Hand v Australian Casualty & Life Limited [2004] NSWSC 252

New South Wales Supreme Court

CITATION : Hand v Australian Casualty & Life Limited [2004] NSWSC 252 HEARING DATE(S) : 30/10/03, 31/10/03, 5/12/03 JUDGMENT DATE : 2 April 2004

JUDGMENT OF : Burchett AJ at 1 DECISION : Action dismissed.

CATCHWORDS : DISABILITY INSURANCE - claims of total disability and alternatively partial disability - consideration of medical issues - claims failed on the facts. LEGISLATION CITED : Limitations Act 1969, s 14(1)(a) PARTIES : Craig Ashley Hand (Plaintiff) Australian Casualty & Life Limited (Defendant) FILE NUMBER(S) : SC 5141/99 COUNSEL : In person (Plaintiff) R. Horsley (Defendant) SOLICITORS : In person (Plaintiff) Cutler Hughes and Harris (Defendant)

- 29 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

Burchett AJ

2 April 2004

5141/99 Craig Ashley Hand v Australian Casualty & Life Limited JUDGMENT 1 His Honour: The plaintiff sues the defendant claiming to be entitled to certain benefits under a policy of insurance relating to employees, including the plaintiff, of Lakegarden Pty Limited. Among the events insured against is "injury", that is to say, as defined in the policy, "bodily injury of the Insured Employee caused by an accident occurring while this Policy is in force as to the Insured Employee and resulting directly and independently of all other causes in loss covered by this policy", involving "Total Disability", that is to say, as defined by the policy, "the continuous inability of the Insured Employee by reason of injury or sickness: (a) during the first two years of a period of disability to perform each and every duty of his occupation; and (b) beyond the first two years of such period of disability to perform any gainful occupation for which he is reasonably suited by education, training or experience and in either case the Insured Employee is not engaged in any occupation for wage or profit". As is revealed by the terms of the definition of "Total Disability", the policy is also concerned with the event of "sickness", but this is not important for present purposes because benefits are only payable on that footing for a maximum period of two years and no dispute about that period has arisen. An alternative which is of present importance is that of "Partial Disability", that is to say, as defined by the policy, "following a period of Total Disability for which a benefit has been payable for at least thirty consecutive days, the Insured Employee returns to work in a gainful occupation, but due to Injury or Sickness which directly caused such Total Disability, is unable to perform all the duties of that occupation and, as a result, is earning income at a rate less than 75% of Pre-Disability Earnings". The expression "Pre-Disability Earnings" is defined as meaning "the average monthly earnings during the 12 month period immediately prior to Total Disability". By a provision under the heading of "BENEFITS", it is specified: "When, immediately following a period for which a Total Disability Benefit has been payable, the Insured Employee suffers Partial Disability, the Company will pay periodically a benefit…" 2 The plaintiff's claim is that on 1 May 1991 he suffered injury in a motor vehicle accident, with the result that he sustained total disability, or, alternatively, partial disability, within the meaning of the policy. The defendant company in fact paid benefits to the plaintiff, on the footing of total disability, for a period of two years from the end of the month in which the injury was suffered, but on 3 May 1993 it advised him as follows: "We understand…that you are unable to return to your pre-disability occupation as an insurance agent, but that you are fit to return to work on a full time basis in alternative employment. At the time of joining this group scheme, you had been in your current occupation for five months, and, continued to work for a further three months, making a total of eight months in this particular form of employment. Our Assessor's report indicates that prior to October, 1989, your occupational duties, since leaving school in 1982, were shop assistant, storeman and office worker. You have demonstrated you are capable of performing this work when you returned to work in May, 1992 until November, 1992, when your employer ceased trading. This policy provides coverage for your own occupation only for the first two years of claim. Accordingly, we advise that this period expires on the 30th May, 1993 and no benefits will be paid beyond that date." Approximately one year later, on 1 June 1994, Mr Hand's solicitors wrote in response that, apart from brief periods, he had "not been able to return to any form of work because of his debilitating headache", and that he claimed to be "at the least partially disabled" within the meaning of the policy. 3 It appears that, between 15 May 1992 and some time in November 1992, Mr Hand did work as a shop assistant although he alleges that he had difficulty in doing so. Also, between November 1993 and March 1994 he did some work as a casual truck driver, and between April 1994 and July 1994 he did some work as a casual builder's labourer. About Christmas 1994, he worked for two weeks as a labourer. 4 Mr Hand was born on 18 September 1965. He left school, at the age of eighteen, one year before he was to sit for the higher school certificate, and worked for some years as a shop assistant or storeman in a menswear shop. After an overseas holiday, he became a subagent selling AMP policies of insurance on a commission basis in the employ of Lakegarden Pty Limited trading as North Coast Wealth Planners. That was on 27 October 1989, when he was aged 24. However, he did not work continuously from then until the date of the motor accident; following a previous injury, sustained on 30 July 1990, when he hurt his knee, he was off work for some nine months. 5 A matter of a few weeks before the accident of 1 May 1991, Mr Hand married his wife Pauline, a marriage which ended in separation on 12 June 2000, subsequent divorce, and at least 38 Family Court and Local Court cases involving husband and wife, their property, and the custody of their two children. 6 Apart from the work to which I have referred, the plaintiff has not engaged in paid employment in all the years since 1991. For a brief period, he did some unpaid part time work as a counsellor in a branch of a religious charity, and he claims to have worked as a "house husband", caring for the two children of his marriage, who are now aged six and eight, prior to his wife obtaining custody, and doing the housework. At one point in his evidence, he said: "In lieu of part-time work, I am raising my children which is of great benefit to my rehabilitation. I have thoroughly enjoyed it." There was some disputed evidence about his also doing maintenance and building work in the home. 7 The accident out of which the plaintiff's claim arises has been variously described in the documents, each of which reflects his account, as a head-on collision between a car driven by the plaintiff and a truck coming the other way on a one lane bridge, as a side swiping collision with a truck, and as a "near head-on collision". It is clear that physical injuries to the plaintiff at the time, so far as could be observed, were minimal. He did not lose consciousness. The observable injuries, as reported by Dr Maxwell, a neurologist who saw him on 19 July 1991, were "lacerations to his right arm and face". However, he complained immediately of severe headaches, and has continued to do so ever since. His headaches were in the "left periorbital and frontal region and in the neck region". In the early period, he received "relief from his neck pain" with physiotherapy, again as reported by Dr Maxwell. Dr Maxwell's detailed neurological examination "was normal" and he had "a full range of neck movement". At that stage, he had "recovered well from his neck pain". A brain CT scan was reported as normal, as was, later, a brain MRI scan. A cervical X-ray on 21 October 1991 detected nothing relevant, but on 30 November 1995 and later, cervical scanning revealed two disc prolapses, to which I shall refer, the precise significance of which has to be determined in the context of the evidence. 8 As late as 11 June 1993, Dr Maxwell still found "no limitation of neck movement", although there was "some pain in the cervical/occipital/sub-occipital region". His headaches were considered to be "mostly muscle contraction in aetiology". The doctor had earlier made it clear he regarded the headaches as "a mild persistent disability" (estimated at 5%), which "would be expected to improve in time". 9 Dr Maxwell, to whom the plaintiff was referred by his general practitioner in Lismore, Dr Delaney, seems to have been the first specialist in the area, highly relevant to the complaints made, of neurology to have the opportunity to assess the situation following the accident. He also had the advantage that he had seen the plaintiff before for some unrelated condition. Another specialist neurologist who saw the plaintiff early on was Dr J Colebatch, who saw him at the Neurology Clinic of the Prince of Wales Hospital on referral from Dr Delaney on 28 October 1991. Dr Colebatch's report includes the following: "He presents with constant left sided headaches dating from a motor vehicle accident on 1st May, this year. He tells me he had had no serious headache prior to then. Apparently he was the driver of a car which was hit on the side by a truck and was clearly very shaken by his experience. Although apparently there were no external signs or symptoms of a head injury, he was a little confused for one or two months thereafter and he dates his now constant headache from immediately after getting out of the car. This has remained focused around the left orbit and also on the left temple and is present most days. If not present, it will be brought on by minor exertion. It is not associated with nausea or photophobia. He finds that his concentration is poor and this too could cause a headache, but he has been able to go to work about once a week. I understand there is the possibility of litigation pending from his accident. Previous investigations, including a CT scan, have been normal. He has had no other neurological symptoms. … On examination, neck movement was full and painless and there was no local tenderness of the scalp or neck. Cranial nerve examination was normal, as was examination of the upper and lower limbs. … …His pattern seems to be one of tension-vascular headache. I have asked him to return in three months for review." There is no evidence that the plaintiff did return for review by Dr Colebatch. 10 Also at this early stage, the plaintiff was referred to a psychologist, a Mr Stewart Hase, who saw him on 22 October 1991 at the request of his solicitor, and thereafter on a number of occasions until 26 March 1992. Mr Hase reported that the plaintiff told him "he did not suffer from headaches before that time [i.e. of the accident on 1 May 1991] and that he had been living an active and happy life with few problems". 11 Mr Hase wrote: "While it is difficult to be certain, it appears reasonable to assume that prior to the accident Craig was living a normal, well adjusted life. However, any obsessional tendencies in his personality prior to the accident would explain his preoccupation with and difficulty in overcoming his symptoms and his slow response to treatment. It is also important to consider that reaction to injury and response to treatment is often complicated by the issue of compensation. I believe that Craig's condition…was affected by both these factors." 12 Although Dr Colebatch records Mr Hand as having told him he "had had no serious headache" prior to the accident and Mr Hase records him as having said "he did not suffer from headaches" before the accident, the fact is he was seen by an ear nose and throat surgeon, Dr Raikundalia, only a fortnight after the accident, on 15 May 1991, for a condition of allergic rhinitis with "some clouding in some sinuses" observable in x-rays, when he gave Dr Raikundalia a history of "facial pains and headaches since last two years". 13 Notwithstanding the dearth of specialist support for such a view, Mr Hand's general practitioner, Dr Delaney, has consistently reported over the years that he suffers "intractable headaches and severe cervical pain". His most comprehensive report is one dated 14 September 2000 which recapitulates that Mr Hand "was involved in a motor vehicle accident on 1st May 1991. He was the driver of a vehicle that was side swiped by a passing truck on a single lane bridge." The report continues: "After the motor vehicle accident Craig Hand complained of a number of symptoms. These included severe chronic headaches; severe cervical pain, irritability, confusion, dizziness and depression." 14 Despite the periods of some months of work to which I have referred, Dr Delaney reports that Mr Hand "has been unable to work since 1991". He refers to cervical spine injury involving posterior disc prolapses at C4/5 and C5/6 first detected by a CT scan on 30 November 1995, and he "assess[es] the permanent impairment to his cervical spine to be 10%". He also refers to "chronic pain syndrome" and "depression". But in an earlier report of 24 August 2000, Dr Delaney attributed Mr Hand's "anxiety and depression" to "his recent marital separation", prior to which the doctor thought "he was managing home duties and his parenting responsibilities with a major role in childcare." The doctor's views about fitness for work seem also to have undergone some change over the years, since on 25 June 1996 he stated the plaintiff was "unfit for work at present and has been for most [emphasis added] of the time since his accident on the 1/5/91". 15 On 28 February 1992, Mr Hand saw a chiropractor, Mr James Duffy, giving him a dramatic description of his accident - "a head on collision with a truck". He complained then of neck pain, headaches, low back pain and right shoulder pain. Mr Duffy diagnosed various areas of muscle spasm. Relevantly to the neck, he diagnosed "[f]lexion – extension - flexion sprain/strain injury to the cervical spine" and "[m]yospasm to the posterior cervical muscles". He also diagnosed headaches "associated with diagnosis" of muscle spasm. Additional areas of muscle spasm were "[r]ight upper trapezius muscle spasm" and "[b]i-lateral sterno-cleidomastoid muscle spasm" and "[m]yospasm of the lumbar erector spinae muscles". Mr Duffy gave chiropractic treatment on ten occasions in 1992, and also on 13 April and 16 April 1993. He thought the prognosis was "poor to guarded". 16 On 24 October 1993, Mr Hand presented himself at Lismore Base Hospital complaining he had "put neck out when leant forward". The note of presenting problems refers to "whiplash car accident 1-5-91". He was assessed as a "non urgent" patient for triage categorisation and the medical assessment noted in the hospital records includes: "mild neck pain past few days suddenly worse on leaning forward this morning". Subsequently, Mr Hand expressed disappointment and surprise that he had not been regarded at the hospital as being in a serious condition – "he couldn't understand why they had let him go home", as he told one his therapists. 17 Mr Hand was seen for psychological assessment by a consulting clinical psychologist, Mr Allan Andreasen, at the Lismore Psychology Clinic on 10 August 1993, and again on 2 March 1994. Mr Andreasen was one of two psychologists whose reports, tendered in evidence, were supplemented by oral evidence. In his case, that evidence was given by telephone from Lismore because of his serious ill health. Mr Andreasen appears to have become involved in the case at the request of the plaintiff's solicitor and he consulted with Dr Delaney. He also had the benefit of a report from Mr Hase, several chiropractors including Mr Duffy, Dr Colebatch and Dr Maxwell. He reported that the plaintiff: "presented in a most odd and obsessed fashion and the giving of the history was disorganised and markedly lacking in insight. There was a considerable mismatch between the reasonable presentation and the seriousness of the complaints and this was particularly notable in terms of claims that he was confused and had a headache without showing any signs of either. His presentation was characterised by complaint and obsession rather than depression or difficulty." Mr Andreasen considered there was "a somatoform pain disorder…characterised by preoccupation with pain for more than six months with the complaints of pain and resulting social and occupational impairments being grossly in excess of what would be expected from the physical findings such as they are. There are also indications of considerable delusion and thought disorder and of depression." He found no indications of neuropsychological impairment and found "no indications in the testing of malingering as such". He found indication of "a schizoid breakdown in [the plaintiff's] previously rigid and immature personality". 18 As for the prognosis, in September 1993 Mr Andreasen wrote: "It is very difficult to estimate the prognosis in this case. Considerable clarity would be introduced into the situation were he to attend a pain clinic and subsequently present himself to the Commonwealth Rehabilitation Service for rehabilitation assessment. At present this man considers that he is permanently impaired and he looks forward to compensation providing sufficient investment funds for him to live on a rental income for the rest of his life." In fact, although at least one other doctor made a similar suggestion, there was no evidence Mr Hand was ever admitted to a pain clinic. 19 Seen again by Mr Andreasen on 2 March 1994, Mr Hand "said he was still playing cricket and hadn't blacked out on the field although he had had a lot of headaches and had had to be taken off the ground a number of times". He also said "he still had dizzy spells, although he hadn't passed out and these had only been through exertion such as at sport when he was playing cricket or running". At the same time, he said "he couldn't do difficult housework like vacuuming". On an earlier occasion, in 1993, he had said "his wife had learned to adapt to him not being able to do anything and not doing anything." Mr Andreasen specifically asked about whether he had been to a pain clinic as had been suggested in August 1993, to which Mr Hand "said he hadn't been able to remember who told him about the pain clinic and he hadn't been up to it and he couldn't remember how far he had got with the arrangements or whether someone was going to make an appointment, he just couldn't remember." He was given a written reference to pain clinics in Brisbane and told they "would help him to get on with his life and to manage his pain and other difficulties and that he should take this referral to his GP who would then refer him to the pain clinic". Mr Andreasen concluded: "This man, who is not sure of his age, reports continuing neck pain, headaches, inability to do little things, forgetfulness and a great need for others to massage him and generally look after him. This man remains in my opinion, primarily psychiatrically disturbed. It is very likely that there have been long term problems with personality development and adjustment although to the best of my knowledge these had not been apparent in the gross manner that they are at present until his involvement in the motor vehicle [accident] in 1991. I should conclude therefore as I did in the last report that this man, as a result of this accident, has suffered a schizoid breakdown in his previously rigid and immature personality. His complaints and inabilities are complex and contradictory. They basically result from muscular tension and from him defining himself as an injured and sick person who cannot cope with personal responsibility or with being well. The medico legal context is a significant factor in this man's presentation. I should recommend as in the last report that this man attend a pain clinic at the Prince of Wales Hospital or Greenslopes Hospital in Brisbane. If he is accepted into such a program, this would be the best place for him to begin to take some responsibility for his own life. It may well be that he would not be accepted into such a program because of the psychiatric dimension to his presentation and the significance of the medico-legal context." 20 On 20 June 2002, Mr Andreasen reported again, after he had been requested to comment on some thirteen photographs showing the plaintiff "engaged in various pursuits", and after he had been shown the report of another clinical psychologist, a Ms Farrelly, who had submitted the plaintiff to certain psychological tests. Earlier, on 18 September 2001, Mr Andreasen had commented on the problem of "interpretation of a bizarre presentation and a highly suspect test performance and a marked mismatch between his presentation and the seriousness of his claimed injuries". He had acknowledged that there was not "any great difference between Ms Farrelly's psychological diagnosis" and his own. He had concluded: "I don't think there is anything in my findings or indeed of [ sic ] those of Ms Farrelly that would point to any clear disability as a result of this man's involvement in the motor vehicle accident in question. …When I saw this man he was delusional and preoccupied and he seemed to have become this way after the accident but that is not the same as saying that the accident in any way caused it. Whether the link in his own mind between the accident and his multiple and bizarre symptoms and complaints is real (delusional) or malingered I do not know." But Mr Andreasen remarked: "I should say however that this man's score at only percentile 5 on the Warrington Recognition Memory test is quite suggestive of malingering and of course this test performance could rightly be taken to so characterize the other questionable test performances." Upon being shown the photographs in April 2002, Mr Andreasen commented that they "appeared to depict Mr Hand in various pursuits involving physical recreation, he looks cheerful and healthy and of course all this is hardly consistent with his claims of disability and nor are they consistent with any delusional or psychiatric status." He added: "Craig Hand has always said that he sometimes has these so-called symptoms and sometimes doesn't and I can only reiterate that the symptoms had never made any sense to me in relation to the injuries he claims to have received in the motor vehicle accident in question. These photographs may well further support the conclusion that this man is malingering and I would not in any way disagree with that conclusion. After consideration of the results of Jill Farrelly's assessment I was less inclined to see this man as having any psychiatric diagnosis at all, even of delusional thinking, and these photographs would tend to confirm that." 21 When Mr Andreasen gave evidence orally, he was asked to assume that a number of the complaints made by Mr Hand could be explained by some specific organic deficit, and on that assumption whether his opinion would be any different. He replied: "That may well indicate that Mr Hand had, or does have, headaches, but my conclusion was also based on things like taking vitamin C tablets to suicide, but having a dry mouth and being unable to swallow; being able to play cricket and have sex, and yet not take out the garbage; and a lot of other completely contradictory things, as well as complaints of poor concentration, side by side with a very good test performance with new learning and memory and concentration. So, certainly, they might indicate some basis for headaches, and I hope I haven't said there were no headaches. All I have said is that the whole presentation was contradictory, and the test results confirmed that." Later in his evidence he said: "There may or may not be some basis for some pain, but I would stick with my conclusions that his reported symptoms are far in excess of what could be expected from almost any level of pain that he is claiming, and that there is a certain pattern of – contradictory pattern of what he can and can't do – which is more likely to suit him, rather than reflect the extent of any kind of pain, headache or otherwise." 22 Mr Andreasen maintained that the psychological tests were "quite suggestive of malingering", and he also referred to "a couple of probably very telling performances on tests, where we know, from long experience, that even memory-damaged people still do reasonably well in those tests, and he did particularly poorly on them. They are the most transparent ones that most people think is the sort of memory affected by physical problems." Pressed by Mr Hand to concede that his test performance might have been caused by "some disorder", Mr Andreasen said: "There's no disorder that makes a person malinger. The headache doesn't affect test results. In fact, there was nothing wrong with most of your test results, except in just a few instances, and they happened to be instances where malingering is very evident and, basically, your performance on those was more like a malingered performance than a genuine one, either for a person with a headache or without a headache." Later in his evidence, he explained: "I mean, people come in to me every day and say that they have headaches, and everything else they say matches that, and their test results reflect the sorts of deficits that people get when their concentration is affected by headaches, and so on and so on. And his pattern didn't hang together like that, so the conclusion is that it doesn't make sense. There is no support. It is more likely to be a somatoform, or psychologically-based, functionally-based, discomfort and disability, and so on, rather than an organically based one." 23 Finally, Mr Andreasen was asked to comment on the question of exacerbation of the personality disorder that he thought Mr Hand exhibited, and whether "a stressful marriage [would] have the same effect, or be another possibility [alternative to the accident]?" and he replied: "Yes, probably much more likely to." 24 Another psychologist also gave oral evidence in the case, Ms Jillian Farrelly. She practises as a clinical psychologist in Macquarie St Sydney, and she reported on the plaintiff on 2 April 2001. She said "the most striking feature" of her consultation with Mr Hand "was his performance on one particular test called the Warrington Recognition Memory test." On one component of this test Mr Hand scored at the fifth percentile, that is to say, he was "out-performed by 95% of a normal population and on the other component of the test … he scored at just a little bit more than the ninth percentile." Ms Farrelly commented that "they were both very unusual scores and it is considered that this represents malingering of memory function". She confirmed, when questioned, that they were "both appalling scores" and "equally malingering". People only genuinely score in that range "if they have severe brain damage", of the kind verifiable by CT scanning. She said: "The only way you can score in this way for reasons other than organic is through deliberate choice to do so." But in other tests, Mr Hand scored in a manner inconsistent with such organic deficits. The inconsistency was something she had not often encountered, but when she had it was "[g]enerally [with] people who are feigning a picture of mental incompetence."