MetLife Insurance Ltd v FSS Trustee Corporation / FSS Trustee Corporation v Maund

Judgment 1MACFARLAN JA: I agree with the judgment of Ward JA and also with the additional reasons of Meagher JA. 2MEAGHER JA: The respondent (Ms Maund), as an officer in the New South Wales police force, was also a member of the First State Superannuation Scheme. She became entitled to a total and permanent disability (TPD) benefit under a group life policy of insurance issued by MetLife Insurance Ltd (MetLife). There was an issue as to the salary amount by reference to which that TPD benefit should have been calculated. The policy wording issued to the trustee of the scheme, FSS Trustee Corporation (FSS), provided that the relevant salary was that of the member "at the time of the Insured Event". 3The question between MetLife and FSS on the one hand and Ms Maund on the other was as to what constituted that Event. The relevant facts were as follows. Ms Maund was a police officer from 1999 until 21 January 2010 when she was medically discharged. She became a member of the scheme in December 2001. In January 2007 and as a result of her employment she suffered from chronic adjustment disorder and post-traumatic stress disorder. She became incapacitated as a result of that illness and last worked for the New South Wales police force on 8 May 2007. 4Ms Maund contended that the time of the Insured Event was 21 January 2010, the date of her discharge. MetLife and FSS contended that it was 8 May 2007 when Ms Maund was first suffering from an illness which incapacitated her (as distinct from one which later had that result). Neither party contended that the relevant date was January 2007 when Ms Maund first suffered from the illness which resulted in her incapacity. 5The primary judge held that the TPD benefit should have been calculated by reference to Ms Maund's salary at the time six months after 8 May 2007, namely 8 November 2007. His Honour did so on the basis that this was the time when Ms Maund first satisfied the first three elements of the definition of TPD in the group life policy. 6I agree with Ward JA, for the reasons that her Honour gives and those which follow below, that the primary judge erred in doing so. On the proper construction of the policy, the Insured Event is the suffering of the illness or occurrence of the bodily injury which results in the Insured Member being able to satisfy, then or later, the definition of TPD. In Ms Maund's case that was January 2007. There was no difference between her salary at that time and her salary as at May 2007. Accordingly, the orders sought by MetLife and FSS and proposed by Ward JA should be made 7The general promise of the insurer, MetLife, which appears at the commencement of the policy wording is, subject to the terms and conditions of the policy, "to pay to the Policyowner the individual amounts of insurance" set out in the policy. Although the contract is issued to FSS as Policyowner, the persons insured against illness or injury that results in incapacity are the Insured Members, who individually are defined as "a Police Officer who is a member of the Scheme and who is insured under this Policy". 8The Insured Members are covered under the policy for Death and TPD Benefits (cl 2.1). Clause 3 provides: "If an Insured Member dies or suffers from TPD while this policy is in force, subject to the provisions of this policy, we will pay to the policyowner the Sum insured in respect of that member, Subject to clause 2." The policy commenced on 1 July 2005 and may be cancelled by the Policyowner at any time. 9TPD is defined in the First Schedule. That definition, with the exception of an injury or illness that is or results in the loss of use of a limb or limbs or the loss of sight in one or both eyes, presupposes the happening of an "Insured Event giving rise to the claim" to a Benefit. 10"Insured Event" is defined to mean "an illness (including sickness, disease or disorder) suffered, or, bodily injury occurring, to a Police Officer while an Insured Member". As is noted above, to be an Insured Member the officer must be a member of the Scheme and insured under the policy. 11Clause 10 of the policy is significant. It describes the circumstances in which MetLife will have no liability to pay a benefit in respect of an Insured Member. It does so by reference to the occurrence of several circumstances. They include where "the Insured Member dies or the Insured Event causing TPD occurs after this policy is cancelled or terminated for any reason" (cl 10.1(f)) and where "the Insured Member dies or the Insured Event causing TPD occurs after the day the Insured Member ceases to be a Police Officer" (cl 10.1(g)). Clause 10.2 states that in the event of any conflict between these provisions and any other provision of the policy, "the terms of this clause shall prevail". 12The effect of cl 10.1 and the definitions of Insured Event and TPD is that for a member to satisfy the definition of TPD so as to be entitled to the payment of a TPD benefit under the policy, the illness or bodily injury which results in TPD must occur whilst that person is a member of the New South Wales police force and after the policy has commenced and before it is cancelled or terminated. 13The amount of the benefit which is payable varies depending on whether the Insured Member was On-Duty or Off-Duty at the time of the injury or illness and on whether the Normal Hours that he or she was working at that time were 15 hours each week or more. In cases of illness, rather than injury, and in cases of aggravation or exacerbation of illness, cl 4 in the First Schedule explains how to determine whether the Member was On-Duty or Off-Duty at the relevant time. 14If a Member is entitled to payment of a TPD benefit, as is accepted to be the case in relation to Ms Maund, the Sum Insured to be paid in accordance with cl 3 is defined as "the amount calculated under the Second Schedule 2B and 2C by reference to the Insured Member's age, Salary, Service Factor and whether the Insured Member is On-Duty or Off-Duty at the time of the Insured Event giving rise to the claim". It is accepted that the reference to the Service Factor makes it necessary also to have regard to Part 2D of the Second Schedule when calculating the Sum Insured. That Part contains a formula for the calculation of the On-Duty Sum Insured. One element of that formula is the Member's "Salary at the time of the Insured Event". 15There is no reason not to construe Insured Event when used in the definition of Sum Insured (and in the formula in Part 2D) in accordance with its defined meaning and as referring to an illness suffered or bodily injury occurring to an Insured Member. As defined it is the event the happening of which is necessary to attract the operation of the policy and used as the point of reference in determining the amount to which the Insured Member is entitled by way of a Benefit. 16There is also very good reason not to construe it in the way contended for by MetLife and FSS. If the Insured Event is the time when the Insured Member's injury or illness becomes incapacitating the Insured Member would not be covered in the event that he or she ceased to be a police officer, or the group policy was cancelled or terminated, after the injury or illness was sustained but before it became incapacitating. The implicit premise on which cl 10.1 is drawn, which accords with the other provisions to which I have made reference, is that the insurer is liable to pay a benefit in respect of an Insured Member if that person dies or sustains an injury or illness which is or later becomes incapacitating so long as death or that injury or illness happens before the policy is cancelled or terminated and whilst that person is a police officer. 17There is an admitted awkwardness in the language of cl 3 which refers to the Insured Member dying or suffering "from TPD while this policy is in force". That awkwardness is resolved and a "congruent operation [given] to the various components of the whole" (Wilkie v Gordian Runoff Ltd [2005] HCA 17; 221 CLR 522 at [16]) if the expression "suffers from TPD" is understood as referring to the suffering or sustaining of the illness or injury which then or later results in TPD. 18WARD JA: FSS Trustee Corporation (FSS) is a statutory corporation established by s 7 of the Superannuation Administration Act 1996 (NSW). It is the trustee of various superannuation schemes constituted under the First State Superannuation Act 1992 (NSW). One of those schemes is the First State Superannuation Scheme (the Scheme), which was established for the benefit of members of the New South Wales police force. Police officers who are members of the Scheme have an entitlement to benefits in the event of death or total and permanent disablement. 19MetLife Insurance Ltd (MetLife) is a life insurance company. It issued a group life insurance policy (the Policy) in favour of FSS, to provide cover for insured members of the Scheme. 20Ms Maund is a former member of the New South Wales police force. She was a member of the Scheme from December 2001. 21Ms Maund suffered physical injuries in the course of her employment in July 2004. She subsequently complained of bullying and harassment at work. She was diagnosed in August 2008 as suffering from a psychological illness, namely a chronic adjustment disorder with depressed and anxious mood. The first symptoms of Ms Maund's illness had manifested themselves in January 2007. Ms Maund was unable to work, due to her psychological illness, from 8 May 2007. 22On 4 February 2008, Ms Maund applied to the police force for a partial and permanent disability benefit under the provisions of the Crown Employees (Police Officers Death and Disability) Award 2005 (the Award). That claim was approved by the Commissioner of Police in December 2009. At that time, Ms Maund entered into a deed under which she acknowledged, as was the case pursuant to clause 10.6 of the Award, that members of the Scheme were entitled only to one benefit: either a "partial and permanent disability benefit" or a "total and permanent disablement benefit". In the deed, Ms Maund undertook to repay all moneys then paid to her as a partial and permanent disability benefit under the Award in the event that she later received a total and permanent disablement benefit. 23On 9 April 2009, Ms Maund lodged with FSS a claim for total and permanent disablement under the Policy. In that claim, she specified the date of her disability as 19 July 2004 and the date she had last worked as 8 May 2007. Her description of the nature of her illness or injury included both the 2004 physical injury and "ongoing bullying and harassment causing psychological injury". 24Ms Maund was medically discharged from the police force on 21 January 2010. In July 2010, MetLife accepted Ms Maund's claim to a total and permanent disablement benefit. On or around 29 July 2010, Ms Maund was paid that benefit. 25Disputes then arose as to the liability of Ms Maund, pursuant to the December 2009 deed, to repay the amount that had been paid to her by way of the partial and permanent disability benefit under the Award and as to the quantum of the total and permanent disablement benefit to which she was entitled under the Scheme. 26Those disputes led to two sets of proceedings in the District Court: proceedings brought by the Crown in right of the State suing, under the December 2009 deed, to recover as a debt the Award payment that had been made to Ms Maund (the Crown proceedings) and proceedings brought by Ms Maund against FSS suing for an alleged shortfall in the amount of the total and permanent disablement benefit paid to her in July 2010 (the Maund proceedings). 27In the Crown proceedings, Ms Maund did not dispute the undertaking to repay the amount she had received in 2009 under the Award. She initially filed a cross-claim seeking a set-off in respect of certain amounts that she claimed were owing to her in respect of leave entitlements, salary and tax; and in respect of her claim against FSS but then abandoned that cross-claim and initiated the Maund proceedings instead. In the Maund proceedings, FSS filed a cross-claim against MetLife and Ms Maund, seeking a declaration as to the proper construction of the Scheme trust deed and Scheme rules, and the Policy, as well as a declaration that MetLife is liable to pay any further benefit to which Ms Maund is entitled under the Policy. 28Both sets of District Court proceedings were transferred to the Supreme Court by Balla DCJ pursuant to s 144 of the Civil Procedure Act 2005 (NSW). They were listed for hearing in succession by Lindsay J in the Equity Division. His Honour then published one set of reasons canvassing both sets of proceedings ([2013] NSWSC 183). 29His Honour found in favour of the Crown in the Crown proceedings. There is no appeal from that decision. In the Maund proceedings, which the parties had agreed would substantially be determined by findings on two particular issues as to the proper construction of the MetLife insurance policy, his Honour found that Ms Maund's benefit should have been determined by reference to her salary as at 8 November 2007 and thus she was entitled to a relatively small further amount by way of benefit. FSS and MetLife now seek to challenge that determination. 30His Honour published a second judgment, in which he made final orders to give effect to his earlier determination as well as costs orders (Maund v FSS Trustee Corporation (No 2) [2013] NSWSC 233). No challenge is now pressed as to those costs orders. 31The respective summonses for leave to appeal were heard concurrently with the appeals themselves, in the event that leave were to be granted.

Summonses for leave to appeal 32The applications by each of FSS and MetLife for leave to appeal from his Honour's decision relate to the first of the two issues that were determined in the Maund proceedings, namely the construction of the expression "time of the Insured Event giving rise to the claim" for the purposes of the calculation of the "Sum Insured" in the Policy. 33Ms Maund had contended that the time of the Insured Event giving rise to her claim was the date on which her employment with the police force was terminated upon her medical discharge in January 2010. FSS and MetLife had contended that the relevant time was the date on which Ms Maund ceased work, i.e., 8 May 2007, that being the time that her psychological illness incapacitated her from work. 34His Honour, having sought the parties' submissions on an alternative date, held that neither of the dates for which the respective parties had contended was correct and that the relevant date was 8 November 2007, that being six months after Ms Maund had ceased work, at which time Ms Maund had satisfied all but one of the elements of the policy definition of total and permanent disablement.

Leave to appeal 35Leave to appeal is necessary pursuant to s 101(2)(r)(i) of the Supreme Court Act 1970 (NSW) as the quantum in issue is less than $100,000. It is sought on the basis that the construction placed on the policy by the primary judge has an effect not only in relation to Ms Maund's entitlement under the policy but on other members' entitlements. 36In an affidavit sworn 13 May 2014, the General Counsel and Company Secretary of FSS, Mr Ian Pendleton, has deposed that the original MetLife policy was on foot from 1 July 2005 until 30 September 2011 and that from 1 October 2011 a different group life insurance policy is in force under which total and permanent disablement benefits were provided to members on materially the same terms. 37Mr Pendleton notes that in all relevant years salaries of employees of the New South Wales police force were indexed with effect from 1 July. Following an analysis of total and permanent disablement claims made over the period of the Policy, he deposes that if the construction placed on the policy by the primary judge is correct, FSS as trustee will need to review 92 paid claims and 126 pending claims with regard to the indexation of salaries from the next 1 July after the date the member last worked; and that there will be corresponding implications in respect of the period from 1 October 2011 to 19 January 2012 under the current policy. 38Ms Maund objects to the grant of leave to appeal. 39She submits variously that: the judgment is not retrospective and does not affect cases in relation to past members that are not before the Court; as the insurance policy which is the subject of his Honour's judgment is no longer current there will be no "knock on" consequences and there is only a remote chance that anyone could now make a claim on the policy; the Court is not obliged to make a determination for the purpose of reducing the workload of FSS' commercial operations as trustee; the manner in which FSS and MetLife choose to manage future claims is a matter in which they are free to operate on a case by case basis and nothing in the judgment changes the Policy or limits the past or future management of cases by FSS/MetLife; the relevant regulations and legislation have also since been amended; that, as MetLife is no longer the insurer of the Scheme, it will incur no future costs; and that FSS gained a financial advantage as a result of delay in processing her claim (i.e., the delay to July 2010), because it continued to receive premiums in relation to her membership which were incremental according to her salary increases in that period and because it had backdated her benefit to a date with a much lower salary. 40FSS does not accept that it obtained any financial advantage as a result of the matters asserted by Ms Maund but in any event submits that this is irrelevant to the question of the proper construction of the policy. It maintains that it has an obligation as trustee to consider the import of his Honour's determination on past and pending claims. 41In the course of the concurrent hearing, both FSS and MetLife accepted that if leave to appeal were to be granted they would be liable for the costs of the appeal, irrespective of its outcome, and that they would not seek to disturb the costs orders made below. Ms Maund appeared to accept that this was an appropriate way to proceed, though I did not understand her thereby to be consenting to the grant of leave to appeal. 42Having regard to the undertakings given as to the costs of the appeals, in my opinion it is appropriate for leave to appeal to be granted in circumstances where there is clearly an issue of importance for the trustee in the determination of the proper construction of the policy, which may affect many other members with past or pending claims.

Scheme 43The Scheme was established following the making by the Industrial Relations Commission of the Award. Clause 10.1 of the Award contained an acknowledgment by the Police Association of New South Wales that the New South Wales Police would establish an insurance scheme to pay the lump sum benefits prescribed by clauses 7 and 8 of the Award, those being lump sum benefits for death and total and permanent disablement as a result of "on duty" and "off duty" injury respectively. It contemplated that the insurance scheme would be established "with First State Super", that being defined as the superannuation scheme established under the First State Superannuation Act 1992 (NSW) or subsequent arrangements. 44A trust deed was executed pursuant to clause 13(1) of the First State Superannuation Act to make provision for, and with respect to, the workings of the Scheme (the Trust Deed). As varied from time to time, the Trust Deed, together with the Scheme Rules as defined in the Act, formed part of the Scheme. Neither the Trust Deed nor any of the Scheme Rules was in evidence. However, it does not appear to have been disputed that the relevant form of the Trust Deed for present purposes was one governed by a deed of variation made on 29 March 2006 and that rule 11 of the Scheme Rules provided as follows: 11.1 The Trustee [FSS] may acquire, hold, vary or dispose of one or more insurance policies to provide insurance benefits for members. 11.2 The insured benefit of a member is: (a) limited to the extent that the Trustee is able to effect cover under an insurance policy; (b) only payable to the extent that the Trustee receives payment from the insurer under an insurance policy. This rule 11.2 [forming part of the deed by clause 2.2 of the deed] prevails over an inconsistent rule [other than rule 22]. 45Clause 10.8 of the Award provided that entitlement to receive a lump sum from the Scheme was to be assessed in accordance with the terms of the Trust Deed and the Policy.

Policy 46The Policy, entitled "Group Life Insurance Policy Contract - Blue Ribbon", was issued by MetLife in favour of FSS and commenced on 1 July 2005 (clause 1.1 and First Schedule). Clause 12.2 of the Policy provides that its terms and conditions shall apply notwithstanding any contrary provisions in the Award or the Trust Deed of the Scheme. 47Clause 3 of the Policy provides as follows: 3. DEATH AND TPD If an Insured Member dies or suffers from TPD while this policy is in force, subject to the provisions of this policy, we will pay to the policyowner the Sum Insured in respect of that member, Subject to clause 2 [sic]. [It is not suggested that anything in clause 2 was relevant in Ms Maund's case.] 48The term "Insured Member" is defined in the definitions section of the policy as "a Police Officer who is a member of the Scheme and who is insured under this Policy". 49"TPD" is defined in the definitions section of the Policy as "Total and Permanent Disablement" by reference to the following definition in clause 6 of the First Schedule (with emphasis added): 6. TOTAL AND PERMANENT DISABLEMENT While covered under this Policy Total and Permanent Disablement shall mean: (a) The Insured Member suffering the loss of use of two limbs or the sight of both eyes or the use of one limb and the sight of one eye (where limb is defined as the whole hand or the whole foot), or (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. (c) In the case of an Insured Member whose normal hours are less than 15 hours each week at the time of the insured event giving rise to the claim: The Insured Member, because of injury or illness becomes permanently unable to perform the basic activities normally undertaken as part of everyday life. This will be evidenced by being unable to undertake any two of the activities listed below .... 50"Normal Hours" is defined in the definitions section of the Policy, relevantly, as the full-time or part-time hours that a police officer is "contracted" to perform. 51Therefore, the relevant risk against which Ms Maund was insured and for which she ultimately became entitled to a benefit was the risk that, while the Policy was in force and while she was a member of the Scheme, she would "suffer" from TPD within the meaning of that term in clause 6(b) of the First Schedule. 52Since it was not suggested that Ms Maund had become incapacitated through the physical injuries she sustained in 2004, and it was common ground that Ms Maund's "Normal Hours" were more than 15 hours per week, for Ms Maund to satisfy the definition of TPD under the Policy it was necessary for her to establish both that she had been absent from work "through injury" for six consecutive months and that she had provided proof to MetLife's satisfaction of the extent of her incapacity in terms of the unlikelihood that she would ever engage again in any gainful profession, trade or occupation for which she is reasonably qualified. 53Once TPD was established, Ms Maund's entitlement was to payment of the "Sum Insured". It is the definition of this term that is critical for present purposes: Sum Insured means the amount calculated under the Second Schedule 2B and 2C by reference to the Insured Member's age, Salary, Service Factor and whether the Insured Member is On-Duty or Off-Duty at the time of the Insured Event giving rise to the claim. If the Sum Insured exceeds the Maximum Benefit, it is reduced to the Maximum Benefit. [my emphasis] 54The reference in that definition to "the Second Schedule 2B and 2C" must have been intended to encompass Second Schedule 2D, since it is only there in the Second Schedule that the Service Factor calculation appears. 55The Service Factor calculation in Second Schedule 2D provides that the "On-Duty Sum Insured" for each Insured Member is dependent upon the percentage of full-time workload undertaken during each 28 day period of employment, averaged over the term of employment from the later of 1 July 2005 and the commencement of employment. Subsequent to the calculation of the Service Factor, there is a further calculation to be performed for each Insured Member in order to determine the member's On-Duty Sum Insured - that being in accordance with the following formula: "Service Factor x Multiple of Salary x Salary at the time of the Insured Event". 56"Insured Event" is defined in the definitions section of the Policy as meaning "an illness (including sickness, disease or disorder) suffered, or, bodily injury occurring, to a Police Officer while an Insured Member". 57Clause 4 of the First Schedule, dealing with how benefits are payable when claim requirements have been satisfied, includes the following provision: The Sum Insured will be determined as being payable on the On-Duty or Off-Duty basis according to whether the Insured Member was On-Duty or Off-Duty at the time that the Insured Event giving rise to the claim occurred. An illness which is contracted by the Insured Member in the course of Employment is an Insured Event which occurred On-Duty. Where an Insured Member's illness is aggravated, accelerated, exacerbated or is subject to deterioration, and the Insured Member's Employment while covered as an Insured Member was a substantial contributing factor to such aggravation, acceleration, exacerbation or deterioration, the illness is an Insured Event which occurred On-Duty. [my emphasis] 58The terms "On-Duty" and "Off-Duty" are defined in the definitions section of the Policy: the former, meaning "duty in the course of Employment ..."; the latter meaning "any time that a Police Officer is not On-Duty". It was common ground that Ms Maund was On-Duty at the relevant time for the purposes of the calculation of the Sum Insured. 59Clause 7 of the Policy, with emphasis added, provides that: 7.1 The Policyowner [FSS] must notify us in writing as soon as is practicable of an event entitling the Policyowner to a Benefit. 7.2 The accuracy and timeliness of a claim investigation, and subsequent payment, will be diminished if we are not notified in writing within one year after the event giving rise to the claim. 7.3 It is a condition of payment of any Benefit that the Insured Member provides us with such evidence to substantiate the claim as we may reasonably require. The Insured Member must submit at our expense to a medical examination conducted by a legally qualified medical practitioner appointed by us as we deem necessary. Satisfactory proof of age may be required prior to any payment of Benefits. 60Pursuant to clause 10.1, MetLife has no liability under the Policy to pay a benefit in respect of an insured member from the time any of the circumstances listed in clause 10.1(a)-(h) occurs. Those circumstances include: (f) the death of the insured member or where "the Insured Event causing TPD occurs after this Policy is cancelled or terminated for any reason" and (g) the death of the insured member or where "the Insured Event causing TPD occurs after the day the Insured Member ceases to be a Police Officer".

Primary Judgment 61His Honour considered that, in construing the policy, various words were critical. Among those were the following: in the insuring clause (clause 3), the words "suffers from TPD while this policy is in force" and "the Sum insured" ([97]); in the definition of "Sum Insured", the words "Salary" and "at the time of the Insured Event giving rise to the claim" ([105]). 62His Honour considered (at [110]) that the expression "at the time of the Insured Event giving rise to the claim" in the definition of "Sum Insured" directed attention to clause 7. As can be seen from the clause as extracted above, clause 7 is an administrative provision requiring notification by FSS to MetLife as soon as practicable of "an event entitling the Policyowner to a Benefit". In clause 7.2, reference is made to there being a diminution in accuracy and timeliness of the claim investigation depending on the length of time after "the event giving rise to the claim" that notification is given. Neither sub-clause 7.1 or 7.2 uses the term "Insured Benefit". Moreover, the notification referred to in clause 7.1 is notification by FSS not by the insured member. 63His Honour also noted (at [112]) that the relevant expression ("at the time of the Insured Event giving rise to the claim") appeared in various forms throughout the policy: appearing in that form in the definition of Sum Insured; in the introductory words of clause 6(b) and (c) of the First Schedule; and in the formula in Second Schedule 2D, but appearing with slight variations in clause 7.2 of the policy and clause 4 of the First Schedule. 64His Honour referred (at [117]) to Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 53; (2004) 219 CLR 165 at [40] and Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 at [22], noting that "[t]he meaning of the Policy, as a commercial document, must be determined objectively, by reference to what a reasonable person in the position of the contracting parties would have understood its provisions to mean, having regard to its text, context and purpose". There is no dispute as to his Honour's statement of the principles derived from those cases. 65His Honour accepted that the Court should be slow to conclude that the Policy should be construed in a way that substantially departs from, and is discordant with, the way that the relevant industrial awards and the legislation governing police officers and their employer (the Police Act 1990 (NSW)) were designed to operate ([121]). Nevertheless, his Honour concluded that, ultimately, the Policy must be construed according to its terms as a commercial document ([125]). No complaint is made as to his Honour's approach in this regard. 66Turning to the construction of the relevant expression in the Policy, his Honour noted that, common to the definitions of "total and permanent disablement" in the Award and the Policy, was that a police officer could not fall within the scope of either "unless and until, at least, he or she had been absent from work for six consecutive months through injury or illness" ([145]). His Honour noted that even if Ms Maund could be regarded as having become incapacitated, to such an extent as provided for in the respective definitions, on her last day of work, she could not be regarded as having acquired the status of "total and permanent disablement" until she had been absent from work "through injury or illness" for six consecutive months ([146]). 67His Honour considered that the word "occurred" in the last paragraph of clause 4 of the First Schedule and the word "after" in clause 7.2 of the Policy suggested that, where the Insured Event took the form of an illness rather than a bodily injury, the words "the event giving rise to the claim" related to a particular time of either contraction or aggravation of the illness ([169]). His Honour noted that, in Ms Maund's case, her illness was "contracted" no later than January 2007 when the symptoms of her psychological illness first became manifest ([170]). 68His Honour then noted that the words in clause 3 "suffers from TPD while this Policy is in force" directed attention to the definition in clause 6(b) of the First Schedule and said that, within the parameters of that definition, Ms Maund could not be said to have "suffered from TPD" until she had satisfied the first three elements of that definition; i.e., until she had been absent from work, through illness, for a consecutive period of 6 months (that date being 8 November 2007) ([174]-[175]). 69At [176], his Honour addressed the fact that the policy definition of TPD contained additional words to the corresponding definition in the Award, namely the words introduced by "having provided proof to our satisfaction ...". His Honour accepted that, read literally, this could be taken as subjecting a finding of TPD to delays in the insurer's investigative processes. Certainly, Ms Maund would not have satisfied the definition of total and permanent disablement under the Policy in its entirety until all of the requirements of proof had been satisfied. 70His Honour considered that such a reading (i.e., as to the time at which Ms Maund could be said to have 'suffered' from TPD) would be unreasonable ([177]). His Honour concluded that the additional words in the definition of TPD related to proof of incapacity and did no more than reflect the fact that under the Policy it was MetLife, and not the employer, that was charged with the responsibility of being satisfied as to the insured member's incapacity ([177]). 71His Honour therefore concluded (at [182]) that the contingency for which clause 3 provided, i.e., Ms Maund suffering from TPD, occurred on 8 November 2007 and (at [183]) that it was not until that date that there occurred "an event entitling the Policyowner to a Benefit" in relation to Ms Maund, as that expression was used in clause 7.1 of the Policy. 72At [185], his Honour said that: Bearing in mind that the "Insured Event" relating to Ms Maund was an illness suffered over a period of time that included the six consecutive months (between 8 May 2007 and 8 November 2007) through which she was absent from work through illness, and that she could not be said to have "suffered from TPD" within the meaning of the Policy until 8 November 2007, the relevant "time of the Insured Event" for the purpose of the expression "Salary at the time of the Insured Event" in the formula set out in Part 2D of the Second Schedule to the Policy should be taken as being 8 November 2007. 73Subsequently, having received written submissions from the parties as to the questions of costs and interest, his Honour found that on and from 29 July 2010 it was unreasonable for MetLife not to have paid the full amount of the entitlement and accordingly, on an application of s 57 of the Insurance Contracts Act 1984 (Cth) and regulation 32 of Insurance Contracts Regulations 1985 (Cth), his Honour considered that there should be an award of interest against MetLife from that date ([2013] NSWSC 233 at [8] and [9]). His Honour did not find that it was unreasonable for MetLife to take until 29 July 2010 for the payment of moneys referable to Ms Maund and therefore did not allow any interest for the period preceding the date upon which the moneys were paid to Ms Maund (at [11] and [12]). 74As to costs, MetLife and FSS had agreed that if there were to be a limited order for costs in favour of Ms Maund then, as between themselves, they would bear their own costs of the proceedings ([15]). His Honour concluded that as Ms Maund (who had represented herself in the proceedings) had succeeded in establishing that she was underpaid her beneficial entitlements, the interests of justice required that she be allowed her out of pocket expenses to the extent that, consistently with authority they could be allowed in her favour, and ordered that FSS pay the costs of Ms Maund assessed in a particular amount ([16]).

Appeal 75The sole ground of the respective appeals, though expressed in slightly different terms in each of the draft notices of appeal, is that his Honour erred in construing the "time of the Insured Event giving rise to the claim", for the purposes of the calculation of the "Sum Insured" in Ms Maund's case, as being the date six months after Ms Maund ceased work (8 November 2007) rather than the date on which she ceased work (8 May 2007). 76Various submissions were filed in these proceedings. Those that were ultimately relied upon by the respective parties were as follows: (i) FSS' Summary of Argument; (ii) FSS' Submissions filed 14 October 2013, with the exception of paras [56]-[57] and [64]-[84]; (iii) MetLife's Summary of Argument; (iv) MetLife's Submissions filed 18 November 2013; (v) Ms Maund's "Rebuttal Submission to Both Applicants' Outline of Submissions for Leave to Appeal" filed 14 November 2013; (vi) Ms Maund's "Rebuttal Submission to MetLife Insurances Submissions dated 18th November 2013 - if they are successful in obtaining Leave to Appeal" filed 25 November 2013; (vii) FSS' Outline of Submissions in Reply to Ms Maund's 14 November 2013 submissions dated 16 January 2014; and (viii) Ms Maund's Submissions filed 23 January 2014 in reply to FSS' January 2014 Submissions. 77At the outset I note that there was an objection (by FSS and MetLife) to reliance by Ms Maund on her submission of 23 January 2014 (itemised at [76] (viii) above) on the basis that it was filed without leave and, in the case of MetLife, that it had not previously been provided to it. Ms Maund disputed this and said that a copy of that submission had been included in a white folder earlier served by her on the applicants. 78As no prejudice was suggested to have been suffered by the applicants as a result of the service of her January submission, to the extent that leave is necessary I would give leave for Ms Maund to rely thereon. 79The other preliminary matter to note is that it is apparent from various of the submissions that were filed in the proceedings (the submissions referred to at [76] (ii), (vii) and (viii) above) that Ms Maund had filed a summons seeking leave to cross-appeal from his Honour's decision, in respect of which it appears she served various other submissions. 80Ms Maund accepts that she wrote to the Court of Appeal Registrar in late October, and confirmed in December last year, that she was discontinuing her cross-appeal. The discontinuance of her appeal is made clear in the opening paragraph of her 23 January 2014 submissions and was confirmed by her at the hearing before this Court. The matter has proceeded on that basis. 81Nevertheless, in the course of argument Ms Maund's position was that, while she accepted as reasonable his Honour's finding as to the relevant date (i.e., the time of the Insured Event giving rise to the claim) being 8 November 2007, if this Court were to find that his Honour had erred in so finding then she wished to maintain that the date she had originally contended for as was the correct date (namely January 2010 when she was medically discharged from the police force) was "another relevant date". On that basis FSS indicated that it did not withdraw (as it had indicated it would) the submissions it had made in relation to Ms Maund's cross-appeal (at [58] to [63] of the submissions referred to at 76 above). FSS also raised the problem that not all of the evidence on which Ms Maund had relied, when the matter was before his Honour in order to argue for the January date, was before this Court. 82The hearing proceeded on the basis that Ms Maund was allowed to say what she wished in support of the 2010 date. Macfarlan JA indicated that the Court would in due course review the position as to whether any further submissions or copies of material that had been before the primary judge would be necessary for the determination of the appeal. I have considered the submissions relied upon by Ms Maund in that regard. In my opinion, no further submission or material is necessary to determine the proper construction of the Policy.

FSS/MetLife submissions 83FSS and MetLife broadly, although not wholly, adopted each other's submissions in relation to the two appeals and in general I will refer collectively to their submissions. In essence, what FSS and MetLife contend is that "the time of the Insured Event giving rise to the claim" is the date on which the insured member is no longer capable, whether through injury or illness, of attending work - i.e., the date on which the injury or illness becomes incapacitating. 84It is submitted that it is only when an injury or illness becomes incapacitating that it can give rise to a claim. It is submitted that this interpretation gives the Policy a consistent and workable operation irrespective of whether the illness or injury is immediately disabling or becomes disabling over a period of time they maintain that there is a distinction between provisions in the Policy that determine the entitlement to the payment of a benefit (such as the definition of "TPD") and provisions in the Policy that determine how such a benefit is to be calculated (such as the definition of Sum Insured). 85By reference to the text of the Policy, it is submitted that, for an "Insured Event", whether that be an illness or injury, to "give rise to" a claim under the Policy, the Insured Event must logically be anterior to the date on which the elements of the definition of TPD. This is supported by the expression in clause 10.1(f) and (g) to the "Insured Event causing TPD" (my emphasis). 86FSS/MetLife submit that the "time of the Insured Event giving rise to the claim" is not a reference to the time at which evidence of the existence of such state of affairs becomes available nor the time at which such evidence is provided to the trustee. They point out that those are matters entirely within the control of the insured member or the insured member's agents and that it would be an odd construction of the Policy that enabled the extent of the insurer's liability to be at the whim of a member, who might choose to delay obtaining medical evidence and/or providing it to the insurer. 87Similarly, if the relevant time were not until MetLife was, or ought reasonably to have been, satisfied as to the proof of incapacity, that would leave the extent of the benefit to be affected by matters within the insurer's control. 88It is submitted that, had the Policy been intended to operate such that the "time of the Insured Event giving rise to the claim" be the time at which an insured member satisfied the definition of temporary and permanent disablement and hence became entitled to payment of the benefit, then the Policy could readily have been drafted to achieve that. It is further submitted that the references in clause 7 of the Policy to events entitling the Policyowner to a benefit or giving rise to the claim do not assist in the construction of the Sum Insured since neither uses the term "Insured Event" and in neither case is the ascertainment of the precise date of the event critical to the operation of the respective provisions. 89It is contended by FSS/MetLife that there is no logical or sound commercial distinction between the two causes of incapacity (injury and illness) when considering how the Sum Insured is to be calculated and that, if such a distinction were to be maintained, it would produce inconsistency as between the position of a police officer who was physically injured in an incident and one whose incapacity was not due to a physical injury but, say, due to a psychological illness that developed as a result of having witnessed such an incident (such as where another officer was physically injured). As to the former, it is submitted that the time of the Insured Event could only sensibly be the date of the injury assuming the injury was immediately incapacitating. In the case of the latter, it is submitted that there is no relevant distinction simply because the illness may not develop until later. It is submitted that in both cases the relevant date is the date that the officer, through either illness or injury, is incapacitated from work. It is submitted that his Honour erred in equating "Insured Event" with the insured contingency or risk. 90FSS/MetLife point to a number of adverse or potentially anomalous consequences that would follow if his Honour's construction is correct. 91First, it is submitted that any insured member who turned 45 or older during the requisite six-month period of absence from work would suffer a reduction in the multiple of salary determined by schedule 2B, and hence a corresponding reduction in the Sum Insured, if the relevant date was the end of the 6 months' absence from work and not the beginning of that period. 92Second, it is submitted that his Honour's construction would have the consequence that an insured member who was injured within 6 months of the expiry of the Policy or who ceased to be employed within that period would not be entitled to a benefit. 93Third, it is submitted that if the time at which the Insured Event giving rise to a claim occurs is the end of the 6 month period then this would arguably lead to the insured being "off-duty" rather than "on-duty" at the relevant time. 94Reliance is placed on the High Court's comments at [15] in Finch v Telstra Super Pty Ltd [2010] HCA 36; (2010) 242 CLR 254 as providing support for FSS/MetLife's submission as to the need to avoid the unintended adverse consequences of his Honour's interpretation of the Policy. Emphasis is also placed on the need for the expression "time of the Insured Event giving rise to the claim" to be able to be interpreted consistently by reference to objective facts.

Ms Maund's submissions 95Ms Maund's submissions on the present appeals largely reiterate the history of the matter and the submissions made below as to the three possible "TPD" dates for the purposes of construction of the relevant clause in the Policy. 96Ms Maund's contention is that it is not until the insurer is satisfied of proof of the incapacity that the Insured Event giving rise to the claim has occurred. However, logically, that cannot be the case because, if so, the Insured Event is not something "causing TPD" or "giving rise to a claim" at all; rather, it is the time of determination of the claim. 97Ms Maund emphasised that she had not been at fault for any delays regarding her claim and that she had no control over when or how MetLife and/or FSS were satisfied as to her claim. To the extent that those matters are relevant, they seem to support the construction advanced by FSS/MetLife in that they point to the need for an objectively certain date from which the Sum Insured was to be calculated. 98Reference was made by Ms Maund to Mabbett v Watson Wyatt Superannuation [2008] NSWSC 365; (2009) 15 ANZ Insurance Cases 90-138as confirming the six-month condition in the standard total and permanent disability definition. Ms Maund stated that Mabbett further confirmed that the correct date for assessing an Insured Member's likelihood of returning to work was six months. 99In Mabbett v Watson, Einstein J considered the entitlement to a total and permanent disability payment of a plaintiff who had injured his back on the same day that he tendered his resignation. The date by reference to which any such benefit was to be calculated was not in issue in that case. Rather, his Honour was required to determine the relevant test of causation for the first limb of the test for eligibility for total and permanent disability payments under the relevant insurance policy, which included the requirement for the injured person to be absent from employment for at least 6 months "in a row" and, for the purposes of the second limb of the test, the date at which likelihood of a return to work was to be assessed. 100It is submitted by Ms Maund that this case serves to dispel the notion that his Honour was "out of step" with current legal thinking and confirms the correct date for assessing an insured member's likelihood of returning to work as being at the end of the six month absence. However, the conclusion in Mabbett as to that date does not assist in the interpretation of the relevant words in the Policy in this case. 101In essence, Ms Maund's argument is that the date adopted for the calculation of the benefit by the primary judge is more logical and reasonable than the date advanced by FSS and MetLife. 102In response to that contention, it is submitted by FSS and MetLife that the determination that a member is totally and permanently disabled is a determination carried out independently of any determination that might be made by the Commissioner of Police for the medical discharge of a police officer. It is submitted that it could not have been the intention that liability of the insurer be dependent on a decision as to the timing of medical discharge from employment, this being a matter within the control of Ms Maund and the Commissioner of Police. It is submitted that the construction contended for by Ms Maund would have the effect that delay by Ms Maund in seeking, and delay by the Commissioner of Police in granting, a medical discharge would result in MetLife being exposed to a greater liability than would be the case if the relevant date were the independent objectively ascertainable date upon which an illness or injury occurred.

Conclusion 103There is nothing in the text of the Policy that requires the expression "time of the Insured Event giving rise to the claim" to be construed as the time that the insured risk or contingency is established. Had that been the intention, the Policy could readily have been drafted so to provide. The verb "suffers" in the expression "suffers from TPD" in clause 3 is not particularly apt in light of the inclusion, in the definition of TPD, of reference to the provision of satisfactory proof to the insurer. That definition suggests that there is a distinction to be drawn between the proof of the requisite incapacity and the happening of the Insured Event that will give rise, in due course and on the provision of the satisfactory proof of the extent of the incapacity, to a claim for and entitlement to a TPD benefit. 104As a textual matter, the happening of the "Insured Event" to which reference is made in the definition of Sum Insured must precede both the claim and the provision of satisfactory proof of the claim, since the Insured Event is referred to as something "giving rise to" a claim. That leaves open the possibility that there may be an "Insured Event", in the sense of an illness or injury as defined, that does not ultimately give rise to a claim. Otherwise there would be no reason to include the words "giving rise to a claim". 105Where the Policy distinguishes between a specific injury (as in clause 6(a) of the definition of total and permanent disablement in the First Schedule) and an illness or injury having a particular effect (as in clauses 6(b) and (c)), it does so expressly. There is no reason to suppose that clause 6(b) of the definition relevantly distinguishes between an injury or an illness when determining, for the purposes of the Sum Insured, the time of the Insured Event giving rise to the claim. 106The potential for there to be adverse consequences for an insured member in terms of quantification of a benefit if the relevant time is not until the conclusion of the 6 month period, while not determinative, provides some support for the conclusion that the construction adopted by his Honour could not have been intended. 107Of more import, to my mind, is that if his Honour's construction is correct then there would be no need for the words "giving rise to the claim" in the definition of Sum Insured. Identification of the 8 November (end of the 6 month absence) date as the "Insured Event" equates that event with the risk insured against and, as already noted, there is no textual basis to require that to be the case. 108FSS/MetLife urge the proper construction of the clause as referring to the time at which a bodily injury is suffered or an illness is contracted (or aggravated), being an injury or illness that incapacitates the insured member from work; i.e., an incapacitating injury or illness. It is only that kind of injury or illness that is capable (once the extent of the incapacity has been established both through the fact of a consecutive 6 month absence from work due to that illness and the provision of proof to the satisfaction of the insurer) of giving rise to a claim for a TPD benefit. 109However, the construction advanced by FSS/MetLife requires "Insured Event" in the relevant expression to be read as "incapacitating Insured Event". Read in the context of clause 10 of the Policy, which refers to an Insured Event causing TPD, there is no warrant for reading "Insured Event giving rise to a claim" as meaning an injury or illness that is then incapacitating. Rather, the expression is focussing on the time an injury occurs or an illness is contracted or aggravated. If that injury or illness later proves to be incapacitating to the extent required under the Policy then an entitlement to a benefit under the Policy will arise but not otherwise. 110My conclusion is that on the proper construction of the Policy the relevant date for the calculation of Ms Maund's benefit was January 2007. That is the date when, as later diagnosed, Ms Maund first came to suffer the recognised psychological illness that ultimately led to her incapacity and resulted in her satisfying the definition of TPD in the policy. No party contended for that date. However, when put in the course of this hearing, FSS/MetLife confirmed that it would make no difference to Ms Maund's position if the earlier date were found to be the correct date for the calculation of the benefit rather than the date contended for by FSS/MetLife. 111I accept that in some cases it may not be immediately obvious what the relevant date is, in the case of an illness that is contracted during the policy period and which later becomes incapacitating, that the illness was contracted (or aggravated). Manifestation of symptoms consistent with a psychological condition does not necessarily mean that a person is then suffering from that psychological condition, even though the development of those symptoms may later lead to a diagnosis of psychological illness. However, that is a matter to be dealt with by the relevant medical evidence when the time comes for proof of the claim to be provided. 112For those reasons, I have concluded that the "time of the Insured Event giving rise to a claim", where the claim is for TPD within the definition in clause 6(a) of the First Schedule, is the time the bodily injury occurs, or illness is contracted or aggravated, that leads to the relevant incapacity of the insured member from work, thus giving rise to the claim under the Policy. In Ms Maund's case, that was January 2007. Therefore, she was not entitled to the further payment made to her in respect of her TPD benefit.

Orders 113The appeals should be allowed and the following orders made:

1. Leave to appeal is granted in each of proceedings 107706/2013 (the MetLife proceedings) and 107746 (the FSS proceedings) and each of the appeals is allowed.
2. Orders 1 to 5 of the Court below be set aside.
3. In place thereof, order that there be judgment for FSS Trustee Corporation and MetLife Insurance Ltd.
4. Order Ms Maund to repay to MetLife the sum paid to her pursuant to the orders made by Lindsay J on 21 March 2013.
5. The costs orders made below not be disturbed.
6. The appellants pay Ms Maund's costs of the appeals.

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: 25 August 2014