Onepath Life Ltd v Standley

Judgment

1. MACFARLAN JA: I agree with Meagher JA.
2. MEAGHER JA: The appellant (Onepath) insured the respondent (Mr Standley) under a policy of life and disability insurance. The primary judge upheld Mr Standley's claim to a lump sum benefit for total and permanent disability: Standley v Onepath Life Ltd [2020] NSWSC 848. There are two issues raised by Onepath's appeal. The first concerns the construction of the relevant total and permanent disability (TPD) definition. The second is whether his Honour erred in finding that by September 2017 Mr Standley satisfied that definition by reason of a secondary psychological condition which emerged more than a year after he sustained the physical injuries from which his permanent disablement was said to have resulted.

Overview

1. The policy of life and disability insurance commenced on 26 May 2008 and was renewed annually. On 2 August 2015 Mr Standley was involved in a motor vehicle accident whilst riding his motorcycle. He sustained injuries to his left wrist and two factures to his right leg, the latter requiring surgery. Although he returned to work in October 2015, the physical disabilities arising from those injuries resulted in Mr Standley resigning on 2 February 2016 from his position as a call centre manager (a position also described as that of customer experience manager) for a parcel delivery service. At the time of the hearing before the primary judge in March 2020, Mr Standley had not worked in that or any equivalent occupation.
2. The event on which Mr Standley relies as entitling him to a lump sum TPD benefit has two elements, each of which must follow "as a result of illness or injury". They are that he (a) was absent from and unable to engage in his "Own Occupation" for three consecutive months and (b) is disabled at the end of the period of three consecutive months to such an extent that he is "unlikely ever again to be able to engage in [his] Own Occupation". The reference to Own Occupation is to the "most recent occupation in which the life insured was engaged prior to the date of disability".
3. Onepath's contention was that as Mr Standley ceased to be engaged in his occupation as a call centre manager on 2 February 2016, the relevant three month period commenced on that day. It followed that at the end of that period, 2 May 2016, Mr Standley had to establish that he was then disabled to such an extent that he was unlikely ever again to be able to work in that occupation. If he was not, that was, on Onepath's case, the end of the matter. No claim that he became so disabled at the end of a later three month period could be made.
4. Although his original TPD claim of 30 August 2016 was treated as made by reference to the three month period commencing 2 February 2016, Mr Standley's pleaded claim included that his physical and associated psychological injuries prevented him from engaging in or following that occupation "from about February 2016 and continuing". Furthermore by Mr Standley's written submissions served before the hearing, it was contended that the three month period, the end of which marked the date for assessment of his permanent disability, "may not start on one's last day of work, but could also potentially start later, if it is only at [some] later date that the claimant becomes unable [ever] to engage in their occupation".
5. The primary judge was not satisfied that by reason of the physical injuries Mr Standley sustained he was precluded in the period from February to May 2016 from engaging in his former occupation on a full time basis or that at the end of that period he was unlikely ever to be able to return to work in that occupation: Judgment [53]. In reaching that conclusion his Honour added that he was not "persuaded that during that period [any] psychological sequelae had developed".
6. However his Honour construed the policy as not requiring that the consecutive three month period commence when Mr Standley ceased employment in his most recent occupation. Doing so his Honour held that by the beginning of September 2017 Mr Standley had been absent from and unable to work in that occupation for a consecutive period of three months at the end of which he was, by reason of his psychological condition, unlikely ever to return to full time employment in that occupation: Judgment [58], [59], [64]. Accordingly his entitlement to a lump sum TPD benefit was made out. On 29 June 2020 the primary judge entered judgment in favour of Mr Standley for $778,135.

Grounds of appeal

1. Onepath presses grounds 1 and 2 of its amended notice of appeal. During the course of oral argument ground 3, which maintained that there had been a denial of procedural fairness, was abandoned.
2. Grounds 1(a) and 2(a) raise whether the date for assessment of Mr Standley's permanent disability could be other than 2 May 2016, the date three months after he ceased working as a call centre manager. The remaining grounds 1(b) and 2(b), (c) and (d) challenge his Honour's finding that Mr Standley was totally and permanently disabled within the terms of the relevant definition as at 1 September 2017.

The date for assessment of disablement

1. As the plurality observed in Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522; [2005] HCA 17 at [16], when interpreting an insurance policy "preference is given to a construction supplying a congruent operation to the various components of the whole".

A preliminary matter

1. In its argument before this Court, one of the provisions of the policy to which Onepath draws attention in support of its argument as to the date for the assessment of disability is clause 3.2.1.3 headed "Date of disablement". It is accepted that this clause was not relied on in the written or oral argument made to the primary judge, or otherwise specifically drawn to his Honour's attention. Relying on authorities such as Suttor v Gundowda (1950) 81 CLR 418; [1950] HCA 35 and Water Board v Moustakas (1988) 180 CLR 491; [1988] HCA 12, Mr Standley, somewhat faintly, contends that Onepath is precluded from relying on this provision (extracted in [19] below) because its doing so would raise new factual issues that "may have attracted further evidence" at first instance. This contention is not sustainable, and should be rejected.
2. The uncontroversial evidence was that Mr Standley resigned from his current employment (and accordingly ceased to work in his occupation as a call centre manager) on 2 February 2016 and that he did not thereafter work in that occupation (or in any other occupation) before December 2017, when proceedings were commenced. Onepath's case before the primary judge was that "Mr Standley can only succeed in his claim if he can establish that as at May 2016 (i.e. at the end of the three month period since he left work), he was unlikely at that time to ever be able to work" as a call centre manager (Judgment [47]). The construction argument sought to be made, partly in reliance on clause 3.2.1.3, is wholly consistent with that case and if accepted would not give rise to any different or further factual issues beyond those raised and dealt with below.

The relevant terms of the policy

1. The cover provided by the OneCare policy wording includes but is not limited to Life Cover (clause 2), TPD Cover (clause 3) and Trauma Cover (clause 4). The Policy Schedule current as at 14 April 2017 records that Mr Standley's cover included "Life Cover with optional TPD Cover", the "benefit payment type" being "lump sum", the relevant "TPD definition" being "Own Occupation" and the sum insured at that time being $698,094.
2. Focussing on the TPD Cover, the insuring clause (clause 3.2.1) provides: If the life insured suffers total and permanent disability while their TPD Cover is in force and satisfies the conditions of the TPD definition which applies (as shown on the Policy Schedule and defined in section 3.2.1.2), we will pay the full TPD Cover amount insured by the benefit payment type which applies.
3. Clause 3.1 provides that if "the lump sum benefit payment type applies, the TPD Cover amount insured is the amount for which we agree to cover the life insured".
4. Clause 3.2.1.2 is headed "TPD definitions" and contains seven different TPD definitions, which take account of whether the life insured is working, a homemaker, or classified as a "non-worker". Each definition has numbered Parts. An insured is entitled to the TPD benefit if they satisfy the elements of any Part. The TPD definition applying to Mr Standley's cover is the "Own Occupation TPD definition", containing five Parts.
5. That definition relevantly provides: 'Own Occupation' relates to the most recent occupation in which the life insured was engaged prior to the date of disability. Own Occupation TPD means that, as a result of illness or injury, the life insured: 1. a. has been absent from and unable to engage in their 'Own Occupation' for three consecutive months; and b. is disabled at the end of the period of three consecutive months to such an extent that they are unlikely ever again to be able to engage in their 'Own Occupation'; or 2. a. suffers at least 25% permanent whole person impairment as defined in the American Medical Association publication 'Guides to the Evaluation of Permanent Impairment', 5th edition, or an equivalent guide to impairment approved by us; and b. is disabled to such an extent that, as a result they are unlikely ever again to be able to engage in their 'Own Occupation'; or 3. suffers 'loss of limbs and/or sight' … [the definition which follows is not extracted] or 4. suffers 'loss of independent existence' … [the definition which follows is not extracted] or 5. suffers 'cognitive loss' 'Cognitive loss' means total and permanent deterioration or loss of intellectual capacity that has required the life insured to be under continuous care and supervision by another adult person for at least six consecutive months and, at the end of that six month period, they are likely to require ongoing continuous care and supervision by another adult person.
6. Clause 3.2.1.3 is headed "Date of disablement" and provides: To determine the benefits payable for cover under Part 1 of an: • Any Occupation; or • Own Occupation; or • SuperLink SIS Own Occupation TPD definition, the date of disablement will be the date three months after the life insured permanently ceases work. To determine the benefit payable for cover under Part 1 of the Business TPD Definition One and Definition Two, the date of disablement will be the date nine months after the life insured permanently ceases work. To determine the benefit payable for cover with all other TPD definitions, the date of disablement is the date that all of the elements of the definition of TPD are satisfied. The benefit payable will be the relevant TPD Benefit that applied at the date of disablement.
7. For a TPD benefit to be paid, the life insured must also satisfy specified "survival periods". In other words, he or she must "survive without life support for the relevant survival period after the date the life insured satisfies the TPD definition" (cl 3.2.1.2). In the case of Own Occupation TPD cover, the only Parts of the definition for which there is a survival period are Parts 2, 3 and 4, in each the period being eight days starting on the date that the TPD definition is satisfied.
8. The lump sum payment to which Mr Standley was entitled in the event that he became "totally and permanently disabled" was "indexed", meaning that at each policy anniversary the amount insured was automatically increased by a percentage amount determined in accordance with clause 11.1. As at 14 April 2017 that amount was $698,094.
9. Accordingly the TPD Cover is a form of contingency insurance which provides no indemnity but instead a payment upon the happening of a contingent event. The event is the suffering of "total and permanent disability" as a result of illness or injury and must occur while the cover is in force. That benefit is not payable if the disability "arises as a result of the life insured's intentional act or omission" (cl 3.6). Where the insured is a worker, whether employed or self-employed, one measure of disability is their ability to engage in any or a particular occupation. The sum to be paid is not measured by any loss suffered as a result of the disability, and the happening of the relevant contingency does not require fault on the part of any person. Nor does it have to result from a work related illness or injury.

Disposition of question of construction

1. Turning then to the issue of construction, the life insured is entitled to "the full TPD Cover amount" when he or she "suffers total and permanent disability". The disability described in each Part of the Own Occupation definition must be the result of illness or injury. That definition does not in terms require that any of its parts be satisfied within a particular time from the happening of any such illness or injury. For example Part 5 requires that the insured suffer "cognitive loss" requiring the insured to be under continuous care and supervision by another person. That element of the definition may be satisfied following a slow or progressive deterioration of intellectual capacity provided that it results from illness or injury.
2. There remains the requirement in the insuring clause that the insured "suffers" TPD whilst the "cover is in force". Although there was little attention to this language in the argument, it was not suggested that Mr Standley did not have the benefit of the TPD Cover up to and including September 2017.
3. In Mr Standley's case, the relevant definition is Part 1 of the Own Occupation definition. The first element of that definition requires that "as a result of illness or injury" the life insured has been absent from and unable to engage in their most recent occupation for three consecutive months. The second requires that at the end of that period the life insured is disabled to such an extent that they are unlikely ever again to be able to engage in that occupation.
4. Each of these elements is concerned with the insured's inability to engage in a particular occupation, the first during a period of three consecutive months in which the insured has not worked and been unable to work in that occupation, and the second for the remainder of the insured's working life. There is no reference to employment in either element of the definition, and accordingly no reason to read the first as concerned with a three month period in which the life insured was employed or first ceased to be employed. In Finch v Telstra Super Pty Ltd (2010) 242 CLR 254 at [12]-[13]; [2010] HCA 36 a similar question arose in a differently worded superannuation trust deed. There the Court did not read the language narrowly or as limited to the Members' "active Work" with a particular employer.
5. So read the first element of Part 1 of the definition is satisfied if the life insured has not worked in their most recent occupation (and in that sense been "absent from" that occupation) for a period of three consecutive months because they have been unable to do so as a result of illness or injury. That will remain so irrespective of whether, between the illness or injury and the commencement of that period, the insured's employment in that occupation has ended for whatever reason. The second element is then satisfied if at the end of that period the disability arising from that illness or injury is such that they are unlikely ever again to be able to engage in that occupation.
6. Onepath relies on the statement in clause 3.2.1.3 that in the case of Part 1 of the Any Occupation, Own Occupation or SuperLink SIS Own Occupation TPD definitions "the date of disablement will be the date three months after the life insured permanently ceases work". Whereas Part 1 of the Own Occupation TPD cover applies where the insured is "unlikely ever again" to engage in their most recent occupation, Part 1 of the Any Occupation TPD cover only applies where the insured is disabled from engaging in any occupation for which they are reasonably suited by education, training or experience. In each case the definition requires that the insured be unable to work.
7. Clause 3.2.1.3 provides that the benefit payable under Part 1 of these covers is that which applied "at the date of disablement", defined as the date "three months after the life insured permanently ceases work". Under the Any Occupation cover that reference is to ceasing to work in any occupation, and under the Own Occupation cover it is to ceasing work in their most recent occupation. If both elements of the relevant definition are satisfied the insured will have "permanently" ceased to work in the relevant occupation at the commencement of the period of three consecutive months. Accordingly the reference to "permanently ceases work" is not, as Onepath contends, to the insured ceasing to work for a particular employer. It is to their ceasing to work in an or any occupation "permanently" because of a disability that satisfies the two elements required for cover under Part 1. That gives clause 3.2.1.3 a coherent and consistent application in relation to those and each of the remaining definitions of TPD.
8. Returning to the primary judge's findings, his Honour held at Judgment [53] that although Mr Standley was absent from work from 2 February to 2 May 2016, he had not established that during that period he was unable to work in his occupation as a customer experience manager. Adopting the language of clause 3.2.1.3, although he had ceased to work in that occupation, he had not done so "permanently" because he was not at that time disabled from doing so by his physical injuries and their consequences. However on his Honour's further (challenged) findings that position had changed by 1 June 2017. At that time Mr Standley was not, and was unable to be, engaged in his occupation as a customer experience manager because of the physical and psychological consequences of the injuries sustained in his motor cycle accident. And as at 1 September 2017, Mr Standley was unlikely ever again to be able to engage in that occupation. Thus he had, for the purposes of the TPD cover, "permanently" ceased work in that occupation, so as to entitle him to the relevant benefit.
9. Grounds 1(a) and 2(a) should be dismissed.

Finding of total and permanent disablement by and as at September 2017

1. The appellant contends that the primary judge erred in three respects in holding that Mr Standley was totally and permanently disabled as at September 2017. They are: (1) that his Honour gave insufficient reasons for that conclusion (ground 2(d)); (2) that his Honour applied the "incorrect test" when addressing that question (grounds 1(b) and 2(b)); and (3) that his Honour erred in finding that he was totally and permanently disabled by reason of his psychological condition (ground 2(c)).

The conduct of the hearing

1. The first of these grounds makes it necessary to consider the way in which Mr Standley's claim was contested in the proceedings below. As his Honour recorded at Judgment [47], Onepath's position was that Mr Standley could only succeed if he established that as at May 2016 he was unlikely ever again to be able to work as a customer experience manager. Mr Standley maintained that he satisfied the TPD definition at that time as a result of his physical impairment or his physical and psychological impairments. Onepath contested that he had any psychological impairment at that time. Alternatively Mr Standley contended that by December 2017 he suffered from a psychological condition, in addition to his physical impairment, which satisfied that definition (Judgment [48]).
2. In support of their respective positions the parties relied on the medico-legal opinions identified at Judgment [15] and [16] and summarised between Judgment [17] and [35]. None of those experts was required for cross-examination, the parties ultimately leaving it to the Court to resolve the differences in that evidence.
3. Mr Standley gave evidence and was cross-examined. However as the primary judge recorded at Judgment [38]: … whilst [counsel] challenged Mr Standley's veracity on matters to do with his physical limitations and his role as a [customer experience manager], he did not put to Mr Standley that he had lied to the medical experts and to the Court about his psychological condition, and I did not take Onepath to dispute that Mr Standley had, at least by September 2017, developed a psychological condition.
4. Onepath contests the correctness of his Honour's observation and refers to a number of passages in the cross-examination of Mr Standley said to contest the opinions as to his psychological condition, or at least the veracity of the histories on which they were based. In Mr Standley's case the relevant opinions were expressed by Dr Teoh, Dr Takyar and Mr Wright, and in Onepath's case by Dr Kneebone. On the face of it each of these practitioners was qualified to express an opinion about Mr Standley's psychiatric or psychological condition. In addition Onepath relied on a report of Mr Standley's treating general practitioner, Dr Davies.
5. The cross-examination in the passages referred to does not contest the assumptions or histories relied on in support of the opinions as to Mr Standley's psychological condition. Instead, as his Honour noted, it was directed to "Mr Standley's veracity on matters to do with his physical limitations and his role as a customer experience manager".
6. Specifically, it was put to Mr Standley that it was in his interests to exaggerate the extent of his injuries and his incapacity to work; that he exaggerated the physical activities involved in his role as a customer experience manager; and that medical reports which recorded that he could not attend the gym as a result of his injuries were incorrect.
7. However the cross-examination did not deal with the central proposition that the appellant sought to advance on appeal, namely that Mr Standley deliberately exaggerated to the experts the extent of his psychological condition. The cross-examiner's questions were not directed to the psychological injury or problem which manifested itself after October 2016 and focussed on the claim as originally made which was not based on any such psychological injury.

The primary judge's reasons

1. Having rejected Mr Standley's claim based on the three month period to 2 May 2016 the primary judge addressed his alternative case. In considering whether by September 2017 Mr Standley satisfied the definition, his Honour sought to apply the "unlikely ever" test as explained by Leeming JA in TAL Life Ltd v Shuetrim (2016) 91 NSWLR 439; [2016] NSWCA 68 at [88], [89].
2. Mr Standley's argument in support of that claim was based on the following propositions (Judgment [58]): (1) He had in April 2017 and September 2017 been diagnosed with a psychological condition which prevented him from working full time in his own occupation. (2) Mr Standley had not as at September 2017 been working for three months. (3) He was not as at September 2017 ever likely to return to his own occupation on a full time basis, having regard to his psychological condition and his physical condition. (4) He had presented to Onepath reports which supported the contentions in (1) and (3) above.
3. In relation to those propositions the primary judge noted at Judgment [59]: The first proposition was not in dispute. In relation to the remaining propositions, Mr Standley did provide reports to Onepath of Dr Takyar, Dr Teoh and Mr Wright. Onepath did obtain a report from Dr Davies which undermined Mr Standley's claims, but at the hearing Onepath did not seek to establish that Mr Standley's claims as to his psychological condition in the second half of 2017 were fake or exaggerated or that he was able to return to full time employment as a [customer experience manager] in 2017 and beyond, and, as I have noted, [counsel] did not cross examine Mr Standley on these issues or make submissions on them - rather, Onepath's position was that Mr Standley's condition in 2017 was simply not relevant to the Court's determination, the focus of which should be, [counsel] submitted, May 2016, consistent with Mr Standley's claim form and his pleading. That position may also have been influenced by the fact that the psychiatric report which Onepath obtained from Dr Kneebone, whilst unsupportive of Mr Standley's claim to be unable to work at all, did express the view that Mr Standley would "in all likelihood" be able to work only part time (see [32] above).
4. Two observations may be made at this point. First, it was accepted by Onepath that the question raised by the Own Occupation definition as it applied to Mr Standley was whether he was disabled from working full-time. Secondly the primary judge recorded at Judgment [27] in relation to Dr Davies' report of 6 September 2017: Dr Davies' report is not inconsistent with Mr Standley having suffered some psychological impact from the accident at some time before August 2017, but the report is not supportive of the contention that Mr Standley was in such a state that he could not return to work and it contradicts the proposition that he was, as at August 2017, unlikely ever to work again in his own occupation, even on the basis of the limitations Mr Standley described to Dr Davies. Dr Davies' report stands in contrast to the reports of Dr Takyar at … and Dr Teoh at … , which deal with the position in September 2017 and April 2017 respectively.
5. The opinions of Drs Takyar and Teoh, Mr Wright and Dr Kneebone as to Mr Standley's psychiatric condition are summarised at Judgment [17], [18], [22], [23], [30], [31] and [32]. His Honour concluded at Judgment [64]: Having regard to Onepath's position and the absence of any challenge at the hearing to Mr Standley's psychological condition as at September 2017 (and beyond) and its impact on his ability to ever return to work full time as a CEM, as well as the medical reports (other than of Dr Davies) which support his claims, Mr Standley has made out his entitlement to the benefit under the policy from September 2017.
6. The reference to "Onepath's position" is to be understood as being to its contention that Mr Standley had to satisfy the TPD definition as at 2 May 2016.

No insufficiency of reasons

1. Onepath's challenge to his Honour's reasons as "insufficient" should be rejected. The extent of the obligation to provide reasons depends on the matters actually in issue. The primary judge identified and dealt with the steps in Mr Standley's argument. He found that as at 1 September 2017 and in the three months prior he had not been working and had been diagnosed with a psychological condition which prevented him from working full-time in his former occupation. The primary judge also found that as at September 2017 he was unlikely ever to return to that occupation on a full-time basis having regard to that condition and his physical condition (Judgment [64]).
2. The evidence on which those findings were based was identified and dealt with shortly on the basis that the fact of Mr Standley's psychological condition as at September 2017 was not challenged. His Honour was justified in taking that course for the reasons given above.

No application of an incorrect test

1. The appellant does not identify any error of principle in his Honour's approach, but rather contends that the primary judge did not make express findings on matters relevant to the issue of disability. However his Honour made findings as to each element of the TPD definition and identified the evidence supporting those findings. Where there was no challenge to the evidence that as at September 2017 Mr Standley's psychological condition prevented him from being likely ever to engage in full-time employment in his previous occupation, his Honour was not required to make any more detailed findings.

The evidence as to Mr Standley's psychological condition supported a finding that the TPD definition was satisfied

1. Dr Teoh's evidence was that as at April 2017, Mr Standley was suffering from a Chronic Adjustment Disorder with Mixed Depression and Anxious Mood, that his prognosis was poor, his condition chronic and that he had "attained maximum medical improvement". In September 2017 Dr Takyar agreed with Dr Teoh's diagnosis, following his assessment of Mr Standley on 14 September 2017. Dr Takyar also described his condition as "permanent and stable" and considered that his working capacity was reduced to "one or two days per week".
2. Mr Wright also assessed Mr Standley's condition in mid-September 2017 and agreed with the diagnoses of Drs Teoh and Takyar. Finally in July 2019, Mr Standley was examined by Dr Kneebone on behalf of Onepath. He agreed that at that time there was "objective evidence" to support Mr Wright's earlier diagnostic conclusion. Addressing Mr Standley's condition at that time, he concluded that even if he had the benefit of a pain management program and a course of antidepressant medication the best outcome for him was a "return to part-time employment in a role less demanding than his pre-injury position". On that basis he considered he was at that time "incapacitated to such an extent as to render him unlikely ever to be able to engage in his own occupation".
3. In concluding that Mr Standley was totally and permanently disabled as at September 2017, the primary judge took account of Dr Davies' report of 6 September 2017 (see [43] above]). His opinion was that Mr Standley would be able to "return to functional work despite ongoing physical disability" (emphasis added) and did not include any consideration of Mr Standley's psychological condition at that time as diagnosed by Dr Teoh and later by Drs Takyar and Kneebone and Mr Wright. To the extent that there was any inconsistency between Dr Davies' opinion, as a general practitioner, concerning Mr Standley's ability to work and those of the practitioners referred to above, the primary judge was entitled to prefer the latter and is not shown to have erred in doing so.
4. Grounds 1(b) and 2(b) to (d) should also be dismissed.

Conclusion

1. The appeal should be dismissed with costs.
2. McCALLUM JA: I agree with Meagher JA.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 10 December 2020