Hannover Life Re of Australasia Ltd v Dargan

The definitions in the policy 15There are two definitions critical to the outcome of these proceedings. First, the definition of Total and Permanent Disablement in cl 1.3 of the policy and, second, that of Regular Remuneration Work in the glossary to the policy. 16Clause 1.3 of the policy, so far as relevant, defines Total and Permanent Disablement in the following terms: "1.3 Total and Permanent Disablement in respect of an Insured Person who was gainfully employed within the six months prior to the Date of Disablement is where: 1.3.1 the Insured Person is unable to follow their usual occupation by reason of an accident or illness for six consecutive months and in our opinion, after consideration of medical 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." Whilst Regular Remuneration Work is defined in the glossary as follows: "an Insured Person is engaged in regular remunerative work if they are doing work in any employment, business, or occupation They must be doing it for reward - or the hope of reward - of any type."

The reasoning of the primary judge 17The primary judge took the view that the appellants had not addressed the correct question, namely was Mr Dargan reasonably capable of driving a taxi by virtue of his past education, training or experience. The primary judge answered that question in the negative. He considered that the words "education, training or experience" constituted "a link between the job and past education, training or experience" (judgment par [44]). He took the view that the link did not exist in the present case. His reasoning was to the following effect: "[47] The answer to the question was No. Mr Dargan had not been a taxi driver before his accident. The only way in which he could take work as a self-employed taxi driver was to obtain an ancillary certificate and he could not hold an ancillary certificate unless he successfully completed the Road Transport Training Course. Until he did that he was not reasonably fitted for the work. He did not have education, training or experience that fitted him to be a taxi driver. He did not have the capacity to undertake the work because he lacked the necessary qualification of an ancillary certificate." 18The primary judge also concluded that the policy did not call for a qualitative analysis of education, training and experience in the definition of Total and Permanent Disablement beyond that necessary to determine whether the claimant had the capacity to take the job at the time when the issue of whether he or she was totally and permanently disabled was to be tested.

The issues in the appeal 19The appellants contended that the primary judge was incorrect in concluding that Mr Dargan was not fitted by education, training or experience to carry out the work of a taxi driver. 20By Notice of Contention Mr Dargan contended that in circumstances where he had previously been in full-time employment, his ability to undertake part-time employment did not lead to the conclusion that he was not totally and permanently disabled within the meaning of that expression in the policy. This point was not taken before the primary judge but the appellants did not object to the point being taken, nor did they contest the fact that Mr Dargan was capable of driving a taxi for no more than 20 hours per week, as distinct from the 40 hours per week which he had previously been working.

The parties' submissions 21The appellants submitted that the purpose of the policy was to afford a benefit where the disablement was both total and permanent. They submitted that the work of taxi driving was work for which Mr Dargan was reasonably fitted by virtue of his education, training and experience. They submitted that the primary judge erred in limiting his consideration to whether Mr Dargan had worked as a taxi driver previously and then finding that the fact that retraining was required excluded this work from the definition. They submitted that the phrase "reasonably fitted by education, training or experience" was a composite phrase placing a limitation on the basis that a person might be fit for alternative work, but it was not necessary for the insurer to demonstrate that the claimant had actually performed such alternative work prior to his or her disablement. 22The appellants submitted that Mr Dargan was of sufficient education, training or experience to work as a taxi driver having regard to his previous work driving heavy vehicles. They submitted that the need for a "basic induction course" did not effect the position and that reasonably fitted did not exclude further training reasonable for him to undertake. 23At the hearing senior counsel for the appellants submitted that the primary judge did not pay adequate attention to the use of the word "reasonably" in the phrase in question. He relied in particular on what was said by Hodgson J (as his Honour then was) in Chammas v Harwood Nominees Pty Ltd (No 1) (unreported, 14 April 1993). In that decision a somewhat similar provision meant that employment must be employment the claimant is capable of undertaking having regard to his education, experience and training, or at least employment which he could become capable of undertaking with further training which would be reasonable for him to undertake. 24On the issue raised by the Notice of Contention the appellants submitted that the provision was required to be construed according to the ordinary and natural meaning of the words, having regard to the commercial purpose and object of the policy. It referred to the definition of Regular Remuneration Work and submitted that it made no reference to such regular work being full or part-time. They submitted regular part-time work of 20 hours per week fell within the definition of Regular Remuneration Work. 25In support of these submissions the appellants relied on the decision of this Court in Manglicmot v Commonwealth Bank Officers Superannuation Corp Pty Ltd [2011] NSWCA 204; (2011) 282 ALR 167 where the provision in question was somewhat similar to the provision in question in the present case and in particular defined Total and Permanent Disablement as follows: "(b) having been absent from work through injury or illness for an initial period of six (6) consecutive months and in our opinion being incapacitated to such an extent as to render the Insured Person unable ever to engage in or work for reward in any occupation or work which he or she is reasonably capable of performing by reason of education, training or experience." 26In that case Giles JA, with whom Young and Whealy JJA agreed, concluded that a person was not totally and permanently disabled within the meaning of that provision in the policy where he or she could only undertake part-time work as distinct from the full-time work which that person had previously undertaken. The appellants submitted that to the extent that Hodgson J in Chammas supra reached a contrary conclusion, he was considering a policy in different terms. The appellants emphasised that the policy in question did not require a consideration of whether an insured person could perform his usual job or usual occupation. 27In his written submissions Mr Dargan focused almost entirely on the issues raised by the Notice of Contention. However, he submitted that what was said by Hodgson J in Chammas supra concerning retraining was not relevant to the construction of the provision in question in the present case, as it was concerned with a policy containing entirely different provisions. 28At the hearing senior counsel for Mr Dargan substantially adopted the reasoning of the primary judge on this point. In Chammas supra Hodgson J was primarily concerned with whether liability under the policy could arise where the claimant was only capable of part-time employment as distinct from the full-time employment in which he previously had been engaged. 29So far as the Notice of Contention was concerned, Mr Dargan referred to the words at the back of the claim form considered by Hodgson J in Chammas supra "unlikely ever to engage in or work for reward in any occupation or work for which (the member) is reasonably qualified by education, training or experience". He also pointed to the fact that Hodgson J had decided in that case that where a person had previously engaged in full-time employment the relevant test was capacity to engage in full-time employment. 30Mr Dargan submitted that in reaching this conclusion Hodgson J was considering words relevantly similar to those used in the policy in question in the present case. Further, he submitted the reasoning of Hodgson J in Chammas supra on the Notice of Contention question had been followed on a number of occasions, principally by the Full Court of Western Australia in Beverley v Tyndall Life Insurance Co Ltd [1999] WASCA 198; (1998) 21 WAR 327 and by the Federal Court in Alcoa Australia Retirement Plan Pty Limited v Thompson [2002] FCA 256; (2002) 116 FCR 139. 31Mr Dargan submitted that the words "reasonably fitted" in the policy directed attention to the work history of the claimant. Thus he submitted that if at the time of the event giving rise to the claim, the claimant was carrying out full-time employment then part-time employment would not be work for which he or she was reasonably fitted within the meaning of the clause. Mr Dargan submitted that to the extent that this Court reached a contrary conclusion in Manglicmot supra, it was wrongly decided. 32In his submissions at the hearing, senior counsel for Mr Dargan sought to draw support for the construction contended for from the fact that the policy was a Group Life policy which could apply to members in different occupations and working either full-time or part-time. He submitted that in these circumstances a sensible commercial construction required that the question of Total and Permanent Disablement be measured by reference to the work undertaken prior to the event giving rise to the claim.

Consideration 33There are three preliminary matters which should be mentioned. First, it was common ground between the parties that the date the question of a claimant's Total and Permanent Disablement is to be assessed was a date six months after the incident giving rise to the claim. Second, it was also common ground that, as at that date, Mr Dargan was unable to work full-time but (subject to the training issue) was capable of working part-time as a taxi driver for 20 hours per week. 34The third preliminary matter is that the definition of Total and Permanent Disablement required the insurer to form an opinion as to whether the claimant was unlikely to engage in Regular Remuneration Work as defined. In so forming an opinion the insurer is required to act reasonably: Hannover Life Re of Australasia Ltd v Sayseng [2005] NSWCA 214; (2005) 13 ANZ Ins Cas 90-123at [47] [56] [72] per Santow JA, Spigelman CJ and Tobias JA agreeing. In the present case where the issue is one of construction of the clause in light of substantially agreed facts, the parties were content to proceed on the basis that the question to be answered was whether, as a matter of fact, Mr Dargan was totally and permanently disabled within the meaning of that expression in the policy. 35There was no issue between the parties that the policy should be given a businesslike interpretation giving attention to the language used by the parties, the commercial circumstances which the document addressed and the object which it was intended to secure: McCann v Switzerland Insurance Australia Ltd [2000] HCA 65; (2000) 203 CLR 579at [22]. 36Whether the fact that further training was necessary for Mr Dargan to pursue the occupation of a taxi driver meant that for the purpose of the policy Mr Dargan was totally and permanently disabled depends on the construction of the phrase "reasonably fitted by education, training or experience". Two things should be stated. First, some context needs to be given to the word "reasonably" in the phrase. Second, the words "education, training or experience" are used both disjunctively and conjunctively. A person can be reasonably fitted for Regular Remuneration Work by reason of education or training or experience or a combination of those factors. 37The question of whether a person is reasonably fitted for a particular type of work will always depend on the facts of the particular case. However, with respect to the primary judge, it does not seem to me that the need to obtain a licence and as a condition of maintaining it undertake a limited qualifying course would preclude a person from being reasonably fitted for a particular occupation. 38In the present case Mr Dargan was an experienced truck driver who it can be inferred, was familiar with the rules of the road and the demands involved in driving commercial vehicles. He was able to obtain an ancillary certificate to drive a taxi without undertaking any test and was able to comfortably pass the test required as a condition of maintaining the certificate. The evidence does not suggest that Mr Dargan's training and experience as a truck driver was insufficient to enable him to complete the course. Even assuming that he had to refresh his knowledge of the rules of the road and acquaint himself with the major roads around Hobart to complete the course, that would not in my opinion mean that he was not reasonably fit to drive a taxi by virtue of his education, training or experience. 39The position may be contrasted with that considered by Brereton J in Halloran v Harwood Nominees Pty Ltd [2007] NSWSC 913; (2007) 16 ANZ Ins Cas 90-142. The policy in that case contained a definition of disablement in the following terms: "In relation to a Life Assured means having been absent from employment with the Company through injury or illness for six consecutive months and in the opinion of the Association after consideration of medical evidence having become incapacitated to such an extent as to render the Life Assured 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 provided that a Life assured shall be deemed to have become Totally and Permanently Disabled if he has suffered the loss of two limbs or the sight of both eyes or the loss of one limb and the sight of one eye where "limb" means the whole hand or the whole foot." 40The plaintiff in that case was injured in 1995 whilst being employed with the responsibility of greasing machinery. From 1996 to 1998 he completed a TAFE course in Office Administration and Computer Studies. He obtained employment thereafter as a contract officer with the Aboriginal Land Council as its Regional Project Officer in eastern New South Wales, responsible for the negotiation of traditional land rights on behalf of Aboriginal communities. Brereton J unsurprisingly held that at the time of suffering his injury he was not qualified for this work by reason of his education, training and experience. The position may be contrasted with the present case involving the obtaining of a certificate and a subsequent week-long course to ensure he was capable of retaining it. 41In Harwood supra Brereton J emphasised (at [35]) that the assessment under the claim in question had to be made at the expiration of six months and could only take into account work for which the employer was suited at the expiration of that period. That may be accepted but his Honour did not have to deal with the question which arose in the present case. That is, whether the need to complete a training course which the claimant at the time of assessment had the education, training and experience to successfully complete, leads to the conclusion that at that time he was incapable of performing the work within the meaning of the policy. 42As I indicated the question was considered by Hodgson J in Chammas supra. Clause 18.1 of the policy in that case provided for a lump sum payment on death or disablement in being incapacitated for further employment. Clause 18.2 of the policy provided that the question of the disablement shall be determined by the Trustee and for that purpose the Trustee may rely on the advice of a medical practitioner. The claim form contained a definition of Total and Permanent Disablement relevantly in the following terms: "Having provided proof to the satisfaction of the Trustee that the member has become incapacitated to such an extent as to render the member unlikely ever to engage in or work for reward in any occupation or work for which is [sic] reasonably qualified by education training or experience." 43Hodgson J in these circumstances reached the following conclusion on the question of construction: "The first matter I need to consider is whether the defendant considered the wrong question. The crucial words in both CL18.1 and CL18.2 are the words 'incapacitated for further employment'. 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. However, I do think that employment must be given a reasonable construction; and I think employment should be limited to full-time employment, and to employment which is reasonably open to the member. That is, I think, the employment must be employment which the member is capable of undertaking, having regard to his education, experience and training, or at least employment which he could become capable of undertaking with further training which it would be reasonable for him to undertake. The requirement that the incapacity be 'for' further employment, carries with it, I think, the requirement that the incapacity be permanent or substantially permanent. Mere temporary incapacity would clearly be insufficient. Although, contrary to what I said in my oral reasons, the reference is to incapacity 'for' further employment, not 'from' employment, I think the actual availability of employment and the question of the likelihood of obtaining employment is relevant. Turning to the question as stated on the back of the claim form, I do not think that is, in any material respect, different from the question arising from the words as I have interpreted them. The test stated there is that the member should be rendered unlikely ever to engage or work for reward in any occupation or work for which he is reasonably qualified by education, training or experience; and I think those words sufficiently indicate that the relevant employment is full-time employment, and that the question is not merely incapacity to engage in some theoretical employment, but actual likelihood of obtaining employment. And the reference to reasonable qualification, I think, appropriately encompasses the requirement that the employment should be something that the member is capable of undertaking." 44Although cases dealing with policies that have a different wording must be treated with caution, his Honour's view as to the meaning of the expression "reasonably qualified" is of some assistance in this case. In the present case there is nothing to suggest that as at the date Mr Dargan's disability fell to be assessed, he was not capable of obtaining an ancillary certificate and completing the training course which he undertook in 2008. The contrary was not suggested. It follows, in my opinion, that at the time his capacity for employment came to be assessed he was reasonably fitted to carry out the occupation of a taxi driver, at least on a part-time basis. 45In those circumstances, subject to the point raised by the Notice of Contention, the primary judge was in error in concluding that Mr Dargan was totally and permanently disabled. His Honour's conclusion, in my respectful opinion, failed to take into account the word "reasonably" in his construction of the provision and in its application to Mr Dargan. 46The 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. 47The construction, in my opinion, is consistent with the purpose of the policy. It is to provide benefits for Total and Permanent Disablement, not partial disablement. 48Nor do I think the construction which I prefer is affected by the fact that the policy is a group policy capable of applying to both full-time and part-time workers in different areas of employment. What is required for all participants is Total and Permanent Disablement, namely, inability to engage in Regular Remuneration Work for which the claimant is reasonably fitted by education, training or experience. The fact that a person had worked full-time does not mean that he or she is not reasonably fitted for part-time work. 49Thus far I have dealt with the issue without reference to any authorities which may be relevant to the question. As with the issue raised by the Notice of Appeal it is important to bear in mind that the construction of a particular clause will not necessarily be assisted by the construction of somewhat similar but not identical clauses in other policies. However, the conclusion I have reached is the same as that reached by this Court in Manglicmot supra. I have set out the relevant clause in that policy in par [25] above and it can be seen that it effectively incorporates the definition of Regular Remuneration Work in the present policy. I would respectfully agree with the reasons of Giles JA and in particular his Honour's conclusions in pars [88] and [89]. 50It was submitted that Manglicmot supra was wrongly decided and in particular that it was inconsistent with Chammas supra, Beverly v Tyndall Life Insurance Co Ltd supra and Alcoa Australia Retirement Plan Pty Limited v Thompson supra. Giles JA in Manglicmot analysed those cases: [2011] NSWCA [68]-[72] [76] [78]. I respectfully agree with his analysis but would add the following comments. 51The policy in Chammas supra did not have a definition of Regular Remuneration Work but simply referred to employment. Hodgson J construed employment in that policy to only encompass full-time employment. That provides no assistance in the present case. It was in that context that his Honour came to consider the wording on the claim form. The fact that he interpreted that wording consistently with his construction of the word employment in cl 18.1 of the policy means that his judgment is of little assistance in interpreting the words in the present case. 52Beverly v Tyndall Life Insurance Co Ltd supra concerned the construction of a policy with different wording to the present. The issue was whether the appellant was totally and permanently incapacitated by reason of her inability to pursue her previous occupation as a cook. It was held that she was. No issue arose as to whether she could do this work or any other work part-time: 21 WAR 327 at [31]-[32]. The only reference to Chammas supra was in support of the proposition that the insurer had to exercise its discretion on whether or not to admit a claim upon real and genuine consideration: 21 WAR 327 at [35]. 53Alcoa Australia Retirement Plan Pty Ltd v Thompson supra involved the construction of a provision substantially similar to that construed in Manglicmot supra. R D Nicholson J reached a contrary conclusion to that reached by Giles JA and after dealing with the authorities made the following remarks: 116 FCR 139 at [66]-[67]: "In White at 673-676 the court considered a number of cases dealing with the requirement that the work there involved ('a job') be one for which the member was 'reasonably qualified by education'. A number of the cases there referred to illustrate that the words 'any occupation or work' are limited by the words 'for which the Member is reasonably suited by education, training or experience'. The same point is made in MacGillivray, Insurance Law (9th ed 1997), p 711 par [25-46] where it is stated that such clauses 'must receive a reasonable construction in relation to their object'. It is stated further at p 712, par [25-48] that they must therefore be construed in the context of the actual business of the assurer. Here the applicant worked as a maintenance foreman. If the approach followed by the Full Court in Beverley were followed, the occupation or work for which he is reasonably so suited would arguably be a person wholly engaged in full-time maintenance foreman duties. When the definition is applied in this way it is seen that the characterisation of the occupation or work for which the member is so reasonably suited is itself determinative of whether or not the occupation is of a full-time or part-time character. To hold that the words referred to a full-time occupation is not necessarily to imply the words 'full-time' into the definition. Rather, it is to state the effect of the application of the words as they appear in the context of the factual circumstances relating to the assured." However, his Honour described authority on this point as inconclusive and was not prepared to allow the appeal on the ground that the Trustee had misconstrued the Trust Deed. 54With respect to his Honour, construction of the provision must look to the words used, having regard to the context, purpose and object of the contract. For the reasons I have given, I would reach a contrary conclusion. Further, to the extent that a reasonable construction is required, there does not seem to me 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. 55In the result, I would allow the appeal. Having regard to the terms on which leave to appeal was granted, the appellants should pay the respondent's costs of the application for leave to appeal and the appeal and the costs orders made below should not be disturbed.

Orders 56In the circumstances, I make the following orders: 1 Appeal allowed. 2 Orders 1 to 6 of the judgment of Gzell J on 8 November 2011 be set aside. 3 Order that the appellants pay the respondent's costs of the application for leave to appeal and the appeal. 57MACFARLAN JA: I agree with Bathurst CJ 58MEAGHER JA: I agree with the Chief Justice that for the reasons he gives, the appeal should be allowed and consequential orders made. 59HOEBEN JA: I agree with Bathurst CJ 60TOBIAS AJA: I agree with the orders proposed by the Chief Justice for the reasons he has expressed.

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