In her application for income protection insurance with Westpac
in September 2007, Ms Guirgis failed to disclose her diagnosis of,
amongst other things such as irritable bowel syndrome,
fibromyalgia. This was despite Ms Guirgis seeing at least two
specialist rheumatologists for neck and shoulder pain, for which
she had treatment.
Ms Guirgis gave evidence that prior to completing the
application, no-one had mentioned fibromyalgia to her. However, Ms
Guirgis did disclose in her application a consultation with Dr
Andrew Gibson, who was acknowledged by the primary judge to be a
specialist rheumatologist practising at the Cabrini Hospital.
Court of Appeal agrees with first instance decision
In October 2011, Ms Guirgis made a claim upon her policy which
was ultimately denied by Westpac in April 2012. The claim was
denied on the basis that Ms Guirgis had failed to comply with her
duty of disclosure under
section 21 of the ICA.
The primary decision was handed down in Ms Guirgis' favour,
which was then appealed.
Ultimately, the Court of Appeal agreed with the primary judge,
who concluded that while it was accepted that fibromyalgia was
mentioned by Dr Feletar (described as a "local"
rheumatologist) and Dr Gibson to Ms Guirgis, the primary judge
could not conclude that the respondent "was aware of the
fibromyalgia diagnosis in August 2007".
The Court of Appeal also found that Ms Guirgis would not have
disclosed that she had recently seen Dr Gibson if she wished to
mislead the insurer as to the existence of fibromyalgia.
Lack of written guidelines regarding availability of insurance
if fibromyalgia disclosed
With respect to the question of whether Westpac would have
entered into the contract even if Ms Guirgis had not failed to
comply with the duty of disclosure (as required by section 29(1)(c)
of the ICA), the Court of Appeal concluded that although Westpac
gave evidence that if Ms Guirgis had disclosed her fibromyalgia, no
policy would have been issued, this evidence was based upon a
written guideline that was never produced.
This was a gap in the applicant's proof and found by the
Court of Appeal to be "a failure by [Westpac] to prove the
very thing [it] sought to prove - namely, that its written
guidelines would have prevented the writing of the policy" [at
No specific question regarding fibromyalgia in questionnaire
sent to general practitioner
The Court of Appeal also noted that the "personal medical
attendant report" form that the applicant sent to Ms
Guirgis' general practitioner before the policy was issued, did
not make reference to fibromyalgia.
The court went on to say that if fibromyalgia was so serious as
to mandate no policy being written, then there should be a question
dealing with fibromyalgia in the questionnaire.
The absence of such a question, coupled with Westpac's
failure to produce the underwriting guidelines, "almost
mandated a finding unfavourable to [Westpac] on the issue of
whether it had established that it would not have entered into the
policy had fibromyalgia been disclosed" [at (58)].
Lessons for life insurers seeking to avoid a policy for
This case serves as a useful reminder for life insurers that
when seeking to rely on section 29(2) to avoid a policy for
fraudulent non-disclosure, an insurer needs to:
prove that the insured actually knew, or ought to have been
aware, of the matters that the insurer says should have been
prove what it would have done if the matters had been
disclosed, including being able to provide written evidence to
demonstrate how the insurer's underwriting practices and
guidelines would have operated had the non-disclosure or
misrepresentation not occurred
consider that if certain matters (e.g. a medical diagnosis) are
serious enough to warrant insurers not accepting a risk, whether
these matters should be specifically included in the standard
medical and/or general questionnaire
The failure of a party to call a witness does not necessarily give rise to an adverse inference being drawn in accordance with Jones v Dunkel (1959) 101 CLR 298. An unfavourable inference is drawn only if evidence otherwise provides a basis on which that unfavourable inference can be drawn.
This article examines common coverage issues and considerations for granting indemnity for criminal fines and penalties.
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