Alexander Raymond Walton v The Colonial Mutual Life Assurance Society Limited [2004] NSWSC 616

Reported Decision : (2004) 13 ANZ Insurance Cases 61-620

New South Wales Supreme Court

CITATION : Alexander Raymond Walton v The Colonial Mutual Life Assurance Society Limited [2004] NSWSC 616 HEARING DATE(S) : 5/07/04, 6/07/04, 7/07/04, 8/07/04, 9/07/04 JUDGMENT DATE : 19 July 2004

JURISDICTION: Equity Division Commercial List JUDGMENT OF : Einstein J DECISION : Parties to bring in short minutes of order

CATCHWORDS : Insurance - Insurance Contracts Act 1984 (Cth) - Income protection life insurance policy - Insurer purports to terminate policy after making monthly payments of benefits for number of years - Insurer grounds its refusal to make further payments under s56 of Act on basis that plaintiff's claim fraudulent in that insured had stated in his claim forms that he was not working - Allegation that insured was in fact working - Insurer claims to have cancelled policy on basis that by his fraudulent claim, insured breached duty of utmost good faith under s13 of Act by deliberately or recklessly giving false answers in claim forms submitted by him - Onus of proof - General law proposition that it is not open to insurer to cancel policy after the event which renders it liable has occurred - Consideration in terms of Act section 56 (1) - Effect of Act section 54 (1) is that breach of duty of utmost good faith by insured entitles insurer to refuse to indemnify insured only to extent that insurer's interests are prejudiced by that breach - Act section 54 (1) provides the extent of the remedy for the breach of duty imposed by section 56 (1) - Whether inhibition in insurer being entitled to 'avoid the contract' to be found in section 56 (1) is only a reference to there being no entitlement to so avoid the contract ab initio - Whether no such limitation on entitlement of insurer to avoid the contract in futuro - Whether as a result of the sickness or injury insured unable to perform one or more of the important duties of his occupation - Policy provides no definition of "work" or "working" - Whether insured was from any, and if so what point in time, a person whom, if ever he had been, was no longer continuously disabled within meaning of the policy LEGISLATION CITED : Insurance Contracts Act 1984 (Cth) Marine Insurance Act 1906 (UK) AF and G Robinson v Evans Bros Pty Ltd [1969] VR 885 Australian Casualty Co Ltd v Federico (1986) 160 CLR 513 British Traders Insurance Co Ltd v James [1968] NZLR 1157 De Britt v Frew (1992) 7 ANZ Ins Cas 61-140 Duncan v Prudential Assurance Co Ltd (1999) 10 ANZ Ins Cas 61-433 Edwards v Hunter Valley Co-op Dairy Co Ltd (1992) 7 ANZ Ins Cas 61-113 Entwells Pty Ltd v National & General Insurance Co Ltd (1991) 6 ANZ Ins Cas 61-059 Farmers Co-Op Ltd v National Benefit Assurance Co Ltd (1922) L1R417 CASES CITED : Fernance v Wreckair Pty Ltd (No 2) (1992) 43 IR 300 - ICt(NSW) Gugliotto v Commercial Union Assurance Co of Australia (1992) 7 ANZ Ins Cas 61-104 Halford v Price (1960) 105 CLR 23 Manifest Shipping Co Ltd v Uni-Polaris Shipping Co Ltd (the Star Sea) [2003] 1 AC 469 Mourad v NRMA Insurance Ltd (2003) 12 ANZ Ins Cas 61-560 Naomi Marble & Granite Pty Ltd v FAI General Insurance Company Ltd (No 1) [1999] 1 Qd R 507 Robertson & Thomson v French (1803) 102 ER 779 Super Chem Products Limited v Amercian Life and General Insurance Co Ltd [2004] 2 All ER 358 Tiep Thi To v Australian Associated Motor Insurers Ltd (2001) 3 VR 279; 11 ANZ Ins Cas 61-490 PARTIES : Alexander Raymond Walton (Plaintiff) The Colonial Mutual Life Assurance Society Limited (Defendant) FILE NUMBER(S) : SC 50101/03 COUNSEL : Mr M Maxwell (Plaintiff) Mr J Maconochie QC, Mr Sheller (Defendant) SOLICITORS : Marsdens Law Group (Plaintiff) Turks Legal (Defendant)