This case considered the insured’s duty of disclosure in relation to a life policy. The insurer, Comminsure, sought to avoid the policy because of an alleged misrepresentation and failure to disclose particular information, within the meaning of s 29 of the Insurance Contracts Act 1984 (Cth).

The deceased had a history of non-serious illness which included weight problems (treated by lap band surgery), stress and anxiety, and some minor fainting episodes, but failed to disclose this information when applying for the policy. The court found that the deceased was not suffering from any mental illness that he was required to disclose, and the answer he gave was not a misrepresentation, as the wording of the question could lead one to reasonably interpret ‘depression or mental disorder’ differently from normal stress and anxiety not uncommon in everyday life. However, the court found that at the time that he signed the declaration of good health, the deceased must or should have known that the correct answer to the question about fits or fainting episodes was ‘yes’. The court held that this answer was reckless and fraudulent within the meaning of s 29.

Despite this, the court came to the conclusion that Comminsure would have still entered the contract, even if the insured had not breached its duty of disclosure, and so the beneficiary was entitled to succeed in her claim. While the underwriter had said that, if she had received the full medical history she would have rejected the application, internal memos within Comminsure showed that others within the company would still have granted the application.

You can access the reasons for judgment here.