HCF Life Insurance Company Pty Ltd v Kelly
[2002] WASCA 264
•20 SEPTEMBER 2002
HCF LIFE INSURANCE COMPANY PTY LTD -v- KELLY [2002] WASCA 264
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2002] WASCA 264 | |
| THE FULL COURT (WA) | |||
| Case No: | FUL:161/2001 | 23 JULY 2002 | |
| Coram: | WALLWORK J TEMPLEMAN J MATHEWS AJ | 20/09/02 | |
| 14 | Judgment Part: | 1 of 1 | |
| Result: | Appeal allowed | ||
| B | |||
| PDF Version |
| Parties: | HCF LIFE INSURANCE COMPANY PTY LTD JOHN PATRICK KELLY |
Catchwords: | Insurance contract Respondent injured at work Whether totally and permanently disabled Whether focus should be on an occupation worker had habitually performed Whether relevant he could do other work |
Legislation: | Nil |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE FULL COURT (WA) CITATION : HCF LIFE INSURANCE COMPANY PTY LTD -v- KELLY [2002] WASCA 264 CORAM : WALLWORK J
- TEMPLEMAN J
MATHEWS AJ
- Appellant
AND
JOHN PATRICK KELLY
Respondent
Catchwords:
Insurance contract - Respondent injured at work - Whether totally and permanently disabled - Whether focus should be on an occupation worker had habitually performed - Whether relevant he could do other work
Legislation:
Nil
Result:
Appeal allowed
(Page 2)
Category: B
Representation:
Counsel:
Appellant : Mr P G McGowan
Respondent : Mr C P Shanahan
Solicitors:
Appellant : Greenland Brooksby
Respondent : Butcher Paul & Calder
Case(s) referred to in judgment(s):
Beverley v Tyndall Life Insurance Co Ltd (1999) 21 WAR 327
Chammas v Harwood Nominees Pty Ltd (1993) 7 ANZ Insurance Cases 61-175
Edwards v The Hunter Valley Co-op Dairy Co Ltd & Anor (1992) 7 ANZ Insurance Cases 61-113
Wyllie v National Mutual Life Association of Australasia Ltd & Ors, unreported; SCt of NSW; BC9703063; 18 April 1997
Case(s) also cited:
Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500
De Britt v Frew (1992) 7 ANZ Insurance Cases 61-140
Distillers Company Biochemicals (Australia) Pty Ltd v Ajax Insurance Company Ltd (1973-74) 130 CLR 1
Heitman v Guardian Assurance Company Limited & Anor (1992) 7 ANZ Insurance Cases 61-107
Johnson v American Home Assurance Co (1998) 192 CLR 266
Re Beloved Wilke's Charity (1851) 3 Mac & G 440; 43 ER 330
White v Board of Trustees (1997) 2 Qd R 659
(Page 3)
1 WALLWORK J: The respondent was injured at his work. He made a claim pursuant to the terms of an insurance policy he had with the appellant on the basis that he was totally and permanently disabled.
2 Pursuant to the policy the relevant definition of total and permanent disablement was:
"Total and permanent disablement which has lasted for at least 12 months and completely prevents and is likely to completely prevent for the rest of the life of the person disabled from engaging in any occupation for which he is fitted by reason of his education, training or experience."
3 The appellant denied liability under the policy and the respondent took action in the District Court at Perth. In his reasons for decision the learned trial Judge said:
"1. The policy definition, when it refers to an insured person's occupation, must, in the context of this action, be limited to an underground fitter or an automotive mechanic.
2. The plaintiff's physical injuries, in conjunction with his psychiatric condition, permanently precluded him from returning to work in either of those occupations.
3. The defendant did not apply the policy definition of total and permanent disablement to the plaintiff's condition."
4 His Honour continued:
"The decision made by the defendant that the plaintiff was not totally and permanently disabled within the meaning of the policy because he had a retained capacity to engage in work other than his pre-accident occupations was, in my judgment, a misinterpretation of the policy.
I am satisfied the plaintiff has proved to the required standard that he was totally and permanently disabled within the meaning of the policy definition."
5 The appellant claims that the learned trial Judge erred in his conclusions as the respondent has a residual capacity to work in a number of areas, for example, as a spare parts manager, a repairs assessor, instrument man, geologist's assistant, and other similar occupations.
(Page 4)
6 One of the reasons for his Honour's decision is revealed in the following passage:
"In this case the only occupations for which the plaintiff [respondent] was reasonably suited by education, training or experience were those of an underground fitter or a motor mechanic. The other occupations of spare parts manager and repairs assessor had erroneously been included in his curriculum vitae. The defendant was later told this and seemed to accept it. It was certainly accepted to be the position at the trial. The question to be decided is whether there was evidence upon which the defendant, exercising its discretion upon 'real and genuine consideration' and on sound reasons, could conclude he was likely to be capable of doing the important duties of an underground miner or motor mechanic (Beverley v Tyndall Life Insurance Co Ltd (1999) 21 WAR 327.) The focus must be on the occupation to which the plaintiff was fitted by reason of his education, training or experience. It must not be on his retained capacity to do work other than in an occupation he had habitually performed. I propose to adopt this meaning of 'total and permanent disability' and go on to review the medical evidence in deciding whether the defendant has been shown to have been unreasonable in the decision it made."
7 In the next paragraph the learned Judge said:
"I have already referred in general terms to the medical evidence which showed that the plaintiff had a residual capacity to do certain types of work. I now propose to analyse the medical evidence contained in the book of medical reports introduced as an exhibit with a view to deciding whether the plaintiff is totally and permanently disabled within the meaning of the policy definition from engaging in the occupation of an underground fitter or automotive mechanic."
8 It can be seen from the above passages that the learned Judge confined the relevant words in the definition of "disablement" in the policy - which were "disabled from engaging in any occupation for which he is fitted by reason of his education, training or experience" - to the occupations "of an underground fitter or a motor mechanic." His Honour also said that the focus "… must not be on his retained capacity to do work other than in an occupation he had habitually performed."
(Page 5)
9 There is no requirement in the relevant definition of "disablement" which has the effect that the words "any occupation for which he is fitted by reason of his education, training or experience" are limited to "an occupation he had habitually performed." At first glance it seems that the learned Judge unduly restricted the words in the policy. It is relevant to see how his Honour came to his conclusions.
10 In par 23 of the reasons the learned Judge said that the onus was on the insured to provide whatever evidence was necessary to lead to the conclusion that total and permanent disablement had been established. His Honour said:
"This onus includes the presentation of medical evidence as to the extent of the injured person's incapacity and evidence precluding the likelihood of the insured permanently engaging in any occupation for which he is fitted by reason of his education, training or experience - Heitman v Guardian Assurance Company Ltd & Anor (1992) 7 ANZ Insurance Cases 61-107 (Supreme Court of WA) at 77, 487."
11 Further on in par 29 the learned Judge said that he would review the medical evidence but it was correct to say that the respondent had a residual capacity to work in a number of areas such as spare parts manager, repairs assessor, instrument man, geologist's assistant and other similar jobs. "This residual capacity has never been denied by the appellant. The issue, however, is whether it excludes him from the benefit conferred by the policy."
12 In coming to his conclusions his Honour relied on the reasons in Beverley v Tyndall Life Insurance Co Ltd (1999) 21 WAR 327. In that case the definition of totally disabled was different to the one in the present policy. In the Beverley decision Condition 2.38 provided:
"TOTAL DISABILITY AND TOTALLY DISABLED… is when solely because of sickness or injury:
You are not capable of doing the important duties of your regular occupation; and
You are not working in any gainful occupation …"
(Page 6)
13 A further condition in that policy, Condition 3A.18, provided:
"DISABILITY WHILST UNEMPLOYED
If you have been … unemployed for 12 months or more immediately before becoming totally disabled, you will only be considered to be totally disabled if, solely because of sickness or injury:
You are unable to perform any occupation for which you are reasonably suited by education, training or experience and
You are not working in any gainful occupation …"
14 At 336 of his reasons in Beverley Ipp J said:
"The foregoing provisions explain what is meant under the policy by 'total disability'."
15 His Honour said that the state of being 'permanently' as well as 'totally' disabled was dealt with by Condition 2.39.
16 At 337 his Honour said:
"It follows that, ignoring matters which were common cause, for the appellant to establish that she was totally disabled whilst unemployed (within the meaning of Condition 2.38 read with Condition 3A.18), she was required to show that because of injury, she was unable to perform any occupation for which she was reasonably suited by education, training or experience. The only occupation for which the appellant was so reasonably suited was that of a cook (or, arguably, a person 'wholly engaged in full time domestic duties'). It seems to me that, having regard to the terms of Condition 2.38, a person will be regarded as being unable to perform any occupation for which she is reasonably suited if she is 'not capable of doing the important duties' of that occupation. It does not appear to have been disputed that the appellant was totally disabled whilst unemployed, within the meaning of Condition 2.38 read with Condition 3A.18. … The fundamental question on which the trial proceeded (and with which this Court is concerned) was whether the appellant was totally and permanently disabled within Condition 2.39. I shall leave aside those elements of the
(Page 7)
- definition of total and permanent disability which were not in dispute."
17 In that case the cl 2.39 was quite different to the present policy and it can be seen from the above reasons that Beverley's case was different to this one. One difference was that the definition of "total disability" and "totally disabled" in Beverley, related to the insured being not capable "of doing the important duties of your regular occupation." That is not so in this case.
18 The question is whether or not the respondent did establish that he was disabled "from engaging in any occupation for which he is fitted by reason of his education, training or experience."
19 The respondent was a fully qualified motor mechanic. His Honour found (par 29):
"… it is correct to say that the plaintiff has a residual capacity to work in a number of areas such as spare parts manager, repairs assessor, instrument man, geologist's assistant and other similar jobs. This residual capacity has never been denied by the plaintiff."
20 When examining the medical evidence his Honour said in par 36 of his reasons that:
"I have already referred in general terms to the medical evidence which showed that the plaintiff had a residual capacity to do certain types of work."
21 In the course of the examination his Honour commented upon the medical report of Dr Gathay dated 22 September 1995. His Honour said:
"…while the plaintiff might be able to return to office/administrative type duties by the end of that year, she was of opinion that he would never be able to return to work as a miner because of his chronic pain and disability."
22 On 20 October 1995, an orthopaedic surgeon, Mr Loefler reported that the respondent had a restricted range of forward flexion and that there was still abnormality in his para-spinal musculature. Mr Loefler certified the respondent fit for full-time work not involving heavy lifting. In his final report dated 2 January 1996, Mr Loefler concluded that while the respondent would continue to improve it was likely he would be left with
(Page 8)
- a disability flowing from his spinal injury. There was a possibility his back pain would gradually increase. As a consequence Mr Loefler was of the view that the plaintiff would not be able to return to his pre-injury work and would only be fit to carry out work involving light or moderate lifting.
23 Professor Taylor, a specialist in spinal medicine, concluded that the respondent's thoracic pain at the T4/5 and T5/6 levels remained constant and was exacerbated by prolonged standing and extension movements. On 23 May 1996 his low back pain remained unchanged.
24 His Honour referred to the reports of Mr F G Bell who "like most of the other medical practitioners, believed the plaintiff had recovered sufficiently to work in a number of non-physically demanding areas." Mr Bell attributed the respondent's painful state in no small part as due to his continuing anger in relation to the accident, the medical treatment he had received and the efforts that had been put into his rehabilitation. While unable to point to any clinical signs of serious spinal pathology, Mr Bell believed that the respondent's consuming anger would need to be addressed before he was fit to return to the work force. He concluded:
"From a physical point of view I cannot find any good reason why Mr Kelly cannot go back to a reasonable level of work but I do not think it would be reasonable to expect him to return to his pre-accident work for both physical and psychological reasons."
25 Dr Ouzas, a consultant psychiatrist, diagnosed the respondent as suffering from a fairly severe form of post-traumatic stress disorder. His Honour said:
"When seen by Dr Ouzas in 1995 the seriousness of the plaintiff's psychological symptoms was such that in the opinion of the psychiatrist, he was largely precluded from any form of useful work or even retraining."
26 His Honour said that later reports from Dr Ouzas confirmed that the respondent had continued to suffer from post-traumatic stress disorder and depression. In Dr Ouzas' opinion this mental state was caused by his physical injuries. In the concluding paragraph of his report dated 8 June 1995 Dr Ouzas said:
"In conclusion, whilst working as a motor mechanic may involve a range of mutual activities which may be tolerable, the
(Page 9)
- potential for exposure to a range of very powerful triggers reminiscent of the original trauma is quite high and would more than likely be poorly tolerated (if at all) without triggering his difficulties. Again there would be a concern for the safety of others with whom he may be working (as well as for himself)."
27 His Honour said that the conclusions of Dr Ouzas were supported by two clinical psychologists, Jenny Connolly and Peter Currie. However, he said that other evidence was not so favourable to the respondent. Dr Mustac, a consultant psychiatrist, had been unable to find any evidence of either major depression or post-traumatic stress disorder. He had concluded that the respondent was fit from a psychiatric perspective to resume work but that he had no desire to do so. The learned Judge said:
"Dr Mustac went so far as to say that the plaintiff was able to return to his pre-accident work or any other work but doubted he would do so in the light of his antagonistic and self-pitying attitude."
28 The learned Judge said he was conscious of the conflict in the psychiatric evidence. However, none of the medical witnesses had been called to give evidence. That made it difficult to reach a decision where there was the conflicting evidence.
29 His Honour said he was unimpressed by the contents of Dr Mustac's report. He believed the report was highly subjective in its terms and that many of the conclusions which Dr Mustac had reached fell outside the range of his expertise. In any event in some instances they were seemingly unwarranted. His Honour was not prepared to attach the same weight to Dr Mustac's opinions as he was to those of Dr Ouzas.
30 In the light of the fact that none of the medical witnesses were called to give evidence, in my view it is necessary to further examine some of the evidence, remembering that the onus was on the respondent to establish his claim.
31 The respondent was born on 30 December 1962. He was injured on 4 April 1995 when he was 32 years of age. A large rock fell on him whilst he was working in a mine. The rock fell onto the left side of his body and lower legs. He suffered fractured ribs on the left side (1st to 8th), a collapsed lung, a fractured first lumbar vertebra and residual hip and back pain. He was in hospital for three weeks and continued treatment thereafter. Whilst he was working as a miner his duties had
(Page 10)
- included operating a shotcrete machine and pumps, operating loaders, and applying wood and concrete mesh in underground tunnels.
32 On 20 October 1995 Mr Loefler said that the fractures in the left thorax had healed well. The fractures of L1 and L2 were solidly united but the L1/2 disc was narrow. The respondent had a restricted range of forward flexion. He did not have any pain on that day. Mr Loefler said he had given the respondent a certificate for full time work in a position not involving heavy lifting. Mr Loefler said:
"He is happy with this and is keen to return to some form of employment."
33 It appears from a certificate of Ms Rawlings, a rehabilitation counsellor, dated 20 October 1995 that the respondent left school at the age of 16 years. He had completed Year 10 and then spent four years as an apprentice motor mechanic. He had worked as a motor mechanic in various workshops for two to three years. He had then worked for Qantas as a ground engineer on jet engines for two years. He later worked with Theis Contractors in the Sydney Harbour Tunnel in a mining capacity. He also worked at that time as a fitter/mechanic. He told Ms Rawlings that he was very interested in the mining industry and if he was unable to return to his normal duties he would like to become a safety officer. He felt he had previous skills, expertise and experience which could contribute to such a role.
34 In a report dated 18 April 1996 Mr F G Bell said that he thought the respondent could undertake forms of employment such as a storeman in light industry, any form of clerical work where he could get up and move about from time to time, gardening, and any job which did not involve lifting weights say greater than 10 kgs, or acquiring him to flex his back a great deal.
35 On the 6 August 1996 Mr Bell said that he thought the respondent was capable of work as a storeman in light industry, a shop assistant and in light manufacturing conditions in a factory. Mr Bell said:
"I do not therefore consider him totally and permanently disabled. He could certainly work as a spare parts manager, a repairs assessor and in time I think he would be able to work as a duty mechanic in an 'NRMA service unit' which I believe would need to start on a part time basis and gradually increase towards full time work as his psychological and physical injuries recover."
(Page 11)
36 Mr Bell reported that the respondent had stated to him that he did not want to do a storeman's job and any other apparently menial type of job. "He wants to make his mark."
37 On 18 January 1997 Mr Bell said that from a physical point of view he could not find any reason why the respondent could not go back to a reasonable level of work "but I do not think it would be reasonable to expect him to return to his pre-accident work for both physical and psychological reasons."
38 On 5 February 1997 Dr Marsden, a specialist in occupational medicine, said that the respondent had told him he felt he had recovered sufficiently to be able to return to work in some clerical working role. He explained to the respondent that it would be helpful if he did start to look for work:
"…and in my opinion he has recovered sufficient in capacity to be able to return to work of a general clerical nature where he is able to work under direction in a clerical basis where he can sit, stand and walk within his own reasonable timeframe, sort and distribute mail, undertake computer access work from time to time with appropriate on job training and undertake simple filing etc. In my opinion he could work in those duties on a full time basis. He could also work in the management of a tool store on a full time basis and this was to use his background experience as a tradesman mechanic and as part of that working role he could mend small pieces of machinery, hand tools etc which is often a function undertaken by tool store operators."
39 In a report dated 23 March 1998 Dr Ouzas said that if the respondent was stabilised on medication and given adequate psycho-therapeutic contact, that is once a week, he would be able to return to some form of work which did not require significant physical exertion.
40 On 19 February 1999 a rehabilitation consultant physiotherapist, Ms Tibbey, said that the respondent's functional abilities indicated that he was capable of performing light to medium work per the US Department of Labour Physical Demand Classification. Future work sought should be preferably light in nature and allow changes in posture between sitting and standing as indicated and not involve extended reach and/or forward stooping. Types of suitable work options include light retail, café, sales, and customer service type positions.
(Page 12)
41 On 8 June 1999 Dr Ouzas said that since March 1998 the respondent had not attended for further treatment. But Dr Ouzas thought he should not work as a motor mechanic in the future, one of the reasons being that there would be a concern for the safety of others with whom he might be working as well as form himself.
42 It is apparent from the evidence that the respondent had never previously been employed in a spare parts department or required to do any quoting or assessing of any kind; also he was not employed as an NRMA road service person. He had spent all his employment with Paul Barrett Motors in Penrith working as a mechanic in the workshop. There is a certificate from Penrith Mitsubishi that the respondent had not worked as a spare parts manager or repairs assessor during his employment with that firm.
43 The respondent says in his outline of submissions that the insurer's obligation was to exercise its discretionary judgment fairly and reasonably as a condition precedent to the validity of its decision. In my opinion the insurer did this. However, it was not persuaded by the respondent that he had satisfied the relevant condition of the policy.
44 As the respondent says in his submissions, if the insurer fails to meet the objective standards which govern the exercise of its discretionary judgment when making a determination as regards its liability, then the insurer loses the benefit of that condition and it becomes appropriate for the Court to consider the matter itself - Chammas v Harwood Nominees Pty Ltd (1993) 7 ANZ Insurance Cases 61-175 per Hodgson J at 78001 applying McLelland J's adoption of this principle in Edwards v The Hunter Valley Co-op Dairy Co Ltd & Anor (1992) 7 ANZ Insurance Cases 61-113 and Hunter J's in Wyllie v National Mutual Life Association of Australasia Ltd & Ors, unreported; SCt of NSW; BC9703063; 18 April 1997. In this case the learned trial Judge applied that principle and considered the matter for himself. On this appeal this Court must consider whether the learned Judge should have taken that course.
45 On a fair reading of the medical reports and having regard to the other evidence, in my view the respondent's present problems are not likely to completely prevent him from engaging "in any occupation for which he is fitted by reason of his education, training or experience" for the rest of his life. He is still a very young man. His physical condition is quite good and he provided the appellant with a complete book of medical reports which I have read. He may need some further treatment but he is
(Page 13)
- in my opinion obviously not totally and permanently disabled within the meaning of the definition. Were it not for his present psychiatric problems he could undertake many occupations. In my view it is to undervalue his ability and his attitude to say that he is unlikely to be employed in "any occupation for which he is fitted" for the rest of his life.
46 With respect to the respondent's contention that the insurance company had applied the wrong definition by including the words "or work" after the word "occupation" in its initial letter of rejection dated 30 August 1996, it is my view that the words "or work" do not detract from the words "in any occupation" in the definition. The learned Judge said the words "or work" widened the scope of the definition because the word "occupation" is defined in the new shorter Oxford Dictionary as meaning amongst other things:
"What a person is (habitually) engaged in, especially to earn a living; a job, a business, a profession, a pursuit, an activity."
47 If the word "work" was substituted in that definition for the words "a job" the definition would be the same.
48 With respect to the respondent's contention that the appellant is estopped from denying that it accepted that underground fitter or motor mechanic were the only relevant occupations for the definition of total and permanent disability under the policy and that therefore because that was a finding of fact this appeal cannot succeed - (pars 22 - 24 of the respondent's submissions) - in my view that submission should not be upheld. The learned trial Judge in my view, erred in overruling the decision of the appellant.
49 If his Honour's decision was not correct this Court can look at it again. The Court is not "estopped" from deciding the issues. If the appellant had erroneously by its conduct accepted that only two occupations were relevant to the question of total and permanent disability under the policy that does not govern the correct interpretation of the policy by this Court on this appeal.
50 With respect to ground 2 of the appeal the submissions of the respondent state that no evidence was led at trial regarding what training or re-education would be required to allow the respondent to pursue any of the named occupations or that such occupations would be available to him. Further that the fact that the respondent needs such retraining suggests that such occupations fall outside the policy definition. In my
(Page 14)
- view, these contentions do not take sufficient account of the onus of proof under the policy.
51 Ground 2.2 of the appeal asserts that the respondent had a residual capacity to work in a number of areas such as spare parts manager, repairs assessor, instrument man, geologist's assistant and other similar jobs. In my view, those occupations are unduly restrictive. There are many occupations for which the respondent "is fitted by reason of his education, training or experience."
52 The evidence available in this case in my opinion does not establish that the respondent is unable to be employed "in any occupation for which he is fitted by reason of his education, training or experience". The onus was on him to establish that.
53 I would allow the appeal.
54 TEMPLEMAN J: I have read in draft the reasons to be published by Wallwork J. I agree with those reasons and with his Honour's conclusion, that the appeal should be allowed.
55 MATHEWS AJ: I have had the benefit of reading the reasons for judgment of the Hon Justice Wallwork. I am in agreement with those reasons and have nothing further to add.
6
1