New South Wales Supreme Court CITATION : George Maurice Norman Farkas v Northcity Financial Services Pty Ltd & 3 Ors [2004] NSWSC 206 23, 24 and 25 March 2004 HEARING DATE(S) : 2 and 28 April 2004 2 June 2004. JUDGMENT DATE : 22 June 2004 JURISDICTION: Equity Division Commercial List JUDGMENT OF : Bergin J DECISION : The fourth defendant is liable to pay Terminal Illness Benefits totalling $750,000 to the plaintiff. Negligence claims dismissed. CATCHWORDS : [INSURANCE] - Claims that insurer liable to pay the plaintiff "terminal illness benefits" - Plaintiff diagnosed with cancer - Policy responds upon the "occurrence" of a "terminal illness" defined as a condition "highly likely" to result in death within 12 months - Construction of "highly likely"- Whether "terminal illness" relates to the prognosis of disease at diagnosis with treatment or without treatment-Whether the "occurrence" of a terminal illness relates to the time of diagnosis or to when the insured first suffers symptoms. - [NEGLIGENCE] - Claims insurer and insurance brokers negligently failed to inform plaintiff of insurer's acceptance of proposal - Exclusion clause if insured event occurred within 90 days of policy start date - Whether plaintiff notified of acceptance on 21 January 2002 or only on 25 February 2002- Effect of delay in notification. - [WORDS & PHRASES] - "occurrence" - "terminal illness" - "highly likely". LEGISLATION CITED : Insurance Contracts Act 1984 (Cth) Asteron Life Limited v Zeiderman [2004] NSWCA 47 Australian Casualty Co Ltd v Federico (1986) 160 CLR 513 Edwards v The Hunter Valley Co-op Dairy Co Ltd & Anor (1992) 7 ANZ Insurance Cases 61-113 CASES CITED : James Noel Eric Butcher v Martin Port (1985) 3 ANZ Insurance Cases 60-638, (1985) 1 NZLR 491 Johnson v American Home Assurance Company (1998) 192 CLR 266 McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579 Minister Administering the Crown Lands Act v Deerubbin Local Aboriginal Land Council [No2] (2001) 50 NSWLR 665 George Maurice Norman Farkas (Plaintiff) Northcity Financial Services Pty Ltd (First Defendant) PARTIES : K & M Pty Ltd (Second Defendant) Donald Michael Shar (Third Defendant) Tower Australia Ltd (Fourth Defendant) FILE NUMBER(S) : SC 50154/03 BW Walker SC, R Lancaster (Plaintiff) COUNSEL : JJ Graves SC, S Jacobs (First Defendant) JB Simpkins SC, RA Pepper (Second and Third Defendants) NC Hutley SC, D Villa (Fourth Defendant) Bruce & Stewart (Plaintiff) SOLICITORS : Smith Lawyers (First Defendant) Minter Ellison (Second and Third Defendants) Turks Legal (Fourth Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST BERGIN J 22 JUNE 2004 50154/2003 GEORGE MAURICE NORMAN FARKAS v NORTHCITY FINANCIAL SERVICES PTY LIMITED & 3 ORS JUDGMENT 1 The plaintiff, George Maurice Norman Farkas, seeks declarations against the fourth defendant, Tower Australia Limited (Tower), as to his entitlement to payment of benefits pursuant to a contract of insurance, Policy No. 1230588 (the Policy). The plaintiff makes alternative claims for damages against the first defendant, Northcity Financial Services Pty Limited (Northcity), the second defendant K&M Pty Limited (K&M), and the third defendant, Donald Michael Shar (Shar) as alleged agents of Tower. 2 The main issues to be determined in this case are the proper construction of the Policy and whether the defendants were negligent in effecting the plaintiff's insurance cover. The plaintiff claims that his application for cover was accepted by Tower in December 2001 and that Shar and/or the other defendants failed to notify him of that acceptance until 25 February 2002. In May 2002 the plaintiff was diagnosed with malignant non-Hodgkin's lymphoma in the form of diffuse large cell lymphoma of B cell type. Subsequent to diagnosis, the plaintiff made a claim for the benefits under the Policy and the claim was declined. 3 These proceedings were commenced by way of Summons on 3 November 2003. The matter was heard on 23, 24 and 25 March 2004. At the request of the parties a regime for written submissions was put in place and final oral submissions on the question of the construction of the Policy were heard on 2 April 2004. The parties then sought a further regime for written submissions in respect of the negligence claims. The plaintiff filed 297 pages of written submissions. The defendants responded with 67 pages. On 28 April 2004 there was an application to reopen the plaintiff's case for filing of further documentary material. That application was partly successful with one further document being admitted. Final oral submissions were heard on 2 June 2004 when judgment was reserved. 4 Mr BW Walker SC leading Mr R Lancaster, of counsel, appeared for the plaintiff. Mr JJ Graves SC leading Mr S Jacobs, of counsel, appeared for Northcity. Mr JB Simpkins SC leading Ms R Pepper, of counsel, appeared for K&M and Shar and Mr NC Hutley SC leading Mr D Villa, of counsel, appeared for Tower. 5 On 2 June 2004 Mr Walker SC referred to the written submissions that had been filed by the plaintiff and responded to by the defendants. He informed the Court that he adopted the written submissions in relation to the construction of the Policy signed by junior counsel for the plaintiff, Mr R Lancaster, on 1 April 2004. In respect of the later 297 pages of submissions filed for the plaintiff Mr Walker SC said: The written submissions are not mine or my junior's and I should therefore be careful in informing your Honour as to what I adopt and what I don't. In particular, I do not adopt the argument which is put concerning the credibility of Mr McFarland. There are written submissions put concerning the honesty of his testimony which are not in my submission supportable in relation to Browne v Dunn or other canons of the conduct of advocacy, and I am not associated and I do not associate myself with that argument. 6 On 28 April 2004 Mr Gorczyca informed the Court that he had drafted the lengthy submissions with the plaintiff's instructions. The submissions also contained an attack on the manner in which Mr Hutley SC put his submissions and indeed ran the trial. Mr Walker SC indicated that he did not associate himself with that submission. When I indicated that I would not be dealing with the submission unless I was asked to, Mr Walker SC advised that he did not ask the court to deal with that submission. The Policy 7 Tower advised the plaintiff by letter dated 12 March 2002 that his application for benefits known as "Tower Term" and "Critical Illness" had been accepted. The letter enclosed the "Policy Document" the Schedule to which recorded that the Application Date was 2nd September 2001, the Issue Date was 12th March 2002 and the Commencement Date was 8 March 2002. It also recorded that the Total First Premium was $720.61 with a Policy Fee of $6.35. Tower Term Benefit Conditions 8 Part 1 of the Tower Term Benefit Conditions of the Policy provided: TOWER Term pays a lump sum upon death, terminal illness and/or total and permanent disability (TPD) in accordance with the terms explained in these Conditions. The product also has some other features, which adds value to your insurance protection. TOWER Term provides cover 24 hours a day anywhere in the world. 9 Part 3 entitled "Benefits", provided relevantly as follows: 3.1 When the Benefits are Payable In Part 3 we describe the insured events when benefits are payable. In some circumstances a benefit won't be paid even if the insured event happens. These circumstances are explained in Part 5. 3.2 Benefits Provided Benefit details for a life insured are shown in a Certificate for Tower Term for that life insured. The cover starts for the benefit on the benefit start date and stops: · if your policy is cancelled; · if the benefit amount is paid in full; or · at the benefit end date; whichever happens first. The benefit amount can change through indexation and is explained in Part 4. 3.3 Death Benefit The death benefit amount is payable if a life insured dies while covered for the death benefit. The death benefit is not provided under stand-alone TPD. 3.4 Terminal Illness Benefit If a life insured is diagnosed with a terminal illness while covered for the death benefit, the death benefit amount is payable, to a maximum terminal illness benefit of $2 million under all policies we have issued which cover that life insured. 10 "Terminal illness" is defined in the Glossary applicable to both the Tower Term Benefit Conditions (Part 8) and the Critical Illness Benefit Conditions (Part 11) although the latter also contained a Critical Illness Glossary (Part 10). In any event, for the purposes of the Tower Term Benefit Conditions "terminal illness" was defined as follows: terminal illness means an illness or condition which is highly likely to result in death within 12 months, where this assessment is confirmed by appropriate specialist medical practitioners approved by us. 11 The "Certificate for Tower Term" (the TT Certificate) referred to in clause 3.2 included an Issue Date of 12 March 2002, a Benefit Start Date of 8 March 2002 and a Benefit End Date being the statement date before age 100. The Benefit Amount in the Certificate is $100,000. Part 5 of the Tower Term conditions provides that the TT Certificate "may include special conditions or exclusions which affect when a benefit is payable". The TT Certificate does not include any special conditions or exclusions. Part 5 also refers to circumstances in which a benefit would not be payable including: "if the claim arises directly or indirectly from either: a pre-existing condition if such condition was not disclosed in the application" or "any sickness or other condition" that Tower had "excluded by name or specific description". 12 Part 6 of the Tower Term conditions includes details of how to make a claim (6.1), information that Tower would need in relation to the assessment of the claim (6.2) and possible medical requirements (6.3). It states that the insured should "contact us and ask for a claim form" and that the form should be returned within 30 days of "the event" otherwise the claim may not be payable "if too much time has elapsed and we cannot properly assess your claim". It includes the statement that Tower would not consider a claim if the required information had not been received within 1 year of "the event" unless the life insured was "legally incapacitated". Critical Illness Benefit Conditions 13 Part 1 of the Critical Illness Benefit Conditions provides: Critical Illness pays a lump sum if a life insured dies, is diagnosed with a terminal illness or suffers one of the insured events in accordance with the terms explained in these Conditions, except where Critical Illness is taken as a stand-alone benefit. Critical Illness provides cover 24 hours a day anywhere in the world. 14 Part 3 entitled "Critical Illness Benefits" provides: 3.1 When the Critical Illness Benefit is Payable In Part 3 we describe the insured events when the benefit is payable. In some circumstances the benefit won't be paid even if an insured event happens. These circumstances are explained in Part 7. The Critical Illness insured events provide coverage to age 70, except Loss of Independent Existence which can continue to age 100. Death and terminal illness can also continue to age 100. 3.2 Critical Illness Benefit Provided Benefit details for a life insured are shown in a Certificate for Critical Illness for that life insured. The cover starts for a benefit on the benefit start date and stops: · if your policy is cancelled; · if the benefit amount is paid in full; or · at the benefit end date; whichever happens first. Payment of a Critical Illness benefit will affect the benefit amount, which is explained in Part 3. The benefit amount can change in other circumstances, as explained in Part 6. The death benefit will be paid in advance for a life insured on the occurrence of terminal illness or one of the insured events in accordance with the terms explained in these Conditions, except where Critical Illness is taken as a stand-alone benefit. 15 Part 3 then records the insured events, one of which is cancer, and continues: 3.3 Critical Illness Benefit Payable The benefit amount (or part of the benefit amount in the case of Angioplasty) applying under a Certificate for Critical Illness for a life insured, is payable on the death of that life insured, or on the occurrence of terminal illness or one of the insured events while covered for Critical Illness, as long as: · The proof of occurrence of any insured event supplied by or on behalf of a life insured must include:- · acceptable support by appropriate Specialist Medical Practitioners registered in Australia or New Zealand (or other country approved by us); · copies of such relevant confirmatory investigations including, but not limited to, clinical, radiological, histological and laboratory evidence as we require; · where the insured event involved a surgical procedure, confirmation that the procedure was the usual treatment for the particular underlying health condition and was medically necessary; · if the insured event is marked with (a single cross), that life insured first suffered the insured event at least 90 days after the benefit start date shown in that Certificate for that life insured. … If Critical Illness is ever reinstated, the benefit start date is taken to be the date Critical Illness is reinstated. … Where a Certificate for Critical Illness for that life insured shows Death Cover Not Applicable, that life insured must survive the insured event for 14 days after diagnosis. 16 Cancer is marked with a single cross. The Critical Illness Certificate (the CI Certificate) referred to in clause 3.2 includes an Issue Date of 12 March 2002, a Benefit Start Date of 8 March 2002, a Benefit End Date at the statement date before age 100, a Benefit Amount of $650,000 and Death Cover of $650,000. There are no special conditions recorded. Indexation and Critical Illness Waiver of Premium were both recorded as "Applicable". It was submitted by Tower that the inclusion of "$650,000" next to the words "Death Cover" in the CI Certificate was an error and that the entry should have been "Applicable", particularly having regard to the terms of clause 4.2 set out below. 17 Part 4 entitled "Death Cover" provides relevantly: 4.1 When benefits Under Death Cover Are Payable In Part 4 we describe the insured events when benefits under death cover are payable. In some circumstances a benefit won't be paid even if the insured event happens. These circumstances are explained in Part 7. 4.2 Benefits Provided The benefits set out in Part 4 do not apply if the Certificate for Critical Illness for that life insured shows that death cover is not applicable. The cover starts for these benefits on the benefit start date and stops: · if your policy is cancelled; · if the benefit amount is paid in full; or · at the benefit end date; whichever happens first. The death cover amount is reduced by any terminal illness benefit or Critical Illness Benefit paid for the life insured. The death cover amount can change in other circumstances as explained in Part 6. 4.3 Terminal Illness Benefit If a life insured is diagnosed with a terminal illness while covered for death cover, the death cover amount is payable, to a maximum of $2 million under all policies we have issued which cover that life insured. 4.4 Death Benefit The death cover amount is payable if a life insured dies unless the Certificate for Critical Illness shows that death cover is not applicable. 4.5 Buy-Back Option The buy-back option applies to a life insured under this policy if: · the Certificate for Critical Illness shows that a life insured is covered under this policy for both death and Critical Illness; · it is exercised before the statement date before the life insured turns 70; and · no medical or occupational loadings or exclusions apply to the premium in respect of that life insured. If we pay either the Critical Illness benefit in full, death cover (including terminal illness) for up to the value of the benefit amount paid can be purchased for that life insured without the need for further medical evidence. The option to purchase this additional cover can only be exercised within the 13th month after payment of the Critical Illness in full. If the buy-back option is exercised, the new benefit amount will not be indexed, and our standard premium rates for the life insured's then current age will be applied to the new cover. 18 Part 6 entitled "How the Benefits Can Change" refers to the indexation factor up to a maximum of $1.5 million if the CI Certificate shows that "indexation applies". In that instance, if the insured does not want indexation for the Critical Illness Benefit there is a requirement to notify Tower during the 30 days before the statement date when the change is to occur (6.1). Clause 6.2 relates to the capacity of the insured who chooses the "stepped premium option" to request Tower to "freeze the premiums payable at any time after a life insured reaches age 45" and includes the following: The premium freeze option means that the benefit amount and any death cover shown in the Certificate for Critical Illness will generally reduce (but not increase) at each statement date after the premium freeze date, so the same premium for that life insured applies each year. 19 Clause 6.3 "Benefit Reduction" provides that when "a benefit is paid under Critical Illness, leaving a reduced benefit amount, then future premiums will be calculated on the reduced benefit". 20 Part 7 entitled, "When We Won't Pay You a Benefit", provides relevantly: In this Part, we explain when we won't pay a benefit under Critical Illness, even if the insured event occurs. In addition, the Certificate may include special conditions or exclusions which affect when a benefit is payable. … No benefit is payable on the death or terminal illness of a life insured if it is the direct or indirect result of intentional self-injury within 13 months of: · the benefit start date; · the date of any benefit increase, but only in respect of that increase; or · the date of reinstatement, if benefits are ever reinstated. No benefit will be payable if the claim arises directly or indirectly from either: · a pre-existing condition if such condition was not fully disclosed in the application for that life insured; or · any sickness or other condition which we have excluded by name or specific description for that life insured. 21 Part 8 deals with Claims in the same terms as Part 6 of the Tower Term Benefit Conditions. Part 10 of the Critical Illness Conditions, entitled "Critical Illness Glossary" includes the following definition: cancer means the presence of one or more life threatening malignant tumours, including malignant melanoma of at least Clark level 3 depth of invasion or 1.5 mm thick, Hodgkin's disease, leukaemia and other malignant bone marrow disorders, and characterised by the uncontrolled growth and spread of malignant cells and the invasion of normal tissue. The following tumours are specifically excluded: · tumours showing the malignant changes of "carcinoma in situ" unless requiring radical surgery or which are histologically described as pre-malignant; · malignancies of the skin (including basal cell carcinomas, squamous cell carcinomas, unless there is evidence of metastases) other than melanoma of at least 1.5 mm thickness; · prostatic tumours which are histologically described as TNM classification T1 or are of another equivalent or lesser classification unless requiring radical surgery; · chronic lymphocytic leukaemia less than Rai stage 3; · papillary micro-carcinoma of the thyroid or bladder. 22 Part 11 to the Critical Illness Conditions entitled "Glossary" records that it defines expressions used in the Conditions and that "the insured events are defined separately in the Critical Illness Glossary". The Glossary which, as I have said, applies to both the Tower Term conditions and the Critical Illness conditions includes the definition of "terminal illness" for the purposes of the Critical Illness Conditions in the same terms as for the Tower Term Conditions and is repeated for convenient reference as follows: terminal illness means an illness or condition which is highly likely to result in death within 12 months, where this assessment is confirmed by appropriate specialist medical practitioners approved by us. Construction of Tower Term Benefit Conditions 23 The Tower Term provides for payment of a "lump sum", being the "death benefit" as recorded in the TT Certificate at $100,000, for "diagnosis with" a "terminal illness" as defined in the Glossary as "an illness or condition which is highly likely to result in death within 12 months, where this assessment is confirmed by the appropriate specialist medical practitioner" approved by Tower. There is no waiting period for the payment of this benefit. 24 The issue for determination on this aspect of the plaintiff's claim is whether he was "diagnosed with a terminal illness while covered for the death benefit". There is no doubt that the plaintiff was covered for the death benefit. The issue is whether his diagnosis in May 2002 with malignant non-Hodgkin's lymphoma in the form of diffuse large cell lymphoma of B cell type (the cancer) was a diagnosis of a "terminal illness" as defined. 25 One issue that has arisen is the meaning of "highly likely" in the definition of "terminal illness" in the Glossary that requires that for the illness to be terminal it must be "highly likely to result in death within 12 months". In Minister Administering The Crown Lands Act v Deerubbin Local Aboriginal Land Council [No 2] (2001) 50 NSWLR 665, Spigelman CJ in dealing with the term "likely to be needed" in the statute there under consideration said: 51. The appellant referred to the well-known judgment of Deane J where his Honour said that the word "likely": "can … in an appropriate context, refer to a real or not remote chance or possibility" as distinct from "probably" in the sense of a more than 50 per cent chance: Tillmanns Butcheries Pty Ltd v Australasian Meat Industry Employees' Union (1979) 42 FLR 331 at 346. In Boughey v The Queen (1986) 161 CLR 10 at 21, in a joint judgment of Mason J, Wilson J and Deane J, their Honours expressed the view that in the statute there under consideration: "… the word 'likely' is used … with what we apprehend to be its ordinary meaning, namely, to convey the notion of a substantial – a 'real and not remote' – chance regardless of whether it is less or more than 50 per cent …" 52. The word "likely" is protean. It has more than one usual meaning and takes its colour from its surroundings: see, for example, Jungarrayi v Olney (1992) 34 FCR 496 at 504. The context in which the word is used in a particular statute will usually indicate the intended meaning. 26 Tower's written submission included a submission that: "the use of the word "highly" to qualify the word "likely" elevates the inquiry into the realm of probability as opposed to there being a 'real chance'". In final oral submissions on 2 June 2004 Mr Hutley SC added the following submission: In our submission "highly likely" must mean something different and of greater level of certainty than "balance of probabilities", because as a matter of English "more probable than not" or "on the balance of probabilities" is something quite different from describing something as "highly likely". If one is moving analogically into the realms of the law, for the purposes of burden of proof, which is on the balance of probabilities, and as has been said if it is 51% the law takes it as determinative, but as a matter of English no one would consider that a description of a burden that something be highly likely would be satisfied by the same level of satisfaction as more probable than not. 27 Mr Hutley SC submitted that it was an "impressionistic matter" and that a "95% chance of death is highly likely and there is no doubt a shading below that" that may be a point at which "highly likely" is achieved. He submitted that if one's chances are even, effectively at 50/50, that death will occur within 12 months, it is not equivalent to saying that it is "highly likely" that death will occur within 12 months. 28 Mr Walker SC submitted that there is no necessity to attach any "numbers" to the term "highly likely" because it is a "qualitative judgment which of course involves a quantitative element" but emphasised that it is "one which the parties have shrunk from expressing in terms of arithmetically expressed risk". He emphasised that the context of this policy is death and "the importance of chances looms the larger". He submitted that it is "highly likely" for the purposes of the risk covered by this Policy (the uncertainties of life) to be informed that it could be the "flip of the coin" or a 50/50 chance. Whilst flip of the coin in other contexts may reveal a more likely than not approach it here reveals an intolerably high prospect of dying. 29 The introduction of numerical percentages introduces gradations of more precise measurement than that which can usually be achieved, or intended, by the utilisation of epithets such as the one under consideration in the context of the Policy in this case. The words "highly likely" applied in an empirically disciplined area such as whether a company is able to pay its debts having regard to income, expenses and debts will be far less a matter of impression than whether a person's illness will result in death within 12 months. The context in which the words "highly likely" are found in the Policy means that an "assessment" or a judgment has to be made as to whether the likelihood of death within 12 months is high. I am satisfied that the term "likely" means a real and not remote chance and that in this context "highly likely" moves, as Tower submitted, into the realms of probability. It is not necessary to speak in percentages – the test is that the likelihood of death in 12 months is high, or, put another way, in all probability death will result within 12 months. 30 The "diagnosis" of the terminal illness is the event that entitles the payment of the death benefit. For the cancer to qualify as a terminal illness under the Tower Term conditions, there had to be an "assessment", or an evaluation or judgment, that the cancer would be highly likely to result in the plaintiff's death within 12 months. Tower dictated the manner in which a claim was to be made for benefits under both the Tower Term Benefit Conditions and the Critical Illness Benefit Conditions. In both there was the requirement for the insured to make contact with Tower "and ask for a claim form". The insured was required to "return the completed claim form to the Claims Manager at our head office address" (6.1 and 8.1 respectively). The Policy also provided that Tower needed the claim form within 30 days of the event or as soon as possible thereafter "so that we can quickly and properly assess whether the life insured meets the conditions necessary for a claim" (6.1 and 8.1 respectively). The Policy also provided that the payment of a claim "depends upon the life insured's co-operation in meeting the claim requirements" and states that it may be necessary for the insured to be medically examined and that if the insured does not co-operate in this regard Tower "will not be able to pay a claim" (6.2-6.3 and 8.2-8.3 respectively). 31 The Claim Form provided to the plaintiff was entitled "Crisis Care Insurance Claim Form" to which reference is made below. There are a series of questions addressed to the insured and to the medical practitioner in the Claim Form none of which seeks a prognosis. The confirmation process is not in the hands of the insured and it is the responsibility of Tower. If a claim is made that there has been a diagnosis of a condition or illness together with an assessment that it is a terminal illness, that is, that it is highly likely to result in the claimant's death within 12 months of the diagnosis, it is up to Tower to take the confirmatory step that may consist of perhaps (a) requiring the insured to attend upon specialist practitioner(s) approved by Tower, or (b) providing the insured's details and assessment to the relevant practitioners for their review. There is also the alternative that Tower might regard the treating specialist who offers the assessment as an "appropriate specialist medical practitioner" under the definition and treat the assessment as confirmed by reason of his/her approval by Tower. 32 The factual question for determination in respect of the Tower Term Benefit Conditions is whether the plaintiff was diagnosed with a "terminal illness". Construction of Critical Illness Benefit Conditions 33 Under the Critical Illness Benefit Conditions Tower is obliged to pay the Death Cover amount if the insured "is diagnosed with a terminal illness". There is no waiting period in respect of this "terminal illness benefit". Tower is obliged to pay the Critical Illness Benefit Amount if an insured "suffers one of the insured events". However Tower is not obliged to pay the benefit if an insured "suffers" the insured event, cancer, within 90 days after the benefit start date shown in the TT Certificate. 34 The terminal illness benefit is not payable if "Critical Illness is taken as a stand-alone benefit". The term "stand-alone benefit" is not defined in the Policy however, I am satisfied from a reading of the Policy as a whole that it means that the insured has opted for cover for a single benefit as opposed to cover for more than one benefit. For instance a stand-alone benefit would be for a critical illness benefit only or a death benefit only. However where cover is obtained for both critical illness benefit and death benefit, they are not "stand-alone". 35 The CI Certificate refers to the "Insurance Benefit" as "Critical Illness" and the "Benefit Amount" of $650,000. The Term "Death Cover" is included in the Certificate but there is no heading "Death Cover Amount". There was controversy as to whether the entry next to "Death Cover" in the Certificate should have been "Applicable" or "Not Applicable" rather than the amount of $650,000 that is recorded. In this regard clause 4.2 provides that the benefits set out in Part 4 – Death Cover, do not apply if the CI Certificate "shows that death cover is not applicable". Similarly clause 4.4 provides that the death cover amount is payable "unless" the CI Certificate "shows that death cover is not applicable". Although there is certainly reference to the "death cover amount" in clause 4.2, 4.3 and 4.4 such references do not suggest that the "death cover amount" is shown in the CI Certificate. This may seem to support Tower's submission that the amount of $650,000 next to the entry "Death Cover" in the CI Certificate is a mistake and it should read "Applicable" because the plaintiff had the "Death Benefit" cover in the Tower Term Benefit Conditions. This does not really matter because the parties agreed in final submissions that the one amount, $650,000, is payable as the Critical Illness Benefit for death, an insured event or for terminal illness under these Conditions. 36 These Conditions require Tower to pay to the plaintiff the "death cover amount" ($650,000) on "diagnosis" of a terminal illness. The question then in respect of both the Tower Term Benefit and the death cover amount in the Critical Illness Benefit Conditions is whether the plaintiff was diagnosed with a terminal illness. Diagnosis and Claims on Tower 37 There is no issue that the diagnosis of the cancer occurred on 1 May 2002. The parties have agreed that the plaintiff first suffered symptoms on 8 April 2002. On 14 June 2002 Northcity forwarded to Tower a Statutory Declaration made by the plaintiff on 13 June 2002, an Authority to the Health Insurance Commission (HIC), a Medical Authority and a Claim Form. The Statutory Declaration referred to the completion by the plaintiff of an application for Critical Illness Insurance on 2 September 2001 and annexed the application to the Declaration. There was also reference to the "Customer Information Brochure" that was provided to the plaintiff when he signed the Application. The Statutory Declaration concentrated on the Critical Illness cover and made no reference to the Tower Term cover. The HIC Authority authorised the HIC to release directly to Tower the plaintiff's Medicare claims history. The Claim Form contained the Medical Authority by which the plaintiff authorised "any doctor" who had been consulted by him to provide "any information" about him to Tower. 38 The Claim Form was entitled "Crisis Care Insurance Claim Form" and required the "Life insured" to complete Sections A and B. Section A consisted of formal matters such as the Policy Number, name, date of birth, occupation, address and contact details. Section B consisted of questions relating to the "medical condition stated in the policy that" the applicant "suffered", the date of the onset of symptoms, the details of the treatment received and the names of the treating doctors. To the question posed "Are you receiving, or do you expect to receive any other benefits as a result of this condition?" the plaintiff answered, "No claim as yet submitted. I have an income protection policy with Australian Casualty & Life". The Medical Section of the Claim Form was completed by Dr Anthony Dodds on 17 June 2002 and forwarded to Tower by Northcity on 20 June 2002 together with Pathology Results and "Doctors Reports" relating in the main to the pathology and scans. 39 Tower advised the plaintiff by letter to Northcity that his "file" had been forwarded to "our assessor for consideration". In late June Tower wrote to the HIC seeking the details of "all doctors" the plaintiff had consulted in the previous 18 years, since 1984. It also wrote on 24 June 2002 to Dr S Misitilis, the plaintiff's treating gastroenterologist at St Vincent's Clinic Diagnostic Endoscopy Centre and sought advice in relation to the plaintiff's "current condition" including "your prognosis for recovery". An identical letter was sent to Dr Brian Churnin the plaintiff's general medical practitioner. 40 Dr Mistilis responded by letter dated 5 July 2002 advising of the tests leading to the diagnosis of the cancer and reporting that the plaintiff had completed three courses of "CHOP" chemotherapy with a further four courses planned. He also advised that on re-examination after the three courses of chemotherapy the "lymphoma masses have cleared completely" however, he suggested that Tower "rely on Dr Dodd's (to whom Dr Mistilis had referred the plaintiff) opinion regarding the long-term prognosis for recovery". By letter to Tower dated 28 July 2002 Dr Churnin provided a history of the plaintiff's presentation to him relevant to the diagnosis of the cancer and advised that he felt "unable to make prognostic judgments as we are dealing here with "cutting edge" therapy via Dr Dodds in this area of medicine" although he did report that up to that stage there had been "only positive response to therapy". 41 Dr Dodds, a clinical haematologist and blood stem cell transplantation specialist, reported to Dr Mistilis on 8 May 2002 on the plan for the plaintiff's treatment and stated that it "is obviously a serious condition although large cell lymphomas do have a significant response rate to chemotherapy. A proportion of these diseases can be cured with chemotherapy but extranodal presentations such as this have a worse prognosis. We may consider autologous blood stem cell transplant as a therapy in remission to try and increase the chance of long-term survival". 42 Dr Dodds reported to Dr Churnin on 1 July 2002 on a number of matters relating to the plaintiff's treatment including: that the results of the biochemical and blood tests that he had arranged for the plaintiff were "virtually normal"; that the x-ray results showed some linear scars but were "otherwise normal"; that the endoscopy to assess the response in the gastric lymphoma showed that "this has returned to being nearly normal"; that he would continue on with the treatment with the next dose due on 17 July 2002; and that he had taken the "precaution" of seeing the plaintiff the day before his treatment to "ensure he remains well". 43 On 4 October 2002 Tower wrote to the plaintiff referring to his claim "for critical illness benefit" and advised that "Tower cannot admit the claim". The letter continued: "The Policy provides that a benefit amount is payable on the occurrence of an insured event, subject to the life insured first suffering the insured event 90 days after the benefit start date. Based on the medical reports, the occurrence of the insured event occurred within 90 days of the Benefit Start Date shown in the Critical Illness Certificate. It follows, that having regard to the 90 day exclusion contained in Clause 3.3 of the Policy, that a Critical Illness Benefit is not payable". 44 On 26 November 2002 Dr Dodds wrote to the Claims Assessor at Tower advising that the plaintiff was under his care for "non-Hodgkin's lymphoma" and that he was currently an inpatient in the hospital "undergoing a bone marrow transplant because of the severity of his condition". Dr Dodds referred to the continuing treatment and the need for the plaintiff to have at least three months to recover after being in hospital for four weeks. Dr Dodds advised that he hoped that after "3-6 months" the plaintiff would be well enough to return to part time or full time work. 45 Dr Dodds reviewed the plaintiff through December 2002 and January 2003. On 23 January 2003 Dr Dodds reported to Dr Mistilis that the plaintiff had "recovered very well from his autologous transplant and is returning to near normal health". He also advised that "clinically" he could find "no evidence of recurrent lymphoma". Dr Dodds monitored the plaintiff and reviewed him each month. On 7 May 2003 he reported to Dr Churnin that the plaintiff was "looking much better and has returned to work" and that "there is no clinical evidence of relapse and his blood tests have returned to completely normal. He is about to embark on a trip to Europe and I will see him again in three months time". 46 On 8 May 2003 the plaintiff wrote to Tower in response to its letter to him of 4 October declining his claim. He advised that the delay in responding had been caused by his extensive treatment and claimed that Tower was liable to pay "the Benefit under the Critical Illness Policy together with an amount representing the waiver of premiums that should have occurred under the Term Policy plus interest" on the basis of the negligence of Tower, Northcity, K & M and Shar and on the basis of breach of contract. The letter also advised that "it appears that Tower has failed to consider, as it should have, its liability to pay the benefit of $100,000 under the Tower Term (Death) Policy and $650,000 under the Critical Illness Policy under the Terminal Illness Provisions of those policies". The plaintiff enclosed a letter from Dr Dodds and went on to claim that the "90 day exclusion is entirely irrelevant in the case of terminal illness, such benefits becoming due and payable immediately upon the diagnosis of such condition". The letter concluded with a claim for $750,000 plus interest from July 2002 ($56,500) and advice that a Statement of Claim had been prepared and would issue soon. 47 A letter from Dr Dodds dated 2 May 2003 was enclosed with the plaintiff's letter and included the background diagnosis of the cancer and stated that the plaintiff's "condition at that time was very serious with a survival highly likely to be less than 12 months". The letter continued: "He has since undergone intensive chemotherapy including an autologous bone marrow transplant to treat his condition. He is in the process of recovering from his treatment and his disease currently appears to be in remission". 48 On 16 May 2003 Tower wrote to the plaintiff in response to his letter of 8 May 2002 seeking details of the basis upon which the allegations of negligence against Shar were made and seeking a period of 21 days to enable it to conduct "investigations" before the plaintiff commenced legal proceedings. The letter also contained the following: Your comments with respect to the "Terminal Illness Provisions" of the Term and Critical Illness policies are noted. Tower does not accept that it has any liability to pay a benefit under the Critical Illness policy under these provisions in the current circumstances. It is conceded that a benefit may be payable under the Term policy under the Terminal Illness benefit provision. To date however, we note that you have not made a claim for such a benefit. We will take your letter of 8 May 2003 as notification of such a claim and assess it immediately. 49 On 10 July 2003 Tower wrote to the plaintiff in terms that included the following: Having now considered these claims we advise you that Tower does not consider that you are entitled to a benefit under either policy on the basis that your condition does not meet the definition of Terminal Illness as provided by either policy. In this regard we note that Dr Dodds stated in his report dated 2 May 2003 that your "disease currently appears to be in remission". 50 Dr Dodds has monitored the plaintiff at three monthly intervals and the results of his tests have been "completely normal" (28 July 2003), "thankfully … negative" (28 October 2003) and "entirely normal" (2 February 2004). This is merely to describe the plaintiff's present health status and is not relevant to the construction of the Policy. 51 Tower's claim in its letter of 10 July 2003 was not that there had been no assessment but that the assessment of Dr Dodds of 2 May 2003, demonstrated that the plaintiff did not have a terminal illness as defined in the Policy because his disease "was currently in remission". Tower's response misunderstood its obligations under the Policy. Once the plaintiff lodged his claim for the $100,000 and $650,000 terminal illness benefits claiming that he had been diagnosed with the cancer with Dr Dodd's assessment that "at that time", being at diagnosis, the plaintiff's survival was "highly likely to be less than 12 months", Tower was obliged to take the next step of either requiring the plaintiff to attend doctors "approved" by it for the "confirmation" of that assessment or doctors approved by Tower should have reviewed Dr Dodds' assessment and expressed a view. That was not done. Instead, Tower suggested that because the plaintiff was in remission (more than 12 months after diagnosis) he was not terminally ill within the definition in the Policy. 52 Tower's approach at trial was that it does not wish to take any points in relation to the timing of the lodgement of the claim, except in relation to any claim for interest if it comes to that, and that it does not wish to maintain any argument about a lack of confirmation of the diagnosis. It accepted that if it is found that the plaintiff's illness or condition was one that was "highly likely to result in death within 12 months" of diagnosis, it is liable to pay to the plaintiff the $100,000 death benefit under the Tower Term Conditions and the $650,000 death cover amount under the Critical Illness Conditions. Tower failed to address the correct question at the time of considering the plaintiff's claims. It used the fact that the plaintiff was in remission as at May 2003 rather than considering whether the diagnosis of the cancer as a terminal illness at May 2002 was "confirmed". Such process has now has been left to the Court: James Noel Eric Butcher v Martin Port (1985) 3 ANZ Insurance Cases 60-638: (1985) 1 NZLR 491 at 497, 500, 505 as referred to by McLelland J in Edwards v The Hunter Valley Co-op Diary Co Ltd & Anor (1992) 7 ANZ Insurance Cases 61-113 at 77,537. Terminal Illness 53 Tower submitted that the assessment that death is highly likely within 12 months, has to be made taking into account the treatment that was available to the plaintiff and cannot simply look at the diagnosis and assume that the disease will be untreated. It was also submitted that the evidence establishes that it was not "highly likely" that the plaintiff would die within 12 months of diagnosis. The Evidence of Dr Anthony Dodds 54 Anthony J Dodds is the Director of Haematology and Blood Stem Cell Transplantation at St. Vincent's Hospital in Sydney. He is also an Associate Professor (Conjoint) at the University of New South Wales in Sydney. 55 Dr Dodds first saw the plaintiff on 3 May 2002, some two days after the diagnosis of lymphoma was made by Dr Ben Goodman of Laverty Pathology. A CT scan on 2 May 2002 revealed enlargement of mediastinal lymph glands in the chest and multiple pulmonary lesions. Dr Dodds reported that such revelation suggested "wide-spread involvement by the lymphoma". After further tests Dr Dodds was able to diagnose the plaintiff with "generalised intermediate-grade stage 4 non-Hodgkin's lymphoma of poor prognostic type because of the involvement of multiple extra nodal sites of disease". Dr Dodd's was the treating Doctor who provided the reports to Tower in support of the plaintiff's claim in 2002 and 2003. He also provided an additional report dated 3 March 2004 for the purpose of giving evidence in these proceedings. 56 The report dated 3 March 2004 includes the following: On Diagnosis his illness was highly likely to result in death within 12 months and because of that I sought opinions from other members of my department at St Vincent's Hospital and from Professor Graham Young, Clinical Associate Professor of the Department of Medicine and Deputy Director of the Kanematsu Laboratories Royal Prince Alfred Hospital, with Professor D Raghaven, the Associate Director, Comprehensive Cancer Centre University of Southern California School of Medicine, and by email with Professor James Armitage of the University of Nebraska Medical Centre, USA. Professor Armitage is a world authority in the treatment of non-Hodgkin's lymphoma. It was decided, because of the serious nature of Mr Farkas' condition, to treat him with 6 chemotherapy sessions of CHOP, together with MabThera, an anti-body used to improve the response rate of the CHOP treatment. On 22 June 2002, Mr Farkas underwent a further gastroscopy carried out by Dr Mistilis. The histopathology report showed no evidence of lymphoma in the stomach but it was felt that the depth of the biopsies was not sufficient to be sure of this and thus Mr Farkas completed his chemotherapy course. Because of the high likelihood of relapse of his disease it was decided to treat him further with an autologous stem cell transplant. He underwent this procedure in November 2002, which required his stay as an in-patient in St. Vincent's Hospital for approximately one month. During that period he did suffer some complications but recovered from the procedure and currently remains in remission. There remains however a significant risk of relapse of the lymphoma and ultimately death from it. 57 Dr Dodds was asked for his best recollection of what occurred during the consultation with the plaintiff on 3 May 2002. He said he probably spoke with the plaintiff in a rather "vague way" because when he sees someone "with a fatal disease" he doesn't necessarily lay things out completely on the table. He said he could not recollect his exact words but that he would have told the plaintiff "something along the lines" of "a 50/50 chance". He agreed that the plaintiff had approached him in May 2003 in respect of his "problem" with the insurance, however he had spoken to him about this problem on a number of other occasions. He agreed that the plaintiff sent him some information that he understood was in an effort to help him in preparing his report. He agreed that his letter of May 2003 in which he stated that it was "highly likely" that the plaintiff's survival would be less than 12 months, was an opinion expressed on the basis that the plaintiff did not receive therapy. He said it was "the prognosis without any treatment at the time of diagnosis". As to whether at the time of diagnosis, the prognosis with treatment would be different, Dr Dodds said: "It would be different. It's still a pretty grave prognosis, but certainly a lot better than that, yes". This apparent concession was not left alone. Dr Dodds evidence in further cross-examination diluted it significantly. 58 Dr Dodds was asked about a paper entitled "A Predictive Model for Aggressive Non-Hodgkin's Lymphoma" written by Dr MA Shipp in 1993 and known as the Shipp report. Dr Dodds agreed that it had constituted the recognised prognostic index, referred to as the International Prognostic Index (IPI), since its publication but that it had a problem of being a broad overall prognostic index that may not be helpful for "particular rarer sorts of lymphomas". The IPI and the age adjusted index operate to predict the risk of death of a person diagnosed with aggressive non-Hodgkin's lymphoma. Dr Dodds agreed that according to the IPI and the age adjusted index the plaintiff's risk of death within one year was "about 50%". 59 Dr Dodds gave evidence that combination chemotherapy has "transformed aggressive non-Hodgkin's lymphoma from a fatal disease into one which is often curable". He said that treatment would be offered to a patient in the plaintiff's position but that "not everybody accepts treatment" and gave the following evidence: Q. And you agree with (Dr Szer's) view that making the assumption that the usual treatment would be applied to Mr Farkas, his likelihood of surviving 12 months was about 50%? A. Well, I would put it lower than that but that's based really more on my clinical experience and I guess consulting the other doctors in Australia and the United States who looked at George's case and they were concerned, hence we gave him the additional treatment we wouldn't normally give people with aggressive non-Hodgkin's lymphoma. Q. You wouldn't disagree with the opinion that the best material available to predict his survival rate was the predictive model, the IPI? A. I agree with that, yes. Q. And the IPI predicts for survival of 12 months at about 50%? A. That's correct, yes. Q. And that's what Dr Szer considered his likelihood of survival was? A. Yes. Q. And you don't disagree with that, do you? A. This is where it is difficult, because I am concerned that in this patient there were other factors. Q. What other factors? A. The gastrolymphoma, the multiple extranodal sites that were involved. … Q. They are taken up in the IPI, are they not? A. They are, but I make the formal point that the IPI didn't include a large group of patients. It is always difficult on an individual patient. You have to base it on clinical experience, that's the only thing you have. Q. In departing from the IPI you would rely upon your idiosyncratic views; correct? A. And those of the other doctors that we consulted, yes. Q. And their views as to the likelihood of survival may have differed from yours? A. They could have. They all felt that we should offer George additional treatment to try and improve his survival. Q. You don't know what these other doctors' views were as to the likelihood that Mr Farkas would have survived less than 12 months with CHOP therapy? A. No, we could only base it on the published information, that's correct. Q. And that's the Shipp report; correct? A. That's correct, yes. Q. But you had a concern personally that Mr Farkas might be something worse than that? A. I did, yes. Q. But you couldn't put a figure on that, could you? A. I can't put a figure on it based on published literature, no. Q. On any literature? A. I don't have a single patient who survived in this situation. That's I guess an experience that sticks in my mind. (emphasis added) Q. And the problem with that is because … A. It's numbers. Q. And it's numbers which haven't been normalised across a sample perhaps of sufficient size to be able to be statistically meaningful; correct? A. That's correct, yes. Q. Has the IPI been updated since 1987? A. I don't recall so. I don't think anything has been published about that, no. 60 In re-examination Dr Dodds explained that although the IPI took gastrointestinal tumours into account, there was a range of different histological types of gastrointestinal tumours, some of which have a very good prognosis and may respond to antibiotic therapy and some others that have a grave prognosis and are universally fatal. He was concerned about the extent of involvement elsewhere in the plaintiff's body, particularly in the lungs and compared to the Shipp report prognosis of 50%, put the plaintiff's prognosis "a little below the middle" or "a worse prognosis". The Evidence of Professor Graham AR Young 61 Graham AR Young is a Clinical Associate Professor at the Department of Medicine at the University of Sydney and a senior Staff Specialist, Institute of Haematology at the Royal Prince Alfred Hospital in Sydney. The plaintiff consulted Professor Young on 27 May 2002 for the purpose of obtaining a second opinion concerning his condition. Professor Young referred to the diagnosis that had been made of the plaintiff's condition as "malignant non-Hodgkin's lymphoma in the stomach in the form of diffuse large cell lymphoma of B cell type". The Professor stated in his Report dated 3 March 2004 that the plaintiff was "diagnosed as having advanced diffuse large cell lymphoma with a poor prognosis" and that in May 2002 the plaintiff's condition was "very serious". 62 Professor Young referred to the definition of terminal illness in the Critical Illness Benefit Conditions referring to it as a definition of "cancer" and expressed an opinion that the date of the "occurrence" of the plaintiff's condition, lymphoma, was 1 May 2002. He also referred to the fact that the plaintiff's lymphoma was "stage IV being associated with the worst prognosis". His written report stated: 17. At the time of diagnosis, Mr Farkas' condition condition (sic) was such that it was highly likely to result in death within 12 months. 18. Mr Farkas underwent a stem cell transplant in November 2002, and, while he is currently in remission, there remains a significant risk of relapse of the lymphoma and, ultimately, death. 63 During cross-examination by Mr Hutley SC, Professor Young admitted that the plaintiff had drafted a report for his consideration. Paragraph 17 of the draft read: 17. At the time of diagnosis he was suffering a terminal illness and his condition was such that it was highly likely to result in death within 12 months. 64 Professor Young made notes on that draft and amended paragraph 17 to read as follows: 17. At the time of diagnosis, he was suffering a potentially terminal illness and his condition was such that it was highly likely to result in death within 12 months, particularly if not treated successfully . 65 Professor Young said it was "quite possible" that he had taken out the words "potentially" and "particularly if not treated successfully" because the plaintiff had asked him not to include them in his report. He agreed that he had informed the plaintiff when he saw him that he had a "50/50" chance. He then explained that may not have been an absolute truth because one has to utilise "clinical judgment" and exercise compassion when one is dealing with a patient with an aggressive malignancy. He gave evidence that what he tries to do in such circumstances is to give some hope to the patient and, in those circumstances, does not speak the "absolute truth". 66 Tower submitted that, having regard to the way in which Professor Young's report was prepared, less weight, or no weight, should be given to the opinions expressed in it. The covering letter the plaintiff sent to Professor Young with the draft report stated that: "I should emphasise in submitting this summary to you, I am in no way attempting to dictate what you should say. As requested by you, this is simply to serve as an aide for the preparation of your report and if I have incorrectly stated certain matters, then no doubt you will correct those matters". It appears that after this letter the plaintiff might have discussed the content of the report with the Professor. I say, "appears" because the suggestion that the plaintiff "quite possibly" asked the professor to change his report was not put to the plaintiff. It seems to me that the plaintiff has been operating in a pressure cooker environment both in dealing with his diagnosis, prognosis and treatment and in dealing with the insurance issues and this litigation. The highest it can be put in the circumstances is that the change was "quite possibly" made at the plaintiff's request. 67 The relevance of the additional words that were taken out of the final report will depend upon whether the test in the definition is the diagnosis, without treatment, or the diagnosis with treatment. In any event, Professor Young's view expressed in his draft report that the plaintiff's prognosis was that it was highly likely that the plaintiff's condition would result in his death within 12 months "particularly if not treated successfully" was really a statement that death could still occur with treatment. It is not a statement that he would not die within 12 months if treated. 68 In cross examination Professor Young said that there was no doubt in his mind that if the plaintiff had not received treatment "he would have been dead very quickly, certainly within twelve months" and that: The problem is that one can never guarantee the results of treatment when one is treating a patient with advanced cancer, therefore one has to try to make some kind of estimate based on your experience as to whether or not an individual patient is likely to be successfully treated or not. Now, unfortunately we don't have crystal balls that can give that with any certainty. Therefore, I have to use my experience and say based on my experience and knowing that Mr Farkas, knowing his age and many other things which have been discussed in my report, knowing that he had not only a large abdominal mass, he had diffuse large cell lymphoma and may have had lung involvement, he was in a very poor prognostic category and based on these facts I thought there was a chance and a highly significant chance that he could not be alive in 12 months time. Q. What I want to ask you though is when you expressed the opinion in paragraph 17 were you expressing that opinion on the basis of an assumption as to his prognosis if he received no treatment, was that what you were saying when you expressed the opinion in paragraph 17? A. It was not, it was not specified as such and I was not making a distinction and I hoped I was trying to say in my previous answer that certainly without treatment it would not have been, he would not, I would not have expected him to be alive and I did not have the certainty to be able to, even with treatment, be sure that he would be alive in twelve months time. … Q. Do you agree that his chance of surviving twelve months from the date of diagnosis without therapy would have been less than five percent? A. Yes I do. … Q. Would you agree that at the time of diagnosis, on the assumption that he would undertake the usual therapy? A. Yes. Q. Appropriate to persons suffering this condition? A. Yes. Q. That his chance of surviving twelve months from the date of diagnosis, that is May 2002, was something better than 50/50? A. No, I would not, and I don't think Professor Szer says that either. Q. What do you say his chances were of surviving better than twelve months as at the date of diagnosis on the basis of his receiving the usual treatment, or can't you say? A. I think it is very difficult to say because there are features to Mr Farkas's case, not only did he have stage four disease involving with a gastrointestinal mass, and I have read out the statistics on that, he also had involvement, based on his CT scan, of his lungs, which would have made things even worse. Now, it is very difficult in medical statistics to get patients who are exactly the same and therefore we do end up using statistics which do exactly that and that is average out patients according to their disease and their stage but there are so many other caveats that can change that diagnosis. I find it often very difficult to give precise diagnostic information. I would have said though that in my opinion it would have been less than a 50 percent chance of him surviving twelve months. … Q. You yourself, is it the case, can not put a percentage upon the prognosis for Mr Farkas as at May 2002, is that what you tell her Honour? A. Well, I am saying that I would not agree with this final statement in this report on page 7 (Dr Szer's report) particularly that 50 percent chance. In my opinion it would have been less than 50 per cent. Q. Well, would it have been significantly less than 50 per cent? A. I would certainly have put it more in the 20 to 30 per cent. 69 When Professor Young was reminded that at his consultation with the plaintiff he had informed him that he had a 50/50 chance of survival, he said he was seeking to convey to him that there was uncertainty about his prognosis and that "50/50 to me means you are on the toss of a coin type thing". He agreed that "namely" that meant it was "equally likely that he would die and it was equally likely that he would survive his condition". In further cross-examination Professor Young gave the following evidence: Q. If you believe the person's chances were 50/50 would you as a doctor have given them a prognosis in words to the effect that "you are highly likely to be dead within twelve months"? A. I must confess I very seldom will say to a patient "I think you are highly likely to be dead in twelve months". I deal with a lot of patients with malignant diseases which may well mean they are dead in twelve months but I suppose because my practice before I start treating patients is to try to give them some hope and optimism I will often paint a picture which is, that will we say, not an absolute truth, because I am never sure how any individual patient is going to respond before they start treatment. So, I am therefore left to try and instil some hope and I would certainly not say to a patient, bearing in mind this was a second opinion when I saw Mr Farkas and I was not going to be the treating physician, I would not have thought I would have said anything like "it's highly likely you are going to die within twelve months". I don't think that would have been appropriate for me to do. 70 Professor Young said that when treating a patient with an advanced malignancy he has to try and strike a balance of optimism, hope and reality. He believed he probably would have said his chances were 50/50 but that was not strictly scientific or even legalistic because one has got to try and use clinical judgment. He said that until he knows how patients are going to respond to treatment he will often couch his advice in terms that are not "totally frank" or put another way he uses "clinical judgment and compassion". He said he was seeking to convey that he had "an advanced type of cancer that was potentially life-threatening and could have been life-threatening if not treated and could have been life-threatening if treated". The evidence of Dr Jeffrey Szer 71 Dr Jeffrey Szer is a Clinical Haematologist and Medical Oncologist with particular expertise in leukaemia, lymphoma and haemopoietic stem cell transplantation. He is a full-time member of the senior medical staff of the Royal Melbourne Hospital and holds the academic rank of Associate Professor in the Department of Medicine, University of Melbourne. 72 In respect of the opinion expressed by Dr Dodds that the plaintiff's illness was highly likely to result in death within 12 months, Dr Szer reported: If the assessment made by Dr Dodds was describing the natural (untreated) history of this condition, I do agree with his contention, but as indicated previously, no reasonable physician would fail to offer combination chemotherapy to a fifty-two year old patient with this diagnosis in 2002. As such, I am not of the opinion that the plaintiff was highly likely to be dead within 12 months as at May 2, 2002, nor at 13 June 2002 nor at 8 May 2003. One needs to examine old literature to identify the natural history of stage IV large B cell non Hodgkin lymphoma. In 1981, Dr Fisher from the National Institutes of Health of the USA published a definitive paper on the state of the art then (Fisher RI et al. Factors predicting long term survival in diffuse mixed histiocytic or undifferentiated lymphoma: Blood 1981; 45-51). In that paper with state-of-the-art therapy available at the time (somewhat similar to CHOP), the complete remission rate of stage IV patients was 38% with a median survival of 11 months. Thus more than 50% of patients were dead within 12 months. Results without such therapy were < 5% survival at 12 months. This indicates that there was a high likelihood, that the natural history of the disease Mr Farkas had diagnosed was death before 12 months. In addition, in the Fisher paper, the complete remission rate of patients with a gastrointestinal mass was 7% with a median survival of 6 months, even with therapy further emphasising how poor the prognosis of the plaintiff was at the time of diagnosis. Thus, without therapy, the prognosis would have been dismal for this patient, but with the standard therapy available in May 2002, he would have had an approximately 50% chance of being alive and free of lymphoma at 12 months. 73 Dr Szer's expressed assessment of "an approximately 50% chance of being alive and free of lymphoma at 12 months" was explored in evidence: Q. Applying statistics to an individual is fraught with problems, isn't it? A. Yes. Q. Because statistics are the arithmetical and mathematical description of the experience of the group. Is that correct? A. Correct. Q. And to say of an individual that he or she exhibits what is characteristic only of a group can lead to very bad confusion and poor thinking in medicine. Isn't that right? A. If it was so used, correct. … Q. Doctor, in that last sentence you have contrasted two possibilities; one, no therapy and, two, standard therapy. Do you accept that summary? A. Yes. Q. And may her Honour take it that you are contrasting them hypothetically as at May 2002? A. Yes, prior to commencement of therapy. Q. And applying to Mr Farkas the assessment you made on the basis of the statistical and clinical material referred to in your report; is that correct? A. Correct. Q. And without therapy your epithet for his prognosis was dismal; correct? A. Correct. A. And then you said that with therapy there was a 50/50 chance he would improve that prospect; is that correct? A. Correct. Q. So there was a 50/50 chance of his prognosis remaining dismal; isn't that right? A. No, because prognosis is something you determine at a point. It is not something you determine on an ongoing basis. Q. Just to play it out with what mercifully didn't happen to understand your use of this word prognosis and your description of dismal as at May 2002, if we have the argumentative luxury of two Mr Farkases, that is, everything similar except one gets therapy and one doesn't, the one without therapy you would expect to die within 12 months, wouldn't you? A. Yes. Q. And it might be fair to say that you would expect that at no stage during the 12 months would his prognosis get better than dismal; would that be right? A. Yes. Q. Now we turn to the Mr Farkas who receives what you call the standard therapy available in May 2002. After therapy commences and halfway through, if he appeared to be responding well would you, as an expert, describe his prognosis as having been improved or would it be too early to change your description of it? A. It would be too early to change the description at that point, but that converse is not true, that is, if the disease were progressing at that point rather than responding to treatment it would be easy to say he would be more likely to be on the less favourable side of that prognosis. Q. So that early favourable response may not justify improving prognosis but persistence of disease progression into therapy would make his prognosis worse; is that correct? A. That's correct. Q. And as time went on during this first year following diagnosis, it would be correct to say, wouldn't it, that the prognosis for the treated Mr Farkas not responding well or suffering complications would continue to spiral downwards; is that right? A. If that were the only treatment able to be offered, yes. Q. Whereas, on the other hand, if things were on the up and up, treatment appeared, as it were, touch wood, to be working after, say, six-months, it may still be too early to improve your prognosis for 12 months survival; is that correct? A. Yes. Q. That's because quite a lot can happen in six months? A. That's right. Q. So that for the treated Mr Farkas. As at May 2002 when you first set out to describe his prognosis, assuming as a clinician you were concerned to do so with the semantic precision you are being asked to do now, doctor, you would simply not be in a position to predict whether he was going to be one of those treated patients whose prognosis may remain 50/50 or whether he would be one of those treated patients whose prognosis went into a sad decline; isn't that right? A. That's correct. Conclusion on Construction of the Policy 74 The plaintiff and the second and third defendants submitted that the Policy requires a prognosis that the result would be death within 12 months based on the presentation of the disease at the time of diagnosis, not taking into account the treatment that was available. It was submitted that the construction for which Tower contends requires the insertion of the words "with treatment" and that such a construction is not reasonable when one reads the whole of the Policy. 75 It was submitted that the construction for which Tower contends leads to uncertainty. Those uncertainties include whether all insureds will accept treatment with emphasis placed upon patient autonomy There is the uncertainty of the response to treatment particularly, for instance, in the "rarer" types of cancer, a type with which the plaintiff was diagnosed. There is also the uncertainty of the timing of treatment that may be administered. There is the further uncertainty of the different types of treatment that may be prescribed by different practitioners. What if, for a variety of reasons, the patient is unable to have access to the obviously world class treatment to which the plaintiff had access? All of these uncertainties favour the construction that it is the presentation of the disease per se at the time of diagnosis rather than its presentation with treatment that is relevant for prognosis. If there is an ambiguity in the definition as to whether it is an illness or condition that is treated or an illness or condition that is not treated, the construction given to the Policy should favour the plaintiff: Australian Casualty Co Ltd v Federico (1986) 160 CLR 513 at 520-521 per Gibbs CJ; Johnson v American Home Assurance Company (1998) 192 CLR 266 at 274-275 per Kirby J; McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579 at 602 per Kirby J. That means that on the basis that there is an ambiguity, the prognosis is to be made at the time of diagnosis on the presentation of the disease per se rather than the presentation of the disease with treatment. 76 The words of the definition, that it is "an illness or condition which is likely to result in death within 12 months", also support this construction. It may seem odd, particularly to medical practitioners, that the assessment of the high likelihood of death within 12 months does not take into account the available treatment. However that is what the words say, without the introduction or implication of the words "with treatment". I am satisfied that the appropriately beneficial construction of the Policy is that the prognosis, or assessment, is to be made of the presentation of the disease per se without treatment. 77 There is no doubt that on the construction of the Policy requiring the prognosis without consideration of treatment, the plaintiff's prognosis was "dismal" and it was highly likely that his condition or illness would result in death within 12 months. I am satisfied that on this construction the plaintiff was diagnosed with a terminal illness within the meaning of that term within the Policy. Tower is therefore liable to pay to the plaintiff the Death Cover of $650,000 under the Critical Illness Benefit Conditions and the Death Benefit of $100,000 under the Tower Term Benefit Conditions. 78 Even on the construction of the Policy that there was to be a prognosis considering the available treatment, the evidence of the plaintiff's medical witnesses establishes that at the time of diagnosis, with the special combination of the factors present with this plaintiff's disease, especially the involvement of the lungs, it was highly likely that the plaintiff's illness would result in death within 12 months. The luxury of retrospectivity must be resisted in this case because the relevant time for prognosis is May 2002. Tower fell into the retrospectivity trap when it declined the plaintiff's claim on the basis that the plaintiff was in remission in 2003. That was not the relevant test. The correspondence in 2003 was part of the claim made in 2002 and the relevant test was whether the assessment that the plaintiff was diagnosed with a terminal illness was confirmed, not whether the plaintiff just happened to be in remission at the time of the further correspondence. 79 Even the evidence of Tower's medical witness, Dr Szer, does not detract from the conclusion that even with treatment the plaintiff's death was highly likely within 12 months of diagnosis. His prognosis without treatment was "dismal". The highest Dr Szer could put it with treatment was that the plaintiff would have had "an approximately 50% chance of being alive and free of lymphoma at 12 months". Of course the test was not whether he was alive and free of lymphoma. Putting that to one side, Dr Szer's "approximately 50% chance" is just an approximation. The cross-examination of Dr Szer utilising the example of having two identical patients, one with treatment and one without treatment, was rather illuminating. He frankly conceded that early favourable response to treatment may not justify improving prognosis but persistence of disease progression would make prognosis worse. It must be remembered also that Dr Szer did not see the plaintiff at the relevant time – at diagnosis - whereas Dr Dodds and Professor Young did. 80 The evidence of Dr Dodds that he had not had one patient in the plaintiff's condition that survived 12 months is also very important. Both Dr Dodds and Professor Young relied heavily upon their clinical experience and why not, it may be asked. This Policy is predicated on the basis that it is the practitioner's views or assessment of whether death within 12 months is highly likely. Notwithstanding the problem that arose in relation to the wording of Professor Young's report, I am not satisfied that his concession that it was "quite possible" that he did not include the extra words at the behest of the plaintiff requires that I reject his evidence given in this trial. I have however reviewed his evidence with that concession in mind. Had he been the only medical witness for the plaintiff the acceptance of his evidence might have been more problematical, however it has to be remembered that this was left as a "possibility" even though the qualifying word "quite" was included. In any event the words that were not included in the final report are not pivotal in the light of the competing claims in this case. Indeed it appears that Professor Young's additional words, "particularly if not treated successfully" touch upon the uncertainty of the response to treatment to which reference is made earlier. 81 Although I am satisfied that numerical percentages introduce gradations of more precise measurement than intended by the parties to this Policy, the cross-examination of the plaintiff's medical witnesses and the evidence in chief of Tower's medical witness focused upon such percentages. With treatment, Dr Dodds' prognosis for the plaintiff was "a little below the middle" and a "worse prognosis than 50/50"; Professor Young's prognosis was less than 50% at 20% or 30% - thus a 70% or 80% chance of death within 12 months; and Dr Szer put it at "approximately 50%". I am satisfied that the combination of this evidence elevates the chances of the plaintiff's death within 12 months of diagnosis, as Tower put it in the written submissions, into the realm of probability as opposed to there being a real chance. I am satisfied that on the evidence, even with treatment, the plaintiff's prognosis with the gastrolymphoma and multiple extranodal sites particularly in the lungs, was a high likelihood of death within 12 months. Tower is therefore liable to the plaintiff for the terminal illness benefits in both Tower Term and Critical Illness Benefit Conditions. The Insured Event – clause 3.2 82 The Critical Illness conditions provide in clauses 3.2 and 3.3 for payment of benefits upon the occurrence of "one of the insured events". The plaintiff claims that clause 3.2 is not introductory and should be read separately from 3.3. Clause 3.3 imposes the waiting period of 90 days. The plaintiff submitted and accepted that he first "suffered" the insured event upon diagnosis of it on 1 May 2002 and that such date is not more than 90 days after the benefit start date shown in the CI certificate. 83 However the plaintiff submitted that on a proper construction of the Critical Illness condition the obligation of Tower is to pay the "death benefit" referred to in the 4th paragraph of clause 3.2 upon the occurrence of one of the insured events and is not subject to the 90 day waiting period. It was submitted that the words "in accordance with the terms explained in these conditions" do not pick up the conditions imposed in clause 3.3 or apply them to clause 3.2. 84 It was submitted that although the single cross next to the word "cancer" in the table of insured events has a significance for the purposes of clause 3.3 and recovery of the Critical Illness benefit amount, there is nothing in the words or structure of the Policy that requires that single cross to have any significance for the purposes of the 4th paragraph of clause 3.2. It was further submitted that there is no reason to construe the Policy upon the assumption that the pre-condition to the insured's entitlement to a Critical Illness benefit should apply identically, or at all, to the insured's entitlement to the distinct optional extra of death cover. It was submitted that on the ordinary meaning of the words used in the 4th paragraph of clause 3.2, the death cover amount is payable simply upon the occurrence of one of the insured events and it is submitted in this case, it became payable upon the plaintiff's diagnosis with cancer. 85 In this regard the plaintiff relied upon the description of benefits in the Customer Information Brochure published by Tower and provided to the plaintiff. That description is as follows: Critical Illness provides a benefit upon the death of a life insured. All or part of the death benefit amount will be advanced the first time the life insured is ever diagnosed with terminal illness or meets the definition of a listed insured event. Where Critical Illness is taken as a stand-alone benefit payment is contingent upon the life insured meeting the definition of a listed insured event. Critical Illness Benefit Payable The benefit amount is payable on the earliest to occur of death or a life insured satisfying the definition of one of the insured events, and on the condition that: · For events marked with (X) the life insured first suffered the insured event at least 90 days after the benefit start date (or date of increase or reinstatement). …. Once the benefit amount is paid for death, all cover stops for that life insured. The benefit amount applicable for death will be reduced if a benefit is paid for terminal illness or for one of the other listed insured events. 86 I am not satisfied that the plaintiff's construction of the Policy in this regard is correct. Clause 3.2 is introductory and sets out what benefits are "provided" by the Policy. Clause 3.3 provides when the benefits are "payable" as does clause 4.3. The plaintiff obtained death benefit cover under the Tower Term conditions. The alternative or additional benefit provided under the Critical Illness conditions for death cover is subject to the conditions in clause 3.3. The occurrence of a terminal illness under the Critical Illness Policy is not subject to the 90 day waiting period but I am satisfied that it is clear that the occurrence of an insured event is subject to the condition imposed in clause 3.3, the 90 day waiting period. The Occurrence of an Insured Event – clause 3.3 87 Tower and the plaintiff have approached the matter on the basis that the cancer occurred within the 90 day waiting period and Tower is not obliged to pay that amount for an insured event. Counsel for Shar and K&M argue differently albeit that Shar disavowed the arguments in his evidence. 88 Clause 3.3 limits when the "critical illness benefit" is "payable" and includes the limitation that the benefit for the "occurrence" of one of the insured events is payable only if the insured "suffered the insured event at least 90 days after the benefit start date" shown in the Certificate. The second and third defendants submitted that the "occurrence" of the insured event, the cancer, is not to be construed as the "diagnosis" but rather as the time when the disease occurred. It was submitted that the review of the definition of "cancer" in the Critical Illness Glossary demonstrates that it would be absurd to suggest that "occurrence" means "diagnosis". The definition of "cancer" contains no reference to diagnosis. Other "insured events" refer to a diagnosis, for example in relation to "dementia", "multiple sclerosis", and "Parkinson's disease". 89 The Policy also draws the distinction between "terminal illness" claims that require diagnosis and indeed a prognosis and "insured events" claims that require an "occurrence". It was submitted that the words of the Policy are incapable of being construed as defining the insured event identified as "cancer" not only as the disease but also as the diagnosis of the disease. The plaintiff and Tower submitted that the nature of "cancer" is such that the occurrence is synonymous with the diagnosis. 90 The definition of "cancer" extracted above includes relevantly "the presence of one or more life threatening malignant tumours … characterised by the uncontrolled growth and spread of malignant cells and the invasion of normal tissue". Tumours may be present and may be malignant but they might not be "life threatening". Tumours may be present and may be non-malignant but may be life threatening by reason of their location and/or size. To ascertain whether a tumour is malignant one must have a test. To ascertain whether a malignant tumour is life threatening characterised in the manner defined, a judgment has to be made by a person with capacity to make such a judgment. 91 The "presence" of the relevant tumours, the cancer, can only be ascertained by diagnosis. But the point made by Mr Simpkins SC is that the date upon which the tests and the judgments necessary to diagnose the cancer is not intended to be the date of the "occurrence" of the cancer. It was submitted that what is required is a judgment as to when the relevant tumours were first present, as opposed to first diagnosed, to establish when the cancer "occurred". In supplying "proof of occurrence" of the insured event to Tower the insured was required to include "acceptable support" from a particular category of medical specialists, copies of relevant "confirmatory investigations" and proof that the insured "first suffered" the event at least 90 days after the benefit start date shown in the CI Certificate. It was submitted that these words support the construction that the occurrence of the cancer is the date upon which the insured "first suffered" the cancer or when the relevant tumours were "first" present. It seems to me that in the case of the insured event, "cancer", the exclusion is based on when the insured first suffers the disease and the only way the suffering of that event can be ascertained with certainty is the diagnosis of the cancer. 92 This is somewhat academic because I have found that Tower is liable to the plaintiff under the Policy for the "terminal illness" benefit. It is also academic because there is no doubt that the plaintiff "first suffered" the cancer within 90 days after the benefit start date. His diagnosis was on 1 May 2002. 93 There was a further submission that the Policy falls foul of section 47(2) of the Insurance Contracts Act 1984 (Cth) because it purports to exclude cover for cancer that was present prior to the Start Date of the Policy. It is not necessary to decide this issue having regard to the findings I have made and in any event there is no issue that the plaintiff first suffered the cancer after the Start Date of the Policy. However it is relevant on the alternative claims in negligence upon which I consider it appropriate to express a view having regard to the nature of the claims made. It seems to me that the Policy does not limit the insurer's liability "by reference to" a sickness or disability to which the insured was subject at a time before entering into the Policy. The Policy has the effect of limiting the insurer's liability not by reference to pre-contract sickness or disability but to post contractual occurrence or suffering and, in the case of cancer, diagnosis, irrespective of whether the insured was subject to the cancer prior to the contract: Asteron Life Limited v Zeiderman [2004] NSWCA 47. The negligence claims 94 The plaintiff made alternative claims against Tower, Shar and the other corporate defendants on the basis that if he failed against Tower on the construction questions, the defendants are liable to him for damages by reason of the negligence in failing to notify him of his acceptance by Tower on 21 December 2001. His case is that if he had been notified on 21 December 2001 the evidence establishes that the premium would have been paid forthwith and the waiting period of 90 days would have passed by the time he first suffered the cancer on 8 April 2002 or 1 May 2002. 95 There is an admission that Tower notified Shar, Northcity and/or K&M on 21 December 2001 and that the plaintiff was not informed of this acceptance at that time. Shar claims that he informed the plaintiff of his acceptance on about 21 January 2002 and that the plaintiff did not take up the cover until 25 February 2002, a period of about 6 weeks. There was the usual business delay of processing the paperwork and cheque until 8 March 2002, the Start Date of the Policy. That was a delay of 9 business days. 96 It is submitted that the evidence establishes that even if the plaintiff had been informed of his acceptance on 21 December 2001, it is probable that he would not have taken up the policy for at least 6 weeks and thus would not have had a Policy Start Date until 9 business days after that, being approximately mid February 2002. This would mean that the insured event would still have occurred within the 90 days waiting period from 8 April 2002 when the plaintiff first suffered the cancer. Finally it was submitted that even if the plaintiff had paid the premium on 21 January 2001 it is probable that with a 9 business day delay at that time of year with the public holidays the Policy Start Date would have been 8 January 2002. That would mean that the plaintiff first suffered the insured event within the 90 days waiting period. If the Start Date was 7 January 2002 it would be outside the 90 days waiting period. 97 The negligence claims depend in part upon whether I accept Shar's evidence that he informed the plaintiff on 21 January 2002 that Tower had accepted him. Facts 98 The plaintiff is a barrister-at-law and has been in practice for approximately 25 years. He has known Shar since 1991 and has utilised his services as a broker to arrange and effect insurance policies for him since that time. During the period 1991-2000 Shar arranged and effected life insurance policies for the plaintiff with Colonial Mutual Life Australia (Colonial), income protection policies with Australian Casualty & Life (AC&L) and business expenses policies with AC&L. 99 The manner of completion of the applications for these policies has been described by the plaintiff in evidence and it is apparent that Shar filled out the details of the applications in most circumstances with the plaintiff signing the applications after completion. The plaintiff's preferred method of paying his insurance premiums was by monthly direct debits from his bank account. This was the method utilised from 1996 to April 2000. In April 2000 this method was changed to direct debits against the plaintiff's credit cards. 100 During the period 1996 to 2001 Shar had raised with the plaintiff the prospect of taking Critical Illness cover, to which Shar referred as the "dreaded diseases cover". The plaintiff gave evidence that during those years he did not consider it appropriate to take out such cover. However in 2001 the plaintiff had a discussion with his accountant, Robert Lowy, about mutual friends suffering serious health problems and Mr Lowy suggested to the plaintiff that he should consider obtaining Critical Illness insurance. 101 The plaintiff met with Shar on 27 April 2001 when the topic of critical illness cover was again discussed. The plaintiff's evidence was that Shar raised the topic and the plaintiff responded that funnily enough Mr Lowy had also suggested it to him in recent times. Subsequent to that meeting the plaintiff, at Shar's request, prepared a very detailed analysis of his financial position which he faxed to Shar on 6 June 2001. On 18 June 2001 Shar faxed to the plaintiff a list of what he referred to as "typical 'Dread Diseases' ". That list included cancer as an insured event. 102 On 18 July 2001 Shar provided what has been referred to as his "first report" to the plaintiff. The covering letter of that report noted that it was based on the discussions that had occurred on 27 April 2001 and the subsequent detailed information the plaintiff had sent to Shar. It is noted that the plaintiff's accountant, Mr Lowy, had suggested that the plaintiff cancel his income protection policy and effect a "critical illness (Dread Disease) policy". The report included a section entitled "important matters" which referred to the fact that Northcity and Shar had taken all reasonable steps to ensure correctness of the information and that the opinions were based on the information available at the time. There was also a statement that neither Shar nor Northcity accepted responsibility for any change in circumstances that affected the strategies covered in the financial plan. 103 It was discovered that this report needed to be amended because when the plaintiff provided his financial details to Shar he had failed to take into account, and Shar had failed to note, that he had not brought to account any tax payable on work in progress in the liability section of his information. Although the first report was under cover of the letter dated 18 July 2001, the report itself was dated 15 June 2001. The error in failing to take the tax into account on the work in progress was discussed at a meeting between the plaintiff and Shar on 26 July 2001. The plaintiff claims that he made a decision at this meeting that he would take out Critical Illness insurance and that the only matter outstanding was the amount of cover that he would seek. 104 Shar produced a second report that is dated 27 June 2001 in which the liabilities included the amount of $387,100 for tax on the work in progress. There were some matters in the second report that the plaintiff needed to clarify and to that end he wished to meet with his accountant. That meeting took place on 8 August 2001 and was attended, in part, by Shar. The plaintiff made a detailed note immediately after the meeting which included the following: Shar again recommended dispensing with the Colonial policy on the grounds that it was only payable on death whereas the (Tower) Critical Illness Policy was payable on death and one of the defined "events" occurring ("Dread Diseases") and therefore was better value and I didn't need $1M + death cover as I had no kids (my uncles and mother were old and likely to die before me) & if I was still with Donna then she was not likely to stay in a big house (her kids would be grown up) and would most likely sell it on my death which, given the value it must be worth, would still leave plenty for her to buy a unit or s'thing smaller with plenty left over to live on. I should change my Income Monthly Disability Cover & Business Expense Cover from 14 days to 30 day wait as premiums much cheaper. I should keep Fellowship of Prof's policy as I had a foot in the door and could always increase w/o new medical exam. 105 The note records that Shar left the meeting and a discussion took place between Mr Lowy and the plaintiff in the following terms: We discussed my Colonial cover and despite Shar in numerous discussions recommending I give up the Colonial Cover as it only covered death Bob thought it best to keep it (provided I could afford it) as if gave it up and then married Donna or s'one else, I would probably want a life policy to cover as come close to covering the Mtge and the older you get the harder it may be to get cover again, as would have to go to new medicals etc. and could've got such in the meantime – therefore we decided I'd keep the Colonial Policy. Bob agreed with Shar that I should change the 14 day waiting period re Monthly Disab etc to 30 as in his view 14 days was ridiculous as it involved such a high premium. Such a policy was really meant to cover a more prolonged illness - if get the flu unlikely to be off for 14 days, therefore for the considerable premium reduction I should definitely go for the 30 days. I should definitely take out critical illness cover (Bob reminded me that the discussions between Shar and me started in large part bec. he suggested I have such a policy) = $650,000. Therefore: 1. I'd keep Colonial = $1,060,216 = death only 2. Get critical illness: Death and Insured Event as per Table 3. Monthly Disab. & Bus. Expenses 14 30 day wait 4. Keep Fellowship of Prof's Policy 106 Shar produced a third report dated 22 August 2001. The plaintiff gave evidence that he did not ask Shar to produce that report and he certainly did not request any detail of quotations for cover for anything less than $650,000 notwithstanding that such quotations are included within that report. 107 On 29 August 2001 the plaintiff attended Shar's office at which time an application for the Critical Illness insurance policy was completed. The plaintiff sat with Shar at a table in his office and as Shar asked questions, the plaintiff answered and Shar completed the content of the application form. The plaintiff signed the form without going back through to read it in detail. He explained this on the basis that he had been dealing with Shar for ten years and that Shar had all his financial and medical details and knew the way in which he paid premiums by direct debits to his credit cards. 108 The plaintiff gave evidence in cross-examination that the reason he did not go back through the form that Shar had filled in was because he "trusted" him and "regarded him as a friend". He said that at the time of this meeting he did not realise that Shar had not filled out the automatic debit authority within the application form. He claimed that Shar knew from numerous discussions with him that he "conducted my whole life by credit card" and that Shar would have been told by him that "my preferred method of payment was monthly". The plaintiff claimed that Shar did not ask him about the direct debit authority section of the application form and that he "skipped over it and I was not aware that that was there". The plaintiff claimed in oral evidence that there was "absolutely nothing" said about a premium at the meeting of 29 August 2001 with Shar. The plaintiff was cross-examined on this topic and gave the following evidence: Q: Didn't you wonder, as you were sitting there listening to Mr Shar asking questions and completing the form, what was going to happen to …. A: No, because it was an application for insurance. Q: Did you think that there would be some later occasion upon which a premium would be sought from you? A: Yes, when the insurance company chose to accept my application. Q: And did you understand, then, that Mr Shar would ask you for some authority in the nature of a periodical debit authority? A: Yes, which he did at the time. He told me I had been accepted and I immediately read out credit card details to him on the spot. Q: You had made many times earlier in your life, hadn't you, prior to August of 2001, applications or proposals for insurance? A: Yes. Q: And, please correct me if I've got it wrong, but isn't it your evidence that your natural habit, or your natural custom is when you make such applications or proposals you fill out the periodical debit form? A: No, because you put in an application. My past experience was that the premium was asked for when the application, when he was notified that the application was accepted. Q: I see, so your habit or custom prior to August of 2001 in relation to proposals or applications for new insurance is that you would never pay the premium in advance of being notified of being accepted, is that right? A: The only new policies that I took out from, via Mr Shar in '91, '92 and '95 that was Mr Shar's procedure. You can complete an application. You submit it. It gets accepted. You pay the premium. Q: That is what proceeded with Mr Shar over the years and with your other insurance representatives, is that right? A: Well, I didn't have other insurance representatives. The others just automatically renewed, for example, my home and contents insurance. I would simply receive a renewal notice on an annual basis and I would ring up and pay by credit card. My car insurance, I would receive a renewal notice. There were never any discussions in respect of other insurances. Only with my home insurance. If I had purchased items in that given year, then I would have a discussion about increasing the level of cover for the contents. … Q: When you were speaking to Mr Shar about this proposal he said to you, didn't he, "George, we've completed the application. We need to pay a premium?" A: This is totally untrue. Q: And you said to him, didn't you, "I'm still not sure as to the amount of cover I want. I still need to do a lot of thinking on the whole thing?" A: That is totally untrue … Q: Mr Shar said to you, didn't he, "you understand that you will not be on cover"? A: He never said anything to me of the sort. Q: And you said, didn't you "I am fully aware that by not paying the premium I am not covered. This is of no concern as I don't have this type of cover, in any event"? A: I didn't say it and it is illogical. I had three-quarters of the insurance cover in any event. I had monthly … short answer is that is not true because it was of concern to me that I have critical illness cover. That's why the application was submitted. 109 The plaintiff claimed in cross-examination that Shar did not mention the word, "premium", at the meeting of 29 August 2001. However the plaintiff was directed to his own statement in which he stated that he said to Shar at the meeting: "you should immediately notify me and I will immediately, as has been my usual practice over the years of which you are well aware, pay the relevant premium due which you know I prefer doing by entering into an automatic credit card debit authority for monthly payments as I have always done in the past". The plaintiff admitted that he did say the word "premium" and suggested that when he denied that the word premium was said in his earlier evidence it was a denial that it was "an issue". The plaintiff was shown a series of other applications in which the direct debit had been completed. The plaintiff said that he signed those direct debit authorities because he was asked to do so at the time. The plaintiff gave the following evidence in cross-examination: Q: It was in your experience, wasn't it, Mr Shar's usual practice in your dealings with him to ask you either to give cheques for anticipated premiums or to complete periodical debit authorities for anticipated premiums when he was inviting you to execute proposals for insurance? A: I did so whenever I was asked. Q: On this occasion – I'll just remind you where we were yesterday afternoon – when you were speaking to Mr Shar about making an application for a critical illness cover on 29 August 2001, Mr Shar said to you, didn't he, words to the effect of: "George, we've completed the application. We need to pay a premium"? A: Absolutely not. The only person that mentioned the word premium was myself when at the end of a continuing discussion after Tower we spoke of AC&L and at the end of which I pointed out that they were not related, they were separate. Tell me when, particularly, critical illness is accepted and the moment I'm accepted I'll pay a premium. That was the only mention of premium and that mention came from me. I categorically deny that Mr Shar ever asked me for a premium at that meeting. Q: What was your reason please in deciding that you wouldn't pay any premium until you got notified of an acceptance? A: The reasoning was that at that time I was not asked for a premium. I put in an application and I was aware that in order for insurance cover to come into effect, once an insurer has accepted you, you must pay a premium. Q: That is the only explanation you're prepared to offer, is it? A: That happens to be the truth, not a matter of what I'm prepared to offer. Q: You said, didn't you, to Mr Shar that you weren't sure what the amount of cover was that you wanted? A: Absolutely not. Q: You say, do you, that you had determined it should be $650,000 worth of cover? A: Correct. … Q: You had a discussion didn't you on 29 August 2001 with Mr Shar about what amount of cover ought to be applied for? A: No Q: And Mr Shar said to you, didn't he, that if you were undecided it was better to apply for the highest amount that you had in mind to avoid the need to possibly redo some medicals if you had otherwise opted for a lower figure and then changed your mind to a higher figure? A: Absolutely not. 110 Shar's evidence was that he brought the "whole event to a closure" by virtue of the fact that he was on his way to South Africa to visit his mother who was very ill. He wanted the plaintiff to make up his mind about the amount of insurance he wanted to take out. He arranged to meet with the plaintiff and claims that he said to him that he should at least apply for the insurance of $650,000 and let the insurance company underwrite him while he was making up his mind. He said the reason he chose $650,000, apart from appearing in the third report, was that it was highest amount the plaintiff was likely to take and the medicals that would be necessary would at least cover that amount and if he took anything lower he would not have to go through any additional medical costs. Shar claims that he asked the plaintiff to pay the premium when he completed the application form. His evidence was that the plaintiff told him that he was not going to pay the premium until a package had been put together and everything was acceptable "premium-wise". 111 It is apparent that the application was forwarded to Tower by letter dated 31 August 2001. On 2 September 2001 the plaintiff received a letter from Northcity signed by Shar which enclosed an application form to MLC for disability income protection and business expenses cover. It also included a letter addressed to the plaintiff's general practitioner, Mr Brian Churnin, a Tower Medical Examination Form and a copy of the application form that had been forwarded to Tower. Although the letter was dated 2 September 2001 the plaintiff gave evidence that he did not receive it until approximately two weeks after that date. 112 Tower advised Shar by letter of 5 September 2001 that the initial monthly premium of $616.41 was required to be paid "in order to complete the processing" of the plaintiff's application for Critical Illness cover. Tower wrote two further similar letters in September and October 2001. The requests for the initial premium were but one item amongst a number of requests in the letters. Shar's evidence was that he did not ask the plaintiff for the premium at these times because the plaintiff had informed him that he would not pay the premium until he had been accepted. Shar was not concerned that the application would not be processed, because his experience with Tower was that notwithstanding such request the applications would still be processed. 113 By letter dated 9 October 2001 Shar wrote to the plaintiff advising that it was quite important to finalise his insurances before his birthday in November and requesting him to make contact with him to set up a time to finalise the outstanding matters. There were various requirements the plaintiff had to comply with for an MLC policy and the Tower medical Examination information. At the end of November Shar telephoned the plaintiff and informed him that Tower required him to have a current ECG because they would not accept the previous one. The plaintiff arranged to have an ECG on 6 December 2001 and after advising Shar of that fact was informed by him that there were "a few additional documents" that he needed to sign and he would like to meet with the plaintiff. 114 The plaintiff and Shar met in the plaintiff's chambers on 6 December 2001, at which time Shar gave to the plaintiff a back/neck disorder questionnaire that MLC required him to complete. Shar also advised the plaintiff that Tower needed him to sign a quotation as well as signing and certifying the information in the previous report that Shar had given to Tower. This document was headed "Quick Quote" and the plaintiff signed it. Later that day the plaintiff attended for the ECG and requested the doctor to forward it to Shar that day. 115 Shar had a conversation with the plaintiff at the Synagogue in Bondi Junction on 15 December 2001. He gave affidavit evidence that he informed the plaintiff that Tower had "all the information necessary to underwrite you and we will try to get an acceptance as quickly as possible". 116 Tower advised Shar's office on 21 December 2001 that the plaintiff's application for Critical Illness cover had been accepted. On that day James McFarland of Northcity wrote an email to Shar in the following terms: Hello dshar Helen called, george farkas has been accepted, need to arrange payment. Could not get through to Sophie Dick from MLC Underwriting. Her number if you want to try and call her is 99663399 or alternatively Glen Freeman on 99578710. 117 In January 2002 the plaintiff received a pro forma document from Northcity and Shar indicating that as from 1 February 2002 Northcity was changing its address. 118 Documents in the Tower file indicate that on 31 December 2001 and 7 January 2002 it wrote to Shar stating that Tower was awaiting the premium requested on 5 September 2001. On 9 January 2002 Tower sent a document entitled "Requirement Reminder" to Shar reminding him of the requirement for the payment of unpaid premium and advising that if such was not forthcoming within 14 days the plaintiff's application would not proceed. 119 Shar claimed in his affidavit that he telephoned the plaintiff on 14 January 2002 and had a conversation in which he advised him that he had been accepted by Tower. By this time there was also an indication from MLC that the income protection policy that the plaintiff was seeking with that company would be subject to a 50 percent loading. Shar also gave evidence that he advised the plaintiff of this matter in the same telephone conversation. In cross-examination Shar conceded that the date of his conversation with the plaintiff was probably on 21 January 2002. This change was assisted by the fact that Shar had written to the plaintiff on 22 January 2002 enclosing a letter for him to send to MLC making enquiries as to why the 50% loadings had been imposed. There was also an email dated 23 January 2002 from Shar to MLC in which Shar advised that he had "only now managed to get in touch with" the plaintiff. 120 The plaintiff denies that he was informed that Tower had accepted him in that conversation. However he accepted that he did have a conversation with Shar in January 2002 and that he was informed that MLC had imposed a 50 percent loading because of his previous back complaints. 121 Shar claimed that he made a note of the conversation with the plaintiff and that note is in evidence. It is in the following terms: Gave G new AC&L prems for reduced cover & 30 day wait. Said he could not understand MLC particularly the exclusions. Said they were absolutely minor. I said he should get his doctor to write to Glen Freeman. To be on cover said he needed to pay Tower prem. If he delayed they may require DOH. Said he wanted to relook his whole situation & needed to refresh his memory. Once he'd gone thru his files he'd get back to me. 122 It is apparent that on 9 January 2002 someone from Northcity telephoned Tower seeking an extension in relation to the plaintiff's application. Tower's records note that further reminders were given to Shar on 21 and 28 January 2002 and 4 February 2002 that Tower was "awaiting premium". On 5 February 2002 Tower's documents record that the "adviser telephoned" and "agreement to extend case for one more week then definitely npw". The Tower records note that a further reminder was sent on 11 February 2002 and that on 12 February 2002 "application closed off – letter to Mr Farkas (cc adviser)". 123 Soon after 5 February 2002 the plaintiff received a letter dated 5 January 2002 on Northcity letterhead signed by James McFarland on behalf of Shar. The envelope was postmarked 5 February 2002. That letter advised the plaintiff that Shar would be away from his office until 19 February 2002 and included the following: I requested Tower Life to underwrite the income protection based on the medical evidence that they had at hand and they too came back with a suggested loading of 50%. Can you please let me know if Brian Churnin has written to MLC regarding the loading and whether he has received a reply yet. I would like to finalise the matter shortly after my return while the medical examinations are still current for Tower Life and to carry out the suggested alteration to the Australian Casualty & Life policy. I will contact you on my return to arrange to meet with you. 124 The plaintiff wrote to Dr Churnin by letter dated 5 February 2002 advising him that Shar had informed him that MLC would only disclose the reasons for the imposition of the loadings to him. He also enclosed a copy of a letter of the same date written to MLC asking it to advise Dr Churnin of those reasons and providing his contact details. 125 The plaintiff claimed that he made a note of the conversation he had with Shar in what he described as "late January" 2002. That is the conversation of 21 January 2002. That note made no reference to the acceptance by Tower of which Shar said he advised the plaintiff in that telephone call. Significantly that note made no reference to the imposition of the loadings by MLC nor did it refer to the information that Shar obviously gave to the plaintiff that MLC would only provide the reasons for the imposition of the loadings to Dr Churnin. 126 The plaintiff received a letter from Tower dated 12 February 2002 in an envelope postmarked 14 February 2002. That letter was in the following terms: As at 12th February 2002 we have not received the outstanding requirements to enable us to assess your application for the valuable protection sought. Whilst there may be good reasons for the requirements not being met at this time, we are unable to hold our file open indefinitely. We now confirm that any "interim cover" which may have been offered as a result of this application is cancelled. Should you wish to reapply for cover you are most welcome to do so and we would require your initial premium and the outstanding requirements. Depending on the timing of a reapplication, updated health details may be requested. Want to know more? Please telephone your adviser, Mr D Shar, by telephoning 0293691444 or our Customer Services Staff on 1800 226 364. 127 When the plaintiff received this letter he telephoned Shar, informed him of its receipt and advised him that he did not understand why it had been sent. He read the letter to Shar who said, "Ignore that letter. It is in error. Tower have everything they need. I cannot understand why that letter was written". The date of this call was probably after 19 February 2002 because Shar was in New Zealand at a Tower conference until that date. 128 The plaintiff met with Shar on 25 February 2002. The plaintiff claimed that at this meeting Shar said, "Congratulations you have been accepted" by Tower for the Critical Illness and Death cover and that he "now" had to pay the premium. The plaintiff gave evidence that he reminded Shar that he always paid by credit card and then provided him with his credit card and Shar completed a credit card debit authority form. The plaintiff then signed and dated that form. Shar also produced a Tower Health Declaration to the plaintiff for his signature because it had been "some time" since his original application. 129 When Shar met with the plaintiff on 25 February 2002 he had with him a document that he handed to the plaintiff in which there was a reference to the Critical Illness cover with Tower. It referred to "proposed cover" and Shar claimed that he used those words because the plaintiff "was still undecided as to what he wanted to do in relation to his Tower policy". It also referred to the "present cover" with AC&L and included a comparative table of premiums at 14 days, 30 days, 60 days and 90 days. The plaintiff completed the relevant documentation including signing the direct debit authority to his credit card and the Policy was issued as referred to earlier in this judgment. 130 On 30 April 2002 the plaintiff telephoned Shar and advised him that "something was found" on the biopsies that he had recently undergone. The plaintiff then noted that any diagnosis would be excluded under the 90 day exclusion in the Critical Illness Conditions and complained that it was totally unacceptable that Tower had taken 6 plus months to decide whether they would accept him or not. It was in this conversation that the plaintiff claims Shar advised him that Tower had in fact accepted him in December 2001 but that the plaintiff had only paid the premium on 25 February 2002. 131 The plaintiff gave evidence that he asked Shar why he did not tell him of the acceptance in December and Shar responded "I admit that I didn't advise you in December at all. You had been away on holidays for most of January and therefore I could not tell you in January either." The conversation then proceeded with the plaintiff informing Shar that he was very angry and Shar suggesting that they wait until the biopsy results came through. 132 In a telephone conversation with Shar on 3 May 2002 the plaintiff arranged a meeting in his chambers on 6 May 2002. The plaintiff gave evidence that at this meeting he informed Shar that the Specialist Haematologist, Dr Dodds, had informed him that his condition was such that he was likely to be dead within 6 months. He said he was very upset and angry at Shar for not telling him that he had been accepted in December 2001. Shar advised the plaintiff to make a claim on Tower and the plaintiff gave evidence that Shar said "I understand why you are upset as you had in fact been accepted in December 2001 but only paid the premium on 25 February this year". Shar advised the plaintiff that he would personally take it upon himself to approach Tower and to explain the circumstances. He said it was "too big an issue for the normal claims managers" that he normally dealt with and that he would approach the General Manager of Tower directly because he had very good connections with Tower and knew the General Manager. 133 On 7 May 2002 the plaintiff telephoned Shar and advised that he wanted some specific answers. He asked him when in December Tower had accepted him for Critical Illness. Shar replied that Tower had telephoned his office on 21 December 2001 and advised that he had been accepted and that they required the premium. Shar advised that Tower had spoken to his assistant because he had already gone on holidays and that his assistant emailed his desk which Shar looked at when he came back from holidays in January. Shar informed the plaintiff that he had told him of that acceptance on 14 January 2002. Later on 7 May 2002 the plaintiff received a telephone call from Shar in which he advised that he and his partner had an urgent meeting that afternoon with the General Manager of Tower. He advised also that there was to be a meeting the following week in respect of the plaintiff's "matter". In a subsequent telephone conversation that day the plaintiff suggested to Shar that he tell Tower the truth. 134 Mr Simpkins SC suggested to the plaintiff that he was not terribly concerned about whether he obtained cover for Critical Illness from Tower, demonstrated by his lack of follow up with Shar between November/December and mid February when he received a letter from Tower dated 12 February 2002. This proposition was put to the plaintiff a number of times in cross-examination and was rejected. The plaintiff's evidence was that he understood that Shar was going to contact him as soon as Tower had advised him of the result of the plaintiff's application. Consideration 135 Although the plaintiff denies that Shar asked him for a premium on 29 August 2001, the plaintiff's own evidence is that he advised Shar that he would pay a premium when Shar contacted him with advice that he had had been accepted. The justification for not asking the plaintiff for a premium in the circumstances of the three subsequent letters from Tower is more easily understood when one considers the plaintiff's evidence that he would pay the premium when he was accepted. There is not much between the evidence of the plaintiff and that of Shar in relation to the premium situation as at 29 August 2001. Whether Shar asked for it or not the plaintiff made it clear that he would pay the premium when he was advised he had been accepted. 136 Both the plaintiff and Shar presented in evidence as parties trying to do the best to give accurate evidence. The cross-examination of each was both searching and intense. On the one hand the plaintiff claims that he was not informed of his acceptance until 25 February 2002. On the other Shar claims he was informed on 21 January 2002. There was nothing in the oral evidence of either man that was glaringly erroneous or devious. In circumstances such as these resort to the contemporaneous documents is of assistance. There is in support of the plaintiff's claim a lack of any letter advising him that Tower had accepted him and the file note he claimed he made of the conversation with Shar on 21 January 2002. On the other hand, for Shar, there is the file note of the alleged conversation on 21 January 2002 and there is the letter of 5 January (wrongly dated) written on 5 February 2004. 137 The plaintiff's case is that although there was a conversation with Shar in January in relation to the MLC proposal, he was not informed that Tower had accepted his proposal. Consistently with that case and if I were to accept the plaintiff's evidence the note relied upon by Shar of his conversation with the plaintiff in January 2002 could not be a true record of that conversation. Shar was cross-examined about this note and gave the following evidence: Q: First of all, it contains no date on it; is that right? A: Correct. Q: Second, it is not physically attached to any other document; correct? A: Correct. Q: Third, it shows no physical signs of having been so attached do you agree? A: I don't think it ever was attached. Q: It bears all the appearance of a piece of paper on its own floating loose, doesn't it? A: That's quite right, but file notes generally are. Sometimes they are on the back of a message pad. Q: You surely don't keep your files all mixed up together, do you? They wouldn't be files then would they? A: We have individual loose leaf files when we are using files. … Q: You can point to nothing in the way you keep your files or the manner in which this document came to light to date if at all, can you? A: The letter that I wrote to him on 5 February would imply that he knew that he had been accepted and to keep the medicals alive we needed to do something. Q: In answer to a question by me about the dating of that handwritten note, you have responded with an argument about the implication of a letter you wrote on 5 February, haven't you? A: I'm not sure that I have. You asked me for an explanation, I just tried to give an explanation. Q: There is nothing in the way you kept your files or the way that document came to light which enables you to date it, don't you agree? A: No, I've had that printout dated the 14th and this was done on the same day as that printout. Q: That's your sworn memory, that it was done on the same day? A: Absolutely. Q: They aren't attached to each other, at all are they? A: Not at all. Q: They don't cross-refer to each at all? A: Not at all. They were two separate issues. Q: And yours is a memory which once was prepared to put forward 14 January categorically, wasn't it? A: Never categorically, and I don't think it ever says categorically, Mr Walker. I use the 14th as the best assumption I could make at that point in time because the whole motivation was to get to see Tower as quickly as possibly. Q: Your dating that you have just referred to ties it to 14th January doesn't it? A: The dating of the 14th January, correct, that was when it was printed, but if I only phoned on the 21st, and this file note was made on the same day as that notation on the printed note – on the typed note, sorry. Q: On the typed note? A: Correct. Q: Which typed note? A: The one. Q: Part of the annexure? A: Correct. …. Q: To be on cover have you annexed any explanation as to why those words are written to left of the margin of what otherwise you have written? A: I have no idea. Q: What about this as a situation. The words you have added tactically to try and make that note forensically useful for you. What do you say to that? A: If that were the case I would have rewritten the note very neatly. … Q: The reference to Mr Farkas delaying, are you saying that you ever told Mr Farkas that he was delaying paying premium? A: Mr Farkas knew he wasn't paying his premium because he hadn't made up his mind as to the level of cover he wanted, and he had told me right in the beginning that he would only pay his premium when he made up his mind the total amount of premiums he wanted to pay for all his insurances. Q: If that is the way you spoke to him, why didn't the note record you asking him to make up his mind rather than pay premium? A: In hindsight I could have done a million things. I was trying to close this particular deal and get him to make a decision. He would either say look, I am not happy with the premium, come see me or give me some explanation. The explanation was he had not made up his mind yet so there was nothing I could do. Q: This is not a note which records accurately any conversation you ever had with Mr Farkas, is it? A: Yes, it is. 138 The terms of the letter written on 5 February 2002 (dated 5 January 2002) are important. Although the letter does not say in terms that the plaintiff has been accepted for cover, it proceeds from a premise that such acceptance is in place. This letter was relied upon to suggest just that. The defendant's file note of the conversation of 21 January 2002 suggests that he advised the plaintiff of MLC's 50 percent loading. The letter of 5 February 2002 advised that Shar had requested Tower to underwrite the income protection upon which MLC had required a 50 percent loading, but that Tower had come back with exactly the same loading of 50 percent. That put an end to the efforts to obtain the income protection without the loadings. The letter of 5 February 2002 states that Shar wanted "to finalise the matter" shortly after his return from New Zealand while the medical examinations were still current. That statement seems to me to be on the premise that Tower had already accepted the plaintiff for cover and that all that needed to be done was to finalise it. It was suggested that this be done quickly whilst medicals were still current. 139 The evidence the plaintiff gave of his discussions with Shar and Shar's conduct subsequent to the plaintiff's diagnosis are relied upon by the plaintiff to suggest that Shar did not inform him in January 2002 that he had been accepted for cover. There is no doubt that Shar did everything he possibly could to take up the plaintiff's cause with the more senior people in Tower. I have little doubt that this extra effort was because of the delay in advising the plaintiff that he was accepted for cover. 140 James Edward McFarland, the personal assistant to Shar during the relevant period, was called to give evidence in the defendants' cases. One of Mr McFarland's tasks was that each week he, with Shar, went through every outstanding application. One of the outstanding applications was the plaintiff's and when Mr McFarland raised this with Shar in January 2002 that Tower had requested the premium Shar informed him that the plaintiff "keeps telling me that he is still thinking about it and does not want to pay the premium until he has made up his mind". Shar informed Mr McFarland that the plaintiff did not want to go ahead until all the insurances were finalised. Although I accept Mr McFarland's evidence as truthful, I regard the safer course in deciding whether the plaintiff was informed in the conversation of 21 January 2002 that Tower had accepted him is to disregard the evidence given by Mr McFarland. This is so because the conversations Shar had with him could easily have been referring back to conversations with the plaintiff prior to 21 January 2002. 141 The plaintiff's conduct in late 2001 and 2002 is indicative of someone who was in no hurry to take out the insurance. He had taken his time in finalising the medical requirements and Shar had to write to him to try to have the insurances in place before his birthday in November 2001. That did not happen. Although he was informed directly by Tower by letter in December 2001 that it was considering his application and also had the discussion at the Synagogue with Shar about that time, he did not make any contact with Shar to find out if Tower had accepted him. As he would have it, even when Shar rang him on 21 January 2002 there was no discussion about whether Tower had accepted him. After MLC imposed the loadings, the plaintiff cancelled his proposal with that company. It was then that Shar sought income protection cover from Tower without loadings as advised to the plaintiff in the 5 February 2002 letter. All of this is indicative of a person wanting to finalise all insurances at the one time. 142 The 5 February 2002 letter is also consistent with Shar's evidence that he had been trying to have the plaintiff "close the deal". This is something that Shar had been pushing for since late 2001. The letter asked if Dr Churnin had written to MLC re the reasons for the loadings. The plaintiff had not pursued that matter until at least 5 February 2002. The delay between the cancellation of the MLC policy on 25 January 2002 and 5 February 2002 is further evidence that the plaintiff was in no real hurry to "finalise" his insurances, as Shar had been trying to achieve. 143 The note prepared by Shar and given to the plaintiff in their meeting on 25 February 2002 is also supportive of Shar's evidence that the plaintiff wanted to finalise all his insurances at the one time. The notes made by the plaintiff that he claims were made of the conversation in January 2002 show that the plaintiff was considering the total cost of all the insurance premiums. As I have said the plaintiff's note makes no mention of the 50% loading imposed by MLC nor does it mention the suggestion that Dr Churnin was to write to MLC. It is obvious therefore that if this is a note of the January 2002 conversation the plaintiff certainly left out some matters of significance. 144 The letter of 5 February 2002, wrongly dated 5 January 2002, is consistent with the plaintiff having been informed of the acceptance. What needed to be done after that letter was not the awaiting of acceptance but the need to "finalise" the matter on Shar's return whilst the medicals were current. The plaintiff's reaction to the Tower letter of 12 February 2002 is also relevant. He did not ask Shar "have I been accepted yet" but asked why the letter had been sent. When Shar informed him that Tower had everything and that it had been sent in error the plaintiff did not complain that Tower was taking far too long to make up its mind. 145 I am satisfied, on balance, that Shar informed the plaintiff on 21 January 2002 that Tower had accepted him for cover. An explanation as to why the plaintiff did not recall that part of the conversation or, convinced himself that he was not so informed, may be that he was on holidays at the time and did not make his usual detailed note of the conversation. It is clear that the note is quite deficient for the reasons referred to above. There is also the subsequent trauma of the diagnosis of the very thing for which he had obtained cover and the identification of the existence of the 90 days waiting period. However this is only speculation. The fact is that Shar did inform the plaintiff on 21 January 2002 that Tower had accepted him. 146 The consequences of that finding are that although I am satisfied that Shar should have informed the plaintiff in December 2001 or earlier in January 2002 that Tower had accepted him, the probabilities on all the evidence are that the plaintiff would have sorted out his income protection cover first and waited to pay the premium for Tower and AC&L in a "package". This insurance had been discussed for years with the plaintiff. The fact that he had decided to pursue it in 2001 after discussions with his accountant was not something that he regarded as urgent. It seems to me that the urgency of it has been elevated in the plaintiff's mind by reason of his subsequent diagnosis with a terminal illness, thankfully one that is presently in remission. 147 I am satisfied on all the evidence that if the plaintiff had been informed on or shortly after 21 December 2001 that Tower had accepted him he would not have taken out the insurance until after the MLC had responded and the loadings question had been sorted out. Taking those steps into account it is probable that "the package" would not have been finalised until it was actually finalised on 25 February 2002 with a Policy Start Date of 8 March 2002. Conclusion on negligence claims 148 I am not satisfied that the plaintiff has made out his claims in negligence. Those claims are dismissed. This conclusion makes it unnecessary to decide the agency questions raised by Northcity. 149 The parties are to bring in Short Minutes of Order reflecting these findings. I will list the matter at 11.30 am on 25 June 2004 for directions for the filing of those Short Minutes. If the parties are unable to agree on an order for interest and/or costs I will fix a date for that argument at the directions hearing on 25 June 2004. ********************************** Last Modified: 06/23/2004 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.