Halloran v Harwood Nominees Pty Ltd & Anor

Halloran v Harwood Nominees Pty Ltd & Anor - [2007] NSWSC 913 - NSWSC 2007 case summary — Zoe

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6149/05 Mark Halloran v Harwood Nominees Pty Limited & Anor JUDGMENT (ex tempore) 1 HIS HONOUR: The plaintiff Mark Halloran was, during his employment by CSR between 20 February 1995 and 2 July 1996, a member of a superannuation fund of which the first defendant Harwood Nominees Pty Ltd was the trustee, and under which he and other employees were entitled to certain benefits if he became disabled from employment. Harwood obtained a policy of life insurance from the second defendant National Mutual Life Association of Australasia Limited, under which employee members of the superannuation fund were the lives assured, and by which the insurer agreed to pay a benefit to the superannuation fund in the event of a member becoming totally and permanently disabled. Mr Halloran last worked for CSR in May 1996 and had resigned from his employment by 2 July 1996, citing difficulties with his back, which had been injured in a fall at work in July 1995. Years later, in 2003, he claimed a disability benefit from the superannuation fund. Harwood referred the claim to National Mutual, which declined indemnity under the insurance policy on the ground that Mr Halloran was not totally and permanently disabled within the meaning of the policy, and Harwood decided that Mr Halloran was not relevantly disabled under the trust deed. Subsequently, Mr Halloran made an application for reconsideration, supplying further material; the insurer and the trustee both again declined his claim. It is apparent that the basis upon which his claim was declined was that, for a period of six months in late 1999 to early 2000, Mr Halloran was employed by the New South Wales Aboriginal Lands Council as a project officer, after he had undertaken some retraining. It is common ground that if he was qualified under the trust deed, the amount of the benefit to which Mr Halloran was entitled was $65,660.40. 2 The case has been capably argued by Mr Bleasel for the plaintiff and Mr Cavanagh for the defendant and I am indebted to them for their concise, focussed and relevant arguments, which have much assisted me in being in a position to deliver judgment now. The principal issues for determination are: · First, whether the trustee's discretion under the trust deed miscarried; · Secondly, whether the insurer's discretion under the insurance policy miscarried; and, · Thirdly, if the insurer's discretion did miscarry, whether Mr Halloran was in fact totally and permanently disabled within the meaning of the policy. Background 3 The relevant factual background may be summarised as follows. Mr Halloran commenced employment with CSR as a greaser - that is, an employee responsible for greasing machinery, which involves climbing over machinery, ascending and descending towers and, sometimes, operating in confined and dangerous spaces - on 20 February 1995; at the same time, he became a member of the CSR Employees' Retirement Fund. In the course of that employment, on 18 July 1995, he slipped and fell down some steel steps when descending from a tower, striking his back. Following that fall, he was off work for a week, then returned to light duties for a further week and thereafter to his normal duties. He remained with CSR for nearly another year, but over that period the condition of his back deteriorated and he had an amount of time off work; the evidence suggests he was off work for something like one in four days over that period. It seems likely that his actual last work date was 3 May 1996, although the business records suggest that he ceased to be an employee of CSR on 2 July 1996. It is clear that he resigned, and an issue in the proceedings is whether that resignation was by reason of his having become disabled or for some other reason. On 14 January 1997, Harwood rolled over the amounts standing to his credit in his member's account with the superannuation fund to the AMP Benefit Preservation Plan. 4 From mid-1996, Mr Halloran enrolled in TAFE courses in office administration and computer studies, in order to acquire skills in those areas. He completed some introductory courses by the end of 1996 but it took him three years, at least until the end of 1998, to complete his TAFE course as a whole. From 26 August 1999 he was employed, for a period of six months until 25 February 2000, on a contract basis by the Aboriginal Lands Council as its regional project officer in southern New South Wales, where he was responsible for the negotiation of traditional rights on behalf of the elders of the local Aboriginal communities with entities such as the National Parks and Wildlife Service and State Forests. He did most of this work from home, where he was able to work largely at his convenience, taking rest breaks where necessary, and being able to stand and sit and move as it suited him. However, he also undertook some field trips, which involved travelling in four-wheel-drive vehicles, sometimes over relatively rough roads. 5 His contract work with the Aboriginal Lands Council came to an end, by expiry of the contract, on 25 February 2000. In 2001 and 2002, he undertook a further course of study, obtaining an advanced diploma in Applied Aboriginal Studies from Tranby College at Glebe in Sydney. It seems that he completed that course towards the end of 2002. 6 On 5 December 2002 he made two applications to Centrelink; one for a carer's pension, in respect of the care of his mother who had been injured in an encounter with a treadmill in a gymnasium, and a second for unemployment benefits. I infer from the circumstance that both these applications were made on the same day that they were made in the alternative, with the intention that the unemployment benefits would cover his position until the carer's pension was approved. In connection with the application for unemployment benefits made on 5 December 2002, he entered into a "Preparing For Work" agreement as required by Centrelink, and in it he answered a question as to whether he had any disability that prevented him from obtaining work in the negative. However, on inspection of the totality of the material which accompanied that answer, it is apparent that his explanation that he was at that stage seeking part-time work is correct, as the previous page of the application shows that he was seeking casual or part-time work at that time. 7 In March 2003 he enrolled in courses for the degrees of Bachelor of Business Management and Bachelor of Laws at the University of Technology, Sydney. He withdrew from that course at the end of March 2003 and commenced courses for the same degrees at the University of Canberra in or about July 2003. He continued these studies for some years, although presently he is not studying due to a further injury which he has more recently suffered. 8 On 4 December 2003 he lodged his first claim on the superannuation fund for a disability benefit. It was accompanied by a medical certificate of Dr Yates, who certified that he had been unable to perform all the duties of his normal occupation from 18 July 1995, that he was unable to perform any kind of work, and could not perform the duties of his normal occupation, and that he did not expect him ever to return to his normal occupation nor to any for which he was reasonably suited by education, training or experience. The trustee sought further information, and was provided inter alia with a report dated 13 May 1997 of Dr Evans, who as at that date expressed the opinion that Mr Halloran was not fit for his previous occupation of factory greaser, would be fit for light work not requiring much bending or twisting of the back or lifting of weights heavier than 5 kilograms, and would continue to experience pain and stiffness in the low back and pain in the legs, perhaps eventually coming to spinal surgery. 9 The trustee forwarded Mr Halloran's claim to National Mutual, the insurer. On 21 June 2004 the insurer rejected the trustee's claim on the policy, in the following terms: According to the employer's statement, completed by CSR Limited Mr Halloran resigned from employment with CSR Limited on 2 July 1996. The claimant commenced employment with the New South Wales State Aboriginal Land Council on 26 August 1999 to February 25, 2000, therefore has been gainfully employed after this effective 'last day at work' with CSR Limited. The claimant does not meet criteria under the terms and conditions of the policy…

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16 On 7 October 2005 the trustee informed Mr Halloran's lawyers of its decision. It gave no further reasons. These proceedings were then instituted. 17 Before I turn to the issues, it is convenient to say a little about Mr Halloran's background, which informs his education, training and experience at relevant times. 18 He was born on 30 April 1968, was 28 years of age when he ceased employment with CSR in July 1996 and 39 years of age at the date of the hearing before me. He left school on 1 December 1986, it would seem at the end of year 11, having obtained his School Certificate. He had no trade training and prior to his employment with CSR had worked in a series of labouring jobs: as a builder's labourer, farmhand, warehouse hand, park worker for the National Parks and Wildlife Service, leading hand in an orchard, heavy machinery operator, and tradesman's assistant in hydraulic or welding services. He had no experience in an office environment or as a shop assistant. Counsel for the defendants conceded, in my opinion rightly, that as at July 1996 Mr Halloran was not suited by his then education, training and experience for the job which he ultimately obtained with the Aboriginal Land Council in 1999/2000. The Trust Deed and Insurance Policy 19 Mr Halloran's entitlement to a disability benefit from the superannuation fund is governed by the trust deed. The insurance policy governs not Mr Halloran's entitlement to a benefit from the superannuation fund but the benefit which Harwood, as trustee, is entitled to receive from its insurer National Mutual in certain events which, by operation of provisions of the trust deed, it then becomes bound to pass on to Mr Halloran. 20 Clause 18 of the trust deed provides as follows: 18.1 In the event of a Member ceasing to be an Employee by reason of his having become disabled for further employment, he shall be entitled to a disablement benefit equal to the amount of the benefit which would have been payable pursuant to sub-rule 17.1 had the Member died on the date which the Member ceased to be an Employee PROVIDED THAT: (a) in respect of so much of the disablement benefit as is represented by his Member's Account, the question of disablement shall be decided by the Trustee in its absolute discretion and for that purpose the Trustee may rely upon the advice of any medical practitioner; and

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27 The question for the insurer was that posed by the definition of total and permanent disablement in the insurance policy, which is not the same question as that posed for the trustee by clause 18. To the extent that there was a gap between the two, the trustee was uninsured and, therefore, a self-insurer. 28 As any benefit available under clause 18(1)(a) was paid on 14 January 1997, the only entitlement in issue is the benefit referred to in clause 18(1)(b). This has two consequences. The first is that insofar as the trustee is uninsured in respect of the benefit, it is a self-insurer and its role is qua insurer and not qua trustee, as Hodgson J (as his Honour then was) explained in a similar context in Chammas v Harwood Nominees (No 1) (1993) 7 ANZ Ins Cas 61-175; (NSWSC, Hodgson J, 14 April 1993, BC9301704), at 3, 11, 17-18. This has implications for the relief that the court can ultimately grant; as at least ordinarily speaking, where a trustee's decision is vitiated for miscarriage of discretion the matter will be referred back to the trustee, whereas if an insurer's decision is vitiated the court will substitute its own decision for that of the insurer, as, indeed happened in Chammas. 29 The second is that insofar as the trustee was insured, the only relevant decision is that of the insurer, the only discretion under clause 18(1)(b) being that of the insurer and the trustee having no further discretion to exercise. The result is that, to the extent that the trustee insures in respect of benefits payable to a member, the insurer decides the question of disablement in accordance with the policy; to the extent that that leaves the trustee uninsured, the trustee decides the question, in accordance with the trust deed, but qua self-insurer. The Insurer's Decision 30 It is convenient next to deal with the decision of National Mutual. On both occasions on which it made a decision, it expressly referred to Mr Halloran's employment by the Aboriginal Land Council in 1999/2000 as its reason or explanation. 31 It is now well established, and uncontroversial in the present case, that an insurer's obligation to a person in the position of Mr Halloran in the present context is one to act fairly and reasonably. In Edwards v Hunter Valley Co Op Dairy Co Limited (1992) 7 ANZ Ins Cas 61113, McLelland J, as the later Chief Judge then was, discussed the obligations of an insurer in similar circumstances, stating that there was an implied obligation to consider and determine whether it should form the relevant opinion; that that involved a consideration and determination of the correct question; and that in the exercise of powers affecting the interests both of itself and of a claimant such as Mr Halloran, the insurer was under a duty of good faith and fair dealing requiring it to have regard to the interests of the claimant. His Honour said that it was well established that where under a contract of insurance, an element of the insurer's liability was expressed in terms of the opinion of an insurer, the insurer was obliged to act reasonably in determining and considering the matter [see also Chammas v Harwood Nominees, 11]. More recently the position has been considered in the Court of Appeal in Hanover Life Re of Australia Limited v Sayseng [2005] NSWCA 214; (2005) 13 ANZ Ins Cas 90-123, in which the existence of any such obligation to an employee in Mr Halloran's position was challenged but upheld by the Court of Appeal, notwithstanding the distinction that in Edwards the policy had been taken out by the employer as distinct from an affiliated trustee - in which respect Sayseng is on all fours with the present case. Santow JA, with whom Spigelman CJ and Tobias JA agreed, did not consider that Edwards was distinguishable, and concluded that the duty of utmost good faith extended to persons who were not strictly parties to the insurance contract such as those in the position of Mr Halloran. His Honour agreed with the trial judge's conclusion that the nature of the insurer's obligation was as stated in Edwards. 32 In such a case, the employee, though not a party to the insurance contract, has standing to challenge the insurer's decision. Hanover Re in the Court of Appeal plainly establishes this, which was not in dispute in this litigation. If anything, the position is even clearer in the present case, where the insured trustee as well as the insurer is joined as a party and where the trust deed, by clause 18.2(c), imposes an obligation on the trustee to handle all matters in relation to the claim on the insurer, to receive all moneys payable by the insurer, and to pay them over to the former member. In other words, if Mr Halloran was entitled to a favourable decision by the insurer, he would be entitled to compel the trustee to make a claim on the insurer, recover the proceeds from the insurer, and pay them over to him. 33 As I have said, the question for the insurer was whether Mr Halloran was totally and permanently disabled within the meaning of the insurance policy. In my view, that was an opinion which had to be formed as at the date six months from when he last worked for CSR within the definition "having been absent from employment with the Company … for six consecutive months". In Giles v National Mutual Life Association of Australasia Limited (1986) 4 ANZ Ins Cas 60-751, the insurance policy contained a similar provision, to the effect that the insured, a chiropractor, was prevented "throughout the immediately preceding continuous period of six months" from engaging in his usual profession, business, occupation or any similar occupation. He ceased to work in August 1983. Pigeon J in the Supreme Court of Western Australia said at (74,529): The cause of action of Mr Giles' claim if it arises at all arose in February 1984. If all stipulations are proved the moneys under the policy would become payable at that date. I consider basically that I must look at that date to see if the cause of action was then established. I am, however, doing that at this point of time so I consider it is open to me to take into account certain events that have occurred subsequently. If, for example, it was a proven fact that the life insured did obtain a position that earned a living then that would be sufficient to indicate he is not disabled for the remainder of his life.

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35 In Fernance, the Court was considering a definition of total and permanent disablement in an insurance policy issued by National Mutual in terms relevantly identical to that in the present case. In my view, it is clear that Hungerford J, when speaking of "the future", was speaking of the future after expiry of the period of six consecutive months absence, not the future after the date of hearing. Read as a whole, I think it is clear that when his Honour referred to the "time of assessment", his Honour was referring to the expiry of the six month period - that is, the date as at which the assessment of total and permanent disability was to be made - and not the date on which the assessment was in fact made in the sense of the date of the decision of the trustee or the hearing before any court. 36 Mr Cavanagh submitted that subsequent events, including actual employment for which the employee became suited only by retraining after the relevant date, were relevant and could be taken into account. In many cases, as was indicated in Pigeon J's judgment in Giles, evidence of subsequent events may be relevant. In the present case, if Mr Halloran had returned to work as a greaser or had returned to heavy labour that would prove that he could not have been permanently disabled for work for which he was suited as at the relevant date for assessment. He was, undoubtedly, suited by education, training and experience for work as a greaser or a labourer and had he subsequently returned to such work it could not have been argued that he was shown to be permanently disabled from it after an absence of six months from CSR. But the definition in the policy is concerned with employment for which the employee was suited at the expiry of the six month period. As Fernance makes clear, employment for which an employee becomes suited only subsequently by reason of retraining is not the type of employment which is contemplated by that definition, because it is not employment for which the employee was at the relevant date of assessment suited by his or her then education, training and experience. In my view, to take into account work for which the employee became suited only by subsequent retraining would be contrary to the authority of Hungerford J's decision in Fernance, and would also be contrary to the definition. If an employee is not disabled as defined at the relevant date, a subsequent deterioration in his or her condition does not qualify him for a disablement benefit. Conversely, if he or she is disabled as defined at the relevant date, a subsequent improvement in his or her condition does not retrospectively disqualify the employee from the benefit. To adopt the construction for which the defendant contends would make the time at which the application for a benefit is made and the time at which it was considered by the trustee decisive rather than the time objectively fixed by the trust deed as at which that decision should be made. It might well result in different decisions properly being made by a trustee on an initial application and on an application for reconsideration, and then a different decision again by a Superannuation Complaints Tribunal conducting a review as at the date that the matter came before it. That result seems to me an undesirable one. 37 The definition does not exclude all reference to a return to work undertaken after the date of assessment. As I have indicated, in many cases such a return to work may be decisive. What this definition excludes is consideration of employment for which the employee was not suited as at the relevant date of assessment. 38 Mr Cavanagh submitted that the insurer was entitled to take into account information that had been submitted by the employee/claimant in the claim without seeking out more information, the onus being on the employee to make out his claim. At least as a general statement, I entirely agree; I add the qualification "as a general statement" because, conceivably, there may be circumstances in which an insurer would not act fairly or reasonably by rejecting a claim when there had been some obvious oversight by the claimant in its preparation which could easily be remedied by a request for further information. It is to be borne in mind that the process is not an adversarial one, and the insurer does bear an obligation of utmost good faith. 39 But accepting that the insurer is entitled to take into account information supplied by the employee without seeking more, does not mean that the insurer can take into account all information supplied by the employee in response to a questionnaire designed by the insurer if some of the information so requested and supplied is, in law, irrelevant to the decision to be made. In this case, National Mutual's decisions plainly took into account Mr Halloran's subsequent employment by the Aboriginal Land Council. That was employment which I find, as was conceded, he was not reasonably suited for by his education, training and experience as at the date six months after he was last employed by CSR. It was, therefore, an irrelevant consideration for National Mutual's decision. No one suggested, and it could not be suggested, that taking into account an irrelevant consideration was not a ground which would avoid the insurer's exercise of discretion. It follows that, in my opinion, the insurer's decision was void. 40 As cases such as Edwards, Chammas and, ultimately, Hanover Re make clear, where the insurer's discretion miscarries the Court can proceed to perform the function of the insurer itself. This was explained by Bryson J in the first instance decision in Sayseng v Kellogg Superannuation P/L [2003] NSWSC 945, in the following terms (at [77]): Where, as in Hanover's Group Life Contract, entitlement to insurance is expressed in the Policy to depend on facts of which the opinion of the insurer is an element, intervention by courts takes place on different principles to intervention in discretionary decisions of trustees. Two different approaches to judicial intervention in discretionary decisions not uncommonly operate in litigation about superannuation, and (as in this case) in relation to the same claim. The grounds upon which the opinion of an insurer may be challenged are generally similar but the consequences of a successful challenge are more radical. The court regards the reference to the insurer's opinion, in the context of a contract of insurance, as a means adopted by the parties for ascertainment of the facts to which the opinion relates: contractual entitlement depends on the facts, not, primarily, on the opinion which is the means of ascertaining them, and if the insurer has actually failed to form the opinion, or has constructively failed by acting on some wrong basis, the court proceeds to determine the facts.

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41 Before proceeding to the second stage of the exercise which involves the Court considering whether, substituting its opinion for the insurer's opinion. Mr Halloran was totally and permanently disabled as at the relevant date, it is convenient to turn to the case against the trustee. The Trustee's Decision 42 I therefore turn to the decision of Harwood Nominees as trustee. Although, as I have indicated, I think that in the context of this case, Harwood's decision is to be reviewed on the basis that it was acting qua insurer and not qua trustee, lest I be wrong in that respect, I shall refer to the bases upon which a trustee's decision may be reviewed. These were summarised by McLelland J, as he then was, in Rapa v Patience (NSWSC McLelland J, 4 April 1985, unreported, BC8500888) as follows: 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 ...), third, that the discretion was not exercised in accordance with the purposes for which it was conferred and, fourth, where the trustees have disclosed … the reasons for the exercise of their discretion that those reasons are not sound. 43 That summary has since been cited many times with approval, including by Hodgson J in Chammas v Harwood Nominees and by Bryson J in Sayseng v Kellogg Superannuation. Like Hodgson J in Chammas, I do not see it necessary to consider in detail in this case whether there is in substance any difference between the grounds upon which a trustee's decision can be reviewed and those upon which an insurer's discretion can be reviewed, because it is uncontroversial that in either case asking the wrong question or taking into account an irrelevant consideration would vitiate the exercise of the relevant discretion. 44 I have already identified the question which in this case the trustee was required to consider as being whether, in the terms of clause 18.1 of the trust deed, Mr Halloran had ceased to be an employee by reason of his having become disabled for further employment. 45 The first issue which arises in that respect is what "further employment" clause 18.1 contemplates, and, in particular, whether it is employment by the employer defined in the trust deed - namely CSR Ltd or an associated company - or whether it extends to further employment with any employer. This was a question which also had to be considered by Hodgson J in Chammas, but in the rather different context that clause 18.1 of the similar but not identical trust deed in that case provided "An employee shall be entitled to a lump sum as a death or disablement benefit upon his death or disablement in being incapacitated for further employment ...". Unlike the present case, that provision did not require that the member cease to be an employee by reason of his having become disabled, as the present provision does. His Honour rejected the argument of the employee that, as the rules contained a definition of employer and employee, the employment referred to in the rules was the employment by the employer (as defined) of the employee (as defined) (at 12): I do not think the existence in the rules of definitions of employer and employee do have the result that "employment" here should be construed to mean the particular employment of the defined employer and employee. I think the whole context of cl 18 makes it clear that employment there is to be given a wider construction. 46 As I have said, in the present case, unlike in Chammas, clause 18.1 requires a connection between the disability and the cessation of employment with the specific employer CSR. Although my mind has wavered on the topic, and although I think there is considerable force in the argument that this is a distinction of some significance, ultimately I think the overall context of a superannuation trust deed providing benefits for death and disablement favours the view that, in its commercial context as a whole, clause 18.1 was concerned with disablement for further employment generally, and not just for employment with the specific employer referred to in the trust deed. Accordingly, on the somewhat different wording of this deed, I would nonetheless reach the same conclusion as Hodgson J did in Chammas. 47 Also like Hodgson J in Chammas, I would conclude that the reference to employment must be given a reasonable construction, limited to full-time employment reasonably open to the member, being employment which the member is capable of undertaking having regard to his education, experience and training, or at least could have become capable of undertaking with further training that it would be reasonable for him to undertake. In my view, there is significance in a context in which disability is often qualified by the adjective "total and permanent", in the circumstance that those words do not appear in clause 18.1. The degree of disablement required by clause 18.1 is less than "total and permanent", notwithstanding that "disability" is said by some of the dictionary definitions to have a connotation of permanence. Light duties, specifically for an injured worker, would not be the type of full-time employment in a regular occupation that the provision has in mind. Insofar as in the first instance decision in Sayseng, Bryson J seems to have been of the view that total and permanent disablement would not be established if there remained a capacity for part-time employment, that does not apply in the present context of clause 18.1, because of the absence of the words "total and permanent" from the present trust deed. In any event, with great respect, his Honour's view appears to be at odds with the prevailing judicial view on this topic, to which I shall return. 48 The relevant date at which the disablement referred to in clause 18.1 is to be determined must be the date of cessation of employment. That is the only construction that gives sensible meaning to clause 18.1, in its requirement that the cessation of employment be by reason of the member (implicitly) already having become disabled for further employment. That only makes sense if the disability is established by the date of the end of the employment. I respectfully adopt what was said by Windeyer J in Maciejewski v Telstra Super Pty Ltd (No 2) [1999] NSWSC 341, at [10]-[12]: 10. Counsel for the plaintiff says that the Trustee must form the opinion as at the date it makes its determination, in this case namely November 1998, as to whether the claimant is unlikely ever to engage in any gainful work, and if the answer to that question is in the affirmative whether that state of being unable to engage in any gainful work was the reason the member ceased to be an employee, in this case, in 1991. In other words what is said is that the position as to invalidity must be looked at at the time the decision is made and not at the time of ceasing to work.

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I have come to the conclusion that it is necessary to look at the 1991 date and to establish cessation of employment because of total invalidity as at that date, because if that were not so sense could not be given to the requirements of 2.2.3. Counsel for the plaintiff says that the Trustee through its directors did not consider the appropriate question and therefore did not give real, genuine and fair consideration to the claim of the plaintiff which the Trustee was required to do. He goes on to say that because there is no evidence from any director of the Trustee company and therefore there was no opportunity to cross-examine any Trustee, and because the Trustee itself has chosen not to give reasons for its decision then one must look carefully at the matters now before the Court to determine whether or not the decision of the Trustee was based on a fair consideration of the evidence before it and the matters it was required to take into account under the rules. 49 Similarly, in Constantinides v Du Pont Superannuation Fund Pty Ltd [2002] FCA 534, Marshall J (at [33]) said that the phrase "in service" must be read sensibly to include an employment relationship which may no longer be active but which has not been terminated, and that assessment of the member's disability was at the last day of service, inactive though that service was. Although they were concerned with a slightly different question, the decisions of Fernance and Giles to which I have already referred support the same conclusion. Once again, none of that is to say that evidence of subsequent events may not be admissible and relevant to prove whether or not an employee was disabled as at the relevant date [see, for example, McArthur v Mercantile Mutual Life Insurance Co Ltd [2001] QCA 317; Bannister v National Mutual Life Association of Australasia Ltd, (1990) (TasSC, Zeeman J, 9 October 1990, unreported BC900333)]. 50 I do not think that the decision of the Full Court of the Federal Court in Cameron v Board of Trustees of the State Public Sector Superannuation Scheme [2003] FCAFC 214 establishes the contrary. The passage in that judgment (at [22]) - to the effect that the Superannuation Complaints Tribunal makes a de novo review and any training carried out before that review can be taken into account in determining the likelihood of obtaining employment - which might be taken to point in the opposite direction, is simply a part of a lengthy extract from the reasons of the Superannuation Complaints Tribunal set out in the judgment of the Full Court - a part that was not in issue in the appeal. I do not take the Full Court, nor Spender J at first instance, to have expressed a view on that issue at all. Indeed, as Mr Bleasel points out, in the special factual circumstances of that case, where it seems that no provision of the relevant instrument fixed a date at which the assessment was to be made, the decision of the Superannuation Complaints Tribunal may have been correct. But it does not bear on the circumstance where, as here, the effect of the deed is to fix the date as at which the assessment must be made. 51 It is true that the actual resolution of the trustee, on each occasion on which it rejected the claim, prima facie addresses the correct test, in that the resolutions are expressed in terms of "disablement from further employment within the meaning of the trust deed". If that were all that was available, it might be difficult to conclude that the trustee had not addressed the correct test. But the answer is to be found in material that surrounds those resolutions. When the trustee first responded to the request by Mr Halloran's solicitor for the requisite forms to make a claim, it referred in its letter of 7 October 2003 to the definition of total and permanent disablement from the policy, not the term in the trust deed; more significantly, in the reasons it gave Mr Halloran for the first refusal of the claim in its letter of 31 August 2004, it referred to a definition of disablement which it said was the meaning it had in the trust deed but which plainly was not the definition in the trust deed. That material establishes that the trustee did not understand the question that it had to address under clause 18.1, but thought it had to address the policy definition. Its reasons of 31 August 2004 make clear that it addressed the wrong question. There is nothing in its subsequent decision which would cure that defect; to the contrary, the subsequent decision was an affirmation of the original decision and was expressed as such. 52 I think the inference is inescapable, particularly from the circumstance that on each occasion the trustee had before it the letter from the insurer declining the claim for the reason that Mr Halloran had been employed for six months with the Aboriginal Land Council, and the reference in Harwood's letter of 31 August 2004 to the insurer's advice, that the trustee took into account that same matter, namely, that after he had ceased employment with CSR and after the relevant date of assessment he had, by retraining, become suited for alternative employment for which he was not suited at the relevant date for assessment. 53 However, as Mr Cavanagh has submitted, it is not so clear in the case of the trustee that this would be an error, because in clause 18.1 of the trust deed there is no such limitation to employment for which he was suited by experience, education and training as at the relevant date, as there is in the policy definition. Hodgson J, in Chammas, contemplated that the type of employment envisaged by the corresponding clause included employment: "which he could become capable of undertaking with further training which it would be reasonable for him to undertake". It seems to me there was nothing unreasonable about Mr Halloran undertaking the retraining which he did undertake, and that that has made him suited for further employment. Accordingly the trustee did not err in taking into account work which Mr Halloran could become capable of undertaking with further training. The different result is a function of the difference between the definitions of "disability" in the policy and in the trust deed. 54 Nonetheless, the trustee addressed the wrong question, and for that reason its decision is void. If the trustee were acting merely qua trustee, I would declare its decision void and remit it to the trustee, even though it may be permissible in some circumstances for the court to substitute its own decision for that of the trustee [Sayseng [71]-[75]; Maciejewski [13], [14], [21]; cf Vidovic v Email Superannuation Pty Ltd (1995) NSWSC Bryson J, 3 March 1995; Minehan v AGL Employees Superannuation Pty Ltd (1998) 134 ACTR 1, [64]-[68] and Dillon v Burns Philp Finance Ltd (1988) NSWSC, Bryson J, 20 July 1988]. But, as to the extent that any decision of the trustee is relevant, it was acting as insurer, the court could, if necessary, substitute its own decision [Edwards; Chammas]. 55 It was submitted on behalf of the trustee that it is protected by clause 41 of the trust deed, which provides relevantly as follows: 41.1 The Trustee is only liable for its acts or omissions which are dishonest or constitute an intentional or reckless failure to exercise the degree of care and diligence required of it. 41.2 The Trustee may recover from the Fund any loss or expenditure incurred in relation to the Fund unless it results from the Trustee's dishonesty or an intentional or reckless failure to exercise the degree of care and diligence required of it or the law otherwise prevents it. 41.3 The benefit of rules 41.1 and 41.2 also applies to the Company and each associated company, and each director or officer of the Trustee, the Company or an associated company.

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56 In my view, clause 41 is plainly directed to the personal liability of the trustee for breach of trust, as distinct from the liabilities of the trust. The present case is not concerned about personal liability of the trustee for its acts and omissions, but the entitlement of a beneficiary against the trust fund. Was Mr Halloran totally and permanently disabled? 57 The next step is to determine, in place of the insurer's definition, whether Mr Halloran was totally and permanently disabled within the policy definition. This, as I have said, is a judgment to be made as at the expiration of six months from when he last worked for CSR, which is either in November or December of 1996. 58 The position may be summarised this way. He was injured in a fall at work on 18 July 1995. He was seen by a local doctor, Dr Chandran, the next day, 19 July. He had a number of days, up to a week, off work and then one week of light duties as a storeman. He then returned to normal duties. But over the ensuing ten months or so his back deteriorated, and he found he was not able to perform all of the duties of his employment, including, in particular, obtaining access to small narrow and dangerous spaces as his duties sometimes required. He had a significant period of time, about one day in four, off work. He had pain in his back daily, which he described at an early stage as radiating down the back of his left leg. 59 On 2 April 1996 he had another fall, not at work, and hurt his right knee. He was seen by Dr McAlpine on 4 April 1996 and was certified unfit for the last three days, but fit for all duties with effect from 9 April. He was referred for a lumbosacral X-ray which, when obtained, was suggestive of spondylosis. Dr McAlpine concluded that further assessment was required. Dr McAlpine's report of 30 April 1996 reveals that he complained of pain radiating down the back of his left leg as well as back pain in April 1996. 60 Some time during this period he had a grievance with his supervisor at CSR and made a complaint in that respect. He consulted solicitors on 28 May 1996; he mentioned that he had been harassed at his job by a foreman, but also that he had slipped over and hurt his back, that he had given one week's notice and had seen a company doctor; so the solicitor made a note that Dr Mickels should be qualified. It seems to me that the preferable inference is that he was seeing the solicitor about a workers compensation claim and, although reference was made to being harassed by the foreman, the principal basis which he was advancing for leaving his job was having hurt his back. 61 The solicitors sent him to see Mr Mickels, orthopaedic surgeon. Mr Mickels expressed an opinion on 1 July 1996 that: I would regard the patient as able to carry out any work not involving excessive heavy lifting, bending and working in very confined or awkward spaces and I think he would be able to continue with his previous occupation, though with the likelihood there would be some aggravation of his back pain resulting from his work.

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62 I must say that I find that rather contradictory, as his previous occupation required bending and working in confined spaces, and to ask a man to continue with his previous employment on the basis that it will occasion some aggravation of his back pain, does not seem to me consistent in real practical terms with a capacity to continue in that occupation. A man is not to be taken to have the capacity to continue in employment if it is at the expense of his health or aggravates pain. 63 Thereafter, over the next year and a half, he had a number of medical attendances, some of them for treatment, some of them for medico-legal purposes. It appears from Dr McAlpine's report of 18 November 1997 that he attended Dr McAlpine's surgery with back pain on 31 July, 23 October 1996, 23 April and 6 November 1997, when a complaint of pain radiating down the base of the left leg was recorded. On 25 October 1996, when he saw Dr Yates, he complained of a flare up of his pain for which he sought assistance. 64 The medical reports consistently record a history that he ceased work because of the degree of pain in his back associated with his work. While the source of that history is no doubt Mr Halloran, it is a contemporaneous history, and in circumstances where there is but the slightest material to found a suggestion that he resigned for any other purpose, I do not see why I should reject his evidence that he resigned because of the back pain which his work caused or aggravated. 65 The employer, CSR, sent him to see another orthopaedic surgeon, Mr Van der Rijt, who expressed the opinion that there was nothing wrong with him and that he was exaggerating. Mr Van der Rijt reviewed X-rays of the lumbar spine (which all the other doctors also reviewed) and concluded that they were unremarkable; in that conclusion Mr Van der Rijt was on his own, and I prefer the opinions of the doctors who thought the X-rays suggestive of spondylosis. 66 Dr Yates, on 28 January 1997, reported that Dr Bird had provided a medical certificate on 10 December 1996 to the effect that Mr Halloran should undertake no excessive heavy lifting, bending or working in confined or awkward spaces, and Dr Yates himself expressed the opinion that he would probably have a degree of pain and disability in the long-term, although his condition was likely to remain stable, and concluded that he would be able to undertake work not involving excessive heavy lifting, bending or working in confined spaces. 67 In a report dated 22 April 1997, Dr Miniter gave a prognosis that Mr Halloran would improve with a conservative regime, but would have long-term lower back pain which would be episodic in nature and may impinge upon his ability to perform his normal duties, in which case it would be sensible that he retrain himself. While conservatively expressed, the thrust of the opinion is that if he kept on doing the sort of work which he had been doing with CSR, he would get worse. 68 In a report of 13 May 1997, Dr Evans reported to Mr Halloran's solicitors that he was not fit for his previous occupation of factory greaser, but would be fit for light work not requiring much bending or twisting of the back or lifting of weights heavier than 5 kilograms. 69 In a report of 7 July 1997, Dr Khan reported to CSR's solicitors that the defects which had become apparent on a CT scan of Mr Halloran's back were not work-related, and that he had recovered from any soft tissue or muscular injury arising out of the work-related incident on 18 July 1995, but that nonetheless it was inadvisable that he return to heavy labouring and heavy lifting work in view of pre-existing spondylolysis and degenerative disc lesions noted on X-rays and scans. In these proceedings, I need not be troubled with whether the origin of the problem was or was not work-related. What is significant for present purposes is that a doctor retained on behalf of the employer thought it inadvisable that Mr Halloran continue in heavy labouring or heavy lifting work. Moreover, Dr Khan seems to have been troubled by the absence of evidence of radicular symptoms in the left leg, which one would have expected to be associated with the L5-S1 disc showing a large left posterolateral disc protrusion displacing the left S1 nerve root. In that respect, he cannot have been aware of the complaints reported as early as Dr McAlpine's first report of 30 April 1996 of pain radiating down the back of the left leg, and I think that in those circumstances Dr Khan's scepticism was unwarranted. 70 Dr McAlpine provided another report on 18 November 1997, concluding that Mr Halloran had not undertaken heavy work of late, was currently limited by the pain he got with bending or twisting, but could cope fairly well with a job that required sitting and office work. At present, he was unfit for heavy duties but would be fit for light duties not involving repetitive lifting or bending or lifting more than 5 kilograms. Dr McAlpine provided a certificate on 30 January 1998 to the effect that Mr Halloran was unable to do manual work from 3 May 1996 to 30 January 1998 and was retraining into clerical work from 30 January 1998 onwards. 71 Dr Evans provided a further report on 13 March 1998 concluding that Mr Halloran was not fit for his previous job of factory greaser but would be fit for light work not requiring much bending or twisting of the back or lifting of weights heavier than 5 kilograms: "Hopefully he will obtain some clerical work when he has finished his training". The prognosis was that he would continue to experience pain and stiffness in the lower back and pain in the legs, eventually, possibly, coming to spinal surgery. 72 Mr Van der Rijt provided a further report of 20 April 1998. He continued to express the view in substance that there was nothing wrong with Mr Halloran and that he was exaggerating. On this occasion, Mr Van der Rijt had the CT scan which had been performed on the same day as his first assessment but was not then available to him. It is somewhat surprising that this did not produce at least some revision in Mr Van der Rijt's opinion, since the CT scan demonstrates quite clearly significant spinal pathology, as every other doctor accepted; I think perhaps Mr Van der Rijt was trapped by his original opinion from which he did not feel able to resile. 73 The point is validly made that for a serious back condition Mr Halloran does not seem to have had a great deal of treatment. But it seems to me that he is the type of man who does not like taking medication or seeking medical intervention where it can be avoided. Quite telling on this topic is the circumstance that, on 30 October 2000, long after his workers compensation claim had been resolved and long before the present disability claim was conceived, he presented to his local doctor complaining of acute lower back pain after chopping wood a couple of days before, and in distress with pain radiating into the legs, but said he did not want medication; he was referred for physiotherapy and X-rays. The point of this, which is not answered by the circumstance that he did not have the physiotherapy, is that it tends to show that at a time where there does not appear to have been the slightest incentive for him to invent a complaint, he presented to a doctor complaining of an aggravation of back pain after activity, causing him distress, but for which he refused medication. The point is also not answered by the circumstance that throughout the preceding six months when he was working for the Aboriginal Land Council he does not appear to have made any such complaints. What is significant is that after some activity he did become significantly distressed. I think it can reasonably be inferred that had he engaged in the type of labour which he had been engaged up to 1996, he would similarly have experienced acute lower back pain. 74 The question whether Mr Halloran fell within the definition of "totally and permanently disabled" involves two elements. The first, which is uncontroversial, is that he had been "absent from employment with [CSR] through injury … for six consecutive months". It seems clear that he was absent from employment with CSR for six consecutive months at least by December 1996. As to whether or not it was through injury, for the reasons I have already explained, I am not prepared to reject his evidence, and the secondary evidence contained in the medical reports which is supportive of his contemporaneous assertions that he left work because of his injury, in favour of the supposition, for which there is no supporting evidence, that he did so because of a disagreement or grievance with his foreman. 75 The second limb is whether he has become incapacitated to such an extent as to render him "unlikely ever to engage in or work for reward in any occupation or work for which he is reasonably qualified by education, training or experience".

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(4) for which he is reasonably qualified by education, training or experience (as at the date of assessment) [ Giles , Fernance ) 77 The work for which Mr Halloran was reasonably qualified at the date six months after he ceased to work for CSR was work as a labourer, or other unskilled work. He had no skills for work other than as a labourer. He had no experience and no skills for work as an office assistant. It may be that, in theory, he could have worked as a shop assistant, but one has to look at the reality of employment in a New South Wales country town such as Tumut. It was put that he could have performed the lighter work that he did perform for a week on light duties for CSR in one of the stores, but that was work provided for him as an injured worker, as light duties, in accordance with the employer's obligation under workers' compensation legislation to provide such work. It is not work for which he would easily have obtained employment had it been known that he had a disability. Ironically, to some extent, there is support for the contention that it would have been difficult for him to obtain that type of work with his disability in the circumstance that, when he did seek some casual work in late 2002, he felt constrained to suppress the fact of his disability. 78 The medical evidence to which I have referred satisfies me that, as at December 1996, Mr Halloran was not fit, and had not, for six months, been fit, and would not in the foreseeable future likely become fit, to perform duties as a labourer. There is a substantial concurrence in the opinions that he was fit to perform light work not involving heavy lifting, repetitive bending and so on. As was pointed out by Matheson J in Cavill Power, in the context of someone whose experience and history was as a labourer, that is as good as saying no work at all; he was fit for a labouring job in which he did not have to significantly labour. In my opinion, Mr Halloran was, as at December 1996, incapacitated to such an extent that he was unlikely ever to engage in any occupation or work for which he was then reasonably qualified by education, training or experience. 79 It follows that, substituting my determination for that of the insurer, Mr Halloran was as at December 1996 totally and permanently incapacitated within the policy definition, and the trustee was entitled to a payment from the insurer. As this means that the disablement benefit is, in the event, an insured benefit, only the insurer's decision is relevant under clause 18.1(b), and no decision by the trustee is required, the insurer having (by the court's substituted decision) decided that question of disablement in favour of Mr Halloran. The trustee would then be bound, under clause 18.2(c), to pass on to Mr Halloran the payment it receives from the insurer. 80 Although I will hear counsel on the precise relief, it seems to me that the appropriate course is to declare the decisions of the insurer and the trustee void; to declare that Mr Halloran is totally and permanently disabled within the meaning of the insurance policy; to order the insurer to pay the sum insured to the trustee, and the trustee thereupon to pay that sum to Mr Halloran. As only the insurer's decision is relevant, there is no need to remit the matter to the trustee. 81 My orders are: 1. Declare that the decisions of the First Defendant in relation to the Plaintiff's claims for a disablement benefit are void. 2. Declare that the decisions of the Second Defendant in relation to the Plaintiff's claims for a total and permanent disablement benefit are void. 3. Declare that the Plaintiff satisfied the requirement of total and permanent disablement while in the service of the company within the meaning of the Group Life Policy GL 6811. 4. Order that the Second Defendant pay the First Defendant the sum of $65,660.40 together with interest pursuant to s 57 of the (CTH) Insurance Contracts Act 1984 from 14 September 2005 to date. 5. Declare that the said interest to date amounts to $10,514.66. 6. Order that the First Defendant pay the Plaintiff, the said sum of $65,660.40 together with the said interest, upon receipt from the Second Defendant. 7. Order that the First and Second Defendants pay the Plaintiff's costs, such costs to be assessed on an ordinary basis up to the beginning of 14 October 2006, and thereafter on an indemnity basis.

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Judgment (40 paragraphs)

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Cases Cited (12)