Nile v Club Plus Superannuation Pty Ltd & Anor

CATCHWORDS : Superannuation - Total and Permanent Disablement - The case turns on its facts - Practice and Procedure - Separate determination of questions

Superannuation Industry (Supervision) Act 1993 (Cth) LEGISLATION CITED : Superannuation (Resolution of Complaints) Act 1993 (Cth)

Tonkin v Western Mining Corporation Ltd (1998) 10 ANZ Ins Cases 61-397 at 74,268 Rapa v Patience, McClelland J, 4 April 1985 (unreported) CASES CITED : Edwards v The Hunter Valley Co-op Dairy Co Ltd (1992) 7 ANZ Ins Cases 61-113 at 77,536 Chammas v Harwood Nominees Pty Ltd, Hodgson J, 14 April 1993 (unreported) at 11 Sayseng v Kellogg Superannuation Pty Ltd [20032] NSWSC 945 at 77-88

PLAINTIFF James Edward Nile FIRST DEFENDANT PARTIES : Club Plus Superannuation Pty Ltd SECOND DEFENDANT Citicorp Life Insurance Ltd

Mr G B Beauchamp - Plaintiff COUNSEL : Ms V M Heath - First Defendant Ms K M Guilfoyle - Second Defendant

PLAINTIFF Firths FIRST DEFENDANT SOLICITORS : Ebsworth & Ebsworth SECOND DEFENDANT Deacons

• 1 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

1454/2003 JAMES EDWARD NILE v CLUB PLUS SUPERANNUATION PTY LTD & CITICORP LIFE INSURANCE LTD

1 The first defendant is the Trustee of the Club Plus Superannuation Scheme, constituted by a Deed of Trust dated 27 February 1987, as amended from time to time. The first defendant procured the issue by the second defendant of a policy of Group Life Insurance. The plaintiff became a Member, as defined in the Trust Deed and claimed to be entitled to be paid $49,500 on the basis that he was suffering from a Total and Permanent Disablement. The parties agree that the combined effect of the Trust Deed and the Insurance Policy is that the definition of that condition that is now relevant is the definition contained in the Insurance Policy, which reads: "Total and Permanent Disablement (TPD) Total and Permanent Disablement shall mean:- a) Suffering the loss of two limbs or the sight of both eyes or the loss of one limb and the sight of one eye (where limb is defined as the whole hand of the whole foot), or b) 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). 'We Our or Us' means Citicorp Life Insurance Limited." 2 Each of the defendants rejected the plaintiff's claim, and also rejected requests for reconsideration of those rejections, and the plaintiff now seeks orders setting aside those decisions, and consequential relief. The Early 1997 Decisions 3 The plaintiff completed a "Statement of Claim" form and a statutory declaration, both dated 30 December 1996. It seems that these were provided by the plaintiff to the first defendant, and that the first defendant sent them on to the second defendant. In those forms, he said that he had been injured on 19 April 1996, whilst working as a bar steward for Riverwood Legion Club. In those documents he described his injury as "L4/L5 disc injury", said that he had not worked since being injured and said that he was not expected to return to work. He said that he was entitled to workers compensation benefits, and identified the workers compensation insurer in question, and he listed the doctors who had seen him: Drs Patrick, Blake, Evans, Hocker, and Wong. He described his duties as "working behind a bar, TAB, Keno, setting up function rooms, carrying tables up and down stairs". He had not been employed in a supervisory capacity, and he answered a question about the level of education required for his job: "Bar and cocktail course, Skillshare Auburn Nov 1995". He was a shift worker. Asked questions about the extent to which his work involved lifting, carrying and reaching above his shoulder, where the question defined "occasional" as one third of the time or less, "frequent" as one third to two thirds of the time, and "continuous" as more than two thirds of the time, he said that the job required lifting of weights of under seven kilograms and of seven to nineteen kilograms occasionally, and twenty kilograms or more frequently. The job required carrying weights of seven kilograms occasionally, and weights of twenty kilograms and over frequently; and it required reaching above his shoulders occasionally. He also said that the job required him to be walking or standing 100 percent of the time. Asked to list all of the jobs he had held in the preceding ten years he said: "carpenter 1971 to 1993", and bar steward from 22/12/95 to 25/12/96. 4 A letter from Riverwood Legion & Community Club Ltd to the plaintiff dated 20 December 1996, which evidently accompanied these documents, informed the plaintiff that the Club's workers compensation insurer had notified the Club that he was unable to work, and that his claim could take up to twelve months to finalise. The Club could not hold his position indefinitely, and it had decided to terminate his employment as at 25 December 1996. 5 Another document provided to the defendants at this time was a form of "Employer's Statement" completed on behalf of the Club, dated 9 January 1997. This form described the plaintiff's job title as casual steward, and his duties as "serving drinks, processing TAB & Keno tickets, setting up for functions". It said that the plaintiff was not employed in a supervisory capacity. The form asked the same general questions as did the "Statement of Claim" form about lifting, carrying and reaching above shoulders, and walking and standing. It appears (the copy in evidence may not be perfect) that the only activity ticked in respect of lifting, carrying and reaching was that he lifted weights of seven to nineteen kilograms occasionally; and he spent 20 percent of his time walking and 80 percent standing. 6 Asked if the Club had any alternative job openings for the plaintiff, if he was unable to do his regular work, it said "No". Asked what similar types of work the plaintiff's skills "could" qualify for, it said "TAB agency". 7 The plaintiff had made a claim for worker's compensation benefits, and had retained solicitors for that purpose. It appears that there were provided to the defendants (probably to the first defendant, that forwarded them on to the second defendant) three medical reports, one dated 2 May 1996 from Dr Lim, a radiologist, addressed to Dr Wong who was the plaintiff's general practitioner; and two from Drs Patrick and Blake, orthopaedic specialists, addressed to the plaintiff's solicitors, dated 30 September 1996 and 7 November 1996 respectively. A report of Dr Kirsh, another orthopaedic specialist, addressed to the workers compensation insurer of the Club and dated 14 January 1997 may have been provided by the plaintiff, but in any event it came to the attention of the defendants. The second defendant arranged for the plaintiff to be seen again by Dr Kirsh, and also for him to be seen by Dr Innes-Brown, another orthopaedic specialist, and in due course it received from those two doctors reports dated 10 February 1997 and 12 March 1997 respectively. 8 The second defendant declined the claim on 9 April 1997 and the first defendant declined it on 12 May 1997, essentially because of the last two mentioned reports, so that it is necessary to go into some detail about the medical evidence available to the defendants at the time these decisions were made. 9 Dr Lim's report spoke only of radiological findings: in brief, mild circumferential bulging of the L3/4 and L5/S1, and a disc protrusion at the L4/5 level, causing significant compression of the thecal sac. Neither he, nor Dr Patrick, Dr Blake or Dr Kirsh addressed the question whether the plaintiff suffered from a total and permanent disability, as defined, presumably because none of them had been asked to do so. 10 Drs Patrick, Blake and Kirsh addressed themselves to questions that were no doubt relevant for workers compensation purposes. They recorded the histories given to them, their findings upon examination, and their observations about the radiological investigations, and they expressed opinions generally about the plaintiff's capacity for work, the extent of his disability, and his future prognosis. For the moment, it is probably sufficient to note that Dr Patrick reported that the plaintiff had a disc injury, that he needed to be careful with his back indefinitely, particularly when bending and twisting, that he remained incapacitated for physical work involving heavy lifting, frequent bending or prolonged stooping, and that whilst he would be left with permanent impairment at the back, then assessed at 20 percent, it was possible that there would be some improvement. However, it was also possible that there could be some deterioration with time. 11 Dr Blake reported that the plaintiff was fit for light and semi-sedentary types of work only, that he was not fit for work as a bar steward, and not fit for work placing significant stress on his lower back, in the form of heaving lifting or carrying, or repeated or prolonged bending. This was likely to be permanent although some improvement was likely with time. 12 Dr Kirsh's report of 14 January 1997 said that the plaintiff was essentially unchanged, but the doctor's earlier report seems not to have been available to the defendants at this stage. He did not comment specifically on the plaintiff's capacity for work except to quote the history given to him. However, this was remedied, to a degree, by the report of 10 February 1997, when the doctor said the plaintiff was not fit for work then, but expected that in the long term he would be able to do work that did not involved heavy lifting or bending. 13 The second defendant asked Dr Innes-Brown to report, saying of the plaintiff's claim: "For the purposes of assessing this claim under the terms of our policy, we need to form a view whether the condition they are suffering from has rendered them unable to perform their occupation and whether they are unlikely ever to engage in or work for reward in any other occupation or work for which they are qualified by education, training or experience. We would be grateful if you could set out in your report whether, as a result of your examination, you were able to form a view regarding the capacity of Mr Nile to work for reward in their own occupation or any other occupation as relevantly defined and if so, could you set out your conclusions in this regard. If you feel Mr Nile would be able to work for reward in some occupation, could you please indicate to us the job for which you consider them to be fit." 14 This is not quite the correct question, but nothing turns upon that now. Dr Innes-Brown reported, generally adversely to the plaintiff, concluding: "Some of his responses during the examination were inconsistent and clearly contrived, indicating that he is seeking to exaggerate the level of his claimed disabilities. The prognosis from an orthopaedic point of view is for slow progression of his spondylosis but not at such a rate that it would prevent him from continuing to work until normal retiring age. Because of his lumbar spondylosis he should exercise due back care during any heaving lifting or arduous bending and twisting. He would therefore in my view be fit to work as a barman but not as a cellarman. He presents as an intelligent man and is well versed in carpentering and has experience in the hospitality industry, and would therefore be qualified to engage in a wide variety of occupations where he does not have to engage in repeated heavy lifting or arduous bending and twisting activities. In general, he is fit to carry out any work where he could sit or stand at will, such as supervising the console in a petrol station, or manning a weighbridge or as an invoice clerk, or as a storeman handling lighter components, and so on. 15 On 9 April 1997 the second defendant wrote to the first defendant, saying: "We have now received all the necessary information on the above claim. After careful review of the medical information provided by Dr Kirsh and Dr Innes-Brown, we advise that the TPD claim will be declined. Dr Kirsh was of the opinion that Mr Nile would be able to return to work in the long term which does not involve heavy lifting or bending. Dr Innes-Brown's report states the following:- * There was a good range of active neck and shoulder movements * There was evidence of longstanding degenerative disease * Some responses were contrived and exaggerated * There is evidence of a slow progression of spondylosis but not to an extent that Mr Nile would be unable to work until retirement. * Mr Nile should, however, exercise due back care * Fit for work as a barman * Has experience in the hospitality and carpentry industries and would be fit for a wide range of occupations. It is our opinion that Mr Nile does not satisfy the definition of Total and Permanent Disablement as contained in the policy contract." 16 It may be that the first defendant did not then have the reports which the second defendant thought it proper to summarise. In any event, the first defendant wrote to the plaintiff on 12 May 1997, saying: "I refer to your recent claim for a Total and Permanent Disablement benefit from the Club Plus Portable Superannuation Fund. The Trustee of the Fund has taken out an insurance policy to cover this benefit. In terms of the Deed governing the Fund, the definition of Total and Permanent Disablement in that policy applies for all purposes of the Fund. Under that insurance policy, Total and Permanent Disablement means: '(a) The Member suffering the loss of use of two limbs or the sight of both eyes or the loss of use of one limb and the sight of one eye (where limb is defined as the whole hand or the whole foot), or (b) The member having been absent from their Occupation with the Employer through Injury or Illness for six consecutive months and having provided proof to { the Insurer's} satisfaction that the Member has become incapacitated to such an extent as to render the Member unlikely ever to engage in any gainful profession, trade or occupation for which the Member is reasonably qualified by reason of education, training or experience.' You will appreciate from the definition that a Member will not necessarily qualify for a benefit even though their injury or illness has resulted in the loss of their current employment, or in partial or temporary disablement. The Trustee has considered your claim, including the various medical reports obtained by you and the Insurer, and has formed the view that your circumstances do not satisfy the requirements for Total and Permanent Disablement as set out above. The detailed medical reports do not establish that the illness or injury which you have suffered is such that you are unlikely to ever again obtain work for which you are reasonably qualified by education, training or experience. Hence, the decision to decline the claim still stands." 17 The letter went on the speak of the plaintiff's rights so far as concerned an appeal to the Superannuation Complaints Tribunal, and to terminate his membership of the Superannuation Scheme. 18 In my judgment, these decisions of the defendants cannot be successfully challenged. To the contrary, they were soundly based upon the material then placed before the defendants. No medical practitioner had opined that the plaintiff fell within the policy definition of Total and Permanent Disablement, and the general view expressed by the various medical practitioners fell a good deal short of that definition. The Late 1997 Decisions 19 On 3 June 1997 the plaintiff wrote to the first defendant, replying to the first defendant's letter of 12 May. He asked that his letter be considered as a complaint under s101 of the Superannuation Industry (Supervision) Act 1993 (Cth), and challenged the proposition that he would be able to return to his usual occupation, because he could not lift, bend or sit for any length of time. Therefore, he said, he would definitively not be able to get any employer to hire him. He forwarded copies of further reports from Dr Blake and Kirsh, and said that he awaited the first defendant's reply so that "we can discuss this complaint at length". 20 These two reports, dated 26 May and 20 June 1997 respectively, were addressed to the plaintiff's solicitors, and were evidently written for the purpose of some workers compensation proceeding, actual or contemplated. Dr Blake reported: "Mr Nile now appears permanently unfit for any work placing significant stress through his lower back, including work as a bar steward where significant lifting and carrying are part of the duties. In view of his relatively young age, 40 years, vocational assessment, with consideration of retraining and rehabilitation, through his treating doctors, would be supported." 21 Dr Kirsh reported without comment a history from the plaintiff that the plaintiff could not find work, because he could not sit or stand for long, and expressed a view as to the percentage loss of use of the plaintiff's back and legs. 22 The first defendant forwarded these documents on to the second defendant. It arranged for the plaintiff to be examined by Dr Endrey-Walker, described in address as a surgeon. The plaintiff apparently failed to keep the appointment that had been made, and it was then arranged that the plaintiff see Dr Funnell, described in address as a rehabilitation specialist. Dr Funnell reported on the letterhead of Dr Endrey-Walker on 3 October 1997. Dr Funnell set out, at some length, the history he obtained, and his findings on examination. The history reported was that the plaintiff had left school in year 9, and had worked for the next 23 years as a labourer in his father's carpentry business; that he left this employment in 1995 because he was not getting along with his father; that he was unemployed for a time, before commencing the Skillshare programme, which on this occasion resulted in his obtaining work with the Riverwood Legion Club; and he had no other experience or training. 23 The doctor considered that the plaintiff's description of his symptoms was exaggerated, but continued: "Because of the presence of the disc injury on C.T. scan, I suspect that Mr Nile is unfit for occupations which require heavy lifting and carrying, and in this regard it is prudent that he not undertake his previous work activities as a labourer or bar steward. At the same time, I believe that there are a wide variety of jobs for which he would be suitable following vocational assessment and [retraining]. Any job of a generally sedentary nature should predictably lie within his work capacity. The only real restriction would be with regard to repetitive or heavy lifting below waist height. He should be fit to undertake clerical work, perhaps within a factory or warehouse setting, to undertake the duties of a console operator, and possibly outdoor duties such as a parking policeman or patrolman. None of these duties should aggravate his pain or worsen his condition in the long term." 24 The evidence includes documents recording that on 21 October 1997 a claim made by the plaintiff against his employer in the Compensation Court was settled, on terms that he be paid a total of $45,000, representing lump sums for the permanent impairment of his back and legs, and for pain and suffering. It is not clear whether this material was before the defendants at the time when they made their decisions in the latter part of 1997, but it does seem to matter. On 24 October 1997 the second defendant wrote to the first defendant, saying that the second defendant maintained its decision to decline to meet the plaintiff's claim. It did so by reference to the report of Dr Funnell, but adding a reference to "the totality of the evidence obtained and provided", and it said that Dr Funnell had considered that the plaintiff could manage a wide range of occupations, "including clerical work, parking policeman, patrolman, shop assistant or toll collector". This does not correspond accurately with what Dr Funnell actually reported, but in relation to the decision of the second defendant now under consideration, this does not seem to be truly significant. 25 On 4 December 1997 the first defendant wrote to the plaintiff. The letter is in much the same form as its letter of 12 May 1997. 26 Once again, I see no proper basis for thinking that either of these decisions should be overturned. The highest that the plaintiff's case went, to this point, was that the plaintiff said in his letter of 3 June 1997 that by reason of his physical limitations no-one would employ him, a statement generally repeated to the doctors by the plaintiff, and Dr Blake reported that he was physically unfit for some work, but not all work; and Dr Funnell reported that there were jobs, that he identified, that he considered that the plaintiff could do. There is no need to elaborate upon the bald finding that the decisions of the defendants, up to this point in time, cannot be criticised. The 2001 and 2002 Decisions 27 On 25 February 1998 the plaintiff lodged a complaint with the Superannuation Complaints Tribunal, pursuant to the provisions of the Superannuation (Resolution of Complaints) Act 1993 (Cth). The tribunal, having obtained copies of various documents, referred to the reports of Drs Innes-Brown and Funnell, and of Dr Kirsh dated 10 February 1997, observed that these did not support the plaintiff's claim, and invited the plaintiff to withdraw his complaint. Later, the tribunal treated the complaint as withdrawn. 28 On 26 May 1999 the plaintiff's solicitors wrote to the first defendant, requesting copies of a large number of documents. Until then, it seems, the solicitors had represented the plaintiff in the workers compensation proceedings, but not in respect of his claim against the present defendants, except perhaps that they might have given him some more or less casual advice. There was no reply by the first defendant initially, and the plaintiff's solicitors wrote to it again on 10 September 1999. On 28 September 1999 the first defendant replied, explaining that the administration of the Superannuation Scheme had changed from one administrator to another, and that the plaintiff's file was presently unavailable. There was further correspondence, and the first defendant wrote on 6 January 2000 providing copies of various documents (although there was not provided at this stage copies of the minutes of the meetings at which the early 1997 and late 1997 decisions of the first defendant were made). In response to the plaintiff's solicitors request for information as to whether a vocational guidance assessment had been undertaken by either defendant, the first defendant said: "Vocational Assessment was not considered". 29 On 5 July 2000 the plaintiff's solicitors wrote again, requesting medical reports, and minutes of meetings. The first defendant responded on 31 July 2000, saying that "our Trustee" had been requested to supply the minutes of the meetings, and had not yet done so; and that there were no reports that had not been provided already, except perhaps for some held by the second defendant, not in the possession of the first defendant. 30 On 15 January 2001 the plaintiff's solicitors forwarded to the first defendant copies of drafts of a summons, a notice of motion seeking the production of the outstanding documents, and an affidavit by the plaintiff; and they requested a reply within 21 days. That was not forthcoming, but on 9 February 2001 the first defendant wrote to the plaintiff's solicitors saying that the matter would "be discussed at the upcoming Board meeting". 31 The evidence is silent as to what happened on the occasion of that Board meeting, except that the minutes of a meeting of the first defendant's Claims Committee of 22 February 2000 records this: "Documentation and draft summons received dated 15/01/01 from Firths. The Secretary contacted Firths and advised that the matter would be referred to Claims Meeting on 22/2/01 and the Directors would review the case. Upon review the Directors noted that James Nile did not meet the definition of TPD and the matter would be reported to the full Club Plus Board. The Directors requested the insurer to write directly to the Solicitors and provide a copy to the Board of Club Plus. IT WAS RESOLVED that the Directors note that the medical evidence considered when reviewing the claim did not establish that James Nile met the definition of TPD and this decision would be recommended to the full Club Plus Board." 32 The evidence includes a copy of a file note of the second defendant dated 19 March 2001 commencing: "Original file unable to be located. Copy of file provided by Club Plus." 33 There followed a brief summary of the previous medical reports. The evidence does not establish what use, if any, was made of this document, or what if anything happened before 5 December 2001, on which day there was a meeting of the first defendant's Claims Committee. The minutes of that meeting record that on the previous day the plaintiff had telephoned asking that his case be reopened, but that he did not intend to supply any new medical evidence. On the same day, the first defendant wrote to the plaintiff advising that his claim would be reassessed on receipt of further medical evidence. 34 On 12 December 2001 the plaintiff wrote to the first defendant, forwarding a copy of an MRI report by Dr Sachinwalla dated 27 July 1999. It added nothing significant, in that it did not address the question whether the plaintiff fell within the definition of Total and Permanent Disablement contained in the insurance policy. The first defendant forwarded a copy to the second defendant, which replied on 2 February 2002 maintaining its previous position; and on 26 March 2002 the first defendant wrote to the plaintiff in these terms: "The Trustee has carefully considered your claim for a Total and Permanent Disablement benefit but regrets to advise that the claim has been denied. The Trustee can only admit claims where it is satisfied that an insured member of the Plan has suffered an accident or illness, which prevents the member from being able to work in any position for which they are suitably qualified by education training or experience. Based on the evidence that you have provided the Trustee is not satisfied that these conditions have been met. If you are not satisfied with this response there are procedures in place which assist you to make further enquiries or lodge a complaint. Please refer to the attachment to this letter." 35 Once again, I consider that the decisions under consideration (that is the decision of the first defendant of 19 March 2001 and the decisions of the two defendants in early 2002) cannot properly be challenged now; whilst the plaintiff has pointed to various matters that might be described as in-exactitudes, the material that had been put before the defendants did not justify the view that the plaintiff fell within the policy definition of Total and Permanent Disablement, much less that the decisions of the defendants that the plaintiff did not fall within that definition should be set aside. The 2003 and 2004 Decisions 36 The plaintiff commenced the present proceeding 18 February 2003. Between May and July 2003 his solicitors served upon the defendants' solicitors a variety of documents that are now said to be significant, and by letter dated 1 July 2003 they asked the defendants to reconsider the earlier decisions that had been made. The defendants accepted that such a request is a proper one (see Tonkin v Western Mining Corporation Ltd (1998) 10 ANZ Ins Cases 61-397 at 74, 268), and they in fact reconsidered the matter. 37 The additional material put before the defendants by the plaintiff included the following:

(a) A report of Dr Blake dated 5 May 2003 in which he said that he had not seen the plaintiff since 1997, but continued: "In my opinion, as examined on 26 May 1997, Mr James Nile was incapacitated to an extent that he was unlikely ever to engage in for reward any occupation or work for which he is reasonably qualified by education, training or experience."

(b) A further report from Dr Patrick dated 6 June 2003. He had not seen the plaintiff since 1997, but said: "In my opinion, Mr James Nile is incapacitated to an extent that he is unlikely to ever engage in for reward any occupational work for which he is reasonably qualified by education, training or experience. He is no longer fit to do carpentry work or bar work full time. He might be fit for suitable part time light sedentary work only and, depending outcome of any skilled vocational assessment, might well require some vocational training with regard to such work, still likely to be part time work of a lighter nature."

(c) Another copy of the radiological report of Dr Lim dated 2 May 1997, and a report by Dr Sachinwalla dated 17 July 1997, concerning an MRI. These two reports expressed no view as to whether the plaintiff fell within the definition of Total and Permanent Disablement, but provided a radiological basis for the view that the plaintiff has a disc lesion. However, this is not in contention.

(d) Two further reports of Dr Kirsh, one dated 9 May 2003 in which he said that he had not seen the plaintiff since 1999, but continued: "Certainly at that stage I did not think that he would return to significant gainful employment or any occupational work for which he was reasonably qualified by education, training or experience. He may require vocational training but I suspect that he satisfies the definition of total and permanent disability in the long term."

The other, dated 6 June 2003 said: "James Nile has been under my care from 1996-1999. At that stage he had problems with both his lumbar and cervical spine and I believe was due to have an anterior cervical fusion. I believe that he is unlikely to ever engage in for reward any occupation or work for which he is reasonably qualified by education, training or experience."

(e) Reports of Dr Fearnside, a neurological surgeon, dated 6 March 2000 and 28 May 2003. He dealt principally with a condition of the plaintiff's neck, the consequence of a fall in 1999, said to be the consequence of the plaintiff's low back disability. There is a question, to which I will return, as to whether the consequences of the neck condition are properly to be considered in relation to the plaintiff's claim under the Superannuation Scheme, but in his 2003 report Dr Fearnside said: "In my opinion, Mr Nile is incapacitated to an extent that he is unlikely ever to engage in for reward any occupational work for which he is reasonably qualified by education, training or experience."

(f) Two reports of Dr Sheridan, another neurosurgeon, dated 7 February 2000 and 5 June 2003. Like Dr Fearnside, he was primarily concerned with the plaintiff's neck condition, but he said: "It is my opinion that Mr Nile is incapacitated to an extent that he is unlikely ever to engage in an occupation or work for which he is reasonably qualified for by way of education, training or experience. I last saw him in 1999 and to the best of my knowledge this is still the case."

(g) A series of other reports from other doctors that do not seem to me to add anything now significant.

(h) An affidavit of the plaintiff dated 24 September 2003. 38 In his affidavit, the plaintiff said that he had left school at the age of 14, in year 9, without the School Certificate, because he was not performing well; his grades were usually C, D or E. He said that he had average reading, writing and mathematical skills, and was able to do only simple mathematics without the aid of a calculator. He did not know how to use a computer. When he left school, he started to work for his father, a journeyman carpenter, but did not enter an apprenticeship, and he worked for his father for 23 years, as a labourer. He described that work as involving the building of new homes, and including repetitive heavy lifting and carrying, and assembling objects and hammering in awkward positions, and walking on uneven surfaces whilst carrying things. 39 He fell out with his father and left that employment, but could not find work, as he had no skills other than for labouring work. He had never used a nail gun and therefore could not find carpentry/labouring work. After a time on unemployment benefits, he enrolled in a two week TAFE course to learn how to be a steward and/or bar attendant. He then obtained a job with the Riverwood Legion Club on a casual basis. After a time he was working some 30 to 35 hours per week there, and also one night per week at another club. 40 He described the duties of a bar attendant. To summarise this, it is sometimes heavy work, involving stacking racks of glasses estimated to weigh 15kg in a dish washer, in awkward positions, moving heavy tables and chairs up and down stairs, stacking refrigerators and shelves with cartons of bottles, a task that sometimes involved bending or kneeling, pouring ten litre jugs of orange juice into dispensers, handling bags of coins weighing 10 to 15kg, and sometimes trays weighing 25kg, sometimes working as a doorman, a task that sometimes required him to eject or assist in the ejection of people from the Club, and continually standing and walking. 41 He said that there was no light work available, that he had been paid a lump sum of $45,000 in settlement of some of his worker's compensation rights (as mentioned above), and an additional $70,000 later on, presumably in redemption of his right to periodic payments. 42 He referred to the report of Dr Innes-Brown dated 12 March 1997, and to the opinion of the doctor that he was fit for work as a barman. He said that he disagreed with this view, stating that he could not lift or carry even moderately heavy objects, and that pain prevented him from various activities that he listed. He then referred to the report of Dr Innes-Brown that he was well-versed in carpentry and had experience in the hospitality industry, and that there a wide variety of jobs he could do that did not involve repetitive lifting or arduous bending or twisting, for example, supervising the console at a petrol station, manning a weighbridge, an invoice clerk or storeman handling light components and so on, and he said that he strenuously disagreed with this. 43 He said that he could not work in the carpentry industry, because he could not lift or carry even moderately heavy weights, and was unable to bend, lift or perform twisting movements, and could not sit or stand or walk for long. 44 He said that he had never worked as a console operator in a petrol station, but from his understanding as a customer he could not do some parts of that work: lifting and carrying boxes so as to stack shelves, sometimes with heavy objects such as cartons of soft drinks, five litre containers of oil, or firewood, or to fill up propane tanks for customers. He expressed similar views as to the position of storemen. 45 He also said that he did not know exactly what duties were involved in manning a weighbridge or being an invoice clerk, but said that he had no relevant experience. 46 He then went on to refer to the report of Dr Funnell, as to his capacity to do certain kinds of work, generally in the same way, and he described efforts he had made to obtain work, unsuccessfully. 47 He said that, as a consequence of his low back injury, his left leg was sometimes so painful that it gave way, and on one such occasion in 1999 he suffered head and neck injuries, thereby leading to Dr Wong referring him to Dr Sheridan. 48 He concluded by saying that he did not think that he would be able to find any suitable work without undergoing some vocational training, and even then he did not think he would be able to do more than a couple of hours per day, three days a week. 49 The solicitors for the second defendant wrote to the plaintiff's solicitors on 21 November 2003, saying that the second defendant had reconsidered the matter. They pointed out that the second defendant was required to be satisfied not that the plaintiff was unlikely to return to his former employment, but that he was unlikely to return to any job for which he was reasonably qualified by eduction, training or experience. The second defendant said that the plaintiff had numerous transferable skills arising from his education, training and experience. The solicitors said that the plaintiff was not qualified to make the comments he had made, concerning his transferable skills in carpentry and the hospitality industry, but that it had taken these into account in weighing them up against the contradictory opinions of Drs Funnell and Innes-Brown; and it maintained its earlier attitude. 50 On the evidence, the first defendant did not make any decision at this stage, but in any event the plaintiff's solicitors forwarded to the solicitors for each of the defendants a further affidavit by the plaintiff dated 16 December 2003, and both defendants reconsidered the matter in the light of that affidavit. In this affidavit the plaintiff gave more detail concerning the 1999 fall and the consequences of that, but also said that he had developed leg problems immediately after his injury of 19 April 1996, the left leg rather worse than the right. He estimated that he had fallen over initially about a week after that injury, and that he thereafter became more hesitant about carrying things because his left leg was apt to give way without notice. He described his ongoing symptoms in more detail than had been the case earlier, and spoke of his difficulties in carrying things. 51 The solicitors for the second defendant wrote again on 2 March 2004 saying that the second defendant had reconsidered the matter. They said that the fact that the plaintiff had fallen in 1999 and injured his neck was irrelevant, because the relevant time to consider whether he was suffering from a Total and Permanent Disablement was 1996. They subsequently repeated the argument set forth in their letter of 16 December 2003, said that the second defendant was entitled to "attach whatever amount of weight it considers appropriate" to the plaintiff's affidavit, and in essence said that on the basis of the evidence of Dr Innes-Brown the plaintiff was qualified to engage in a wide range of occupations where he does not have to engage in repeated heavy lifting or arduous bending and twisting activities; and he was also capable of working where he could sit or stand at will, for example supervising a console in a petrol station, manning a weighbridge, as an invoice clerk, or as a storeman handling light components. 52 The first defendant reconsidered the matter, in the sense that its Technical and Claims Committee considered it at a meeting held on 8 November 2004. The redacted copy of the minutes of that meeting records when the Committee meeting commenced, and when various people joined and left the meeting. Between 3.10pm and 4.07pm nineteen matters were considered, including the plaintiff's request for reconsideration. As to that, there was a resolution recorded in these terms: " IT WAS RESOLVED that we reconsidered the matter and the Committee is of the opinion that the member does not, based on all the evidence provided, meet the definition of Total and Permanent Disability as contained in the insurance policy."

The Superannuation Scheme and the Insurance Policy 53 As mentioned earlier, the Superannuation Scheme operates by force of a Deed. The first defendant is the Trustee of the Scheme, and clause 10.3 of the Deed gives it "an absolute and unfettered discretion" to exercise its various authorities, powers and discretions. Clause 10.4 authorises it to act upon advice, and clause 10.6 to delegate its authorities, powers and discretions. Clauses 24 and 25 and a Schedule to the Deed provided for the benefits payable to Members, including a lump sum when a Member became totally and permanently disabled. 54 A policy of insurance was issued by the second defendant in favour of the first defendant. It is not easy to find any explicit promise by the second defendant to pay any money in respect of Total and Permanent Disablement, but it is not suggested that there was not such a liability, in appropriate circumstances. The second defendant agreed to accept as a Member of the Plan a category of people, of whom the plaintiff was one. The policy provided that the second defendant would be liable to pay "accidental death benefits", subject to certain conditions, and it then continued: Our liability will cease as and for a Member on the occurrence of any one of the following events:- i) When a death or total permanent disablement benefit has been paid to the Trustees. ii) When the Member attains the Normal Retirement Age. iii) Thirty days from the date the Member was last employed by the Company. (iv) On the cancellation of this Contract by the Trustees. (v) On the day before the Member commences duty with the armed services of any country. (vi) On the day this Contract terminates because of non-payment of premiums due. If Member is given leave of absence by the Company without Salary we will continue to accept liability for a maximum period of one year providing he is not joining the armed forces and the Trustees continue to remit premiums." 55 The Policy dealt with other topics and continued: "The Trustees will notify us as soon as possible after the event of the death or total and permanent disablement of a member or any other circumstance which entitles the Trustees to receive a payment from us. We will not accept liability for any claim which is first notified more than one year after the event giving rise to the claim. The Trustees will provide us with all certificates or other documents which may be reasonably required, and the member must submit to all medical examinations we may reasonably require." 56 The second defendant contends that it is not liable in respect of the consequences of the plaintiff's fall in 1999, because the plaintiff ceased to be employed by "The Company", that is Riverwood Legion Club, on 25 December 1997. Assuming that this is so, and assuming also that this means that the first defendant might not be liable to the plaintiff for the consequences of the 1999 injury, I think it is clear that the plaintiff must succeed. 57 In Rapa v Patience, McClelland J, 4 April 1985, not reported, his Honour said: "The grounds on which the performance by trustees of functions such as these may be successfully challenged are those applicable generally to the exercise by trustees of discretionary powers, helpfully discussed by McGarvie J in Karper v Paul (1984) VR 161. As encapsulated by his Honour in that case there are three such grounds and in some circumstances a fourth. They are, first, that the discretion was not exercised by the trustees in good faith, second, that the discretion was not exercised upon real and genuine consideration (which includes consideration of the wrong question - see Scott on Trusts 3rd ed. Vol. 3 para. 187.3), third, that the discretion was not exercised in accordance with the purposes for which it was conferred and, fourth, where the trustees have disclosed (otherwise than in the course of the proceedings in which the discretion is challenged) the reasons for the exercise of their discretion that those reasons are not sound." 58 This decision has often been cited, and appears never to have been doubted. No party to this litigation suggested that it was other than correct. The decisions of the first defendant are to be considered on this basis. 59 The position of the second defendant, as insurer, is different to the position of the first defendant, as trustee. The second defendant has a duty of good faith and fair dealing that required it to have due regard to the interests of the plaintiff and to act reasonably in considering the matter, and if the view taken by the insurer was unreasonable then a court might substitute its own view. See particularly Edwards v The Hunter Valley Co-op Dairy Co Ltd (1992) 7 ANZ Ins Cases 61-113 at 77,536; Chammas v Harwood Nominees Pty Ltd, Hodgson J, 14 April 1993, not reported at 11 and Sayseng v Kellogg Superannuation Pty Ltd [2003] NSWSC 945 at 77-88. 60 In 2003 and 2004 the second defendant had to reconsider the plaintiff's claim according to these criteria, and in my view, the position had changed significantly. The opinions of Drs Innes-Brown and Funnell, expressed in 1997, had to be reconsidered, not just in the light of the opinions put before the second defendant by Drs Blake, Patrick, Kirsh, Fearnside and Sheridan (leaving out of account, I assume, so much of these opinions as was founded upon the plaintiff's neck condition), but also the statements of the plaintiff as to why he thought he could not do some of the physical work involved in the occupations suggested by Drs Innes-Brown and Funnell, so long before. The topic for consideration in 2003 and 2004 was markedly different to the topic for consideration in 1997, when the opinions of Drs Innes-Brown and Funnell stood for all practical purposes, having regard to the policy definition of Total and Permanent Disablement, unchallenged and uncontradicted. 61 It is of course true that the plaintiff had no qualifications to express medical opinions, but that does not mean that his statements as to what he could and could not do, expressed by reference to his physical symptoms and, more importantly, his education, training and experience, should be put out of consideration; and for all that appears, the opinions of Drs Blake, Patrick and Kirsh in particular were put aside without thought or comment. 62 Dr Innes-Brown had proceeded on the basis that the plaintiff was well versed in carpentering. The first affidavit of the plaintiff said that he was not well versed in this. On the evidence, the second defendant had no continuing basis for thinking that the plaintiff was well versed in carpentering. The history recorded by Dr Innes-Brown gives no real support to what appears to have been an assumption that the doctor made. 63 Similarly Dr Innes-Brown said that the plaintiff had experience in the hospitality industry, and either by reference to this matter alone or to this matter considered with other matters he apparently considered that the plaintiff was qualified for various other kinds of work. The first affidavit of the plaintiff expressed a very real limitation to the plaintiff's "experience in the hospitality industry": little more than the relatively menial work of a casual steward over a period of about a year. The affidavit also pointed to the artificiality of the idea that he could do other jobs suggested by the doctor. 64 As Hodgson J pointed out in Chammas, a decision that has been followed from time to time, without anyone ever apparently expressing a doubt about its correctness, and the correctness of which is not challenged now, 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. 65 Dr Funnell's opinion stands in a not dissimilar position. 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. 66 I do not mean to suggest that the second defendant should have accepted all that the plaintiff said, or all that the doctors who supported him said, but I do think that the reasons given by the second defendant demonstrate that it did not approach the matter in the appropriate way. It did not purport to weigh the significance of what the plaintiff had said, and consider whether that material undermined or in any way affected the opinions of Drs Innes-Brown and Funnell; and it did not, it appears, give any consideration to the new reports of other doctors furnished by the plaintiff's solicitors. 67 In address, the defendants made much of the fact that Drs Innes-Brown and Funnell reported that certain findings made by them upon examination of the plaintiff disclosed inconstancies, said to demonstrate that the plaintiff's complaints were unreliable, and that the defendants were entitled to proceed on the basis that this was so. The detail does not seem to me to be particularly important now. Neither Dr Innes-Brown nor Dr Funnell accepted the plaintiff as reliable, and each thought that the plaintiff suffered from some disability, not as great as he described. Until 2003 there was no reason why either defendant should have acted otherwise than in accordance with these views, but then the position changed. Each of Drs Innes-Brown and Funnell thought that the plaintiff had some degree of disability, and the basis upon which their views had been expressed were challenged by the plaintiff's affidavits, and in addition there were reports of other medical practitioners to be considered, for the first time. Even if the plaintiff had deliberately lied to Dr Innes-Brown and Funnell, something that was not suggested, that did not operate to exempt the second defendant (or the first defendant) from reconsidering the matter in the light of the fresh material put before it. 68 I conclude that the second defendant's decisions of 2003 and 2004 were so unreasonable that they cannot stand. To the extent that the second defendant gave reasons for these decision, those statements of reasons do not refer at all to the opinions of Drs Blake, Patrick, Kirsh, Fearnside and Sheridan, constituting new material put before the second defendant for its consideration; and they did not grapple with the reality that the plaintiff had explained, in layman's terms rather than as an expression of medical opinion, why he could not do the work that Drs Innes-Brown and Funnell had said he could do. I should have thought that, as a minimum, the second defendant needed to consider whether the factual assumptions made by these two doctors, as to what physical activities were involved in the work in question, and whether the two doctors or either of them adhered to the opinions expressed so long before, on what were now said to be wrong assumptions; and it also needed to consider, in the light of what the plaintiff had now said, whether it was or was not likely that the plaintiff would actually obtain an actual position with an actual employer. Further, in the light of the information newly provided by the plaintiff about his education, training and experience, the second defendant needed to reconsider the opinions expressed by Drs Innes-Brown and Funnell, based upon what might have been misconceptions by them as to the plaintiff's education, training and experience. 69 The second defendant's decisions should therefore be set aside, and the position considered by the Court. 70 During the hearing the defendants objected to the plaintiff leading any evidence now, other than as to the material that had been placed before them. They contended that if their decisions were set aside, then and only then should there be an order made under Part 31 of the Rules, for the separate determination of the question what order the Court might make, in place of the decision made by the second defendant. This had not been foreshadowed on any directions hearing. To say the least of it, this is an unattractive way for the business of the Court to be conducted. There is really no reason why the matter could not have been dealt with on the one hearing. The suggestion made by the defendants that the evidence yet to be adduced, if any, might be confusing is hardly acceptable. It is quite common, for example, for judges to direct juries that evidence is to be considered for one purpose, but not for another. See too the provisions of Part 1 rule 3. 71 Turning then to the position of the first defendant, the plaintiff emphasised that a committee of the first defendant considered the matter on 8 November 2004. In the course of 57 minutes the committee dealt with the plaintiff's application, and eighteen other matters. There is no real information about those other matters, just some headings in the minutes: "Declined TPD claims", "Invalidity …", "Recommendation for disbursement of death benefits", "Other matters" and "General Business", but assuming that the other eighteen matters were disposed of promptly, I find it impossible to see how the plaintiff's application for reconsideration could possibly have been given the attention that was necessary. There was a good deal of new information to be considered, and conflicting materials to be assessed. 72 The first defendant led no evidence (other than the tender of a consolidated version of the Trust Deed), and of course it did not have to give reasons, but the evidence leaves it in the position now where it cannot be said that it gave the matter real and genuine consideration. So far as the evidence shows, it merely adopted, or to use the plaintiff's expression "rubber stamped" the decision of the second defendant; and if this is not correct, the evidence points strongly to the conclusion that it failed to give any or any real or genuine consideration to the new material put before it on behalf of the plaintiff, disclosing matter that ought to have prompted a reconsideration. 73 The decision of the first defendant of 8 November 2004 must therefore be set aside. 74 I make the following Declarations and Orders:

1. Declare that the first defendant failed to give real and genuine consideration to the plaintiff's claim under the Trust Deed.

2. Declare that the second defendant failed to reasonably consider the claim made upon the second defendant by the first defendant in respect of the plaintiff's claim.

3. Order that there be separately determined now, after the making of the above Declarations, the question whether the second defendant is liable in respect of the claim made concerning the plaintiff.

4. Stand the proceedings over until 16 March before the Registrar, for the purpose of then fixing a further date for hearing.

5 Reserve the question of costs for the consideration of the judge conducting the further hearing of the matter, but express the view that, subject to what might be submitted hereafter, the defendants should pay the costs of the plaintiff in respect of the hearing on 7, 8 and 9 December 2004, and any costs thrown away by reason of the necessity for a separate hearing. **********

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.