Drucilla Munnings v Colina Insurance Ltd

• Jurisdiction: Bahamas
• Judge: Winder, J.
• Judgment Date: 14 November 2019
• Date: 14 November 2019
• Docket Number: 2016/CLE/gen/00285
• Court: Supreme Court (Bahamas)

IN THE SUPREME COURT

COMMON LAW & EQUITY DIVISION

Before

Hon. Mr. Justice Ian R. Winder

2016/CLE/gen/00285

Between

Drucilla Munnings

Goldean Munnings

Plaintiffs

and

Colina Insurance Limited

Defendant

Appearances:

Devard Francis for the Plaintiffs

Ashley Williams for the Defendant

Winder, J.

This is the trial of a preliminary issue. By Order dated 20 October 2016, this Court ordered the trial of the said issue which was framed as follows:

Whether or not there was a fraudulent non-disclosure of material medical information by the Insured; if so, is the Defendant entitled to avoid the policy.

The claim was brought by the plaintiffs' claims as beneficiaries under a life insurance policy issued to their deceased sister.

Background facts

1 Policy No.003020655 (The Policy) was issued on or around 24 September 2001 to Melody Munnings (‘the deceased’) by Global Life Insurance Company Limited. The defendant (Colina) was the successor to the interest of Global Life Insurance Company Limited.

2 In completing the application for insurance, dated 27 July 2001, the deceased answered “no” to the following questions asked in the application:

24. So far as you know, have you been told by a doctor that you had:

(d) Arthritis, gout, joint, muscle or skin disorder?

(g) Prostate or testicular disease, disease of the uterus, ovaries or breast?

(i) Disorder of the urinary tract or kidneys, sugar, albumin blood in urine?

(k) To be admitted to a hospital or any other health case facility for an operation, observation, diagnostic, diagnostic tests or treatment of any illness?

(l) Any other health impairment or medically treated condition within the past five (5) years?

3 When asked at question 30 of the application, Are you in good health and free from all symptoms of illness and disease? the deceased answered: Yes. She did however respond, Yes, at question 24 (h) of the application which asked whether, So far as you know have you been told by a doctor that you had Anemia, Leukemia or other blood disorder. The deceased indicted that she was anaemic but not on medication of any kind. As a result of this response the deceased was required to attend a laboratory and complete some testing to assess her red blood count. The test indicated that her red blood count was within the normal range for women. The insurers are said to have assumed the risk based upon the representations.

4 The deceased, who died on 26 August 2011, had been diagnosed with sickle cell disease, since 27 September 1985. Contrary to the responses of the deceased at questions 24 and 30 of the application, the accepted evidence before the Court was that the deceased regularly attended Dr Patrick Robert's office for treatment relating to her illness. Complaints ranged from generalized body pains, painful knees, groin pain, pain in left arm, pain in left hip, painful limbs, joint pain, fatigue and fever. These were pains associated with sickle cell painful crisis. The visits recorded with Dr Roberts were on: 19 April 1993; 21 April 1993; 7 July 1993; 17 June 1994; 26 February 1998; 11 November 1998; 8 January 1999 and 9 April 1999

5 On the deceased 26 February 1998 visit to Dr Roberts she was diagnosed with aseptic necrosis of the head of the femur.

6 Upon the death of the deceased, and the refusal of Colina to honour the policy, Drucilla Mannings and Goldean Munnings, two of the three named beneficiaries on the Policy, commenced this action. The Specially Endorsed Writ filed on 2 Mar 2016 provides in part as follows:

• 1. Melody Munnings took out a life insurance with Global Life Assurance Bahamas Ltd in July 2001.

• 2. The Defendant Company operating as an Insurance Company under the Laws of the Commonwealth of the Bahamas took out the life insurance of Global Life Assurance Bahamas Limited, and that of Melody Munnings.

• 3. That Melody Munnings appointed Drucilla Munnings, Goldean Munnings and Victoria Munnings as the Beneficiaries of the life assurance with the aforesaid Global Life.

• 4. The said Melody Munnings died on the 26th August 2011.

• 5. The Plaintiffs, as beneficiaries of the said insurance claimed from the Defendant the stated amount of the insurance contract.

• 6. The Defendant has failed and/or refused to honor the terms of the contract and pay the Plaintiffs. Beneficiaries thereunder pursuant there to.

• 7. The Defendant claimed that there was a non-disclosure of material information by the late Melody Munnings and as a result denied the Plaintiff's Claim.

• 8. The Defendant claimed that they were unaware of the Late Melody Mannings sickle cell anemia.

• 9. The Defendant was well aware that the late Melody Mannings had sickle cell anemia as she was examined by their doctor, indication was made that she had anemia and the Defendant acknowledge increasing the initial premium for the contract of insurance.

• 10. That having accepted the risk, the Defendant now refuses to honour the Contract of insurance.

7 The (Amended) Defence provided in part as follows:

• 4 The Defendant denies paragraph 9 of the Statement of Claim. On the application for insurance the Insured disclosed that she was anemic, as such; in accordance with its usual procedure, the Defendant requested that the Insured have an anemic-specific blood test performed to determine the extent of her illness. The result of the blood test indicated that the Insured had a haemoglobin blood count of 11.8g/dl, a risk the Defendant accepted without increasing the initial premium.

• 5 The Policy contains a validity clause which provides:

  “We (the Defendant) cannot contest the validity of the Policy after it has been in force during the life insured's lifetime for two years from its issue date. However, this is subject to the following:

  (b) We can contest at any time in respect of a misstatement of age, or a total disability benefit, or fraud.”

• 10 Additional medical information was received by the Defendant in relation to the Insured, which included a report prepared by Princess Margaret Hospital. The report revealed that the Insured was diagnosed with sickle cell disease on 27th September 1985, and that on 8th November 1997, the Insured was admitted into hospital…

• 11. By reason of the deceased's non-disclosure of material facts the Defendant was induced to issue the policy as applied for by the deceased and as a result of the said non-disclosure, the Defendant contends that the Policy became and is wholly void and in the circumstances denies paragraph 10 of the Statement of Claim.

8 The plaintiffs sole witness was Goldean Mannings, the sister of the deceased and one of the three named beneficiaries under the Policy. Colina called Todney Marsh, Senior Manager - Underwriter and Colette Darville as its witnesses.

9 Goldean Munnings's evidence was that she was present at the time that the deceased completed the application for life insurance with the then Global Life Insurance Company and maintained that the insurers did in fact know that the deceased had sickle cell anemia. She maintained that this was the reason for an increased premium of 50% prior to issuing the policy. In response to the deceased's response to question 24 (h) of the application:

“So far as you know, have you had or been told by a doctor that you had:

(h) Anemia, Leukemia or other blood disorder?”

Goldean Munnings acknowledged that the deceased appeared to have answered yes to this question and the initials MM were present along with a handwritten notation which read; ‘Applicant is anaemic but is not on medical iron of any kind.”

10 Golden Munnings also acknowledged that the deceased answered no to the questions at 24(d), (g), (i), (k) and (I) of the application. When questioned as to whether the “no” responses to these questions to were truthfully answered, Ms. Munnings responded that she did not believe the answers given were truthful.

11 Goldean Munnings confirmed the deceased's indication in the application (question 30) that she was in good health and free from all symptoms of illness and disease. She also confirmed the many visits and consultations of the deceased at the Princess Margaret Hospital (‘PMH’) with respect to sickle cell disease over the years. In particular she was questioned on the admission of the deceased to the PMH for treatment of conditions not expressly related to sickle cell anemia on 8 November 1997.

12 During re-examination Golden Munnings reiterated that sickle cell was not on the list of conditions/ diseases on the application for insurance and stated that the deceased was prescribed folic acid for the condition. She maintained that the agent who had assisted the deceased in the application process had been advised that the deceased had been diagnosed with sickle cell anemia.

13 Todney Marsh, Colina's Senior Manager - Underwriting gave evidence that she reviewed the plaintiffs’ claim. She indicated that a part of her job was to assess risk on life insurance applications, which includes determining if additional information is required on an applicant. According to her this involved reviewing medical requirements and doctor's reports to determine whether an applicant's life was considered ‘standard or substandard’. She explained that knowing this would allow the Insurer to set premiums and decline risk. According to her, where the deceased indicated ‘anemia’ the Insurer would interpret this as iron deficiency anemia. She stated that as a result of the interpretation of ‘anemia’ on the life insurance application by the defendant the only test requested was a CBC, which does not test for sickle cell disease, only iron deficiency. Further that the results of the CBC performed on the deceased showed that her haemoglobin was within normal range.

14 According to Marsh the insurer would have requested that a sickle cell prep test be performed had the deceased indicated she had sickle cell anemia. As persons with sickle...