Timothy Andrew Burnard Muggleston v National Mutual Life Association of Australasia Ltd

Supreme Court of NSW|2004-09-23|Before: Bergin J

Reported Decision : (2005) 13 ANZ Insurance Cases 61-638

CITATION : Timothy Andrew Burnard Muggleston v National Mutual Life Association of Australasia Ltd [2004] NSWSC 913 HEARING DATE(S) : 15, 16, 17, 23 September JUDGMENT DATE : 23 September 2004 JURISDICTION: Commercial List JUDGMENT OF : Bergin J DECISION : Defendant not entitled to avoid the policy of insurance

16 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST

50158/03 TIMOTHY ANDREW BURNARD MUGGLESTON v NATIONAL MUTUAL LIFE ASSOCIATION OF AUSTRALASIA LIMITED JUDGMENT 1 The plaintiff, Timothy Andrew Burnard Muggleston, seeks a declaration that the defendant, National Mutual Life Association of Australasia Limited, is not entitled to avoid the policy of insurance number 210081832 (the Policy) issued to him by the defendant. The plaintiff also seeks an order that the defendant specifically perform the Policy.

2 The defendant claims that pursuant to s 29(2) of the Insurance Contracts Act 1984 (Cth) it was entitled to avoid the policy because the plaintiff fraudulently failed to comply with his duty of disclosure and/or fraudulently made misrepresentations in the proposal for insurance.

3 This is an insurance case of a rare kind because there are no questions of construction of the Policy. Although the trial of the matter took approximately three days and although there were a range of issues outlined in the pleadings and in the initial argument, the real issue is confined to matters of fact in short compass as to whether the plaintiff informed the defendant that his knee became swollen if he received a particularly hard bump on the football field. 4 The plaintiff was born on 26 May 1957 and is presently aged 47 years. It is apparent that in his youth he lived in Tasmania for a time and the irresistible conclusion to be drawn from the evidence is that he is a rugby fanatic and loved playing rugby.

5 In about 1977 he experienced pain in his right knee from an injury playing football. Dr Law in Tasmania operated on the knee and removed the cartilage from the outside of his right knee. In about 1979 the plaintiff had a second operation, also performed by Dr Law. The plaintiff said that he did not feel that he needed that operation and that it was a procedure suggested by Dr Law and by his parents. After the surgery he was able to walk and run and play sport without difficulty. Some time before he left Tasmania, in about late 1979, he broke both of his wrists playing football and although there was no operative procedure, the wrists were in plaster casts. The plaintiff made full recovery from those fractures. The plaintiff left Hobart in December 1979 and it is apparent that he then lived in Sydney until about 1994. 6 In about 1980 or 1981 the plaintiff had a further operation to remove a fatty nodule which had formed on the inside of the right knee. His evidence was that he was told it looked unattractive and it is apparent that the surgery was mainly cosmetic.

7 Between 1982 and 1992 the plaintiff played Rugby Union for the Hunters Hill Rugby Union Club. It is apparent that he was quite good at that sport, evidenced by, for instance, an extract in The Glebe newspaper of 21 May 1986 referring to him taking home three points for the best and fairest and referring to him being announced as the man of the round. During this period the plaintiff did some bartending work. His knee was swollen from time to time but his evidence was that during that period it was never painful.

8 In late 1989 or early 1990 the plaintiff commenced work with FAI Insurance. In 1990 he saw his then general practitioner, Dr Gambrill, who referred him to an orthopaedic surgeon, Dr Neil Thomson. The plaintiff said that he had forgotten about this reference to Dr Thomson until reminded of it by his solicitor in the preparation for this case. Dr Thomson wrote to Dr Gambrill thanking him for referring the plaintiff to him and reporting that the plaintiff had given a history of recurring problems with his right knee. He also referred to the procedures in the 1970s and the fatty nodule removal in 1981. Dr Thomson wrote: His present complaints are that he has swelling in the right knee and it aches. He is not able to play sport.

9 Dr Thomson referred to the effusion in the right knee and the palpable osteophytes, and observed that the x-rays showed advanced degenerative change in the knee joint. He expressed the following opinion: Unfortunately this man has quite marked degenerative changes in the knee joint and at the age of 33 this is an extremely difficult problem. He can be helped by physiotherapy and exercise to strengthen the muscles, avoidance of too much stress to the knee and NSAID's. I do not feel that there is any place for osteotomy at the present time to carry out realignment as he has had both menisci removed. Unfortunately he will ultimately come to joint replacement but he is too young for this at the present time. I would be happy to review him again. 10 The plaintiff gave evidence that after being reminded by his solicitor about the referral, he recalled that when he went to Dr Gambrill he had a form with him from FAI and that when Dr Gambrill saw the scarring on his knee he informed Dr Gambrill that he had had a cartilage removed on the inside and the outside of his knee. Dr Gambrill said that he could not make a judgment on that and he would have to refer him to a specialist. The plaintiff's evidence is that this appointment, or these appointments, were work related and not precipitated by any problem that he was having with his knee. He said that he was playing sport in 1990. Indeed, he was playing Rugby Union for Hunters Hill, playing golf, running, and playing social cricket for Hunters Hill. He certainly does not recall being informed that he had degenerative change in his knee or that he needed a joint replacement.

11 There is in evidence the Annual Report and Financial Statement of the Hunters Hill Rugby Union Football Club. That Report refers to the Halligan Cup Report which describes the Halligan Cup Competition as a "new concept" with teams nominated to play on a week to week basis. The Report referred to a nucleus of players and named the plaintiff as part of a group of players who made the season "quite successful". The Report also records that the plaintiff played five games out of eighteen, albeit that in his evidence in the witness box the plaintiff thought that it was more like eight or nine games.

12 In 1994 or thereabouts the plaintiff moved to the northern part of New South Wales and commenced working at a music store that was owned by a family company. This work required him to stand up in the shop for long periods and to move about regularly. He did not have any problems when he was working. It is apparent that he commenced playing third grade football with the Ballina Football Club but after only one game moved to what is known as the Golden Oldies, which seems to be a group of older men who get together on social occasions but also enjoy playing Rugby. It is was described in evidence as being more drinking than football. However the plaintiff indicated that there was also some serious football played by the Golden Oldies, and gave the example of receiving a black eye on one occasion in one of the matches. It is apparent from the evidence that he commenced playing football in the Lismore/Ballina area in 1994.

13 The plaintiff's mother had suffered from melanoma and in October 1994 the plaintiff consulted for the first time with Dr Nicole Alexandra Boyce, who is a general practitioner practicing in private practice in a group practice known as the Lismore Clinic in Lismore. At the first consultation with Dr Boyce notes were made in respect of the plaintiff's presentation. Dr Boyce noted that the plaintiff was a new patient and that he was usually well, however, he presented with a skin lesion above the right eye and wanted it looked at. Dr Boyce also noted that the plaintiff had a cough and cold with coloured sputum, low grade fever and that he had a mild left shoulder ache on movement. These items were listed under the heading "Probs" in Dr Boyce's notes. The fourth item referred to the right knee and suprapatella bursitis and a secondary injury playing Rugby Union football two months previously. Dr Boyce noted there was no heat or redness in the bursa and no evidence of infection in the knee. It is also clear from the notes that Dr Boyce took the plaintiff's blood pressure and pulse and listened to his chest. She observed that he looked well.

14 Dr Boyce prescribed Rulide for the productive cough. She then ordered a full blood count and other blood tests, and she prescribed Naprosyn for the knee and suggested review and possible orthopaedic referral. She suggested that review should occur in a week to see if the plaintiff had settled, however, if there was any problem she noted that he was to attend upon her earlier. Dr Boyce also noted that she would carry out "cryo" on the sun spot on his next visit. Dr Boyce received the blood test results, noting cholesterol at 6.5 and a reading for glucose, next to which she noted that she needed to discuss it with the plaintiff when he came in the following week. 15 It is clear that the plaintiff returned to see Dr Boyce on 28 October 1994 and that she performed the treatment on his face, but there is nothing mentioned at all in the notes about his knee on that occasion.

16 The plaintiff continued working and playing football, and in 1995 he went on the tour with the Golden Oldies to New Zealand. Also on that tour was Peter Alexander Scruton. The Golden Oldies have a rule that if you do not wish to be tackled, you wear red shorts. Mr Scruton noted that when they were playing football in New Zealand, which is apparently where the plaintiff received his black eye, the plaintiff was not wearing red shorts. Indeed Mr Scruton said that the plaintiff appeared to be playing football without any impediment or complaint. He did not recall him complaining of any problems whilst in New Zealand, nor missing any of the games that were played in New Zealand.

17 That trip was in October 1995, and when the plaintiff returned from New Zealand he attended upon Dr Boyce and informed her that he needed to have a mole checked at the angle on his jaw. It is also apparent from the note made by Dr Boyce on 31 October 1995 that the plaintiff was concerned about the mole because of his mother's history of melanoma. Dr Boyce referred the plaintiff to Dr Choo in respect of the mole. Also recorded in the notes of that visit is that Dr Boyce gave the plaintiff a script for Voltaren Rapid and gave him the nonsteroidal antiinflammatory drug warning. She made the note "helped knee" or "knees".

18 Peter Scruton commenced employment with the defendant in about 1990. He was an agency manager for the northern New South Wales region, working at the defendant's office in Lismore. In October 1995 there were retrenchments arising out of a national restructure of the defendant and Mr Scruton was retrenched. He then commenced his own business as an insurance agent for the defendant. He approached the plaintiff to see if he could secure his business. Indeed he was successful and the plaintiff and his wife were Mr Scruton's first clients. 19 On 23 November 1995 Mr Scruton met with the plaintiff and conducted an analysis of his insurance position. On 11 December 1995 he met with the plaintiff and his wife, Mrs Holly Muggleston, to arrange insurance for them. There had been some difficulty making the appointment so Mr Scruton went to the plaintiff and Mrs Muggleston's home in Ballina. At that meeting Mr Scruton discussed with the plaintiff and his wife various options for insurance and completed the National Mutual application form for the plaintiff. Mr Scruton said that he completed the application by asking the plaintiff the questions in the application, with the plaintiff answering them and Mr Scruton writing the answers. He said that at times he would have to paraphrase the plaintiff's answers to make them fit into the space provided on the application. Mrs Muggleston sat with the plaintiff and Mr Scruton whilst the application was completed.

20 The application was for income protection and life disablement and trauma protection. It was identified as a new business application for the plaintiff. The weekly benefit sought was $440 with a waiting period of two weeks and a benefit period to sixty-five. The plaintiff's occupation was accurately described as a retail proprietor, albeit he was not the sole owner of the business. In the section in which the usual doctor details had to be recorded, Dr Boyce was listed together with the statement that Dr Boyce had been the plaintiff's doctor for one year.

21 In respect of the question "Date and reason of last consultation with any doctor", there was recorded 28 November 1995 for the removal of a mole from the side of the face by Dr Choo. 22 There is then the question: 11 H (i). Do you engage in any hazardous or organised sport activities, e.g. football, aviation, scuba diving, motor sport, rock climbing, martial arts, etc?

There were two boxes provided, one with the word "No" next to it and the other with the word "Yes" next to it. Both the plaintiff and Mr Scruton knew that the plaintiff played football, indeed they played football in the same team. The plaintiff and Mr Scruton decided that the "No" box should be ticked because Mr Scruton read that question as meaning hazardous sporting activities and he expressed the opinion, both in the witness box and to the plaintiff at the time the form was filled out, that this question only related to football if it was hazardous and that it was not hazardous to play football for the Ballina Golden Oldies.

23 It is not part of the defendant's case that this question was answered wrongly or fraudulently and indeed that is understandable having regard to the fact that the plaintiff did inform the defendant via its agent, Mr Scruton, that he did play football, and that the defendant, through Mr Scruton, gave the plaintiff advice that the football he played was not hazardous. Of course when one reads that question, it is odd to answer "No" to it because it refers to both hazardous sporting activities and organised sporting activities, and specifically mentions football as an example. One would have thought that the "Yes" box should have been ticked.

24 There is then section 13 entitled "Medical History of Person to be Insured". The preamble states: Have you ever had, or been told you had, or received advice or treatment for - and a series of conditions is then listed including the following: D. Gout, arthritis, rheumatism, cartilage or ligament injury (knees , elbow, wrist, shoulder ), bone fracture, hernia?" The "Yes" box was ticked.

25 There was also a question "K" in relation to Dermatitis psoriasis or other disorder of the skin which was also ticked "Yes". Under this heading there was paragraph Q which stated: Other than already stated, have you within the last 5 years: (i) had any medical examination, advice, treatment or been in hospital?" The "No" box was ticked. (ii) had an ECG x-ray or other test including a blood test?" The "Yes" box was ticked.

26 At the bottom of section 13 the following appeared: NB. For any condition underlined above please also complete the appropriate questionnaire under sections 14 and 15. 27 There is also a section stating: For yes answer please provide the following details.

Then there are columns for the question reference, the illness, injury or test, the date of commencement, the time off work, the degree of recovery, the full details of treatment including date of the last symptoms, and the full name and address of doctors or hospitals, if any. In respect of the disorder of the skin in paragraph K there was an entry in relation to a procedure on the toes in 1978 with time off work for two weeks. It is clear that the plaintiff could not remember the name of the doctor. In respect of Q (ii) the plaintiff referred to the blood test ordered by Dr Boyce in 1994 as "Simply routine check for cholesterol".

28 In section 14, to which the applicant was directed for the underlined matters, there was a section headed "Knee, elbow, wrist and shoulder" and the applicant was required to circle the specific condition. The knee was circled and the following questions and answers appear on the form: A. When did you first suffer from the disorder? 1977 . B. Please state which knee/elbow/wrist/shoulder is affected?" (The knee is circled and the word "Right" appears.) C. What was the cause? Football injury. D. Please describe symptoms fully? Swelling in knee - some pain. E(i) Which doctors have treated your disorder? Dr Law. (ii) Give approximate dates of consultation 1977. (iii) What was the nature of the treatment? Removal of cartilage. F. Have you had any recurrence of this trouble?" (The "Yes" box is ticked.) If yes, please give details of dates, doctors consulted and treatment (There are three lines available for that answer within which there appears:) 1979 - further operation - removed further cartilage. Successful. G. How much time from your occupation have you lost through this disorder? Nil . H. How long, if at all, have you been symptom-free? No recurrence of pain during normal work and home activities. 29 The application was signed by the plaintiff on 11 December 1995 and on 19 February 1996 the application was accepted, with 15 February 1996 being the date for inception.

30 The plaintiff gave evidence of what happened at the meeting with Mr Scruton and of what occurred at the time section 14 was completed. He said that he informed Mr Scruton that in 1977 he had had a cartilage operation on his right knee and that it was quite successful and he had been able to go back to playing football and to work without difficulties. He also said that he informed Mr Scruton that in 1979 he had had another cartilage operation on the same knee and it had been successful. He also informed Mr Scruton that the fatty nodule had been removed from the knee when he was in Sydney and that he "had a bump on my knee which was like a large wart. It was under the skin and was removed. It was cosmetic surgery". He said that Mr Scruton responded that he did not think that "we need to include that in the form because you have already told the insurer about your cartilage removal". 31 The plaintiff gave evidence that he informed Mr Scruton: "I have had a knee problem before. It is fine now. I can stand, walk and run on it but I have had a knee problem. It swells up occasionally". He said that Mr Scruton said that he thought they had brought that to the insurer's attention and said "We have told them about the operations on the knee". 32 Both Mr Scruton and the plaintiff gave evidence that Mr Scruton informed the plaintiff that he thought that he may have an exclusion in the Policy in relation to his knee. He also gave evidence that he had a conversation with Mr Scruton in respect of section 14 in which he informed him that he did not have pain during his normal work and home activities, that he did have some swelling but that he did not have pain when the knee was swollen. He said that he was playing Golden Oldies Rugby Union about five or six times a year. 33 It was in May 1996 that the plaintiff attended Dr Boyce again when he had a problem with his knee. Dr Boyce noted that the plaintiff needed an x-ray and wrote in her notes: "Chronic injury, recurrent prepatella bursitis". Dr Boyce referred the plaintiff to Dr Ashwell. Dr Ashwell is an orthopaedic surgeon practicing in Lismore. His routine is to have his patients inform is receptionist of the general nature of the problem, so that when they arrive for their appointment, they can fill in a questionnaire specific to that problem. Dr Ashwell was aware that the plaintiff was coming in to see him in respect of his knee, and the plaintiff received the knee questionnaire which he filled out in the reception area. 34 The form has a space for the patient's name, date of birth and occupation. There is then the question "Do you play any sport?" The plaintiff answered "Yes". He disclosed that he was a Rugby player and that he played in the second row. He identified his right knee in answer to the question of which knee was "bothering" him. In answer to the question "Did you injure the knee?" he answered "Yes". In answer to the question as to the date of the injury, he answered "Constant". In answer to the question "In your own words how did you injure it?", he answered "Strain of thirty years of Rugby Union and cricket".

35 Underneath that part of the questionnaire, there is what is referred to as the Lysholm Knee Scale, with a direction to the patient to circle the response that "most applies" to him/her in each category. There are then headings: "Limp, support, locking, instability, pain, swelling, stair climbing, squatting". Under each heading there are categories such as: "None, slight, severe, periodical". In respect of "limp", the plaintiff circled "3 slight and/or periodical". For "Support", the plaintiff circled "0 weight-bearing impossible". In relation to "Locking" he circled "0 catching sensations but no locking". In relation to "Instability" he circled "10 occasionally in daily activities". In respect of "Pain" he circled "15 marked during heavy exertion". In respect of "Swelling" he circled "0 constant". The other choices in that category were: "none, on heavy exertion or on normal exertion". For "Stair climbing" he circled "6 slightly impaired" and for "Squatting" he circled "2 not beyond 90 degrees".

36 Dr Ashwell reported to Dr Boyce that the plaintiff had a moderate effusion with tenderness on either joint line. He advised that for the moment all he could do was offer an arthroscopic debridement to give him an idea of the degree of damage in his joint and to clean the joint surfaces and try and delay the progress of arthritis. He referred to a quite significant arthritis in the plaintiff's right knee for someone of his age and that it appeared to be sport related. He also advised that he had discussed with the plaintiff the importance of protecting the knee in order to try and delay the eventual joint replacement until perhaps even his fifties. He said that he had advised the plaintiff to continue with light exercise, bike riding and swimming, but that it would be best to avoid football.

37 It is apparent that the plaintiff proceeded with the arthroscopy and on 30 August 1996 Dr Ashwell reported to Dr Boyce that he had arthroscoped the plaintiff's right knee and debrided an extremely arthritic joint. He said that there was mild wear on the patella and that he had inserted 20 mls of Marcaine for pain relief. 38 The plaintiff returned to Dr Ashwell for review in October 1996 with persisting effusion in his right knee joint, which had failed to settle following the arthroscopic debridement and osteoplasty. Dr Ashwell recommended ice application and Feldene. He also advised the plaintiff that he may require repeat arthroscopy if there was no significant improvement in the knee.

39 By July 1997 the plaintiff had obviously become concerned about his condition. He apparently expected more from the arthroscopy than he received. Dr Boyce, in referring the plaintiff to a new orthopaedic surgeon, Dr Randle, stated that the worsening of the plaintiff's knee was impacting on his life which, she said, "used to be centred socially around Rugby". It is obvious that at this time the plaintiff had ceased his football career. Dr Boyce continued: He actually had an arthroscopy by Dr Ashwell last year and I think Tim had unrealistic expectations from this. He feels his knee has got worse since the arthroscopy and is having difficulty coming to terms with it. At this point in time he would prefer not to see Dr Ashwell again and requests just a second opinion to help him to accept his worn out knee. For your convenience I have copied Dr Ashwell's correspondence re the arthroscopy".

40 It is clear that the plaintiff attended Dr Randle who reported in late 1997 that there was small effusion with no tenderness. Dr Randle referred him for physiotherapy and gave him a trial of Naprosyn. In January 1998 Dr Randle reviewed the plaintiff who was then having severe pain in his knee and had to elevate his leg after he finished work each day. He said that he discussed the situation very carefully with the plaintiff, and advised that although the plaintiff was still young, he thought that the symptoms were so severe that he would benefit from a knee replacement. He said that the plaintiff understood the limitations that would be placed on his life and understood that he would need revisions of it before his days were up.

41 It was in 1999 that the plaintiff's knee became just too painful for him to continue with his work. Dr Boyce completed a medical certificate in relation to his condition on 7 April 1999. She noted that she had been aware of his right knee osteoarthritis since his first consultation with her on 11 October 1994, however severe pain had only been present since 17 March 1999. 42 The plaintiff did not make an application to the defendant in respect of his problem until prompted by Mr Scruton. Mr Scruton apparently saw him at around the time the plaintiff was experiencing the severe problems and said, "You know, you're covered in your policy, why don't you put a claim in". The plaintiff said that he responded, "Well, they won't cover for that, will they?" and Mr Scruton said, "Well, you are covered. If you can't do your job properly why don't you put a claim form in and see what happens". The reference by the plaintiff to "cover for that" is a reference that he claims he made to an incident that occurred whilst he was watching Rugby Union that has been referred to as a "rolling maul" collapsing on to him whilst he was on the sideline. He fixes the decline of the condition of his knee to that incident. The defendant claims that such an incident did not occur and this is just another aspect of the plaintiff attempting to hide the true condition of his knee from the defendant. I shall return to that. 43 Mrs Muggleston filled out a claim form for the plaintiff in which there is reference to "chronic right knee pain and inflammation" which had been "recently diagnosed as severe osteoarthritis". Mrs Muggleston gave evidence that her use of the word "chronic" was due to the fact that by 1999 her husband's problem with his knee had been present for approximately two years or so since the rolling maul problem.

44 It is clear that the plaintiff was having difficulty coming to terms with a number of things in respect of his health from 1999 through to 2001. Indeed there is a report from a psychologist, Bronwyn Sargeant, that is relied upon by the defendant as supporting a claim of fraudulent misrepresentation or fraudulent failure to disclose the plaintiff's condition. 45 The defendant claims that Section 14 in the Application Form dealing with the knee (extracted above) was filled out fraudulently by the plaintiff, albeit that Mr Scruton wrote the answers given by the plaintiff. The defendant submits that the plaintiff did not tell Mr Scruton about the swelling of the knee. Mr Scruton was cross-examined by Mr Cavanagh for the defendant and he denied that the plaintiff told him that he had swelling if he got a bump at football. There is a factual conflict which has to be determined: Is it more probable than not that the plaintiff did tell Mr Scruton about the swelling of the knee? 46 Both Mr Lovas, who appears for the plaintiff, and Mr Cavanagh, relied on the same authorities in respect of the test to be applied in this matter. A statement is made fraudulently if it is made with knowledge of its falsity or without belief in its truth or recklessly not caring whether it is true or false. Derry v Peek (1889) 14 App Cas 337 at 374; Pendlebury v Colonial Mutual Life Assurance Society (1912) 13 CLR 676 at 680. A fraudulent misrepresentation is a representation which is false and which is made either knowingly or without belief in its truth or recklessly not caring whether it be true or false with the intention that it should be acted on by the insurer. Plasteel Windows Australia Pty Limited v CE Heath Underwriting Agencies Pty Limited (1989) 5 ANZ Ins Cas 60-926 at 75-951; Von Braun v Australian Associated Motor Insurers Limited (1998) 135 ACTR 1 at 11-12. See also Tyndall Life Insurance Co Limited v Chisholm [1999] SASC 445 at [68]. 47 It is accepted that the burden is to the Briginshaw standard. There has to be a comfortable satisfaction in the Court that the failure to disclose or the misrepresentation was not made innocently or negligently, but knowingly, lacking an honest belief in its truth, with the moral turpitude that accompanies an intention to deceive. 48 The defendant relies upon the plaintiff's background employment with FAI. There is no doubt that the plaintiff knew the importance of disclosing matters to the insurer and that he was an experienced underwriter. He was well aware of the function of the proposal, of its importance, and of the requirement to give honest and complete answers. He agreed that the insurer had specifically drafted the questions to obtain specific answers and that the information that he provided would be relied upon by the insurer in deciding whether to accept the risk. He also agreed in cross-examination that he was aware that he was required to disclose all matters which would be relevant to the decision of the insurer as to whether to accept the risk in response to these answers. 49 The first portion of the proposal relied upon by the defendant is question Q under section 13 in which the answer "No" was given to the question of whether, in the last five years, the plaintiff had any medical examination, advice, treatment or had been in hospital. It is alleged that that is patently false and that he must have known it was false because he had been to see Dr Boyce only two months prior to the proposal, and he had also been to see Dr Boyce in 1994.

50 The next portion upon which the defendant relies is section 14 relating to the knee. Mr Cavanagh, in a forensically successful cross-examination, obtained from the plaintiff concessions that, really, these questions and answers, and in particular the reference to "Swelling in knee - some pain", related back to the symptoms that were present in 1977, and that therefore the reference to any present swelling in the knee was not in the proposal. It is submitted that the plaintiff well knew that he had swelling in his knee and a problem with his knee when he went to see Dr Boyce in 1994 and that he had received anti-inflammatories. The plaintiff's evidence in respect of the script that was given to him in 1994 was that he did not take those tablets.

51 The defendant submitted that he was given anti-inflammatories in October 1995, about six weeks before this proposal, and must have remembered that fact when he filled it out. It is submitted that Mr Scruton was a careful man and that if he had been told that the plaintiff did experience swelling in the knee after bumps at football, that there would have been a different answer to "H" in section 14 than the one that is there. It was submitted that Mr Scruton presented as an honest man and that the irresistible inference is that nothing was said to Mr Scruton about any swelling of the knee after 1979.

52 There is an additional attack made by the defendant and that is that the word "successful" and the answer relating to the 1979 operation was also false, and knowingly false. In that regard I return to the report of Bronwyn Sargeant, the psychologist, dated 6 April 2000. That report says, in part, that the plaintiff believed that his father was possibly responsible "for some shoddy deals with a surgeon to perform surgery on his knee which in fact would lead to permanent disability rather than to really assist him".

53 The defendant submitted that it is obvious that in 2000 the plaintiff did not regard the operation in 1979 as a success and it is probable that he would have held the same view in 1995 when he completed the proposal. It is submitted that the statement in answer to H, "no recurrence of pain etc during normal work and home activities", is just part of the fraud and indeed it was a fraudulent misrepresentation to suggest that there had been no recurrence of "pain etc" in that fashion, hiding from the insurer the true position, and knowing that the "etc" dealt with swelling that had in fact occurred. 54 The defendant submitted that it would be very difficult for this Court to accept the plaintiff as an honest witness; that the rolling maul was just a ruse and did not happen; that the suggestion that he did not take the tablets given to him by his doctors is quite unbelievable; that at the time of completing the proposal he simply could not have forgotten his attendances upon Dr Boyce and in particular the prescription for the problem with his knee. It was submitted that, when viewed in its totality, the plaintiff's evidence is improbable, implausible and so inconsistent with the objective evidence that it should be rejected.

55 The defendant relies heavily upon the events post-inception to submit that it is irresistible to conclude otherwise than the presentation to Dr Ashwell was in fact consistent with how the plaintiff was six months earlier; that he had constant trouble; that he had pain as described; and that he just failed to disclose it in the knowledge that it was fraudulent not to disclose it in the hope that the insurer would cover him for his knee.

56 On the other hand, the plaintiff submits that he had no intention to defraud. It is submitted that taking into account both his demeanour and the actual disclosures he made in the form, I would accept that the plaintiff is an honest person and far from fraudulent. There might have been some negligence in the manner of filling out the form but, as Mr Lovas submitted, it was far from fraudulent. 57 There is a danger in placing too much emphasis on demeanour. One has to remember that a Court is not the most comfortable place, particularly for people who are the subject of fraud allegations and for people whose jobs may be affected by their answers. It is of some assistance but it would be unfortunate in the extreme to have to rely only on the presentation of a witness. What needs to be looked for is some objective or other evidence to assist with the analysis and the decision as to who is to be accepted and what is more probable than not in the circumstances of the case.

58 Mr Lovas points to the answer in "H" in section 14 where there is the curious reference to "no recurrence of pain etc during normal work and home activities". That seems to me to suggest that the symptom-free situation is limited and it is limited only to normal work and home activities. In other words, anything out of the ordinary is not symptom-free and that, it is submitted by Mr Lovas, is consistent with the plaintiff having informed Mr Scruton that there were times when he was not symptom-free, that is, outside normal work and home activities. Whatever be the case, football is neither normal work nor normal home activities and Mr Scruton knew that he was playing football. There is no reference to the sport but the context of that statement is a most important factor in trying to decide whether or not Mr Scruton was told by the plaintiff about the swelling of the knee.

59 Another interesting aspect is that Mr Scruton said on 11 December 1995 that he suspected or thought that the plaintiff's knee would be excluded. Of course the insurer did not exclude it on the presentation of what was on the form and Mr Scruton, although not an agent, had been a manager of an agency and would seem, on one view of it, to have known more than what was on this form to suggest an exclusion of the knee for two procedures seventeen and fifteen years earlier that were described as successful and nil time off work.

60 The other aspect that assists is the plaintiff's delay in making a claim when it is obvious that he started to experience a decline in mid 1996, in 1997, in 1998 and in early 1999. For three and a half years it was obvious that he was declining and ultimately experiencing excruciating pain. It does not seem to me that a fraudulent individual has to be prompted to make a claim on the insurer, which brings me to the rolling maul. The plaintiff was playing football in '95 and it appears he proceeded to play football in '96 but something took him to the doctor on 14 May '96. The first presentation to the doctor, once again, was his skin and his concern about the history of melanoma in the family, as can be seen from the notes on 14 May. The fact that he needed an x-ray for what was described as a "chronic" injury may or may not suggest that there was a reference to a particular incident. Certainly there is nothing in anybody's notes that refers to the words "rolling maul". The plaintiff's wife was cross-examined about it and gave evidence that he had come home from a match and informed her that a rolling maul had fallen on him but that is the extent of the evidence.

61 The referral letter from Dr Boyce to Dr Randle stated that the plaintiff needed a second opinion and the reason he needed a second opinion was because he needed assistance in coming to grips with his knee being worn out; in other words, he could not accept that he had a worn out knee. He had been told by Dr Ashwell that he might need a second debridement; he had been informed at that stage that he may need further work on the knee; he would not accept it.

62 The psychological report of Ms Sargeant does not suggest to me that the plaintiff was of the view that his surgery was unsuccessful. I have read the medical evidence and, without going into the detail, it is obvious that the plaintiff was troubled at that time in respect of other matters and, although they were being explored with the psychologist, I could not conclude that his presentation to Ms Sargeant in April 2000 is evidence that he was fraudulent in 1995 when he used the word "successful" in describing the outcome of the cartilage procedure in 1979.

63 Realistically, if the defendant wanted to establish that the referral to Dr Thomson in July 1990 was not work related, it could have pursued the forensic steps to enable it to call some evidence in that regard. The plaintiff was asked in cross-examination about whether he had tried to find evidence to establish that the referral was work related. He said he had but he was unable to obtain it. There may be a number of reasons why an employer may not have asked an employee to obtain medical assessment at the commencement of the employment. It may be there was some superannuation involved. I do not know whether there was a requirement that before one was able to have the benefit of such a fund as FAI there needed to be a medical, but I am not satisfied that the plaintiff's evidence in that regard was false. The evidence that he gave is supported by his wife, Mrs Muggleston, but once again, it is not taken any further. Dr Thomson's report does not refer to any employer, however, there was only one visit to Dr Thomson which may be supportive of such a circumstance.

64 So what had happened by the time the plaintiff had filled out the form on 11 December 1995 otherwise? There was the presentation to Dr Boyce on 11 October 1994 and the presentation in October 1995 after his return from the Golden Oldies trip to New Zealand. That is two visits in sixteen years since his second procedure in 1979 and in eighteen years since the first operation in 1977. At most there were three visits, if one takes into account the visit to Dr Thomson. The plaintiff described the position as occasional swelling of the knee. If visits to the doctor in relation to the knee is equated to the plaintiff suffering from swelling of the knee, then having regard to those two or three visits, the description "occasional" seems to me to be appropriate. He used the word "rare" and it is clear that it may have been rare that the pain was coupled with the swelling.

65 Dr Ashwell was cross-examined about the presentation with bursitis. He gave evidence that it is possible to have bursitis or swelling and effusion without pain. However, he said that as the condition progresses it would become painful. Interestingly, Dr Boyce palpated the knee and did not find any heat in 1994 and did not find any infection.

66 I am of the view that the plaintiff's claim that he was able to experience swelling with no pain is not false. I am not satisfied to the Briginshaw standard that the plaintiff failed to disclose his condition in his proposal. I am satisfied that it is probable that the plaintiff did tell Mr Scruton about the swelling for the reasons that I have outlined above. The limitation on the symptom-free period is significant. If the plaintiff had simply said to Mr Scruton, "No, I don't have any symptoms now", "H" could have been answered "1979 to date" or "1990 to date" or some other date, but the answer given is, in my view, consistent with the plaintiff's claim that the conversation included reference to the swelling of the knee at football or after football. In that circumstance the plaintiff did disclose to the defendant: Mr Scruton was the defendant's agent and thus disclosure occurred.

67 I am not satisfied that the defendant was entitled to avoid the policy on the basis of fraudulent failure to disclose or fraudulent misrepresentation. Although there were arguments that were put by Mr Lovas in respect of the section not being triggered, I have not dealt with them because of the view that I have reached in respect of the defendant's claim of fraud.

68 I declare that the defendant, National Mutual Life Association of Australasia Limited, was not entitled to avoid the policy of insurance number 210081832 issued to the plaintiff.

69 I direct that the parties bring in Short Minutes of Order reflecting that declaration, and consequential orders in relation to payment of moneys due to the plaintiff having regard to the fact that the policy has not been avoided. The defendant is to pay the plaintiff's costs. **********

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