Carroll v United Super Pty Ltd

Judgment

1. The plaintiff, Mr Nicholas Carroll was self-employed as a builder until March 2012. He became a member of the industry superannuation fund, Construction and Building Union Superannuation Fund ("the Fund"), in June 1988.
2. The first defendant, United Super Pty Ltd ("the Trustee"), is the trustee of the Fund. It exercises its trustee functions pursuant to the CBUS Trust Deed ("the Deed") that constitutes the Fund.
3. The second defendant, Hannover Life Re of Australasia Ltd ("Hannover"), issued a Group Life Insurance Policy (No. VGL 4163) ("the Policy"), to the first defendant in relation to members of the Fund, including Mr Carroll.
4. Mr Carroll claims that he ceased work as a consequence of pain caused by bilateral hip dysplasia (a congenital condition characterised by abnormal tissue growth) and as a result has been unemployed since 9 March 2012. He is still a member of the Fund. It is not disputed that he remained continuously unemployed for a three month period until 9 June 2012. He claims that he has since 9 March 2012 been disabled, and that after the three month waiting period he qualified as "totally and permanently disabled" within the provisions of the Policy from 9 June 2012.
5. On 18 December 2012 Mr Carroll claimed the payment of a benefit of $104,000 from the Trustee on account of his claimed total and permanent disablement (also referred to in these reasons as "a TPD benefit"). On 12 February 2013 the Trustee referred Mr Carroll's claim to Hannover for determination. In September 2013 and April 2014 the Trustee declined to accept Mr Carroll's claim. In separate decisions in June and August 2013 and February 2014 Hannover also declined to accept his claim.
6. In September 2014 Mr Carroll brought these proceedings against both the Trustee (as first defendant) and Hannover (as second defendant), challenging their respective decisions to decline his claim. The first issue in these proceedings is whether or not those decisions can be avoided as having been made in breach of the duties applicable to each of the Trustee and Hannover. In the event that the decisions cannot be avoided, they will stand and Mr Carroll's case would fail.
7. But in the event those decisions were avoided, Mr Carroll now asks the Court itself to assess whether he is entitled to the payment of the TPD benefit at the qualifying date of 9 June 2012. His case is based on evidence that includes events that have occurred since the Trustee's and Hannover's respective decisions to decline his claim. Both the Trustee and Hannover contend on the whole of the evidence, including the evidence arising from events since the decisions to decline right up to the hearing, that Mr Carroll still does not qualify for a TPD benefit under the Policy.
8. It is not in contest that Mr Carroll would be entitled under the Policy to a TPD benefit of $104,000 were he successful.
9. Some complexity arises in these proceedings by the need to consider events in Mr Carroll's life after the Trustee's and Hanover's respective decisions. After receiving advice as to conservative treatment of his right hip pain until early 2015, Mr Carroll finally submitted to a right total hip replacement in February 2015. Since then his left hip has become symptomatic. By the time of the trial he had become a possible candidate for left total hip replacement, but that surgery had not yet taken place. And from early 2015 the plaintiff had some involvement (the precise level of which was strongly disputed) in a small importing business owned by his wife, Mrs Genevieve Carroll. These matters were all said to bear upon whether or not the plaintiff qualified as TPD as at June 2013.
10. Mr A. Coombes of counsel appeared for Mr Carroll, instructed by Mr S. Firth of Firths Compensation Lawyers. Ms B. Nolan of counsel appeared for the first and second defendants respectively, the Trustee and Hannover, instructed by Mr M. Iacuzzi of Turks Legal.
11. Before recounting a narrative of the events concerning Mr Carroll's claim it is convenient first to set out the relevant framework of the Deed and the Policy.

The Deed and the Policy Wording

1. The Deed is the first legal gateway through which Mr Carroll's claim must pass. But the principal objective of his case was to attempt to set aside the decisions of the Trustee and Hannover and then to establish that he was TPD under the terms of the Policy.
2. The structure of the Deed may be shortly described: it appoints, confers powers upon, limits the liability of, and provides an indemnity to the Trustee out of the fund (clause 1); it admits persons to participate as Employers, as defined, in the Fund (clause 2); it provides for eligibility for membership and Membership of the Fund (clause 3); it constitutes the Fund, vests it in the Trustee, and defines the Fund as including monies assets and Policies held by the Trustee (clause 4); and provides for a system of benefits payable from the Fund to members (clause 5).
3. Subject to applicable superannuation law, the Trustee "has the complete management and control of all proceedings matters and things in connection with the Fund" and has "an absolute and uncontrolled discretion" in the exercise of its powers: Deed, clause 1.2(b) and (c). The "Trustee may act on the advice or opinion" of consultants, claims assessors, medical practitioners "or other professional person": Deed clauses 1.2(h). At all relevant times Mr Carroll qualified as a Member of the Fund.
4. The Deed's powers of management and investment of the Fund authorise the Trustee (clause 4.4 (a)) to effect from time to time, at the expense of the Fund, Policies of insurance with one or more insurers in regard to the management of the Fund and to continue or renew such Policies "as the Trustee may think fit". Clause 4.4 provides follows: "4.4 Insurance (a) The Trustee shall have Power to effect or take out at the expense of the Fund, from time to time, one or more term or other Policies or contracts with one or more Insurer in regard to the management of the Fund and to continue or renew or arrange for the continuance or renewal of all or any of such Policies or contracts for such period or periods as the Trustee may think fit. The Trustee may also agree, from time to time, with the Insurer concerned for any Policy or contract to be varied or modified. In addition to or in substitution of any contract of insurance or Annuity, the Trustee may provide for the death and disablement Benefits (including without limitation Temporary Incapacity Benefits and Total and Permanent Disablement Benefits). (b) A Policy shall be on such terms and conditions as may be approved by the Trustee and the Trustee shall pay all premiums, and receive from the Insurer all payments, refunds and other moneys, in respect of the Policy and shall dispose of all moneys so received in accordance with the deed. (c) If at any time: (i) the Trustee is of the opinion that it is not reasonably practicable to obtain insurance or an increase in insurance or to maintain insurance in respect of a Member under a Policy or in the event that the Fund is self-insuring, to fund the Benefits specified in sub-clauses 5.11 and 5.12, on terms acceptable to the Trustee and or to provide for the death and disablement Benefits (including without limitation Temporary Incapacity Benefits and Total and Permanent Disablement Benefits); or (ii) pursuant to the Policy, the Insurer, for any reason whatsoever, fails to provide or increase or reduces, terminates or withholds insurance in respect of a Member or refuses to admit a claim for the whole or part of the insurance effected in respect of a Member, any Benefit payable to or in respect of the Member pursuant to the Deed shall be reduced to the extent that insurance is not obtained, increased or maintained or is not provided or increased or is reduced or terminated or that claim is not admitted in respect of the Member, as the case may be, or, where insurance is withheld, shall be adjusted accordingly."
5. The Deed provides for: a system of Members Accounts, as defined, against which accrued benefits in respect of a Member may be credited (clause 4.5); and a Reserve Account for accretions to or profits upon the realisation of investments and monies not required to the payment of benefits (clause 4.6).
6. The Deed clause 5.1 describes the system of Benefit Events by which the Trustee is authorised to pay out the Benefits of the Fund. Clause 5.1 provides as follows: "5.1 Benefit Events (a) Subject to the Deed and the Relevant Law, the Benefits of the Fund shall be as specified in or determined in accordance with Division Two of this clause 5 and only become payable on the happening of the events prescribed in that clause. Subject to the Relevant Law, any decision of the Trustee as to whether a Benefit is payable, and regarding the amount, form and application of any Benefit, is final and conclusive against all persons. (b) The Trustee shall not pay a Benefit if the payment results in the Trustee or an Employer contravening any Relevant Law if the Trustee believes that the payment of a Member's Benefit is contravening or will contravene any Relevant Law, the Trustee may: (i) where applicable, reduce the contributions payable in respect of the Member; or (ii) subject to the Relevant Law, transfer an amount from the Member's Account to the Reserve Account; or (iii) apply a combination of sub-clauses 5.1(b)(i) and 5.1(b)(ii); as it considers appropriate."
7. Under the Deed, clause 5.12, a benefit is payable to a member of the Fund, such as Mr Carroll, if the member ceases to be "Gainfully Employed" prior to attaining the age of 65 and suffers "total and permanent disablement". Clause 5.12 provides as follows: "5.12 Total and Permanent Disablement Subject to this Deed, the Benefit payable to a Member who ceased to be Gainfully Employed prior to attaining the age 65 having suffered Total and Permanent Disablement shall be the sum of: (a) the Member's Retirement Credit; and (b) the amount of any Insured Benefit, if any, provided in respect of the Member."
8. The Deed, clause 7.2 provides its own definition of "Total and Permanent Disablement" in the following terms: "'Total and Permanently Disabled' shall have a corresponding meaning but where at any time, all or part of the Benefit payable in the event of Total and Permanent Disablement is an Insured Benefit, the term 'Total and Permanent Disablement' shall bear the meaning ascribed to it in the relevant Policy in lieu of the above definition."
9. The Deed, clause 7.2 contains a definition of "Policy", which the parties agree is the terms, conditions and particulars contained in Hannover's Group Life Policy VGL 4163, which is also referred to as "the Policy" in these reasons. Clause 7.2 also contains defined terms for "Gainful Employment" and "Insured Benefit", as follows: "'Gainful Employment' in relation to a Member means engagement in any business, trade, profession, vocation, calling, occupation or employment for gain to the extent required by the Relevant Law and 'Gainfully Employed' shall have a corresponding meaning; … 'Insured Benefit' means the proceeds of any Policy effected by the Trustee on the life of a Member or in respect of the disablement (including without limitation the Temporary Incapacity or Total and Permanent Disablement) or a Member;"
10. Provided a claimant meets the conditions of clause 5.12 by ceasing to be "Gainfully Employed" prior to the age of 65 and by suffering "Total and Permanent Disablement", the relevant benefit payable under clause 5.12(b) is "the amount of any Insured Benefit". The definition of "Insured Benefit" refers to "the proceeds of any Policy effected by the Trustee… in respect of the disablement… of a Member". The Policy is such a policy in Mr Carroll's case.
11. To assess whether a claimant is entitled to an "Insured Benefit" it is necessary to determine whether there are any "proceeds" of the applicable Policy. That in turn directs analysis to the definitions and provisions of the Policy itself. The Policy definition of "Total and Permanent Disablement" must be considered in lieu of the equivalent definition, the definition of Gainful Employment, in the Deed, clause 7.2. Unless the Policy definition is satisfied no Insured Benefit is payable. Neither party argued to the contrary.
12. The Policy, under the heading "BENEFITS", provides for the payment of Agreed Benefits in respect of various events, the relevant one being in Mr Carroll's case, the suffering of Total and Permanent Disablement (or "TPD" in these reasons) giving rise to the payment of what the Policy calls a "Total and Permanent Disablement Agreed Benefit". The obligation to pay this Agreed Benefit is provided for under Policy clause 2.1, as follows: "2.1 Agreed Benefit If cover is in force under The Policy when an Insured Person: (a) dies; or (b) suffers Total and Permanent Disablement (TPD); or (c) is diagnosed with a Terminal Illness (TIB); we must pay the Agreed Benefit. These obligations as ours are subject to the conditions contained in The Policy and to the Proposer and the Insured Person abiding by all the conditions which apply to them."
13. Hannover agrees under clause 2.2 of the Policy to pay a Total and Permanent Disablement Agreed Benefit, as follows: "2.2 When Do We Pay A Total Permanent Disablement Agreed Benefit Where, at the Date of Disablement we are satisfied an Insured Person meets the following requirements, we will pay the Total and Permanent Disablement Agreed Benefit subject to: (a) where the Insured Person was aged less than 65 and was engaged in Regular Remuneration Work within the 12 months prior to the Date of Disablement, they meet either Part 1A, Part 1B, Part 2, Part 3, Part 4 or Part 5 of the Total and Permanent Disablement definition; or"
14. The Policy definition of "Total and Permanent Disablement" is divided into parts that speak to different kinds of events that may potentially qualify a person as TPD. The one relevant to Mr Carroll's situation is "Part 2 -Unlikely to Return to Work" and is as follows: "Total and Permanent Disablement means with respect to an Insured Person, who as at the Date of Disablement is covered under The Policy for Total and Permanent Disablement, that they meet one or more of the following Parts as outlined in clause 2.2: … Part 2 - Unlikely to Return to Work: The Insured Person is unable to follow their usual occupation by reason of Illness or Injury for 3 consecutive months and in our opinion, after consideration of medical or other evidence satisfactory to us, is unlikely ever to be able to engage in any Regular Remuneration Work for which the Insured Person is reasonably fitted by education, training or experience."
15. The expression "Regular Remuneration Work" that appears within the applicable definition of total and permanent disablement is defined in the Policy, in the following terms: "Regular Remuneration Work means an Insured Person is engaged in regular remunerative work if they are doing work in any employment, business, profession or occupation. They must be doing it for reward, or the hope of reward of any type. The Insured Person is also considered to be engaged in regular remunerative work if they are on Employer Approved Leave."
16. To qualify under the Policy a claimant must prove "Total and Permanent Disablement" as at the "Date of Disablement". The definition of that date varies depending on the kind of TPD which is claimed. The definitions in the Policy in respect of Part 2 claims provide a definition of the relevant "Date of Disablement" as follows: "Date of Disablement Total and Permanent Disablement is treated as having occurred on the Date of Disablement which is the earlier of: … (b) for Part 2 of the Total and Permanent Disablement definition, the date on which the Insured Person commenced their period of 3 consecutive months of inability to work that results in Total and Permanent Disablement; or… "
17. The Trustee and Hannover join issue with Mr Carroll as to whether he has satisfied the Policy requirement that he is "unlikely ever to be able to engage in any Regular Remuneration Work for which he is reasonably fitted by education, training or experience", also referred to in shorthand in these reasons as an "ETE clause".
18. What now follows is a narrative of the history relevant to the determination of the matters in issue. This narrative represents the Court's findings on the matters covered, except to the extent that the context indicates that only the parties' allegations are being recorded. For reasons of economy this narrative does not always include reference to versions of the facts that have been rejected.
19. The narrative is divided into two parts. The first part sets out the Court's findings concerning events up until the Trustee and Hannover decided to decline Mr Carroll's claims in the period between June 2013 and March 2014. That narrative is then interrupted by the Court's first stage analysis as to whether the Trustee's and Hannover's decisions to decline payment to Mr Carroll can be avoided.
20. These reasons conclude that one of the Trustee's and all of Hannover's decisions can be avoided and that the Court can itself proceed to assess whether Mr Carroll is entitled to a TPD benefit. Then after an analysis of the applicable legal principles the narrative resumes and in its second part sets out the Court's relevant findings after the June 2013 - March 2014 period in the specific subject areas relevant to the Court's final conclusion as to whether Mr Carroll is entitled to a TPD benefit under the Policy.

Mr Carroll's Claim for a TPD Benefit is Declined - 2012 to 2014

1. Mr Carroll was born in October 1968. At the date he ceased work in March 2012 he was 43. At the time of the hearing he was 48. He has lived in Tasmania all his life.
2. After leaving school, at about the age of 18 in 1986 Mr Carroll undertook an apprenticeship in spray painting to which he was committed throughout 1986 and 1987.
3. In 1988 Mr Carroll worked as a labourer for Baulderstone Hornibrook Pty Limited. His labouring duties involved repairing the tops of grain elevator silos and working on swinging stages.
4. But by the relatively early age of 21 Mr Carroll demonstrated aptitude for self-employment. In 1989 he made use of his spray painting apprenticeship and commenced businesses as self-employed panel beater. He undertook this work for approximately 8 years between 1989 and 1997, ultimately employing up to five employees in his business.
5. Mr Carroll changed direction in 1997. Still working in a self-employed capacity, he commenced work as a building contractor in 1997, undertaking the construction of homes for speculative sale, and other dwellings and home maintenance. He also sub-contracted to TAS Span, undertaking work involving steel laying, formwork and concreting. This building contracting work that commenced in 1997 ultimately concluded, after about 15 years, on 9 March 2012.
6. But between October 2010 and March 2012 Mr Carroll took on other employment that overlapped with his building contracting business. In those 18 months he worked as a supervisor/leading hand carpenter for GBE Maintenance Services Pty Ltd ("GBE"). His duties in this role involved working in contract mining projects, quoting and costing of jobs, and general building and construction work.
7. Mr Carroll's duties before ceasing work on 9 March 2012 involved a range of essentially manual labouring activities: trench digging, working with steel, concreting, bricklaying, timber framing, plastering, painting, roofing, domestic lock up and fit tout, joinery, window fitting and replacing, tiling, scaffolding, and operating excavators.
8. Mr Carroll's work also involved tasks which were not purely laboring: quoting and costing jobs. These tasks at first appear to involve less physical activity than the former list of tasks. But the contested evidence shows they do involve their own measure of demanding physical activity. The majority of Mr Carroll's duties did involve constant lifting, walking, climbing ladders, bending and standing for long periods of time.
9. Mr Carroll was suffering intense hip pain in early 2012. So he consulted Dr Scott Fletcher in February 2012 for a medical assessment of his pain condition. Shortly subsequent to that assessment he ceased work.
10. In late 2013 he was being prescribed Celebrex 200 mg and Panadol to treat his pain levels.
11. This history records Mr Carroll's account of his working history which the Court accepts. Aspects of his working history and disability levels were in contest. But that contest is dealt with later in these reasons.

The OnePath Income Protection Policy

1. Mr Carroll took out an income protection policy with OnePath Life Ltd ("OnePath"), a life insurance entity associated with the ANZ Banking Group, on 16 February 2011. When Mr Carroll ceased work on 9 March 2012 he first lodged an income protection claim with One Path in respect of his right hip. OnePath accepted his claim and benefits commenced to be paid from April 2012.
2. But whilst Mr Carroll was pursuing his claim against the Trustee and Hannover, OnePath investigated Mr Carroll's medical history and determined that Mr Carroll had failed to disclose a pre-existing history of osteoarthritis to his right hip and lower back in his application to OnePath for income protection insurance.
3. OnePath conducted that investigation between April and September 2012. Then on 27 September 2012 OnePath denied Mr Carroll's claim. It placed a lumbosacral spine right hip exclusion against his income protection cover and total and permanent disablement cover.
4. On 9 October 2012 Mr Carroll lodged with OnePath a subsequent claim for osteoarthritis affecting his left hip. This supplementary claim was outside the exclusion in respect of his right hip and was accepted. Benefits commenced to accrue to Mr Carroll in respect of this separate claim from 1 September 2012. Those benefits were being paid throughout the period covering the contest between Mr Carroll and Hannover.
5. OnePath's income protection file for Mr Carroll came into the possession of both the Trustee and Hannover, before they made their decisions to decline the plaintiff's claim. The OnePath file was part of the materials each of them relied upon to decline Mr Carroll's claim.
6. Certain material is produced on subpoena from OnePath and made the subject of cross examination on a voir dire. But no party submitted it should remain on a voir dire and it will all be admitted into evidence.

The Trustee Declines Mr Carroll's Claim - September 2013 and April 2014

1. Mr Carroll made initial enquiries of Cbus in December 2012 and was invited to complete and provide a member statement, an occupational history form, and educational training and experience form and a confidential medical report from his treating doctor. He did all of this. Mr Carroll generally provided the required documents to the Trustee which in turn provided them to Hannover.
2. Mr Carroll provided medical reports and statements from his general practitioner Dr Keith Barnes of 17 October 2012, 12 December 2012, 17 December 2012 and 22 May 2013, and his treating orthopaedic surgeon Dr Scott Fletcher of 15 March 2012, 22 October 2012, and 27 March 2013. He also gave authority for there to be provided a medical report of 20 November 2012 from a consultant orthopaedic surgeon Dr Z. Poplawski, which report had initially been obtained for his claim against OnePath. Relevant parts of these medical reports are discussed later in these reasons.
3. As part of their investigation of Mr Carroll's claim, the Trustee and Hannover organised surveillance upon him. An investigation report resulting from an surveillance dated 15 November 2012 recorded three separate periods of surveillance in excess of 19 hours over some two days was before them. This surveillance showed the plaintiff entering, driving and alighting from motor vehicle, undertaking shopping and walking up steps and climbing a ladder at one point.
4. The Trustee obtained for its consideration not only a member statement from Mr Carroll but an employer statement from Mr Carroll's own business "Nick Carroll Constructions" and another from his other employer between 2010 and 2012, GBE.
5. The Trustee declined Mr Carroll's claim on two occasions, first by letter to Mr Carroll on 16 September 2013 and then by letter to Mr Carroll's solicitors on 1 April 2014.
6. The two letters are set out below. The Trustee's reasons for decision are to be gleaned from these two letters. Unlike Hannover, the Trustee is not obliged to give reasons for its decision: Sayseng at [32] ff. The Trustee did not go into evidence as to its reasons. But it tendered its file of internal working documents (Exhibit 1), identifying the material before it at the time the decisions were made. It is unclear on the evidence of this file to what extent the material before the Trustee was weighed or taken into account, except to the limited extent that may be inferred from its two letters of 16 September 2013 and 1 April 2014.
7. The Trustee's 16 September 2013 letter relevantly provided as follows: "We write as a follow up to our previous letter in which we advised that the Trustee had requested an additional report from Dr Barnes following HLRA's decline of your Total and Permanent Disablement benefit. Dr Barnes' report has now been received and the Trustee completed its review of your claim on 10 September 2013. The Trustee reviewed all the evidence including your correspondence dated 17.6.2011, Member Statement, Employer's Statement of Nick Carroll Construction, Employer's Statement GBE Maintenance and the medical evidence from Dr K Barnes, S Fletcher, Z Poplawaski and the Surveillance Investigation. Also considered was a copy of your Income Protection claim information provided by One Path. In particular it was noted that you are fit for sedentary type work, such as that of a project manager, although the evidence does not support that you are capable of returning to your role as a builder. To meet the definition of Total and Permanent Disablement a person must be considered unlikely ever to be able to engage in any Regular Remuneration Work for which a person is reasonably fitted by education, training or experience - not just permanently unfit for the occupation they were performing prior to their disablement. After consideration of the evidence obtained, the Trustee resolved that you did not meet the definition of Total and Permanent Disablement. The Trustee recognises the importance of your claim and remains committed to review any additional specialist medical evidence which supports your claim for a Total and Permanent Disablement. If you disagree with the decision of to decline your claim, you may take the following steps to have it considered by a senior officer who was not involved with the decision."
8. Despite the blandness of this letter, what might perhaps have been put in the letter as reasons but was not is evident from the Trustee's file (Exhibit 1) of material before it. Exhibit 1 includes a 13 June 2013 working document ("the June 2013 working document"), which appears to contain written consideration of some ingredients of relevance to its September 2013 decision in a section headed "Opinion". Even though the June 2013 working document precedes the Trustee's first decision by three months, it provides useful guide to the Trustee's decision-making process.
9. As will be seen, there was very considerable overlap between the documents before the Trustee at the time of its 2013 - 2014 decisions (and contained within Exhibit 1) and the documents before Hannover at the time of its 2013 - 2014 decisions (and contained within Exhibit 2). Ms Robyn Turton appears in both files as the senior claims assessor for Hannover (also known by its full title, Hannover Life Re of Australia Ltd, and often abbreviated in the correspondence to "HLRA"). The person with day-to-day management of Mr Carroll's file within the Trustee's office was Ms Aisha Dahini, a senior claims assessor, who appeared to report to Ms Linda Elliott, the Trustee's claims and complaints assessor. Within Hannover, others took over the management of subsequent Hannover decisions from Ms Robyn Turton.
10. The June 2013 working document signed by Ms Aisha Dahini, provides the following reasoning in its "Opinion" section: "Regarding the member's capacity for work, the balance of medical opinion confirms that the member is not fit to return to his role as a builder and we acknowledge that as at January 2013 the member was receiving Income Protection Payments from One Path due to his inability to return to previous employment. However the two Orthopaedic Consultants opine that the member is fit for work of a sedentary nature. S Fletcher having consulted with the member on at least two occasions further opines in his March 2013 report the member could work as an estimator which we note is a role that the member has completed previously. He also states he wouldn't consider the member TPD, even though at the time of his report he had not consulted with the member for over a year. The member's most recent medical report from Dr K Barnes advises that the member is not currently working, currently experiencing difficulty in managing home duties and is not currently engaged in any further retraining but Dr Barnes has never provided comment on the member's capacity to do other roles within his education, training and experience. We also note that the member is not currently seeking specialist treatment. Based on the available information, we are unable to form an opinion that the member meets the definition of TPD within the contract. In terms of requesting additional information to support the member's claim, it is our opinion that while a Vocational Assessment or commentary on the surveillance material from the member's doctor would have made for a more complete assessment it is unlikely to add weight to the member's claim."
11. It is worthwhile briefly to examine the contents Trustee's file between the June 2013 working document and the 16 September 2013 letter. The June 2013 working document raises the concern that Dr Barnes has not ever "provided comment on the member's capacity to do other roles within his education training and experience". Shortly after the June 2013 working document the Trustee, in light of information that Hannover had just declined Mr Carroll's claim on 7 June 2013, wrote to Dr Barnes on 24 June 2013 for his comments on Mr Carroll's capacity to engage in other suitable employment within his education training and experience, including in the roles of estimator and project manager. The Trustee informed Mr Carroll of this further enquiry of Dr Barnes.
12. But in the meantime, Mr Carroll had written on 17 June 2013 a lengthy note to the Trustee in response to Hannover's declining his claim on 7 June. In that note Mr Carroll said the following: "I first went to see Scott Fletcher early in 2012 as been referred to by my GP at that time. I explained to Scott that I had severe pain in both my hips and surrounding muscles by the end of the day from work particularly in my right hip, and they were getting worse as time went by. I had an MRI scan done as requested by Scott and as a result he immediately said as quoted in his letter dated 15 March 2012 that I was unable to work at the moment in any meaningful way. He was going to organise some rehab for me and recommend me to see a physio and get some beneficial exercises to try and help with the movement of my hips. As I was too young for hip replacements at this stage, as quoted by Fletcher." [sic]
13. Mr Carroll's 17 June 2013 note also complained about and criticised Dr Scott Fletcher for not accepting his account of his level of disability in his left hip. He then continued to explain his then present disability for various work tasks: "As far as studying for a future in my line of work, this is becoming harder and harder. I am in constant pain, especially with sleeping at night from lying on my side. The hip joints aches from the pressure from the weight of my legs and I can really only sleep on my back or front. Sleeping on my back is a pain not only for me but also for my wife, because I wake her up with my snoring most nights as well as myself. I'm not getting a full night sleep and I'm struggling not only physically but also mentally. As a result from Dr Poplawski's report, One Path have accepted my Claim and they are honouring my claim with monthly payments as shown in the documents that I have forward to you. Please bear in mind that Onepath has accepted my claim for my left hip only and this is not the condition with Hannover. I have two problematic hips and I have had TPD policy attached to my super from around the age of 18. I don't see how Onepath can accept my claim for one bad hip but Hannover can't accept my claim for two bad hips, which has been diagnosed with bilateral hip dysplasia with secondary osteoarthritis, worse on the right side, which this disease does not get better, it gets worse. Also a degree of left lateral cutaneous nerve entrapment - an incidental diagnostic with no relevance to my hip dysplasia problem. I can understand if Hannover is thinking that I still can be re-trained for another line of work whether in my line of work or in another totally different line of work. But that is not the case with these hips of mine. Who is going to employ me on a part time bases and be prepared to not have me turn up until I'm fit for work again? e.g." If I am in pain, and until the pain has settled enough to go back to work, is this a good example of getting me back into the work force, in a less physical capacity!!" I did enrol in a computer aided drawing course (auto cad engineering drawings) but I have pulled out of it because I don't have the mental concentration required for the course due to sitting for long hours in discomfort is just too much for me." [sic]
14. Mr Carroll also commented in conclusion in this letter as follows: "Reading and writing the letter is really quite depressing for me because it really brings home the life that I now live and what's in front of me. I'm relying on this payout from CBus (Hannover] to assist me in obtaining new hips sooner than later for as I can't afford full hospital cover. I'm not going to write any more. I'm hoping that I have given you clear and reasonable understanding of my predicament that I'm in and I hope that you grant this claim in my favour." [sic]
15. The Court accepts the accuracy of Mr Carroll's statements in this 17 June 2013 note to the Trustee. That acceptance is irrelevant for present purposes but ultimately relevant to the Court's later enquiry after vitiating the Trustee's and Hannover's respective decisions.
16. In an internal assessment by the Hannover's senior claims assessor, Ms Robyn Turton, on 20 August 2013 she drew the following conclusions from Mr Carroll's note and reiterated the decision Hannover had already made on 7 June 2013 to decline the members claim: "The member's claim with Onepath is for 'Temporary' Disablement whereby paid monthly instalment benefits. The criterion upon which Onepath have assessed the member's claim would be at variance to the terms and condition under which HLRA is required to assess the member's claim for a TPD benefit. It is also a point in time, namely March 2012 that HLRA is required to form an opinion towards a TPD benefit, and not at a date some several months later. The fact that the member perceives Dr Fletcher's opinion as unfavourable is not for our office to comment. The member clearly has stated that he has continued to engaged in low impact activities such as swimming, bicycle riding, walking and golf. Notably the activity of golf does requiring a pivoting of the hips, and as such demonstrates that the member's restriction is not as severe as the member would like us to believe. Bicycle riding would similarly also impact on hip movement and require a period of a prolong seated position, as would the member utilising a ladder to formulate his own exercise strategy. The member did indicate that, "I'm relying on this payout from CBUS…" which would also suggest that the member's claim is strongly financially driven or motivated. Whilst we appreciate the member's situation, there is no intrinsic new evidence provided of which would materially alter our opinion, and shall maintain our decision to decline the member's claim as communicated to the Fund on 07 June 2013." [sic] This is Hannover's second decision which is dealt with further below where Hannover's decisions are collected.
17. Mr Carroll then emphasised in a further email to the Trustee on 28 August 2013 his difficulty in undertaking any work and the difficulties in his being retrained: "My career was a builder, Building domestic homes. I can no longer perform my duties as a builder being for I need to have both my hips replaced. My question is what happens now ? Im currently on the waiting list for a replacement of my right hip which can take up to Two years on the waiting list. I am hoping that the new right hip will take some pressure off my left hip and that I wont have to have the left hip replaced for a while longer. I cant understand were I can be retrained in my line of work, my line of work is building or renovating houses. Unless the meaning of being retained in my line of work means Example; becoming a builder or surveyor, or a architect II this would be a career change in a hole new industry and would take years of training. My point being I can not be retrained in my line of work ( building new homes, etc. ) because of the physicality of its nature." [sic]
18. The same day a medical report came in from Mr Carroll's general practitioner, Dr Barnes, indicating Mr Carroll had a potential at the present time for sedentary work. Dr Barnes' report of 28 August 2013 was relevantly to the following effect: "This man has severe degenerative change within his right hip joint and the only procedure that is going to help is a right hip replacement. I recently referred him to an Orthopaedic surgeon, Mr Peter Van Winden, who suggested that if he were to have a right hip replacement then possibly his left sided hip symptoms would be less apparent and that his left hip would hopefully last many years. He also discussed with Mr Carroll as to whether he would be able to return to building with a hip replacement. Mr Van Winden's comment was that although generally discouraged, with ceramic on ceramic bearing surface, provided that the patient is not doing any substantial jumping from heights, it is still a reasonable proposition. Consequently in response to your first question, at the present time he would not be prevented from doing sedentary such as estimator or office work, and project manager would also be a possibility. He is, however, contemplating a hip replacement and once he has this done then certainly those positions of basically sedentary work as described under estimator or project manager would certainly be feasible. He also talked about doing architectural design, planning as a retraining course and once he had done those he would be able to work in these non physical areas. In response to your second question: I think that once this man had a hip replacement on the right side he would be able to return to some work for which he is either currently skilled, or might be able to retrain. Certainly at the present time he is not capable of building and being a builder."
19. As a result of the further investigation work after the June 2013 working document, the author of that document, Ms Aisha Dahini wrote an updating memorandum dated 9 September 2013 to her reporting superior, Ms Linda Elliott, the Trustee's relevant claims assessor as follows: "Whilst the Trustee was reviewing the file, additional correspondence from the member dated 17 June 2013 was received and forwarded to HLRA for comment. The correspondence outlines the member experiences in getting medical information to support his Income Protection Claim and his comments about his future employability. On 20 August 2013, HLRA responded to the member's correspondence via email and concluded that they appreciated the member's situation, however there was no evidence that would materially alter their opinion. The report from the member's treating GP - Dr K Barnes was received by Super Partners on 4 September 2013. In the report Dr K Barnes notes that the member had been referred to Mr Peter Van Winden - Orthopaedic Surgeon and that Mr Peter Van Winden commented that although generally discouraged, provided the patient was not doing any substantial jumping from heights, it was reasonable for him to return to building after the member had a hip replacement. Dr K Barnes also is of the opinion that at the present time the member was not prevented from doing sedentary work such as estimator or office work. On the basis of the additional report by Dr K Barnes we do not believe that the member meets the definition of TPD under the policy and therefore believe the claim should be declined."
20. After the Trustee's 16 September 2013 letter, further correspondence passed between representatives of the Trustee and Mr Carroll and his legal representatives, Firths Compensation Lawyers ("Firths"). Consequent upon that further correspondence, the Trustee made a second decision declining Mr Carroll's claim, which was communicated in the Trustee's letter of 1 April 2014 to Firths.
21. Between September 2013 and April 2014 some correspondence took place between the Trustee and Mr Kelvin Lau, claims assessor with OnePath. Then on 21 January 2014 Firths provided to the Trustee a statement signed by Mr Carroll and dated 23 December 2013, with a request that both the Trustee and Hannover review it and certain enclosed documents and reconsider the claim. It was this letter in which Firths also indicated to the Trustee that if Hannover refused to reconsider and accept the claim "we hereby request you as trustees and policy owner [to] commence proceedings against the insurer to enforce our clients entitlement to benefits under the policy".
22. Mr Carroll's statement of 23 December 2013 gave a career in working history which has been sent out earlier in these reasons. It then directly addressed his own assessment of his current disability levels as follows: "Everyday Life 13. I suffer from constant pain in my hips and I also get referred pain in both my legs. After doing some activities both my legs get stiff, tight and sore and then I find that I have to rest for at least three hours, before I can move again with difficulty. 14. Since the last day I worked I have continued to have difficulty with my everyday life. My life consists of good and bad days in relation to my hips and legs pain. On good days I feel good enough to move around and do simple tasks, such as doing the washing or walking. After doing tasks I may experience severe debilitating pain in my hips and groin area, the muscles in my legs get stiff and sore as well. If this happens, I take Celebrex and lay down for at least three hours before I move around the house again. On a weekly basis I have approximately 3-4 goods days and 2-3 bad days. 15. I suffer from the following restrictions: Sitting - on a good day I can sit for about two hours before I need to stand up and move around for about 5 to 10 minutes and then go back to sitting down. On a bad day, I cannot sit down due to intense pain and spend most of my time lying down. Standing - in the morning I can stand for about one hour and then I have to sit down or move around or rest for 5 to 10 minutes. On a bad day, I could probably stand for ten minutes and then I have to sit down or move around, Walking - on a good day I can walk for about 15 minutes, and then I start getting sore and limp. I then need to rest for a couple of hours before I can walk again. On a bad day, I do not walk at all. Driving in a motor vehicle - I sometimes find it difficult to lift my legs up when I am entering the driver's seat due to the pain. I sometimes sit on the driver's seat and physically pull my legs with my arms and hands inside the vehicle. On really bad days, I rely on my wife to drive me. On a good day, I can drive up to one hour, before stopping and having a 5-10 minute break. Walking up and down stairs - I have two flights of stairs in the house and there are about 18 steps. I find it difficult going up the stairs. This action hurts my groins and legs, more in the right side than the left. I also experience pain when I am going down stairs in both hips and legs. Squatting - on a bad day, I cannot squat at all On a good day, I can probably squat a few times but then I get sore. The more movement I do, the faster my legs start to lock up. Kneeling - I find it sorer to kneel. I find it causes me more pressure in my hips. On a good day I can do it a few times before I get sore. On a bad day, I cannot kneel. 16. I have found that my sleeping patterns are affected. I only get around 3-4 hour sleep a night as it takes me a very long time to get to sleep. I find that I am always in pain and I am often woken up by my pain levels when lying on my side, I then cannot return to sleep. The hip joints ache from the pressure from the weight of my legs. I find that I constantly move in bed and find that I only can sleep on my back or front. Hence, I need to lay down during the day for 1 -2 hours to essentially recover from the lack of sleep. This happens 3-4 days per week. 17. My reduced sleep causes me short term memory loss, problem solving and my ability to concentrate. 18. On good days, I drive to the shops and do the grocery shopping. The shops are about a 2 minute drive from my house. Due to my hip condition, I take my time with the walking. When I get home, I unpack the groceries and I sit down and rest as this activity causes me hip, groin and leg pain. 19. On good days, I can also pack the dishwasher, tidy up the house, but as I have found with every physical activity I then have to rest. I need to rest for at least one hour before I move again, 20. On bad days, I take Celebrex and rest for 2 - 3 hours. I stand up to move around, as this eases my pain. 21. Before my conditions became debilitating, I used to play golf once or twice per month, I used to be able to play 9 or sometimes 18 holes. I now play once every two months if I feel physically up to it. The last time I played I only lasted 6 holes and then had to stop due to extreme pain. I try to do golf as my treating doctors advised me to move around otherwise my condition will get worse if I do not move. Before my hips condition, I used to fish twice a month. Now I go probably once every three months. I just don't feel motivated anymore to go fishing due to my physical restrictions. I am also afraid I might fall on the boat at sea and make my hips even worse than they currently are. 22. Before my hips condition, I used to do bike riding with my wife and kids at least once a week. Now I cycle at home, in my shed if I feel good, I do this for about 10 minutes and then I get sore. I do this to keep my muscles moving as advised my treating doctors. 23. Before my hip conditions, I used to walk for about one hour, I now walk 15-10 minutes before getting sore and walking back home to rest. I do this to keep my muscles moving as advised my treating doctors. 24. At times, I feel upset because my life has changed and cannot work in my career due to my physical restrictions."
23. Mr Carroll's 23 December 2013 statement then continued to deal with his prospects of employment in the following terms: "Prospects of Employment 25. Since ceasing work I have been unsuccessful in finding any employment that I could do or working in my business. Since I ceased work, I received Sickness Benefits from Centrelink for a short period and then Income Protection payments from One Path Life Ltd to date and continuing on the basis of total disablement. 26. Due to my symptoms and restrictions there is no way that I can work in the areas that I have experience in. All these jobs require standing for long hours, repetitive lifting, repetitive bending, repetitive squatting, repetitive kneeling and walking. It also involves ladders, walking on uneven ground and trench work. I cannot honestly see myself performing these duties in the real world. My constant pain stops me from working in the construction industry."
24. Then Mr Carroll directly dealt in the statement with the Trustee's contention that he could work as an estimate or project manager in the following terms: "My comments in respect of CBUS view that I could work as an Estimator or Project Manager 27. To work as an Estimator, I need to complete a course and be qualified. I made enquires at Launceston Tas TAFE and a gentleman named Bruce McKenzie informed me that they are not running a course in estimation. Mr McKenzie said that they are not running it any longer as there is only one module in it. Mr McKenzie also said that the big companies now buy automatic software that does the estimation. 28. I understand that to work in estimating, the duties expected could involve assisting construction managers, architects and surveyors in planning and organization, preparing sketches, working drawings and specifications, editing and revising plans, inspecting work and materials for compliance with specifications, collecting data using surveying instruments and photogrammetric equipment. Even if I had the opportunity to retrain, I would have extreme difficulties with standing, sitting, kneeling, squatting, walking on uneven ground and driving. I become incapacitated after doing some light tasks at home. There is no way I could work in this position. In addition my pain levels and lack of sleep will not allow me to be alert and functioning as expected. 29. I understand that to work in project management I would also need TAFE qualification or higher. The duties expected could involve planning, organizing, directing, controlling and coordinating the construction of civil engineering projects, attending buildings and dwellings, being on demand to attend a job site. I also made enquires at Launceston Tas TAFE and the same gentleman Bruce McKenzie informed me that there is an online Certificate IV in Building and Construction which runs for 2.5 years. I would have difficulties studying this course due to my sitting restriction, my lack of sleep and pain levels will affect my concentration, I honestly cannot see myself being able to study for this long. 30. I understand that to work in Project Management, the duties expected involve having total control of a project, being on site, planning, organizing, directing, construction, managing the human resources involved in the building and construction. Even if I had the opportunity to retrain, I would have extreme difficulties with standing, sitting, climbing ladders, kneeling, squatting, walking on uneven ground and driving. I become incapacitated after doing some light tasks at home. In addition my pain levels and lack of sleep will not allow me to be alert and functioning as expected. 31. Therefore, based on my previous training, education and experience there is no job that I could perform in my locality on any regular basis due to my restrictions and limitations."
25. The Court accepts the accuracy of Mr Carroll's 23 December 2013 statement. That acceptance is irrelevant for present purposes but ultimately relevant to the Court's later enquiry after vitiating the Trustee's and Hannover's respective decisions.
26. On 11 February 2014 Hannover wrote the letter to the Trustee, set out later in these reasons, which records Hannover's third decision declining Mr Carroll's claim. On 25 February 2014 Hannover's 11 February letter was provided to Firths.
27. The Trustee's 1 April 2014 letter records the Trustee making a decision on 26 March 2014. But the Trustee's second decision was conventionally referred to in the proceedings by reference to the date of the 1 April 2014 letter. A record of this decision that is independent of the letter to Mr Carroll exists in Exhibit 1. It consists of memorandum from Ms Tahini to Ms Elliott of 24 February 2014, to which Ms Elliott apparently agrees on behalf of the Trustee on 26 March 2014 stating in the "comments" section of the minute, "Agree with opinion having considered the totality of the information provided". After surveying the history of the matter and the position that had been taken by the insurer, the minute said the following: "(3) Additional Evidence Statement of Client - 23.12.2013 25. Since ceasing work I have been unsuccessful in finding any employment that I could do or working in my business. Since I ceased work, I received Sickness Benefits from Centrelink for a short period and then Income Protection payments from One Path Life Ltd to date and continuing on the basis of total disablement 27. To work as an Estimator, I need to complete a course and be qualified 29. I understand that to work in project management I would also need TAFE qualification or higher 31. Therefore, based on my previous training, education and experience there is no job that I could perform in my locality on any regular basis due to my restrictions and limitations (4) Opinion The member is now a 45 year old builder who last worked in March 2012 as a self-employed person for Nick Carroll Constructions. As per the Statement of Client, the member is disputing the roles of Estimator and Project manager as being within his existing ETE. However we note that the member's resume indicates that he was responsible for quoting and costing of jobs through his role at GBE Maintenance Services Pty Ltd. Project Management is also mentioned. Also prior to ceasing all work the member was involved in running his own business, which presumably would have involved quoting on work and project supervision to some extent. The gaining of qualifications in Estimating or Project Management given the member's previous on the job experience in those functions could therefore be seek as up-skilling rather than re-training. It is also noted that he did not need formal qualification to perform those functions in his previous roles. Referring to the medical information, we confirm that the member has been cleared for the roles of Estimator and Project Manager - without having to perform manual duties. The member has also been cleared for office work - although the nature of such work has not been expanded on. Regarding to the member's claim that there is no job that he could perform in his locality (Launceston) we confirm a search of jobs on Seek revealed limited Construction roles in the Launceston area, none of which would be suitable for the member given his restrictions. However we are unaware of the labour market conditions closer to when the member ceased work or in the last six months. A Labour Market Analysis together with a Vocational Assessment would give a better understanding of the member's transferable skills and real job prospects, although it is noted that such a report if complied now would be subject to any deterioration in the member's condition in the last year and recent changes in the economic climate. It is therefore our opinion that given the totality of the evidence at hand the decision to decline the claim be maintained. A full copy of the previous file is available on request." [sic]
28. On this occasion, because of its adoption by the decision maker, Ms Dahini's minute can be accepted as the Trustee's reasons for decision of 26 March 2014, communicated to Mr Carroll's lawyers on 1 April 2014.
29. The 1 April 2014 communication of the Trustee's decision to Mr Carroll's lawyers was in the following terms: "The Trustee reviewed all the evidence including the Insurer Letter, correspondence from Firths dated 21 January 2014, Statement by Claimant dated 23 December 2013, Member Statement, Employer Statement of Nick Carroll, Employer's Statement GBE Maintenance and the medical evidence from Dr K Barnes, S Fletcher, Z Poplawaski, the Surveillance Investigation report and the Income Protection file from One Path. The Trustee notes that whilst the roles of Estimator and Project Manager are being disputed as being within your client's existing training, education and experience that the function of quoting and costing jobs was part of his role as a Supervisor at GBE Maintenance Services. It is also noted on your client's resume that your client finds managing projects rewarding. Given your client's job experience including that of running his own business and other Building Certificates obtained through TAFE, the gaining of formal qualifications in Project Management or Estimation is seen as up-skilling rather than requiring retraining. On 26 March 2014, the Trustee maintained its opinion that your client docs not meet the definition of Total and Permanent Disablement under the policy. A copy of the Insurer's decline is also included for your reference."
30. Once again, the Trustee did not adduce evidence to explain or provide further reasons beyond those set out in the 1 April 2014 letter. Nor was there any evidence to connect that letter with the contents of the Trustee's file or the June 2013 working document.

Hannover Declines Mr Carroll's Claim - June and August 2013 and February 2014

1. Hannover declined Mr Carroll's claim on three occasions: by letter to Mr Carroll on 7 June 2013, by email to the Trustee on 20 August 2013 and by letter to the Trustee on 11 February 2014. Each of these decisions of Hannover was communicated to the Trustee at the time and is mentioned above in the narrative of the Trustee's decisions.
2. Hannover did not adduce evidence from the relevant decision maker or tender a statement of its reasons for these decisions. Hannover has a duty to provide reasons for its decision. The Court was left to infer Hannover's reasons for its three decisions from its correspondence.
3. Hannover's 7 June 2013 letter undertakes something of an audit of the material then available to Hannover. And in respect of each principal document before Hannover, the letter gives a brief summary of its contents. Hannover's 7 June 2013 letter covers: Mr Carroll's member details; the employer statement from GBE Maintenance Services Pty Ltd of 11 December 2012; the employer's statement of Mr Nick Carroll Constructions of 18 December 2012; the member's statement of 18 December 2012; the medical reports of Dr Keith Barnes of 25 September 2012, 18 October 2012 and 12 December 2012; the medical reports from Dr Scott Fletcher of 16 February 2012, 15 March 2012, 22 October 2012, and 27 March 2013; surveillance reports of LS Associates of 30 May 2012 and 15 November 2012; and the medical report by consulting orthopaedic surgeon Dr Z. J Poplawski of 20 November 2012. The 7 June 2013 letter is addressed to the Trustee and in a concluding section entitled "Discussion and Summary" as follows: "Discussion and Summary The member purports to have become totally and permanently disabled as a result of his claimed medical condition of bilateral hip dysplasia. Whilst the member has cited his last employer to be that of GBE Maintenance Services Pty Ltd, the Employer Statement as completed by this particular employer did allege of the member's having last worked with their company as an employee during March of 2011, with the member then working as a subcontractor under his own ABN beyond such date in 2011, up until ceasing work in or about 9 March 2012. Therefore for the purpose of our assessment the member is described to be one of a self-employed contractor/builder/carpenter, having last worked in this role within his own registered business on or about 9 March 2012 The Date of Disablement as defined is hence seen to have occurred on 9 March 2012 when the member is alleged to have begun the three months consecutive inability to work that results in Total and Permanent Disablement. Based on the medical history to hand, the member since at least 2010 did sought medical consultation and investigation into his symptoms of hip pain predominantly of the right, of which were aggravated by the inherent manual work duties performed of a builder/carpenter. Following a consultation with Orthopaedic Surgeon Dr Scott Fletcher in February 2012, a diagnosis was given of a bilateral hip dysplasia particularly on the right hand side, and also articular cartilage de-lamination, label tears and subchondral cyst formation, particularly in the acetabulum. It was opined by Dr Fletcher at that time that the member would be unable to work at the moment in a meaningful way and with the member being age 43 years, the member is a little too young for a hip replacement at this stage. However Dr Fletcher did hold the view that the member would be capable of performing lighter duties eg in a job that involves non-manual labour and where periods of rest can be undertaken. Such job roles considered as suitable would include those of quoting and estimating materials, and as such Dr Fletcher does not accept that the member is unlikely ever to be able to return to work in an occupation which he is reasonably fitted by way of education training or experience. Similarly, Consultant Orthopaedic Surgeon, Mr Z J Poplawski whom examined the member in December 2012, did recommend that the member should seek more sedentary type employment. To this end, the member had reported that his usual work duties did incorporate spending time looking at jobs and carrying out quotes and assessments, often after work and/or on week-ends, and of often having had a number of people working for him, whom he did need to supervise as required. Given that the member did work in the capacity of self-employment, it is reasonable to deduce that the member in all likelihood could have continued to engage in the managing of his own business undertaking the lighter non manual aspects such as quoting, estimating or supervision of sub-contractors, together with any necessary administration tasks, albeit his claimed bilateral hip condition. It would however appear that the member has elected to retrain in the area of Design, with the intent to go into that type of industry, of which is basically sedentary and not so physically demanding, as opposed to continuing in his own business within a lighter role/capacity. The member holds extensive knowledge, experience and training within the construction industry and panel beating industry, of which could be utilised into a number of other viable employment options, of which do not require a heavy physical demand. Based on the observation reports to hand, the member would appear to have a greater physical capacity than that as reported to the orthopaedic specialists of Mr Z J Piplowski or Dr Scott Fletcher, by the member at time of consultation. Accordingly, the evidence does not persuade Hannover Life Re to reach an opinion that the member is totally and permanently disabled in line with the policy definition. The obligation to provide information establishing an entitlement to the TPD rests with the insured. Please ensure that a copy of our decline letter is provided to the member or their representative to assist them to understand our decision to decline their claim."
4. Hannover's second decision is recorded in its email of 20 August 2013 to the Trustee. This email is from Ms Robyn Turton, the senior claims assessor at Hannover engaged on this matter and sent to an email address of the Trustee. The 20 August 2013 email refers to the communication from Mr Carroll of 17 June 2013 (set out above) and continues in the following terms: "We refer to your email dated 12 August 2013 enclosing correspondence from the member dated 17 June 2013. Simply put the member is comparing his coverage under the CBUS policy with that of Onepath. The member's claim with Onepath is for 'Temporary' Disablement whereby paid monthly instalment benefits. The criterion upon which Onepath have assessed the member's claim would be at variance to the terms and condition under which HLRA is required to assess the member's claim for a TPD benefit. It is also a point in time, namely March 2012 that HLRA is required to form an opinion towards a TPD benefit and not at a date some several months later. The fact that the member perceives Dr Fletcher's opinion as unfavourable is not for our office to comment. The member clearly has stated that he has continued to engaged in low impact activities such as swimming, bicycle riding, walking and golf. Notably the activity of golf does requiring a pivoting of the hips, and as such demonstrates that the member's restriction is not as severe as the member would like us to believe. Bicycle riding would similarly also impact on hip movement and require a period of a prolong seated position, as would the member utilising a ladder to formulate his own exercise strategy. The member did indicate that, "I'm relying on this payout from CBUS…" which would also suggest that the member's claim is strongly financially driven or motivated. Whilst we appreciate the member's situation, there is no intrinsic new evidence provided of which would materially alter our opinion, and shall maintain our decision to decline the member's claim as communicated to the Fund on 07 June 2013."
5. Finally, Hannover declined Mr Carroll's claim by letter dated 11 February 2014. This final decision on Mr Carroll's claim followed upon Mr Carroll's provision of his additional statement of 23 December 2013. The communication of this decision was issued under the hand of a different senior assessor for Hannover, Ms Michelle Fowler. The relevant parts of Hannover's 11 February 2014 letter are as follows: "We refer to the abovementioned claim and note that the member has provided a statement dated 23.12.13 for further consideration of his claim. We confirm that we have reviewed all available evidence again. Whilst we note the contents of the statement provided by the member, the medical evidence already supplied and considered does not support that the member meets the definition of total and permanent disablement under the terms and condition of the policy. The obligation to provide Information establishing an entitlement to the TPD rests with the Insured. Please ensure that a copy of our letter is provided to the member or their representative to assist them to understand our decision to maintain our decision on their claim."
6. Neither Ms Robyn Turton nor Ms Michelle Fowler gave evidence in the proceedings.
7. It is now useful to state the legal principles that apply to decision-makers such as the Trustee and Hannover, before considering the application of these principles in respect of the questioned decisions.

Applicable Legal Principles - Duties and Procedures of Decision Makers

1. The law defining the scope of the duties of decision makers dealing with claims by members of superannuation funds for whom the trustee has obtained insurance cover is well developed. That law and the corresponding rights of members may be shortly stated.
2. The Member's Standing to Sue. A member of a superannuation fund for whom the trustee has obtained insurance cover has standing to seek an order that the insurer pay the trustee the amount due to the trustee under the insurance contract: Erzurumlu v Kellogg Superannuation Pty Ltd [2013] NSWSC 1115 ("Erzurumlu") at [54]. The member has standing to bring a claim both under the Deed against the trustee and under the Policy against the insurer: Wyllie v National Mutual Life Association of Australasia Ltd (1997) 217 ALR 324 ("Wyllie"), at 337-338.
3. The Trustee's Decision-Making Duties. In making its determination, a trustee has a duty to apply a trust fund, such as the Fund, in accordance with the trust deed, in this case the Deed: Finch v Telstra Super Pty Ltd (2010) 242 CLR 254; [2010] HCA 36 ("Finch") at [30] ff. It is also required to act in good faith, on a real and genuine consideration of the material before it, for the purpose for which it was conferred, for sound reasons where the trustee has disclosed reasons, although the Trustee is not obliged to give reasons for its decision: Hannover Life Re of Australia Ltd v Sayseng [2005] NSWCA 214 ("Sayseng") at [32] ff (per Santow JA). Where no reasonable person deciding whether to form the opinion required of the trustee could have reached that decision, a failure of good faith, a failure of genuine consideration, or a lack of proper purposes may be inferred: Sayseng at [33]. The ambit of any challenge to a trustee's decision is restricted to consideration of the material available to the trustee: Sayseng at [33].
4. Finch adds important definition to the duties that apply to trustees of superannuation funds, such as the Trustee, and explains that the decisions of such a Trustee may be reviewable for want of "properly informed consideration". The High Court explained this in Finch at [66] as follows: "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" (55). 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. And failure to seek relevant information in order to resolve conflicting bodies of material, as here, is also 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. Whether or not it will be decided hereafter that, consistently with s 14 of the Complaints Act, the duty of a trustee in forming an opinion of the present type is a duty to form a fair and reasonable opinion, or even a duty to form a correct opinion, there is because of the importance of the opinion and its place in the Scheme a high duty on the Trustee to make inquiries for "information, evidence and advice" which the Trustee may consider relevant. The existence of that duty in a more intense form than exists under Karger v Paul principles in their standard application is further support for the correctness of Byrne J's decision."
5. The general rule where a trustee has failed to discharge its duties in considering a member's claim is to refer the matter back to the trustee for reconsideration: Sayseng at [33]. But if the Court vitiates an insurer's decision upon breach of an insurer's duty of utmost good faith and embarks on a second stage inquiry, and on that inquiry finds that the plaintiff is totally and permanently disabled within the Policy definition, there may be no further work for the Trustee to perform and no need to remit the matter to the Trustee for further consideration and it can be dealt with by the Court: Jones v United Super Pty Limited [2016] NSWSC 1551 at [112].
6. This statement of applicable principle now deals with the duties on insurers in the position of Hannover.
7. The Insurer's Duty of Utmost Good Faith. An insurer dealing with a claim against it owes an insured a duty of utmost good faith, sometimes also described as a duty of good faith and fair dealing: Sayseng at [36]. The duty of utmost good faith does not impose obligations in the abstract; it depends on the contractual rights and obligations of the parties in relation to the claim; and it imposes an obligation on the insurer to exercise its rights and discharge its obligations as conferred by the contract of insurance with the utmost good faith: Ziogos v FSS Trustee Corporation as Trustee of the First State Superannuation Scheme [2015] NSWSC 1385 ("Ziogos") at [66].
8. The insurer's obligation of utmost good faith is contractual not fiduciary. Conduct which would not be permissible in a fiduciary relationship will not necessarily infringe the duties of good faith and fair dealing, as the fiduciary relationship is one in which the parties are not free to pursue their separate interests: JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow & Lehane's Equity: Doctrines & Remedies (5th ed, 2014, LexisNexis Butterworths) ("Meagher, Gummow & Lehane").
9. Some common practical examples of the discharge of the obligation of good faith and fair dealing assist in understanding its scope. The obligation may, in appropriate circumstances, require an obvious enquiry to be made: Halloran v Hardwood Nominees Pty Ltd [2007] NSWSC 913 ("Halloran") at [38]. It is important to correlate the activities that an insured is capable of undertaking, as for example activities that are demonstrated in video surveillance material, to the activities the insured is required to undertake in employment: Ziogos at [103].
10. The Duty to Form an Opinion. Under a contract for insurance, if an element of insurance liability is expressed in terms of the satisfaction, or opinion, of the insurer, the insurer is obliged to act reasonably in considering and determining that matter: Edwards v The Hunter Valley Co-op Dairy Co Ltd (1992) 7 ANZ Ins Cas 61-113 ("Edwards") and Sayseng at [47]. In Edwards (at 77,536) McLelland J stated with respect to clauses such as that in issue in this case, that there was an implied obligation on the insurer to consider and determine whether it should form the relevant opinion, which involved a consideration and determination of the correct question; and in the exercise of powers affecting the interest of both itself and the claimant the insurer was under a duty of good faith and fair dealing requiring it to have due regard to the interest of the claimant. McLelland J's statement of the law was once more adopted with approval by the Court of Appeal last year in Hannover Life Re of Australasia Ltd v Jones [2017] NSWCA 233 ("Jones").
11. Jones also approved (at [82] - [85]) Brereton J's statement in Jones v United Super Pty Limited at [55] that the insurer's decision will also be liable to be reviewed and avoided by the Court if in forming an opinion (about a claimant's disability) the insurer: (1) misdirects itself in law, that is to say asks itself the wrong question; or (2) takes into account an irrelevant consideration or fails to take into account a relevant consideration.
12. And Jones explains how concepts of reasonableness are to be applied in forming an opinion about a claimant's disability. Jones was decided after the Court reserved judgment in this matter, so the Court gave leave to the parties to make additional submissions in relation to it. The parties especially referred to its statements of principle in relation to reasonableness. Analogies exist between the judicial review cases, in which unreasonableness is assessed in the sense described in Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 ("Wednesbury") at 234, and the implied term of reasonableness in contracts of insurance, where the formation of the insurer's opinion is a condition of the insurer's liability. But the analogy is not so close as to require the adoption of the stringent test of unreasonableness in the Wednesbury sense in the insurance contract cases: Jones at [121]. Rather the criterion of reasonableness of an insurer's decision is "whether the opinion formed by the insurer was not open to an insurer's acting reasonably and fairly in consideration of the claim": Jones at [121]. And the insurer's assessment of reasonableness is not made by reference to entirely objective criteria but must be unreasonable on the material then before the insurer: Jones at [94]. Nor does the assessment of reasonableness require the Court to undertake a review of the merits of the insurer's decision: Jones at [93] and [99].
13. In Jones (at [65]) the Court of Appeal adopted McLelland J's remarks in Edwards as to the Court's task in deciding whether the insurer was entitled to form the opinion which it did: "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 at 529, '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."
14. If the view taken by the insurer is shown to have been unreasonable on the material before it, then the decision can be successfully attacked: Sayseng (at [36]) and Jones (at [67] and [94]). The Court must not substitute its own view for that of the insurer by reference to additional material not before the insurer: Sayseng (at [54]) and Jones (at [68]).
15. The insurer's duty of utmost good faith in dealing with a claim and the duty to act reasonably in forming an opinion may be compared and contrasted. The duty of utmost good faith: (a) is broader than the implied term obliging the insurer to act reasonably and applies to all aspects of the claims handling process: Ziogos at [68] and Jones at [71]; (b) does not imply a higher or stricter standard than the implied term requiring the insurer to act reasonably in considering and determining the matter: Ziogos at [69]; (c) is not to be equated with the implied obligation to act reasonably in forming an opinion concerning or being satisfied about a particular matter; nor are the two standards the same: Ziogos at [73], commenting on CGU Insurance Ltd v AMP Financial Planning Pty Ltd [2007] HCA 36; (2007) 235 CLR 1; and (d) requires the insurer to form the opinion itself and to act with the utmost good faith in doing so and it is not sufficient that some other insurer acting reasonably could have reached the conclusion that it did: Ziogos at [74].
16. Some authorities have used other words to describe the obligation to act reasonably in forming an opinion. Nicholas J's description of the obligation is particularly useful: as one which requires the decision-maker to give an objective even-handed and realistic consideration to the whole of the evidence, uninfluenced by personal beliefs, prejudice, suspicion, or speculation: Savelberg v United Super Pty Ltd [2011] NSWSC 1482 at [13]. In accordance with authority, "objective" in Nicholas J's formulation should be taken to mean "unbiased from the perspective of the decision-maker" and not to invite an assessment of a hypothetical claimant or a decision divorced from the actual material before the decision-maker.
17. The Duty to Give Reasons. It follows from the requirement that the insurer itself form an opinion acting in accordance with its duty of utmost good faith, that the insurer should give reasons for its decision. As Ball J explained in Ziogos at [75]: "[75] In my opinion, it follows from the previous paragraph that MetLife was also required by its duty of utmost good faith to give reasons for its decision. It is only by examining those reasons that it is possible to determine whether it acted with the utmost good faith in forming the opinion it was required to form. To put the point another way, where an insured person's rights depend not on the objective fact (whether or not the insured suffered from TPD) but on the insurer's opinion concerning that question, the requirement of utmost good faith requires the insurer to explain how it reached the decision it did so that the insured person can be satisfied that the decision itself was reached in the utmost good faith."
18. But an insurer is not required to undertake the detailed consideration of a claim required at a court hearing: Chammas v Harwood Nominees (1993) 7 ANZ Ins Cas 61-175 ("Chammas") and Weber v Tiss Pty Ltd [2005] NSWSC 67 at [8], ("Weber"). An insurer's statement of reasons for declining a claim should be understood as a practical document intended to inform the claimant of the basis of the decision rather than providing detailed reasons with reference to the evidence being relied upon, comparable to a judgment of a court or tribunal: Weber at [8].
19. The Use of Expert Evidence. Expert evidence was deployed on both sides in this case and some of it was before the Trustee and Hannover at the time of their respective decisions. This circumstance adds additional content to the applicable duties in the consideration and determination of this claim. The following additional statements of principle have relevance where experts are involved. If the insurer seeks an opinion from an expert it must provide the expert with all the information relevant to the expert's opinion; the expert must be asked the right questions; but asking the right questions of the expert does not require the insurer to ask the expert to address specific provisions in the policy as the insurer is making the ultimate decision and not delegating it: Lazarevic v United Super Pty Ltd [2014] NSWSC 96 ("Lazarevic") at [101]. Experts and the insurers who rely upon them should attend to evidence relating to the individual insured and the insured's characteristics rather than to general statements of hope or expectation about the circumstances or conduct of anyone suffering from the condition in question: Ziogos at [102]. Where an expert's opinion about an insured's circumstances or capacity for employment depends upon an assumption it may be impermissible for the insurer to rely upon the expert's opinion as to that matter unless the assumption is verified: see for example Ziogos at [103].
20. The Consequences of Non-Compliance. If the insurer does not comply with its duty of utmost good faith the Court may itself determine the question whether the insurer suffered from total and permanent disablement: Sayseng at 36, Birdsall v Motor Trades Association of Australia Superannuation Fund Pty Ltd [2015] NSWCA 104 at [25] and Jones at [67].

The Challenge to the Trustee's Decisions

1. These reasons now examine Mr Carroll's challenges to the respective decisions of the Trustee and Hannover, commencing with the Trustee's decisions of September 2013 and April 2014. But before those decisions are examined it is necessary to analyse the defendants' preliminary contentions about the Trustee's decisions, contentions that were not based on the content of those decisions.

The Defendants' Preliminary Contentions - The Trustee's Decisions

1. The Defendants' No-Standing Arguments. The defendants answered Mr Carroll's challenge to the Trustee's decisions by first submitting that he had no standing to mount such a challenge and that he should be barred on discretionary grounds from doing so. The defendants' arguments on this topic took different forms. For the reasons which follow, the Court did not find their arguments persuasive on this topic.
2. But it should first be observed that although the arguments the defendants fielded on this topic were aimed at the Trustee, they mostly did not really attack the Trustee at all but attacked Mr Carroll's standing to join Hannover into his claim.
3. First, the defendants point out that Mr Carroll is not a party to the policy, which is made between the Trustee and Hannover. They submit he cannot sue on the Policy and that he does not satisfy the preconditions for a beneficiary to stand in the shoes of the beneficiary's trustee to sue a third party at law. The defendants develop their argument: that although it is accepted in the law of trusts that the beneficiary can stand in the shoes of a trustee to sue a third party, where a trustee refuses to take action, the beneficiary must make "an application for leave" before commencing the suit; and here Mr Carroll has made no such application for leave.
4. This first argument is answered by authority. The fact that Mr Carroll is not a party to the Policy is not an obstacle to his seeking to enforce it here. The Trustee holds the benefit of Hannover's obligations to act in utmost good faith on trust for members including Mr Carroll and in "special" or "exceptional" circumstances a beneficiary such as Mr Carroll may bring proceedings in the beneficiary's own name which would otherwise to be bought by the trustee: Tal Life Ltd v Shuetrim; Metlife Insurance Ltd v Shuetrim (2016) 91 NSWLR 439; NSWCA 68 ("Shuetrim") at [53]. Where, as in this case, Mr Carroll is the only member of the superannuation fund with an interest in the relevant chose in action against Hannover to the extent that it involves assessment and determination of claims made by him under the policy, the "requisite special exceptional circumstances will be satisfied by a failure by the trustee to sue on a cause of action in the performance of the duties owed by the trustee to the beneficiary to protect the trust estate or protect the interest of the beneficiary": Shuetrim at [55]. It is not in contest that the Trustee has not sued Hannover. The relevant special circumstances are made out. Leave is not required. The Trustee has been joined as a defendant. Both parties to the Policy are parties to the proceedings. Mr Carroll does not have a personal claim but can require Hannover to pay to the Trustee the amount due under the Policy: Erzurumlu at [54].
5. Second, the defendants argued, drawing upon certain statements in Shuetrim at [56] and [57], that in substance here Mr Carroll was really seeking specific performance of a contract, namely the Policy, between the Trustees and Hannover and that he was precluded on discretionary grounds from obtaining such a remedy.
6. This second argument is also unpersuasive. The passages in Shuetrim at [56] and [57] upon which the argument is based merely reflect attempts by the Court of Appeal in that case (Leeming JA) to construe the pleadings before them. The statements in Shuetrim do not support the proposition that every action by beneficiary of a trust in the present circumstances to seek enforcement of insurance policy to a trustee and an insurer is an action in specific performance. Analysis of the pleadings and the submissions put on behalf of Mr Carroll in this case makes clear that all that Mr Carroll does not seek for the Trustee to pursue is the equitable remedy of specific performance against Hannover, but rather seeks for the Trustee to take a simple action on the Policy at law for Hannover's alleged breach of its contractual duty of utmost good faith. Beneficiaries are entitled to commence proceedings to require their trustees bring such actions at law: Shuetrim at [54].
7. Mr Carroll's Statement of Claim does not seek specific performance. Rather it seeks relief wholly in the nature of declarations (see prayers for relief 1 to 7), including declarations that he qualifies as totally and permanently disabled under the Policy (prayer 7) and that Hannover is liable to pay the trustee under the Policy sum of $104,000 to be held in trust for him (prayer 8). This conclusion is not weakened by Mr Carroll's written closing submissions that anomalously describe the plaintiff's claim as seeking "specific performance from each of the defendants". The pleading shows that not to be so and authority suggests it is unnecessary.
8. And even if a discretionary defence of unclean hands were able to be fielded against Mr Carroll were he to seek a decree in specific performance, it is not available in answer to a suit for purely statutory relief such as a claim under Supreme Court Act 1970, s 75 for a declaration: Lodge v National Union Investment Co Limited (1907) 1 Ch 300 and Meagher, Gummow & Lehane [3-120]. It is not therefore necessary to consider Mr Carroll's more detailed answers to the defendants' submissions, in which Mr Carroll contests that an unclean hands defence would fail even if it were available to the defendants.
9. Third, the defendants argued that the declaratory relief claimed in the Statement of Claim does not seek to determine any right or legal controversy between these parties, apparently because of Mr Carroll's lack of standing, and perhaps otherwise.
10. But this submission is also unpersuasive. The declarations sought are directed to justiciable issues between Mr Carroll and both these defendants, issues which will have financial consequences.
11. The defendants next questioned the way Mr Carroll had sought to define the nature of the duty the Trustee owed.
12. The Defendants' Arguments about the Trustee's Duty. The defendants submitted that cases such as Finch, which examine a trustee's compliance or otherwise with its obligations under a superannuation trust deed to determine, as it was described in Finch, the "total and permanent invalidity" of a member, are not applicable here. The defendants submitted that the Deed does not require the Trustee to form an opinion. Rather, it is said that the Deed clauses 4.4 (b), 5.1 (a) and 5.12 provide in the Trustee "a duty to distribute to those members who qualified under the Policy as TPD, the amount of any Insured Benefit provided in respect of the member". The defendants' argument then concludes that "the TPD definition in the Policy also did not require the Trustee to form an opinion: rather it was the Insurer was required to form the requisite opinion". The substance of the argument was that because such a duty to form an opinion was absent from the Deed, Mr Carroll's claim against the Trustee, criticising its formation of a decision about Mr Carroll's TPD status, was misconceived. The defendants' submission treats the Trustee as a rubber stamp for Hannover's decisions.
13. This was a surprising argument from the defendants. As will be seen from the correspondence set out below, the Trustee had taken the contrary view: that it was indeed obliged to form an opinion about Mr Carroll's TPD status and it did so. In my view, the Trustee was correct in so doing.
14. Moreover, this submission is not persuasive. The submission overlooks the terms of the Deed that require the Trustee to form an opinion about Mr Carroll's TPD Status under the Deed as distinct from under the Policy. The Deed contemplates that the Trustee is the relevant decision maker: it is the "decision of the Trustee as to whether a benefit is payable (clause 5.1 (a)); and the Trustee shall not authorise the payment of benefits in certain circumstances (clause 5.1 (b)). Under Deed clause 5.12, the Trustee must determine "the benefit payable to a member". Whilst the clause does not expressly refer to the Trustee forming an opinion about the Member's TPD status in the same way that the Policy does, Deed clause 5.12 clearly implies that the Trustee must form such an opinion.
15. A Deed, clause 5.12 determination necessarily involves the Trustee deciding whether or not the member is one who, "ceased to be Gainfully Employed prior to attaining age 65 years having suffered Total and Permanent Disablement". Once the Trustee decides that a member so qualifies, clause 5.12 (b) quantifies the amount the Trustee is to pay as "the amount of any Insured Benefit". Although the focus of analysis then quickly turns to the definition of TPD under the policy, because no Insured Benefit would be payable unless this definition is satisfied, it should not be forgotten that clause 5.12 represents a real decision-making event of the Trustee before the Trustee pays any available Policy proceeds to the Member. And as earlier stated, in making that determination the Trustee has a duty to apply the Fund, which represents trust assets, only in accordance with the Deed: Finch at [30] ff. It was not sought to be submitted by either party here that there was any material difference between the two TPD definitions in the Policy and the Deed.
16. But one part of the defendants' argument can be partly accepted. The defendants further argued that the Trustee was required to determine whether Hannover's decision was made in breach of its duty of good faith and fair dealing. The statements in Shuetrim at [55] certainly imply that a trustee in the position of the Trustee has such a duty, because a trustee's failure to act upon such a determination is a basis for the member to join the trustee to require action on the trustee's chose in action against the insurer and to sue upon the breach.

Analysis of Mr Carroll's Contentions about the Trustee's Two Decisions

1. Mr Carroll challenges both the Trustee's 16 September 2013 decision and its 1 April 2014 decision. Those decisions are set out under the heading earlier in these reasons "The Trustee Declines Mr Carroll's Claim - September 2013 and April 2014". If Mr Carroll were to fail in his challenge to these two decisions of the Trustee, he may yet succeed in the proceedings, if he were nevertheless able to show a failure in Hannover's applicable decision-making duty under the Policy which was amenable to relief at the suit of the Trustee. Mr Carroll succeeds in his challenge to the first of the Trustee's decisions and to Hannover's decisions.
2. The Trustee's 16 September 2013 Decision. Mr Carroll submits that the absence of any other evidence from the Trustee as to its decison-making beyond the terms of the Trustee's 16 September 2013 letter permits the Court to infer that the Trustee declined Mr Carroll's claim on the basis it considered him "fit for sedentary type work". Mr Carroll submits that it was incumbent on the Trustee to consider whether such sedentary work was within Mr Carroll's education, training or experience and was realistically available to him.
3. Mr Carroll submits that the Trustee did not turn its mind to that question. This in substance is a submission that the Trustee failed in its duty to give real and genuine consideration to the material before it on the issue whether sedentary work was within Mr Carroll's education training and experience and was realistically available to him. Mr Carroll submits that the conclusion that the Trustee did not turn its mind to this question can be drawn from the Trustee's own internal June 2013 working document, which acknowledges that a "Vocational Assessment…would have made for a more complete assessment". Mr Carroll submits that the acknowledgement within the working document correctly states what the Trustee needed to do properly to inform itself as to whether "sedentary type work" was within Mr Carroll's education, training or experience and was realistically available to him: by obtaining a vocational assessment.
4. That failure then is said to constitute a breach of duty by the Trustee sufficient to vitiate its decision of 16 September 2013 declining his claim and requiring that decision to be made again.
5. Consistent with the defendants' position in its preliminary argument, that Mr Carroll had no standing to challenge the Trustee's decision and that the Trustee had no duty to determine whether Mr Carroll was totally and permanently disabled, the defendants did not put final submissions in answer to Mr Carroll's submissions about the Trustee's decisions.
6. Mr Carroll's submissions against the Trustee's first decision are persuasive. The only evidence of the Trustee's reasons for the 16 September 2013 decision is the Trustee's letter of that date itself. That letter only contains one sentence that qualifies as a reason for decision: "In particular it was noted that you are fit for sedentary type work, such as that of a project manager…." The rest of the letter merely states the applicable test under the Deed, gives the decision, engages in diplomacy, or states Mr Carroll's rights of appeal.
7. The limited reasons given in the letter itself are not a sufficient basis to infer the Trustee did not exercise its discretion in good faith, for the purpose for which it was conferred, or without real and genuine consideration. The reasons given appear sound enough, as far as they go: fitness for sedentary work may be an answer to a TPD claim under the Policy. And there was medical evidence from Mr Carroll's own general practitioner, Dr Barnes that he was fit for such work.
8. And in my view, in the absence of evidence connecting the June 2013 working document with the actual decision of the Trustee, it is impermissible to attempt, as Mr Carroll's submissions seek to do, to use the June 2013 working document as evidence of the Trustee's reasons for decision. The Trustee did not expressly adopt the June 2013 working document either in its letter to Mr Carroll or in any other internal document on its file recording the decision. Though the June 2013 working document was before the Trustee, its content can be ignored as a statement of reasons.
9. But the June 2013 working document and the presence, or absence, of other documents on the Trustee's file are nevertheless evidence of the process the Trustee undertook, or failed to undertake, in making its decision. That process is now examinable by the standards that were set in Finch at [66]. Finch establishes that the Trustee's decision may be reviewable for want of a "properly informed decision". Measured against those standards, the Trustee's decision-making process was inadequate and was a breach of the duty it owed to Mr Carroll. Although provisions of the Deed here that empower the Trustee in its decision-making processes are not identical to those in Finch the powers held here in Deed clauses 1.2(b), (c) and (h) are sufficiently plenary and analogous to those in Finch, to attract to the Trustee the same obligations of inquiry as were set in Finch.
10. I infer that a vocational assessment was not obtained: none is on the Trustee's file (Exhibit 1) before 16 September 2013 despite the opinion expressed in the June 2013 working document, "that while a Vocational Assessment… would have made for a more complete assessment…." This is presumably because of the additional words that follow in the June 2013 working document "…[the Vocational Assessment] is unlikely to add to the members claim".
11. The June 2013 working document shows that the Trustee was aware that further professional opinion in the form of a vocational assessment could have been obtained and considered to make for "a more complete assessment". This was a valid judgment, as evidence of fitness for sedentary work does not of itself allow the conclusion to be immediately drawn that sedentary work was within the plaintiff's ETE. In my view the Trustee recognized that such an assessment was potentially relevant to its decision. The Trustee then failed to seek such relevant opinion to complete its assessment. Its reasons for doing so were speculative; there was no apparent basis for the reason for not pursuing this opinion, "…it is unlikely to add weight to the members' claims". The Trustee did not have a basis to infer, nor did it identify a basis to infer, that an unsought expert opinion could not assist a member, especially where it might fill an evidentiary gap. The Trustee had some material before it that that suggested Mr Carroll may be able to work as an estimator or project manager but these were not wholly sedentary roles. The Trustee's failure to seek the missing vocational material was in my view a breach of the Trustee's duty.
12. The Trustee's 1 April 2014 Decision. Mr Carroll challenges the Trustee's 1 April 2014 decision on two bases. First, he submits that the applicable definition of "Total and Permanent Disablement" does not recognise the concept of "up skilling" used by the Trustee in this letter. And he submits that there is no evidentiary basis upon which the Trustee, acting in accordance with its duty, could distinguish "up skilling" from re-training.
13. This first argument is not persuasive. The first two quoted paragraphs of the 1 April 2014 letter may qualify as the Trustee's reasons for a decision, which is recorded in the third paragraph of the letter. The expression "up skilling" should be taken in context to mean "developing existing skills", which, provided the activity is reasonable in the circumstances of the TPD claimant, existing authority (see below) suggests may indeed be an answer to a TPD claim. And the material before the Trustee about Mr Carroll's job experience and the building certificates that he had obtained, though controversial as will be seen below, cannot in my view be said not to provide some evidentiary basis for the Trustee to conclude that up skilling was possible. In the absence of a duty on the Trustee to provide reasons, the scope for challenging the Trustee's observations in the 1 April 2014 letter is limited.
14. Moreover it is said that the Trustee failed to turn its mind to the question of whether the work Mr Carroll could allegedly perform as an "estimator" or a "project manager" was realistically available to him. But in my view it was open on the authorities, which will be discussed below, for the Trustee to take the view, without legal error, that it did not have to consider this question. Although it should be said that the relevantly available materials, being the 1 April 2014 letter, the June 2013 working document and the material on the file between them, allow the Court to infer that the Trustee did not give real and genuine consideration to whether the work Mr Carroll could allegedly perform as an "estimator" or a "project manager" was realistically available to him.
15. Mr Carroll does succeed in vitiating the first of these two decisions of the Trustee. That would be sufficient for the matter to be remitted to the Trustee for its further consideration. But whether that should happen or not also depends on the outcome of Mr Carroll's challenge to Hannover's decisions.

Mr Carroll's Challenge to Hannover's Decisions

1. Hannover's 7 June 2013 Decision. Hannover's letter of 7 June 2013 is structured first to summarise the medical evidence upon which Hannover was relying to make its decision. Then it sets out its reasoning, in a section entitled "Discussion and Summary" which has been set out in full earlier in this judgment.
2. Mr Carroll's first argument is that the very summary from which Hannover is working in its first decision is both incorrect and biased in its selection of material from the medical reports before it. Mr Carroll submits that this summary "cherry-picks" points from the various medical reports that are "not a reasonable and fair consideration of the evidence actually before the second defendant". Mr Carroll's second argument is more directed to Hannover's reasoning process. He submits that when Hannover came to assess the evidence before it that the assessment "did not involve a realistic and common sense approach to the real prospect of the plaintiff obtaining employment within his education, training or experience".
3. As to the first argument - the erroneous summary of the medical evidence, Mr Carroll points to material that appears in the 7 June 2013 letter under the heading "Medical Report(s) by Dr Keith Barnes dated 25/09/2012, 18/10/2012". Under that heading the following passage appears (with the italicised emphasis that appears in the original text of the 7 June 2013 letter): "When seen in August 2011 for a review of hip joint x-rays, the member did advise that he gets relief from taking NSAIDS and currently has no pain. The member was reassured that the member was fit to undertake any occupations, and hence was to go ahead trying to join the arm(?)"
4. The incomplete last word in the passage could perhaps be a reference to "the army" but that is unclear. Mr Carroll points out that the reports of Dr Barnes of 25 September 2012 and 18 October 2012 contain no material that is "even remotely similar" to the summary set out below.
5. Examination of Dr Barnes' reports of 25 September 2012 and 18 October shows that they at no stage mention that Mr Carroll was able to or was reassured that he was able to "undertake any occupations". Rather they emphasise: that Mr Carroll has pain in both hips at the end of each day; that even with a normal left hip he would be getting symptoms in the left hip; and that if there were no symptoms on the right hand side "the severity of his symptoms would preclude him from working at this time". This is a long way from being "fit to undertake any occupations". This summary is prepared to present relevant material to the Hannover decision-maker. It is wrong and I infer caused the decision-maker to fail to take into account relevant considerations, namely the correct contents of Dr Barnes' reports of 25 September 2012 and 18 October 2012.
6. Mr Carroll's next point is that the 7 June 2013 letter makes no effort to engage with the content of Dr Barnes' two reports of 22 May 2013, although it acknowledges the receipt of both these medical reports. The acknowledgement of receipt of both reports of that date is in the second paragraph of the letter, as follows: "In our previous correspondence dated 17 April 2013 we detailed the documentation on which we would be assessing this claim. We acknowledge that the member did provide additional information for our consideration in the form of three reports compiled by Dr Keith Barnes dated 22 May 2013. Please find below details of the claim, the evidence we considered and a discussion on our determination."
7. The 7 June 2013 letter then details the various matters including the member details, employer statements, member statements and medical reports but omits any further reference to the medical reports of Dr Barnes of 22 May 2013. The concluding "Discussion and Summary" contains no reference to the medical reports of 22 May 2013.
8. Dr Barnes' two reports of 22 May 2013 contain material of apparent relevance to Hannover's consideration of Mr Carroll's TPD status as at 7 June 2013. In the first report of that date (the four paragraph report addressed to Hannover) Dr Barnes says the following: ""He is getting constant pain in his hips and is taking anti-inflammatories and analgesics with limited benefit. He says that he is getting trouble managing home duties and is not able to work in his previous occupation as a builder. He tells me that he is not working in any capacity and although he has a desire to retrain in building instruction this has not happened and he does not feel that he would be able to cope with this because of his pain. I feel that he is heading towards hip replacement and I am referring him off to an orthopaedic surgeon to consider this.""
9. The second report, followed by a series of headings (of one paragraph addressed to Mr Peter Van Winden), relevantly states: "He is in a difficult position because he is getting increasing pain, is able to do less, and he is not able to do his previous occupation as a builder. He is hoping to retrain into more educational aspects of building but this has not happened."
10. Mr Carroll contends that the inference to be drawn from this material is that Hannover did not take into account these relevant expressions of opinion from Dr Barnes in his 22 May 2013 reports.
11. There is substance in this submission and Hannover's contrary submission is not persuasive. The failure to mention the 22 May 2013 reports of Dr Barnes as part of a summary specifically designed to set out the material being considered, and parts of which were indeed then referred to in the "Discussion and Summary" are weighty indicators that these expressions of opinion were not taken into account. The decision failed to take into account relevant considerations. Dr Barnes' two medical reports of 22 May 2013 were plainly relevant. Taken together, they record a medical history that Dr Barnes did not doubt and emphasise his continuing unfitness for work as a builder and that his hip pain was affecting his ordinary domestic duties. They were the most up-to-date medical evidence available to Hannover about the plaintiff's pain and capacities. Hannover cannot argue that the earlier medical reports are a ready substitute. They were out-of-date.
12. The Court's conclusions on these arguments are sufficient to vitiate Hannover's 7 June 2013 decision. But Mr Carroll put a number of alternative arguments about this decision which are now briefly considered.
13. Mr Carroll's second argument then leaves the issue of additions and omissions from the summary of medical evidence and addresses Hannover's reasoning process. Mr Carroll's submissions on his second argument focus upon the three paragraphs of material in the "Discussion and Summary" of the 7 June 2013 decision, commencing with the words "given that the member" and in ending with the words "…which do not require a heavy physical demand". These three paragraphs are set out earlier in these reasons.
14. Mr Carroll submits that there was no evidence available to Hannover to allow it to reason to a conclusion that Mr Carroll could have continued managing his own business with him "undertaking the lighter non-manual aspects such as quoting, estimating or supervision of sub-contractors, together with any necessary administration tasks". Moreover, Mr Carroll submits that Hannover made no attempt to enquire of him whether such a scenario was a viable way of operating his self-employed business, prior to expressing the opinion that he had continuing capacity for self-employment.
15. This argument is persuasive. This reasoning should have been put to Mr Carroll for his specific comment before Hannover sought to rely upon it. Mr Carroll was the sole operator of his own business and was the person in the best position to provide evidence of the practicability of managing his own business in accordance with this scenario.
16. A similar criticism is directed at Hannover's reasoning that Mr Carroll's "extensive knowledge, experience and training within the construction industry" was something which "could be utilised into a number of other viable employment options, (of) which do not require a heavy physical demand". Mr Carroll submitted that this was unsupported by evidence.
17. Mr Carroll argues that Hannover could have elected to undertake a vocational assessment for Mr Carroll before making the 7 June 2013 decision; something that Hannover subsequently did. Instead Mr Carroll argues that Hannover made no attempt to identify through a vocational assessment the "other viable employment options" that Mr Carroll could pursue. Nor was there any apparent consideration of whether those "other viable employment options" were realistically available to Mr Carroll.
18. It is not necessary to consider Mr Carroll's other submissions on this aspect of the reasoning of Hannover's 7 June 2013 decision but they are recorded below for completeness.
19. Mr Carroll submits that a mere assertion of an ability to engage in unspecified "employment options" or a specific light duties role within his own business, absent any evidence to support those assertions, is not a realistic and common sense assessment of Mr Carroll's real prospects of ever being able to engage in "regular remuneration work" as defined in the Policy, and is therefore a failure to act with fair dealing and to give due regard to the interests of the plaintiff.
20. Mr Carroll submits that Hannover's reliance upon his election "to retrain in the area of design with the intent to go into that type of industry" fails to recognise that any retraining in "design" would be undertaken by the plaintiff after the relevant date of assessment (being 9 June 2012, a date three months after Mr Carroll ceased work). Authority (see below) suggests that such training is irrelevant to the consideration of whether the plaintiff is TPD.
21. None of Hannover's two subsequent decisions of 20 August 2013 or 11 February 2014 purport to replace its 7 June 2013 decision. Indeed they are both expressed in terms of assuming the correctness of the 7 June 2013 decision: and then (a) considering what "would materially alter our opinion" (20 August 2013), or recording "a decision to maintain our decision" (11 February 2014). So Mr Carroll's success in challenging the first of Hannover's three decisions would permit the Court to consider proceeding to a second stage inquiry. But there are problems with the subsequent decisions in any event.
22. Hannover's 20 August 2013 Decision. After Hannover's 7 June 2013 decision, part of Mr Carroll's note to Hannover of 17 June 2013 (which is fully set out above) is in the following terms: "The physio advised me on a number of exercises, which involved bicycle riding, walking, swimming and golf, all of low impact on my hips. He said that if I sit back and do nothing, they will soon start to stiffen up quickly and the arthritis will take over sooner rather than later, and then it's a case of new hips. I was also put on anti-inflammatory medication from Dr Barnes which they do settle the pain after excises. The problem is that the only way to stop the pain is to have new hips put in."
23. Mr Carroll's 17 June 2013 note prompted Hannover to revisit its 7 June 2013 decision.
24. Mr Carroll submits Hannover's reaffirmation of its 7 June 2013 decision in its 20 August 2013 decision was another breach of its duty of utmost good faith and its duty to act reasonably in forming an opinion. Mr Carroll submits that Hannover's conclusion in the sentence "notably the activity of golf does require a pivoting of the hips and as such demonstrates that the member's restriction is not as severe as the member would like us to believe", vitiates the decision.
25. Mr Carroll submits that this aspect of the 20 August 2013 decision is expressed in "an evidentiary vacuum". Mr Carroll submits that Hannover made no attempt to seek a medical opinion from any of Mr Carroll's treating doctors, or any other doctor, as to whether Mr Carroll's stated level of golf activity was inconsistent with his reported level of impairment. Rather, Mr Carroll submits Hannover simply leapt to what was really a medically unqualified conclusion about what was a medical matter, which he submits "does little other than indicate the jaundiced view that the second defendant took of the plaintiff's claim".
26. This argument is persuasive. One striking omission from Hannover's reasoning about Mr Carroll's golf activity is its failure to factor into its reasoning that such golf activity that Mr Carroll does undertake is an approved form of low impact exercise approved by his physiotherapist, and designed to avoid his hips stiffening up altogether. Such a view could not reasonably be formed by Hannover without Hannover procuring a clear understanding from a medical professional as to why, and precisely what, exercises including some gold activity had been prescribed for Mr Carroll's health. To use the language of Jones at [121], in my view Hannover failed the criterion of reasonableness in forming its opinion in this respect, as the opinion formed was not open "to an insurer acting reasonably and fairly in consideration of the claim".
27. In the statement Mr Carroll supplied on 17 June 2013 he also said the following, "I am relying on this payout from CBus (Hannover) to assist me in obtaining new hips sooner [rather] than later for as I can't afford full hospital cover". According to Mr Carroll, the text of the 20 August 2013 decision seizes upon this admission as evidence of Hannover's bias. Whether that is so is less than clear and does not have to be decided, given the strength of the other aspects of Mr Carroll's claim, challenging this decision.
28. Mr Carroll submits that Hannover makes no real attempt to grapple with other aspects of the plaintiff's detailed letter of 17 June 2013. Mr Carroll submits that Hannover sweeps the content of that letter away with the statement, "there is no intrinsic new evidence provided of which would materially alter our opinion and shall maintain to decline the member's claim", as communicated on 7 June 2013.
29. The detailed nature of Mr Carroll's statement of 17 June 2013 does not seem to have been considered in the way that one might expect from such a detailed letter. But it is not necessary for the Court to decide this issue.
30. Hannover's 11 February 2014 Decision. Mr Carroll supplied a further statement to Hannover on 23 December 2013. The material parts of this statement are set out earlier in these reasons. This in turn led to Hannover's decision of 11 February 2014.
31. Mr Carroll's statement of 23 December 2013 sets out much of the history which has already been the subject of findings in these reasons. The Court accepts that statement as accurate, based upon Mr Carroll's oral evidence. But for assessing the validity of the Trustee's and Hannover's decisions, the statement can merely be seen as part of the material before them, that they were entitled to take into account.
32. The part of Mr Carroll's 23 December 2013 statement of particular relevance to the challenge to the 11 February 2013 decision is the section headed "My comments in respect of CBUS view that I could work as an Estimator or Project Manager". This section of the 23 December 2013 statement takes issue with the case Hannover had put to Mr Carroll that he could work as either an estimator or project manager. In each case Mr Carroll explained: "I would have extreme difficulties with standing, sitting, kneeling, squatting, walking on uneven ground and driving. I become incapacitated after doing some light tasks at home. There is no way I could work in this position. In addition my pain levels and lack of sleep will not allow me to be alert and functioning as expected." And as to any occupation requiring retraining at TAFE for 2.5 years, Mr Carroll said this statement: "I would have difficulties studying this course due to my sitting restriction, my lack of sleep and pain levels will affect my concentration. I honestly cannot see myself being able to study for this long."
33. Mr Carroll submits that Hannover's 11 February 2014 decision, conveyed in its letter of that date, makes no attempt to engage with the contents of his 23 December 2013 statement. He submits that all the decision does is to "note the contents" of the 23 December 2013 statement before proceeding to conclude in the most general terms, "the medical evidence already supplied and considered does not support that the member meets the definition of total and permanent disablement under the terms and conditions of the Policy".
34. Mr Carroll's submission is that the decision of 11 February 2014 "does not appear to have involved any reasonable consideration of the material then available to the second defendant". It is difficult to know how Hannover engaged with the important contest presented by the 23 December 2013 statement of Mr Carroll's stated inability to undertake the physical side of estimating and project management. That is because no reasons for Hannover's decisions appear. The text of the 11 February 2014 letter gives no indication of Hannover's reasons for its decision to "maintain our decision". In my view, this was a breach of Hannover's duty to give reasons, and this decision (see Ziogos at [75]) can be avoided on this basis alone.
35. Relying on cases such as Chammas, Hannover submits that its decisions should be construed as "a practice document", not a judgment. But the lack of any reasons here is the answer to that argument.
36. Hannover submits that Mr Carroll's submissions engage in an overzealous scrutiny of aspects of Hannover's decision making process. In my view, Mr Carroll's approach is not overzealous. But in the respects indicated in these reasons it has been shown that Hannover failed to meet the standards set by established authority, including the requirement to give reasons.
37. Hannover also appears to submit that it is sufficient for the Court to focus on the reasonableness of the outcome of its discussions and that the decisions reached by Hannover based on a finding, that Mr Carroll had a capacity to run the administrative and non-labouring aspects of a building and construction business, such as project management and estimating, was a reasonable conclusion to be reached in all the circumstances. But this submission falls into the trap of assessing reasonableness by reference to entirely objective criteria, an approach which Jones at [94] rejects.
38. The Court concludes for these reasons that Hannover's decisions should be vitiated. The decisions are based upon a process that involved a breach of Hannover's duty of utmost good faith and a breach of its duty to act reasonably in forming an opinion about Mr Carroll's TPD status.
39. The Defendants' Submission - No Second Stage Inquiry. The defendants submitted that even if the Court got to this point and was in a position to determine that the Trustees' or Hannover's decisions should be avoided, that the Court should stop and go no further and that there should be no second stage inquiry.
40. The defendants put two submissions in support of this course. First, that there is no utility in conducting a second stage inquiry as the Court must come to the same conclusion as Hannover already has. The second reason was that the plaintiff is seeking an equitable remedy and does not come to equity with clean hands.
41. Neither of these submissions can be dealt with before the second stage inquiry begins. The Court must embark on the second stage inquiry in order even to deal with the submissions that the defendants put and will now do so.
42. The defendants submit that the evidence at trial amply demonstrated several things: that the plaintiff has a capacity to engage in the day to day running of businesses, such as "Too Easy Distributing" and "Nicholas Wines"; that he has demonstrated the will and motivation to do so with respect to these two business; and that it is clear from the way the plaintiff has conducted these businesses that the medical evidence is correct that the plaintiff was capable of sedentary work in a self-employed business capacity, a capacity for which he was suited. The defendants then submit it can be seen now that the plaintiff obviously does not satisfy the TPD definition.
43. But the Court cannot decide this now. This is an important part of the second stage inquiry. Such conclusions can only be reached upon a proper evaluation of the evidence adduced in the second stage inquiry.
44. And there are several reasons why the defendants' unclean hands argument must fail. Firstly the argument depends upon Mr Carroll giving false answers and engaging in deliberately misleading conduct. But the findings below do not warrant that conclusion. Whilst the Court did not find Mr Carroll to be an entirely reliable witness and that he was a person prone to exaggeration and overstatement, he was still a witness who attempted to tell the truth. But again this cannot be decided until the second stage inquiry starts.
45. But there are other reasons why an unclean hands defence will not succeed here as follows. The first and most complete answer to this submission is the one identified earlier, that the plaintiff seeks declaratory relief, which as a statutory remedy cannot be met by a defence of unclean hands.
46. Secondly, at best the conduct that the defendants complain of in Mr Carroll is the contention that he is generally discreditable or disreputable. In my view, the defendants' contentions to this effect do not have "an immediate and necessary relation to the equity sued for": Dewhirst v Edwards [1983] 1 NSWLR 34 at 51. Mr Carroll is not seeking any equitable relief against Hannover but purely declaratory relief. He is arguably seeking an equitable remedy as beneficiary of a trust against the Trustee. But the relevant equity which he is seeking to vindicate is an equity in ensuring the proper administration by the Trustee of the Fund pursuant to the Deed. It is difficult to see how any of the general allegations of lack of credit have an immediate and necessary relation to that equity. Even a beneficiary of poor credibility is entitled to ask a trustee to have the trust properly administered.
47. The Court should embark upon a second stage inquiry. It has heard the evidence and is in a position to decide whether the plaintiff is TPD within the Policy.

Is Mr Carroll TPD within the Policy?

1. The Court's decision in relation to whether Mr Carroll is now TPD within the Policy depends upon additional findings of fact. These findings cover matters that: (a) occurred after the period that the Trustee and Hannover declined the plaintiff's claim; or (b) were not before the Trustee or Hannover at the time they made their respective decisions but are now before the Court, on the second stage inquiry.
2. But the findings relate to specific issues that flow from the operation of the ETE clause in the Policy. The authorities on that subject must first be considered.

Applicable Legal Principles - Interpretation of the ETE Clause

1. Education training and experience ("ETE") clause policy wordings similar to The Policy clause Part 2 - Unlikely to Return to Work and the definition of Regular Remuneration Work have received extensive judicial consideration both at first instance and on appeal.
2. From those cases statements of applicable principle can be refined. In the Court of Appeal's decision in Jones (at [147] - [150]) Gleeson JA considered Brereton J's elucidation of the meaning of an ETE clause identical to the one under consideration in this case. The effect of the Court of Appeal's decision in Jones was to approve Brereton J's comprehensive statement at first instance in that case (Jones v United Super Pty Limited [2016] NSWSC 1551, [71] - [72]) of the proper interpretation of the ETE clause, which is set out here in full: "[71] It is not necessary, in order to satisfy the TPD definition, that the insured must be incapable of any regular remunerative work, but only that he or she be incapable of regular remunerative work for which he or she is reasonably fitted by education, training or experience. The ETE clause confines the scope of the "regular remunerative work" from which the insured is disabled to that for which the insured is reasonably fitted by education, training or experience. In that phrase, the word "by" is important - it postulates a connection between the suggested future work, and the insured's past education, training and experience. The concept of an occupation or work "for which the Insured Person is reasonably fitted by education, training or experience" directs attention to the insured's vocational history to date, and to occupations for which that vocational history fits the insured. It refers not to any work for which the insured might have physical and mental capacity without further training, but to work for which the insured has been prepared and shaped by education, training and/or experience. The purpose of the provision is to provide a benefit for those who are disabled from following the vocations for which their past education, training and experience has prepared them - not any occupation which may be conceived, however far removed from his or her vocational history, which can be performed without further education, training or experience. The policy insures the capacity of an insured to perform regular remunerative work, not simpliciter, but in an occupation for which the insured's education, training and experience has prepared him or her. In that way, it insures against loss of the ability to pursue those employments or careers for which the insured has been prepared and shaped by his or her past vocational history. The point is illustrated by the reverse of the current type of situation: a surgeon whose tertiary education was in medicine and whose entire vocational history was in surgery, who lost the fine motor skills required for surgery, but was otherwise physically fit, would not be reasonably fitted by education, training or experience for work as a manual labourer, even though he or she might be perfectly capable of performing it without further training. [72] Thus the first question should be, for what occupations is this claimant fitted by his or her education, training and employment. It is a mistake to first search for occupations which an insured might be able physically and mentally to perform without further education, training or experience, rather than to examine the insured's vocational history and to identify from it the occupation or occupations for which his education, training or experience has prepared the insured."
3. In the ETE clause the word "by" in the phrase "reasonably fitted by education, training or experience" clearly expresses the notion of a link or connection between the suggested future work and the insured's past, education, training and experience": Jones at [146] citing Wardley Australia Limited v the State of Western Australia [1992] HCA 55; (1992) 175 CLR 514 at 525.
4. "Unlikely Ever" to be Able. The words "unlikely" and "ever" in this group of words have both been closely considered. The word "unlikely" in the formulation has been said to mean improbable in the sense of a less than 50 per cent chance: Halloran at [76] and Beverly v Tyndall Life Insurance Co Ltd [1999] WASCA 98; (1999) 21 WAR 327 at 32.
5. Expressing the word "unlikely" as requiring a less than 50 per cent chance does not invite a statistical test, as the formula is not concerned with what is likely in the population as a whole but rather whether having regard to what is known about the insured, he or she was unlikely ever to be able to engage in any gainful profession, trade or occupation for which he or she was reasonably qualified by reason of education, training or experience: Ziogos at [83].
6. In Shuetrim Leeming JA (at [88] - [89]) also cautioned against the illusion of mathematical precision in the application of the term, as follows: "[88] It seems clear to me that the headnote of White has caused some subsequent decisions to depart from what was applied in Beverley (as well as by White J herself in Wiley). Further, I accept TAL's submission that in most cases any attempt to express a likelihood in percentage terms will have merely the illusion of mathematical precision. I also agree with TAL's submission that the bracketed words in the TAL policy tell against the construction in the headnote. Those words confirm what flows from the ordinary meaning of the language of "unlikely ever", namely, that where there is a real chance that a person may return to relevant work, even though it could not be said that a return to relevant work was more probable than not, the insurer would not be satisfied that the definition applies. "Unlikely ever" is, in this context, much stronger than "less than 50%". [89] What follows is this. To make an assessment of TPD, it is not sufficient for the insurer to be satisfied that it is more likely than not that the person willnever return to relevant work. On the other hand, if there is merely a remote or speculative possibility that the person will at some time in the future return to relevant work, an insurer will not, acting reasonably and in compliance with its duties, be able to be satisfied that the person is not TPD. The criticaldistinction is between possibilities which are readily contemplatable eventhough they may not be more probable than not, and possibilities which areremote or speculative. A real chance that a person will return to relevant work, even if it is less than 50%, will preclude an Insured Person being unlikely ever to return to relevant work."
7. The issue is whether it is unlikely that the insured would actually obtain paid employment for which the insured was qualified by education, training or experience, not whether in theory the insured may obtain employment of that type: Halloran at [76]; Banovic v United Super Pty Ltd [2014] NSWSC 1470 and Lazarevic at [108]-[109].
8. "Regular Remuneration Work". Capacity to perform "regular remunerative work" is different from the capacity to perform a particular work task; and it does not follow that because a person is physically capable of performing one or more work tasks, that that the person has an ability to engage in remunerative work: Hannover Life Re of Australasia Ltd v Colella (2014) 47 VR 1; VSCA 205 ("Colella") and Jones v United Super Pty Limited [2016] NSWSC 1551 at [77].
9. A person can be reasonably fitted for "Regular Remuneration Work" by reason of education, or training or experience or a combination of those factors: Hannover Life Re of Australasia Ltd v Dargan (2013) 83 NSWLR 246; [2013] NSWCA 57 ("Dargan"). A claimant may require further training to pursue another occupation after the termination of his employment, leading to the assessment of whether the claimant was totally and permanently disabled. The fact that some further training may be required does not preclude a conclusion that the claimant was reasonably fitted to carry out the further occupation: Dargan at [44]. In Dargan, for example, a heavy vehicle driver had already obtained a certificate to become a taxi driver and only needed to pass a subsequent week long course to ensure that he was able to retain that certificate: Dargan at [40]. He was found not to be TPD. But in Halloran the claimant had ceased to be employed in a role of greasing machinery and in the three years after leaving that employment he completed a TAFE course qualifying him for white collar work. Brereton J held in Halloran that at the time of suffering his injury the claimant was not qualified for that work "by reason of his education, training and experience": Halloran at [35] and Dargan at [40] - [41].
10. Dargan also decides (at [46]) upon an identical wording that even part-time work may qualify as Regular Remuneration Work but casual work or othe work of an intermittent nature would not qualify as Regular Rmunaeration Work. Bathurst CJ said in Dargan at [46]: "[46] The question of whether Mr Dargan suffered Total and Permanent Disable­ment, notwithstanding his ability to undertake part-time work as a taxi driver at the relevant date, depends on whether such part-time work was Regular Remuneration Work as that term is defined in the policy. The definition provides that a person is engaged in regular remunerative work if they are doing work in any employment, business or occupation. There is no limitation on the work being full-time or part-time. The limitations are that the work must be remunerative, that is done for reward or hope of reward and must be regular. The word regular means something occurring at fixed times or uniform intervals (see the definitions in the Shorter Oxford English Dictionary and the Macquarie Dictionary). Thus, it would not in the present context include casual work or other work of an intermittent nature. However, the word regular would not on a literal construction exclude part-time work. In the present case Mr Dargan was able to work regularly, albeit on a part-time basis as a taxi driver, at least from June 2008. Subject to passing the course, there was nothing to suggest he would not have been capable of doing this at the time of assessment and as I indicated the contrary was not put. It follows, in my opinion, that Mr Dargan was capable of doing Regular Remuneration Work."
11. Geographical Limitation on Employment. In Jones (at [173] - [176]) the Court of Appeal considered, but did not decide, whether the policy definition of total and permanent disablement would be satisfied, if the claimant was incapable of finding available employment in or near the location where he lived. A ground of appeal in Jones was directed to challenging particular remarks of the learned trial judge, Brereton J, which remarks were not essential to his Honour's reasoning and therefore the issue did not need to be determined on appeal in Jones. Brereton J's remarks at first instance in Jones v United Super Pty Limited (at [67]) were relevantly as follows: "I find it difficult to accept that someone who has always resided and worked in a regional town may be regarded as not TPD because there are jobs which he or she could physically perform, but only on the other side of the country. They would have lost the ability, which they formerly had, to work in any employment for which they were fitted by education, training or experience, where they live."
12. On appeal in Jones (at [174]) the Court discussed the existing conflict of authority and academic opinion on this question: "[174] In expressing that view, his Honour recognised that some authorities supported a narrower view that the concept of "unlikely ever to (be able to) engage" in work is concerned solely with the capacity of the Insured to perform suitable work, and not the availability of such work: Repatriation Commission v Hill(2005) 142 FCR 88; [2005] FCAFC 7 at [57]-[58]; Wells v Australian Aviation Underwriting Pool [2004] QCA 43 at [17]; and Hannover Life Re of Australasia Ltd v Collela (2014) 47 VR 1; [2014] VSCA 205 at [30] and [34]. His Honour also noted that a similar view had been expressed by the current authors of Enright & Merkin, Sutton on Insurance Law (4th ed), Vol 2 at [21.360]. Against this, was the view expressed in decisions in this State which, his Honour noted, have emphasised that the practical availability of suitable work for the insured is relevant to the likelihood of his or her engaging in it: Chammas v Harwood Nominees Pty Ltd (1993) 7 ANZ Ins Cas 61-175; Nile v Club Plus Superannuation Pty Ltd [2005] NSWSC 55 at [64]; and in Wheeler v FSS Trustee Corporation ATF First State Superannuation Scheme [2016] NSWSC 534 at [74]-[80]."
13. An issue for trial judges in this State will be whether to apply the earlier decisions in this State, to which Brereton J referred at first instance in Jones and to agree with his Honour's remarks on this issue, or to apply the interstate appellate authority and the academic opinion.
14. If these interstate and Federal Court appellate decisions are directly on point then this issue must be approached bearing in mind the relationship between a single judge of a state Supreme Court and a full court of another state, a relationship which was re-stated by the High Court in Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22, at [135]: "[135] Intermediate appellate courts and trial judges in Australia should not depart from decisions in intermediate appellate courts in another jurisdiction on the interpretation of Commonwealth legislation or uniform national legislation unless they are convinced that the interpretation is plainly wrong (195). Since there is a common law of Australia rather than of each Australian jurisdiction, the same principle applies in relation to non-statutory law."
15. This issue does not ultimately arise in this case but is briefly discussed here. Existing New South Wales first instance authority such as Ziogos at [102], requires the Court to assess a claimant in the manner that Brereton J did: not hypothetically, but in the claimant's very circumstances.
16. Brereton J included a claimant's place of residence as one of those circumstances: this allows the Court could accurately consider a claimant's particular rather than hypothetical circumstances.
17. It must be said that if a claimant's location is wholly ignored, so must be the many incidental costs to a claimant in selling assets, altering existing local financial engagements and relocating to another part of the State or country in assessing a claimant's TPD status.
18. Where it can be accepted that there is no availability of local work (based on a claimant's existing education, training or experience) in the claimant's local area, it seems difficult to justify assessing a claimant as not being TPD if the cost of relocating to find available work of that kind elsewhere would make accepting that distant work an economically unviable decision. The overall costs of relocation are a logical integer in any finding that a claimant is not TPD due to the availability of work outside the local area.
19. The appellate authority outside New South Wales can be briefly surveyed. Repatriation Commission v Hill (2005) 142 FCR 88; [2005] FCAFC 7 ("Hill") at [57] - [58] in construing repatriation legislation was concerned to ensure that an unwarranted gloss was not placed upon the language used by the legislature in the expression to "do work". The full Court of the Federal Court found at [58] that the expression "does not focus upon employability but rather on the capacity to perform remunerative work of a kind for which the person is otherwise suited".
20. In Colella, after considering Hill at [30], the Victorian Court of Appeal was examining the words "unable to work" in an insurance policy and said the following on this issue at [34]: "[34] To the extent, however, that the trial judge's construction of the expression unable to work' is dependent on the existence of work which is reasonably available in the market place and in an area in which it could be expected an insured in the position of the claimant could reasonably apply', the trial judge went too far.22 The TPD definition is concerned with the capacity of an insured to perform work in an occupation or remunerative employment. The policy does not insure the actual availability of work for the insured in the occupation or remunerative employment in the town or region in which the insured resides."
21. It can be accepted that policies such as the Policy do not "ensure the actual availability of work for the insured in the occupation or remunerative employment in the town or region in which the insured resides". It may be necessary to measure the insured-claimant's employability by reference to kinds of employment that can only be obtained elsewhere. But it is not realistic to assess the availability of such employment without also taking into account the costs of the claimant relocating or travelling to acquire such employment.
22. Other cases, which are said to import and apply what has been referred to as a "labour market test" have been criticised as exemplifying an impermissible elision between two quite separate concepts - realistic physical capacity and labour market availability: Enright and Merkin, Sutton on Insurance Law, 4th Edition, Thomson Reuters, 2014, Volume 2 at [21.360] ("Enright and Merkin").
23. The Time to Determine TPD Status. The time at which a claimant suffers TPD is capable of a general answer, which was discussed by Ball J in Ziogos at [86] as follows: "[86] … Generally, and subject to the terms of the policy, the question whether a member suffers from TPD is to be determined as at the expiration of the qualifying period specified in the policy. In the normal case, it is at that point of time that the insured person's cause of action under the policy arises: see Giles v National Mutual Life Association of Australasia Ltd (1986) 4 ANZ Ins Cas 60-751 at 74,529 per Pidgeon J, cited with approval by Brereton J in Halloran v Harwood Nominees at [33]. See also Stevenson J's discussion in Shuetrim v FSS Trustee Corporation [2015] NSWSC 464 at [51]ff. However, that will not always be the case. Where the right to make a claim under the policy depends, as in this case, on the formation of an opinion by the insurer in relation to a matter concerning the future which itself is uncertain, the position is less clear. It is difficult to see how the insurer could be in breach of the policy until the claim is made and the opinion is formed or the insurer fails to form the opinion in breach of its duty of utmost good faith. In those cases, the question whether the member suffers from TPD should be determined at the time the insurer forms its opinion or fails to form its opinion consistently with its duty of utmost good faith. In addition, as Pidgeon J pointed out inGiles, it is possible to take into account subsequent events to the extent that they shed light on what was likely at the time the assessment was to be made."
24. Enright and Merkin (at [21.430]) also argue that the "as at" date, or date for assessment to determine TPD status, is the expiration of the applicable qualifying period as the relevant date. But the special definition in the Policy of "Date of Disablement" for the purpose of Part 2 of the Total and Permanent Disablement definition "is the date on which the insured person commences their period of 3 consecutive months of inability to work that results in Total and Permanent Disablement". That here is 9 March not 9 June 2012. But in this case nothing turns on the difference between the beginning and the end of the three month qualifying period.
25. The Use of Subsequent Medical and Other Evidence. It is not uncommon in the consideration of TPD claims for a party to contend that medical and other expert opinions expressed subsequent to the date upon which the insurer is required to assess whether or not a claimant is totally and permanently disabled should be taken into account when examining the claim at the earlier date for the required assessment. Depending upon the terms in which such expert opinions are expressed, they may be relevant to and may be taken into account by the Court when it is considering the probability of a claimant being able to engage in suggested occupations at the date in which an insurer is required to assess total and permanent disablement: Shuetrim at [150]. As McPherson JA explained in McArthur v Mercantile Mutual Life Insurance [2002] 2 Qd R 197 at [23] this conclusion accords with the principle that the court does not speculate when it may know: approved in Jones at [194]; and see also Finch v Telstra Super Pty Ltd (2010) 242 CLR 254; [2010] HCA 36 at [18].
26. Mr Nicholas Carroll. Assessing Mr Carroll's credibility was complicated by his frequent lack of realism. The Court assesses him as an essentially honest witness, but an often unrealistic one.
27. The evidence shows Mr Carroll to have been involved in the administration of various businesses. In my view he has neither the personality nor the temperament to be involved on the sales side of those businesses. Mr Carroll is not short of business ambition, but many of his ideas are just that: concepts that he entertains as possibilities but which do not ultimately achieve much. He can be involved in his wife's businesses creating websites or setting up a business name. But inferring from that he is capable of performing in continuous sedentary office work in such a business from those facts is much more difficult.
28. Mr Carroll had a tendency to underplay his actual capacities. This made him a less than fully reliable witness on facts essential to his claim. But it was necessary to look through this feature of his evidence to make a true assessment of the issues.
29. And Mr Carroll's credit was apt to be misjudged by complicated questions that were put to him. A number of occasions he did say, genuinely "can you explain it - sorry - a bit better?" And cross examining counsel had to put another question. The speed of the cross examination he faced was not always easy for him to follow. I generally do not infer anything against him from his apparent incomprehension in dealing with some of the questions directed to him.

Consideration and Findings in Relation to Mr Carroll's TPD Status

1. Overview of the Issues. A number of issues are not in contest and can be put to one side. There is no dispute that Mr Carroll was unable to work due to illness, being bilateral hip dysplasia, for three consecutive months. Accordingly, the first limb of the Policy definition Of Total and Permanent Disablement, Part 2 - Unlikely to Return to Work, is satisfied.
2. It is not in issue that the date at which the assessment of whether Mr Carroll qualifies as TPD should take place as at 9 March 2012. But as indicated the difference between 9 March and 9 June is immaterial in this case.
3. The real questions for consideration are: whether Mr Carroll is "unlikely ever", to be able to engage in "regular remuneration work", for which he is "reasonably fitted education training or experience".
4. Nor did any real issue emerge that in addressing these questions medical or other evidence of Mr Carroll's activities after the assessment date of 9 March 2012 could not be used to infer whether Mr Carroll was TPD as at that date. Mr Carroll had a right hip replacement in 2015 but that was predicted and its consequences debated by the doctors close to March 2012.
5. As Brereton J explained (at [71]) in Jones v United Super Pty Ltd, the purpose of the ETE clause "is to provide a benefit for those were disabled from following the vocations for which their past education training and experience has prepared them", and (at [72]) "the first question should be for what occupation is this claimant fitted by his or her education training and employment. It is mistake to first search for occupations which are insured might be able physically and mentally to perform. Rather the exercise is to examine the insured's vocational history and identify the occupations for which his ETE prepares the insured."
6. Mr Carroll's past vocational history is as a self-employed spray painter, panel beater, builder, supervisor and leading hand. His experience ranged from heavy manual labour, unskilled and skilled work, operating machinery but also some higher analytical functions, which included the quoting and costing of building and construction jobs. It is only these higher functions, which require no hard physical labour that provide the past vocational platform for any future work on Mr Carroll's part. As will be seen, the hard physical work is now closed to him.
7. Here, by looking at Mr Carroll's past vocational history of self-employment and as an employee in the building industry, the contest really narrowed to two main areas: (1) could Mr Carroll use his existing vocational experience to work as a project manager or estimator in either an employed or self-employed basis, or (2) could he use his existing vocational experience to undertake regular remuneration work on a self-employed basis in private business ventures.
8. As to (1), working in the role of estimator or project manager, the defendants' case was that the medical evidence and Mr Carroll's past vocational history supported the conclusion that he could undertake such work but that he had chosen not to do so. Mr Carroll's case in contrast, was that he could not perform such work and in any event it was not available anywhere near where he lived. In response to that, the defendants said on the authorities that it is not necessary for them to establish the actual availability of work, as they were not insurers of employment in the local area but they need only show that he had a capacity for such work. But there is a question as to how one assesses Mr Carroll in his actual circumstances.
9. As to (2), working in business ventures in a self-employed role, the defendants' case was that Mr Carroll was already doing regular remuneration work through the activity he had been undertaking for some years in two existing businesses, "Too Easy Distributing" and "Nicholas Wines". Mr Carroll's case in response was that whatever he did for these two businesses was just occasional and on an intermittent and voluntary basis to help out his wife, Genevieve, who owned the businesses and that his activity neither demonstrated and he was doing regular remuneration work or that he was capable of regular remuneration work of that kind of the future.
10. The medical and other evidence expressed a reasonable consensus as to what Mr Carroll cannot do: it was agreed he is physically incapable of returning to work as a builder in a hands-on role. The differences were as to what he could do. This is best considered under these two issues.
11. Issue (1) - Estimator or Project Manager. There was no real dispute that before 9 March 2012 Mr Carroll had the vocational experience to undertake work as an estimator or as a project manager. In order to continue to undertake that work he would need to undertake an additional certification course, as he does not have the necessary Certificate IV in Building and Construction and would need to obtain that.
12. But the difference between the doctors on issue (1) was whether by reason of a combination of physical and psychological characteristics Mr Carroll is, and was at the assessment date, incapable even of undertaking any kind of work (including wholly sedentary work) in alternative fields such as estimating, or project management. As an aside, it is difficult to see how a role, for example, in building inspection could involve anything other than physical on-site work, which the general medical consensus would preclude.
13. I accept the evidence of Ms Collier of Rehab4Life who has had to examine many jobs in estimating over the years and she has made many enquiries about that kind of work. She feels that Mr Carroll "probably would struggle" with estimating or project management. This is because of her knowledge of the market and discussing matters with employers, who are "quite adamant that they require someone physically able to go on site". I accept Mr Carroll's physical incapacity would therefore preclude him from this type of work. In my view, Ms Collier showed herself the labour market and vocational expert most closely attuned with the Tasmanian market. Although even Mr Ngaronngarotata indicated that the Tasmanian building industry market is "a very hard labour market". And the medical evidence supports this incapacity so as to effectively preclude this kind of work for Mr Carroll and it is not necessary for the Court to consider the availability of work issues in the labour market in Tasmania.
14. Dr Sharman was cross examined and I accept his opinion that, as it appeared to be more insightful than that of Dr Ernst with respect to Mr Carroll, due to a combination of physical and psychological symptoms, Mr Carroll does not have capacity to work in any building related role which involves him being hands-on.
15. Doctor Sharman says that although Mr Carroll had technically successful hip replacement surgery he nevertheless had a "relatively poor outcome". He says that the replaced hip was in "an absolutely technically satisfactory fashion". But Doctor Sharman regards it as a relatively poor outcome in the terms that the symptoms were not cured. One of the factors used medically to assess the impairment following hip replacement is a level of the pain suffered, and in Dr Sharman's opinion, which the Court accepts, the back and left hip pain Mr Carroll suffers still impacts his functioning.
16. Issue (2) - Self Employment in Private Business Ventures. The principal case the defendants put against Mr Carroll was that he had already demonstrated considerable aptitude for running a small business, as the defendants submitted he was already running two businesses, Too Easy Distributing and Nicholas Wines. Mr Carroll denied that he was running these businesses. I accept his denial. His overall case that he is helping out his wife's businesses is correct although not all he says can be accepted.
17. Too Easy Distributing. The Too Easy Distributing business started in late 2014. The business involves the importation of products from the People's Republic of China, mainly agricultural equipment and accessories.
18. Mr Carroll's statements to the defendants and material filed in these proceedings did not mention Too Easy Distribution until just before the hearing. In an affidavit sworn on 4 November 2016, days before the hearing commenced, when subpoenas had been issued to Mr Carroll probing for information about the business, Too Easy Distributing, Mr Carroll put on a supplementary affidavit concerning the business. The contents of this affidavit became an important testing ground for Mr Carroll's credibility and capacity for full time, part time or casual work. He was strongly challenged about the accuracy of what he had stated in this affidavit. He persisted in defending what was said in the affidavit against a series of attacks upon his credibility.
19. It was put to Mr Carroll that the 4 November 2016 affidavit was only put on in response to the defendants issuing a subpoena to Exeter Farm and Feed, a neighbouring business. He denied that. I do not fully accept his denial. The timing of the affidavit and its content were clearly designed to deal for the first time with the business Too Easy Distributing, which had not been mentioned in previous affidavits. Mr Carroll was not as forthcoming about assisting in these businesses as he should have been in his earlier affidavits and statements.
20. The affidavit of 4 November 2016 is quite short. Although this affidavit calls the business "Too Easy Distributors", it is clear referring to the business which is correctly known as "Too Easy Distributing". Mr Carroll says in the affidavit that his wife Genevieve runs the business and is the only employee of the business and "she handles all aspects of the operation of the business". Mr Carroll's affidavit explains that the business started "about two years ago", which calculated from the time of the affidavit therefore is about November 2014.
21. But he says, "Unfortunately, the business has not been particularly successful. To date the business has operated a loss. On average over the last 4 - 5 months, Genevieve has made one sale per fortnight. Sales have included selling four feeders to Exeter Farm and Feed for $400 (exclusive of GST) each." Mr Carroll explained, and I accept, that Mrs Carroll had come up with the idea of the business. But I also accept his account that the ambitions of husband and wife have not been realised. He explained, "The business was Genevieve's idea. We had hoped that if the business was successful, Genevieve would have been able to work in the business full-time. However, because it hasn't been a success, Genevieve has had to go back to work as a dental assistant." I accept this evidence.
22. Despite a wide ranging and challenging cross examination, the defendants did not really shift this characterisation of the business as a loss-making small business owned by Genevieve Carroll. In my view the evidence which is examined below shows that Mr Carroll and his wife were dabbling as amateurs in an importing business. Their business involves intermittent operations that are consistent with and measured by their talents as amateurs. There is no evidence this business could support Mr Carroll to undertake regular remunerative work. At best it seems to suggest that Mr Carroll, a resourceful man, forced to be at home by personal circumstances, wanted to deploy his talents as best he could by supporting his wife's business. Mr Carroll was not running or attempting to conceal from the Court some successful international importing business.
23. Mr Carroll says that the business has not been particularly successful. At the time of the hearing in November 2016 I accept that the business had been operating at a loss. The Court accepts Mr Carroll's evidence that over the 4 to 6 months prior to the hearing Mrs Genevieve Carroll had made one sale per fortnight, which included selling four "feeders to Exeter Farm and Feed for $400. Exeter Farm and Feed is a neighbouring agricultural business.
24. Cross-examination of Mr Carroll was first directed at showing that he was more closely involved with the business than he said he was. In that respect the cross-examination was a success. The Court does not fully accept all Mr Carroll said on that subject. And the Court concludes that he underplayed his involvement in the business. But the cross-examination did not establish that this business, or one like it, provided, or was even capable of providing regular remunerative work for Mr Carroll. Nor did it establish that Mr Carroll was sufficiently regularly involved in the administration of the business that his activity could be used as a signpost of his capacity to perform regular remunerative work.
25. Mr Carroll first explained in general terms the limits of what he did for the business. He said in the affidavit of 4 November 2016 that he had "given Genevieve a hand with the business on a few occasions". In my view that was an exaggeration: he gave Genevieve "a hand" on more than just "a few occasions". The cross-examination shows that he became the default point of contact for the business when his wife, Genevieve, was not available. Mrs Carroll returned to work as a dental nurse in February 2016. Too Easy Distributing had started in November 2014. I accept that she worked in the business from late 2014 through 2015 but that she had to return to work because her business was not successful. She was not called to give evidence.
26. The cross-examination was also aimed at showing that the business was really being operated under his direction and that he was able to conduct it on a regular basis as the main point of contact. The evidence that emerged did not show it was his business. But it did demonstrate that in 2016 he was covering extensively for his wife's absence from the business, after she had gone back to work. But in my view this was just the informal assistance that might readily be given within a family and does not involve the discipline of working regular if limited hours in a structured work environment.
27. Ownership of the Business. The Too Easy Distributing business started in late 2014. At the commencement of his cross examination Mr Carroll was taken to the website of Too Easy Distributing. He declared that Too Easy Distributing was "my wife's business" and "only her business". But he conceded that he did "have some involvement" in the business.
28. Mr Carroll agreed that he had given his wife, Genevieve, "a hand with the business" on more than two or three occasions and "as much is possible when I can". But he made clear that he was "only helping" and was "not involved in the business". He conceded early that he does take an active part in the business "at some stages". The display of items for sale in the business is done in the front yard of their house. Mr Carroll explained that when people "come to have a look at some of our products", if he is "able to [he] will go out and assist them". I accept that this is what he does.
29. Mr Carroll had a tendency to refer collectively with his wife to ownership of the Too Easy Distributing business. On many occasions in evidence he described Too Easy Distributing as "our business" and said that what was being displayed was "our products". But he denied legal ownership of the business and the Court accepts that denial. To explain his use of the word "our" in these answers to the effect that it was "my wife's business", he used a not uncommon marital expression that "whatever is hers is mine and what's mine is hers". And he made clear that in using that expression all he was intimating was that the business "is Genevieve's business legally" but that because he is at home and cannot work "I just try and assist her where I can". But in his early cross examination he insisted that this was not a regular occurrence.
30. It was put to Mr Carroll that his case was that "your wife's running a business in which you say you have no involvement". But he consistently denied such an overstatement of his case, conceding that he helped out in his wife's business, taking mobile phone calls and showing people around the yard.
31. Mr Carroll's account became more specific, in four main areas. He explained in his affidavit of 4 November 2016, showing the limits of his commitment, that his involvement in Too Easy Distributing was limited to the following: (a) answering the phone if Mrs Carroll was unable to answer it; (b) speaking to customers who came to the businesses display yard when Mrs Carroll was unavailable, (something is only done five or 10 times over the last two years) but without becoming involved in actual sales ; (c) driving a forklift a few times to move things around the yard - probably about four or five times for about five minutes each time; and (d) on one occasion when Carroll went to China on holidays with his wife he accompanied her to a factory where she purchased horse floats for the business to sell, pursuant to an advance invitation to her to attend the factory. Each of these four parts of this account was substantially challenged. I do not accept all Mr Carroll's evidence on these matters. But overall I accept his evidence that his role was as an intermittent helper to his wife.
32. Answering the Phone and Website Contacts. Mr Carroll agreed that he answered the phone, if his wife was not able to do so. And he took messages and would occasionally accept direct inquiries from customers himself. He explained why his phone number is displayed on the website of the business: it was there so he could deal with customers whilst his wife, Genevieve, was at work. He also agreed his telephone number was placed on the website as a point of contact, when the business started. In my view it was always there as a backup for potential customers who might wish to contact his wife.
33. Mr Carroll says he has had no involvement in the creation of the Too Easy Distributing website. This can be accepted: Mr Carroll does not strike the Court as the kind of individual who, even if he had the training (which he did not) would have the inclination to create websites. Moreover there are testimonials on the website, that I accept a genuine that have been organised by Mr Carroll's wife, Genevieve, such as, for example, the testimonial from a Ms Donna Titmuss. Other testimonials are from relatives of Mrs Genevieve Carroll, as well as Mr Carroll.
34. Mr Carroll's mobile telephone number is displayed in various places on the website. On a page of the website that invites the visitor to the website to "View our Tyres [for sale]" Mr Carroll's telephone number appears. But he says, and I accept, that he has not had any telephone calls about tyres originating from the Too Easy Distributing webpage. His mobile telephone number also appears on a pizza oven brochure available on the website, relating to another of the products that Too Easy Distributing offered for sale. But he did not receive any phone calls for this product.
35. Facebook Posts and Cheval Horsefloats. As to Mr Carroll's statement that he has "waited for Genevieve to come to speak to customers about the products", his wife is often inside and he is outside, when people come to look at products displayed outside the house. He says he meets the people while Genevieve is inside and then she comes out and deals with them.
36. Mr Carroll explained that he feels that "I feel a burden to my wife" he says "she's taken on a lot" he goes on to say "she's trying to go ahead and try and keep going and trying to get somewhere with our lives, so I'm just trying to get her the best I can". I accept that evidence. Mr Carroll demonstrated an entrepreneurial bent in his early career. He was able to run his own business and employ others. But his past actual experience in doing that was always in a situation where he contributed to the success of the business, through being physically active in the operation of the business on the panel beater's shop floor or on building sites. With Too Easy Distributing, and any other business Mr Carroll could have been involved in as at March or June 2012, such an active physical contribution to the business was beyond his capacity.
37. Mr Carroll was asked why he did not explain in his affidavit why his telephone number appeared on the Too Easy Distributing website. His answer that "I didn't think it was necessary" was quite satisfactory. The affidavit was not designed to anticipate every turn of cross-examination. Nor is it to his discredit that such things were not mentioned in his affidavit.
38. Mr Carroll was challenged about certain entries made on behalf of "Cheval Floats Tasmania" on its Facebook web page, a page that had some association with Too Easy Distributing. These Facebook entries were made in about August 2016 and advertise "rural products for sale". Some of the posts refer to Mr Carroll and appear to be signed off "kind regards Nick". But I accept Mr Carroll's evidence, when he was pressed on this subject: he said that these entries were posted by his wife using his name. He was able to explain that to be so because he says his wife's computer was used: this can be inferred from the fact the web page displays icons referring to the fact that she was the source of the post. I accept this inference. It was suggested to him that he was using his wife's computer to make these entries, to make the entries, which he denied. I accept his denial. Many the entries were after her ordinary working hours, when she would have been around to make than.
39. The Court asked Mr Carroll why he and Genevieve Carol would put these entries in Mr Carroll's name. His explanation was that it was to meet the occasion, that there was a slight preference for people in the farming community to deal with males rather than females. This answer did not explain all the entries on the website. Quite a number of them were in Mrs Carroll's name and giving her mobile phone number as a point of contact. But these other entries instead tended to confirm Mr Carroll's account that his wife did have an active role in what he always said was her business.
40. Use of the Forklift. Mr Carroll was observed using a forklift vehicle. He explains, and the Court accepts, that the Too Easy Distributing business very occasionally needed to move heavy items that needed to be lifted with a forklift. Mr Carroll's work history meant he held a forklift licence since the age of 22. His wife, who was a dental nurse by training, did not. He says, I accept, that moving the items of what was a borrowed forklift only took a few minutes. He could recall moving a number of items: a cattle crush, a cattle ramp, a heavy piece of rubber and two dog kennels. He explained that they had borrowed the forklift from Exeter Farm and Feed, the next door neighbour in Exeter. I accept his evidence that he has only been on a forklift on the four of five occasions he claims.
41. Visiting Factories in China. Mr Carroll explained that he had been to China three times. From his point of view, these trips were partly holidays and partly to help with his wife's business. On one trip he had visited the Guangzhou District. On another occasion he had flown to Shanghai. He visited the Great Wall of China on one of these trips. He mostly went to China with his wife.
42. Mr Carroll was challenged about his airline travel to China. It was suggested that with his disabilities he would have difficulty in occupying an economy seat for such an 11 hour flight. But he responded, "When I fly, I ask to be put up in the front area where there is plenty of leg room. You can actually walk past the seats. So every time they put me in there and then I just walk around if I get sore."
43. Mr and Mrs Carroll's last trip to China was in November 2015. I accept that when he and his wife were there, they had a look at a factory that manufactured and supplied horse floats, Cheval Floats and "Qingdao Fencing" which made fencing wire for agricultural purposes. They also "just relaxed a bit" including taking a journey to the Great Wall of China.
44. The Wrangler. Mr Carroll's mobile telephone number also appears on the Too Easy Distributing website for a "Ride Over Gate" (or "ROG") product that Too Easy Distributing also attempts to sell. This product is sourced from The Wrangler, a business that trades from Whaketane, on the Bay of Plenty in the North Island of New Zealand.
45. Mr Carroll concedes that he and his wife Genevieve travelled to New Zealand, so she could do business with The Wrangler. I accept that Mrs Genevieve Carroll was the business contact of Too Easy Distributing for The Wrangler.
46. The New Zealand website for The Wrangler lists Mr Carroll as its Australian agent for the "Ride Over Gate", together with his mobile telephone number and his email address at Too Easy Distributing. Mr Carroll denies being the Australian agent and says that his wife Genevieve is the agent and that the reason his own mobile telephone number is displayed is because his wife is at work. He reaffirmed his explanation that his name was displayed because his wife was at work. I accept his explanation.
47. Mr Carroll says, and I accept, that his telephone number and email are available for the Australian Ride Over Gate for convenience but the business remains that of his wife.
48. Mr Carroll denied there was any distribution agreement for The Wrangler to distribute and market their products in Australia through Too Easy Distributing. I accept that denial. The defendants issued subpoenas to the Wrangler. But nothing emerged that demonstrated Mr Carroll's account that he was not the agent was wrong.
49. And for products such as those supplied by the Wrangler, I accept Mr Carroll's evidence that he takes messages on the whole and tells people that his wife will call them back. I also accept his evidence "we've had very little business anyway" and "we've sold very little over the two years".
50. The Court put to Mr Carroll whether he ever calls people back to do business with them himself. He denied that he did so, except on a few occasions when his wife did not have time. To test this, the Court directed that Mr Carroll produce his telephone records for his phone number for 2016. He telephone records were cross examined upon and showed a mixture of calls to family and friends and some businesses.
51. Inferences from the Nature of Mr Carroll's Work in Too Easy Distributing. Cross examination demonstrated that Mr Carroll had the capacity, based on his past experience as a small business owner, to undertake some tasks that could be deployed in an undemanding situation where day-to-day work requirements were forgiving. Cross examination did not demonstrate that he had either the drive or the resources to advance the logistics, the customer base, and the turnover of such a business to a threshold where it could provide him with sustainable remuneration on a full time or even a part time basis over the medium-term. And it is interesting to observe in this connection that in the years before March 2012 he had had to fall back on supplementary income from GBE because his own self-employed business skills were not sustaining him financially.
52. Whether he has the "hope of reward" from his involvement in such a business is another question. He conceded in cross examination that he did, at least indirectly through his wife's possible business success, have such a hope. Whatever hope of reward he has from such a business, on his current performance is not to be assessed as a hope of reward in the form of regular remuneration. His hope of reward is tied to a family business environment where ultimate business responsibility lay with other family members so he could, if necessary, defer regular work commitments and take time out as required to cope with any recurrences of his pain.
53. The Nicholas Wines Business. The evidence concerning Nicholas Wines can properly be characterised in the words of Counsel for the plaintiff in closing submissions. Counsel submitted that to call it a "business" is to stretch the concept of a "business" to breaking point. In my view, one would only describe Nicholas Wines as a set of discussions between a number of individuals who were vaguely considering transacting together some exporting business between China, Australia and New Zealand. Mr Carroll himself described the business as "a bit of a pipe dream", and in my view, that is all it is.
54. Mr Carroll had a number of discussions with an acquaintance of his, Mr Jim Stevenson, a resident of New Zealand, and Mr Dennis Zeng Xu, a resident of the Chinese city of Shenzhen. The conversations between them arose informally in social settings in a hotel or motel. Mr Stevenson is a friend to whom Mr Carroll can talk. Mr Stevenson and his wife and Mr Carroll and his wife, Genevieve, are friends. Mr Stevenson is apparently a very driven individual who had looked at the possibility of exporting wine into China and began discussing that with Mr Carroll and his wife. The concept developed between the two families to the point that Mr Carroll's wife Genevieve applied for a trade mark logo and a company, Nicholas Wines Pty Ltd, was set up. Mr Carroll and Mr Stevenson's faces appear on some of the logo material. This was Mr Stevenson's idea.
55. Telephone records show that Mr Carroll speaks to Mr Stevenson on a regular basis. But I accept Mr Carroll's evidence that many of those conversations relate to personal issues about family matters. As Mr Carroll said, "it's an outlet for me, it's probably a bit of an outlet for him as well to have someone to talk to and we just seem to click really well and have lots of laughs and stuff". In my view, much of the relationship and communications between Mr Carroll and Mr Stevenson are explained by family friendship. It is not unknown for informal business ventures to be set up between friends that never go anywhere.
56. Mr Carroll was criticised in cross examination for the amount of time he spent on the telephone with Mr Stevenson. But in my view, it is overly suspicious to conclude that these conversations relate to business matters. There is an undoubted friendship between Mr Stevenson and Mr Carroll. I accept Mr Carroll's evidence that Nicholas Wines may be mentioned between them "every now and then" but their main communications are to "chat" about other matters. Mr Carrols trikes the Court as an individual who enjoys the company of others.
57. It was also put to Mr Carroll that he could use any payout from these proceedings as a capital contribution to the business of Nicholas Wines. Mr Carroll was dismissive of this. He was of the view that the setup fees that are involved in exporting wine into China are substantial. The licenses that are required and a partnership with a local Chinese company, are all such that he believes that "you've got to have a fortune in the bank" before you can set up in China, so that you can "prove that you've got funds". He said that has "really knocked it on its head". He was not sanguine about his wife, Genevieve, being able to overcome the problems of exporting wine to China.
58. Mr Carroll's telephone records produced on subpoena show that some telephone calls had been made to wine producers in Australia that may have assisted in the Nicholas Wines business had it ever got underway and there were text messages to similar effect. But the communications did not represent anything like an active business. Some of them were initiated by Mrs Carroll and they were all interspersed with a bulk of communications of a personal and family nature to friends such as Mr Stevenson and to photographers and other relatives.
59. Mr Carroll did take a more active role in the business than he first conceded. Emails were produced and cross examined on later in the proceedings which showed Mr Carroll using his email address "nick@tooeasydistributing.com" to communicate about the importation of horse floats and for the Too Easy Distributing business and in relation to Nicholas Wines to facilitate a Mr Lee in China securing a "Chinese investor to help get Nicholas Wines off the ground in China". But Mr Carroll characterised these communications as simply Mr Stevenson and his wife having proposed ideas and Mr Carroll would be "tagging along".
60. A business plan emerged for Nicholas Wines from later subpoenaed documents but this document in the associated communications did not show that the company was actually doing anything. The documents are consistent with Mr Stevenson pushing aspects of the Nicholas Wines business and Mr Carroll giving friendly assistance. Text messages as recently a month before the hearing show that Mr Carroll is messaging Mr Stevenson saying "Hi Jim I have a phone meeting at 10 this morning. Could you follow up and call Paul Farholl and Vivienne Zo?". Mr Carroll somewhat discreditably initially denied who these people were but then ultimately indicated that they work with "Aus Wine". But in my view the overall impression created by the extra documents does not damage Mr Carroll's account.
61. Mrs Genevieve Carroll was not called to give evidence, about, for example the family journey to New Zealand to deal with The Wrangler on behalf of Too Easy Distributing. There was some evidence that she could perhaps have travelled from Tasmania to New South Wales to give evidence, but no ultimate explanation as to why she did not give evidence. She was undoubtedly a witness that would have been in a position to confirm some of Mr Carroll's evidence. The Court can only infer that her evidence would not have assisted his case. But without her, the Court generally accepts his account.
62. Inferences to be Drawn From Nicholas Wines. In my view, nothing of value to these proceedings may be inferred from Mr Carroll's informal assistance to his wife and discussions about Nicholas Wines.
63. In Summary. In my view, no matter how Mr Carroll's prior vocational experience is approached, Mr Carroll is unlikely ever to be able to engage in Regular Remuneration Work as defined under the Policy, based on his education, training or experience. The two forms of work which he could undertake based on his education, training or experience are precluded for different reasons. Estimating and project management work is not wholly sedentary and requires visits to work sites. I accept the medical evidence that says Mr Carroll is unfit for such physical work. And in relation to running small family businesses, the highest characterisation that could be given of Mr Carroll's work for Too Easy Distributing or Nicholas Wines was that it was "casual work or other work of an intermittent nature", which Bathurst CJ said in Dargan does not qualify as Regular Remuneration Work.

Conclusion and Orders

1. For these reasons the Court has concluded that the plaintiff is successful in challenging both the Trustee's and Hannover's decisions in 2013 and 2014 that Mr Carroll was not Totally and Permanently Disabled under the Policy and the Deed. The Court proceeded to a second stage inquiry and assessed for itself whether Mr Carroll is Totally and Permanently Disabled within the Policy as at the time for assessment, 9 March 2012 and finds that he is. The plaintiff is therefore entitled to a declaration to that effect and orders that Hannover pay the sum of $104,000 to the Trustee for distribution to Mr Carroll.
2. The plaintiff has been successful and costs would normally follow the event. But some party may seek a special costs order. To allow for that possibility and for the parties to formulate the declarations and orders in the form they wish, the matter will be adjourned to 10 May 2018 for mention or such other date as the parties may wish to arrange with my Associate.
3. For these reasons the Court makes the following orders and directions: 1. Direct the parties to bring in short minutes of order to give effect to these reasons; and 2. List the proceedings for mention at 9.30am on 10 May 2018 for any argument on costs or other consequential issues. 3. Liberty to apply.

Amendments 19 July 2018 - [88], second line, citation should read Finch v Telstra Super Pty Ltd (2010) 242 CLR 254; [2010] HCA 36 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: 19 July 2018