Otherwise, the plaintiff did not adduce any evidence to prove that he has been “under the regular care and attendance of a registered medical practitioner” since the incident in
November 2000.
The plaintiff was not entitled to make claim under the policy. At the very worst, he ceased being totally disabled shortly after the incident in November 2000, and the defendant would in any event have been entitled to stop paying benefits to him.
Was the plaintiff’s claim fraudulent?
Section 56 of the ICA provides:
“Fraudulent claims
(1) Where a claim under a contract of insurance, or a claim made under this Act against an insurer by a person who is not the insured under a contract of insurance, is made fraudulently, the insurer may not avoid the contract but may refuse payment of the claim.
(2) In any proceedings in relation to such a claim, the court may, if only a minimal or insignificant part of the claim is made fraudulently and non‑payment of the remainder of the claim would be harsh and unfair, order the insurer to pay, in relation to the claim, such amount (if any) as is just and equitable in the circumstances.
(3) In exercising the power conferred by subsection (2), the court shall have regard to the need to deter fraudulent conduct in relation to insurance but may also have regard to any other relevant matter.”
In the present case, the defendant contends that the claim by the plaintiff was entirely fraudulent and that, even if not entitled to avoid the policy, the defendant was entitled to refuse payment of the claim.
In Australian Associated Motor Insurers Ltd v Tiep Thi To,[12] Mandie J considered a case in which an insured made a claim on her motor vehicle policy stating that the car had been stolen from her driveway, knowing however that the car had been damaged while it was being driven by her son without her consent. She made this statement in the mistaken belief that she would have been unable to claim in the true factual situation. The insurer was ordered by a magistrate to pay on the claim. An appeal by the insurer to Mandie J was allowed. In the course of judgment, his Honour said (at [16]):
“If a person knowingly makes false statements believing that they have an invalid claim in order to mislead the insurer into believing that they have a valid claim, it seems to me not to matter whether in fact the claim is valid or invalid. The claim is made dishonestly and hence fraudulently within the meaning of [s 56 of] the Act.”
[12](1999) 151 FLR 384.
An appeal against the judgment of Mandie J was dismissed. In To v AAMI Ltd,[13] Buchanan JA, with whom Charles and Callaway JJA relevantly agreed, outlined the common law remedies available to an insurer in respect of fraudulent claims, and said at [17]:
“In my opinion the changes to the common law position effected by s 56 are only to limit the insurer’s remedy in the event of fraud to the denial of the fraudulent claim rather than avoidance of the policy and to enable the Court to order payment where only a minimal or insignificant part of the claim is fraudulent and it would be harsh and unfair not to pay the remainder. Otherwise the legal position remains unaltered: an insurer need not pay a fraudulent claim, whether or not there is an underlying loss which is covered by the policy. There was a moral or public policy dimension to the common law principle, which is preserved in s 56. While s 56 is remedial, and is to be construed beneficially, its effect cannot be pushed beyond the meaning of the words in the section.”
[13](2001) 3 VR 279.
An assessment of whether the plaintiff was fraudulent in making this claim necessarily involves a consideration of his credit. It will be apparent from my findings above that I have formed an adverse view as to his credit. In addition to the matters to which I have referred, the defendant urged me to have regard to a variety of matters which it submitted would compel a conclusion as to the plaintiff’s dishonesty. It is sufficient, however, if I refer to only to the following.
On 14 December 1992, the plaintiff completed a credit application form for the purpose of opening a credit account with a plumbing supply firm, North Coast Plumbing. On that form, the plaintiff said that:
(a) he traded as “EA Syddall”;
(b) the nature of his business activity was “plumbing gas fitting roofing”;
(c) he had commenced this business on 1 July 1992.
That was only two months before he lodged the application form with ACL in which he said that his principal occupation was “computer operator/programming”, that he had been in that principal occupation for one year, and that he did not have a second occupation.
The plaintiff attempted to explain away the contents of the 1992 credit application form on the basis, in effect, that he was only opening the account to enable him to obtain supplies to use in his own home renovations. That explanation rang hollow.
But in any event, the fact of the matter is that in November 1992, when he was seeking to get a benefit in the form of a credit account, the plaintiff gave one version of his occupational details, and only two months later, when seeking to obtain the benefit of insurance coverage, the plaintiff gave a completely different version.
In 1999, the plaintiff sought an early payout of his superannuation benefits, which were being held and managed by Prudential Superannuation, on the basis of financial hardship. He provided a statutory declaration dated 16 April 1999 stating that the cause of his financial hardship was “unemployment”. Part of the superannuation moneys were paid to the plaintiff, but a balance was retained by the superannuation fund. On 12 November 1999, the plaintiff wrote to the superannuation fund stating:
“I wish to terminate my superannuation policy with you and roll it over into another fund. Please find enclosed the policy document.
The name of the fund to which it will be transferred is ‘The Sheldrick Superannuation Fund’.”
On 21 July 2000, the plaintiff wrote to the relevant officer in the superannuation fund complaining about a lack of action. Amongst other things, he said to the superannuation fund that his employer was “the Sheldrick Superannuation Fund
(Mr Raymond Sheldrick)”.
On 26 July 2000, Mr Sheldrick sent to the superannuation fund a compliance letter signed by Mr Sheldrick and Mrs Christine Sheldrick, certifying that the
Sheldrick Superannuation Fund was an approved superannuation fund and that
“Mr Eric Syddall has been in our employ since 10.06.1999”.
There is no record of the plaintiff ever having been employed by the Sheldricks between 10 June 1999 and 26 July 2000. Indeed, the plaintiff ultimately conceded in evidence that he was never employed by Mr Sheldrick. The inconsistency between his assertion to the superannuation fund and the representation made by the plaintiff in the claim on the insurer in this case is apparent. It is also inconsistent with the plaintiff’s ongoing receipt of unemployment benefits during that period.
In his evidence in chief before me, the plaintiff asserted (in para 9) that “by about June 1995 I was earning about 12,000 per month overall but had business expenses”. That proposition was so far from the truth, as disclosed in his tax returns, as to be ludicrous.
In a similar vein, in his evidence in chief the plaintiff said (at para 28) that he “did not receive any income from being engaged in business activities after 27.11.2000 other than receiving outstanding monies from work completed to that time”. This evidence might be literally true, but it is equally clear that the family trust, of which the plaintiff was the trustee, continued after 2000 to receive payment for computer services performed by the plaintiff, including under the business name
“AK Computers”.
These examples fortify the adverse view I have formed as to the plaintiff’s credibility, and lead me to conclude further that the plaintiff has a demonstrable record of making whatever representations he considers necessary to achieve a particular purpose, regardless of the truth or falsity of those representations.
When the plaintiff lodged his claim in January 2001, he must have known that his occupation was not that of a plumber and that he did not have gross monthly earnings of $4,000 per month. The further information he gave (in his letter of
29 January 2001) to the insurer that his involvement in computers was nothing more than a hobby was also information that he must have known to be false. His ongoing assertion of disability to the extent he sought to portray it was also something he must have known to be false.
I conclude that this claim was made and pursued dishonestly, and therefore fraudulently, by the plaintiff, and the defendant was and is entitled to refuse to pay on the claim.
THE PLAINTIFF’S CLAIMS IN THIS PROCEEDING
It follows from the findings made above that the plaintiff’s contention that the defendant breached the terms of the policy fail because either the defendant was and is entitled to avoid the policy or the defendant was and is entitled not to pay on this claim.
There are, however, two matters raised on the plaintiff’s pleadings and in his arguments that should be addressed.
The first comprises contentions by the plaintiff that the defendant repudiated the policy of insurance. The contention is two-fold. In his further amended statement of claim, the plaintiff alleged:
“84.The insurer/defendant by refusing to pay rehabilitation benefit made on a presumptive future medical opinion made an anticipatory repudiation in an effort to avoid escalated rehabilitation and other related benefits.
85.The insurer/defendant by refusing to pay benefit at all, made a total repudiation in an effort to avoid an escalated lifetime benefit payment with or without rehabilitation and other benefits, and has continued to refuse to properly reassess the claim in the ensuing years.”
In his outline of submissions at the conclusion of the trial, the plaintiff asserted:
“Repudiation of contract by the defendant started on about the 12.3.2001 and was compounded several times up to about 3.5.2001 to present a fraudulent and reckless basis on which to deny the claim;”
The plaintiff contended, in effect, that he had accepted the repudiation and rescinded the policy on about 11 September 2006.
The plaintiff elaborated in his submissions on this allegation of repudiation:
“77.About April 2001 the insurer subject to a claim on a contract of insurance declined to pay rehabilitation benefits to the plaintiff when he was contractually entitled to it. Subject to the continuation of the contract the plaintiff would further have been entitled to be paid under the contract for rehabilitation expenses. This was an anticipatory breach of the contract by the defendant to avoid totally the financial exposure relying on an upcoming medical review and not the current diagnosed medical condition of the plaintiff. It was also a repudiatory breach of contract and an act not in the utmost good faith.” (citations omitted)
The only entitlement of the plaintiff to be paid “rehabilitation benefits” under the policy of insurance was found in cl 8 of the policy which provided:
“8.If the person insured is totally disabled for at least the length of the waiting period and is rehabilitating him or herself:
· in a government program recognised by, or sponsored by a Federal or State government, we will pay you a benefit;
· in any way approved by us in writing, we will pay you money towards his or her expenses.
Each of these things is discussed in more detail below.
The benefit we pay
We will pay you half your monthly benefit for each month the person insured is totally disabled and participates in a rehabilitation program recognised or sponsored by a State or Federal government. This benefit is extra to any other benefit we pay you. We will only pay if we agree in writing to pay before the person insured enters the program.
The benefit accrues from the day the person insured starts the program after the waiting period. We pay you at the end of each month for which you are entitled to be paid. The amount we pay you is not affected by anything the person insured earns.
We will pay for up to 12 months, until the person insured stops being totally disabled, or the person insured leaves the program, whichever happens first.
The expenses we pay
If the person insured is totally disabled for at least the length of the waiting period, you can ask us to pay the person insured’s costs of rehabilitating him or herself. These costs include buying goods – for example, equipment. The most we will pay is an amount equal to 6 payments of your monthly benefit. We will only pay an amount for costs which we have approved in writing before you or the person insured incurs them and which a registered medical practitioner says, in writing, the person insured needs to spend as part of his or her rehabilitation.
The registered medical practitioner cannot be you or your family member, business partner, employee or employer, not can it be the person insured or his of her family member, business partner, employee or employer.”
There is no evidence of the plaintiff having been involved in a government rehabilitation program, or asking the defendant to agree to him entering such a program. He therefore had no entitlements under the first dot point in cl 8.
Nor is there evidence of the plaintiff asked for approval of expenses pursuant to the second dot point in cl 8.
In short, the defendant was under no obligation to pay the sort of “rehabilitation benefit” on which the plaintiff relies to found his allegation of repudiation. That disposes of that argument.
The plaintiff’s second contention is, in effect, that by declining the claim the defendant repudiated the contract of insurance. It is to be recalled, as is apparent from the history of the correspondence and investigations which I have outlined at length above, that the defendant took several months to investigate the claim, including by obtaining independent medical advice. During that time, the defendant paid the plaintiff benefits pending its decision to accept or reject the claim. Nothing in the defendant’s conduct in the course of its investigation indicated an intention not to be bound by the terms of the policy of insurance. On the contrary, its conduct in paying benefits while the claim was being investigated indicated a prima facie intention of observing the terms of the income protection insurance policy.
On 3 May 2001, the defendant declined the claim. I respectfully adopt the pithy observation by Campbell J in Green v AMP Life Ltd[14] that “[t]he mere fact that an insurer denies a claim for indemnity under a policy is not in itself enough to amount to a repudiation of a contract of insurance”.
[14]13 ANZ Ins Cases 90-124 at [151].
This was a case in which the plaintiff claimed to be indemnified under the policy, and the defendant denied its liability to indemnify the plaintiff by relying on the terms of the policy. The plaintiff had, on 13 February 2001, been reminded of the definition of total disability under the policy which gave rise to an entitlement to claim benefits. By the terms of the letter of 3 May 2001, the defendant was clearly relying on the terms of the policy to support its denial of his claim, contending, on the basis of medical evidence, that the plaintiff was fit to perform the duties of a computer programmer/database administrator.[15]
[15]See, for comparison, Judd v Suncorp Insurance & Finance (1988) 5 ANZ Ins. Cases 60-832 at 75,191.
In my view, the plaintiff did not establish any basis for contending that the defendant had repudiated the contract of insurance.
The second matter raised by the plaintiff in his pleadings and in his final submissions was an allegation that the defendant had failed to act with utmost good faith. This was pleaded in paragraph 83 of the amended statement of claim, under the heading “Fraud, misrepresentation” as follows:
“83.The insurer/defendant did not accurately report the medical opinions of the plaintiff’s attending medical practitioner and insurer/defendant’s elected medical practitioner to improperly cease benefit payments and resume premium receipt as no such opinions were available to the insure/defendant on or before 03.05.2001 in order to avoid prolonged financial exposure.”
This allegation was further articulated in his closing submissions:
“75.From about 12.3.2001 the defendant conspired to deny Dr Winstanley of material facts relating to the diagnosis of the plaintiff’s cervical spondylosis in an attempt to pervert the opinion of the medical practitioner and deny the plaintiff of a large amount of money via a Commonwealth Statutory Fund and a premeditated basis for the assessment panel to deny the plaintiff’s claim number 785592.
76.From about 18.4.2001 the defendant conspired to deny Dr Christie ob material facts relating to the diagnosis of cervical spondylosis in this matter in a claim or potential claim to pervert the opinion of the medical practitioner and deny the plaintiff of a large amount of money via a Commonwealth Statutory Fund as per elsewhere herein.
...
78.On about the 3.5.2011 the insurer further repudiated the contract and acted in bad faith or alternatively not in the utmost good faith by failing to present all relevant medical information to the assessment panel with the result the assessment panel could not have properly assessed the plaintiff’s medical condition and denied the claim. The denial of the claim was based on fraudulent misrepresentation or concealment of medical opinion and was not avoidance of the contract.” (citations omitted)
The plaintiff repeated these assertions in his oral submissions.[16] The onus was on the plaintiff to prove these serious allegations. He did not lead any evidence whatsoever to support any of the findings which would be necessary in order to reach the conclusions for which he contends. When cross-examining Ms Chung, the plaintiff put to her that the defendant had an intention to deny the claim and the reason that Dr Lynam’s reports were concealed from the assessment panel was to cause the claim to be denied. Ms Chung flatly denied that contention.[17]
[16]See, for example, Transcript 13-64 ll 48-54.
[17]Transcript 10-37 ll 28-38.
There was no evidence that Dr Winstanley had not seen Dr Lynam’s report. But even if he had, it would have made no difference to Dr Winstanley’s approach to examining the plaintiff and making his own diagnosis[18] and in any event, the diagnosis reached by Dr Winstanley after examining the plaintiff was completely consistent with that which had previously been expressed by Dr Lynam.
[18]See evidence of Dr Winstanley at Transcript 10-40 ll 5-20.
There is no evidence to demonstrate that the defendant “conspired to conceal evidence” or otherwise acted improperly with respect to the obtaining of independent medical reports in the matter. The plaintiff has failed to prove that the defendant failed to observe its duty to act with utmost good faith.
DAMAGES
As noted previously, the plaintiff claimed a wide range of relief. In his amended statement of claim, the plaintiff made the following claims:
“132. The plaintiff claims the following relief:
(a)Liquidated/contractual damages of Four Million, Nine Hundred and Fifty Four Thousand, Four Hundred and Fifty Six dollars ($4,954,456) plus interest of $241,781 dollars (total $5,196,238) for benefit payments under the contract of insurance for the period from April 2001 to January 2038 (plaintiff’s age 81.69 or as permitted by law) including all contractual benefits due in that period;
(i)Exemplary damages 5 times the aforesaid figure and or relative jail terms and the court recommend ASIC pursue criminal charges against the insurer and or its parent company/companies under the Corporations Act 2001 (Cth), Insurance Contracts Act 1984 (Cth) and or Criminal Code Act 1995 (Cth).
...
(c)Such further compensatory orders as the court sees fit based on Paragraphs 105 to 119 herein and otherwise pursuant to UCPR r. 156 grants general relief or relief for those losses, impositions or traumas dur to the defendant’s fraudulent and or bad faith acts pursuant to Part II of the Insurance Contracts Act 1984 (Cth) as amended:
(i)Aggravated physical suffering to plaintiff $5,196,238;
(ii)Loss of peace of mind and enjoyment of life to plaintiff $5,196,238;
(iii)Loss of goods and chattels when forced to leave and sell his house $36,500;
(iv)Loss of equity in house $311,319;
(v)Property rental income July 2002 – present at $300 per week;
(vi)Interest as prescribed by law and contract;
(d)Costs on an equitable basis or nominal damages to plaintiff for stress and associated losses by self representation during an aggravated prolonged attack and continued denial by defendant $250,000;
(e)The defendant declares that the plaintiff is entitled to have claimed on the policy and indemnifies to plaintiff to be able to apply for insurance without default;
(f)Because the plaintiff would have remained insured for other events, the defendant pay for in total and in advance a guaranteed renewable insurance policy with an insurer that is not related to or affiliated with the defendant, on behalf of the plaintiff until the plaintiff’s death with a life time benefit for injury and sickness and 7% annual escalation option and death benefits and any other benefit of the Policy all to the same level as the original policy would have been at the time of settlement with no exclusions except the plaintiff’s current disability or in the alternative pay to the plaintiff the policy benefits that would fall due between the plaintiff’s age 81.69 and age of 95 increased with all options of the Policy in effect and death benefit cover. The additional benefits such as inter alia: death, nursing, accommodation, travel and spousal income are still valid during benefit payment (clause 1 of the Policy). The court order that the parent company or any company that takes over the responsibility of the Policy, on the demise of the defendant, continue such policy:
...
(k)Interest thereon for items not already included and/or further interest calculated on any outstanding balances.
133.Special, general and exemplary damages:
...
(b)Special and/or general and/or exemplary damages be awarded to the plaintiff’s family to compensate for impecuniosity and or humiliation and or loss of enjoyment of life (loss of financial security and conversely financial suffering) imposed on his family:
(i)Spouse Susan Syddall, as someone living with the person insured as his or her spouse on a domestic basis in good faith; $5,196,238;
(ii)Son Daniel Syddall $2,598,119;
(iii)Son David Syddall $1,558,871;
(iv)Daughter Amanda Syddall $1,000,000;
(v)Daughter Katie Syddall $1,000,000;
(vi)Nominal damages to spouse direct benefits denied related to the attendance and care of the insured and loss of her own income in the event of physical disability $250,000;
(vii)Loss of income benefit to spouse $2,000;
(viii)Interest on item (vii) herein and on any late payments.
(c)Exemplary damages be awarded because of the inadequacy of the statutory scheme to provide a remedy for the kinds of damage inflicted by a deliberate disregard of their obligations under the contract;
(d)Exemplary damages be awarded having regard to the nature of the relationship between an insurer and insured with the aspects of dependence and vulnerability in a time of need and disability and imposed impecuniosity;
(e)Exemplary damages be awarded in keeping with the financial responsibility of the defendant and its parent company to dissuade improper use of its fiscal/fiduciary position/power and or the court system to avoid financial exposure;
(f)Exemplary damages be awarded in keeping with the financial responsibility and stature of the defendant and its parent company to dissuade repeated breaches by this insurer and other insurers.
134.In accordance with the ever increasing age of death of the Australian male the plaintiff requests as a further exemplary measure the lifetime benefits be recalculated to age 95 or as the court sees fit.
135.The plaintiff requests that exemplary damages against the defendant, a corporate body, be awarded at five times the rate for a natural person and be based on the entire claim.
136.The plaintiff requests as an exemplary measure and to avoid unforseen losses for the plaintiff, no future depreciation of the claim be granted to the defendant.
137.Due to the protracted period covered by this claim (May 2001 to present) no one interest percentage or simple amount is able to be stated. All interest rates expressed herein is the annual interest rate on the total unpaid amount for the month period based on Commonwealth Government 10 Year Bonds averaged from prior 10 years plus 3% to the date of settlement pursuant to s.57 Insurance Contracts Act 1984 (Cth) which applies to the exclusion of any other law.”
In the body of his statement of claim, the plaintiff had alleged:
- that he had been “deprived of the policy benefits including its psychological security” (para 109);
- that he “suffered damages caused by the insurer/defendant’s breaches and attempts to totally avoid the legitimate policy benefit of a rehabilitation program and costs” (para 110);
- that he “suffered damages caused by the defendant/insurer’s breaches and attempts to avoid totally a lifetime claim or at least reduce the policy claim where Australian males are living past age 100 to a lower age of about 80 by advantage of other calculation guidelines that are different to the contract of insurance” (para 111);
- that the plaintiff “suffered damages caused by the insurer/defendant’s attempts to avoid the claim based on the imposition of further conditions” (para 112);
- that the defendant “humiliated the plaintiff and caused emotional trauma” in connection with the FICS claim (paras 113 and 114);
- that the plaintiff and his family “through imposed impecuniosity suffered and continues to suffer emotional trauma and many other financial and lifestyle losses in addition to contractual losses” (para 115);
- that the plaintiff “has suffered loss of the guarantee of being consistently insured no matter what the insured’s health” (para 116);
- that the plaintiff “has suffered a loss of policy death benefits” (para 117);
- that the plaintiff “suffered a loss of enjoyment of life” (para 118);
- that the plaintiff “suffered emotional trauma through the insurer/defendant acting in bad faith” (para 119);
- that there should be an award of exemplary damages and that “relief to the plaintiff should be recalculated instead of a low short term average CPI figure to the full 7% of the Escalation Option as future economical conditions may substantially exceed this cap as in 1986 to 1989 when they exceeded 8%”
(para 121);
- that due to the defendant’s conduct “the plaintiff has been removed from and is unable to re-enter the housing market causing inter alia emotional trauma” and has “suffered inequity by the loss of property ownership which would not have occurred had the contract been honoured” (para 126);
- that the plaintiff “has suffered the loss of ability to receive rental income from or about 16.10.2003” (para 127);
- that the plaintiff lost other assets, such as a motor vehicle, tools of trade, office equipment, sailing and other boats, trailers, household furniture and other
(para 128);
- the plaintiff suffered loss of regular dental and other health care (para 129).
In his outline of submissions at the conclusion of the trial, the plaintiff submitted:
“96.The plaintiff suffered the loss of a calculable contracted financial loss including inter alia:
(a)Monthly benefit;
(b)Rehabilitation expenses;
(c)Rehabilitation costs;
(d)Premium refunds; and
(e)otherwise as per the statement of claim.
97.The plaintiff suffered the loss of incalculable contracted loss including inter alia:
(a)Appropriate medical intervention;
(b)Non-insurability due to impecuniosity and the defendant’s aggravated persistence on inter alia the plaintiff’s fraudulent acts (not indemnify, prevents other insurance by reputation or impecuniosity);
(c)Loss of financial security being a provision of the contract of insurance;
(d)Loss of each family member’s financial security being a provision of the contract of insurance;
(e)The plaintiff suffered the reverse of financial security;
(f)The plaintiff’s family members were deprived of the benefit of the contract of insurance and suffered the reverse of financial security and each lost the respective roll of the plaintiff to them as husband/father; and
(g)otherwise as per the statement of claim and reply.”
To the extent that the plaintiff’s claim for relief related to lost benefits, the plaintiff led no evidence to support his claim in respect of the assessment of the benefits payable or to support the case he sought to advance in respect of the calculation of those benefits. Nor was any evidence called to establish the present day value of any entitlement to benefits in the future.
Otherwise, many of the heads of damage sought to be recovered by the plaintiff (for example, damages for emotional trauma to himself and other members of the family) are simply not recoverable as a matter of law, and the plaintiff could not point me to any authority in the course of oral submissions to support these claims. In any event, no evidence was led in support of those claims, nor was any evidence led in support of the plaintiff’s claim for exemplary damages. I note in passing that the plaintiff himself conceded in his written submissions that many of these damages were “incalculable”. I infer from that that the plaintiff intended to convey that he was unable to calculate them. Nor am I.
Otherwise, the plaintiff did not lead any evidence to support the losses claimed. There was, for example, no evidence to support his claim of loss of competitiveness in the housing market, nor was there evidence to support the claims made concerning loss of property.
In short, an assessment of the damages which the plaintiff would have recovered had he succeeded in his claim is not possible on the state of the evidence presented by the plaintiff in this case.
Conclusion
The plaintiff’s claim is dismissed.
I will hear the parties as to costs.
5
1