Khan v Host-Plus Pty Ltd
[2024] VCC 1640
•15 November 2024
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMON LAW DIVISION | Revised Not Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-21-05326
| MUHAMMAD HAMZA KHAN | Plaintiff |
| v | |
| HOST-PLUS PTY LIMITED (ACN 008 634 704) | First Defendant |
| METLIFE INSURANCE LIMITED (ACN 004 274 882) | Second Defendant |
---
JUDGE: | HER HONOUR JUDGE TRAN | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 24 – 27, 31 October, 1 November 2023 | |
DATE OF JUDGMENT: | 15 November 2024 | |
CASE MAY BE CITED AS: | Khan v Host-Plus Pty Ltd and Anor | |
MEDIUM NEUTRAL CITATION: | [2024] VCC 1640 | |
REASONS FOR JUDGMENT
---
Subject:SUPERANNUATION – REVIEW OF DECISIONS, AND RELATED MATTERS
INSURANCE – TOTAL AND PERMANENT DISABLEMENT
Catchwords: Whether insurer’s decision invalid as unfair or unreasonable - Whether error in insurer’s process, consideration or determination – whether trustee’s decision invalid
Legislation Cited:
Cases Cited:Hannover Life Re of Australasia Ltd v Sayseng [2005] NSWCA 214; Hannover Life Re of Australasia Ltd v Colella [2014] VSCA 205; Hannover Life Re of Australasia Ltd v Jones [2017] NSWCA 233; Karger v Paul [1984] VR 161; Alcoa of Australia Retirement Plan Pty Ltd v Frost (2012) 36 VR 618; [2012] VSCA 238; Finch v Telstra Super Pty Ltd (2010) 242 CLR 252; [2010] HCA 36; Overlook v Foxtel [2002] NSWSC 17 (2002) Aust Contract R 90-143; Manglicmot v Commonwealth Bank Officers Superannuation Corporation Pty Ltd (2011) 282 ALR 167; [2011] NSWCA 204; Hannover Life Re of Australasia Ltd v Dargan (2013) 83 NSWLR 246; [2013] NSWCA 57; TAL Life Ltd v Shuetrim (2016) 91 NSWLR 439; MetLife Insurance Limited v Hellessey [2018] NSWCA 307; Manglicmot v Commonwealth Bank Officers Superannuation Corp Pty Ltd (2011) 282 ALR 167; White v Board of Trustees [1997] 2 Qd R 659; Beverley v Tyndall Life Insurance (1999) 21 WAR 327; Board of Trustees of the State Public Sector Superannuation Scheme v Gomez [2018] QCA 67; McArthur v Mercantile Mutual Life Insurance Co Ltd [2002] 2 Qd R 197; Halloran v Harwood Nominees Pty Ltd [2007] NSWSC 913; (2010) 16 ANZ Ins Cas 90-142
Judgment: Proceeding dismissed
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | The plaintiff appeared in person | |
| For the Defendant | Mr S Walsh | Turks Legal |
TABLE OF CONTENTS
INTRODUCTION
THE LEGAL FRAMEWORK
The Trust Deed
The policy
Figure 1: Aide-mémoire to definition of total and permanent disablement
The claim against MetLife
The claim against Host-Plus
THE PROCESSING OF MR KHAN’S CLAIM
The first determination
The second determination
PLAINTIFF’S SUBMISSIONS
DEFENDANTS’ SUBMISSIONS
THE COURT’S REASONING AND DECISION
Overview of applicable principles
Structure of reasons
Was MetLife’s first determination invalid?
Was MetLife’s process fair?
Was MetLife’s consideration of Mr Khan’s claim unreasonable?
Was MetLife’s opinion reasonably open to it?
Was MetLife’s second determination invalid?
Was MetLife’s process fair?
Was MetLife’s consideration of Mr Khan’s claim reasonable?
Was MetLife’s opinion reasonably open to it?
What would the Court have determined if it proceeded to the second stage?
Mr Khan’s symptoms of pain
Diagnosis and prognosis of physical condition
Diagnosis and prognosis of Mr Khan’s mental condition
Mr Khan’s capacity for gainful employment
Conclusion on second stage
Were Host-Plus’ determinations invalid?
JUDGMENT
APPENDIX – FINDINGS ON PARTICULARS OF BREACH OF DUTY IN FURTHER AMENDED STATEMENT OF CLAIM
HER HONOUR:
Introduction
1On 7 December 2016, Muhammad Hamza Khan injured his lower back while working as a food and beverage attendant at Crown. As a result, he claims to be entitled to a total and permanent disablement benefit (“TPD benefit”) under an insurance policy that the trustee of his superannuation fund (“Host-Plus”), took out with an insurer (“MetLife”) for the benefit of its members. Mr Khan claimed that MetLife and Host-Plus’ decisions declining his claim were invalid; and that the Court should find that he is entitled to payment of a TPD benefit.
2Mr Khan holds two Masters level degrees from the University of Canberra – a Master of Business Administration degree and a Master of Professional Accounting degree. He also holds a Graduate Diploma in Business Administration from the University of Canberra, as well as a Bachelor of Science degree completed in Pakistan. However, his employment in Australia, even after graduating from the two Masters degrees in 2012, has always been confined to customer service roles in hospitality and retail.
3Mr Khan’s statement of claim and submissions formulate the grounds of invalidity in many ways, each of which will be addressed in these reasons. The fundamental question, though, is this: in rejecting Mr Khan’s claim, was it unreasonable for MetLife to rely on material which suggested that Mr Khan could work in a sedentary role outside the hospitality industry, for example as an administration officer, accounts clerk or bank clerk?
4For the reasons which follow, I have concluded that it was not; and that Mr Khan’s proceeding should be dismissed.
The legal framework
The Trust Deed
5Clause 26.1 of the trust deed for Host-Plus provided Host-Plus with the power to obtain a group policy of insurance, in its own name, for the payment of benefits on a member’s death, total and permanent disability or total and temporary disability.[1] The term “Total and Permanent Disablement” was defined as having “the same meaning as contained in any Policy effected by the Trustee with an Insurer in respect of the Member and in force at the time of the Total and Permanent Disablement of the Member and the expression Totally and Permanently Disabled shall have a corresponding meaning”.[2]
[1]Supplementary Courtbook emailed to the Court by the defendants on 20 October 2023 (“DSCB”) 76-77
[2]DSCB 38
6Clause 26.6 and Clause 26.7, governed the payment of an insured benefit to a Member:[3]
“26.6 Payment of Insured Benefit
If any Insured Benefit is being provided, the Trustee shall only be obliged to commence payment of the Insured Benefit to the extent that moneys for the Insured Benefit are received by the Trustee from the Insurer and credited to the Member’s Accumulation Account.
[3]DSCB 77
26.7 Recovery of Insured Benefit
The Trustee shall take all reasonable steps to recover amounts due under insurance from the Insurer but shall not be obliged to do.”
[sic]
7The net effect of these provisions is that the definition of total and permanent disablement was governed by the terms of the policy of insurance, and any obligation on Host-Plus to pay a TPD benefit was dependent upon money actually being received by it.
The policy
8At the relevant time, Host-Plus held a group life policy with MetLife (“the policy”).[4] Clause 5.1 provided for the payment of a TPD benefit to Host-Plus when “a Covered Person … is determined as having a Total and Permanent Disablement”.[5]
[4]Effective from 26 September 2015 and varied on 9 March 2016, see Joint Courtbook emailed to the Court by the defendants on 5 October 2023 (“JCB”) 298-351
[5]JCB 314
9Total and permanent disablement was defined (insofar as is relevant) as:
“Total and Permanent Disablement (TPD) means:
1. Unlikely ever to return to work
If the Covered Person is Employed or engaged in a gainful Occupation, business, profession or Employment within 12 months of the date a Covered Person ceases to be so Employed or engaged:
1.1. that Covered Person has suffered an Injury or Illness and, as a result of that Injury or Illness, the Covered Person:
1.1.1.is totally unable to be employed or engaged in that Occupation, business, profession or employment for a period of six consecutive months; and
1.1.2.is determined by us that at the end of that six month period (or such later time as agreed with the trustee), to be permanently incapacitated to such an extent as to render the Covered Person unlikely ever to be employed or engaged in any gainful Occupation, business, profession or employment for which the Covered Person is reasonably suited by education, training or experience.”
10The term “Occupation” was defined to mean the employment or activity in which the Covered Person is principally employed. In Mr Khan’s case, this was the role of food and services attendant. The term “employment” on the other hand was not restricted to this role, but referred to being “engaged by an employer under a contract of employment”.
11As Mr Khan was self-represented, he was provided with an aide-mémoire that separated out the component parts of this definition.[6] This aide-mémoire is extracted as Figure 1 below.
[6]This was agreed by the defendant to be accurate.
Figure 1: Aide-mémoire to definition of total and permanent disablement
12Dividing up the definition in this way provides a helpful visual illustration of the objective and subjective parts of the term “total and permanent disablement”, ie:
(a) the objective component: Mr Khan must have, within 12 months of ceasing employment, suffered an injury that renders him totally unable to be employed in his occupation as a Food and Services Attendant at Crown and, as a result, been totally unable to be employed or engaged in that occupation for a period of six consecutive months; and
(b) the subjective component: MetLife must determine that, at the end of the six month period, Mr Khan is permanently incapacitated to such an extent as to render him unlikely ever to be employed or engaged in any gainful occupation, business, profession or employment for which Mr Khan is reasonably suited by education, training or experience.
13There was no dispute that Mr Khan had suffered an injury to his back on 7 December 2016. Nor was there any real dispute that, as a result, he was subsequently unable to be employed as a food and services attendant at Crown for a period of six consecutive months (ie: until 7 June 2016). For the purposes of this proceeding, the objective component of the test for total and permanent disablement can be viewed as satisfied. However, MetLife has determined, twice, that Mr Khan was not permanently incapacitated to such an extent as to render him unlikely ever to be employed or engaged in any gainful occupation, business, profession or employment for which Mr Khan was reasonably suited by education, training or experience. The subjective component has not been satisfied. Unless it can be shown that one or more of MetLife’s determinations were invalid, Mr Khan’s proceeding must be dismissed.
The claim against MetLife
14There are two stages to the consideration of a claim against an insurer in relation to a policy of this kind. In the first stage, the Court considers whether one or more of MetLife’s determinations were invalid.
15In determining Mr Khan’s claim, MetLife:[7]
(a) was required to consider and determine the correct question;
(b) was under a duty of good faith and fair dealing; and
(c) was required to act reasonably in making the required determination.
[7]Hannover Life Re of Australasia Ltd v Sayseng [2005] NSWCA 214 at [47]-[49]
16A determination made by MetLife will only be invalid if the Court is satisfied that MetLife has breached one or more of these obligations.
17If (and only if) the Court is satisfied that a determination is invalid, does the potential[8] arises for the Court to move to the second stage, which is to determine for itself whether Mr Khan is permanently incapacitated to such an extent as to render him unlikely ever to be employed or engaged in any gainful occupation, business, profession or employment for which he is reasonably suited by education, training or experience.[9]
[8]I have used the word “potential” here, because the defendants also contended that any error in the first determination was cured by the second determination, so that the Court could only move to the second stage if satisfied the second determination was invalid.
[9]Hannover Life Re of Australasia Ltd v Sayseng [2005] NSWCA 214 at [36] and [47]-[49]; applied in Hannover Life Re of Australasia Ltd v Colella [2014] VSCA 205 at [73] and Hannover Life Re of Australasia Ltd v Jones [2017] NSWCA 233 at [67]-[69] and [85]
The claim against Host-Plus
18Host-Plus also determined that Mr Khan did not meet the definition of total and permanent disablement in the policy. The principles applicable to review of the decision of a superannuation trustee differ to those applicable to the review of a decision of an insurer. A decision by a trustee can only be set aside if:[10]
(a) the decision was not exercised upon real and genuine (and therefore informed)[11] consideration;
(b) a discretion was not exercised in good faith or was made for an improper purpose; or
(c) any reasons given for the decision were unsound.
[10]Karger v Paul [1984] VR 161
[11]Alcoa of Australia Retirement Plan Pty Ltd v Frost (2012) 36 VR 618; [2012] VSCA 238 at [39]-[40], applying Finch v Telstra Super Pty Ltd (2010) 242 CLR 252; [2010] HCA 36 at [66]
19It is only in exceptional circumstances that a Court would substitute its own decision for the decision of a trustee. Even if a trustee’s decision is invalid, it would usually be sent back to the trustee to be lawfully re-made.
20However, Host-Plus accepted that, if the Court determined that a TPD benefit was payable by MetLife under the policy, it should reconsider its decision that Mr Khan was not totally and permanently disabled. A finding of invalidity in Host-Plus determination was therefore not essential to Mr Khan obtaining the remedy he sought. Given this, the primary focus of the parties’ submissions (and the primary consideration for the Court) was whether MetLife’s determinations were invalid.
The processing of Mr Khan’s claim
21In the first stage (ie: when considering whether Metlife’s determinations were invalid) the Court must consider only the material which was before MetLife. It is therefore necessary to describe the claims process in some detail.
The first determination
22Maurice Blackburn Lawyers (“MBL”) lodged a claim for a TPD benefit on Mr Khan’s behalf under cover of a letter dated 27 February 2019. [12] The letter enclosed:
(a) Mr Khan’s completed claim form dated 30 January 2019;[13]
(b) Mr Khan’s resume;[14] and
(c) a medical statement completed by Mr Khan’s general practitioner (“GP”), Dr Beng Eu dated 1 February 2019.[15]
[12]JCB 373-375
[13]JCB 352-359
[14]There is a resume at JCB 607-609, although there was no clear evidence that this was the resume attached to MBL’s letter of 27 February 2019.
[15]JCB 360-363
23Mr Khan’s claim form described his injury as a “Lower back injury”. It referred to treatment from Dr Eu, and from a pain specialist, Dr Noam Winter. Dr Eu’s medical statement described Mr Khan’s present condition as “Ongoing back pain – no improvement with treatment. Probably caused by physical activity at work initially. Prognosis uncertain.”[16] Under the heading “Medical Certification” the medical statement provided three options:[17]
[16]JCB 360
[17]JCB 361
“Please complete either:
Section 1. If patient was unable to work; or
Section 2. If patient was able to work on a partial/restricted basis; or Section 3. If patient has recovered”
24Dr Eu left sections 1 (unable to work) and 3 (recovered) blank and completed section 2 (able to work on a partial/restricted basis). When asked to describe Mr Khan’s capabilities and limitations he stated:[18]
[18]JCB 362
“Capabilities
Able to do sedentary duties
Limitations
Very limited manual work, lifting”
25On 4 March 2019,[19] MBL emailed Host-Plus a copy of a report of Dr Winter dated 27 February 2018, stating that Dr Eu was currently the only doctor treating Mr Khan for his condition but that he had previously attended Dr Winter and Dr David Vivian at the Metropolitan Spinal Clinic.
[19]JCB 379
26The report of Dr Winter dated 27 February 2018 was preliminary in nature and did not express any opinions in relation to Mr Khan’s future capacity to work, stating:[20]
“My feeling is that he likely has some facet joint dysfunction which is being exacerbated by load-bearing work.
It might be worthwhile doing a trial of low dose anti-inflammatories and, if negative, it might be worthwhile performing some lumbar medial branch blocks to potentially diagnose and subsequently treat his facet joint pain. The goal would then be to try and get him to do a bit more intensive physiotherapy and to get him back doing a little more and being able to load weight through the area.
At this stage, Muhammad will consider his options and will get back to me if he wants to go ahead with any intervention. Follow-up will be organised depending on the results of what he desires.”
[20]JCB 510
27On 1 April 2019, MBL emailed a completed employer’s statement dated 13 March 2019 to Host-Plus.
28On 5 April 2019, MetLife wrote directly to MBL in relation to Mr Khan’s claim, providing an explanation of the claims process it would adopt. The letter also requested ATO records and an “Explanation in relation to business “MHK Corps” for which you are noted as Managing Director”.
29On 8 April 2019, MetLife wrote to Dr Winter and Dr Eu with a series of questions and a request to complete a functional capacity table in relation to Mr Khan.[21]
[21]JCB 384-389
30On 15 April 2019, Dr Eu wrote to MetLife responding to their request. His letter included the following:[22]
“6. There is still a possibility of further treatment for his back pain. It was suggested to him that he could have facet joint injections to try and relieve some of his symptoms. There is however no guarantee that this treatement would be effective for him.
7. As he has had this condition for over 2 years, I think he has achived maximum medical improvement. We do not expect any significant improvement currently. There may be further treatment in the future that may offer him some relief, but this is uncertain.
...
10. iave no concerns about the validity of his back pain. Mr. Khan has been motivated to recoever from his back injury. He has had nothing to gain from remaining injured.
...
14. I would recommend that Mr. Khan avoids any job that has a signfiicant physical componenent, which includes heavy lifting, or repeated movements involving his back. He may be suitable to work in a sedentary capacity. However, this has not been tested as he has never found a sedentary position to test it out. It is also possibe that he might not be able to sit for long periods, which would mean he is limited in his capacity to remain seated at work- having to either change his position or restrict his work hours.
15. I think there is no chance that he can return to any physical work. he is unable to return to the work as a server as he was doing before as the activities involved would aggravate his back problem. There is possibilty of doing a sedentary job, as stated before, but until such a role can be found, it is impossible to test it out.”
[sic]
[22]JCB 520-521
31Dr Eu declined to complete the functional capacity table, suggesting that it would be more appropriate for a physiotherapist to complete.
32On 30 April 2019, MBL emailed MetLife stating (presumably in response to the query from MetLife about MHK Corps) that:[23]
“Our client instructs that he has attempted to start a work from home business to accommodate his injury. He has created a website, however, has not done any billable work yet. He confirms this is just to keep his mind off of the injury and keep busy.”
[23] JCB 396
33On 14 May 2019, MetLife received Mr Khan’s Workers’ Compensation file.[24] This included:
(a) a medical report from Dr Eu dated 13 February 2019[25] which stated “He is fit to do sedentary duties, but as I understand, his role at work does not offer this option of sedentary duties … As stated before, he is fit to do sedentary duties- no physical work”;
(b) numerous WorkCover certificates of capacity; and
(c) an independent medical examination report from occupational physician Gary Davison dated 9 November 2018,[26] which stated that there was no clinical evidence that Mr Khan had an injury to his back and that Mr Khan may have suffered a strain injury in the course of his employment but he considered that that injury had long since resolved. He concluded that Mr Khan was fit to resume his pre-injury duties.
[24]JCB 398
[25]JCB 518-519
[26]JCB 585
34On 29 May 2019, MBL provided MetLife with Mr Khan’s ATO records.[27]
[27]JCB 402
35On 30 May 2019, MetLife received a copy of Mr Khan’s Prahran Market Clinic clinical notes.[28]
[28]JCB 405
36On 30 July 2019, MetLife wrote a “procedural fairness” letter to MBL.[29] In that letter, MetLife referred (among other things) to:
(a) Dr Eu’s 1 February 2019 report in which he stated that Mr Khan is able to do sedentary duties; and
(b) Dr Davison’s 9 November 2018 report in which he states that Mr Khan has recovered from any back injury.
[29]JCB 406-409
37MetLife requested Mr Khan’s response and, in particular, the following information:[30]
“· The Medical Statement from Dr Beng Eu states that the Member is fit to undertake sedentary duties which falls within the Members ETE. Does the Member disagree? If so, could the Member kindly provide reasons.
· The Members resume demonstrates that he has completed a Masters in Business Administration and a Masters in Professional Accounting, indicating that he is sufficiently qualified to undertake sedentary work. Does the Member disagree? If so, please provide reasons.”
[30]JCB 408
38On 12 September 2019, MBL wrote to MetLife responding to its first procedural fairness letter and enclosing a letter from Dr Hsin-Hua Liu, a GP who worked at the same practice as Dr Eu.[31] In summary, MBL contended that:
(a) although Mr Khan had completed Master of Business Administration and Master in Professional Accounting degrees in 2012, in the seven years since he had been unable to find any employment in this area;
(b) Mr Khan had applied for, on average, twenty jobs per month in the last eight months;
(c) Mr Khan did not have the necessary education, training or experience to be considered for roles in business administration or professional accounting “in the real world”;[32]
(d) MetLife was obliged to make a realistic and genuine consideration of whether there was a recognised occupation that Mr Khan could obtain and retain for the purposes of producing a living, despite his ongoing pain and fluctuating symptoms; and
(e) it would be unreasonable for MetLife to consider that sedentary roles within business administration or professional accounting were attainable[33] for Mr Khan.
[31]JCB 522-524
[32] JCB 413
[33]Actually the word used at JCB 415 is unattainable, but this is plainly an error.
39Dr Liu’s letter stated that Dr Liu had only seen Mr Khan once and was providing the report to the best of his ability for Mr Khan’s medical notes. Nevertheless the letter stated:[34]
“According to his medical notes, Mr Khan has been unable to work in any capacity since 10/1/2017. He has been and remains unfit for any physical work. He may be capable for work in a sedantary role but this has not been tested as he has never found a sedantary position.
It is also likely that he might not be able to sit for reasonable periods of time in the foreseeable future which means he is limited in his capacity to remain seated at work and having to either his change his sitting position or/and restrict his work hours.”
[sic]
[34]JCB 523
40And:
“It is difficult to ascertain his long-term prognosis as he is still awaiting further assessment and treatment from a specialist. Based on his treating doctor Dr Eu’s previous reports, Dr Eu stated that he has achieved maximal medical improvement and significant improvement is not expected currently. There may be further treatment in the future which may offer him symptom relief but prognosis is guarded.”[35]
[35]JCB 524
41By email sent to Host-Plus on 22 October 2019, MBL made a claim for release of the accumulated funds in Mr Khan’s superannuation account on the grounds of permanent incapacity. This claim was supported by:
(a) a statutory declaration made by Mr Khan on 13 September 2019; and
(b) medical certificates from both Dr Eu and Dr Liu in which a tick was inserted next to “Yes” in response to the question of whether Mr Khan, in their opinion, met the definition of permanent incapacity, ie he “has ceased to be engaged in gainful employment by means of ill-health (whether physical or mental) to such an extent that [he] is unlikely, because of the ill-health, to engage in gainful employment for which [he] is reasonably qualified by education, training or experience”.[36]
[36]JCB 705 (Dr Eu) and JCB 706 (Dr Liu)
42Host-Plus determined to release the accumulated funds to Mr Khan. Host-Plus treated this decision as entirely separate from Mr Khan’s claim for a TPD benefit. It did not forward Mr Khan’s statutory declaration and two medical certificates to MetLife.
43In a report dated 23 January 2020,[37] Mr Wakaroa Taki of Acumen Health provided MetLife with an employability assessment of Mr Khan. Mr Taki concluded that administration officer, accounts clerk and bank worker were suitable occupation roles for Mr Khan to pursue.
[37]JCB 610-627
44On 18 March 2020,[38] MetLife wrote again to Dr Eu requesting that he provide details of Mr Khan’s symptoms, complete a functional capacity table and consider his capacity for the roles of administration officer, accounts clerk and bank worker.
[38]This was marked for identification as MFI5, rather than formally tendered, but is included here for context as it is partially attached to Dr Eu’s response on 21 March 2020.
45On 21 March 2020,[39] Dr Eu responded, stating:
“8. In light of his function as listed in the alternative job options, he is fit do a sedentary job as those described. He would be recommended to do this part-time initially as I would be concerned about his sitting/standing position at work, and whether this would cause him some pain. Whilst he has qualifications, he ahs never worked in any of these positions, so has no relevant experience that would lead him to finding employment in these suggestes jobs,
9. He is unfit for his previous role as the physical nature of his work has always resulted in a deterioration in his condition. He is suitable to work a sedentary role, but his lack of any experience in these roles are a major hindrance from getting any of these roles.”
[sic]
[39]SCB 100-105
46He also confirmed (by marking “A” for “Able” next to each duty) that Mr Khan had the functional capacity to perform each of the required duties of administration officer, accounts clerk and bank worker.
47On 18 May 2020,[40] MetLife wrote a second “procedural fairness” letter to MBL. That letter records, in particular:[41]
“Mr Khan attended an employability assessment with Acumen Health on 12 December 2019. In their report dated 23 January 2020 Acumen Health were able to confirm suitable employment options for Mr Khan including Administration Officer, Accounts Clerk and Bank Worker. These employment options were deemed suitable for Mr Khan when taking into consideration his transferrable skills, objective evidence of functional capacity, pre-disability earnings, education, age and labour market analysis.
We supplied a copy of the employability assessment and labour market analysis report from Acumen Health dated 23 January 2020 to Mr Khan treating General Practitioner, Dr Eu for opinion.
In his report dated 21 March 2020 Dr Eu confirms Mr Khan is able to sit, use the phone and computer and is able to perform all duties associated with the role of an Administration Officer, Account Clerk and a Bank Worker as identified by Acumen Health. Dr Eu states Mr Khan is fit to do a sedentary job part time initially due to concerns about his sitting and standing position at work, and whether this would cause him some pain. Dr Eu states that whilst Mr Khan has qualifications he has never worked in any of the these occupations (Administration Officer, Accounts Clerk and Bank Worker) and therefore considers he has no relevant experience that would lead him to finding suitable employment in these suggested jobs.
As part of their employability assessment and labour market analysis, Acumen Health completed employer contacts which confirm that Mr Khan’s Masters level education in Administration is sufficient for an Administration Officer role, with 100% of people working in the role possessing a Post Graduate or equivalent qualification or below. Employer contacts further confirm that a Masters level education in Accounting is sufficient for an Accounts Clerk role with 100% of people working in the role possessing a Post Graduate qualification of below. Finally, employer contacts confirm that a Masters level education in Accounting is sufficient for this role, with 100% of people working in the role possessing a Post Graduate qualification or below.”
[40]JCB 419-422
[41]JCB 421
48On 20 May 2020, MBL responded,[42] emphasising that work must be remunerative work which Mr Khan could obtain and retain in the real world. MBL stated that it was relevant that Mr Khan’s former employer Crown was unable to offer him[43] suitable employment. MBL also stated:
(a) MetLife should seek clarification from Dr Eu;
(b) Mr Khan was referred to a psychologist and that MetLife had not obtained any information about this; and
(c) Mr Khan had also consulted a physiotherapist at Kieser Physiotherapy.
[42]JCB 423-425
[43]Actually the letter says “her” but this is clearly erroneous
49On 18 June 2020,[44] MetLife wrote again to Dr Eu, with further questions and a request to again complete a functional capacity table.
[44]JCB 526-527
50On 10 July 2020, Dr Eu responded, stating:[45]
(a) Mr Khan had seen a mental health nurse (as opposed to a psychologist) in May 2020;
(b) “I would expect that he would be fit to do 20 hours a week of sedentary duties spread across 5 days. This would determine how long he will be able to sit for without aggravating his symptoms”;
(c) “In chornic back pain, prolonged sitting can sometimes aggravate the pain, but there usually are measures that can be taken, such as havign schedules breaks or changing his work psoition to a standing desk for some of the time”; [sic] and
(d) Mr Khan could sit over 2 hours, stand over two hours and walk up to 60 minutes. His concentration, memory, energy levels and motivation were not impacted but his mood was impacted, as “Chronic pain can cause a depressive state”.
[45]JCB 728 and annotations on JCB 526-7
51On 31 August 2020,[46] MetLife wrote a third “procedural fairness” letter to MBL, which (after outlining the background) summarises what MetLife viewed as the salient points from Dr Eu’s report of 10 July 2020.
[46]JCB 426-429
52On 25 September 2020, MBL responded to the third procedural fairness letter. After repeating its argument in relation to suitable employment, it noted that Mr Khan’s mental health had deteriorated and he was now consulting a clinical psychologist, Dr Dennis Mazalin. The letter concluded by saying that Mr Khan had nothing further to add and a decision was requested within one month.
53On 9 October 2020, MetLife wrote to Host-Plus declining Mr Khan’s claim (“MetLife’s first determination”).[47] It stated that it was not reasonably satisfied that Mr Khan was unlikely ever to return to work, relying particularly on:
(a) the opinion of Mr Khan’s treating general practitioner, Dr Eu, that he was fit to undertake sedentary duties for at least 20 hours per week; and
(b) the employability assessment conducted by Mr Taki, which suggested that suitable employment options for Mr Khan included Administration Officer, Accounts Clerk and Bank Clerk.
[47]JCB 433-438
54In its reasons, MetLife acknowledged that Dr Eu had said that Mr Khan had no relevant experience that would lead him to find suitable employment as an administration officer, accounts clerk or bank clerk. However, it considered that Dr Eu was not qualified to give an opinion about Mr Khan’s prospects of obtaining employment and that Mr Taki’s report was of greater relevance and weight on this issue.
55On 10 November 2020, Host-Plus wrote to Mr Khan informing him that it had resolved that Mr Khan did not meet the definition of total and permanent disablement in the policy (“Host-Plus’ first determination”).[48] It relied particularly on:
(a) Dr Eu’s opinion that Mr Khan would be fit to work 20 hours a week of sedentary duties;
(b) Dr Taki’s employability assessment which suggested Office Administration, Accounts Clerk and Bank Clerk as appropriate roles; and
(c) the opinion provided by Dr Davison on 9 November 2018 that Mr Khan’s condition had resolved and he had capacity to undertake his pre-injury duties and hours of work.
[48]JCB 441-445
The second determination
56By letter dated 12 February 2021, MBL lodged a complaint with Host-Plus in relation to the rejection of Mr Khan’s claim.[49] The letter enclosed a report of psychologist Dr Dennis Mazalin dated 20 January 2021,[50] which diagnosed Mr Khan with major depressive disorder and generalized anxiety disorder. Dr Mazalin concluded:[51]
“Although Mr Khan has a degree in business administration and professional accounting, he lacks the experience required to bolster his applications. His chronic pain condition interferes with his ability to present well to a future employer. And if he was to be employed in roles such as an office administrator, accounts clerk, or within banking, he would likely struggle with his pain levels due to the prolonged sitting required in such roles.
A significant improvement to his pain levels and medical condition is required for his mental health to improve, and therefore also his vocational prospects. If his medical state does not improve, he may still be able to make some marginal to moderate improvements to his mental health, but possibly not at sufficient levels to work in many professional roles. He may then more likely acquire non-professional roles, but these roles must not induce a strain on him physically.”
[49]JCB 446-451
[50]JCB 530-533
[51]JCB 532-3
57On 9 April 2021, MetLife wrote to occupational therapist Dr Phillip Haynes requesting a report.[52]
[52] JCB 452
58On 19 April 2021, MetLife wrote to psychiatrist Associate Professor Abdul Khalid requesting a report.[53]
[53] JCB 455
59On 19 April 2021, Dr Haynes provided MetLife with a report in which he concluded that there was no diagnosable condition present;[54] and Mr Khan was fully fit to work as a Food and Beverage Attendant on a full-time basis.[55]
[54] JCB 594
[55] JCB 596
60On 12 May 2021,[56] Associate Professor Khalid provided his report. He noted that Mr Khan had said that, about ten days previously, he had seen consultant psychiatrist Professor Bruce Singh who had commenced him on Ritalin and would see him again on 7 May 2021. Associate Professor Khalid diagnosed Mr Khan with somatic symptom disorder with predominant pain (chronic pain disorder) and adjustment disorder with mixed anxiety and depressed mood. In relation to prognosis he said:[57]
“I consider that Mr Khan would require treatment with antidepressant medication for at least six months and he may also benefit from attending a pain management program. I expect that with treatment with antidepressant medication and pain management program his symptoms would significantly improve if not go into full remission.
…
I do not consider that Mr Khan has current capacity for any of the vocational options identified in the employability assessment report from Acumen Health dated 12 December 2019. He requires assertive treatment under the care of his psychiatrist, Professor Singh and he would benefit from a pain management program. I expect that within six months of treatment he would have capacity for office administration, accounts clerk or bank worker.
…
Because of Mr Khan’s somatic symptom disorder with predominant pain (chronic pain disorder) and adjustment disorder with mixed anxiety and depressed mood, I do not consider that he has a current capacity for work.
As noted in my above response, he requires assertive treatment under the care of his psychiatrist, Professor Singh and he would benefit from a pain management program. I expect that within six months of treatment he would have capacity for office administration, accounts clerk or bank worker.”
[56]JCB 598-606
[57]JCB 603-4
61On 4 June 2021, MetLife provided a fourth “procedural fairness” letter to MBL.[58] The letter reviewed all the medical reports MetLife had received and stated that it considered that from a physical perspective Mr Khan was not unlikely ever to return to work and had a capacity for each of the three roles identified in Mr Taki’s report. From a psychiatric perspective, it accepted that Mr Khan currently had no work capacity, but said that the medical evidence supported Mr Khan having a future capacity for work in suitable employment.
[58]JCB 458-465
62On 29 July 2021, MBL responded to MetLife’s procedural fairness letter. It enclosed a medical report of treating psychiatrist Professor Bruce Singh dated 15 July 2021.[59] This report is very brief and can be set out in its entirety:
“This gentleman was sent to me on the 16th April 2021 as to whether he might have undiagnosed ADHD, and to comment on his anxiety and depression. I confirm that diagnosis of all 3 conditions.
I did an interview on the 16th and commenced him on Ritalin and also suggested a trial of 50mg of Pristiq. I have not seen him since reviewing him on the 07.05.2021 namely, only two visits. My direct diagnosis is mixed anxiety and depression: secondary to a work injury, chronic pain, and undiagnosed ADHD.
Prognosis and estimate of future medical treatment: I was not able to come to a conclusion about this. In regards to question C, D, E and F: I do not believe I have the information to make any worthwhile comments. In regard to G, comment on the reports of consultant occupational physician, Dr Philip Hanes I was not provided with that report, but I did get the report from Associate Professor Abdul Kahlid with which I agree.”
[59]JCB 534
63MBL’s letter concluded by stating that Mr Khan had reached maximum medical improvement and that a decision should be made on the claim within one month.
64On 18 August 2021, MetLife wrote to Host-Plus declining Mr Khan’s claim (“MetLife’s second determination”).[60] After reviewing the material before it and considering submissions made by MBL, the letter explained:[61]
“In conclusion, the evidence supports that from a physical perspective, the Member has a capacity for sedentary employment and Acumen Health have identified the role of an Administration Officer, Accounts Clerk and Bank Worker to be within the Member’s education and training. While we note that from a psychological perspective, the Member no current capacity for the suitable employment options identified by Acumen Health, both Associate Professor Khalid and Professor Singh share the opinion that, within six months of treatment, the Member’s symptoms are expected to significantly improve, if not, go into full remission. Furthermore, within six months of treatment, Associate Professor Khalid and Professor Singh share the opinion that the Member is expected to have the capacity for work in office administration, accounts clerk and bank worker roles.”
[60]JCB 474-485
[61] JCB 482
65On 28 September 2021, Host-Plus wrote to MBL informing them that Host-Plus had resolved to maintain its decision that Mr Khan did not meet the definition of total and permanent disablement in the policy (“Host-Plus’ second determination”)[62]. The letter referred particularly to:
(a) the opinion of Associate Professor Khalid, dated 12 May 2021, to the effect that although Mr Khan did not currently have capacity for roles in office administration, accounts clerk or bank worker, he would after six months’ treatment from his treating psychiatrist;
(b) the opinion from his treating psychiatrist Professor Singh dated 15 July 2021 stating that he agreed with the report of Associate Professor Khalid;
(c) the opinion of Dr Haynes, consultant occupational physician, dated 19 April 2021 that Mr Khan was fit to return to work as a food and beverage attendant on a full-time basis;
(d) the opinion of Dr Eu that he would expect that Mr Khan was fit to do 20 hours a week of sedentary duties;
(e) the opinion of Dr Davison, consultant occupational physician, dated 9 November 2018, that his condition had resolved and he had capacity to undertake pre-injury duties and hours of work; and
(f) Mr Taki’s employability assessment.
[62] JCB 486-488
Plaintiff’s submissions
66In impressively detailed and thorough submissions, Mr Khan contended that:
(a) MetLife had information from his WorkCover file that his former employer, Crown, a large organisation, had been unable to find him a suitable sedentary role; it was not reasonable for it to conclude that Mr Khan could find such a role in the “real world”;
(b) it was not reasonable for MetLife to rely upon his Masters degrees, which were completed in 2012, given his lack of industry experience. It was no more than a hypothetical possibility, rather than a real probability, that he could find work;
(c) MetLife had been informed that he had applied for 20 jobs per month and been unable to obtain employment;
(d) he had attempted to return to work at Crown on modified duties and been unsuccessful;
(e) in his report dated 15 April 2019, Dr Eu stated there were no concerns about the validity of Mr Khan’s back pain, that he was motivated to recover and that Mr Khan had achieved maximum medical improvement. He also stated that Mr Khan was limited in his capacity to remain seated at work;
(f) Dr Liu had also provided a supportive report;
(g) It was not reasonable for MetLife to prefer the opinion of Dr Davison, who saw Mr Khan once, over the opinions of his treating practitioners;
(h) MetLife had failed to give proper weight to the report of pain specialist Dr Noam Winter and (having requested a report from him) failed to follow him up and obtain that report;
(i) it was not reasonable for MetLife to rely upon the report of Mr Taki, as it failed to consider the impact of sitting restrictions on Mr Khan and the fluctuating intensity and frequency of his pain. Mr Taki had also not performed any functional capacity assessment;
(j) MetLife had not requested Mr Khan to perform any required retraining;
(k) it was not correct to say that Dr Eu said he could perform these roles, as he had expressed concern with Mr Khan’s sitting ability;
(l) MetLife relied in its procedural fairness letter of 31 August 2020 upon clinical notes of the Prahran Market Clinic which said that he had been applying for finance positions, but failed to have regard to the same notes which stated that he was not upskilled in accounting[63] and made numerous references to his struggles with chronic pain;
(m) it was not reasonable to rely upon the report of Dr Davison, given it pre-dated his 16 March 2020 MRI which showed mild multi-level facet joint arthropathy; and stated that there was no clinical evidence of facet joint arthropathy;
(n) MetLife’s reliance upon the fact that 100 per cent of people performing the roles as administration officer, accounts clerk or bank teller had “post-graduate qualifications or below” was irrational, given all people have post-graduate qualifications or below. The more relevant consideration was what percentage of people performing the three roles had post-graduate qualifications, given Mr Khan asserted he was overqualified for the role; and
(o) MetLife failed to consider the impact of his declining mental health and (upon being informed that Mr Khan had mental health issues) failed to delay its decision until it obtained a report from a psychologist.
[63]JCB 500
67In addition, in relation to MetLife’s second determination, Mr Khan contended that:
(a) MetLife failed to give sufficient weight to the opinion of his treating psychologist, Dr Mazalin, that his chronic pain would interfere with his ability to present well to a future employer and that he would struggle with pain levels with prolonged sitting;
(b) MetLife failed to give sufficient weight to Professor Singh’s diagnosis of mixed anxiety and depression, chronic pain and ADHD;
(c) MetLife should not have relied on Dr Haynes’ opinion that Mr Khan was fit for food and beverage roles, which contradicted the opinions of all of his treating practitioners;
(d) MetLife failed to give sufficient weight to Associate Professor Khalid’s diagnoses of PTSD with predominant pain, chronic pain disorder and adjustment disorder with mixed anxiety and depression and his opinion that Mr Khan was not currently capable of working in the identified roles;
(e) it was unreasonable of MetLife to take into account Associate Professor Khalid’s opinion that Mr Khan would improve with treatment under the care of a psychiatrist, when Mr Khan was not in fact under the ongoing care of Professor Singh at the time. The potential improvement identified by Associate Professor Khalid was a mere hope; and
(f) MetLife should have also taken into account Mr Khan’s ADHD diagnosis, as one of the biggest distracting factors for him was his pain.
Defendants’ submissions
68In their submissions,[64] the defendants emphasised that in the “first stage” the Court was limited to considering the material before MetLife at the time it made each of its determinations; and that Mr Khan bore the onus of demonstrating that there had been some vitiating error by MetLife in making its determination. The Court’s task was described as “supervisory”[65] – that is, it did not involve reviewing the merits or substituting its own view as to how a discretion should be exercised.
[64]Which were also impressively detailed and thorough, but less remarkably so, given they were made by experienced counsel.
[65]Paragraph 37 of the Defendant’s Opening Outline of Submissions
69Where the error alleged was unreasonableness, the defendants contended that Mr Khan was required to establish that “the opinion formed by the insurer was not open to an insurer acting reasonably and fairly in the consideration of the claim”.[66] The defendants also relied upon decisions on the meaning of “unreasonableness” in the context of commercial cases, which described conduct which renders the commercial bargain “nugatory, worthless or, perhaps, seriously undermined”[67].
[66]Hannover Life Re of Australasia Ltd v Jones [2017] NSWCA 233 at [121]
[67]Overlook v Foxtel [2002] NSWSC 17 (2002) Aust Contract R 90-143 per Barrett J at [65]-[67]
70In relation to the duty of good faith and fair dealing, it was said that not every flaw in reasons amounted to a breach of the duty of good faith and fair dealing. Further, MetLife was not required to uncritically accept evidence supportive of Mr Khan’s claim – evaluating the weight to be attributed to competing evidence was a matter entirely for MetLife.
71The defendants submitted there was no vitiating error in the first determination. MetLife had answered the correct question; and it was reasonable for it to determine that it was not reasonably satisfied that Mr Khan was unlikely ever to return to work. In particular:
(a) “employment” for the purposes of the definition of total and permanent disablement included part-time employment;[68]
(b) the words “education, training or experience” were used “both disjunctively and conjunctively”. In other words, a person could be reasonably suited for employment:[69]
(i)by reason of their education alone;
(ii)by reason of their training alone;
(iii)by reason of their experience alone; or
(iv)by reason of a combination of two or more of these factors.
[68]Manglicmot v Commonwealth Bank Officers Superannuation Corporation Pty Ltd (2011) 282 ALR 167; [2011] NSWCA 204 at [87]; Hannover Life Re of Australasia Ltd v Dargan (2013) 83 NSWLR 246; [2013] NSWCA 57 at [46]-[47]
[69]Hannover Life Re of Australasia Ltd v Dargan [2013] NSWCA 57; (2013) 83 NSWLR 246 at [36]
(c) it was reasonably open to MetLife to conclude that the roles of administrative officer, accounts clerk and bank worker were roles for which Mr Khan was reasonably suited by education, training or experience given the report of Mr Taki;
(d) it was reasonably open to MetLife to conclude that Mr Khan had the physical capacity to perform these roles given the reports of Dr Eu, Dr Liu and Dr Davison;
(e) the process adopted by MetLife was reasonable and fair, and involved multiple procedural fairness letters, in a context where Mr Khan was represented by a reputable and experienced law firm;
(f) under clause 13.2 of the policy, it was a condition of payment of a benefit that the Covered Person provide MetLife with such evidence to substantiate the claim as it may reasonable require.[70] MBL provided no further evidence after its letter of 25 March 2020; and instead pressed for a decision within one month. If MBL sought to rely upon psychological evidence, it should have provided it to MetLife.
[70]JCB 317
72Finally, it was submitted that if there was any vitiating error in the first decision, it was cured by the second decision. By the time of that report, MetLife had (and considered) a report from psychologist Dr Mazalin and reports from psychiatrists Professor Singh and Associate Professor Khalid.
The Court’s reasoning and decision
Overview of applicable principles
73Under the terms of the policy, it is MetLife’s opinion which determines whether the subjective component of the definition of total and permanent disablement is met. The formation of an opinion of the likelihood that a person will ever return to employment is necessarily an imprecise and uncertain exercise, which requires “factors to be examined which are difficult to weigh, impressions to be formed, and judgments to be made”.[71] It is a matter on which reasonable minds may differ. The Court has no power, in the first stage of the enquiry, to replace MetLife’s opinion with its own.
[71]Finch v Telstra Super Pty Ltd (2010) 242 CLR 252; [2010] HCA 36 at [29]
74However, MetLife does not have an unfettered discretion to determine whether or not Mr Khan is entitled to a total and permanent disablement benefit.[72] In forming its opinion, MetLife must apply the correct test. It has a duty of good faith and fair dealing.[73] Its opinion must not be unreasonable.[74] The review of the Court of the decision of an insurer may be limited, but it is a real review.
[72]Alcoa of Australia Retirement Plan Pty Ltd v Frost (2012) 36 VR 618; [2012] VSCA 238 at [40], applying Finch v Telstra Super Pty Ltd (2010) 242 CLR 252; [2010] HCA 36 at [66]. This comment was made in the context of review of a superannuation trustee’s decision, but applies even more strongly to the decision of a private insurer.
[73]TAL Life Ltd v Shuetrim (2016) 91 NSWLR 439 at [61]; Hannover Life Re of Australasia Ltd v Jones [2017] NSWCA 233 at 455
[74] Hannover Life Re of Australasia Ltd v Jones [2017] NSWCA 233 at 454
75This is not an arm’s-length commercial contract, but an insurance policy provided by an insurance company to a superannuation trustee, for the benefit of an employee. It forms part of a network of regulatory obligations on both the superannuation trustee and an employer, the fundamental purpose of which is to safeguard the financial security of employees and their dependents in the event of life-changing disability. There is no call for the adoption of an overly deferential approach to the opinion of the insurer.
76On the other hand, there may also be consequences for adopting an overly broad interpretation of the definition, including an increase in the premiums for policies; an increase in costly litigation; an increase in delay in processing claims; and a decrease in the availability of insurance cover. Nobody’s pockets (not even private insurers) are inexhaustible.
77As said by Nettle JA in Alcoa of Australia Retirement Plan Pty Ltd v Frost:[75]
“The economic, industrial and ultimately social imperatives which inform the advent of the superannuation industry, not to mention that beneficiaries of the kind with which we are concerned in one way or the other invariably purchase their entitlements, are productive of legitimate expectations which the law will enforce. Superannuation fund trustees [and their insurers] are bound to give properly informed consideration to applications for entitlements and, if that necessitates further inquiries, then they must make them.
So to say does not mean that a trustee is required to do the impossible. Nor is it to suggest that a trustee is expected to go on endlessly in pursuit of perfect information in order to make a perfect decision. The reality of finite resources and the trustee’s responsibility to preserve the fund for the benefit of all beneficiaries according to the terms of the deed means that there must be a limit.”
[75](2012) 36 VR 618; [2012] VSCA 238 at [59]-[60]
78Although Nettle JA was speaking of a trustee of a superannuation fund, the legitimate expectations to which he refers may be equally applied to an insurer.
79In the end, the fundamental question for the Court is whether the opinion formed by MetLife was “open to an insurer acting reasonably and fairly in the consideration of [Mr Khan’s] claim”.[76]
[76]Hannover Life Re of Australasia Ltd v Colella [2014] VSCA 205 at [6]
80In these reasons, I have considered three fields of operation for MetLife’s obligations to act reasonably and fairly: the process, the consideration and the determination.
81The obligation to act fairly speaks mostly to the process adopted by MetLife. Did it provide Mr Khan with the materials it relied upon? Did it give him a reasonable opportunity to respond to that material and any concerns it may have had arising from that material? Did it seek out clarification and further information, where clarification and further information was reasonably required?
82The concept of unreasonableness operates primarily in relation to the consideration and determination of the claim.[77] A determination may be unreasonable if it was not open to MetLife, on the material before it, to form the opinion that Mr Khan was not unlikely ever to be employed or engaged in any gainful occupation, business, profession or employment for which he was reasonably suited by education, training or experience.
[77]MetLife Insurance Limited v Hellessey [2018] NSWCA 307 at [7]
83But there may also be unreasonableness in MetLife’s consideration of whether it should form the relevant opinion. If the path of reasoning followed by MetLife involved a failure to take into account relevant considerations, taking into account irrelevant considerations, a lack of logic or an application of the wrong test, the opinion may be unreasonable, even though the ultimate determination might have been one which was reasonably open to MetLife.
84When considering these issues, careful attention must be paid to the actual words of the definition of total and permanent disablement, and its context within the policy. When one does so, the following becomes apparent.
85First, the name of the benefit itself “total and permanent disablement” provides an indication of the circumstances it is intended to cover.[78] It is placed alongside Death and Terminal Illness benefits. This suggests that it is a specific benefit intended to cover a limited and relatively extreme situation – ie: a worker being totally and permanently unable to perform any remunerative employment by reason of disability. Mere illness or impairment, even long-term is not necessarily sufficient.
[78]See Manglicmot v Commonwealth Bank Officers Superannuation Corp Pty Ltd (2011) 282 ALR 167 at [86]
86Second, further emphasis on the limited nature of the benefit is provided by the use of the words “unlikely ever”. The meaning of these words was considered by Leeming JA in TAL Life Ltd v Shuetrim.[79] After a thorough and careful analysis of the decisions in White v Board of Trustees[80] and Beverley v Tyndall Life Insurance,[81] Leeming JA concluded that the words “unlikely ever” were much stronger than “less than 50%” or “not probable”. A person was unlikely ever to return to work if there was no more than a mere remote or speculative possibility that they would do so. However, if there was a “real chance” that a covered person would return to relevant work, they were not “unlikely ever” to return to work.
[79]TAL Life Ltd v Shuetrim (2016) 91 NSWLR 439 at [89]-[90]
[80][1997] 2 Qd R 659
[81](1999) 21 WAR 327
87Third, the word “any” emphasises the broad nature of the capacity for work under consideration. It includes part-time work, so long as it is work for which the covered member is reasonably suited by education, training or experience and it can fairly be regarded as “gainful”. As said by Giles JA in Manglicmot v Commonwealth Bank Officers Superannuation Corporation Pty Ltd:[82]
“It is quite emphatic: the member must be unable ever to engage in or work for reward in any occupation or work … Introduction of full time employment or part-time employment into the wording, notions which themselves carry uncertainty (what is the standard for full time employment?) is in my view not warranted. The clause requires unfitness to work, without distinction between full time work and part-time work other than by regard to the work which the member is reasonably capable of performing by reason of education, training or experience.”
[82](2011) 282 ALR 167 at [88]; see also Hannover Life Re of Australasia Limited v Dargan (2013) 83 NSWLR 246, [2013] NSWCA 57 at [46]-[54]
88Fourth, the use of the defined term “Occupation” in addition to business, profession or employment confirms that the work that might be performed need not be in a role previously performed by the covered person – it suffices if it is a role for which they are “reasonably suited by education, training or experience”.
89Fifth, the role which might be performed must be one for which the covered person is reasonably suited by education, training or experience. The use of the word “by” suggests some connection with the member’s education, training or experience.[83] The use of the word “reasonably” highlights the value judgment inherent in the assessment. The use of the word “or” emphasises that it need not be a role that the covered member has actually performed before, so long as it is suitable having regard to their education, training or experience. The covered person can be reasonably suited for relevant work “by reason of education or training or experience or a combination of those factors”.[84]
[83]Hannover Life Re of Australasia Ltd v Jones [2017] NSWCA 233 at [146]
[84]Hannover Life Re of Australasia Limited v Dargan (2013) 83 NSWLR 246, [2013] NSWCA 57 at [36]
90Sixth, in these reasons, the term “relevant work” will be used as a convenient substitute for the words “any gainful Occupation, business, profession or employment for which the Covered Person is reasonably suited by education, training or experience”. However, the words used by the definition require that the work in question be genuine remunerative work.[85] It would be insufficient for an insurer to point to some particular task or tasks that Mr Khan could perform that might be described as “work”. The question for consideration is, rather, whether there is some actual occupation, business, profession or employment (ie: some role) which is gainful (ie: is remunerative, will provide Mr Khan a means of financial support) and for which Mr Khan is reasonably suited by education, training or experience.
[85]Hannover Life Re of Australasia Ltd v Colella [2014] VSCA 205 at [4]-[5] (Beach JA) and at [30] (Garde AJA)
Structure of reasons
91In the following sections, I will consider, in relation to each determination by MetLife, whether there was any unfairness in the process adopted by MetLife, any unreasonableness in its consideration; and whether its ultimate determination was reasonably open to it. I will then consider what the Court would have done if it had determined Mr Khan’s claim for itself. Finally (although it was not the focus of either party’s submissions) I will consider whether Host-Plus’ determinations were invalid.
92For completeness, I have also included, in an appendix to my reasons, my findings on each of the particulars of breach raised in Mr Khan’s further amended statement of claim, even though Mr Khan’s submissions were not expressly tied back to these particulars.
Was MetLife’s first determination invalid?
Was MetLife’s process fair?
93The process adopted by MetLife was scrupulously fair from a structural perspective. Before making the first determination, it provided Mr Khan’s lawyers with three procedural fairness letters describing the material it had before it. MBL was also provided with copies of relevant reports; and an opportunity to respond with submissions and further material. MBL could be in no doubt as to the internal thought process of MetLife and the material which it had before it.
94Of course, fairness must be real, not just structural. Although Mr Khan was obliged to provide MetLife “with such evidence to substantiate the claim as we may reasonably require”,[86] there was no burden of proof upon him. MetLife was under a duty to make reasonable enquiries and to seek information in response to conflicts or gaps apparent in the material before it.[87]
[86]Clause 13.2 of the policy, JCB 317
[87]See Finch v Telstra Super Pty Ltd (2010) 242 CLR 252; [2010] HCA 36 at [66]. Although the High Court was there considering superannuation trustee’s duties, an insurer should be held to an at least comparable standard.
95The standard imposed by this duty was one of reasonableness, not perfection. To expect perfection (aside from being unattainable) could have collateral impacts on the cost of processing claims; and the delays in reaching determinations. MetLife was entitled to take into account the opportunity it had provided to Mr Khan to provide relevant material in support of his application in considering whether further enquiries were necessary. It was not required to chase every rabbit, not only into its hole, but through every twist and turn of the rabbit warren.
96One of those rabbits was Dr Winter, a former treating pain specialist. MetLife had a report from him dated 27 February 2018.[88] That report recorded Dr Winter’s “feeling” that Mr Khan had some facet joint dysfunction and suggested some possible treatment options. It did not express any opinion on the likelihood that Mr Khan would engage in relevant work in the future. By letter dated 8 April 2019, MetLife requested a report from Dr Winter. Dr Winter never provided one. However, Dr Winter was a former, rather than current treater. MetLife had reports from two treating GPs, Dr Eu and Dr Liu. Dr Eu, in particular, clearly had extensive knowledge of his client’s condition. There was no suggestion that Dr Winter could provide more, or better, opinion than was contained in his own report or the reports that were before MetLife. I am not satisfied there was anything unreasonable or unfair in MetLife not pursuing Dr Winter for a report before it made its first determination.
[88]JCB 510
97More rabbits can be seen in MBL’s response to the second procedural fairness letter.[89] The letter contended that MetLife should seek clarification from Dr Eu in relation to what Mr Khan’s restrictions would be if he did return to work in a part time capacity and what type of hours Mr Khan would be able to perform.[90] MetLife did this by its letter dated 18 June 2020 to Dr Eu.[91] In his response dated 10 July 2020,[92] Dr Eu informed MetLife that Mr Khan would be fit to do 20 hours a week of sedentary duties spread across five days; and that he could sit and stand and walk for over two hours and his concentration, memory and energy levels were not impacted. There was nothing unreasonable or unfair in the process MetLife adopted in relation to this issue.
[89]JCB 423-425
[90]JCB 424
[91]JCB 419-422
[92]JCB 728 and JCB 526-7
98MBL also contended that Mr Khan was referred to a psychologist by Dr Eu in January 2020 and that MetLife had failed to obtain any information in relation to this. MetLife asked Dr Eu for information about this in its letter dated 18 June 2020. In his response, Dr Eu informed MetLife that Mr Khan saw a mental health nurse not a psychologist, and did not have a mental health diagnosis as a result, but it was confirmed that he was suffering from chronic pain. Again, there is nothing unreasonable or unfair in the process adopted by MetLife in relation to this issue.
99MBL also drew MetLife’s attention to the fact that there was evidence that Mr Khan was attending a physiotherapist in December 2016 prior to consulting Dr Eu. It does not appear that MetLife did anything in response to this. However, MBL does not explain the relevance of this information. In circumstances where MetLife accepted that Mr Khan suffered an initial back injury in December 2016, it was not unreasonable or unfair to fail to take any further steps in response to this information.
100MetLife provided MBL with a copy of Dr Eu’s response of 10 July 2020, and a summary of its contents, in its third procedural fairness letter dated 31 August 2020.[93] MBL responded[94] by providing an “update” that their client’s mental health had “deteriorated” and he was now consulting a clinical psychologist. It suggested that MetLife contact Dr Mazalin directly if it required further clarification regarding Mr Khan’s condition. The letter concluded “our client has nothing further to add to the claim at this stage and relies upon all the information and documentation provided which it is submitted supports his disablement within the meaning of the policy. Accordingly, our client requests that a decision be made on the claim within one month.”
[93]JCB 426-429
[94]JCB 431-432
101A reasonable insurer might have responded to the assertion that Mr Khan’s mental health had deteriorated and the information that Mr Khan was now consulting a psychologist, by requesting a report from that psychologist. However, I am not satisfied that a reasonable insurer must have taken this course. I accept that MetLife was under a duty to make further enquiries.[95] However that duty was not unlimited. As explained in Board of Trustees of the State Public Sector Superannuation Scheme v Gomez:[96]
“However, if the information previously advanced by the member provides only equivocal or incomplete support for the application and the member elects not to advance information contradicting information adverse to the application, the risk will be higher. That is particularly so where it is apparent that if such contradictory information existed the member could procure it. In such a case the Board may logically infer from the paucity of information supporting the application and the lack of contradiction of information adverse to it that it can more safely act upon the adverse information without further inquiry.”
[95]Alcoa of Australia Retirement Plan Pty Ltd v Frost at [39]-[46]; Finch v Telstra Super Pty Ltd (2010) 242 CLR 252; [2010] HCA 36 at 280-281 (albeit considering the obligation of a superannuation trustee rather than an insurer).
[96][2018] QCA 67 at [53]
102MetLife had a recent report from Mr Khan’s treating GP explaining that Mr Khan had no mental health diagnosis and aside from impacts on mood and sleep recorded no impacts on his functional ability. By that stage, the claim had been on foot for over 18 months. Requesting a further report would have led to additional expense and delay. In a context where MBL, on behalf of Mr Khan, had stated that Mr Khan had no further information and had pressed for a determination within one month, it was not unreasonable or unfair for MetLife to proceed to determination on the basis of the material before it.
103For completeness, if I had found that MetLife had acted unfairly by not seeking out a report from Dr Mazalin on Mr Khan’s mental health, I would have held that this error was corrected by the second determination (in which a report from Dr Mazalin was considered).
104In conclusion, I am not satisfied that there was anything unfair or unreasonable in the process adopted by MetLife.
Was MetLife’s consideration of Mr Khan’s claim unreasonable?
105MetLife’s first determination provided an explanation of the opinion that it was required to form. That explanation paraphrased the words of the definition of total and permanent disablement. It applied a date of assessment of 7 June 2017 (six months after the date of injury).[97] It limited the period of time within which Mr Khan must be unlikely to be employed or engaged in relevant work to the period from 7 June 2017 to his normal retirement age. It noted that if there was a real chance that Mr Khan would return to work prior to reaching retirement age, even if less than 50%, he was not “unlikely ever” to return to relevant work. It also noted that the employment contemplated by the definition included part-time work.
[97]No objection to this date of assessment was made by Mr Khan. In any event, MetLife considered material provided after this date. There is no suggestion a different conclusion would have been reached if a later date of assessment were used, particularly given the principle that “the court does not speculate when it may know” – see McArthur v Mercantile Mutual Life Insurance Co Ltd [2002] 2 Qd R 197 at [23] (per McPherson JA)
106It is apparent from its reasons that MetLife:
(a) conducted a careful review of Mr Khan’s Workers’ Compensation file;
(b) accepted that Mr Khan had ceased work due to a lower back injury sustained during his employment and that he had attempted to return to work but this was unsuccessful;
(c) assumed that Mr Khan could no longer work in his previous occupation of food and beverage attendant, and only considered sedentary roles;
(d) considered Mr Khan’s contention that he had been unable to obtain employment in the area he had studied despite applying for 20 jobs over the previous 18 months; and
(e) relied heavily on Dr Eu’s reports in reaching the conclusion that Mr Khan was capable of sedentary employment as an administration officer, bank worker or accounts clerk.
107There was no failure to consider relevant considerations evidenced in relation to these matters.
108Mr Khan submitted that it was unreasonable of MetLife to prefer the opinion of Dr Davison over the opinion of his treating practitioners. This is not an accurate characterisation of MetLife’s reasons. In fact, MetLife relied primarily on the reports of Dr Eu in making its determination. It did prefer Dr Eu’s reports to the reports of Dr Liu. This was not unreasonable given Dr Liu said in his report that he had only seen Mr Khan once, was providing the report to the best of his ability based on Mr Khan’s medical notes and recommended contacting Dr Eu.
109Mr Khan also submitted that it was unreasonable of MetLife to rely upon the report of Mr Taki, as Mr Taki failed to consider the impact of sitting restrictions on Mr Khan and had performed no functional capacity assessment. However, it was not within Mr Taki’s expertise to perform a functional capacity assessment. Further, MetLife did not rely solely upon the report of Mr Taki in forming its conclusion. Rather, it considered Mr Taki’s opinion on suitable roles for Mr Khan in conjunction with Dr Eu’s opinion and functional capacity assessment.
110Finally, Mr Khan contended that MetLife erred in considering the percentage of people working in the proposed roles who had post-graduate qualifications or below, rather than the percentage of people working in the proposed roles who had post-graduate qualifications. There was a lack of practical logic in MetLife’s reliance upon the fact that “100% of people working in the role [possess] a Post Graduate or equivalent qualification or below” in support of its conclusions. Post Graduate qualifications were the highest possible qualification. It followed that, for any role, 100% of workers would have a Post Graduate qualification or below. This metric provided no support for MetLife’s conclusion.
111However, there was no error in MetLife’s fundamental chain of reasoning, which was that:
(a) based on Mr Taki’s report, administration officer, accounts clerk and bank worker were suitable roles for Mr Khan, having regard to his education, training, experience and transferable skills; and
(b) based on Dr Eu’s report, Mr Khan had the functional capacity to perform each of these roles for 20 hours per week.
112Dr Eu did express the opinion that Mr Khan’s lack of experience was a barrier to his obtaining employment in these roles.[98] However, this was not within Dr Eu’s expertise as a general practitioner. It was reasonable for MetLife to prefer the opinion of Mr Taki on this issue. It was also reasonable for MetLife to rely upon Dr Eu’s opinions in relation to the three specific roles and functional capacity assessment provided by Dr Eu in preference to earlier, more general statements made by him, such as “he might not be able to sit for long periods, which would mean he is limited in his capacity to remain seated at work”.[99]
[98]SCB 100
[99]JCB 521
113Mr Khan submitted that MetLife failed to have regard to the report of Dr Winter. However, that report was based on a single consultation in February 2018. It does not provide substantive evidence of the likelihood that Mr Khan would work in a sedentary role in the future.
114Mr Khan submitted that MetLife was selective in the regard it paid to the Prahran Market Clinic notes. I am not satisfied that this is the case. It is apparent from its reasons that MetLife conducted a detailed and real review of all the material before it. It was not necessary for MetLife to quote every passage in the clinical notes that may be relevant to its determination.
115Finally, MetLife included in its determination reference to Mr Khan’s mental health and the impact of chronic pain, noting Dr Eu’s opinion that Mr Khan’s concentration, memory, energy levels, social interaction, motivation, anxiety management, self-care, emotional regulation, stress management and ability to leave the house were not affected “despite his chronic pain causing a depressive state”.
116I am not satisfied that, in its consideration, MetLife failed to take into account any relevant consideration, took into account any irrelevant consideration, failed to apply the correct test or was otherwise unreasonable.
Was MetLife’s opinion reasonably open to it?
117Dr Eu’s reports, taken as a whole, provided compelling evidence against a determination that Mr Khan was unlikely ever to be employed in relevant work, particularly when considered in conjunction with the report of Mr Taki. Against this was Mr Khan’s chronic pain and resultant depression, his failed attempt to return to work at Crown, and his contention that he had applied unsuccessfully for employment and was overqualified. However, aside from MBL’s general assertions that Mr Khan had unsuccessfully applied to multiple roles, there was no evidence before MetLife that overqualification was a barrier to employment as an administration officer, accounts clerk or bank worker.
118It was open to MetLife, acting reasonably, to conclude that:
(a) administration officer, accounts clerk and bank worker were roles for which Mr Khan was reasonably suited by education, training or experience; and
(b) there was a real chance that Mr Khan would be gainfully employed in one of these roles (or a similar role) before he reached retirement age.
119I am not satisfied that MetLife’s first determination was invalid.
Was MetLife’s second determination invalid?
120By the time of the second determination, MetLife had before it the following additional evidence in relation to Mr Khan’s mental state:
(a) a report from Dr Mazalin dated 20 January 2021, which diagnosed Mr Khan with major depressive disorder and generalised anxiety disorder;
(b) a report from medico-legal psychiatrist Associate Professor Khalid;
(c) a report from treating psychiatrist Professor Singh; and
(d) a report from occupational therapist Dr Haynes.
Was MetLife’s process fair?
121MBL was provided with a detailed procedural fairness letter.[100] That letter included summaries of the reports of Dr Mazalin, Associate Professor Khalid and Dr Haynes. It explained MetLife’s view that Dr Mazalin’s report did not “speak to a permanent incapacity or negative prognosis”. It also explained that although Associate Professor Khalid’s opinion was that, at the time of his report, Mr Khan did not have a capacity for the three vocational roles identified, he was also of the view that with an assertive treatment program under the care of his psychiatrist he would expect Mr Khan to have the capacity for work in office administration, or as an accounts clerk or bank worker.
[100] JCB 458
122In response to this letter, MBL provided MetLife with the report of treating psychiatrist Professor Singh dated 15 July 2021 and pressed for a decision within one month.
123I am not satisfied there was anything unfair in MetLife’s process.
Was MetLife’s consideration of Mr Khan’s claim reasonable?
124Mr Khan submitted that MetLife should not have relied upon Dr Haynes’ opinion that Mr Khan was fit for food and beverage roles, as it contradicted the opinion of all of his treating practitioners. I accept that preferring Dr Haynes’ opinion to that of his treating practitioners without any further enquiry or explanation would have been an invalidating error.[101] However, a careful reading of MetLife’s reasons reveals that it did not do so. Although MetLife refers to Dr Haynes when summarising the material before it, its conclusion is that Mr Khan “has a capacity for sedentary employment and [Mr Taki has] identified the role of an Administration Officer, Accounts Clerk and Bank Worker to be within [Mr Khan’s] education and training” [italics added].[102] It does not rely on Dr Haynes’ opinion that Mr Khan is capable of performing his pre-injury role.
[101]See, for example Alcoa of Australia Retirement Plan Pty Ltd v Frost (2012) 36 VR 618; [2012] VSCA 238 at [45]
[102]JCB 481
125Mr Khan also submitted that MetLife should not have taken into account Associate Professor Khalid’s opinion that Mr Khan would improve with treatment under the care of a psychiatrist, when Mr Khan was not in fact under the ongoing care of Professor Singh. Curiously, MBL’s letter to MetLife dated 29 July 2021 stated that Mr Khan is “currently receiving treatment from Professor Bruce Singh”.[103] Nevertheless, it is apparent from MetLife’s reasons[104] that it was aware that Professor Singh had not seen Mr Khan since 7 May 2021. MetLife did not rely upon treatment being provided by Professor Singh, specifically, but rather upon Associate Professor Khalid’s opinion (which had been provided to Professor Singh and with which Professor Singh agreed) that it was expected that Mr Khan would improve with treatment. This formed part of the evidentiary matrix which led MetLife to conclude that Mr Khan was not unlikely ever to obtain relevant work. I am not satisfied it was an irrelevant consideration.
[103]JCB 473
[104]JCB 481
126Mr Khan also submitted that MetLife should have taken into account Mr Khan’s ADHD diagnosis. However, there was no material before MetLife to suggest that this was an “injury or illness” as a result of which Mr Khan was unlikely ever to obtain relevant work. I am not satisfied that this was a consideration which MetLife was required to take into account.
127I am not satisfied that, in making its second determination, MetLife failed to take into account any relevant consideration, took into account any irrelevant consideration, failed to apply the correct test or was otherwise unreasonable.
Was MetLife’s opinion reasonably open to it?
128In relation to Mr Khan’s psychological condition, the following material was particularly relevant.
129First, Dr Eu, who was the treating practitioner who had the longest and closest relationship with Mr Khan, had expressed the view that Mr Khan would be fit to do 20 hours a week of sedentary duties spread across five days. This view as to Mr Khan’s capacity was formed notwithstanding Dr Eu’s acceptance of the validity of Mr Khan’s complaints of pain. In his functional capacity assessment, Dr Eu acknowledged that chronic pain can cause a depressive state, but recorded no impact on Mr Khan’s concentration, memory, energy levels, social interaction, motivation, anxiety management, emotional regulation or stress management.
130Second, Mr Khan had seen a mental health nurse in May 2020, but did not have a mental health diagnosis as a result.
131Third, Mr Khan first attended psychologist, Dr Mazalin, in June 2020, some three and a half years after his initial injury. He had attended Dr Mazalin on eight occasions prior to Dr Mazalin’s report. Dr Mazalin diagnosed Mr Khan with major depressive disorder and generalised anxiety disorder. He expressed the opinion that Mr Khan’s prognosis was “mixed”; and that if his pain did not sufficiently abate he was likely to experience worse psychological outcomes. He also expressed the view that “[a]t this point in time”, Mr Khan’s conditions were making it “considerably more challenging for him to find suitable work”.[105] He then went on to provide further information about these challenges, which were:
(a) he lacks the experience required to bolster his applications;
(b) his chronic pain condition interferes with his ability to present well to a future employer; and
(c) he would likely struggle with his pain levels due to the prolonged sitting required in such roles.
[105]JCB 532
132None of these three matters were clearly within the realm of expertise of a psychologist.
133The limits of Dr Mazalin’s report were explained to MBL (who had provided Dr Mazalin’s initial report). No further report from Dr Mazalin, or substantive response was provided by MBL. Instead, MBL provided a report of Professor Singh. That report agreed with the opinion of Associate Professor Khalid.
134Fourth, Associate Professor Khalid diagnosed Mr Khan with somatic symptom disorder with predominant pain and adjustment disorder with mixed anxiety and depressed mood. He expressed the opinion that Mr Khan did not have presently have the capacity for any of the three identified roles. However, in his opinion “with treatment with antidepressant medication and pain management program his symptoms would significantly improve if not go into full remission”. Although Associate Professor Khalid refers to this treatment being provided “under the care of his psychiatrist [Professor Singh]” his opinion is focussed on the nature of the treatment rather than the requirement that it be provided by a particular practitioner.
135MetLife accepted that Mr Khan, at the time of its decision, lacked capacity for relevant work as a result of his mental health. A mere hope or speculation that there would be improvement would not suffice. However, in the present case, there was no direct evidence that Mr Khan’s mental health condition was long-term. The strongest evidence came from the report of Dr Mazalin, but this referred only to a “mixed” prognosis. Further, in relation to capacity for work, the report largely relied upon matters outside Dr Mazalin’s psychological expertise. Against this were the opinions of Associate Professor Khalid (with whom treating psychiatrist Professor Singh agreed) that Mr Khan would improve with treatment.
136In TAL Life Ltd v Shuetrim,[106] Leeming JA considered whether an opinion that “in the ordinary course with appropriate treatment” a person could return to work was a “mere expression of hope”. He concluded that such an opinion might sustain an opinion that the clause was not satisfied. He also noted that it might “depending on the particular facts and degree of uncertainty … also warrant deferring the assessment date”.[107] In the present case, there was no substantive evidence that Mr Khan’s mental illness was long-term. Indeed, only a few months previously, Dr Eu had provided a report supporting his return to work in a sedentary capacity. MBL had been provided with details of the relevant medical opinions and was not proffering any further evidence, but rather was pushing for a decision.
[106]TAL Life Ltd v Shuetrim (2016) 91 NSWLR 439; [2016] NSWCA 68 at [110]-[111]
[107]At [111]
137Taken together, it was open to MetLife, acting reasonably, to determine the claim, rather than delay its determination further while Mr Khan had treatment. It was also reasonable for it to conclude that Mr Khan’s mental health would improve sufficiently for him to be able to obtain relevant work in a sedentary role such as administration officer, bank worker or accounts clerk. This was inconsistent with total and permanent disablement.
138Further, as with the first determination, it was reasonable for MetLife to conclude that Mr Khan had the physical capacity to obtain and perform one of the three suggested roles, at least part-time.
139Mr Khan has not succeeded in showing that either of MetLife’s determinations were invalid.
What would the Court have determined if it proceeded to the second stage?
140As the Court has not found either of MetLife’s determinations were invalid, it has no power to proceed to the second stage. However, for completeness, I will explain the findings that the Court would have made on the evidence led at trial, if it had proceeded to the second stage.
Mr Khan’s symptoms of pain
141I accept that Mr Khan suffers ongoing intermittent pain and it is likely that he will continue to suffer this pain. However, I am not satisfied that his own descriptions of his pain, and resultant limitations, were reliable. They tended to be melodramatic, exaggerated and self-serving. They were contradicted by his capacity to travel extensively overseas, including long flights;[108] manoeuvring a large suitcase;[109] meeting business contacts;[110] and on one trip pushing his mother in a wheelchair.[111] They were contradicted by his presentation in Court; and his capacity to represent himself, including sitting for long periods and moving freely when distracted.[112]
[108] T60, L29-T61, L9
[109] T60, L13-14
[110] T66, L20-23
[111] T65, L13-L16
[112]See T196, L21-T197, L7
142The reliability of his evidence was also undermined by the findings of medico-legal neuropsychologist Dr Jackson.[113] Dr Jackson conducted a neuropsychological assessment of Mr Khan on 19 April 2023. The answers provided by Mr Khan in this assessment, if genuine, would have meant that he had low, extremely low or borderline results on every substantive neuropsychological metric, including IQ, verbal comprehension, perceptual reasoning, working memory and processing speed. On the depression, anxiety and stress scale, his answers were suggestive of extremely severe depression and anxiety, as well as severe stress.
[113] JCB 951
143However, Dr Jackson observed[114] that during the initial interview Mr Khan gave no overt signs of having any difficulty understanding questions, and presented with euthymic (normal) mood and a full range of emotional affect. This changed as soon as testing commenced, when questions would be responded to with blank stares and assertions that he did not understand. In the course of his neuropsychological tests, Dr Jackson performed three tests designed to check for reduced effort. On two of these tests, Mr Khan recorded below the critical score. Dr Jackson concluded that:
“Mr Khan presented with clear illness behaviour during formal testing and failed 2/3 tests of effort, which were the simplest effort tasks (forced choice memory). It is clear that he has produced an invalid and unreliable neuropsychological profile.”
[114]JCB 967
144Dr Jackson gave oral evidence at trial and was cross-examined at length. His evidence was calm, balanced and persuasive. I accept his evidence. The dramatic change in Mr Khan’s presentation observed by Dr Jackson and his failing two out of three of the tests for effort cannot be explained by agitation at the late start to the appointment, ADHD, depression or anxiety or cultural or language difficulties. I find that Mr Khan’s performance on the substantive neuropsychological tests was distorted by a deliberate lack of effort on Mr Khan’s part.
145In December 2017, Mr Khan registered an MHK Corps Pty Limited (“MHK”). Mr Khan was its sole director and shareholder. In August 2018, Mr Khan registered MHK for GST. In September 2018, he created an MHK website, offering freight forwarding and logistics services.[115] By April 2019, MHK had begun accepting clients.[116] The evidence in relation to Mr Khan’s role in working for MHK is directly relevant to his capacity for employment. It is also indirectly relevant to the extent that it undermines the reliability of his evidence more generally.
[115]SCB 108, T134, L21-28
[116]T143, L20-28
146MHK continued to provide services to clients up to the time of trial. It made a small profit in the last financial year. In the course of cross-examination, Mr Khan persistently sought to downplay the services he provided through MHK as effectively just passing messages between clients and the customs broker, and said that he worked on average 1.5 hours per week. However, it was apparent from correspondence[117] and invoices, that his role and expertise was greater than this. Further, he demonstrated a detailed understanding of MHK’s invoices[118] as well as a capacity to concentrate and provide answers in relation to the import requirements in response to questions.
[117]Eg JCB 1426; JCB 2090; JCB 2139
[118]See for example, T160, L1-T161, L21
147On his website, Mr Khan described in detail the services that MHK could offer. Under cross-examination he asserted that MHK could not in fact perform many of these services.[119] Either his assertions on the website were incorrect, or his evidence in court was incorrect. Either conclusion would undermine the reliability of his evidence.
[119]T136, L6-17; T138, L23-27; T141, L3-15
148On 30 April 2019 (around the time Mr Khan obtained his first clients) MBL informed MetLife that:[120]
“Our client instructs that he has attempted to start a work from home business to accommodate his injury. He has created a website, however, has not done any billable work yet. He confirms this is just to keep his mind off of the injury and keep busy.”
[120]JCB 396
149MBL did not make any disclosure to MetLife about the work Mr Khan performed for clients of MHK, which he commenced performing in April 2019. Mr Khan did not tell Mr Taki or Dr Haynes about it. The first reference to this business in this proceeding was on 28 September 2022, in answers to interrogatories.[121] He only disclosed it to Centrelink shortly prior to the trial.[122]
[121]T188, L 6-30
[122]T185, L11-12
150This non-disclosure was despite the fact that MHK had gross income of $4,255 in 2018/19;[123] $61,457 in 2019/2020;[124] $112,750 in 2020/2021;[125] and $218,294 in 2021/2022.[126] These figures can be viewed as inflated by Mr Khan’s method of accounting, which was to record as income payments received by clients for fees he paid on their behalf. But nevertheless, they demonstrate that the business that MHK was engaged in was not an insignificant endeavour. It was real work.
[123]JCB 1081
[124]JCB 1086
[125]JCB 1096
[126]JCB 1102 (this figure was inflated by a COVID payment)
151Overall, Mr Khan demonstrated a propensity to say what suited him at any given time. I do not find that Mr Khan told deliberate untruths in his evidence in Court. However (to use his own terminology) what he said in evidence tended to be more “wishful” than based in reality.
152Of all the witnesses, I found the evidence of Dr Eu to be the most compelling. He had been seeing Mr Khan regularly since 2017. He was clearly a committed, caring and supportive general practitioner with a good understanding of Mr Khan’s condition. It is largely because of his support for the veracity of his client’s experience of pain that I accept that Mr Khan genuinely continues to suffer pain (albeit not to the extent asserted by Mr Khan).
Diagnosis and prognosis of physical condition
153Dr Eu’s evidence, both at the time MetLife made its determinations and at trial, was to the effect that Mr Khan had a degenerative condition of his back and that significant improvement was not expected. He was confident Mr Khan could not return to anything that required ongoing repetitive back work. In evidence-in-chief he said that there was:
“the possibility he can return to some sedentary duties, but I think because we haven’t been able to test it out, I don’t know what his capacity is in terms of how many hours he is able to sit for long … periods where he needs a break or there is a limit to how many hours he can work in a day.”[127]
[127]T166, L15-20
154In cross-examination, Dr Eu agreed that Mr Khan had a functional capacity to perform work as an administrative, officer, accounts clerk or bank worker and that he was physically fit to do 20 hours a week of sedentary duties spread across five days.[128] He went on to say that this would be monitored to see how it was being coped with and that he could not be sure that there was not a physical problem with this number of hours.
[128]T166, L28-T167, L16
155Ultimately, he agreed that from both a physical and psychological perspective, Mr Khan had a real chance of engaging in a sedentary role on a part-time basis.[129]
[129]T175, L17-30
156He agreed that he would defer to the vocational experts on barriers to actually obtaining employment.[130]
[130]T167, L13-16
157I prefer Dr Eu’s evidence to the evidence of medico-legal consultant occupational physician, Dr Haynes. Dr Haynes saw Mr Khan on only one occasion. As an occupational physician, he may have more training and experience in diagnosing back injuries than a GP, but he is not a specialist orthopaedic surgeon. He notes mild multilevel facet joint arthropathy on an MRI scan of Mr Khan’s lumbar spine performed on 16 March 2020, but expresses the opinion that it was consistent with normal findings for a man of Mr Khan’s age. Based on this, he reaches a conclusion that there was no diagnosable condition present and therefore that Mr Khan was fit to return to work as a food and beverage attendant. Effectively this amounts to a complete rejection of Mr Khan’s complaints of pain. Aside from the lack of objective signs, he provides no reason for doing so. As Dr Eu explained, with great perspicacity, in cross-examination :
“Um, not necessarily. He doesn’t see the patient for several years as an ongoing thing. He doesn’t - he doesn’t have a concept of ongoing symptoms, presentation. You know, Dr - Mr Khan has no - had no reason to, um - to present with those back pains because he was actually unemployed over that period. So, you know, he had no ulterior motive to actually have back pain, and we’d been treating him for many years trying to resolve this. Now, I don’t think occupational physician has a sense of that ongoing history.
...
Even if he thinks it’s normal to have degenerative changes, it doesn’t mean it’s not the cause of his pain.”
158I am similarly sceptical of the views expressed by Dr Davison.
159The best evidence of the diagnosis and prognosis of Mr Khan’s physical condition is provided by Dr Eu. I find that he has a long-term degenerative condition of his back, which prevents him returning to any role involving repetitive back movements. However, I am not satisfied that it prevents him working in a sedentary role for up to 20 hours per week.
Diagnosis and prognosis of Mr Khan’s mental condition
160I have already referred to the reports of Dr Mazalin, Professor Singh and Associate Professor Khalid in my reasons relating to stage one.
161In his oral evidence, Dr Mazalin confirmed his diagnosis of major depressive disorder and generalised anxiety disorder in a context of chronic pain from a back injury. He provided no direct evidence that Mr Khan was permanently disabled from employment. In cross-examination, he agreed that he took Mr Khan’s complaints of pain at face value[131] and that assessing what was involved in a particular role may be more a matter for an occupational therapist.[132] He also agreed that he would defer to the opinion of a treating psychiatrist who was part of a managing team.[133]
[131]T230, L22-25
[132]T233, L21-24
[133]T234, L5-9
162Professor Singh provided a further report dated 21 July 2023[134] at the request of the defendants and gave oral evidence. He had been provided with the report of neuropsychologist Dr Jackson by the defendants. In his report he says “I do not know him well enough to comment on this claim as I have only been treating him for ADHD. As noted by the neuropsychologist and in my view, he is not a particularly reliable historian. In my view, on the balance of probabilities, he would be capable of performing now or at some stage in the future some other occupation or a sedentary role without restrictions, notwithstanding his ADHD provided it is under treatment.” This opinion is curious, given Professor Singh in fact also diagnosed Mr Khan with mixed anxiety and depression. There also seems to be an internal conflict between his statement that he does not know Mr Khan well enough to comment on his claim, and has not seen him since 2021, and his opinion that on the balance of probabilities he would be capable of performing a sedentary role without restrictions. I find Professor Singh’s contemporaneous opinion from 2021 more likely to be reliable than his opinion expressed in July 2023. That opinion was to the effect that he agreed with Associate Professor Khalid, that Mr Khan would improve with treatment sufficiently to obtain sedentary employment.
[134]JCB 930
163Associate Professor Khalid also provided a further report prior to trial and gave oral evidence. In his report, dated 29 September 2023,[135] he considers material provided to him by the defendants’ solicitors, including the report of Dr Haynes, the report of Mr Jackson and the 2023 report of Professor Singh. His report is not based on a re-examination of Mr Khan. He concludes that a “diagnosis of somatic symptom disorder with predominant pain is doubtful” but says that he cannot confirm factitious disorder or malingering without further reviewing Mr Khan. He says Mr Khan’s prognosis “is guarded as his reported psychological symptoms and level of psychological functioning are likely to continue at least until his TPD claim matter is finalised.” He notes Mr Khan is running his own business, MHK, which is growing in income, and the neuropsychological report of Mr Jackson in which it was observed that Mr Khan demonstrated illness behaviour. He concludes that he no longer holds the belief that Mr Khan did not have a current work capacity for the roles of office administration, accounts clerk or bank worker as at 30 April 2021.
[135]JCB 975-990
164Again, I did not find this this report particularly helpful. It is based on assumptions about the nature and extent of MHK’s business which were not borne out in evidence. It also appears to be based, at least in part, on the opinion of Dr Haynes. It was not supported by any further review of Mr Khan, although it is apparent from Associate Professor Khalid’s report that this would have been of assistance to him. I prefer to rely upon Associate Professor Khalid’s previous report.
165Finally, in relation to Mr Khan’s mental health, Dr Eu agreed with Professor Singh’s view that from a psychiatric point of view, Mr Khan would be capable of performing a sedentary role without restrictions.[136] As with his opinion in relation to Mr Khan’s physical condition, this opinion deserves significant respect, and I accept it.
[136]T174, L17-19
Mr Khan’s capacity for gainful employment
166Two vocational experts were called by the defendants: Mr Taki and Ms Aelan Bradley. Mr Taki’s report (which was before MetLife) was helpful in identifying three roles for which Mr Khan may be suited by his education, training or experience. There was no contradictory evidence from a vocational expert and I accept it.
167Ms Bradley prepared two reports. Her first was prepared for an insurer other than MetLife. It found Mr Khan was suitable for roles such as food and beverage attendant, accountant or accounting clerk, inquiry clerk or customer service officer or bank worker. Her conclusion in relation to food and beverage attendant was based upon her acceptance of the reports of Dr Davison and Dr Haynes. Aside from that, she largely draws very similar conclusions to Mr Taki.
168Her second report was prepared in September 2023 at the request of the defendants’ solicitors. I did not find this report of assistance. She extrapolates from her instructions that Mr Khan is working as a customs clearing agent, to a conclusion that he can perform all the typical duties of that role, to concluding that he could work in a freight-forwarding business or as a customs clearing agent, customs compiler/classifier or import/export clerk/freight forwarder. A role as a customs clearing agent required licensing. She described a certificate III, certificate IV or diploma as “useful” for import-export clerk, or freight forwarder. She also relied upon her instructions as to MHK’s total sales. Although she did not have any way of knowing this, the figures she was provided were inflated by Mr Khan’s accounting method of including fees he paid on behalf of his client as income. Finally, her opinion as to the availability of roles was also based on a conversation with an unnamed “Specialist Recruiter”, effectively amounting to no more than a conduit for untestable hearsay.
169I do not accept that the roles suggested by Ms Bradley in her second report are roles for which Mr Khan is reasonably suited by reason of education, training or experience; or that he has a real chance of working in them without first obtaining further training or experience. In particular, roles which require completion of a certificate III or IV course at a TAFE, or a diploma, do not fall within the type of “short qualifying or refresher course” that may be within the scope of a person’s “education, training or experience”.[137]
[137]Hannover Life Re of Australasia Ltd v Colella [2014] VSCA 205; (2014) 47 VR 1 at [32]; Hannover Life Re of Australasia Ltd v Dargan (2013) 83 NSWLR 246 at [37]; Board of Trustees of the State Public Sector Superannuation Scheme v Gomez [2018] QCA 67 at [66]-[68] and [90]; Halloran v Harwood Nominees Pty Ltd [2007] NSWSC 913; (2010) 16 ANZ Ins Cas 90-142 at [26]
Conclusion on second stage
170In summary, Dr Eu, whose evidence I found compelling, was of the view that Mr Khan would be capable of performing a sedentary role without restrictions from a psychiatric point of view. From a physical perspective, he was of the opinion that Mr Khan could perform a sedentary role part-time, starting from 20 hours. According to Dr Eu, the number of hours Mr Khan could perform may have required subsequent adjustment, but there is nothing in Dr Eu’s evidence to suggest that Mr Khan would be incapable of performing any work at all, or part-time hours so minimal as to not constitute gainful employment. This is particularly so bearing in mind that Mr Khan was working part-time casual hours even before his injury.
171Mr Taki provides three roles for which Mr Khan may be suited by his education, training or experience. Dr Eu confirms that Mr Khan has the physical capacity for these roles.
172Dr Mazalin, Mr Khan’s former treating psychologist, had concerns about Mr Khan’s ability to work, but his concerns were based on an acceptance of the veracity of Mr Khan’s reports of pain and the impact of this pain on Mr Khan’s functional capacity to perform the suggested roles. As to the veracity of Mr Khan’s reports of pain, I have found them unreliable. As to the impact of pain on Mr Khan’s functional capacity to perform the suggested roles, I prefer the opinion of Dr Eu, in conjunction with the report of Mr Taki. Regardless, Dr Mazalin did not actually offer the opinion that Mr Khan was unlikely ever to work in a relevant role. Treating psychiatrist Professor Singh and Associate Professor Khalid were both of the opinion that Mr Khan could work in a sedentary role, with treatment. Mr Khan has in fact received treatment, in the form of anti-depressants prescribed by his general practitioner.
173Against this was Mr Khan’s assertions of pain and incapacity and his inability to obtain employment. I have found his evidence concerning the extent of his pain to be unreliable. Through the operation of his business, MHK, and in the manner in which he represented himself at trial, he demonstrated an intelligence, ability to focus and attend to detail which would place him well in an entry-level administrative role. He asserted he had applied unsuccessfully for numerous jobs, but the only documentary evidence he provided was in relation to applications to his former employer in the period immediately after his injury, many years ago.
174Having regard to all the evidence at trial, I am satisfied that there is a real chance that Mr Khan will be employed or engaged in employment for which he is reasonably suited by education, training or experience before he reaches retirement age. Indeed, I think it would be a great shame if he did not return to the workforce, as it is apparent that he has much to offer.
175Accordingly, had I been called upon to decide the issue, I would have concluded that Mr Khan was not unlikely ever to be employed in any gainful employment for which he was reasonably suited by education, training or experience.
Were Host-Plus’ determinations invalid?
176Neither party focussed on the determinations made by Host-Plus at trial. I am not satisfied that there was any invalidating error in those determinations. It appears from its reasons to have given real and genuine consideration to Mr Khan’s claim. There is no suggestion that it acted for an improper purpose. Its reasons were not demonstrably unsound.
177A question which arose at trial was whether Host-Plus should have forwarded to MetLife the medical certificates it received from MBL on 22 October 2019 in support of Mr Khan’s application for release of his accumulated superannuation funds.[138] In those certificates, both Dr Eu and Dr Liu had ticked “yes” to the question of whether, in their opinion, Mr Khan met the definition of permanent incapacity. The definition of permanent incapacity provided to Dr Eu and Dr Liu was that he had “ceased to be engaged in gainful employment by means of ill-health (whether physical or mental) to such an extent that [he] is unlikely, because of the ill-health, to engage in gainful employment for which [he] is reasonably qualified by education, training or experience”. Although not identical to the subjective component of the TPD definition (notably, according to the defendants, it omits the word “ever” after unlikely) it is very similar to it.
[138] See above paragraph [41]
178As a matter of good practice, I think it would have been preferable if Host-Plus had forwarded these certificates to MetLife. The certificates were submitted by MBL in support of a different claim – to release accumulated superannuation funds. However, Host-Plus is one entity, which knows what it knows. It cannot take off one hat, put on another, and disclaim knowledge of relevant material. Having said that, in the particular facts of this case, I am not satisfied that the bare certificates provided by Dr Eu and Dr Liu were sufficiently probative to require that they be provided to MetLife. This is particularly so given MetLife had more detailed reports from both Dr Eu and Dr Liu.
Judgment
179I am not satisfied that any of Metlife’s or Host-Plus’ determinations were invalid. Even if I had been satisfied that Metlife’s determinations were invalid, and I had proceeded to stage two, I would not have determined that Mr Khan met the criteria for a TPD benefit.
180The proceeding is dismissed. I will hear from parties on the question of costs.
| Appendix – Findings on particulars of breach of duty in Further Amended Statement of Claim | |
| Claim | Ruling |
| Particulars of alleged breach of duty by MetLife | |
| MetLife failed to consider the insurance claim with proper regard to the interests of Mr Khan | No basis in submissions or evidence. Not a recognised ground of review. |
| MetLife failed to take into account in considering the insurance claim all relevant considerations | Addressed in relation to first and second determination under heading “Was MetLife’s consideration of Mr Khan’s claim unreasonable?” |
| MetLife took into account in considering the insurance claim an irrelevant consideration | Addressed in relation to first and second determination under heading “Was MetLife’s consideration of Mr Khan’s claim unreasonable?” |
| MetLife failed to reach a proper decision in respect of the insurance claim on the evidence before it | No submissions. Effectively addressed in relation to first and second determination under heading “Was MetLife’s opinion reasonably open to it?” |
| MetLife failed to act towards the Plaintiff, in respect of the insurance claim, with the utmost good faith | No submissions. Effectively addressed in relation to first and second determination under heading “Was the process adopted by MetLife fair?” |
| MetLife failed to make a decision as to whether to accept or reject an insurance claim within a reasonable time and in a timely manner | No basis in submissions or evidence |
| MetLife failed to give the Plaintiff an opportunity to comment on and if appropriate rebut material which MetLife was to consider before making its decision | Addressed in relation to first and second determination under heading “Was the process adopted by MetLife fair?” |
| MetLife failed to give reasons for its decision | No basis, reasons were given and no inadequacies identified |
| MetLife decision was unreasonable | Addressed in relation to first and second determination under heading “Was MetLife’s opinion reasonably open to it?” |
| Particulars of alleged breach of duty by Host-Plus | |
| Host-Plus refused to consider the Fund claim | No basis, claim was considered and rejected |
| Host-Plus failed to exercise any discretion in good faith, with real and genuine consideration and in accordance with the purposes for which the discretion was conferred | No basis in submissions or evidence |
| Host-Plus failed to take into account in considering the Fund claim all relevant considerations | No basis in submissions or evidence. In relation to certificates of Dr Eu and Dr Liu, addressed under heading “Were Host-Plus’ determinations invalid?” |
| Host-Plus took into account in considering the Fund claim an irrelevant consideration | No basis in submissions or evidence. |
| Host-Plus failed to reach a proper decision in respect of the Fund claim on the evidence before it | No basis in submissions or evidence. Not a recognised ground of review. |
| Host-Plus reached a decision in respect of the Fund claim under the dictation of MetLife | No basis in submissions or evidence. Host-Plus’ reasons demonstrate independent consideration was given. |
| Host-Plus failed to exercise, in making the decision, the same degree of care, skill and diligence as an ordinary prudent person would exercise in dealing with property of another for whom Host-Plus felt morally bound to provide, alternatively to exercise, in relation to all matters affecting the entity, the same degree of care, skill and diligence as a prudent superannuation trustee would exercise in relation to an entity of which it is trustee and on behalf of the beneficiaries | No basis in submissions or evidence. Not a recognised ground of review. |
| Host-Plus failed to make a decision as to whether to accept or reject the Plaintiff’s claim within a reasonable time and in a timely manner | No basis in submissions or evidence. Not a recognised ground of review. |
| Host-Plus failed to ensure that Host-Plus’s duties and powers were performed and exercised in the best interests of the Plaintiff | No basis in submissions or evidence. Not a recognised ground of review. |
| In the alternative to paragraphs 17 and 21 above, Host-Plus failed to give reasons for its decision | No basis, reasons were given and no inadequacies identified. Not a recognised ground of review. |
| Host-Plus failed to make the insurance claim on behalf of the Plaintiff with MetLife | No basis, Host-Plus directed the claim to MetLife for the formation of the relevant opinion |
| Host-Plus failed to do everything that was reasonable to pursue the insurance claim on behalf of the Plaintiff with MetLife | No basis in submissions or evidence. Not a recognised ground of review. |
| Host-Plus failed to give the Plaintiff access to the material which Host-Plus was to consider before reaching its decision | No basis in submissions or evidence, detailed procedural fairness letters were provided by MetLife to Mr Khan |
0
13
0