FEDERAL COURT OF AUSTRALIA Graham v Colonial Mutual Life Assurance Society Limited (No 2) [2014] FCA 717 Citation: Graham v Colonial Mutual Life Assurance Society Limited (No 2) [2014] FCA 717 Parties: CHERYL ANNE GRAHAM v COLONIAL MUTUAL LIFE ASSURANCE SOCIETY LIMITED (ACN 004 021 809) File number: WAD 520 of 2011 Judge: MCKERRACHER J Date of judgment: 4 July 2014 Catchwords: INSURANCE – life insurance – insurer avoided policy pursuant to s 29(2) of the Insurance Contracts Act 1984 (Cth) on the basis that the insured made fraudulent non-disclosures – insured made a fraudulent non-disclosure within the meaning of s 29(2) – insured would have entered into the contract even if full disclosure had occurred – insurer not entitled to avoid the policy due to the operation of s 29(1)(c) Legislation: Insurance Contracts Act 1984 (Cth) ss 21, 25, 27, 28, 29(1)(c), 29(2), 31 Cases cited: Advance (NSW) Insurance Agencies Pty Ltd v Matthews (1989) 166 CLR 606 Australian Casualty & Life Ltd v Hall (1999) 151 FLR 360 CIC Insurance Ltd v Midaz Pty Ltd [1998] QCA 21 Briginshaw v Briginshaw (1938) 60 CLR 336 Burns v MMI-CMI Insurance Ltd (1994) 8 ANZ Ins Cas 61-228 Commercial Union Co of Australia Ltd v Beard (1999) 47 NSWLR 735 McCabe v Royal & Sun Alliance Life Insurance Australia Ltd [2003] WASCA 162 Permanent Trustee Australia Ltd v FAI General Insurance Co Ltd (1998) 153 ALR 529 Permanent Trustee Australia Co Ltd v FAI General Insurance Co Ltd (2001) 50 NSWLR 679 Permanent Trustee Australia Ltd v FAI General Insurance Company Ltd (in liq) (2003) 214 CLR 514 Plasteel Windows Australia Pty Ltd v CE Heath Underwriting Agencies Pty Ltd (1989) 5 ANZ Ins Cas 60-926 Troja v Troja (1994) 33 NSWLR 269 Tyndall Life Insurance Co Ltd v Chisholm (2000) 11 ANZ Ins Cas 90-104 Von Braun v Australian Associated Motor Insurers Ltd (1998) 135 ACTR 1 Date of hearing: 16 - 18 December 2013 Place: Perth Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 170 Counsel for the Applicant: Mr M de kerloy with Mr N de kerloy Solicitor for the Applicant: Mony de kerloy Barristers & Solicitors Counsel for the Respondent: Mr R Cavanagh SC with Mr J Duncan Solicitor for the Respondent: Turks Legal IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 520 of 2011 BETWEEN: CHERYL ANNE GRAHAM Applicant AND: COLONIAL MUTUAL LIFE ASSURANCE SOCIETY LIMITED (ACN 004 021 809) Respondent JUDGE: MCKERRACHER J DATE OF ORDER: 4 JULY 2014 WHERE MADE: PERTH THE COURT ORDERS THAT: 1. Within 10 days the applicant is to file a minute of proposed orders reflecting the relief to which she is entitled by virtue of these reasons and, if necessary, any supporting submissions (not exceeding three pages in length). 2. Within a further 10 days the respondent file and serve a responsive draft minute of proposed orders, if any, and, if necessary, supporting submissions (not exceeding three pages in length). 3. Unless the Court otherwise orders, the terms of the final relief will be determined on the papers. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 520 of 2011 BETWEEN: CHERYL ANNE GRAHAM Applicant AND: COLONIAL MUTUAL LIFE ASSURANCE SOCIETY LIMITED (ACN 004 021 809) Respondent JUDGE: MCKERRACHER J DATE: 4 JULY 2014 PLACE: PERTH REASONS FOR JUDGMENT THE DISPUTE 1 Ms Graham claims under a life insurance policy issued by the respondent (Comminsure). The policy insured the life of her late husband, Mr Zaher Elwaly, who was insured under that policy in 2007 at age 35. He died in 2010. Comminsure avoided the policy pursuant to s 29(2) of the Insurance Contracts Act 1984 (Cth) (ICA) on the basis of fraudulent non-disclosure by Mr Elwaly. STATUTORY CONSIDERATIONS 2 Such non-disclosure and its consequences are addressed in some detail in federal legislation. The following provisions of the ICA are central to resolution of this dispute: 3 Section 21 ICA deals with the insured's duty of disclosure, providing: (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. (2) The duty of disclosure does not require the disclosure of a matter: (a) that diminishes the risk; (b) that is of common knowledge; (c) that the insurer knows or in the ordinary course of the insurer's business as an insurer ought to know; or (d) as to which compliance with the duty of disclosure is waived by the insurer. (3) Where a person: (a) failed to answer; or (b) gave an obviously incomplete or irrelevant answer to; a question included in a proposal form about a matter, the insurer shall be deemed to have waived compliance with the duty of disclosure in relation to the matter. (emphasis added) 4 Section 25 ICA provides that where, during the negotiations for a contract of life insurance but before it was entered into, a misrepresentation was made to the insurer by a person who, under the contract, became the life insured or one of the life insureds, the ICA has effect as though the misrepresentation had been so made by the insured. 5 The definition of misrepresentation is also modified by s 27 which provides that a person shall not be taken to have made a misrepresentation by reason only that the person failed to answer a question included in a proposal form or gave an obviously incomplete or irrelevant answer to such a question. 6 By s 28 ICA, the consequences of non-disclosure for general insurance are established. Section 29 ICA deals similarly with life insurance providing: (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. (2) If the failure was fraudulent or the misrepresentation was made fraudulently, the insurer may avoid the contract. … 7 A potential overriding judicial discretion is provided by s 31 ICA relevantly in these terms: (1) In any proceedings by the insured in respect of a contract of insurance that has been avoided on the ground of fraudulent failure to comply with the duty of disclosure or fraudulent misrepresentation, the court may, if it would be harsh and unfair not to do so, but subject to this section, disregard the avoidance and, if it does so, shall allow the insured to recover the whole, or such part as the court thinks just and equitable in the circumstances, of the amount that would have been payable if the contract had not been avoided. … THE ISSUES 8 The key issues in the case are: 1. Whether Mr Elwaly made any misrepresentations and failed to disclose relevant matters within the meaning of the ICA; 2. If so, was Comminsure entitled to avoid the policy within the meaning of s 29(2) ICA; 3. If so, should the Court exercise its discretion pursuant to s 31 ICA; 4. If the policy was not validly avoided pursuant to the ICA, is Comminsure entitled to withhold the life care benefit on public policy grounds; and 5. Whether the health declaration applicable to the policy was 'obviously incomplete' within the meaning of s 21(3) or s 27 ICA and/or whether that declaration, not being signed by Mr Elwaly, constitutes a failure to answer the questions included in the health declaration within the meaning of s 21(3) or s 27 ICA. THE KEY FACTS 9 Ms Graham is a beneficiary and trustee of the EG Self-Managed Super Fund. On about 31 October 2006, by a document entitled 'Personal Statement – Personal Insurance Portfolio' (Personal Statement) and on 20 December 2006, by a document entitled 'Application – Personal Insurance Portfolio' which required the provision of 'personal and medical details' (Application), Mr Elwaly and Ms Graham applied in writing to Comminsure for two insurance policies, namely, a policy insuring Mr Elwaly's life and an income care policy in the name of Mr Elwaly. 10 On 13 June 2007, Comminsure entered into two policies of insurance with Ms Graham and Mr Elwaly who were both then trustees of the EG Self-Managed Super Fund. Those policies were Total Care Plan policy no 1104388, being the policy in dispute in this proceeding (Policy) and an Income Care Plus policy no 01104387 (Income Protection Policy). The Policy, subject to its terms and conditions, provided for the payment of a life benefit of $1 million in the event of the death of Mr Elwaly (Life Care Benefit) and a life care advance benefit up to a maximum of $20,000 (Life Care Advance Benefit). 11 Mr Elwaly died in a fire on 16 January 2010 in Western Australia at his business premises. Three days later, Ms Graham notified Comminsure of his death and on 16 March 2010, Comminsure paid the Life Care Advance Benefit to her pending Comminsure's determination of the claim for the Life Care Benefit. On 18 March 2010, Dr J McCreath, forensic pathologist, reported to the State Coroner of Western Australia that the cause of Mr Elwaly's death was 'smoke inhalation and burns'. 12 On 2 February 2011 Ms EF Vicker, Deputy State Coroner, found that the death of Mr Elwaly was caused by smoke inhalation and burns and arose by way of misadventure. It is common ground that Mr Elwaly died by misadventure during the cause of what appears, on the balance of probabilities, to be an attempt by him to deliberately set fire to computer and business records at the business premises in order to destroy them. The fire caused substantial damage to the business premises. 13 The cover was provided against the following events within Comminsure. On 3 January 2007, two underwriters' file notes were recorded by employees of Comminsure, Mr Craig Lord and Ms Elizabeth Waugh-Lill. Mr Lord's notes identified Mr Elwaly's then recent gastric bypass surgery and, in addition to requesting that standard Lifescreen tests be undertaken, also requested a general practitioner examination be undertaken on Mr Elwaly. Those notes also (relevantly) identified the following matters relating to the Application: Medical Limit Requirements apply. … 00886761 – IP$2,652 IND, WP1/12, BP 65, ICB, 75% loading due to BMI. To be replaced. … Note client was going to apply to AIG, however, they had declined him due to stomach stapling operation performed. Adviser has noted she contacted our office and the person she spoke with (No name provided) confirmed we may be able to provide cover in this case. … Family History: x 1 diabetes @ 59, OK … Note adviser notes regarding stapling, and client has lost 40kgs over past 12 months? No further information provided. For level of cover, there are medical requirements anyway, will request PMAR as well as own GP exam. … Own GP Exam Dr W Quarles … 1. Please also comment on full medical history including BMI, treatment and operation details, and prognosis. MBA including HIV, Hep B & C serology Cotinine Test 14 On 12 February 2007, Mr Elwaly's Lifescreen test results were provided to Comminsure and on 19 February 2007, Ms Waugh-Lill updated the underwriter's file note to include the following notation regarding Mr Elwaly's Lifescreen test results: 'MBA bilirubin 23/20, HIV, Hep B & C negative, cotinine not tested'. 15 On 3 April 2007, Mr Elwaly's general practitioner, Dr Warner Quarles completed a form provided to him by Comminsure entitled 'Confidential – Medical Examination'. 16 On 10 May 2007, a further underwriter's note was completed by Ms Waugh-Lill noting that the 'advisor wants the offer issued and I have agreed to waive cotinine as it is no longer a std requirement'. 17 On 15 May 2007, Comminsure sent a letter to Professional Investment Services Pty Ltd enclosing health declaration forms and on 24 May 2007, Professional Investment Services Pty Ltd trading as 'On Q Prosperity' returned to Comminsure the health declaration forms signed by Mr Elwaly and dated 12 May 2007 (Declaration of Continued Good Health) (i.e. ostensibly before the form was actually sent by Comminsure). On 13 June 2007, the Policy and the Income Protection Policy were entered into. 18 Comminsure avoided the Policy pursuant to s 29(2) ICA on 21 December 2011 and has not paid Ms Graham any of the remaining Life Care Benefit under the policy beyond the Life Care Advance Benefit. SOME BROAD GUIDING PRINCIPLES 19 In construing the law applicable to the resolution of this dispute, it is to be borne in mind that the provisions listed above (which are contained in Pt 4 ICA) are contained within a statutory code which replaces the common law. The majority of the High Court (Mason CJ, Dawson, Toohey and Gaudron JJ) in Advance (NSW) Insurance Agencies Pty Ltd v Matthews (1989) 166 CLR 606 (at 615) held: 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. Accordingly, the circumstances in which it is legitimate to resort to the antecedent common law for the purpose of interpreting the statute are extremely limited: see Gamer's Motor Centre (Newcastle) Pty. Ltd. v. Natwest Wholesale Australia Pty. Ltd. (1987) 163 CLR 236 at pp. 243-244. Knowledge 20 It is common ground as I take it, but certainly is also the law that where the word 'known' is used in s 21(1) ICA, it is to be distinguished from suspicion or belief: see Permanent Trustee Australia Ltd v FAI General Insurance Co Ltd (1998) 153 ALR 529 (at 582-583) per Hodgson CJ, in equity as adopted in the New South Wales Court of Appeal in Permanent Trustee Australia Co Ltd v FAI General Insurance Co Ltd (2001) 50 NSWLR 679. The Chief Justice 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". However, it must be remembered that a belief may sometimes itself be a matter relevant to the decision of an insurer. An insured may know that it has a particular belief, and know that its having that belief is relevant to the decision of an insurer, in which case that belief itself is a matter which must be disclosed. It is possible that the belief of the insured in Khoury v GIO (NSW) (1984) 165 CLR 622; 54 ALR 639 that his sons were systematically stealing from the business was a matter known to be relevant to the decision of the insurer, in which case that case could be decided under the Insurance Contracts Act in the same way as it was at general law. 21 The High Court (McHugh, Kirby and Callinan JJ) in Permanent Trustee Australia Ltd v FAI General Insurance Company Ltd (in liq) (2003) 214 CLR 514 held (at 531): The word "knows" is a strong word. It means considerably more than "believes" or "suspects" or even "strongly suspects". And the matter, to answer the description that para (a) of the subsection states, must be a matter that is not only "relevant to the decision of the insurer whether to accept the risk, and if so, on what terms", but also one that the insured knows to be such a matter. 22 Gummow and Hayne JJ took a different view in their dissenting judgment in that decision observing (at 546) (footnotes omitted): Attempting to define the boundary between "belief" and "knowledge", except by reference to the facts of a particular case, is fraught with difficulty. The substitution of one set of value laden words for the word "know" (like "informed belief … sufficient … to induce any reasonable man" to adopt a course of action, or holding "a belief on which that person is prepared to act in the world of practical affairs" may do little more than restate the problem which the section presents. 23 A matter that is known to the insured is certainly more than something which the insured should reasonably infer: CIC Insurance Ltd v Midaz Pty Ltd [1998] QCA 21. 24 On the other side of the ledger, however, the courts have rejected the notion of qualifying the word 'known', for example, by the word 'actually': see Commercial Union Co of Australia Ltd v Beard (1999) 47 NSWLR 735 (at [37]). Recklessness 25 Further, it has been said in the context of s 29(2) ICA that non-disclosure or misrepresentation is fraudulent if it is made with an absence of actual and honest belief in its truth: it is a deliberate decision by the assured to mislead or conceal something from the insurer or recklessness amounting to indifference about whether this occurs: Sutton, Insurance Law In Australia, 3rd ed, LBC, Sydney, 1999, para 3.138. 26 Various cases have held that fraud is established by proving that the insured knowingly withheld relevant matters or gave information knowing it was false or was reckless without regard to the truth: Plasteel Windows Australia Pty Ltd v CE Heath Underwriting Agencies Pty Ltd (1989) 5 ANZ Ins Cas 60-926; Burns v MMI-CMI Insurance Ltd (1994) 8 ANZ Ins Cas 61-228; Von Braun v Australian Associated Motor Insurers Ltd (1998) 135 ACTR 1; Tyndall Life Insurance Co Ltd v Chisholm (2000) 11 ANZ Ins Cas 90-104. ANALYSIS OF KEY EVENTS Circumstances preceding Mr Elwaly's death 27 It is necessary to say more about the circumstances leading up to the death of Mr Elwaly. Much of this evidence was uncontroversial and was adduced by his widow, Ms Graham, who was, in my assessment, an entirely credible witness, although she may have seen the state of her husband's health through more optimistic eyes than an objective observer. Although the evidence established that Mr Elwaly had not been as well mentally or physically in the relevant period as the Application suggested, it appears that he did not convey to Ms Graham the problems he was experiencing, particularly symptoms from time to time of unhappiness or depression. If Ms Graham's evidence is to be accepted, and it is, then it means that Mr Elwaly had not been sharing this information with Ms Graham. It is doubtful whether, taken alone, this suggests any relevant deception on the part of Mr Elwaly. He may have been keen to avoid needlessly worrying her. He may have been concerned about disclosing what he may have considered, misguidedly, a form of weakness. I do not propose to speculate on such possibilities. I prefer to rely on the medical evidence discussed in detail below. 28 Ms Graham met Mr Elwaly in 2004. They were married in 2005 after he divorced his former wife. They had two children from the marriage, a son and a daughter. She first met Mr Elwaly, whom she describes as Eddie, in March 2004 while she was working at Sir Charles Gairdner Hospital as a nurse. At that stage he had his own business, R&R Accountancy, and worked from his home in Fremantle. She discovered that he also had two twin girls from the previous marriage. They commenced living together from July or August 2004 and, after being engaged a month or two after that, married on 2 April 2005. 29 In August 2006, they purchased an accounting business through a company known as Balsley Pty Ltd of which they were both directors. To purchase the business they obtained a business loan for approximately $200,000 and also received some funds from Mr Elwaly's parents. The business was running satisfactorily until the end of 2009 with payment of bills being up to date or under control. 30 Mr Elwaly's previous marriage had been organised by Mr Elwaly's family. Mr Elwaly had grown up in Saudi Arabia and emigrated to Australia. He had married a lady from Syria in 1999. On separation, there were difficulties over access and custody to his daughters. There were Family Court proceedings in relation to the children. Mr Elwaly had been receiving psychological counselling in 2005 in relation to the stress experienced as a result of the family law disputes. 31 Ms Graham gave evidence that although Mr Elwaly had been overweight when she first met him in 2004, he was otherwise apparently in good health. In her opinion he was not a big drinker. He was keen to lose weight and was then turning his mind to that issue. By early 2006, the Family Court problems had been resolved and their son was born. According to Ms Graham, they were happy. 32 To deal with his weight concerns, Mr Elwaly had been admitted to hospital in March 2006 to have his stomach stapled. The operation went well and Mr Elwaly was very pleased with the result. They continued to be reasonably happy after this time, although Mr Elwaly experienced some frustrations from language difficulties as English was his second language. 33 In early 2007, Mr Elwaly's father suffered a period of ill health with the main problem being diabetes. He also had some knee problems. Ms Graham's evidence was that in May 2007, while Mr Elwaly's father was in hospital for a knee operation, she received a call from the hospital to say that Mr Elwaly had fainted in the hospital room whilst visiting his father. Subsequently, Mr Elwaly had a CT scan and a follow-up appointment with a neurologist but no diagnosable cause was discovered. As will be seen, the timing of these events is of some significance in the non-disclosure debate. Ms Graham said that she was aware that Mr Elwaly had suffered a number of other fainting episodes which he said had begun upon his arrival in Australia. They were not frequent and as far as she was concerned, the fainting was not a serious issue and did not affect Mr Elwaly's day to day life. 34 Their daughter was born in December 2007. By early 2008, Mr Elwaly was drinking more than usual and he wished to have some assistance with overcoming this perceived problem. They discovered a clinic in New South Wales which he attended for four weeks. On return from the clinic he consumed no alcohol for about 9 months. 35 At some time earlier in 2006 they discussed life insurance. Mr Elwaly had already taken policies with Comminsure. Since then his circumstances had changed. Ms Graham recalled meeting a professional advisor and being asked to sign an application for the insurance policies. Her understanding was that she was required to sign the policies because Mr Elwaly wanted the insurance policies to be owned by the superannuation fund of which she was one trustee. 36 On the morning that Mr Elwaly died Ms Graham noticed nothing unusual about his demeanour. Nor had there been any unusual behaviour in the week preceding his death. She had been shopping in the morning and was informed of Mr Elwaly's death by the police at about lunchtime of the day that he died. At the time of Mr Elwaly's death he was only aged 37. 37 A history of depression on the part of Mr Elwaly was put to Ms Graham in cross-examination. Ms Graham had not been aware that antidepressants had been prescribed for Mr Elwaly in 2002. Ms Graham was aware that there had been a dispute with the vendor of the accountancy business in 2006/2007 and Mr Elwaly had taken legal advice in relation to this. She was also aware that Mr Elwaly was prescribed antidepressant medication in the year before his death, but not the specific drug (Clonazepam). She also knew he was taking Antabuse to assist him to stop drinking alcohol. She was aware he was seeing a consultant psychiatrist in 2009 due to some paranoid tendencies that had developed. Ms Graham was not aware at the time of his death that Mr Elwaly was being investigated in respect of irregularities relating to the business. She was also not aware in August 2006 that Dr Quarles, Mr Elwaly's general practitioner, had prescribed Endep, another antidepressant. She had no recollection of Mr Elwaly explaining to her that he was seeing Dr Quarles for problems with stress and anxiety or depression. She accepted that Mr Elwaly may have chosen not to tell her that. She was also unaware that Mr Elwaly was prescribed Lexapro in December 2006 by Dr Quarles. She was not aware what that medication was intended to treat. She was also unaware that Dr Quarles had prescribed Mr Elwaly Ativan on 7 May 2007. Ms Graham was unaware what Lexapro and Ativan would be treating but there was separate evidence that both drugs were antidepressants. 38 Ms Graham also resisted the suggestion that the referral of Mr Elwaly to a neurologist by the hospital after he had fainted during the May 2007 visit to his father was indicative of a concern about something more serious than merely fainting. Ms Graham's evidence was that, as explained to her, the hospital was simply following a protocol. She was told by her friend who was a nurse at the hospital when she went to pick up Mr Elwaly that there was nothing wrong with him. She could not recall any employee of the hospital telling Mr Elwaly that he was not to drive until he had been seen by a neurologist. Generally, Ms Graham did not accept that this incident was anything more serious than a fainting incident notwithstanding the fact that Mr Elwaly was referred to a neurologist. She was pressed on this and other health issues on the basis that she was playing them down. 39 Ms Graham was also not aware that Mr Elwaly was prescribed Temaze, which is a sleeping tablet. She was not aware nor could she recall him being prescribed Alprax in May 2008 for anxiety, nor that by May 2008 Dr Quarles felt that Mr Elwaly needed a more sophisticated mental health plan. 40 Ms Graham rejected the suggestion that Mr Elwaly was on what might be described as a 'downward spiral' from about 2005 to the date of his death. 41 As indicated above, I accept the evidence of Ms Graham. To the extent that Mr Elwaly's health problems were more serious, these problems arose after entry into the Policy rather than before. Completion of the Application 42 Evidence was given as to the events involved in procuring the insurance cover. Ms Michelle Taylor was employed in 2005 by a company trading as 'On Q Prosperity'. She was consulted by Mr Elwaly in May 2006 to look at his insurance position and to facilitate the increase of his life insurance cover. Mr Elwaly came to see her shortly after purchasing the accounting business. Mr Elwaly told her his interest was in making sure that his wife and children would be covered if anything happened to him. At that stage, Mr Elwaly already had a policy of life insurance and a policy of income protection insurance with Comminsure. Ms Taylor advised him to get some extra life insurance to be owned by his self-managed superannuation fund. Initially, an application was made to another insurer, AIG (AIG Application). This required Mr Elwaly to fill out an application form which included a personal statement relating to this health and medical history. 43 Ms Taylor was unable to recall the specific details pertaining to this process, but described her general practice at the start of an application completion process to explain to an applicant the general duties of disclosure including the need to disclose any medical or health related issues to the insurer. The AIG Application required Mr Elwaly to answer a question about significant weight loss. Mr Elwaly informed Ms Taylor that he had recently lost some weight after having undergone lap banding surgery. She explained that AIG rejected his application for insurance on the basis of the weight loss issue and the lap banding surgery. 44 As Mr Elwaly already had policies with Comminsure, Ms Taylor recalled making a phone call to someone at Comminsure to explain the circumstances about the weight loss, lap band surgery and AIG declining to insure Mr Elwaly. The person from Comminsure indicated that they would nevertheless be able to increase the life insurance cover for Mr Elwaly notwithstanding his weight loss and lap band surgery pending his completion of a further application. The person also advised that they may increase the premium load in the short term until the weight loss had been stabilised. Ms Taylor met with Mr Elwaly in October 2006 to assist completing the Application for increased life insurance with Comminsure. To the best of her recollection, she assisted him in completing his responses to the questions in the Application and Personal Statement after her usual practice of explaining the duty to disclose all medical conditions. Ms Taylor recalled filling in the answers which Mr Elwaly gave her to the questions raised in the document. When the Application was completed, Mr Elwaly and his wife, Ms Graham, signed it. The Application was forwarded to Comminsure. 45 In about January 2007, Comminsure requested that Mr Elwaly obtain a Physician's Medical Attendance Report (PMAR) with his own general practitioner, Dr Quarles. They also requested that he have a series of medical tests completed. Ms Taylor was informed by a person from Comminsure that the results of the tests and the PMAR would be necessary before 'underwriting' would make a decision. 46 Ultimately, cover was approved but Comminsure imposed a condition of increasing the annual premium by 75% for the Policy. Ms Taylor's understanding was that the premiums were due to medical evidence that Comminsure had received about Mr Elwaly. Ms Taylor forwarded the provisional offer of insurance to Mr Elwaly and he posted them back to her. At this time she did not specifically discuss with Mr Elwaly the need for him to disclose any additional medical matters to the insurer. Once she had received the completed acceptance of the offers by Mr Elwaly, she forwarded them on to Comminsure on 24 May 2007. On 13 June 2007, she received confirmation that the Policy had been issued, together with a copy of the Policy. 47 Ms Taylor confirmed in cross-examination, when taken to the entirety of the Application, that she had asked the questions very literally and she faithfully and literally recorded his answers in the Application. She confirmed that at no stage had he told her prior to the insurance being effected that he had been prescribed antidepressant medication in August 2006 or that he had been treated for depression. Medical evidence as to Mr Elwaly's health 48 Dr Stephen Chang is a general practitioner whom Mr Elwaly consulted on a number of occasions between 16 August 2002 and 1 May 2004. On the first visit, Dr Chang's main concern was with Mr Elwaly's weight and how it was affecting his general health. He recommended Mr Elwaly undergo a number of blood tests. They were pursued but on 19 August 2002, when they were reviewed they were found to be unremarkable. Dr Chang went through the tests with Mr Elwaly on that date. 49 On that occasion, Mr Elwaly expressed his desire to reduce his alcohol intake. It was not affecting his health (in the sense that all of his blood tests were normal) but he was anxious to lose weight and believed cutting back alcohol could help. 50 In the course of discussions on that day, Mr Elwaly also explained that he felt he was suffering from a degree of anxiety and depression. That was connected, according to Mr Elwaly, with his struggle to find employment in Australia since his return from Syria despite his high level of qualification. Dr Chang prescribed a low dosage of Prozac/Lovan. Significantly, he did not consider Mr Elwaly's depression to be serious or indicative of any diagnosable mental illness. 51 On 17 September 2002, Mr Elwaly reported improvement in his mood and was keen to come off the medication. Dr Chang advised him that he should come off the medication gradually to avoid negative effects of withdrawal. 52 Dr Chang considered that Mr Elwaly suffered from 'reactive depression' as opposed to 'major depression'. Reactive depression (also called 'situational depression') is a mild to moderate depression following a stressful event. Usually the symptoms of a reactive depression will not last longer than a few months after exposure to the stressor, as a person develops coping strategies. Major depression, on the other hand, according to Dr Chang, is an emotional, physical and cognitive (thinking) state that is intense and long lasting and has more negative effects on a person's day to day life. Dr Chang explained that when a patient is diagnosed as suffering from major depression, he would insist that they persevere with a course of medication for at least six months to determine its effect. That was not the case with Mr Elwaly and Dr Chang was comfortable for him to cease taking the medication gradually. 53 When Dr Chang saw Mr Elwaly again on 4 November 2002, Mr Elwaly expressed continuing concern about his weight. He was keen to trial Duromine to reduce his appetite and subsequently took Duromine for three months from November 2002 to January 2003. 54 On 3 October 2003, after nine months, Mr Elwaly reported that he was off all medications and no longer drinking alcohol. Blood tests were repeated at his request and, once again, the results were unremarkable in any negative sense. Dr Chang last saw Mr Elwaly on 1 May 2004 when he complained of frequent urination. He was concerned about a kidney infection and a test which was conducted which excluded that possibility. At that final consultation, Mr Elwaly was in good spirits and presented in good health. According to Dr Chang, Mr Elwaly was in 'a pretty good frame of mind'. Dr Chang thought he wanted to say 'goodbye' because he was leaving the area. 55 Dr Chang summarised his views as to Mr Elwaly's suffering as 'a very mild or mild depression, more of a reactive type of depression … being a reaction to the circumstances that he was in'. Dr Chang accepted in cross-examination that Mr Elwaly had volunteered the information as to his concern about his alcohol intake, but he stressed that was in connection with Mr Elwaly's weight gain concern. Dr Chang also did not consider that alcohol was a problem in and of itself for Mr Elwaly, and that it was not affecting his cognitive function. Mr Elwaly was still able to work and still able to function. It was just contributing to his weight gain. 56 Dr Chang was cross-examined about his understanding of reactive depression. It was put to him that reactive depression was just a sub-type of major depression within the meaning of DSM4 (the Diagnostic and Statistical Manual of Mental Disorders), but Dr Chang would not agree that Mr Elwaly was suffering from major depression. Dr Chang thought that it was normal for Mr Elwaly to be a little upset when things were not going his way and he was not getting a good job. 57 Dr Chang accepted that when he prescribed Prozac, he had to prescribe (as a matter of standard practice) a minimum of six months. 58 Dr Quarles was also a general practitioner who saw Mr Elwaly between 2004 and 2009 after Dr Chang. The first visit in December 2004 dealt with Mr Elwaly's struggle with his weight. He explained that he had tried a variety of diets and exercise but had little success in keeping to a healthy weight. Various tests were conducted, which showed that Mr Elwaly had a stomach infection for which he was prescribed antibiotics. The rest of the test results were all in the normal range. In the first half of 2005, there were various consultations related to normal matters including issues of weight. Dr Quarles conducted several further blood tests. Other than the presence of a slightly fatty liver, the blood tests were unremarkable. 59 Dr Quarles recommended various weight loss techniques, including the use of Xenical. Duromine capsules were prescribed in April 2005 as an appetite suppressant. In June 2005, after trying the various other measures, Dr Quarles considered Mr Elwaly to be a suitable candidate to be referred to a Dr Leon Cohen for gastric banding surgery. 60 In the second half of 2005, after seeing Dr Cohen, Mr Elwaly made further attempts to lose weight without the need for surgical intervention. Ultimately, he had a successful gastric banding operation in March 2006 which resulted in a very good recovery. 61 On 7 August 2006, Mr Elwaly consulted Dr Quarles in relation to stress he was feeling in his relationship and at work, and difficulty with tiredness and sleeping. Dr Quarles recommended that he try Endep to assist with night time sedation, anxiety and in higher doses, elevating his mood. According to Dr Quarles, Mr Elwaly was 'almost certainly not given the antidepressant dose'. Dr Quarles thought that his level of stress was no more severe than that commonly experienced by an average small business owner with a dozen or so staff. 62 On 30 November 2006, Dr Quarles conducted a Kessler 10 test with Mr Elwaly (K10 test). He explained that this is a standard anxiety and depression checklist used by the Australian medical profession. Mr Elwaly scored 24 out of 50, which is considered to be within the 'moderate distress' band. The results were not alarming, but were indicative of some level of distress. 63 On 8 December 2006, Dr Quarles prescribed Mr Elwaly with Lexapro, which is used to treat anxiety as well as depression. 64 In April 2007, Dr Quarles explained that he was contacted by Comminsure to perform a medical assessment on Mr Elwaly for the purposes of a life insurance policy for which he was applying. Dr Quarles was not provided with a copy of Mr Elwaly's Application, but conducted the medical examination on 3 April 2007 in accordance with a series of questions provided to him by Comminsure in the form of a report. 65 In the report to Comminsure, Dr Quarles confirmed that there was no indication of past or present abuse of alcohol or misuse of drugs. That remained his view. 66 Dr Quarles had no reason to believe that Mr Elwaly was suffering from any type of mental disorder or serious depression. Dr Quarles confirmed that Mr Elwaly was not suffering from either. 67 Dr Quarles believed that Mr Elwaly's reaction to his father falling ill and being admitted to hospital was normal in the circumstances. However, he did provide Mr Elwaly with a prescription for Ativan on 7 May 2007 and 18 May 2007 to help him cope with the stress of his father's illness. 68 Mr Elwaly's fainting in hospital in mid-May 2007 was reported to Dr Quarles. He was aware that Mr Elwaly was taken to the emergency department of the hospital where a CT scan, exercise test and EEG were all reported as being unremarkable. Mr Elwaly was referred to a neurologist and a diagnosis of possible syncopal seizure was made. Mr Elwaly was discharged without treatment or need for follow up. 69 After the insurance cover was placed, Dr Quarles had no further consultations with Mr Elwaly until he made further prescriptions of Ativan and Temaze on 28 September 2007. Dr Quarles confirmed that in more serious cases of depression his usual practice is to refer a patient for further medical assessment and review. This is in fact what he did later on with Mr Elwaly (after the insurance policy was entered into). 70 In May 2008, Dr Quarles prescribed Mr Elwaly with Alprax, a drug used to treat anxiety disorders. He also felt that a mental health plan was desirable at that point and that more advanced medical assistance should be obtained to deal with Mr Elwaly's stress and anxiety. At that time Dr Quarles was aware that Mr Elwaly was seeing a marriage counsellor, Mr Zish Ziembinski. 71 By 9 July 2008, Mr Elwaly disclosed to Dr Quarles that he had been drinking more and gambling irresponsibly, causing considerable strain on his marriage. He informed Dr Quarles that he had decided to voluntarily admit himself into South Pacific Private, a clinic in Sydney which assists patients with rehabilitation. Dr Quarles congratulated Mr Elwaly on seeking assistance of his own accord. 72 On 15 August 2008, on his return from rehabilitation, Mr Elwaly informed Dr Quarles that his stay at South Pacific Private in Sydney was for four weeks. He presented as being much calmer and more relaxed than on his last consultation and Dr Quarles noted that there was 'no special management needed'. 73 About six months later, when Dr Quarles saw him, Mr Elwaly was struggling again with alcohol use and gambling, which was a theme throughout 2009. He was also suffering feelings of stress and anxiety and had difficulty sleeping. 74 Dr Quarles accepted in cross-examination that he would not lightly prescribe antidepressants in any dosage and that he would discuss possible side effects carefully with patients. 75 Dr Quarles was of the view that 24 from the K10 test was on the borderline between mild and moderate distress. He was shown a New South Wales Department of Health publication which suggested that a score of 24, on what may be the same test and may be of the same scoring mechanism, was, in the view of the authors of that document, indicative of high psychological distress. (I place little weight on this given the absence of evidence as to the document's provenance, evidence as to its usage and any alternative testable evidence from a medical expert.) 76 Dr Quarles was cross-examined at length about the report he received from the hospital concerning Mr Elwaly fainting. He did not accept that there was sufficient information in the report to indicate Mr Elwaly had a seizure. He considered (without being at all critical) that the hospital had been very cautious. He was not aware that Mr Elwaly had seizures at any time. Dr Quarles was clear in his view that Mr Elwaly had simply fainted in hospital. This accords with the description of a syncopal seizure. He indicated that twitching can come with fainting so that it looks like a 'mini fit'. In his opinion there was no other support at all for a seizure considering all of the tests, including a CT scan, an EEG and exercise tests, were normal. No anticonvulsants were prescribed. Independent underwriting evidence 77 Ms Graham called evidence from Mr O'Leary, an underwriting expert. I will come to his evidence in a moment. His evidence was initially objected to on the basis that the determination of facts did not require the evidence of a 'reasonable, prudent underwriter'. As to this, s 21 and s 28 dealing with general insurance and s 29 ICA applying to life insurance specifically adopt the language of the particular insurer, rather than any other insurer. It followed that the only evidence relevant was the evidence of the particular insurer, namely, that which would be led by Comminsure (see McCabe v Royal & Sun Alliance Life Insurance Australia Ltd [2003] WASCA 162 (at [21]), which confirmed what Handley JA had said in Permanent Trustee Australia Co Ltd v FAI General Insurance Co Ltd (at 686)). (Mr O'Leary was not being called to assert that the evidence being adduced for Comminsure was 'ridiculous', which might go to the credit of the insurer's evidence, but simply that he would have approached the position differently.) For Ms Graham, however, it was pointed out that evidence adduced for Comminsure and which was challenged by Ms Graham's expert, Mr O'Leary, related to the guidelines imposed by Comminsure's reinsurers, thus setting up an independent standard by which Comminsure's underwriters were required to comply. Ultimately the objection fell away on the basis that Comminsure accepted his evidence could potentially be relevant to the s 31 ICA discretion even though the availability of any argument under s 31 ICA was strenuously resisted by Comminsure. 78 In the end, the outcome of the case did not turn on s 31 ICA. The extensive evidence of Mr O'Leary, while entirely acceptable, has not been the point on which the case has turned. 79 Further, as the case has not been determined under s 31 ICA, I propose to disregard Mr O'Leary's evidence as I accept that the question in this proceeding concerns what Comminsure would have done if there had been full disclosure. 80 Nonetheless, for completeness only, and without taking it into account in the reasoning, I will summarise the evidence. Although he was cross-examined more at a technical level I saw no reason to doubt his credit even though his evidence played no role in the reasoning of my decision. 81 Mr O'Leary's independence and expertise were not challenged. The three questions he was asked initially were: (a) having regard to Mr Elwaly's circumstances was his life insurable?; (b) if so, would there be any particular loading or difference in policy to the one he actually obtained?; and (c) did he have any other comments from his sphere of expertise? 82 As to the first question, Mr O'Leary summarised the pertinent underwriting facts as to Mr Elwaly's medical history as follows: • 1991-1998: A variety of seizures. Fully investigated with negative results. Eventually decided that these were more likely vasovagal than epileptic. There was a further 'fit on 18/5/07, attended emergency department, EEG normal, probable syncopal seizure, no need for anticonvulsants. • Since 2002: Excess alcohol and anxiety/depression. Advised to reduce alcohol and prescribed antidepressant medication. Medication continued through 2002 and again from 2006. The pertinent medical reports are as follows: • Dr Stephen Chang's report dated 4/4/11 addressed to Mony de Kerloy Barristers and Solicitors which refers to a visit on 19/8/02 when Mr. Elwaly admitted to excessive alcohol and a degree of depression relating to the difficulty to obtain suitable employment. He was advised to reduce alcohol and prescribed antidepressants. When seen one month later he had improved. • Dr. W. Quarles' report dated 1/7/12 addressed to Mony de Kerloy Barristers and Solicitors which refers to mild to moderate depression in 2006 treated with low dose medication. Excess alcohol. The only amounts of alcohol mentioned are 3 standard drinks per day. • Mr. Elwaly disclosed, at the application for insurance, 4 standard drinks weekly. Liver function tests including the Gamma GT at the time of the insurance examination were normal as was the Triglyceride reading. Some of the historic Liver function tests have been abnormal at times but do not present the typical picture that one might expect when the cause was excess alcohol. The GGT, Triglycerides and MCV have always been normal. These results do not necessary suggest excessive alcohol consumption at or around the time of the blood tests. • Problems with obesity culminating in lap band surgery in 2006. Weight has reduced significantly since then. Height and weight measured at the examination for insurance was 175cm 82 kg. • 2006: Gastro Oesophageal Reflux Disease requiring mediation with Proton Pump inhibitors. A similar history in 2004. 83 Mr O'Leary expressed the view that a reasonable underwriting decision, had all this information been disclosed, would have been to accept Mr Elwaly's application for life and disability insurance and that he would have been insurable. 84 On the second question, Mr O'Leary expressed the following views: In my expert opinion a reasonable underwriting decision, had all this information been disclosed, would be as follows: • In my expert underwriting opinion the seizures can be interpreted as likely to be vasovagal rather than epileptic. EEGs and scans have been normal which suggest no serious underlying cause. I believe that this history could be accepted for Life cover at the normal rate of premium, with a small rating of 50% extra morbidity being required for each of the disability benefits. I believe my opinion to be consistent with the rating guides being used by the insurer at the time of the commencement of the policy. • The excess alcohol and anxiety/depression requiring treatment are of concern, particularly for the disability cover. My expert opinion is that for the disability cover a reasonable decision would be to apply a mental health exclusion worded widely enough to encompass any complications of excess alcohol. The Life cover should be rated at 75% extra mortality. • The lap band surgery is, in my opinion, not an underwriting concern in view of the fact that Mr Elwaly's weight has stabilised. • The Gastro Oesophageal Reflux Disease appears to be well controlled with the use of Proton Pump Inhibitors and, in my opinion, does not merit any extra premium for the cover that was proposed. In conclusion, had the full medical history been known, in my expert underwriting opinion that Mr Elwaly was acceptable for insurance with a rating of 75% extra mortality for the Life cover. In respect of the Disability cover, it is my opinion that a rating of 50% extra morbidity should be applied together with a mental health exclusion worded widely enough to encompass any complications of excess alcohol. It is my opinion that these decisions are consistent with the underwriting philosophy being used by the insurer at the time. It is also consistent with the 'Retail Advice Retro Underwriting Opinions provided by the Comminsure underwriters on 12 July 2010, 11 February 2011, 25 May 2011 (possibly a duplicate copy of 11/2/11 version) and the shorter opinion dated 25 May 2011 which appears to be a final opinion as it does not state any further evidence was awaited. 85 By way of other general comments, Mr O'Leary noted that the Comminsure underwriting sheet indicated that the final decision was to obtain an Own GP Exam with a specific question: 1. Please also comment on full medical history including BMI, treatment and operation details, and prognosis. 86 Mr O'Leary noted that although the Own GP Exam was obtained, there was no indication that the above question was asked. In Mr O'Leary's opinion, had it been asked and answered, there would have been a greater likelihood of some of the past medical history being mentioned at the time of the original underwriting in 2007. This was clearly a matter of submission and I do not treat it as expert evidence. 87 He also noted that Comminsure had provided two underwriting guides which were being used in 2007, one from RGA Re and the other from Swiss Re. Mr O'Leary said it was important to understand exactly which of these manuals would have been used by Comminsure to assess Mr Elwaly's application had all the medical information been known. Mr O'Leary commented that if there would have been referral to both guides, then it is important to know whether Comminsure's normal practice was to use the decision from the guide that was more favourable to the insurance applicant. He also noted that in a number of separate retrospective underwriting opinions relevant to the case which were obtained from internal discovery, none of the opinions suggested that Mr Elwaly was, in the opinion of the Comminsure underwriters, uninsurable and, in fact, the conclusions in the first and final reports indicated that Comminsure would have entered a contract for all benefits with a mental health exclusion on the Disability Income Protection in the Total Disability Benefit. 88 Three supplementary expert witness reports of Mr O'Leary were prepared. Although there was further commentary in the supplementary reports, they were also (like his first report) essentially more in the nature of submission rather than expert opinion. He noted, for example, that Ms Waugh-Lill had expressed a view about whether or not Mr Elwaly would have been insured had his full medical history been known. Mr O'Leary observed that the opinion provided by Ms Waugh-Lill was inconsistent with the opinions provided in the internal retrospective underwriting opinions from Comminsure despite the fact that the medical history and the reference guides were the same. He accepted that the written underwriting guide suggested that co-morbid mental health and alcohol issues could, but did not necessarily always, result in declinature particularly for disability benefits, depending on the diagnosis of the mental health issue. He went on to say though that based on his experience of having performed practical underwriting and having written reinsurance medical underwriting guides, the practical areas of the assessment of a history of mental health issues and alcohol abuse were very subjective, often turning on individual factors in particular cases. Mr O'Leary added that, by their nature, written guidelines, must err on the side of caution leaving the underwriter to depart from the guidelines in cases where the specific facts may merit such a departure. 89 Mr O'Leary accepted in cross-examination that the mental health of the life insured could have an impact on the underwriting decision. He accepted that the decision taken by the insurer would depend upon its particular philosophy. He expressed the view that the fact of prescription of medication would not necessarily make an underwriting decision more conservative than for an individual who was suffering with the same level of depression but not receiving medication. He was unmoved on the position concerning the fainting. He considered a prudent underwriter could reasonably have concluded that Mr Elwaly got spells from time to time, they had been fully investigated and there was no underlying cause which would impact in any major way on Mr Elwaly's risk of dying. 90 Mr O'Leary was cross-examined on notes taken by Mr Ziembinski who was counselling Mr Elwaly and Ms Graham concerning their marriage. He noted that Mr Elwaly's attendance was driven by the circumstances relating to limited access to his children from his first marriage and marital difficulties, rather than for depression or use of alcohol. Mr Ziembinski's notes recorded Mr Elwaly as being highly anxious, unsettled and angry regarding the circumstances relating to his limited access to his two daughters in 2005. By 2006, there were some issues concerning the second marriage. Mr O'Leary observed that at no stage was there any objective diagnosis of alcohol problems or details of the amounts of alcohol consumed by Mr Elwaly. His view was that there was nothing in the notes to lead him to alter his opinion that Mr Elwaly would have been able to obtain cover from a prudent underwriter in 2007. He pointed out that there was no reference in Mr Ziembinski's notes to depression, or that Mr Elwaly's anxiety was worsening. Mr O'Leary noted that the only mention of gambling in the notes was after the commencement of the Policy, and in any event, spending time at the casino may have been indicative of a problem in the marriage but not necessarily in the health assessment of an individual. I pause to observe that while I have disregarded the evidence of Mr O'Leary, Mr Ziembinski's notes are in evidence independently and I have made brief reference to their content (below at [125]), as has Ms Waugh-Lill (see [95]). The actual underwriter 91 The actual underwriter, Comminsure, called its employee Ms Waugh-Lill to give evidence to deal with Ms Graham's argument under s 29(1)(c) ICA. She spoke to the application received by Comminsure on about 2 January 2007 from Mr Elwaly and Ms Graham as trustees for the EG Self-Managed Super Fund to replace Mr Elwaly's existing life policy and income protection policy issued by Comminsure. The initial assessment of the risk was referred to Mr Craig Lord, an underwriter in Comminsure's underwriting department in Sydney. She was then Mr Lord's manager. Mr Lord recommended further inquiries regarding the risk proposed and as a result, Comminsure received Mr Elwaly's test results conducted by Lifescreen on 12 February 2007 and the confidential-medical examination form from Dr Quarles dated 3 April 2007. Ms Waugh-Lill produced contemporaneous underwriting file notes from 19 February 2007 to 10 May 2007, and confirmed that on 10 May 2007 she determined that Comminsure would offer the cover proposed in the 2007 Application for insurance subject to a 75% increase in premiums in respect of the total and permanent disablement cover and a 100% increase in premiums in respect of the income protection cover applied for, subject to Mr Elwaly signing the Declaration of Continued Good Health in light of the period of time that had passed since he signed the 2007 Application for insurance, being about five months. She explained that the purpose of the Declaration of Continued Good Health was for Mr Elwaly to advise if there had been any change in his health since the 2007 Application for insurance was signed by him. The loadings to the premiums were necessary due to Mr Elwaly having had a gastric banding procedure and having experienced a rapid and significant weight loss. She had been informed of another insurer's declinature to cover him. She received a facsimile from Professional Investments Services on 24 May 2007 which included the Declaration of Continued Good Health signed by Mr Elwaly ostensibly on 12 May 2007. As a result of the receipt of the documents, Comminsure entered into the Policy and the Income Protection Policy. 92 Mr Waugh-Lill noted that Mr Elwaly had answered in the negative to all of the following questions in the Application: Have you ever used or injected yourself with any drug not prescribed by a doctor or received counselling or treatment for the use of alcohol or drugs? Have you ever had or sought advice or treatment, experienced symptoms or suffered from any of the following: … Depression or mental disorder (Including but not limited to stress, anxiety, panic attacks, behavioural or nervous disorders) Have you ever had or sought advice or treatment, experienced symptoms or suffered from any of the following: … Gastric or duodenal ulcer, persistent indigestion, irritable bowel or other bowel disorder Have you ever had or sought advice or treatment, experienced symptoms or suffered from any of the following: Epilepsy, fits of any kind, fainting episodes or recurring headaches or migraines Have you ever had or sought advice or treatment, experienced symptoms or suffered from any of the following: Any other illness, injury, disease or disorder not mentioned above Other than those conditions mentioned above, are you taking any regular prescribed medication (excluding contraceptives)? Are you considering seeking medical advice, treatment, tests or surgery in the future? (emphasis added) 93 For the purpose of her evidence, Ms Waugh-Lill was asked to assume that Mr Elwaly had the medical history pleaded in the defence and that she knew of the following relevant matters: (i) Mr Elwaly had suffered from depression in 2002 and had consulted Dr Chang on a number of occasions in relation to his depression including 19 August 2002 and 17 September 2002. (ii) Mr Elwaly had been prescribed by Dr Chang and had obtained antidepressant medication on 19 August 2002, 17 September 2002, 21 October 2002, 31 October 2002, 5 December 2002 and 12 December 2002. (iii) Mr Elwaly had continued to suffer from depression and anxiety in 2006 and 2007 and had consulted Dr Quarles on a number of occasions in relation to his depression and anxiety including 7 August 2006, 8 December 2006, 7 May 2007 and 18 May 2007. (iv) Mr Elwaly had been prescribed by Dr Quarles and obtained antidepressant medication on 7 August 2008, 8 December 2006 and 23 December 2006. (v) Mr Elwaly had suffered from unexplained seizures, fits and/or fainting spells in 1994 and 1997 and was admitted to the Emergency Department of Royal Perth Hospital on a number of occasions including 18 May 1994, 30 May 1994, 27 February 1994, 17 March 1994, 16 June 1994, 9 December 1997 and 19 December 1997. (vi) Mr Elwaly had suffered a fit and was admitted to the Emergency Department of Sir Charles Gardner Hospital on 18 May 2007. (vii) Mr Elwaly had received counselling from Dr Chang in relation to excessive alcohol intake on 19 August 2002 and 3 October 2002. (viii) Mr Elwaly had suffered from gastric reflux condition and obtained medication on 20 December 2004 and 16 May 2006. (emphasis added) 94 Ms Waugh-Lill said that had she been aware of Mr Elwaly's medical history as pleaded in the defence, she would not have accepted the risk proposed and would have declined to offer the two policies or any other cover on the life of Mr Elwaly on any terms as at 13 June 2007. This would have been based, she said, on the fact that he suffered from fits, seizures, fainting spells or blackouts and was admitted to hospital on numerous occasions in 1994 and 1997. He also suffered from another fit and was admitted to hospital on 18 May 2007, and the cause had not been ascertained. She also relied upon his driving privileges being revoked in 1994 because of the fits or blackouts. Based on this history alone she would have declined any cover on any terms. 95 Ms Waugh-Lill indicated there were also other matters which would have caused her not to issue cover. Specifically, the fact that Mr Elwaly had suffered from depression and anxiety in respect of which he had a number of consultations with his general practitioner and was prescribed antidepressant medication by Dr Chang and Dr Quarles in 2002, 2006 and 2007, that Mr Elwaly had received counselling from his general practitioner in relation to excessive alcohol intake in 2002 and that he had suffered from a gastric reflux condition in respect of which he was prescribed medication in 2004 and 2006. Ms Waugh-Lill would have been guided by the contents of the RGA Global Underwriting Manual and the Swiss Re Underwriting Guidelines. She made it clear in a subsequent affidavit that as the seizures were unexplained, she would have declined to issue cover on any terms and for her part, the notes produced by Mr Ziembinski confirmed that conclusion. 96 In cross-examination, Ms Waugh-Lill agreed that the information that had been disclosed by Mr Elwaly raised a sufficient concern with her to prompt her to ask for a full medical history. However, although they asked for one, they never received it. In other words, it was clear that the policies were provided without seeking and obtaining a full medical history. It is significant that Dr Quarles made it clear in providing his response that he could only provide a two or three year medical history as he had only known Mr Elwaly for two or three years. 97 Ms Waugh-Lill confirmed that it was an underwriting requirement that the Declaration of Continued Good Health be signed after a case has been active for three months to check that nothing has changed in that time. This is an underwriting requirement before the provisional offer could be made. Ms Waugh-Lill appeared to agree, and I so find, that one of the reasons a full medical history was not sought or obtained was because the topic that Comminsure was really interested in was Mr Elwaly's post-surgical progress after the stomach stapling operation. That aspect was noted on at least two occasions in Ms Waugh-Lill's notes. On the second occasion, the note was: We really need to know when this surgery took place and full details of clients post surgical progress – it is by no means certain that we will offer cover – especially IP – I would be very clear in your requirements that cover may not be offered (IP referred to income protection). 98 The next note, on 10 May 2007, from Ms Waugh-Lill was 'as advised by WA sales office – adviser wants the offer issued and I have agreed to waive cotinine as it is no longer a std requirement'. 99 On 15 May 2007, in the letter to Professional Investment Services Pty Ltd, confirmation was given that there were no underwriting requirements outstanding. 100 No Declaration of Continued Good Health was actually signed or received before 15 May 2007 when the notification of no further underwriting requirements was given. The document which came in bearing the date 12 May 2007 was not actually signed or received on 12 May 2007. That document signed 12 May 2007 was faxed to Ms Waugh-Lill on 24 May 2007. 101 Ms Waugh-Lill accepted that the only sensible explanation was, in fact, that they had waived any further underwriting requirements before receipt of Mr Elwaly's Declaration of Continued Good Health. 102 It was put to Ms Waugh-Lill that there was ample opportunity to seek a full medical history but she did not do that because she did not ask the right questions of the insurance agent. 103 The cross-examination of Ms Waugh-Lill highlighted another difficulty with the Declaration of Continued Good Health. Two forms were sent back to Comminsure bearing a facsimile imprint mark of 24 May 2007, one of them at 11.45 am and one of them at 11.46 am, presumably progressively in the same transmission. Both of the forms were incorrectly completed, being signed in both places by Mr Elwaly, both for the signature of the life insured and the signature of the applicants, without Ms Graham's signature. One form was also incorrectly dated, saying 'dated at this 12 day of May 2007'. The other Mr Elwaly had not inserted the correct location at which he signed it but, rather, inserted the word 'MONDAY'. Ms Waugh-Lill accepted that administration should have referred the form back to the advisor to have it properly executed. Both forms were obviously signed incorrectly and as I understood the evidence of Ms Waugh-Lill, should have been sent back for correct execution as the errors were obvious on the face of the forms. Ms Waugh-Lill's response to other views within Comminsure 104 Ms Waugh-Lill was also aware that other underwriters in Comminsure had looked at the matter but she had not seen those opinions at the time of the hearing. Ms Waugh-Lill was taken in the course of her cross-examination to such business records and, in particular, to a memorandum prepared on 9 May 2011 by Ms Maureen Groves, Case Manager, Retail Claims (Memo No 1), which recorded that the policy had been in force for two years and seven months when Mr Elwaly died. It recorded that at the: underwriting stage, medical and blood tests were obtained and underwriting was accepted at borderline ordinary NSD rates with a 75% loading for TDP and a 100% loading for the IP policy'. 105 It continued: U/W was aware at the time of application that the deceased was undergoing a Gastrectomy (lap banding surgery) due to his weight. 106 It noted that: on the application for insurance [Mr Elwaly] answered NO to question 3(e) regarding Depression or Mental disorder. He also informed us that he drank 4 standard drinks daily and that he was non-smoker'. 107 Memo No 1 continued (recording events taking place well after the completion of the Application and the Declaration of Continued Good Health): The circumstances were [Mr Elwaly] sourced a large petrol container and other cleaning products to clean graffiti from his business premises on the 14/1/2010. It was reported on 16/01/2010 [Mr Elwaly] went to Burswood Casino and had consumed alcohol and had slurred speech. While he was outside smoking, he was unsteady on his feet and was not allowed back in to the casino by the security officer. The deceased then left the Casino and went back into his business premises (he ran an accounting business which employed 12 people), whereby the building was ignited. The fire service was called, and they put out the fire and found [Mr Elwaly] in the building. Investigators found a lighter and petrol drum at the scene. The coroner concluded it was likely the petrol [Mr Elwaly] poured around the premises ignited the fire whereby [Mr Elwaly] collapsed due to smoke inhalation. The coroner found death by misadventure. 108 Memo No 1 then went on to record that during the assessment of the claim, medical records from treating doctors and Medicare records were obtained. It noted that the medical notes from Dr Chang on 19 August 2002 noted Mr Elwaly admitted to excessive alcohol intake and a degree of depression, that Mr Elwaly commenced Prozac/Lovan due to being unable to find a suitable job even though he emigrated to Australia as a qualified accountant. It was also noted that Mr Elwaly then saw Dr Chang on 3 October 2003 and was off all medications and alcohol. Memo No 1 recorded that the medical notes from Dr Quarles stated that Mr Elwaly was on Lexapro for stress on 8 December 2006 and was drinking less alcohol. The memorandum continued: Based on our findings thus far, whilst there were episodes of stress/anxiety and excessive alcohol intake there are no suicide ideations or attempts at suicide. Even if this was suicide it is outside the 13 months exclusion period, so we cannot decline the claim on this. We were aware of alcohol intake being four standard drinks per day and the stress and anxiety has been determined due to [Mr Elwaly] not being able to find a job for which he was suited to. Based on the above and the cause of death, I recommend we admit the claim. (emphasis added) 109 Although there was strenuous objection to Ms Waugh-Lill being cross-examined on this material, plainly it is relevant if other underwriters within Comminsure were of the view that the claim would and should have been met. As noted, Memo No 1 is signed by Ms Groves, Case Manager. Two other names and positions appear at the foot of the memorandum, but given the first person singular is used in the recommendation at the foot of the memorandum and the singular agent's number appears at the head of the memorandum, I would infer that the document was prepared by Ms Groves. 110 The fact that the views were expressed succinctly does not mean they are any less valid. Indeed, the fact that they were prepared as part and parcel of everyday business rather than in connection with a forensic exercise, in my view, gives them greater force. Comminsure did not call Ms Groves or any other officer or employee other than Ms Waugh-Lill. I infer that none of them would have been of assistance to Comminsure's case on this point. 111 The internal personnel involved in preparing the analysis at the time of the claim were Mr Scott Robinson, a technical underwriting manager at Comminsure who was no longer with Comminsure but indirectly worked with Ms Waugh-Lill and Mr Jeff Szmej, the underwriting manager in the New South Wales team and a colleague of Ms Waugh-Lill in a different team. Ms Groves was on the 'retail side' and Ms Waugh-Lill did not work with her. 112 Mr Robinson, for his analysis also had the same clinical notes of Dr Chang to which Ms Waugh-Lill had access. He summarised those in considerable detail in his written underwriting opinion apparently dated 12 July 2010. He also had all the information from Dr Quarles as set out in the defence. At the end of a detailed summary of that material, he recommended to Ms Groves to accept cover, saying: I can confirm that based on the limited information to date, it would appear that Comminsure would have still entered into contracts for all benefits however, a Mental Health Exclusions would have been imposed on the TPD and Income Protection benefits. 113 He did, however, say: I'm aware that further investigation is being done on this matter, particularly given the history of Depression and Alcohol abuse which was not previously disclosed, as this is relevant to the risk being assessed, despite normal Liver Function tests. Upon receipt of this information his file should be referred back to the UCSS team for review, as it is also possible that no cover would have been entered into. (emphasis added) 114 That recommendation to accept cover, subject to the further information, appears to have been made by Mr Robinson to Ms Groves on 12 July 2010. Notwithstanding the above qualifications, it was that recommendation from Mr Robinson which led to the memorandum from Ms Groves saying that she recommended that 'we admit the claim' in Memo No 1. The date of her recommendation appears to be 9 May 2011. It was further confirmed by a memo made by Mr Szmej on 25 May 2011 upon referral by Ms Groves, which indicated that: The file has been referred back to Underwriting due to additional medical information being received. – We have received a report from Dr Chang dated 04/04/11 which basically contains the same information provided to us by the same Dr in his report dated 12/04/2010. Blood tests included with this report were essentially normal. - We received a report from Dr Cohen dated 12/04/11. The information post dates the signing of the application. - We received two reports from Dr Evans concerning the client's gastric bypass operation in March 2006. We knew about this at initial assessment stage and cover was rated accordingly. - I confirm there is no new information provided that will alter the retrospective opinion provided by Scott Robinson back on 12/07/2010. (emphasis added) 115 Ms Waugh-Lill accepted that she had no different information than that available to Mr Robinson and Mr Szmej. Her response to the views with which she was presented was 'I have interpreted it differently'. 116 At no stage before giving her evidence was Ms Waugh-Lill shown any of these internal recommendations which recommended that the claim should be accepted on the basis that cover would have been given had all the information been known. 117 Notwithstanding the internal recommendations that the claim should be accepted because cover would have been placed had all the information been disclosed, by an apparently undated memorandum (Memo No 2) possibly signed by four other officers from Comminsure (none of whom was called to give evidence) it was recommended that the cover be declined. One of the considerations set out in that memorandum was that the coroner's report showed findings as: [Mr Elwaly] had a history of stress, anxiety, psychotic ideation, gambling addiction and alcohol abuse. He was known to suffer depression when he consumed alcohol. [Mr Elwaly] operated an accountancy business and it was known he owed a considerable amount of money. 118 The report also dealt with other uncontentious coroner's findings but then, at least to the extent Memo No 2 is unredacted, records the following information as being obtained from Mr Elwaly's treating doctors: • He was a heavy drinker of alcohol • Suffered Depression • Took anti-depressant medication such as Prozac • Suffered seizures and dizziness and doctor notified RTA that his licence should be taken away 119 It continues without referring to the opinions discussed above: Based on the information now at hand a retrospective underwriting opinion was obtained and the findings of this are; Had we known about the client's long history of stress, depression, anxiety, alcohol issues and unexplained blackouts/fits we would not have offered any cover at all on both occasions in 2004 and 2007. The decision would have been decline. (emphasis added) 120 I take Memo No 2, in the absence of any witness explaining it, to be prepared by a person who was identified as holding the position of Team Manager, Retail Claims, although it has also possibly been signed by three other people from the Retail section of Comminsure. The retrospective underwriting opinion referred to in Memo No 2 was not in evidence. 121 Memo No 2 itself is not entirely accurate in relation to the state of health of Mr Elwaly as at the time of completing the Application nor the Declaration of Continued Good Health. For example, there was little, if any, evidence that he was a heavy drinker or that he had any problem with alcohol. On a fair analysis, the evidence that he suffered from the condition of depression was minimal, the evidence concerning Prozac was also minimal and while the evidence concerning fainting spells was accurate, it is not the case that he had suffered seizures. 122 But particularly, by citing the part of the coroner's report concerning gambling addiction and alcohol abuse, the memorandum was relying on events which occurred well after the Application and the Declaration of Continued Good Health were completed. These could not possibly be relevant to the decision to cover at the time it was made as they were events that had not then occurred. 123 No explanation has been given as to why there is no reference in Memo No 2 to the earlier recommendations made by Mr Robinson and Mr Szmej, which were based on the same material that was before Ms Waugh-Lill, and which recommended that the claim should be accepted as cover would have been accepted if the information had been disclosed. WERE THE ANSWERS FRAUDULENT MISREPRESENTATIONS? 124 I consider that the Comminsure case significantly overstates health problems being experienced by Mr Elwaly at the time of completing the Application and the Declaration of Continued Good Health. He was overweight and had addressed this issue apparently with considerable success. He disclosed the surgery and the weight loss as a result of it. He was suffering from time to time from feelings of stress, anxiety and depression as a result of challenging events in his life including the fact that he had difficulty gaining employment, had serious problems with his first marriage and access to his children, had language difficulties and various other forms of stress. He did not, however, in my appreciation of the evidence, suffer from any mental health condition which required disclosure. To suggest that he had a drinking problem, more specifically that he required counselling or treatment for alcohol, is not open on the evidence. It is true that on 19 August 2002, he consulted Dr Chang concerning his alcohol intake, but Dr Chang was emphatic and I accept (and the liver function tests confirm), that this was directed only to the issue of weight loss and a belief by Mr Elwaly that he could lose weight if he cut down his alcohol consumption. Further, it is most important to distinguish between events which occurred after completion of the Application and the Declaration of Continued Good Health from those which occurred beforehand. 125 Comminsure relies upon consultations with a clinical psychologist in 2005 in which, on two occasions, the topic of drinking was raised. Again, these were not consultations for drinking problems in the sense of alcohol addiction but consultations concerning marital issues when drinking was raised as an incidental issue. The consultations with the psychologist were driven by concern about the marriage problems. The clinical psychologist was not called to give evidence. If Comminsure sought to demonstrate that there was fraudulent non-disclosure about counselling or treatment for alcohol, the evidence on which it sought to rely was inadequate. 126 In relation to counselling or treatment for depression, stress or anxiety, it is true that Mr Elwaly discussed symptoms of depression with Dr Chang and Dr Quarles. I have considered this evidence closely in the analysis of the evidence above. Neither of the general practitioners called to give evidence were prepared to support any notion that Mr Elwaly was a depressant as such. The medical evidence adduced established that there is a significant difference between someone who suffers from the condition of depression and a person who is depressed from time to time as a result of external factors. The Queensland Court of Appeal (McMurdo P, Shepherdson J and Thomas JA) in Australian Casualty & Life Ltd v Hall (1999) 151 FLR 360 (at [57]-[59]) said: 57 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. 58 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). 59 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) 44 NSWLR 186; 147 FLR 12 where his Honour said (at [8.3]): "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'." 127 At [74]-[77]) their Honours continued: 74 Question D was in these terms: "During the past five years have you consulted any provider of medical services for any reason?" 75 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 pars 24-26. 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. 76 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 s 21(1) of the Insurance Contracts Act to disclose. 77 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 justifiably found that the advice she received from Drs Marnane and Campbell were that her problems were minor. (emphasis added) 128 In relation to fits and fainting episodes, the question is whether Mr Elwaly fraudulently incorrectly answered the question by denying that he had counselling or treatment for fits and fainting episodes. This issue is more difficult and in my view is the key issue regarding the first question of whether the answer 'No' was fraudulently incorrect. 129 The evidence appears to show that between 1994 and 1997 there were episodes of fainting and on one occasion Mr Elwaly did receive advice or treatment in relation to this. 130 As for the incident at Sir Charles Gairdner Hospital on 16 May 2007 (which was after completion of the Application), while visiting his father, it appears Mr Elwaly felt lightheaded, lost awareness and collapsed unconscious for about 30 seconds. The hospital then took commendable, but very conservative, measures to make sure there was no underlying problem. It is clear that the results show there was no underlying problem whatsoever. It is entirely conceivable that in relation to that incident the answer Mr Elwaly gave was correct. That is, he considered that he had not had either counselling or treatment in relation to fainting episodes, but had simply been checked for any problems. There is no evidence that he had had treatment on the previous occasions he had visited the hospital in relation to fainting episodes in 1994 and 1997. There is no evidence that he had a positive basis for a belief that he had either counselling or treatment for such episodes. However, this is not to conclude there is no difficulty with his answer. 131 As for the implicit suggestion that he had backdated the Declaration of Continued Good Health to 12 May 2007 to avoid disclosing the 16 May 2007 experience, in my view this was without foundation and pure speculation. It is true that Mr Elwaly provided a more comprehensive detail of earlier experiences when he was seen by a consultant neurologist after completing the Application and the Declaration of Continued Good Health. 132 Although I consider that, at the least, Mr Elwaly was careless in completion of answers and not as fulsome as he might have been with the benefit of hindsight, it is not a simple thing for the declining insurer to discharge its onus of proving fraud to the Bringinshaw standard (Briginshaw v Briginshaw (1938) 60 CLR 336). 133 The basis for Comminsure's assertion that it was entitled to avoid the Policy on the grounds of fraudulent misrepresentation is that Mr Elwaly gave negative answers to seven questions asked of him in the Application. It is said that those answers were fraudulent having regard to the relevant matters set out in the defence. Properly understood, the questions in the Application seek to inquire as to whether the applicant has or proposes to consult a medical provider about the medical conditions mentioned in the questions. 134 Ms Graham's case was that Mr Elwaly was not suffering from alcohol related illness, condition or dependence. Ms Graham emphasises that the medical evidence of both Dr Chang and Dr Quarles and the results of his blood tests made clear that there was no concern of that description. The concern which Mr Elwaly did have, had a connection with alcohol and was related to his weight gain. There was evidence from Dr Quarles that in April 2007, Mr Elwaly was very pleased with himself that he had achieved significant weight loss and overcome his struggle with his weight. In December 2006, correspondence from Dr Cohen, the doctor who carried out lap banding surgery for Mr Elwaly, reported that Mr Elwaly was making 'stunning progress' having lost 46 kilograms or 78% of his excess weight and with his BMI falling from 43 to 27.5. This, Ms Graham argues with some force, is entirely inconsistent with any submission by Comminsure that Mr Elwaly's health was on some sort of 'downward spiral' since 2004. 135 In relation to depression, the situation is a little more complex. In 2002, Dr Chang trialled Mr Elwaly on Prozac for a month or so, but within a month Mr Elwaly was asking Dr Chang if he could come off the medication. It was Dr Chang who encouraged him to stay on it for a while to avoid any negative side effects from withdrawal. By October 2003, the evidence showed that Mr Elwaly was entirely medication free and by May 2004, he was trouble free. During the period August 2006 until June 2007, there were visits to Dr Quarles and there were three occasions on which prescriptions were given for what Dr Quarles described in evidence as being 'normal human stress or anxiety'. The types of normal human stress referred to by Dr Quarles were things like living with a new baby, work stress and Mr Elwaly's father being admitted to hospital. The evidence from Dr Quarles was that, in each case, Mr Elwaly was able to recover once the stresses subsided or were no longer applicable. 136 Dr Quarles was pressed in cross-examination on whether Mr Elwaly was suffering from depression or a depressive illness which required antidepressants on three occasions between August 2006 and June 2007. The response from Dr Quarles in each instance was that Mr Elwaly was not suffering from depression as such, and that the drugs were properly prescribed in a very low non-depressive dosage for purposes such as a mild sedative for sleep deprivation (Epilene), this being caused by the birth of a new baby. Similarly, Dr Quarles explained that Lexapro and the Ativan were prescribed in low dosages for human stress issues such as Mr Elwaly's father's illness and hospitalisation. 137 Mr Elwaly's health at that time is not to be confused with and can be contrasted with the situation in 2008 and 2009 when Mr Elwaly's mental health deteriorated to a point where he became mildly depressed and he was referred to Dr Proud. It was around this time that Mr Elwaly did actually commence seeking medical assistance for more serious problems. In contrast, in the period 2004 to 2007, Mr Elwaly was in relatively good health. Ms Graham's case is that Comminsure might have had an argument if Mr Elwaly had taken out the Policy at this time rather than at the earlier point in time. Dr Quarles also expressed the view that there had been a qualitative change in the condition of Mr Elwaly after June 2007. 138 There was also support from Ms Graham that in the period 2004 to 2007, Mr Elwaly's condition was not such as to cause a concern. She did not observe him or understand him to be suffering from depression, alcohol problems or otherwise. For Ms Graham it is argued that her observations of her husband in this period correlate with the true medical position. 139 The fainting episode in May 2007 should also be seen in its context. The evidence shows that Mr Elwaly suffered from syncopal fainting, which was a benign condition. Syncope is defined as being a transient loss of consciousness due to inadequate cerebral blood flow (MacNalty, AS and Critchley, Butterworths Medical Dictionary, 2nd ed, Butterworths, 1978). Mr Elwaly was relatively young when this incident occurred. However, according to the neurological report of Dr Conrad Ng of 25 February 1998, he did have four or five episodes of collapse since 1994 and had presented on a number of occasions to the emergency department at Royal Perth Hospital. The report also explained that Mr Elwaly described a gradual onset of feeling lightheaded for 30 seconds to a minute before he lost consciousness. This was unaccompanied by chest pains or palpitations, tongue biting, incontinence, subsequent weakness or abnormal sensation in his limbs. Mr Elwaly had it investigated in 1994 by a general practitioner. Two EEGs were performed which gave normal results, as did a Holter monitor and an MRI of the pituitary fossa. The report concluded with the following paragraphs: … On examination Mr. Elwaly is young gentleman, alert and orientated, in no distress. There was no jaundice, anaemia, clubbing or cyanosis. Pulse was 72/minute and regular, blood pressure lying 130/170 mmHg, standing 134/84 mmHg. Cardiovascular respiratory and abdominal examinations were unremarkable. Examination of his cranial nerves and peripheral nervous system was normal. He was reviewed by Dr. Lamont and based on the history his symptoms are highly suggestive of convulsive syncope. Exacerbating factors include poor food intake and poor sleep. There may be also an element of stress in that he works long hours at his job. I have informed him that he can resume driving and perform his usual work and activities. He has also been advised to avoid precipitating factors. No further medications are necessary. I have not made an appointment for further review at our Clinic. … 140 In an annexure to Dr Quarles' report there was reference to some sort of a spell in January 2007, but this would not be sufficient to warrant rushing to a conclusion that Mr Elwaly had experienced some kind of a seizure. 141 In relation to the state of mind of Mr Elwaly, there is no proper basis for drawing a conclusion that Mr Elwaly was aware at any time up to signing the Declaration of Continued Good Health that he suffered from an 'alcohol related illness'. He had not sought any treatment from Dr Chang or Dr Quarles or Dr Ziembinski in relation to alcohol related illness. Importantly, he did seek treatment for weight loss in consequence of which he was told to cut down everything he ingested and was successful in doing so. I do not consider that it has been established that Mr Elwaly was seeking counselling or treatment for the use of alcohol or drugs, nor was he prescribed medication for such a problem. His medical consultation was purely connected to his weight. 142 Nor do I consider that it has been established that at the time of completion of the Application, Mr Elwaly was suffering or had suffered from depression or depressive illness or that he knew this to be the case. When he answered 'no' to the question '[h]ave you ever had or sought advice or treatment, experienced symptoms or suffered from … [d]epression or mental disorder …', that answer was true. It was true that he had suffered from stress, but given that the words appearing in the Application are such that depression or mental disorder are in bold font and the rest of the question, including stress and anxiety, are not, one might reasonably read the question as referring to stress and anxiety connected with depression or mental disorder, as distinct from the normal stress and anxiety that many people feel not uncommonly. If there is ambiguity in the question, it is to be resolved against Comminsure: s 23 ICA; see Australian Casualty & Life Ltd (at [75]). 143 Comminsure point to the fact that Mr Elwaly filled in a depression checklist which had a question '[h]ow often do you feel depressed?' for Dr Quarles on 30 November 2006, and that Dr Chang said he suffered from reactive depression. Comminsure argues that Ms Graham's submission that Mr Elwaly never suffered from depression has no support. 144 I would need to be satisfied that Mr Elwaly knew that he was suffering from a medical condition for which medical treatment was required. He did have problems with stress, as indicated, but I find that the main health issue with which he was concerned was being overweight, as a result of which he had tried various measures culminating in recent lap band surgery and weight loss prior to completing the Application. Not only was this condition and circumstance fully disclosed, but it was also the factor which caused Comminsure to impose a 75% loading on the premium. It is certainly significant, in my view, that Mr Elwaly's own medical tests at the time of the Application revealed normal results. Indeed, Comminsure itself had also obtained medical evaluations and blood tests both in 2004 when it provided the original cover and in 2007. All of these evaluations and tests were positive in the sense that they did not disclose any serious medical condition which might go to the insurer's risk. 145 I accept the submission for Ms Graham that a reasonable inference from all of these matters is that Mr Elwaly, when completing the Application, understood that Comminsure was already familiar with his relatively good health, having regard to the fact that he already held a life insurance policy with Comminsure, he had provided blood tests in 2004 and he had undergone, at the insurer's request, an independent medical evaluation which involved a comprehensive physical examination dealing with, amongst other things, liver and renal functions, general biochemistry, lipid levels and the presence of Hepatitis A, B and HIV. It was also significant that when Comminsure offered Mr Elwaly the cover in 2004, which he accepted, a 50% premium loading was imposed because of his weight. Factors concerning his weight were the factors that he disclosed when completing the Application. They would be the factors which would reasonably be regarded as being of significance to the insurer. Ms Waugh-Lill confirmed that this was so. 146 As at 20 December 2006, when the Application was completed and 24 May 2007 when the Declaration of Continued Good Health was received by Comminsure, Mr Elwaly was not suffering from or seeking medical attention with respect to any medical condition, diagnosable sickness or other serious medical ailment. He was doing well in weight loss as a result of the lap band surgery conducted in March 2006. It is certainly true that Mr Elwaly had a number of medical visits in 2006 prior to completion of the Application but none of those realistically went to the insurer's risk. Dr Quarles' medical notes show that he saw Mr Elwaly in March 2006 for conjunctivitis and issues concerning the forthcoming surgery. He saw him in April 2006 for back pain and in June 2006 for tiredness and cold symptoms and in August for tiredness and work stress. In November 2006 he consulted Dr Quarles regarding stress and anxiety and completed an anxiety and depression checklist. In December 2006 Dr Quarles prescribed Lexapro in a low dose for stress issues, as previously explained. I accept the evidence of Dr Quarles that there is nothing in 2006 or 2007 to demonstrate that Mr Elwaly was in bad health. The blood tests which the insurer obtained in 2004 and again in 2007 were all unexceptional and confirmed the view expressed by Dr Quarles. It would be reasonable to infer, if that was Dr Quarles' view at the time when he saw Mr Elwaly, that he would have conveyed that view to him. It is consistent with this that Mr Elwaly did not disclose concerns about his health to his wife, Ms Graham. 147 When Dr Quarles completed the medical examination and assessment in April 2007 at the request of Comminsure, again, he expressed no concerns at all about Mr Elwaly's state of health. There is no reason Mr Elwaly would have considered otherwise. The questions raised by Comminsure were extensive. 148 Disclosing the surgery and his weight loss led the insurer to seek additional extensive information. The insurer made the judgement on whether or not to place the cover on the basis of the information in those tests, not simply on the information contained in the Application. 149 In my view, the only clearly incorrect answer of 'no' was to the question concerning whether Mr Elwaly had ever had or sought advice or experienced symptoms or suffered from fainting episodes. At the time of the Application and the Declaration of Continued Good Health he must or should have known the correct answer to this questions was 'yes' not 'no'. The answer was at the very least careless, but given the specific nature of the question and his history, I must conclude that his answer was reckless and therefore fraudulent within the meaning of s 29(2) ICA. Otherwise I reject the contentions: (a) that he had suffered from depression as the question in the Application was directed to 'disorders'; (b) that he had received counselling or treatment for excessive alcohol consumption. I accept the medical evidence that to the extent he himself had concerns about alcohol, it was related to diet and weight loss. The weight issue was fully disclosed by Mr Elwaly and was explored by Comminsure; and (c) that gastric reflux was relevant or would have been considered to have been relevant. There was no evidence to support that contention. 150 But, as indicated, I accept that Comminsure has established fraudulent non-disclosure as to the fainting fits about which Mr Elwaly must have known, and was reckless not to consider and disclose. COMMINSURE WOULD HAVE PLACED THE COVER IN ANY EVENT 151 It is common ground that s 29(1)(c) ICA refers to the particular insurer and the contract in question rather than another insurer or another contract of insurance or a similar contract. 152 The evidence does not point to the Policy being offered subject to different terms and conditions, bearing in mind there was already a 75% premium loading on the Policy. This is largely a question of fact on which the insurer, according to the authorities and a conventional reading of the provision, carries the onus. Comminsure sought to discharge that onus by adducing the evidence of Ms Waugh-Lill. Debelle J in Tyndall Life Insurance (at [78]) expressed the effect of s 29(1)(c) as being: In other words, unless the insurer relies on the answers made by the insured, it is not entitled to avoid the policy even in the case of fraudulent non-disclosure or fraudulent misrepresentation. So, in this case, in order that the remedies of s 29 may be available to it, Tyndall must show that the fraudulent non-disclosure or fraudulent misrepresentations were relevant and induced it to accept the risk. I respectfully agree with Professor Sutton that it is implicit in the wording of s 29(1)(c) that the insurer is denied a remedy only where he would have entered into precisely the same contract as that which was made: Sutton, Insurance Law: Australia (2nd ed.) para 3.115. 153 Shortly prior to entering into the Policy Comminsure considered that it was necessary for the following information to be provided: (a) a PMAR; (b) a GP Exam with comment on full medical history including BMI, treatment and operation details and progress; (c) a MBA test including HIV, Hepatitis B and C serology; and (d) a cotinine test. 154 Although Comminsure's risk assessor proposed that those four items be obtained, ultimately Comminsure did not seek all of that information. In February 2007, it did require Mr Elwaly to be examined by way of extensive blood tests, the results of which were all unexceptional. Little had changed since the previous tests were provided in 2004. In April 2007, Comminsure obtained a 'medical evaluation' from Dr Quarles. His report was completed on a form provided by Comminsure. What is particularly significant is that Dr Quarles made it clear that he had been professionally acquainted with Mr Elwaly for only two or three years. Although his report was fulsome, it was apparent that he could only speak for Mr Elwaly's health cover for that limited period. Of course, the report did present Mr Elwaly in good health. 155 If Dr Quarles' report was examined at the time it was made and if the insurer had a concern that Dr Quarles had professionally known Mr Elwaly for only two or three years, it did nothing about that concern. It is quite apparent that on no description could the account given by Dr Quarles be described as a 'full medical history' because he had only known Mr Elwaly for a quite limited period of time. 156 That is a factor which speaks volumes on the question of whether Comminsure would have placed the cover in any event. 157 Comminsure ignored its own risk assessor's recommendation to obtain a full medical history and was satisfied in accepting a medical history for the last two or three years. The only inference from this can be that it did not consider that a full medical history was necessary or that medical history prior to 2004 was not relevant to its risk. This would also be consistent with Mr Elwaly's understanding, namely, that, in light of the fact that the insurer already had covered him in 2004, he was updating the insurance company about his recent surgery as part of increasing his insurance levels. 158 It is particularly significant that internal analyses of whether the cover would have been placed in any event by Comminsure were sought and views were given by officers who were apprised of all of the information that was available to Ms Waugh-Lill when she expressed her view in her evidence. Those officers were removed from the forensic environment and provided what I take to be a realistic commercial answer. Their views were expressed well before proceedings issued. Based upon the same information, they unequivocally reached the conclusion that the cover would have been and should have been granted. 159 Comminsure did not call those officers and employees or former officers and employees. Nor did Comminsure show those reports to Ms Waugh-Lill before her evidence statement was finalised. I consider that the views expressed by those officers are to be preferred. I do not raise this as a criticism of Ms Waugh-Lill because she was asked to make certain assumptions based on the contents of the defence set out (at [82]) above in order to express her view as to whether cover would be granted or declined. In my view, as already explained, those assumptions were not made good by Comminsure. 160 More importantly, the events surrounding the Application prove with realistic clarity what actually happened. Very shortly after Ms Waugh-Lill was prompted with an inquiry about cover under the Policy, she dispatched confirmation that there were no further underwriting requirements together with the Declaration of Continued Good Health. The reality at that stage was that the report from Dr Quarles made it clear that he had only known Mr Elwaly for two or three years professionally, so there was certainly no full medical history, and Dr Quarles reported, consistently with the fact, that Mr Elwaly, with the exception of the lap band surgery and the weight issue, was in reasonably good health. Although Comminsure was adamant that it would have closely regarded the Declaration of Continued Good Health when it was returned with the notification there were no further underwriting requirements, that is simply not borne out by the facts. Both of the Declarations of Continued Good Health, one for each policy, were quite incorrectly completed and signed by only one person, Mr Elwaly. If the forms had been examined, these errors would have been obvious. As Ms Waugh-Lill conceded, the forms should have been examined (by others) and returned to Mr Elwaly for correct completion. The only possible inference from these facts is that Comminsure was sufficiently satisfied with the risk not to carefully examine the Declaration of Continued Good Health. Accordingly, in my view, it is clear Comminsure would still have entered into the policy and, thus, pursuant to s 29(1)(c) it follows that it was not open to Comminsure to avoid the contract under s 29(2) ICA. Public policy 161 Finally, I will deal with the deferral of public policy. 162 Mr Elwaly was clearly in a troubled state when he deliberately set fire to the business premises. The fire caused substantial damage to the premises and appears to have been an attempt to destroy computer and business records. Comminsure relies on the fact that his death, caused by smoke inhalation, occurred during the execution of a serious indictable crime as evidenced by s 444 of the Criminal Code (contained in a Schedule to the Criminal Code Act Compilation Act 1913 (WA)) which provides that criminal damage by fire (arson) is a crime punishable by life imprisonment. Comminsure argues that arson has the capacity to cause injury or death to innocent members of the public or to emergency service workers such as fire fighters, police and ambulance officers. Whilst an arsonist may not plan to be killed or seriously injured in the fire that he sets out to deliberately start, such may be taken, Comminsure argues, to be a not far-fetched or fanciful potential consequence. Indeed, it may be taken that it is not an uncommon reality for arsonists to die in their own fires, Comminsure submits (without any statistical or other evidence to support the alleged 'not uncommon reality'). 163 Comminsure argues that no court will assist a man who founds his cause of action on an immoral or illegal act, citing Troja v Troja (1994) 33 NSWLR 269. I accept Comminsure's submission that the Court should not permit a criminal to profit from his crime as such, but the burning of the records and the business premises, assuming those acts were criminal, were not the cause of Mr Elwaly's death. The cause of death, as indicated, was the unforeseeable entrapment within the business premises and asphyxiation from smoke inhalation. 164 Under the contract, Comminsure agreed to pay the Life Care Benefit regardless of whether Mr Elwaly's death was deliberately caused or accidentally caused or came about because of the involvement in a criminal activity. Clause 3.1 provides: (a) Subject to the conditions of this policy we will pay the Life Care benefit while the Life Care benefit applies, the Life Insured dies. (b) The Life Care benefit ceases to apply: • on the death of a Life Insured • from the Policy Anniversary Date preceding the Life Insured's 99th birthday • from the Cover Expiry Date, if any • when this Policy terminates (c) The Life Care benefit will not be payable on the Life Insured (whether sane or insane) commits suicide within one year from [certain dates]. Which ever happens first. 165 The only exclusion to deliberate death in the Policy is in the event of death by suicide within a year from the date the policy begins or is reinstated. There is no suggestion that Mr Elwaly sought to take his own life in such a painful manner. Even if this were so, the Policy did not preclude suicide after one year from the date the Policy commenced. 166 The Policy did not overlook the possibility of an accidental death caused by criminal activity. Under cl 3.9, which deals with 'Accidental Death Cover Option', there is provision for a further benefit in the event of an accidental death of the insured. In this case, Mr Elwaly had taken up that option for the sum of $140,000, but no claim is made under 'Accidental Death Cover' for any sum because there was a specific exclusion relating to the accidental death cover arising from death caused directly or indirectly by participation in criminal activity. The Policy specifically addressed the consequences of death being caused directly or indirectly by criminal activity. The consequence is that the accidental death cover would not apply in such circumstances, but the Life Care Benefit would continue to apply. The logic behind this is presumably that most people do not ordinarily set out to take their own life by criminal activity. 167 There is no wording in the Policy which would support the argument advanced by Comminsure that it should be implied that recovery is precluded if the loss is caused by the insured's deliberate or criminal act. There is no scope for implying such a term as it would be directly contrary to the terms of the Policy cited above. But perhaps at a more practical level, as the coroner found, Mr Elwaly's death was caused by misadventure. The actual death was caused by smoke inhalation when he could not get out of the premises. Clearly this was unforeseen, unexpected and unintentional – a tragic accident. More importantly, Ms Graham had absolutely nothing to do with the events which gave rise to Mr Elwaly's accidental death. She was completely unaware of those events. CONCLUSION 168 Based on the foregoing analysis, it is clear that the application for insurance was deficient and it is difficult to conclude, other than, that it must have been deliberately so in one aspect which must or should have been known to be relevant to Comminsure's decision to cover Mr Elwaly's life. 169 Notwithstanding this, on the evidence as a totality, I am satisfied that the same cover would have been accepted by Comminsure in any event. That being so, Ms Graham is entitled to succeed in her claim. 170 I make the following orders: 1. Within 10 days the applicant is to file a minute of proposed orders reflecting the relief to which she is entitled by virtue of these reasons and, if necessary, any supporting submissions (not exceeding three pages in length). 2. Within a further 10 days the respondent file and serve a responsive draft minute of proposed orders, if any, and, if necessary, supporting submissions (not exceeding three pages in length). 3. Unless the Court otherwise orders, the terms of the final relief will be determined on the papers. I certify that the preceding one hundred and seventy (170) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher. Associate: Dated: 4 July 2014