Miley v Friends Life Ltd

An insured claiming income-protection benefits bears the burden of proving entitlement under the policy. In assessing chronic fatigue syndrome, the court must consider the evidence as a whole, including the condition’s fluctuating nature. General descriptions of limitations should not be treated as contradicted by isolated instances of activity unless there is a sufficiently direct and stark contradiction. A financial review form must be interpreted according to its wording. Where it expressly permits income from investments to be ignored, income realised from vested shares may fall within that exclusion even if the shares originated as employment remuneration.

The claimant sought continuing payments under an income-protection policy after the defendant stopped paying in September 2013. He alleged that chronic fatigue syndrome prevented him from performing the material and substantial duties of his employment. The defendant alleged fabrication or exaggeration, relied on surveillance and documentary discrepancies, and counterclaimed for benefits previously paid. It also alleged that the claimant had failed to disclose other income and sought to avoid the policy. The principal issues were the claimant’s entitlement, the credibility and medical significance of his presentation, and the proper construction of the financial review forms.

1. The claimant discharged the burden of proving that he suffered from chronic fatigue syndrome at a level sufficiently debilitating to satisfy the policy. The assessment had to take account of the nature of his former employment, which involved long hours, evening meetings and sustained concentration.
2. The court considered the evidence globally. Chronic fatigue syndrome is an elusive and fluctuating condition, and the ability to undertake occasional activities such as cycling, skiing, driving, travelling, reading or socialising did not necessarily contradict an account of substantial incapacity. The surveillance evidence showed no sufficiently direct and unequivocal contradiction. The claimant had not deliberately fabricated or materially exaggerated his disability.
3. The defendant’s allegations of dishonesty were not established. Discrepancies between generic accounts of limitation and particular activities carried less weight than stark, contemporaneous contradictions. The evidence of the claimant’s wife, friends and other witnesses was not dishonest, although their loyalty could affect objectivity.
4. The restricted shares vested during the claim constituted income from investments within the meaning of the financial review form. Applying Re Lilly's Will Trusts [1948] 2 All E.R. 906, the meaning of investment depended on context. The form expressly permitted income from investments to be ignored, and the fact that the shares originated as employment remuneration did not displace that wording. The defendant’s alternative construction was also rejected by the contra proferentem rule.
5. The claimant’s failure to disclose the share income was not deliberately fraudulent. The counterclaim therefore failed. Judgment was entered for unpaid benefits from September 2013 to 26 July 2017, with interest. No declaration was made concerning payments thereafter.