Atton v National Mutual Life Association of Australasia [2007] NSWSC 310

New South Wales Supreme Court

CITATION : Atton v National Mutual Life Association of Australasia [2007] NSWSC 310

HEARING DATE(S) : 19/03/07

JUDGMENT DATE : 10 April 2007

JUDGMENT OF : Gzell J

DECISION : Judgment for the defendant with costs.

CATCHWORDS : CONTRACTS - General Contractual Principles - Construction and Interpretation of Contracts - Income protection policy of insurance - Sickness benefit less than injury benefit - Sickness defined to include total disablement from injury that did not start within 30 days of injury - Whether total disablement started within that period - No new principles

PARTIES : John Atton - Plaintiff National Mutual Life Association of Australasia - Defendant

FILE NUMBER(S) : SC 3573/05

COUNSEL : Mr M Lawson - Plaintiff Mr R Cavanagh - Defendant

SOLICITORS : Thomas Mitchell Solicitors - Plaintiff Turkslegal - Defendant

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

GZELL J

TUESDAY 10 APRIL 2007

3573/05 JOHN ATTON v NATIONAL MUTUAL LIFE ASSOCIATION OF AUSTRALASIA JUDGMENT

The issue 1 John David Atton was insured under an income protection policy. National Mutual Life Association of Australasia became the insurer under the policy. The policy drew a distinction between an injury and sickness, the latter giving rise to lesser benefits. Mr Atton sought a declaration that he sustained an injury in terms of the policy. The background 2 Mr Atton was a director and shareholder of John Atton Engineering Pty Ltd. He was also an employee. His company had contracted with Alstom Engines Pty Ltd to provide his services as superintendent to coordinate work being done by employees of his company and employees and subcontractors of Alstom. The work was maintenance and repairs of the naval vessel HMAS Tobruk at Garden Island. 3 On 11 August 1999, while performing a safety inspection, Mr Atton twisted his right knee and immediately felt severe pain. He was carried off the ship back to an office on the harbour where he took pain killers and completed paperwork until 8.00 pm. Thereafter until the end of the contract, Mr Atton performed his tasks from the office. Work on the Tobruk ceased on Friday 3 September 1999. In the period from his accident to that date Mr Atton worked full time and drew a full salary from his company. 4 Mr Atton said he did not work from 4 September 1999 to 6 September 1999, from 8 September 1999 to 11 September 1999, from 13 September 1999 to 14 September 1999 and from 18 September 1999 to 22 September 1999. However, that period covered three weekends and followed the completion of the contract on the Tobruk. On 7 September 1999, Mr Atton attended a debriefing and was paid. On 12 September 1999 he was paid for liaising with subcontractors in Sydney. On 15 September 1999 Mr Atton was looking at tender documents in Sydney for which he claimed he was paid for 40 hours including travel time. 5 On 23 September 1999, Mr Atton said he resumed work. This was another long-term project at the Eraring Power Station. When he was working on such projects he was required to work long hours and did so. 6 When not working on long projects, Mr Atton worked in his workshop. He said that between 22 September 1999 and 7 January 2000 he was unable to attend to this work on an average of two or three days per week. He explained this evidence. He did not mean that there were two or three days a week in which he did no work in his workshop. He said he summed the number of hours that he worked each day and converted those hours to notional days on an eight-hour per day basis. 7 Mr Atton saw Dr Townson on 18 August 1999. Dr Townson referred him for physiotherapy. He did not prescribe any medication. There is no evidence that Mr Atton received any physiotherapy treatment. He did not tell the doctor that he was incapable of working. He said that the doctor told him that he had not sustained a serious injury to his knee and it should improve. 8 On 11 November 1999, Mr Atton saw Dr Meredith who diagnosed a tear of his right medial meniscus and referred him to Dr Ridhalgh, an orthopaedic surgeon, whom Mr Atton saw on 15 November 1999. The doctor agreed that he had a medial meniscals tear and would benefit from surgery. In his report of 12 December 1999, Dr Meredith expressed the view that Mr Atton was currently fit for his normal duties and, following the arthroscopy, this should be enhanced. There might be a few days at the time of the operation where he would be unfit for work. 9 Mr Atton ceased work on 27 December 1999, the arthroscopy was performed on 7 January 2000 and he returned to work on 23 February 2000. 10 Mr Atton completed a claim form on 24 January 2000. In answer to the question: "When did you cease all work?" Mr Atton answered at 7.00 am on 27 December 1999. The claim was accepted by National Mutual and Mr Atton was paid from 10 January 2000 to 27 February 2000. 11 In the middle of 2002, Mr Atton was referred to Dr Lindsay Laird, another orthopaedic surgeon, who performed a second arthroscopy on 16 September 2002. Mr Atton said he attempted to return to work on 9 October 2002 but was unable to do so. Mr Atton lodged a second claim form dated 30 September 2002. The claim was accepted and Mr Atton has been in receipt of benefits under the policy since 16 October 2002. 12 Mr Atton lodged a third claim form on 17 October 2003 in which to the question "When did you cease all work?" he answered 3 September 1999. 13 Mr Atton was examined by other medical practitioners whose reports were in evidence. They do not, in my view, advance the case. National Mutual accepts that Mr Atton has been totally disabled within the meaning of the policy since 16 October 2002. The policy 14 The policy provided benefits on total disablement, death, and partial disablement following total disablement. The schedule to the policy stated the monthly benefit at $3,250. For partial disablement following total disablement the monthly benefit was multiplied by the fraction constituted by the difference between the insured's pre-disability income and the income after disablement divided by the pre-disability income. The schedule defined the benefit period as life for injury and five years for sickness. The policy defined total disablement in cl 2 in these terms: "If the person insured is totally disabled, we will pay you the monthly benefit. The person insured is totally disabled if, because of an injury or sickness, he or she is: § unable to perform at least one income producing duty of his or her occupation; § not working; and § under the regular care and attendance of a medical practioner." 15 Clause 2 of the policy further provided: "We will decide whether the person insured's total disablement is caused by an injury or a sickness, based on medical evidence.