Carroll v United Super Pty Ltd - [2018] NSWSC 403

Supreme Court

New South Wales

Amendment notes

Medium Neutral Citation: Carroll v United Super Pty Ltd [2018] NSWSC 403
Hearing dates: 7, 8, 9, 23, 24 and 25 November 2016, 2, 6 December 2016, 17 February 2017
Date of orders: 04 April 2018
Decision date: 04 April 2018
Jurisdiction: Equity
Before: Slattery J
Decision:
See paragraphs 279 – 281

Catchwords: INSURANCE – General – total and permanent disablement – plaintiff/insured self-employed in the building and construction industry – plaintiff suffers hip disability and ceases work in March 2012 – plaintiff a member of an industry superannuation fund – first defendant is a trustee of the fund – first defendant takes out a policy of insurance for the benefit of members of the fund with the second defendant insurer – plaintiff claims he is totally and permanently disabled after being off work for three months and entitled to a benefit for the same – the first and second defendants decline the plaintiff’s claim on various dates between June 2013 and April 2014 – identification of the duties applicable to each of the first and second defendants in making their decisions to decline the plaintiff’s claim – whether the first defendant trustee failed to act in good faith on a real and genuine consideration of the material before it – whether the second defendant insurer acted with the utmost good faith in dealing with the plaintiff’s claim and reasonably in forming an opinion as to whether the plaintiff qualified as totally and permanently disabled under the policy – whether the defendants’ respective decisions can be set aside – whether the Court should itself determine whether the plaintiff is totally and permanently disabled under the policy – whether the plaintiff was “unlikely to ever to be able to engage in any regular remuneration work for which he is suited by education training or experience”.
Cases Cited: Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223
Banovic v United Super Pty Ltd [2014] NSWSC 1470 Beverly v Tyndall Life Insurance Co Ltd (1999) 21 WAR 327
Birdsall v Motor Trades Association of Australia Superannuation Fund Pty Ltd [2015] NSWCA 104
Chammas v Harwood Nominees (1993) 7 ANZ Ins Cas 61-175
CGU Insurance Ltd v AMP Financial Planning Pty Ltd (2007) 235 CLR 1
Dewhirst v Edwards [1983] 1 NSWLR 34
Edwards v The Hunter Valley Co-op Dairy Co Ltd (1992) 7 ANZ Ins Cas 61-113
Erzurumlu v Kellogg Superannuation Pty Ltd [2013] NSWSC 1115
Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89
Finch v Telstra Super Pty Ltd (2010) 242 CLR 254
Halloran v Hardwood Nominees Pty Ltd [2007] NSWSC 913
Hannover Life Re of Australasia Ltd v Colella (2014) 47 VR 1
Hannover Life Re of Australasia Ltd v Dargan (2013) 83 NSWLR 246
Hannover Life Re of Australasia Ltd v Jones [2017] NSWCA 233
Hannover Life Re of Australia Ltd v Sayseng [2005] NSWCA 214
Jones v United Super Pty Limited [2016] NSWSC 1551
Lazarevic v United Super Pty Ltd [2014] NSWSC 96
McArthur v Mercantile Mutual Life Insurance [2002] 2 Qd R 197
Lodge v National Union Investment Co Limited (1907) 1 Ch 300
Repatriation Commission v Hill (2005) 142 FCR 88
Savelberg v United Super Pty Ltd [2011] NSWSC 1482
Sayseng v Kellogg Superannuation Pty Ltd [2003] NSWSC 945
Tal Life Ltd v Shuetrim; Metlife Insurance Ltd v Shuetrim (2016) 91 NSWLR 439
Wardley Australia Limited v the State of Western Australia (1992) 175 CLR 514
Weber v v Tiss Pty Ltd [2005] NSWSC 67
Wells v Australian Aviation Underwriting Pool [2004] QCA 43
Wyllie v National Mutual Life Association of Australasia Ltd (1997) 217 ALR 324
Ziogos v FSS Trustee Corporation as Trustee of the First State Superannuation Scheme [2015] NSWSC 1385
Texts Cited: Enright and Merkin, Sutton on Insurance Law (4th ed, Volume 2, 2014, Thomson Reuters)
JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow & Lehane’s Equity: Doctrines & Remedies (5th ed, 2014, LexisNexis Butterworths)
Category: Principal judgment
Parties: Plaintiff: Nicholas Carroll
First Defendant: United Super Pty Ltd (ABN 46 006 261 623)
Second Defendant: Hannover Life Re of Australasia Ltd (ABN 37 062 395 484)
Representation:
Counsel

Plaintiff: A. Coombes
Defendants: B. Nolan
Solicitor
Plaintiffs: Stephen Paul Firth, Firths Compensation Lawyers
First and Second Defendants: Michael Iacuzzi, TurksLegal

File Number(s): 2014/276267
Publication restriction: No

Judgment

The plaintiff, Mr Nicholas Carroll was self-employed as a builder until March 2012. He became a member of the industry superannuation fund, Construction and Building Union Superannuation Fund (“the Fund”), in June 1988.
The first defendant, United Super Pty Ltd (“the Trustee”), is the trustee of the Fund. It exercises its trustee functions pursuant to the CBUS Trust Deed (“the Deed”) that constitutes the Fund.
The second defendant, Hannover Life Re of Australasia Ltd (“Hannover”), issued a Group Life Insurance Policy (No. VGL 4163) (“the Policy”), to the first defendant in relation to members of the Fund, including Mr Carroll.
Mr Carroll claims that he ceased work as a consequence of pain caused by bilateral hip dysplasia (a congenital condition characterised by abnormal tissue growth) and as a result has been unemployed since 9 March 2012. He is still a member of the Fund. It is not disputed that he remained continuously unemployed for a three month period until 9 June 2012. He claims that he has since 9 March 2012 been disabled, and that after the three month waiting period he qualified as “totally and permanently disabled” within the provisions of the Policy from 9 June 2012.
On 18 December 2012 Mr Carroll claimed the payment of a benefit of $104,000 from the Trustee on account of his claimed total and permanent disablement (also referred to in these reasons as “a TPD benefit”). On 12 February 2013 the Trustee referred Mr Carroll’s claim to Hannover for determination. In September 2013 and April 2014 the Trustee declined to accept Mr Carroll’s claim. In separate decisions in June and August 2013 and February 2014 Hannover also declined to accept his claim.
In September 2014 Mr Carroll brought these proceedings against both the Trustee (as first defendant) and Hannover (as second defendant), challenging their respective decisions to decline his claim. The first issue in these proceedings is whether or not those decisions can be avoided as having been made in breach of the duties applicable to each of the Trustee and Hannover. In the event that the decisions cannot be avoided, they will stand and Mr Carroll’s case would fail.
But in the event those decisions were avoided, Mr Carroll now asks the Court itself to assess whether he is entitled to the payment of the TPD benefit at the qualifying date of 9 June 2012. His case is based on evidence that includes events that have occurred since the Trustee’s and Hannover’s respective decisions to decline his claim. Both the Trustee and Hannover contend on the whole of the evidence, including the evidence arising from events since the decisions to decline right up to the hearing, that Mr Carroll still does not qualify for a TPD benefit under the Policy.
It is not in contest that Mr Carroll would be entitled under the Policy to a TPD benefit of $104,000 were he successful.
Some complexity arises in these proceedings by the need to consider events in Mr Carroll’s life after the Trustee’s and Hanover’s respective decisions. After receiving advice as to conservative treatment of his right hip pain until early 2015, Mr Carroll finally submitted to a right total hip replacement in February 2015. Since then his left hip has become symptomatic. By the time of the trial he had become a possible candidate for left total hip replacement, but that surgery had not yet taken place. And from early 2015 the plaintiff had some involvement (the precise level of which was strongly disputed) in a small importing business owned by his wife, Mrs Genevieve Carroll. These matters were all said to bear upon whether or not the plaintiff qualified as TPD as at June 2013.
Mr A. Coombes of counsel appeared for Mr Carroll, instructed by Mr S. Firth of Firths Compensation Lawyers. Ms B. Nolan of counsel appeared for the first and second defendants respectively, the Trustee and Hannover, instructed by Mr M. Iacuzzi of Turks Legal.
Before recounting a narrative of the events concerning Mr Carroll’s claim it is convenient first to set out the relevant framework of the Deed and the Policy.

The Deed and the Policy Wording

The Deed is the first legal gateway through which Mr Carroll’s claim must pass. But the principal objective of his case was to attempt to set aside the decisions of the Trustee and Hannover and then to establish that he was TPD under the terms of the Policy.
The structure of the Deed may be shortly described: it appoints, confers powers upon, limits the liability of, and provides an indemnity to the Trustee out of the fund (clause 1); it admits persons to participate as Employers, as defined, in the Fund (clause 2); it provides for eligibility for membership and Membership of the Fund (clause 3); it constitutes the Fund, vests it in the Trustee, and defines the Fund as including monies assets and Policies held by the Trustee (clause 4); and provides for a system of benefits payable from the Fund to members (clause 5).
Subject to applicable superannuation law, the Trustee “has the complete management and control of all proceedings matters and things in connection with the Fund” and has “an absolute and uncontrolled discretion” in the exercise of its powers: Deed, clause 1.2(b) and (c). The “Trustee may act on the advice or opinion” of consultants, claims assessors, medical practitioners “or other professional person”: Deed clauses 1.2(h). At all relevant times Mr Carroll qualified as a Member of the Fund.
The Deed’s powers of management and investment of the Fund authorise the Trustee (clause 4.4 (a)) to effect from time to time, at the expense of the Fund, Policies of insurance with one or more insurers in regard to the management of the Fund and to continue or renew such Policies “as the Trustee may think fit”. Clause 4.4 provides follows:

“4.4   Insurance
(a)   The Trustee shall have Power to effect or take out at the expense of the Fund, from time to time, one or more term or other Policies or contracts with one or more Insurer in regard to the management of the Fund and to continue or renew or arrange for the continuance or renewal of all or any of such Policies or contracts for such period or periods as the Trustee may think fit. The Trustee may also agree, from time to time, with the Insurer concerned for any Policy or contract to be varied or modified. In addition to or in substitution of any contract of insurance or Annuity, the Trustee may provide for the death and disablement Benefits (including without limitation Temporary Incapacity Benefits and Total and Permanent Disablement Benefits).
(b)   A Policy shall be on such terms and conditions as may be approved by the Trustee and the Trustee shall pay all premiums, and receive from the Insurer all payments, refunds and other moneys, in respect of the Policy and shall dispose of all moneys so received in accordance with the deed.
(c)   If at any time:
(i)   the Trustee is of the opinion that it is not reasonably practicable to obtain insurance or an increase in insurance or to maintain insurance in respect of a Member under a Policy or in the event that the Fund is self-insuring, to fund the Benefits specified in sub-clauses 5.11 and 5.12, on terms acceptable to the Trustee and or to provide for the death and disablement Benefits (including without limitation Temporary Incapacity Benefits and Total and Permanent Disablement Benefits); or
(ii)   pursuant to the Policy, the Insurer, for any reason whatsoever, fails to provide or increase or reduces, terminates or withholds insurance in respect of a Member or refuses to admit a claim for the whole or part of the insurance effected in respect of a Member,
any Benefit payable to or in respect of the Member pursuant to the Deed shall be reduced to the extent that insurance is not obtained, increased or maintained or is not provided or increased or is reduced or terminated or that claim is not admitted in respect of the Member, as the case may be, or, where insurance is withheld, shall be adjusted accordingly.”

The Deed provides for: a system of Members Accounts, as defined, against which accrued benefits in respect of a Member may be credited (clause 4.5); and a Reserve Account for accretions to or profits upon the realisation of investments and monies not required to the payment of benefits (clause 4.6).
The Deed clause 5.1 describes the system of Benefit Events by which the Trustee is authorised to pay out the Benefits of the Fund. Clause 5.1 provides as follows:

“5.1   Benefit Events
(a)    Subject to the Deed and the Relevant Law, the Benefits of the Fund shall be as specified in or determined in accordance with Division Two of this clause 5 and only become payable on the happening of the events prescribed in that clause. Subject to the Relevant Law, any decision of the Trustee as to whether a Benefit is payable, and regarding the amount, form and application of any Benefit, is final and conclusive against all persons.
(b)   The Trustee shall not pay a Benefit if the payment results in the Trustee or an Employer contravening any Relevant Law if the Trustee believes that the payment of a Member's Benefit is contravening or will contravene any Relevant Law, the Trustee may:
(i)    where applicable, reduce the contributions payable in respect of the Member; or
(ii)   subject to the Relevant Law, transfer an amount from the Member’s Account to the Reserve Account; or
(iii)   apply a combination of sub-clauses 5.1(b)(i) and 5.1(b)(ii);
as it considers appropriate.”

Under the Deed, clause 5.12, a benefit is payable to a member of the Fund, such as Mr Carroll, if the member ceases to be “Gainfully Employed” prior to attaining the age of 65 and suffers “total and permanent disablement”. Clause 5.12 provides as follows:

“5.12   Total and Permanent Disablement
Subject to this Deed, the Benefit payable to a Member who ceased to be Gainfully Employed prior to attaining the age 65 having suffered Total and Permanent Disablement shall be the sum of:
(a)   the Member’s Retirement Credit; and
(b)   the amount of any Insured Benefit, if any, provided in respect of the Member.”

The Deed, clause 7.2 provides its own definition of “Total and Permanent Disablement” in the following terms:

“’Total and Permanently Disabled’ shall have a corresponding meaning but where at any time, all or part of the Benefit payable in the event of Total and Permanent Disablement is an Insured Benefit, the term ‘Total and Permanent Disablement’ shall bear the meaning ascribed to it in the relevant Policy in lieu of the above definition.”

The Deed, clause 7.2 contains a definition of “Policy”, which the parties agree is the terms, conditions and particulars contained in Hannover’s Group Life Policy VGL 4163, which is also referred to as “the Policy” in these reasons. Clause 7.2 also contains defined terms for “Gainful Employment” and “Insured Benefit”, as follows:

“’Gainful Employment’ in relation to a Member means engagement in any business, trade, profession, vocation, calling, occupation or employment for gain to the extent required by the Relevant Law and ‘Gainfully Employed’ shall have a corresponding meaning;
…
‘Insured Benefit’ means the proceeds of any Policy effected by the Trustee on the life of a Member or in respect of the disablement (including without limitation the Temporary Incapacity or Total and Permanent Disablement) or a Member;”

Provided a claimant meets the conditions of clause 5.12 by ceasing to be “Gainfully Employed” prior to the age of 65 and by suffering “Total and Permanent Disablement”, the relevant benefit payable under clause 5.12(b) is “the amount of any Insured Benefit”. The definition of “Insured Benefit” refers to “the proceeds of any Policy effected by the Trustee… in respect of the disablement… of a Member”. The Policy is such a policy in Mr Carroll’s case.
To assess whether a claimant is entitled to an “Insured Benefit” it is necessary to determine whether there are any “proceeds” of the applicable Policy. That in turn directs analysis to the definitions and provisions of the Policy itself. The Policy definition of “Total and Permanent Disablement” must be considered in lieu of the equivalent definition, the definition of Gainful Employment, in the Deed, clause 7.2. Unless the Policy definition is satisfied no Insured Benefit is payable. Neither party argued to the contrary.
The Policy, under the heading “BENEFITS”, provides for the payment of Agreed Benefits in respect of various events, the relevant one being in Mr Carroll’s case, the suffering of Total and Permanent Disablement (or “TPD” in these reasons) giving rise to the payment of what the Policy calls a “Total and Permanent Disablement Agreed Benefit”. The obligation to pay this Agreed Benefit is provided for under Policy clause 2.1, as follows:

“2.1   Agreed Benefit
If cover is in force under The Policy when an Insured Person:
(a)   dies; or
(b)   suffers Total and Permanent Disablement (TPD); or
(c)   is diagnosed with a Terminal Illness (TIB);
we must pay the Agreed Benefit.
These obligations as ours are subject to the conditions contained in The Policy and to the Proposer and the Insured Person abiding by all the conditions which apply to them.”

Hannover agrees under clause 2.2 of the Policy to pay a Total and Permanent Disablement Agreed Benefit, as follows:

“2.2 When Do We Pay A Total Permanent Disablement Agreed Benefit
Where, at the Date of Disablement we are satisfied an Insured Person meets the following requirements, we will pay the Total and Permanent Disablement Agreed Benefit subject to:
(a) where the Insured Person was aged less than 65 and was engaged in Regular Remuneration Work within the 12 months prior to the Date of Disablement, they meet either Part 1A, Part 1B, Part 2, Part 3, Part 4 or Part 5 of the Total and Permanent Disablement definition; or”

The Policy definition of “Total and Permanent Disablement” is divided into parts that speak to different kinds of events that may potentially qualify a person as TPD. The one relevant to Mr Carroll’s situation is “Part 2 –Unlikely to Return to Work” and is as follows:

“Total and Permanent Disablement means with respect to an Insured Person, who as at the Date of Disablement is covered under The Policy for Total and Permanent Disablement, that they meet one or more of the following Parts as outlined in clause 2.2:
…
Part 2 – Unlikely to Return to Work:
The Insured Person is unable to follow their usual occupation by reason of Illness or Injury for 3 consecutive months and in our opinion, after consideration of medical or other evidence satisfactory to us, is unlikely ever to be able to engage in any Regular Remuneration Work for which the Insured Person is reasonably fitted by education, training or experience.”

The expression “Regular Remuneration Work” that appears within the applicable definition of total and permanent disablement is defined in the Policy, in the following terms:

“Regular Remuneration Work means an Insured Person is engaged in regular remunerative work if they are doing work in any employment, business, profession or occupation. They must be doing it for reward, or the hope of reward of any type. The Insured Person is also considered to be engaged in regular remunerative work if they are on Employer Approved Leave.”

To qualify under the Policy a claimant must prove “Total and Permanent Disablement” as at the “Date of Disablement”. The definition of that date varies depending on the kind of TPD which is claimed. The definitions in the Policy in respect of Part 2 claims provide a definition of the relevant “Date of Disablement” as follows:

“Date of Disablement
Total and Permanent Disablement is treated as having occurred on the Date of Disablement which is the earlier of:
…
(b) for Part 2 of the Total and Permanent Disablement definition, the date on which the Insured Person commenced their period of 3 consecutive months of inability to work that results in Total and Permanent Disablement; or… ”

The Trustee and Hannover join issue with Mr Carroll as to whether he has satisfied the Policy requirement that he is “unlikely ever to be able to engage in any Regular Remuneration Work for which he is reasonably fitted by education, training or experience”, also referred to in shorthand in these reasons as an “ETE clause”.
What now follows is a narrative of the history relevant to the determination of the matters in issue. This narrative represents the Court’s findings on the matters covered, except to the extent that the context indicates that only the parties’ allegations are being recorded. For reasons of economy this narrative does not always include reference to versions of the facts that have been rejected.
The narrative is divided into two parts. The first part sets out the Court’s findings concerning events up until the Trustee and Hannover decided to decline Mr Carroll’s claims in the period between June 2013 and March 2014. That narrative is then interrupted by the Court’s first stage analysis as to whether the Trustee’s and Hannover’s decisions to decline payment to Mr Carroll can be avoided.
These reasons conclude that one of the Trustee’s and all of Hannover’s decisions can be avoided and that the Court can itself proceed to assess whether Mr Carroll is entitled to a TPD benefit. Then after an analysis of the applicable legal principles the narrative resumes and in its second part sets out the Court’s relevant findings after the June 2013 – March 2014 period in the specific subject areas relevant to the Court’s final conclusion as to whether Mr Carroll is entitled to a TPD benefit under the Policy.

Mr Carroll’s Claim for a TPD Benefit is Declined – 2012 to 2014

Mr Carroll was born in October 1968. At the date he ceased work in March 2012 he was 43. At the time of the hearing he was 48. He has lived in Tasmania all his life.
After leaving school, at about the age of 18 in 1986 Mr Carroll undertook an apprenticeship in spray painting to which he was committed throughout 1986 and 1987.
In 1988 Mr Carroll worked as a labourer for Baulderstone Hornibrook Pty Limited. His labouring duties involved repairing the tops of grain elevator silos and working on swinging stages.
But by the relatively early age of 21 Mr Carroll demonstrated aptitude for self-employment. In 1989 he made use of his spray painting apprenticeship and commenced businesses as self-employed panel beater. He undertook this work for approximately 8 years between 1989 and 1997, ultimately employing up to five employees in his business.
Mr Carroll changed direction in 1997. Still working in a self-employed capacity, he commenced work as a building contractor in 1997, undertaking the construction of homes for speculative sale, and other dwellings and home maintenance. He also sub-contracted to TAS Span, undertaking work involving steel laying, formwork and concreting. This building contracting work that commenced in 1997 ultimately concluded, after about 15 years, on 9 March 2012.
But between October 2010 and March 2012 Mr Carroll took on other employment that overlapped with his building contracting business. In those 18 months he worked as a supervisor/leading hand carpenter for GBE Maintenance Services Pty Ltd (“GBE”). His duties in this role involved working in contract mining projects, quoting and costing of jobs, and general building and construction work.
Mr Carroll’s duties before ceasing work on 9 March 2012 involved a range of essentially manual labouring activities: trench digging, working with steel, concreting, bricklaying, timber framing, plastering, painting, roofing, domestic lock up and fit tout, joinery, window fitting and replacing, tiling, scaffolding, and operating excavators.
Mr Carroll’s work also involved tasks which were not purely laboring: quoting and costing jobs. These tasks at first appear to involve less physical activity than the former list of tasks. But the contested evidence shows they do involve their own measure of demanding physical activity. The majority of Mr Carroll’s duties did involve constant lifting, walking, climbing ladders, bending and standing for long periods of time.
Mr Carroll was suffering intense hip pain in early 2012. So he consulted Dr Scott Fletcher in February 2012 for a medical assessment of his pain condition. Shortly subsequent to that assessment he ceased work.
In late 2013 he was being prescribed Celebrex 200 mg and Panadol to treat his pain levels.
This history records Mr Carroll’s account of his working history which the Court accepts. Aspects of his working history and disability levels were in contest. But that contest is dealt with later in these reasons.

The OnePath Income Protection Policy

Mr Carroll took out an income protection policy with OnePath Life Ltd (“OnePath”), a life insurance entity associated with the ANZ Banking Group, on 16 February 2011. When Mr Carroll ceased work on 9 March 2012 he first lodged an income protection claim with One Path in respect of his right hip. OnePath accepted his claim and benefits commenced to be paid from April 2012.
But whilst Mr Carroll was pursuing his claim against the Trustee and Hannover, OnePath investigated Mr Carroll’s medical history and determined that Mr Carroll had failed to disclose a pre-existing history of osteoarthritis to his right hip and lower back in his application to OnePath for income protection insurance.
OnePath conducted that investigation between April and September 2012. Then on 27 September 2012 OnePath denied Mr Carroll’s claim. It placed a lumbosacral spine right hip exclusion against his income protection cover and total and permanent disablement cover.
On 9 October 2012 Mr Carroll lodged with OnePath a subsequent claim for osteoarthritis affecting his left hip. This supplementary claim was outside the exclusion in respect of his right hip and was accepted. Benefits commenced to accrue to Mr Carroll in respect of this separate claim from 1 September 2012. Those benefits were being paid throughout the period covering the contest between Mr Carroll and Hannover.
OnePath’s income protection file for Mr Carroll came into the possession of both the Trustee and Hannover, before they made their decisions to decline the plaintiff’s claim. The OnePath file was part of the materials each of them relied upon to decline Mr Carroll’s claim.
Certain material is produced on subpoena from OnePath and made the subject of cross examination on a voir dire. But no party submitted it should remain on a voir dire and it will all be admitted into evidence.

The Trustee Declines Mr Carroll’s Claim – September 2013 and April 2014

Mr Carroll made initial enquiries of Cbus in December 2012 and was invited to complete and provide a member statement, an occupational history form, and educational training and experience form and a confidential medical report from his treating doctor. He did all of this. Mr Carroll generally provided the required documents to the Trustee which in turn provided them to Hannover.
Mr Carroll provided medical reports and statements from his general practitioner Dr Keith Barnes of 17 October 2012, 12 December 2012, 17 December 2012 and 22 May 2013, and his treating orthopaedic surgeon Dr Scott Fletcher of 15 March 2012, 22 October 2012, and 27 March 2013. He also gave authority for there to be provided a medical report of 20 November 2012 from a consultant orthopaedic surgeon Dr Z. Poplawski, which report had initially been obtained for his claim against OnePath. Relevant parts of these medical reports are discussed later in these reasons.
As part of their investigation of Mr Carroll’s claim, the Trustee and Hannover organised surveillance upon him. An investigation report resulting from an surveillance dated 15 November 2012 recorded three separate periods of surveillance in excess of 19 hours over some two days was before them. This surveillance showed the plaintiff entering, driving and alighting from motor vehicle, undertaking shopping and walking up steps and climbing a ladder at one point.
The Trustee obtained for its consideration not only a member statement from Mr Carroll but an employer statement from Mr Carroll’s own business “Nick Carroll Constructions” and another from his other employer between 2010 and 2012, GBE.
The Trustee declined Mr Carroll’s claim on two occasions, first by letter to Mr Carroll on 16 September 2013 and then by letter to Mr Carroll’s solicitors on 1 April 2014.
The two letters are set out below. The Trustee’s reasons for decision are to be gleaned from these two letters. Unlike Hannover, the Trustee is not obliged to give reasons for its decision: Sayseng at [32] ff. The Trustee did not go into evidence as to its reasons. But it tendered its file of internal working documents (Exhibit 1), identifying the material before it at the time the decisions were made. It is unclear on the evidence of this file to what extent the material before the Trustee was weighed or taken into account, except to the limited extent that may be inferred from its two letters of 16 September 2013 and 1 April 2014.
The Trustee’s 16 September 2013 letter relevantly provided as follows:

“We write as a follow up to our previous letter in which we advised that the Trustee had requested an additional report from Dr Barnes following HLRA's decline of your Total and Permanent Disablement benefit.
Dr Barnes’ report has now been received and the Trustee completed its review of your claim on 10 September 2013.
The Trustee reviewed all the evidence including your correspondence dated 17.6.2011, Member Statement, Employer's Statement of Nick Carroll Construction, Employer's Statement GBE Maintenance and the medical evidence from Dr K Barnes, S Fletcher, Z Poplawaski and the Surveillance Investigation. Also considered was a copy of your Income Protection claim information provided by One Path.
In particular it was noted that you are fit for sedentary type work, such as that of a project manager, although the evidence does not support that you are capable of returning to your role as a builder.
To meet the definition of Total and Permanent Disablement a person must be considered unlikely ever to be able to engage in any Regular Remuneration Work for which a person is reasonably fitted by education, training or experience - not just permanently unfit for the occupation they were performing prior to their disablement.
After consideration of the evidence obtained, the Trustee resolved that you did not meet the definition of Total and Permanent Disablement.
The Trustee recognises the importance of your claim and remains committed to review any additional specialist medical evidence which supports your claim for a Total and Permanent Disablement.
If you disagree with the decision of to decline your claim, you may take the following steps to have it considered by a senior officer who was not involved with the decision.”

Despite the blandness of this letter, what might perhaps have been put in the letter as reasons but was not is evident from the Trustee’s file (Exhibit 1) of material before it. Exhibit 1 includes a 13 June 2013 working document (“the June 2013 working document”), which appears to contain written consideration of some ingredients of relevance to its September 2013 decision in a section headed “Opinion”. Even though the June 2013 working document precedes the Trustee’s first decision by three months, it provides useful guide to the Trustee’s decision-making process.
As will be seen, there was very considerable overlap between the documents before the Trustee at the time of its 2013 – 2014 decisions (and contained within Exhibit 1) and the documents before Hannover at the time of its 2013 – 2014 decisions (and contained within Exhibit 2). Ms Robyn Turton appears in both files as the senior claims assessor for Hannover (also known by its full title, Hannover Life Re of Australia Ltd, and often abbreviated in the correspondence to “HLRA”). The person with day-to-day management of Mr Carroll’s file within the Trustee’s office was Ms Aisha Dahini, a senior claims assessor, who appeared to report to Ms Linda Elliott, the Trustee’s claims and complaints assessor. Within Hannover, others took over the management of subsequent Hannover decisions from Ms Robyn Turton.
The June 2013 working document signed by Ms Aisha Dahini, provides the following reasoning in its “Opinion” section:

“Regarding the member's capacity for work, the balance of medical opinion confirms that the member is not fit to return to his role as a builder and we acknowledge that as at January 2013 the member was receiving Income Protection Payments from One Path due to his inability to return to previous employment.
However the two Orthopaedic Consultants opine that the member is fit for work of a sedentary nature. S Fletcher having consulted with the member on at least two occasions further opines in his March 2013 report the member could work as an estimator which we note is a role that the member has completed previously. He also states he wouldn't consider the member TPD, even though at the time of his report he had not consulted with the member for over a year.
The member's most recent medical report from Dr K Barnes advises that the member is not currently working, currently experiencing difficulty in managing home duties and is not currently engaged in any further retraining but Dr Barnes has never provided comment on the member's capacity to do other roles within his education, training and experience. We also note that the member is not currently seeking specialist treatment.
Based on the available information, we are unable to form an opinion that the member meets the definition of TPD within the contract.
In terms of requesting additional information to support the member's claim, it is our opinion that while a Vocational Assessment or commentary on the surveillance material from the member's doctor would have made for a more complete assessment it is unlikely to add weight to the member's claim.”

It is worthwhile briefly to examine the contents Trustee’s file between the June 2013 working document and the 16 September 2013 letter. The June 2013 working document raises the concern that Dr Barnes has not ever “provided comment on the member’s capacity to do other roles within his education training and experience”. Shortly after the June 2013 working document the Trustee, in light of information that Hannover had just declined Mr Carroll’s claim on 7 June 2013, wrote to Dr Barnes on 24 June 2013 for his comments on Mr Carroll’s capacity to engage in other suitable employment within his education training and experience, including in the roles of estimator and project manager. The Trustee informed Mr Carroll of this further enquiry of Dr Barnes.
But in the meantime, Mr Carroll had written on 17 June 2013 a lengthy note to the Trustee in response to Hannover’s declining his claim on 7 June. In that note Mr Carroll said the following:

“I first went to see Scott Fletcher early in 2012 as been referred to by my GP at that time. I explained to Scott that I had severe pain in both my hips and surrounding muscles by the end of the day from work particularly in my right hip, and they were getting worse as time went by. I had an MRI scan done as requested by Scott and as a result he immediately said as quoted in his letter dated 15 March 2012 that I was unable to work at the moment in any meaningful way. He was going to organise some rehab for me and recommend me to see a physio and get some beneficial exercises to try and help with the movement of my hips. As I was too young for hip replacements at this stage, as quoted by Fletcher.” [sic]

Mr Carroll’s 17 June 2013 note also complained about and criticised Dr Scott Fletcher for not accepting his account of his level of disability in his left hip. He then continued to explain his then present disability for various work tasks:

“As far as studying for a future in my line of work, this is becoming harder and harder. I am in constant pain, especially with sleeping at night from lying on my side. The hip joints aches from the pressure from the weight of my legs and I can really only sleep on my back or front. Sleeping on my back is a pain not only for me but also for my wife, because I wake her up with my snoring most nights as well as myself. I'm not getting a full night sleep and I'm struggling not only physically but also mentally.
As a result from Dr Poplawski's report, One Path have accepted my Claim and they are honouring my claim with monthly payments as shown in the documents that I have forward to you. Please bear in mind that Onepath has accepted my claim for my left hip only and this is not the condition with Hannover. I have two problematic hips and I have had TPD policy attached to my super from around the age of 18. I don't see how Onepath can accept my claim for one bad hip but Hannover can't accept my claim for two bad hips, which has been diagnosed with bilateral hip dysplasia with secondary osteoarthritis, worse on the right side, which this disease does not get better, it gets worse. Also a degree of left lateral cutaneous nerve entrapment - an incidental diagnostic with no relevance to my hip dysplasia problem.
I can understand if Hannover is thinking that I still can be re-trained for another line of work whether in my line of work or in another totally different line of work. But that is not the case with these hips of mine. Who is going to employ me on a part time bases and be prepared to not have me turn up until I'm fit for work again? e.g." If I am in pain, and until the pain has settled enough to go back to work, is this a good example of getting me back into the work force, in a less physical capacity!!"
I did enrol in a computer aided drawing course (auto cad engineering drawings) but I have pulled out of it because I don't have the mental concentration required for the course due to sitting for long hours in discomfort is just too much for me.” [sic]

Mr Carroll also commented in conclusion in this letter as follows:

“Reading and writing the letter is really quite depressing for me because it really brings home the life that I now live and what's in front of me.
I'm relying on this payout from CBus (Hannover] to assist me in obtaining new hips sooner than later for as I can't afford full hospital cover.
I'm not going to write any more. I'm hoping that I have given you clear and reasonable understanding of my predicament that I’m in and I hope that you grant this claim in my favour.” [sic]

The Court accepts the accuracy of Mr Carroll’s statements in this 17 June 2013 note to the Trustee. That acceptance is irrelevant for present purposes but ultimately relevant to the Court’s later enquiry after vitiating the Trustee’s and Hannover’s respective decisions.
In an internal assessment by the Hannover’s senior claims assessor, Ms Robyn Turton, on 20 August 2013 she drew the following conclusions from Mr Carroll’s note and reiterated the decision Hannover had already made on 7 June 2013 to decline the members claim:

“The member’s claim with Onepath is for ‘Temporary’ Disablement whereby paid monthly instalment benefits. The criterion upon which Onepath have assessed the member’s claim would be at variance to the terms and condition under which HLRA is required to assess the member’s claim for a TPD benefit.
It is also a point in time, namely March 2012 that HLRA is required to form an opinion towards a TPD benefit, and not at a date some several months later.

The fact that the member perceives Dr Fletcher's opinion as unfavourable is not for our office to comment. The member clearly has stated that he has continued to engaged in low impact activities such as swimming, bicycle riding, walking and golf. Notably the activity of golf does requiring a pivoting of the hips, and as such demonstrates that the member's restriction is not as severe as the member would like us to believe. Bicycle riding would similarly also impact on hip movement and require a period of a prolong seated position, as would the member utilising a ladder to formulate his own exercise strategy.
The member did indicate that, "I'm relying on this payout from CBUS…" which would also suggest that the member's claim is strongly financially driven or motivated.
Whilst we appreciate the member's situation, there is no intrinsic new evidence provided of which would materially alter our opinion, and shall maintain our decision to decline the member's claim as communicated to the Fund on 07 June 2013.” [sic]

This is Hannover’s second decision which is dealt with further below where Hannover’s decisions are collected.

Mr Carroll then emphasised in a further email to the Trustee on 28 August 2013 his difficulty in undertaking any work and the difficulties in his being retrained:

“My career was a builder, Building domestic homes. I can no longer perform my duties as a builder being for I need to have both my hips replaced. My question is what happens now ? Im currently on the waiting list for a replacement of my right hip which can take up to Two years on the waiting list. I am hoping that the new right hip will take some pressure off my left hip and that I wont have to have the left hip replaced for a while longer.
I cant understand were I can be retrained in my line of work, my line of work is building or renovating houses.
Unless the meaning of being retained in my line of work means Example; becoming a builder or surveyor, or a architect II this would be a career change in a hole new industry and would take years of training.
My point being I can not be retrained in my line of work ( building new homes, etc. ) because of the physicality of its nature.” [sic]

The same day a medical report came in from Mr Carroll’s general practitioner, Dr Barnes, indicating Mr Carroll had a potential at the present time for sedentary work. Dr Barnes’ report of 28 August 2013 was relevantly to the following effect:

“This man has severe degenerative change within his right hip joint and the only procedure that is going to help is a right hip replacement. I recently referred him to an Orthopaedic surgeon, Mr Peter Van Winden, who suggested that if he were to have a right hip replacement then possibly his left sided hip symptoms would be less apparent and that his left hip would hopefully last many years.
He also discussed with Mr Carroll as to whether he would be able to return to building with a hip replacement. Mr Van Winden's comment was that although generally discouraged, with ceramic on ceramic bearing surface, provided that the patient is not doing any substantial jumping from heights, it is still a reasonable proposition.
Consequently in response to your first question, at the present time he would not be prevented from doing sedentary such as estimator or office work, and project manager would also be a possibility. He is, however, contemplating a hip replacement and once he has this done then certainly those positions of basically sedentary work as described under estimator or project manager would certainly be feasible.
He also talked about doing architectural design, planning as a retraining course and once he had done those he would be able to work in these non physical areas.
In response to your second question: I think that once this man had a hip replacement on the right side he would be able to return to some work for which he is either currently skilled, or might be able to retrain. Certainly at the present time he is not capable of building and being a builder.”

As a result of the further investigation work after the June 2013 working document, the author of that document, Ms Aisha Dahini wrote an updating memorandum dated 9 September 2013 to her reporting superior, Ms Linda Elliott, the Trustee’s relevant claims assessor as follows:

“Whilst the Trustee was reviewing the file, additional correspondence from the member dated 17 June 2013 was received and forwarded to HLRA for comment. The correspondence outlines the member experiences in getting medical information to support his Income Protection Claim and his comments about his future employability.
On 20 August 2013, HLRA responded to the member's correspondence via email and concluded that they appreciated the member's situation, however there was no evidence that would materially alter their opinion.
The report from the member's treating GP – Dr K Barnes was received by Super Partners on 4 September 2013.
In the report Dr K Barnes notes that the member had been referred to Mr Peter Van Winden – Orthopaedic Surgeon and that Mr Peter Van Winden commented that although generally discouraged, provided the patient was not doing any substantial jumping from heights, it was reasonable for him to return to building after the member had a hip replacement.
Dr K Barnes also is of the opinion that at the present time the member was not prevented from doing sedentary work such as estimator or office work.
On the basis of the additional report by Dr K Barnes we do not believe that the member meets the definition of TPD under the policy and therefore believe the claim should be declined.”

After the Trustee’s 16 September 2013 letter, further correspondence passed between representatives of the Trustee and Mr Carroll and his legal representatives, Firths Compensation Lawyers (“Firths”). Consequent upon that further correspondence, the Trustee made a second decision declining Mr Carroll’s claim, which was communicated in the Trustee’s letter of 1 April 2014 to Firths.
Between September 2013 and April 2014 some correspondence took place between the Trustee and Mr Kelvin Lau, claims assessor with OnePath. Then on 21 January 2014 Firths provided to the Trustee a statement signed by Mr Carroll and dated 23 December 2013, with a request that both the Trustee and Hannover review it and certain enclosed documents and reconsider the claim. It was this letter in which Firths also indicated to the Trustee that if Hannover refused to reconsider and accept the claim “we hereby request you as trustees and policy owner [to] commence proceedings against the insurer to enforce our clients entitlement to benefits under the policy”.
Mr Carroll’s statement of 23 December 2013 gave a career in working history which has been sent out earlier in these reasons. It then directly addressed his own assessment of his current disability levels as follows:

“Everyday Life
13.   I suffer from constant pain in my hips and I also get referred pain in both my legs. After doing some activities both my legs get stiff, tight and sore and then I find that I have to rest for at least three hours, before I can move again with difficulty.
14.   Since the last day I worked I have continued to have difficulty with my everyday life. My life consists of good and bad days in relation to my hips and legs pain. On good days I feel good enough to move around and do simple tasks, such as doing the washing or walking. After doing tasks I may experience severe debilitating pain in my hips and groin area, the muscles in my legs get stiff and sore as well. If this happens, I take Celebrex and lay down for at least three hours before I move around the house again. On a weekly basis I have approximately 3-4 goods days and 2-3 bad days.
15.   I suffer from the following restrictions:
Sitting - on a good day I can sit for about two hours before I need to stand up and move around for about 5 to 10 minutes and then go back to sitting down. On a bad day, I cannot sit down due to intense pain and spend most of my time lying down.
Standing - in the morning I can stand for about one hour and then I have to sit down or move around or rest for 5 to 10 minutes. On a bad day, I could probably stand for ten minutes and then I have to sit down or move around,
Walking - on a good day I can walk for about 15 minutes, and then I start getting sore and limp. I then need to rest for a couple of hours before I can walk again. On a bad day, I do not walk at all.
Driving in a motor vehicle – I sometimes find it difficult to lift my legs up when I am entering the driver's seat due to the pain. I sometimes sit on the driver's seat and physically pull my legs with my arms and hands inside the vehicle. On really bad days, I rely on my wife to drive me. On a good day, I can drive up to one hour, before stopping and having a 5-10 minute break.
Walking up and down stairs - I have two flights of stairs in the house and there are about 18 steps. I find it difficult going up the stairs. This action hurts my groins and legs, more in the right side than the left. I also experience pain when I am going down stairs in both hips and legs.
Squatting - on a bad day, I cannot squat at all On a good day, I can probably squat a few times but then I get sore. The more movement I do, the faster my legs start to lock up.
Kneeling - I find it sorer to kneel. I find it causes me more pressure in my hips. On a good day I can do it a few times before I get sore. On a bad day, I cannot kneel.
16.   I have found that my sleeping patterns are affected. I only get around 3-4 hour sleep a night as it takes me a very long time to get to sleep. I find that I am always in pain and I am often woken up by my pain levels when lying on my side, I then cannot return to sleep. The hip joints ache from the pressure from the weight of my legs. I find that I constantly move in bed and find that I only can sleep on my back or front. Hence, I need to lay down during the day for 1 -2 hours to essentially recover from the lack of sleep. This happens 3-4 days per week.
17.   My reduced sleep causes me short term memory loss, problem solving and my ability   to concentrate.
18.   On good days, I drive to the shops and do the grocery shopping. The shops are about a 2 minute drive from my house. Due to my hip condition, I take my time with the walking. When I get home, I unpack the groceries and I sit down and rest as this activity causes me hip, groin and leg pain.
19.   On good days, I can also pack the dishwasher, tidy up the house, but as I have found with every physical activity I then have to rest. I need to rest for at least one hour before I move again,
20.   On bad days, I take Celebrex and rest for 2 - 3 hours. I stand up to move around, as this eases my pain.
21.   Before my conditions became debilitating, I used to play golf once or twice per month, I used to be able to play 9 or sometimes 18 holes. I now play once every two months if I feel physically up to it. The last time I played I only lasted 6 holes and then had to stop due to extreme pain. I try to do golf as my treating doctors advised me to move around otherwise my condition will get worse if I do not move.
Before my hips condition, I used to fish twice a month. Now I go probably once every three months. I just don't feel motivated anymore to go fishing due to my physical restrictions. I am also afraid I might fall on the boat at sea and make my hips even worse than they currently are.
22.   Before my hips condition, I used to do bike riding with my wife and kids at least once a week. Now I cycle at home, in my shed if I feel good, I do this for about 10 minutes and then I get sore. I do this to keep my muscles moving as advised my treating doctors.
23.   Before my hip conditions, I used to walk for about one hour, I now walk 15-10 minutes before getting sore and walking back home to rest. I do this to keep my muscles moving as advised my treating doctors.
24.   At times, I feel upset because my life has changed and cannot work in my career due to my physical restrictions.”

Mr Carroll’s 23 December 2013 statement then continued to deal with his prospects of employment in the following terms:

“Prospects of Employment
25. Since ceasing work I have been unsuccessful in finding any employment that I could do or working in my business. Since I ceased work, I received Sickness Benefits from Centrelink for a short period and then Income Protection payments from One Path Life Ltd to date and continuing on the basis of total disablement.
26. Due to my symptoms and restrictions there is no way that I can work in the areas that I have experience in. All these jobs require standing for long hours, repetitive lifting, repetitive bending, repetitive squatting, repetitive kneeling and walking. It also involves ladders, walking on uneven ground and trench work. I cannot honestly see myself performing these duties in the real world. My constant pain stops me from working in the construction industry.”

Then Mr Carroll directly dealt in the statement with the Trustee’s contention that he could work as an estimate or project manager in the following terms:

“My comments in respect of CBUS view that I could work as an Estimator or Project Manager
27.   To work as an Estimator, I need to complete a course and be qualified. I made enquires at Launceston Tas TAFE and a gentleman named Bruce McKenzie informed me that they are not running a course in estimation. Mr McKenzie said that they are not running it any longer as there is only one module in it. Mr McKenzie also said that the big companies now buy automatic software that does the estimation.
28.   I understand that to work in estimating, the duties expected could involve assisting construction managers, architects and surveyors in planning and organization, preparing sketches, working drawings and specifications, editing and revising plans, inspecting work and materials for compliance with specifications, collecting data using surveying instruments and photogrammetric equipment. Even if I had the opportunity to retrain, I would have extreme difficulties with standing, sitting, kneeling, squatting, walking on uneven ground and driving. I become incapacitated after doing some light tasks at home. There is no way I could work in this position. In addition my pain levels and lack of sleep will not allow me to be alert and functioning as expected.
29.   I understand that to work in project management I would also need TAFE qualification or higher. The duties expected could involve planning, organizing, directing, controlling and coordinating the construction of civil engineering projects, attending buildings and dwellings, being on demand to attend a job site. I also made enquires at Launceston Tas TAFE and the same gentleman Bruce McKenzie informed me that there is an online Certificate IV in Building and Construction which runs for 2.5 years. I would have difficulties studying this course due to my sitting restriction, my lack of sleep and pain levels will affect my concentration, I honestly cannot see myself being able to study for this long.
30.   I understand that to work in Project Management, the duties expected involve having total control of a project, being on site, planning, organizing, directing, construction, managing the human resources involved in the building and construction. Even if I had the opportunity to retrain, I would have extreme difficulties with standing, sitting, climbing ladders, kneeling, squatting, walking on uneven ground and driving. I become incapacitated after doing some light tasks at home. In addition my pain levels and lack of sleep will not allow me to be alert and functioning as expected.
31.   Therefore, based on my previous training, education and experience there is no job that I could perform in my locality on any regular basis due to my restrictions and limitations.”

The Court accepts the accuracy of Mr Carroll’s 23 December 2013 statement. That acceptance is irrelevant for present purposes but ultimately relevant to the Court’s later enquiry after vitiating the Trustee’s and Hannover’s respective decisions.
On 11 February 2014 Hannover wrote the letter to the Trustee, set out later in these reasons, which records Hannover’s third decision declining Mr Carroll’s claim. On 25 February 2014 Hannover’s 11 February letter was provided to Firths.
The Trustee’s 1 April 2014 letter records the Trustee making a decision on 26 March 2014. But the Trustee’s second decision was conventionally referred to in the proceedings by reference to the date of the 1 April 2014 letter. A record of this decision that is independent of the letter to Mr Carroll exists in Exhibit 1. It consists of memorandum from Ms Tahini to Ms Elliott of 24 February 2014, to which Ms Elliott apparently agrees on behalf of the Trustee on 26 March 2014 stating in the “comments” section of the minute, “Agree with opinion having considered the totality of the information provided”. After surveying the history of the matter and the position that had been taken by the insurer, the minute said the following:

“(3) Additional Evidence
Statement of Client – 23.12.2013
25.   Since ceasing work I have been unsuccessful in finding any employment that I could do or working in my business. Since I ceased work, I received Sickness Benefits from Centrelink for a short period and then Income Protection payments from One Path Life Ltd to date and continuing on the basis of total disablement
27.   To work as an Estimator, I need to complete a course and be qualified
29.   I understand that to work in project management I would also need TAFE qualification or higher
31.   Therefore, based on my previous training, education and experience there is no job that I could perform in my locality on any regular basis due to my restrictions and limitations
(4) Opinion
The member is now a 45 year old builder who last worked in March 2012 as a self-employed person for Nick Carroll Constructions.
As per the Statement of Client, the member is disputing the roles of Estimator and Project manager as being within his existing ETE. However we note that the member’s resume indicates that he was responsible for quoting and costing of jobs through his role at GBE Maintenance Services Pty Ltd. Project Management is also mentioned.
Also prior to ceasing all work the member was involved in running his own business, which presumably would have involved quoting on work and project supervision to some extent.
The gaining of qualifications in Estimating or Project Management given the member’s previous on the job experience in those functions could therefore be seek as up-skilling rather than re-training. It is also noted that he did not need formal qualification to perform those functions in his previous roles.
Referring to the medical information, we confirm that the member has been cleared for the roles of Estimator and Project Manager – without having to perform manual duties. The member has also been cleared for office work – although the nature of such work has not been expanded on.
Regarding to the member’s claim that there is no job that he could perform in his locality (Launceston) we confirm a search of jobs on Seek revealed limited Construction roles in the Launceston area, none of which would be suitable for the member given his restrictions. However we are unaware of the labour market conditions closer to when the member ceased work or in the last six months.
A Labour Market Analysis together with a Vocational Assessment would give a better understanding of the member's transferable skills and real job prospects, although it is noted that such a report if complied now would be subject to any deterioration in the member's condition in the last year and recent changes in the economic climate.
It is therefore our opinion that given the totality of the evidence at hand the decision to decline the claim be maintained.
A full copy of the previous file is available on request.” [sic]

On this occasion, because of its adoption by the decision maker, Ms Dahini’s minute can be accepted as the Trustee’s reasons for decision of 26 March 2014, communicated to Mr Carroll’s lawyers on 1 April 2014.
The 1 April 2014 communication of the Trustee’s decision to Mr Carroll’s lawyers was in the following terms:

“The Trustee reviewed all the evidence including the Insurer Letter, correspondence from Firths dated 21 January 2014, Statement by Claimant dated 23 December 2013, Member Statement, Employer Statement of Nick Carroll, Employer's Statement GBE Maintenance and the medical evidence from Dr K Barnes, S Fletcher, Z Poplawaski, the Surveillance Investigation report and the Income Protection file from One Path.
The Trustee notes that whilst the roles of Estimator and Project Manager are being disputed as being within your client's existing training, education and experience that the function of quoting and costing jobs was part of his role as a Supervisor at GBE Maintenance Services. It is also noted on your client's resume that your client finds managing projects rewarding.
Given your client's job experience including that of running his own business and other Building Certificates obtained through TAFE, the gaining of formal qualifications in Project Management or Estimation is seen as up-skilling rather than requiring retraining.
On 26 March 2014, the Trustee maintained its opinion that your client docs not meet the definition of Total and Permanent Disablement under the policy. A copy of the Insurer's decline is also included for your reference.”

Once again, the Trustee did not adduce evidence to explain or provide further reasons beyond those set out in the 1 April 2014 letter. Nor was there any evidence to connect that letter with the contents of the Trustee’s file or the June 2013 working document.

Hannover Declines Mr Carroll’s Claim – June and August 2013 and February 2014

Hannover declined Mr Carroll’s claim on three occasions: by letter to Mr Carroll on 7 June 2013, by email to the Trustee on 20 August 2013 and by letter to the Trustee on 11 February 2014. Each of these decisions of Hannover was communicated to the Trustee at the time and is mentioned above in the narrative of the Trustee’s decisions.
Hannover did not adduce evidence from the relevant decision maker or tender a statement of its reasons for these decisions. Hannover has a duty to provide reasons for its decision. The Court was left to infer Hannover’s reasons for its three decisions from its correspondence.
Hannover’s 7 June 2013 letter undertakes something of an audit of the material then available to Hannover. And in respect of each principal document before Hannover, the letter gives a brief summary of its contents. Hannover’s 7 June 2013 letter covers: Mr Carroll’s member details; the employer statement from GBE Maintenance Services Pty Ltd of 11 December 2012; the employer’s statement of Mr Nick Carroll Constructions of 18 December 2012; the member’s statement of 18 December 2012; the medical reports of Dr Keith Barnes of 25 September 2012, 18 October 2012 and 12 December 2012; the medical reports from Dr Scott Fletcher of 16 February 2012, 15 March 2012, 22 October 2012, and 27 March 2013; surveillance reports of LS Associates of 30 May 2012 and 15 November 2012; and the medical report by consulting orthopaedic surgeon Dr Z. J Poplawski of 20 November 2012. The 7 June 2013 letter is addressed to the Trustee and in a concluding section entitled “Discussion and Summary” as follows:

“Discussion and Summary
The member purports to have become totally and permanently disabled as a result of his claimed medical condition of bilateral hip dysplasia.
Whilst the member has cited his last employer to be that of GBE Maintenance Services Pty Ltd, the Employer Statement as completed by this particular employer did allege of the member's having last worked with their company as an employee during March of 2011, with the member then working as a subcontractor under his own ABN beyond such date in 2011, up until ceasing work in or about 9 March 2012.
Therefore for the purpose of our assessment the member is described to be one of a self-employed contractor/builder/carpenter, having last worked in this role within his own registered business on or about 9 March 2012
The Date of Disablement as defined is hence seen to have occurred on 9 March 2012 when the member is alleged to have begun the three months consecutive inability to work that results in Total and Permanent Disablement.
Based on the medical history to hand, the member since at least 2010 did sought medical consultation and investigation into his symptoms of hip pain predominantly of the right, of which were aggravated by the inherent manual work duties performed of a builder/carpenter.
Following a consultation with Orthopaedic Surgeon Dr Scott Fletcher in February 2012, a diagnosis was given of a bilateral hip dysplasia particularly on the right hand side, and also articular cartilage de-lamination, label tears and subchondral cyst formation, particularly in the acetabulum.
It was opined by Dr Fletcher at that time that the member would be unable to work at the moment in a meaningful way and with the member being age 43 years, the member is a little too young for a hip replacement at this stage.
However Dr Fletcher did hold the view that the member would be capable of performing lighter duties eg in a job that involves non-manual labour and where periods of rest can be undertaken. Such job roles considered as suitable would include those of quoting and estimating materials, and as such Dr Fletcher does not accept that the member is unlikely ever to be able to return to work in an occupation which he is reasonably fitted by way of education training or experience.
Similarly, Consultant Orthopaedic Surgeon, Mr Z J Poplawski whom examined the member in December 2012, did recommend that the member should seek more sedentary type employment. To this end, the member had reported that his usual work duties did incorporate spending time looking at jobs and carrying out quotes and assessments, often after work and/or on week-ends, and of often having had a number of people working for him, whom he did need to supervise as required.
Given that the member did work in the capacity of self-employment, it is reasonable to deduce that the member in all likelihood could have continued to engage in the managing of his own business undertaking the lighter non manual aspects such as quoting, estimating or supervision of sub-contractors, together with any necessary administration tasks, albeit his claimed bilateral hip condition.
It would however appear that the member has elected to retrain in the area of Design, with the intent to go into that type of industry, of which is basically sedentary and not so physically demanding, as opposed to continuing in his own business within a lighter role/capacity.
The member holds extensive knowledge, experience and training within the construction industry and panel beating industry, of which could be utilised into a number of other viable employment options, of which do not require a heavy physical demand.
Based on the observation reports to hand, the member would appear to have a greater physical capacity than that as reported to the orthopaedic specialists of Mr Z J Piplowski or Dr Scott Fletcher, by the member at time of consultation.
Accordingly, the evidence does not persuade Hannover Life Re to reach an opinion that the member is totally and permanently disabled in line with the policy definition. The obligation to provide information establishing an entitlement to the TPD rests with the insured.
Please ensure that a copy of our decline letter is provided to the member or their representative to assist them to understand our decision to decline their claim.”

Hannover’s second decision is recorded in its email of 20 August 2013 to the Trustee. This email is from Ms Robyn Turton, the senior claims assessor at Hannover engaged on this matter and sent to an email address of the Trustee. The 20 August 2013 email refers to the communication from Mr Carroll of 17 June 2013 (set out above) and continues in the following terms:

“We refer to your email dated 12 August 2013 enclosing correspondence from the member dated 17 June 2013.
Simply put the member is comparing his coverage under the CBUS policy with that of Onepath.
The member's claim with Onepath is for 'Temporary' Disablement whereby paid monthly instalment benefits. The criterion upon which Onepath have assessed the member's claim would be at variance to the terms and condition
under which HLRA is required to assess the member's claim for a TPD benefit.
It is also a point in time, namely March 2012 that HLRA is required to form an opinion towards a TPD benefit and not at a date some several months later.
The fact that the member perceives Dr Fletcher's opinion as unfavourable is not for our office to comment. The member clearly has stated that he has continued to engaged in low impact activities such as swimming, bicycle riding, walking and golf. Notably the activity of golf does requiring a pivoting of the hips, and as such demonstrates that the member’s restriction is not as severe as the member would like us to believe. Bicycle riding would similarly also impact on hip movement and require a period of a prolong seated position, as would the member utilising a ladder to formulate his own exercise strategy.
The member did indicate that, "I'm relying on this payout from CBUS…" which would also suggest that the member's claim is strongly financially driven or motivated.
Whilst we appreciate the member's situation, there is no intrinsic new evidence provided of which would materially alter our opinion, and shall maintain our decision to decline the member's claim as communicated to the Fund on 07 June 2013.”

Finally, Hannover declined Mr Carroll’s claim by letter dated 11 February 2014. This final decision on Mr Carroll’s claim followed upon Mr Carroll’s provision of his additional statement of 23 December 2013. The communication of this decision was issued under the hand of a different senior assessor for Hannover, Ms Michelle Fowler. The relevant parts of Hannover’s 11 February 2014 letter are as follows:

“We refer to the abovementioned claim and note that the member has provided a statement dated 23.12.13 for further consideration of his claim.
We confirm that we have reviewed all available evidence again.
Whilst we note the contents of the statement provided by the member, the medical evidence already supplied and considered does not support that the member meets the definition of total and permanent disablement under the terms and condition of the policy.
The obligation to provide Information establishing an entitlement to the TPD rests with the Insured.
Please ensure that a copy of our letter is provided to the member or their representative to assist them to understand our decision to maintain our decision on their claim.”

Neither Ms Robyn Turton nor Ms Michelle Fowler gave evidence in the proceedings.
It is now useful to state the legal principles that apply to decision-makers such as the Trustee and Hannover, before considering the application of these principles in respect of the questioned decisions.

Applicable Legal Principles – Duties and Procedures of Decision Makers

The law defining the scope of the duties of decision makers dealing with claims by members of superannuation funds for whom the trustee has obtained insurance cover is well developed. That law and the corresponding rights of members may be shortly stated.
The Member’s Standing to Sue. A member of a superannuation fund for whom the trustee has obtained insurance cover has standing to seek an order that the insurer pay the trustee the amount due to the trustee under the insurance contract: Erzurumlu v Kellogg Superannuation Pty Ltd [2013] NSWSC 1115 (“Erzurumlu”) at [54]. The member has standing to bring a claim both under the Deed against the trustee and under the Policy against the insurer: Wyllie v National Mutual Life Association of Australasia Ltd (1997) 217 ALR 324 (“Wyllie”), at 337-338.
The Trustee’s Decision-Making Duties. In making its determination, a trustee has a duty to apply a trust fund, such as the Fund, in accordance with the trust deed, in this case the Deed: Finch v Telstra Super Pty Ltd (2010) 242 CLR 254; [2010] HCA 36 (“Finch”) at [30] ff. It is also required to act in good faith, on a real and genuine consideration of the material before it, for the purpose for which it was conferred, for sound reasons where the trustee has disclosed reasons, although the Trustee is not obliged to give reasons for its decision: Hannover Life Re of Australia Ltd v Sayseng [2005] NSWCA 214 (“Sayseng”) at [32] ff (per Santow JA). Where no reasonable person deciding whether to form the opinion required of the trustee could have reached that decision, a failure of good faith, a failure of genuine consideration, or a lack of proper purposes may be inferred: Sayseng at [33]. The ambit of any challenge to a trustee’s decision is restricted to consideration of the material available to the trustee: Sayseng at [33].
Finch adds important definition to the duties that apply to trustees of superannuation funds, such as the Trustee, and explains that the decisions of such a Trustee may be reviewable for want of “properly informed consideration”. The High Court explained this in Finch at [66] as follows:

“There is no doubt that under Karger v Paul principles, particularly as they have been applied to superannuation funds, the decision of a trustee may be reviewable for want of “properly informed consideration” (55). If the consideration is not properly informed, it is not genuine. The duty of trustees properly to inform themselves is more intense in superannuation trusts in the form of the Deed than in trusts of the Karger v Paul type. It is extremely important to the beneficiaries of superannuation trusts that where they are entitled to benefits, those benefits be paid. Here, for example, the applicant was claiming a Total and Permanent Invalidity benefit to support himself for the rest of his life. His claim depended on the formation of an opinion by the Trustee about the likelihood that he would ever engage in “gainful Work”: that was not a mere discretionary decision. In the Deed there was a power to take into account “information, evidence and advice the Trustee may consider relevant”, and that power was coupled with a duty to do so. It would be bizarre if knowingly to exclude relevant information from consideration were not a breach of duty. And failure to seek relevant information in order to resolve conflicting bodies of material, as here, is also a breach of duty. The Scheme is a strict trust. A beneficiary is entitled as of right to a benefit provided the beneficiary satisfies any necessary condition of the benefit. Whether or not it will be decided hereafter that, consistently with s 14 of the Complaints Act, the duty of a trustee in forming an opinion of the present type is a duty to form a fair and reasonable opinion, or even a duty to form a correct opinion, there is because of the importance of the opinion and its place in the Scheme a high duty on the Trustee to make inquiries for “information, evidence and advice” which the Trustee may consider relevant. The existence of that duty in a more intense form than exists under Karger v Paul principles in their standard application is further support for the correctness of Byrne J’s decision.”

The general rule where a trustee has failed to discharge its duties in considering a member’s claim is to refer the matter back to the trustee for reconsideration: Sayseng at [33]. But if the Court vitiates an insurer’s decision upon breach of an insurer’s duty of utmost good faith and embarks on a second stage inquiry, and on that inquiry finds that the plaintiff is totally and permanently disabled within the Policy definition, there may be no further work for the Trustee to perform and no need to remit the matter to the Trustee for further consideration and it can be dealt with by the Court: Jones v United Super Pty Limited [2016] NSWSC 1551 at [112].
This statement of applicable principle now deals with the duties on insurers in the position of Hannover.
The Insurer’s Duty of Utmost Good Faith. An insurer dealing with a claim against it owes an insured a duty of utmost good faith, sometimes also described as a duty of good faith and fair dealing: Sayseng at [36]. The duty of utmost good faith does not impose obligations in the abstract; it depends on the contractual rights and obligations of the parties in relation to the claim; and it imposes an obligation on the insurer to exercise its rights and discharge its obligations as conferred by the contract of insurance with the utmost good faith: Ziogos v FSS Trustee Corporation as Trustee of the First State Superannuation Scheme [2015] NSWSC 1385 (“Ziogos”) at [66].
The insurer’s obligation of utmost good faith is contractual not fiduciary. Conduct which would not be permissible in a fiduciary relationship will not necessarily infringe the duties of good faith and fair dealing, as the fiduciary relationship is one in which the parties are not free to pursue their separate interests: JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow & Lehane’s Equity: Doctrines & Remedies (5th ed, 2014, LexisNexis Butterworths) (“Meagher, Gummow & Lehane”).
Some common practical examples of the discharge of the obligation of good faith and fair dealing assist in understanding its scope. The obligation may, in appropriate circumstances, require an obvious enquiry to be made: Halloran v HardwoodNominees Pty Ltd [2007] NSWSC 913 (“Halloran”) at [38]. It is important to correlate the activities that an insured is capable of undertaking, as for example activities that are demonstrated in video surveillance material, to the activities the insured is required to undertake in employment: Ziogos at [103].
The Duty to Form an Opinion. Under a contract for insurance, if an element of insurance liability is expressed in terms of the satisfaction, or opinion, of the insurer, the insurer is obliged to act reasonably in considering and determining that matter: Edwards v The Hunter Valley Co-op Dairy Co Ltd (1992) 7 ANZ Ins Cas 61-113 (“Edwards”) and Sayseng at [47]. In Edwards (at 77,536) McLelland J stated with respect to clauses such as that in issue in this case, that there was an implied obligation on the insurer to consider and determine whether it should form the relevant opinion, which involved a consideration and determination of the correct question; and in the exercise of powers affecting the interest of both itself and the claimant the insurer was under a duty of good faith and fair dealing requiring it to have due regard to the interest of the claimant. McLelland J’s statement of the law was once more adopted with approval by the Court of Appeal last year in Hannover Life Re of Australasia Ltd v Jones [2017] NSWCA 233 (“Jones”).
Jones also approved (at [82] – [85]) Brereton J’s statement in Jones v United Super Pty Limited at [55] that the insurer’s decision will also be liable to be reviewed and avoided by the Court if in forming an opinion (about a claimant’s disability) the insurer: (1) misdirects itself in law, that is to say asks itself the wrong question; or (2) takes into account an irrelevant consideration or fails to take into account a relevant consideration.
And Jones explains how concepts of reasonableness are to be applied in forming an opinion about a claimant’s disability. Jones was decided after the Court reserved judgment in this matter, so the Court gave leave to the parties to make additional submissions in relation to it. The parties especially referred to its statements of principle in relation to reasonableness. Analogies exist between the judicial review cases, in which unreasonableness is assessed in the sense described in Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 (“Wednesbury”) at 234, and the implied term of reasonableness in contracts of insurance, where the formation of the insurer’s opinion is a condition of the insurer’s liability. But the analogy is not so close as to require the adoption of the stringent test of unreasonableness in the Wednesbury sense in the insurance contract cases: Jones at [121]. Rather the criterion of reasonableness of an insurer’s decision is “whether the opinion formed by the insurer was not open to an insurer’s acting reasonably and fairly in consideration of the claim”: Jones at [121]. And the insurer’s assessment of reasonableness is not made by reference to entirely objective criteria but must be unreasonable on the material then before the insurer: Jones at [94]. Nor does the assessment of reasonableness require the Court to undertake a review of the merits of the insurer’s decision: Jones at [93] and [99].

The affidavit of 4 November 2016 is quite short. Although this affidavit calls the business “Too Easy Distributors”, it is clear referring to the business which is correctly known as “Too Easy Distributing”. Mr Carroll says in the affidavit that his wife Genevieve runs the business and is the only employee of the business and “she handles all aspects of the operation of the business”. Mr Carroll’s affidavit explains that the business started “about two years ago”, which calculated from the time of the affidavit therefore is about November 2014.
But he says, “Unfortunately, the business has not been particularly successful. To date the business has operated a loss. On average over the last 4 - 5 months, Genevieve has made one sale per fortnight. Sales have included selling four feeders to Exeter Farm and Feed for $400 (exclusive of GST) each.” Mr Carroll explained, and I accept, that Mrs Carroll had come up with the idea of the business. But I also accept his account that the ambitions of husband and wife have not been realised. He explained, “The business was Genevieve’s idea. We had hoped that if the business was successful, Genevieve would have been able to work in the business full-time. However, because it hasn’t been a success, Genevieve has had to go back to work as a dental assistant.” I accept this evidence.
Despite a wide ranging and challenging cross examination, the defendants did not really shift this characterisation of the business as a loss-making small business owned by Genevieve Carroll. In my view the evidence which is examined below shows that Mr Carroll and his wife were dabbling as amateurs in an importing business. Their business involves intermittent operations that are consistent with and measured by their talents as amateurs. There is no evidence this business could support Mr Carroll to undertake regular remunerative work. At best it seems to suggest that Mr Carroll, a resourceful man, forced to be at home by personal circumstances, wanted to deploy his talents as best he could by supporting his wife’s business. Mr Carroll was not running or attempting to conceal from the Court some successful international importing business.
Mr Carroll says that the business has not been particularly successful. At the time of the hearing in November 2016 I accept that the business had been operating at a loss. The Court accepts Mr Carroll’s evidence that over the 4 to 6 months prior to the hearing Mrs Genevieve Carroll had made one sale per fortnight, which included selling four “feeders to Exeter Farm and Feed for $400. Exeter Farm and Feed is a neighbouring agricultural business.
Cross-examination of Mr Carroll was first directed at showing that he was more closely involved with the business than he said he was. In that respect the cross-examination was a success. The Court does not fully accept all Mr Carroll said on that subject. And the Court concludes that he underplayed his involvement in the business. But the cross-examination did not establish that this business, or one like it, provided, or was even capable of providing regular remunerative work for Mr Carroll. Nor did it establish that Mr Carroll was sufficiently regularly involved in the administration of the business that his activity could be used as a signpost of his capacity to perform regular remunerative work.
Mr Carroll first explained in general terms the limits of what he did for the business. He said in the affidavit of 4 November 2016 that he had “given Genevieve a hand with the business on a few occasions”. In my view that was an exaggeration: he gave Genevieve “a hand” on more than just “a few occasions”. The cross-examination shows that he became the default point of contact for the business when his wife, Genevieve, was not available. Mrs Carroll returned to work as a dental nurse in February 2016. Too Easy Distributing had started in November 2014. I accept that she worked in the business from late 2014 through 2015 but that she had to return to work because her business was not successful. She was not called to give evidence.
The cross-examination was also aimed at showing that the business was really being operated under his direction and that he was able to conduct it on a regular basis as the main point of contact. The evidence that emerged did not show it was his business. But it did demonstrate that in 2016 he was covering extensively for his wife’s absence from the business, after she had gone back to work. But in my view this was just the informal assistance that might readily be given within a family and does not involve the discipline of working regular if limited hours in a structured work environment.
Ownership of the Business. The Too Easy Distributing business started in late 2014. At the commencement of his cross examination Mr Carroll was taken to the website of Too Easy Distributing. He declared that Too Easy Distributing was “my wife’s business” and “only her business”. But he conceded that he did “have some involvement” in the business.
Mr Carroll agreed that he had given his wife, Genevieve, “a hand with the business” on more than two or three occasions and “as much is possible when I can”. But he made clear that he was “only helping” and was “not involved in the business”. He conceded early that he does take an active part in the business “at some stages”. The display of items for sale in the business is done in the front yard of their house. Mr Carroll explained that when people “come to have a look at some of our products”, if he is “able to [he] will go out and assist them”. I accept that this is what he does.
Mr Carroll had a tendency to refer collectively with his wife to ownership of the Too Easy Distributing business. On many occasions in evidence he described Too Easy Distributing as “our business” and said that what was being displayed was “our products”. But he denied legal ownership of the business and the Court accepts that denial. To explain his use of the word “our” in these answers to the effect that it was “my wife’s business”, he used a not uncommon marital expression that “whatever is hers is mine and what’s mine is hers”. And he made clear that in using that expression all he was intimating was that the business “is Genevieve’s business legally” but that because he is at home and cannot work “I just try and assist her where I can”. But in his early cross examination he insisted that this was not a regular occurrence.
It was put to Mr Carroll that his case was that “your wife’s running a business in which you say you have no involvement”. But he consistently denied such an overstatement of his case, conceding that he helped out in his wife’s business, taking mobile phone calls and showing people around the yard.
Mr Carroll’s account became more specific, in four main areas. He explained in his affidavit of 4 November 2016, showing the limits of his commitment, that his involvement in Too Easy Distributing was limited to the following: (a) answering the phone if Mrs Carroll was unable to answer it; (b) speaking to customers who came to the businesses display yard when Mrs Carroll was unavailable, (something is only done five or 10 times over the last two years) but without becoming involved in actual sales ; (c) driving a forklift a few times to move things around the yard – probably about four or five times for about five minutes each time; and (d) on one occasion when Carroll went to China on holidays with his wife he accompanied her to a factory where she purchased horse floats for the business to sell, pursuant to an advance invitation to her to attend the factory. Each of these four parts of this account was substantially challenged. I do not accept all Mr Carroll’s evidence on these matters. But overall I accept his evidence that his role was as an intermittent helper to his wife.
Answering the Phone and Website Contacts. Mr Carroll agreed that he answered the phone, if his wife was not able to do so. And he took messages and would occasionally accept direct inquiries from customers himself. He explained why his phone number is displayed on the website of the business: it was there so he could deal with customers whilst his wife, Genevieve, was at work. He also agreed his telephone number was placed on the website as a point of contact, when the business started. In my view it was always there as a backup for potential customers who might wish to contact his wife.
Mr Carroll says he has had no involvement in the creation of the Too Easy Distributing website. This can be accepted: Mr Carroll does not strike the Court as the kind of individual who, even if he had the training (which he did not) would have the inclination to create websites. Moreover there are testimonials on the website, that I accept a genuine that have been organised by Mr Carroll’s wife, Genevieve, such as, for example, the testimonial from a Ms Donna Titmuss. Other testimonials are from relatives of Mrs Genevieve Carroll, as well as Mr Carroll.
Mr Carroll’s mobile telephone number is displayed in various places on the website. On a page of the website that invites the visitor to the website to “View our Tyres [for sale]” Mr Carroll’s telephone number appears. But he says, and I accept, that he has not had any telephone calls about tyres originating from the Too Easy Distributing webpage. His mobile telephone number also appears on a pizza oven brochure available on the website, relating to another of the products that Too Easy Distributing offered for sale. But he did not receive any phone calls for this product.
Facebook Posts and Cheval Horsefloats. As to Mr Carroll’s statement that he has “waited for Genevieve to come to speak to customers about the products”, his wife is often inside and he is outside, when people come to look at products displayed outside the house. He says he meets the people while Genevieve is inside and then she comes out and deals with them.
Mr Carroll explained that he feels that “I feel a burden to my wife” he says “she’s taken on a lot” he goes on to say “she’s trying to go ahead and try and keep going and trying to get somewhere with our lives, so I’m just trying to get her the best I can”. I accept that evidence. Mr Carroll demonstrated an entrepreneurial bent in his early career. He was able to run his own business and employ others. But his past actual experience in doing that was always in a situation where he contributed to the success of the business, through being physically active in the operation of the business on the panel beater’s shop floor or on building sites. With Too Easy Distributing, and any other business Mr Carroll could have been involved in as at March or June 2012, such an active physical contribution to the business was beyond his capacity.
Mr Carroll was asked why he did not explain in his affidavit why his telephone number appeared on the Too Easy Distributing website. His answer that “I didn’t think it was necessary” was quite satisfactory. The affidavit was not designed to anticipate every turn of cross-examination. Nor is it to his discredit that such things were not mentioned in his affidavit.
Mr Carroll was challenged about certain entries made on behalf of “Cheval Floats Tasmania” on its Facebook web page, a page that had some association with Too Easy Distributing. These Facebook entries were made in about August 2016 and advertise “rural products for sale”. Some of the posts refer to Mr Carroll and appear to be signed off “kind regards Nick”. But I accept Mr Carroll’s evidence, when he was pressed on this subject: he said that these entries were posted by his wife using his name. He was able to explain that to be so because he says his wife’s computer was used: this can be inferred from the fact the web page displays icons referring to the fact that she was the source of the post. I accept this inference. It was suggested to him that he was using his wife’s computer to make these entries, to make the entries, which he denied. I accept his denial. Many the entries were after her ordinary working hours, when she would have been around to make than.
The Court asked Mr Carroll why he and Genevieve Carol would put these entries in Mr Carroll’s name. His explanation was that it was to meet the occasion, that there was a slight preference for people in the farming community to deal with males rather than females. This answer did not explain all the entries on the website. Quite a number of them were in Mrs Carroll’s name and giving her mobile phone number as a point of contact. But these other entries instead tended to confirm Mr Carroll’s account that his wife did have an active role in what he always said was her business.
Use of the Forklift. Mr Carroll was observed using a forklift vehicle. He explains, and the Court accepts, that the Too Easy Distributing business very occasionally needed to move heavy items that needed to be lifted with a forklift. Mr Carroll’s work history meant he held a forklift licence since the age of 22. His wife, who was a dental nurse by training, did not. He says, I accept, that moving the items of what was a borrowed forklift only took a few minutes. He could recall moving a number of items: a cattle crush, a cattle ramp, a heavy piece of rubber and two dog kennels. He explained that they had borrowed the forklift from Exeter Farm and Feed, the next door neighbour in Exeter. I accept his evidence that he has only been on a forklift on the four of five occasions he claims.
Visiting Factories in China. Mr Carroll explained that he had been to China three times. From his point of view, these trips were partly holidays and partly to help with his wife’s business. On one trip he had visited the Guangzhou District. On another occasion he had flown to Shanghai. He visited the Great Wall of China on one of these trips. He mostly went to China with his wife.
Mr Carroll was challenged about his airline travel to China. It was suggested that with his disabilities he would have difficulty in occupying an economy seat for such an 11 hour flight. But he responded, “When I fly, I ask to be put up in the front area where there is plenty of leg room. You can actually walk past the seats. So every time they put me in there and then I just walk around if I get sore.”
Mr and Mrs Carroll’s last trip to China was in November 2015. I accept that when he and his wife were there, they had a look at a factory that manufactured and supplied horse floats, Cheval Floats and “Qingdao Fencing” which made fencing wire for agricultural purposes. They also “just relaxed a bit” including taking a journey to the Great Wall of China.
The Wrangler. Mr Carroll’s mobile telephone number also appears on the Too Easy Distributing website for a “Ride Over Gate” (or “ROG”) product that Too Easy Distributing also attempts to sell. This product is sourced from The Wrangler, a business that trades from Whaketane, on the Bay of Plenty in the North Island of New Zealand.
Mr Carroll concedes that he and his wife Genevieve travelled to New Zealand, so she could do business with The Wrangler. I accept that Mrs Genevieve Carroll was the business contact of Too Easy Distributing for The Wrangler.
The New Zealand website for The Wrangler lists Mr Carroll as its Australian agent for the “Ride Over Gate”, together with his mobile telephone number and his email address at Too Easy Distributing. Mr Carroll denies being the Australian agent and says that his wife Genevieve is the agent and that the reason his own mobile telephone number is displayed is because his wife is at work. He reaffirmed his explanation that his name was displayed because his wife was at work. I accept his explanation.
Mr Carroll says, and I accept, that his telephone number and email are available for the Australian Ride Over Gate for convenience but the business remains that of his wife.
Mr Carroll denied there was any distribution agreement for The Wrangler to distribute and market their products in Australia through Too Easy Distributing. I accept that denial. The defendants issued subpoenas to the Wrangler. But nothing emerged that demonstrated Mr Carroll’s account that he was not the agent was wrong.
And for products such as those supplied by the Wrangler, I accept Mr Carroll’s evidence that he takes messages on the whole and tells people that his wife will call them back. I also accept his evidence “we’ve had very little business anyway” and “we’ve sold very little over the two years”.
The Court put to Mr Carroll whether he ever calls people back to do business with them himself. He denied that he did so, except on a few occasions when his wife did not have time. To test this, the Court directed that Mr Carroll produce his telephone records for his phone number for 2016. He telephone records were cross examined upon and showed a mixture of calls to family and friends and some businesses.
Inferences from the Nature of Mr Carroll’s Work in Too Easy Distributing. Cross examination demonstrated that Mr Carroll had the capacity, based on his past experience as a small business owner, to undertake some tasks that could be deployed in an undemanding situation where day-to-day work requirements were forgiving. Cross examination did not demonstrate that he had either the drive or the resources to advance the logistics, the customer base, and the turnover of such a business to a threshold where it could provide him with sustainable remuneration on a full time or even a part time basis over the medium-term. And it is interesting to observe in this connection that in the years before March 2012 he had had to fall back on supplementary income from GBE because his own self-employed business skills were not sustaining him financially.
Whether he has the “hope of reward” from his involvement in such a business is another question. He conceded in cross examination that he did, at least indirectly through his wife’s possible business success, have such a hope. Whatever hope of reward he has from such a business, on his current performance is not to be assessed as a hope of reward in the form of regular remuneration. His hope of reward is tied to a family business environment where ultimate business responsibility lay with other family members so he could, if necessary, defer regular work commitments and take time out as required to cope with any recurrences of his pain.
The Nicholas Wines Business. The evidence concerning Nicholas Wines can properly be characterised in the words of Counsel for the plaintiff in closing submissions. Counsel submitted that to call it a “business” is to stretch the concept of a “business” to breaking point. In my view, one would only describe Nicholas Wines as a set of discussions between a number of individuals who were vaguely considering transacting together some exporting business between China, Australia and New Zealand. Mr Carroll himself described the business as “a bit of a pipe dream”, and in my view, that is all it is.
Mr Carroll had a number of discussions with an acquaintance of his, Mr Jim Stevenson, a resident of New Zealand, and Mr Dennis Zeng Xu, a resident of the Chinese city of Shenzhen. The conversations between them arose informally in social settings in a hotel or motel. Mr Stevenson is a friend to whom Mr Carroll can talk. Mr Stevenson and his wife and Mr Carroll and his wife, Genevieve, are friends. Mr Stevenson is apparently a very driven individual who had looked at the possibility of exporting wine into China and began discussing that with Mr Carroll and his wife. The concept developed between the two families to the point that Mr Carroll’s wife Genevieve applied for a trade mark logo and a company, Nicholas Wines Pty Ltd, was set up. Mr Carroll and Mr Stevenson’s faces appear on some of the logo material. This was Mr Stevenson’s idea.
Telephone records show that Mr Carroll speaks to Mr Stevenson on a regular basis. But I accept Mr Carroll’s evidence that many of those conversations relate to personal issues about family matters. As Mr Carroll said, “it’s an outlet for me, it’s probably a bit of an outlet for him as well to have someone to talk to and we just seem to click really well and have lots of laughs and stuff”. In my view, much of the relationship and communications between Mr Carroll and Mr Stevenson are explained by family friendship. It is not unknown for informal business ventures to be set up between friends that never go anywhere.

Mr Carroll was criticised in cross examination for the amount of time he spent on the telephone with Mr Stevenson. But in my view, it is overly suspicious to conclude that these conversations relate to business matters. There is an undoubted friendship between Mr Stevenson and Mr Carroll. I accept Mr Carroll’s evidence that Nicholas Wines may be mentioned between them “every now and then” but their main communications are to “chat” about other matters. Mr Carrols trikes the Court as an individual who enjoys the company of others.
It was also put to Mr Carroll that he could use any payout from these proceedings as a capital contribution to the business of Nicholas Wines. Mr Carroll was dismissive of this. He was of the view that the setup fees that are involved in exporting wine into China are substantial. The licenses that are required and a partnership with a local Chinese company, are all such that he believes that “you’ve got to have a fortune in the bank” before you can set up in China, so that you can “prove that you’ve got funds”. He said that has “really knocked it on its head”. He was not sanguine about his wife, Genevieve, being able to overcome the problems of exporting wine to China.
Mr Carroll’s telephone records produced on subpoena show that some telephone calls had been made to wine producers in Australia that may have assisted in the Nicholas Wines business had it ever got underway and there were text messages to similar effect. But the communications did not represent anything like an active business. Some of them were initiated by Mrs Carroll and they were all interspersed with a bulk of communications of a personal and family nature to friends such as Mr Stevenson and to photographers and other relatives.
Mr Carroll did take a more active role in the business than he first conceded. Emails were produced and cross examined on later in the proceedings which showed Mr Carroll using his email address “[email protected]” to communicate about the importation of horse floats and for the Too Easy Distributing business and in relation to Nicholas Wines to facilitate a Mr Lee in China securing a “Chinese investor to help get Nicholas Wines off the ground in China”. But Mr Carroll characterised these communications as simply Mr Stevenson and his wife having proposed ideas and Mr Carroll would be “tagging along”.
A business plan emerged for Nicholas Wines from later subpoenaed documents but this document in the associated communications did not show that the company was actually doing anything. The documents are consistent with Mr Stevenson pushing aspects of the Nicholas Wines business and Mr Carroll giving friendly assistance. Text messages as recently a month before the hearing show that Mr Carroll is messaging Mr Stevenson saying “Hi Jim I have a phone meeting at 10 this morning. Could you follow up and call Paul Farholl and Vivienne Zo?”. Mr Carroll somewhat discreditably initially denied who these people were but then ultimately indicated that they work with “Aus Wine”. But in my view the overall impression created by the extra documents does not damage Mr Carroll’s account.
Mrs Genevieve Carroll was not called to give evidence, about, for example the family journey to New Zealand to deal with The Wrangler on behalf of Too Easy Distributing. There was some evidence that she could perhaps have travelled from Tasmania to New South Wales to give evidence, but no ultimate explanation as to why she did not give evidence. She was undoubtedly a witness that would have been in a position to confirm some of Mr Carroll’s evidence. The Court can only infer that her evidence would not have assisted his case. But without her, the Court generally accepts his account.
Inferences to be Drawn From Nicholas Wines. In my view, nothing of value to these proceedings may be inferred from Mr Carroll’s informal assistance to his wife and discussions about Nicholas Wines.
In Summary. In my view, no matter how Mr Carroll’s prior vocational experience is approached, Mr Carroll is unlikely ever to be able to engage in Regular Remuneration Work as defined under the Policy, based on his education, training or experience. The two forms of work which he could undertake based on his education, training or experience are precluded for different reasons. Estimating and project management work is not wholly sedentary and requires visits to work sites. I accept the medical evidence that says Mr Carroll is unfit for such physical work. And in relation to running small family businesses, the highest characterisation that could be given of Mr Carroll’s work for Too Easy Distributing or Nicholas Wines was that it was “casual work or other work of an intermittent nature”, which Bathurst CJ said in Dargan does not qualify as Regular Remuneration Work.

Conclusion and Orders

For these reasons the Court has concluded that the plaintiff is successful in challenging both the Trustee’s and Hannover’s decisions in 2013 and 2014 that Mr Carroll was not Totally and Permanently Disabled under the Policy and the Deed. The Court proceeded to a second stage inquiry and assessed for itself whether Mr Carroll is Totally and Permanently Disabled within the Policy as at the time for assessment, 9 March 2012 and finds that he is. The plaintiff is therefore entitled to a declaration to that effect and orders that Hannover pay the sum of $104,000 to the Trustee for distribution to Mr Carroll.
The plaintiff has been successful and costs would normally follow the event. But some party may seek a special costs order. To allow for that possibility and for the parties to formulate the declarations and orders in the form they wish, the matter will be adjourned to 10 May 2018 for mention or such other date as the parties may wish to arrange with my Associate.
For these reasons the Court makes the following orders and directions:

Direct the parties to bring in short minutes of order to give effect to these reasons; and

List the proceedings for mention at 9.30am on 10 May 2018 for any argument on costs or other consequential issues.

Liberty to apply.

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Amendments

19 July 2018 - [88], second line, citation should read Finch v Telstra Super Pty Ltd (2010) 242 CLR 254; [2010] HCA 36

Decision last updated: 19 July 2018

Medium Neutral Citation:	Carroll v United Super Pty Ltd [2018] NSWSC 403
Hearing dates:	7, 8, 9, 23, 24 and 25 November 2016, 2, 6 December 2016, 17 February 2017
Date of orders:	04 April 2018
Decision date:	04 April 2018
Jurisdiction:	Equity
Before:	Slattery J
Decision:	See paragraphs 279 – 281
Catchwords:	INSURANCE – General – total and permanent disablement – plaintiff/insured self-employed in the building and construction industry – plaintiff suffers hip disability and ceases work in March 2012 – plaintiff a member of an industry superannuation fund – first defendant is a trustee of the fund – first defendant takes out a policy of insurance for the benefit of members of the fund with the second defendant insurer – plaintiff claims he is totally and permanently disabled after being off work for three months and entitled to a benefit for the same – the first and second defendants decline the plaintiff’s claim on various dates between June 2013 and April 2014 – identification of the duties applicable to each of the first and second defendants in making their decisions to decline the plaintiff’s claim – whether the first defendant trustee failed to act in good faith on a real and genuine consideration of the material before it – whether the second defendant insurer acted with the utmost good faith in dealing with the plaintiff’s claim and reasonably in forming an opinion as to whether the plaintiff qualified as totally and permanently disabled under the policy – whether the defendants’ respective decisions can be set aside – whether the Court should itself determine whether the plaintiff is totally and permanently disabled under the policy – whether the plaintiff was “unlikely to ever to be able to engage in any regular remuneration work for which he is suited by education training or experience”.
Cases Cited:	Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 Banovic v United Super Pty Ltd [2014] NSWSC 1470 Beverly v Tyndall Life Insurance Co Ltd (1999) 21 WAR 327 Birdsall v Motor Trades Association of Australia Superannuation Fund Pty Ltd [2015] NSWCA 104 Chammas v Harwood Nominees (1993) 7 ANZ Ins Cas 61-175 CGU Insurance Ltd v AMP Financial Planning Pty Ltd (2007) 235 CLR 1 Dewhirst v Edwards [1983] 1 NSWLR 34 Edwards v The Hunter Valley Co-op Dairy Co Ltd (1992) 7 ANZ Ins Cas 61-113 Erzurumlu v Kellogg Superannuation Pty Ltd [2013] NSWSC 1115 Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 Finch v Telstra Super Pty Ltd (2010) 242 CLR 254 Halloran v Hardwood Nominees Pty Ltd [2007] NSWSC 913 Hannover Life Re of Australasia Ltd v Colella (2014) 47 VR 1 Hannover Life Re of Australasia Ltd v Dargan (2013) 83 NSWLR 246 Hannover Life Re of Australasia Ltd v Jones [2017] NSWCA 233 Hannover Life Re of Australia Ltd v Sayseng [2005] NSWCA 214 Jones v United Super Pty Limited [2016] NSWSC 1551 Lazarevic v United Super Pty Ltd [2014] NSWSC 96 McArthur v Mercantile Mutual Life Insurance [2002] 2 Qd R 197 Lodge v National Union Investment Co Limited (1907) 1 Ch 300 Repatriation Commission v Hill (2005) 142 FCR 88 Savelberg v United Super Pty Ltd [2011] NSWSC 1482 Sayseng v Kellogg Superannuation Pty Ltd [2003] NSWSC 945 Tal Life Ltd v Shuetrim; Metlife Insurance Ltd v Shuetrim (2016) 91 NSWLR 439 Wardley Australia Limited v the State of Western Australia (1992) 175 CLR 514 Weber v v Tiss Pty Ltd [2005] NSWSC 67 Wells v Australian Aviation Underwriting Pool [2004] QCA 43 Wyllie v National Mutual Life Association of Australasia Ltd (1997) 217 ALR 324 Ziogos v FSS Trustee Corporation as Trustee of the First State Superannuation Scheme [2015] NSWSC 1385
Texts Cited:	Enright and Merkin, Sutton on Insurance Law (4th ed, Volume 2, 2014, Thomson Reuters) JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow & Lehane’s Equity: Doctrines & Remedies (5th ed, 2014, LexisNexis Butterworths)
Category:	Principal judgment
Parties:	Plaintiff: Nicholas Carroll First Defendant: United Super Pty Ltd (ABN 46 006 261 623) Second Defendant: Hannover Life Re of Australasia Ltd (ABN 37 062 395 484)
Representation:	Counsel Plaintiff: A. Coombes Defendants: B. Nolan Solicitor Plaintiffs: Stephen Paul Firth, Firths Compensation Lawyers First and Second Defendants: Michael Iacuzzi, TurksLegal
File Number(s):	2014/276267
Publication restriction:	No