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High Court of Ireland Decisions |
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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Kelleher v. Irish Life Assurance Company Ltd. [1988] IEHC 3 (16 December 1988) URL: http://www.bailii.org/ie/cases/IEHC/1988/3.html Cite as: [1988] IEHC 3 |
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THE HIGH COURT
986 No.7169P
BETWEEN
HILDA KELLEHER
Plaintiff
AND
IRISH LIFE ASSURANCE COMPANY LIMITED
Defendants
TRANSCRIPT OF JUDGMENT DELIVERED BY THE HONOURABLE MR JUSTICE DECLAN COSTELLO ON 16TH DECEMBER 1988
The deceased, Dr Daniel Kelleher, was a Consultant Physician practising in Cork. He was married with two grown-up sons and at the time of his death was aged 57.
Sedgwick Dineen Consultants Limited operated a group life assurance scheme on behalf of the members of the Irish Medical Assocation. The insurers under the scheme were Irish Life Assurance PLC, the Defendants in this action.
A contract of insurance was entered into not long before Dr Kelleher's death between the Defendants and Dr Kelleher's wife, Mrs Hilda Kelleher, and it was entered into in the following circum stances:
An application form (which I will call "a general application form") was sent by Sedgwick Dineen Consultants Limited to Dr Kelleher. It was signed by Dr Kelleher and also by Mrs Kelleher. Along with that form was sent a second form (which I will call "the special application form"). This form was signed by Dr Kelleher alone.- After these two documents were returned, a policy of assurance was issued on 10th October 1985, and it is this policy which is the subject matter of these proceedings. Under this policy the life of Dr Kelleher had been insured for £80,000. Dr Kelleher, in fact, died in tragic circumstances not long after the insurance was effected and Mrs Kelleher now makes a claim on foot of this policy.
It is necessary to refer in some detail to the policy and to the two proposal forms to which I have referred. It is stated in the policy that the policy was granted by Irish Life Assurance PLC and accepted by the proposer named in the schedule on the basis of the proposal made in writing and signed by the proposer. The only document signed by the proposer, that is to say, Mrs Ke lleher, was the general application form, and I am satisfied that the reference in the first paragraph of the policy to "the proposal" is a reference to the general application form.
The policy goes on to state: "The contract of assurance will consist of this policy... (reads) ... and the proposal"., so that the Defendants are correct in their submission that the contract between the parties is to be found not just in the policy of assurance but also in the general application form to which I have referred.
The general application form contained on page 2 a series of questions which were required to be answered by aperson using the form in the normal course of events but these were explicitly excluded and crossed out for reasons which I will explain in a moment. However, at the end of the application form there is contained a declaration which was signed by Dr Kelleher and also by Mrs Kelleher. It is of some relevance to point out that this declaration was signed by Mrs Kelleher while she herself was in hospital but that it was read over to her by Dr Kelleher, so that both Mrs Kelleher and Dr Kelleher were fully aware of what the declaration contained. The declaration stated as follows:
"I/We the life to be assured ... (reads). ..should be disclosed." The last paragraph of the declaration reads: "It is hereby agreed... (reads). .shall be the basis of the contract of assurance."
To my mind the reference to "any other declaration" has the effect of making the declaration contained in the special form form part of the basis of the contract of assurance. The special form was sent out because Sedgwick Dineen Consultants Limited had negotiated with Irish Life a special scheme of insurance, the main effect of which was to obviate the necessity for members of the IMA to produce medical evidence before a contract of insurance was entered into. In this form that was used was a form which was printed and which was apparently of use in a general way for pension plan schemes. On the back of the form there was typewritten script which was clearly inserted for the purposes of the special scheme with the IMA. One of the paragraphs was headed "Special Promotional Offer Benefit" and it was made clear from the special form that there would be life cover of £80,000 and disability benefit cover of £10,000 and that the life cover was to be made available free of medical evidence.
The declaration of health which Dr Kelleher signed was as follows: "I declare that I am actively at work... (reads) ... to today's date." It seems to me that this declaration was correctly made. The evidence has not established that there was anything wrong with the facts so declared and I do not think that any right arises from any alleged breach of any of the statements made in that declaration.
However, whilst the situation as stated by Dr Kelleher in the declaration of health was true, there was nonetheless another aspect of the case to which I must now refer. Dr Kelleher had unfortunately suffered from cancer in the year 1981. He, an experienced and knowledgeable doctor, felt that he needed a check up and his doctor in Cork confirmed the bad news to him. Cancer of the prostate gland had been diagnosed and Dr Kelleher went to London to have treatment. He obtained radiation treatment in London for the cancer, which was successful. This radiation treatment apparently stopped the cancer and its spread but the effect of the treatment, unfortunately, was to cause radiation damage. This radiation damage has been made clear from the hospital records which have been produced and it has been referred to in the evidence of Dr Jago, evidence which I accept for the purpose of this judgment.
The Defendants' case is that there were material facts not disclosed firstly, relating to the fact that Dr Kelleher had cancer in 1981 and, secondly, that he suffered from radiation damage which was continuing up to the time the declarations to which I have referred were made on 10th September 1985, and that their non-disclosure permits them to repudiate the policy. The Defendants rely on the breach of the terms of the declaration to which I have referred which is contained at the end of the general application form. They also rely on the conditions in the policy itself, conditions which are of course, part of the terms of the contract between the parties.
The first condition on which the Defendants rely is a different matter altogether to the question of non-disclosure. It is contained in clause 4 of the conditions which provides that, in the event of the death of the life assured by his own act within one year from the date of the commencement of the insurance, the Company shall not be made liable to make any payment under it.
The defence was raised that there was a breach of clause 4 of the contract in that the death of Dr Kelleher on 30th November 1985 was death by suicide. I accept the general principles in relation to this, aspect of the law as set out by Mr Justice O'Hanlon in The State (McKeown) v Scull y a986)ILRM 133. I am satisfied that the Court cannot presume suicide and that a claim that a person committed suicide must be strictly proved. The evidence does not satisfy me that Dr Kelleher killed himself. Therefore the result is, in my opinion, that this ground by which the Defendants claim to repudiate the contract fails.
I turn, then, to what I think is the Defendants' main case: the non disclosure of material facts which they claim occurred in this case. ,_„ As I stated, they rely not just on the terms of the declaration made in the general application form but also on clause 6 of the contract which provides:
"If any question contained in the proposal... (reads) ... the Company shall be entitled to avoid the policy."
What the Defendants claim is that there has been non-disclosure concerning the health of the life assured. I propose to approach the consideration of the issues raised on this aspect of the case by considering the obligation of the Plaintiff and also the obligation of the deceased at common law. Again, there is no conflict on this aspect. The general duty at common law is to disclose material facts, that is, facts which would affect the mind of a prudent insurer either in deciding to underwrite the risk at all or in fixing the premiums.
I think that the Defendants are correct in their contention that the two facts to which I have referred are material facts, that is to Ba the fact that Dr Kelleher had had cancer in 1981 and the fact that he received radiation treatment for it which caused radiation damage for which he had been treated up to as late as February 1985, were material facts as understood in the common law doctrine on this subject. I think that both these facts would have affected the mind of a prudent insurer, both as to whether or not a risk should be undertaken and, if it was, as to what premium should be paid.
What I now have to consider is the effect of the contract on the common law duty which Dr Kelleher and Mrs Kelleher had in the circumstances of this case. To my mind it is clear that the terms of the contract itself did not in any way reduce the duty which existed. The declaration at the end of the application form was, I think, made part of the contract between the parties and the statement "I/We understand that failure to disclose a material fact ...(reads)...,r may constitute grounds for rejection of the claim.", means that there was, because of the view I have taken of these two facts, a breach of the obligation contained in the declaration to disclose material facts.
Apart from that, there seems to me to have been an obligation imposed by the contract in relation to the disclosure of matters concerning the health of the life assured in clause 6, so that there is nothing in the contract by which it could be said that the duty at common law has been reduced or modified. That there was a contractual obligation arising from the contract of assurance is perfectly clear and the Defendants are entitled to avail of the terms of the contract.
It has been said, however, on behalf of the Plaintiff that there has been a waiver of the common law duty to which I have referred. It is said that this waiver arises from the fact that the general application form had deleted from page 2 all the questions which normally would be required to be answered and that, furthermore, the special application form contained a declaration of health which was an extremely limited one. It is urged that these two facts amounted to a waiver by Irish Life of the obligation to which I have referred. I cannot agree with this submission, however.
It seems to me to run counter to the clear wording of the declaration at the end of the general application form. I think it is quite clear to anybody reading the two documents that Irish Life were requiring a full disclosure of material facts and that there was no waiver of the obligation.On the contrary, in fact, there was an insistence on it by the two documents to which I have referred.
I think there may be a misunderstanding in the submissions that have been made to me as to the effect of the special promotional offer. The special promotional offer was obviating the necessity of producing medical evidence but it did not obviate the obligation to make full disclosure and this was, in fact, underlined in the other document which was sent to persons availing of the special scheme.
Finally, it has_ been suggested that the effect of the Supreme Court decision in Aro Road and Land Vehicles Ltd v The Insurance Corporation of Ireland (1986) IR 403 is that in this case full disclosure was not necessary.For the purpose of considering this submission I will assume that this decision covers life assurance cases and I will assume that it covers cases in which there have been proposals signed by the insured. But if the test is, as suggested on the Plaintiff's behalf, that facts which are material and which must be disclosed are only those facts which an insured person himself would consider to be reasonable to disclose, then must hold that Dr Kelleher failed to pass the test as did the Plaintiff.
Both Dr Kelleher and the Plaintiff were aware of the medical history to which I have referred. I do not think either of them could have thought it reasonable not to disclose this medical history. If the test was one of reasonableness on the part of the insured person, think it was unreasonable for there not to have been disclosure of the fact that there had been cancer and radiation damage.
In these circumstances it seem to me there was no waiver by the Defendants of the obligation which was on the Plaintiff and on the person whose life was insured. There was no variation of the common law duty. There was a contractual duty to disclose which .r was stated in clear terms. In my view the breach of that contractual duty entitles the Defendants to repudiate liability.
In the particular circumstances of this case a fair order to make would be that both parties bear their own costs. In the normal way when a defendant raises a number of points and wins but only wins on one point, a defendant would still be entitled to costs. Once the allegation of suicide had been made I think the Plaintiff reasonably felt justified in going on with the case. This might have been the result if this allegation had not been made, so I think a fair order, is to provide that both parties bear their own costs in view of the fact that this serious allegation has not been established.
