Chapman v United Super Pty Ltd

Issue 1: Was the plaintiff unable to work in his usual occupation for 6 consecutive months following 4 March 2007? 14The plaintiff says he did no work, nor did he attempt any work, for over six months from 4 March 2007. 15The defendant notes that Dr TA Anderson, a specialist occupational physician, reported to the Insurer that: "Mr Chapman is not fit at this stage to return to his previous occupation at Firewise (Aust) Pty Ltd. He would only be fit for very lightweight work. ... [I]f he does not satisfactorily return to full duties with Firewise (Aust) Pty Ltd and there is no lighter full time occupation that they would be able to provide for him, one might very reasonably raise the question as to who would be likely to employ him. Bearing in mind that he has previous experience as a spare-parts interpreter this is a possibility and again is the type of job that might very reasonably be looked at." 16Unfortunately, it would seem that the last sentence from the passage I have quoted put in the mind of the Insurer that being a spare parts interpreter would be something that the plaintiff could do, and accordingly that he would not be totally and permanently disabled under the relevant definitions. 17The evidence that was presented before me indicates that this is not at all likely. There was some part of this material which was before the Trustee and the Insurer, but it would seem that mostly this came out during the hearing in Court. The plaintiff left school after Year 10 and then worked as a checkout operator at a Coles Supermarket for a year or so. Apart from that work he has only ever done manual work. 18However on one occasion when the plaintiff was injured, his then employer moved him from being a driver to work as a "spare parts interpreter". That designation means a person who receives a request from a customer for a spare part, examines the various manufacturers' catalogues, identifies and orders the relevant part and then contacts the customer. The plaintiff said that when he did this job he frequently got the part wrong and was unable to perform the work required satisfactorily. On this evidence, the possibility of the plaintiff taking up a successful position as a spare parts interpreter seems remote. 19The onus is on the plaintiff to show that he is totally and permanently disabled within the relevant definitions. The first part of the Insurer's contract definition on which I am currently focused requires the plaintiff to show that he is unable to follow his usual occupation for six consecutive months. The plaintiff says that this was the case. The defendants say that they do not accept this. 20The defendants' submissions refer to Dr Anderson's Report to which I have already referred at paragraph 14 that merely says that the plaintiff could in the doctor's opinion pursue light weight duties. The doctor was quite sure that he was not able to perform the full duties of his quite arduous job. 21I cannot see on the evidence before me how there is any answer to the plaintiff's evidence that he could not follow his usual occupation for six consecutive months after the date of disablement. 22I should note here the various difficulties that the plaintiff has in proving his case. First, he has been involved in other accidents, particularly motorcar accidents. Secondly, he was advised by Dr Nair to have surgery on his back though there were other medical opinions to suggest that that was not a very wise course to take. He had the surgery which unfortunately was unsuccessful and indeed caused further problems. Thirdly, and most significantly, the plaintiff contracted a serious illness in 2012 and during treatment for this illness he went into a coma. Since then his memory has been significantly affected so that he cannot remember significant facts. Thus it was quite understandable in cross-examination when he replied that he just could not remember what had happened.

Issue 2: At the date of disablement, was the plaintiff unlikely to ever be able to work in any occupation for which he was reasonably fitted by education, training or experience? 23I pass now to the second question of fact, which I consider to be the one of pivotal importance in the case, and which counsel for the defendants called the second limb of the Insurer's contract definition of "total and permanent disablement"; namely that in the opinion of the Insurer the plaintiff is "unlikely ever to be able to engage in any Regular Remuneration Work for which the plaintiff is reasonably fitted by education, training or experience". 24Mr MBJ Lee SC relied on the authority of the Court of Appeal's decision in Manglicmot v Commonwealth Bank Officers Superannuation Corporation Pty Ltd [2011] NSWCA 204 at 33 [88] where it was said: "The Hannover TPD clause defines total and permanent disablement. It is quite emphatic: the member must be unable ever to engage in or work for reward in any occupation or work. As further context, the member must have been absent from work for six months. Introduction of full time employment or part-time employment into the wording, notions which themselves carry uncertainty (what is the standard for full time employment?) is in my view not warranted. The clause requires unfitness to work, without distinction between full time work and part-time work other than by regard to the work which the member is reasonably capable of performing by reason of education, training or experience." 25Those words were from the judgment of Giles JA. Whealy JA and I were the other members of the Court and we agreed with what Giles JA had said. I was informed from the bar table that there was a five member Court of Appeal which was at the time of the hearing reviewing the correctness of that paragraph. No party wished me to hold back in giving judgment in this case because of that fact. 26However, after preparation of what was then considered to be the final draft of these reasons the Court of Appeal delivered its judgment: Hannover Life Re of Australasia v Dargan [2013] NSWCA 57. 27The principal judgment was delivered by Bathurst CJ with whom Macfarlan, Meagher, Hoeben JJA and Tobias AJA agreed. The Court affirmed Manglicmot, with the Chief Justice stating at [54] that the words used in the document supported that view and that "there does not seem to be anything unreasonable in construing the contract as providing that a person who is capable of undertaking regular part-time work is not totally and permanently disabled". 28However, as pointed out by Mr CJS Purdy in his additional submissions, the work must be regular work not casual. 29The Dargan judgment, however, also dealt with other matters that might affect the present case. Thus, I had a message sent to counsel inviting further submissions. 30Both sets of counsel made additional submissions, for which I am grateful. 31The defendants' central submission is that the plaintiff has not demonstrated either to the Insurer, to the Trustee, or to the Court, that he is unable to do part-time work for which he is reasonably fitted by his education, training and experience. 32Putting aside situations of de minimus training one does not require a plaintiff to undergo a course of retraining in order to make him or her employable. Even if an injured ballet dancer has the intellectual capacity to go to university, get a law degree and become a barrister, that would not disqualify him or her from being totally and permanently disabled (assuming that they were not able to take any part-time job that was reasonably fitted to his or her then current education, training or experience). 33This construction was reached by Hungerford J in Fernance v Wreckair Pty Ltd (No 2) (1992) 43 IR 300 at 329 and affirmed by Brereton J in Halloran v Harwood Nominees Pty Ltd [2007] NSWSC 913 at [36]. 34Dargan makes it clear at [37] that it is no bar to the finding that work is within the plaintiff's education, training or experience that a short qualifying course of training or retraining may be required. 35The plaintiff says he is not fit even for part-time work. The defendant says that the plaintiff can do part-time work as a spare parts interpreter, a taxi driver, a checkout operator and similar jobs. 36I have already considered the position of spare parts interpreter and on the facts I discard that as a realistic possibility. 37The plaintiff would need some retraining to be a taxi driver. Although there is no actual evidence on this point, it would seem from general knowledge that the retraining would not be particularly arduous and would come within the principle noted in paragraph 34 above. 38The onus is on the plaintiff to show that he is not able to do any part-time work so that any deficiency in proof here would be to his account. He probably could be a checkout operator without retraining. He would have to stand for some time, but again the evidence does not show that he cannot do that. 39Counsel for the plaintiff submits that the reference to "occupational work" in a totally and permanently disabled policy is taken to mean "a recognised occupation, not a special light duties job for injured workers, and must be work which the plaintiff is likely to obtain having regard for the practical realities of [his] situation". The authority given for that proposition is Sayseng v Kellogg Superannuation Pty Ltd [2007] NSWSC 583 at [64] per Nicholas J. This is consistent with the principle stated in paragraph 34 above. It is put that there was no evidence in the instant case before the Trustee or the Insurer that the sort of work suggested was available to the plaintiff or, perhaps to put it more accurately, available to the plaintiff on 4 March 2007. 40In any event, the plaintiff points to the fact that medical evidence supports his view that he is unable either to sit or stand for long periods of time. This, he submits precludes him from virtually all occupations, including sedentary ones. The main support for this proposition is the medical reports of Dr Deveridge. 41Dr Deveridge's first Report dated 8 April 2009 (Court Book page 291) based on the doctor's examination of the plaintiff on 7 April 2009 was for some unexplained reason never shown to the Trustee or the Insurers before their rejection of the claim in 2009. Dr Deveridge opined that the plaintiff was permanently unfit for his pre-accident employment and for labouring type work generally. "He is going to be permanently unfit for repetitive bending, heavy lifting, carrying, twisting, pushing, and dragging. He is to avoid prolonged periods of sitting or standing. He has limited transferable skills. In his current state, even sedentary duties stay would prove difficult ... With time, pain management, and retraining, he may get back to a part time sedentary position." 42Dr Deveridge reviewed the plaintiff in March 2011. He said: "The degree of disability does seem excessive when taken into account with the medical imaging and operative findings. However his complaints are accepted as reasonable and consistent. ... there was no evidence of any conscious exaggeration. He is permanently unfit for his pre-accident employment installing fire sprinklers, and for labouring work generally... [h]is inability to sit or stand in any posture for other than brief periods would also act against return to spare parts interpretation, or other similar semi-sedentary employment. I consider that both Dr. Harvey Sutton and Dr. Anderson have incorrectly indicated that he is fit for that type of work. I consider that his injury and current condition qualifies him for total and permanent disablement..." (Court Book page 313) 43As Dr Deveridge indicated, the doctors which were asked to examine the plaintiff on behalf of the Insurer took a different view as to the plaintiffs' ability to handle part-time work. 44If I were the person that had to make a decision, on the balance of probabilities, as to the plaintiffs' inability to work any job that his training and experience allowed him to do as at 4 March 2007, I may have come to the conclusion that there was sufficient evidence to satisfy that onus. However that is not what is required of me in this case. Further, the facts do not necessarily lead a reasonable adjudicator to that conclusion. 45Apart from the opinion of Dr Deveridge, there are the opinions of Drs Harvey Sutton and Anderson who are experienced in this field. They consider that the material given by the plaintiff does not demonstrate that as at 4 March 2007 he was completely unable to do any work, whether full-or part-time, for which he was experienced and trained to do. 46Added to this is the problem that the plaintiff has suffered other trauma since March 2007 which may well have contributed to his present condition. There was the unsuccessful operation on his back, a couple of car accidents and severe illness. 47It is notorious that either degenerative or accident-related back trouble can be extremely painful and debilitating. However the definition in the relevant policies is an extremely hard one to satisfy, so much so that one wonders sometimes whether people taking out total and permanent disability insurance realise that it is only a very narrow range of cases where they may recover under the policy. This is despite attempts by courts to read down the most extreme clauses to bring some realism back into play. To succeed, an injured person must satisfy the Insurer (and the Trustee) that they are disabled to such an extent that they are rendered unlikely ever again to resume work in an occupation for which they are reasonably suited by education, training or experience. That must be proved as at the date of the disablement. Very often other circumstances intervene so that it is very difficult indeed to make the assessment as at the date of disablement, yet if it cannot be done then the insured's claim is likely to fail. 48The Court Book contains copies of most, if not all, relevant medical evidence. I have reviewed it, but I do not perceive the necessity to quote extensively from it. There is certainly material there which would enable a Trustee or Insurer to come to the conclusion that the plaintiff satisfied the definition. 49On the other hand, there is substantial medical evidence that the plaintiff's condition is not as severe as he claims and that it is a little surprising that the physical evidence has caused the plaintiff to be so debilitated. Some material suggests that the plaintiff has now convinced himself that he cannot work at all and this view has outweighed other evidence. 50Again, however, it is fair to remark that some of the doctors retained by the Insurer seem to be a bit too optimistic as to the plaintiff's chances of obtaining even part-time employment. Whether this remark is accurate or not, the fact that the Insurer has had such advice from well-qualified medical experts means that it was entitled to act upon such advice. 51In view of all this, it would be quite reasonable for an adjudicator to come to the view that the plaintiff was not totally and permanently disabled.

Issue 3: Does the conduct of the Trustee make it appropriate for the court to interfere with its decision? 52As I mentioned earlier, I am not the person who decides whether the plaintiff is totally and permanently disabled. The Trust Deed gives that decision to the Trustee and the Insurer. When considering that decision it is important to remember that the plaintiff clearly bears the onus of proving the loss is covered by the terms of the policy: Petersen v Union des Assurances de Paris IARD (1995) 8 ANZ Ins Cas 61-244 and that the Insurer is entitled to put the claimant to strict proof: Regina Fur Co Ltd v Bossom [1958] 2 Lloyd's Rep 425. Although these propositions may have to be stated with less certainty after the High Court's decision in Finch v Telstra Super Pty Ltd [2010] HCA 36, they remain basically true for the instant case. 53In this litigation, the onus is on the plaintiff to establish that the Insurer's or Trustee's decision on the material before them to deny the plaintiff indemnity was (a) so unreasonable in all the circumstances that the Court is required to intervene, see Tonkin v Western Mining Corporation Ltd [1998] WASCA 101; or (b) that either the Trustee or the Insurer breached some duty to the plaintiff. It is not sufficient for the Court to say that had it been the initial decision maker, or if it were an appeal court hearing the matter de novo, it would have come to a different decision. The Court must focus on whether the decision of the Insurer or the Trustee or both was so unreasonable that a reasonable person in that situation could not have made it. 54The plaintiff's primary argument was that the first and second defendant's decisions were unreasonable. I have already decided for the reasons given earlier that this claim is not made out. As to (a), I have already analysed the two limbs of the primary definition of "totally and permanently disabled". It is the second limb that causes the doubt about the Trustee's decision. However, when one looks at the material before the Trustee which I have analysed in section (2) of these reasons and add to that the fact that the plaintiff suffered further injuries since 4 March 2007, I cannot be satisfied that the plaintiff has established that the Trustee's decision or the Insurer's decision were unreasonable. There was medical evidence both ways. Although some of the comments made by the defendants' doctors seem to be a bit too optimistic as to the plaintiff's chances of obtaining even part-time employment, there is material to suggest that part of the plaintiff's problem is that he has so convinced himself that he cannot accept that he is now able to work at least part-time. 55The plaintiff claims that the Trustee and / or the Insurer failed to discharge a number of duties owed to him. 56The plaintiff alleges that the Trustee breached its duty; (a) to act with the utmost good faith; (b) to form an opinion in relation to the plaintiff's claim based on a real and genuine consideration of the evidence; (c) to seek further information or resolve conflicting evidence; (d) to form an opinion independently of the Insurer's decision. 57"Utmost good faith" is perhaps a more appropriate description of the Insurer's obligation, however, it is broad enough to cover the general fiduciary duty of a Trustee. 58The plaintiff says that the Trustee placed the interests of the Insurer above those of its members including the plaintiff. 59At the hearing, the plaintiff's counsel focussed on the alleged failure of the Trustee to resolve competing bodies of opinion as to the plaintiff's capacity for certain types of work, and its failure, once it purported to give reasons for its decision, to give a proper explanation for its rejection of the plaintiff's claim. 60Similar allegations were made against the Insurer, reliance being placed on Hannover Life Re Australasia Ltd v Sayseng [2005] NSWCA 214. 61Counsel for the defendants noted that, although much of the argument proceeded on the basis that the duties of the Insurer and Trustee were coterminous, this was not an accurate representation of the law in its current state. The coexistence of superannuation trustees and insurers, both of whom make decisions on the same issue by reference to the same facts, tends to obscure their differential duties. 62I accept this submission, but, for the purposes of this case, there is little to be gained by strictly applying it. 63Until recently, the principles governing the review of decisions of superannuation trustees were widely assumed to be the same as those governing exercises of discretion by trustees generally, although the appropriateness of applying such principles without qualification was sometimes questioned: see Gilberg v Stevedoring Employees Retirement Fund Pty Ltd [2008] NSWSC 1318 at [17] - [23]; Telstra Super Pty Ltd v Flegeltaub [2000] VSCA 180 at [6], [25]. 64Accordingly, the applicable principles were those outlined by in Rapa v Patience (Unreported, Supreme Court of New South Wales, McLelland J, 4 April 1985) by MH McLelland J at 11: The grounds on which the performance by trustees of functions such as these may be successfully challenged are those applicable generally to the exercise by trustees of discretionary powers, helpfully discussed by McGarvie J in Karger v Paul (1984) VR 161. As encapsulated by his Honour in that case there are three such grounds and in some circumstances a fourth. They are, first, that the discretion was not exercised by the trustees in good faith, second, that the discretion was not exercised upon real and genuine consideration (which includes consideration of the wrong question - see Scott on Trusts, 3rd ed. Vol. 3, para. 187.3), third, that the discretion was not exercised in accordance with the purposes for which it was conferred and, fourth, where the trustees have disclosed (otherwise than in the course of the proceedings in which the discretion is challenged) the reasons for the exercise of their discretion that those reasons are not sound. 65However, in Finch v Telstra Super Pty Ltd [2010] HCA 36, the High Court denied that the principles in Karger v Paul [1984] VR 161 should apply without modification to a decision by a superannuation trustee as to whether a member was entitled to a benefit by virtue of the fact he was unlikely ever to engage in "gainful Work". 66The Court noted in Finch at [29] that, unlike Karger v Paul, the case before the Court was not one "involving a 'discretion'". The judges said this in considering whether the member of the scheme was "unlikely ever to engage in gainful Work". In forming an opinion on that subject there are no doubt factors to be examined which are difficult to weigh, impressions to be formed, and judgments to be made, but the field is quite different from fields in which the competing claims of potential candidates for bounty are compared. 67At [66] the Court emphasised that: "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". 68The Court declined to indicate the extent to which Karger v Paul should be rejected or modified in its application to such decisions by superannuation trustees (at [65]). At present, it appears that Karger v Paul remains relevant at least as a low-water mark: it indicates those cases in which the Court will certainly intervene, although the circumstances for intervention may be wider than the four categories outlined by McGarvie J. 69The decision in Finch casts doubt on earlier decisions as to a plaintiff having the obligation of furnishing the trustee with all relevant material and on questions of onus of proof. This problem has been discussed in some later cases (see: Alcoa of Australia Retirement Plan Pty Ltd v Frost [2012] VSCA 238). There is little purpose in discussing it here, because the Trustee and the Insurer had a bulk of medical opinions and it is hard to imagine how any further reports could have assisted. 70As to the onus of proof, the better view would seem to me that no question of onus is relevant when considering the Trustee's decision. As Bryson J said in Vidovic v Email Superannuation Pty Ltd (Unreported, Supreme Court of New South Wales, Bryson J, 23 February 1995) at 13: The formation by the trustee of an opinion is not analogous to judicial or arbitral decision of a disputed question... There is no onus of proof on any person; there are no adversaries. 71As to the onus of proof before the court relating to the question of whether or not a trustee breached its duty to the plaintiff, the rule must be that he or she who alleges must prove. 72Assuming the Trustee has a duty to give genuine consideration to the plaintiff's claim, has the plaintiff proved breach? 73Mr Purdy argued that on the evidence the Trustee did not appear to have given any real consideration to the exigencies of the occupations of spare parts interpreter, cashier or inspector, relative to the plaintiff's capabilities. 74I have already made some comments as to the inadequacy of the view which originally came from a comment of one of the doctors that the plaintiff could work as a spare parts interpreter. However, the basal question which the Trustee and the Insurer had to face was whether the plaintiff was able to pursue any sedentary occupation even on a part-time basis. On this question the doctors were divided. The Trustee made a choice as was open to it. 75I do not consider that the plaintiff has demonstrated that the Trustee failed in its duty to deal with the claim appropriately. 76It is also suggested that the Trustee had a duty to give reasons for its decision and failed to give adequate reasons. The Trustee gave some reasons. It was not obliged to give reasons to the same degree of detail as these reasons. I do not see any breach here. 77It was also put that the Insurer was also in breach of duty to the plaintiff. There was discussion during the oral hearing as to whether the duty of the Insurer was different to that of the Trustee. There is no need to delve into those matters. Any duty of the Insurer to the plaintiff could not exceed that of the Trustee. 78It follows that the plaintiff has failed to convince me that the decisions of the Trustee or the Insurer are so unreasonable or in breach of duty that they should be reviewed and remitted to the decision maker. It further follows that I can give the plaintiff no relief. 79Accordingly the plaintiff's claim must be dismissed with costs.

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: 23 May 2013