IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

ACTION NO. HBC0033 OF 1999L

BETWEEN:

SAVITTRI GOVENDAR and
JACINTA SANJINI GOVENDAR
PLAINTIFFS

AND:

BLUE SHIELD [PACIFIC] INSURANCE LIMITED
DEFENDANT

Mr S. Krishna and Mr S. Nadan for the Plaintiff
Mr N. Lajendra for the Defendant

Date of Hearing:	27 June 2005
Date of Judgment:	11 August 2005

JUDGMENT OF FINNIGAN J

This was a trial to determine only the liability if any of the Defendant to the Plaintiff under a Policy of Insurance.

The Facts

Not much was in issue. Three witnesses gave evidence. The Plaintiff was a member of a group of Medical Practitioners. The group subscribed to a group Health Insurance Scheme run by the Defendant. There was a policy and this was accepted by the group. The policy covered doctors who were members of the group and who wished to be covered. Each doctor’s eligible dependants were also covered, if any, with no increase in the premium. The Defendant held a list of names of members of the group with eligible dependants and dates of birth, all being persons covered under the policy. The list varied from year to year.

Each year at renewal time the Defendant sent to the secretary of the group a notice of renewal. After the group signified that it wished to renew, with a list of the current members and dependants, the Defendant checked each name on the list to ensure each was eligible for coverage, then the Defendant sent a debit note to the group stating the premiums for the individuals and the total of those premiums, payable by the group.

During 1997 the Plaintiff had been a member of the group and with his wife had been covered by the policy. In January 1998 the Defendant sent out its renewal letter to the Secretary of the group. Acceptance of renewal and a list of current members and dependants was returned to it by the Secretary. The Defendant then sent the debit note for the 1998 year and its print out of the list of persons it accepted as covered, and from/for whom it required premiums, ($315 per practitioner).

In the meantime however the Defendant had altered its policy. The Defendant’s witness told me that until the 1998 year the Defendant covered people under the policy until age 70. When it had sent out the letter soliciting renewal (16 January 1998) it enclosed a “revised medical policy”. From the evidence this was actually a sheet of paper containing two clauses one headed “Termination of Benefits” and other headed “Upgraded Benefits”. The Termination clause was new. In part it read as follows;

“The insurance cover in respect of an Insured shall terminate on the earliest of the following applicable date; - 

[a] to	[g] …………..

[h]	at midnight, Suva time, on the last day of the Policy year in which the insured and/or his dependant shall have attained the age of sixty four years [64].”

This is what the letter said about the revised policy:

“Please note that there is an increase in your premiums and this stems from the high claims experience faced on your group together with today’s rise in medical cost. To date there is a loss ratio of 569.50 over the last 3 years, which is the result of $13,490.00 premium against $76,826.58 of claims.

Also, for the Medical policy the terms and conditions will now fall under the revised medical policy (enclosed).

An important area to note in the revised medical policy would be the definition of dependants. Parents or one named next of kin cannot be covered by single employees as it had been previously.

However, we are able to provide cover for them under our individual policy rating and those wishing to make these arrangements please contact the following persons………”

The letter merely mentions the revised policy and draws attention to a reduction in the cover previously offered to dependants but no where draws attention to the reduction in cover by reason of age.

The Defendant sent back to the group its list of names which I gather was a list of all the same names that the group had sent to it when agreeing to renew. There were 29 families on the Defendant’s list, a total by my count of 99 names. The Plaintiff’s name and his wife’s were towards the bottom of the first page in a column of 41 names. In the 2 ½ pages, i.e. 2 ½ columns, every name had the same entry “1] MEDIVAC & PACMED, except the Plaintiff where the entry was *** Over Age ***. This different notation for the Plaintiff is not immediately apparent but is readily visible once one looks for it.

The premium structure was simple. The account debited the group. In 1998 a Practitioner paid $315.00 whether he insured only himself, himself and his wife, or himself his wife and children. The notice that it had deleted the Plaintiff (but not his wife) from coverage was simply a changed number of families on the debit note from 28 to 27, and on the print out of names it had changed the Plaintiff’s cover to “over age”. It did however still include the Plaintiff’s wife as covered for MEDIVAC & PACMED.

The group premium should have been paid by the group, but in Lautoka the practice was for the insurance agent to go to each Practitioner and get individual payment of the premium for that person and any dependants. On 25 March 1998 the Plaintiff paid a premium of $315.00 and the agent gave him the Defendant’s official receipt which was headed “Provisional Receipt”.

Crucial finding of Fact

From the above agreed facts one crucial finding readily emerges. Had the group sent a cheque for the group premium, the premium would have covered 27 families plus one employee [28]. The Plaintiff and his wife would not have been asked for a premium and presumably would have got no cover whether they knew about it or not. The agent however collected an individual premium from the Plaintiff. This was a mistake but the Plaintiff’s wife was named in the Defendant’s list as one of the insured. There was no evidence to suggest that the Plaintiff had been made aware that the letter to the group secretary contained a new term making him ineligible.

So far as the Defendant’s witness can say, the Plaintiffs premium has never been refunded.

Decision:

The evidence is not clear whether the group of doctors was an incorporated body or a loose association. Originally called the Western Private Medical Practitioners Association it changed its name at about the time with which this action is concerned to Fiji College of General Practitioners. A former secretary of the group who gave evidence referred to it consistently as “the Association”. The Defendant invoiced the group as an association and on the evidence of its witness expected the annual premium to be paid as a lump sum by the group. However it assessed the premium by fixing an individual premium for each member of the group.

This is significant to a decision whether the Defendant’s contract was with the Plaintiff or with an incorporated body. This is an issue not addressed by Counsel. In the absence of clear evidence I take what evidence there is to establish that the group was incorporated, and the insurance contract in the present case was between the Defendant and the group. The Defendant nonetheless employed an agent in Lautoka and the function of the agent was to visit each person insured and obtain an individual premium from each. 

Even if I am wrong in that, I believe the conclusion I have reached on liability would be the same. The deciding factor is whether the Plaintiff was made aware by the Defendant that he was not being offered insurance in the 1998 year. If its contract was with him personally, it failed completely to let him know that it unilaterally had changed the contract to exclude him. It sent its correspondence only to the secretary of the association. There is no evidence that the Secretary was aware of the Plaintiff’s change. Its conduct led to a situation of bona fide mistake. Instead of deleting the Plaintiff from its list in accordance with its decision not to cover him, it generated a list which not only included his name and that of his wife but in fact offered renewal for his wife. They put alongside his name “Over age” but this departure from former coverage was not drawn to anybody’s attention, was clearly not noticed by the secretary of the association and clearly was not noticed by the agent who collected the premium from the Plaintiff. 

Was the notice of the change sufficient?. I think not. There is no indication that the Plaintiff was ever made aware that the business policy and the insurance policy of the Defendant had been changed. The Defendant never told him that it no longer covered him. Without notice he was entitled to expect to it to continue and the Defendant’s witness told me that previously he was covered until age 70. I think the onus was on the Defendant to take more positive steps than it did, and tell him that it had changed its policy and excluded him. 

After the failure to give adequate notice, the Defendant then retained the Plaintiff’s premium and so far as the evidence reveals and so far as the Defendant’s witness knows, that premium has never been refunded. The fact that the receipt issued was a “provisional receipt” now strengthens the Plaintiff’s claim because at the time it was issued the Defendant reserved the right to reject the Plaintiff, return his premium and make its position clear. It never did that.

In particular, the Defendant seems to me to have induced the Plaintiff’s mistake. This as it happened, deprived him of the chance to seek cover elsewhere but that is not a factor in my decision. In general as I understand the law, mistake of this sort does not void the contract, if on an objective view the contract is clear and complete in its terms, as was the case here. Two cases with some similarity in principle to this one are Taylor -v- Johnson (1983) 151 CLR 422 and McRae –v- Commonwealth Disposals Commission (1950) 84 CLR 377.

My clear conclusion from this facts is that in the 1998 year the Defendant was bound to cover the Plaintiff as it had done previously. Judgment in liability therefore is entered for the Plaintiff.

I accept Counsel’s assurance that with this issue resolved there is no issue as to quantum.

I access costs in favour of the Plaintiff at $800.00.

D.D. Finnigan
JUDGE

At Lautoka
11 August 2005