Zurich Australia Ltd v Trajkoski
[2002] WADC 248
•4 DECEMBER 2002
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS
LOCATION: PERTH
CITATION: ZURICH AUSTRALIA LTD -v- TRAJKOSKI [2002] WADC 248
CORAM: BLAXELL DCJ
HEARD: 27 NOVEMBER 2002
DELIVERED : 4 DECEMBER 2002
FILE NO/S: CIV 1903 of 2002
BETWEEN: ZURICH AUSTRALIA LTD
Applicant/Defendant
AND
BOGOJA TRAJKOSKI
Plaintiff/Respondent
Catchwords:
Practice and procedure - Application by defendant for summary judgment - Claim for payment under superannuation policy - Condition precedent to payment under policy that the defendant be of a certain opinion as to the extent of the plaintiff's incapacity - Whether the defendant unreasonable in failing to come to such opinion
Legislation:
Nil
Result:
Order that summary judgment be entered for the defendant
Representation:
Counsel:
Applicant/Defendant : Mr P L Harris
Plaintiff/Respondent : Mr T P Heard
Solicitors:
Applicant/Defendant : Ilberys
Plaintiff/Respondent : Bradford & Co
Case(s) referred to in judgment(s):
Heitman v Guardian Assurance Co Ltd & Anor (1992) 7 ANZ Ins Cas 61-107
McArthur v Mercantile Mutual Life Insurance Co Ltd (2002) 2 Qd R 197
Case(s) also cited:
Nil
BLAXELL DCJ: This is an application for an abridgment of time and for summary judgment to be entered for the defendant pursuant to O 16, r 1 of the Rules of the Supreme Court. The circumstances giving rise to the delay in bringing the application have been explained by way of an affidavit filed on behalf of the defendant, and the plaintiff has not taken issue with the same. In my view the defendant should be granted leave to bring the substantive application.
The nature of the plaintiff's claim
The plaintiff is aged 41 years and at all material times was employed as a general labourer with Civil & Earthmoving Contractors of Kwinana Pty Ltd. Under the terms of his employment the plaintiff was a member of a superannuation fund administered by the defendant which entitled him to certain benefits in the event of him becoming totally and permanently disabled. The "plan rules" under the superannuation policy relevantly defined "total and permanent disablement" as follows:
"Such state of incapacity resulting from bodily injury, illness or disease as has solely necessitated the Member's absence from his or her employment for six consecutive months and shall, in the opinion of Zurich after consideration of such medical or other evidence as it may require, continue to render the Member incapable of resuming his or her previous occupation or ever engaging in any other occupation for which the Member could be suited by education, training or experience."
On 22 November 1997 the plaintiff ceased his employment following an injury to his lower back, and has not returned to work since. On about 5 June 2000 he lodged a claim with the defendant seeking benefits on the basis that he was totally and permanently disabled. Paragraph 6 of the statement of claim pleads that:
"Medical evidence has been provided to the defendant for consideration pursuant to the said policy but, unlawfully, and in breach of the said policy, the defendant has failed to properly assess or consider the said medical evidence and has unlawfully declined the plaintiff's claim."
The plaintiff accordingly claims damages in respect of the defendant's failure to pay the benefits said to be due under the superannuation policy.
The material facts
The plaintiff does not dispute any of the facts relied upon by the defendant in support of its application. It is necessary that I now outline these facts rather fully given that the essential issue is whether the defendant has acted unreasonably in failing to accept the plaintiff's claim.
On 5 June 2000 the defendant received the plaintiff's "statement of disability" which set out the circumstances of his accident, the nature of his injury, and particulars of his work history. The form specified the names of three doctors or physicians who had treated the plaintiff for his injury and authorised the defendant to obtain all relevant information from those medical practitioners.
On 31 August 2000 the defendant wrote to each of the medical practitioners requesting a medical report. The consultant physician Dr S Baskaranathan responded on 15 September 2000 (inter alia) as follows:
"Item 1: I have been involved in the assessment and management of this man's symptoms related to a work accident on 22-11-1997. His last consultation with me was on 29‑1‑1999. He complained of left sided mid‑lower back pain which radiated to the hip region, into both groins and down the left thigh. These symptoms were supported by his inability to maintain good lumbar spinal movements in forward flexion and extension. He also reported pain in the legs on attempting straight leg raise of both legs and this pain was more in the back and in the thigh. There were no neurological signs to suggest nerve root compromise. Attempts at rehabilitation were unsuccessful.
I was of the opinion that he did not have the capacity to return to work as a labourer.
Since I am not his General Practitioner, I cannot comment as to whether he is still symptomatic or whether there has been any improvement in his symptomatology after his worker's compensation claim was settled. I would suggest that his General Practitioner, Dr. Lucy Soon at the Mirrabooka Medical Centre be contacted for an up to date opinion on his current disability.
Based on a clinical opinion on his last consultation, returning him to his pre‑injury occupation as a labourer would be a problem as he does have x‑ray signs of disc problems in his lower back and it would appear reasonable to encourage him to look for other work options which are mostly alternative light duties.
Item 2: When he injured his back in November 1997, he was employed as a labourer at the Naval Base Garden Supplies. As I have stated earlier, although I have not seen him since January 1999, I would imagine that he would still remain incapacitated to the extent that he would find it difficult to perform the heavy components of his workload as a labourer which would include lifting weights exceeding 10kgs on a repetitive basis and working in crouched positions, squatting and repetitive bending of the spine to pick objects from below knee level.
If you need an updated report, I would suggest that his General Practitioner be contacted.
Item 3: Mr. Trajkoski has always been in labouring work. He also stated that he attended school in W.A. and did not finish Year 10. When I last saw him in January 1999, my clinical impression was that he had the capacity for alternate light duties as a processor in a factory. Attempts at rehabilitation at this stage were unsuccessful.
Item 4: The physical condition that prevented him from performing his duties has already been stated above. There is always a psychological component to all injuries especially for spinal problems. He did have a negative perception of his disability and in fact displayed a mild degree of disease conviction which would indicate a psychological problem. Whether he remains much the same cannot be stated and again I would suggest that his General Practitioner is contacted for more information. Based on what I have stated in the above paragraph, a prognosis for the future cannot be predicted." (emphasis added)
On 9 November 2000 the consultant neurologist, Professor F L Mastaglia, advised the defendant to the effect that he had not seen the plaintiff since August 1998 and was unable to provide any medical report as to his current condition. On 24 November 2000 the plaintiff's general practitioner, Dr Lucy Soon, wrote to the defendant as follows:
"The above named still suffers constantly from debilitating back pain. It precludes him from returning to work as a labourer. He is not able to perform any of the duties of his occupation.
Unfortunately he has had no training for other types of work nor has he had adequate education to enable him to do work other than labouring. However, he is a reasonably intelligent man so he may be able to be trained to do light mixed duties.
Mr Trajkoski's severe back pain is the condition preventing him from performing his duties at the time of ceasing work. He has improved very little despite extensive investigations and treatment. It is very difficult to predict whether he will ever be able to return to gainful employment. His lack of progress has been very disappointing and very baffling so if things continue as they have been doing since the day of his injury the chance of a future in the workforce is bleak." (emphasis added)
On 2 March 2001 the defendant wrote to the plaintiff in polite terms advising that the claim would receive "full and prompt consideration" once it received answers to the following questions:
"1.Date you ceased work was 22 November 1997. The date of claim form is 31 May 2000. Could you please provide details why the delay in claiming.
2.Did you or are you receiving any workers compensation?
3.If so, could you please provide details eg. Name of insurer, amount dates etc.
4.If no, what source of income have you been receiving if any since 22 November 1997?
5.The medical report received from Dr Baskaranathan advised that attempts at rehabilitation were unsuccessful could you please explain why?
6.Are you receiving any treatment now or have you seen any other doctors or specialists recently as Dr Mastaglia advises that he hasn't seen you since August 1998 and Dr Baskaranathan advises that his last consultation with you was 29 January 1999.
7.How does and/or is your condition affecting your lifestyle?"
The plaintiff responded to this request by a letter from his solicitors dated 15 March 2001 which was in the following terms:
"The questions you have asked appear in general terms to be irrelevant to this matter which essentially concerns the medical evidence.
Questions concerning the delay in claiming, workers' compensation and our client's source of income are all irrelevant.
Similarly questions directed to our client about rehabilitation and it being unsuccessful are also irrelevant. This should be the subject of medical evidence.
In relation to question 6 our client does receive medical treatment from Dr Soon and we understand that you have a copy of Dr Soon's report of 5 May 2000 indicating that our client is totally unfit for all work.
Question 7 which relates to our client's lifestyle is also irrelevant.
This matter has been outstanding since 5 June 2000.
Please be advised that unless we receive a decision in relation to our client's claim within fourteen days of today's date we will immediately apply to the Supreme Court for a declaration that a decision be made immediately. We will be seeking the costs of that application.
Please make your decision in relation to this matter as a matter of urgency and notify us by return."
There then followed a letter dated 23 March 2001 from the defendant to the plaintiff's solicitors providing reasons for the questions that had been previously asked, and a letter dated 28 May 2001 from the plaintiff's solicitors enclosing a copy of Dr Soon's report dated 5 May 2000 (which the defendant did not possess). This report pre‑dated the report which the defendant had previously received from Dr Soon and stated that as at 5 May 2000 the plaintiff was "still totally unfit for gainful employment".
There was then a delay until 21 February 2002 when the plaintiff's solicitors provided the following answers to the questions which had been asked by the defendant nearly a year beforehand:
"1.The delay in claiming was due to our client being unaware of the provisions allowing him to claim for a permanent disability. Further he was obtaining the required evidence for the claim.
2/3Our client did settle a common law/workers' compensation claim in July 1999.
4.Workers' compensation relating to a settlement and CentreLink benefits.
5.Rehabilitation was unsuccessful due to the injuries our client received.
6.No real ongoing treatment.
7.Substantial impact on our client's lifestyle in that he is unable to work."
The defendant responded by a letter dated 13 April 2002 in which it advised the plaintiff's solicitors (inter alia):
"We note that you have chosen to provide extremely concise answers that do nothing to assist us in the assessment of your client's claim. This only serves to make our task more difficult and the prospect of litigation all the more inevitable. If your client can satisfy us that he is genuinely disabled and entitled to benefits, then we will be delighted to pay this claim. We emphasise however, that the onus rests upon your client to provide satisfactory evidence to allow a reasonable decision to be made.
…
You can not reasonably expect Zurich to accept a claim when your sole evidence is a letter that is insufficiently specific from a general practitioner and you have not submitted any reports from specialist doctors or any detailed evidence of rehabilitation programs attempted without success.
Rather than simply deny the claim and provide you with opportunity to initiate litigation, we invite you to take a less adversarial approach and submit comprehensive reports and other evidence that supports your contention that your client has a contractual right to a Total & Permanent Disablement benefit."
On 12 July 2002 the plaintiff issued the writ in the present proceedings.
The merits of the application
The provision in the superannuation policy the subject of the plaintiff's claim is (for present purposes) indistinguishable from that dealt with in Heitman v Guardian Assurance Co Ltd & Anor (1992) 7 ANZ Ins Cas 61-107. There Franklyn J (at 61-107) held as follows:
"In my opinion, save where it is unreasonable on the medical evidence provided or obtained to fail or refuse to form the relevant opinion, total and permanent disablement within the meaning of the policy definition exists when the conditions prescribed by that subparagraph exist, ie the six months' absence from employment and the formation by the insurer of the relevant opinion. On the occurrence of those two events it exists within the meaning and for the purposes of the policy. If after a consideration of medical evidence, the relevant opinion is not formed and on an objective view of that evidence the failure or refusal to form the same is not unreasonable, then for the purposes of the policy the insured has not established total and permanent disablement, even if, as a matter of fact, he was then disabled to the extent identified in the definition and whether or not other medical evidence then existed or subsequently came into existence to show that he was, as a matter of fact, relevantly incapacitated. On the assumption that the policy is still in force in relation to him, he may in such a case seek a further consideration by the insurer of further medical evidence."
This view of the law was confirmed by the decision of the Queensland Full Supreme Court in McArthur v Mercantile Mutual Life Insurance Co Ltd (2002) 2 Qd R 197 where the majority held (at 215) that:
"A difficulty with regarding the appellant's claim as a claim for a debt is that the formation of the respondent's opinion is a precondition of the right to payment under the policy. Until the respondent's opinion has been found to have miscarried and until findings are made as to total and permanent disability, no sum can be due to the appellant.
Damages for breach of contract are awarded with the object of placing the plaintiff in the position in which he would have been had the contract been performed. If the contract had been performed in this case, the respondent would have formed the subject opinion honestly, bona fide and reasonably. Continuing this analysis, if an insurer acting reasonably would have rejected the claim, the appellant would be unable to demonstrate loss. On the other hand, if it is concluded that an insurer acting reasonably would have accepted the claim, the appellant would be entitled to the payment of the sum stipulated by the policy to be payable in the event of total and permanent disability."
Accordingly, the present plaintiff will have a good claim if there is evidence to show that the defendant has acted unreasonably in failing to come to the opinion contemplated by the policy definition of "total and permanent disablement". In the absence of evidence which is capable of sustaining that proposition, there will be no real issue to be tried, and the defendant will be entitled to summary judgment.
The opinion which the plaintiff contends the defendant ought reasonably to have reached is that his injury will "continue to render (him) incapable of resuming his previous occupation or ever engaging in any other occupation for which (he) could be suited by education, training or experience". The policy stipulates that the question whether the defendant holds this opinion is to be determined "after consideration of such medical or other evidence as it may require". The materials before me show that the defendant did require "medical or other evidence" as listed in the questions set out in its letter of 2 March 2001. The plaintiff through his solicitors initially refused to answer these questions, but ultimately provided information in an abbreviated form as set out in their letter of 21 February 2002.
In the end, the medical evidence before the defendant was limited to three reports from two of the plaintiff's doctors. That from Dr Baskaranathan (dated 15 September 2000) stated that the plaintiff should be encouraged to look for "other work options which are mostly alternative light duties". The most recent report from Dr Soon (dated 24 November 2000) stated that the plaintiff "may be able to be trained to do light mixed duties".
These reports speak for themselves, and obviously contradict the plaintiff's claim that he has been incapable (inter alia) of "ever engaging in any other occupation for which (he) could be suited by education, training or experience".
It follows in my view that there was no basis on which the defendant could reasonably have concluded that the plaintiff was totally and permanently disabled within the meaning of the policy. There is no real issue to be tried and I find that the defendant is entitled to summary judgment.
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