Australian Casualty & Life Ltd v Hall [1999] QCA 240

IN THE COURT OF APPEAL 99.240 SUPREME COURT OF QUEENSLAND Appeal No 575 of 1998 Brisbane [Aust Casualty & Life v Hall] BETWEEN: AUSTRALIAN CASUALTY & LIFE LIMITED ACN 000 333 844 (Defendant) Appellant AND: ALISON THELMA HALL (Plaintiff) Respondent McMurdo P Thomas JA Shepherdson J Judgment delivered 2 July 1999. Separate reasons for judgment of each member of the Court, each concurring as to the orders made. APPEAL DISMISSED WITH COSTS. CATCHWORDS: INSURANCE - GENERAL - POLICIES OF INSURANCE - MISREPRESENTATION AND NON-DISCLOSURE - DUTY OF DISCLOSURE - whether misrepresentation or non-disclosure fraudulent - sections 21(1) and 29 Insurance Contracts Act 1984 (Cth) considered - whether insured knew matter to be relevant to insurer determining whether to accept the risk and if so, on what terms - meaning of "known" in s21(1) discussed - whether conduct amounted to reckless indifference Insurance Contracts Act 1984 (Cth) ss18, 21, 29 Advance (NSW) Insurance Agencies Pty Ltd v Matthews (1989) 166 -- 1 of 32 -- CLR 606, considered Bahr v Nicolay (No 2) (1988) 164 CLR 604, applied CIC Insurance Limited v Midaz Pty Ltd & Anor (1998) 10 ANZ Ins Cases 61-394, considered Derry v Peek (1889) 14 AC 337, (1989) 5 TLR 625, [1886-90] All ER Rep 1, considered Permanent Trustee (Australia) Ltd v FAI General Insurance Co Ltd (1998) 153 ALR 529, (1998) 10 ANZ Ins Cases 61-408, applied Shepherd v National Mutual Life Association of Australasia Limited & Anor (1995) 8 ANZ Ins Cases 61-233, not followed Counsel: Mr RJ Douglas SC, with him Mr JJ Gleeson for the appellant. Mr DJS Jackson QC, with him Mr D Savage for the respondent. Solicitors: Bain Gasteen for the appellant. Corrs Chambers Westgarth for the respondent. Hearing Date: 12 March 1999. -- 2 of 32 -- IN THE COURT OF APPEAL [1999] QCA 240 SUPREME COURT OF QUEENSLAND Appeal No 575 of 1998 Brisbane Before McMurdo P Thomas JA Shepherdson J [Aust Casualty & Life v Hall] BETWEEN AUSTRALIAN CASUALTY & LIFE LIMITED ACN 000 333 844 (Defendant) Appellant AND ALISON THELMA HALL (Plaintiff) Respondent REASONS FOR JUDGMENT - McMURDO P Judgment delivered 2 July 1999 1 I have had the benefit of reading the reasons for judgment of Shepherdson J who has set out the relevant facts and analysed the issues and I am in general agreement with his reasons. 2 The appellant claims that under s29 Insurance Contracts Act 1984 (Cth) ("the Act") it is entitled to avoid its contract of insurance with the respondent as the respondent fraudulently failed to comply with her duty of disclosure in the proposal form. 3 The first issue for determination is whether his Honour erred in finding that the respondent did not fail to comply with her duty of disclosure. If there has been no such error, the appeal fails. -- 3 of 32 -- 4 4 The respondent's duty of disclosure is set out in s21 of the Act: "(1) Subject to this Act, an insured has a duty to disclose to the insurer, before the relevant contract of insurance is entered into, every matter that is known to the insured, being a matter that: (a) the insured knows to be a matter relevant to the decision of the insurer whether to accept the risk and, if so, on what terms; or (b) a reasonable person in the circumstances could be expected to know to be a matter so relevant." 5 The only failure to disclose relied upon by the appellant relates to the 1989-1990 symptoms which the respondent had explained to her general practitioner Dr Marnane. Dr Marnane referred the respondent to physician Dr Campbell. The respondent gave evidence that she had suffered from symptoms including headaches with vomiting once a month usually on Saturdays; less serious headaches during the week; dizziness and chest pains. These symptoms persisted for a month or two, possibly even for six months, before her appointment with Dr Campbell on 11 July 1990. Dr Campbell prescribed medication for the severe headaches but as they improved she did not take the medication. Dr Campbell told her she was "as fit as a fiddle ... had nothing to worry about health-wise, and that [she] was in good health". She regarded the symptoms as "minor ailments". Most of the symptoms, other than the severe headaches, continued after her visit to Dr Campbell and were present around the time the proposal form was completed on 21 September 1990. She did not disclose the symptoms in the proposal because the physician had advised her that she was well and she regarded them as minor matters. In other words, she was getting on with her life despite the minor symptoms, having been told she was in good health by Dr Campbell. In addition she was conscious that the policy had a waiting period of 14 days before benefits became payable and did not consider it necessary to mention matters which would be unlikely to take her out of the work force for 14 days or more. -- 4 of 32 -- 5 6 The learned trial judge found the respondent to be an honest witness. 7 Dr Campbell was not called to give evidence. 8 Question A on the second page of the proposal form inquired of the respondent "Have you ever had, or been told you had or received advice or treatment for ..." and then listed conditions, disorders or diseases, only the last of which is relevant to the appellant which provided "Any other condition or injury". The respondent answered "No" to that question. The answer was truthful as the 1989-1990 minor symptomology did not relate to a condition or injury, the respondent having been told she was in good health. 9 The next question asked of the respondent in the proposal form was "B: To the best of your knowledge and belief, do you now have any impairment or deformity or departure from good health ?" to which she again answered "No". The respondent conceded in cross-examination that the 1989-1990 symptomology did interfere with her health at that time. It was however reasonable for her to assume in the circumstances that disclosure was not necessary because the symptoms were minor and her physician had told her she was in good health. In addition, she was, quite reasonably, concerned with matters which would be relevant to keeping her out of the work force for 14 days or more. 10 The next relevant query in the proposal form asked of the respondent "D: During the past five (5) years have you consulted any provider of medical services for any reason ?" to which the respondent truthfully answered "Yes". Table E then followed. Above Table E were the words "IF YES TO ANY OF THE ABOVE QUESTIONS PLEASE GIVE DETAILS IN E BELOW". The headings of Table E are: "NAME OF INJURY OR SICKNESS; WHEN DID IT START; DURATION; WAS AN OPERATION PERFORMED ? IF SO, WHAT TYPE; HAVE YOU MADE COMPLETE RECOVERY; NAME AND ADDRESS OF DOCTOR OR HOSPITAL". The headings in Table E are not relevant to the -- 5 of 32 -- 6 respondent's 1989-1990 minor symptomology and it was perfectly understandable why she made no reference to them. 11 Question 5 on page 1 of the proposal confirms that any benefits for either sickness or for office overheads and business expenses are subject to a waiting period of 14 days, a fact supportive of one of the respondent's reasons for non-disclosure. 12 In these circumstances I agree with Shepherdson J and with the findings of the learned judge below that in terms of s21(1)(a) of the Act the respondent did not consider her 1989-1990 symptoms relevant to the appellant's decision whether to accept the risk or the terms of the risk. 13 I also agree with Shepherdson J that in terms of s21(1)(b) of the Act it was reasonable for a person in these circumstances to have regarded the 1989-1990 symptomology as irrelevant. 14 The appellant cannot avoid the contract with the respondent where as here there has been no failure to comply with the duty of disclosure under ss29(1) and 21(1) of the Act. The appellant having failed to establish this threshold point, it is unnecessary to consider the matter of fraud relied upon by the appellant in the second ground of appeal argued by it. In any case, the reasons of Shepherdson J and my reasons make it clear that such a ground would be doomed. 15 I agree with Shepherdson J that the appeal should be dismissed. -- 6 of 32 -- 7 IN THE COURT OF APPEAL SUPREME COURT OF QUEENSLAND Appeal No. 575 of 1998 Brisbane Before McMurdo P Thomas JA Shepherdson J [Aust Casualty & Life v Hall] BETWEEN: AUSTRALIAN CASUALTY & LIFE LIMITED ACN 000 333 844 (Defendant) Appellant AND: ALISON THELMA HALL (Plaintiff) Respondent REASONS FOR JUDGMENT - THOMAS JA Judgment delivered 2 July 1999 1 I agree with the reasons of Shepherdson J and with the orders he proposes. -- 7 of 32 -- 8 IN THE COURT OF APPEAL SUPREME COURT OF QUEENSLAND Appeal No 575 of 1998 Brisbane Before McMurdo P Thomas JA Shepherdson J [Aust Casualty & Life v Hall] BETWEEN: AUSTRALIAN CASUALTY & LIFE LIMITED ACN 000 333 844 (Defendant) Appellant AND: ALISON THELMA HALL (Plaintiff) Respondent REASONS FOR JUDGMENT - SHEPHERDSON J Judgment delivered 2 July 1999 1 On 24 December 1997 a judge of the District Court gave judgment for the above named plaintiff (respondent) against the above named defendant (appellant), in an action in which the respondent had sought declaratory and monetary relief, more particularly a declaration that under a policy of professional income replacement effected with the appellant, the appellant was obliged to pay the respondent "the monthly benefit" as defined in the policy. -- 8 of 32 -- 9 2 The policy afforded (inter alia) a monthly sickness benefit of $5,000 with a waiting period of 14 days, certain benefit increase entitlements and a life time benefit period. 3 On 21 September 1990 the respondent had signed a proposal for the insurance. On or about 5 December 1990 the appellant accepted the proposal and issued a policy. At trial there was no dispute that since about 1992 save for brief periods the respondent has been disabled by psychiatric conditions and that that disability falls within the policy risks. The appellant paid to the respondent benefits under the policy equivalent to five years benefits but at a level reflecting 75 per cent of her gross income as a Barrister in practice for the 1990/1991 financial year. 4 The respondent asserted an entitlement to full benefits of $5,000 per month increased pursuant to entitlements under the policy and beyond a five year period. 5 The appellant defended the respondent's claim alleging misrepresentation and breach of duty of disclosure in respects pertaining to her health and income and that on 8 October 1996 it had terminated the policy by reason of (inter alia) breach of duty of disclosure. 6 At trial it was common ground that pursuant to s 29(2) of the Insurance Contracts Act 1984 (Cth) the purported avoidance of the policy by the appellant could only be supported in the event that any misrepresentation or non-disclosure "was made fraudulently". The learned trial judge concluded that there was no fraud by the respondent in any of the respects pleaded and gave judgment in her favour. 7 In the course of his reasons, His Honour: "... found the plaintiff a most satisfactory witness. Her memory of detail in the events of past years was patchy. However she was subjected to a long and relentless detailed examination and cross-examination over more than a day and a half and was quite unshaken." 8 The appellant has appealed the whole of the judgment and although the notice of -- 9 of 32 -- 10 appeal contains nine grounds, when the appeal was heard the appellant argued two grounds only. They were: Ground 4 "His Honour erred in law in finding that fraudulent misrepresentation or non- disclosure could not be constituted by a proposer for insurance making an honest decision not to disclose a matter considered not to be material in circumstances where a reasonable person would make disclosure." Ground 8 "In respect of the proposal for insurance by the respondent in relation to the 1990 symptoms, His Honour erred in failing to find that the respondent knowingly or alternatively recklessly: 8.1 Failed to answer in the affirmative with particulars of such incident, in response to the questions in the proposal as to whether she had, or been told she had, or received advice or treatment in respect of 'any other condition'; 8.2 Failed to disclose such symptoms and advice and treatment in respect of the same." 9 I now recite part of the learned trial judge's reasons for judgment and that part is a general outline of events which as the judge said were quite non-contentious: "The plaintiff was born on 15 June 1965. She would seem to have lived her life in Mackay, attending Brisbane Girls Grammar School as a boarder for part of 1981 and part of 1982. She attended the University of Queensland from 1983. In 1985 she was given a deferral of her studies for medical reasons. In the later years of her University course, she worked in the Crown Law office and subsequently for solicitors Murrell Stephenson. She was admitted to the Bar in December 1988 and would seem to have commenced practice in mid-1989. She took her own Chambers on the 16th floor of the M.L.C. Building from about the commencement of 1990. In February 1989, while working for Murrell Stephenson she had taken out disability insurance with the defendant through a broker, Max Boers. She had met him at an insurance law conference. She was aware of some features of the defendant's disability cover which appealed to her. In or about March 1990 she had a chance meeting in the street with Don -- 10 of 32 -- 11 Francis who had been a teacher at BGGS when she was there. Francis told her that he was working in insurance for National Mutual. That led to Francis visiting her in her Chambers on 21 March 1990 for the compiling of a proposal for increased disability cover with the defendant. Don Francis filled out the proposal form in his handwriting, having asked her the questions. She then signed the form. There is no suggestion that the form was filled out other than in accordance with her responses. There was a gynaecological problem which she disclosed for the first time in March 1990. Prior to 1989 she had returned a positive PAP smear for HPV. She said she didn't think it would recur but that between 1989 and 1990 it did so. She therefore wrote a confidential letter to the insurer, in collaboration with Mr. Francis, and gave the letter to Francis to convey to the insurer. Nothing turns on this issue. In September 1990 the plaintiff's legal practice was growing. She had an intention to buy a house. She contacted Francis in respect of increased cover. He came to see her. He merely copied the answers to medical questions from the March proposal and gave them to her to read and sign. Francis raised with her the difficulty presented in quantifying the income of a young professional in the first year of practice. The plaintiff mentioned that her accountant, Chris Newport, had a short time before prepared some income projections for her application for housing finance. She was asked: 'Did you show him a copy of the forecast?-- I did. The circumstances surrounding that are that he said, "You know, we can insure you for 75 per cent of your income and we don't how (sic) what your income is. Do you have any way of substantiating it", and I said, "Well, I have got these cash flow forecasts here. Maybe they would be of some assistance?" He had a look at them and said, "Yeah, they will be great." So, we worked out the policy cover to be 75 per cent of the total of the cash flow forecasts. Now, did he say anything to you concerning whether or not he would have to seek outside advice about doing it on forecast rather than doing it on actuals?-- He said he'd never done it this way before and he would go to the boss about it. Did he mention a particular name?-- I think he said Paul Beardmore. And did you understand who Mr Beardmore was?-- State manager I thought.' Again she signed the proposal and Francis took it away with him. At a later point of time he telephoned her and told her that Paul Beardmore had said yes, -- 11 of 32 -- 12 that that was the way they could insure her and that everything was fine. She was required to have another AIDS test. She refused on the basis that she had had one for the policy in March and considered herself an unlikely prospect for contracting AIDS. Francis phoned her and told her that Beardmore had approved everything about the proposal save for her having an AIDS test. In the November she relented and had the test and the policy then issued on or about 5 December 1990." 10 His Honour then went on to find - the following matters were not in issue - that in March 1992 the respondent suffered serious disabling ill-health with Ross River virus and other problems, that in 1994 she recovered somewhat but then suffered the onset of a severe form of schizophrenia, and that it was common ground that the respondent has since then been totally and permanently disabled. 11 Returning to the quite voluminous evidence before the learned trial judge, it is apparent that on 21 March 1990 the respondent had signed an earlier proposal for the same type of insurance cover save that, relevantly, at that stage she sought a monthly benefit of $2,500 for accident and sickness benefits during her lifetime (AR341 and 391). 12 The 21 September 1990 proposal sought to increase each monthly benefit to $5,000 (AR410). A policy with an effective date of 18 May 1990 had earlier issued on the 21 March 1990 proposal (AR335). 13 The evidence showed that more or less contemporaneously with the 21 March 1990 proposal the respondent had written the appellant a letter (an incomplete and undated photocopy of which appears at AR395-397 of the appeal record). This letter refers to an even earlier proposal for insurance cover which the respondent had made to the appellant on 7 February 1989 (see AR325). That proposal was for Premium Income Protector Policy (see AR314). This policy was entered into on or about 21 February 1989. In it the accident benefit was $1,500 monthly, with a waiting period of 14 days and a life time maximum benefit period. The sickness benefit was $1,500 monthly with a waiting period of 14 days -- 12 of 32 -- 13 and maximum benefit period "age 65" (AR320). 14 The copy letter at AR395 advised the appellant of information of which the respondent had omitted to inform the appellant in the 1989 proposal. In that letter she informed the appellant that in May or June 1987 she was diagnosed as having an HPV infection, that she was subsequently referred to a Dr Lander, a Gynaecologist at Wickham Terrace, that in August 1987 she underwent "operative treatment of the condition at the Royal Brisbane Hospital", that thereafter she "was given a clear bill of health by Dr Lander", and that she was having six-monthly pap smears which until February 1990 had been completely clear. The letter (part of which has been omitted in the photocopying process) at least makes clear that the February 1990 pap smear upon specialist examination by Dr Lander showed a "minor trace of the HPV which I was told was insignificant". 15 In the letter the respondent then went on to explain her reasons for not disclosing the above information in her earlier proposal. They were: 1. Personal embarrassment; 2. The professional nature of her acquaintance with her insurance broker; 3. The advice of her specialist that she had no likelihood of recurrence of the virus but to merely continue regular pap smears. 16 In that letter the respondent invited the appellant to obtain a report on her condition from Dr Lander and gave Dr Lander's Wickham Terrace address. 17 As I have said a policy issued on the 21 March proposal. 18 I have specifically mentioned this letter for two reasons which are: 1. The present appeal concerns alleged non-disclosure by the respondent; 2. A copy of the above letter was referred to in the respondent's proposal dated 21 September 1990, as "noted in agents comments". -- 13 of 32 -- 14 19 I turn now to Ground 8 which deals with what are called "the 1990's symptoms". 20 In the proposal of 21 September 1990 under the heading "MEDICAL HISTORY OF PERSON TO BE INSURED" appears the following: "A Have you ever had, or been told you had or received advice or treatment for: (answer yes or no to each question in A, B, C and D)." 21 Immediately below this question A appeared 29 matters (to use a neutral word) each of which required an answer placed in a box. A thirtieth matter read: "Any other condition or injury." and it too required a boxed answer - the respondent answered "No" to this question. 22 Of the remaining 29 matters the respondent answered "No" to 26, and to each of the following: "Back pain or any other disorder of the back or spine" - "(1) Yes". "Thyroid disorder" - "Yes". "Female organ disorder" - "Yes" . 23 Question B to which the respondent answered - "No" read: "To the best of your knowledge and belief do you now have any impairment or deformity or departure from good health?" Question C to which the respondent answered - "No" read: "Have you ever taken any drug which has not been prescribed for you by a medical practitioner?" Question D to which the respondent answered - "Yes" read: "During the past five (5) years have you consulted any provider of medical services for any reason?" 24 Immediately following questions B,C and D and still in the medical history part of the proposal appeared a table headed: "IF YES TO ANY OF THE ABOVE QUESTIONS PLEASE GIVE DETAILS IN E BELOW." -- 14 of 32 -- 15 25 In the table which is "E", the headings were: "Name of injury or sickness When did it start Duration Was an operation performed? if so what type Have you made complete recovery? Name & address of doctor or hospital?" 26 In table E, the respondent gave details under each heading for "back pain" and gave details for all headings save "duration" when referring to "enlarged thyroid ". The reason for this was that under the heading "when did it start", "Birth" was written. The respondent did not give any details for "female organ disorder" to which she had answered "yes". 27 Towards the end of this table E, appear the words "supplementary letter and note in agent's comments" - this obviously referred to the letter mentioned in paras 14 and 15 ante. 28 Still in the medical history of person to be insured portion the respondent gave the name and address of her usual medical attendant as - "Dr Cynthia Marnane, T&G Building, Brisbane". The note in the agent's comments portion of the proposal (see AR419) included the following: "Pap smear test performed on 29/8/90 showed clear result" Then and still in "agent's comments" in a different handwriting which was that of Don Francis was a reference to income and after that: "The attached letter is a copy of the submission made on 21/3/90 which was accepted after the client submitted to an HIV test." 29 Before I turn to the submissions of Mr Douglas SC, who appeared for the appellant both in this Court and at the trial, I note there was evidence before the learned trial judge that Dr Marnane had referred the respondent to Dr G R Campbell, a Physician of Wickham Terrace, who had examined the respondent on 11 July 1990 and had then on 13 July 1990 written to Dr Marnane a report on the respondent. The report is in evidence (AR547). -- 15 of 32 -- 16 30 That letter or report from Dr Campbell began by saying the respondent "has quite a few problems. All of them are minor but they worry her". 31 Dr Campbell then mentioned: (a) Tension headaches which occurred three to four times a week - easily relieved by aspirin; (b) Migraine - headaches every one to two months - always on a Saturday; (c) Chest wall pain - localised on one side of the chest or the other; (d) Two episodes of tilting or rotation being probably vestibular 'possibly associated with her sinusitis or whatever'. 32 Dr Campbell said in the letter "On examination she is really quite well but somewhat obese". He gave in summary form the results of his examination which included a normal ECG and said "I think she really has little to worry about". He mentioned some "indicators of possible potential diabetes" and advice he had given her that she have a sugar free diet and remain as slim as possible (AR548). 33 Although Dr Campbell's report to Dr Marnane was in evidence and Dr Campbell did not give oral evidence - Dr Marnane did - the learned trial judge found that there was no evidence that the respondent saw Dr Campbell's report prior to the proposal. This finding is not challenged. 34 The learned trial judge in the course of his careful judgment dealt specifically with "the plaintiff's health in 1990". He said: "The plaintiff agreed that she consulted her general practitioner, Dr. Marnane, in 1989 and 1990 and later saw a physician, Dr. Campbell. While it does not seem that she was suffering all of the following symptoms over the entire period, she complained at various times of migraine headaches, other headaches, occasional dizziness, sometimes described as a "tilting" feeling. She agreed that the complaint of dizziness may have first been made in September 1989. In July 1990 she was feeling fatigued. She was cross- examined by Mr Douglas: ‘After the attendance upon Dr. Campbell in mid-July 1990, -- 16 of 32 -- 17 you were obviously very conscious about these symptoms?-- Yes. Which you had asked him about?-- Yes. And these were the same symptoms to which you had referred to in your referral consultation with Dr. Marnane?-- Yes. They would have been uppermost in your mind?-- The symptoms? Yes?-- Yes, yes. They were uppermost in your mind because they were impeding your day to day health?-- that's right. They were impeding your day to day domestic life?-- Yes. And they were impeding your day to day work life?-- Yes, I think that's right. And that continued, at the very least, for some months after the attendance upon Dr Campbell?-- I think so, yes. You completed the proposal about nine weeks after your attendance upon Dr. Campbell?-- Yes.' Elsewhere the plaintiff described the above as 'minor ailments'. She said that the three matters to which she had made specific mention on the proposal form were the only matters that she thought relevant to the insurer. She received considerable support in this assertion from Dr Marnane and Dr. Campbell. Dr. Marnane gave evidence. It was she who examined the plaintiff on 4 September 1989 and on a number of subsequent occasions. It was [at] the plaintiff's request that Dr. Marnane referred her to Dr. Campbell. Dr. McCormack who was another doctor in Dr. Marnane's practice was not called to give evidence. Dr. Marnane was asked in cross-examination: 'Now, when you saw Alison Hall on the occasions that you've spoken of she appeared to you to be in good health?-- Yes. And she had on the occasions that Mr. Douglas has taken you through some minor complaints?-- Yes. -- 17 of 32 -- 18 And which you certainly didn't have any cause to, yourself, think sufficient on any occasion to refer her to anybody else?-- No. On the one occasion that you did refer her you referred her because she wanted to be referred?-- Yes. And not because you had any concerns about her complaints?- - Yes, that's right.' The plaintiff gave uncontradicted evidence which seems to be compatible with the abovementioned evidence of Dr. Marnane. She was asked in respect of the March 1990 proposal: 'And notwithstanding that you were suffering from those symptoms, you make no mention of them in this proposal?-- No. You did so quite deliberately?-- Yes. Just as in the later proposal you did so quite deliberately?-- That's right. In effect you turned your face against those symptoms in terms of disclosing them to the insurer on either occasion?-- Dr. Marheine (sic) hadn't been able to find anything wrong with me possibly by that point in time, so once again I didn't think they were worthy of disclosure.' In respect of Dr. Campbell, she said that Dr. Campbell gave her a full neurological examination and said that there was nothing wrong with her. She was "as fit as a fiddle". She was asked about the glucose tolerance test and diabetes: ' And you also discussed with him diabetes?-- I told him about the glucose tolerance test. He said to me that he could produce that test result in anyone who was on a low sugar diet for a week. I told him I had been dieting at the time the glucose tolerance test was done, and he said, 'Well, there you are'. You discussed with Dr. Campbell the fact that you had some family history of diabetes?-- That's right, there was a great grandmother and a cousin. You recall discussing that with him?-- I think so, yes. You also discussed with him the test which you had -- 18 of 32 -- 19 undertaken in 1986?-- Yes. He told you that you had a predisposition or vulnerability to the onset of diabetes?-- No, he didn't. He prescribed some treatment to deal with what you discussed with him about diabetes?-- No. He advised you to undertake a sugar-free diet?-- In order to lose weight, not because of diabetes.’ There is no evidence that prior to the proposal the plaintiff saw Dr. Campbell's report to Dr. Marnane, or that his very guarded comment about 'possible potential diabetes' was conveyed to her. It seems clear from Dr. Campbell's report that he was at pains to reassure the plaintiff that her problems were minor and that there was really nothing wrong with her. Dr. Campbell was not called as a witness in the proceedings. In the circumstances the question 'Have you ever had or been told you had or received advice or treatment for - diabetes' was correctly answered by the plaintiff 'No'. She had never had diabetes. One can hardly criticise her under a general duty of disclosure when the advice that she was receiving from both Dr. Marnane and Dr. Campbell was to the effect that her problems were minor. Much was made of the fact that some of her symptoms persisted after she had been reassured by Dr. Campbell and prior to the insurance contract issuing. The fact of the matter is that she had been told they were of no consequence. I accept that she considered them minor ailments." 35 The appeal raises for consideration ss 21(1) and 29 of the Insurance Contracts Act 1984 (Cth). The contract in question is one which falls within s 18(1)(b) of the Insurance Contracts Act 1984 - s 18 appears in "DIVISION 2 - Life Insurance" in "PART III - INSURABLE INTERESTS ". 36 Section 21(1) reads: "21(1) Subject to this Act, an insured has a duty to disclose to the insurer, before the relevant contract of insurance is entered into, every matter that is known to the insured, being a matter that: (a) the insured knows to be a matter relevant to the -- 19 of 32 -- 20 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." 37 Sub-sections 29(1) and 29(2) relevantly read: "Life Insurance 29(1) This section applies where the person who became the insured under a contract of life insurance upon the contract being entered into: (a) failed to comply with the duty of disclosure; or (b) made a misrepresentation to the insurer before the contract was entered into; but does not apply where: (c) the insurer would have entered into the contract even if the insured had not failed to comply with the duty of disclosure or had not made the misrepresentation before the contract was entered into; or (d) the failure or misrepresentation was in respect of the date of birth of one or more of the life insureds. (sic) (2) If the failure was fraudulent or the misrepresentation was made fraudulently, the insurer may avoid the contract...". The contract in question was a contract of life insurance. 38 It was the appellant's case both here and in the court below that: (a) the respondent's answers to proposal questions A, B, D and E in light of her failure to disclose her then recent and current symptoms and consequent attendance on Dr Campbell were false; (b) that the respondent was not merely careless; that she was dismissive of the right of the appellant insurer to be afforded information which if disclosed would have resulted in rejection of the proposal and that the appellant did not "attain the standard which would be observed by an honest person placed in those circumstances" (citing Royal Brunei Airlines Sdn Bhd v Tan Kok Ming [1995] 2 AC 378 at 390). 39 Sub-section 21(1) has been considered by this Court previously. In CIC Insurance Limited v Midaz Pty Ltd & Anor (1998) 10 ANZ Ins Cases 61-394 Pincus JA, with whose -- 20 of 32 -- 21 reasons Moynihan SJA agreed said, after quoting s 21(1): "It will be noted that the duty is not expressed to extend to any matter unknown to the insured; the language does not suggest an intention to cover matters which should have been known but were not." 40 In terms of s 21(1), subject to the Act, the statutory duty to disclose to the insurer, (that disclosure to be made before the relevant contract of insurance is entered into) is of "every matter that is known to the insured being a matter that" falls within sub-paragraph (a) or (b) of s 21(1). 41 The statutory duty to disclose is first directed to any matter known to the insured and once a matter is known to the insured, the next aspect of the duty to which the statute directs attention is whether the insured knows the matter to be relevant to the insurer whether to accept the risk and if so, on what terms. 42 Whether a particular insured has discharged the duty imposed by s 21(1) is to be first viewed in light of the knowledge of the insured described in s 21(1)(a) and secondly by considering the provisions of s 21(1)(b). 43 As to the meaning of "known" in s 21(1) I would with respect adopt and apply the following words of Hodgson CJ in the Equity Division of the Supreme Court of New South Wales in Permanent Trustee Australia Ltd v FAI General Insurance Co Ltd (1998) 153 ALR 529 where at par 8.3, his Honour said: "In my opinion, 'known' in s 21(1) means more than suspected or believed. What is required is that the matter should be the subject of a true belief, held with sufficient assurance to justify the term 'known'." 44 On the evidence before the learned trial judge and on the judge's findings as to her credit worthiness there is no doubt that the respondent at the time she signed the proposal on 21 September 1990, knew (truly believed) that she had seen Dr Campbell about the matters which she admitted in her cross-examination. Having been satisfied on the aspect of the -- 21 of 32 -- 22 respondent's knowledge of those matters, one turns to the next question whether she knew the matters to be relevant in terms of s 21(1)(a) and if this question be answered "yes" one then considers whether her failure to disclose was fraudulent. 45 I leave to one side for the moment the aspect of s 21(1)(b). Sub-section 21 (1)(a) 46 In cross-examination the respondent agreed that she had asked Dr Marnane to refer her to a physician and that before seeking the referral she had told Dr Marnane on or about 5 July 1990 of the symptoms which led her to ask for the referral. She admitted quite freely (as I read the transcript) having told Dr Marnane that she suffered a tilting feeling in her body which she described in cross-examination as "a momentary loss of consciousness. I think without losing track of TV or conversation or anything like that"; (AR096) that she found this disturbing, that she told Dr Marnane that she had suffered headaches at that time, that she had told Dr Marnane she was suffering headaches three or four times a week and that was true, and that she was suffering very severe headaches once a month usually on a Saturday although she did not describe them as migraines and that they were accompanied by vomiting and that she told Dr Marnane the other headaches occurred three or four times a week, that the Saturday headaches were very disturbing but the other headaches were "more of a nuisance thing", and that she suffered sharp fleeting pain in her chest wall about which she was very disturbed. 47 She then agreed with Mr Douglas that she had suffered the dizziness intermittently since September 1989. She agreed with him the conditions had been sufficiently persistent to make her worry about her good health and well-being, and she said "I thought I had a brain tumour at the time but I couldn't find a doctor who would agree with me". She described this belief that she had a brain tumour as "passing thought". She told Mr Douglas that all the -- 22 of 32 -- 23 symptoms for which she saw Dr Campbell cleared within a matter of months after she saw him. She said she didn't think she had a migraine headache after she saw Dr Campbell (AR99), that by October 1990 she was probably suffering the other headaches, that it was possible she was still suffering the sharp chest pain in October 1990, and that in July 1990 she had been working hard and was very fatigued. 48 When Mr Douglas put to the respondent that she had discussed diabetes with Dr Campbell she replied: "I told him about the glucose tolerance test. He said to me that he could produce that test result in any one who was on a low sugar diet for a week. I told him I had been dieting at the time the glucose tolerance test was done and he said 'Well there you are'." 49 She agreed that she discussed with Dr Campbell the fact that her great grandmother and a cousin had diabetes, but she denied Mr Douglas' suggestion that Dr Campbell had told her that she had a pre-disposition or vulnerability to the onset of diabetes and that he prescribed her some treatment to deal with what she had discussed with him about diabetes (AR102/15-20). She agreed that Dr Campbell had advised her to undertake a sugar free diet saying "In order to lose weight not because of diabetes" (AR102). She said Dr Campbell told her the glucose tolerance test undertaken in 1986 was an aberration. I interpolate here, that earlier in her cross-examination, Mr Douglas had asked the respondent "You say the prospect of your suffering diabetes was never raised with you prior to September 1990?" and she replied: "It was raised when Dr Janet Irwin did the glucose tolerance test. It was raised again when I went to see the physician Dr Campbell. He told me it was a minor aberration and that he could produce such a test result if he put anyone on a low sugar diet for a week and he said not to worry about it ever again." 50 The respondent had earlier denied to Mr Douglas that in about April 1986 she had -- 23 of 32 -- 24 been told at Princess Alexandra Hospital there was a prospect of her developing diabetes within about 10 years of 1986. 51 As for the medication prescribed by Dr Campbell for the migraine headaches, the respondent said she had never needed to take it as she did not suffer migraine headaches after seeing Dr Campbell. 52 Later in the cross-examination of the respondent the following questions and answers appeared: "Q. Now you accept don't you that you did not refer to Dr Campbell or any attendance upon him in the proposal of September 1990? A. That's right. Q. You also accept that you do not refer in that proposal to any of the symptoms which you had related to Dr Marnane and in turn Dr Campbell in September of 1990? A. That's correct. Dr Campbell told me I was as fit as a fiddle and I had nothing to worry about health wise and that I was in good health so I saw no reason to tell the insurer about that. Q. But you were still suffering symptoms before you went to see Dr Campbell? A. That's right. Q. You were suffering symptoms after you went to see Dr Campbell? A. That's right. Q. But you didn't mention those symptoms or the attendance upon Dr Campbell and the proposal? A. No. Q. Because you didn't think it was relevant? A. That's exactly right. Q. Here was a physician who had examined you a couple of months before? A. Yes. Q. A couple of months before? A. Yes. Q. The proposal? A. Exactly. Q. He had examined you between the March proposal and the September proposal? A. Yes, that's right. Q. In fact you hadn't mentioned any of these symptoms that you were suffering in the March proposal either? A. No that's right. Q. But you were suffering at least some of those symptoms at the time of the March proposal weren't you. A. Yes, I regarded them as minor ailments. Q. They were medical conditions weren't they? A. Yes, none of them were likely to take me out of the workforce for 14 days though. -- 24 of 32 -- 25 Q. That was uppermost in your mind wasn't? A. The 14 day period. Q. Yes. A. I think that's probably right yes." (AR103) 53 It is apparent from the above emphasis (which is mine) that the respondent admitted that she did not believe the symptoms for which she saw Dr Campbell and the attendance on Dr Campbell were relevant to be disclosed to the appellant. 54 The answers to the last three or four above quoted questions must be considered in the light of the following questions and answers given by the respondent earlier in her cross- examination: "Q. Your approach to completing this proposal was if you didn't think something was going to reoccur you didn't think it necessary to tell the insurer? A. My approach was if something was a medical condition if it would recur or would be likely to recur and would result in an absence from work of more than 14 days I would tell the insurer. If it would result in less than 14 days it was probably irrelevant because I would never be able to make a claim anyway. Q. So your approach was if you had suffered some condition which hadn't reoccurred or even if it did it was unlikely to have you off work for 14 days you weren't going to bother telling the insurer about it? A. As a broad test that's right." (see AR 078-079) 55 It is in my view apparent that the matters about which the respondent admitted she saw Dr Campbell were all that could be properly called symptoms. In question A in the 21/9/90 proposal each of the 29 matters is a condition or disorder or disease. Each of the 29 is not directed to a symptom. Question A began: "Have you ever had or been told you had or received advise or treatment for" 56 The thirtieth and last matter in question A, and to which the respondent answered "No" is: "Any other condition or injury". 57 In my view a symptom is not a condition. The Shorter Oxford English Dictionary on Historical Principles gives the following definition of "symptom": 1 (Path.) A (bodily or -- 25 of 32 -- 26 mental) phenomenon, circumstance or changing of condition arising from and accompanying a disease or affection and constituting an indication or evidence of it; a characteristic sign of some particular disease". I note, as Thomas JA pointed out during the hearing of the appeal that a Dr Foxcroft who had been asked to comment on certain events (not relevant to the 1990's symptoms) had said: "None of the symptoms described add up to a condition ... ." 58 Question D was in these terms - "During the past five years have you consulted any provider of medical services for any reason?" 59 The actual question that it asks is whether the applicant has consulted a provider. It does not ask for a statement of the reasons for any such consultation, let alone for a statement of symptoms. I do not think that there is any ambiguity in this, although if there was it should be resolved against the insurer which was responsible for drawing the document. The question did however require a "yes" answer and this activated the obligation to give answers in table E (see paras 24 to 26 above). That table however commences with the "name of injury or sickness", and the remaining questions in table E are subsidiary to the designated injury or sickness. 60 An obligation would arise on the part of the respondent to disclose her consultations with Dr Campbell and Dr Marnane only if there was a material injury or sickness of which she knew and which she was obliged by section 21(1) of the Insurance Contracts Act to disclose. 61 It is quite clear that the respondent did not know (truly believe) that the symptoms about which she saw Dr Campbell were relevant to the decision of the appellant whether to accept the risk and if so on what terms. Indeed she thought them irrelevant because Dr Campbell told her she was "as fit as a fiddle" and in my view the learned trial judge -- 26 of 32 -- 27 justifiably found that the advice she received from Drs Marnane and Campbell were that her problems were minor. 62 I turn now to the question concerning "diabetes." 63 Only one of the matters which, on the appellant's case, the respondent discussed with Dr Campbell is capable of being termed "a condition"; that is "diabetes" against which the respondent in answering Question A, put "No". 64 As already indicated, the respondent denied having been advised by Dr Campbell that she had a pre-disposition or vulnerability to the onset of diabetes and denied that Dr Campbell prescribed treatment to deal with diabetes. She conceded " diabetes" was mentioned and that Dr Campbell gave advice concerning the 1986 glucose tolerance test and advice that she undertake a sugar free diet. The learned trial judge found (as I have set out in the extract above quoted) that there was no evidence that prior to the proposal, the respondent saw Dr Campbell's report to Dr Marnane or that his very guarded comment about "possible potential diabetes" was conveyed to her. 65 Thus there was no evidence that the respondent was aware at the time of the proposal that Dr Campbell had made what the learned trial judge called "his very guarded comment". 66 And so, when the respondent answered "No" to the question, "Have you ever had or been told you had or received advice or treatment for diabetes?", she gave an answer of what she knew - what she truly believed. 67 In my view the answer to this question was correct, and further it cannot be said that any of the remaining matters about which the respondent consulted Dr Campbell was a condition. Thus, in my view the answer "No" to "any other condition or injury" was correct. 68 I am unable to conclude that the respondent breached the duty to disclose imposed by s 21(1)(a). -- 27 of 32 -- 28 Sub-section 21(1)(b) 69 The appellant relies on this sub-section arguing that a reasonable person in the circumstances could be expected to know that the consultations with Dr Campbell concerning her recent and current symptoms were relevant to the decision of the appellant whether to accept the risk and if so on what terms. 70 The test imposed by s 21(1)(b) is an objective one. The insured's duty of disclosure under s 21(1) extends to "every matter that is known to the insured being a matter that a reasonable person in the circumstances could be expected to know to be a matter so relevant" i.e. relevant to the decision of the insurer whether to accept the risk and if so on what terms. 71 The phrase "in the circumstances" must mean in the circumstances in which the matter became known to the insured and the circumstances at the time the duty of disclosure falls to be discharged. 72 I do not think that the hypothetical reasonable person in the circumstances could be expected to have any better knowledge than the respondent that the matters in question (in particular the condition about which she consulted Dr Marnane and Dr Campbell and the fact that she consulted with them) were relevant to the insurer's decision whether to accept the risk. It is difficult to think otherwise in the light of Dr Campbell's indication to her that she was "as fit as a fiddle". The onus in relation to this issue lies upon the insurer (Babatsikos v Car Owners’ Mutual Insurance Co Limited [1970] VR 297, 301) and there is no good reason, on the evidence which the learned trial judge has accepted, to think that it has been shown that the respondent breached her obligations under s 21(1)(b). 73 Indeed, it is difficult to think that the conduct of the respondent in relation to any aspect of this issue could be described as other than that of a reasonable person. The particular issue raised by s 21(1)(b) is narrower than this, and it is enough to say that on the -- 28 of 32 -- 29 evidence accepted by his Honour it could not properly be found that a reasonable person in the circumstances could be expected to know that the consultations with Drs Marnane and Campbell or the medical condition that led to them were matters relevant to the decision of the insurer whether to accept the risk. 74 It is true to say that when in his reasons the learned trial judge discussed the issue "The Plaintiff's Health in 1990" he did not refer to s 21(1)(b). 75 Nevertheless, despite such omission and because the test posed by that sub-section is an objective one, this Court is able to deal with the matter and for reasons which I have already given the response to the test posed in s 21(1)(b) must have resulted in a response unfavourable to the insurer. 76 I turn now to the appellant's claim that the respondent failed fraudulently to comply with her duty of disclosure. Ground 4 and Section 29 77 At trial the appellant had pleaded and relied on the fact that on or about 8 October 1996 it had by letter terminated the policy by reason of (inter alia) breach of duty of disclosure. 78 In respect of the matters which are the subject of Grounds 4 and 8, it could only justify this plea by proving that the respondent's failure to comply with the duty of disclosure was made fraudulently (see s 29(2)). If it cannot do this, its appeal must fail. 79 Mr Douglas has argued that the respondent's evidence shows that the respondent's non-disclosure of the July 1990 consultation with Dr Campbell was a deliberate act on her part, and that that deliberate non-disclosure was, in the circumstances, reckless and sufficient to justify a finding of fraud. 80 Before considering this submission further it is necessary to mention Advance (NSW) -- 29 of 32 -- 30 Insurance Agencies Pty Ltd v Matthews (1989) 166 CLR 606 in which Mason CJ, Dawson, Toohey and Gaudron JJ, when speaking of the Insurance Contracts Act 1984 said (at p 615): "The evident intention of the legislature is to replace the antecedent common law regulating non-disclosure, misrepresentations and incorrect statements by insured persons before entry into a contract with the provisions of Pt IV. To that extent Pt IV is a statutory code which replaces the common law." 81 In Shepherd v National Mutual Life Association of Australasia Limited & Anor (1995) 8 ANZ Ins Cases 61-233 Hedigan J of the Supreme Court of Victoria said at p 75619: "... I have no doubt that the failure to disclose the matters was not fraudulent, that is, that there was no deliberate intention on the part of Mr Shepherd to suppress any information." 82 This passage seems to suggest that if there is a deliberate intention to suppress information then a failure to disclose is fraudulent. In my respectful view that cannot be a general rule. It may be that there is a deliberate intention not to disclose certain information but that of itself does not make fraudulent a failure to disclose. 83 To succeed on its appeal the appellant must satisfy this Court that: (a) the respondent failed to comply with her duty of disclosure; and (b) that such failure was fraudulent. 84 I have already stated that in my view the respondent did not fail to comply with her duty of disclosure and that is enough to dispose of the appeal. 85 If I should be wrong, I shall assume the respondent failed in the respects stated by the appellant in para 38 ante, and consider whether such failure was fraudulent. 86 The learned trial judge in his reasons for judgment said: "Sections 21 and 26 of the Act outline the duty of disclosure and what constitutes misrepresentation. Not every misrepresentation or failure to disclose will however amount to fraud. I accept Mr Savage's submission that fraud involves an element of dishonesty or moral turpitude. A proposer might make an honest decision not to disclose a matter considered not to be material in circumstances where a reasonable person would make disclosure. Such non-disclosure falls a long way short of fraud." -- 30 of 32 -- 31 87 This passage in the reasons for judgment followed shortly after the learned trial judge had quoted the following passage from the speech of Lord Herschell in Derry v Peek (1889) 14 AC 337 at 374 where he said: "[F]raud is proved when it is shewn that a false representation has been made (1) knowingly, or (2) without belief in its truth, or (3) recklessly, careless whether it be true or false. Although I have treated the second and third as distinct cases, I think the third is but an instance of the second, for one who makes a statement under such circumstances can have no real belief in the truth of what he states. To prevent a false statement being fraudulent, there must, I think always be an honest belief in its truth. And this probably covers the whole ground, for one who knowingly alleges that which is false, has obviously no such honest belief." 88 The decision of the High Court of Australia in Bahr v Nicolay (No 2) (1988) 164 CLR 604 shows that the learned trial judge correctly stated that fraud involves an element of dishonesty or moral turpitude. 89 In that case Mason CJ and Dawson J said (at p 614): "According to the decisions of this Court actual fraud, personal dishonesty or moral turpitude lie at the heart of the two sections [of the Transfer of Land Act 1893 (WA)] and their counterparts." 90 Mr Douglas argues that deliberate non-disclosure admitted by the respondent was, in the circumstances reckless and therefore fraudulent. 91 What is clear from the respondent's evidence is that the symptoms for which she consulted Dr Marnane and Dr Campbell were matters which, after she saw Dr Campbell became in her view minor ailments and unlikely to recur or cause her to be absent from work for more than 14 days. 92 In my view, given the standard of proof required to prove fraud, it cannot be said on the evidence before the learned trial judge, that the respondent's deliberate decision not to disclose and her consequent failure to disclose the fact of her consultation with Dr Campbell and the symptoms about which she saw him, amounted to reckless indifference and was -- 31 of 32 -- 32 therefore fraudulent. 93 It may be said that the respondent was careless in not making the disclosures about which Mr Douglas complains. If her conduct were categorised as "careless" that in my view did not make it "reckless, careless whether it be true or false". Obviously, and this accords with the learned trial judge's view of her creditworthiness, she believed what she had been told by Dr Campbell to be true. 94 For reasons I have given I conclude that the appellant has failed to prove a failure by the respondent to discharge her statutory duty to disclose and further, that if she did so fail, that that failure was fraudulent. 95 I would dismiss the appeal with costs. -- 32 of 32 --