Rustin v Colonial Mutual Life Assurance Society
[2014] QDC 202
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- Unreported Judgment
- Rustin v Colonial Mutual Life Assurance Society[2014] QDC 202
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Rustin v Colonial Mutual Life Assurance Society[2014] QDC 202
Rustin v Colonial Mutual Life Assurance Society[2014] QDC 202
DISTRICT COURT OF QUEENSLAND
CITATION: | Rustin v Colonial Mutual Life Assurance Society [2014] QDC 202 |
PARTIES: | NICOLE RENNAE RUSTIN (plaintiff applicant) v COLONAL MUTUAL LIFE ASSURANCE SOCIETY (defendant respondent) |
FILE NO: | BD 492/2014 |
DIVISION: | Civil |
PROCEEDING: | Application to compel further and better disclosure |
ORIGINATING COURT: | District Court |
DELIVERED ON: | 29 July 2014 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 28 July 2014 |
JUDGE: | Kingham DCJ |
ORDER: | (1)That the respondent must disclose: (a)applications in which the applicant answered “yes” to question 8(h) on the personal statement which were made in the two week period that covers the week before and the week after the date on which Ms Rustin’s application was made; (b)documents evidencing whether that application was accepted or refused and, if accepted, documents relating to subsequent avoidance of the policy, if any; (2)The order applies only to the first 250 qualifying applications identified by the respondent; (3)The parties must not disclose any information that would identify a person not connected with the proceedings in giving effect to these orders; (4)If any of the documents are used for any purpose during the proceedings, they must be presented in a form so that personal identifying information has been redacted. The costs of the application are costs in the cause unless either party wishes to submit I should make a different order. |
CATCHWORDS: | CIVIL LITIGATION – PROCEDURE – DISCLOSURE – APPLICATION FOR FURTHER DISCLOSURE – where insurer avoided policy for non-disclosure of medical condition – where insured sought disclosure of documents evidencing insurer’s practice at the time of the application for insurance – whether documents directly relevant – whether request oppressive – whether there were special circumstances justifying disclosure – where limited further disclosure was ordered. |
COUNSEL: | P Bingham for the applicant C Harding for the respondent |
SOLICITORS: | Maurice Blackburn for the applicant McInnes Wilson for the respondent |
- [1]Ms Rustin is claiming benefits under an insurance policy which the respondent has avoided for non-disclosure of a history of consultations and treatments, including in relation to depression and anxiety. This is an application to compel further and better disclosure, which is cast in broad terms. During submissions, counsel for the applicant reduced the scope of the request to an order compelling disclosure of applications in which the applicant had answered “yes” to question 8(h) on the personal statement and documents evidencing whether:
(1)the application was accepted or refused; and
(2)if accepted and subsequently avoided for non-disclosure, documentation regarding that.
- [2]The applicant proposes the order is further limited potentially in two ways, to avoid oppression. Firstly, by reference to time. It is proposed that the search for the documentation span over only a period of a week before and a week after the date of Ms Rustin’s application. Secondly, if I consider this necessary, it is proposed I impose a cap on the number of applications pursued.
- [3]The respondent opposed the application on a number of grounds: firstly, that the documents did not fall within the current test for disclosure and, secondly, even if they did, that the request was oppressive and, further, that this was not a case in which the special circumstances justified more expansive disclosure.
- [4]There is no dispute between counsel about the relevant principles to apply, just how they should determine this case. The test for disclosure is that the documents would tend to prove or disprove an allegation in issue, that is, the direct relevance test. Here, the allegation in issue is defined by the statutory relief provided to an insurer under section 29, subsection (3) of the Insurance Contracts Act 1984 (Cth).
- [5]The issue the applicant points to is whether the respondent would, had the applicant answered “yes” to question 8(h), refused to enter a contract of insurance on any terms. The respondent did not contest the assertion by counsel for the applicant that, on his reading of the pleadings, the respondent was not alleging fraudulent misrepresentation and I am proceeding on that basis. Although there is some lack of precision in the defence, I am also proceeding on the basis that the respondent is avoiding under section 29(3), that is, that it would not have entered into a contract – not the contract – a contract, on any terms.
- [6]The onus rests with the respondent at trial. It will need to establish that it would not have been prepared to enter into a contract with the applicant on any terms if the misrepresentation had not been made. This test requires the court to engage in a retrospective exercise, which is also hypothetical and determine, on the balance of probabilities, what the insurer would have done if the information had been disclosed. It is not enough that the respondent would probably have deferred its decision when the application was assessed, perhaps because it needed to conduct further investigations. It must show that at some point, the offer probably would have been declined.[1]
- [7]The difficulty in the court’s task in making this assessment has been recognised by expert commentators who have adverted to the need for evidence of the particular insurer’s office practice at the relevant time.[2]
- [8]The respondent has conceded, by disclosing its manual that evidence of its practice at the time is directly relevant to an issue; although there seems to be a question about whether the one disclosed was the one in use at the relevant time. But I put that to one side. In any case, although it accepts the manual is relevant, it says decisions made on other applications are not. The distinction is somewhat hard to fathom. The manual sets out what the insurer said its underwriters should have done. The material sought by the applicant relates to what the insurer actually did with similar applications.
- [9]I appreciate that applicants who answer question 8(h) “yes” could exhibit a broad range of conditions not necessarily equivalent to the applicant’s. However, it is the respondent who has grouped those conditions together and developed guidelines about how the applications by persons who positively answer the question should be assessed. It can be accepted, then, that for underwriting purposes, they fall into a class which presents a sufficiently distinct type of risk, even if there are gradings within that risk profile.
- [10]The manual details information and the criteria that then might be used to categorise the condition, assess the risk and determine the application. They reveal that, depending upon the category of condition, a contract of insurance would be offered whether on a standard or, perhaps, on different terms. That is, not all those who answer question 8(h) positively would be refused insurance.
- [11]Although the order sought is likely to net applications not on all fours with the applicants’, I consider those documents, like the guidelines, demonstrate the particular insurer’s actual office practice for applications which fall into that distinct class. As such, they are relevant to a matter in issue. They would tend to prove or disprove an allegation in issue; that is, that the respondent would have refused Ms Rustin’s application eventually had she had answered “yes” to question 8(h).
- [12]There is little judicial consideration of applications of this nature. I note there is the South Australia case of Bauer Tonkin Insurance Brokers v CIC Insurance[3]. In that case, this sort of disclosure was allowed. The test for disclosure in South Australia is more generous than ours. However, I concur with his Honour’s view that the evidence of the insurer’s practice is at the heart of the equivalent provision for a different type of insurance, section 28 (3) in that case. His Honour concluded that evidence of the insurer’s practice was at the heart of that issue and, as such, was relevant to the issues in dispute. He did not appear to me to be deciding that application on the more generous train of inquiry test.
- [13]I appreciate the risk identified by respondent’s counsel that there could be an undue focus at trial on other applications which are not truly comparable and that this has the capacity to confuse the issue somewhat. I’m confident, though, a trial judge can control the proceedings appropriately. The applicant’s purpose in referring to the other applications is to test the non-expert evidence given for the respondent (which will be retrospective and hypothetical), by reference to documents demonstrating what practice was at the time.
- [14]Were I wrong in my decision that it is directly relevant, I would have ordered limited disclosure on the basis that there are special circumstances, given the unusual nature of the finding the court must make. With appropriate limitations, I consider it is in the interests of justice for the applicant to have access to documents which evidence the actual practice of the particular insurer so the retrospective and hypothetical evidence can be properly tested.
- [15]The next question is how to limit the scope of the disclosure. The applicant has already sensibly suggested a much more confined process, which would reduce the impact of the order considerably. Although I see some indications of exaggeration of time and cost in the respondent’s material, I accept, nevertheless, it could be an onerous exercise if not strictly limited. I certainly cannot determine what percentage of applicants in a two week period would have answered “yes” to question 8(h) and I will not speculate about that. Instead, I will use the number of overall applications as my guide. Based on Ms Arkin’s investigations of the number of applications in that year, and assuming an even spread, it could involve close to 1800 applications over a two week period. Even that could be time-consuming and expensive, given the manner in which those documents have been archived.
- [16]The applicant made a further suggestion that I place a cap on the number of qualifying applications that must be disclosed. I consider that is an appropriate concession given the uncertainty at this stage of the scale of the task and the difficulty in dealing with documents filed on a legacy system. A cap of 250, which I understand is what was proposed by the applicant’s counsel, will be imposed.
- [17]I ask counsel to settle orders that give effect to the following requirements as to disclosure:
(1)That the respondent must disclose:
(a)Applications in which the applicant answered “yes” to question 8(h) on the personal statement which were made in the two week period that covers the week before and the week after the date on which Ms Rustin’s application was made;
(b)Documents evidencing whether that application was accepted or refused and, if accepted, documents relating to subsequent avoidance of the policy, if any;
(2)The order applies only to the first 250 qualifying applications identified by the respondent;
(3)The parties must not disclose any information that would identify a person not connected with the proceedings in giving effect to these orders;
(4)If any of the documents are used for any purpose during the proceedings, they must be presented in a form so that personal identifying information has been redacted. The costs of the application are costs in the cause unless either party wishes to submit I should make a different order.
- [18]Having now heard the parties’ submissions on costs, I consider costs in the cause is still the appropriate order to be made for two reasons: Firstly, I have made an order which is significantly confined compared to the original application. Although there was an approach made for something that was similar, it would still have involved many, many more times the number of applications than my order does. Secondly, that approach was made at a time when most of the costs of this application had already been incurred and at a time when it would have been difficult (and in fact it was not possible) for the respondent to obtain instructions.