Relevant Legal Principles
94There was also no issue between the parties, that the Policy should be given a businesslike interpretation, paying 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 579, at [22]; Hannover Life Re of Australasia Ltd v Dargan, at [35].
95In order to obtain his entitlement, the Plaintiff was required to produce the information and evidence as required by the Trustee in order to satisfy it that the benefit was properly payable to the Plaintiff in accordance with the Deed. In this case, the benefit payable to the Plaintiff was to be funded out of the Policy, and was payable upon him, as a Member of the Fund, suffering TPD. This was determined according to the definition of that term incorporated by reference to the Policy.
96The Trustee was required to decide whether it was satisfied that the Plaintiff had "ceased to be Gainfully Employed prior to attaining the age of 65 having suffered Total and Permanent Disablement" on the ordinary meaning of those words. It was required to independently consider whether it was so satisfied. It would not discharge its duty if it merely followed, or endorsed, the opinion of the Insurer.
97The definition of TPD required the Insurer to form an opinion on the question whether the Plaintiff was unlikely to engage in Regular Remuneration Work as defined. The task was to determine, on a balance of probabilities, whether an historical fact, namely the prognostic character of the Plaintiff's condition, at a time earlier than the court's consideration of the issue, had been established. That required the determination of the question whether, as a matter of fact, the Plaintiff was totally and permanently disabled within the meaning of that expression in the Policy.
98In Erzurumlu v Kellogg Superannuation Pty Ltd, Ball J set out the relevant legal principles, which he described as not being substantially in dispute, as follows (at [52] - [55]):
"The Trustee has a duty to apply the trust assets in accordance with the Trust Deed. In performing that duty, it is required to inform itself properly of the relevant facts: Finch v Telstra Super Pty Ltd [2010] HCA 36; (2010) 242 CLR 254 at [30] ff. It is also required to act in good faith, on a real and genuine consideration of the material before it and for sound reasons, although it is not obliged to give reasons for its decision: see Hannover Life Re of Australasia Ltd v Sayseng [2005] NSWCA 214; (2005) 13 ANZ Ins Cas 90-213 at [32] ff per Santow JA (with whom Spigelman CJ and Tobias JA agreed). If, for any reason, the Trustee has failed to discharge its duties in considering the member's claim, the appropriate order is to refer the matter back to the Trustee. The court generally does not itself seek to execute the trust: Hannover Life Re of Australasia Ltd v Sayseng [2005] NSWCA 214; (2005) 13 ANZ Ins Cas 90-213 at [33].
Although a member is not a party to the contract with the insurer who provides insurance cover to the trustee of a superannuation fund, the member has standing to enforce the contract as a beneficiary of the trust which holds the insurance policy as one of its assets. The member does not have a personal claim but is entitled to seek an order that the insurer pay to the trustee the amount due to the trustee under the contract: Sayseng v Kellogg Superannuation Pty Ltd [2003] NSWSC 945 at [78] ff. An insurer, when considering a claim, must comply with its obligation of utmost good faith. That obligation requires the Insurer to act reasonably in considering the claim. The obligation to act reasonably includes an obligation to consider and to determine the correct question. It also includes an obligation to give the member an opportunity to answer any material on which the insurer intends to rely: Hannover Life Re of Australasia Ltd v Sayseng [2005] NSWCA 214; (2005) 13 ANZ Ins Cas 90-213 at [35] ff. Although the obligations of the trustee and the insurer are expressed in different terms, from a practical point of view, the grounds on which the decision of each may be challenged are similar: Sayseng (2003) at [77]. The duty of the court is to determine whether the insurer breached its duty of utmost good faith. It is not to substitute its own view for that of the insurer. However, if an insurer refuses a claim in breach of its obligation of good faith, the court itself can determine whether, on the material available to it, the claim fell within the policy: Sayseng (2005) at [36].
Although it is an issue that is ultimately to be determined by the terms of the trust deed and policy, generally the question whether a member suffers from total and permanent disablement is to be determined at the time and by reference to the facts that exist at the time the member first suffers from total and permanent disablement in accordance with the policy. It is at that time, and by reference to those facts, that the trustee and insurer are required to consider the question whether the member suffers from total and permanent disablement. There is a question whether that is when the member ceased work or when the qualifying period before any benefit is payable expires: compare Halloran v Harwood Nominees Pty Ltd [2007] NSWSC 913 at [33] per Brereton J (who preferred the latter approach) and Sayseng v Kellogg Superannuation Pty Ltd [2007] NSWSC 583 where Nicholas J appears to have preferred the former approach. The parties accept that nothing turns on which approach is adopted in this case. However, in my opinion, the preferable approach is the one adopted by Brereton J. On the wording of the Policy, Mr Erzurumlu could not have suffered from total and permanent disablement until the expiration of the six month period. It seems logical to assess whether Mr Erzurumlu could ever engage in work at that time."
99In relation to the Trustee, in Finch v Telstra Super Pty Ltd, the High Court held that:
"... There is no doubt that under Karger v Paul principles, particularly as they have been applied to superannuation funds, the decision of a trustee may be reviewable for want of "properly informed consideration". If the consideration is not properly informed, it is not genuine. The duty of trustees properly to inform themselves is more intense in superannuation trusts in the form of the Deed than in trusts of the Karger v Paul type. It is extremely important to the beneficiaries of superannuation trusts that where they are entitled to benefits, those benefits be paid. Here, for example, the applicant was claiming a Total and Permanent Invalidity benefit to support himself for the rest of his life. His claim depended on the formation of an opinion by the Trustee about the likelihood that he would ever engage in "gainful Work": that was not a mere discretionary decision. In the Deed there was a power to take into account "information, evidence and advice the Trustee may consider relevant" and that power was coupled with a duty to do so. It would be bizarre if knowingly to exclude relevant information from consideration were not a breach of duty. And failure to seek relevant information in order to resolve conflicting bodies of material, as here, is also a breach of duty. The Scheme is a strict trust. A beneficiary is entitled as of right to a benefit provided the beneficiary satisfies any necessary condition of the benefit. Whether or not it will be decided hereafter that, consistently with s 14 of the Complaints Act, the duty of a trustee in forming an opinion of the present type is a duty to form a fair and reasonable opinion, or even a duty to form a correct opinion, there is because of the importance of the opinion and its place in the Scheme a high duty on the Trustee to make inquiries for "information, evidence and advice" which the Trustee may consider relevant. ..."
100Bryson J explained, in Vidovic v Email Superannuation Pty Ltd, at 13:
"The formation by the trustee of an opinion is not analogous to judicial or arbitral decision of a disputed question ... There is no onus of proof on any person; there are no adversaries."
101In relation to the Insurer, the following principles, which have been taken from the authorities, particularly, Edwards v Hunter Valley Co-op Dairy Co Ltd (1992) 7 ANZ Ins Cas 61-113, at 77,536-7, and Sayseng v Kellogg Superannuation Pty Ltd [2003] NSWSC 945, may be stated:
(a) The insurer must consider, and determine, the correct question or questions. This essentially requires the correct interpretation of the policy of insurance.
(b) If the insurer seeks an opinion from an expert, it must provide the expert with all of the information that is relevant to the expert's opinion.
(c) Where an expert opinion is sought, the expert must also be asked the right questions.
(d) Asking the right questions of the expert, however, does not require the insurer to ask the expert to address specific provisions in the policy. The insurer is itself making the ultimate decision, and not delegating the decision making to the expert. The critical enquiry for the court is whether the insurer, ultimately, has addressed the correct questions either directly, or indirectly with the aid of the expert's opinion, and has taken account of the relevant information either directly, or indirectly, in respect of relevant information assessed by the expert.
(e) The insurer is under a duty to act in good faith and to observe fair dealing in respect of both the trustee and the insured.
(f) As part of this duty, the insurer must have due regard for the interests of the insured. However, this duty is contractual, not fiduciary. This duty is analogous to the duty of a mortgagee exercising a power of sale of mortgage property.
(g) Where a state of affairs governing entitlement of the insured to a benefit is to be determined after a consideration by the insurer, the insurer must act reasonably in considering the matter and in coming to its conclusion.
(h) If the view taken by the insurer can be shown to have been unreasonable on the material before it, the insurer's decision can be successfully attacked.
(i) If the insurer's decision is successfully attacked, the matter upon which its opinion was required becomes one for determination by the court.
102Unless the view taken by the Insurer could be shown to have been unreasonable on the material then before it, the decision of the Insurer could not be successfully attacked on this ground. The question whether there was a reasonable basis for the decision turns on the evidence, taken as a whole, conveyed to the insurer at the time.
103A person is engaged in regular remunerative work under the Policy if he, or she, is able to undertake work occurring at fixed times or uniform intervals, including part-time work, but excluding casual work, or other work of an intermittent nature. In Hannover Life Re of Australasia Ltd v Dargan, the Court observed, at [46] - [47]:
"The question of whether Mr Dargan suffered Total and Permanent Disablement, notwithstanding his ability to undertake part-time work as a taxi driver at the relevant date, depends on whether such part-time work was Regular Remuneration Work as that term is defined in the policy. The definition provides that a person is engaged in regular remunerative work if they are doing work in any employment, business or occupation. There is no limitation on the work being full-time or part-time. The limitations are that the work must be remunerative, that is done for reward or hope of reward and must be regular. The word regular means something occurring at fixed times or uniform intervals (see the definitions in the Shorter Oxford English Dictionary and the Macquarie Dictionary). Thus, it would not in the present context include casual work or other work of an intermittent nature. However, the word regular would not on a literal construction exclude part-time work. In the present case Mr Dargan was able to work regularly, albeit on a part-time basis as a taxi driver, at least from June 2008. Subject to passing the course, there was nothing to suggest he would not have been capable of doing this at the time of assessment and as I indicated the contrary was not put. It follows, in my opinion, that Mr Dargan was capable of doing Regular Remuneration Work.
The 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."
104In Halloran v Harwood Nominees Pty Ltd, the Court considered the entitlement of a worker to benefits asserted to arise under a superannuation scheme as a result of a disability. The worker was required to prove 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 work for reward in any occupation or work for which he or she is reasonably qualified by education, training or experience ...". At [76], Brereton J analysed the relevant clause as follows:
"That phrase can be distilled into the following components.
(1) Unlikely (meaning a probability of less than 50%) [White v The Board of Trustees [1997] 2 Qd R 659, 673]
(2) Ever to engage (meaning on a full-time regular basis) [Riley v National Mutual Life Association [1986] 4 ANZ Ins Cas 60-684, 74063; Chammas; Nile v Club Plus Superannuation Pty Limited [2005] NSWSC 55, cf Wyllie v National Mutual Life Association of Australasia [1997] 217 ALR 324; Sayseng v Kellogg Superannuation]
(3) In any occupation or work (meaning a recognised occupation, not a special light duties job for injured workers) [Cavill Power v Royale; Dolton v State Authority Superannuation Board [1995] NSWIRC at 159 [11.1]] and being work which he is likely to be able to obtain [Chammas, Nile v Club Superannuation, [64]];
(4) For which he is reasonably qualified by education, training or experience (as at the date of assessment) [Giles, Fernance)."
105In Nile v Club Plus Superannuation Pty Ltd [2005] NSWSC 55, the relevant total and permanent disability clause provided:
"Having been absent from employment with the Company for six consecutive months and having provided proof to our satisfaction 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 the member is or may become reasonably qualified by education training or experience."
106Brownie AJ wrote, at [64] - [65]:
"As Hodgson J pointed out in Chammas ... one must consider not just the theory that someone is physically fit to do particular work, but also the actual likelihood of that person obtaining employment, meaning full time employment (or, I take it, substantially full time employment, generally comparable with the plaintiff's employment before his 1996 injury) that was reasonably open to the plaintiff. Given the plaintiff's education, training and experience, the prospects of his actually obtaining employment in any of the jobs suggested by Dr Innes-Brown were remote, and perhaps non-existent.
...
The notion that some employer might employ him to do 'clerical work' had to be reconsidered in the light of the plaintiff's affidavits, and one is left to wonder who might realistically be expected to employ him in that capacity, given his education, training and experience; and the proposition that he might be employed as a parking patrolman, standing and walking all day, is equally unpersuasive, given the plaintiff's statements in his affidavit, and the medical evidence."
107In Ivkovic v Australian Casualty & Life Ltd (1994) 10 SR (WA) 325, at 351, Commissioner Roberts-Smith QC, sitting as the District Court of Western Australia, wrote:
"I should also say in passing that the word "unlikely" in the definition is of some significance. It clearly sets a much lower test than would be posed if an insured had to establish that he was incapable of following his usual or any other occupation. Thus, even if the evidence were to leave open a possibility that in the future an insured might be able to do so, if it nonetheless established that he or she was unlikely to be so able, that would be sufficient to make out the claim."
108The definition relates to disability to obtain future employment. It requires consideration of whether or not, on the evidence, it is probable that the Plaintiff would actually obtain paid employment for which he was qualified, by education, training or experience, and whether his condition disabled him from doing what he was qualified, by education, training or experience, to do. The application of the definition is directed to the realities affecting the capacity of the insured under consideration. It is not about theory: Sayseng v Kellogg Superannuation Pty Ltd [2007] NSWSC 583, at [64]. Similarly, the concept must include that which is reasonably available and in an area in which it could be expected the insured, in the position of the Plaintiff, could reasonably apply.
109In Baker v Local Government Superannuation Scheme Pty Ltd, McDougall J expressed a similar view, concluding, at [58], the "Court is required to take a realistic and common-sense approach. There must be a real prospect, and not merely some theoretical possibility, that the work will be available. It should not be work in some special light duties job created for the injured worker."
110In Cigna Life Insurance New Zealand Ltd v Rowles (High Court (New Zealand), Ellis J, 2 May 1997, unrep), the insurance policy included the phrase "reasonably qualified by education, training or experience". North J held:
"The word "qualified" in the clause can be said to limit the clause to situations where the claimant has some formal qualification, but I consider its proper construction is in the more general sense of "fit for". That meaning is a usual one as will be seen from the Concise Oxford Dictionary. To be "qualified" is to be "made fit for". In terms of the clause in the policy that fitness must be acquired by education training or experience. [The insured's] fitness for any occupation is to be judged at the time she makes the claim. The use of the word "reasonably" to qualify "qualified" (to use the word in another sense) can only import a lack of strict or rigorous approach to the claimant's fitness for other work or occupation. The extent of the retraining therefore is a factor."
111In Sayseng v Kellogg Superannuation Pty Ltd, Bryson J, wrote, at [64] and [73]:
"The definition relates to disability to obtain future employment. It requires consideration of whether or not, on the evidence, it is probable that the insured would actually obtain work for reward (i.e. paid employment) for which he is qualified by education, training or experience, and whether his condition has disabled him from doing what he is qualified to do. The court is expected to take a realistic and common sense approach in its assessment. The application of the definition is directed to the realities affecting the capacity of the insured under consideration. It is not about theory.
...
The part-time work which the insurer submitted the plaintiff was capable of doing was never adumbrated, apart from reference to the duties and limitations specified in the rehabilitation programmes. I find it significant that there was no evidence which identified any form of work which the plaintiff would be capable of performing free of pain, and without the need to take frequent breaks for relief of pain and changes in posture. According to the evidence, the plaintiff's condition is, and has been continuously since 11 December 1997 [the hearing being in 2006/07], such that he is possibly able to perform light tasks which allow him to relieve pain by lying down, sitting, standing, moving about, and changing posture regularly during a shift, and does not involve bending, lifting or twisting. As a matter of reality and common sense, it is difficult to envisage the probability of the existence of paid employment for work of that kind. On any view, such work would not be of the kind that the plaintiff is reasonably capable of performing by reason of education, training or experience."
112In Halloran v Harwood Nominees Pty Ltd, Brereton J, also considered the relevance of further training. His Honour wrote, at [34] - [36]:
"In Fernance v Wreckair Pty Ltd (No 2) (1992) 43 IR 300 (a decision which was reversed by the Full Court of the Industrial Court on appeal, on different grounds which do not affect its authority on this point) Hungerford J said (at 329):
Inherent in those findings of unfairness is my conclusion that the definition of 'totally and permanently disabled', which refers to 'any occupation or work for which he is reasonably qualified by education, training or experience', makes the assessment of the relevant incapacity as at the time of the assessment and not after retraining. In other words, whether a member is unlikely ever to engage in work is to be determined according to his qualification, after the period of six consecutive months absence, at that time and not at some future time as a result of the retraining; that must be so, it seems to me, because the definition refers to any occupation or work 'for which he is reasonably qualified'. The definition does not admit, in my view of it, qualifications by education, training or experience which the member may or may not be able to obtain in the future.
In Fernance, the Court was considering a definition of total and permanent disablement in an insurance policy issued by National Mutual in terms relevantly identical to that in the present case. In my view, it is clear that Hungerford J, when speaking of "the future", was speaking of the future after expiry of the period of six consecutive months absence, not the future after the date of hearing. Read as a whole, I think it is clear that when his Honour referred to the "time of assessment", his Honour was referring to the expiry of the six month period - that is, the date as at which the assessment of total and permanent disability was to be made - and not the date on which the assessment was in fact made in the sense of the date of the decision of the trustee or the hearing before any court.
Mr Cavanagh submitted that subsequent events, including actual employment for which the employee became suited only by retraining after the relevant date, were relevant and could be taken into account. In many cases, as was indicated in Pigeon J's judgment in Giles, evidence of subsequent events may be relevant. In the present case, if Mr Halloran had returned to work as a greaser or had returned to heavy labour that would prove that he could not have been permanently disabled for work for which he was suited as at the relevant date for assessment. He was, undoubtedly, suited by education, training and experience for work as a greaser or a labourer and had he subsequently returned to such work it could not have been argued that he was shown to be permanently disabled from it after an absence of six months from CSR. But the definition in the policy is concerned with employment for which the employee was suited at the expiry of the six month period. As Fernance makes clear, employment for which an employee becomes suited only subsequently by reason of retraining is not the type of employment which is contemplated by that definition, because it is not employment for which the employee was at the relevant date of assessment suited by his or her then education, training and experience. In my view, to take into account work for which the employee became suited only by subsequent retraining would be contrary to the authority of Hungerford J's decision in Fernance, and would also be contrary to the definition. If an employee is not disabled as defined at the relevant date, a subsequent deterioration in his or her condition does not qualify him for a disablement benefit. Conversely, if he or she is disabled as defined at the relevant date, a subsequent improvement in his or her condition does not retrospectively disqualify the employee from the benefit. To adopt the construction for which the defendant contends would make the time at which the application for a benefit is made and the time at which it was considered by the trustee decisive rather than the time objectively fixed by the trust deed as at which that decision should be made. It might well result in different decisions properly being made by a trustee on an initial application and on an application for reconsideration, and then a different decision again by a Superannuation Complaints Tribunal conducting a review as at the date that the matter came before it. That result seems to me an undesirable one."
113The 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 each. The words describe a capacity to undertake a new job based on education, training or experience. They constitute a link between the job and previous education, training or experience: Dargan v United Super Pty Ltd [2011] NSWSC 1316, at [44] (Gzell J).
114In Chapman v United Super Pty Ltd, Young AJ, at [32] - [34], put the principle this way:
"Putting aside situations of de minimus training one does not require a plaintiff to undergo a course of retraining in order to make him or her employable. Even if an injured ballet dancer has the intellectual capacity to go to university, get a law degree and become a barrister, that would not disqualify him or her from being totally and permanently disabled (assuming that they were not able to take any part-time job that was reasonably fitted to his or her then current education, training or experience). This construction was reached by Hungerford J in Fernance v Wreckair Pty Ltd (No 2) (1992) 43 IR 300 at 329 and affirmed by Brereton J in Halloran v Harwood Nominees Pty Ltd [2007] NSWSC 913 at [36].
Dargan makes it clear at [37] that it is no bar to the finding that work is within the plaintiff's education, training or experience that a short qualifying course of training or retraining may be required."
115I have earlier referred to the Plaintiff's submission regarding what the Insurer, in relation to its first and second decisions, referred to as the "onus" upon the Plaintiff. I should add the statement of Young AJ, in Chapman v United Super Pty Ltd, at [70], to the effect that "the better view would seem to me that no question of onus is relevant when considering the Trustee's decision", which echoes what Nettle JA said in Alcoa of Australia Retirement Plan Pty Ltd v Frost, at [47] and [54].