White v The National Mutual Life Association of Australasia Limited - [2003] NSWSC 1209

CITATION: White v The National Mutual Life Association of Australasia Limited [2003] NSWSC 1209

HEARING DATE(S): 04/09/03, 05/09/03, 10/10/03, 05/12/03

JUDGMENT DATE:
22 December 2003

JUDGMENT OF: Whealy J at 1

DECISION: The plaintiff is entitled to succeed on the claim under clause A1 of the Insurance Policy. He is accordingly entitled to a declaration on damages in respect of this claim. The plaintiff fails on the claim under clause 5A of the Policy because it is statute barred (s 14 of Limitation Act 1969). The Exhibits are to remain with the file.

CATCHWORDS: Insurance - Income Protection Policy - Disability

LEGISLATION CITED: Limitation Act 1969 (NSW)
Insurance Contracts Act 1984

CASES CITED: Johnson v American Home Assurance Company (1998) 192 CLR 266 at 272-276
Manren Limited v Royal & Sun Alliance Insurance Australia Limited [2003] 12 ANZIC 61-568
Amcor Limited v Comptroller and General Customs (1991) 105 ALR 216 at 220
Peak Trailer & Chassis Limited v Jackson (1967) 1 WLR 151 at 161
Minister for Immigration & Multicultural Affairs v Hu (1997) 79 FCR 309 at 322
Hooper v Accidental Death Insurance Co (1860) 5 H. & N. 546
Zollo v National Australia Bank & Anor (No 2) (Supreme Court of South Australia Full Court, unreported, 21 March 1997)
Jones v Dunkel (1959) 101 CLR 298
Cross on Evidence 6th Australia Edition at para 1215
Payne v Parker (1976) 1 NSWLR 191 at 200-202
Cigna Insurance Asia Pacific Limited v Packer (2001) 11 ANZIC 61-492
Pioneer Concrete (UK) Limited v National Employers Mutual General Insurance Association Limited (1985) 2 All ER 395
MacGillivray on Insurance Law 9th Edition at para 19-35
Penrith City Council v GIO of NSW (1991) 24 NSWLR 564 at 568
Do Carmo v Ford Excavations Pty Ltd (1984) 154 CLR 234 at 245

PARTIES :
Leslie Reginald White v The National Mutual Life Association of Australasia Limited

FILE NUMBER(S): SC 20108/02

COUNSEL: Mr M. Scheib - Plaintiff
Mr. R. Cavanagh - Defendant

SOLICITORS: Gadens Lawyers - Plaintiff
P.W. Turk & Associates - Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

WHEALY J

MONDAY 22 December 2003

20108/02 - Leslie Reginald WHITE v THE NATIONAL MUTUAL LIFE ASSOCIATION OF AUSTRALASIA LIMITED

JUDGMENT

1 HIS HONOUR: The plaintiff in these proceedings is Leslie Reginald White.

2 The plaintiff commenced proceedings against the defendant by statement of claim filed on 25 March 2002. By an amended statement of claim, filed on 3 December 2002, the plaintiff enlarged the claim seeking declarations and damages against the defendant. The enlarged claim relates to the plaintiff’s asserted entitlement arising out of a Professional Income Protection Plan contained in Policy No 761916V issued by the defendant. There are two principal limbs to the plaintiff’s claim. These are, first, a claim to the payment of a weekly benefit upon the plaintiff becoming totally disabled within the meaning of the policy. The claim covers the period between 1996 and the end of the term of the policy. This is the larger portion of the plaintiff’s claim and it exceeds $1.3 million. The second claim relates to an entitlement to payment for weekly benefits in circumstances where the plaintiff has suffered “a specified sickness”. This is the smaller of the two claims and is for an approximate amount of $60,000.00.

3 By order of the Court, the plaintiff was directed to file affidavit evidence supporting the legal aspects of his claim. Consequently the plaintiff swore an affidavit of 22 November 2002 (Exhibit “B“). There was also a later affidavit sworn 7 October 2003 (Exhibit “C”). In addition, counsel for the plaintiff, has provided the court with a helpful chronology summarising the basic factual matters underpinning the claim. I propose at the outset to give a brief overview of the material referred to in both the affidavits and the chronology. A great number of the matters in the chronology are not disputed on the pleadings.

An Overview – the plaintiff’s work history

4 The plaintiff was born on 6 May 1939 at Grand Falls Newfoundland in Canada. In Exhibit “B”, he described himself as “a retired Paper Mill Plant Manager”. It appears that he formally retired from the workforce and from this occupation in September 1994. At that time his position was described as “Vice-President-Operations, McKinley Paper Company”. The plaintiff had worked in the paper manufacturing industry for the whole of his working life. This began as long ago as 1956. He worked for a number of corporations in various parts of North America. In late 1987 and early 1988, the plaintiff had discussions with a Mr Denis Shore, an executive with Amcor Paper, a member of the Amcor Limited group in Australia. This led to the plaintiff securing a position as manufacturing manager of Amcor’s Paper Mill located at Botany in New South Wales. The plaintiff worked for Amcor at Botany between 15 May 1988 until very shortly before 7 May 1992.

5 The terms of his employment contract with Amcor included a term that his employer agreed to take out appropriate insurance to provide salary continuance for him in the event of his incapacity to discharge his duties. At the time, the plaintiff was introduced to a Mr Ken Boyd from the National Mutual Life Association of Australasia Limited. It was he who was to put in place a salary continuance policy and also a superannuation policy.

6 On 20 September 1988 the defendant issued a Professional Income Protection Plan being policy number 761916V to “A.P.M. Member of Amcor Group”. In general terms, this protection plan agreed to pay specified benefits to the owner of the policy if Leslie R. White, described in the policy as the life insured, became totally disabled. Several years later, on 30 August 1990, the defendant issued a “new” Professional Income Protection Plan to “update” policy number 761916V. The issue was accompanied by a letter from the defendant signed by Mr G. R. Webb (Chief General Manager Personal Business) dated 30 August 1990. The letter informed Amcor that the “new policy document” provided “full details” of the terms and conditions of the updated protection.

7 I shall set out relevant details in relation to the terms and conditions of the policy at a later point in this judgment.

8 The plaintiff has described in considerable detail the burden which fell upon him at the Botany Mill after 1988 when he had taken up his position there. It is sufficient to say that this detail in his affidavit demonstrates the not inconsiderable difficulties involved in working as a Manager at a paper mill in general terms; and especially in the particular conditions which prevailed at Botany. In particular, the work made intensive physical demands upon the plaintiff. It required him to work from 4am or 5am each day until 6pm or 7pm; and sometimes much later, seven days a week. In terms of physical activities, the plaintiff was required to be on his feet usually out on the operating floor sometimes for the whole day. He was also required to climb ladders and walk along catwalks located over the paper machines. The detail of his evidence demonstrates that a paper mill can often be a dangerous environment with a number of hostile ingredients built into it. As things turned out, the plaintiff was very successful in turning around the fortunes of the mill during the period when he was in charge there. The mill became efficient, more productive and presumably more successful economically.

9 Towards the end of 1991, Mr Shore had a number of discussions with the plaintiff in relation to a proposal then under consideration by Amcor Paper. This was a proposal to build a small paper mill in New Mexico. Eventually, the plaintiff agreed that he would take on the job of supervising the establishment of the new mill and then the responsibility of running it. It was decided that the plaintiff would finish up at Botany in early May of 1992 and return to the United States of America (to Macon in Georgia), have a vacation of two to three months; and then move to New Mexico where work was to begin on the construction of the new mill. The plaintiff and his wife left Australia on 7 May 1992. They travelled to Macon, Georgia where they owned a home. This had been purchased a couple of years before when the plaintiff had been working in Indiana. On 16 July 1992, while he was still on holidays, the plaintiff woke in the middle of the night with severe chest pains. He was admitted to Charter Northside Hospital where it was discovered he had suffered an acute myocardial infarction. On 24 July 1992, Dr James Chapman of the Medical Center of Central Georgia carried out a triple bypass at that institution to which the plaintiff had been urgently transferred. He was discharged on 30 July 1992 for convalescent purposes. In fact, the plaintiff said that, before returning to the United States, he had experienced a number of physical symptoms which had been causing him discomfort and causing him to feel unwell. He had suffered from hypertension and had problems with his cholesterol level. In addition, the stress of his job in Botany had been quite severe.

10 After the plaintiff recovered from his bypass surgery, he started to work at the fledgling new mill in New Mexico. This was in the middle of September 1992. New Mexico is about 1600 miles from Macon. To get there it was necessary for the plaintiff to fly from Atlanta, Georgia to Albuquerque and from there he would drive to Grants, a small town fairly close to Prewitt where the mill was to be established. The plaintiff’s role was to oversee the entire project although he was not involved in the day to day construction of the mill. He supervised the hiring of staff and potential mill workers and established intensive training programs for all staff. Later he supervised the installation of the paper machine. At the time he stopped working - in May 1994, - the paper machine was running but the mill was not yet operational. The plaintiff described in considerable detail the extent of his duties during this time. I shall not pause to repeat the detail as it is comprehensively described in Exhibit “B”. The plaintiff said that he would be down at the mill site for weeks at a time and almost continuously during the whole of 1993 and until May of 1994. Throughout this period, he lived in a house in Grants provided for him by Amcor Paper.

11 In about the middle of August 1993, the plaintiff suffered a stroke when he was out walking with his wife. He consulted his cardiologist, Dr Kalli, who he had been seeing since his bypass surgery. Dr Kalli arranged a number of tests including a Doppler study, a MRI brain scan and an angiogram. From about the beginning of 1994, the plaintiff experienced a number of physical symptoms while he was working at the Prewitt mill site. These related to his increasing inability to climb stairs, lack of energy, dizzy spells and anxiety. The symptoms became more severe and more intense as the year moved on. By about April 1994, the plaintiff found any physical activity very difficult, even walking. He was always puffed, out of breath and flushed. He began to feel that he could no longer do the routine parts of his job. He developed anxiety and suffered from insomnia and loss of appetite.

12 The plaintiff described in detail the extent of the work he was required to do for the purposes of setting up an operational paper mill in Prewitt. In general terms, as a consequence of the extent of the physical activity, the length of time each day it was necessary to work and the intense responsibility of the position, the plaintiff soon found that he was unable to carry out his work activities. This was because of the extent of the physical symptoms he was experiencing. He found that he could not climb the catwalk to overview equipment; nor could he climb to the “backside” of the paper machine. He was unable to walk up and down the stairs as he was required to do. He had difficulty breathing. He had to stop and sit to catch his breath. The constant walking, climbing and running gave him pain in his lower back and his right leg. Because of his physical symptoms, he was not able to attend personally to the problems encountered in the mill; nor was he able to give the direction and leadership needed to address those problems.

13 The plaintiff reported the difficulties he was having to Mr Shore who was in Australia. In fact, he told Mr Shore that, because of his health problems, he could not, in his view, carry on working at the Prewitt mill. Following a telephone conversation between the two men, the plaintiff immediately stopped working at the Prewitt mill. He stayed at Grants for about three months but did not work at the mill. He made himself available to give advice over the telephone but he did not officially undertake any work at the mill itself. After he returned to Macon in late August of 1994, the plaintiff spoke again to Mr Shore by telephone.

14 Following this conversation, on 12 September 1994, the plaintiff entered into a written retirement agreement with Amcor Paper and the McKinley Paper Company. On 23 May 1994 the plaintiff had filled out a claim form and had sent it on 16 June or thereabouts to the defendant in Australia. This was a claim under policy number 761916V. The plaintiff completed that part of the form relating to claims in respect of “sickness”. In response to the question – “What is the nature of the sickness?” the plaintiff responded “High blood pressure/hypertension/bypass 1992 (stroke August 1993)”. He also referred to the surgery in July 1992. The plaintiff indicated in the claim form that he had ceased work “at 11am on 30 May 1994”. He stated that the disability was likely to be “probably permanent due to stress and elevation of job site (7,000 feet)”. He provided information about his treating doctors and he informed the company that his average weekly earnings and business expenses, but not tax, for the past twelve months had been US$3,326.00.

15 On 2 June 1994, Dr Kalli completed a report in connection with the plaintiff’s claim. It appears, although it is not clear, that this may have been sent to the defendant prior to the receipt by the defendant of the plaintiff’s claim dated 23 May 1994. A further report was written by Dr Kalli on 29 June 1994. On 14 July 1994, the defendant “admitted” the plaintiff’s claim and commenced paying benefits to him as from 10 June 1994. These payments continued on a regular basis until 2 April 1996.

16 On 24 April 1996, the defendant wrote a letter to the plaintiff informing him that a recent audit of his claim revealed that he was “not eligible for benefits under the policy and that no further payments would be made”. The letter relied on two matters. The first was that the medical evidence supplied to support the claim “did not meet the policy requirements for total disability”.

17 The relevant part of the letter was in these terms: -

“The test for payment under the policy conditions is whether you are totally disabled from working as a Manufacturing Manager of Paper Mill such as the one you were employed by in Australia.

The medical evidence supplied to support your claim specifies the cause of disability as “Coronary Artery Disease, for which you have had surgery, and High Altitude Sickness”. Significantly, medical evidence specifies that whilst you were working and residing at high altitude such as in New Mexico, you were well but whilst residing in Macon Georgia, where Dr Kalli has examined you, you were not totally disabled.”

18 Secondly, it was asserted that the plaintiff was not eligible for payment because of provisions in the policy providing that no benefit would be payable if at the date total disablement commenced the life insurer had continually travelled or resided outside of Australia for a period exceeding two years. It is now conceded that this second basis of rejection was not a relevant matter under the terms of the amended policy. The letter continued: -

“The late revelation of these facts to you is sincerely regretted. In some form of compensation for this late notification, National Mutual does not intend to seek recovery of amounts that have been paid outside the policy provisions.

If you require any further explanation or reconciliation of the situation, please address your written requisition to this office, quoting this letter as reference.”

19 The letter was signed “Mr Les Walker, Senior Claims Officer”.

20 In paragraph 39 of Exhibit “B”, the plaintiff said, in his view, his condition had been such, that, since stopping work on 30 May 1994, he had been unable to perform the normal duties of his usual occupation of paper mill manager. He described in detail the range of duties involved in his position as a plant manager. He made the point that he was unable to walk upstairs without resting. He could not walk without having difficulty breathing and experiencing chest pain. He said he could no longer safely climb ladders and walk along catwalks to observe equipment. He maintained that he had had regular check-ups with Dr Kalli until about April 1996. Between 1996 and the date of his affidavit (22 November 2002) he had regular check-ups with his family doctor, Dr Linkous.

21 In his second affidavit (Exhibit “C”) the plaintiff corrected the date when he had ceased work. It was he said in fact, 13 May 1994 and not as he had earlier stated, 30 May 1994. He asserted that he had not engaged in any gainful employment since 13 May 1994. The plaintiff gave details, however, of payments he had received on a regular basis from Amcor Paper between September 1994 and November 1996. These were described as “deferred compensation entitlements” due to him pursuant to his employment contract with Amcor.

22 In June 2001 he commenced receiving a monthly retirement benefit from the United States Social Security Administration. These benefits were, in April 2002, converted to “disabilities benefits” by the United States Social Security Administration. The plaintiff provided confirmation of these matters by the production of letters from the Social Security Administration and a print out of benefits received. The affidavit contained other information and statements which I will mention where necessary in relation to the submissions made on behalf of the parties.

An overview of the medical evidence

23 There was no oral or affidavit evidence from medical practitioners on either side. In fact, as I understand the position, the defendant has never had the plaintiff medically examined and has no medical material to place before the court. All medical material is in the form of letters, notes and statements comes entirely from the plaintiff’s medical practitioners.

24 There appears to have been four principal medical practitioners involved in the treatment and care of the plaintiff between 1992 and the present time. They were, first, Dr Ramana Kalli, his treating physician between 1992 and 1996. His practice was located at First Street, Macon, Georgia. The surgeon who conducted the by-pass surgery in July 1992 was, as I have said earlier, Dr James Chapman of the Medical Center of Hamlock Street, Central Georgia. While the plaintiff was in New Mexico he consulted and was treated by Dr Kaplan, who was treating him for hypertension and shortness of breath. Finally, there was the plaintiff’s family doctor, Harry Linkous whose practice is conducted at Northside, Macon, Georgia. Dr Linkous has been the plaintiff’s general practitioner since about 1993 and continues to treat him at the present time.

25 There are of course, a number of other specialist doctors who have treated, examined or tested the plaintiff from time to time during the period between 1992 and the present.

26 The medical reports generally support the fact that the plaintiff suffered an acute myocardial infarction in 1992 and that he underwent a successful triple by-pass operation in that month. The reports also support the fact that the plaintiff suffered a mild to moderate stroke when he was in Georgia in the middle of August 1993. This occasioned a degree of weakness in his left side generally and, in particular, in his left leg. Thirdly, the reports establish that the plaintiff suffers from chronic obstructive pulmonary disease which causes altitude sickness. Fourthly, he has been treated for many years for hypertension, albeit, with considerable success.

27 In more recent times, the plaintiff has experienced other serious health problems. Dr Linkous has chronicled the more recent problems. These include a lower extremity radicular pain in the right leg as a result of a grade 1/2 spondylolisthesis at L5/S1 (the plaintiff himself said that he first hurt his back when he was working for Amcor at Botany). In addition, he injured his left shoulder in a minor fall in 1997 or 1998. In 2000, he was diagnosed with prostate cancer. He received radiation therapy for this as a result of which the condition is, it is hoped, in remission. The treatment, however, caused residual scarring in the lumbar spinal region, exacerbating the degenerative changes in that area. The right leg and back problems have made it difficult for the plaintiff to travel distances; and he has a difficulty with remaining seated for any length of time because of back and pelvic pain.

28 It will be necessary in due course to examine in more detail some of the medical reports in the light of the issues litigated between the parties. It is convenient, however, to draw attention to the essential problem which the defendant suggests the plaintiff must overcome in the litigation. This arises out of the views expressed in the medical reports by Dr Kalli. The “problem” may be tracked to a letter written by Dr Kalli on 29 June 1994 shortly after the plaintiff’s claim was first lodged with the defendant. I shall set out the whole of the text of the letter: -

“ Re: Leslie White
Policy 76196V
To Whom it may concern

This is in response to your enquiries that you wanted to know more information about Leslie White. I wished you would have gone through my letter which was a three paragraph letter which explains the situation.

Mr White has a known case of Coronary Artery disease and had a by-pass surgery. Subsequently he was doing well. He also has hypertension. He moved to New Mexico, and while living in high altitudes, he was having shortness of breath, and was unable to perform his duties without getting short of breath. However, when he came to Macon, after staying here for a week or so, his symptoms subsided and he started feeling much better. I did not ask for any specific consultations for this condition, but it was felt that this was high altitude syndrome which is evident, that when he is staying there he is having problems, and when he comes back to the Macon area he is not having the symptoms.

The reason I recommended that he should probably avoid the high altitudes was that the symptoms could be prevented. There is no specific treatment required other than avoiding the cause and effect factor which happens to be, in this gentleman, high altitudes. There are no surgeries recommended at this time. I personally feel that as long as he stays at high altitudes, he is going to have the symptoms. If you need further information, please contact me.

Sincerely,

Ramana V. Kalli, M.D.

29 It must be said that the plaintiff, in his evidence, did not by any means agree with the view expressed by Dr Kalli. He agreed that his condition had improved somewhat; and that he was “somewhat better” when he came back to Macon. But he said that the essential conditions of his illness remained, and indeed worsened over time, after he had returned to Macon, Georgia in 1994. He maintained that he reported his continuing symptoms to Dr Kalli in subsequent visits up until about the middle of 1996. He became disillusioned, however, with Dr Kalli and ceased using him after that time, thereafter preferring to rely upon treatment from his family doctor, Dr Linkous.

30 It does not appear that Dr Kalli ever revised or changed the opinion that he had had expressed in 1994. For example, he provided a progress certificate to the defendant on 12 April 1996. It will be recalled that it was on 24 April 1996 that the defendant wrote the letter to the plaintiff informing him that a recent audit of his claim “revealed that he was not eligible for benefits under the policy and that no further payments would be made”. It is not difficult to infer that the defendant’s point of view was markedly affected, indeed perhaps determined, by the certificate which had been provided by Dr Kalli a few weeks earlier. This certificate (document 16 in Exhibit 1) required the medical practitioner to state “the nature of the condition of the patient”. In this part of the certificate, Dr Kalli wrote: -

“(1) Coronary Artery disease

(2) Status post by-pass surgery

(3) High altitude syndrome”

31 The medical practitioner did not, however, answer questions 1(b), (c) and (d). He was then required to answer the following two questions:

“3(a) How long was, or will, patient be continuously totally disabled so that he is unable to pursue his usual occupation or attend to any business affairs whatsoever?

(b) How long was, or will, patient be continuously partially disabled so that he is prevented from attending to a material portion of the daily duties pertaining to his occupation?”

32 Dr Kalli gave the same answer to each of these questions. The answer was as follows: -

“As long as he stays in New Mexico”.

33 This was, on its face, a rather puzzling response by Dr Kalli. The fact is that the plaintiff had not been in New Mexico nor had he been working there since late August 1994. He had, however, attended Dr Kalli on a number of occasions for treatment. Putting this (and other) puzzling aspects of the certificate to one side, however, it appears tolerably clear that Dr Kalli was expressing precisely the same view that he had expressed in his letter to the insurance company nearly two years earlier on 29 June 1994.

34 Dr Linkous, it appears, had a different point of view. There is a letter he prepared, presumably for the benefit of the Insurance Company. This was written on 20 May 1996. (Document 19 in Exhibit “A”). His letter is in the following terms: -

“ To Whom it may concern:

Re; Leslie White

DOB: 5 June 39

Mr White was seen in this office today with discussion of extended disability. Patient is unable to stand for prolonged length of time and is unable to climb due to some residual unsteadiness due to CVA and his known heart disease. Also from an injury to his left arm plus some residual from stroke which makes it very difficult for him to climb or walk throughout the plant to perform the necessary inspections for his usual job as plant manager. His residuals appear to be well stabilised. I do not expect any significant improvement over any of this in the near future.

In my opinion he is probably permanently disabled for his usual occupation. He may be able to return to something less strenuous but since this is his management style this will make him ineligible to continue in his usual job.

If I may be of further assistance please do not hesitate to call.

Harry A. Linkous III, MD.

35 Dr Linkous provided a further certificate N. M. Superannuation Pty Ltd in May 1997. In this document, he speaks of the plaintiff’s “permanent incapacity”. He said it was caused by “residual weakness from CVA, shoulder injury and heart disease. He is permanently unable to perform most duties of his usual occupation”. About a year later, on 26 June 1998, he wrote a detailed letter to the chief medical officer for the defendant. This letter (omitting formal parts) is as follows: -

“In response to your request of 21 May 1998, Mr White has been under my care since 1993. His claim for disability stems from a number of disabling conditions. He has a history of coronary artery disease culminating in a 3 vessel by-pass in 1992. He suffers a lower extremity ridiculer pain in the right leg as a result of a grade 1 to 2 spondylolisthesis at L5-S1. He also has a history of CVA with some mild residual left sided weakness. In addition, he has injured his left shoulder in a minor fall. This persists as an exacerbation of his previous CVA symptoms. Additionally he suffers from chronic obstructive pulmonary disease which resulted in altitude sickness during a recent visit to the mountains in Colorado. This severely limits his exercise tolerance and, when coupled with his coronary artery disease, categorises him as a NY Heart Association Class 3 for disability.

Mr White’s major disabling complaint is his disability to stand or sit for any length of time. Very frequent rest periods are necessary for him to be able to perform even the most menial of tasks. This requires the patient to lie down and elevate his feet in order to obtain relief from his pain. Certainly he is unable to lift or carry, nor can he bend or stoop without suffering moderate to severe pain. His markedly limited exercise tolerance makes it impossible for him to carry out a full days work, and in fact, his work capacity is limited to only a few hours per day.

In my opinion Mr White is unable to perform the duties related to any occupation for which he is trained, and certainly is unable to carry out the duties of his usual occupation, even on a part-time basis.”

36 Thus it will be seen that these differing views expressed by the plaintiff’s two principal medical practitioners had the capacity to influence significantly the defendant’s response to the claim during and after 1996. In due course, it will be necessary for me to resolve these differences and indeed to form a view about the reliability of the plaintiff’s evidence in relation to his physical symptoms throughout the relevant period.

An overview of the Professional Income Protection Plan

37 As I indicated earlier the relevant policy conditions are contained in the “new” policy document which was issued on or about 30 August 1990. The Plan first deals with total disability benefit (T D B). The relevant part of the Plan is in the following terms: -

The Benefits

A1 – Total Disability Benefit

(1) While the Life Insured is suffering Total Disability, we will pay you the Benefit from the expiration of the Qualifying Period until:

(a) the Life Insured ceases to be Totally Disabled; or

(b) the expiry of the Accident Benefit Period or the Sickness Benefit Period (as the case may be); or

(d) the death of the Life Insured;

whichever happens first.

(2) The Benefit shall be the lesser of:

(a) the Amount of Benefit; and

(b) 75% of Average Weekly Income, less all periodic amounts (whether commuted or not) paid or payable to you in respect of the Life Insured’s disability. Such amounts include:

(i) payments in respect of sick leave;

(ii) payments from any superannuation or retirement scheme;

(iii) benefits from any other disability income, sickness or accident policy;

(iv) payments pursuant to any statute or ordinance, whether by way of workers compensation, accident compensation, social services payment or otherwise.

(3) Subject to full and accurate information about income of the Life Insured having been provided in your proposal, then, for the purposes of this clause, 75% of Average Weekly Income shall not be less than the Amount of Benefit on the date the Policy was issued or, if the Amount of Benefit has been changed other than by Cost of Living Increases as described in Clause B3, the Amount of Benefit at the date such change took effect.”

38 “Total Disability” is defined in the policy as follows: -

’Total Disability’

(a) is unable to perform the normal duties of his usual occupation; and

(b) is not engaged in any gainful employment; and

‘Average Weekly Income’

(a) the twelve months immediately prior to his becoming Totally Disabled; or

(b) any other period of twelve consecutive months in the three years immediately prior to his becoming Totally Disabled,

whichever is the higher.”

‘Benefit’

‘Totally Disabled’

‘Sickness’

39 The policy contains a second relevant benefit described as “Specified Sickness”. The Clause is A5 and is in the following terms:

A5 – Specified Sicknesses

If the Life Insured suffers a Sickness as listed below, we will deem him to be Totally Disabled whether or not he is able to work and whether or not he requires continuing treatment from a Medical Practitioner.

Payments to you will commence after the expiration of the Qualifying Period and be payable for the period shown, but will cease immediately if the Life Insured dies or reaches the expiry age during this period. However, if the disability continues beyond the stated period, you will continue to receive benefits pursuant to Clause A1 or A2 (as the case may be).

You may make only one claim under this clause.

Sicknesses Minimum Payment Periods

- heart attack 26 weeks less Qualifying Period

- coronary artery surgery 26 weeks less Qualifying Period
- cancer 26 weeks less Qualifying Period
- stroke 26 weeks less Qualifying Period
- paraplegia 26 weeks less Qualifying Period
- quadriplegia 26 weeks less Qualifying Period
- chronic kidney failure 26 weeks less Qualifying Period

(a) “heart attack” means acute myocardial infarction where such a diagnosis has been documented by the occurrence of chest pain and electrocardiographic evidence and appropriate elevation of cardiac enzymes;

(b) “coronary artery surgery” means coronary artery bypass grafting surgery performed via thoracotomy.”

40 The policy contains a schedule dated 30 August 1990. It provides for a qualifying period of four weeks. The amount of benefit is stated at $2,666.00 per week with the commencement date being 20 September 1988 and the expiry date being 6 May 2004, the day on which the plaintiff will reach the age of 65. Thus, the expiry date of the policy is 6 May 2004.

41 Finally, the policy contains an Increasing Claim Benefit Annexure (I.C.B). This provides for an increase on each Policy Anniversary of the amount of benefit payable under Clause A2 of the Policy; and (b) (for the purposes of Clause A2 of the Policy), the Average Weekly Income. The I.C.B. commencing date was 20 September 1988 and the I.C.B. expiry date was 20 September 1998.

Title to sue

42 The policy in the present case was, as I have already indicated, owned by Amcor. However, the beneficial ownership of the policy was transferred in 1994 to the plaintiff. From that time, he became not only the Life Insured but the owner of the policy. There is no dispute between the parties that he is entitled to maintain this action as the legal owner of the policy.

The course of the proceedings

43 The plaintiff filed his statement of claim on 25 March 2002. As originally framed, the claim brought by the plaintiff, pursuant to Policy No 76196V, related only to the plaintiff’s major claim. It seems the plaintiff had not adverted to the fact that an “updated” policy had been issued by the defendant in August 1990. Moreover, the defence originally filed on behalf of the defendant appears to proceed on the same mistaken assumption, namely that the relevant document was the original policy issued on 20 September 1988. The plaintiff gave evidence that he first became aware that, under the updated terms of the policy there was an entitlement to make a claim in relation to a specified sickness either late in 2002 or early 2003. The information was conveyed to him by Cara Williams, a solicitor with Gadens. This firm has acted for the plaintiff throughout the proceedings. There is no evidence from any relevant officer of the defendant as to his or her beliefs on the point.

44 There was, in fact, an amended statement of claim filed on 3 December 2002. The amended claim refers to the “updated” policy issued on 30 August 1990. The pleading enlarges the nature of the proceedings to include the second claim under condition A5 of the updated policy. Subsequently, the defendant filed an amended statement of defence. In relation to the smaller claim, the defendant alleged that no claim had been made by the plaintiff for “sickness benefits” within six years of the first accrual of the cause of action. As a consequence, it was alleged that the claim is statute barred (s 14 Limitations Act 1969). In relation to the major claim, that under clause A1 of the “updated” policy, the defendant admitted the plaintiff’s initial disablement – the period during which he was paid benefits – but asserted that the plaintiff had not “suffered Total Disability as defined in the Policy since 2 April 1996”. The defendant filed this amended defence on or about 9 May 2003.

45 The plaintiff filed a reply on 1 July 2003. This pleading sought to set up a number of grounds by which it was alleged that the defence to the smaller claim – based on the Limitation Act 1969 – should be rejected.

46 The hearing commenced on 4 September 2003. The plaintiff was represented by Michael Scheib of counsel. The defendant’s counsel was Richard Cavanagh. Unfortunately the matter was not able to proceed to conclusion on the days originally appointed for hearing namely, 4 and 5 September 2003. Regrettably, the Court was unable to provide the video-link facilities which had been ordered and organised at an earlier date. Consequently the further hearing was adjourned to 10 October 2003. On this day, a video-link was established between Sydney, New South Wales and Savannah, Georgia. The plaintiff gave evidence and was extensively cross-examined over approximately four hours. The parties made oral submissions on that day and provided thereafter extensive written submissions.

47 There was a further brief hearing on Friday 5 December 2003 at the conclusion of which I reserved my decision.

Policies of insurance - principles of interpretation

48 The principles in relation to the construction of policies of the kind involved in the present litigation are relevantly settled and clear. They include the following: -

1. An insurance policy is a species of commercial contract. It must be interpreted so as to give the words used their ordinary meaning. The primary duty of a court is to discern from the language, structure and apparent purpose of the document what it means. The Court needs to take into account the commercial and social purposes of an insurance policy ( Johnson v American Home Assurance Company (1998) 192 CLR 266 at 272-276). The policy should be construed in a fashion that accords with commonsense, facilitates commerce, contains costs and secures public confidence in the courts ( Manren Limited v Royal & Sun Alliance Insurance Australia Limited [2003] 12 ANZIC 61-568.

2. A person’s “normal business” is one which conforms to a normal rule ( Amcor Limited v Comptroller and General of Customs (1991) 105 ALR 216 at 220. In Peak Trailer & Chassis Limited v Jackson (1967) 1 WLR 151 at 161, Widgeree J held that what is normal is something which happens as a rule, in contra distinction to something which is abnormal or exceptional.

3. “Occupation” does not mean job or position. A person’s qualification, skills and employment history are relevant in determining a person’s usual occupation ( Minister for Immigration & Multi Cultural Affairs v Hu (1997) 79 FCR 309 at 322).

Hooper v Accidental Death Insurance Co

49 There is very little dispute between the parties in relation to the application of these principles to the present matter. There are two matters of contention however, where a resolution is necessary. The first relates to the plaintiff’s argument that the expression “is unable to perform the normal duties of his usual occupation” should be given an interpretation which includes three elements, including a geographical element. The plaintiff argued that the plaintiff’s “usual occupation” is not simply his own description of his occupation “retired paper mill plant manager” (para 3 Exhibit “B”; T 54.25 and 54.45). Rather, it was argued by Mr Scheib that the plaintiff’s “usual occupation” comprises a combination of three elements:

(i) A description of the project on which he was engaged;

(ii) His usual activities;

(iii) The geographical location where he performed those activities

50 The defendant agrees that occupation does not simply mean job or position. It disputes however that an occupation has a geographical limitation.

51 In this regard, I consider that the defendant’s submission is correct, at least in the circumstances of this case. One could imagine, for example, a position of employment where an occupation was so tied up with the geographical location that it would be reasonable to take that element into account in determining the meaning to be given to the phrase “usual occupation”. For example, a deep sea diver necessarily carries out his occupation in a geographical position. While it is true that in 1994 the plaintiff was working at a particular location in Prewitt, New Mexico where the altitude plainly had an impact on his physical condition, it would be, in my view, a strained meaning of the expression “usual occupation” to test whether the plaintiff was disabled in the circumstances of this case, by reference to the place where he was working when the altitude sickness affected him. This is especially so when there were plainly other positions as a paper mill manager available to him in many other parts of the United States of America where he might have been able to work otherwise than at altitude.

52 Although I agree with the defendant’s submissions in relation to this particular aspect of the matter and do not agree with the plaintiff’s submissions, I do not think that this is a matter that is determinative of the issue between the parties. It will become clear why this is so when the plaintiff’s work history and his medical history are examined.

53 The second matter of contention between the parties arises out of a submission made by the defendant. At para 15 of the written submissions, Mr Cavanagh on behalf of the defendant argued that the plaintiff must establish a causal connection between the sickness and the inability to perform the normal duties of the plaintiff’s usual occupation. That proposition, I consider, is plainly correct. Moreover, the sickness must be the sole cause of the inability to perform the normal duties of his usual occupation. That too, I regard as a correct proportion. It accords with the language of the policy. The defendant went further, however, and argued that the plaintiff must establish, according to this submission, that he is, or was unable to perform the normal duties of his usual occupation solely by reason of a sickness suffered whilst employed by Amcor. Mr Scheib, on the other hand, argues that this is too extreme a position, having regard to the terms of the policy.

54 In relation to this point of contention, I consider that the plaintiff’s argument is the correct one. There is no term of the policy that imposes such a limitation on the plaintiff’s entitlement to receive benefits. All that he needs to establish is that he is suffering “total disability” within the meaning of the policy at any time or times before the expiry of the policy. Moreover, one could well imagine the situation arising where, during a period of total disability, an insured, during the life of the policy, suffered a catastrophic injury which forever obliterated his or her working ability. It could not be the position, in such a situation that the insured was prohibited from relying on the terms of the policy merely because the injury occurred after he had ceased his employment as a consequence of the earlier disability.

55 This point of distinction however, is not critical in the present matter. That is because the plaintiff’s case is based on the contention that the underlying sicknesses which brought about his total disablement in 1994 were in fact all suffered while he was working for Amcor. Moreover, it is the plaintiff’s case that those disabling sicknesses have persisted until this day and will in fact persist permanently and certainly beyond the expiry of the policy next year.

The critical issue – major claim

56 The critical issue in relation to the major claim is whether the plaintiff has brought himself within the definition of “total disability” in the policy. In practical terms, this means that the plaintiff must establish first, that by reason solely of sickness, the plaintiff has been, and is unable to perform the normal duties of his usual occupation; second, that he is not engaged in any gainful employment and, third, is under the continuous direction of professional care of a medical practitioner.

57 Having regard to the pleadings, and to the history of the matter outlined earlier, it may be said that the onus lies on the plaintiff to establish each of these matters as and from 2 April 1996 up to the present time. The plaintiff’s case, of course, is that he has been totally disabled since May 1994; and that, in general terms, his condition has gradually deteriorated since that time. Nevertheless, the issue, and the time frame in which it is to be determined, is as I have stated it.

The normal duties of the plaintiff’s usual occupation

58 It is convenient to determine first the normal duties of the plaintiff’s usual occupation. It is only when these are understood that one can meaningfully examine the issue of the plaintiff’s ability to carry out those normal duties having regard to his sickness.

59 The primary argument advanced by the plaintiff’s counsel took as its focus the plaintiff’s duties when he had been at the Prewitt mill. It is fair to say however, that Mr Scheib argued that a reasonable construction of the relevant phrase in the policy is this: an inability to perform the normal duties of the plaintiff’s usual occupation at any sensible or realistic level, or in any fair sense. Having regard to the principles I have set out earlier that seems to me to be a reasonable construction of the policy.

60 I have earlier set out the plaintiff’s evidence in his affidavit of some of the matters that were involved, in general terms, in his working at the Prewitt mill. These involved not only a considerable amount of “office work” but also a considerable amount of physical exercise and the need to move quickly and with physical skill and precision at various times. The same may be said of the working burden that fell upon the plaintiff when he was working in the Botany mill between 1988 and May 1992.

61 During his cross-examination, the plaintiff gave further evidence about his work experience between the early 1980’s and the time when he first took up his position at Botany. First, he worked with Time Container as mill manager, then with the Mead Corporation initially as the manufacturing manager in Lynchburg, Virginia and later as mill manager at Otsego, Michigan. At transcript p 99 lines 5 to 20 the plaintiff gave the following evidence: -

“Q. You also gave this evidence: that performing the job of mill manager at Botany was similar to the roles you performed at the two Mead paper plants?

A. Yes sir.

Q. Do you remember saying that?

A. Yes sir.

Q. Could you tell his Honour how the two roles were similar?

A. Well, your Honour, they were both – both the Botany mill and the two mills of Mead – were older plants. They weren’t properly maintained and money wasn’t spent in maintenance like it should have been. So it was an ongoing thing to try to keep production and quality up while still trying to maintain – so there was a very similar situation between those three plants.”

62 The plaintiff was asked to describe the physical activities involved in his work as a mill manager for the Mead Corporation at Michigan. He said (at p 99 line 55 to p 100 line 25): -

“At both plants I would normally arrive at the plant between 7 and 8 o’clock in the morning. I would stop in the office and talk to the plant accountant and then go into the plant and make a plant tour. In other words, I would walk around the plant, talk to the crews, find out how we ran the day before, what complaints they might have, what needed to be fixed, if anything, checking into the environmental things and that type of thing. That would take me generally from 7.30, in that neighbourhood to 9, 9.30.

Then I would come back to my office and check my mail. At that time at Mead we were just starting to get computers so I would check my e-mail. Then normally at about 11 o’clock I would have a staff meeting with all my direct reports and we would discuss our order situation if we were behind; quality problems from the customers and that type of thing.

By that time it would be about lunchtime. We would have lunch. After lunch I would go back out into the plant, check to see how things were running and then come back and spend some time with customer service and our personnel manager to check out union grievances and things of that nature. So that pretty much took up the whole day.”

63 The plaintiff said that when he was at Michigan he spent about 30% of his time on the floor and 70% of the time in the office. At Lynchburg he would have spent 60% of his time on the floor and 40% in the office. He said that at both plants he was required to walk along gangways and catwalks to fulfil his role as mill manager or manufacturing manager. He was required to climb up and down vertical ladders “from time to time” at both plants. Whereas, when he was at the Prewitt mill, he had to confer with the machine operators on all three shifts during each day, at the Mead Corporation plants his requirements were to confer with the machine operators on the day shift and sometimes in the afternoon shift. He was also required from time to time to cope with emergencies which required him to run through the plant and across the plant floor.

64 The plaintiff also described in general terms the same type of fairly intense physical activity being required when he was working with Time Container.

65 In my view, the Court is able to obtain a very fair picture of the normal duties of the plaintiff’s usual occupation from the broad canvas painted by the plaintiff of the nature of his work between the early 1980’s and 1994 when he stopped working at the Prewitt mill. The plaintiff’s work skills and his career progression plainly demonstrated that he was something of a “workaholic”. It appears that he was utilised by his employer as a very effective trouble shooter throughout the entire period of his working history. In his position as either manufacturing manager or plant manager, he worked very long hours, carried out work of a stressful nature and, in particular, was required to work quite frequently at a significantly intense physical level. This entailed walking and running; climbing and operating machinery in the sometimes difficult and hostile environment of a paper mill. Although the intensity of the level of physical work varied from time to time and from job to job, I regard these aspects of physical activity as part and parcel of his normal duties and not tasks which only fell to be performed in exceptional circumstances or on abnormal occasions. No doubt there were occasions where an abnormal amount of physical effort was required. But generally the work was very demanding physically even as a normal component of the task.

The Plaintiff’s ability to perform the normal duties of his occupation as at April 1996

66 I have come to the conclusion that the plaintiff has satisfied me, on the probabilities, that he has since 2 April 1996 been totally disabled, that is, solely by reason of sickness he has been, from that day to this, unable to perform the normal duties of his usual occupation.

67 As I have pointed out above, the plaintiff does not have to prove that he is unable to perform all the normal duties of his usual occupation. He has to prove, and indeed has, that he is unable to carry out the normal duties of his usual occupation at any sensible or realistic level or in any fair sense. The wording of this policy is to be contrasted with terminology such as that appearing in the policy under consideration in Zollo v National Australia Bank and Anor (No 2) (Supreme Court of South Australia Full Court, Unreported, 21 March 1997).

68 The starting point for my determination relating to the conclusion that the plaintiff has been unable to perform the normal duties of his usual occupation since April 1996 is, in fact, the earliest stage of his illness. By the middle of 1992, the plaintiff had already been suffering from hypertension. This had been discovered during his time in Australia. He had been taking the drug Isoptin (see Tab 11, Exhibit “A” where this earlier history is recorded). His blood pressure was still high on 26 May 1993 (Tab 13, Exhibit “A”) and by this time he was being prescribed Zocor. A year later, there is a record in Dr. Kalli’s clinical notes that the plaintiff had “uncontrolled hypertension”. There are other references in the medical documents as well.

69 Against the background of the high blood pressure, there occurred the acute myocardial infarction in mid July 1992. In fact, the plaintiff in his affidavit had said that, before returning to the United States, he had experienced a number of physical symptoms which had been causing him discomfort and causing him to feel unwell.

70 That this was a severe heart attack is confirmed by the fact that the plaintiff underwent a triple coronary artery bypass at the Medical Centre of Central Georgia. The defendant does not dispute the occurrence of this serious illness but makes the point that the plaintiff apparently recovered and was able to return to work. Nevertheless, there is every reason to suppose that the serious myocardial infarction and the consequent bypass surgery were likely to have continuing impact on the plaintiff’s health. They were also a reliable indicator that subsequent cardiac respiratory problems were related to these significant episodes in the middle of 1992.

71 In the middle of August 1993, the plaintiff, who was by then approximately 54 years of age, suffered a stroke. This happened, it will be recalled when he was out walking with his wife in Macon, Georgia. He described this occurrence briefly in paragraph 23 of his first affidavit. Dr Kalli’s clinical notes, recorded during the month of August 1993, corroborate the happening of this event. The symptoms reported led to further investigation by other medical practitioners. The defendant, in its written submissions, described this as “a small stroke” but, in the context of the plaintiff’s serious heart condition the previous year, his hypertension and high cholesterol level, there can be seen emerging a pattern of illness that was quite likely to have had an impact on the plaintiff’s abilities to work in his normal fashion. It is to be imagined that a stroke, even a moderate one, would be likely to have health consequences, even though no further stroke eventuated. It seems clear beyond doubt that this cerebrovascular accident (CVA) has left the plaintiff with mild residual left sided weakness. There is a reference to the history of CVA in Dr Linkous’ clinical notes in 1997 and 1998, and also in his earlier report dated 20 May 1996 (tab 19, Exhibit “A”). It is also referred to in the Doctor’s statement to “NM Superannuation Pty Ltd” dated 14 May 1997 (Tab 21) and in the report dated 26 June 1998 to the defendant (Tab 22). The plaintiff referred to the fact that he had suffered a stroke in his claim form dated 23 May 1994. Finally, the plaintiff was cross-examined about the effects of his stroke. He said he still had some problems with his left leg from the point of view of strength which was an ongoing problem (T 67 Lines 20-35).

72 There then emerged the debilitating and increasingly severe symptoms experienced by the plaintiff from the beginning of 1994 to the time he ceased work in May 1994. The presence, legitimacy and extent of these disabling symptoms has not been put in issue by the defendant. I have already described them in some detail when outlining the contents of the plaintiff’s affidavit, Exhibit “B”. The defendant plainly accepted the existence of these symptoms and their disabling affect at that time on the plaintiff’s ability to continue his work at the Prewitt mill. The plaintiff had completed his claim form and sent it to the insurance company on 23 May 1994. He entered into a written retirement agreement with Amcor on 12 September 1994. By this time, the plaintiff had returned to Macon, Georgia. He in fact came back to his home in Georgia in late August 1994. It is worth setting out in full the plaintiff’s own statements made in Paragraph 39 of Exhibit “B”. In it, he addresses the general situation of his health and his continued inability to work as a consequence. The affidavit it will be recalled, was sworn in November 2002.

“39. Since I stopped working at the Prewitt mill on 30 May 1994, my medical condition has been such that I have been unable to perform the normal duties of my usual occupation of paper mill plant manager. The normal duties of that occupation which I am unable to perform include working a minimum of 10 hour days, making tours (inspections) of all operating departments a minimum of 3 times per day to observe the operation of all equipment and to speak to all operating …..… The normal access to most equipment is via vertical ladders and most catwalks are only accessible that way. As well a paper mill’s floor is usually wet with water and paper stock making it slippery. I cannot walk up stairs without resting and nor can I walk without having difficulty breathing and experiencing chest pain. I can no longer safely climb ladders and walk on cat walks to observe and check rotating equipment without putting my life or a worker’s life in jeopardy.”

73 The thrust of the defendant’s cross-examination in this regard was to raise with the plaintiff the suggestion that, in a number of ways, he had felt better and in fact was better almost from the time he left New Mexico and returned to Macon. It was, in effect, suggested to him that symptoms such as shortness of breath and difficulty walking around the factory floor and upstairs simply disappeared. It is fair to say that the plaintiff disagreed with each such suggestion and, in substance, maintained that he continued to experience those symptoms. He did agree, on the other hand, that when he returned to Macon his symptoms were “lesser than what they were in New Mexico” (T 67 line 55). In fact the plaintiff agreed that when he came back to Georgia in 1994 he felt “somewhat better” (T 70 line 20). He was asked to describe his physical abilities when he came back from New Mexico. He said:-

“When I came back from New Mexico at the beginning, I was walking close to 3 miles a day. By late 1996, I was down to 2 miles a day, or less than 2 miles and now I don’t walk at all. I can’t walk, Your Honour, I can’t walk one mile now without stopping.” (T 73 line 55)

74 He was asked whether this was because of his right leg problem and back problem but replied:-

“No Sir, I get out of breath and I get chest pain and I get pain in my left arm.” (T 74 line 5)

75 During re-examination the plaintiff was asked to identify which of the symptoms he experienced in New Mexico had continued to trouble him. He said:-

“I still suffered from shortness of breath. That was my biggest problem but it was to a lesser degree initially. But I still had some chest pains and I still had some pains in my arm.” (T 98 line 30)

76 It needs to be stressed that this answer was given in the context of a question which asked the plaintiff to describe the symptoms he was suffering in 1996 in Macon, Georgia by comparison with the symptoms he had experienced in New Mexico.

77 The plaintiff’s own evidence, put simply, is that he has been quite unable, since 1994 and in fact since 1996, to carry out the physical tasks necessarily involved in his occupation as a Mill Manager. The transcript at page 96-97 is instructive in this regard. I shall set it out.

“Q. Mr Cavanagh also suggested to you that in 1996 or thereabouts you were quite able to undertake the work of a mill manager. Do you remember him suggesting that to you.

A. Yes Sir.

Q. And you disagreed with him.

A. Yes Sir.

Q. Do you remember that?

A. Yes Sir.

Q. Could you tell his Honour why you disagreed?

A. Well I disagree with it for the simple reason that I could no longer walk. I could not walk upstairs or I’d be short of breath. I could not climb ladders. I could not cross catwalks or – paper machines. There is no way that I could perform those duties.

Q. You said in your evidence that when you returned from New Mexico you felt somewhat better in Macon.

A. Yes Sir.

Q. Do you remember giving that evidence?

A. Yes Sir.

Q. Could you tell us please what you meant to convey when you said you felt ‘somewhat better’?

A. OK. When I was in New Mexico we had a small lawn in the front of our residence. It was probably about 50 feet. I tried to push a lawnmower across that and back and could only go one direction and I had to quit. And I could not walk. I tried walking over there and I could not walk. When I came back to Macon I was up to about 2 miles a day. So my energy level was better and my breathing was considerably better but then it just kept on going downhill. That was what I meant by ‘somewhat better’.

Q. And Mr Cavanagh suggested to you that in 1997, perhaps around the beginning of that year, there was no stress in your life and you disagreed with that. Could you tell his Honour why you did that?

A. Yes. Your Honour, there was a great deal of stress in my life because I worked all my life. That’s all I knew – was to work. I would get up in the morning; I had something to get up for, to go to work. I enjoyed it. After the bypass surgery, after the stroke and not being able to work in New Mexico, and then coming back on disability and being paid by National Mutual the disability payments, all of a sudden, that stopped. Now I had no income. I had no way of making income. With bypass surgery and the stroke – and I don’t know about Australia but in the U.S. there is absolutely no-one who is going to hire somebody with those medical conditions and, needless to say, that put me under a great deal of stress.”

78 All of this, in my view, was powerful evidence in support of the plaintiff’s claim. And it is important to note that the plaintiff’s continuing disabilities, although initially not as severe as they were later to become, were not confined to any particular geographical location. I should add that I found the plaintiff to be an extremely impressive witness. He struck me as truthful, genuine and to the point. Although it is necessary to recall that a court needs to exercise a sound degree of judicial scepticism in evaluating the demeanour of witnesses, I have absolutely no doubt that this plaintiff was an entirely truthful and reliable witness. The picture that emerged was that of a very hard working, successful, ambitious and effective businessman who was, in his mid-fifties, struck down with a series of illnesses which, to his great disappointment, effectively took him out of his hard earned position in the workforce. The plaintiff effectively rebuffed the suggestion that he simply decided to retire in 1996. He left me in no doubt that he regrets very much the fact that his health problems have forced him out of the industry in which he had worked so hard for so many years.

Does the medical evidence support the plaintiff?

79 In the main, I consider that the medical evidence does support the proposition that the plaintiff’s ill health in 1992 through to 1994, together with its sequelae, brought about a situation where he was thereafter unable to perform the normal duties of his usual occupation. The medical evidence, I should add, was somewhat unstructured and lacking in organisation. Despite this, I repeat that it does, in general terms, support the plaintiff’s claim. Specifically, however, Dr Kalli does not assist the plaintiff’s case. He does not entirely destroy it. But, if his view is accepted, he effectively sidelines the plaintiff’s case. Indeed, it was Dr Kalli’s report to the defendant that brought about the decision to cease paying benefits to the plaintiff. It is as well if I deal with Dr Kalli immediately.

80 As I said, in the overview of the medical evidence contained in the earlier part of this decision, Dr Kalli came to a certain view about the plaintiff’s condition very early in the piece and never budged from it. In the document which supported the plaintiff’s claim to the insurance company in June 1994 (Tab 5 Exhibit “A”) Dr Kalli had described the nature of the sickness in the following terms: -

“Coronary artery disease

S/P coronary by-pass

High altitude problem”

81 In answer to the question “How long has the patient suffered from this condition? Dr Kalli responded -

“When he stays in New Mexico, he has these symptoms.”

82 Dr Kalli was asked to describe “the nature of all treatment, if any”. To this his response – somewhat obscurely – was: -

“High altitude sickness”.

83 Question 3 asked the doctor to express an opinion. The question was in these terms: -

“In your opinion was the accident or sickness caused or aggravated by the patient’s occupation ?”

84 Dr Kalli ticked the box “Yes” and added “When he is in Macon he doesn’t have the symptoms”.

85 Finally, Dr Kalli was asked to express an opinion as to how long the patient was likely to be totally disabled. His answer to this was: -

“As long as he lives in New Mexico”.

86 This document gives the impression that it was “scribbled out” hurriedly and certainly the answers are, to a degree, problematic. To be fair to Dr Kalli however, he did write the later letter dated 29 June 1994 (“To whom it may concern”) which I have set out verbatim earlier in this decision. The letter puts Dr Kalli’s view bluntly: the point he makes is that when the plaintiff is in New Mexico he has problems; but when he comes back to the Macon area “he is not having the symptoms”. The letter did acknowledge however that the plaintiff “has a known case of coronary artery disease and had a by-pass surgery”. Dr Kalli’s clinical notes indicate that the plaintiff subsequently consulted the doctor on a relatively brief number of occasions. These appear to have been on 5 October 1994, 15 March 1995, 27 November 1995, 15 January 1996, 15 April 1996, and 3 June 1996. On 27 November 1995, the progress notes record that the plaintiff came for a follow up visit. He was described as “doing relatively well, no complaints”. On 15 January 1996 the note states: -

she

87 (This mistake, regarding the patient’s sex, hardly engenders confidence).

88 On 15 April 1996 the notes record: -

“Came for a follow up visit. Doing fairly well, except feeling occasionally short of breath and fatigued.”

89 The plaintiff’s evidence, however, is that he did complain to Dr Kalli as long before in 1994 and 1995 about his shortness of breath, chests pains and the pain radiating down his arm (T 102 .25 – 45). The last visit to Dr Kalli appears to be on 3 June 1996. The progress notes record that the plaintiff came to do a stress test and other tests as well. It records the plaintiff complaining of “dizziness”. It also records that Dr Kalli decided to put a cardiac event recorder on the plaintiff and bring him back in six months time. The subsequent monitoring summary report is difficult to follow; but it does appear to confirm that, although no significant arrhythmias were noted, there were a number of instances where dizziness was reported.

90 During cross-examination, the plaintiff was asked about statements made to him by Dr Kalli during consultations. He agreed that Dr Kalli had told him that his symptoms would largely dissipate provided that he did not return to New Mexico but the plaintiff said “That’s not what happened” (T 59 line 50). During re-examination, the plaintiff said that, both in 1994 and 1995, he complained to Dr Kalli about his shortness of breath, minor chest pains and the pain radiating down his arm (T 107 lines 15-45). The plaintiff said that he stopped going to see Dr Kalli in 1996. He decided instead that he would go to his family doctor, Dr Linkous. He explained that there were two reasons for this decision. At T 97 he said: -

“One is that I could not understand him and I would go in and see him and I’d probably be in there for 45 minutes and then he would examine me in that length of time and by the time I got to pay the bill he would be talking about me on the dictaphone. And then before I get the bill paid he would be talking about somebody else on the dictaphone. So my opinion – my faith in him dropped off. I just did not feel comfortable with seeing him because he didn’t take time to examine me.

The second reason: I didn’t have the money to pay both Dr Linkous and Dr Kalli and I felt more comfortable with Dr Linkous that if there was something wrong, as in the case with Dr Bell, he found somebody to go to if I needed it.”

91 The final document prepared by Dr Kalli is the “Progress Certificate” (Document 16 in Exhibit 1) which I have extracted when providing an overview of the medical evidence earlier in this decision. There is no need to repeat its contents again. I said at the time that its contents were, in a number of respects, puzzling. Although this document is the document which presumably promoted the defendant to come to the decision to cease paying benefits to the plaintiff, it must be said that a close analysis of the certificate confirms the view that it has been completed in a very haphazard manner. It is largely incomplete and the statements made in relation to questions 3a and 3b are contradictory and unsatisfactory. I say they are contradictory because it could hardly be said that the plaintiff was both continuously totally disabled and continuously partially disabled at the same time. I say they are unsatisfactory because, to the doctor’s certain knowledge, the plaintiff had ceased work in 1994 and had been living in Macon, Georgia ever since. If, by chance, the doctor did not know this, then he did not know his patient well at all. The view I take of the certificate, however, is that it had been very hurriedly prepared; that consideration had not been given to the significance of its contents and, in any event, it hardly did justice to the continuing complaints the plaintiff had been making to Dr Kalli at the time of his visits to him in the period between 1994 and 1996. Nor did it record, as I think it should have, the continuance of symptoms that were relevant to the plaintiff’s coronary artery disease and the sequelae of his bypass operation and stroke. It must be said that the document – and it was a pivotal document so far as the defendant was concerned – was an inadequate and incomplete medical summary.

92 There is however, a solid body of medical evidence that in fact supports the plaintiff’s position. It needs to be said as well that there is absolutely no evidence from the defendant whatsoever, and that all the medical evidence was admitted without objection. In making these observations, I am not being critical of the defendant. But is needs to be stressed that the role taken by the defendant in these proceedings has been, essentially, to allow all of the evidence to go before the Court and then to point to matters in it that might be thought to raise uncertainties or contradictions. The plaintiff was required to be cross-examined on his affidavit but, as I understand it, the defendant has not required any other person whose evidence has been tendered to attend for cross-examination.

93 I turn now to consider the balance of the medical evidence. It will be sufficient if I describe it in summary form without descending into intricate detail.

94 First, there are the various documents from Dr Linkous. I have earlier set these out. They include the letter of 20 May 1996, his certificate to N. M. Superannuation Pty Ltd in May 1997 and his detailed letter of 26 June 1998 addressed to the chief medical officer of the defendant. It needs to be borne in mind that all this material needs to be examined in light of the fact that the plaintiff’s claim had been rejected by the insurance company on 24 April 1996. There are as well a number of documents which record consultations the plaintiff had with Dr Linkous once he resumed seeing him on a regular basis. The plaintiff had said that from 1997 to 1999 he was under Dr Linkous’ care for conditions associated with his stroke and coronary artery disease.

95 The letter (“To whom it may concern”) written on 20 May 1996 is instructive in a number of respects. First, Dr Linkous, unlike Dr Kalli, drew no distinction between the plaintiff’s condition and his capacity to work, depending on whether he was in New Mexico or any other place. The plaintiff’s physical limitations were attributed to “CVA and his known heart disease. Also from an injury to left arm plus some residual from stroke which it makes it very difficult for him to climb or walk throughout the plant to perform the necessary inspections for his usual job as plant manager”. Secondly, Dr Linkous did not expect any significant improvement “in the near future”. Of course, his opinion was expressed in slightly qualified terms in that he said the plaintiff “is probably permanently disabled for his usual occupation”. These opinions were expressed relatively shortly after the insurance company, acting on the basis of the certificate from Dr Kalli, had decided to cease paying benefits.

96 The thrust of the attack by the defendant on the various reports of Dr Linkous is that they do not, taken in isolation, provide the necessary detail to enable the Court to determine the critical issue in this case. But in my opinion, taken with the plaintiff’s own evidence, they do achieve that result. The fact that the more recent reports have focussed on other serious disabilities now experienced by the plaintiff, particularly his back and right leg problems, does not take away from the force of his opinions regarding the plaintiff’s level of incapacity arsing from CVA and heart disease. I consider that Dr Linkous’ 1998 opinion, expressed by that time, without qualification, that the plaintiff is to be “categorised as a NY Heart Association Class 3 for disability” is particularly telling in this regard.

97 There is a recent report of Dr Linkous dated 13 June 2003 which refers to the plaintiff’s inability to travel because of back and pelvic pain due to degenerative changes in the lumbar spine and residual scarring from radiation therapy. This report, as I understood it, was prepared for the purposes of supporting the video-link application. It does not purport to address the plaintiff’s overall medical condition but is confined to the reasons why he was unable to travel to Australia without difficulty. I do not consider this report as being of any great significance, either one way or the other, in this case.

98 In the context of describing some of the material sent by Dr Linkous, I mentioned at an earlier point in this decision the “statement” he sent to N.M. Superannuation Pty Ltd on 14 May 1997. This, it will be recalled was a document sent in connection with a claim on the superannuation fund in which the plaintiff had been a member.

99 Another doctor had, about this time, provided a “statement” to N. M. Superannuation Pty Ltd. This was Dr Timothy M. Loryolea. It appears that he was a doctor at the Medical Centre North situated at Riverside Drive, Macon, Georgia. The statement is dated 29 April 1997. It also addressed the issue of “permanent incapacity” for the purposes of the superannuation plan. The document stated: -

“Mr White appears to suffer from residual weakness from his previous stroke. This problem along with his heart disease will always keep him from performing the rigorous duties of his once held position.” (Exhibit “A” Tab 20).

100 The doctor then certified, as Dr Linkous had done in the statement he gave in May 1997, that: -

“I certify that, in my opinion, the above named member is unlikely ever again to engage in gainful employment for which he/she is reasonably qualified by education, training or experience.”

101 It is true that neither of these “statements” addressed the income protection policy definition of “totally disabled”. Nevertheless, they specifically addressed the issue as to whether the plaintiff was, or was not, likely ever to work again. Secondly, the “statements” plainly linked the plaintiff’s incapacity to work to problems associated with his 1992/1994 illnesses.

102 It is important to note that neither doctor qualified the opinions expressed in those “statements” by suggesting that the plaintiff’s incapacities were linked to high altitude work locations.

103 In his written submissions, counsel for the plaintiff suggested that these opinions were entitled to considerable weight on the basis that they had been received without objection in the proceedings; and that no contrary medical evidence was tendered by the defendant to contradict their substance. I agree with this submission.

104 I repeat, as I have stated above, that the combination of the plaintiff’s own evidence, together with these unqualified medical opinions, present a strong case in support of the plaintiff’s major claim. In my view, the combination of all this evidence demonstrates these things: first, the plaintiff was severely disabled at the time he ceased working in New Mexico. There was at this time clearly a relationship between a number of his symptoms and the earlier heart problems and stroke. The more serious symptoms took the form of that which has been described as “altitude sickness”. When the plaintiff returned to Macon, Georgia later in 1994, although he was “somewhat better” his symptoms persisted at least to the extent that he was short of breath, had some pains in the chest and pains in the left arm. In addition, there remained a general weakness on the left side of his body. It is clear the plaintiff sought to improve his fitness and health by endeavouring to walk regularly; but as time went by, he found he was restricted and hampered in these activities.

105 The deterioration in his health, as a consequence of these earlier sicknesses, can be best appreciated in the context of Dr Linkous’ report on 26 June 1998. In that report, his treating doctor examined the range of the plaintiff’s disabilities and health problems. It is not unimportant to note that Dr Linkous stated that the plaintiff suffered from chronic obstructive pulmonary disease. This, he said, severely limited his exercise tolerance and, coupled with his coronary artery disease, categorised him as “NY Heart Association Class 3 for disability”.

106 He also referred to the plaintiff’s “markedly limited exercise tolerance” and to the fact that his work capacity was limited “to only a few hours per day”.

107 Dr Linkous’ final opinion appears in the last paragraph where he said: -

“In my opinion Mr White is unable to perform the duties related to any occupation for which he is trained, and certainly is unable to carry out the duties of his usual occupation, even on a part-time basis.”

108 This was not restricted to the plaintiff’s chronic back problem but embraced his entire medical history.

The Defendant’s submission

109 In view of the findings I have made, it is unnecessary to answer each and every submission made on the defendant’s behalf. There are a number of matters, however, that require specific response. First, the defendant argued that there was little evidence of the plaintiff’s symptoms during the period 1996 to 2003. In my opinion, this submission does not afford appropriate weight to the plaintiff’s evidence and, for that matter, to the powerful inferences to be derived from the medical evidence. For example, the plaintiff’s affidavit evidence in Exhibit “B” at para 39, although expressed in general terms, is plainly capable of affording a general picture of his health up to the date of the affidavit of 22 November 2002. Secondly, the evidence of Dr Linkous establishes a permanency and in fact, a continuing decline relating to the plaintiff’s health. This is especially so in relation to his ability to exercise and walk. Moreover, the plaintiff himself said, (T 73-74) because of his problems with breathlessness, chest pains and pains in his arm, he is not these days able to walk any reasonable distance without stopping. The plaintiff, I should observe, was not a voluble witness, nor one to complain at length in relation to his disabilities.

110 The next principal matter relied on by the defendant was the failure of the plaintiff to call members of his family and to provide by way of evidence an explanation for a matter appearing in one of the medical records of Dr Linkous. In one sense, this was very much a side wind, although the defendant sought to make much of it. The particular record is that of an “office visit” on January 6, 1997. Dr Linkous’ note (Exhibit “A” Tab 17) records, in part, the following: -

“He has numbness in his leg for about one month. Leslie runs a package store on Gray Hwy. next door to Rick’s bar. He and his wife are both there most of the time. He feels like he is working too much, though, and is under a great deal of stress.”

111 According to the defendants’ submissions, this document “came to light through the efforts of the defendant in obtaining the document”. There is no evidence, however, to identify the precise circumstances in which the document came into the defendant’s possession. It does not, for example, appear in the list of documents filed for the defendant on 21 October 2002 or in the supplementary list.

112 In Exhibit “C”, a supplementary affidavit filed on behalf of the plaintiff, the plaintiff had annexed a copy of Dr Linkous’ note dated Jan 6, 1997. In para 12 of the affidavit, the plaintiff said: -

“Annexed and marked G is a copy of a note made by my family doctor, Dr Linkous, of a visit to his surgery on 6 January 1997. Although I recall seeing Dr Linkous in 1997, I have no specific recollection of this visit. I did not tell Dr Linkous that:

· I run a package store on Gray Hwy;

· I was at the package store most of the time;

and

· I felt like I was working too much.

I do not run a package store on Gray Hwy. However, my wife and son do.

My wife purchased the business, including the freehold from my son, Reggie in about March 1996. My son, Reggie managers the store with my wife. I have never worked in the store although I have been there on several occasions.”

113 The plaintiff was cross-examined about the attendance at the doctor’s office on 6 January 1997. He was cross-examined also about the underlying topic. He said (T 85) that his wife and son had run a packaged liquor store on Gray Hwy. between the years 1996 to 2003. He confirmed that he had played no part in either the management or providing physical work at the store. The plaintiff also said that he had not derived any income at all from that business. His wife and son had made the decision to buy the business and did so in 1996. The purchase was negotiated about two or three months before the insurer ceased paying benefits under the policy.

114 The plaintiff was tested in cross-examination as to the statement he had made in his affidavit. He reiterated that he had not told Dr Linkous that he was running the store on Gray Hwy.

115 The defendant’s precise submission was that it was incumbent upon the plaintiff to adduce other evidence “on the issue”. That is, there was a need to call Dr Linkous to explain why he made the note he did; and a need to call the plaintiff’s wife and son to verify the truth of the plaintiff’s statement that he had never worked in the store. Further, the defendant submitted that a Jones v Dunkel (1959) 101 CLR 298 inference should be drawn because of the plaintiff’s failure to call any evidence from his wife, his son or Dr Linkous “on that issue”. The defendant asked the Court to infer that evidence from the plaintiff’s wife, his son and Dr Linkous would not have assisted the plaintiff’s case.

116 There are two problems with this submission. First, I was perfectly satisfied by the plaintiff’s evidence that he in fact had not made the statements to Dr Linkous attributed to him in the report of January 6, 1997. As I said earlier, the plaintiff was a thoroughly impressive, reliable and truthful witness. This extended to his evidence on this particular point. Secondly, there was no need for the plaintiff to give evidence on the matter although no doubt he, as it turned out correctly, assumed that he might be asked something on the issue in cross-examination. The matter was not, however, an issue in the case. It was certainly not raised as an issue prior to the cross-examination on 10 October 2003. Moreover, it is not correct to say, as the defendant submitted, that it had no means of speaking to Dr Linkous or, if it wished adducing evidence from him. The defendant had apparently communicated with Dr Linkous in the past: for example, there was a report by Dr Linkous on 26 June 1998 sent directly to the chief medical officer of the defendant. If it wished, the defendant might have spoken to Dr Linkous to discuss with him any matter either touching upon the plaintiff’s medical condition or relating to his clinical notes of 6 January 1997. In addition, there was little light the plaintiff could throw on the contents of the note other than to deny, as he did, that he had made the statements during the consultation. Finally, the nature of the doctor’s note – a random hearsay record without more – did not strike me as particularly reliable. In all, I was not prepared to draw the suggested inference (Jones v Dunkel (supra); Cross on Evidence 6th Australia Edition at para 1215; Payne v Parker (1976) 1 NSWLR 191 at 200-202.

117 In the context of this submission, the defendant also pointed to the plaintiff’s evidence that he has not operated a bank account since the mid-1990’s and has no tax returns. The plaintiff explained the reason why he does not have financial records. He explained as well that his wife operated the family bank account and that his pension benefits were paid directly into it. Contrary to the defendant’s submission, I accept this evidence and find nothing remarkable or surprising about it whatsoever.

118 It is fair to say, I think, that Mr Cavanagh on behalf of the defendant conceded that if I were to accept the plaintiff as a witness of truth whose evidence was both reliable and credible, his submissions on these points would be considerably diminished, if not eliminated.

Gainful employment

119 I have already referred briefly to Exhibit “C”. In this affidavit, the plaintiff stated that he had not engaged in any gainful employment since 13 May 1994. In addition, he gave details of income he had received up to, in effect, the time of hearing. I accept the plaintiff’s evidence in these regards. So far as the material from the United States Social Security Administration, I find that this provides some limited corroboration for the proposition that the plaintiff has not, during the relevant periods, engaged in any gainful employment. But my general acceptance of the proposition is based primarily on my acceptance of the plaintiff as a witness of truth.

120 In addition, I accept the plaintiff’s evidence that his wife has handled the majority of family financial matters during the period he was working; and that she continues to do so. The plaintiff said that he had not himself operated a bank account since about the mid-90’s. His evidence confirmed that the monthly benefits to which he was entitled as a consequence of his disabilities were credited to the bank account of his wife, Joan White. I accept also his evidence that he has not been required to file income tax returns since the financial year 1996, that being the year when he last received monthly payments of deferred compensation from Amcor Paper. The plaintiff’s evidence was that he has not been required to file income tax returns since that time because until June 2001 he received no income; and thereafter, his only income has been the monthly benefit he receives from the U.S. Social Security Administration. This latter amount is not taxable.

“Under the continuous direction and professional care of a Medical Practitioner”

121 This is the third component the plaintiff must establish throughout the relevant period in order to satisfy the contractual test of “total disability”. Surprisingly, given the nature of the plaintiff’s illness and the medical attention he has received, this is the most unsatisfactory part of the evidence relating to his claim. I observed earlier – and it has relevance in the present context – that the medical evidence assembled on the plaintiff’s behalf was somewhat unstructured and lacking in organisation. It might have been expected that the evidence on this final issue would be clear cut and well organised. It is not. Nevertheless, I am satisfied that, taken as a whole, the evidence is sufficient to satisfy me, on the probabilities, that throughout the entirety of the period to trial the plaintiff has been under the continuous direction and professional care of a medical practitioner.

122 There is no doubt that this was so until mid-1998. I have already reviewed the medical evidence between 1992 and 1998 in that regard.

123 The plaintiff said that he had ceased attending Dr Kalli in 1996. It was at that time he made his decision to consult his general practitioner, Dr Linkous. The plaintiff gave evidence that he has seen Dr Linkous “two or three times a year” during the period between 1999 and October 2003 (T 75 lines 5-15). The plaintiff also said that when he stopped seeing Dr Kalli, he continued to see Dr Linkous in 1996 and 1997 (T 79).

124 Mr Cavanagh specifically put to the plaintiff that he had not been under the care of a medical practitioner during the period 1997 to 1999 for any condition associated with his stroke or coronary artery disease. The plaintiff did not agree with the proposition; and asserted that he had been under the care of a medical practitioner for these conditions. He said that this was Dr Linkous and he said that he had “talked to him about these conditions” on the various visits he mentioned. He pointed out that Dr Linkous continued to prescribe blood pressure pills and blood thinners for him. As an example, the plaintiff said that this had happened “just recently” (T 80 line 50).

125 The defendant has argued that this aspect of the definition of “total disability” is important. Its inclusion is consistent with the intended operation of the policy. Further, there would be no basis for excusing the failure of an insured to remain under the continuous direction and professional care of a medical practitioner. In the context of these propositions, Mr Cavanagh argued that an insured will not satisfy the definition unless he or she is, in fact, under the continuous direction and professional care of a medical practitioner. It is not sufficient, he argued, merely that an insured visits the doctor on a yearly basis.

126 In general, I accept that these propositions are correct. Nevertheless, the practical content of such a contractual obligation will vary from situation to situation. The circumstances in the present matter may be fairly summarised as follows: first, there is the plaintiff’s evidence, admittedly sparse, about his continued visits to Dr Linkous over the last six or seven years. Secondly, there is the plaintiff’s denial that these visits were unrelated to his stroke and coronary artery disease. Thirdly, there is the evidence of Dr Linkous (for example, in Tab 19 Exhibit “A”) where the plaintiff’s condition was described as being “well stabilised”. The report continues: -

“I don’t expect any significant further improvement over any of this in the near future.”

127 The ensuing medical documentation conveys the same general understanding of the plaintiff’s condition. Indeed, on 14 May 1997, it will be recalled that Dr Linkous thought that the plaintiff was “permanently unfit to perform most duties of his usual occupation”. The weakness in the plaintiff’s case on this point is that there has been little in the way of medical evidence after mid-1998.

128 In my opinion, the purpose and intention of the contractual condition under scrutiny is to ensure that there will be independent proof available from a satisfactory source that, from time to time, satisfies the other aspects of the definition of “total disability”. For example, that the sickness persists; and that the patient is by reason solely of the sickness unable to work in the contractual sense. In the particular circumstances I have outlined pertaining to this case, it would not be a reasonable interpretation of the relevant contractual clause to hold that the plaintiff was obliged to see his doctor in relation to the relevant conditions every month or, for that matter, every two or three months. Visits of two to three times a year to a general practitioner with a good understanding of the plaintiff’s medical history and of his coronary and related problems, would be sufficient compliance. Moreover, I consider that I am entitled to take into account the additional circumstances that the insurance company had declined to make any further payment after April 1996. If that situation had not occurred, I have little doubt that Dr Linkous would have been required by the insurance company to provide a regular assessment. This may have had an indirect benefit. The medical reports consequently may have been in a more satisfactory state than they are.

The claim under A5 – minor claim

129 The plaintiff’s second claim relates to an entitlement to payment for weekly benefits in circumstances where the plaintiff has suffered “a specified sickness”. The original statement of claim did not refer to clause A5 of the policy and there was no claim made in respect of it. The amended statement of claim, however, pleaded clause 5 of the “update” policy and alleged that on 16 July 1992 the plaintiff suffered a sickness listed in clause A5 of the policy, namely a heart attack. There was an alternative pleaded namely that, on 24 July 1992, the plaintiff suffered a sickness listed in clause A5, namely coronary artery surgery. The pleading continued as follows: -

“15. By reason of the matters alleged in paragraphs 13 and 14, the plaintiff became entitled, upon claim being made under clause A5 of the Policy, to be paid the Benefit for a period of 22 weeks.

16. The plaintiff, by this amended statement of claim, makes a claim upon the defendant for payment of the Benefit pursuant to clause A5 of the Policy.”

130 In the defence to the amended statement of claim, the defendant did not admit that the plaintiff had suffered either of the sicknesses referred to in paras 13 and 14 of the amended statement of claim. In paragraph 8 of the defence, the defendant stated: -

“(i) Prior to the filing of the Amended Statement of Claim the Plaintiff did not submit a claim or provide notice to the Defendant of his intention to pursue a claim;

(ii) In breach of condition D1 of the Policy the Plaintiff did not submit to the Defendant an authorised claim form;

(iii) In breach of the Policy the Plaintiff did not submit an authorised claim form as soon as possible after suffering the sickness on 16 July 1992;

(iv) The failure of the Plaintiff to submit an authorised claim form prior to the commencement of proceedings was a breach of the Policy;

(v) The Plaintiff is by virtue of the Limitation Act 1969, precluded from pursuing the first claim.”

131 The plaintiff filed an extensive reply in response to the defence to the amended statement of claim. First, the reply asserted that at all material times the defendant had in its possession medical evidence establishing that the plaintiff had relevantly suffered sickness in the terms of the policy. Secondly, there was an assertion that the defendant was estopped from denying that the plaintiff had suffered the relevant sickness. Thirdly, the plaintiff maintained that he had lodged claim forms on 23 May or, alternatively on 2 June 1994, which in substance were claims for all benefits payable under the policy. In those circumstances, the plaintiff claimed that he was not in breach of the policy as the defence had alleged; and that, further, his claim was not time-barred. Fourthly, the plaintiff pleaded s 54(1) of the Insurance Contracts Act 1984. Finally, there was an allegation of fraudulent conduct concerning the defendant’s actions which, it was alleged, postponed the operation of the statutory bar.

132 At the commencement of the hearing, the parties maintained the positions they had respectively adopted in the pleadings. At the conclusion of the evidence, however, Mr Cavanagh on behalf of the defendant modified the defendant’s position somewhat. He indicated that the outstanding issue in relation to the plaintiff’s minor claim was the issue regarding the operation of s 14 of the Limitation Act 1969. There was no longer any issue regarding the nature of the sicknesses suffered by the plaintiff on 16 and 24 July 1992. At T 114 line 40 Mr Cavanagh said: -

“There is no issue about this, except the claim is statute barred. If my friend can overcome the Limitation Act he is entitled to the benefit of it. There are issues about the accounts and whether there is a bonus, whether the policy continues. There are issues as to how you determine the benefit payable. We will work it out.”

133 As will appear later, the parties in fact worked out the mathematical calculations of the benefits that should flow if the plaintiff is otherwise entitled to succeed on this claim. For present purposes, the sole issue is whether the plaintiff’s claim in this regard is statute barred.

134 As I shall explain in a moment, the issue between the parties was rendered somewhat more complicated by the manner in which written submissions were made. Before explaining those complications, it is necessary that I refer briefly to the statutory provisions which bear upon the issue. The first of those is s 14(1)(a) of the Limitation Act 1969. This provides that an action on a cause of action founded on contract is not maintainable if brought after the expiration of a limitation period of six years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims. The second statutory provision that may arguably have a bearing on the issue is s 54(1) of the Insurance Contracts Act (Commonwealth) 1984. Sub-section 1 of this section is in the following terms: -

“(1) Subject to this section, where the effect of a contract of insurance would, but for this section, be that the insurer may refuse to pay a claim, either in whole or in part, by reason of some act of the insured or of some other person, being an act that occurred after the contract was entered into but not being an act in respect of which sub-section (2) applies, the insurer may not refuse to pay the claim by reason only of that act but the insurer’s liability in respect of the claim is reduced by the amount that fairly represents the extent to which the insurer’s interests were prejudiced as a result of that act.”

135 A reference to ”an act” includes a reference to “an omission” (s 54(6)).

The parties’ submissions

136 In his written submissions dated 29 October 2003, Mr Scheib had argued that the claim signed by the plaintiff on or about 23 May 1994 was a claim for benefits payable under the policy generally. This argument was consistent with para 3 (a) of the plaintiff’s reply to the defence to the amended statement of claim. Mr Scheib said that clause A5 provided that the life insured might make only one claim under the clause. Consequently, for either one of the sicknesses that the plaintiff had established, he became entitled to payment for a period of 22 weeks. That is, 26 weeks less a qualifying period of four weeks. Since the plaintiff had made a claim, he was entitled to succeed.

137 Mr Scheib’s argument in this respect was, on its face, a puzzling one. This was because, assuming it to be the fact that the plaintiff’s 1994 claim extended to a claim for benefits under the policy generally, the plaintiff, nevertheless, faced the difficulty that proceedings were not instituted in respect of the benefit under clause A5 until the date of the filing of the amended statement of claim. This did not occur until 3 December 2002. Depending on the date when the plaintiff’s cause of action first accrued, it would appear at first blush that the plaintiff’s claim under A5 remained statute barred, notwithstanding the lodgement of the claim in May or June 1994.

138 Mr Cavanagh did not pick up this point in his submissions. Rather, he argued (p 19 of his written submissions 6 November 2003) that no claim was ever made for such a benefit. He argued that the plaintiff’s first notice of such a claim was in the amended statement of claim. At para 49 of his submissions, Mr Cavanagh stated: -

“The plaintiff makes no submission in respect of the Limitation Act defence raised by the defendant. The plaintiff makes no submission, absent that a claim was made in 1994, to suggest that the Limitation Act defence is not available. Unless the Court concludes that a claim was made for a benefit under clause A5 in 1994 there appears to be no dispute that the claim is barred pursuant to the Limitation Act.”

139 The plaintiff’s counsel filed written submissions in reply on 4 December 2003. These were amplified by a further brief written submission on 9 December 2003 to which the defendant responded.

140 The thrust of the plaintiff’s reply submissions was this: first, the plaintiff abandoned his previous assertion that the claim he made on or about 23 May 1994 was to be regarded as a claim for benefits payable under the policy generally, including benefits under clause A5. In abandoning this position, the plaintiff conceded that if his cause of action first accrued on or about 23 May 1994, it was in fact time-barred before the filing of an amended statement of claim. Secondly, the plaintiff abandoned the allegations of fraud contained in the reply. Thirdly, the plaintiff maintained his claim for a benefit under clause A5. The argument he now maintained, however, was rather different to that originally stated.

141 The revised argument was that, on a proper construction of the policy, the making of a claim under clause A5 was a pre-condition to any liability arising in the defendant. As a consequence, the plaintiff’s cause of action under clause A5 accrued on the date of the plaintiff’s amended statement of claim namely, 3 December 2002. Although the making of the claim by way of the amended statement of claim reflected an omission on the plaintiff’s part to provide the defendant with an “authorised claim form”, this did not permit the defendant to refuse to pay the claim. This was because of the provisions of s 54(1) of the Insurance Contracts Act. There was no evidence of prejudice to the defendant arising from the plaintiff’s failure to provide an authorised claim form.

142 On behalf of the defendant, Mr Cavanagh relied on the decision in Cigna Insurance Asia Pacific Limited v Packer (2001) 11 ANZIC 61-492. The defendant argued that this decision persuasively established, in the case of an accident policy, that “the cause of action accrues when all the facts have occurred which the plaintiff must prove in order to succeed”. In this regard, the defendant’s argument was that the accrual of the cause of action occurred no later than the time when the deemed disability arose, namely the date of either of the relevant sicknesses. In response to the specific matter raised by the plaintiff, the defendant maintained that it could not have been the intention in the case of a policy such as the present that the cause of action accrued at a time when an insured, in his absolute discretion, determined that he would lodge a claim.

Resolution of the issue

143 As I stated earlier, the change in position adopted by the parties on this point made a relatively simple issue somewhat more complicated. Nevertheless, it is the court’s duty, as best it can, to resolve the issue as between the parties.

144 The starting point, in my view, is to ascertain, from the terms of the policy whether the plaintiff is correct in alleging that the making of a claim under clause A5 was a pre-condition to liability on the part of the defendant. This is the distinction the plaintiff sought to draw between the terms of the subject policy and the policy the subject of the proceedings in Cigna Insurance v Packer (supra).

145 On page 2 of the policy there is the following general provision: -

“As long as premiums are paid within the time allowed and subject to the conditions of this policy:

(a) We promise to pay you benefits; and

(b) We guarantee to renew your policy; and

No matter how many claims you may make and regardless of any changes in the Life Insured’s health, occupation or pastimes.”

146 Clause A5 contains the following statements: -

“You may make only one claim under this clause”.

147 There appears to be only one section of the policy which deals with making a claim. This is clause D1. It is in the following terms: -

“D1 – Notice of Claim -

(1) You submit to Us an authorised claim form, completed by the Life Insured and his Medical Practitioner, containing full particulars of any Injury or Sickness. Until received by Us, We will not be deemed to have notice of the claim.

(2) No benefit will be payable for any period more than one month prior to the receipt of such notice.

(3) All certificates and evidence required by Us in respect of a claim shall be provided at Your expense and shall be in the form We prescribe.”

148 In my opinion, clause D1 does not, as a matter of construction, make the submission of an authorised claim form a pre-condition to liability. It is not expressed as such. Moreover, its purpose is to give “notice of the claim”. The proper construction of this clause is that it does no more than place an obligation on the person making a claim under the policy to complete and submit an authorised claim form containing the details required. Failure to do so may create a breach of a term of the policy but does not make the giving of notice of the claim in the prescribed form a condition precedent to the insured person bringing action. (See, by way of contrast, Pioneer Concrete (U.K.) Limited v National Employers Mutual General Insurance Association Limited (1985) 2 All ER 395; and the cases cited in MacGillivray on Insurance Law 9th Edition at para 19-35). Although the defendant had pleaded in its defence to the amended statement of claim that the defendant’s liability was dependant on the plaintiff making a claim under the policy, this construction was not pressed in argument. In any event, as I have held, on its proper construction, clause D1 does not operate as a pre-condition to liability.

149 The effect of this finding is to undermine the foundation of the plaintiff’s final alternative submission. It remains to be determined, however, when the plaintiff’s cause of action first accrued in relation to the A5 claim. It is only then that one can determine whether the claim was statute barred as at 3 December 2002. The principles are as stated by Wilson J in Do Carmo v Ford Excavations Pty Limited (1984) 154 CLR 234 at 245: a cause of action accrues when all the facts have occurred which the plaintiff must prove in order to succeed.

150 The question as to the accrual of a cause of action under an insurance policy is not altogether an easy one. For example, in Penrith City Council v Government Insurance Office of New South Wales (1991) 24 NSWLR 564 at 568 Giles J (as he then was) considered that, in relation to an indemnity policy, the cause of action was for unliquidated damages for breach of contract. His Honour held that the plaintiff’s cause of action accrued upon breach. It was necessary to ask what the defendant was required to do in performance of his promise; and when it failed to do what was required of it. Only when the answer was given to these questions could it be ascertained when the cause of action accrued.

151 The Full Court of the Supreme Court of Western Australia did not agree with this aspect of Giles J’s reasoning, at least so far as personal accident policies were concerned (Cigna Insurance v Packer (supra) at paras 32, 84-88). In that case, the members of the Full Court came to the conclusion that, at least in the case of the policy under consideration there, there was no requirement to lodge a claim or make a demand. The cause of action accrued in that case following upon the happening of the accident and the occurrence of permanent total disablement as defined in the policy.

152 It is not necessary in the present matter to resolve the tension between these differing approaches. There are a number of reasons why this is so. First, the matter was not argued in these terms before me. Secondly, no submissions were made in relation to the broader issues surrounding the construction of different types of policies and the need to examine the accrual question in the light of those differences.

153 More significantly, however, it is not necessary to pursue this question because, in my view, the plaintiff did lodge a notice of claim which was capable of satisfying the requirements of contractual clause D1. This, it will be recalled, was the position first taken by the plaintiff but denied by the defendant. Later, the plaintiff abandoned the point and the matter was then not pursued by the defendant, although it might well have been.

154 The facts I have found demonstrate that the plaintiff sent a claim form to the defendant, as best as one can tell, on or about 16 June 1994. This was the claim form dated 23 May 1994 described earlier in these reasons (see para 14). There was also the form completed and sent by Dr Kalli. This was dated 2 June 1994 and appears to have been sent to the defendant on or about that date. These two documents were, it is to be inferred, in the “prescribed” form mentioned in clause D1. The documentation, in combination, constituted an authorised claim form, completed by the insured and his medical practitioner, containing full particulars of sickness. It informed the defendant that the plaintiff had undergone “coronary artery surgery” and that he had sustained a “stroke”. The forms were not restricted to claims under any particular section of the policy. The notification was equally applicable to a claim under clause A1 and clause A5. These were not mutually exclusive clauses under the policy but were available as concurrent claims at least for 22 weeks.

155 As I have indicated earlier, the plaintiff gave evidence that he was not aware at the time that the subsidiary claim was available. In fact, he did not become aware of this until late in 2002 or early 2003. There is of course no evidence from the defendant as to its “state of mind” or that of any of its officers.

156 The consequence of the lodging of the notice of claim by the plaintiff in June 1994 was twofold. First, the defendant commenced paying benefits to him as from 10 June 1994. These were benefits, in fact, under clause A1. Second, the defendant, however, did not make any payment to the plaintiff under clause A5. As from 10 June 1994, at the very latest, the defendant was in breach of its obligations to pay benefits under clause A5.

157 The result of these findings is that it is unnecessary to pursue the difficult question as to whether, in a policy of the kind in question here, the cause of action accrued upon the plaintiff’s suffering either his heart attack or sustaining the consequent by-pass surgery thus creating the deemed total disablement mentioned in clause A5; or whether it accrued upon the failure of the defendant to pay benefits to the plaintiff upon receipt of the notice of claim recording that he had sustained one or other of the “sicknesses” mentioned in clause A5. The reason that it is unnecessary to make a definitive choice between these alternatives is that, in either case, six years and more elapsed before the filing of the amended statement of claim on 3 December 2002.

158 For the foregoing reasons, I have come to the conclusion that the plaintiff’s minor claim is in fact statute barred. The plaintiff cannot succeed on this claim.

159 Lest I be in error, I should record that there is no dispute between the parties that the amount of this benefit is $60,654.00. This is calculated by multiplying a figure of $2,757.00 x 22 weeks. The figure of $2,757.00 represents, in Australian dollars, an amount being 75% of the plaintiff’s average weekly income at the relevant time.

Remedies

160 The plaintiff is accordingly entitled to succeed on his major claim but not on the second claim. During the course of final argument, the plaintiff indicated that he continued to press for a declaration albeit one framed somewhat differently from that appearing in the pleadings. The effect of the amendments sought is that the plaintiff seeks a declaration that he has been totally disabled since 2 April 1996. Secondly, the plaintiff seeks damages. Again, there is general agreement between the parties as to the mathematical basis of the plaintiff’s claim for damages under clause A2.

161 In view of the findings I have made that the plaintiff has been totally disabled within the meaning of the policy since 2 April 1996, it is apparent that there is no prospect of the plaintiff recovering from this situation prior to the expiry date of the policy namely, 6 May 2004. In those circumstances, I am satisfied that the plaintiff is entitled to damages in the sum calculated and agreed in mathematical terms. This is the amount of $1,365,662.00.

162 Accordingly, I am of the view that the plaintiff is entitled to a declaration in terms of para 19C of the statement of claim, as amended by the written submissions. Secondly, the plaintiff is entitled to damages in the calculated amount.

163 I propose to direct the parties to bring in Short Minutes of Order to give effect to the findings made in these reasons for decision. Although the plaintiff has succeeded on one claim and failed on the other, it is my preliminary view that the plaintiff is entitled to his costs of the proceedings. If necessary, I shall hear the parties on this point and in relation to any other consequential relief that is sought.

164 The Exhibits are to remain with the file.

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Last Modified: 03/19/2004

CITATION:	White v The National Mutual Life Association of Australasia Limited [2003] NSWSC 1209
HEARING DATE(S):	04/09/03, 05/09/03, 10/10/03, 05/12/03
JUDGMENT DATE:	22 December 2003
JUDGMENT OF:	Whealy J at 1
DECISION:	The plaintiff is entitled to succeed on the claim under clause A1 of the Insurance Policy. He is accordingly entitled to a declaration on damages in respect of this claim. The plaintiff fails on the claim under clause 5A of the Policy because it is statute barred (s 14 of Limitation Act 1969). The Exhibits are to remain with the file.
CATCHWORDS:	Insurance - Income Protection Policy - Disability
LEGISLATION CITED:	Limitation Act 1969 (NSW) Insurance Contracts Act 1984
CASES CITED:	Johnson v American Home Assurance Company (1998) 192 CLR 266 at 272-276 Manren Limited v Royal & Sun Alliance Insurance Australia Limited [2003] 12 ANZIC 61-568 Amcor Limited v Comptroller and General Customs (1991) 105 ALR 216 at 220 Peak Trailer & Chassis Limited v Jackson (1967) 1 WLR 151 at 161 Minister for Immigration & Multicultural Affairs v Hu (1997) 79 FCR 309 at 322 Hooper v Accidental Death Insurance Co (1860) 5 H. & N. 546 Zollo v National Australia Bank & Anor (No 2) (Supreme Court of South Australia Full Court, unreported, 21 March 1997) Jones v Dunkel (1959) 101 CLR 298 Cross on Evidence 6th Australia Edition at para 1215 Payne v Parker (1976) 1 NSWLR 191 at 200-202 Cigna Insurance Asia Pacific Limited v Packer (2001) 11 ANZIC 61-492 Pioneer Concrete (UK) Limited v National Employers Mutual General Insurance Association Limited (1985) 2 All ER 395 MacGillivray on Insurance Law 9th Edition at para 19-35 Penrith City Council v GIO of NSW (1991) 24 NSWLR 564 at 568 Do Carmo v Ford Excavations Pty Ltd (1984) 154 CLR 234 at 245
PARTIES :	Leslie Reginald White v The National Mutual Life Association of Australasia Limited
FILE NUMBER(S):	SC 20108/02
COUNSEL:	Mr M. Scheib - Plaintiff Mr. R. Cavanagh - Defendant
SOLICITORS:	Gadens Lawyers - Plaintiff P.W. Turk & Associates - Defendant