Hannover Life Re of Australasia Ltd v Jones

The appeal concerned an insurance policy taken out by the trustee of a superannuation fund for the benefit of its members. The respondent, who had suffered a back injury while working as a roofing supervisor, claimed a benefit for "total and permanent disablement" (TPD). The insurer's liability was contingent on it forming a favourable opinion that the claimant met the definition of TPD. The insurer formed an unfavourable opinion, concluding that the respondent did not satisfy the definition. The appeal was brought by the insurer against a decision that it had not acted reasonably and fairly in forming its opinion.

The court was required to determine the standard of review applicable to the insurer's opinion regarding the respondent's TPD claim. Specifically, the court considered whether the review should be limited to unreasonableness in the *Wednesbury* sense, or whether it involved a merits review of the insurer's opinion on an entirely objective basis. A further issue was the construction of the phrase "reasonably fitted by education, training or experience" within the TPD definition, and whether it required a connection between suggested future work and the claimant's existing education, training, and experience, particularly where the claimant possessed transferable skills but no vocational history in alternative roles.

The court reasoned that the trial judge had not substituted his own opinion for that of the insurer but had conducted a detailed analysis demonstrating that the insurer had selectively considered material that supported a denial of the claim. The court found that the insurer had not acted reasonably and fairly in considering the respondent's claim, and that its opinion was not open to an insurer acting reasonably and fairly on the material before it. The court affirmed that the task was not to assess what it thought was reasonable but to determine if the insurer's decision was one that no reasonable repository of power could have taken, consistent with the principles established in *Minister for Immigration and Citizenship v Li*. The court rejected the submission that it must undertake a merits review of the insurer's decision or that there was a special rule in insurance cases.

The appeal was dismissed, and the appellant was ordered to pay the costs of the first respondent.