Vasram v AMP Life Limited

Applicant's submissions 2 The policy document which was submitted to the Court was policy number H2000097 issued to the applicant and having a commencement date of 25 June 1988. The parties agreed that the policy documents issued to all members of the representative group were, in so far as is relevant to this proceeding, identical to this policy document. 3 The policy document has four parts: (i) two covering pages which contain a summary of the policy at the issue date and some information concerning the impact of Commonwealth legislation concerning life insurance policies; (ii) a buyer's guide for conventional policies issued by AMP (the "Guide"); (iii) a schedule which sets out the details of the insured, the current policy owner, the sum insured, the amount of the premium and the special conditions; and (iv) the conditions of the policy. 4 It is the applicant's case that the policy document, read as a whole, represents that during the life of the policy the AMP Agent dealing with each insured will be Mr Vasram or an agent of the insured's choice. There is no express term to this effect in the document. However, the applicant submits that the term should be implied from a reading of the whole of the document. The applicant did not refer to any authority to support this construction. One may assume that he is relying on the general principles of construction of contract and the implication of terms in contract. These authorities, which include those cited by the respondent, will be referred to shortly. One of the puzzling aspects of the applicant's case is that, although it relies on the implication of a term into the contract of insurance, the applicant does not allege breach of contract. This point was explicitly made on behalf of the applicant at an earlier hearing. 5 To assess the applicant's argument it is necessary to consider the policy document in detail. The first of the covering pages is headed "Special Policy AMP" with the subheading, "Member's Guide and Life Insurance Policy". It also contains within a box, a summary of the policy at the issue date and at the bottom of the page there appears the following, "Please Keep this Document in a Safe Place and Intact. If a request is made for sight of the policy, DO NOT remove any pages but forward the whole document". 6 I have set out the wording of this cover page in detail because the submissions made on behalf of the applicant relied on the wording of the Guide. However, those submissions did not indicate whether the applicant's position was that the Guide formed part of the contract or was independent of it. It was submitted for the respondent that the Guide was not intended to set out the conditions of the policy but it was conceded that the Guide could potentially contain statements of a representational character. In my opinion, this concession was properly made and it is therefore not necessary for me to explore status of the Guide further. 7 As its title suggests the Guide contains general information about AMP and its policies. In its introductory paragraph it states: "This booklet has been produced by AMP to explain some key aspects of Life Insurance and gives answers to commonly asked questions. You have bought a conventional insurance or term policy so this booklet is mainly concerned with these types of insurance. It describes the types the conventional and term insurance offered by AMP and gives schedules showing illustrative cash values for a range of conventional contracts. It also gives an outline of other types of insurance offered by AMP. It is impossible to give a full description of AMP's policies in a booklet of this size: full details are set out in the appropriate policy documents." If you require further assistance, please contact your AMP Office or Agent."

8 Mr Hyde, counsel for the applicant, drew my attention to a number of places in this booklet where, in addition to the introductory paragraph just quoted, the term "your Agent" or "your AMP Agent" is used. As the applicant's case depended on a very expansive interpretation being given to these words it is worthwhile setting out those instances and the context in which they occur. They are:

· In a paragraph headed, "What is Life Insurance?" the booklet refers to disablement insurance contracts which are not described in the booklet and continues "… your Agent will be able to tell you about them".

· In a paragraph headed, "What happens if I want to stop paying premiums?" it is stated that "your policy is flexible - if you need advice contact your AMP Agent"

· Under the heading "What policy term should I choose?", the document states "[y]ou should bear in mind that the longer the policy term the lower the cash value at early durations. Your AMP Agent will be able to give you full details".

· In a section in which the cash value of certain types of policies in certain circumstances is set out, it is said that, "[y]our AMP Agent will be able to provide you with detailed illustrations for the particular policy you have chosen".

· Under the heading "What kind of policy should I buy?" it states "[y]our AMP Agent is trained to help you make the right decision".

9 My Hyde argued that the use of the term "your Agent" or "your AMP Agent", when taken in conjunction with other provisions in the document, gave rise to a representation that the insured was entitled to continue dealing with the original agent or, should a change of agent be necessary, with an agent of the insured's choice. 10 There were two other parts of the document to which Mr Hyde referred in support of this interpretation of the policy document. First, he pointed to a comment in the Guide about the flexibility of the policy. The context of this comment is important and therefore I quote the whole of the relevant paragraph (part of which I have already quoted in paragraph 9): "WHAT HAPPENS IF I WANT TO STOP PAYING PREMIUMS? Normally once you have paid at least two years' premiums under a conventional policy: i. you can convert it to a policy with reduced benefits and no further premiums payable, or ii. you can take the cash value (see below) of the policy. Your policy is flexible - if you need advice on the options available, contact your AMP Agent." 11 The second item was a paragraph on the cover sheet for the conditions of the policy. Under the heading "Your AMP Policy" the following statement was made. "You are now a Member of AMP Ownership of an AMP policy makes you a member of this mutual Society and gives you rights other than those arising directly from the terms of your policy. You may, for instance, vote personally or by proxy in important matters such as election of directors. If you request it, your name will be placed on the Voter's Role and you will automatically be sent voting material so that you may forward your vote or proxy. Also, if you request them, you will be sent a copy of your Society's Act of Incorporation and By-laws, and a copy of the Annual Report." 12 My Hyde argued that the reference to the policy being flexible and the statement that ownership of an AMP policy gives rise to rights other than those arising directly from the terms of the policy provided support for his interpretation of the phrase "your Agent". In support of his argument he also referred to another document that was headed "Termination of Appointment as an AMP Corporate Agent". The document appeared to be part of the AMP contract with Chiman Vasram Pty Ltd ("the company") as an AMP agent. There are a number of references in this document to the company's right to dispose of its register to another agent approved by AMP. Mr Hyde also referred to a letter dated 9 June 1992 from Jodie Dalley of AMP addressed to the applicant as managing director of the company. The letter stated that "[a]s you will be aware, you have the right to sell your Life Register to an agent of your choice (subject to approval by the Society)". 13 Mr Hyde recognised the difficulty in establishing the relevance of any term or representation in the letter and the agency contract to the contract between AMP and each insured as those documents relate only to the relationship between AMP and the company. On my raising this point with him, he said that he put the submission no higher than to say that these documents are consistent with his interpretation of the policy document. I do not agree with this. There is a considerable and significant difference between what is contained in the agency contract and the letter and the construction that the applicant seeks to put on the policy document. The former is simply AMP agreeing that their agent could sell his register to an agent of his choice, subject to AMP's approval. The latter is that each insured is entitled to nominate an agent of his or her choice. However, the submission illustrates the difficulties raised by the applicant's construction. No limits were suggested to the insured's right to choose an agent. What limits, if any, are to be implied? Is each insured entitled to choose a different agent from those chosen by the other policyholders? Is AMP's approval of the choice of agent required?

Interpreting the policy document 14 Interpreting a contract requires the Court to consider the whole of the instrument in which the contract is embodied. It must discern the intention of the parties from the words used in the instrument; Australian Broadcasting Commission v Australian Performing Right Association Ltd (1973) 129 CLR 99. The words of the contract are to be given their "natural meaning"; Hide & Skin Trading v Oceanic Meat (1990) 20 NSWLR 310 at 313 per Kirby P. Where the words of the instrument have a clear and unambiguous meaning, it is neither necessary nor permissible to go beyond that meaning. This is so even if the meaning appears "capricious or unreasonable, and notwithstanding that it may be guessed or suspected that the parties intended something different"; Australian Broadcasting Commission v Australian Performing Right Association (above) at 109. 15 If the clear meaning of the words would lead to an absurdity, the contract should be construed so as to avoid the absurdity by applying, omitting or correcting words; Watson v Phipps (1985) 63 ALR 321; Fitzgerald v Masters (1956) 95 CLR 420 at 426-427; Westpac Banking Corporation v Tanzone Pty Limited [2000] NSWCA 25. It may on occasion be necessary to consider the matrix of facts surrounding the formation of the contract, including the commercial purpose of the contract. However, this is only necessary where the language is "ambiguous or susceptible of more than one meaning"; Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 352 per Mason J. 16 I do not accept that the policy document contains any representation that the insured was entitled to deal with either the original agent or an agent of the insured's choice. The use of the possessive pronoun "your" in conjunction with a noun, in this case, "Agent" or "AMP Agent", says nothing about whether the relationship was one of choice. It indicates a relationship between the person and the object but it says nothing about how such relationship came about. It certainly does not indicate that the person had choice in the matter. Any knowledge we have as to how the relationship came about is extrinsic and may or may not involve choice on the part of the person concerned. Consider, for example, the following: "your teacher", "your doctor", "your father", "your member of parliament". Moreover, I do not find anything the policy document that would alter this position and invest the words with the mantle of choice. 17 For the applicant to succeed, it would be necessary to show that a person reading the document in contemplation of purchasing insurance would have understood it as promising (whether contractually or otherwise) that the right to choose "your Agent" would be part of the arrangement with AMP. If there was some latent meaning or some ambiguity in the language of the policy document, the applicant might be able to draw on the principles outlined above to establish the proposition he propounds. However, in my opinion, this is not the case. The applicant's problem is that there is something missing. For the applicant to succeed in his submission, it would be necessary either to show that the omission itself constitutes a representation or to imply into the document a term dealing with choice of agent. 18 No argument was put in support of either of these positions and I can see no basis on which they could be justified. There was no suggestion and no evidence to suggest that the failure to mention who had the right to choose an agent would lead to the conclusion that the choice remained with the insured. Nor has it been shown that the conditions necessary to ground the implication of a term could be met. These criteria were summarised by the majority of the Privy Council in B.P. Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283 and accepted by the High Court in Codelfa Construction Pty Ltd v State Rail Authority of N.S.W. (1982) 149 CLR 337 at 347, 404. Without going though each criterion, it seems clear that the term concerning choice of agent is not necessary to give business efficacy to the contract. In the absence of any such term, there is no reason to suppose that AMP should not be entitled to chose its own agent.

Issue of re-instatement 19 This issue can be dealt with shortly. The applicant conceded that there is no automatic right to have a policy reinstated. The applicant's submissions refer to representations concerning reinstatement made by officers of AMP in various correspondences. For the reasons set out in my judgment of 21 November, I have already concluded that the only possible substantial common issues in this proceeding involve the interpretation of the express terms of the policies. This hearing was to determine those issues only and therefore to the extent that they go beyond those issues, the applicant's submissions are irrelevant. 20 Mr Dempsey, counsel for the respondent, submitted that, in view of condition 5(b) of the conditions of the policy, the applicant's concession that there was no automatic right of reinstatement is rightly made. Condition 5(b) provides: "Subject to Section 100 of the Life Insurance Act, if any premium is not paid within one calendar month after it falls due we may cancel this policy in which event no benefit will become payable or be provided and any premium paid may be retained by us.' The Life Insurance Act current at the date of the policy was the Life Insurance Act 1945 (Cth). Section 100 of that Act gave considerable protection to holders of an "ordinary" policy against forfeiture of that policy due to non-payment of premiums. However, whether it protects any particular policy-holder would depend on whether the criteria set out in the section apply to the individual circumstances of each group member. For instance, s 100 requires that not less than three years' premiums have been paid in cash and that the surrender value of the policy exceeds the amount of the debt owing to the insurer under the policy or secured by it. Whether or not the statutory protection would apply is not a question of the express terms of the policy and would need to be determined separately in respect of each of the relevant policies. There is no other relevant provision in the express terms of the policy that entitles the insured to have lapsed policies re-instated or considered for re-instatement.

whether the proceeding should continue as a representative proceeding. 21 The respondent submits that as this hearing has disposed of the only common issues found to exist, there is no utility in the proceeding continuing as a representative proceeding. The respondent points out that while in general terms the disputes arise out of the relationship between AMP and the company, facts critical to the causes of action are specific to the individual circumstances of the respective group members. I agree with this submission. There would be an advantage in any proceedings brought by members of the representative group on the issues raised by the applicant being heard together. However, in my opinion the representative proceeding will not provide an efficient or an effective means of dealing with the claims of group members. 22 I will therefore make orders in accordance with the above reasons. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Stone.

Associate: Dated: 22 December 2000 Counsel for the Applicant: Mr J Hyde

Solicitor for the Respondent: Mallesons Stephen Jacques