FEDERAL COURT OF AUSTRALIA
Minister for Health & Aged Care v Harrington Associates Ltd [2000] FCA 1723
INSURANCE – health insurance – whether contravention of s 67(1) of National Health Act – whether respondent carrying on health insurance business – whether respondent falls within exception of carrying on accident and sickness insurance business or business of a kind prescribed for purposes of definition of “health insurance business” in s 67(4) – whether reg 47(1)(b) of National Health Regulations invalid – whether reg 47(1)(b) has “practically wholly swallowed up” inclusionary part of definition of accident and sickness insurance business.
TRADE PRACTICES – whether contravention of s 52(1) of Trade Practices Act – whether respondent made representation with respect to future matter without reasonable grounds for so doing – effect on representation of subsequent corrective representation – whether representation was mere puffing – whether representation made in trade or commerce.
PRACTICE & PROCEDURE – pleading of inconsistent allegations of fact.
WORDS & PHRASES – “each and every” – “ordinarily requires the provision of hospital treatment or relevant health services”.
National Health Act 1953 (Cth), ss 4(1), 67(1), 67(2), 67(4), 67A(1), 140(1)
Trade Practices Act 1974 (Cth), ss 51A, 52(1), 75B(1)
National Health Regulations 1954 (Cth), regs 47(1)(b), 48(2A)(f)
Statutory Rules 1997, No 133
Health Legislation Amendment Act 1985 (Cth), s 14
Statutory Rules 1995, No 408
Triaca v Summaries Pty Ltd [1971] VR 347 referred to
Aussie Home Security Pty Ltd v Sales Systems Australia Pty Ltd [1999] FCA 1458 referred to
Blacker v National Australia Bank Ltd [2000] FCA 681 referred to
A & S Oayda Investments Pty Limited v Burns Philp Trustee Company Limited (In liquidation) (FCA: Lockhart J, 25 November 1994, unreported) referred to
St Lukes Health Insurance v Medical Benefits Fund of Australia Ltd (1995) ATPR ¶41-428 discussed
Eveready Australia Pty Ltd v Gillette Australia Pty Ltd (No 4) (2000) ATPR ¶41-751 referred to
Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 referred to
Explanatory Statement to Statutory Rules 1997, No 133
The New Fowler’s Modern English Usage rev. 3rd ed. at p. 235
Quirk et al A Comprehensive Grammar of the English Language at pp. 382 & 963
Macquarie Dictionary 3rd ed.
MINISTER FOR HEALTH & AGED CARE v HARRINGTON ASSOCIATES LTD (ACN 073 478 627), HARRINGTON (SILVER CROSS INSURANCE) ASSOCIATES PTY LTD (ACN 085 873 669) & PETER THOMAS WOODCOCK
NG 762/99
KATZ J
29 NOVEMBER 2000
SYDNEY
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IN THE FEDERAL COURT OF AUSTRALIA |
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N 762 of 1999 |
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BETWEEN: |
MINISTER FOR HEALTH & AGED CARE APPLICANT
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AND: |
HARRINGTON ASSOCIATES LTD (ACN 073 478 627) FIRST RESPONDENT
HARRINGTON (SILVER CROSS INSURANCE) ASSOCIATES PTY LTD (ACN 085 873 669) SECOND RESPONDENT
PETER THOMAS WOODCOCK THIRD RESPONDENT
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DATE OF ORDER: |
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WHERE MADE: |
THE COURT DIRECTS THAT:
The applicant bring in short minutes of the orders which he now seeks in light of the accompanying reasons for judgment.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
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IN THE FEDERAL COURT OF AUSTRALIA |
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N 762 of 1999 |
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JUDGE: |
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DATE: |
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PLACE: |
REASONS FOR JUDGMENT
1 There is before the Court an application made by the Minister for Health & Aged Care (“the Minister”). There are presently two respondents to that application, Harrington (Silver Cross) Insurance Associates Pty Ltd (“Harrington”) and Mr Peter Thomas Woodcock. As originally framed, the application had also named as a respondent Harrington Associates Ltd, but the Minister subsequently discontinued his application as against that respondent, it having been de-registered by the Australian Securities and Investments Commission.
2 The Minister seeks in his application relief under two statutes, the National Health Act 1953 (Cth) (“the NHA”) and the Trade Practices Act 1974 (Cth) (“the TPA”).
3 So far as his claim under the NHA is concerned, the Minister has sought relief against Harrington only. That relief is injunctive in nature and has been sought on the basis that Harrington has engaged in conduct that constitutes a contravention of subs 67(1) of the NHA.
4 So far as his claims under the TPA are concerned, the Minister has sought against both Harrington and Mr Woodcock both declaratory and injunctive relief. As to Harrington, the Minister has sought that relief on the basis of three contraventions by it of subs 52(1) of the TPA. As to Mr Woodcock, the Minister has sought that relief on the basis that Mr Woodcock has been involved within the meaning of subs 75B(1) of the TPA in Harrington’s three contraventions of subs 52(1) of the TPA.
5 I mention immediately that it is not disputed by Mr Woodcock that, if Harrington has contravened subs 52(1) of the TPA in any of the respects alleged by the Minister, then Mr Woodcock has been involved within the meaning of subs 75B(1) of the TPA in such contravention. Mr Woodcock is a director of Harrington and was described before me by counsel appearing both for him and for Harrington as “the prime mover in all of this”; counsel also told me that, assuming contravention by Harrington of subs 52(1) of the TPA, Mr Woodcock’s involvement within the meaning of subs 75B(1) of the TPA in such contravention was “as clear as can be”. It will therefore only be necessary for me, as a matter of substance, to consider whether Harrington has contravened subs 52(1) of the TPA in the three respects alleged by the Minister; the corresponding conclusion regarding Mr Woodcock will necessarily follow.
6 It is convenient to deal in the first instance with the Minister’s claim against Harrington under the NHA and to refer immediately in that connection to certain provisions of the NHA and of the National Health Regulations 1954 (Cth) (“the Regulations”). (For the purpose of referring to provisions of the NHA, reprint 6, which reprinted the NHA as of 25 August 1998, is sufficient. For the purpose of referring to provisions of the Regulations, it is necessary to use both reprint No 5, which reprinted the Regulations as of 31 January 1996, and Statutory Rules 1997, No 133, which amended the Regulations as reprinted in a manner relevant for present purposes.)
7 Subsection 67(1) of the NHA prohibits any person other than a “registered organization” from carrying on “health insurance business” (and has done so since the commencement in 1985 of the Health Legislation Amendment Act 1985 (Cth), s 14). Contravention of that prohibition is made an offence (see subs 67(2) of the NHA) and can also found injunctive relief (see subs 67A(1) of the NHA). Additionally, injunctive relief may be granted (see again subs 67A(1) of the NHA) in respect of the proposed engaging in of conduct that would constitute a contravention of subs 67(1) of the NHA. (As I have already mentioned, it is the former type of injunctive relief which the Minister seeks against Harrington in the present proceeding.)
8 A “registered organization” is defined in subs 4(1) of the NHA as meaning an organization registered under Pt VI of the NHA.
9 The notion of “health insurance business” is defined in subs 67(4) of the NHA as follows:
“health insurance business means the business of undertaking liability, by way of insurance:
(a) with respect to loss arising out of a liability to pay fees or charges in relation to the provision in Australia of hospital treatment or an ancillary health benefit; or
(ab) with respect to the happening of an occurrence that ordinarily requires the provision of hospital treatment or relevant health services, whether or not payment of benefits to the insured is dependent upon one or more of the following:
(i) such treatment or services being provided to the insured;
(ii) the insured requiring such treatment or services;
(iii) fees or charges being payable by the insured in relation to the provision of such treatment or services; or
(b) with respect to, or with respect to the happening of an occurrence connected with, the provision in Australia of hospital treatment or an ancillary health benefit;
but does not include:
(c) accident and sickness insurance business;
(d) liability insurance business; or
(e) business of a kind prescribed for the purposes of this paragraph….”
10 I note immediately that the Minister relies only on par (ab) of the definition of “health insurance business” in his NHA claim against Harrington. I note further that the notions of “hospital treatment”and“relevant health services”, as used in par (ab) of the definition of “health insurance business”, are each also defined in subs 67(4) of the NHA. For present purposes, it is sufficient to mention that medical services are within the notion of “relevant health services”.
11 It will be noticed that the definition of “health insurance business” in subs 67(4) of the NHA expressly excludes from that type of business a number of kinds of business which might otherwise have fallen within par (ab) of that definition. Two such kinds of business are those referred to in pars (c) and (e) respectively of the definition of “health insurance business” in subs 67(4) of the NHA, namely, “accident and sickness insurance business” and “business of a kind prescribed for the purposes of this paragraph”.
12 To deal first with the exclusion from “health insurance business” as defined in subs 67(4) of the NHA of “accident and sickness insurance business”, the latter notion, like the former one, is defined in that subsection. The definition of the latter notion is as follows:
“accident and sickness insurance business means the business of undertaking liability, by way of insurance, to pay a lump sum, or to make periodic payments, on the happening of a personal accident, disease or sickness, but does not include:
(a) any such business where liability is undertaken with respect to loss arising out of a liability to pay fees or charges in relation to the provision in Australia of hospital treatment or an ancillary health benefit; or
(b) business of a kind prescribed for the purposes of this paragraph….”
13 As to par (b) of the definition of “accident and sickness insurance business”, it is necessary for present purposes to refer only to par 47(1)(b) of the Regulations, which provides that for the purposes of par (b) of the definition of “accident and sickness insurance business” in subs 67(4) of the NHA, among the kinds of business prescribed (and therefore excluded from the notion of “accident and sickness insurance business”) are:
“(b) the business of undertaking liability, by way of insurance, to pay a lump sum, or to make periodic payments, on the happening of a personal accident, disease or sickness, where the business includes the offer, promotion or offer and promotion of a policy (or a group of policies) in which:
(i) the amount of benefit varies according to the kind of insured event that occurs; and
(ii) the insured event is defined in terms that involve the provision of hospital treatment or relevant health services;
whether or not the insurer’s liability is in any way contingent on any treatment or services being provided to the insured, or on the payment of fees or charges for any treatment or services.”
14 To deal next with the exclusion from “health insurance business” as defined in subs 67(4) of the NHA of “business of a kind prescribed for the purposes of this paragraph”, it is necessary for present purposes to refer only to par 48(2A)(f) of the Regulations, which provides that for par (e) of the definition of “health insurance business” in subs 67(4) of the NHA, health insurance business does not include the business of undertaking liability by way of insurance for:
“(f) benefits payable:
(i) because of an event defined in the policy; and
(ii) in a lump sum or in parts; and
(iii) if the total benefit payable for each event defined in the policy is at least $10,000.”
15 Having referred now to most of the provisions of the NHA and the Regulations relevant for present purposes, I turn next to an outline of the issues arising as between the Minister and Harrington in the former’s NHA claim against the latter.
16 Harrington does not dispute in the present proceeding that it is not an organization registered under Pt VI of the NHA. Further, Harrington has conceded for the purpose of the present proceeding that it carries on insurance business. However, it says, the insurance business which it carries on is not “health insurance business” within the meaning of that notion in subs 67(4) of the NHA and it is therefore not liable to be enjoined under subs 67A(1) of the NHA. As I understand it, there are at least two, and possibly three, branches to Harrington’s argument.
17 First, Harrington says that it carries on “accident and sickness insurance business” within the meaning of subs 67(4) of the NHA, so that, by virtue of par (c) of the definition of “health insurance business” in that subsection, it does not carry on the latter type of insurance business.
18 As to that branch of Harrington’s argument, the Minister concedes that, but for the combined effect of par (b) of the definition of “accident and sickness insurance business” in subs 67(4) of the NHA and par 47(1)(b) of the Regulations, the insurance business which Harrington carries on would be “accident and sickness insurance business” within the meaning of subs 67(4) of the NHA and therefore not “health insurance business” within the meaning of that subsection. However, says the Minister, the combined effect of the former two provisions is that the insurance business which Harrington carries on is not “accident and sickness insurance business” within the meaning of subs 67(4) of the NHA.
19 Harrington responds to that position adopted by the Minister by alleging the invalidity of par 47(1)(b) of the Regulations, something which the Minister denies. (I note now that Harrington did not dispute before me the correctness of the Minister’s contention that the insurance business which it carried on was caught by the terms of par 47(1)(b) of the Regulations, assuming that paragraph to be valid.)
20 The second branch of Harrington’s argument that the insurance business which it carries on is not “health insurance business” within the meaning of subs 67(4) of the NHA depends on par (e) of the definition of “health insurance business”. Harrington claims that the insurance business which it carries on falls within par 48(2A)(f) of the Regulations, so that, by virtue of par (e) of the definition of “health insurance business”, Harrington does not carry on the latter type of insurance business. In response, the Minister denies before me that the insurance business which Harrington carries on falls within par 48(2A)(f) of the Regulations.
21 (I note now that, at one stage, Harrington proposed to advance an alternative argument regarding par 48(2A)(f) of the Regulations to the effect that that paragraph was invalid. At the outset of Harrington’s counsel’s opening at the hearing of the present proceeding, I told him that I did not understand the point of that alternative argument; I was unable to see how the invalidity of par 48(2A)(f) of the Regulations could be of any assistance to his client, since the only effect of the paragraph’s invalidity would be to deny to Harrington a means which would otherwise have been potentially available to it of avoiding the characterisation of the insurance business which it carried on as “health insurance business” within the meaning of subs 67(4) of the NHA. After further discussion of the matter between us during his closing submissions, Harrington’s counsel announced that he would not pursue the argument. I add that, if he had pursued it, I would have declined to rule on it, since I remain of the view that the establishing by Harrington of the invalidity of par 48(2A)(f) of the Regulations would have been futile from its point of view.)
22 As well as the two branches of Harrington’s argument which I have just identified, there may be as well a third branch, one which depends on the terms of par (ab) of the definition of “health insurance business” in subs 67(4) of the NHA. (It will be recalled that it is only par (ab) on which the Minister relies in order to establish that Harrington carries on “health insurance business” within the meaning of subs 67(4) of the NHA.) Harrington may be submitting that, assuming against it that the insurance business which it carries on does not fall within either par (c) or par (e) of the definition of “health insurance business” in subs 67(4) of the NHA, nevertheless the insurance business which it carries on is not caught by the terms of par (ab) of that definition. To the extent to which it does make such a submission, the Minister obviously denies the correctness of that branch of Harrington’s argument as well.
23 There are thus in substance two, or possibly three, issues for me to resolve for the purpose of the Minister’s NHA claim against Harrington: first, the validity of par 47(1)(b) of the Regulations; secondly, the construction and application of par 48(2A)(f) of the Regulations; and, thirdly, the construction and application of par (ab) of the definition of “health insurance business” in subs 67(4) of the NHA. I will deal with those issues in the order in which I have just set them out.
24 Turning first to the question of the validity of par 47(1)(b) of the Regulations, the regulation-making power conferred by the NHA is in a typical form. Subsection 140(1) of the NHA provides relevantly that the Governor-General may make regulations prescribing all matters which by the NHA are permitted to be prescribed. That power is, however, expressed in subs 140(1) to be subject to the typical qualification that such regulations must not be inconsistent with the NHA.
25 Harrington submitted that par 47(1)(b) of the Regulations was invalid, because, being inconsistent with two provisions of the NHA, its making had not been authorised by subs 140(1) of the NHA. First, par 47(1)(b) of the Regulations was said to be inconsistent with what I will call the inclusionary part of the definition of “accident and sickness insurance business” in subs 67(4) of the NHA, in other words, that part of the definition which appears before the words “but does not include”. Secondly, par 47(1)(b) of the Regulations was said to be inconsistent with par (c) of the definition of “health insurance business” in subs 67(4) of the NHA, which, it will be recalled, excludes from the notion of “health insurance business” “accident and sickness insurance business”.
26 In truth, the second of those two alleged inconsistencies with the NHA is merely a makeweight, since the content of the exclusion from the notion of “health insurance business” worked by par (c) of the definition of that notion in subs 67(4) of the NHA depends on the true content of the definition of the notion of “accident and sickness insurance business” in subs 67(4) of the NHA. If par 47(1)(b) of the Regulations is consistent with the inclusionary part of the definition of the latter notion, then par 47(1)(b) of the Regulations cannot be inconsistent with par (c) of the definition of “health insurance business” in subs 67(4) of the NHA, since par 47(1)(b) of the Regulations merely serves as part of the definition of the notion contained in par (c) of the definition of “health insurance business” in subs 67(4) of the NHA; if, on the other hand, par 47(1)(b) of the Regulations is inconsistent with the inclusionary part of the definition of “accident and sickness insurance business” in subs 67(4) of the NHA, then it simply has no part to play in defining the content of the exclusion from the notion of “health insurance business” worked by par (c) of the definition of that notion in subs 67(4) of the NHA.
27 I therefore turn to Harrington’s real argument, which is one of alleged inconsistency between par 47(1)(b) of the Regulations, on the one hand, and the inclusionary part of the definition of “accident and sickness insurance business” in subs 67(4) of the NHA, on the other.
28 Harrington’s inconsistency argument regarding par 47(1)(b) of the Regulations and the inclusionary part of the definition of “accident and sickness insurance business” in subs 67(4) of the NHA was put at the hearing before me in two different ways.
29 One such way was that par 47(1)(b) of the Regulations “purports to take away what” the inclusionary part of the definition of “accident and sickness insurance business” in subs 67(4) of the NHA “has given”. That way of putting the argument could not possibly succeed, since that was precisely the outcome which par (b) of the definition of “accident and sickness insurance business” in subs 67(4) of the NHA contemplated, if it were to be relied on for the purpose of making a regulation.
30 A second way with more chance of success in which the argument was put at the hearing before me was that par 47(1)(b) of the Regulations “practically wholly swallows the definition of [‘]accident and sickness insurance business[’] in [subs] 67(4)” of the NHA or, as it was also put, that the “one has swallowed the other because … the way the regulations are constructed, they say accident [and sickness] insurance business is defined as [A] and then … go[ ] on to say in effect, but it shall exclude [A]”.
31 It will be noticed (compare [13] above with [12] above) that par 47(1)(b) of the Regulations merely repeats word for word, before it reaches the clause beginning with the word “where”, the words of the inclusionary part of the definition of “accident and sickness insurance business” in subs 67(4) of the NHA. Harrington placed heavy reliance on that fact in making the argument to which I have referred in the preceding paragraph of these reasons.
32 I am prepared to accept for present purposes that par (b) of the definition of “accident and sickness insurance business” in subs 67(4) of the NHA should not be construed as having permitted the prescription of the very business which is referred to in the inclusionary part of that definition. That, it appears to me, would not be the excluding of business of a certain kind from the business which is referred to in the inclusionary part of that definition, but rather the repealing of the inclusionary part of the definition. Further, I am prepared to accept for present purposes that the question whether the purported exclusion by regulation of business of a certain kind from the inclusionary part of that definition is instead an attempted repeal of the inclusionary part of the definition should be determined as a matter of substance, rather than as a matter of form. However, all that said, I am unable to accept that, as a matter of substance, par 47(1)(b) of the Regulations has attempted to repeal the inclusionary part of the definition of “accident and sickness insurance business” in subs 67(4) of the NHA.
33 The point may be made simply by comparing par 47(1)(b) of the Regulations in its current form with the provision in its original form. When par 47(1)(b) of the Regulations was first enacted in 1995 (by Statutory Rules 1995, No 408), it was in the same form as it is presently, except that, in subpar 47(1)(b)(ii), the word “ordinarily” appeared before the word “involve”. Then, in 1997 (see Statutory Rules 1997, No 133), the word “ordinarily” was omitted. The explanation given for that omission in the explanatory statement for the amending statutory rule, which statement was issued by authority of the Minister, was that, “The inclusion of ‘ordinarily’ was an oversight … and overly widened the categories of prescribed business such that they applied to too wide a range of products”. That explanation, the accuracy of which I can see no reason to doubt, confirms that par 47(1)(b) of the Regulations in its current form has not “practically wholly swallow[ed]” up the inclusionary part of the definition of “accident and sickness insurance business” in subs 67(4) of the NHA; it has left within that inclusionary part at the very least that range of products which was erroneously excluded from it by the original version of par 47(1)(b) of the Regulations.
34 A conclusion that par 47(1)(b) of the Regulations in its current form has not “practically wholly swallow[ed]” up the inclusionary part of the definition of “accident and sickness insurance business” in subs 67(4) of the NHA also accords with common sense, since one can easily imagine insurance business which falls within the inclusionary part of the definition of “accident and sickness insurance business”, but which does not include the offer or promotion or both of a policy or group of policies in which the insured event is defined in terms that involve, whether ordinarily or otherwise, the provision of hospital treatment or relevant health services. To take a simple example, one can imagine insurance business which falls within the inclusionary part of the definition of “accident and sickness insurance business” and which involves solely a policy in which the insured event is defined as the breaking of a limb.
35 I therefore reject that branch of Harrington’s argument in which it submits that par 47(1)(b) of the Regulations is invalid and that it therefore does not carry on “health insurance business” within the meaning of subs 67(4) of the NHA, because it instead carries on “accident and sickness insurance business” within the meaning of that subsection.
36 In order to deal with the remaining two issues which I have identified in [23] above as arising (or possibly arising) in connection with the Minister’s NHA claim against Harrington, it will be convenient for me to say now something more of the facts of the present matter than I have so far done. (What I say will also be relevant to one of the Minister’s TPA claims.)
37 Certain Lloyd’s underwriters have appointed an Australian company, Global Underwriting Services Pty Ltd, as their coverholder for the purpose of a certain type of insurance policy. Harrington is responsible for the marketing of that policy, which exists in two versions, a “group” version and a “retail” (or “individual”) version. (For present purposes, it is sufficient to refer to the retail version of the policy.) It is the marketing by Harrington of that very policy which Harrington has conceded for the purpose of the present proceeding amounts to the carrying on by it of insurance business.
38 (It may be that, strictly speaking, it is not Harrington which is carrying on the relevant insurance business, but rather the Lloyd’s underwriters and (perhaps) their coverholder. However, I am prepared to act for the purpose of the present proceeding on Harrington’s concession. I note that the evidence before me establishes that the Minister has reached agreement with the Lloyd’s underwriters and their coverholder not to seek relief against them under the NHA in connection with the policy and they, in turn, have agreed to abide the outcome of the present proceeding, a matter which confirms my willingness to act on Harrington’s concession.)
39 The policy is not a model of clarity. Fortunately, however, resolution of many of the problems apparently thrown up by its drafting is not required in order to determine the issues with which I am dealing in these reasons.
40 A significant feature of the policy to which it is convenient to turn immediately is what is described as the “schedule of benefits”, which is an attachment to the policy.
41 That schedule of benefits was based on an American publication known as the International Classification of Diseases, 9th Revision, Clinical Modification (“ICD-9-CM”), which publication was in turn based on a publication of the World Health Organisation known as the International Classification of Diseases, 9th Revision. The latter publication is used for the purpose of classifying mortality data, whereas ICD-9-CM is used for the purpose of classifying morbidity data.
42 There was in evidence before me an Australian version of ICD-9-CM, which is similar to the original American version. The Australian version of ICD-9-CM contains, among other things, a tabular list of diseases and injuries, divided into seventeen parts. As well, the Australian version of ICD-9-CM contains a tabular list of medical procedures, divided into sixteen parts.
43 Like the tabular lists of diseases and injuries and of medical procedures in ICD-9-CM, the policy’s schedule of benefits is tabular in form and is divided into parts, of which there are twenty-one. For instance, the first part is headed “Respiratory System Diseases”, the second “Diseases of the Heart and Circulatory System”, the third “Diseases of the Nervous System” and so on. Each part lists a number of what are described as “conditions”. For instance, the first part has thirty-seven, beginning with “Respiratory failure requiring tracheostomy”, “Empyema without fistula requiring thorocotomy [no doubt, ‘thoracotomy’ was meant] with complications”, “Acute pneumothorax requiring scarification of pleura with complications” and so on. Each condition is allocated a number, in the case of those conditions listed in the first part, between 1001 and 1037, in the case of those listed in the second part, between 2001 and 2050, in the case of those listed in the third part, between 3001 and 3031, and so on. Also allocated to each condition is a “benefit” expressed in dollar terms. For instance, 1001 has a benefit of $45,000, 1002 has a benefit of $18,500, 1003 has a benefit of $17,500 and so on. The benefits are shown in order of decreasing value within each part of the schedule of benefits; for instance, the last listed condition in the first part shows a benefit of only $1,250. As well as there being a number and a benefit sum allocated to each condition, there is also allocated to each condition something called “% Capital Benefit” which is obviously allocated to the condition on the basis that the “Capital Benefit” being referred to is $100,000. For instance, the percentage of capital benefit for condition 1001, which, as I have already mentioned, has a benefit of $45,000, is stated to be “45.00”. There are a total of 550 separate conditions listed in the twenty-one parts of the schedule of benefits, each with its own number, benefit and percentage of capital benefit. It is not in dispute that all of the 550 separate conditions contain reference to a disease or injury and that most, but, as will be seen below (at [65]), not all, of them contain reference as well to a medical procedure.
44 Turning now to the body of the policy itself, there are a number of matters in it to which I should refer.
45 The period of insurance under the policy is one year, but the insurance can be renewed for further yearly periods “subject to acceptance” by the insurers and “at [their] consent”. The insurance can be cancelled by the insurers at any time during the period of insurance on the giving of one month’s notice and the repayment of the unearned premium, less the coverholder’s “administration fee”. The insurers’ liability to “pay any Benefits for which [sic] a claim that has not already been agreed and paid and agreed [sic] will cease” on a number of listed events, including the cancellation of the policy. That liability will also cease on the insured person’s death. During the first annual period of insurance, an insured,
“… cannot claim for any condition that manifested itself during the first 90 days after the initial commencement date of the policy. This includes any condition for which [the insured] received treatment or [which the insured] became aware of during this 90 day period. However, in the event of this policy being renewed this waiting period no longer applies.
This waiting period will not apply in the event of accidental injury.”
The term “accidental injury” is defined in the policy, but it is unnecessary to set out the definition for present purposes.
46 There is said in the policy to be a basic premium which is “determined annually by three factors, gender, age and smoking status”. Further, should the insurers decide that an individual’s health “may be of higher risk [higher risk than what is not specified], the premium will also include any further loading determined by the insurer[s] as appropriate for that individual’s risk”. If the insured does not,
“… make a claim in any one-year, a 5% discount from the normal terms will apply to the subsequent year’s premium. Thereafter a further 5% discount will apply to each subsequent year provided no claims are made. However, the maximum discount available is 25%.”
47 If a “recognised medical specialist” diagnoses the insured as having “one of the conditions” shown in the schedule of benefits, then, prima facie, the insurers will pay to the insured what is described as “the percentage amount[ ] of the capital sum”, but which is, in truth, the benefit shown for that condition in the schedule of benefits. A “recognised medical specialist” is defined in the policy as meaning “a medical specialist recognised for the purposes of the Health Insurance Act, 1973 as being a ‘specialist’ in that [sic] specialty”. The “capital sum” or, as it is referred to in the schedule of benefits, the “capital benefit”, is nowhere defined in the policy, but is plainly a reference to the maximum amount of benefits payable under the policy, which is stated to be $100,000. (As well as an annual cap on benefits, there exists, assuming renewals of the policy, a lifetime cap on benefits of $500,000.)
48 The policy provides that, “In the event of more than one condition being diagnosed only the highest of the benefit(s) will be paid”. Presumably, that is a reference to a situation in which there occurs a diagnosis by one specialist on one occasion of multiple conditions.
49 The policy provides that, “Once a claim has been made under one of the benefit sections shown in the schedule no further claims can be made for the same benefit. However [the insured] can claim under another benefit….” However, if the insurers agree to renew the policy, the insured may make “a new claim for a previously diagnosed condition” (presumably, one in respect of which a claim has already been made and paid under a previous policy). The insured’s entitlement to make such further claim is, however, expressed to be conditional on the insured’s having “received medical treatment for this condition”. The existence of that condition precedent to the making of a further claim appears to be reinforced by the further statement that “if no medical treatment is received by the insured after a claim has been paid then no further benefits will be paid in subsequent years” (presumably, in respect of the same condition).
50 The insurers do not undertake to treat as conclusive the diagnosis of the insured by a recognised medical specialist which is relied on as the basis of a claim. The policy provides:
“[The insurers] may, at [their] discretion, seek a ‘second opinion’ prior to making a claim payment. This would involve a physician of [the insurers’] choice reviewing the claim, discussing the claim with the treating physician and possibly reviewing medical information relating to the claim.”
“Second opinion” is defined in the policy as “an opinion sought by [the insurers] from a second medical specialist to qualify [sic] the principal [sic] diagnosis of the first medical specialist”. It is apparent, from the reference in the clause which I have just quoted to “the treating physician”, that it is expected by the insurers that an insured will have obtained medical treatment for the condition diagnosed once that diagnosis has been made. Further, since the policy requires claims to be made within three months of diagnosis, it seems to be expected by the insurers that the insured will have obtained such medical treatment within that three month period.
51 At the same time, however, the policy provides that the insured’s entitlement to a benefit as shown in the schedule of benefits will not be affected by “the failure to undertake any medical procedure that would normally be recommended as treatment”. That statement must be understood as inapplicable in the case of a renewed policy, if the insured seeks to make “a new claim for a previously diagnosed condition” (see [49] above). The policy also provides that the insured’s entitlement to a benefit as shown in the schedule of benefits will not be affected by “the receipt of any benefits from Medicare or a health fund”, benefits which would in all probability have been paid because the insured had undergone hospital treatment or relevant health services.
52 It is convenient to mention now that, as well as having in evidence before me the policy which I have been discussing, I also have two other documents closely associated with the policy, both bearing Harrington’s name. One is a pamphlet which contains both material advertising the insurance policy and a form of application for cover under the policy. The other is a pamphlet said to contain “Rules for Disputed Claims”. It will be necessary for me to say something later about the contents of each of those two pamphlets.
53 Having summarised the terms of the policy, I turn now to the second of the three issues to which I have referred in [23] above, namely, the construction and application of par 48(2A)(f) of the Regulations. It will be recalled (see [14] above) that that paragraph provides that for par (e) of the definition of “health insurance business” in subs 67(4) of the NHA, health insurance business does not include the business of undertaking liability by way of insurance for:
“(f) benefits payable:
(i) because of an event defined in the policy; and
(ii) in a lump sum or in parts; and
(iii) if the total benefit payable for each event defined in the policy is at least $10,000.”
54 Prima facie, the policy marketed by Harrington does not fall within par 48(2A)(f) of the Regulations, since, for the 550 separate events which it defines for which a benefit is payable, the total benefit payable for each of no fewer than 420 of them is less than $10,000.
55 However, in an attempt to bring itself within par 48(2A)(f) of the Regulations, Harrington relies on three separate matters: first, it relies on the fact that the “capital sum” (or “capital benefit”, as it is described in the schedule of benefits) under the policy is $100,000; secondly, it submits that the word “each” in subpar (iii) of par 48(2A)(f) of the Regulations is to be construed as meaning “each and every”; and, thirdly, it submits that, even if the first two matters on which it relies are not accepted, then, at least to the extent to which the policy insures against the 130 separate events for each of which the total benefit payable is at least $10,000, the policy does not constitute health insurance.
56 None of those three matters persuades me that the policy marketed by Harrington falls either wholly or partly within par 48(2A)(f) of the Regulations.
57 As to the first of them, I have already mentioned that the notions of the “capital sum” or “capital benefit’ are not defined in the policy, but appear plainly to be intended to refer to the $100,000 cap on benefits payable annually under the policy. Neither of those notions could be said to represent “the total benefit payable for each event defined in the policy”; rather, they represent the maximum sum payable under the policy by the adding together of at least two of the total benefits payable for separate events defined in the policy (there being no separate event for which the total benefit payable is as great as $100,000).
58 As to the second of them, when it was first submitted before me that I should construe the word “each” in subpar (iii) of par 48(2A)(f) of the Regulations as meaning “each and every”, I sought clarification of that submission, because I did not understand what was intended to be conveyed by it. I asked whether what was actually being submitted was that subpar (iii) of par 48(2A)(f) of the Regulations should be read as referring to the total benefits payable for all events defined in the policy. I was told by way of reply, “That could be another alternative”, and then the submission was simply repeated that “when it talks about ‘for each event’ it must be read to be: each and every event”. I infer from that exchange between Harrington’s counsel and me that the submission being made was not that subpar (iii) of par 48(2A)(f) of the Regulations should be read as referring to the total benefits payable for all events defined in the policy. That being the case, I remain unclear as to what was intended to be conveyed by the submission. According to The New Fowler’s Modern English Usage, rev. 3rd ed., p. 235, the phrase “each and every” is “used for emphasis”, while, according to Quirk et al (A Comprehensive Grammar of the English Language, p. 963), the conjoining of the two words in the phrase is “redundant and emphatic”. That view taken by the commentators has also been taken by the courts. As was said by Gowans J for himself and for Winneke CJ and Little J in Triaca v Summaries Pty Ltd [1971] VR 347 at 350, when speaking of a guarantee given to “each and every” member of two bodies, “The words ‘and every’ are only emphasis”. Thus, to read the word “each” in subpar (iii) of par 48(2A)(f) of the Regulations as if it were followed by the words “and every”, as was submitted on Harrington’s behalf should be done, would result in no substantive change to the meaning of the subparagraph. Whether read as written or as if the words “and every” were present, the purpose of the use of the word (or phrase) in subpar (iii) of par 48(2A)(f) of the Regulations would still be to “pick out the members of a set singly, rather than considering them in a mass” (Quirk and others, p. 382). That is a purpose which would have assisted Harrington if it had been in Harrington’s interest not to fall within par 48(2A)(f) of the Regulations, but which can be of no assistance to Harrington in the present circumstances.
59 As to the third of the three matters relied on by Harrington in an attempt to bring itself within par 48(2A)(f) of the Regulations, I find it impossible to reconcile Harrington’s reading of that paragraph with what appears to me to be its plain meaning, namely, that, where a policy insures against a multiplicity of events, then each (and every!) event defined in that policy must involve a total benefit payable of at least $10,000 before it can be said that the business of insuring someone under that policy is not “health insurance business”.
60 I turn now to the last of the three issues to which I referred in [23] above, namely, the construction and application of par (ab) of the definition of “health insurance business” in subs 67(4) of the NHA.
61 It will be recalled (see [9] above) that par (ab) of the definition of “health insurance business” in subs 67(4) of the NHA refers to the business of undertaking liability, by way of insurance,
“(ab) with respect to the happening of an occurrence that ordinarily requires the provision of hospital treatment or relevant health services, whether or not payment of benefits to the insured is dependent upon one or more of the following:
(i) such treatment or services being provided to the insured;
(ii) the insured requiring such treatment or services;
(iii) fees or charges being payable by the insured in relation to the provision of such treatment or services….”
62 It will also be recalled that the policy marketed by Harrington provides for the undertaking of liability with respect to 550 separate defined events. The fact that the policy contained 550 separate defined events led me to raise with counsel for the Minister during his submissions before me the question whether it was necessary for me to be satisfied with respect to every one of the 550 separate defined events provided for in the policy that the disease or injury referred to in it was one which ordinarily required the provision of hospital treatment or relevant health services before I could conclude that, prima facie, the business of insuring someone under the policy fell within par (ab) of the definition of “health insurance business” in subs 67(4) of the NHA. The resulting exchange between counsel for the Minister and me provoked the following submission by counsel for Harrington during the making of his own closing submissions:
“I should make this concession, your Honour. Your Honour put to my friend that it didn’t necessarily follow, at least to the non-expert Court in medical matters, that treatment under the Act, the relevant hospital or related health treatment, followed; and that may be true in some respects, but it has to be conceded from our part in fairness, your Honour, that the very method by which these tables were prepared assumed, on the requirement of diagnosis by the specialist, that there would be at least treatment by going to a specialist for that purpose. And of course, that embarks necessarily along the path of the relevant treatment under the Act.
I know your Honour has suggested, well, maybe it requires consideration of each individual line, but for our purposes, your Honour, we are prepared to concede, because of the nature of the policy which required diagnosis, that it necessarily involved at least entering the arena of treatment for relevant purposes, and we don’t take, as it were, a line by line objection. The respondents want a ruling on this matter, may it please your Honour, and your Honour can see, of course, as has already been pointed out, that not all the items have the word ‘requiring’. 1018 has been referred to; another one is 1023, I think.
HIS HONOUR: No, 1023 does talk about requiring admission, but 1019, for instance, talks about interstitial lung disease with complications, without any particular reference to requiring some procedure or admission to a hospital.
MR TILMOUTH: That’s right. So, your Honour, it has to be conceded anyway the majority of them, the large majority of them have the word ‘requiring’, but in order to qualify for a benefit you have to get a specialist diagnosis, and that is treatment under any view. So we don’t take that point, your Honour, because the scheme was constructed around that qualifying event for the benefit itself.”
63 That submission was made by counsel for Harrington after the making by him of certain submissions to the effect that, assuming the policy was not excluded by pars (c) or (e) from the definition of “health insurance business” in subs 67(4) of the NHA, nevertheless the policy did not fall within par (ab) of that definition. A question exists in my mind whether, in making his later submission which I have just quoted, counsel was thereby intending to abandon his earlier submissions to the effect that the policy did not fall within par (ab) of the definition of “health insurance business” in subs 67(4) of the NHA. It may be that he was. However, it also appears to me that the better course, in case he was not, is to deal with counsel’s earlier submissions on the issue, something to which I now turn.
64 I begin by repeating that, for the business of insuring a person under a policy to fall within par (ab) of the definition of “health insurance business” in subs 67(4) of the NHA, it is necessary that the policy concerned insure the person “with respect to the happening of an occurrence that ordinarily requires the provision of hospital treatment or relevant health services”. As I understand it, what is sought to be conveyed by the notion of the provision of hospital treatment or relevant health services being ordinarily required is that, in their absence, the person suffering the relevant disease or injury will either not ordinarily be cured or, if the disease or injury is incurable, will not ordinarily have its symptoms alleviated to the greatest extent possible. One way in which the Minister might have sought to persuade me that the policy marketed by Harrington was of the type under discussion was by calling expert medical evidence directed to showing that each of the diseases or injuries referred to in the schedule of benefits ordinarily required the provision of hospital treatment or relevant health services in the sense referred to above. However, the Minister did not take that course. Instead, he sought to rely on Harrington’s own documents, especially on the terms of the policy, in order to persuade me of that matter.
65 In [43] above, I have already set out the terms of the first three of the conditions in the first part of the schedule of benefits under the policy. Each of those three conditions can conveniently be divided into two parts, that before the word “requiring” and that after. The first part of each condition is a disease or injury listed in the ICD-9-CM tabular list of diseases and injuries and the second part of the condition is a medical procedure listed in the ICD-9-CM tabular list of medical procedures. (I ignore what appears to me to be the misplacement of the words “with complications” in two of those three conditions.) Of the 550 conditions in the schedule of benefits, 491 more of them are similarly expressed, although a few of them describe as required for the disease or injury, not a medical procedure, but “admission”, which is plainly a reference to admission to hospital. In addition to the 494 conditions which I have just mentioned, twenty-six more of them take a form similar to “[disease or injury] requiring [medical procedure or admission]”; however, instead of using the connector “requiring”, they use either the connector “involving” or the connector “with”. For instance, condition 20012 is “Pyogenic arthritis involving arthrotomy or arthroscopy”, while condition 14004 is “otosclerosis with stapedectomy”. Finally, the remaining thirty of the 550 conditions consist simply of a disease or injury without any stated connection to a medical procedure or hospital admission, for example, condition 8013, “hypoglycaemic coma”.
66 It appears to me that, to the extent to which the policy requires for the making of a successful claim for a benefit thereunder that a recognised medical specialist has expressed the opinion that the insured has a disease or injury “requiring” a medical procedure or admission to hospital, that tends to show that the policy insures a person “with respect to the happening of an occurrence that ordinarily requires the provision of hospital treatment or relevant health services”. A similar conclusion also appears to me to be appropriate where the schedule of benefits has the effect that a recognised medical specialist must express an opinion that the insured suffers from a disease or injury “involving” or “with” a particular medical procedure or hospital admission.
67 There are, it appears to me, other indications in the policy that the provision of hospital treatment or relevant health services will ordinarily be required in connection with all of the diseases or injuries referred to in the schedule of benefits. As well as the matter to which I have referred in the preceding paragraph, I have already referred, in [49] above, to the necessity for having received “medical treatment” for a condition before one can make a claim in respect of the same condition under a renewed policy and, in [50] above, to the insurers’ reserving the right to discuss a claim with the insured’s “treating physician”.
68 Furthermore, that the provision of hospital treatment or relevant health services will ordinarily be required in connection with all of the diseases or injuries referred to in the schedule of benefits is a theme which is repeated, not only in the policy, but also in Harrington’s additional documents to which I have referred in [52] above. In the pamphlet containing the application form, interested persons are told that, if insured, they will receive “an upfront lump sum payment” “[o]nce the medical specialist diagnoses and confirms that your condition needs to be treated”. In the pamphlet containing rules for disputed claims, rules are provided for a situation in which an insured has received a benefit payment, but “at the end of [his or her] treatment” believes that “there is a sound case for disputing the amount paid” by the insurers. In that case, the initial diagnosis is to be reviewed by an independent physician and,
“3. If the independent physician decides that the original diagnosis was accurate then [the insured] will be required to provide all the relevant bills relating to the treatment of [his or her] condition.
4. The bills will be analysed by an independent auditor against known benchmark fees supplied by the Australian Medical Association for each treatment used.
5. If at the end of this process there is still a dispute over the amount of the benefit received it will be referred to the Asia Pacific Arbitration Centre for a mediated decision.”
69 It is also worth mentioning here that, in 1998, the now-deregistered Harrington Associates Ltd entered into an agreement with the Lloyd’s coverholder regarding the marketing of the policy. At that time, Harrington was not yet in existence and Harrington Associates Ltd was trading as Harrington (Silver Cross) Insurance Associates (later, the distinctive part of Harrington’s own name). In that agreement, the policy was described as providing “trauma and medical crisis”cover. In a slight variation on that description of the policy, in the pamphlet containing the application form, the policy is described as providing “serious illness & crisis cover” and as being “serious illness insurance” that pays benefits if one has “a serious illness or injury”. It appears to me that one could infer from those descriptions of the policy alone that it insures against diseases or injuries ordinarily requiring the provision of hospital treatment or relevant health services.
70 In an attempt to repel the conclusion that the policy should be characterised as one which insures persons with respect to the happening of diseases or injuries that ordinarily require the provision of hospital treatment or relevant health services, Harrington made only one submission. As I understood it, that submission was that the presence of the word “requiring” in the schedule of benefits had been “coincidental” or “purely accidental” and that the drafter of the schedule of benefits (Mr Woodcock, as I understand it; certainly, he has asserted copyright in the schedule of benefits) had intended by the use of the word merely to “measure[ ] the level of seriousness of the basic condition according to its consequence”. As an aspect of that submission, it was further submitted that the drafter of the schedule of benefits would equally have given effect to his intention if, instead of expressing in that way those conditions which are in the form “[disease or injury] requiring [medical procedure or admission]”, he had expressed them in the form “[disease or injury] resulting in [medical procedure or admission]”.
71 That submission does not persuade me that the policy does not insure persons with respect to the happening of diseases or injuries that ordinarily require the provision of hospital treatment or relevant health services. I am unable to see how Mr Woodcock’s intention when using the word “requiring” in drafting the 494 conditions which contain that word (about which specific intention, I may say, there was no evidence before me) is of any assistance to me in deciding whether the policy insures against diseases or injuries which ordinarily require the provision of hospital treatment or relevant health services. In any event, even if the matter were relevant, it appears to me to be overwhelmed by all of the other matters to which I have already referred above, which leave me comfortably satisfied that all of the diseases and injuries against which the policy insures do ordinarily require the provision of hospital treatment or relevant health services.
72 Having now dealt with the three issues with which I foreshadowed dealing, it will be apparent that, in the view which I take, Harrington is carrying on “health insurance business” within the meaning of subs 67(4) of the NHA and has therefore engaged in conduct that constitutes a contravention of subs 67(1) of the NHA.
73 I turn now to the Minister’s TPA claims against Harrington (and Mr Woodcock).
74 As I mentioned at the outset of these reasons for judgment, the Minister has claimed in the present proceeding that Harrington has contravened subs 52(1) of the TPA in three respects. In each respect, the alleged contravening conduct consisted of the making by Harrington of a representation to the public. In substance, the three alleged representations were as follows: first, that Harrington’s insurance business was not “health insurance business” within the meaning of the NHA (“the ‘not health insurance business’ representation”); secondly, that any benefit paid under the policy would cover the full cost of being treated for the disease or injury in respect of which the benefit was being paid (“the ‘no gap’ representation”); and, thirdly, that representations being made concurrently with the subject representation identified all of the material terms of the policy relating to the cover, being monetary or other limits on the extent of the cover and on claims (“the ‘no fine print’ representation”).
75 As to the “no gap” representation only, the Minister expressly pleaded in his statement of claim reliance on s 51A of the TPA. Subsection 51A(1) of the TPA provides that, for the purposes of (relevantly) subs 52(1) of the TPA, where a corporation makes a representation with respect to any future matter and it does not have reasonable grounds for doing so, the representation shall be taken to be misleading. Subsection 51A(2) of the TPA provides that, for the purposes of the application of subs 51A(1) in relation to a proceeding concerning a representation made by a corporation with respect to a future matter, the corporation shall, unless it adduces evidence to the contrary, be deemed not to have had reasonable grounds for making that representation.
76 It should be noted that the Minister did not, in the alternative to his reliance on s 51A of the TPA, plead in his statement of claim any of those special facts which are necessary to be pleaded before a case under subs 52(1) of the TPA not relying on s 51A of the TPA can be made out regarding a representation with respect to a future matter: for a reference to the authorities discussing what those necessary special facts are, see my reasons for judgment in Aussie Home Security Pty Ltd v Sales Systems Australia Pty Ltd [1999] FCA 1458 (26 October 1999, unreported) at [19].
77 I can dispose quickly of all issues regarding the alleged “not health insurance business” representation. In its defence, Harrington admitted making the representation and in its closing submissions before me, it acknowledged that the answer to the question whether Harrington had contravened subs 52(1) of the TPA by making that particular representation “follows the event”, that is to say, necessarily followed from my conclusion on the Minister’s NHA claim against Harrington. As I have already concluded that Harrington is carrying on “health insurance business” within the meaning of subs 67(4) of the NHA, it therefore follows that I will also conclude that Harrington has contravened subs 52(1) of the TPA by making the “not health insurance business” representation. (It also follows that I will conclude that Mr Woodcock has been involved within the meaning of subs 75B(1) of the TPA in that particular contravention by Harrington of subs 52(1) of the TPA.)
78 I turn next to the alleged “no gap” representation.
79 Although, in its defence, it denied making the representation in substance alleged, namely, that any benefit paid under the policy would cover the full cost of being treated for the disease or injury in respect of which the benefit was being paid, Harrington did admit making statements in which it had specifically stated that there would be “no gap” (or “gaps”). Further statements which, for present purposes, it admitted making had also included, among others: “You are fully covered for the total cost of any and all treatments”; the policy “covers you completely so you are never out of pocket”; the policy “provide[s] total cover”; “[Y]ou are fully covered for all known bills”; “[I]f you suffer a serious injury or illness, you will not be out-of-pocket by merely having the right treatment”; “Once the medical specialist diagnoses and confirms that your condition needs to be treated you receive an upfront lump sum payment that covers you completely - no gaps”; and the policy “[e]nsures the lump sum paid is more than enough to cover all known costs associated with that ‘event’ - no gaps”.
80 I note that Harrington’s defence made no reference to s 51A of the TPA, which provision, as I have already mentioned (see [75] above), was being expressly relied on by the Minister in connection with the alleged “no gap” representation; nor did Harrington’s defence make reference to any matter arising as a result of the Minister’s reliance on that provision.
81 During his closing submissions at the hearing of the proceeding before me, the Minister submitted that the evidence established that the alleged “no gap” representation had been made, that that representation fell within s 51A of the TPA and that Harrington had not established by evidence that it had had reasonable grounds for the making of that representation.
82 However, the Minister did not only seek to rely on s 51A of the TPA regarding the alleged “no gap” representation. There had also been evidence in his case directed to establishing that the total benefit payable under the policy for nine of the conditions in the schedule of benefits would be insufficient to cover an insured person’s cost of being treated for the relevant disease or injury and in his closing submissions the Minister relied on the existence of that evidence as well. (The nine conditions had been selected at random from a larger group of thirty-five, which had themselves been selected from the 550 conditions listed in the schedule of benefits because statistics were said to be conveniently available regarding the cost of treating them.)
83 No issue existed before me to which the evidence to which I have just referred had been properly directed, given the form of the Minister’s statement of claim (see [76] above), but the evidence had nevertheless not been objected to by Harrington. Furthermore, in its closing submissions before me on the alleged “no gap” representation, Harrington focused entirely on the nine conditions which had been the subject of the irrelevant evidence in the Minister’s case to which I have just referred. Significantly, Harrington had not put before me evidence in its case which would have satisfied the burden imposed on a corporation by s 51A of the TPA when it is applicable, nor did Harrington refer to that provision in its “official” closing submissions (although some brief reference was made to it in a further submission made after the Minister had completed his closing submissions in reply).
84 I am satisfied that those statements which Harrington has admitted making amounted to the making by it of the alleged “no gap” representation. Further, given Harrington’s approach to the matter, I hold that Harrington has contravened subs 52(1) of the TPA by making the representation (with obvious flow-on consequences so far as Mr Woodcock is concerned). I reach that conclusion because I am satisfied that the “no gap” representation was one with respect to a future matter within the meaning of s 51A of the TPA and that, Harrington not having adduced evidence to the contrary within the meaning of subs 51A(2) of the TPA, it is deemed not to have had reasonable grounds for making the representation. (As to what is required of a corporation in order to satisfy the burden imposed on it by subs 51A(2) of the TPA regarding a representation with respect to a future matter, I refer to my reasons for judgment in Blacker v National Australia Bank Ltd [2000] FCA 681 (25 May 2000, unreported), especially at [82]-[90]. What I said in those reasons regarding proving that there were reasonable grounds for representations made in a cash flow statement is equally applicable to the present representation.)
85 As to the parties’ debate before me about the nine conditions to which I have referred in [82] above, it is unnecessary for me in the present circumstances to attempt to resolve it. (I do note, however, that, as to two of the nine conditions, each involving the insertion of a prosthesis, counsel for Harrington told me from the Bar table in closing submissions that, in effect, Harrington had fixed its level of benefit on an assumption that the insured person would obtain the relevant prosthesis without charge to that person, but that it had transpired that that assumption had been wrong. That meant, he conceded, that the total benefits payable under the policy for those two conditions would be insufficient to cover an insured person’s cost of being treated for the relevant disease or injury.)
86 Finally, I turn to the alleged “no fine print” representation.
87 Although, in its defence, it denied making the representation in substance alleged, namely, that representations being made concurrently with the subject representation identified all of the material terms of the policy relating to the cover, being monetary or other limits on the extent of the cover and on claims, Harrington did admit to making, among others, the statement: “There is no small print. If the doctor says you need treatment for a serious illness, we pay you. No hassles”. That statement had appeared in an advertisement in the Sydney Sunday Telegraph of 21 March 1999, which advertisement had also contained a form of coupon which readers were invited to fill in and send to Harrington. It is convenient for present purposes to set out the entire text of that advertisement (omitting both some irrelevant text, such as that of the coupon, and emphasis appearing in the advertisement):
“Finally, total & affordable illness and injury cover.
What is Silver Cross?
Silver Cross is a totally new and more affordable insurance that pays you first so that you can pay the bills.
It covers you completely so you are never out of pocket.
No running around between a fund, Medicare office and back again just to retrieve a measly rebate.
There is no small print. If the doctor says you need treatment for a serious illness, we pay you. No hassles.
How does Silver Cross work?
Simple. In the event of a serious illness or injury, you receive a lump sum payment designed to cover the total cost of your treatment.
In a nutshell, this means that you, the patient, have total control over how, where and even when it is spent.
You, and you alone, decide which doctor or specialist you choose to have look after you, at which hospital you like to be treated and so on. Wherever and whenever you like.
Perhaps best of all, whatever is left over you get to keep!
What does Silver Cross cover?
Silver Cross totally and comprehensively covers ALL serious illnesses and accidents.
No ifs. No buts. And most importantly, NO GAPS.
You are fully covered for the total cost of any and all treatments.
It can’t get any simpler than that!
If it’s so simple and affordable, why hasn’t anything like Silver Cross been offered before?
The current health fund system in Australia operates under archaic guidelines and laws drawn up in the early 1950’s. These were never meant to cope with the needs or scope of the modern-day health requirements of today’s society. What it has meant, as news reports testify every day, is an expensive, inefficient and bureaucratic system.
Silver Cross is an entirely new concept designed for the new century. It is for today and tomorrow. It is pure insurance. Pure and simple.
So, just like your car or home, the power over how and by whom repairs are carried out is decided by the person who takes out the policy, that is you, thus guaranteeing everything is done completely to your satisfaction.
Even better, as an added bonus because it is a pure form of insurance, if you don’t make a claim for the first five years, you’ll automatically receive a no-claim discount.
Silver Cross offers you full coverage on serious illnesses and injuries as well as complete peace of mind.
It’s what you expect insurance to be - total cover when it’s needed.
So how can I learn more about Silver Cross?
Just fill out the coupon below and information will be sent to you about this unique insurance product.
No stamp is required. Simply write reply paid and the address on an envelope or you can fax the coupon to 9369 3263.”
88 I note that the advertisement which I have just quoted uses the phrase “small print”. It appears that Harrington has used the phrases “small print” and “fine print” interchangeably in its promotional material. For instance, in promotional material which it itself tendered, namely, the pamphlet to which I referred above (see [52]) containing both material advertising the insurance policy and a form of application for cover under the policy, Harrington stated that the policy “is the most user friendly insurance product on the market. There is no fine print to read”. The Macquarie Dictionary 3rd ed. also treats the two phrases as interchangeable. Its entry for “small print” directs one to its entry for “fine print” and its entry for the latter phrase says, “the small print in a contract, etc., establishing conditions and matters of detail”.
89 In par 43 of his statement of claim, the Minister particularised those respects in which he alleged that the making of “no fine print” statements by Harrington such as that in the Sunday Telegraph advertisement which I have set out above was misleading or deceptive or likely to mislead or deceive. For present purposes, it will be sufficient for me to discuss the matter by reference to that advertisement alone. The Minister’s position in substance was that, when read in light of the balance of that advertisement, the “no fine print” statement was misleading or deceptive or likely to mislead or deceive, because the policy contained five material terms not referred to in the balance of that advertisement. Reference was made to five of the provisions of the policy to which I have referred in [47] to [49] above, as follows:
“The policy provides that in the event of more than one condition being diagnosed only the highest of the benefit(s) will be paid. Further, once a claim has been made under one of the benefit sections shown in the Schedule no further claims can be made for the same benefit. However an insured can claim under another benefit provided the total of all benefits paid under this insurance does not exceed A$100,000 per person per year. In any event the maximum of all benefits payable during the lifetime of the Insured shall not exceed A$500,000. If no medical treatment is received by the insured after a claim has been paid then no further benefits will be paid in subsequent years.”
90 I have already mentioned that Harrington denied in its defence the making of the “no fine print” representation. However, it went further. It was in par 40 of his statement of claim that the Minister had pleaded the making of the relevant representation and, as I have already mentioned, in par 43 that he had pleaded the misleading or deceptive character of the representation. As well as pleading to par 40 by denying it, Harrington also pleaded to par 43 in the following way:
“The respondents deny paragraph 43 of the Statement of Claim and further say that the promotional material was designed to attract responses from the public and that all terms and conditions relating to the cover would be disclosed to members of the public responding to the advertisement or promotional material.”
91 I do not find it easy to understand that plea, which appears to me to breach the rule regarding the pleading of inconsistent allegations of fact: see A & S Oayda Investments Pty Limited v Burns Philp Trustee Company Limited (In liquidation) (FCA: Lockhart J, 25 November 1994, unreported) at page 25. However, it appears to me that what was implicit in what was being further said in the plea which I have just quoted was that advertisements like the one in the Sunday Telegraph had not disclosed significant terms of the policy, but that that was irrelevant, since those terms would have been disclosed at a later stage, before contract.
92 During the course of his final submissions before me, counsel for Harrington took, it appears to me, the same approach to the alleged “no fine print” representation as had been taken in the second part of the pleading which I have quoted in the next preceding paragraph. In other words, he conceded that advertisements like the one in the Sunday Telegraph had not disclosed significant terms of the policy, but submitted that that was irrelevant, since those terms would have been disclosed at a later stage, before contract.
93 A similar argument was made to and rejected by Northrop J in St Lukes Health Insurance v Medical Benefits Fund of Australia Ltd (1995) ATPR ¶41-428. The context in which the argument had been made to Northrop J had been electronic and print advertisements for health insurance, although the fact that the advertisements were for health insurance is a mere coincidence. Northrop J said (at 40,823):
“[E]ven if I accept —as I do accept—the fact that MBF would explain to persons applying for the cover what were [sic] the effect of the terms of the package that was entered into, that does not overcome any misleading or deceptive conduct which had occurred at an earlier stage when the member of the public seeing the advertisement, or hearing it, goes along to MBF to consider entering into it. The misleading or deceptive conduct occurs at the time of the publication of the television advertisement or of the publication of the newspaper advertisements.”
94 Counsel for Harrington made no submission before me that the approach taken by Northrop J in the St Lukes case was plainly wrong; indeed, counsel for Harrington made no reference at all in his closing submissions to that case, although it had been expressly relied on by the Minister in his closing submissions. I accept the correctness of Northrop J’s approach and apply it to the present circumstances.
95 Counsel for Harrington made two further submissions regarding the “no fine print” representation which require an elaboration of the reasons for rejecting them which is only marginally more lengthy than was given of the reasons why they should be accepted. The two further submissions were: first, that the “no fine print” representation was mere puffing; and, secondly, that the “no fine print” representation had not been made in trade or commerce, but anterior thereto.
96 As to the first of those submissions, I reject it for two reasons. First, as was said by Lindgren J in Eveready Australia Pty Ltd v Gillette Australia Pty Ltd (No 4) (2000) ATPR ¶41-751 at 40,694, [59], when confronted with a similar argument: “The specificity of those words [that is, the words of the relevant representation] is inconsistent with the nature of advertising puff”. Secondly, the “no fine print” representation is at the “fact” end of the fact-opinion continuum.
97 As to the second of those submissions, I reject it because it is obvious that the ultimate purpose of making the representation was to induce members of the public to enter into contracts of insurance with those on whose behalf Harrington was marketing the policy. That is sufficient to render the making of the representation the engaging in of conduct in trade or commerce. If authority for such a proposition is thought needful, it can be found in the following statement about s 52 of the TPA made by the High Court of Australia (Mason CJ and Deane, Dawson and Gaudron JJ) in Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 at 604:
“What the section is concerned with is the conduct of a corporation towards persons, be they consumers or not, with whom it (or those whose interests it represents or is seeking to promote) has or may have dealings in the course of those activities or transactions which, of their nature, bear a trading or commercial character. Such conduct includes, of course, promotional activities in relation to, or for the purposes of, the supply of goods or services to actual or potential customers, be they identified persons or merely an unidentifiable section of the public.”
98 It follows that I conclude that Harrington has contravened subs 52(1) of the TPA by making the “no fine print” representation (again, with obvious flow-on consequences so far as Mr Woodcock is concerned).
99 Now that I have concluded in favour of the Minister against Harrington on the Minister’s NHA claim and against Harrington and Mr Woodcock on the Minister’s TPA claims, a question arises as to the appropriate orders to be made. During the hearing, the parties joined in asking me to give them an opportunity to consider my reasons before any possible argument as to orders took place. I will therefore merely direct for the moment that the Minister bring in short minutes of the orders which he now seeks in light of the conclusions which I have expressed above.
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I certify that the preceding ninety-nine (99) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Katz. |
Associate:
Dated: 29 November 2000
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Counsel for the Applicant: |
Alan Robertson S.C.; Peter Renehan |
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Solicitor for the Applicant: |
Australian Government Solicitor |
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Counsel for the Respondent: |
Sydney Tilmouth QC |
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Solicitor for the Respondent: |
M L Marmentini & Co |
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Date of Hearing: |
27 July 2000 |
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Date of Judgment: |
29 November 2000 |
