AIA Australia Ltd v Richards

The insurance policy 5 The relationship between AIA and Mr Richards commenced in 2002, when, on or about 30 May 2002, the respondent completed an "Application for Priority Protection/Superannuation Term Life". In the application for cover, Mr Richards selected the "Disability Income Plan". This cover provided for the payment of a "Disability Income Benefit" and could encompass "Optional Benefits", including a "Claim Escalation Benefit", which Mr Richards also selected. He recorded his "Present Occupation" in the application as an "Anaesthetic Nurse", with daily activities involving "Caring for Peri-Operative Patients". On or about 12 November 2002, AIA and the respondent entered into a contract of life insurance which was identified by policy number 10914730, and termed a "Priority Protection" policy. 6 The "Disability Income Plan" was described in cl 6 of the "Policy Terms and Conditions". It indicated that "[t]he benefits chosen under the plan are shown on the policy schedule". The policy schedule indicated that, under the policy, Mr Richards had "Disability Income" cover together with an entitlement to a "Claims Escalation" benefit. The "Monthly Benefit" payable under this cover was recorded in the policy schedule as $3,750, to which the Claim Escalation Benefit was applied where appropriate. 7 Relevantly, cl 6.1 indicated that Mr Richard's cover included a "Total Disablement benefit". The definitions in cl 2, together with cl 6.1, provided that the "Total Disablement benefit" was a component of the "Disability Income benefit" that was payable by the applicant when the life insured had suffered "Total Disablement". "Total Disablement" was defined in cl 2 as follows: 'TOTAL DISABLEMENT' means that, due to Injury or Sickness, the Life Insured: • is unable to perform one or more of the important duties of His or Her occupation that He or She must be able to perform to earn income; and • is following the advice of a Medical Practitioner; and • is not working. 8 The "Claim Escalation Benefit" was also defined in the cl 2 definitions as follows: …Where the Monthly Benefit for Total Disablement has been paid continuously for 12 consecutive months, We will increase the Monthly Benefit for Total Disablement by the lesser of 7.5% per annum compound and the Consumer Price Index Increase. 9 This optional benefit was not in issue in these proceedings. The issues in the proceedings concerned the "Total Disablement benefit", and whether Mr Richards fraudulently claimed and received payments of it. 10 Clause 6.4.1 provided for automatic termination of the contract of insurance upon the occurrence of the following events: 6.4.1 Termination The Disability Income Plan will terminate on: • the Life Insured's permanent retirement from the workforce, except when directly due to disablement; • the death of the Life Insured; • the latest Policy Renewal Date prior to the Life Insured's 65th birthday (the expiry date of the plan); or • the date the Policy lapses or is cancelled; whichever is earliest to occur. 11 The clause did not provide for termination for fraud.

The respondent's claims under the policy and the allegations made by the applicant 12 Commencing from 28 March 2003, Mr Richards made claims under the policy for payment of the "Total Disablement benefit". A total of 112 claims were made from 28 March 2003 to 6 January 2016, and these claims were paid by the applicant. The applicant makes no allegations in respect of these claims, which it referred to as the "First Stage Claims". 13 From February 2016 to October 2016, it was alleged that Mr Richards made eight further claims under the policy on 5 February 2016, 7 March 2016, 6 April 2016, 6 May 2016, 12 June 2016, 6 July 2016, 9 September 2016 and 10 October 2016. These claims, referred to by the applicant as the "Second Stage Claims", are the subject of the insurer's claim against Mr Richards. 14 The pleadings prepared by the applicant were carefully drawn. There was some amendment to the framing of the allegations against the respondent in their original and amended form. The allegations made against Mr Richards in the Amended Statement of Claim related to the eight "Second Stage Claims" which were alleged to have been made. It was alleged that in making those claims Mr Richards had made the following representations: 7. When making each of the Second Stage Claims, Richards represented to AIA, among other things, that: (a) he suffered from a Total Disablement within the meaning of the Policy Document; (b) he had suffered from a Total Disablement since 2002; (c) he did not perform, either paid or unpaid, duties of any other occupation during the relevant claim period; (d) he did not have a return to work plan; (e) there were daily restrictions which he suffered from which prevented him from performing the usual duties; (f) the information on the claim form was true, correct and complete. (Representations). 15 It was then alleged that: 8. As a result of the Second Stage Claims and/or Representations (and each of them), AIA paid monies: (a) to Richards under the Disability Income Benefit (Payments); and Particulars (i) Payment in the sum of $4,703.74 with respect to the period 18 January 2016 to 17 February 2016; (ii) Payment in the sum of $4,703.74 with respect to the period 18 February 2016 to 17 March 2016; (iii) Payment in the sum of $4,703.74 with respect to the period 18 March 2016 to 17 April 2016; (iv) Payment in the sum of $4,703.74 with respect to the period 18 April 2016 to 17 May 2016; (v) Payment in the sum of $4,703.74 with respect to the period 18 May 2016 to 17 June 2016; (vi) Payment in the sum of $4,703.74 with respect to the period 18 June 2016 to 17 July 2016; (vii) Payment in the sum of $4,703.74 with respect to the period 18 July 2016 to 17 August 2016; and (viii) Payment in the sum of $4,703.74 with respect to the period 18 August 2016 to 17 September 2016. (b) to third parties to process and evaluate the Second Stage Claims. Particulars (i) Investigation fees in the sum of $16,672.00; (ii) Assessment fees in the sum of $13,068.00. 16 After this came the critical allegation that Mr Richards was acting contrary to these representations when he made the "Second Stage Claims": 9. At the time of making each of the Second Stage Claims during the period 26 January 2016 to 8 August 2016 (and each claim during that period), Richards was, contrary to the Representations: (a) intending to perform or performing the duties of another occupation; (b) capable of performing the duties of his usual occupation; Particulars (a) Since at least 26 January 2016, Richards claimed that he provided services, including acupuncture, from a clinic in Riga, Latvia and on 19 September 2016 an investigator engaged by AIA attended upon Richards at the Lady Fitness Brivibas Street on Brivibas in Riga, Latvia and paid for and received acupuncture treatments from Richards. (b) Further, since at least 6 June 2016, Richards was advertised as providing acupuncture treatments at the Aktiv Kvinna Centre in Hammarby Stockholm. On 9, 16 and 25 August 2016 and 8, 20 and 21 September 2016 investigators engaged by AIA attended upon Richards at that Centre and paid for and received acupuncture treatments from Richards. 17 A separate allegation contained in [10] of the original Statement of Claim was removed from the Amended Statement of Claim. (This allegation related to the period after August 2016, with the allegation in [9] in its unamended form only covering the period January to August 2016.) 18 The allegation pleaded in [9] of the Amended Statement of Claim was that, contrary to the representations made, from January 2016 the respondent was at least capable of performing, and intending to perform another occupation and then from at least August 2016 he was actually performing the duties of another occupation and was capable of performing his usual occupation. It should be emphasised again that the allegations of fraud made by the applicant against the respondent commence only from February 2016 and only comprise the "Second Stage Claims". 19 In these premises, the applicant alleged that the conduct pleaded in [7] and [9] of the Amended Statement of Claim meant that it was entitled to refuse payment of the "Second Stage Claims" pursuant to s 56(1) of the Insurance Contracts Act 1984 (Cth) due to the representations having been fraudulently made. Furthermore, it was alleged that this pleaded conduct constituted a breach of the good faith term implied into the insurance contract by s 13 of the Insurance Contracts Act 1984 (Cth). 20 It was further pleaded that the conduct pleaded in [7] and [9] of the Amended Statement of Claim amounted to a repudiation of the contract by Mr Richards or, in the alternative, a sufficiently serious breach of the good faith term so as to entitle the applicant to terminate the contract. It was then pleaded that the applicant did so by letter sent to Mr Richards dated 19 October 2016 or, in the alternative, through the filing of the Amended Statement of Claim. 21 Further, and in the alternative, the applicant pleaded that in lodging the "Second Stage Claims" Mr Richards completed a declaration that the information contained within was true, correct and complete and that he understood and agreed that if he made any false or fraudulent statement or failed to advise the applicant of any relevant information regarding his claim then the applicant could refuse to pay benefits, cancel his claim or cancel the contract. It was then pleaded that in submitting each of the "Second Stage Claims", Mr Richards failed to disclose relevant matters and made false and fraudulent representations and that this entitled the applicant to cancel the contract on this basis, which it did by letter dated 19 October 2016. 22 In the alternative to these claims under the contract, the applicant pleaded that it is entitled to recovery of the payments made on the basis that they are moneys had and received paid under a mistake of fact.

Evidence 23 The evidence filed by the applicant in support of its application for summary judgment was primarily contained in Exhibit LW-01 to the affidavit of Lloyd Williams, affirmed 21 July 2017. It consisted primarily of copies of claim forms submitted by the respondent, the results of investigations undertaken on the applicant's behalf and correspondence between the applicant and the respondent following the conclusion of those investigations. I accept that the representations in the documentation of the investigations undertaken are admissible on the basis that they are contained in business records of the applicant insurer within the meaning of s 69 of the Evidence Act 1995 (Cth). 24 The applicant sought to establish a number of things from the evidence, so as to justify the grant of its application for summary judgment. First, it sought to establish the claims made by the respondent, and the representations made. It then sought to establish that a person it identified through its investigations as providing acupuncture and other alternative health services overseas was the respondent. It then sought to use the evidence to show that this person was, from at least January 2016 intending to perform another occupation and capable of performing his usual occupation and that from at least August 2016 he was actually performing another occupation and capable of performing his usual occupation. The applicant drew upon certain alleged admissions made to it by the respondent in aid of establishing these matters. It was submitted by the applicant that the admissions linked the evidence together to prove that the respondent's "Second Stage Claims" under the policy were fraudulent, with the result that the applicant was entitled to the relief that it sought. 25 Within that framework, I now turn to examine the evidence that was placed before me.

Claims under the policy 26 As noted above, the evidence before me was that the respondent lodged claims for benefits under the policy from 28 March 2003 through to 10 October 2016. The allegations against Mr Richards in this proceeding concern the "Second Stage Claims" made over the period from 5 February 2016 to 10 October 2016. The claim forms for the entirety of both periods were before me in evidence on this application. In the final claim lodged for this period, for the period 18 September 2016 to 17 October 2016, the respondent recorded his residential address in Riga, Latvia. (It should be noted that on several of the other forms for the "Second Stage Claims" he recorded addresses in Wolverhampton, United Kingdom and in Sweden.) It was stated in the form dated 10 October 2016, when asked if the respondent had a "Return To Work Plan", "I will not return". The answer "No" was ticked in response to the question, "Did you perform, either paid or unpaid, any of the duties of your usual (or any other) occupation during this claim period?". The response to a request to "…list all the duties of your usual occupation you were unable to perform in this claim period …" was provided as "all" and the reason for being unable to perform all duties was recorded as "pain, stiffness, depression". It was stated that daily activities over the period were limited to studying languages, "light exercise (stretching)" and "TV" and "reading". His daily restrictions that prevented him from working were again listed as "pain, stiffness, depression". He answered "Yes" to the question "Do you confirm that your continued Total Disablement, either paid or unpaid, is due solely and directly to your injury/sickness?" and stated the period of Total Disablement as being from 2002 to "present". He also stated that he "Never!" expected to resume his usual duties. 27 At the bottom of the form, the respondent also signed the following declaration: I hereby declare that the information in this Claim Form is true, correct and complete. I understand and agree that if I make any false or fraudulent statements or fail to advise AIA Australia of any relevant information regarding my claim, AIA Australia may refuse to pay benefits and proceed to cancel my claim and/or my insurance cover. 28 Affixed to the form was a signature that was consistent with that on the other claim forms, and with the signature on the "Personal Statement" which had accompanied the respondent's application for insurance cover. 29 The content of forms submitted in support of the other "Second Stage Claims" were consistent, if not close to identical, to this form. In some of the forms, there was a desire indicated by the respondent to retrain and to potentially go into business in the future. However, there was an assertion in them all that the respondent would not and could not return to his previous occupation, that he had not been performing his usual duties and nor did he expect to be able to perform them in the future due to his condition.

"Desktop" investigations 30 Near the end of 2015, the applicant became suspicious of the claims made by the respondent under the policy and commissioned what was termed a "desktop" investigation of the respondent. The report of that first investigation was dated 14 January 2016 and was before me on this application. This report was not provided to the respondent. The investigator reported as follows. The investigator had identified a Facebook profile for a person named "Vinny Richards" and a post made by this person to a Facebook page entitled "Medics Direct Training" on November 24, 2015. The post was said to be made from a location in Latvia. The post stated as follows: Hi, I did botox fillers course 13 Nov in London. I have a question. I did botox on a client, I did as I was trained. Her eyelid on right side, has a little droop after 8 days. Any suggestion on how I can fix it? Thanks 31 The applicant submitted that this was evidence that indicated, once the person making the post was identified as the respondent, that the respondent was working, after training, in a similar occupation to his usual occupation as a nurse by providing botox treatment. 32 The other relevant evidence taken from Facebook and included in the report was material referring to what appears to be a business called "Holistic Health Riga". A copy of what the owner of the "Vinny Richards" Facebook account described as "My New Business Card" was uploaded to that Facebook profile on 2 November 2015. It was a business card for "Holistic Health Riga". That business was noted in the report as having a website: . The business card contained a telephone number which was associated with this website. When asked "where" the business was being operated by other Facebook users, the report showed that the owner of the "Vinny Richards" profile had stated "Riga Kaunas Vilnius & Gdansk" and also posted images with the caption "My street". This suggested that the business was being operated in Riga, Latvia, and was being operated by a "Vinny Richards". 33 According to the report, the investigator also reviewed the website for "Holistic Health Riga". The section of the website entitled "About Us" stated that "We are a new [sic] in Riga offering an Holistic approach to your health and wellbeing". There was a photo on that page of a man who the applicant asked me to infer was Mr Richards, based on the results of the later investigations. The website included a street address in Riga and an email address. The email address was itself said to be associated with a Facebook page entitled "Holistic Health". It was reported that on 18 November 2015 a photograph was added to the page for "Holistic Health" which was the same as the Facebook profile picture for the "Vinny Richards" Facebook profile referred to earlier. Comments on that picture posted by other Facebook users included the following: "Mr. Doc. Vinny Vinny Richards I'll visite [sic] You once [sic] time". There was a response visible from the page "Holistic Health" saying "ok SEE YOU". On 11 November 2015, another Facebook user posted to the page "Good luck with your new venture, Vinny. X" and "tagged" the "Vinny Richards" profile in the post. A domain search of the Holistic Health website was also undertaken and it was reported that the registrant for the page was a "Vinny Richards", with an address recorded in Riga, Latvia. 34 The report also indicated that the Holistic Health website contained a link to a profile on a website, . This profile was in the name of "Vinny Richards" and contained the same photograph of a man as included in the "About Us" section of the Holistic Health website. It was said to state a number of things, including that the owner of the profile "trained as a nurse, then became an Anaesthetist". 35 The results of the "desktop" investigation therefore appeared to suggest that the business "Holistic Health" was linked to the owner of the "Vinny Richards" Facebook profile and was being operated by a "Vinny Richards". The "Holistic Health" website then linked this same person to the "Vinny Richards" profile on the "Heathcare Volunteer" website, together with the assertion on that page that "Vinny Richards" was a nurse with experience in anaesthetics. 36 A further "desktop" investigation undertaken by another firm supported many of the findings obtained from the first "desktop" investigation. The product of that second investigation was before me in the form of a number of screenshots from the websites in question. These included a screenshot from the "News" tab of the "Holistic Health" website. Under the heading "Recent Posts" was a post, dated 16 November 2015, which stated "We have a new clinical room in Riga". Also provided was a screen shot of the "About Us" page of the website noted above. That screenshot contained the same photo of the man asserted to be the operator of the business together with text such as: "Our Practitioner has over 20 years experience in hospitals in Europe and Australia. With Medical Education. Certification from Beijing in Acupuncture and from Harley Street London in Aesthetics and Face Rejuvenation". 37 The critical evidence obtained from the second "desktop" investigation was a further screenshot from the "Healthcare Volunteer" website which had been linked to the "Holistic Health" page in the earlier report. It showed a profile on that website for a "Vinny Richards". "Vinny Richards", who was said to be located in "Riga ZZ Latvia", had been a member since 2 January 2014 and had last updated his profile on 26 January 2016. In the "About Me" section of the profile, as shown in the screen shot, was the following information: I am an Australian living in Latvia & Sweden from Nov 2011. I trained as a nurse, then became an Anaesthetist. I am also qualified to teach 11-99yrs. I just gained my Masters Degree in Public Heath at Malardalen University Sweden. I also hold a Medical Degree in Critical Care and Anaesthetic Medicine. I currently work on EU Health Projects. I also have a clinic in Riga Latvia where I practice Acupuncture. In the clinic we also make Facial Rejuvenation with Botulium Injections and Dermal Fillers. (emphasis added) 38 It was submitted that this evidence, with its reference to Australia, living in Latvia and Sweden, having worked as a nurse and now operating a clinic in Latvia allowed it to be inferred that the "Vinny Richards" in the various social media accounts, and already linked to the business "Holistic Health" by the other "desktop" evidence, was in fact the respondent. The evidence supports that submission, and it is strengthened by the further evidence to which I will turn. Counsel for the applicant also noted that this particular item of evidence was the basis for the particulars to [9] of the Amended Statement of Claim that since at least 26 January 2016 the respondent had claimed to provide acupuncture from a clinic in Riga, Latvia and that it was the respondent who was holding himself out as capable of providing acupuncture services in Riga, Latvia from that date.

Surveillance 39 The results of the "desktop" investigations meant that it was considered appropriate by the applicant to investigate the respondent in the business premises that had been set up, with the evidence obtained online appearing to suggest that the person believed to be the respondent had an operating business. This included the premises in Latvia and also premises in Sweden that had been identified but were not the subject of the "desktop investigation reports". 40 Six surveillance reports dated 9, 16 and 25 August and 8, 20 and 21 September 2016 respectively were included in the evidence before me in respect of the clinic in Stockholm, along with a surveillance report dated 19 September 2016 in respect of the clinic in Riga. It is best to deal with the substance of the surveillance evidence chronologically. 41 The substance of the 9 August 2016 report was as follows. The investigator booked treatment via a Swedish website, and the day before received a text message from a sender who identified himself as "Dr Vinny @ Aktiv Kvinna Stockholm". The investigator reported attending at the clinic and having acupuncture performed by "Vinny", whilst recording the treatment by use of the camera on a mobile phone. The investigator reported that: "Vinny" told him that he "had some hip pain due to a motorcycle accident"; "that he lives part time in Latvia and has a clinic there"; and "that he comes from Australia and that he also does other treatments like esthetics". Screen shots of "Vinny" from the video recording were appended to the report and bore some similarity to those photos in the "desktop" investigative material (though it should be noted that none of the photographic evidence is of particularly high quality). 42 On 16 August 2016, another investigator attended the clinic in Stockholm. This investigator also booked through the internet and the booking was said to be with "Vinny Richards www.holistic-aesthetic.se". This investigator also recorded his attendance at the clinic. The person providing the treatment introduced himself as "Vinny". The receptionist also referred to him as "Vinny". He provided acupuncture treatment and told the investigator he was also an "anesthesiologist". One of the pictures appended to the report showed a name badge worn by "Vinny" which appears to read "Dr Vinny…Practitioner" and was indicated in the report to read "Dr Vinny Medical Practitioner". Also attached was a photograph of a handwritten receipt for acupuncture from "Holistic-Health.se". 43 On 25 August 2016, this investigator returned to the clinic in Stockholm for further treatment, having booked again online, and once again videoed the treatment with a mobile phone. Another receipt was provided for this treatment, this time from "Holistic-Aesthetic.se". 44 This investigator again attended at the Stockholm clinic and produced a further report dated 8 September 2016, having once again received acupuncture from "Vinny". The investigator said that "Vinny" stated that "he also worked in a clinic in Latvia". He "worked every other week or 4 and a half day(s) in Sweden and the other week in Latvia". 45 The report of 19 September 2016 describes an investigator attending at a clinic in Riga, Latvia. The booking was made through an email address called holistichealth.riga@gmail.com, which had been found on the website . The investigator was introduced to the person who would be performing the treatment, who described himself as "Vinny". He performed acupuncture on the investigator. "Winny" (sic) told the investigator that: he worked in Stockholm four days a week, that he came from Brisbane, Queensland in Australia; that he lived in Riga, Latvia but preferred to work in Sweden and that he also did work with fillers and botox. 46 The report dated 20 September 2016 describes an investigator attending again at the clinic in Stockholm. "Vinny" performed acupuncture on the investigator and stated the following: that he had flown to Stockholm from Riga that day, that he had not been to Australia for three years; that he had a house in Queensland, and that he intended to move back to Australia. 47 A further report from the other investigator in Sweden dated 21 September 2016 described another return visit to the Stockholm clinic. The person providing the treatment introduced himself again as "Vinny" and he performed acupuncture on the investigator. "Vinny" told the investigator that he "had some hip pain due to a motorcycle accident", and he said that it happened "five years ago". He said that he still rides a scooter in Stockholm and in Riga. 48 It should be noted that all of the reports in respect of the surveillance in Sweden contained photographs, taken from the video recording, of a man said to be the respondent performing acupuncture. It was not possible for the investigator in Riga to record that treatment due to what was said to be the requirements of Latvian domestic law. 49 The applicant's submission was that, drawing the evidence together, it was possible to infer that the person performing the treatments in both Stockholm and Riga was the same person. Given the details of the booking process and his statements made to investigators it was possible to link him to the "Holistic Health" website, which was linked to the "Vinny Richards" Facebook profile and also the critical profile on the "Healthcare Volunteer" website, which is of substantial importance. The information provided to the investigators during the course of treatment was consistent with the information on the "Healthcare Volunteer" profile. All of this evidence was consistent with the person performing the treatment being the same person as the person described in the "desktop" investigation reports, and with that person being the respondent himself. Furthermore, the surveillance evidence indicated that the person performing the treatment was capable of performing acupuncture without apparent difficulty, although he did make some reference to an injury. This was evidence that from at least August 2016, the respondent was actually performing another occupation, seemingly without difficulty, while the "desktop" evidence supports an inference that he was capable of doing so, and intending to do so, from January 2016. 50 Within this evidentiary context, however, the strongest support for the applicant's claim comes from the admissions made by the respondent when confronted with the allegations. I turn to these now.

Admissions made by the respondent 51 Following the investigations undertaken, on 19 October 2016, in a letter sent to the respondent the applicant declined the respondent's claim dated 10 October 2016. The letter relevantly stated as follows: Dear Mr Richards, Disability Income Benefit and Claims Escalation Benefit Policy Number: 10914730 Retail Supplementary Report Form dated 10 October 2016 We refer to the Retail Supplementary Report Form dated 10 October 2016 ("the Claim") which you lodged with AIA. AIA advises that the Claim is declined for the following reasons: 1. The Claim is fraudulent; 2. You have made false and misleading statements in the Claim; 3. You have failed to disclose relevant information in the Claim. We provide an explanation of why we have made this decision below: Decision … 4. Since at least 5 February 2016, you have lodged claims with AIA under the Policy seeking payment of the monthly benefit ("the Claims"). 5. When making the Claims, you represented to AIA among other things that: (a) You suffered from a Total Disablement; (b) You suffered from a Total Disablement since 2002; (c) You did not perform, either paid or unpaid, duties of any other occupation during the relevant claim period. (d) You did not have a return to work plan; (e) There were daily restrictions which you suffered from that prevent you from performing the usual duties; (f) You did not ever expect to resume the usual duties; and (g) That the information on the claim form was true, correct and complete. 6. At the time of making the Claims from at least 5 February 2016, you were: (a) Capable of performing the usual duties; or (b) Intending to perform the duties of another occupation; or (c) Performing the duties of another occupation; (d) Working; and (e) Earning income. 7. In particular, we note that we have evidence that: a. since at least 26 January 2016, you claimed that you provided services, including acupuncture, from a clinic in Riga, Latvia and on 19 September 2016 an investigator engaged by us attended upon you at the Lady Fintness Brivibas Street on Brivibas in Riga, Latvia and paid for and received acupuncture treatments from you; and b. since at least 6 June 2016, it has been advertised that you provide acupuncture treatments at the Aktiv Kvinna Centre in Hammarby Stockholm and on 9, 16 and 25 August 2016 and 8, 20 and 21 September 2016 investigators engaged by us attended upon you at that Centre and paid for and received acupuncture treatments from you. 8. In these circumstances, we have formed the view that: a. the Claims were and are made fraudulently, in that in formulating and presenting the Claims, you knowingly made false statements in connection with the Claims for the purpose of inducing AIA to meet the Claims; and b. the Claims are contrary to the legal declaration you made when you submitted the Claims to the effect that the information on the claim form is true, correct and complete and that you understood and agreed that if you made any false or fraudulent statement or failed to advise AIA of any relevant information regarding your claim, AIA may refuse to pay benefits and proceed to cancel your claim and/or the Policy. … 52 This correspondence squarely put the allegations made by the applicant in this proceeding before the respondent, and included reference to the evidence that it had obtained and which was before me on this application. 53 On that same day, the applicant informed the respondent by letter that it had cancelled the contract of insurance. That letter relevantly stated the following: Dear Mr Richards, CANCELLATION NOTICE Disability Income Benefit and Claims Escalation Benefit Policy Number: 10914730 We refer to your contract of life insurance with AIA Australia Ltd ("AIA"), policy number 10914730, entered into or about 12 November 2002 ("the Policy"). AIA hereby puts you [sic] notice that the Policy is cancelled. The cancellation of the Policy takes effect 28 days from the date of this letter. AIA has cancelled the Policy as: 1. You have made fraudulent claims under the Policy; 2. You have made false and fraudulent statements when submitting claims; and 3. You have failed to disclose relevant information regarding a claim when submitting claims. Decision ... Cancellation AIA is entitled to cancel the Policy on the basis of the declaration you have signed when submitting Claims, which states that the information on the claim form is true, correct and complete and that you understood and agreed that if you made any false or fraudulent statement or failed to advise AIA of any relevant information regarding your claim, AIA may refuse to pay benefits and proceed to cancel your claim and/or the Policy. AIA also has an entitlement, under law, to cancel the Policy due to the making of fraudulent claims. … 54 The content of the cancellation letter under the heading "Decision" was the same as that contained in the first letter sent by the applicant on 19 October 2016. A third letter was sent by the applicant to the respondent on that date as well. This letter enclosed the originating application, statement of claim and supporting affidavit that had been filed to commence the present proceedings in this Court. 55 Mr Richards replied to the correspondence sent by the applicant that same day, by email, in the following terms: Dear Mr Lloyd Williams, Yes the information is true. I am doing some acupuncture treatments. But not able to [sic] this as a full career but as a step back into the workplace. I am only able to do maybe 10 or so treatments a month, which equates to around 300euro [sic] from this I have to pay commission for hire of room. I am currently under another specialist in Riga for my condition. I have stated this on my forms. Also may I add I really pushed myself to get back into work. As my psychological health was suffering and I was admitted to psychiatric hospital for suicide attempt. I may have been naive or just foolish but my goal was to get back to work full time in the future. I [sic] requested I can send proof of my medication and also you can access any medical files. I hope I have explained my situation. Regards Vincent Richards … (emphasis added) 56 Later that same day, the respondent followed up with a further email sent to the applicant: Dear Mr Lloyd-Williams, [sic] May I add I only started this work in September in Riga. In Stockholm mid June. Regards Vincent Richards … 57 Furthermore, on 25 October 2016 the respondent emailed the applicant's solicitor and stated that he: …would like to know where I submit contracts to show I was in Sweden June 2016 & Riga Ladyfitness from September 2016. 58 The respondent also provided a letter addressed to the Federal Court of Australia in lieu of appearing at the first case management hearing for this proceeding in December 2016. It was also sent to the applicant. Relevantly, it stated as follows: 27th November 2016 Dear Federal Court of Australia, … I have advertised acupuncture treatment since June 2016. My intention was to give treatments of maybe 10-12 clients per month as a test to see if I could make some sort of career from this and in time increase the work. I thought 10-12 a month would be ok as I am still suffering from my condition and taking medication. Medication consists of analgesia, sleeping medicine and anti-depressants. AIA have a list of these on their files. My first client was not until end of July 2016. This was in Stockholm Sweden, but as there is a lot of competition from experienced Chinese practitioners I did not get so much work. From my 1st client to end of September only 7 clients. In September I took a place in Riga Latvia offering same services and I also enclose a contract stating this time I began, AIA are saying I worked there in Riga from January which is untrue as I did not begin until September. I did register in Latvia with Tax office but this was how I could get Latvian residency as I was nonresident in Sweden. So I would like to explain the reason why I did not inform AIA of my intentions. The reason is that I knew if I told them they would cause me problems and maybe threaten to stop the benefit. I have had a bad time with AIA for the past few years. Making threats to stop my benefit and harassment. I have had severe depression and on 2 occasions I have been admitted to Psychiatric hospitals with suicide attempts. AIA were aware of this but continued to harass me. … I was intending to tell AIA when I believed I was ready to undertake work again as I truly believe if I did not try and make something of my life I think it would end earlier than it should. So now I am left in Latvia with no income as my acupuncture clients hardly cover my costs and AIA probably relieved I have made such a stupid mistake. It was a stupid thing to do as to lie on my documents to AIA but I really felt I had to take the chance as AIA are not sympathetic to their clients … … (emphasis added) 59 Upon being clearly confronted by the applicant with the allegations, the respondent stated in his first email on 19 October 2016 that "the information is true" and "I am doing some acupuncture treatments". He then sought to qualify this, by stating that he was not doing much and had not been doing it for long. Nevertheless, this constituted an admission that he had been doing work whilst contemporaneously claiming that he cannot perform such work. He also admitted that he had been doing such work in both Riga and in Stockholm. These constituted plain admissions by the respondent as to what was put to him by the applicant and which can then link him to the body of evidence gathered by the applicant and outlined earlier in these reasons. 60 As was conceded by the applicant, the admissions are qualified to an extent by the second email in relation to the time period that the respondent claimed to have been working from. However, the evidence from the profile on the "Healthcare Volunteers" website was evidence that the respondent had been intending to practise acupuncture since at least 26 January 2016, and so was holding himself out as doing as much. 61 In his letter to the Court, the respondent admitted that he "did not inform AIA of my intentions" because he "knew if I told them they would cause me problems and maybe threaten to stop my benefit". This is an admission of concealment of the facts from the applicant, and demonstrates that he was conscious that he was deliberately making representations to the insurer that were false. He also stated that it "was a stupid thing to do as to lie on my documents to AIA but I really felt I had to take the chance…". The respondent thus admitted that he lied in making the claims alleged to be fraudulent by the applicant. These admissions are strong evidence that he knowingly made statements, which he knew to be false, in making the claims under the policy, particularly when linked with the other evidence and the fact that he was confronted with the substance of that evidence, at least in terms of that obtained through surveillance.

Doctor's report 62 Finally, in the evidence before me, there was document called a "Retail Medical Attendant's Statement", annexed to one of the "Second Stage Claims". It was purportedly completed by a doctor in Riga, Latvia and stated that the doctor's "current diagnosis" of the respondent was: Arthritis in the spine & hips with fitness accident 12 years ago led to the arthritis. Pain, discomfort, depression (chronic) suicide attempt. 63 This diagnosis was said to be supported by objective evidence in the form of an "X-ray in Riga, Latvia" which showed "arthritis in the spine and hips". The doctor indicated that the respondent was unable to perform any of the duties or responsibilities of his usual occupation "due to [his] medical condition". The report also stated that the respondent "will complete these forms twice a year as directed by you". It is unnecessary to determine whether the doctor is complicit in any fraud on the part of the respondent. In any event, the utility of this report to serve in the respondent's favour is limited by the evidence gathered against him by the applicant and his subsequent admissions when confronted with the allegations made by the applicant.

Conclusion on the Evidence 64 It follows that there is objective evidence indicating that the respondent, since at least January 2016, was intending to perform acupuncture upon patients in Latvia and Sweden. Furthermore, there is evidence that, from at least August 2016, the respondent has actually been performing acupuncture in Latvia and Sweden. The admissions made by the respondent by the applicant upon being confronted with these allegations are plain. The evidence, linked together, shows that the respondent was capable of performing his usual occupation over the relevant period and intending to perform, or performing, the duties of another occupation. This was despite him having made representations when submitting the Second Stage Claims to the applicant to the effect that he was totally disabled. The admissions show that the respondent knowingly made false representations and, accordingly, having considered the evidence before me I am persuaded that the respondent's Second Stage Claims were fraudulent. The clarity of the evidence is sufficient to satisfy me to the Briginshaw standard of these matters.

Relief 65 At common law an insurer has the right to cancel a contract prospectively upon the basis of a breach of contract of such a serious nature as the commission of a fraud against the insurer: Manifest Shipping Co Ltd v Uni-Polaris Shipping Co Ltd [2001] UKHL 1; [2003] 1 AC 469 at 498-499 [61]. See also Versloot Dredging BV v HDI Gerling Industrie Versicherung AG [2016] UKSC 45; [2017] AC 1 at 10 [8]. 66 Nothing in the Insurance Contracts Act 1984 (Cth) abrogated that right. Section 56(1) of the Insurance Contracts Act states: (1) Where a claim under a contract of insurance, or a claim made under this Act against an insurer by a person who is not the insured under a contract of insurance, is made fraudulently, the insurer may not avoid the contract but may refuse payment of the claim. 67 Avoidance ab initio is prohibited: see also s 11. The ability to avoid had been uncertain: Manifest Shipping [2003] 1 AC at 501 [66]; Britton v Royal Insurance Co (1866) 4 F&F 905; 176 ER 843 at 909; and AXA General Insurance Ltd v Gottlieb [2005] EWCA Civ 112; Lloyd's Rep IR 369 at 374-375 [17]-[22]. The Explanatory Memorandum to the Insurance Contracts Amendment Bill 2013 (Cth) dealing with the new provision for cancelling life contracts to insure, s 59A, also supports this construction. 68 This availability of the right to terminate or cancel the policy in futuro for the making of a fraudulent claim was denied by Einstein J by his Honour's construction of s 56(1) in Alexander Raymond Walton v The Colonial Mutual Life Assurance Society Ltd [2004] NSWSC 616 esp at [49] to [51]. With respect, I cannot agree. "Avoidance" is not termination in futuro. There is no basis, in my view, to consider that that common law contractual right has been statutorily abolished. 69 The question of damages arises. Given that the breaches of the contract of insurance are the making of fraudulent claims from 5 February 2016, the question arises as to the loss caused by such claims. First, there are the policy sums paid out on the basis of the claims being made. That is straightforward. The same sums would clearly be recoverable in an action for restitution for money paid by way of mistake of fact. The totals of those sums together with pre-judgment interest from the respective dates of payment are recoverable. 70 The insurer also claims its investigation costs. At one level, these might be seen as part of its cost of doing business, and therefore part of its overheads. That is the better analysis for the investigations commenced before February 2016. It is not, however, the correct analysis for investigations carried out after February 2016. The investigation took place because of suspicion about claims that were in fact fraudulent. These costs fall within an orthodox application of Hadley v Baxendale (1854) 9 Ex 341; 156 ER 145 at 151; European Bank Ltd v Evans [2010] HCA 6; 240 CLR 432 at 437-438 [11]; Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8; 236 CLR 272 at 286 [13]; AMP Financial Planning Pty Ltd v CGU Insurance Ltd [2004] FCA 1330; 139 FCR 223 at 254-255 [123]; and see Enright I and Merkin R, Sutton on Insurance Law (4th ed, Thomson Reuters, 2015) Vol 2 p 64. 71 Thus, these expenses plus pre-judgment interest from the date of expenditure are recoverable. 72 Costs should, in a case such as this, be paid on a full indemnity basis. The applicant has filed affidavits identifying professional costs and disbursements totalling $92,856.00 and $26,604.65 respectively, which I will round down to $110,000. Whilst these sums are high, they reflect the detailed care and attention that have been given to such a serious matter. Had Mr Richards not made fraudulent claims the applicant would not have to have expended them. 73 Finally, I note that r 39.05(a) of the Federal Court Rules 2011 (Cth) provides that this Court may vary or set aside a judgment or order after it has been entered if it was made in the absence of a party. As Mr Richards has not participated in the disposition of this application, or indeed entered an appearance at any stage in this proceeding, it is appropriate that he be made aware of this rule, though I am satisfied that he has been served with all relevant process and notified of the hearing dates. 74 The orders that I will make are:

1. I direct the applicant to file a schedule of claimed payments and investigation expenses incurred after February 2016 totalled to a judgment sum calculating any pre-judgment interest payable up to a date 7 days after filing in order for judgment to be ordered as of that date.
2. The respondent pay the costs of the applicant on an indemnity basis, payable on a lump sum basis of $110,000.
3. The applicant serve a copy of these reasons and the orders made on the respondent by email to his last known email address, pointing out the existence of r 39.05(a) of the Federal Court Rules 2011 (Cth). I certify that the preceding seventy-four (74) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Chief Justice Allsop.