Southern Cross Assurance Company Limited v Australian Provincial Assurance Association Limited [1935] HCA 56

[16]

the policy, averred that it was interested in the life of Evans to the amount assured. The defendant, after putting the plaintiff to the proof of the agreement, raised certain defences based on a contention that the contract of reassurance was merely a contract of indemnity ; and pleaded further that certain answers made by Evans in his personal statement, which was made a basic part of the contract of reassurance, were untrue and failed to disclose certain material facts relating to various consultations he had had with his medical advisers, and thus were made by Evans falsely and fraudulently to induce the plaintiff to execute and issue to him the policy of life assurance. The defendant relied also upon the failure of the plaintiff to notify the defendant that Evans had refused to submit himself to further medical examination at an early stage of the original assurance. At the hearing before Jordan C.J. the plaintiff put in evidence the policy of reassurance, and the documents mentioned therein, together with two original policies and certain letters, and thereupon closed its case. The defendant applied for a nonsuit substantially upon the ground that the con- tract, being a contract of reassurance, was one of indemnity merely, and that the plaintiff had failed to prove that it had sustained a loss against which it had to be indemnified. The application was refused. At the close of the defendant's case questions substantially as follows were left for the determination of the jury : - (a) Did Evans make any statement in the documents which he submitted to the plaintiff which was fraudulently untrue ? (b) Did Evans make any untrue statement in those documents ? and (c) Did the plaintiff fail to make a fair disclosure to the reassur- ing company of the fact that Evans had declined to be re-examined ? The questions were answered in the negative. A verdict was entered for the plaintiff in the sum of £2,000. An appeal by the defendant to the Full Court of the Supreme Court was dismissed : Southern Cross Assurance Co. Ltd. v. Australian Provincial Assurance Association Lid. (1).

[52]

Dr. Tucker, who is mentioned in the answer, was the family physician of Evans; he had had occasion during the period of ten years often to attend members of his household, and knew Evans' habits and his medical history. The allegation that the answer to the question was not in accordance with fact depends upon four or five incidents. On 24th July 1918 Evans called at Dr. Tucker's surgery and complained that for three weeks he had had a pain in his right groin following, as he thought, a chill. A thorough examination was made but nothing was discovered of any significance, and Dr. Tucker merely prescribed a laxative pill. Evans did not consult him again until 28th February 1920, when he attended his surgery and complained of an inflamed toe. This was put down as probably gout and a remedy was prescribed, Evans next consulted Dr. Tucker on 26th August 1924, when he complained of fullness at the pit of the stomach. He was again examined with some thoroughness, but nothing was found to account for it and simple digestive remedies were prescribed. Dr. Tucker was next consulted by Evans on 12th August 1926. He then complained of a headache. This time an examination disclosed an irregularity in the action of his heart. This Dr. Tucker considered as possibly important. Besides preserib- ing remedies for digestion and liver, he questioned him as to the extent of his smoking and reduced his allowance of tobacco and tea. He saw him a fortnight later and found that the cardiac arrhythmia had disappeared. Dr. Tucker concluded that it had been due to too much smoking and that his heart was not unsound. He did not restrict his activities in any way. He was unable to say whether he informed Evans that he had found any irregularity of his heart. He was not consulted by him again prior to Evans' proposal of Ist October 1927 to the respondent company. After that proposal, in the absence of Dr. Tucker, Evans did consult his partner, Dr. Lind. He did so on 12th January 1928. He complained of feeling unfit, sweating at night, and losing weight and of some catarrhal infection of the throat. Dr. Lind made an examination then and five days later. Evans' heart displayed a slight irregularity, the muscle sounds were poor; there were no bruits. Dr. Lind thought that there were indications of myocarditis, and he had some discussion with Evans and his wife. In the meantime, the respondent company

[94]

A construction was at one time given to these provisions from which it necessarily resulted that a contract of insurance on the life of a third person should amount to a contract of indemnity. It was decided in the Court of King's Bench presided over by Lord Ellenborough that no more could be recovered than the loss which the insured suffered by the dropping of the life (Godsall v. Boldero

(1)). Of this case, Lord Blackburn said in Burnand v. Rodocanachi ((2): - " Lord Ellenborough falling into a blunder which has since been corrected thought that the contract of life assurance was a contract of indemnity, and accordingly held that that was a good defence on the part of the insurance company. I have been told by people connected with insurance companies and other people with whom I have been brought into contact in the course of my professional experience, that no sooner had that been done than there was such an outcry that everyone said he would never insure with a company which was capable of doing such a shabby thing. Consequently the insurance company instantly paid the whole loss and the whole of the costs, and published everywhere that they had done so. Nevertheless Lord Ellenborough's decision stood until it was decided in the Exchequer Chamber that that case went altogether upon a mistaken idea that a contract of life insurance was a contract of indemnity, whereas it was nothing of the sort." _ The case in the Exchequer Chamber which overruled Godsall v. SBatdero (1) is Dalby v. India and London Life Assurance Co. (3). The third section of the statute was given a construction by which _ the word " hath " was read as referring to the time of effecting the policy. Thus the insured must at the time of obtaining the insurance have an interest in the life. When death occurs, he can recover 'the full amount of that interest and no more. Events which occur after the insurance cannot diminish the amount which he is entitled _ to recover. '" Thus, the liability of the assurer becomes constant and uniform, to pay an unvarying sum on the death of the cestui que vie, in consideration of an unvarying and uniform premium paid

Southern Cross Assurance Company Limited v Australian Provincial Assurance Association Limited [1935] HCA 56 - HCA 1935 case summary — Zoe

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Judgment (143 paragraphs)