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Supreme Court of the ACT |
Last Updated: 7 May 2008
CONTRACTS - construction and interpretation - deed of dissolution of partnership - claim to be made on retiring partner's life insurance policy - provision ambiguous and susceptible of more than one meaning - background and context aids to construction - circumstances of policy holder to meet definitions in policy before claim paid - making of claim for total and permanent disability discharged contractual obligation - retiring partner entitled to make subsequent terminal illness claim.
Maggbury Pty Ltd v Hafele Aust Pty Ltd [2001] HCA 70; (2002) 210 CLR 181
Investors Compensation Scheme Ltd v West Bromwich Building Society [1997] UKHL 28; [1998] 1 WLR 896
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165
Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298
Carter Bros v Renouf [1962] HCA 67; (1962) 111 CLR 140
No. SC 111 of 2003
Judge: Gray J
Supreme Court of the ACT
Date: 7 March 2007
IN THE SUPREME COURT OF THE )
) No. SC 111 of 2003
AUSTRALIAN CAPITAL TERRITORY )
BETWEEN: KENNETH ALDRED JACOBS
Firstnamed Plaintiff
AND: LIDODALE PTY LTD
ACN 002 801 256 as trustee of the
JACOBS FAMILY TRUST
Secondnamed Plaintiff
AND: MICHAEL JOHN ARCHINAL
Thirdnamed Plaintiff
AND: M AND J ARCHINAL PTY LTD
ACN 053 538 686 as trustee for the
M J ARCHINAL FAMILY TRUST
Fourthnamed Plaintiff
AND: THOMAS JOHN CHARLES MACPHILLAMY and
JANE PENELOPE ADAMSON as executors of the ESTATE OF THE LATE DAVID RICHARD THYNE ADAMSON
Firstnamed Defendants
AND: AJ PTY LTD
ACN 062 075 745 as trustee of the
D R T ADAMSON FAMILY TRUST
Secondnamed Defendant
Judge: Gray J
Date: 7 March 2007
Place: Canberra
THE COURT ORDERS THAT:
1. The plaintiffs' claim be dismissed with costs.
The Parties and the Claim
1. Kenneth Aldred Jacobs (Kenneth Jacobs), the firstnamed plaintiff, and Michael John Archinal (Michael Archinal), the thirdnamed plaintiff, claim to be entitled to shares in the proceeds of a claim made by their former and now deceased partner, David Richard Thyne Adamson (David Adamson), in respect of a policy of insurance with MLC Limited (MLC) described as MLC Life Cover Super Policy 1666-5688L (the policy of insurance).
2. Kenneth Jacobs, Michael Archinal and David Adamson carried on business in partnership between 1996 and 1 July 2001 as veterinary surgeons trading as "Canberra Veterinary Hospital" from premises located adjacent to the Barton Highway at Lyneham in the ACT (the partnership).
3. The other parties, Lidodale Pty Ltd and M and J Archinal Pty Ltd, as second and fourthnamed plaintiffs, are respectively trustees of the family trusts set up by Kenneth Jacobs and Michael Archinal. Thomas John Charles MacPhillamy (Tom MacPhillamy) and Jane Penelope Adamson (Jane Adamson) are the executors of the estate of the late David Adamson and are the firstnamed defendants. The secondnamed defendant, AJ Pty Ltd, is the trustee of David Adamson's family trust.
4. David Adamson died on 7 June 2002. On 9 May 2002, MLC paid to David Adamson, by way of his family trust, the sum of $692,930.00, being the proceeds of the policy of insurance.
5. The partnership had been dissolved with effect from 1 July 2001. As a consequence of discussions between the partners, a document entitled "Heads of Agreement" (the Heads of Agreement) had been signed by each of the partners but was undated. A formal agreement was subsequently prepared and took the form of a deed which was titled "Deed of Dissolution of Partnership and Sale of Business" (the Deed). The issue of differences between the Heads of Agreement and the Deed and whether those differences effect the construction of the relevant clause in the Deed, is in issue in these proceedings. I should add that the trustees of the family trusts are parties to the Deed of Dissolution as is the trustee of the service trust but, of course, that trustee is not a party to these proceedings.
6. The policy of insurance was the subject of a provision of the Deed. As part of the arrangements for dissolution of the partnership, that provision required David Adamson to "make an application for a claim" under the policy. If the claim was "accepted", David Adamson was entitled to $100,000.00 of the proceeds less his share of the costs of the dissolution and he was to pay one third of the balance to each of Kenneth Jacobs and Michael Archinal. In the event of the claim being "rejected" by the insurance company, David Adamson was entitled to keep the policy for his own benefit.
7. The issue between the parties is the effect of this provision on the monies that were paid by the insurer, MLC, to David Adamson under the policy of insurance. The plaintiffs say that David Adamson was in breach of the obligation imposed upon him to pay one-third of the balance of the proceeds of the insurance policy to the plaintiffs. In the alternative, the plaintiffs claim that David Adamson received the proceeds of the insurance policy in circumstances that gave rise to a constructive trust in favour of the other partners or their trusts.
The determination of the factual issues
8. The determination of the issues that arise in this case has been made extremely difficult as a consequence of the forensic decisions made by both parties as to how this case should be presented. In the case of the plaintiffs, they did not call either of the plaintiffs, Kenneth Jacobs or Michael Archinal. Neither side called Gary O'Sullivan, the financial adviser to all the partners before Tom MacPhillamy was engaged by David Adamson to carry out that role for him. It was Gary O'Sullivan who advised the partners in respect of the policy of insurance, the subject of these proceedings. At that time he must be considered to be the agent of all parties and it was he who organised the counterpart policies which were held by each of the partners. In the case of the defendants, they did not seek to call or tender evidence from Tom MacPhillamy, who advised David Adamson shortly before MLC paid out on the insurance policy. Neither party called Peter Beames, an accountant who was apparently instrumental in drawing the Heads of Agreement and perhaps the Deed also. He, presumably, was also acting on behalf of all of the parties.
9. In particular, this is a case where no affidavit of either of the plaintiffs was tendered although affidavits from them had been filed before the hearing. Initially, there were extensive written objections made by the defendants to the affidavits of Kenneth Jacobs but in any event, the affidavits were not read. The plaintiffs' case relied upon a large amount of documentation tendered by consent. The plaintiffs also read the affidavits of two of MLC's employees, Joanne Taglione and Deborah Sweeney, concerning MLC's processing of the insurance claim and that evidence was the subject of cross-examination.
10. As far as the defendants' case was concerned, the defendants tendered an affidavit from Jane Adamson, one of the firstnamed defendants and an executor of David Adamson's estate. A number of passages from that affidavit were not read but she was extensively challenged in cross-examination by counsel for the plaintiffs on those passages that were. The only other affidavit tendered by the defendants was that of Michael MacKenzie, an employee/manager of the farm at Naas which David Adamson owned and in respect of which he took an active interest. Although required for cross-examination, his evidence was largely unchallenged.
11. Ultimately, this case involves determining what a provision in the parties' deed of dissolution of partnership means. There is no doubt, and it seems common ground, that the provision at issue here is ambiguous and susceptible of more than one meaning. Background and context are important aids to construction. In Maggbury Pty Ltd v Hafele Aust Pty Ltd [2001] HCA 70; (2002) 210 CLR 181 at 188 [11], Gleeson CJ, Gummow and Hayne JJ cited with approval as to the interpretation of a written contract, Lord Hoffmann in Investors Compensation Scheme Ltd v West Bromwich Building Society [1997] UKHL 28; [1998] 1 WLR 896 at 912:
...the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.
In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd & Ors [2004] HCA 52; (2004) 219 CLR 165 at 179 [40] Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ said:
What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction (Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 at 461-462 [22]).
Yet neither party called certain of the witnesses who might have thrown light on the surrounding circumstances and the purpose and object of the particular aspect of the transaction that is the subject of these proceedings. I say this, not really by way of criticism because the parties were entitled to take that forensic decision, but it does highlight the difficulty of determining issues generally on the construction to be placed upon a document, uninformed by the evidence that the participants, or those associated with them, might have been able to give.
12. My complaint about this unsatisfactory state of the evidence before me is directed not only to the absence of direct evidence from the plaintiffs and their agent and adviser, Gary O'Sullivan (who was also David Adamson's agent and advisor), in respect of the circumstances surrounding the dissolution of partnership, but also to one of the defendants, Tom MacPhillamy, who gave advice to David Adamson and appears to have played a critical role in respect of the insurance payout. As I have noted, neither party called Peter Beames who, apparently, drew up the Heads of Agreement.
13. I was urged by Mr Dubler SC, who appeared as counsel for the defendants, that I should invoke the common law rule in Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 in respect of issues concerning Kenneth Jacobs and particularly the financial adviser Gary O'Sullivan. It seems to me that the criticisms that he made could also be applied to certain other circumstances relating to the evidence that might have been given by the defendant, Tom MacPhillamy as David Adamson's financial adviser, replacing Gary O'Sullivan, having regard to the plaintiffs' complaints about David Adamson's conduct in receiving the insurance payout. Nevertheless, as will later appear, I do not derive any assistance from that particular rule in respect of the issues that arise and the way that I approach them.
The insurance arrangement
14. In September 1999, David Adamson was diagnosed as suffering from cancer.
15. At some short time prior to that, and without any inkling of the diagnosis as to David Adamson's health, the parties had agreed to an arrangement whereby each of the parties had taken out counterpart policies with MLC for "Live Cover Super". Each of those policies was equal to what had been estimated as the one-third share that each might be entitled to as to the then estimate of the value of the partnership. At that stage it was considered to be worth $640,000.00. The arrangement was promoted by Gary O'Sullivan, in his role as adviser to the partnership, presumably with a view that if the circumstances calling for a payout under the policy were to eventuate during the partnership period, that would enable the partner's share to be protected for the benefit of the other partners. However, no such arrangement was ever formally put in place.
16. The evidence as to the purpose of this arrangement is very much second hand as the promoter did not give evidence but I think that can safely act on the understanding set in a letter from Bradley Allen, solicitors for Michael Archinal and Kenneth Jacobs dated 16 May 2002. In that letter, the solicitors set out that:
We understand from Gary O'Sullivan that the MLC Life Cover was taken out by each partner for the purposes of funding a business continuation (buy/sell) agreement and that each policy was self owned (rather than cross-owned) in order to achieve the following objects:* To provide a tax deduction for the premium;
* To provide greater flexibility by enabling a retiring partner to take his policy with him;
* To take advantage of the particular MLC product as promoted to the partnership at the time.
As far as we are aware the partners did not complete any business continuation agreement at the time the insurances were taken out. Such an agreement would say, among other things, that the receipt by the insured of the proceeds of the policy is deemed to be payment to him by the continuing partners for his share in the partnership business. Obviously the arrangement has in mind that the amount of insurance cover will be equal to the value of the insured's interest in the partnership business.
17. The plaintiffs' written submission described the arrangement as the "Business Succession Plan" in these terms:
Upon death or retirement, the disabled partner or his estate was to be paid for his interest in the partnership because the partnership was solvent. The object was to avoid winding up with consequent loss of goodwill, so succession was to be achieved on a walk-in/walk-out basis. Hence the policy was to protect the capital of the partnership by allowing such a payment to be made by the partners without compromising their ability to continue to trade due to paying away profits or incurring substantial borrowings: it was not to confer an additional benefit on the departing partner or his estate because he, or it, was being paid the full value of his interest by his former partners from their resources. Otherwise a windfall benefit would accrue to the departing partner or his estate.
18. This submission takes no account of the fact that there was, in fact, no succession agreement that the partners had entered into and, further, that an integral component of the whole arrangement was that the policies were to be self-owned to achieve the purposes set out in the letter from the solicitors, Bradley Allen. The submission as to what was involved in the business succession plan is predicated only upon the occurrence of an event covered by the policy during the continuance of the partnership. It does not deal with the intent of the parties as to what was to happen in the event of dissolution of the partnership where death or disablement was not the cause.
The insurance policy as a partnership asset
19. The submission also seems to be heavily influenced by the plaintiffs' contention that the policy was an asset of the partnership to be dealt with as such and available for distribution on winding up. Although it appears that the partnership paid the premiums on each of the partner's policies, the beneficial interest in the policy was always to remain with the particular partner holding the policy.
20. The question of whether the policy was acquired as partnership property depends upon the manner and circumstances of its acquisition. In Carter Bros v Renouf [1962] HCA 67; (1962) 111 CLR 140, Kitto, Taylor, Menzies Windeyer and Owen JJ said (at 163):
Accordingly the question whether or not property acquired during the partnership in the name of one only of the partners was acquired as partnership property, and therefore upon trust for the partnership, is simply a question whether or not the acquisition was in fact an acquisition on account of the firm or for the purposes and in the course of the partnership business. In most cases the answer depends upon the proper inference to be drawn from the manner and circumstances of the acquisition. A common case is that in which property is bought with partnership money. The fact that it is so bought is of course not conclusive. The partners may have agreed to withdraw the money from the partnership and employ it in a separate joint investment, as happened, according to the findings, in Butler v Madden (1941) 41 SR (NSW) 245 ; 58 WN 187 ; or they may have agreed to the one partner's applying it for his own purposes either as a loan or a gift from the partnership or on account of his share of profits ; and in such a case the property bought would not be partnership property. But where there is no proof that the partners had any common intention inconsistent with that which the unexplained employment of partnership moneys suggests, the conclusion must be that the purchase was on account of the firm,[the statutory equivalent of s 26 Partnership Act 1963 (ACT)] and that therefore the purchasing partner is a trustee of the property for the firm : Lindley on Partnership 12th ed. (1962) p. 361 ; Underhill on Trusts 11th ed. (1959) p. 216.
The present is a case where it can be said that the intention of the partners was to own and hold the policies individually as a separate personal benefit although that circumstance might have benefited the other partners had all partners entered into the necessary supplementary agreement for that to happen.
21. The objects of taking out the policy evince the contrary intention to the individual partner's policy being bought on account of the partnership. Without an agreement setting off any proceeds received by the partner from the policy against the share that the remaining partners would owe to that partner, I doubt that the policy should be considered as a partnership asset during the continuance of the partnership. The position may well have been different if the respective policies could be said to be cross-owned, but that would not have achieved the objective of enabling a retiring partner to take his policy with him on retirement as contributed superannuation. In any event, as will be seen on dissolution, there was a specific agreement entered into by the partners as to how the asset comprised by the policy was to be treated. The plaintiffs' implication that in some way the proceeds ultimately paid to David Adamson under the policy were to be held on trust for the partnership must be rejected.
The insurance policy
22. The insurance policy was effected with cover from 1 September 1999. It was headed `MLC Life Cover Super' and was issued to MLC Nominees Pty Ltd in its capacity as the trustee of the Universal Super Scheme. It had two components:
* Life Cover benefit of $640,000.00 with a yearly premium of $2,265.60;
* Total and Permanent Disability Benefit of $640,000.00 with a yearly premium of $1,900.80.
The two events so insured are different insurances albeit under the one policy. The policy also recognises that benefits may be increased and different types of insurance added. Further, the policy recognises that the premiums paid are to be treated as superannuation contributions. The two forms of cover, that described as Life Cover and that described as Total and Permanent Disability Cover, are expounded in the policy.
The Life Cover
23. The conditions concerning the Life Cover are:
When we will pay If the member dies, we will pay the Trustee the life benefit.When we will pay If the member is diagnosed as having a terminal illness, we will pay the Trustee the life benefit, up to a maximum of $1,000,000.
The life benefit will be reduced by the amount paid and we will reduce premiums in line with the reduced benefit.
...
The Life Cover includes "terminal illness" and that is defined as:
Definition Terminal illness means any illness that a doctor who is an appropriate specialist and our medical adviser both agree is likely to lead to death within twelve months from the date we are told about it.The Trustee does not have to return the money to us if the member recovers from the illness that was diagnosed as terminal.
The life insurance ends on the payment of the full life benefit.
The Total and Permanent Disability cover
24. The Total and Permanent Disability (TPD) cover is defined:
Definition Totally and Permanently disabled (applies until the review date after age 60)The member is totally and permanently disabled if:
* they have a disability caused by injury or sickness.
* as a result of their disability they are completely unable to work at their usual occupation or any other occupation they are reasonably suited to by education, experience or training, and will never be able to do so again; and
* these circumstances have existed continuously over at least six months.
Restrictions on receipt of benefit
25. A restriction on the insured receiving the benefit under the policy is that set out in respect of rules preserving it and separate provision (although to the same effect) was made in respect of terminal illness benefit and the benefit payable for total and permanent disability:
Preservation rules apply to terminal illness and accidental injury benefits |
Government regulations for "preservation" of superannuation fund benefits. |
Preservation rules apply |
Government regulations for "preservation" of superannuation fund benefits apply to total and permanent disability and loss of independence benefits. This means the Trustee may not pass the benefits to the member until it has proof satisfactory to it that the member will never be able to work again in any occupation they are reasonably suited to by education, experience or training. If the member cannot give this proof the Trustee must keep the benefits as "preserved benefits" until permitted to release them under the relevant superannuation legislation and trust deed. |
26. The policy required that the conditions must meet the definition by providing:
Condition must meet definition |
No claim may be made under this insurance until a condition meets all the terms of its definition. |
|
|
All conditions must be diagnosed by a doctor who is an appropriate specialist and confirmed by MLC's medical adviser. |
27. The provision dealing with approval of a claim is set out in this way:
All insurances |
The benefit for each type of insurance is shown in the schedule. We will pay this to the Trustee when we see this policy and have proof: |
The benefit for Life Cover and for Total and Permanent Disability shown in the schedule was $640,000 in each case.
The first claim on the insurance policy
28. On 15 October 1999, David Adamson completed an insurance claim form (erroneously dated 15 September 1999) in respect of a cancer that had been diagnosed on 23 September 1999. His claim was supported by the reports of two medical practitioners, Dr Rob Griffiths and Dr Paul Craft
29. The cancer had been diagnosed as a metastatic (malignant) atypical carcinoid tumour. David Adamson underwent a course of chemotherapy from November 1999. The medical reports did not support the likelihood of death within twelve months (although Dr Griffiths' report conceded the possibility).
30. By letter dated 10 February 2000, MLC notified David Adamson that:
Based on the available information, your condition does not currently satisfy the relevant policy definitions and no benefits are payable at the present time. However, should the situation change, we would be happy to review the claims.
31. A claim had also been notified in respect of an income protection policy held for David Adamson and the letter dated 10 February 2000 also referred to this matter and requested a completed claim form. The claim under the income protection policy was met in part and payments made under that policy. Those payments commenced from 28 December 1999. The correspondence, emails and notes on letters demonstrate that Gary O'Sullivan was fully apprised of the claims under both policies and was the agent for the partnership in dealing with them.
32. In the latter part of 2000, MLC advised David Adamson that because of the practice's profitability despite his absences, he would no longer qualify for partial disability benefits and an ex gratia payment for some of the period was offered. This was the subject of email correspondence between Gary O'Sullivan and Michael Archinal and, on 2 November 2000, it was apparently agreed that the claim under this policy would not be pursued any further.
33. Although the evidence is only that which can be inferred from the documents placed before me, I am satisfied that all of the partners were fully aware of the claims made under both of the MLC policies held for David Adamson.
David Adamson's subsequent activities
34. In March 2000, David Adamson's condition was diagnosed by Professor Zalcberg, a Melbourne specialist, as a metastatic Merkel's cell carcinoma. That is a particularly aggressive cancer and, almost invariably, fatal. David Adamson continued to undergo chemotherapy up until April 2000. The diagnosis made was apparently only manifested in a much later declaration of Professor Zalcberg in September 2001 and the fact that it was a diagnosis different from the original, only made clear in a report of Professor Zalcberg dated 7 November 2001.
35. In the year 2000, David Adamson spent his time at Naas, a rural homestead, where he spent his time in activities related to that property and whilst undergoing treatment. Those activities included a major renovation of the homestead as well as working the farm property. Between 10 July 2000 and 1 December 2000 he returned to the veterinary practice generally on a part-time basis. There is no doubt that David Adamson realised that he was in difficulties in respect to his physical condition but I accept from the material placed before me that he was attempting to continue to live his life and be as active as possible. Nor did he accept that he could not continue to do so, certainly in the period July to December 2000. I consider that he was effectively working in both his veterinary practice and undertaking farm work. I also consider that despite periods where he underwent chemotherapy and radiotherapy, he strove to keep himself as fully employed as possible. After December 2000, he concentrated his activities on the farm and actively worked the property as best he could.
36. I am satisfied, particularly on the evidence that was given by Michael MacKenzie, whom David Adamson had employed as a farm hand on the property since 1996, that, overall, in the period up to April 2002 it cannot be said that David Adamson was "completely unable to work" as the policy definition for total and permanent disability requires.
37. It appears that David Adamson actually ceased his clinical practice in December 2000. Having regard to that, at some stage in 2001, the partners agreed to dissolve the partnership and the agreed date for David Adamson's withdrawal from the partnership was 1 July 2001. This resulted in the partners signing a document entitled "Heads of Agreement" which dealt with the agreement reached for David Adamson's "exit" from the practice.
The Heads of Agreement
38. The Heads of Agreement provided:
HEADS OF AGREEMENT DAVID ADAMSON'S EXIT FROM PRACTICE
* It was agreed that the terms for David Adamson's exit are as follows:
(i) The effective date of David's exit will be 1 July 2001.
(ii) David will be selling his 1/3rd interest in the veterinary business and the building.
(iii) It is agreed that the maintainable earnings of the business, for valuation purposes, is $234,283. (Refer attached worksheet.)
(iv) It was agreed that the capitalisation for the valuation should be 30% which values David's interest at $610,990. (Refer attached worksheet.)
(v) It was agreed that should the small animal business be sold to Australian Veterinary Healthcare or should there be a substantial settlement on David's death and disability policy then the agreed value would be $700,000.
(vi) It was agreed that David's death and disability policy should be determined as part of his exit process. ie. Should there be an eligible claim it should be made. David has undertaken to determine, through the appropriate process, the eligibility of a claim. Should there be no eligible claim at this time it was agreed that David be permitted to maintain the policy for his own benefit into the future.
It was agreed that should a value of $700,000 be payable then the proceeds from any payout of David's insurance should be split evenly amongst the three partners.
(vii) The terms of settlement were agreed to be as follows:
Assuming a sale to AVH or payout of David's insurance:
- payment of a deposit of $200,000 on 10 August 2001;
- payment of $410,990 within 7 days of the signing of this agreement; and
- the balance payable on settlement of the sale to AVH or on the receipt of a payout for David's death and disability policy.
(viii) It was agreed that the costs of the three partners associated with David's exit should be borne equally with David's share to be deducted out of his settlement proceeds.
(ix) It was agreed to provide this Heads of Agreement to an appropriate solicitor to have a settlement deed prepared for execution.
39. Nothing was put to me by way of evidence to show that subsequent negotiations between the partners changed the general intent of those provisions. It is significant that the proceeds of the insurance policy (should David Adamson's claim on it be successful) were intended to be divided equally between each of the partners. This is quite a different view of the use of the policy from that put forward as the "Business Succession Plan". If the plan were to be given effect, then one would have expected the dissolution of the partnership to have made provision for the fact that the reason for the dissolution was David Adamson's inability to carry out his role as a partner or, at least a reference to his retirement rather than his "exit". Whilst the Heads of Agreement clearly did not embody total agreement as to the dissolution of the partnership, the Heads of Agreement comprehended, at least, the broad thrust of what was intended in respect of the partnership's circumstances without David Adamson as a partner. The Heads of Agreement was specific as to the way that the insurance policy was to be dealt with notwithstanding the general intent of the business succession plan that would have seen the remaining partners take the whole of the benefit of that policy if the retirement was solely on the grounds of David Adamson's total and permanent disability to carry out his functions as a partner. In that regard, it should be noted that paragraphs (v) and (vi) of the Heads of Agreement specifically referred to the circumstances that:
* there was uncertainty as to the valuation of the business depending upon the possibility of a sale to Australian Veterinary Healthcare;
* that a sale to Australian Veterinary Healthcare or a substantial settlement on David Adamson's "death and disability policy" would increase the agreed value to $700,000.00;
* in the event that "a value of $700,000.00 be payable", then the proceeds of any insurance payout would be split evenly between the three partners;
* if there was no eligible claim "at this time", it was agreed that David Adamson be permitted to maintain the policy for his own benefit.
40. What the Heads of Agreement highlights is the fact that David Adamson's share in the partnership was valued at $610,990.00 without the factor of an impending sale of the going concern or a payment under the insurance policy. That agreement also stresses the problematic nature of the two events affecting that value and seeks to deal with those events should either come to pass.
The second claim
41. There is no evidence before me as to when the parties had drawn up or when they entered into the Heads of Agreement but from the way that clause (vi) of the Heads of Agreement is expressed, it seems to have been before such a claim had been made. Even if the Heads of Agreement had not been signed at the time, a claim on the policy was, in fact, made by David Adamson which was dated 21 August 2001. That claim could only have been made for the purposes identified in clause (vi) of the Heads of Agreement, "ie, Should there be an eligible claim it should be made".
42. The claim that was made was on forms provided by MLC to Gary O'Sullivan who had requested them and, as I have said, at that stage was the agent of all the partners. A fax cover sheet from MLC with accompanying forms was apparently sent to both Gary O'Sullivan and David Adamson on 7 August 2001. The accompanying letter from the insurer was for "Total and Permanent Disablement Cover". The claim form, apparently filled out by David Adamson, was for, and was headed, a "Total and Permanent Disability Claim". It was signed by David Adamson. It claimed a "reoccurrence of cancer". It asserted that the last day of work was 1 December 2000. By way of a check box, it was noted on the form that since stopping "usual work", the applicant had not worked in any other capacity. With that claim form, MLC also produced MLC forms that it had apparently received in support of the claim form. They comprised forms that were headed "Treating Doctor's Report" from Professor Zalcberg and Dr Paul Craft dated 3 September 2001 and 23 September 2001 respectively.
43. Handwritten responses were made to various questions on the forms headed "Treating Doctor's Report". Dr Craft notes that the symptoms first occurred in September 1999, that the diagnosis was Metastatic Merkel cell carcinoma, that the condition, so far as it affected the chest, was in remission in December 2000 but reoccurred in the left neck in July 2001. He remarks that his Prognosis "is uncertain given 2 relapses in 2 years". Professor Zalcberg reports the same diagnosis and expresses the opinion "probably incurable" and "prognosis very guarded", "traumatised by treatment and disease".
44. MLC, by its employees, then determined that it would obtain additional detailed medical evidence and advised David Adamson on 10 October 2001 that it was "obtaining some additional information to assess your claim".
45. Further material was provided by Professor Zalcberg by letter dated 7 November 2001 and by Dr Craft by letter dated 16 November 2001. Professor Zalcberg opined that although David Adamson was reasonably well and his disease was in remission that he was unfit for further work because of the psychological trauma experienced over the past two years of treatment for a potentially fatal malignancy. Dr Craft was of the view that whilst David Adamson was not currently well enough to return to work as a veterinary surgeon, he expected a recovery over the next few months. He also qualified this opinion by saying that David Adamson may not recover well enough to return to work.
46. What seems to me to be of some importance is an email sent by Clare Howell, an employee of Gary O'Sullivan. It was sent on 15 November 2001 to Michael Archinal in these terms:
MichaelGary asked me to drop you a quick note with an update on David's claim. MLC are still waiting for the reports from Dr. Craft and Professor Zalcberg. These reports were initially requested on 18th October 2001. I have spoken to both Doctor's today to follow up completing the reports. Dr Craft has advised his will be completed and sent back this week, Professor Zalcberg is still completing his. I will keep "hassling" them until we get the information through!! Unfortunately, until MLC receive these reports there is very little we can do toward finalising this claim.
Will let you know when I hear anything further.
Those reports were, of course, to support the claim for total and permanent disability. There was no question of consideration being given to an appropriate specialist and the insurer's medical adviser agreeing that David Adamson's condition was likely to lead to death within twelve months which would have been required if the claim were to be for Life Cover under the policy.
47. The response from Michael Archinal to that email was to ask for the policy number and the name of the company for "our settlement". That information was then provided.
The relevant provisions of the Deed
48. By a deed dated 29 November 2001, the parties formalised their positions with respect to the dissolution of partnership. Clauses 2 and 3 of the Deed provide:
2. Insurance Policy2.1 Adamson must promptly make an application for a claim (the "Claim") under his death and disability policy number 1666 5688L the "Policy") with MLC Life Insurance Company ("the Insurance Company"). Adamson must promptly supply the Insurance Company with all information required by the Insurance Company to process the claim.
2.2 If the Claim is accepted by the Insurance Company:
(a) Adamson is entitled to receive $100,000.00 of the proceeds less the Costs as defined in clause 3.3.
(b) Adamson must promptly pay one third of the balance of the proceeds from the Claim to Jacobs and one third of the balance of the proceeds from the Claim to Archinal.
(c) Adamson is entitled to the remaining one third of the balance of the proceeds.
2.3 If the Claim is rejected by the Insurance Company Adamson may keep the Policy for his own benefit and the parties must sign all documents necessary to do all things necessary to pass the benefit of the Policy solely to Adamson.
3. Purchase Price
3.1 The Purchase Price will be paid as follows:
(a) $200,000.00 on 10 August 2001;
(b) $400,000.00 on 26 September 2001;
(c) the balance in accordance with clause 3.2.
3.2 The balance of the Purchase Price will be calculated as follows:
(a) if the Claim is accepted by the Insurance Company; in accordance with clause 2.2;
(b) if
(i) the Claim is rejected by the Insurance Company; or
(ii) the proposed sale of the small animal practice by Jacobs and Archinal to Australian Veterinary Healthcare Pty Limited does not proceed;
the sum of $10,000.00 less the Costs.
3.3 "Costs" means one third of all of the valuation, legal and accounting costs incurred by the Seller and the Buyer in respect of the dissolution of the Partnership.
3.4 Jacobs and Archinal must do all things reasonably necessary to ensure that the sale referred to in clause 3.2(b)(ii) proceeds.
49. It should be noted that the Heads of Agreement had proposed that the insurance policy proceeds (if available) would be split evenly. The Deed provides for that circumstance only after the sum of $100,000.00 (less David Adamson's share of the costs of the dissolution) has been deducted but otherwise confirms that arrangement. The Deed also provides for the circumstances of neither the sale proceeding nor the claim being successful. In that event, David Adamson was to receive a further $10,000.00 (less costs). The point to be made is that unlike the Heads of Agreement, the Deed envisages the possibility that neither the sale or the insurance policy claim might be successful. If the claim under the policy was unsuccessful, as well as keeping the policy, David Adamson was to be entitled to an additional $10,000.00. Otherwise the Deed generally incorporated the matters that had been the subject of the Heads of Agreement.
50. By the time the Deed was signed, what was in contemplation under the Heads of Agreement had occurred. For example, the dates for the payment of the monies in instalments of $200,000.00 and $400,000.00 had passed and the payments had presumably been made. As I pointed out earlier, this was no more (indeed $20,000.00 less) than what David Adamson's share in the partnership had been agreed in the Heads of Agreement.
51. Whereas the Heads of Agreement had referred to the eligibility of a claim to be determined as part of the exit process, the Deed expressed the matter as making "an application for a claim". It also appears to have been drafted without reference to the procedures and terminology under the policy. Under the policy, the insurer does not "accept" a claim, nor is a claim "rejected". The policy also requires that in cases other than death, an assured's condition meets the terms of the definition of either "terminal illness" or "total and permanent disable[ment]".
The construction of the relevant provisions of the Deed
52. It follows that in construing each of the expressions in the Deed "an application for a claim (the "Claim")", "If the Claim is accepted" and "If the Claim is rejected" will involve considering not only the text but also the surrounding circumstances known to the parties and the purpose and object of the transaction (Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (supra)).
53. In that regard, what seems to me to be of the utmost significance is that there was on foot at the time that the Deed was executed, the claim made by David Adamson for his eligibility in respect of satisfying the definition of "total and permanent disable[ment]" under the policy. The plaintiffs submit that by reference to the Heads of Agreement it can be said to be the general institution of a process to have the question of whether there was an eligible claim determined. As a generalisation, that may be so, but the eligible claim was qualified by the fact that the provision in the Deed was carrying into effect the objective set out in the Heads of Agreement for the eligibility of a claim to be determined "at this time". That time encompassed making of the "claim" that the Heads of Agreement envisaged. The claim, as it was made, (and I consider that to be the claim dated 21 August 2001) was limited to whether David Adamson's condition satisfied the policy definition for "total and permanent disable[ment]". The fact of the claim and what it encompassed was well known to the agent for all the parties, Gary O'Sullivan. It is a circumstance which I regard as known to all the parties at the time and is the "application for a claim" to which the Deed refers.
54. I am further satisfied that as far as the Deed is concerned, the parties all understood this to be the claim referred to under the policy as far as it concerned the Total and Permanent Disability cover provided for in the policy and it can fairly be imputed to them that the claim to which the Deed refers did not extend beyond that aspect. There was no suggestion at that time that the definition of terminal illness in the policy could be satisfied nor any contemplation that a claim be made on that basis.
55. The other aspect of the Deed that reinforces this construction of its intended and understood meaning is the provision for rejection of the claim in clause 2.3 of the Deed. In that event, the parties were required "to sign all documents necessary to do all things necessary to pass the benefit of the policy to Adamson". Having regard to the terms of the insurance policy, such a requirement was clearly unnecessary, but the recognition in the Deed that a "Claim" might be rejected is antithetic to the plaintiffs' submissions as to what "application for a Claim" might mean under the Deed. The plaintiffs have submitted that "the application for a Claim" which the Deed requires to be made is to be treated as a determination of eligibility under all aspects of the policy. The plaintiffs also submit that the evidence shows that the insurer keeps all claims on foot and reviews them for changed circumstances. In particular, it is said that is evidenced by the insurer's treatment of the first claim made by David Adamson. In such circumstances, it is said that there can be no outright rejection of a claim. However, if that were to be so, there could never be a rejection of any claim so as to invoke clause 2.3 of the Deed which, in its terms, does recognise the circumstance that if the insurer does not pay out on the claim, the policy remains for the benefit of the insured.
56. It is clear from the email correspondence between Michael Archinal and Gary O'Sullivan that the fact that the first claim on the policy that David Adamson had made was not accepted by the insurance company was known to the partners. A similar result in the case of the claim that the Deed required, could presumably be regarded as a "rejection" within what the parties to the Deed contemplated.
57. It seems to me that the concept of "rejection" in the Deed, as the parties understood it to be, is really the corollary of acceptance but, construing it in terms of the policy, it is the approval or non-approval by the insurer of the particular claim made under the policy for the insurer to pay the particular benefit claimed. As far as rejection of a claim is concerned, that would seem to depend upon the action taken by the insurer. In the present case, the benefit claimed was for that described in the Schedule to the policy as "Total and Permanent Disability". Understood in this way, it can be seen that it is for the plaintiffs in this case to establish that the insurer approved the claim that David Adamson made on 21 August 2001 in order for the plaintiffs to establish that in terms of clause 2.2 of the Deed, "the Claim is accepted by the Insurance Company".
The treatment of claims by the insurer
58. Evidence from MLC employees Joanne Taglioni, a Team Leader, and Deborah Sweeney, a Claims Consultant, was put before me of the procedures adopted by the insurer to process claims and, in the case of Deborah Sweeney's evidence, the steps taken in David Adamson's case.
59. The first claim that had been made by David Adamson was on a form headed "Critical Illness Claim Form". The reference in the letter of 10 February 2000 to the claim not satisfying the "relevant policy definitions" was referrable to both the definitions of "terminal illness" and "totally and permanently" disabled. The letter expresses a willingness to review the claim should the situation change. What that really seems to mean, in terms of the insurance policy, is that MLC would remain open to being persuaded that a claim in respect of a condition met whatever of the policy definitions was sought to be established.
60. In the view of Deborah Sweeney, who was the MLC employee who had the carriage of this matter for the insurer, she was deferring "the claim" at that stage and, if the situation changed, the claim would be reviewed. However, the point is that she, or the insurer, by deferring the claim, cannot be said to have "accepted", within the meaning of the Deed, the claim that was being assessed.
Events after the Deed was signed
61. I have earlier set out what had taken place before the parties signed the Deed dated 29 November 2001 in respect of the claim form that David Adamson signed on 21 August 2001. By letter dated 4 December 2001, MLC advised David Adamson that he was required to be reviewed by an independent specialist. The appointment was made for a time at the end of January 2002. That appointment was deferred at David Adamson's request to the first week in February and, as a consequence, he was referred to Dr Benno Ihle. By letter dated 22 February 2002, Dr Ihle reported:
Dr David Adamson presented as a fit, healthy looking middle-aged man in no obvious distress. He repeatedly expressed a positive mental attitude towards his illness. He felt somewhat dismayed by the recent recurrence of further metastatic involvement in his pancreas and intra-abdominal cavity. However he remained positive with regard to the outcome with further radiation treatment to this tumour in due course to be proceeded with at the Peter MacCallum Clinic.He is keen to continue working for as long as possible and did not indicate any significant depressive state in relationship to his illness.
62. He was also of the opinion that David Adamson was capable of continuing to perform his normal work duties as a veterinary surgeon, certainly on a part-time basis but that the question of him returning to full-time employment remained problematical due to the fact that his prognosis is poor.
63. Dr Ihle's report was considered by MLC's officers and a file summary of 6 March 2002 records:
Mr Adamson's medical condition has been described as aggressive and based on the latest medical information a further lump was detected on recent CT of his abdomen. The pancreas was involved and he also had a lymph node resected in his groin. A PET scan showed positive involvement in lymph nodes, pancreas and possibility [sic] the kidney.Mr Adamson has Life Cover and TPD cover.
In view of the rapidly changing medical position, it is likely that he would qualify for the terminal illness benefit.
Please refer to the CMO for an opinion on whether Mr Adamson meets the Terminal Illness definition. An opinion can also be obtained from Dr Ihle.
The approach taken by the insurer
64. That file note demonstrates that the insurer was now prepared to assess the matter in terms of whether the definition of terminal illness in the policy was met. That is, the insurer ceased to consider whether it would approve the claim made under the Total and Permanent Disability cover and proceeded to determine whether a claim could be made out for approval under the Life Cover aspect of the policy. Although David Adamson was informed by letter dated 8 March 2002 that the insurer was currently obtaining additional information from Dr Ihle to further assess his claim, what the insurer was doing was not, in fact, truly assessing the claim that it had before it, but rather pursuing a new line of inquiry.
65. By letter dated 15 March 2002, Dr Ihle reported to the insurer that in his opinion "Dr Adamson's medical condition qualifies him as suffering from a Terminal Illness, as defined under your policy". The insurer's approach to the matter is then clearly set out in the File Summary note dated 18 March 2002. The note was compiled by Deborah Sweeney whose affidavit and evidence was before me. The Melaine referred to in the note is Melaine Hamilton, who is Mrs Sweeney's supervisor. The note stated:
Supplementary report received from Dr Ihle, dated 15/3/2002: Dr Ihle does consider that Dr Adamson's medical condition qualifies him as suffering from a Terminal Illness, as defined under MLC's policy. Dr Ihle's opinion is based on the rate of recurrence of his metastatic cancer and the widespread nature of these metastases.Discussed case with Melaine. Melaine advised to advise the agent that from the Insurer's viewpoint Dr Adamson does satisfy the definition of terminal illness, however as the terminal illness benefit is under the Super life cover, Dr Adamson would need to satisfy the Trustee's definition for TPD, ie not working in any capacity currently and in the future. MLC would need a written declaration from Dr Adamson to state that he had ceased work and would not be working in any capacity currently and in the future. MLC would need a written declaration from Dr Adamson to state that he had ceased work and would not be working in any capacity in the future.
I returned, Mr O'Sullivan, the agent's telephone call on 18 March 2002. I advised the above. I also advised that at this stage we had not admitted the claim as it was not clear if Dr Adamson had totally ceased all work. Mr O'Sullivan advised that yesterday 2 more tumours were found and more treatment was needed and Dr Adamson would not be returning to work. I advised that we would need a declaration from Dr Adamson stating that he would not be returning to work. Mr O'Sullivan requested that the trustee also send any forms needed to be completed by Dr Adamson. I advised that I would speak to the Trustee and forward the necessary forms to him for completion by Dr Adamson and his treating doctors.
66. There are several points that may be made about this file note:
1. The note evidences the fact that the insurer had not admitted the claim that was dated 21 August 2001 for Total and Permanent Disability Benefit. That, as I have determined, was the claim referred to in the Deed.
2. The insurer thereafter was proceeding on the basis of determining whether definition of terminal illness under the Life Cover aspect of the policy was satisfied.
3. The fact that the insurer was not admitting the claim was communicated to Gary O'Sullivan who was, at that stage, the agent for all the parties in this matter.
4. In order for the Life Cover benefit to be paid to the Trustee, a declaration from David Adamson was required both as to cessation of work and that he would not be working in any capacity.
67. A letter from MLC to Gary O'Sullivan reflected this change in approach by the insured. The letter dated 18 March 2002 was headed "TERMINAL ILLNESS CLAIM". The text of the letter stated:
As discussed, government regulations restrict payment from superannuation funds, including terminal illness benefits. The Trustee of the superannuation fund may not pass benefits to Dr Adamson until it has satisfactory proof that, as a result of the illness or loss, he would never be able to work again in any occupation he is reasonably suited to by education, experience or training.Should Dr Adamson's circumstances change and his condition causes him to cease work permanently, Dr Adamson is to complete and return the enclosed forms:
§ Two certificate of medical attendant, to be completed by different doctors.
§ Application for withdrawal of superannuation benefits on grounds of total and permanent disablement form.
In addition, we require a written declaration from Dr Adamson advising that he has ceased working in any capacity and the date he last worked.
68. Gary O'Sullivan did not advise David Adamson of the terminal illness aspect of the letter that he had received from the insurer. His letter to David Adamson dated 26 March 200[2] was headed "Total and Permanent Disablement Claim". It enclosed the medical attendant forms and the application for withdrawal forms referred to in the insurer's letter. It misleadingly said that the documentation was required "in order to progress the above claim". It also included a letter that had presumably been drafted by Gary O'Sullivan and was to be signed by David Adamson stating "... I wish to advise I ceased working in any capacity effective from [blank]".
The view taken by David Adamson
69. David Adamson took the view that at that stage he had done everything that was required in relation to the claim that the Deed required of him. At the stage he received Gary O'Sullivan's letter, I am satisfied that he did not wish to regard himself as permanently disabled from employment and that he considered the documents that he was being asked to provide, particularly the declaration concerning him having ceased work as matters not able to progress the claim that he had made for Total and Permanent Disability. I consider that he was entitled to take that view. I also consider that he had fulfilled the requirement of the Deed by making the claim that he had and that he had provided all the information required by the insurance company to process the claim for the Total and Permanent Disability Benefit.
The plaintiffs' challenge to David Adamson's actions
70. The plaintiffs, in an extensive submission, claim that an analysis of a later statutory declaration made by David Adamson, a facsimile statement that David Adamson asked his sister, Jane Adamson, to send, and the evidence of Jane Adamson, showed that David Adamson entertained a ruse to ensure that the benefit under the policy would not be paid to the plaintiffs. I reject that submission. In my view, the material upon which the plaintiffs rely demonstrates that David Adamson could clearly hold the view that he did and that in any event, the insurer had advised Gary O'Sullivan in terms that meant that the plaintiffs could no longer expect to benefit from the claim dated 21 August 2001 that David Adamson had made pursuant to his obligations under the Deed.
71. By facsimile dated 23 April 2002, Gary O'Sullivan notified the insurer of the existence of the Deed referring to "the client is lodging a TPD claim under the above policy". The letter also refers to "this arrangement was originally set up to fund a super buy/sell equity buy out". The import of that facsimile does not appear to have been appreciated by the insurance company which, by letter dated 26 April 2002, responded by referring to "income protection insurance" but also referring back to the insurer's letter of 18 March 2002. I do not take either of these events as progressing the claim for total and permanent disability under the policy.
72. At about this time near the end of April 2002, there were on-going communications between Jane Adamson and Ken Jacobs and a facsimile from Ken Jacobs for David Adamson. The concern expressed by Ken Jacobs was that David Adamson had not followed through and completed the insurance claim that the Deed required. In my view, that was an unfounded criticism. It was the insurer that had determined not to further progress the claim under the Total and Permanent Disability cover. It was not until after that criticism had been made that David Adamson was advised by Professor Zalcberg that, as he could not tolerate any more treatment, he was "not going to make it". I am satisfied that it was not until then that David Adamson recognised that his time was limited in such a way as to justify him making a claim under the policy on the basis that he was terminally ill. On 29 April 2002, Jane Adamson instructed Conway McCallum, solicitors, to act on the making of a claim for terminal illness benefit under the policy. Although the plaintiffs assert that this was a bogus claim, I am satisfied that it was not. A claim notification was received from Conway McCallum by MLC on 29 April 2002 and a letter sent from MLC direct to David Adamson enclosing claim forms for him to complete.
73. Jane Adamson, who held an Enduring Power of Attorney for David Adamson, and Tom MacPhillamy, his financial adviser, organised the documentation supporting a terminal illness claim form dated 2 May 2002 which David Adamson signed. That document, together with other documents, including the treating doctors' certificates, a report from Professor Zalcberg of 2 May 2002 and letters to MLC Life and the trustees, MLC Universal Scheme, were submitted by Conway McCallum to the insurer. Whilst two of the letters prepared by Tom MacPhillamy and signed by David Adamson refer to a total permanent disability claim and a total permanent disablement benefit under the policy, it is clear that the claim that was being made and supported by these documents was a terminal illness claim under the Life Cover aspect of the policy.
74. The plaintiffs say that this claim was a pretence and contained false assertions, I do not consider that to be so. In my view, for the reasons I have set out, David Adamson was entitled to make the terminal illness claim that he did.
The insurer's actions
75. The plaintiffs point to a passage in Ms Sweeney's affidavit, as the assessing officer for the insurer. In that passage Ms Sweeney deposes:
I acknowledge that a further terminal illness claim form ("the form") was provided by Conway McCallum when they provided all the information I considered the trustee would require in order to pay out on the policy. At no time have I ever considered that the form submitted created a new claim which would require a fresh assessment and determination of Terminal illness. I had already made that determination on 18 March 2002. At all times, I considered that the information provided to me by Conway McCallum under cover of letter dated 6 May 2002 related to the continuation of the claim that was on foot when I spoke to Mr O'Sullivan on 18 March 2002. When I made my assessment on 6 May 2002, I was assessing that ongoing claim.
76. However, Ms Sweeney was equally clear in cross-examination that on 18 March 2002, she was not accepting a claim for a Total and Permanent Disability Benefit. The fact is that MLC received and acted upon the claim and documents provided by Conway McCallum. What is clear is that Ms Sweeney did not accept the claim on the basis of total and permanent disable[ment] as defined in the policy. As I have found, the claim to which clause 2 of the Deed refers is the claim made by David Adamson dated 21 August 2001 and was a claim only for the Total and Permanent Disability Benefit under the policy. Unless the plaintiffs can establish that the claim that was made for the purposes of the Deed was accepted by the insurer, then clause 2.2 of the Deed does not come into operation. The process by which Ms Sweeney actually assessed the claim does not affect that circumstance.
77. In fact, as far as the processes of the insurer were concerned, the acceptance of the claim required the approval of a senior claims consultant. That was a Ms Linda King and that took place in the context of the insurer having before it a terminal illness claim form and the treating doctors' reports which supported that claim. Linda King's signature on 6 May 2002 was the insurer's final procedural step for acceptance of that claim.
78. As to whether there had been a rejection of the claim for a Total and Permanent Disability Benefit, I have found that the insurer did not further progress that claim. It was not the subject of a formal response in writing as the first claim that David Adamson had made was. It seems to me to be arguable that a response of that nature is required to constitute a rejection. There is no cross claim by the defendants for the $10,000.00 (less costs) provided for by clause 3.2(b)(i) of the Deed.
79. Accordingly, I do not find it necessary to determine whether the insurer had, in terms of the Deed, "rejected" the claim for a Total and Permanent Disability Benefit.
80. Ultimately, the claim was paid on 9 May 2002 and David Adamson paid the monies there from into the family trusts of his two sons on 13 May 2002 .
The cross-examination of Jane Adamson
81. On the hearing of this matter, Jane Adamson was extensively cross-examined to suggest that she colluded with her brother, David Adamson, to deny what was said to be the plaintiffs' entitlements under the Deed to the proceeds of the insurance policy. That cross-examination seems to me to have been irrelevant to any proper issue between the parties, needlessly offensive and misconceived. It could not possibly establish some implied admission, as the plaintiffs suggest, that David Adamson "knew his entitlement to a terminal illness benefit was an entitlement within the purview of the Deed". Because of the construction that I have placed upon the Deed and my finding that David Adamson was entitled to make a claim that he did, it is not necessary to canvass the extensive criticisms that were made of Jane Adamson's evidence or to make findings concerning it. However, I should make it clear that I regarded the evidence given by Jane Adamson as honest and credible and I reject as totally unfounded the plaintiffs' assertions that she was a knowing party to what was described as a bogus claim or an attempt to dupe the insurer.
Order
82. The plaintiffs' claim is dismissed with costs.
I certify that the preceding eighty-two (82) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Gray.
Associate:
Date: 7 March 2007
Counsel for the plaintiffs: Mr J Cooper SC with Mr J Pappas
Solicitor for the plaintiffs: Meyer Vandenberg
Counsel for the defendants: Mr R E Dubler SC with Mr I Pike
Solicitor for defendants: Verekers Lawyers
By their Canberra Agent
Ken Cush & Associates
Date of hearing: 5 June 2006
Date of judgment: 7 March 2007
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URL: http://www.austlii.edu.au/au/cases/act/ACTSC/2007/14.html