Johnson v American Home Insurance Company P43/1996 [1997] HCATrans 162 (30 May 1997)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Perth No P43 of 1996

B e t w e e n -

ANDREW WINN JOHNSON

Applicant

and

AMERICAN HOME ASSURANCE COMPANY

Respondent

Application for special leave to appeal

DAWSON J

TOOHEY J

KIRBY J

TRANSCRIPT OF PROCEEDINGS

FROM PERTH BY VIDEO LINK TO CANBERRA

ON FRIDAY, 30 MAY 1997, AT 11.19 AM

Copyright in the High Court of Australia

MR M.J. McCUSKER, QC: May it please the Court, I appear with my learned friend MR R.A. HARRISON for the applicant. (instructed by Messrs Dwyer Durack)

MR C.J.L. PULLIN, QC: If the Court pleases, I appear for the respondent. (instructed by Messrs Cocks Macnish)

DAWSON J: Yes, Mr McCusker.

MR McCUSKER: May it please your Honours. The applicant suffered a severe injury in February 1991. He was insured against permanent total loss of use of a limb and the limb in the insurance policy was defined to include "foot at or above the ankle". The accident happened in February 1991. His right foot was severely injured and the injury was described by an orthopaedic surgeon, Mr Easton, as "one of the most severe injuries to a hind foot that I have seen short of traumatic amputation". Some of the results of the injuries were that the heel on the right foot was unable to come to the ground - what is called an equinis deformity - and all five toes on that foot were stiff and non-functional.

Amputation was recommended to reduce pain and to improve ambulatory function with a prosthesis after amputation. Amputation in the future was said to be highly likely. The trial judge described it in this way, that the applicant "will, in all probability, at some time lose his foot in its entirety". The applicant can, as was found by the trial judge, with a specially built-in support in his shoe, an orthosis, walk for up to 100 metres on, as it was put, a good day. He said there were about three such good days on average in a week. Also, again with that specially built-in support, he is able to stand without crutches for up to an hour but, even with the orthosis, he cannot run, he cannot kick, he cannot walk for more than about 100 metres or walk at all without some degree of pain, sometimes severe. Without the orthosis, he cannot walk at all and, needless to say, bare-footed he is unable to walk, run or do anything with his foot.

TOOHEY J: Mr McCusker, your application, as I understand it, is that the assessment of loss must be made without regard to any aids, prostheses or orthotics that might be available?

MR McCUSKER: That is so, your Honour.

TOOHEY J: Is that the short point in this case or does it go further than that?

MR McCUSKER: That is the short point, your Honour, yes; indeed, that is.

KIRBY J: What is the importance of that point from the point of view of the other insurance policies that you seek to place before us?

MR McCUSKER: A large number of other policies, as appears from the affidavit annexing those policies, contain provisions which are in similar terms - that is, a permanent and total loss of a limb or a foot. That is summarised, your Honours, in the affidavit of Allan Medling.

KIRBY J: What would be the significance - the last thing that the Court would want to do, I would think, would be to get into the video film and looking at what happened on this day or that day. Is the issue one that can be isolated and dealt with purely as a legal question?

MR McCUSKER: In our submission, it can, your Honour, because this is the short point, as identified by his Honour Justice Toohey. It is simply whether or not it is appropriate to take into account, where an injury of this type has occurred, the fact that with - - -

KIRBY J: If the Court held that the interpretation adopted by the Full Court was wrong, then presumably that would then have to go back to be redetermined according to the legal principle, including by reference to the factual evidence of the video film and the consequences of that for any loss that he claims.

MR McCUSKER Yes, your Honour. That is so, your Honour; that is as we see it.

KIRBY J: Mr McCusker, you have made the point that you seek to make. Perhaps we could call on the other side at this stage.

MR McCUSKER: Thank you, your Honour.

KIRBY J: Mr Pullin.

MR PULLIN: May it please the Court. The proper approach to the interpretation of this policy is not in doubt. The court accepted that it means loss of practical utility and it is not restricted to severance before a claim can be made. The case was entirely a fact case. It is clear that Mr Johnson could walk, he could stand, he could bear weight, he could conduct business within Australia and overseas by travelling on aircraft unaided. He succumbed to the temptation to exaggerate - - -

TOOHEY J: Mr Pullin, what do you mean by "unaided"? Do you mean without the use of any orthotics?

MR PULLIN: No walking stick or crutches. The orthotics are merely an insole with a raised section, which the evidence revealed was to reduce pain.

KIRBY J: Is this not a point of general importance for your client and for other insurers throughout Australia, to know whether you subtract the orthotics or you take it into account. I would have thought that is a matter of general importance for the insurance industry of the country. These are very common policies; there are common forms in policies that have been placed before us. It seems to present a very short and rather significant legal point. I would have thought your client would be coming here asking us to clarify this matter.

MR PULLIN: We think the law is settled, your Honour. We say there is no dispute about the law and it was simply a factual issue. Determining whether or not someone has total loss, whether you use a small piece of rubber in the shoe, to put into the shoe, or not is not really the point. The question is whether you can use the foot at all. If you can use it at all, even with some assistance, you have not totally lost the use of the foot. That is our position and we submit that it is really just a factual determination to be made on quite clear principles of law.

TOOHEY J: It is not just a factual determination, is it, it is - you see, there is an underlying question as to whether in assessing permanent loss you have regard to any aids that the person might be able to employ, or whether you take the particular limb or part of the limb, as in this case, and look at it as to what use it can be put without any aids. That is not just a question of fact. It may be that even on the applicant's approach it could be demonstrated ultimately that there is no permanent loss of use, but that is not really relevant at this stage. The applicant comes here on the basis of what is said to be an important question relating to his own position and it is by way of addition to the proper construction of insurance policies.

MR PULLIN: Yes, but in the end the question that is to be determined is whether there is a total loss of use of the foot. The fact that orthotics - - -

DAWSON J: Mr Pullin, what the plaintiff was advised to do was to have his foot cut off, was it not, and have a prosthesis.

MR PULLIN: Yes.

DAWSON J: If that had happened and he used a prosthesis, he would be not - obviously he would have the total loss of use of the limb below the ankle, would he not?

MR PULLIN: Yes, absolutely.

DAWSON J: It would be the prosthesis he was using. In this situation, why is it not the orthotic he is using rather than his foot?

MR PULLIN: Because the evidence is that the orthotic was used to reduce pain.

DAWSON J: If the total loss of use arises as much from pain as anything else, is he not still using the orthotic rather than his foot, just as much as if you were using a prosthesis?

MR PULLIN: But, your Honour, many people use orthotics. Children use them to help them play hockey on the hockey field. You can buy - - -

KIRBY J: Not all of them are injured in circumstances where they are insured.

DAWSON J: And they do not use them in circumstances where they could not do what they are attempting to do without it.

MR PULLIN: We would submit if one looks at the video - I do not know whether members of the Court have had the opportunity of looking at the video, but it shows - - -

DAWSON J: I do not know that that would help us because at that stage he was wearing his orthotics, is that right?

MR PULLIN: He was.

KIRBY J: And it might have been one of his three days a week. The issue is a very small point. Do you take foot plus orthotic or do you just take foot? A or A plus B, that is the question, and I notice that there is some American authority that is referred to in argument, not in the judgment, and one case referred to. There must be jurisprudence elsewhere on this point. It is a common issue that arises in insurance policies. It is a short point, not without interest. Your client will be very grateful for the elucidation of the law on this, perhaps.

MR PULLIN: I am very grateful to the Court, but the fact is that the issue is not whether it is A plus B or A. The question is whether there was total loss of use of the foot. The fact is that because somebody uses a small piece of plastic material that they slip into their shoe, in our respectful submission, does not indicate that there is total loss of use of the foot. It is simply that one is gaining relief from pain to use the orthotic.

KIRBY J: You make it sound like Dr Scholl's corn remover he is putting into his foot.

MR PULLIN: Yes. Well, that is very much like it is I am afraid, may it please the Court. One should not be impressed with the use of the word "orthotic". We are talking about a piece of rubber insole that slips into the shoe and he was shown on video walking in the garden using thongs and when cross-examined about that, of course, he said the thong has got rather a raised section in the middle of it which assisted him to walk around, but the fact is that he could use the foot quite easily and going back to the issue, was there total loss of use of the foot, the answer is no.

DAWSON J: Mr Pullin, that is getting into the area of fact and this Court would not determine that, but would determine the question of principle.

KIRBY J: If the Full Court's principle is right, you will hold the judgment. If the Full Court's principle is wrong, it will go back to be redetermined in the light of all of the facts with the new principle.

MR PULLIN: Yes, there is no question of that. I think I have said all that I can say about the subject, may it please the Court.

KIRBY J: At this stage.

MR PULLIN: At this stage, yes.

DAWSON J: Thank you, Mr Pullin. We need not trouble you further, Mr McCusker. There will be a grant of special leave in this case.

MR McCUSKER: Thank you, your Honours.

AT 11.30 AM THE MATTER WAS CONCLUDED