Dew v Suncorp Life & Superannuation Ltd [2001] QCA 459

SUPREME COURT OF QUEENSLAND CITATION: Dew v Suncorp Life & Superannuation Ltd [2001] QCA 459 PARTIES: JUDY ANNE DEW (plaintiff/respondent) v SUNCORP LIFE AND SUPERANNUATION LIMITED ACN 073 979 530 (defendant/appellant) FILE NO/S: Appeal No 3327 of 2001 SC No 13 of 1999 DIVISION: Court of Appeal PROCEEDING: General Civil Appeal ORIGINATING COURT: Supreme Court at Cairns DELIVERED ON: 26 October 2001 DELIVERED AT: Brisbane HEARING DATE: 10 October 2001 JUDGES: McMurdo P, McPherson JA and Cullinane J Separate reasons for judgment of each member of the Court, each concurring as to the order made. ORDER: Appeal dismissed with costs CATCHWORDS: INSURANCE – LIFE INSURANCE – THE CONTRACT – Appeal against judgment in an action in which respondent sued appellant on a policy of life insurance pursuant to which appellant insured respondent against total and permanent disability APPEAL AND NEW TRIAL – PRACTICE AND PROCEDURE – QUEENSLAND – THE HEARING OF THE APPEAL – PROOF OF EVIDENCE AND PROCEEDINGS BELOW – whether Trial Judge ought to have accepted expert opinion based upon assumption that respondent suffered certain symptoms – finding of fact that symptoms not suffered before policy signed INSURANCE – GENERAL – POLICIES OF INSURANCE – MISREPRESENTATION AND NON-DISCLOSURE – DUTY OF DISCLOSURE – whether duty to disclose arose on admitted medical history – whether finding of fact that no duty arose should be disturbed – whether erroneous test applied under s 21(1)(b) Insurance Contracts Act 1984 of how reasonable person would view the matter -- 1 of 8 -- 2 Insurance Contracts Act 1984 (Cth), ss 21(1)(a), 21(1)(b) COUNSEL: S Keim for the appellant R Hanson QC for the respondent SOLICITORS: Clayton Utz for the appellant Thompson & Royds for the respondent [1] McMURDO P: I agree with the reasons for judgment of Cullinane J and with the order he proposes. [2] McPHERSON JA: I agree with the reasons for judgment of Cullinane J for dismissing this appeal with costs. [3] CULLINANE J: The appellant appeals against a judgment in favour of the respondent in the sum of $522,000.00. The judgment was given on 21 March 2001, in an action in which the respondent sued the appellant on a policy of insurance pursuant to which the appellant insured the respondent against total and permanent disability. [4] The issues litigated before the trial judge were whether there was a failure to make disclosure under s 21 of the Insurance Contracts Act 1984 and whether the respondent was guilty of a fraudulent misrepresentation. The latter is not an issue on this appeal. [5] On 13 June 1996, the respondent made application to the applicant for life cover with an extension for total and permanent disability. She completed a proposal form and underwent a medical examination at the appellant’s request. At the time of completing the proposal form the appellant’s representative did not require her to answer a number of questions in the form concerning her medical history because of the proposed medical examination. [6] At the time of the medical examination she completed a questionnaire and a form provided by the appellant which was described in evidence as a “personal statement”. [7] In completing the personal statement the respondent answered some questions about her medical history. The questions and answers are as follows: 1. Have you ever had a disorder of any of the following? (a) Nervous system and brain such as nervous tension, nervous breakdown, mental disorder, epilepsy? Yes ˛ No ® If “Yes” give full details Family deaths 2. During the last 5 years have you had any medical examination, advice or treatment, any x-ray, blood test or any other tests? If “Yes”, full details required below – including result to tests. Yes ˛ No ® -- 2 of 8 -- 3 Nature of Illness or Injury Date Period Disabled Completely Recovered? Treatment Given Full Name and Address of Doctor or Hospital Stress Yes Advised to rest Dr Kemp 3. (c) Do you now take, or have you ever taken drugs, tablets or medication on a regular basis (Period used & name of drugs/tablets) Yes ® No ˛ If “Yes” give full details [8] On 17 July 1996, the appellant accepted the risk arising from the policy. Shortly after the appellant accepted the risk the respondent, on 30 July 1996, attended on her general practitioner, Dr Kemp, (who had earlier seen her on behalf of the appellant) having suffered a psychotic episode. She presented in a state of agitation claiming to have been hearing voices and experiencing symptoms of paranoia. She was referred to Dr Likely, a consultant psychiatrist, whom she saw on 19 August 1996. She complained to him of: 1. Feeling that she was composed of six different persons with different personalities and thought patterns; 2. Hearing voices of the different personalities conducting internal debates; 3. Having persecutory delusions; 4. Anxiety and distress and various physical symptoms associated with increasingly frequent episodes of the symptoms referred to above and the belief that she was going crazy. She also complained of episodes of depression. Dr Likely assessed her as suffering from a psychotic disorder. [9] The respondent continued to work for a period before having to cease her employment. It is common ground that she is totally and permanently disabled within the terms of the policy. [10] On 7 April 1998, the respondent made a claim under the policy. On 31 July 1998, the appellant cancelled the policy on the grounds of non-disclosure and fraudulent misrepresentation. [11] Section 21(1) of the Insurance Contracts Act 1984 provides as follows: “(1) Subject to this Act, an insured has a duty to disclose to the insurer, before the relevant contract of insurance is entered into, every matter that is known to the insured, being a matter that: -- 3 of 8 -- 4 (a) the insured knows to be a matter relevant to the decision of the insurer whether to accept the risk and, if so, on what terms; or (b) a reasonable person in the circumstances could be expected to know to be a matter so relevant.” [12] The appellant carried the onus of proof in respect of these matters. [13] One matter raised by the appellant was that the learned trial judge, in his consideration of s 21(1)(b) applied an erroneous test. Ultimately, the appellant confined its argument on appeal to a non-disclosure under s 21(1)(b). [14] With the qualification referred to in the last paragraph the appellant can only succeed if some findings of fact made by the learned trial judge are overturned. These findings turned in part upon the credibility of witnesses. [15] The case conducted by the appellant was that the respondent had, for a number of years prior to presenting with the symptoms on 30 July 1996, suffered from the symptoms listed in paragraph 6 of these reasons. (It was undisputed that she had consulted doctors on occasions for episodes of depression.) This evidence came from what the respondent (as His Honour found notwithstanding her denials) told Dr Likely and Ms Wainwright, a psychologist, who both saw her after 30 July 1996 and what she related to Dr Kemp when she saw him on 30 July 1996. [16] In paragraph 49 of his judgment His Honour made it clear that if it were the case that the respondent had been suffering from such symptoms prior to 30 July 1996, her failure to disclose this to the appellant would constitute an obvious breach of her duty and would be fatal to her claim. [17] Although it is clear that the respondent was psychotic at the time she was seen by Dr Likely, it was not the appellant’s case that she was psychotic prior to 30 July 1996 although she was suffering from the symptoms already referred to. It was Dr Likely’s evidence that she suffered, for many years, from a personality disorder. [18] The evidence presented the learned trial judge with the issue whether the respondent in fact had suffered for some significant earlier period from the symptoms which she presented with on 30 July 1996. [19] There was a body of evidence pointing the other way. Firstly, the plaintiff gave evidence that she had not suffered from such symptoms earlier. Her former husband also gave evidence to this effect. It is clear from His Honour’s findings that he was impressed by the evidence of the respondent’s former husband. [20] There was also a body of medical evidence which took the form of records and testimony of medical practitioners who had seen the respondent on occasion over a number of years prior to 1996. His Honour summarises this evidence in paragraph 37 of his reasons. The respondent with some relatively minor qualifications accept these findings as correct. “The psychological problems for which there is medical record in the five years preceding the application are on any view, quite -- 4 of 8 -- 5 minor. In February 1992 the plaintiff complained of anxiety attacks to Dr. Vij. In the six week period between November 1992 and January 1993 the plaintiff again complained to Dr. Vij of anxiety and was referred to Dr. Moorthy whom she saw on two occasions. She was diagnosed as suffering from an adjustment disorder with depression at that time. In November/December 1994 the plaintiff complained to Dr. Kemp of being depressed and irritable and again on 31 August 1995 complained of anxiety. Effectively, this adds up to four episodes of anxiety, irritability or emotional problems in a period of four years. When the details of the plaintiff’s circumstances during these periods are known, the anxiety states are well explained. In 1992 and 1993 her husband was a serving member of the Royal Australian Navy and was frequently absent from home on voyages. During 1990 he had done a tour of duty in the Middle East associated with the Gulf War. There were changes in his navy postings which meant that the plaintiff had to make new friends and adapt to new circumstances on a number of occasions. The problems which this lifestyle gave rise to, have to be seen in the context of the plaintiff’s past. She had an impoverished upbringing. Her mother left the family home when the plaintiff was five years of age and she was raised by her alcoholic father, who quite often left her at home alone. When she was 19 years of age the plaintiff was subjected to high level emotional trauma when her then partner was the victim of a shooting incident and at his funeral, further people were killed in a reprisal attack. During this period in the early 90’s there were a number of deaths in the plaintiff’s family. These included the deaths of a cousin in 1990, her stepfather in 1992, her father and her mother in March and July 1994 respectively and another close friend in July 1995. Also during that period, her brother was diagnosed as positive to HIV.” [21] Apart from seeing Dr Kemp on two occasions because she was depressed she saw him on a number of occasions in the year or so prior to the contract of insurance being entered into. [22] During the period covered by the evidence of the respondent’s medical history, no complaints were made of any of the symptoms which she described in July and August 1996 and which are listed in paragraph 6 of these reasons. [23] The learned trial judge was faced then with a substantial discrepancy between what the respondent had told Dr Likely and Dr Kemp (in July 1996) and Ms Wainwright on the one hand and on the other hand evidence which suggested a quite different state of affairs. He was inclined to accept what the respondent’s husband had said in evidence (see paragraph 43 of the reasons for judgment) and the evidence of the respondent’s medical history revealed no sign of such symptoms. It is perhaps not surprising that His Honour then considered whether there was anything which might explain why the respondent would give a false account. [24] His Honour turned to this question at paragraph 35 of his reasons where he referred to evidence given by Dr Likely about a phenomenon known as retrospective falsification in which a person suffering a psychotic condition might give a false -- 5 of 8 -- 6 account of that person’s medical history and the duration of such symptoms. He concluded at paragraph 57 as follows: “On balance I find the more likely explanation is that the plaintiff in her then mental condition unconsciously falsified the timing of the onset of psychotic symptoms. The plaintiff in giving her evidence was a reliable witness. The experience was difficult for her given her present condition and the intensity of her agoraphobia. Despite being cross-examined over a period of two days on matters that were emotionally upsetting, her answers, in the main, were satisfactory. On important issues her evidence was consistent with that of her former husband to which I have already made reference. I accept as correct her evidence that prior to July 1996 she did not experience psychotic symptoms. Accordingly, the evidence of her complaints to Drs. Kemp and Likely and Ms Wainwright does not suggest to me that at the time of her proposal, the plaintiff was aware of any significant mental condition of which she ought to have made disclosure.” [25] It is contended that the learned trial judge, in finding that it was likely that the respondent had unconsciously falsified her symptoms prior to the onset of a psychotic condition, failed to make due allowance for the factors which Dr Likely in evidence thought would militate against this. [26] It was also contended that Dr Likely’s evidence, given his expertise as a psychiatrist, and that his opinion was based upon an assessment of her history as a whole ought to have been accepted. That is, it is contended that the opinion which he expressed that she was suffering from a longstanding personality disorder but not a psychotic condition ought to have been accepted. [27] The respondent had never been diagnosed as having suffered from a personality disorder and the first time that this was suggested was by Dr Likely who saw her first in August 1996. [28] Dr Likely, when speaking of the personality disorder, explained what he meant by his diagnosis of it in his evidence at page 172: “Looking at the whole of that, in terms of the possibility that you mentioned in your conversation with Dr Jensen about retrospective falsification of symptoms, does that make it more or less likely that this was a women who had retrospectively made up symptoms?-- She gave me a fairly clear account at the time of the evolution of her phenomena. There is just one concerning affect which I wasn’t questioned on by Mr Jensen and that relies to – relates to what I have made reference to in one of my reports in terms of an underlying personality disorder. If I can just talk a little bit about that if that’s all right with you. Sure?-- Personality disorders can or often do arise as a result of some adverse event in the patient’s developmental history and I think in the paragraph outlining the developmental history, I referred to a few of those. Now those types of personality disorders can be associated with symptoms which mimic those of psychotic illness, -- 6 of 8 -- 7 that is, it is sometimes very difficult to tell between a psychotic phenomena and symptoms that we see in personality disorders. Personality disorders are also associated or one type of personality disorder which is referred to as borderline personality disorder, so- called because it was felt at one stage to rest on the borderline between psychosis and normality, that psychosis which often arises out of adverse developmental experiences like with Ms Dew and be referred to as a affective instability, in other words periods of quite rapid changes of moods and phenomenon that borders on psychosis. My view would be that the symptoms that Ms Dew experienced which I referred to as a long history would be due to her personality dysfunction but that there had then been an onset of separate psychotic phenomena in the immediate period preceding her contact with myself, so I think we are dealing with two different things.” [29] The “long history” to which Dr Likely referred was a history of the symptoms listed in paragraph 6 of these reasons. (See Exhibit 7 at p 401 and the evidence in chief at p 162.) In my view, it is clear from the reading of Dr Likely’s evidence in this passage and from his evidence as a whole, that his opinion that the respondent was suffering from a longstanding personality disorder was in substance based upon his acceptance of her statement to him that she had suffered from such symptoms prior to late July 1996. [30] His Honour has made findings which in my view, were open on the evidence that she did not suffer from such symptoms prior to July 1996. Similarly, it was open to His Honour to find that the phenomena of retrospective falsification referred to by Dr Likely could lead, in a case such as this, to an inaccurate history being provided. There is nothing to suggest that in his consideration of this issue His Honour overlooked Dr Likely’s evidence in cross-examination that some features of the respondent’s condition made this less rather than more likely. His Honour, as I have said, had been impressed by evidence, which suggested her account to Dr Likely, Ms Wainwright and Dr Kemp was not correct. [31] The appellant also contends that on the proven medical history His Honour ought to have found that there was a breach of s 21(1)(b), that is, that he ought to have found that a reasonable person would have regarded those matters as matters relevant to the decision of the insurer whether to accept the risk and if so, on what terms. [32] His Honour’s assessment of the respondent’s medical history has already been set out. He describes her psychological problems as revealed by the medical records in the five years preceding the application as “minor” and refers to the various stressful and difficult situations which the respondent encountered during these periods. [33] The evidence paints a picture of episodic difficulties often associated with stressful situations which the respondent had had to face. Overall, the impression is of somebody who has encountered somewhat more of the knocks and bumps of life than an average person and who has suffered, as a consequence, psychological and emotional difficulties. This, at any rate, is the effect of His Honour’s findings on the evidence before him. There was, on the evidence His Honour accepted, no ongoing condition from which the respondent suffered. -- 7 of 8 -- 8 [34] The learned trial judge’s findings on s 21(1)(a) and 21(1)(b) appear in his conclusions at paragraph 73 and 75 respectively: “The plaintiff did not respond fully to Question 2 in the personal statement by her failure to identify the names of the medical practitioners whom she consulted, other than Dr. Kemp. Her failure to do so stemmed from her genuine belief that symptoms which caused her to consult those practitioners did not identify a material injury or illness. In those circumstances the visits were not relevant to the insurer’s acceptance of the risk. Even if she had identified the doctors by name and identified the symptoms she experienced on each occasion, it is unlikely that there would be any difference in the identification of illness or injury. On each occasion the plaintiff appears to have recovered completely from the intermittent episodes of stress and her treatment, at the hands of the Sydney doctors, was non-specific. … These are the extrinsic factors which, for the purpose of s 21(1)(b) of the Act, constitute the circumstances in which the objective assessment is to be made. In those circumstances I have taken the view that the plaintiff has conveyed to the insurer the matters that she knew to be relevant for a decision which the defendant had to make. In my view also, a reasonable person in the circumstances would not have regarded the symptoms complained of to the medical practitioners as being relevant to the insurer’s risk.” [35] These findings also, in my view, were open to His Honour on the evidence before him. [36] As was said earlier, it was argued that the learned trial judge had applied an erroneous test when considering s 21(1)(b). This is said to be revealed by what His Honour said at paragraph 21 of his reasons: “This case essentially confirms the test as being an objective one having regard to the particular circumstances in which an insured person finds himself or herself. Or, as put by the authors of Australian Insurance Law, “an objective test modified by subjective criteria”.[1] [37] Whether this is a correct statement of the relevant principle or not, it is clear when one looks at paragraphs 74 and 75 of the reasons that the only circumstances which His Honour has referred to when considering s 21(1)(b) are those which he refers to in paragraph 74 and which are extrinsic to the plaintiff. There is nothing to suggest that His Honour has done anything other than apply a wholly objective test to the question of s 21(1)(b). His conclusion is unsurprising in view of his findings about the respondent’s medical history. [38] I would dismiss the appeal with costs. 1 See also “Australian Insurance Law” Second Ed. Tarr, Liew and Holligan at p.92-2 -- 8 of 8 --