Tower Australia Ltd v Farkas - [2005] NSWCA 363

Reported Decision:
64 NSWLR 253
(2006) 14 ANZ Insurance Cases 61-679

Court of Appeal

CITATION:
TOWER AUSTRALIA LTD v FARKAS [2005] NSWCA 363

HEARING DATE(S):
9 September 2005

JUDGMENT DATE:

28 October 2005

JUDGMENT OF:
Mason P at 1; Beazley JA at 62; Tobias JA at 63

DECISION:
Appeal dismissed with costs

CATCHWORDS:
INSURANCE - death benefit - critical illness benefit - illness or condition which is highly likely to result in death within twelve months - malignant non-Hodgkin's lymphoma - whether the Policy responded - absence of words "with treatment" in the Policy - construction of Policy - whether regard to be had to available treatment - likely response to diagnosis - meaning of highly likely - mathematical probabilities - balance of probabilities - whether relevant that insured in fact survived beyond twelve months. (D)

CASES CITED:
The Hon Mr Justice D H Hodgson, "The Scales of Justice: Probability and Proof in Legal Fact-finding" (1995) 69 ALJ 731
Cream Holdings Ltd v Banerjee [2003] Ch 650
Farkas v Northcity Financial Services Pty Ltd & 3 Ors [2004] NSWSC 206
H T W Valuers (Central Queensland) Pty Ltd v Astonland Pty Ltd [2004] HCA 54, 79 ALJR 190 at [39]
Makita (Aust) Pty Ltd v Sprowles (2001) 52 NSWLR 705
Malec v J C Hutton Pty Ltd (1990) 169 CLR 638
McArthur v Mercantile Mutual Life Insurance Co Ltd (2001) 163 FLR 236, [2001] QCA 317
Minister Administering the Crown Lands Act v Deerubbin Local Aboriginal Land Council (No 2) (2002) 50 NSWLR 655 at 674[52]
Tillmans Butcheries Pty Ltd v Australasian Meat Employees Union (1980) 42 FLR 331
Willis v The Commonwealth (1946) 73 CLR 105 at 116

PARTIES:
TOWER AUSTRALIA LTD v George FARKAS

FILE NUMBER(S):
CA 40607/2004

COUNSEL:
Appellant: N Hutley SC/ D Vela
Respondent: D F Jackson QC/ W Muddle

SOLICITORS:
Appellant: Turks Legal
Respondent: The Bruce Stewart Commercial Practice P/L

LOWER COURT JURISDICTION:
Supreme Court

LOWER COURT FILE NUMBER(S):
SC 50154/2003

LOWER COURT JUDICIAL OFFICER:
Bergin J

CA 40607/04

SC 50154/03

MASON P
BEAZLEY JA
TOBIAS JA

Friday 28 October 2005

TOWER AUSTRALIA LTD V George FARKAS

BACKGROUND

The appellant issued a Policy of Insurance to the respondent that conferred a death benefit and a critical illness benefit. The death benefit was payable on diagnosis of “terminal illness” and the critical illness benefit was payable on the occurrence of “terminal illness”.

On 1 May 2002, the respondent was diagnosed with malignant non-Hodgkin’s lymphoma. The respondent underwent treatment and his disease eventually went into remission. He claimed the two benefits on the basis that the cancer as diagnosed represented a terminal illness, which was defined in the Policy to mean “an illness or condition which is highly likely to result in death within 12 months”.

At trial, the respondent successfully sought a declaration that he had suffered a “terminal illness” within the Policy, with consequential relief. The trial judge upheld the respondent’s construction of the Policy that the likelihood of death was to…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2005] NSWCA 363
Decision Date: 28 October 2005

CaseChat Overview and Summary

Tower Australia Ltd appealed a decision of the Supreme Court of New South Wales concerning a claim made under a life insurance policy by Mr. Farkas. The dispute centred on whether Mr. Farkas's diagnosis of malignant non-Hodgkin's lymphoma triggered a critical illness benefit under the policy, which required the illness or condition to be "highly likely to result in death within twelve months."

The Court of Appeal was required to determine the proper construction of the critical illness benefit clause, specifically whether the likelihood of death within twelve months should be assessed with regard to available medical treatment, or solely based on the inherent nature of the diagnosed condition. Further, the court had to consider the meaning of "highly likely" in this context and whether the fact that the insured survived beyond the twelve-month period was relevant to the determination of the claim.

The Court of Appeal held that the policy's wording did not necessitate consideration of available treatment when assessing the likelihood of death. Instead, the focus was on the inherent prognosis of the diagnosed condition. The court found that "highly likely" referred to a probability that was more than a mere possibility but less than certainty, and that the assessment should be made at the time of diagnosis. The fact that Mr. Farkas ultimately survived beyond twelve months was not determinative of whether the condition was highly likely to result in death at the time of diagnosis.

The appeal was dismissed, and Tower Australia Ltd was ordered to pay Mr. Farkas's costs.

Orders

Orders of the court

Appeal dismissed with costs

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

CITATION:	TOWER AUSTRALIA LTD v FARKAS [2005] NSWCA 363
HEARING DATE(S):	9 September 2005
JUDGMENT DATE:	28 October 2005
JUDGMENT OF:	Mason P at 1; Beazley JA at 62; Tobias JA at 63
DECISION:	Appeal dismissed with costs

CATCHWORDS:	INSURANCE - death benefit - critical illness benefit - illness or condition which is highly likely to result in death within twelve months - malignant non-Hodgkin's lymphoma - whether the Policy responded - absence of words "with treatment" in the Policy - construction of Policy - whether regard to be had to available treatment - likely response to diagnosis - meaning of highly likely - mathematical probabilities - balance of probabilities - whether relevant that insured in fact survived beyond twelve months. (D)
CASES CITED:	The Hon Mr Justice D H Hodgson, "The Scales of Justice: Probability and Proof in Legal Fact-finding" (1995) 69 ALJ 731 Cream Holdings Ltd v Banerjee [2003] Ch 650 Farkas v Northcity Financial Services Pty Ltd & 3 Ors [2004] NSWSC 206 H T W Valuers (Central Queensland) Pty Ltd v Astonland Pty Ltd [2004] HCA 54, 79 ALJR 190 at [39] Makita (Aust) Pty Ltd v Sprowles (2001) 52 NSWLR 705 Malec v J C Hutton Pty Ltd (1990) 169 CLR 638 McArthur v Mercantile Mutual Life Insurance Co Ltd (2001) 163 FLR 236, [2001] QCA 317 Minister Administering the Crown Lands Act v Deerubbin Local Aboriginal Land Council (No 2) (2002) 50 NSWLR 655 at 674[52] Tillmans Butcheries Pty Ltd v Australasian Meat Employees Union (1980) 42 FLR 331 Willis v The Commonwealth (1946) 73 CLR 105 at 116
PARTIES:	TOWER AUSTRALIA LTD v George FARKAS
FILE NUMBER(S):	CA 40607/2004
COUNSEL:	Appellant: N Hutley SC/ D Vela Respondent: D F Jackson QC/ W Muddle
SOLICITORS:	Appellant: Turks Legal Respondent: The Bruce Stewart Commercial Practice P/L

LOWER COURT JURISDICTION:	Supreme Court
LOWER COURT FILE NUMBER(S):	SC 50154/2003
LOWER COURT JUDICIAL OFFICER:	Bergin J