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High Court of Fiji |
IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION
CIVIL ACTION NO. HBC0094 OF 1997L
BETWEEN:
FRANK R. EGGERS JUNIOR of 15 Marau Place, Lautoka
Plaintiff
AND:
BLUE SHIELD (PACIFIC) INSURANCE LTD a limited liability company having its registered Office at 1st Floor, Parade Building, Suva
Defendant
Mr. C.B. Young with Ms A. Naidu for the Plaintiff
Mr. Rabo Matebalavu for the Defendant
Date of Trial: 28th February, 8 March, 16 March 2000
Date of Judgment: 30th September 2002
JUDGMENT
The Plaintiff sues the Defendant with whom he held a health insurance policy saying it failed to process his claim for overseas evacuation and hospitalisation with necessary despatch and failed to pay him fully on his claim in breach of the policy terms, and contrary to its own written assurances.
The Plaintiff pleads two causes of action. The first has several claims in one. First it is said the Defendant prevaricated or made unnecessary requests contrary to the express terms and/or spirit of the insurance policy. It was pleaded in the alternative that expeditious processing was an implied term of the contract, and this the Defendant had failed to do. In cases of great urgency as here, where the patient was in considerable pain from the lodging of kidney stones in the ureter by the implied term it was said, the insurer to had to decide whether overseas evacuation was appropriate, as a matter of urgency commensurate with the gravity of the ailment. Within the same first cause the Plaintiff pleaded, also in the alternative, that open surgery as proposed by the Defendant for treatment of the Plaintiff’s ureteric stones was not a reasonable alternative to lithotripsy. He also alleged that the Plaintiff had engaged in misleading and deceptive conduct contrary to the Fair Trading Decree 1992.
The second cause of action arose from a letter which the Defendant had sent to the Plaintiff on 12th April 1996. In it the Defendant had assured the Plaintiff that it would pay for all costs of the Plaintiff’s treatment overseas, though air fares would be reimbursed later. The Plaintiff relied on this representation, flew to New Zealand, and obtained treatment. However upon claim for reimbursement being made, the Defendant only paid NZ$500 towards the Plaintiff’s costs saying it was the “maximum limit for your New Zealand treatment .........” The Plaintiff claims these expenses as special damages together with 4% interest. He also claims general damages, exemplary damages, compensation under Section 127 of the Fair Trading Decree, and costs.
The Defendant’s counsel said the case turned on the interpretation of Schedule 4 (1) to the policy document which dealt with overseas medical evacuation benefits. He also argued that the Acting Consultant Surgeon at the Lautoka Hospital was not to be considered “a specialist” under the policy, and that any delay in processing had been reasonable. The defence pleaded that necessary steps were taken by the Defendant to check the validity of the claim, there being an implied term to do so, and concluded the ailment could be treated in local hospitals. The defence denied the interpretation placed on the letter of 12 April 1996 by the Plaintiff.
In his closing address Mr. Young announced that he would not be pursuing any claim for mis-representation in respect of name confusion of the Defendant with that of a substantial and similarly named medical benefits company based in the USA.
Objection was taken by the Plaintiff’s counsel over the line of defence, pursued only in Defence counsel’s closing speech, that Dr. Asaeli Matairavula, the Acting Consultant Surgeon at the Lautoka Hospital who had certified that the Plaintiff’s ureteric stones should be treated overseas, was not a Specialist within the meaning of the policy document. This defence was never pleaded, nor was it put in issue by the defence in the cross-examination of Dr. Matairavula, and was only commented on in the defence evidence. I therefore disregard it : Hobbs v Tilling [1929] 2 K.B. 1 at p 21; Precision Plastics Pty Ltd v Demir (1975) 132 CLR 363 at p 370.
An opportunity was allowed after closing addresses for both counsel to file written submissions. However the court was only provided with submissions and citations by the Plaintiff’s counsel. These were comprehensive and of considerable assistance.
The Facts
The Plaintiff was an American citizen. He had visited Fiji on several occasions and finally came to reside here in 1994. He had always
been covered by medical insurance. He is now retired. He was concerned in case he might need medical attention in the future for
problems that could not be treated in Fiji. Accordingly he consulted a Mr. Rahul Sharma representing the Defendant. Mr. Sharma visited
the Plaintiff at his flat. The Plaintiff was shown the policy document. He read one of the terms which said if the Government medical
doctor said the condition was not treatable in Fiji then the Defendant would provide evacuation overseas. The representative assured
him that any evacuation would be prompt. A proposal was completed on 6th October
1994 and the Plaintiff issued a cheque in payment for $275.00. The policy was issued to commence on 30th October 1994 for a period
of 12 months. Later it was renewed, and was current at the time when the subsequent claim was made.
In his evidence the Plaintiff said “promptness was essential to me”. Mr. Sharma had not made mention, he said, of any independent investigation that the Defendant might and could make under the policy.
On 26 March 1996 the Plaintiff had gone to attend a church vestry meeting when he suffered an attack of pain to his right flank. This soon became so severe he had to leave the meeting. He was unable to drive his car. He was driven to a Dr. Raju’s surgery where he received a pain killing injection. This was not sufficient. He was taken to a friend’s house, where because of the extreme pain first he vomited, then writhed in agony. He was taken to Lautoka Hospital and admitted. He received heavy sedation. After an intravenous pyelogram and x-rays on 29 March the radiologist confirmed the presence of ureteric stones. Each kidney is connected to the bladder by a tube known as an ureter, which carries urine from the kidney to the bladder. These stones formed in the kidney but had become lodged in the right ureter.
The Plaintiff was attended by Dr. Matairavula who gave him the same diagnosis. As Acting Consultant Surgeon at the hospital Dr. Matairavula faxed his diagnosis, opinion and recommendation for overseas treatment to the Defendant addressing it to “The Consultant”. This fax was sent on 1 April 1996. The report referred to the patient’s loin pain experienced over the previous week and the doctor concluded:
“He is also a known case of Basal Cell Carcinoma of the face (lesion excised some years ago). Because of all the above problems, I strongly suggest lithotripsy abroad because this is not available in Fiji.”
That day the Plaintiff telephoned the Defendant’s Suva Office and spoke to a Pricillia Chand. She confirmed having received the fax from the Consultant but said that Blue Shield could not commit itself to evacuation.
Dr. Matairavula therefore sent another fax with the same recommendation but he also added:
“These stones are too small to be removed by the open method so that these can be missed altogether.”
In effect he was giving his opinion that open surgery for stones this small was not an option in this case. The Plaintiff continued to press the Defendant’s staff for a decision but was continually told they were investigating. He described his wait at the hospital:
“During my stay I had to be re-injected numerous times for pain. Pain would continually recur and was totally impossible. I was either in pain or sedated. I was too sedated to argue with Blue Shield on the phone.
I was very scared. I did not know what complications could arise for failure to get prompt treatment.”
The Plaintiff had no relatives in Fiji. He was told by Pricillia Chand that they were doing their own investigations. The Plaintiff was discharged from hospital after 9 days, and still no decision was forthcoming from the Defendant. The Plaintiff returned 2 days later to see Dr. Matairavula who maintained his earlier opinion, that the Plaintiff should go overseas for lithotripsy for his condition. The Plaintiff continued to telephone and fax the Defendant. Meanwhile he read up on medical literature on kidney stones which unsurprisingly did not reassure him. He learnt of the dire complications of failure to treat such stones, such as infection and the need for dialysis for life or a kidney transplant. It became a constant source of worry for him.
Finally the Defendant faxed a letter to the Plaintiff on 12 April 1996. It read:
“Dear Mr. Eggers,
RE: Medical Treatment
We refer to your request for further treatment overseas for treatment of uteric stones.
Please note that Blue Shield is agreeing to cover all costs for your treatment overseas to one of our preferred providers if the stones are removed by lithotripsy. You will have to pay your own airfares and will be reimbursed upon return.
However, if the stones are to be removed via open surgery in overseas, Blue Shield will then reimburse the maximum rates charged in the local Fiji hospitals. In this case airfares will not be reimbursable.
Yours faithfully
Sgd.
Pricillia Chand
CLAIMS COORDINATOR”
The Plaintiff said:
“They never told me who their preferred providers were. They did not arrange air tickets. They made no arrangements.”
He made his own arrangements with difficulty to get to the Mercy Hospital, Auckland. This was on 1 May 1996, some 36 days after the first attack of pain. The arrangements took time as he did not know any one, or know how to go about it. When he reached the hospital, the first test revealed more ureteric stones. He was advised to return later for more thorough tests. On the 8 May 1996 the Specialist carried out a more thorough examination. He found that the Plaintiff was then clear of the stones. The Plaintiff returned to Fiji not having had to suffer any operation or lithotripsy.
The Plaintiff put in his claim for reimbursement with the Defendant, claiming in all NZ$1,416.16 and F$706.00 in a letter dated 20 May 1996. He set out the details of how these sums were arrived at and provided supporting bills and receipts. The Defendant however would only agree to pay NZ$500.00 of this claim.
In cross-examination it was put to the Plaintiff that he himself had suggested the diagnosis for his condition to the Hospital Consultant at Lautoka. This was denied by the Plaintiff. In view of the x-rays at Lautoka, the tests by the radiologist, the stones observed in the first test at Auckland, and the evidence and report by Dr. Matairavula I am satisfied that Dr. Matairavula and the doctor in New Zealand reached their own conclusions on what was ailing or had ailed the Plaintiff. The Plaintiff answered:
“I was not aware lithotripsy was not available in Fiji.”
Dr. Matairavula explained to the Plaintiff why lithotripsy was necessary in this case, namely because the stones were too small for removal by open surgery or by the dormia basket method (the method suggested by Dr. Dhar the Defendant’s medical witness). On the other hand, the Defendant’s staff according to the Plaintiff maintained that the stones could be removed by open surgery.
I accept the evidence of the Plaintiff himself on the basic events, the chronology, his symptoms, the pain, and his dealings with the Defendant which were unchallenged by any contrary evidence and I find his evidence to be plausible and unembroidered. I now move onto the medical evidence and the policy contract.
Did the Plaintiff qualify under the contract of insurance for overseas evacuation and reimbursement?
Overseas medical evacuation benefits were set out in Schedule 4 of the policy document:
“SCHEDULE 4 - SCHEDULE OF INSURED BENEFITS
I find that Dr. Matairavula’s certification contained in his 2 faxed reports to the Defendant qualified sufficiently to fit both categories of certifying authority under the contract. First, I find him a sufficient Specialist as Acting Consultant Surgeon, a General Surgeon in the Fiji context, for such must have been contemplated by the parties. Schedule 5 of the policy document defines “Specialist” as:
“SPECIALIST” means a medical or a dental practitioner registered and licensed as such in the geographical area of his practice who is classified by the appropriate health authorities as a person with superior and special expertise in specified fields of medicine or dentistry.
In the United Kingdom and the European Economic Community countries, the word means a person who holds or has a consultant appointment in a recognised hospital or otherwise is accredited as a specialist for the purpose of the European Economic Community Medical Directives.”
No evidence or pleading was directed at challenging that a Consultant Surgeon was anything but a Specialist. No evidence has been produced by the Defendant to show that it was the registered status of the Plaintiff’s doctor that was unacceptable as opposed to his opinion on the recommended method of treatment. The challenge was always to his opinion. No evidence either has been produced to show that the opinion of Dr. Dhar, the Consultant Urologist at the CWM Hospital in Suva, was ever put to Dr. Matairavula for the purpose of persuading him to modify his certificate, or that the Plaintiff was informed that Dr. Dhar was the only acceptable Specialist in this field for the purposes of the required certification under the policy.
In much larger countries Specialists and Sub-Specialists abound as overseas medical registers will attest. In Fiji we have to accept less specialisation from our Specialists. However I find that Dr. Matairavula, a General Surgeon, who regularly performed operations for the removal of kidney or ureteric stones, was a Specialist within the meaning of Schedules 4 and 5.
Second, Dr. Matairavula’s certification qualified under the second limb also. This part required certification by the Ministry of Health. The Ministry signs through its officials. This certificate emanates from a Consultant Surgeon of a large Government hospital. I do not read the wording to mean that the certificate can only come from an official within the headquarters of the Ministry itself. The Consultant as a senior official of the Ministry can clearly act for and bind the Ministry in this matter. His certification was both informed and authoritative for these purposes.
(b) What was the correct treatment in this case?
Dr. Matairavula diagnosed “2 tiny stones at the distal end of the Plaintiff’s ureter”. After he had faxed his report to the Defendant, he expected an insurance company doctor to come back to him if there were a query. On this occasion Dr. Matairavula, was telephoned by someone, not a doctor, from the insurance company who asked “Why couldn’t you do it here?” Dr. Matairavula said he told the enquirer “These are too small. I cannot do it here”. The doctor said the open surgery procedure and the dormia basket method were not appropriate because of the size of the stones from which this patient was suffering.
Dr. Matairavula confirmed the Plaintiff was in great pain and was sedated 3 times a day which he commented was a “very heavy dose of sedation”. The stones would move around and when they travel down into the ureter they become very painful. The stones here were so small they could pass into the urine and then pass out of the body unnoticed. Open surgery was not suitable in this case since the stones were small and therefore very difficult to remove. He said:
“It is possible to miss the stones. It was not a run of the mill case.”
If not removed these stones, which showed up clearly on the IVP as blocking the ureter could cause the ureter to swell up “like a hosepipe”. If they had been bigger stones, and the patient was in similar pain, Dr. Matairavula said he would have operated immediately. He said urine would build up with back pressure right into the kidney causing stasis. This had happened already, he said, in the Plaintiff’s case. The stasis in turn would lead to the formation of pus which would become life-threatening to the kidney. The function of the kidney would be lost. He said “and it is shown on the x-ray this was beginning to happen”. The Plaintiff’s kidney was beginning to fail.
Dr. Matairavula said he had received no circular stating that the dormia basket method was available at the CWM Hospital. Even if it were available he did not consider the basket procedure the right one for Mr. Eggers’ condition for the stones might well have fallen through the net-like contrivance of the basket.
The defence called Dr. Dhar, who has been Consultant Urologist at the CWM Hospital since 1993. He was the only urologist in the country and, amongst other degrees, he held a Ph.D on the subject of kidney stones. On 11th April 1996 he wrote a report on the Plaintiff and faxed it to the Defendant. From Dr. Matairavula’s report he gleaned that there were 2 small stones in the lower third of the right ureter.
Dr. Dhar said in his report that he would like to see the Plaintiff for himself and he suggested 15th April 1996 when the Plaintiff should be asked to visit him with his x-rays. Dr. Dhar admitted Dr. Matairavula’s report was properly compiled. Apparently there had been previous contact between these two Specialists and Dr. Matairavula would occasionally ring him for his opinion on Lautoka patients.
Dr. Dhar’s report is very short. He never spoke to Dr. Matairavula. He was unable to ask Dr. Matairavula about the x-rays or about the Plaintiff’s symptoms and level of pain, and more significantly he himself never examined the patient. If he had been able to, he would have been able to satisfy himself that the Plaintiff did indeed fit into the category “we manage this type of stones with dormia basket extraction”. He did say ureteric stones were more painful than kidney stones. He admitted the dormia basket method sometimes failed and that stones 2 cms in diameter or less cannot be extracted by the dormia basket method. He concluded that the stones caused blocking which could damage the kidney or the patient could lose the kidney. There was need for urgency and for the treatment to be done quickly. Of the report he said “I was in no position at the time to say that (it) was incorrect”. There is no doubt of Dr. Dhar’s considerable expertise. But Dr. Dhar was never able to come to grips with this case in a way that would allow him to say Dr. Matairavula’s opinion was incorrect.
I found Dr. Matairavula a careful witness and I accept his reasons and opinion as to why immediate overseas treatment by lithotripsy was the correct method of proceeding in the circumstances of the Plaintiff’s ureteric stones.
(c) Was the Defendant’s handling of the claim in accordance with the contract?
It appears the Defendant did not have a doctor on its staff, or available as a consultant from time to time, in order to direct swift checks on an urgent claim for the purposes of validation.
Sekove Waqa , who is now a Claims Officer for the Defendant’s successor, was not working for the Defendant at the relevant time. He was called to give evidence for the Defendant and did his best with the Plaintiff’s file in this matter.
The steps that were undertaken by the Defendant’s staff to validate the Plaintiff’s claim were not put in evidence. The only evidence was that they relied on the short report of Dr Dhar of 11 April 1996. No one at the Defendant’s seemed able to evaluate its significance. What is extraordinary is that they did not ask Dr. Dhar to contact Dr. Matairavula to see if both doctors could reach an agreement together on the correct treatment for the Plaintiff. Only Dr. Matairavula knew the full facts, yet Dr. Dhar had the superior qualifications and greater specialisation in the relevant field. A marriage of the two minds would have produced a swift decision on this urgent claim. Dr. Dhar could not be conclusive and authoritative alone unless either he saw the patient himself or he conferred with Dr. Matairavula who had the x-rays, the tests, and who had examined the Plaintiff personally.
The Defendant might have been able to insist on the Plaintiff being seen by Dr. Dhar, in accordance with a condition in Schedule 6 of the contract document whereby an insured could be required to submit to a medical examination whenever the insurance company deemed it necessary. This request could have been made immediately after the Defendant’s staff received the fax from Dr. Matairavula on 1st April 1996. The tenor of some of the conditions contained in Schedule 6 make it plain that the truth of the claim was a condition precedent to any liability attracting to the Defendant to meet the claim. This requirement confirms that it was contemplated that a claim was to be subject to a validation process being undertaken by the insurance company.
It must also have been understood by the contracting parties that every validation would be processed swiftly and that very urgent claims would be processed with the necessary urgency. Without such a term being implied into the contract, the contract for evacuation would be rendered substantially ineffective. [Halsbury’s Laws of England, 4th edit. para 415]. If there were any doubt about the matter I would apply the contra proferentum rule, preferring a construction least favourable to the person putting forward the document. Clearly a sense of urgency was not brought to bear on the handling of this claim. The Plaintiff’s condition was well known to the Defendant’s staff to be an extremely painful one and yet 10 days were allowed to pass of unbearable pain and heavy sedation for the Plaintiff before the Defendant sought an opinion from another doctor.
This opinion by its very process, compiled without examination or proper foundations, was never going to be able authoritatively to validate or invalidate the Plaintiff’s claim. I find therefore the Defendant was in breach of the contract, of an implied term, that the Defendant would carry out its permitted process of validation of claims with the necessary speed commensurate with the gravity of the claimed medical condition. Reigate v Union Manufacturing Co (Ramsbottom) Ltd. [1918] 1 KB 592 at p 605; Shirlaw v Southern Foundries (1926) Ltd. and Anor. [1939] 2 All ER 113 at p 124 per MacKinnon LJ. Additionally, I find that the Plaintiff’s unchallenged account of his conversation with the Defendant’s agent did take place, and that the Defendant is bound by the agent’s representation of prompt processing and evacuation as a term of the contract.
(d) Significance of Dr. Matairavula’s certification
Once a specialist, such as the Consultant Surgeon Dr. Matairavula, provides the specific certification required under Schedule 4 that the patient cannot be treated in Fiji, it was for the Defendant to provide the benefits as set out in 1(a) or 1(b). It would have been possible for the Defendant to have challenged the certificate as invalid. I have already found as a fact that the Defendant failed to do so with any foundation or authority. The Defendant was therefore bound to meet the claim. It chose not to provide evacuation under its own arrangements as per 1(a). That left the claim to be met by reimbursement under 1(b). Indeed the short main body of the contract, outside of the Schedules, refers by operative words only to the need for treatment or services to be “undertaken by or on the recommendation of physician or surgeon”. Such undertaking or recommendation would then trigger the obligation of the company to indemnify the insured for his eligible expenses.
As it happened, though further stones were shown up in the first test in Auckland, by the time the specialist carried out more thorough tests a week later, all of the stones had cleared themselves from the Plaintiff’s system. No operation was required in the end, either by open surgery, dormia basket or by lithotripsy. There had been a proper need for overseas evacuation and for commencement upon treatment in Auckland nonetheless, and all the expenses submitted had been properly incurred. The Plaintiff is entitled to be reimbursed for his air ticket, treatment and accommodation costs which were above NZ$500.00, and which had not been reimbursed, namely NZ$916.16 and F$706.00. The differential in exchange rate is so slight that I am going to treat the NZ$ in this part of the claim as if they were today’s Fiji dollars.
The Plaintiff is entitled to interest on this sum. Owing to declining interest rates over the relevant period the rate of 9% sought by the Plaintiff is too high. The rate of interest for special damages is now well settled to be at half the appropriate rate: Jefford v Gee [1970] 2 K.B. 130; approved in Attorney-General of Fiji v Charles Valentine (unreported) Court of Appeal Civil App. No. ABU0019 of 1998S; 28th August 1998. I therefore award interest on special damages at the rate of 3% from the date of the Plaintiff’s letter of demand, 20th May 1996, to date of judgment.
Fair Trading Claim
The Plaintiff says the Defendant engaged in misleading and deceptive conduct in contravention of Section 54 of the Fair Trading Decree 1992 in its dealings with the Plaintiff concerning his insurance contract with the Defendant. He gave the following particulars of this head of claim:
(i) Representing to the Plaintiff through or by its servants or agents and/or in the insurance policy that the medical evacuation benefits (included in the insurance policy) entitled the Plaintiff to prompt medical attention overseas once a certificate from an appropriately qualified specialist was obtained stating that the Plaintiff could not be treated in Fiji.
(ii) Providing expressly in the insurance policy that the Defendant would provide, inter alia, “Medical evacuation benefits” when from the outset it had really no intention to do so and delayed the evacuation of the Plaintiff.
(iii) Subsequently and/or unilaterally setting-up or imposing a condition to the insurance policy or to the provision of evacuation that it had to investigate the Plaintiff’s claim and/or the validity of the certificate from an appropriately qualified specialist provided by the Plaintiff.
Section 54 of the Decree reads:
“Misleading or Deceptive Conduct
“Person” has not been defined in the Decree. In holding that “person” in the Decree included corporations in Westin Hotel Company and Anor. v Westin Plaza Ltd. (unreported) Lautoka High Court Civil Action HBC0406 of 1995L; 29 March 1996, Lyons J. said (at p 16):
“Firstly, the Fiji Fair Trading Decree is designed to offer consumer protection and fair dealing in the market place. This is the same as the Australian equivalent. It is trite to note that perhaps a significant number of traders in the market place are corporations - notably at the “top” end. To suggest that the Fair Trading Decree only applies to persons and not to corporate traders is to misinterpret the intent of the legislation.”
I agree with this interpretation.
Section 4 of the Decree defines “trade or commerce” as including:
........ “any business or professional activity.”
“Trade or commerce” was interpreted in the leading judgment of the High Court of Australia in Concrete Constructions (N.S.W.) Pty. Ltd. v Nelson [1990] HCA 17; [1990] ATPR 41-022 at p 51,363 to 51,364 with a restrictive approach:
“The reference to conduct “in trade or commerce” in sec. 52 can be construed as referring only to conduct which is itself an aspect or element of activities or transactions which, of their nature, bear a trading or commercial character.”
Brennan J. at p 51,365 gave the phrase a wider meaning:
“Therefore, in my opinion, if misleading or deceptive conduct occurs in the course of carrying on an activity or carrying out a transaction of a trading or commercial character, the test imported by the phrase “in trade or commerce” is satisfied.”
The conduct is defined by Section 4(2) of the Decree as:
“(a) a reference to engaging in conduct shall be read as a reference to doing or refusing to do any act, including the making of, or the giving effect to a provision of, a contract or arrangement, the arriving at, or the giving effect to a provision of, an understanding or the requiring of the giving of, or the giving of, a covenant.”
In considering what is misleading and deceptive conduct, the courts have been content to follow the ordinary dictionary meaning of the words:
“The most appropriate meaning for the word ‘deceive’ in the Oxford Dictionary is: ‘To cause to believe what is false; to mislead as to a matter of fact, to lead into error, to impose upon, delude, take in’. The most appropriate definition in that dictionary for the word ‘mislead’ is: ‘To lead astray in action or conduct; to lead into error; to cause to err’.”
See Weitmann v Katies Ltd (1977) ATPR 40-042 [1977] 29 FLR 336 at p 343; Puxu Pty Ltd. v. Parkdale Custom Built Furniture Pty. Ltd. (1979) ATPR 40-135 at p 18,474.
It is for the court to determine objectively whether the specific conduct questioned is misleading or deceptive or likely to mislead or deceive: FAI General Insurance Co. Ltd v RAIA Insurance Brokers Ltd (1992) ATPR 40-176 at p 40,409. There is no burden on the Plaintiff in such an action to establish an intent on the part of the Defendant corporation to mislead or deceive: Hornsby Building Society Information Centre v Sydney Building Information Centre Ltd [1978] HCA 11; [1978] ATPR 40-067 at p 17,690.
The Plaintiff had made known his needs and concerns to Mr. Sharma as the representative of the Defendant, when Mr. Sharma came to the Plaintiff’s flat to sell the policy. He was assured by Mr. Sharma that all claims would be processed swiftly so that “evacuation would be prompt”. This assurance was clearly given as an activity or conduct in trade or commerce. Processing was however dilatory and nothing was done to make up for lost time or mishandling by the Defendant taking responsibility for the arrangements for the Plaintiff’s travel, preferred hospital, surgeon etc. as in 1(a).
Besides what Mr. Sharma had said at the time of the completion of the proposal by the Plaintiff, the policy document itself carries a sense of urgency through its choice of words and phrases: overseas evacuation, necessities of treatment, air ambulance, accident, violent injury. There would be no point to a customer in offering cover through the overseas medical evacuation policy if the policy did not provide for swift and timely evacuation when the claim incident occurred.
Based on what Mr. Sharma had said to the Plaintiff and the policy document itself, I am satisfied that the Defendant engaged in misleading and deceptive conduct by representing that once a certificate was forthcoming from an appropriately qualified specialist the Plaintiff would be entitled to prompt medical attention overseas. In fact it would appear it was a letter threatening action from the Plaintiff’s then solicitors that forced the Defendant to make an offer of reimbursement for overseas treatment in its letter of 12 April 1996. I find that there was no attempt by the Defendant to expedite the claim of the Plaintiff whom the Defendant’s staff knew to be in great and continuing pain.
I have already answered Particulars 13 (iii) and found that a process of validation is allowed for under the policy contract. It must of course be carried out with speed in all cases and with great urgency in urgent cases. There was no misleading and deceptive conduct in that regard. Nor do I find that such conduct is to be found in Particulars 13 (ii). I do not find evidence that the Defendant “from the outset had really no intention to (provide medical evacuation benefits) and delayed the evacuation of the Plaintiff.” I believe the claim was handled in a directionless dilatory fashion and without an appropriate sense of urgency and that the Defendant was never in possession of a factually and soundly based opinion to challenge Dr. Matairavula’s certification. The Defendant through its staff thought that both Dr. Dhar and Dr. Matairavula could treat the Plaintiff in Fiji. That belief was flawed, but the evidence does not point to a lack of bona fides. I dismiss the claim as particularised in paragraphs 13(ii) and (iii).
In view of my findings that the claim for overseas evacuation once properly certified should have been met, it was not appropriate for the Defendant to offer reimbursement only on special terms favourable to itself.
The Defendant stated that treatment was to be with “one of our preferred providers”. The Defendant itself made no arrangements, which it could have done at its option as per Schedule 4(1) (a). It appears to have abdicated responsibility. No evidence has been directed to the issue of lesser costs being reimbursable, if such a condition in the letter had not been complied with by the Plaintiff. The point about using “preferred providers” was not argued.
If a lesser treatment became sufficient from that originally and properly certified, the Defendant would still have to pay the lesser costs. Just because lithotripsy was no longer necessary once the Plaintiff was free of symptoms, it would not mean that the expenses of the evacuation and investigative treatment were not properly incurred.
Had the parties been asked the question “What if the stones pass out naturally before the operation, would the lesser expenses already incurred then be covered?” The answer undoubtedly would have been “But of course.” [See Halsbury’s Law of England, 4th edit. para 351; Shirlaw v Southern Foundries (supra) at p 124.] - 21 -
The Defendant’s letter can not mean that because the lithotripsy was found not to be appropriate after all, that only NZ$500.00 would be payable. Lithotripsy was the appropriate treatment at the time of the claim and the evacuation, but whilst the Plaintiff was engaged upon the approved treatment, the ailment rectified itself naturally. This eventuality was not covered in the Defendant’s letter which merely said:
“However, if the stones are to be removed via open surgery in overseas, Blue Shield will then reimburse the maximum rates charged in the local Fiji hospitals. In this case airfares will not be reimbursable.”
Taken alone, the letter is not to be read to mean that the Fiji hospital rate is the applicable rate for reimbursement and that no airfare would be covered. That would have been the writer’s intention if open surgery was the outcome, which in the event it was not. I find the Defendant by its letter of 12th April 1996 did agree to the Plaintiff’s evacuation and proper medical expenses and the like, and agreed that full reimbursement would be provided.
General Damages for Breach of Contract
Chitty on Contracts 26 Edit Vol.1 at para 1810 says:
“Normally, damages for breach of contract relate to financial loss ..................., but non-pecuniary losses may be recovered if they were within the contemplation of the parties as not unlikely to result from the breach. If the defendant’s breach of contract caused physical injury to the plaintiff himself,...................... the plaintiff may recover damages for that injury....................... Damages for personal injury caused by breach of contract may include compensation for pain and suffering.”
As a result of the Defendant’s breach of contract the Plaintiff had to endure an unnecessarily extended period of pain and suffering. Both Dr. Matairavula and Dr. Dhar agreed the Plaintiff’s condition was extremely painful and unpleasant. Ureteric stones with their spiky edges were much more painful than kidney stones. For that extended period of pain and suffering I award the Plaintiff damages of $10,000.00.
Damages for Mental Distress
At para 1811 Chitty on Contracts states:
“Normally, no damages in contract will be awarded for injury to the plaintiff’s feelings, or for his mental distress, annoyance, loss of reputation........................... The Court of Appeal has allowed an exception to this principle: ............................ damages can be awarded for the disappointment and mental distress caused by the breach of contract. The exception has been extended to a contract whose purpose was to protect the plaintiff from annoyance or distress............................ The exception is limited to contracts whose purpose is “to provide peace of mind or freedom from distress.” (Emphasis added)
A medical evacuation policy is bought in order to purchase peace of mind. A customer is worried about obtaining quality medical procedures and operations speedily. He seeks swift remedies if urgent medical problems were to arise. He or she hopes they will never happen. But a person buys a medical policy to lessen his or her anxieties. They know that because of the policy they can be evacuated overseas immediately and go straight in for an operation to alleviate or remedy whatever ailment has cropped up. The patient here, the Plaintiff, suffered two anxieties. First he lost any peace of mind he thought he had purchased. Second, he suffered reasonable anxieties as to the consequences to his present and future health of the lack of promptness and immediacy in the way his claim was being handled. I have referred to the medical and life threatening risks in this case and to Dr. Matairavula’s observation that the Plaintiff’s affected kidney was already failing. These were not illusionary fears. The matter was serious and the Plaintiff was too weak and in too much pain to fight his case with the insurance company. It must be remembered he had no relatives in Fiji to urge his cause.
In Baltic Shipping Co. v Dillon [1993] HCA 4; [1992-93] 176 CLR 344 at p 365 Mason C.J. said:
“For that reason, if for no other, it is preferable to adopt the rule that damages for disappointment and distress are not recoverable unless they proceed from physical inconvenience caused by the breach or unless the contract is one the object of which is to provide enjoyment, relaxation or freedom from molestation. In cases falling within the last-mentioned category, the damages flow directly from the breach of contract, the promise being to provide enjoyment, relaxation freedom from molestation. In these situations the court is not driven to invoke notions such as “reasonably foreseeable” or “within the reasonable contemplation of the parties” because the breach results in a failure to provide the promised benefits.”
and further on (at p 366):
“In the present case, the contract, which was for what in essence was a “pleasure cruise”, must be characterized as a contract the object of which was to provide for enjoyment and relaxation. It follows that the respondent was entitled to an award of damages for disappointment and distress and physical inconvenience flowing from that breach of contract. Indeed, an award for disappointment and distress consequential upon physical inconvenience was justified on that account alone.”
In the same case Brennan J. (at p 371) added:
“To ascertain whether the obtaining of peace of mind is the object of a contract or, more accurately, an object of a contract, reference is made to its terms, express or implied, construed in the context of facts which the parties know or are taken to have been known. Thus, if peaceful and comfortable accommodation is promised to holiday-makers and the accommodation tendered does not answer the description, there is a breach which directly causes the loss of the promised peacefulness and comfort and damages are recoverable accordingly. In cases of this kind, a statement by the promisor commending a service or facility to be provided under the contract is frequently a term of the contract, not a mere representation.”
In that case damages of $5,000.00 were awarded by the High Court for inconvenience which was in addition to a separate head awarded for the injuries received.
Nearly 10 years have passed since the decision in Mouat v Clark Boyce [1992] 2 NZLR 559. The award of $25,000.00 in that case was upheld by the Court of Appeal for an elderly widow for mental stress she had suffered as a result of professional negligence by solicitors. The Court of Appeal held her to have been one half to blame and reduced her damages accordingly. The damages had been awarded since she had lost her house as a result of allowing a mortgage on her home in order to assist a profligate son. The damages were awarded under the head of inconvenience, worry, and stress. The Plaintiff’s counsel has cited several cases to me, many of which related to the award of damages as compensation for frustrations that holiday-makers had had to put up with.
However the mental stress suffered by the Plaintiff in this case was far more serious than the loss of a house, or a home, or the frustration of a lost or ruined holiday. The stress here, besides the delay in treatment and the physical pain endured, related to the prospect of dialysis, the losing of a kidney, being permanently handicapped, or even to the losing of one’s life. Accordingly I award $20,000.00 as damages for the mental stress which the Plaintiff suffered.
Compensation under Fair Trading Decree
Powers of compensation are also provided for under the Decree. Section 127 (1) states:
“If in proceedings instituted under, or for an offence against, this Decree the Court is satisfied that a person who is a party to the proceeding has suffered, or is likely to suffer, loss or damage by reason of a contravention of this Decree, then whether or not any other order is made or relief granted in those proceeding, the Court may, for the purpose of compensating that person or preventing or reducing the extent of the loss or damage, make orders under this section against the person who committed the contravention of a person involved in the contravention.”
Section 126 provides inter alia that a consumer, which Mr. Eggers clearly was, who suffers loss or damage as a result of an act or omission by the Defendant’s contravention of Section 54 may recover for such loss or damage by the bringing of a civil action. The court is given powers to make an award by Section 127 (5) including an award of damages and refund of monies. Further proof of loss or damage as required under Section 126 is not a pre-requisite for the grant of relief under Section 127: Demagogue Pty. Ltd. v Ramensky & Anor. [1992] FCA 557; (1993) ATPR 41-203. In effect the Decree has created new rights and remedies as indeed had the Trade Practices Act for the Commonwealth of Australia.
The decision as to what was the correct treatment in this urgent case could, and should, have been made within a day. By not making a decision, by failing to check the claim swiftly, and by failing to satisfy itself of the correctness of the Specialist’s certification, the Defendant failed to provide a prompt evacuation under the contract. The Plaintiff suffered thereby real risk, pain and mental stress, all of which were suffered unnecessarily. For the misleading and deceptive conduct, I award $550.00 to cover the return of premiums paid, and $10,000.00 compensation, making a total of $10,500.00 under the Decree.
Exemplary Damages
The Plaintiff seeks exemplary damages. I find the Plaintiff has failed to make out a case for such an order. Exemplary damages carries with it the need for punishment. Beyond what I have awarded as damages under the various heads of claim I find there is no further need to heap upon the Defendant a punishment order.
The Defendant’s conduct in this case was inept and incorrect. None of the staff of the Defendant at the relevant time were called to give evidence. There is no evidence before me illustrating a deliberate delay in processing the Plaintiff’s case, or any mala fides. Viewed objectively, the Defendant’s business was conducted in this instance in a dilatory unbusiness-like way. The staff seemed to be indecisive and appeared not to know how to resolve the matter. They did not seem to understand what Dr. Matairavula’s Report signified. They stuck to their misguided stance but I cannot say they did so callously. The effect of their incompetence was dire for the Plaintiff and could hardly have attracted new customers if people came to know how the claim had been processed, and how the Plaintiff had been treated. Many cases were cited to me by Mr. Young. The
Defendant’s conduct could not be characterised as “outrageous”: State Insurance Ltd v Cedenco Foods Ltd (unreported) C.A 216/97; 6 August 1998, a conclusion similarly reached by a 5 judge bench of the Court of Appeal of New Zealand. The court said (p 4):
“The concepts of there being no excuse, and of the failure of an insurance company to pay promptly being significant, do not immediately strike us as synonymous with outrageous conduct.”
I decline to order exemplary damages. I award interest on all damages save special damages, at the rate of 6% from 1 April 1996 to date of judgment.
In the result, the total award of damages and interest of F$58,285.00 can be tabulated as follows:
| (i)Airfare | = | F$706.00 |
| (ii) Balance food & Accommodation [NZ$917.00] which I treat as exchangeable at par | = | 917.00 |
| (iii) Interest at 3% | = | 317.00 |
2. General Damages
| (i) Pain & suffering | = | 10,000.00 |
| (ii) Mental stress | = | 20,000.00 |
| (iii) Interest at 6% | = | 11,700.00 |
3. Compensation under the Fair Trading Decree
| (i) Return of premiums paid | = | $ 550.00 |
| (ii) Compensation | = | $10,000.00 |
| (iii) Interest at 6% | = | $4,115.00 |
| | | F$58,285.00 |
I am asked to award costs on solicitor/client basis or indemnity costs. Whilst the Defendant’s was at fault in not co-operating over the Minutes of Pre-trial Conference, a factor to be taken into account, overall there is no other conduct here in the litigation deserving of such an order.
I will adjourn the question of costs to a day to be fixed now with counsel. Meanwhile the parties are at liberty to file affidavits within 10 days on the costs issue. Providing a sufficient statement of Plaintiff’s costs is before the court, I propose to make a summary assessment and award of costs on the adjournment date.
A.H.C.T. GATES
JUDGE
Solicitors for the Plaintiff: Messrs Young & Associates, Lautoka
Solicitors for the Defendant: Esesimarm & Co, Suva
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