Birdsall v Motor Trades Association of Australia Superannuation Fund Pty Ltd

Judgment

1. BASTEN JA: In May 2009, Mr Robert Birdsall (the appellant) was injured at work. He was a member of the Motor Trades Association of Australia Superannuation Fund (the Fund), of which the first respondent company was the trustee. The fund provided certain benefits to members, including a benefit available to those suffering total and permanent disability. The injury to his right wrist resulted from hyperextension whilst lifting a heavy gearbox, resulting in significant damage to a ligament, and, in addition, to his shoulder. He made a claim for a benefit available under a group life insurance policy issued by MetLife Insurance Ltd (the insurer) in favour of the Fund.
2. Both the insurer and the trustee rejected his claim.
3. In June 2013 the appellant commenced proceedings in the Equity Division of the Court seeking declarations that he was, and had been since 4 October 2010, totally and permanently disabled within the meaning of the policy issued by the insurer. He also sought an order that the insurer and the trustee pay him a sum "representing the benefit for total and permanent disability as at 4 October 2010", calculated at $93,000. In the alternative, he sought damages for breach of contract, a claim which appears not to have been pursued at trial.
4. Apart from factual matters relating to his incapacity, he pleaded that both the trustee and the insurer owed him "a duty of good faith and fair dealing." Both respondents admitted that this was so, perhaps because the duty understated what might have been relied upon against the insurer, namely the duty of utmost good faith pursuant to s 13 of the Insurance Contracts Act 1984 (Cth).
5. The breach of duty on the part of the trustee was said to have been that it had "delegated" to the insurer the authority "to exclusively determine" whether the appellant suffered from a relevant incapacity. As against the insurer, the appellant alleged that there had been a failure to consider the evidence of his treating medical practitioners and "the fact that [he] had made several applications for employment without success."
6. At trial, Hallen J upheld the final allegation, as against both the insurer and the trustee: Birdsall v Motor Trades Association of Australia Superannuation Fund Pty Ltd. [1] This bundle of unsuccessful applications was described as "a relevant consideration that each ought to have considered and it was unreasonable for each not to do so." [2]
7. The adoption of this dual test, applicable to both respondents, reflected the inadequacies of the pleading. If either (or both) failed to take into account material which they ought to have considered, the opinions so formed were invalid and ineffective; it is not clear that unreasonableness was a condition of failure to consider. If the opinions were unreasonable, they may have been invalid on that separate basis. However, the judge did not think that the opinions were unreasonable: rather, when considering all the material, he came to the same conclusion.
8. This is an area in which some care should be taken in identifying and applying the correct test. With respect to trustees, the duties in exercising a discretionary power were helpfully expressed by McGarvie J in Karger v Paul [3] in a passage approved in Attorney General (Cth) v Breckler. [4] Nevertheless the trustee may be said not to be exercising a discretionary power so much as subject to a duty conditioned upon an evaluative judgment. As explained by the High Court in Finch v Telstra Super Pty Ltd: [5] "There is no doubt that under Karger v Paul principles, particularly as they have been applied to superannuation funds, the decision of a trustee may be reviewable for want of 'properly informed consideration'. [6] If the consideration is not properly informed, it is not genuine. The duty of trustees properly to inform themselves is more intense in superannuation trusts in the form of the Deed than in trusts of the Karger v Paul type. It is extremely important to the beneficiaries of superannuation trusts that where they are entitled to benefits, those benefits be paid. Here, for example, the applicant was claiming a Total and Permanent Invalidity benefit to support himself for the rest of his life. His claim depended on the formation of an opinion by the Trustee about the likelihood that he would ever engage in 'gainful Work': that was not a mere discretionary decision. In the Deed there was a power to take into account 'information, evidence and advice the Trustee may consider relevant', and that power was coupled with a duty to do so. It would be bizarre if knowingly to exclude relevant information from consideration were not a breach of duty. … The Scheme is a strict trust. A beneficiary is entitled as of right to a benefit provided the beneficiary satisfies any necessary condition of the benefit."
9. The Court then noted that the statutory scheme, which allowed merit review of the decision of the trustee under the Superannuation (Resolution of Complaints) Act 1993 (Cth) ("the Complaints Act") permitted a complaint that a decision was "unfair or unreasonable." [7] (It may be noted that an insurer might also be party to such a complaint [8] and, if joined, any decision of the insurer relevant to the complaint must also be reviewed. [9] ) While noting that the duties of a superannuation trustee may extend beyond the standard duties to exercise a discretion "on real and genuine consideration" and not "irresponsibly, capriciously or wantonly", [10] Finch did not decide whether s 14 of the Complaints Act effectively imposed a duty to form a "fair and reasonable" opinion.
10. The claim of "delegation" by the trustee (not accepted by the trial judge) may have obscured the fact that there were possible differences between the definitions of qualification for a benefit in the policy and in the trust deed. Thus, under the policy, a total and permanent disablement benefit was available where the insured person had been employed during six months prior to the date of disablement and had suffered a permanent loss of two limbs or the sight of both eyes (or the loss of use of one limb and one eye) or, relevantly for present purposes, "as a result of injury or illness he/she has been unable to work for an initial period of six consecutive months and in our opinion is incapacitated to such an extent as to render the Insured Person unlikely ever to engage in or work for reward in any occupation or work which the Insured Person is reasonably capable of performing by reason of education, training or experience." [11]
11. The availability of benefits under the trust deed included in cl 12 "Insurance Benefits", which were defined to mean "the amount, if any, payable under a Policy on … Total and Permanent Disablement". [12] The phrase "Total and Permanent Disablement" was defined as having the same meaning as that "or an equivalent term" in the relevant policy. Clause 12.1 of the trust deed stated: "12.1 Level of Benefits The amount and nature, if any, of the Insured Benefits applying to a Member shall be determined by the Trustee. … 12.5 Scope of Insurance Cover 12.5.1 Any Insured Benefit shall be subject to the terms of the applicable Policy. 12.5.2 No payment shall be required to be made in respect of a Member in satisfaction of any Insured Benefit that is greater than the amount received by the Trustee under the Policy in respect of that Member after deduction of all administration charges and expenses and taxes attributable to that amount."
12. There was no discussion as to whether the trustee was subject to a duty to pay to the member the amount of any payment received from the insurer and, if so, whether it was entitled to make deductions from that amount. Of course, no such payment had been received from the insurer by the Fund, but the orders sought required payment of the full amount to the appellant, thereby raising the unexplored issue.
13. Clause 21 of the trust deed provided for "Payment of Benefits". It permitted payment of a benefit under the deed by way of "lump sum", as was sought in the present case. Clause 21.2.3 provided that: "The Trustee may pay benefits to a Member: (a) on Retirement or on attaining such age as may be permitted at law; (b) on suffering Permanent Incapacity; …; and (g) in any other circumstances or form permitted under the [Superannuation Industry (Supervision) Act 1993 (Cth)]."
14. There was no consideration as to whether cl 21.2.3 conferred a power or a power combined with a limitation (namely that benefits may only be paid in such circumstances). If the latter construction were adopted it would have been significant that the term "Permanent Incapacity" was defined in the trust deed to have the meaning ascribed to it in the Superannuation Industry (Supervision) Act (including the Regulations). The only relevant definition (at the time the present claim arose) appears to have been that in the Superannuation Industry (Supervision) Regulations 1994, reg 6.01: "permanent incapacity, in relation to a member who has ceased to be gainfully employed, means ill-health (whether physical or mental), where the trustee is reasonably satisfied that the member is unlikely, because of the ill-health, ever again to engage in gainful employment for which the member is reasonably qualified by education, training or experience."
15. The decision of the insurer to refuse the claim was made on 19 April 2012. The trustee considered the claim shortly thereafter, reasons for rejecting being supplied over the name of an assessor and dated 7 May 2012. The assessor did not in terms refer to the trust deed, but identified the basis of the claim as the definition of total and permanent disablement to be found in the insurance policy.
16. Neither the trustee, nor the parties, nor the Court at trial, considered how the phrase "in our opinion", as it appeared in the policy operated for the purposes of the trustee's decision. (The term "our" was defined in the policy as referring to the insurer.)
17. Because there was no challenge in this Court to the finding that the decisions of both the insurer and the trustee were invalid, none of these considerations was addressed, both parties being content with the identified consequence, namely that the Court could (and should) determine the entitlement of the appellant to the benefit. That was the approach taken by the trial judge and not challenged on appeal. In reaching the conclusion that the relevant opinions had not been validly formed, the judge noted that that was "not the end of the matter" and that, "as agreed by the parties", it was appropriate for the court to determine the appellant's claim. [13] That he did. His rejection of the claim was the sole matter challenged on appeal. For the reasons given by Meagher JA, the appeal should be dismissed.
18. However, the agreement of the parties that it was appropriate for the Court to decide the entitlement of the appellant should not go unremarked upon. In the course of his judgment, Hallen J set out a passage from the judgment of Ball J in Erzurumlu v Kellogg Superannuation Pty Ltd, [14] noting: "If, for any reason, the Trustee has failed to discharge its duties in considering the member's claim, the appropriate order is to refer the matter back to the Trustee. The court generally does not itself seek to execute the trust: Hannover Life Re of Australasia Ltd v Sayseng. [15] "
19. That statement was undoubtedly correct: it was what happened, for example, with the approval of the High Court, in Finch at trial. However, if "generally" were intended to allow for the exceptional case, there was no discussion at trial as to what might constitute an exceptional case and as to why the trial court was entitled in the present case to make the decision for the trustee.
20. Ball J continued in Erzurumlu to consider the position with respect to the decision of an insurer. He concluded: "The duty of the court is to determine whether the insurer beached its duty of utmost good faith. It is not to substitute its own view for that of the insurer. However, if an insurer refuses a claim in breach of its obligation of good faith, the court itself can determine whether, on the material available to it, the claim fell within the policy".
21. For that proposition Ball J referred to Hannover Life Re in this Court, at [36]. Before turning to that decision, it should perhaps be noted that there is a tension between the first two sentences in the passage quoted above and the third sentence.
22. The reference to the judgment of this Court in Hannover Life Re was entirely appropriate for a judge at first instance. However, in the passage referred to, Santow JA merely accepted the proposition of McLelland J in Edwards v The Hunter Valley Co-op Dairy Co Ltd [16] to the effect that, the opinion having been found to be invalid, the Court would form its own opinion as to the circumstances. In Edwards, McLelland J had approached this on a cautious basis, stating: [17] "To say that an insurer must act reasonably in forming or declining to form an opinion is not to say that a Court can substitute its own view for that of the insurer. As North J pointed out in Doyle, [18] 'reasonable persons may reasonably take different views'. Unless the view taken by the insurer can be shown to have been unreasonable on the material then before the insurer, the decision of the insurer cannot be successfully attacked on this ground."
23. Having concluded that the matter was not properly dealt with by the insurer (Zurich) McLelland J continued: [19] "The formation by Zurich of the relevant opinion is of the nature of a condition of Zurich's liability under the policy. Zurich cannot rely on non-fulfilment of such a condition if fulfilment was prevented by its own default, and in in such an event the issue upon which Zurich's opinion was required to be formed would become one for determination by the Court (see [Butcher v Port]). [20] "
24. Again, it was entirely appropriate for a judge at first instance to follow the decision of the New Zealand Court of Appeal, although the circumstances of Butcher v Port differed significantly from those in issue on a claim of the present kind. Further, the reasoning of the members of the Court differed: Cooke J relied upon authority dealing with certificates of third parties; Somers J treated the matter as one involving default of an implied term, while Eichelbaum J adopted the approach of Cooke J on this point.
25. At some stage, where it matters to the outcome, and where the parties have addressed the issues, this line of authority may need to be reconsidered. In McArthur v Mercantile Mutual Life Insurance Co Ltd [21] the line of authority was considered by the Queensland Court of Appeal. Muir J, with whom McMurdo P agreed, noted decisions supporting the power of the court to decide the question for itself, saying that this was the course the primary judge took and "not without some misgivings, I accept that it was correct." [22] McPherson JA wrote separately, in terms which cast much doubt upon the line of authority. While accepting that an insured might well have a claim in damages for a lost opportunity where an insurer wrongly failed to form a favourable opinion of the claim, McPherson JA doubted that, in the absence of a favourable opinion of the insurer, a plaintiff had a right or cause of action to recover the benefit under the policy. He stated: [23] "I confess some difficulty in seeing that he has. Without such an opinion from the defendant, he had and has no right to the Agreed Benefits of $80,000. Saying that the defendant's opinion of 12th October 1996 was vitiated by the way in which it was formed has the consequence that there is now no opinion at all. It does not conjure up the opinion that the plaintiff needs to establish his right of action to the sum claimed. Does he, independently of such an opinion, have an accrued right to the $80,000 that the court can enforce? I would, with respect, have thought he had not, unless one takes the further step of substituting for the words 'we are of the opinion'; … the words 'a court is of opinion'; or perhaps of omitting those words altogether …. To take that step is not simply to eliminate a condition precedent relating to proof, but to make it a different contract with a different effect."
26. McPherson JA noted the possibility that s 14 of the Insurance Contracts Act might provide a solution to the problem, but that it was not an approach which had yet been adopted in Australia. With respect to New Zealand authority, he stated: [24] "In Butcher v Port, Sir Robin Cooke said it was well settled that a contracting party was disabled from setting up the absence of a stipulated approval if its non-fulfilment was due to his own default, citing New Zealand Shipping Co Ltd v Societe des Ateliers. [25] That principle has often been applied in Australia, but always in the context of a provision conferring on one party a power or option to determine an existing contract the performance of which was subject to a resolutive condition. In Suttor v Gundowda Pty Ltd, [26] and the many decisions that have followed it, New Zealand Shipping Co has not been regarded as capable of creating a new form of obligation that did not otherwise exist. That is the potential problem raised by the third of the steps in Butcher v Port."
27. Ultimately, and in circumstances where the point did not need to be decided, McPherson JA capitulated: [27] "I am, however, conscious that the decision in Butcher v Port has been followed in Australia on so many occasions that it would be an act of temerity not to follow it here."
28. There being powerful considerations to doubt the application of Butcher v Port in the present circumstances, and an absence of favourable consideration by intermediate courts of appeal in this country, it may appear as timidity not to engage in rational reconsideration. Especially is that so, as Finch noted in another context, where principles developed under the general law are to be applied in novel circumstances, regulated by statute. For example, it is doubtful that any policy justification for the court substituting its own opinion for that of the insurer would carry weight where the Complaints Act provides an alternative independent decision-making process for a dissatisfied insured and beneficiary. Further, the disfavour with which contractual provisions conditioning an entitlement on the opinion or satisfaction of the insurer have been treated in the past may need to be reassessed given the statutory terms prescribed by the Superannuation Regulations [28] requiring the trustee's decision to be conditioned upon its reasonable satisfaction of the standard test of incapacity.
29. There was another obstacle in the way of the appellant obtaining relief from the Court by way of payment of an amount due under the insurance policy. In the pleadings, both respondents asserted that, pursuant to cl 10.1 of the policy, the obligation of the insurer was to make a payment to the trustee. The trial judge stated in an aside that it was "not in issue" that the appellant "had standing to sue the insurer even though it was a group life policy." [29] The absence of objection from the respondents to the appellant bringing proceedings against the insurer (with whom he had no contract), but reliance upon the obligation of the insurer to pay the trustee, may have reflected the terms of s 48A of the Insurance Contracts Act. There was no elaboration in the circumstances as to what might have been appropriate relief and whether it would have been affected by s 48A(1A) of the Insurance Contracts Act.
30. Nor was there any discussion as to whether, if the trustee exercised a separate and independent decision-making power (as it appears to have assumed it was doing), the Court, on finding that no valid decision had been made should have referred the matter back to the trustee, rather than sought to make the decision itself. One fact which militates against any departure from the conventional approach under the general law (namely referral back) is the statutory conferral on the Superannuation Complaints Tribunal, established under the Complaints Act of all the powers, obligations and discretions that are conferred on the trustee. [30] The effect of that provision (and other sections dealing with a variety of different complaints) is to place the Tribunal in the shoes of the trustee. The decision it makes is "in substitution for a decision of a trustee, insurer …". [31] The statutory right of appeal from the Tribunal is limited to an appeal on a question of law from the determination of the Tribunal to the Federal Court. [32]
31. The appellant did not seek to exercise any rights he may have had under the Complaints Act: nevertheless, the existence of the legislative scheme, providing for challenge to decisions on the grounds that they were "unfair or unreasonable", [33] militates against departure by the Supreme Court from the conventional approach to decisions of trustees.
32. Because the appeal must in any event be dismissed, for the reasons given by Meagher JA, these issues need not be explored further.
33. MEAGHER JA: This is an appeal from a determination of the primary judge (Hallen J) that the appellant did not in April 2011 satisfy the definition of Total and Permanent Disablement (TPD) in a group life insurance policy issued by the first respondent (Metlife) to the second respondent as Trustee of the Motor Trades Association of Australia (MTAA) Superannuation Fund (the Trustee): Birdsall v Motor Trades Association of Australia Superannuation Fund Pty Ltd [2014] NSWSC 632.
34. That determination was made by the Court on the evidence before it and notwithstanding that the definition of TPD in that policy provides the relevant opinion as to incapacity be that of Metlife as insurer. The Court's decision involved the making of findings as to the appellant's injury and resultant incapacity and an assessment at the relevant time as to whether that incapacity was such as to render him unlikely ever to engage in or work for reward in any occupation or work which he was reasonably capable of performing by reason of his education, training or experience. On the appeal by way of re-hearing to this Court, that determination is to be reviewed in accordance with the principles in Warren v Coombes [1979] HCA 9; 142 CLR 531.
35. An understanding of the way in which this narrow issue arises is assisted by an outline of the relevant facts and of the way in which the underlying proceedings were pleaded and conducted before the primary judge.

Relevant facts

1. The appellant left school in 2002 having obtained his school certificate. He undertook an elective speciality automotive course and then completed a four year apprenticeship as a motor mechanic with Bonneville Automotive Pty Ltd. In October 2007 he commenced employment with OTO Gas Mechanical (OTO Gas) as an automotive mechanic. He continued in that employment until 4 October 2010.
2. In February 2009 he suffered an injury to his right dominant wrist. That injury was aggravated in May 2009. Between that date and October 2010 the appellant continued to be employed by OTO Gas. He received ongoing treatment for his injury and in December 2009 underwent arthroscopic surgery to his wrist. There were times during this period when he was unfit for any work and other times when he could perform only "light duties" and for restricted hours. It is common ground that these injuries have prevented the appellant from working as a motor vehicle mechanic at any time after 4 October 2010.
3. From January 2003 the appellant was a member of the MTAA Superannuation Fund. Under the terms of the Trust Deed constituting and governing that fund (as amended up to and including 31 August 2011) the benefits payable in respect of a member included Insured Benefits. Those benefits were defined as the "amount, if any, payable under a Policy on death, illness, incapacity or Total and Permanent Disablement" (trust deed, cl 1.1). The amount and nature, if any, of Insured Benefits applying to a member were to be determined by the Trustee and "to provide" those benefits, the Trustee was empowered to enter into group insurance policies with insurers, such as Metlife (trust deed, cll 12.1, 12.2).
4. The Metlife group life policy under which the appellant was an Insured Person (his nomination as such by the Trustee having been accepted by the insurer) commenced on 1 July 2008. It provided by cll 10.1 and 10.2: 10 Total and Permanent Disablement Benefit 10.1 If an Insured Person is TPD while this Policy is in force, subject to the provisions of this Policy, we will pay to you the TPD sum insured in respect of that insured person. 10.2 Total and Permanent Disablement shall mean: (a) Where the Insured Person has been employed at any time during the six months prior to the Date of Disablement: He/she suffers the permanent loss of use of two limbs or the sight of both eyes or the loss of use of one limb and the sight of one eye (where limb is defined as the whole hand or the whole foot). OR As a result of Injury or Illness, he/she has been unable to work for an initial period of six consecutive months and in our opinion is incapacitated to such an extent as to render the Insured Person unlikely ever to engage in or work for reward in any occupation or work which the Insured Person is reasonably capable of performing by reason of education, training or experience. [emphasis added]
5. In these provisions, the references to "you/your" are defined to mean the Trustee and the references to "we/our/us" are to Metlife (policy, cl 5). The Date of Disablement, as it applies to the appellant's claim, is defined as "the date of occurrence of the event or the manifestation of the condition which is the commencement of the six months consecutive inability to work that results in Total and Permanent Disablement". It was common ground that in relation to the appellant this date was 4 October 2010.
6. The policy provides for the Trustee to notify Metlife in writing as soon as is reasonably practicable of an event entitling it to a benefit, including a TPD Benefit. It is also a condition of the payment of any benefit that the Insured Person provide Metlife with such evidence as it might reasonably require to substantiate a claim (policy, cll 15.1, 15.2). Benefits paid in respect of an Insured Person are to be paid to the Trustee who is to hold those monies in trust for the benefit of that person and, where applicable, in accordance with the terms of any relevant trust deed (policy, cl 16.1).
7. Returning to the Trust Deed, the Trustee was required to keep a Member Account for each member showing "any Insured Benefit that has been paid and credited to the account" (trust deed, cl 5.l). Clause 21 governs the payment of any benefit which is defined as "the aggregate of the amount standing to the credit of a Member Account". Such a payment may be made to a Member by way of a lump sum. Clause 21.2.3 describes the events or circumstances on the happening of which the Trustee is entitled to make such a payment. Those circumstances include the Member suffering "Permanent Incapacity". That phrase as defined has the meaning given to it in the Superannuation Industry (Supervision) Act 1993 (Cth) and any regulations made thereunder (trust deed, cl 1.1). As at April 2011 reg 6.01 of the Superannuation Industry (Supervision) Regulations 1994 (Cth) provided: permanent incapacity, in relation to a member, who has ceased to be gainfully employed means ill‑health (whether physical or mental), where the trustee is reasonably satisfied that the member is unlikely, because of the ill‑health, ever again to engage in gainful employment for which the member is reasonably qualified by education, training or experience.
8. Clause 21.5 of the Trust Deed provides that a Member "shall not be treated as suffering Permanent Incapacity unless and until the Member has supplied the Trustee with such medical and other evidence as the Trustee requires to satisfy itself that the Member is suffering Permanent Incapacity".
9. In April 2011 solicitors acting for the appellant made what was described as a "Total and Permanent Disablement claim" on Metlife. Further information was then sought and obtained by Metlife from various sources. That information included a copy of the workers compensation file of Allianz Australia in relation to the appellant's claim. That file contained details of between 50 and 60 job applications that he had made in 2010 and 2011. It included an Earning Capacity Assessment undertaken for that insurer in January 2012 by Dr Andrew Keller, an occupational physician, and Marcia Lee, a vocational psychologist. It also included a report obtained by Metlife in September 2011 from Dr Blair Christian, a consultant occupational physician, who examined and assessed the appellant in September 2011. In December 2011 the appellant's functional capacity to undertake other employment was assessed on behalf of Metlife by Liz Atteya, a rehabilitation counsellor, and the subject of a report dated 24 January 2012.
10. By letter dated 19 April 2012 addressed to the Trustee, Metlife advised that it had determined that the appellant was not incapacitated within the meaning of the TPD definition. For that reason Metlife advised the Trustee that "the Members claim for a total and permanent disablement benefit has been denied". It does not appear that a copy of this letter was sent to the appellant or his solicitors at this time.
11. By a memorandum dated 7 May 2012 a claims assessor in the service of the Trustee agreed with Metlife's conclusion that "the member does not meet the policy definition of total and permanent disablement" and with its decision to decline the claim. On 1 June 2012 the Trustee's Claims Review Panel formally resolved to agree with Metlife's decision to decline the appellant's claim. The fact of that panel's resolution was notified to the appellant's solicitors by letter dated 6 June 2012. That letter indicated that the Panel would reconsider the claim should the appellant "be able to provide contemporaneous evidence" in support of it. The appellant did not provide any such further evidence. Nor did he make any complaint to the Trustee or to the Superannuation Complaints Tribunal under the Superannuation (Resolution of Complaints) Act 1993 (Cth).
12. In 2013 the appellant commenced an engineering degree at the University of Technology. Before he did so it was necessary that he sit for and pass a Special Tertiary Admissions Test for mature age students wishing to enrol in a tertiary degree.

The pleaded claim

1. The appellant commenced proceedings against the Trustee and Metlife in June 2013. The relief sought included a declaration as to his being, since 4 October 2010 or some later date, totally and permanently disabled within the meaning of the Metlife policy and orders that the respondents pay him the sum of $93,000, being the amount of the benefit due as at 4 October 2010, and interest. It was alleged that each of the respondents owed the appellant a duty of good faith and fair dealing; that the Trustee breached that duty by entering into a policy of insurance under which it "delegated" to Metlife the authority exclusively to determine whether or not the appellant had suffered from an incapacity; and that Metlife had breached that duty by, among other things, failing to consider adequately or at all the fact that the appellant had made "several applications for employment without success".
2. Read generously the pleading might be seen to have identified the capacities in which the Trustee and Metlife were said to be subject to a duty or obligation of good faith as being respectively trustee of a superannuation trust and insurer. The pleading did not however recognise that different principles apply to the performance by the Trustee of any duty to form an opinion as to a matter on which a member's entitlement to a benefit depends, to the performance by an insurer of a contractual obligation to form such an opinion and to the relief that may be sought assuming a breach of duty or obligation by either or both is established. As to the position of the Trustee, see Finch v Telstra Super Pty Ltd [2010] HCA 36; 242 CLR 254 esp at [29], [30], [64], [65], [66]. Where a trustee is found to have failed to comply with that duty, the task of forming the opinion will be remitted to it for further determination unless that task admits of only one possible outcome or it is concluded that the trustee is no longer capable of approaching the task fairly and objectively. As to the position in relation to the nature of the insurer's contractual obligation, see the often cited summary of McLelland J in Edwards v The Hunter Valley Co-Op Dairy Co Ltd (1992) 7 ANZ Ins Cas ¶61-113 at 77,536. That statement was approved by this Court in Hannover Life Re of Australasia Ltd v Sayseng [2005] NSWCA 214; 13 ANZ Ins Cas ¶90-123 at [47], [50].
3. In Edwards, applying the New Zealand Court of Appeal decision in Butcher v Port [1985] 1 NZLR 491, McLelland J also held that where the formation of an opinion by the insurer is in the nature of a condition of its liability, the insurer cannot rely on the non-fulfilment of that condition if that non-fulfilment was prevented by its own default. In that event the issue upon which the insurer's opinion is required to be formed becomes one for the determination of the Court. The line of authority proceeding from the application of Butcher v Port in Edwards was followed in McArthur v Mercantile Mutual Life Insurance Co Ltd [2001] QCA 317; [2002] 2 Qd R 197. The correctness of that underlying proposition was not in issue in this Court in Hannover Life v Sayseng. Nor was it in issue in Hannover Life Re of Australasia Ltd v Colella [2014] VSCA 205; 18 ANZ Ins Cas ¶62-036.

Primary judge's reasoning

1. At the commencement of his reasons, the primary judge formulated the principal questions for determination as being: [10] The primary question for determination is whether the decision by the Insurer was invalid, in that it was unreasonable. In the event that the court concludes that the decision made by the Insurer was invalid, it should substitute its own decision for that of the Insurer: McArthur v Mercantile Mutual Life Insurance Co Ltd [2001] QCA 317; [2002] 2 Qd R 197, at [62], and, if appropriate, should order it to pay the amount of the claim, plus interest, to the Trustee, which would then pay it to the Plaintiff… [11] Thus, a key issue will be whether, as a result of the injuries sustained by him in February, and then in May 2009, the Plaintiff suffered TPD within the meaning of the Policy as at 4 April 2011 (6 months from the day on which he last worked).
2. His Honour then proceeded to set out the uncontroversial facts ([15] - [56], [74]), summarised the appellant's oral evidence ([57] - [59]), referred to provisions of the policy and of the trust deed ([60] - [73]), and summarised the medical and occupational evidence ([75] - [93]). Having done so he summarised the submissions made by the parties ([94] - [95]) and referred to a number of decisions containing discussion of the relevant principles ([96] - [123]).
3. His Honour then entered upon a determination of the matters in issue. He did so on the basis that the appellant challenged the insurer's failure to form an opinion in April 2012 that he was incapacitated and the Trustee's determination to the same effect by the resolution of its Claims Review Panel in June 2012. That is apparent notwithstanding that the primary focus of his Honour's analysis was the liability of Metlife under the policy which depended upon the formation by it of such an opinion: [127], [129], [131], [132], [143]. His Honour concluded that Metlife and the Trustee breached in two respects their obligations or duties when concluding that the appellant had not satisfied the TPD definition. First, each failed to take into account that the applicant had applied for many different positions without success: [146]. Secondly, in circumstances where it was not suggested that the appellant had not made genuine efforts to obtain alternative employment, each failed to take into account the fact that beyond the initial period of six months, during which he was unable to work, the appellant had continued to be unable to find any alternative employment as at April 2012: [148]. Neither of those conclusions is challenged on appeal.
4. His Honour continued: [150] In the light of this finding, and as agreed by the parties, it is then appropriate for the court to determine the Plaintiff's claim and the question whether, as at April 2011, it was unlikely that the Plaintiff would ever engage in or work for reward in any occupation or work which he was reasonably capable of performing by reason of education, training, or experience.
5. Having addressed that question, the primary judge concluded: [158] Having considered all of the evidence, I am not satisfied it has been established that the Plaintiff was within the definition of TPD in the Policy and the Trust Deed. In these circumstances, he was not entitled to be paid the relevant amount. It follows that the Plaintiff's claim must be dismissed.

The issue in the appeal

1. The appellant challenges the correctness of that determination. The orders sought in the event that the appeal is successful include judgment for the appellant against the Trustee and Metlife in the sum of $108,000 representing the Insured Benefit of $93,000 together with interest of $15,000 calculated to 6 May 2014. The seeking of this relief directs attention to the precise duties or obligations of the Trustee and Metlife which are said to have been breached and the appropriate relief to be addressed to each in the face of those breaches.
2. At this point it is necessary, if only to make plain what issues were not before this Court, to record the basis on which the proceedings were conducted before the primary judge and on appeal.
3. First, the parties accepted that where the insurer's opinion is not formed in accordance with its express and implied contractual obligations, the Court may decide, as a question of fact, whether that state of affairs existed or did not exist. No challenge was sought to be made to the correctness of the line of authority applied in McArthur v Mercantile Mutual notwithstanding the thoughtful analysis undertaken by McPherson JA in that case which calls into question the correctness of the reasoning in Butcher v Port. Having made such a determination but depending always on the terms of the contract of insurance, the Court may order that the sum which would have been payable had the insurer's opinion been duly formed, be paid to the trustee or insured person.
4. Secondly, it was not in contest that the time at which the question of incapacity was to be addressed by the insurer was as at the end of the initial period of six consecutive months during which the appellant had been unable to work. In this case that was April 2011. It was also not in issue that the evidence to which the Court could have regard in making its determination was not limited to the evidence before the insurer and could include any evidence speaking as to the question of the appellant's capacity to work as at that date.
5. Thirdly, there was no detailed consideration of the provisions of the Trust Deed under which the Trustee may have been required to be satisfied as to the appellant's incapacity or as to the definition of permanent incapacity that it was required to address for that purpose. The primary judge seems to have proceeded on the basis that cll 12.1 and 12.2 answered that description. They provided: 12.1 Level of Benefits The amount and nature, if any, of the Insured Benefits applying to a Member shall be determined by the Trustee. 12.2 Trustee to Effect Necessary Death and Disability Insurances To provide the Insured Benefits, the Trustee may enter into one or more group insurance policies with insurers for amounts and on terms and conditions agreed between the Trustee and the insurer and/or may accept the assignment of a policy of insurance on such terms as the Trustee, in its absolute discretion, determines.
6. At [68] - [70] the primary judge construed cl 12.1 as providing that the Trustee must determine the amount and nature of any Insured Benefit applying to a Member so that, in the case of a TPD benefit, it was required to determine whether it held an opinion in accordance with cl 10.2(a), reading the expression "in our opinion" in that clause as referring to the Trustee rather than Metlife.
7. However, there is another way in which that provision might be read. As Insured Benefits were defined as "the amounts, if any, payable under a Policy", the only sense in which the Trustee could determine those amounts and their nature was by deciding the types and amounts of benefits that would be provided by the fund via the entry into one or more group insurance policies. The Trustee's ability to determine whether there was an amount payable in response to a claim must depend upon the terms of the insurance arranged. In the present case those terms made it clear that the question of incapacity turned on Metlife's opinion as distinct from that of the Trustee. Clause 12.5 of the Trust Deed also made clear that whether an Insured Benefit was payable depended on the terms of the policy and the Trustee was not required to make any payment in satisfaction of such a benefit that was greater than the amount received under the policy. The Trustee was also entitled to deduct all administration charges, expenses and any taxes attributable to that amount before crediting it to a Member's account (trust deed, cl 12.5.2).
8. The effect of cl 21 of the Trust Deed is to require the Trustee to be satisfied that a member is suffering Permanent Incapacity (as that phrase was defined in the relevant regulation) before it was able, in accordance with cl 21.2.3, to pay as a lump sum benefit the amount of any Insured Benefit received from Metlife.
9. Fourthly, before the primary judge, the appellant relied on the decision made by the Trustee's Claims Review Panel in June 2012 to "agree with Metlife's decision to decline the claim" as being the relevant decision of the Trustee. That decision could not have been a decision made as contemplated by cl 21.5 because at that time there was no benefit in the form of an Insured Benefit available to be paid from the Member's account of the appellant. Nor is it clear on what basis that decision was a determination in accordance with cl 12.1 of the amount and nature of the amount payable under the Policy.
10. There is another available explanation for why the Trustee considered the merits of Metlife's decision to reject the appellant's claim. The fact that it did so, initially via a claims assessor and subsequently by its Claims Review Panel, is consistent with the performance of its duty under the superannuation trust to exercise in relation to the making and maintaining of a claim under the policy on behalf of a member the same degree of care, skill and diligence as "an ordinary prudent person would exercise in dealing with property of another for whom the person felt morally bound to provide" and "in the best interests" of that member (trust deed, cl 9(b), (c)).
11. Finally, if the primary judge had determined the question of incapacity in the appellant's favour, it would have been necessary to consider the orders that should be made as against Metlife and in respect of the Trustee. The latter required close attention to the opinion which the Trustee was required to form and the purpose for which it was required to do so. If that opinion was not properly formed, in the ordinary course the exercise of doing so would be remitted to the Trustee. The same questions arise in the event that the appeal is successful. However those questions were not addressed in the appeal, the parties being content to proceed on the basis that if the primary judge is found to have erred in concluding that he was not satisfied that the appellant was within the definition of TPD, the relevant benefit could be paid to the Trustee so as to be available to be paid out to the appellant by the Trustee but in accordance with the terms of the Trust Deed.

Determination of the appeal

1. The definition of TPD requires an assessment of the extent of a person's incapacity to engage in or work for reward as a result of injury or illness. The extent of that incapacity must be such as to render the person "unlikely ever to engage in or work for reward in any occupation or work" that he or she "is reasonably capable of performing by reason of education, training or experience". This makes it necessary to consider whether notwithstanding the person's incapacity, there is any occupation or work which the person is reasonably capable of performing by reason of his or her "education, training or experience". These words are used both disjunctively and conjunctively and refer to education, training and experience assessed as at the time the question of capacity is to be addressed: Hannover Life Re of Australasia Ltd v Dargan [2013] NSWCA 57; 83 NSWLR 246 at [36], [41].
2. Before the primary judge the respondents contended that by reason of his education, training and experience as at April 2011, the appellant was capable of gaining full time employment in the automotive industry either as a motor vehicle parts interpreter or sales assistant or in a customer service/advisory role. The first of these positions describes the activity of participating in the sale of motor vehicle parts and accessories, either by wholesale or retail.
3. The respondents relied, in support of that contention, on the evidence of Dr Keller and Ms Lee, each of whom was cross-examined, and Ms Atteya. Dr Keller undertook an assessment of the appellant's medical condition and physical functional capacity. Ms Lee then suggested the three "work options" described above as within Dr Keller's assessment of the work the appellant was functionally capable of undertaking and as suitable having regard to his educational, employment and general vocational background. Ms Atteya separately assessed his employment history, educational background and transferable skills as fitting him to work either as a customer service assistant, a sales assistant or a sales representative, in each case in the automotive industry.
4. The appellant accepted that he was capable physically of performing each of the three roles identified by the respondents. He also gave evidence that as a result of applying for a job as a vehicle parts interpreter he understood that he had to be familiar with a particular computer programme which enabled stock parts to be located, quoted from and orders fulfilled and followed up. His evidence was that a TAFE course could be undertaken to obtain that skill. He agreed that with "suitable training" he should be able to do that job.
5. The appellant also accepted that as part of his work with OTO Gas he had used a computer to access sources of spare parts and motor vehicle technical and service specifications. Ms Lee's assessment noted that his computer skills included using "the internet, email and microsoft word". In relation to the role of a sales assistant the appellant agreed that he would be able to undertake that role subject to his being taught how to use a cash register. Finally, the appellant acknowledged, and the primary judge found that he had excellent communication skills.
6. On the basis of this evidence the primary judge concluded that there was work available to the appellant in the areas identified that he was reasonably capable of performing by reason of his education, training and experience: [157]. He gave two related reasons for doing so. First, it did not matter that the appellant may have to undertake further training to perform some of those roles because the description "work which [he was] reasonably capable of performing by reason of education, training or experience" did not exclude the possibility of a need for further training where that training would not change the character of the work for which he was already fitted but would enable him to use his existing skills to pursue work of that character: [152]. Secondly, any further training the appellant required would have been minimal and it would have been reasonable in the circumstances for him to undertake that training to enable him to utilise his existing skills: [155].
7. The appellant argues that each of these reasons involved error.
8. He says as to the first that the commercial purpose of the policy was to provide a benefit in the event that at the relevant date the insured person was unable to obtain employment without further training. In support of the proposition that employment that requires re-training is not work for which a person is reasonably fitted, the appellant refers to the decision of Brereton J in Halloran v Harwood Nominees Pty Ltd [2007] NSWSC 913; 16 ANZ Ins Cas ¶90-142 and the earlier decision of Hungerford J in Fernance v Wreckair Pty Ltd (No 2) (1992) 43 IR 300.
9. In Halloran, the plaintiff had been injured whilst employed in the task of greasing machinery. He subsequently completed a TAFE course in office administration and computer studies and obtained employment in a position as a contract officer with the Aboriginal Land Council. It was argued by the insurer that when addressing whether Mr Halloran was totally and permanently disabled, the insurer could have regard to subsequent events showing actual employment for which he had become suited by re-training. That submission was rejected. The definition required the relevant assessment to be undertaken at an earlier point in time and by reference to the employee's then education, training and experience. In that context Brereton J observed at [36]: As Fernance makes clear, employment for which an employee becomes suited only subsequently by reason of retraining is not the type of employment which is contemplated by that definition…
10. The training which the evidence suggested the appellant might have to undertake involved, in relation to the role of parts interpreter, the undertaking of a TAFE course to impart the skills necessary to use particular computer software; and in relation to the position of sales assistant, the need for training on how to operate a cash register.
11. I agree with the primary judge's conclusion that the need for this further training did not mean that the appellant was not already reasonably capable of performing the roles to which it was directed. The expression "reasonably capable" recognises the reality that a person may have to undertake specific training or certification to enable him or her to engage in particular employment for which he or she is otherwise qualified by education, training or experience. That training or certification may be available in the form of a TAFE or other certification course or from the employer. The job advertisements in evidence show that different employers place different emphasis on particular aspects of the skills necessary to undertake employment of the same kind and recognise that some training may be required to fit the employee's skills to the particular employment. The training the appellant may have required answered that description. The evidence showed that he had computer skills but needed to be trained in the use of particular computer software. It also showed that the appellant had the innate intelligence necessary to learn how to operate a cash register without any difficulty.
12. The appellant's position is similar to that of the insured in Hannover Life Re of Australasia Ltd v Dargan [2013] NSWCA 57; 83 NSWLR 246. Mr Dargan was an experienced truck driver. He injured his lower back and was unable to continue in that occupation. The question was whether he was reasonably fit to drive a taxi by reason of his education, training or experience. The evidence showed that he had to obtain a certificate and complete a training course. It did not suggest that his existing training and experience was insufficient to enable him to complete that course. Bathurst CJ (Macfarlan, Meagher, Hoeben JJA and Tobias AJA agreeing) considered at [38]: Even assuming that he had to refresh his knowledge of the rules of the road and acquaint himself with the major roads around Hobart to complete the course, that would not in my opinion mean that he was not reasonably fit to drive a taxi by virtue of his education, training or experience.
13. Mr Dargan's position was clearly different from that of Mr Halloran: Dargan at [39] - [41].
14. As to the second reason given by the primary judge, it is submitted that he erred in finding that any training that the appellant required was "minimal". The primary judge relied upon that finding as supporting his conclusion that in the circumstances it would have been reasonable for the appellant to undertake that further training. In Chammas v Harwood Nominees Pty Ltd (1993) 7 ANZ Ins Cas ¶61-175 Hodgson J (at 77,999 - 78,000) considered that employment which was "reasonably open" by reference to education, training or experience included employment which a person was capable of undertaking and "at least employment which he could become capable of undertaking with further training which it would be reasonable for him to undertake". In Dargan at [44], that view was applied to the similar expression "reasonably qualified".
15. The evidence supported the primary judge's conclusion that any further training or certification required would have been minimal and that in the circumstances it was reasonable for the appellant to undertake that training in order to gain employment utilising his existing skills and experience. The appellant had existing computer skills and considered he was capable of performing the tasks of a spare parts interpreter provided he was shown how to use particular computer software. It was not suggested that with his existing skills he did not have the capacity to undertake and successfully complete that training. The only other training suggested was in the use of a cash register. The evidence did not indicate whether that training could be undertaken on the job or separately. On no view was it likely to involve any significant course of study or training.
16. Finally there was a suggestion in the evidence of Ms Lee that a vocational certificate was required to enable the performance of duties as a spare parts interpreter. Ms Lee assumed, without knowing one way or the other, that a qualified and experienced motor mechanic should be able to secure that employment without the need for such a certificate because those qualifications were above the level of such a certificate. In my view the assumption that such a certificate would not have been required of a person having the appellant's training and experience was justified having regard to the other evidence. The job advertisements for that position indicated that what was essential was a knowledge of car makes and models. No mention was made of any requirement to hold any such vocational certificate. Furthermore the appellant had made inquiries about taking employment as a parts interpreter and agreed that subject to his being trained in the use of a particular computer programme, he was capable of undertaking that employment.

Conclusion

1. The primary judge did not err in not being satisfied that the appellant was within the definition of TPD in the policy. That conclusion makes it unnecessary to consider the questions concerning the position of the Trustee and relief which would arise if the appeal was successful.
2. The orders I propose are: 1. Appeal dismissed. 2. Appellant pay the respondents' costs of the appeal.
3. GLEESON JA: I agree with Meagher JA. NOTE: The extract from the Superannuation Industry (Supervision) Regulation 1994, reg 6.01, set out above at [14] and [42] was the definition in force prior to amendment in 2007. As at April 2011, the definition in reg 6.01 read: "permanent incapacity, in relation to a member, means ill-health (whether physical or mental), where the trustee is reasonably satisfied that the member is unlikely, because of the ill-health to engage in gainful employment for which the member is reasonably qualified by education, training or experience."

Endnotes

1. [2014] NSWSC 632 at [146].
2. Judgment at [149].
3. [1984] VR 161.
4. [1999] HCA 28; 197 CLR 83 at [7].
5. [2010] HCA 36; 242 CLR 254 at [66] (French CJ, Gummow, Heydon, Crennan and Bell JJ).
6. Eg, Rapa v Patience (NSWSC, McLelland J, 4 April 1985, unrep) at 11-12.
7. Section 14(2).
8. Section 18(1)(c).
9. Section 37(2).
10. Karger v Paul [1984] VR 161 at 165.
11. Insurance policy, cl 10.2(a), second dot point.
12. Deed, 1.1, definitions, Insured Benefits.
13. Judgment at [149]-[150].
14. [2013] NSWSC 1115 at [53].
15. [2005] NSWCA 214; 13 ANZ Ins Cas ¶90-213 at [33].
16. (1992) 7 ANZ Ins Cas ¶61-113.
17. Edwards at p 77,536.
18. Doyle v City of Glasgow Life Insurance Co (1884) 53 LJ Ch 527 at 529.
19. Edwards at p 77,537.
20. (1985) 3 ANZ Ins Cas ¶60-638; [1985] 1 NZLR 491 at 497, 500, 505.
21. [2001] QCA 317; [2002] 2 QdR 197.
22. At [72].
23. At [19].
24. At [17].
25. [1919] AC 1, 6.
26. (1950) 81 CLR 418, 440-442.
27. McArthur at [20].
28. Noted at [14] above.
29. Judgment at [4].
30. Complaints Act ss 6, 37(1).
31. Complaints Act, s 41(3).
32. Complaints Act, s 46(1).
33. Complaints Act, s 14(2).

Amendments 04 February 2016 - [58] second sentence: MacPherson JA changed to McPherson JA [70] first sentence: the word "the"inserted before "respondents" [74] first sentence: the first word "It" replaced with "He" 05 February 2016 - [6] "Birsdall" amended to read "Birdsall"

[11] In quote "Inured Benefits" amended to read "Insured Benefits"

Footnote 10 - "164" amended to read "165". 04 April 2016 - Adding note to end of judgment re Superannuation Industry (Supervision) Regulation 1994 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 04 April 2016