The construction of the clause
38Clause 31 of the insurance contract has already been recited. Leaving aside the so-called "plain English" style and ascribing to the first person pronoun the identification of Westpac Insurance and to the second person pronoun the identity of Mr and Mrs Dowsley, the issue that arises is what is its ordinary and grammatical meaning, bearing in mind the purpose which it serves.
39The clause confers a discretion on a person who has been paid a Living Benefit to overcome the effect of the reduction in the Death Benefit that results from the payment of the Living Benefit. That is, unambiguously, the purpose which clause 31 serves.
40The clause imposes conditions on the insured. The clause provides that "Twelve calendar months after" the Living Benefit is paid, the insured can increase the then Death Benefit for the insured person that has received the Living Benefit by up to 50 per cent of the amount of Living Benefit that was paid.
41Clearly, the first sentence of clause 31.1 confers a discretion on the insured. If the right to buy-back were to be exercised, it requires the insured to increase the Death Benefit and to specify the amount (up to 50 per cent of the Living Benefit) by which the amount of insurance should increase.
42The second sentence of clause 31.1, also unambiguously, allows the insured to increase the Death Benefit to bring it to the previous level under the policy before the payment of the Living Benefit.
43The foregoing discretionary exercise (either one or both) does not require a medical check or details of the insured person's health. In other words, it is a means by which a person who has suffered a significant trauma, for which a Living Benefit has been paid, after 12 months and 24 months is able to exercise a discretion to reinstate the full Death Benefit (or up to the full Death Benefit).
44Clause 31.2 imposes conditions. It is unnecessary to repeat them, as they are self-explanatory. The last of the conditions is the only contentious one.
45The last condition requires that the insured must (note the mandatory terminology) request the buy-back in writing within 30 days of the applicable anniversary of the payment of the Living Benefit. The applicable anniversary is either 12 calendar months after the Living Benefit or a further 12 months later.
46The issue between the parties is whether the terms of the policy should be strictly construed to require a request to be made in writing and whether the terms of the policy allow the second option to be effected even though the first has not been.
47The terms on which the parties have agreed is that the exercise of the discretion must be in writing (see the last dot point in subclause 31.2 of the contract). The second aspect, which also requires strict compliance, is that the request be "within 30 days of the applicable anniversary". That anniversary is the anniversary of the payment of the Living Benefit. The payment of the Living Benefit occurred on 16 June 2004. As earlier stated, the first anniversary (12 calendar month anniversary) of that date was 16 June 2005 and the second anniversary was 16 June 2006.
48The term "within" is generally used, in relation to time, to signify the date (or time) by which a requirement or act must occur. In calculating the period, where a commencement date or event is specified, the date of the event is excluded, as are fractions of a day: Forster v Jododex Aust Pty LTd [1972] HCA 61; (1972) 127 CLR 421; Lester v Garland (1808) 15 Ves 248; [1803-1813] 33 ER 748; Dodds v Walker [1981] 1 WLR 1027; Lamont v Heron [1970] HCA 47; (1970) 126 CLR 123; Prowse v McIntyre [1961] HCA 79; (1961) 111 CLR 264; STX Pan Ocean Co Ltd v Bowen Basin Coal Group Pty Ltd (No 2) [2010] FCA 1240 at [50].
49Further, the word "of" in the context of a phrase "within 30 days of" has long been considered to mean "after": Ex parte Fallon (1793) 5 TR 283; Mission Corporation Ltd v Telecom Auckland Ltd [1994] 2 NZLR 357; Williams v Burgess (1840) 10 LJQB 10; at least insofar as it limits the time within which conduct or an event must occur.
50In Associated Dominions Assurance Society Pty Ltd v Balmford [1950] HCA 30; (1950) 81 CLR 161, Fullagar J, at 183, differentiated between a construction given to descriptions of time when, on the one hand, the description defined a period at the expiration of which an act may be done, and, on the other hand, the description defined a period within which an act must be done. His Honour said:
"But it is clear, I think, that significance is attached to such expressions as 'at least' or 'not less than' only in cases where the immediate purpose of the prescription of a time is to define a period on the expiration of which an act may be done, and not in cases where the immediate purpose is to define a period within which an act must be done. In the former class of case the prescribed number of days must elapse between two acts or events. In the latter class of case the act must (unless a contrary intention appears) be done before the expiration of the last of the prescribed number of days (see, e.g. Radcliffe v Bartholomew and Armstrong v Great Southern Gold Mining Co. In the latter case Griffith C.J. said:-'When you talk of doing a thing within a period of a certain number of days, it is quite clear that the end of the last day is the furthest limit. It is impossible to say that a thing required to be done within seven days is done within seven days if done on the eighth day, and it is impossible to make any alteration of the limit by adding the word "clear"'. In the case of s 55 of the Life Insurance Act it is plain that the immediate purpose of the prescription of a period is to fix a time within which cause must be shown. It follows that the last day on which cause may be shown is the fourteenth day after the date of the notice."
51The currently relevant clause refers to Westpac Insurance receiving "a written request within 30 days of the applicable anniversary". The condition is to ensure that Westpac Insurance is aware of the exercise of the buy-back power within a reasonable period of its availability. The fundamental question is: Is a request made and received prior to the relevant anniversary date a request made and received "within 30 days of" that date?
52The issue, in a different context, was considered by the Northern Territory Court of Appeal in Ward v Walton [1989] 66 NTR 20; (1989) 99 FLR 21. The context was the Limitation Act 1981 (NT), which required institution of proceedings within 12 months of the ascertainment of the facts by the plaintiff. The writ issued before the plaintiff ascertained the facts. Asche CJ (with whom, relevantly, Gallop and Rice JJ agreed) said, at 24:
"Clearly the mischief the Act seeks to prevent is undue delay in bringing an action after the ascertainment of material facts by the plaintiff. For clarity, and to remove any doubts as to what the legislature regards as undue delay, a period of 12 months is specified. But if action has already been instituted surely the mischief has already been prevented. If a creditor says to his debtor, 'You must pay me within 12 months', and the debtor replies 'I paid you last month', (and proves it), surely the obligation is discharged. For what the creditor really means is, 'You must pay me before the expiration of 12 months'. No other significance then attaches to the expression 'within 12 months'.
So far as the Oxford English Dictionary defines 'within' in temporal terms, those definitions are as follows:
'In the limits of (a period of time); most usually, before the end of, after not more than; also, since the beginning of, not more than ... ago; or generally between the beginning and end of, in the course of, during.'
Clearly some of those definitions favour the appellant, ('before the end of'), some, the respondent ('during'). In the context, however, and to avoid an otherwise absurd result I consider that the former meaning is appropriate. For it seems to make good sense for the court to be satisfied that 'the action was instituted within' (that is, before the end of or not later than) '12 months after the ascertainment of those facts by the plaintiff'.
A reading of 'within' as meaning 'before the end of' appears in Earl of Morton's Trustees v MacDougall [1944] SC 410. In that case the Agricultural Holdings (Scotland) Act 1923 (UK) provided that compensation for damage done to his crops by game should not be recoverable by a tenant from his landlord 'unless notice in writing of the claim, together with the particulars thereof, is given to the landlord within one month after the expiration of the calendar year ... in respect of which the claim is made'. On 16 December 1942 a tenant sent to his landlords notice in writing of a claim for compensation for damage done to his crops by game in the year 1942. It was contended that the notice was invalid as not being sent during the month of January 1943. It was held by the majority (Lord Mackay dubitante) that the notice was good. Lord Justice - Clerk Cooper said (at 443):
'It is to be noted that the words are "within one month" and not "within the month". According to its normal significance, as evidenced by the dictionaries, "within" when applied to a period of time most usually means "before the end of" ... It seems to me that that is a sufficient meaning to give to the words of the statute - in other words to read them as prescribing a time limit on the expiry of which, if the claim and particulars have not been given, the claim will prescribe.'
In R v IRC; Ex parte Knight [1973] 3 All ER 721, s 103(2) of the Taxes Management Act 1970 (UK) provided that:
'Proceedings for the recovery of any penalty from any person in connection with or in relation to any tax covered by any assessment may, where any form of fraud or wilful default has been committed by him or on his behalf in connection with or in relation to that tax, be commenced at any time within three years from the final determination of the amount of tax covered by the assessment ... .'
The commissioners commenced proceedings under this section before a final determination had been made. It was contended by the taxpayer that the proceedings were premature. The Court of Appeal rejected that argument, holding, inter alia, that on the true construction of the subsection the words 'within three years' mean that proceedings may be commenced at any time 'not later than' the expiration of three years from the final determination: see Russell LJ (at 727) applying Earl of Mortons Trustees v MacDougall."
53Given that the day of the event (the anniversary) is not included in the 30 days, one way of testing the proposition that only a written notification received after the anniversary date would be effective is to ask what would have happened if, on the anniversary date, Mr or Mrs Dowsley notified Westpac Insurance of the exercise of the buy-back option? It must have been within the objective contemplation of the parties that a notification on that date would have complied with the condition.
54Therefore, the 30 day period prescribes the last day by which an act must be done. An exercise of the buy-back option at any time before the expiry of the 30 day limit will satisfy the condition. In the same way as applied in Ward v Walton, supra, a request written and received prior to the applicable anniversary date satisfies the requirement that the request be written and received "within 30 days of" the anniversary date.
55I am comforted in the foregoing by the manner in which the term "receive" has been construed. Prima facie, it has been used to mean "actually get into their hands": Pilcher v Logan (1914) 15 SR (NSW) 24, at 27 per Harvey J. Thus, correspondence sent and received before the applicable anniversary date is, even in the period between the anniversary date and 30 days thereafter, "received".
56The term "within 30 days of the applicable anniversary", which is part of the conditions on the buy-back, does not require a construction that means from the anniversary date until 30 days after the anniversary date. However, the increase in the Death Benefit cannot occur until the anniversary date, notwithstanding the earlier receipt of the request.
57Was such a request made? And what was its effect?
58I make it clear that the evidence as to the terms of the conversation between Mr or Mrs Dowsley and agents or employees of Westpac Insurance (or some other corporation in the Westpac group) are, in my view, irrelevant in determining the satisfaction of the conditions in the contract for buy-back. The condition requires notification to Westpac Insurance in writing. A discussion, if there were one, is irrelevant for present purposes.
59Further, the purpose of the clause is relatively clear. A serious injury having been suffered by an insured and a Living Benefit having been paid by Westpac Insurance, the insured is entitled to increase the Death Benefit by the amount it was otherwise reduced. Westpac, however, requires that the person (in the case of a buy-back up to 50 per cent) will have survived 12 months from the date on which the serious illness occasioning the Living Benefit was paid the Living Benefit.
60In order to increase the Death Benefit to its prior level (i.e. its level before the payment of the Living Benefit) the insured must survive two years. This gives some protection to Westpac Insurance that it, in effect, would not be required to pay the benefit twice in a very short period, without having received any, or any substantial, insurance premiums. Further, Westpac Insurance need to be informed relatively quickly of the exercise of the buy-back option.
61Westpac Insurance has calculated that the capacity to pay a further two years' premiums will suffice for the calculation referred to immediately above.
62Mrs Dowsley has survived the two years. On 19 August 2005, a request was made in writing for buy-back of the Death Benefit. The question that arises is whether that request, or that request coupled with other documents, satisfied the conditions in the insurance contract.
63The Court is required to examine further the terms of clause 31.1.
64That which is required in relation to the second 12 month anniversary (i.e. the anniversary that is 12 calendar months later than the first 12 calendar month anniversary) allows the insured to "increase the Death Benefit to bring it to the level that applied under the policy before [Westpac Insurance] paid the Living Benefit". There is no reference in relation to the second calendar month anniversary to a limit of 50 per cent. By a proper construction of the clause, there could not be a 50 per cent limit on the amount that the Death Benefit could be increased at the time of the second anniversary.
65At the first anniversary (or within 30 days thereof) the insured is entitled to increase the Death Benefit by up to 50 per cent. Thus, an insured could, at the 12 month anniversary, increase the Death Benefit by one per cent of the Living Benefit already paid.
66Nevertheless, a proper construction of clause 31.1 would allow, on the foregoing hypothetical, at the second anniversary (or within 30 days thereof) for the insured to increase the Death Benefit by a further 99 per cent to "bring it to the level that applied under the policy before [Westpac Insurance] paid the Living Benefit".
67As a consequence of the foregoing construction, which, I add, is relatively clear, the second anniversary increase is not confined to 50 per cent of the Living Benefit that had been paid. There is, assuming, as I must, that the appropriate premiums for the two year period would be required to be paid, no purpose served by reading down that which can occur at the second anniversary by making it a condition of the exercise of the discretion or power that some amount (up to 50 per cent) had been exercised at the first anniversary.
68In other words, while the usual situation would likely be that an insured who desired to buy-back the Death Benefit would exercise that contractual right at the first anniversary and increase the Death Benefit by 50 per cent (or a sum approaching that) of the Living Benefit that had already been paid and subsequently (i.e. at the second anniversary) increase the Death Benefit by a further 50 per cent, that is not a necessary arrangement.
69An insured can increase the Death Benefit by one per cent at the first anniversary and 99 per cent at the second anniversary. Likewise, 12 months after the first anniversary (or within 30 days thereof) an insured can exercise the contractual power to buy-back the Death Benefit and bring it to the level that applied prior to the payment of the Living Benefit.
70The two anniversary dates allow for different and independent options to be exercised. The contractual right to buy-back the Death Benefit to reinstate the full amount of the previously paid Living Benefit operates regardless of whether a partial reinstatement was effected at the time of the first anniversary. The timing of that "second option" is set by reference to the timing of the availability of the "first option", but the "options" or "powers" operate independently.
71The written request by Mr Dowsley was received (i.e. was in the possession of) Westpac Insurance within 30 days of the second anniversary of the payment of the Living Benefit. As earlier explained, that it was received significantly before the 30 days does not render that condition unsatisfied. On the contrary, the earlier receipt of a written request of the appropriate kind would satisfy the condition that Westpac Insurance receive it within 30 days of the applicable anniversary.
72However, there is a requirement (the last dot point of subclause 31.2) that the insured "must request the buy-back in writing within 30 days of the applicable anniversary" and the question still remains whether that has occurred.
73A receipt by Westpac Insurance satisfies the first sentence of the last dot point of subclause 31.2 within 30 days of the applicable anniversary. The fact, if it be the fact, that a letter was written 31 days before the applicable anniversary and received by Westpac Insurance two days after the applicable anniversary would not fail to satisfy the last dot point of subclause 31.2.
74The request of 19 August 2005, being in the possession of Westpac Insurance "within 30 days of the applicable anniversary", satisfies the last dot point in subclause 31.2.
75I turn then to the letter of 19 August 2005. The letter expresses a desire "to take up the buy-back option" on the insurance policy. It expresses the view that the request for the buy-back "option" should be made within 30 days of the benefit being paid.
76This latter view is incorrect. The 30 days' period runs from an anniversary (either the first or second).
77The letter of 19 August 2005 does not request an amount by which the Death Benefit would be increased by operation of the "buy-back option". Further, the necessary inference from the terms of the letter of 19 August 2005 is that only that which was available within 30 days of the first anniversary was the subject of request. It is clear from the terms of the letter that the letter did not purport to seek to utilise the capacity to buy-back that which is said to arise on the second anniversary (or within 30 days thereof).
78By letter dated 2 May 2006, Mr Dowsley requested, again, that Westpac Insurance resolve the dispute with regards to the buy-back option and consent to FICS reviewing the issue.
79The basis upon which Westpac Insurance was required to give permission for FICS dealing with the matter was that the amount in dispute was above FICS's "jurisdictional" limit. The amount in dispute was said to be $517,000. $517,000 was the total buy-back and equivalent to the Living Benefit. Thus, the amount in dispute to which FICS had regard was not 50 per cent of the Living Benefit, but the full amount of the Living Benefit.
80There is substantial correspondence between the parties thereafter. At this stage the Court must be concerned with the proper interpretation of the correspondence and not with the terms of the contract.
81At least by the time Westpac Insurance received Mr Dowsley's letter of 2 May 2006, enclosing, as it did, the letter from FICS, it could be under no illusion that Mr Dowsley (on his and Mrs Dowsley's behalf) was requesting a buy-back of $517,000, being, in round terms, the amount of the Living Benefit paid on 16 June 2004.
82Thus, by 16 June 2006, Westpac Insurance had received a written request for buy-back to bring the Death Benefit back to the level it was before the payment of the Living Benefit (see the last dot point of subclause 31.2).
83For the foregoing reasons, the conditions for the buy-back have been satisfied and a written request was made and received, within 30 days of the second anniversary date, to increase the Death Benefit to bring it to the level that applied under the insurance policy before Mr or Mrs Dowsley were paid the Living Benefit. As a consequence, the insured, Mr and Mrs Dowsley, are entitled to buy-back the policy, the only condition on which is the payment of the appropriate premiums.
84The Court makes the following orders:
(1)A declaration that on a true construction of the contract of insurance between the plaintiffs, Lisa and Garry Dowsley, and the defendant, Westpac Life Insurance Services Ltd, the aforesaid plaintiffs have exercised their right to buy-back the first plaintiff's Death Benefit under the terms of the policy of insurance (No Y0532784) to reinstate the full Death Benefit as it existed prior to the payment of the Living Benefit.
(2)An order that the defendant, Westpac Life Insurance Services Ltd, perform its obligations under the aforesaid contract of insurance by reinstating the first plaintiff's Death Benefit under the aforesaid policy, subject to the payment of appropriate premiums calculated in accordance with the policy.
(3)The defendant pay the plaintiffs' costs of and incidental to the proceedings, as agreed or assessed.