Hart v MetLife Insurance Limited

HEADNOTE [This headnote is not to be read as part of the judgment] The respondent insurer, MetLife, issued a group life risk insurance policy to a superannuation fund of which the appellant, Ms Hart, was a member. Under that policy, the definition of total and permanent disablement (TPD) has two limbs: first, that an insured member be absent from work for six consecutive months; and, second, that the insurer be satisfied that the member has become incapacitated to such an extent that he or she is unlikely ever to work again. MetLife's policy terminated on 30 September 2011 and was replaced by a subsequent policy issued by a different insurer. MetLife remained "on risk", however, for certain claims made after that takeover, such as a TPD claim arising from an injury or illness which had caused a member to be "not at work" on 30 September 2011. Ms Hart was "not at work" on 30 September 2011 and then absent from work for a six-month period between December 2014 and June 2015. She thereafter made a claim under the policy to a TPD benefit from MetLife. MetLife denied that it was "on risk" for this claim, which was said to be unrelated to the back injuries that caused her to be "not at work" on 30 September 2011. Ms Hart's case was that she was "not at work" because of those back injuries and her psychological illnesses, which injuries and illnesses also caused her subsequent absence from work for six months and her TPD. In response to Ms Hart's statement of claim seeking declaratory relief and the payment of the TPD benefit, MetLife applied for the determination of separate questions. The Court ordered the determination of three questions, which in substance asked whether MetLife's denial of, and subsequent failure to reconsider, Ms Hart's TPD claim involved breaches of its duties to act in good faith and fairly. The primary judge found that MetLife's conduct did not breach those duties, and, with the agreement of the parties, dismissed the whole of the proceedings. Ms Hart challenges the primary judge's answers to those separate questions and, following a request for further submissions from this Court, the making of the order dismissing the proceedings. In the light of those further submissions, the principal issues in the appeal are: (i) whether the primary judge's answers to the separate questions were capable of disposing of the whole of Ms Hart's claims for relief; and (ii) whether the primary judge erred in making an order disposing of the whole of the proceedings, including in circumstances where the parties agreed to the separate hearing of the three questions and the making of that final order. The Court (Meagher JA, Leeming and Mitchelmore JJA agreeing) allowed the appeal, holding: As to issue (i): (1) MetLife's denial of Ms Hart's claim did not turn on its formation of an opinion under the second limb of the TPD definition as to whether she was incapacitated to the relevant extent. Rather, it denied the claim on the basis that the first limb was not satisfied because Ms Hart was not absent from work for six consecutive months due to any injury or illness for which MetLife remained "on risk". In those circumstances, the well settled legal principles relevant to challenges to a life insurer's opinion as to incapacity were not engaged: Meagher JA at [1]-[5], [34], [37], [41]; Leeming JA at [95]; Mitchelmore JA at [96]. Edwards v The Hunter Valley Co-op Dairy Co Ltd (1992) 7 ANZ Ins Cas 61-113; Hannover Life Re of Australasia Limited v Sayseng [2005] NSWCA 214; (2005) 13 ANZ Ins Cas 90-123; TAL Life Ltd v Shuetrim; MetLife Insurance Ltd v Shuetrim (2016) 91 NSWLR 439; [2016] NSWCA 68; Hannover Life Re of Australasia Ltd v Jones [2017] NSWCA 233; MetLife Insurance Ltd v Hellessey [2018] NSWCA 307; Shuetrim v FSS Trustee Corporation [2015] NSWSC 464; Burke v MetLife Insurance Ltd [2019] NSWSC 177, distinguished. (2) Whether MetLife remained "on risk" for Ms Hart's claim depended upon the resolution of matters of fact and medical opinion. These coverage issues could only finally be determined by a court, and MetLife's formation of an opinion about them did not constitute or result in a decision that was or purported to be legally binding. As the separate questions were directed to alleged breaches of duty by MetLife in its handling of the claim rather than these coverage issues, there was no basis on which the answers to those questions could substantially dispose of Ms Hart's claim other than as to the declaratory relief sought: Meagher JA at [7], [10], [46]-[59], [82]-[88]; Leeming JA at [95]; Mitchelmore JA at [96]. Edwards v The Hunter Valley Co-op Dairy Co Ltd (1992) 7 ANZ Ins Cas 61-113, distinguished. As to issue (ii): (3) In circumstances where the answers to the separate questions did not substantially dispose of Ms Hart's claim, the order dismissing the whole of the proceedings could only be justified if there was a binding compromise between the parties. There was no such compromise. The parties' agreement to the dismissal of the whole of the proceedings was the result of their shared misapprehension as to the legal principles relevant to the resolution of the claim. The parties' consensus did not have the consequence that there was no error in the primary judge's dismissal of the proceedings: Meagher JA at [65]-[67], [88]-[90]; Leeming JA at [95]; Mitchelmore JA at [96]. Fidelitas Shipping Co Ltd v V/O Exportchleb [1966] 1 QB 630; O'Toole v Charles David Pty Ltd (1991) 171 CLR 232; [1991] HCA 14, referred to.

JUDGMENT

1. MEAGHER JA: The underlying proceedings concern a claim to a total and permanent disablement (TPD) benefit under a group life insurance policy (PBR policy). The definition of TPD in that policy has two limbs, each of which must be satisfied. The second requires that the insured group member be incapacitated and that the respondent insurer (MetLife) be satisfied that the insured member is incapacitated to the extent that she is unlikely ever to work again. If the insurer's decision that it is not or could not be so satisfied is not undertaken and made in accordance with the principles identified in Edwards v The Hunter Valley Co-op Dairy Co Ltd (1992) 7 ANZ Ins Cas 61-113, that decision can have no contractual effect, permitting the court to determine whether it is satisfied notwithstanding that the express language of the contract refers to the satisfaction of the insurer: see Edwards v Hunter Valley at 77,537; Hannover Life Re of Australasia Limited v Sayseng [2005] NSWCA 214; (2005) 13 ANZ Ins Cas 90-123 at [36], [54]; TAL Life Ltd v Shuetrim; MetLife Insurance Ltd v Shuetrim (2016) 91 NSWLR 439; [2016] NSWCA 68 at [168]-[188]; Hannover Life Re of Australasia Ltd v Jones [2017] NSWCA 233 at [64]-[69]; MetLife Insurance Ltd v Hellessey [2018] NSWCA 307 at [7]-[9].
2. In a case where there is a challenge to the life insurer's opinion as to incapacity on the basis that it has not been formed in accordance with those principles, the resolution of that challenge has been described as involving two stages. Stage 1 is directed to whether the insurer's opinion was formed in accordance with those principles and has contractual effect. Stage 2 arises if the insurer's opinion was not formed in accordance with those principles, and requires the court to form an opinion as to incapacity. See, for example, Shuetrim v FSS Trustee Corporation [2015] NSWSC 464 at [28]-[35]; Burke v MetLife Insurance Ltd [2019] NSWSC 177 at [22]-[26].
3. The present case is not one in which the liability of the life insurer to the insured member turns on whether the insurer should have been satisfied that she was incapacitated to the relevant extent. Rather, the issue is whether MetLife insured the injury or illness which caused that incapacity in circumstances where MetLife's policy had terminated before the two limbs of the TPD definition had been satisfied. The first required that the insured member be absent from work for six consecutive months because of an insured injury or illness. The second required that the insured member be incapacitated and that the insurer be satisfied as to the extent of that incapacity. It is only this second limb of the TPD definition which involves the so-called stage 1 and stage 2 inquiries referred to above.
4. Whilst MetLife's PBR policy terminated on 30 September 2011, and was replaced with a policy issued by TAL Life Ltd (TAL) on and from 1 October 2011 (the takeover date), MetLife entered into a deed of agreement with FSS Trustee Corporation (the insured Trustee) which provided that MetLife remained "on risk" for "claims arising prior to" the takeover date. Those claims included any TPD claim arising from an injury or illness which had caused an insured member to be "not at work" on the last working day before the takeover, i.e. 30 September 2011. The object of that agreement was to ensure that there was continuity of cover for each member through the takeover period.
5. The appellant, Ms Hart, made TPD claims on TAL and MetLife. Each denied that it was on risk for the injury or illness said to have caused her TPD. On MetLife's case, her TPD was caused by her psychological illnesses, which had not caused her to be "not at work" on 30 September 2011. On Ms Hart's case, which would also seem to be TAL's position, she was "not at work" on 30 September 2011 because of her back injuries and psychological illnesses, both of which resulted in her absence from work for six consecutive months from about 19 December 2014 and caused her to be incapacitated such that it was unlikely she would ever work again. It appears that neither insurer contends that Ms Hart's psychological illnesses, being post-traumatic stress disorder (PTSD) and depression, arise directly or indirectly from her back injuries.
6. Had the PBR policy continued in force until 19 December 2014, by which time Ms Hart had been diagnosed as having PTSD and ceased performing any kind of work as a police officer, there could have been no issue as to her entitlement to claim a TPD benefit from MetLife, subject to it being "satisfied" that she was incapacitated. It would not have been necessary to consider why she was "not at work" on 30 September 2011 and why she was absent from work for six consecutive months from 19 December 2014.
7. Whether MetLife is liable to pay Ms Hart's TPD claim requires that two questions be considered. The first is for what injuries and/or illnesses MetLife continued to be on risk from 1 October 2011. The answer to that question turns on the medical reasons why Ms Hart was "not at work" on 30 September 2011. The second is what injuries and/or illnesses caused Ms Hart's six months' absence from work from 19 December 2014 and her subsequent incapacity. The answer to that question also turns on medical issues. None of these answers involves or requires the formation of any opinion by MetLife.
8. The underlying proceedings were commenced by a statement of claim seeking declaratory relief as well as an order for payment of the TPD benefit alleged to be due. As will become apparent, the declaratory relief was unnecessary and significantly distracting.
9. Uniform Civil Procedural Rules 2005 (NSW), r 28.2 provides that the court "may make orders for the decision of any question separately from any other question" in a proceeding. Rules 28.4(1) and (2) provide that if the decision of a separate question "substantially disposes of the proceedings or of the whole or any part of any claim", the court may "dismiss the proceedings or the whole or any part of any claim for relief".
10. MetLife applied to have two or three questions determined separately. An order for the decision of three separate questions was made on the expressed understanding that the first and second of those questions dealt with what were described in MetLife's written submissions as "Stage 1 issues" (Ex A pp 31-32). Ms Hart's lawyers ultimately consented to the formulation and separate decision of those questions on the same understanding. Neither of those questions in fact raised any stage 1 or stage 2 issues of the kind described in Shuetrim v FSS Trustee and Burke v MetLife. Furthermore, neither of the questions addressed the legal and factual issues arising because of MetLife's denial of Ms Hart's TPD claim.
11. The separate questions were in substance whether MetLife's decision to deny Ms Hart's claim and later decision not to reconsider its earlier denial involved breaches of its duties to act in good faith and fairly when considering and responding to her claim.
12. In the face of the primary judge answering the first two of those questions in the negative (Hart v MetLife Insurance Limited [2022] NSWSC 1157 (the principal judgment)), the parties agreed to, and the primary judge made, orders dismissing the whole of Ms Hart's proceeding, including her claim to the TPD benefit (Hart v MetLife Insurance Limited [2022] NSWSC 1251).
13. As originally formulated, the grounds of appeal were directed only to asserted errors in the answering of the second and third of the separate questions. After the conclusion of oral argument of the appeal, the Court requested further submissions addressing whether, assuming the correctness of the primary judge's answers to those questions, there was nevertheless an error in the making of the order dismissing the proceedings. The Court also inquired whether Ms Hart sought to amend her Notice of Appeal to include a ground directed to such an error. Not surprisingly, Ms Hart made that application, and the Court has received further written and oral argument addressing proposed ground of appeal 5. Having considered those submissions, it is my view that leave to rely on that ground should be granted and the appeal allowed so as to permit Ms Hart's claim to a TPD benefit to be decided by a judge in the Equity Division.
14. An understanding of what has been summarised to this point, and of my reasons for allowing the appeal, is assisted by a more detailed explanation of the context in which Ms Hart's TPD claim on MetLife arose. That context includes the following matters, each of which is dealt with below: (1) the insurance coverage issues; (2) Ms Hart's injuries, illnesses and TPD claims; (3) the claims in the underlying proceedings and the separate questions; and (4) the primary judge's reasons. There follow my reasons for allowing the appeal on ground 5.

The TPD cover

1. MetLife insured FSS Trustee Corporation as trustee of the First State Superannuation Scheme (FSS Scheme) under the PBR policy. It also provided separate cover under a policy referred to as the "FSS Policy", which is no longer relevant in the appeal. The cover under the PBR policy commenced on 1 July 2005 and terminated on 30 September 2011. From 1 October 2011, TAL provided cover to the Trustee for the benefit of the insured members of that scheme under a separate policy issued by it. That insurance was on terms no less favourable to an insured member than those provided by MetLife under the PBR policy.
2. Ms Hart was a police officer between August 2003 and 3 July 2016, and a member of the FSS Scheme since commencing that employment. The PBR policy provided for the payment by MetLife of a TPD benefit in the event that the following two conditions in cl 6 of the First Schedule to that policy were satisfied: … (b) In the case of an Insured Member whose Normal Hours are 15 hours each week or more at the time of the Insured Event giving rise to the claim - the Insured Member having been absent from their Occupation with the Employer through injury or illness for six consecutive months and having provided proof to our satisfaction that the Insured Member has become incapacitated to such an extent as to render the Insured Member unlikely ever to engage in any gainful profession, trade or occupation for which the Insured Member is reasonably qualified by reason of education, training or experience.
3. Each of the limbs of this definition must be satisfied. Whereas the first requires an absence from work "through injury or illness" for a period of six consecutive months, the second does not in terms refer to injury or illness, nor does it expressly require that the incapacity result from the same injury or illness as causes the absence from work. However, as is explained below, MetLife only remained on risk after 30 September 2011 for an injury or illness which on that day had caused an insured member to be "not at work".

MetLife's limited continuing cover

1. The provisions identifying this cover are contained in the "Group Insurance Takeover Terms" published by IFSA as at September 2000 (IFSA Terms). A copy of those terms was attached to a deed of agreement between MetLife and the Trustee dated 6 July 2011.
2. Clause 1.2 of that deed provides that MetLife "remains 'on risk' in respect of Insured Members under the IFSA Terms until it goes 'off risk' for such [members] under the IFSA Terms". Clauses 2.1 and 8.1 of the IFSA Terms require the following principles be applied as an "aid to the interpretation" of those terms:

• generally the previous insurer is responsible for claims arising prior to the takeover date;
• generally the incoming insurer is responsible for claims arising on or after the takeover date;
• takeover should be "seamless" as far as insured members are concerned; and
• there must be continuity of cover through the takeover period. As already mentioned, TAL's takeover date was 1 October 2011.

1. If there is one matter that is clear and beyond controversy in this proceeding, it is that, from Ms Hart's perspective, the transfer of coverage from MetLife to TAL has been far from "seamless".
2. The critical provisions of the IFSA Terms are cll 7.1, 13.3 and 13.4. Clause 7.1 defines "takeover date", "at work", "not at work" and "new events cover". The combined effect of cll 13.3 and 13.4, understood in the light of the definitions in cl 7.1, is that MetLife remained on risk for ongoing cover: … in relation to the medical condition or any directly or indirectly related condition arising from sickness or injury which has caused the insured member… [relevantly] to be not at work on the working day immediately preceding the takeover date. (Italics in original.)
3. Clause 7.1 defines the term "not at work" in contrast to the term "at work". In that provision, "at work" relevantly means that the member is "performing all the duties of his [or her] usual occupation".

Physical injuries and psychological illnesses

1. Ms Hart's back injuries were described in a P902 injury incident notification form dated 29 November 2006. By 6 October 2010, Ms Hart's working duties and hours were subject to permanent restrictions in view of her back injuries. On 30 September 2011, she continued to be subject to those permanent restricted duties because of her back injuries. On 11 September 2012, a second P902 form was submitted on behalf of Ms Hart. It described a meeting at this time about her "return to work program" in which she became "very distressed and could no longer perform duties and was instructed to go home". On 14 September 2012, a further injury report certified Ms Hart as "unfit for work in any capacity", with a diagnosis of "Anxiety and Depression and was referred for psychological counselling".
2. On 5 August 2014, Associate Professor Robertson diagnosed Ms Hart with PTSD against a "background of chronic traumatic stress exposure with a number of particularly horrific 'jobs'". Earlier, in November 2012, Ms Kwok, a psychologist, had described Ms Hart having "levels of anxiety, stress and depression symptoms… in the 'extremely severe' range".
3. On about 19 December 2014, Ms Hart ceased active duties as a police officer. She was subsequently absent from any work from that date and that state of affairs continued past 19 June 2015, six months later. She was medically discharged from the police force on 3 July 2016.
4. It is not controversial that Ms Hart satisfied the description "not at work" on 30 September 2011 because on that day she was not actively performing the usual duties of her occupation and was on "permanent restricted duties", working only six of the eight hours per day (and three of the five days per week) her usual duties required that she work. The factual issue which arises at this point is whether the illnesses or injuries which caused her to be "not at work" on that day included PTSD, depression or anxiety.

Ms Hart's claim on TAL

1. In March 2016, Ms Hart made a claim on TAL for a TPD benefit. The "injury or illness" resulting in that claim was to her "cervical spine, thoracic spine, lumbar spine, shoulders", describing her physical injuries, and "PTSD, Depression, Anxiety", describing her psychological illnesses. The former was said to be the result of "long term wearing gun belt coupled with lack of fatigue management" and the latter the result of "exposure to traumatic events continually".
2. By letter dated 3 January 2018 addressed to the Trustee, TAL rejected Ms Hart's claim on the basis that as at 30 September 2011 her time at work was restricted "due to both Psychological and Physical Injuries, which have continued to date". In support of that being the position, TAL noted that in November 2010 Ms Hart had reported "flashback and anxiety symptoms" relating to traumas to which she had been previously exposed, and that she was subsequently diagnosed with PTSD.

Ms Hart's claim on MetLife

1. Ms Hart's claim was referred to MetLife. On 18 February 2018, she completed a claim form. MetLife initially rejected that claim on the basis that Ms Hart did not answer the description "not at work" on 30 September 2011.
2. In circumstances where each insurer was denying Ms Hart's claim, the Trustee "reviewed the available information" and addressed the question as to which insurer was liable. In its letter dated 12 October 2018, the Trustee suggested that the circumstances appeared to have created an "undesirable position" in which Ms Hart was "concurrently insured under two separate policies for two separate injuries". The Trustee also raised as a further question to be considered whether her psychological illness was a primary and freestanding condition or a "secondary injury" to the physical injury, in which case MetLife might be liable as it was on risk for any "directly or indirectly related condition arising from" her physical or back injuries. The Trustee then requested that TAL and MetLife "review the position" and advise by 1 November 2018 whether either agreed that it was on risk for Ms Hart's claim under the PBR policy. In the event that neither accepted liability, the Trustee proposed to invoke the "adjudication process" provided for under the IFSA Terms.
3. By its letter dated 2 May 2019, MetLife accepted that Ms Hart was "not at work" on 30 September 2011, and for that reason undertook to assess its liability for any TPD claim "arising from" her back or physical injuries. In its letter of 10 May 2019, MetLife advised that it required information beyond that provided in December 2017 when the claim was first notified to it, and that Ms Hart attend medical examinations. In July 2019, MetLife sought further information from the Trustee, and as at 28 April 2020, MetLife's position was that it did not have sufficient information to assess Ms Hart's claim. Nevertheless, it expressed the view that, on the information currently available, it was not liable for any TPD caused by Ms Hart's "primary psychiatric condition", being her PTSD and "Major Depressive Illness".

Complaint to Superannuation Complaints Tribunal and Federal Court appeal

1. Much earlier, in October 2018, Ms Hart made a complaint to the Superannuation Complaints Tribunal (SCT) against the Trustee. MetLife was joined as a party to the proceedings. At that time, its position was that it required further information. In its decision of 26 October 2020, the SCT set aside MetLife's constructive rejection of Ms Hart's claim and substituted a decision that her claim be accepted. Ms Hart was legally represented in those proceedings.
2. MetLife appealed from that decision to the Federal Court under s 46(1) of the Superannuation (Resolution of Complaints) Act 1993 (Cth). That appeal was limited to questions of law. By its judgment delivered on 30 April 2021, the Federal Court set aside the SCT's determination, and declared that the tribunal had erred in determining that MetLife had "constructively rejected" Ms Hart's claim (MetLife Insurance Ltd v Hart [2021] FCA 410 (Derrington J)). Following that decision, on 18 May 2021 the Trustee invited MetLife to complete its assessment of Ms Hart's claims "with the least possible delay" (J[45]).

Ms Hart's continuing claim on MetLife

1. MetLife did so by its letter to Ms Hart dated 9 June 2021, which set out its "current position about our liability for your PTSD" claim under the PBR policy. MetLife said that it was not on risk from 1 October 2011 for any condition not related to her back or physical injuries, and accordingly that it was not on risk for her PTSD and depression illnesses, there being no evidence those illnesses caused her to be "not at work" on 30 September 2011. As Ms Hart was absent from work for six consecutive months because of those psychological illnesses and because they arose from her exposure to traumatic events (and not from her back injuries), MetLife's position was that the first limb of the TPD definition was not satisfied by any sickness or illness for which it remained on risk. This position was also said to accord with the observations and conclusions of Derrington J at [2], [68], [94], [95] and [126].
2. MetLife's letter of 9 June 2021 closed by requesting Ms Hart and the Trustee to provide any further information that might be relevant to its consideration of her claim within 28 days. Finally, it was stated that "after 28 days from the date of this letter, we will finalise our consideration of your TPD claims against MetLife".
3. At the time that letter was received, Ms Hart did not have solicitors acting for her. However, in relation to the proceedings before the SCT and in the Federal Court, she had been represented by Cardillo Gray Partners. At some time before 25 June 2021, she retained the law firm, Firths. On that day, Firths wrote to MetLife in response to its letter of 9 June 2021. Firth's letter recorded that the writer had not had the opportunity to "fully review the file" and made various general and unsupported assertions, including that MetLife had not "performed its duty in reviewing the medical evidence and seeking expert opinion", leaving it necessary that the writer do so.
4. There was no further contact between MetLife or its lawyers and Ms Hart or her lawyers before MetLife's next letter of 9 August 2021, which advised that it had finalised its consideration of her TPD claim and rejected it on the basis that the first limb requirement, that she be "not at work" for six consecutive months, was not satisfied in relation to MetLife because it only remained on risk for a TPD claim based upon her back injuries. The cause of her six-month absence from work was said to be her PTSD and depression illness. Neither this letter nor MetLife's earlier letter of 9 June 2021 relied on the non-satisfaction of the second limb of the TPD definition as a reason for rejecting Ms Hart's claim.
5. In concluding, the letter invited Ms Hart to make a complaint in the event that "MetLife's comments or conclusions set out above" were considered to be "unfair", indicating that it would try to resolve such a complaint within 45 days. The letter also advised that a request could be made by Ms Hart to the Australian Financial Complaints Authority (AFCA) for an "independent review" of her claim.
6. On 15 November 2021, Firths wrote to MetLife, enclosing a statement from Ms Hart and two further medical reports. The letter requested MetLife "review the enclosed documents and reconsider this claim with a view to accepting it within 28 days", failing which it was said instructions were expected "to commence proceedings without any further communication or delay". Moray & Agnew, lawyers representing MetLife, responded on 2 December 2021, noting that 28 days was an "inadequate time to consider and assess the claim (assuming MetLife has any obligation to do so)".
7. In its letter in reply dated 8 December 2021, Firths said, among other things: Your client has now been provided with additional medical evidence relevant to the question of whether our client is TPD for the purposes of the policies issued by your client. As you are aware, your client's formation of an opinion as to the likelihood of our client returning to work in the future is a condition of liability under both policies. The further evidence recently served by our client is directly relevant to the formation of that opinion. Your client owes our client a duty of utmost good faith. Once it has been presented (as it has here) with new evidence germane to the issue on which it is required to form an opinion, it would be a breach of that duty for your client to refuse to consider that evidence and revisit the question of whether our client is TPD for the purposes of the relevant policies.
8. The writer of this extract addresses a subject which did not form any part of the basis on which MetLife had denied liability for Ms Hart's claim. That denial was directed to the non-satisfaction of the first limb of the TPD definition in relation to an injury or illness for which MetLife remained on risk, as its two earlier letters had made clear. MetLife had not formed any opinion for the purposes of the second limb of the definition of TPD because it believed it was not on risk for the psychological illnesses which had caused her incapacity.

Underlying proceedings

1. The appellant commenced these proceedings against the Trustee and MetLife on 17 March 2022. TAL has never been joined as a party and the proceedings against the Trustee have been discontinued on terms which are not in evidence.
2. In her pleading, Ms Hart alleges that her psychological illnesses first developed in about January 2010, her back injuries having been sustained in November 2006. She also alleges that she was "not at work" on 30 September 2011, which was during a period in which she had been placed on permanently restricted duties. She does not in terms allege that she was "not at work" on that day because of those psychological illnesses, as well as her back injuries, although she does allege that at that time she suffered from those injuries and illnesses. Finally, she alleges that as a consequence of her physical injuries and psychological illnesses she ceased active duties as a police officer on about 19 December 2014, and that by 19 June 2015 she suffered "Total and Permanent Disablement" because of those injuries and illnesses.
3. It is not alleged that Ms Hart's psychological illnesses were directly or indirectly related to her back injuries. Nor is it alleged that either of her physical injuries and psychological illnesses, considered separately, was sufficient to have caused her absence from work between 19 December 2014 and 19 June 2015, or her thereafter being or becoming incapacitated to the relevant extent. In oral argument in this Court, senior counsel for Ms Hart confirmed that her case is that her physical injuries and psychological illnesses were the reasons that she was "not at work" on 30 September 2011 and continued to be the reasons why she was off work for six consecutive months from 19 December 2014 and thereafter suffered "Total and Permanent Disablement".
4. The relief sought by Ms Hart in her statement of claim, ignoring that sought with respect to the FSS Policy, relevantly included: 1. A declaration that the second defendant's decision of 9 August 2021 to decline the plaintiff's claim for payment of a benefit under the Group Life Insurance Policy - Blue Ribbon number CGL 3261 ("the PBR Policy")… is void and without effect. 2. Further or in the alternative to 1. above, a declaration that by failing or refusing to reconsider the plaintiff's [claim] under… the PBR policy… the second defendant breached its duty and obligations to the plaintiff. 3. A declaration that the plaintiff has suffered "Total and Permanent Disablement" for the purposes of… the PBR Policy… 4. An order that the second defendant pay to the first defendant, in trust for the plaintiff, the sum of $463,556 being the TPD benefit payable under the PBR Policy in respect of the plaintiff… 5. An order, subject to 4. above, that on receipt by the first defendant from the second defendant of the TPD benefits payable under… the PBR Policy… that the first defendant deal with those amounts in accordance with its trust deed and applicable superannuation legislation. 6. An order that the second defendant pay interest pursuant to s 57 of the Insurance Contracts Act 1984 (Cth).
5. What is immediately apparent is that the MetLife decisions which are the subject of the declarations sought in pars 1 and 2 were concerned with whether Ms Hart's TPD claim should be accepted or rejected or reconsidered. As the above chronology shows, however, none of those decisions involved the formation by MetLife of any opinion that was a condition of its own liability (cf Edwards v Hunter Valley at 77,537). Whilst the essentially claims handling decisions which are the subject of the declaratory relief no doubt required assessments by MetLife of the strength or otherwise of its position on insurance coverage issues, those assessments did not constitute or result in a decision that was or purported to be legally binding as between MetLife and the Trustee or Ms Hart.
6. Focusing on the pleaded case, the claim to the sum payable in accordance with the relief sought in pars 4, 5 and 6 is supported by pleaded pars 8, 10-12, 16-27 and 36. The claims to the declaratory relief sought in pars 1 and 2 are supported by pars 28-36, which plead the existence and breaches of duties including to act fairly, reasonably and in good faith with respect to the making of what are claims handling decisions.
7. As to the form of the declaratory relief, par 1 seeks a declaration that MetLife's decision to reject Ms Hart's claim communicated by its letter dated 9 August 2021 is "void and without effect". That decision was likely based on an interpretation of the TPD provisions of the PBR policy and cll 7.1, 13.3 and 13.4 of the IFSA Terms applied to the facts as assessed by MetLife. It did not involve the forming of any opinion on the part of MetLife which was or could be binding on Ms Hart or the Trustee. The only "effect" that MetLife's communication of its decision to Ms Hart could have was as a statement of MetLife's position. Accordingly, seeking a declaration that this decision was "void and without effect" was misconceived, and the making of that declaration could not at all advance Ms Hart's claim to the relief sought in pars 4, 5 and 6 of the Statement of Claim.
8. The declaration sought by par 2 is directed to the reconsideration by MetLife of that decision and its earlier reasons for rejecting Ms Hart's claim. Again, whether there had been a breach of MetLife's obligation of good faith in its further consideration of the claim could not advance at all the final and binding determination of the legal and factual issues arising between MetLife and the insured member. Its earlier reasons for refusing her claim, given in its letters of 9 June and 9 August 2021, did not include that it had not been or could not be satisfied that she was incapacitated because of her psychological illnesses. Whether MetLife was on risk depended on the resolution of matters of fact and medical opinion not raised for determination by this declaration.
9. Addressing more generally the subject matter of the declarations sought by pars 1 and 2, MetLife's decision communicated by those letters was that it denied Ms Hart's claim because it did not provide cover for injuries or illnesses occurring after its policy had terminated on 30 September 2011. Firths' letter of 15 November 2021 requested a reconsideration of that denial. It was not suggested by this letter that MetLife's first decision was not a timely one or that it was capricious or unfounded (cf CGU Insurance Limited v AMP Financial Planning Pty Ltd (2007) 235 CLR 1; [2007] HCA 36 at [15], [179], [259]). MetLife's position was not relevantly different from that of any other insurer having to decide whether to accept or deny a contentious claim made under a policy. If the parties could not resolve their differences, they would have to litigate, and if MetLife were held to be wrong, it would have to address whether the second limb of the TPD definition was satisfied.
10. Whilst the declaration sought by par 3 requires consideration of the first and second limbs of that definition, it does not identify the injuries or illnesses said to have resulted in Ms Hart's absence from work and her incapacity. It needed to do so if it was to resolve the coverage issues arising in Ms Hart's TPD claim.

Separate questions

1. On 31 May 2022, MetLife filed a motion seeking the determination of separate questions, which, as originally proposed, asked whether Ms Hart was entitled to the declaratory relief claimed by pars 1 and 2. By its subsequent written submissions dated 20 July 2022 (Ex A pp 28-34), MetLife contended that "the questions in Order 1 [relating to the relief sought in pars 1 and 2] would precisely separate the Stage 1 issues from the Stage 2 issues", as to which see [2] above. MetLife also submitted that if the Court answered each of the questions sought by Order 1 "No", then the stage 1 process would be resolved adversely to the plaintiff, and, as was said in Shuetrim v FSS Trustee at [30], that would be the "end of the matter". If those submissions were addressing whether those answers resolved the coverage issues between MetLife and Ms Hart, that statement was simply not correct. There was no stage 1 issue at all. The satisfaction of the second limb of the TPD definition had nothing to do with MetLife's rejection of Ms Hart's claim because the first limb was not satisfied.
2. MetLife's stated objective in proposing the separate questions was to deal with the stage 1 inquiry or issues separately and first. In its written submissions, MetLife said that the questions could be reframed to address in terms the declaratory relief sought in pars 1 and 2, and still achieve that objective. That also was not correct. Nevertheless, that suggestion was taken up in the orders as finally made by Hammerschlag CJ in Eq on 25 July 2022 following a short hearing on 21 July 2022.
3. In the course of that directions hearing, his Honour queried whether the answers to the separate questions would determine the MetLife coverage issues. The following exchanges occurred. Having raised this question, the Court did not resolve it, implicitly leaving it to be assessed by the experienced lawyers on both sides (Ex A pp 52-53; tcpt 21/7/22 pp 12-13): HIS HONOUR: … If I'm only determining whether or not you have not met the duty that arises from the provision in the policy that requires you to admit the claim if they prove to… your actual satisfaction, but reached presumably bona fide and reasonably. Then if I find that you acted in a way that is bona fide and reasonable, I could reach that conclusion even if I come to the conclusion that I don't - if I come to the conclusion that your argument on being on risk is reasonable, I don't have to decide that finally, why do I have to decide that finally? LLOYD: Certainly… Perhaps I didn't understand your Honour. We can win at stage 1 at various levels. HIS HONOUR: If all I'm determining at stage 1 is whether the satisfaction that you reached was not reasonable and in good faith, that's all I'm determining, then I'm not determining your legal defence on a final basis. I'm not determining that. I'm just determining whether or not you acted in a manner inconsistent with your duty as an insurer. LLOYD: I see what your Honour says. Perhaps that's so… HIS HONOUR: My analysis and your analysis are not exactly the same. I think that what is required here is an examination of whether or not you have breached your duty. In determining whether or not you've breached your duty I might look at the strength of or the way that a person in your position would look at that argument and evaluate the strength of that argument… I don't have to decide that question. If that's the case, we never get to actually having to decide it. LLOYD: I agree it could end that way… (Emphasis added.)
4. Towards the conclusion of the directions hearing, there was discussion about whether MetLife would agree that if it failed on the "stage 1" question, it would agree not to appeal before the remainder of the case was dealt with. MetLife gave an undertaking to that effect. In the course of discussion about that subject, Hammerschlag CJ in Eq observed (Ex A p 56; tcpt 21/7/22 p 16): What I regard as important is if I accede to this and at stage 1 you fail that the plaintiff then has her full day in court. At the end of the day, if you turn out to be correct and I turn out to be wrong, that's fine. But this is an individual and the individual is entitled to have the case, as are you, heard expeditiously, cheaply and justly so far as I can achieve. I can tell you that if you do not agree not to appeal if you lose stage 1 then I will not accede to this application.
5. On 25 July 2022, orders for the determination of the following separate questions were made: 1. Did the second defendant breach its duty and obligations in considering and declining the plaintiff's claims on 9 August 2021? (See Statement of Claim [34]) 2. Did the second defendant breach any duty or obligation to the plaintiff in failing since 15 November 2021 to reconsider the plaintiff's claims? (See Statement of Claim [35]) 3. In light of the answers to questions 1 and 2, what, if any relief, should be granted?
6. Ms Hart's solicitors agreed that the purpose of the proposed questions was to resolve stage 1 issues that were said to arise. In par 3 of his affidavit of 4 July 2022, Ms Hart's solicitor, Mr Mickels, said (Ex A p 18): … proceedings involving disputed TPD benefits typically involve a "first stage inquiry" (where the Court examines whether the insurer's decision/s to decline a claim should be set aside) and a "second stage inquiry" (where the Court considers the available evidence and forms its own opinion as to whether the plaintiff is TPD for the purposes of the relevant insurance policy/ies).
7. From the perspective of their client, they submitted that the stage 2 issues should be heard at the same time. As is apparent, that submission did not find favour with the Chief Judge.
8. That TPD claims often involve a two-stage inquiry is undoubtedly correct. However, Mr Mickels' statement that in a first stage inquiry the Court examines whether the insurer's decision to decline a claim should be set aside is only correct if that decision involves the formation of an opinion by the insurer for the purposes of the second limb of the TPD definition. It plainly did not in this case.

The primary judge's reasons

1. The primary judge addressed the first separate question at J[51]-[102]. In doing so, his Honour concluded that MetLife did not breach the "pleaded duties" in dealing with Ms Hart's claim under the PBR policy (J[100]). The duties and breaches referred to were alleged in pars 33 and 34 of the Statement of Claim, and included an obligation "to act fairly and reasonably in considering and determining its opinion", and an obligation "to consider and determine the correct question for the purposes of determining its liability under the PBR Policy".
2. As to the scope of those relevant duties, his Honour had earlier noted that the parties relied upon the decisions in Edwards v Hunter Valley and Hannover Life v Sayseng (J[53]). Relevantly to this appeal, in concluding his reasons in relation to the first separate question, the primary judge observed at J[101] that: … it is not strictly necessary to determine MetLife's wider claim that it was not in fact or in law liable under the PBR Policy in order to determine these matters or the separate questions referred to me, although the conclusions that I have reached above would have the consequence that Ms Hart could not establish that she was not "at work" as at 1 October 2011 by reason of her PTSD claim for the purposes of the PBR Policy, or that TPD was established in respect of her physical injuries for the purposes of the first limb period, or that MetLife was at risk for her PTSD claims under the PBR (or indeed the FSS) Policy.
3. This observation also recognises that the answers to the separate questions and the declaratory relief to which they were directed could not and did not determine whether MetLife was not "in fact or in law" liable for Ms Hart's TPD claim.
4. The primary judge answered the separate questions as follows: 1. [MetLife] did not breach its duty and obligations in considering and declining [Ms Hart's] claims on 9 August 2021. 2. [MetLife] did not breach any duty or obligation to [Ms Hart] in failing since 15 November 2021 to reconsider [her] claims. 3. Given the answers above, the third question does not arise.
5. Having done so, his Honour considered in a preliminary way whether UCPR r 28.4(2) was engaged by those answers. Rule 28.4 relevantly provides: 28.4 Disposal of proceedings (1) This rule applies if the decision of a question under this Division - (a) substantially disposes of the proceedings or of the whole or any part of any claim for relief in the proceedings, or (b) … (2) In the circumstances referred to in subrule (1), the court may, as the nature of the case requires - (a) dismiss the proceedings or the whole or any part of any claim for relief in the proceedings, or (b) give any judgment, or (c) make any other order.
6. At J[123], in language broadly consistent with his earlier observation at J[101], the primary judge said "[i]t is likely that the result of the determination of these separate questions is that the proceedings should be dismissed with costs". The parties were then asked to confer in relation to the drafting of short minutes giving "effect to this judgment". The parties did so, and, in short reasons delivered on 15 September 2022 (Hart v MetLife Insurance Limited [2022] NSWSC 1251), having referred to his earlier observation as to the likely result of the proceedings, the primary judge noted that the parties "agree that the proceedings should be dismissed". His Honour made that order.
7. His Honour's reasons do not suggest that the consensus of the parties that the proceedings should be dismissed was the result of any binding compromise between them as distinct from an acceptance of his Honour's tentative view as to what followed from the answers to the separate questions. In the absence of such a compromise, before making an order for dismissal of the proceedings, his Honour was required by UCPR r 24.8(1) to be satisfied that the issues separately determined were decisive of the claim or claims which was or were to be dismissed. See also Fidelitas Shipping Co Ltd v V/O Exportchleb [1966] 1 QB 630 at 642; O'Toole v Charles David Pty Ltd (1991) 171 CLR 232 at 245, 260; [1991] HCA 14.
8. The answers to questions 1 and 2 were decisive of the claims for declaratory relief in pars 1 and 2. They could not be decisive of the claims for relief in pars 4, 5 and 6 unless the parties had agreed, or were otherwise bound in some way, to treat the answers to those questions as determinative of that relief. There was no such express agreement.
9. However, MetLife contends that up to this point Ms Hart's case has been pleaded and conducted on the basis that the relief sought by pars 4 and 5 would be determined by reference to the answers to the separate questions and whether MetLife had acted reasonably and in good faith in maintaining that it was not liable.

Grounds of appeal (including proposed amendment) and notice of contention

1. There are four grounds of appeal. Grounds 1, 2 and 3 challenge the primary judge's answer to the second question. His Honour's answer to the first is not challenged. Ground 4 depends on the success or otherwise of grounds 1, 2 and 3. If the correct answer to the second question is "Yes", as those grounds contend, then it is said that there should have been a declaration as to the breach of the obligation to reconsider the additional material.
2. Ms Hart also seeks leave to amend to raise ground 5. Her application to do so is made in response to the communication from the Court following the hearing of the appeal. In that communication the Court requested that the parties address the following matters: (1) whether the answers to separate questions 1 and 2 could possibly or did dispose of the legal and factual issues raised by MetLife's rejection of Ms Hart's claim on the basis that it was not "on risk"; (2) whether the answers to separate questions 1 and 2 substantially disposed of Ms Hart's claims to relief under pars 4 and 5 of the Statement of Claim so as to justify the making of the order dismissing those claims; (3) whether the circumstances in which the order dismissing the proceedings was made, including that the parties agreed to the making of that order, provided any justification for the making of the order beyond the power conferred by r 28.4(2). …; and (4) whether Ms Hart seeks to amend her Notice of Appeal to raise the matter in (2) above, and if so whether MetLife opposes that application and on what basis.
3. Ms Hart's responses in relation to these matters are: (1) the answers to the separate questions did not dispose of the legal and factual issues raised by MetLife's defence that it was not on risk; (2) the answers to the first and second separate questions did not dispose of Ms Hart's claims for relief under pars 4 and 5; (3) the circumstances did not justify the making of an order dismissing the proceedings. UCPR r 28.4(1) was not satisfied. If the order was made by consent pursuant to an agreement between the parties, it was void or voidable for mistake, enabling the court to set it aside under UCPR r 36.15(1); and (4) Ms Hart seeks leave to amend her Notice of Appeal to raise ground 5.
4. That proposed ground is: 5. Further or in the alternative, in circumstances where: (a) the first and second separate questions and the answers to those questions given by the primary judge were incapable of disposing of and did not dispose of or render unnecessary the appellant's claims for relief in Prayers 3 to 6 of her Statement of Claim; and (b) the agreement of the parties to orders dismissing the proceedings with costs was the result of a common mistake, then (c) Orders 1 and 2 below were not within the power conferred by UCPR 28.4 and should be set aside; and (d) the third separate question should be answered to the effect that no relief should be granted in light of the answers to grounds 1 and 2, and instead the proceedings should be listed for directions, with a view to programming the proceedings [for] a hearing of the claims for relief in Prayers 3 to 6 of the Statement of Claim.
5. In the event that ground is upheld, Ms Hart seeks the following orders: 3. … set aside Orders 1 and 2 made on 15 September 2022 and in lieu thereof: (a) answer the third separate question: no relief should be granted in light of the answers to questions 1 and 2, and instead the proceedings should be listed for directions, with a view to programming the proceedings to a hearing of the claims for relief in Prayers 3 to 6 of the Statement of Claim; (b) remit the proceedings to the Equity Registrar's list for directions, with a view to programming the proceedings to a hearing of the claims for relief in Prayers 3 to 6 of the Statement of Claim; and (c) costs of the appeal and of the hearing of the three separate questions for determination before Black J on 8 - 10 August 2022 be costs in the cause.
6. In written submissions in support of that application, Ms Hart's counsel explain how from her perspective separate questions, which her lawyers now accept do not dispose of the legal and factual issues raised by MetLife's rejection of her claim, were formulated and determined: 11. The circumstances outlined above indicate that, at all material times, the parties were acting under a mutual misapprehension. They proceeded on the assumption that this case could be determined in the same way as if MetLife had rejected Ms Hart's TPD claim due to a failure to satisfy the second limb of the TPD definition, when in fact, MetLife had rejected Ms Hart's claim on the basis that it was not "on risk" for Ms Hart's TPD claim at all, regardless of whether MetLife was "satisfied" on the second limb issue. During the hearing of the separate questions Motion, the Court made observations which might have identified the parties' mistake, but they remained under the misapprehension that a negative answer to the separate questions would dispose of the proceedings. This was an error, and that error persisted up to and including when the order dismissing the proceedings was made.
7. It is submitted on behalf of Ms Hart that leave should be granted to raise ground 5 and that the appeal on that ground should be allowed. The order dismissing the proceedings should be set aside to allow the claims for the relief in pars 4, 5 and 6 of the Statement of Claim to be determined: 12. We respectfully submit that these circumstances do not justify the making of an order dismissing the proceedings pursuant to UCPR 28.4(2). The conditions prescribed by UCPR 28.4(1) were not satisfied and substantial issues raised on the pleadings have not been heard or determined on the merits. … 16. Further, the Court should set aside the order, lest Ms Hart suffer the injustice of having her causes of action disposed of, without a hearing of those claims on the merits, owing to a mutual mistake. Although both parties are responsible for the error, the resulting order dismissing the proceedings materially prejudices Ms Hart and substantially benefits MetLife. There is no good reason why that inequitable outcome should be allowed to stand. Ms Hart neither sought nor obtained a forensic or other advantage from the course which the proceedings took. To the contrary, she opposed the separate questions Motion and sought to have the proceedings determined at a single final hearing.
8. MetLife's position in relation to the four matters raised by the Court is: (1) the answers to the first and second questions disposed of the entirety of the pleaded case advanced by Ms Hart; (2) on the approach taken to the Statement of Claim by the parties, the answers to the separate questions substantially disposed of Ms Hart's claim for relief under pars 4 and 5; (3) in those circumstances the primary judge had power to dispose of the whole of the proceedings under UCPR rr 28.4(1) and (2); and (4) leave to amend should be refused.
9. In support of its contention that the answers to the first and second questions substantially disposed of the pleaded case advanced by Ms Hart, MetLife made the following submissions. First, "it was always the case that the plaintiff considered (and MetLife agreed) that, under the case as pleaded, establishing a basis for the declaratory relief in paragraphs 1 or 2 was a precondition for obtaining the relief in paragraph 4". Secondly, the issues relating to whether MetLife covered Ms Hart's psychological illnesses were only raised in the relation to the decision which was the subject of the declaration sought in par 1. Thirdly, the Statement of Claim does not contain any separate claim to the relief sought in par 4. Specifically, the Statement of Claim does not "include any claim for relief based upon a breach of contract for wrongly proceeding on the basis that [MetLife] was not relevantly 'on risk'".
10. In relation to whether Ms Hart should be permitted to rely on proposed ground 5, MetLife submitted that to allow the amendment would be to "treat the [pleading] as advancing a case never advanced or intended to be advanced". It was said Ms Hart is not prejudiced by the orders which were made by consent because they "reflected the case she knowingly ran". It was also said MetLife proposed separate questions so that "necessary" preliminary issues could be resolved, and that Ms Hart joined in the making of those orders. Finally, it was said that MetLife has suffered "significant financial prejudice", justifying a discretionary refusal of leave to amend. Alternatively, it was said that any order permitting reliance on ground 5 should be conditional upon Ms Hart paying the costs of the separate questions proceedings and of the appeal.
11. The position which MetLife takes in response to proposed ground 5 is to some extent consistent with its argument earlier made in support of par 3 of its notice of contention. By that paragraph, MetLife submitted that even if the second question should have been answered "Yes", the primary judge should have: a. found that, even taking the [further material sought to be relied on by Ms Hart] into account, on the proper construction of the policy and the proper application of the policy, the claim must have failed because the material before MetLife did not establish: i. that PTSD caused Ms Hart to be "not at work" (as defined) on her last working day prior to the policy terminating; or ii. that the back injury or a related condition caused Ms Hart to be absent from work throughout the six months commencing from her last day of physical work; b. found that any breach [of any obligation of good faith or fair dealing] was not material; and in consequence answered the third question: "The proceedings should be dismissed with costs".
12. This contention implicitly acknowledges that the remaining "material" matter to be addressed before an order dismissing the whole of the proceedings could be made was the coverage or on risk question. Properly understood, as is confirmed by the reference in the extract above to "the material before MetLife", this contention was not addressing a determination of this matter by the Court. Rather, it refers to a determination by MetLife as to whether there was any "reasonable possibility" that it would have concluded that it was on risk for her psychological injuries as well as her back injuries.
13. Thus, whilst identifying the coverage issue remaining to be decided between the parties and the Trustee, MetLife contended that it could be dealt with as if the question of liability was to be determined by it, acting reasonably and fairly, rather than by a court. The outcome of such an exercise might produce a result which supports to some extent or other the coverage position contended for by MetLife. It could not, however, justify the dismissal of the relief sought by pars 4, 5 and 6 and Ms Hart's pleaded claim.

Disposition of the application for leave to amend and the appeal

1. Ms Hart's pleaded claim has two parts. The first is the declaratory relief sought by pars 1, 2 and 3 and supported by pars 28-36 of the pleading. That claim as a matter of legal analysis is not necessary for, and is separate from, the claims for relief made by pars 4, 5 and 6 and supported by pars 8, 10-12, 16-27 and 36 of the Statement of Claim, recognising that par 36 supports both parts of the pleaded claim.
2. That second is a claim to a TPD benefit due under a contract of insurance which provides for the payment of an agreed sum on the happening of that contingency (see Medical Defence Union Ltd v Department of Trade [1980] Ch 82 at 89). The claim is one in debt (see for example McArthur v Mercantile Mutual Life Ins Co Ltd [2002] 2 Qd R 197; [2001] QCA 317 at [4], [9]-[14], [58]-[61]).
3. MetLife's contention that, on the approach taken to the Statement of the Claim by the parties, the answers to the separate questions substantially disposed of Ms Hart's claim for relief under pars 4 and 5 should be rejected. Each of the three ways in which that argument is put is flawed (see [77] above).
4. As to the first, whilst the effect of the parties formulating separate questions seeking the declaratory relief sought in pars 1 and 2 was that the MetLife coverage issues raised by the pleaded TPD claim and MetLife's defence might not be addressed, that outcome proceeded from a misapprehension shared by the parties. It was the consequence of their adopting and adapting the so-called two-stage approach to the resolution of policy coverage issues which on a correct analysis could only be decided by the court. Reference to the written and oral submissions made in support of the application for the separate questions, including the transcript of the proceeding before Hammerschlag CJ in Eq on 21 July 2022, shows that the parties had not at that point in time addressed how the outcome of the first stage hearing would or would be taken to determine MetLife's "legal defence on a final basis" (Ex A p 52; tcpt 21/7/22 p 12).
5. As to the second submission made by MetLife, the coverage or on risk issues were directly raised by Ms Hart's pleading in support of her claim to a TPD benefit, especially at pars 12-25, and by pars 25(a) and (b) of MetLife's defence. The latter pleading was expressed to be in answer to the "whole of the statement of claim".
6. As to MetLife's third submission, the claim in debt for the amount of the TPD benefit upon the happening of the event of total and permanent incapacity was not founded on any breach of contract. The elements of that claim were sufficiently pleaded at pars 12-25.
7. Accepting that none of the separate questions addressed the mainly factual coverage issues, there was no basis on which answers to those questions could substantially dispose of that claim as pleaded. Nor was there any justification for that conclusion arising from the way in which Ms Hart's claim was pleaded and conducted. The dismissal of the whole of the proceedings without addressing the coverage issues was the result of a shared misapprehension of the parties rather than the intended and consensual outcome of an arrangement between them to treat a reasonable determination of those issues by MetLife as a proxy for the decision of the court.
8. In these circumstances, the parties' agreement in the making of an order dismissing the proceedings did not have the consequence that there was not error in the exercise of the power under r 28.4(2).
9. The submission made on behalf of Ms Hart should be accepted. The adoption by the legal representatives of the parties of a mistaken and wrong assumption that the issues raised by Ms Hart's claim might be dealt with by a particular procedure could not deny Ms Hart the opportunity to have her pleaded claim dealt with by the court on its merits.
10. The principal prejudice to which MetLife points as a reason for refusing leave to amend is that it has expended substantial sums in pursuing the separate questions and resisting an appeal which, if leave is granted, may succeed on a basis that was not formulated until after the close of argument in this Court.
11. It is plain that both parties have incurred significant time and costs, which for the most part have been wasted in pursuing the separate questions at first instance and on appeal. How the burden of those costs should be borne as between the parties depends in part upon an assessment of the responsibility which either or each of them should bear for the consequences of the course which the proceedings have followed to date.
12. One possible approach is to defer the determination of those costs orders until after the final resolution of the proceedings below. Another is to determine those costs now with the benefit of the written submissions of the parties. To enable these and other possibilities to be addressed, I propose that the parties be given the opportunity to make written submissions directed to them and the costs orders for which they contend.
13. The orders I propose are: 1. Leave be granted to amend the notice of appeal to include ground 5. 2. Allow the appeal on ground 5. 3. Set aside order 1 made by Black J on 15 September 2022 to the extent that order dismisses the prayers for relief referred to in order 4 below. 4. Order that the proceedings in respect of the prayers for relief made by pars 4, 5 and 6 as supported by pars 8, 10-12, 16-27 and 36 of the Statement of Claim be remitted to the Equity Division for determination of those claims. 5. Set aside order 2 made by Black J on 15 September 2022. 6. Direct that MetLife provide written submissions not to exceed 3 pages within 7 days of the making of these orders on the question of costs, and that Ms Hart respond to those submissions within 7 days of their receipt, her submissions also not to exceed 3 pages. In each case the submissions are to be provided to Meagher JA's Associate.
14. LEEMING JA: I agree with Meagher JA.
15. MITCHELMORE JA: I agree with Meagher JA.

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: 28 September 2023