Long v Is Industry Fund Pty Ltd

[2020] NSWSC 1151

Supreme Court

New South Wales

Medium Neutral Citation:

Long v IS Industry Fund Pty Ltd [2020] NSWSC 1151

Hearing dates:

4 and 5 February 2020, 1 May 2020

Decision date:

27 August 2020

Jurisdiction:

Equity

Before:

Robb J

Decision:

See par [406]. Parties should confer and provide to my Associate short minutes of order to give effect to these reasons for judgment.

Catchwords:

INSURANCE — Life insurance — Accident and sickness — total and permanent disablement — where the second defendant had rejected the claim of the plaintiff on numerous occasions — where, on the proper construction of the Policy, the inability to do any work as a result of Injury or Illness for six consecutive months only relates to periods of six consecutive months that commence at the end of a six month period that satisfies the relevant work requirements — where, on the proper construction of the Policy, the direct cause of the contract of employment being terminated was immaterial — where the second defendant acted on an incorrect construction of the Policy in the third and fourth rejections — where the process of reasoning adopted by the second defendant was not reasonable with respect to the third and fourth rejections

Legislation Cited:

Insurance Contracts Act 1984 (Cth)

Cases Cited:

Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223

Birdsall v Motor Trades Association of Australia Superannuation Fund Pty Ltd [2015] NSWCA 104

Chammas v Harwood Nominees Pty Ltd (1993) 7 ANZ Ins Cas 61-175

Edwards v Hunter Valley Co-op Dairy Co Ltd (1992) 7 ANZ Ins Cas 61-113

Hannover Life Re of Australasia Ltd v Colella (2014) 47 VR 1; [2014] VSCA 205

Hannover Life Re of Australasia Ltd v Jones [2017] NSWCA 233

Hannover Life Re of Australasia Ltd v Sayseng [2005] NSWCA 214

Hellessey v MetLife Insurance Ltd [2017] NSWSC 1284

Ivan Mabbett v Watson Wyatt Superannuation Pty Ltd [2008] NSWSC 365

Manglicmot v Commonwealth Bank Officers Superannuation Corporation Pty Ltd [2011] NSWCA 204; (2011) 282 ALR 167

McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579; [2000] HCA 65

MetLife Insurance Ltd v Hellessey [2018] NSWCA 307

MetLife Insurance Ltd v MX [2019] NSWCA 228

PaulWeber v Tiss Pty Ltd [2005] NSWSC 67

Peppers Hotel Management Pty Ltd v Hotel Capital Partners Ltd [2004] NSWCA 114

Shuetrim v FSS Trustee Corporation [2015] NSWSC 464

Standley v Onepath Life Pty Ltd [2020] NSWSC 848

TAL Life Ltd v Shuetrim (2016) 91 NSWLR 439; [2016] NSWCA 68

Wheeler v FSS Trustee Corporation as trustee for the First State Superannuation Scheme [2016] NSWSC 534

Category:

Principal judgment

Parties:

Martin Long (plaintiff)
IS Industry Fund Pty Ltd (first defendant)
Hannover Life Re of Australasia Ltd (second defendant)

Representation:

Counsel: A Coombes (plaintiff)
I Wylie (sol) (defendants)

Solicitors: Firths (plaintiff)
William Roberts Lawyers (defendants)

File Number(s):

2018 / 374473

Judgment

Introduction

1. The plaintiff is Mr Martin Long. He was born on 18 March 1965, and is presently 55 years of age.

2. The first defendant is IS Industry Fund Pty Ltd (the Trustee). The Trustee was at all material times the trustee of the Intrust Super Fund (the Fund). Mr Long was at all material times a member of the Fund, and was entitled to benefits in accordance with the rules of the Fund.

3. In its capacity as trustee of the Fund, the Trustee was the owner of a group life insurance policy (the Policy) issued by the second defendant, Hannover Life Re of Australasia Ltd (Hannover).

4. Both the Trustee and Hannover were represented by the same lawyers in these proceedings. In practical effect, the proceedings were prosecuted by Mr Long against Hannover, as if he were entitled to enforce the rights of the Trustee under the Policy. No issue was taken by any party in respect of the manner in which the proceedings were conducted. The result will be, if Mr Long succeeds, an order will be made against Hannover that it pay the relevant benefit to Mr Long.

5. Under the terms of the Policy, Mr Long would become eligible for a benefit in the event that he became unable to work for a specified period and suffered Total and Permanent Disablement (TPD) as defined in the Policy.

6. In about August 2004, Mr Long commenced full-time employment with Woolworths Ltd, trading as BWS Forster (BWS), as a retail manager. Mr Long's employment was terminated by his employer on 14 January 2011.

7. Mr Long pleaded that he was unable to work as a result of Injury or Illness, within the meaning of the relevant terms of the Policy, for six consecutive months, and that he is unlikely to resume his previous occupation at any time in the future.

8. Mr Long disclosed in his application for the TPD benefit that he had been dismissed for misconduct in breach of his employer's policies. Mr Long had provided a discount to one or more customers using his personal discount card, which entitled him to a discount on the purchase of products as a result of his being an employee.

9. As will be seen, it was Hannover's position that the cause of Mr Long being unable to do any work for the relevant six consecutive months was that his employment was terminated for misconduct. Mr Long acknowledged that misconduct was the immediate cause of the termination of his employment, but he claimed that, on the proper construction of the Policy, it was not fatal to his claim that he had been dismissed for misconduct. He claimed that the dismissal had exacerbated the effect of a pre-existing psychological Illness, in that he was bipolar, in the context of a pre-existing back Injury, so that he was in fact unable to do any work as a result of Injury or Illness for the requisite six consecutive months.

10. Mr Long first made a TPD claim to the Trustee on a date that is not recorded in the evidence. The amount of the TPD benefit claimed is agreed by the parties to be $211,600. The Trustee evidently made a claim under the Policy on Hannover, and on 25 September 2013, Hannover rejected the claim (first rejection).

11. Thereafter, Mr Long instructed his present solicitors. The solicitors made a further TPD claim on the Trustee on 19 September 2017, and the claim was declined by Hannover on 5 October 2017 (second rejection).

12. Then, on 17 October 2017, the solicitors made a further claim on the Trustee, and the Trustee's claim was again declined by Hannover on 6 November 2017 (the third rejection).

13. Mr Long's solicitors made a final application to the Trustee for a reconsideration of Mr Long's initial TPD claim on 17 October 2018. The claim that the Trustee made following that application was declined by Hannover on 5 November 2018 (the fourth rejection).

14. Mr Long worked for a business called Lilydale Larder in Tasmania for a period of slightly less than two months, being 27 October 2014 to 11 December 2014, when he resigned from his employment.

15. Hannover claimed that this episode demonstrated that Mr Long did not satisfy the TPD definition in the Policy, following the first termination of Mr Long's employment on 14 January 2011. Mr Long, on the other hand, claimed that the episode meant that he was trying to find work, but having done so, he was incapable because of his physical and medical condition from carrying out his duties. According to Mr Long, his resignation merely proved the reality of his contention that he satisfied the TPD definition.

16. Mr Long, through his solicitors, made an alternative claim for a TPD benefit, because of the cessation of his employment by Lilydale Larder on 11 December 2014. That claim was rejected by Hannover on 22 May 2018 (the alternative rejection). Mr Long amended his statement of claim on 21 June 2019 to plead an entitlement to the TPD benefit in respect of the alternative claim.

17. The parties agreed that, if Mr Long establishes that he is entitled to a TPD benefit in respect of the alternative claim, the amount of the benefit is $154,600.

Pleadings

18. In his amended statement of claim, Mr Long pleaded the relevant terms of the Policy in pars 6 to 8, which were admitted by Hannover.

19. Mr Long pleaded in par 9 that he was gainfully employed and working 15 or more hours on average each week, and gave particulars of his employment at BWS, and that this employment continued until 14 January 2011. Hannover admitted this allegation.

20. Hannover denied Mr Long's pleaded claim, in par 10, that he was unable to do any work as a result of Injury or Illness for six consecutive months, and alleged in its defence that his employment ceased because it was terminated for serious breach of company policy and misconduct.

21. It must be noted, as it will be relevant to an issue of the proper construction of the Policy that will be considered below, that Mr Long simply pleaded that he was unable to do any work as a result of Injury or Illness for six consecutive months. The particulars given expressly stated that Mr Long ceased work on 14 January 2011, which implies that the six consecutive months started on that date. However, Mr Long’s particulars added: “and has not engaged in regular employment since”.

22. Hannover also denied Mr Long's allegation, in par 11, that he is unlikely to resume his previous occupation at any time in the future and will be unable at any time in the future to perform any Other Occupation, as defined in the Policy.

23. In par 11 of his amended statement of claim, Mr Long set out detailed particulars of his education and employment history, which were relevant to his education, training and experience. Hannover did not respond to these particulars in its defence, but alleged in par 11(b):

… the available medical evidence most proximate to the end of 6 consecutive months of the plaintiff's alleged inability to do any work, 14 July 2011:

1. did not suggest that the plaintiff was unlikely to resume his previous occupation at any time in the future, or that he would be unable at any time in the future to perform any Other Occupation as alleged;

2. was to the effect that the plaintiff may be able to, or can attempt to, or should return to work, or was fit to do his previous jobs on a full or part-time basis;

   24. In par 12A, Mr Long pleaded the alternative claim based upon the cessation of his employment by Lilydale Larder, which occurred on 11 December 2014. It will become relevant that Mr Long expressly alleged in par 12A.2 that his Date of Disablement, which is a term defined in the Policy, was 11 December 2014.

   25. In response to Mr Long's TPD claim based upon the cessation of his employment at Lilydale Larder, Hannover pleaded in its defence, at par 12A(d), that "the plaintiff ceased employment with Lilydale Larder because he resigned without notice, not as a result of Injury or Illness within the meaning of the Policy". It also pleaded, in par 12A(e), that Mr Long had not been gainfully employed and working 15 or more hours each week within the six months prior to 12 December 2014, as required by the Policy. Finally, Hannover pleaded, in par 12A(f), that "the available evidence most proximate to the period 12 December 2014 to 12 March 2015”, did not suggest that Mr Long satisfied the TPD definition in the Policy.

   26. In par 21 of its defence, Hannover made the following allegations in answer to the whole of the amended statement of claim:

Further and in the alternative to paragraph 1-20 of this defence, in answer to the whole of the amended statement of claim, the defendants:

…

(c)   say that that (sic) the second defendant's obligation to pay the "Agreed Benefit" is subject to compliance by the plaintiff with clauses 7.1 and 7.2 of the Policy, including:

1. written notice of the claim being given to the second defendant as soon as reasonably possible in the second defendant's prescribed form;

2. proof that the relevant event has happened being provided to the second defendant;

3. the evidence listed in clause 7.2 of the Policy being provided to the second defendant if required; and

4. the plaintiff attending medical examinations and providing any other information and proofs that the second defendant may request or require;

…

(g)   say that the second defendant is not obliged to pay a benefit to the plaintiff because he did not give written notice of the claims to the second defendant as soon as reasonably possible in the second defendant’s prescribed form.

27. Mr Long filed a reply on 5 August 2019. His reply included a specific response to the allegation in par 12A(e) of the defence, saying:

…that the (sic) cl 2.2(a) of the Policy (per the policy wording operative as at 12 December 2014) does not require that the plaintiff to have been gainfully employed for 15 hours of every week within the 6 months prior to 12 December 2014. Rather, cl 2.2(a) requires the plaintiff to have been gainfully employed for 15 hours per week for an unspecified period within (but not necessarily for the entirety of) the 6 months prior to 12 December 2014.

28. Mr Long also alleged, in his reply, that he provided any proof required of him by clause 7.1 of the Policy or otherwise requested by Hannover, and that he provided notice of the alternative Date of Disablement to Hannover as soon as reasonably possible. Mr Long further alleged that Hannover had not suffered any prejudice by reason of any delay in his notification of the alternative claim.

29. In final oral submissions, the Court directed questions to Hannover's advocate as to what findings could be made on the evidence concerning the period for Mr Long to make his application that would conform to the requirement that it be "as soon as reasonably possible". That question was asked because Hannover did not call any witness or tender any evidence on the subject. As I understand Hannover's response, it was that Hannover did not seek to identify a specific time when the application was required to be brought by Mr Long, and the delay was a matter that the Court should take into account as part of the circumstances relevant to Hannover’s behaviour in relation to whether it acted reasonably in determining the various applications made by Mr Long: see T 145.7.

30. The hearing in this matter took place on 4 and 5 February 2020. In that time, the parties completed the evidence, but there was insufficient time for the parties to deliver oral submissions to augment the detailed written submissions that they had provided to the Court before the hearing. The proceedings were stood over for further directions on 10 February 2020.

31. On that date, the parties joined in asking the Court to make the following order, which was made by consent:

Order pursuant to r 28.2 UCPR that the following question be separately determined:

Did some or all of the second defendant’s decisions to decline the plaintiff’s claim involve breaches of the second defendant’s duty and obligations to the plaintiff, such that the plaintiff is entitled to declaratory relief to the effect that the second defendant’s decisions are void and without effect?

32. The parties’ written submissions dealt with all issues in the proceedings. The effect of the Court making this order for the determination of the separate question is that, retrospectively, the issues to be determined by the hearing that occurred were narrowed to those raised by the separate question. The result will be that any issue that the parties have dealt with that falls outside the separate question will remain to be determined at a later hearing, if the Court holds that any of Hannover’s decisions are void and without effect.

33. The Court also made orders for the delivery of further submissions by the parties on the separate question. Those submissions have been received. The Court heard oral submissions on 1 May 2020.

34. At the hearing, Mr Long, his wife, and one of the principals of Lilydale Larder were cross-examined. As I understand the position, the parties agree that the cross-examination has no relevance to the determination of the separate question, as the evidence given in cross-examination was not available to Hannover at the time it rejected Mr Long's various applications for the TPD benefits.

35. On 2 July 2020, counsel for Mr Long drew to the Court’s attention the decision of Rein J in Standley v Onepath Life Pty Ltd [2020] NSWSC 848 (Standley), and made brief additional written submissions concerning the significance of the reasoning in that case for the determination of the present proceedings. Hannover’s advocate provided a response on 7 July 2020.

The Policy

36. The Policy, as it existed at the time that is relevant to Mr Long’s first claim, provides in clause 2.1(b) for the payment of the Agreed Benefit when an Insured Person "suffers Total and Permanent Disablement".

37. In the Definitions section of the Policy, Total and Permanent Disablement is defined as meaning either of the conditions described in clause 2.2.

38. The TPD definition relevant to Mr Long's first claim for the TPD benefit is found in clause 2.2(a). For the purpose of these reasons for judgment, it will be convenient to interpolate into the definition the numbers [1] to [4], to indicate the separate components of the definition. The definition is:

2.2 What is Total and Permanent Disablement?

[1] Where an Insured Person is gainfully employed and is working fifteen (15) or more hours on average each week within the six (6) months prior to the Date of Disablement they suffer Total and Permanent Disablement if they;

(a) [2] are unable to do any work as a result of Injury or Illness for six (6) consecutive months and [3] in our opinion, at the end of that six (6) months they continue to be so disabled that they are in our opinion unlikely to resume their previous occupation at any time in the future and [4] will be unable at any time in the future to perform any Other Occupation…

39. When I refer to Issues [1] to [4], I will mean the aspects of the TPD definition in clause 2.2 of the Policy that are prefaced by the respective numbers.

40. Date of Disablement is defined in the Definitions as meaning "the date on which Total and Permanent Disablement is treated as having occurred under clause 2.5".

41. Clause 2.5 relevantly provides:

2.5 Date of Disablement

If clause 2.2 is satisfied, Total and Permanent Disablement is treated as having occurred on the Date of Disablement which is the earlier of;

(a)   the date on which the six (6) months consecutive absence from work that results in Total and Permanent Disablement began…

42. The combined effect of the definition of Date of Disablement and clause 2.5(a) of the Policy is the Date of Disablement is the date on which the six months consecutive absence from work began.

43. However, the effect of clause 2.2(a) is that a determination that an insured satisfies the TPD definition depends upon the formation of the opinion by Hannover that, at the end of the six months consecutive absence from work, the insured continues to be so disabled that they satisfy the definition. In order to distinguish the Date of Disablement from the later date as at which the opinion must be formed as to the satisfaction of the TPD definition, I will call the later date the Relevant Date.

44. "Injury" is defined in the Definitions as meaning "bodily injury caused by violent, external and visible means".

45. "Illness" is defined in the Definitions as meaning "a sickness, disease or disorder".

46. Also in the Definitions, "Other Occupation" is given the following definition:

… any occupation the person is qualified to perform by their education, training or experience at the time we assess the claim and includes;

(a)   part-time occupations; and

(b)   an occupation which may be perceived by the person to be of lower status than the person's previous occupation or an occupation in which the person does not earn as much income as they did in their previous occupation.

47. Clause 7 of the Policy deals with "Claims", and relevantly provides:

7.1 Proof of claim

Our obligation to pay a benefit is subject to the following evidence being provided at no cost to us;

(a)   written notice of any claim or potential claim being given to us as soon as reasonably possible. This notice must be in the form of the Hannover Life Re claim forms or any other documentation we prescribe from time to time and include a Doctor's certification if we require one;

(b)   proof that the relevant event has happened being provided to our satisfaction;

(c)   if the claim arises from Total and Permanent Disablement, the Insured Person, at our discretion, attending any medical examinations with which we may arrange and/or providing any other information we may require;

(d)   such other proofs relating to the claim that we may request;

(e)   the evidence listed in clause 7.2 must be provided to us at no expense, if we require it.

7.2 What Evidence do we pay for?

If we require evidence to assess whether we are liable to pay a claim we must pay the costs of obtaining that evidence except for;

(a)   proof of the date of birth of the Insured Person; and

(b)   an initial medical report which must be supplied in support of any claim for Total and Permanent Disablement. We may require this report to be given in a form of our choosing; and

…

(e)   evidence the Proposer requests us to obtain; and

…

which must be provided at no expense to us…

48. The parties agreed that the policy wording relevant to Mr Long's alternative TPD claim, which was made following the cessation of his employment with Lilydale Larder, had been varied from the terms of the Policy. As I understand it, the parties agreed that the only relevant variation involved the definition of TPD in clause 2.2, which relevantly provides (using the same interposed numbering system as before):

[1] Where an Insured Person is gainfully employed and is working fifteen (15) or more hours on average each week within the six (6) months prior to the Date of Disablement they suffer Total and Permanent Disablement if they;

(a) [2] are unable to do any work as a result of Injury or Illness for six (6) consecutive months and [3] in our opinion, at the end of that six (6) months they continue to be so disabled that they are in our opinion unlikely to resume their previous occupation at any time in the future and [4] will be unable at any time in the future to perform any Other Occupation…

Summary of findings

49. The complexity of the issues that arise out of the five rejections of Mr Long’s TPD claims by Hannover, and the complexity and consequent obscurity of the reasons that are necessary to resolve the extensive submissions of the parties in relation to the significance of the evidence that was provided in support of Mr Long’s claims on an evolving basis, make it advantageous for the Court to set out at the beginning a summary of the conclusions that the Court has reached. They are:

1. Issue [2], concerning the inability of Mr Long to do any work as a result of Injury or Illness for six consecutive months, on the proper construction of the Policy, only relates to periods of six consecutive months that commence at the end of a six month period that satisfies the work requirements contained in Issue [1].

2. In practical terms, there was only one six consecutive month period following the termination of Mr Long’s employment by BWS, which was the period that commenced on 14 January 2011. Consequently, Issue [2] had to be satisfied during that six month period and Issue [3] had to be satisfied at the end of the period. Those two Issues could not be satisfied for a six month period commencing after 14 January 2011, because Issue [1] could not then be satisfied at the beginning of the period.

3. Hannover rejected Mr Long’s four claims for the TPD benefit in relation to the first six month period on the ground that Mr Long’s employment contract was terminated by his employer for breach, so he was subsequently unable to continue his employment. Hannover determined that Mr Long was not unable to do any work for that period as a result of Injury or Illness.

4. The manner in which Hannover dealt with Issue [2] does not appear with equal clarity from the four rejection letters. The first two rejection letters are capable of being read as if Hannover treated the immediate cause of the termination of Mr Long’s employment contract as being a relevant factor, but formed the opinion that Issue [2] was not satisfied because the Injury or Illness from which Mr Long suffered did not have the effect of making him unable to do any work. That is, the rejection in those two cases was based upon the formation of an opinion concerning the consequences of Mr Long’s Injury or Illness.

5. However, Hannover’s reasoning in the third and fourth rejection letters was that, as Mr Long’s contract of employment was terminated for breach, he could no longer carry out his former work, so that Issue [2] could not be satisfied, because Injury or Illness was not shown to be the cause of Mr Long’s loss of employment. Hannover’s treatment of the consequences of Mr Long’s Injury or Illness, as not being sufficient to make him unable to do any work, was treated in the case of these two rejections as being a separate ground for rejecting the claims.

6. On the proper construction of the Policy wording relevant to Issue [2], Mr Long was required to establish that in fact he was unable to do any work as a result of Injury or Illness for the six consecutive months, in the sense that he was incapable of doing work, and the direct cause of his contract of employment being terminated was immaterial.

7. However, as Mr Long’s case was that the circumstances in which his contract of employment was terminated for breach exacerbated pre-existing Injury or Illness that caused him to be unable to do any work, satisfaction of Issue [2] required that Mr Long establish that the consequence was immediate so that his inability to do any work as a result of Injury or Illness had a duration of the full six consecutive months’ period.

8. On the proper construction of the Policy wording relevant to Issue [2], the entitlement to the TPD benefit depends upon proof as a fact that Issue [2] was satisfied, and does not depend upon whether or not Hannover formed the opinion that it was satisfied that Issue [2] had been established. That is unlike Issues [3] and [4], where the opinion formed by Hannover is determinative of the entitlement to the TPD benefit, unless Hannover’s determination is vitiated by breach of duty owed to Mr Long.

9. Thus, even though it appears that the parties in their submissions may have treated Issue [2] as one that depended upon the formation of a relevant opinion by Hannover, the real question is whether the evidence establishes Issue [2]. That is a question for the Court to decide.

10. Even though Issue [2] depends upon a question of objective fact, it was necessary for Hannover, in determining Mr Long’s claims, to form an opinion as to whether Issue [2] was satisfied. Although the opinion formed would not be determinative, if it was formed unreasonably or not in accordance with the Policy, that would be a ground for the Court to declare the determination to be ineffective.

11. The basis upon which Hannover rejected the third and fourth claims by Mr Long was sufficiently clearly infected by an erroneous construction of the Policy, to the effect that Issue [2] could not be satisfied in a case where Mr Long became unable to continue with his prior work because his contract of employment had been terminated for breach. It follows that a finding is justified that Hannover’s rejection of the TPD claim in those cases was vitiated by Hannover acting on an incorrect construction of the Policy.

12. The parties tendered some evidence and made submissions on the effect of the termination of Mr Long’s employment contract, and the consequences of that event in relation to the exacerbation of Mr Long’s pre-existing Injury or Illness, and whether Mr Long was consequently unable to do any work for the six month period. The evidence was inconclusive as to whether the Injury or Illness that incapacitated Mr Long from doing any work was concurrent with the termination and lasted for the full six month period. If the Court were required to decide that issue in this judgment, the result would be a finding that, as a matter of objective fact, the evidence did not satisfy Issue [2].

13. However, the effect of the order for the determination of the separate question must be taken into account. In effect, the question for determination in this judgment is whether Hannover’s decisions to reject Mr Long’s TPD claim were vitiated because of breaches of Hannover’s duty and obligations to Mr Long. The separate question does not encompass the issue of whether objectively the evidence satisfies Issue [2]. Consequently, the insufficiency of the evidence on the issue that is apparent at this stage of the proceedings is not determinative. The satisfaction of Issue [2] must be determined at the second stage of the proceedings on the evidence that is then before the Court.

14. The satisfaction of Issue [3] is to be determined on the basis of the opinion formed by Hannover, unless the determination is vitiated by some breach of duty owed by Hannover to Mr Long.

15. Although Hannover’s reasons for rejecting Mr Long’s first two claims were in some marginal respects inadequate and incomplete, and have been expressed in an infelicitous way, having regard to the standard of reasoning and expression that is required of Hannover, those rejections did not involve a breach of Hannover’s duties to Mr Long.

16. The same would be true of the reasons given by Hannover for rejecting Mr Long’s claims on the third and fourth occasions, but for the fact that Mr Long supported those applications by additional medical evidence that was not conclusive as to the satisfaction of Issue [3], but was material and required a properly balanced consideration in the formation of Hannover’s opinion. By the time of the third and fourth rejections, Hannover acted upon the basis that the new medical evidence was insufficiently relevant to require substantive consideration because it was not produced contemporaneously with the date in respect of which Hannover was required to form the opinion that Mr Long’s circumstances satisfied Issue [3]. Hannover substantially ignored the new evidence in forming its opinion that Issue [3] was not satisfied.

17. Hannover’s duty to Mr Long to adopt a reasonable process in the formation of its opinion concerning the satisfaction of Issue [3] required it to give substantive consideration to the additional medical evidence. Its failure to do so in respect of the third and fourth rejections was a breach of duty that justifies the Court in finding that the third and fourth rejections were not effective.

18. Consequently, by reason of Hannover’s determination of Issues [2] and [3], in relation to the causation and contemporaneous evidence issues, Mr Long is entitled to have his entitlement to the TPD benefit in respect of the first six month period determined by the Court.

19. As to Mr Long’s alternative claim for the period following the termination of his employment by Lilydale Larder, the entitlement to the TPD benefit depends, as an initial requirement, upon the satisfaction of Issue [1] as an objective fact on the available evidence.

20. On the proper construction of the Policy wording relevant to Issue [1], the entitlement to the benefit required proof that Mr Long worked 15 hours or more on average each week for the full six month period prior to the date of the cessation of his employment.

21. Mr Long was not employed by Lilydale Larder for the full six months, so that the decision by Hannover that Issue [1] was not satisfied was justified.

22. Strictly speaking, as was the case for Issue [2] in respect of Mr Long’s first four claims for the TPD benefit, the question whether Issue [1] was in fact established in relation to the alternative claim falls outside of the subject matter of the question for separate determination. However, on the evidence it is so clear that Mr Long did not satisfy Issue [1] in relation to the alternative claim that the Court should find that Mr Long’s claim fails.

50. Issue [4], concerning whether at the Relevant Date Hannover was of the opinion that Mr Long was so disabled that he will be unable at any time in the future to perform any Other Occupation, was not considered at the hearing. As Hannover noted at par 134 of its written submissions, it had rejected Mr Long’s claim because it was not of the opinion that Issue [3] was satisfied. Hannover therefore based its rejection on the issue of whether it was of the opinion that Mr Long was unlikely to ever resume his previous occupation, and not whether he was unable at any time in the future to perform any Other Occupation. As Hannover did not form any opinion concerning Issue [4], it will not be able to argue that any opinion held by it on that subject is determinative. At the second stage of these proceedings, if Issue [4] is raised, the question will be a matter for the Court to decide on the basis of the evidence.

Matters relevant to the determination of Issue [2]

51. Mr Long’s entitlement to the TPD benefit that was the subject of his first four claims depends upon whether he was unable to do any work as a result of Injury or Illness for six consecutive months, which I have called Issue [2].

Mr Long’s contentions concerning satisfaction of Issue [2]

52. Mr Long made the following submission (at par 48 of his written submissions, in relation to the third rejection):

… Whilst it is true that the cessation of work due to illness or injury is a concept present in some TPD policies, that concept is foreign to the term “Total and Permanent Disablement" as defined in the Policy. All that is required to satisfy the first limb of the definition in the Policy is that the plaintiff has ceased work and from the time he ceased work has been disabled for 6 consecutive months as a result of illness or injury. Thus where, as here, the manner in which the plaintiff ceased work (termination) was provocative of the plaintiff's subsequent psychological illness and resulting incapacity for work, the first limb of the TPD definition is satisfied. Consideration of the cause of the plaintiff's cessation of work was irrelevant to the task before the second defendant. By taking into account an irrelevant consideration, the second defendant misdirected itself in law such that its decision flowing from that misdirection cannot stand.

53. I understand this submission by Mr Long to mean that Issue [2] is satisfied, provided in fact the claimant has ceased work, and from the time of cessation has been disabled for six consecutive months as a result of Illness or Injury. It does not matter that the direct or immediate cause of cessation is some event that is not contemplated by Issue [2], provided that cause is “provocative” of Illness or Injury that does satisfy Issue [2]. In Mr Long’s case, the Illness or Injury that was provoked by the termination was a psychological illness that resulted in incapacity for work, when compounded with the consequences of his long-standing back injury.

54. As it will be important to the conclusion that the Court will reach concerning Issue [2], it should be noted that Mr Long made the most extensive submission in his written submissions on that issue in the context of his submissions concerning why the third rejection made by Hannover should be held to be invalid. That is, the submission was made in the context of what has been called the first stage enquiry as to whether, in determining to reject a claimant’s TPD claim, the insurer has breached the duties that it owes to the claimant in respect of the process of determination. This conclusion is patent in the final sentence of the submission extracted above.

55. There was some evidence that was capable of supporting an argument that Mr Long's physical and psychological Injury or Illness pre-dated the termination of his employment, so that the Illness or Injury may have been a cause, or perhaps the cause, of Mr Long acting in a manner that was out of character, and which constituted the misconduct that led to the termination of his employment. Those circumstances may have supported an argument that, although his misconduct leading to the termination of his employment was the immediate cause of the cessation of work, the real or underlying cause was the pre-existing Injury or Illness.

56. In final oral submissions, in response to a question from the Court as to whether it was part of Mr Long's case that the real cause of the termination of work was the pre-existing Injury or Illness, counsel for Mr Long explicitly abandoned any reliance upon a case to that effect. The response given on behalf of Mr Long was that he: "must embrace this proposition that where there is a termination of employment and that termination is itself provocative of the further deterioration in the plaintiff's condition that the immediate cause of work is not (inaudible) what follows from that.": see T 126.9.

57. At T 127.23, counsel for Mr Long stated: "In this case the immediate exacerbation given there is evidence of a pre-existing injury", as Mr Long's explanation of why Issue [2] was satisfied in the present case, notwithstanding that Mr Long had been terminated for misconduct.

58. I therefore take Mr Long's case to be as follows. He does not argue that his pre-existing Injury and Illness was the cause of his conduct that led to the termination of his employment. However, there was a pre-existing Injury and Illness. The effect of the termination of Mr Long's employment for misconduct was the "immediate exacerbation" of the combined effect of the pre-existing Injury and Illness, which had the consequence that, in fact, Mr Long was unable to do any work as a result of Injury or Illness for six consecutive months.

Hannover’s contentions concerning satisfaction of Issue [2]

59. As I have noted above at [20], Hannover denied in its defence that Mr Long was unable to do any work as a result of Injury or Illness for six consecutive months, and alleged that his employment ceased because it was terminated for serious breach of company policy and misconduct. That pleading is consistent with my understanding of the position taken by Hannover, which was that Issue [2] could not be satisfied in a case where Mr Long was unable to do any work in his previous occupation because his right to do so had been lost by reason of the termination of his employment contract for breach.

60. In its written submissions, Hannover dealt with Issue [2] at pars 128 to 137 under the heading “No causative link”. The wording of this heading supports the conclusion that Hannover rejected Mr Long’s claims because it took the view that his employment was terminated for breach, rather than that he became unable to work because of Illness or Injury. This was an aspect of Hannover’s submissions in respect of the first stage of the enquiry, being whether Hannover had complied with its duties to Mr Long, as set out by Hannover at par 98 of its submissions. Hannover also made submissions that included:

1. The Policy only responds if the plaintiff, “as a result of Injury or Illness”, was “unable to do any work” from 11 January to 11 July 2011. A causative link is required between the inability to do work and injury or illness. For example:

[Hannover then made submissions about a number of authorities, some of which I will address below].

1. In this case, at all stages Hannover properly took into account the highly relevant fact that, as the plaintiff has acknowledged from the outset, the reason that he ceased work on 14 January 2011 was that his employment was terminated…

2. In this case, there was no contemporaneous evidence of TPD as at 14 January or 14 July 2011…and the plaintiff’s actual employment circumstances as at 14 January 2011…were to the contrary of any such inference being drawn:

(a)   The Plaintiff was at 14 January 2011 only unable to do work immediately because he had engaged in misconduct in breach of company policy and been dismissed…

61. I consider that, on a fair reading of Hannover’s written submissions, it dealt with Issue [2] on the basis that it fell within the separate question, so that the issue was whether, in considering whether Issue [2] was satisfied, Hannover had acted in accordance with its duties to properly determine Mr Long’s claim, so that its decision on the issue was binding upon Mr Long.

Treatment of Issue [2] in Hannover’s rejection letters

62. Hannover made the following statements concerning Issue [2] in its first four rejection letters. The terms of the reasons given by Hannover are extracted below at [181], [242], [275] and [332]. It is more convenient to set out the full reasons below, where I consider the adequacy of the process of reasoning adopted by Hannover. A consequence is that the extracts are out of context. Issue [2] does not arise in relation to Mr Long’s fifth and alternative claim.

First rejection:

“… The member at the time was employed in the capacity of a full time Retail Manager with Woolworths Limited until being terminated from his employment with effect on 14 January 2011 due to reason other than disablement, namely due to a serious breach of company policy.

Therefore for all intention and purpose of our assessment, the Date of Disablement as defined is deemed to have occurred on 14 January 2011 when the member is alleged to have commenced the six consecutive months absence from work that results in total and permanent disablement…

…

It is however reasonably discernible that the event occurring on or about 14 January 2011 did likely cause a temporary demise in the member’s psychological state around that time, after which the member did receive appropriate counselling and amendment to his prescribed medications…”

Second rejection:

“… Therefore for all intention and purpose of our assessment, the Date of Disablement as defined is deemed to have occurred on 14 January 2011…

Just to recap this Member’s position at the time of disablement. The member in 2011, was employed in the capacity of a full-time Retail Manager with Woolworths Ltd until being terminated from his employment with effect on 14 January 2011, due to reasons other than disablement, namely due to a serious breach of company policy…”

Third rejection:

“… To satisfy the applicable definition of Total and Permanent Disablement, the member also has to satisfy that his incapacity from work is a result of either illness or injury. It has already been established and confirmed in our letter dated 5 October 2017 that the member was terminated from his employment due to a breach of company policy not as a result of an illness or injury…”

Fourth rejection:

“The further evidence provided for review confirms that the Member was sacked (for serious breach of company policy) from his job and following this developed symptoms that were diagnosed as Bipolar Disorder.

…

In any event, had the Member not breached company policy, he would not have lost his job and despite his medical condition he had shown a history of working and had done so for many years whilst on medication and under treatment…”

63. The following conclusions may fairly be drawn concerning the meaning and effect of these relevant parts of the rejection letters.

64. First, Hannover proceeded on the basis that there was one relevant six consecutive month period, being the period commencing when Mr Long’s employment was terminated on 14 January 2011. Hannover decided Mr Long’s claim depending upon whether it was of the opinion that Mr Long had established Issue [2] for the period 14 January 2011 to 14 July 2011. It did not consider the possibility that Mr Long may have suffered from Injury or Illness that satisfied Issue [2] during some six month period that commenced after 14 January 2011.

65. Secondly, in varying degrees of clarity, Hannover rejected Mr Long’s claim for the TPD benefit on the basis that Issue [2] was not satisfied unless the Injury or Illness was the cause of the cessation of work, and that the evidence did not satisfy this condition because the actual cause was the employer’s action in terminating the contract of employment for breach.

66. That conclusion may not appear clearly from the first and second rejections, but the wording of the third rejection “that the member was terminated from his employment due to a breach of company policy not as a result of illness or injury” (emphasis added) does, in my view, show that Hannover rejected Mr Long’s application on the understanding that Issue [2] would not be satisfied if Mr Long was unable to do any work under his prior employment contract because the contract had been terminated for breach. The conclusion appears more clearly in the wording of the fourth rejection where Hannover said: “In any event, had the Member not breached company policy, he would not have lost his job”.

67. Thirdly, Hannover did not reject Mr Long’s TPD claim outright based solely on the ground that Mr Long had not satisfied Issue [2]. In the case of each rejection, Hannover responded to whether Issue [3] had been satisfied, and concluded that it had not.

Relevant period for which Mr Long must have been unable to do any work

68. The first question is whether Issue [2] must be satisfied solely by the circumstances that relate to the initial six consecutive month period commencing on the first inability to do any work, or whether clause 2.2 may be applied to any consecutive six month period while the claimant is covered by the Policy when the claimant is unable to work.

69. The chapeau to clause 2.2 (being Issue [1], and set out at [38] above) requires that the claimant be gainfully employed in a particular manner “within the six (6) months prior to the Date of Disablement”. Clause 2.2(a) requires that the claimant be unable to do any work for six consecutive months, and the opinion required to be formed by the insurer is as to the claimant’s employment prognosis “at the end of that six (6) months”.

70. By clause 2.5 of the Policy (set out above at [41]) “Total and Permanent Disablement is treated as having occurred on the Date of Disablement”. That is the date “on which the six (6) months consecutive absence from work…began”.

71. As clause 2.2 explicitly requires that the claimant be gainfully employed and working a specified amount of time within the six months prior to the Date of Disablement, and that amount of time involves working an average number of hours “each week within the six (6) months”, clause 2.2 will not be satisfied if a significant time after the initial cessation of work, the claimant suffers an Illness or Injury that would, during and at the end of the next consecutive six month period, satisfy the TPD definition. The connection between the requirement for a specified amount of work on average each week in the six months prior to the cessation of work with the inability to work for the next consecutive six month period constrains the date that can satisfy the definition of the Date of Disablement.

72. It should be acknowledged that, upon the strict wording of clause 2.2 of the Policy, there may be some limited ability for a second possible Date of Disablement and commencement of a relevant consecutive six month period. But that will be limited by the meaning of “fifteen (15) or more hours on average each week” in the chapeau, so that the period in which clause 2.2 can work twice, so to speak, will be limited to less than one week or in all probability not much longer than that period.

Significance of Standley

73. If, on the proper construction of the Policy, the definition of TPD could be satisfied if there was any consecutive six month period during the currency of the Policy, as it applied to Mr Long, in which Mr Long was unable to work as a result of Injury or Illness, then it might not matter if there was a delay between the initial termination of employment and the consequential development of the Injury or Illness that had the separate effect of making Mr Long unable to do any work for a consecutive six month period.

74. The decision in Standley has potential application to the determination of this issue.

75. The policy wording and the structure of the insurance cover was significantly different in Standley to the effect of the Policy in the present case. Rein J summarised the effect of the relevant part of the policy wording in the following terms:

[3] There is no dispute as to the terms of the Onepath policy. It provides that Onepath will pay “the full TPD Cover amount insured by the benefit payment type which applies” if Mr Standley suffers “total and permanent disability while the TPD Cover is in force and satisfies the conditions of the TPD definition which applies” (CB 272). The definition which applies is “Own Occupation” (CB 356) and the Own Occupation TPD definition, relevantly, is as follows (see CB 273):

‘Own Occupation’ relates to the most recent occupation in which the life insured was engaged prior to the date of disability.

Own Occupation TPD means that, as a result of illness or injury, the life insured:

1. a. has been absent from and unable to engage in their ‘Own Occupation’ for three consecutive months; and

b. is disabled at the end of the period of three consecutive months to such an extent that they are unlikely ever again to be able to engage in their ‘Own Occupation’…

76. One difference between the policy in Standley and the present case is that the entitlement to the TPD benefit in that case depended upon whether or not, as a matter of fact, Mr Standley satisfied the TPD definition at the relevant time. The entitlement did not depend, as it does in the present case and many other reported cases, on the insurer forming an opinion that the claimant satisfied the TPD definition. That difference is not material for present purposes.

77. Relevantly, the TPD definition in Standley required that, the claimant has been absent from and unable to engage in their Own Occupation for three consecutive months as a result of illness or injury; and is disabled at the end of the period of three consecutive months to such an extent that they are unlikely ever again to be able to engage in their Own Occupation. It must be noted that par 1.a. of the definition refers to circumstances that are required to exist “for three consecutive months”, and par 1.b. requires that a particular condition be satisfied “at the end of the period of three consecutive months”.

78. Importantly, on the face of the definition, the wording does not specify any particular three-month period, and does not, in terms, require that there be only one three-month period that commences on the date of the initial commencement of the absence from the claimant’s Own Occupation. That result gives rise to the possibility that the claimant may be entitled to the TPD benefit because, during the whole of the period for which the claimant was covered by the policy, there was any consecutive three months period during and at the end of which the claimant satisfied the TPD definition, even though the claimant did not satisfy that definition at the end of the initial three months consecutive period after the claimant first became absent from work.

79. In Standley, the insurer defended the claim by Mr Standley on the basis that the only issue was whether Mr Standley satisfied the TPD definition in the policy during and at the end of the first three months period after he ceased to engage in the relevant Own Occupation.

80. Rein J found, at [53], that Mr Standley did not satisfy the TPD definition during and at the end of the first consecutive three months period following his initial cessation of employment. His Honour further found, at [57], that, on the proper construction of the relevant TPD definition, the effect of the words “at the end of the period of three consecutive months” was to have the “precise focus” of requiring that the status of being unlikely ever to work again be satisfied at that time.

81. His Honour then considered an alternative argument put on behalf of Mr Standley, based upon a construction of the TPD definition in the policy that had the effect that the TPD definition could be satisfied in relation to any consecutive three months period for which the policy applied to the claimant: see [58]-[63]. Rein J found that the policy applied to Mr Standley in a three month period ending in September 2017, and that, by reason of additional injury or illness not shown to have been present at the end of the first three consecutive months period, Mr Standley had been absent from and unable to engage in the relevant employment, and, in September 2017, was unlikely ever again to be able to engage in that employment. In fact, the insurer had not comprehensively challenged that finding on the evidence, because of its apparent confidence that the only relevant three consecutive months’ period was the initial one after the commencement of the absence from employment.

82. Finally, Rein J found, at [62]-[63], that the alternative claim was available to Mr Standley, because he had pleaded in his statement of claim that he had been prevented from engaging in his employment “from about February 2016 and continuing” (emphasis added), so that his claim encompassed subsequent three months’ consecutive periods.

83. The conclusion reached by Rein J in Standley depended upon the wording of the TPD definition in the policy in that case, which permitted his Honour to find that the requirement that the claimant be absent from and unable to engage in their Own Occupation for three consecutive months as a result of illness or injury could be satisfied in respect of a three month period that commenced after the initial absence of the claimant from that occupation. For the reasons that I have given above (at [69]-[71]) the wording of clause 2.2(a) of the Policy in the present case – by reason of the relationship between Issues [1] and [2] – requires that the six consecutive months’ period start at the end of the prior six months’ period satisfying the work requirement.

Relevant causes for Mr Long being unable to do any work

84. The second question is whether Issue [2] can only be satisfied if the inability to undertake work is directly caused by a relevant Illness or Injury, so that clause 2.2 cannot be satisfied if the cessation of work is some extraneous cause.

85. A subsidiary question is whether, if clause 2.2 may be satisfied where the cause of the cessation of work is initially extraneous, it is necessary for the consequential Injury or Illness to be immediate and endure for the whole of the six consecutive months. This is linked to the answer to the first question.

86. For the reasons that follow, it is my opinion that, on the proper construction of clause 2.2 of the Policy, the direct or immediate cause of the cessation of work is immaterial, provided that, in fact, the claimant is “unable to do any work as a result of Injury or Illness for six (6) consecutive months”. That is, provided that the requisite Injury or Illness is present and has the stipulated effect, it will not be material to the application of clause 2.2 that the claimant’s employment was terminated at the inception of the six month period for some reason not caused by the Injury or Illness, with the effect that the ability of the claimant to work in the original employment has been negated by the termination of the contract of employment.

87. Issue [1], in the chapeau to clause 2.2, requires the claimant to have been gainfully employed and working in a specified way within the six months prior to the Date of Disablement. Issue [2], in clause 2.2(a), requires that the claimant be “unable to do any work as a result of Injury or Illness for” the next six consecutive months. The focus of clause 2.2(a) is on the inability to work as a result of Injury or Illness. If that inability exists, it will not matter whether, at the inception of the six months period, or at some time during that period, the claimant’s contract of employment is terminated so that, as a separate matter, the claimant becomes unable to do any work in the manner in which the claimant was gainfully employed in the prior six months period.

88. To the extent that Hannover determined that Issue [2] was not satisfied because Mr Long’s contract of employment was terminated for breach, so that he could not continue his previous occupation for the six consecutive months’ period because he was no longer employed, it is to be noted that the words “unlikely to resume their previous occupation” appears in the description of Issue [3] and not Issue [2]. The inability to do any work for the purpose of Issue [2] is not related to whether or not the contract of employment that permitted the previous occupation continues.

89. However, the combined effect of my answer to this second question and the first question is that, if the claimant’s contract of employment is terminated by an extraneous cause, such as in the present case, Issue [2] can only be satisfied if the Injury or Illness of which that cause is provocative – to use Mr Long’s expression – is an immediate consequence of the direct cause, because otherwise the claimant will not be “unable to do any work as a result of Injury or Illness for six (6) consecutive months” after the Date of Disablement. If the consequential Injury or Illness is not immediate, there will be a gap in time and a part of the six months when the claimant would have been able to do work and the only reason that work was not done was the termination of the contract of employment, not the effect of Injury or Illness.

Authorities referred to by the parties

90. It is necessary to consider a number of authorities relied upon by Hannover (as noted above at [60]) in support of its position on the causation issue. Those authorities may, however, be of illustrative value only, as the meaning and effect of each contract of insurance depends upon the proper construction of its own wording.

91. As I noted in Wheeler v FSS Trustee Corporation as trustee for the First State Superannuation Scheme [2016] NSWSC 534 (Wheeler) at [63], in Shuetrim v FSS Trustee Corporation [2015] NSWSC 464 (Shuetrim first instance), Stevenson J said at [67]:

[67] An insured person cannot be TPD within the meaning of the MetLife definition unless he or she is absent from his or her occupation through illness or injury for six consecutive months. It is, in my opinion, implicit in the definition that such incapacity must arise from the injury or illness that caused the six month absence from work. The definition thus requires consideration of whether the incapacity results from that injury or illness…

92. In that case the relevant parts of the TAL and MetLife policies were respectively, per TAL Life Ltd v Shuetrim (2016) 91 NSWLR 439; [2016] NSWCA 68 (Shuetrim on appeal) at [10] and [11]:

… The Injured Person having been absent from their Occupation through Illness or Injury for 3 consecutive months…

… The Insured Member having been absent from their Occupation with the Employer through injury or illness for six consecutive months…

93. Stevenson J said “that such incapacity must arise from the injury or illness that has caused the six month absence from work” (emphasis added). The required subject matter of the absence is absence from their Occupation, and it is that absence that must be “through injury or illness”. That requirement appears to connect the absence to the former Occupation, and as that absence must be “through injury or illness”, it appears that the absence from the Occupation must be caused by the injury or illness. On the basis of the policy wording in that case, if the Occupation is terminated by some cause other than injury or illness, the condition for the entitlement to the TPD benefit cannot be satisfied.

94. The difference between the policy wording in the present case and that considered by Stevenson J in Shuetrim at first instance is that clause 2.2(a) is satisfied simply by the fact of the claimant being “unable to do any work as a result of Injury or Illness”.

95. Hannover also relied upon the case of Ivan Mabbett v Watson Wyatt Superannuation Pty Ltd [2008] NSWSC 365, which was decided by Einstein J.

96. The part of the contract of insurance that raised the question that is Issue [2] in the present case is set out at [27] of the reasons for judgment of Einstein J, and provided:

The Insured Person is disabled if they suffer an illness or injury and:

the illness or injury causes the Insured Person to be absent from employment with the Employer for at least 6 months in a row…

97. This wording appears to be closer to the wording in Shuetrim than the wording in the present case, as it focuses on the illness or injury being the cause of the insured being absent from employment with the employer. The entitlement to the TPD benefit does not depend upon an objective inability to do any work but on an absence from employment with the Employer caused by the illness or injury.

98. The plaintiff was employed by P&O from 15 January 2001 until 9 July 2001. On 9 July 2001, the plaintiff tendered his resignation to P&O for the purpose of commencing work the next day for a different employer. P&O accepted the plaintiff's resignation, but required him to work until the end of the shift, it being a term of the plaintiff's employment contract that he was required to give 8 hours’ notice of resignation. Between the time the plaintiff tendered his resignation, and the time at which the resignation took effect, the plaintiff alleged that he sustained a back injury in the course of his employment with P&O.

99. Relevantly, as his Honour noted at [46], the insurer contended that the plaintiff elected to resign on 9 July 2001, and that meant that it was his resignation, and not the injury, which was the proximate cause of his absence from his employment over the following period.

100. Einstein J gave the following reasons at [55]-[56]:

[55] Ultimately, the issue which must be resolved in this case is whether the plaintiff’s injury caused the plaintiff’s absence in the sense of being a real and effective, and proximate, cause of that absence: cf Lasermax Engineering Pty Ltd v QBE Insurance (2005) 13 ANZ Ins Cas 61-643; [2005] NSWCA 66.

[56] In construing the contractual clause, I note that there is no express requirement that the illness or injury be the sole cause of the plaintiff’s absence from employment. There may be circumstances where there is more than one cause of the plaintiff’s absence. Thus, in the example given above, both the employee’s injury and the employer’s decision to restructure are real and effective causes of the employee’s absence. Similarly, in the present case, if the plaintiff can establish that his injury prevented him from being employed by the Employer for a minimum of 6 months, then the finding must be that the injury is, in fact, an effective cause of that absence. This is true regardless of whether, in the hypothetical case that the employee was not injured, the plaintiff would also have been absent from employment with the Employer due to his resignation.

101. His Honour reached the following conclusion at [58]-[59]:

[58] I reject the Insurer’s contention that the mere fact that the plaintiff had resigned prior to his injury made it impossible for him to sustain an injury on his final day of work which would cause his absence from employment with the Employer in the subsequent 6 month period.

[59] Nonetheless, it is still necessary for the plaintiff to show that his injury was in fact a cause of his absence from employment with the Employer for a minimum of 6 months. Based on the facts which set out below, and which relate to the finding that the plaintiff fails to satisfy the second limb of the TPD definition, the finding is that the plaintiff has failed to discharge this onus.

102. Einstein J therefore rejected the insurer's argument that, once the insured had resigned and therefore terminated his contract of employment, injury or illness that occurred after the resignation could not be a cause of the insured being absent from employment for the requisite period. There may be more than one real and effective causes of the insured's absence. However, his Honour found against the insured claimant on the facts.

103. I do not consider that this decision is of direct assistance in determining the proper construction of the Policy. It is of some comfort that Einstein J concluded that there may be more than one operative cause to a claimant being absent from employment with the claimant’s employer. However, in my view the terms of the policy in that case were materially different to the terms contained in the Policy.

104. Hannover also relied upon the decision of the Court of Appeal in Manglicmot v Commonwealth Bank Officers Superannuation Corporation Pty Ltd [2011] NSWCA 204; (2011) 282 ALR 167, in which the principal judgment was given by Giles JA, Young and Whealy JJA agreeing.

105. In that case, the plaintiff appellant was injured and was subsequently only able to work part-time for his employer. In due course, the plaintiff was offered, and accepted, redundancy.

106. The relevant part of the definition of Total and Permanent Disablement is set out at [28], and stated:

Total and Permanent Disablement means…

(b)   having been absent from work through injury or illness for an initial period of six (6) consecutive months…

107. This term is arguably similar to clause 2.2 of the Policy, as it refers to “absent from work”, while the equivalent wording in the Policy is “unable to do any work”. Although the difference is subtle, it is arguable that the expression “from work” ties the absence slightly more to absence from the former employment than is the case for clause 2.2 of the Policy, which in its terms is concerned with inability to do any work.

108. Giles JA rejected the appellant's appeal for other reasons, but then explained, in obiter, that the evidence did not establish that the appellant's absence from work was through injury or illness.

109. Mr Long responded to Hannover's submissions on the significance of causation by relying upon the decision of the Court of Appeal of the Supreme Court of Victoria in Hannover Life Re of Australasia Ltd v Colella (2014) 47 VR 1; [2014] VSCA 205 (Colella). Ashley and Beach JJA agreed with the reasons of Garde AJA in that case.

110. The relevant part of the definition of Total and Permanent Disablement is set out at [14] in the following terms:

A Person suffers Total and Permanent Disablement if they,

are unable to do any work as a result of injury or illness for 6 consecutive months and…

111. Mr Long submitted that this aspect of the TPD definition was the same as the relevant part of clause 2.2 (a) of the Policy. I accept that submission.

112. Mr Long relied upon [33] of the reasons of Garde AJA, where his Honour said (footnote omitted):

[33] Consistently with authority, the trial judge was right to take into account the claimant's physical ability, intellectual capacity, education and qualifications in concluding that he was unable to perform any work for six consecutive months as a result of injury. Plainly, a person has no ability to do work for which the person does not have the physical or the intellectual capacity, or is unqualified or unsuited. Mr Christie who appeared for the insurer at the trial properly accepted in submissions at the trial that the phrase ’unable to do any work' must mean work that the insured could undertake. This excluded occupations which were beyond the insured from a physical, educational or intellectual perspective.

113. I do not think that the decision in Colella was directed at the present issue, as there was no question about the insured in that case being in fact unable to work because of the termination of the insured's employment, for some reason not connected with injury or illness suffered by the insured. Nonetheless, the decision provides some guidance concerning the proper construction of the relevant part of clause 2.2(a) of the Policy.

114. As Gleeson CJ said in McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579; [2000] HCA 65 (footnotes omitted):

[22] A policy of insurance, even one required by statute, is a commercial contract and should be given a businesslike interpretation. Interpreting a commercial document requires attention to the language used by the parties, the commercial circumstances which the document addresses, and the objects which it is intended to secure.

115. Primacy must be given to the actual words used in a written contract as McColl JA said in Peppers Hotel Management Pty Ltd v Hotel Capital Partners Ltd [2004] NSWCA 114 at [69]: “If the words used [in a written contract] are unambiguous the court must give effect to them, notwithstanding that the result may appear capricious or unreasonable, and notwithstanding that it may be guessed or suspected that the parties intended something different. The court has no power to remake or amend the contract for the purpose of avoiding a result which is considered to be inconvenient or unjust…”

116. As I have stated above, the wording of the relevant part of clause 2.2(a) of the Policy is sufficiently clear and straightforward to require the conclusion that, although the claimant must be gainfully employed and working the requisite number of hours on average each week within the six months prior to the Date of Disablement (as required by Issue [1]), the actual cause of the insured's inability to do any work as a result of Injury or Illness on the Date of Disablement is immaterial. All that is required is that, as from the Date of Disablement, for six consecutive months, the insured is unable to do any work as a result of Injury or Illness. That work is "any work", so that Issue [2] is concerned with absolute incapacity to work. It is not concerned with inability to carry on the previous employment, so it does not matter that the insured could not have continued with that employment anyway, because it has been terminated.

117. The Injury or Illness that results in the insured being unable to do any work could develop spontaneously through physiological processes, or be the result of an accidental Injury, and could even be the consequence of some wrongful conduct on the part of the insured. The fact that the insured's employment may be terminated for misconduct is irrelevant, provided that, as from the Date of Disablement, there is an Injury or Illness that in fact has the result that the insured is unable to do any work.

118. That aspect of the proper construction of the relevant part of clause 2.2(a) involves an acceptance of the submissions made by Mr Long.

Significance of Hannover’s opinion as to satisfaction of Issue [2]

119. The third question is whether the parties were correct in their apparent assumption that Issue [2] was a matter that fell within the power of Hannover under clause 2.2 of the Policy to form an opinion determinative of Mr Long’s right to a TPD benefit.

120. In Shuetrim on appeal at [60], the entitlement of the claimant to a TPD benefit in that case was "expressed to turn upon the state of mind of the insurer" in contradistinction to it being established that the facts of the case objectively established the requirements of the relevant TPD definition. However, the issue upon which the case turned was equivalent to the subject matter of Issues [3] and [4] in the present case. All of these issues depended upon the relevant part of the TPD definition that included words to the effect of “in our opinion” – referring to the formation of an opinion by the insurer that the evidence presented by the claimant satisfies a requirement that is a condition of the entitlement to the TPD benefit.

121. In my opinion, it is clear from the ordinary wording of clause 2.2(a) of the Policy in this case that the words “in our opinion” form part of Issues [3] and [4] and not part of Issue [2]. That is, satisfaction of Issue [2] within clause 2.2(a) requires proof as an objective fact that the claimant has been “unable to do any work as a result of Injury or Illness for six (6) consecutive months” from the Date of Disablement. The available evidence will either establish that fact or it will not. Issue [2] is not to be determined on the basis of any opinion formed by Hannover, and consequently a determination by Hannover that Issue [2] has not been satisfied will not be binding on Mr Long.

122. If my understanding is correct that the parties in their submissions have dealt with Issue [2] as if it Hannover’s opinion as to whether the Issue was satisfied will be determinative unless it breached a relevant duty that it owed to Mr Long, that approach was not in my view correct on the proper construction of the Policy.

123. As the question of whether Issue [2] is to be determined as a matter of objective fact, any opinion formed by Hannover will not be determinative, and must be decided by the Court. The Issue falls outside the ambit of the separate question, and so is not a matter that is to be determined by this judgment.

124. Nonetheless, as Issue [2] was a factor in Mr Long’s entitlement to the TPD benefit, Hannover had to form an opinion as to its satisfaction in deciding whether to accept or reject Mr Long’s TPD claim.

125. In respect of Mr Long’s applications where Hannover determined that Issue [2] was not satisfied on the basis of an incorrect construction of clause 2.2(a) of the Policy – to the effect that Mr Long had not established that he was unable to do any work as a result of Injury or Illness for the six consecutive months’ period, because his contract of employment had been terminated by his employer for breach – Hannover’s rejections of the applications were invalid.

Effect of the evidence as to satisfaction of Issue [2]

126. The evidence relevant to the question of whether Issue [2] was satisfied will be referred to below. There I will consider whether the opinion formed by Hannover concerning whether Issue [3] was satisfied is determinative. The parties tended to deal with the evidence in that context. Various submissions were made concerning that evidence in relation to whether each of the first four rejections of Mr Long’s TPD claim was valid.

127. As I have decided that the satisfaction of Issue [2] does not fall within the ambit of the separate question, it will not be necessary or appropriate for the Court to consider the evidence and that Issue in detail in these reasons.

128. I consider that it is proper to observe that the evidence was somewhat indefinite concerning the severity of Mr Long’s disablement during the six consecutive month period relevant to the satisfaction of Issue [2], particularly in relation to whether Mr Long suffered a total inability to undertake any work from the date of his employment contract was terminated. The evidence as it stands is probably insufficient on that subject to establish that Issue [2] was satisfied. Whether or not that will be the final conclusion reached by the Court will depend upon the evidence that is tendered at the second stage of the proceedings.

Determination of Issue [3]

129. It will be convenient to restate Issue [3], which is whether, in Hannover’s opinion, Mr Long continued as at 14 July 2011 to be so disabled that he was unlikely to resume his previous occupation at any time in the future.

Relevant legal principles

Issue [3] depends upon the validity of the opinion reached by the insurer

130. As noted above, the entitlement of a claimant to a TPD benefit such as that sought by Mr Long under clause 2.2(a) of the Policy does not depend upon the fact that the claimant’s circumstances objectively satisfy Issue [3] at the Relevant Time. It depends upon the formation of the opinion by Hannover referred to in the clause. As Leeming JA said in Shuetrim on appeal at [60], the entitlement "instead is expressed to turn upon the state of mind of the insurer".

131. There are restrictions on the entitlement of the insurer to decide the question of its own liability, but those restrictions are governed by the fact that the relationship between the claimant and the insurer is one of contract and not a fiduciary one.

Principles governing the validity of the determination by the insurer

132. The modern principles governing the circumstances in which the insurer's decision concerning its own liability to pay a TPD benefit may be traced to the decision of McLelland J (as his Honour then was) in Edwards v Hunter Valley Co-op Dairy Co Ltd (1992) 7 ANZ Ins Cas 61-113 (Edwards) at 77,536, where his Honour said (citations omitted):

It is next necessary to examine the nature and content of Zurich’s relevant obligations under the policy. Those obligations were contractual and not fiduciary. Zurich was an insurer, not a trustee. Since the commercial purpose of the policy was, relevantly, to provide insurance against the risk of total and permanent disablement, and since the policy was expressed in terms requiring the formation by Zurich of a particular opinion as a condition of Zurich’s own liability, there was clearly an implied obligation on Zurich to consider and determine whether it should form that opinion. That involved a consideration and determination of the correct question… Furthermore, in the exercise of powers affecting the interests of both of itself and the claimant, Zurich was under a duty of good faith and fair dealing which required it to have due regard to the interests of the claimant…

… However in the field of insurance, it is well-established that where under a contract of insurance an element of the insurer’s liability is expressed in terms of the satisfaction or opinion of the insurer, the insurer is obliged to act reasonably in considering and determining that matter…

To say that an insurer must act reasonably in forming or declining to form an opinion is not to say that a court can substitute its own view for that of the insurer. As North J pointed out in Doyle at 529, “reasonable persons may reasonably take different views”. Unless the view taken by the insurer can be shown to have been unreasonable on the material then before the insurer, the decision of the insurer cannot be successfully attacked on this ground.

133. It should be noted, as it will be relevant to later discussion, that, in the final sentence, McLelland J stated the view that the insurer’s decision could be attacked if it was “shown to have been unreasonable on the material then before the insurer” (emphasis added). The determination of whether or not the decision was unreasonable required acceptance of the proposition that “reasonable persons may reasonably take different views” as to the proper opinion to be formed.

134. McLelland J's statement of the principles that are to be applied has now been accepted in a number of decisions of the Court of Appeal of this State, such as Hannover Life Re of Australasia Ltd v Sayseng [2005] NSWCA 214 (Sayseng) at [36], Birdsall v Motor Trades Association of Australia Superannuation Fund Pty Ltd [2015] NSWCA 104 at [49], [50]; Shuetrim on appeal at [61], [62]; Hannover Life Re of Australasia Ltd v Jones [2017] NSWCA 233 (Jones) at [64]-[69]; MetLife Insurance Ltd v Hellessey [2018] NSWCA 307 (Hellessey) at [7]; and MetLife Insurance Ltd v MX [2019] NSWCA 228 (MX) at [76]. His Honour's judgment has also been followed in numerous decisions at first instance in this State.

135. One aspect of the decision in Edwards that has now been confirmed as part of the law of this State, after some doubt, is that the formation of the opinion by the insurer that the claimant does not satisfy the TPD definition at the Relevant Time is vitiated if the insurer does not make the decision in conformity with the restrictions imposed by the law on the decision-making process. If the insurer's determination is vitiated in this way, then it falls to the Court to determine the question of whether the claimant satisfied the TPD definition at the Relevant Time, on the basis of the evidence that is tendered by the parties in the proceedings: see Shuetrim on appeal at [157]-[163]. Thus, it continues to be true to say that, where the insurer has rejected a TPD claim on the basis that it has not formed the requisite opinion, the proceedings by the claimant in the Court to overturn that determination involve a two-stage process. The first stage requires the question to be answered as to whether the process of the determination breached the restrictions that confine the entitlement of the insurer to determine its own liability, so that its decision is not determinative and is ineffective against the claimant. If the answer to that question is affirmative, then the second stage involves the Court itself determining whether the claimant is entitled to the TPD benefit.

337. It will be convenient to deal with Hannover's submissions as to why it was reasonable for it to discount the other new evidence in the context of a consideration of that evidence.

Adequacy of Hannover's consideration of the evidence

342. I will deal first with Dr Prinsloo's 5 December 2017 report.

343. As noted above, Mr Long's solicitors provided Dr Prinsloo with Mr Long's former doctor's clinical notes from 29 December 2008 to 12 November 2012. Those clinical notes do not appear to be included in the evidence.

344. By par 8 of their letter of instructions, the solicitors noted that Dr Prinsloo had signed the Permanent Incapacity Medical Certificate confirming that Mr Long met the definition of TPD. They asked: "… Could you kindly confirm after reviewing the clinical notes that, had you been his treating doctor as at mid-2011, you would have been of the opinion that he was Totally and Permanently Disabled as defined and expressed by you at that date". As noted above, in an earlier letter of instructions, the solicitors had given Dr Prinsloo the TPD definition, albeit not with the extended definition of Other Occupation.

345. In its fourth rejection letter, Hannover referred to Dr Prinsloo's opinion, stated in her 5 December 2017 report that, had she been his doctor in 2011, she would have considered him to be TPD.

346. In her report, Dr Prinsloo commented on a number of Mr Long's disabilities. She observed: "3) Martin was stable during the last 5 visits, mood seems well controlled on current regime and pain adequately managed, provided he adhered to the current medication regime and did not over exert himself physically…”

347. Dr Prinsloo then noted that Mr Long's main ongoing diagnoses were bipolar disorder and neuropathic pain, with a new diagnosis of glucose intolerance. Mr Long's bipolar disorder was stable on the current regime. His peripheral neuropathy and chronic pain was relatively stable on an ongoing regime of combined pain clinic input and general practitioners support and counselling.

348. Dr Prinsloo then said:

6) The prognosis in terms of full recovery is guarded I do not think he will make significant progress towards being cured – his conditions are lifelong – at best we can try to control the complications and slow down the progress of deterioration

7) his complaints and disabilities listed in the statement of 11/7/2017 are consistent with his treatment and prognosis

8) After reviewing the clinical notes, had I been his treating dr 2011, I would have been of the opinion that he was Totally and Permanently disabled.

349. Dr Prinsloo then listed Mr Long's medical disabilities, some without date and others dated from 2011.

350. The reasoning in Dr Prinsloo's report is relatively brief, although it is in broad terms as elaborate as that contained in Dr Burek's report.

351. Hannover did not, in its rejection letter, rely upon the argument that it put in its written submissions, to the effect that Dr Prinsloo was asked and answered the wrong question. The reasoning behind that argument was that Mr Long's solicitors had only asked whether Mr Long satisfied the TPD definition as at the date of the report and not as at the Relevant Date.

352. That argument cannot be accepted, in the case of the fourth rejection, in relation to this report by Dr Prinsloo, as she was specifically asked to state the opinion she would have given, if she was Mr Long's treating doctor in mid-2011, and that is the opinion that she gave.

353. There is a legitimate issue concerning the weight that ought to have been given to Dr Prinsloo's opinion in the circumstances, but it could not reasonably have been ignored on the basis that it addressed the wrong question.

354. I will now turn to a consideration of the other new information provided in support of Mr Long's fourth TPD claim.

355. In its rejection letter, in addition to the 5 December 2017 report of Dr Prinsloo, Hannover listed reports of Dr Jesudason dated 11 August 2011 and 19 May 2011. Earlier, Mr Long had only provided a report by this doctor dated 31 July 2012.

356. In its Discussion and Summary, Hannover did not make specific reference to the contents of these new reports by Dr Jesudason.

357. Neither of Dr Jesudason's reports contained any opinion as to whether Mr Long satisfied the TPD definition. They were not prepared for that purpose. Dr Jesudason is a psychiatrist and the reports were to Dr Hussain, Mr Long's treating general practitioner.

358. The earlier of the reports observed that, in January 2011, Mr Long was sacked from his job for giving an unauthorised discount to a customer. Dr Jesudason said: "In this context he had lost his self esteem, confidence, felt targeted (sic) and contemplated suicide…"

359. Part of the history taken by Dr Jesudason was:

… He has had circumscribed episodes of being elated, unusually cheery and talkative to the point of being silly, hyperactive, easily angered, indulging in excessive drinking. He also would indulge in risky behaviours. His wife cited his recent offence as one such. He violated managerial ethics and did what he knew was a sackable offence. He also indulges in excessive giving, downloads movies despite repeated warnings and he feels these are out of character with him.

Martin's depressive episodes were described as profound and prolonged when he would stop talking to the point of being stuporose, refusing to get out of bed. His sleep has always been poor – 3 - 4 hours, unrelated to his mood state. Of note is his long history of depression and anxiety, close to 18 years, and several antidepressant trials. He was unsure of past mood stabilisers…

360. It is to be noted that this report was prepared on 19 May 2011, shortly before the Relevant Date. The history given and apparently accepted by Dr Jesudason reached back well before the date when Mr Long's employment was terminated. It recorded that Mr Long's psychological state was exacerbated by the termination but, on a proper reading, it describes a psychological disability that pre-existed the termination. The report provides some evidence that the termination of Mr Long's employment may have resulted from his conduct that was itself influenced by Mr Long's psychological disorder.

361. Hannover's fourth rejection letter does not make clear what, if any, significance Hannover attributed to Dr Jesudason's 19 May 2011 report.

362. In its fourth rejection letter, Hannover noted, in respect of the report of Dr Neale, psychiatrist, dated 23 February 2011, that it stated that Mr Long had been using antidepressants over the past 15 years, and that he was in relapse following the loss of his job.

363. In its fourth rejection letter, Hannover followed its summary of Dr Neale's report by saying:

In any event, had the Member not breached company policy, he would not have lost his job and despite his medical condition he had shown a history of working and had done so for many years whilst on medication and under treatment.

364. That statement is objectively true, so far as it goes. Dr Neale's report was to Dr Hussain, and it is only purpose was to briefly advise Dr Hussain as to Dr Neale's opinion concerning appropriate changes to Mr Long's medication to manage his depression.

365. In its fourth rejection letter, Hannover noted that it had received reports by Dr Weidmann dated 2 May 2018 and 4 July 2018. It did not refer specifically to those reports in its Discussion and Summary in the letter. In fact, as appears from Mr Long's solicitors' 17 October 2018 letter, in which the fourth TPD claim was made, the solicitors enclosed three reports from Dr Weidmann. In its rejection letter, Hannover referred to two of those reports, but omitted the report dated 16 June 2017.

366. Nonetheless, in its written submissions, Hannover sought to explain why it was reasonable that Hannover did not act on the three reports, being the report dated 16 June 2017 (see par 87(a)), the report of 2 May 2018 (see par 87(e)), and the report of 4 July 2018 (see par 87(f) and (g)).

367. Dr Weidmann is a consultant psychiatrist and his 16 June 2017 letter was a report to Dr Prinsloo. Dr Weidmann stated that, on examination, Mr Long was depressed and a little irritable. He gave the opinion that Mr Long was a man with mixed mood as part of bipolar disorder, but no opinion was expressed as to his prognosis or his incapacity to work as at that time or earlier. He made a recommendation about Mr Long's future medication.

368. On 6 October 2017, Mr Long's solicitors wrote to Dr Weidmann to ask him whether, had Mr Long been Dr Weidmann's patient in mid-2011, Dr Weidmann would have been of the opinion that Mr Long met the definition of TPD in mid-2011. The letter enclosed the Permanent Incapacity Medical Certificate dated 19 September 2017 signed by Dr Weidmann, Mr Long's statement dated 11 July 2017, and Dr Hussain's clinical notes from 29 December 2008 until at least 12 November 2012. In the earlier Permanent Incapacity Medical Certificate, Dr Weidmann had confirmed his opinion that Mr Long's clinical signs and symptomatology did not cause him to conclude that he had any real chance of being able to engage in his own occupation and any occupation for which he was reasonably suited by education, training or experience, on a regular basis. Accordingly, Dr Weidmann had in substance been informed of the terms of the TPD definition.

369. It is true that Dr Weidmann did not directly respond to the question that he was asked. He confirmed that Mr Long had bipolar disorder, and observed: "7. I suspect the prognosis is a course of fluctuating symptomatology".

370. On 6 June 2018, Mr Long's solicitors pressed Dr Weidmann to respond to the question asked. Dr Weidmann declined to provide the opinion, saying "I cannot say".

371. In its fourth rejection letter, Hannover noted that it had been provided with two reports of Dr Peter Sharman, occupational physician, dated 22 February 2018 and 10 September 2018. Hannover's only reference to these reports was in the following statement:

Other reports have been retrospective and noted that Dr Sharman has based his opinions on review of clinical notes from three practices.

372. Hannover's written submission was that Dr Sharman only provided an opinion as to the incapacity of Mr Long as at 22 February 2018, rather than as at 2011. In his second report, Dr Sharman only confirmed his prior opinion as at 22 February 2018.

373. Dr Sharman's 22 February 2018 report was, in substance, a nine page report that contained considered reasons in standard medico-legal expert format. Dr Sharman noted that he had received reports and other medical information dated at various dates in 2017. However, it appears that he obtained a comprehensive history from Mr Long, and, at page 6 of 10, the doctor noted that Mr Long had confirmed "the devastating effects to him mentally from the actions of his employer in relation to the use of a discount card".

374. Dr Sharman expressed the following opinion:

Mr Long has significant ongoing health problems, including chronic low back pain and bipolar disorder as diagnosed by his treating psychiatrist. I can see no prospect of a return in any capacity to the workforce, particularly given the unsuccessful trial in 2014 of apparently suitable work.

375. Finally, Dr Sharman stated that Mr Long's prognosis was as follows:

The prognosis is for a continuation of his current medical and psychiatric status and associated working capacity. Although his symptoms may vary from time to time, I do not see any realistic prospect of a sustained improvement in the foreseeable future.

Following review of the documentation and my assessment of Mr Long, I have reached the view that, on the balance of probabilities, Mr Long's complaints and disabilities as contained in his statement are consistent with my clinical findings. I would accept that Mr Long is not able to perform any remunerative work, and has been so for six consecutive months with no prospect that he will be able to return to the workforce in the future and will not be fit for alternative employment.

On that basis, I do not believe Mr Long has any "real chance" of returning to regular and permanent employment, as a result of his chronic back condition causing limited movement and confirmed by the medical imaging, as well as his depressed and anxious mental state associated with his bipolar disorder which is as well controlled as is possible.

376. In his 10 September 2018 report, Dr Sharman was responding to a request from Mr Long's solicitors that he confirm the opinion that he gave on 22 February 2018, on the basis of clinical file notes that were provided to him, that covered the period December 2008 to August 2017. On that basis, Dr Sharman confirmed his earlier opinion.

377. While it is true that Dr Sharman only expressed the opinion that Mr Long had satisfied the TPD definition for six consecutive months before 22 February 2018, Dr Sharman's report was persuasive evidence as at that time.

378. It was not reasonable for Hannover to deal with Dr Sharman's reports by merely noting that he had based his opinions on the review of clinical notes from three practices. That entirely understates the exercise conducted by Dr Sharman, who, within the natural limitations of the information that he could be provided, appears to have undertaken a thoroughly professional examination of the evidence for the purpose of expressing his opinion.

379. Mr Long's solicitors also provided a report of Dr Sofia Ahmed dated 12 April 2018 in support of Mr Long's fourth TPD claim. That report was not listed in Hannover's fourth rejection letter. Although the report confirms that Mr Long suffered significant back pain in a period starting from 30 October 2015, it is otherwise not of substantial direct significance to whether Mr Long satisfied the TPD definition at the Relevant Date.

380. In its fourth rejection letter, Hannover dealt with all of the additional medical evidence by saying:

However, the weight of the evidence does support that the Member had many years of psychiatric illness and had continued to work with appropriate treatment and that he did cease working in January 2011 for reasons other than 'injury or illness'.

381. The premise upon which this statement was based is true to an extent. However, it does not rationally respond to all of the additional evidence that was offered, particularly that contained in Dr Sharman's reports. It is true that Mr Long was able to continue with his employment up until January 2011, notwithstanding his physical and psychological injuries, and that he had been able to manage the effect of those injuries with medication. However, it does not logically follow from that fact that the successful management of the injuries would necessarily continue indefinitely. Many injuries become progressively more difficult to manage with the increasing age of the sufferer.

382. Hannover seems to have proceeded upon the basis that Mr Long was able to manage his injuries up to the time when his employment was terminated, notwithstanding the evidence of the existence of both physical and psychological injury. Hannover appears to have treated the termination as being the single cause of the exacerbation of Mr Long's psychological condition that, at later times, caused Dr Prinsloo, Dr Weidmann and Dr Sharman to conclude that, at least as of dates in 2017 and 2018, Mr Long satisfied the TPD definition. Of the three doctors, Dr Prinsloo certified that she regarded Mr Long as having satisfied the TPD definition as at the Relevant Date. The consequence of the process of reasoning adopted by Hannover was that it effectively gave no weight to much of the evidence provided by Mr Long in support of his application. It relied upon the opinion of Dr Burek that was favourable to its position, without analysing all of the evidence, and judging the weight that should properly be given to each piece of that evidence.

383. I therefore consider that the process of reasoning adopted by Hannover in rejecting Mr Long's TPD claim for the fourth time was not reasonable, and was a breach of the duty that Hannover owed to Mr Long.

Rejection of alternative TPD claim

384. As noted above, in relation to the claims pleaded by Mr Long, this claim differed from the previous four claims, as it was based on a different Date of Disablement. That date was 12 December 2014, when Mr Long ceased his employment with Lilydale Larder.

385. The final occasion on which Hannover declined Mr Long's TPD claim was by letter dated 22 May 2019.

Hannover's reasons for rejection of alternative claim

386. Hannover gave the following reasons for its decision:

We acknowledge that the Member returned to work at Lilydale Larder and was able to work as a full time supervisor for the period from 27/10/2014 – the week ending 17/12/2014. During the employment, the employer has confirmed that the Member was able to walk freely throughout the venue each shift, spending 80% of his time walking or standing, frequently lifting and carrying up to 19kg, and supervising approximately 8 staff members. The clinical records supplied previously suggest that the member consulted with his GP, Dr Adam Renwick on 15/12/2014, and reported to Dr Renwick that he trialled a return to work "managing a hotel was too much physically and mentally".

Since the period of the employment at Lilydale Larder was less than 6 months, and the member has not suggested or provided any evidence that he was otherwise gainfully employed during that period, he does not meet the TPD definition refer to 2.2a of the Policy.

In order to assess the claim under 2.2b of the policy we refer to the initial claim form completed by the Member dated 27/11/2012 which confirms the Member was able to sleep, shower (sometimes with assistance), occasionally prepare meals, mow the lawn on ride-on, sometimes vacuum home and do washings and his statement of 11 July 2017 and affidavit of 6 March 2019 which do not suggest any inability to perform any of the Activities of Daily Living. The Independent Medical Examination report from Dr Sharman dated 22/02/2018, indicates that the Member was able to drive up to 45 minutes, sit for 10-15 minutes and walk for about 15 minutes. Moreover, the Employer has confirmed that during the employment the Member was able to move freely throughout the venue each shift. The evidence suggests that the Member has capability of participating in Activities of Daily Living without need for assistance, and there is no evidence to suggest any loss of use of limb or eye or Cognitive loss.

Therefore it is our opinion that the Member does not satisfy Part 3, Part 4 or Part 5 of the Policy for any disablement occurring on or around 12/12/2014. The obligation to provide information establishing an entitlement to the TPD rests with the insured. The evidence does not persuade Hannover Life Re to reach an opinion that the member is totally and permanently disabled in line with the policy definition…

387. Hannover, in the first part of the letter, considered Mr Long's TPD claim as if it were made under clause 2.2(a) of the Policy. That term provided:

Total and Permanent Disablement in respect of an Insured Person who is:

(a) Aged less than 65 and is gainfully employed and working 15 or more hours each week within the 6 months prior to the Date of Disablement, is determined under either Part 1, Part 2, Part 3…

388. Insured Persons who do not satisfy the requirements of Issue [1] in clause 2.2(a) are limited, by operation of clause 2.2(b), to pursuing a claim for TPD under Part 3, 4 and 5 of the definition of Total and Permanent Disablement.

389. In its letter, Hannover considered whether Mr Long satisfied any of the alternative requirements covered by clause 2.2(b), and determined that he did not. Mr Long has not challenged this aspect of the determination.

Mr Long's submissions concerning final rejection of alternative claim

390. Mr Long accepted that his final, alternative, TPD claim would fail if Hannover's construction of the Policy was correct when it rejected this claim, because the period of Mr Long's employment at Lilydale Larder was less than six months.

390. As I understand it, Mr Long's submission, as found in pars 55 to 57 of his written submissions, was that the word "each" in clause 2.2(a) is ambiguous. Mr Long submitted:

1. The term "each" as it appears in cl 2.2(a) is clearly ambiguous – it has the capacity to refer either to the quantity of hours being worked (that is, "each week" means "per week”) or to be connected to the phrase “within the 6 months" (that is, "each week" means "every week within the 6 months"). The plaintiff contends for the former construction, the second defendant for the latter.

2. The practical effect of the construction contended for by the plaintiff is that where the "Insured Person" has worked in the 6 months prior to their Date of Disablement, they must have done so for 15 or more hours per week to enliven an entitlement to claim under Parts 1 or 2 of the definition. If they have worked less than 15 hours per week they may only claim under Parts 3, 4 5. Thus, only the most casual of employees would be excluded from claiming under Parts 1 or 2.

   392. Mr Long proffered a number of reasons why his construction should be preferred over that given to the provision by Hannover. I will refer to those reasons below, when I consider the proper resolution of the construction issue.

Hannover's response concerning final rejection

393. In its opening written submissions, Hannover only appears to have sought to justify its final rejection of Mr Long's TPD claim on the basis that Hannover's consideration of the medical evidence concerning that claim was reasonable.

394. While Hannover did not, in those submissions, address the construction issue, it is clear from Hannover's 22 May 2019 letter that its primary reason for rejecting the claim was the conclusion that clause 2.2(a) of the Policy required Mr Long to have been employed by Lilydale Larder for a period of at least six months, and he had not been employed for that period.

Validity of Hannover's construction of the Policy

395. As appears from Hannover's letter, the direct basis of Hannover's rejection of the claim was that Mr Long's period of employment before the relevant Date of Disablement was less than six months. It was not, in terms, that Mr Long had not worked for at least 15 hours in each of the weeks over a six-month period.

396. Mr Long's argument was, as it appears to me, that all that clause 2.2(a) required was that, for each week that the claimant worked within the six months period before the Date of Disablement, the claimant must have worked at least 15 hours for each of those weeks. Mr Long argued that the provision of the Policy should be given a liberal construction, to the extent of any ambiguity, and should be construed contra proferentem against Hannover.

397. Mr Long sought to rely upon the fact that the Policy was obtained by the Trustee as trustee of the Fund, which described itself as "specifically catering for the hospitality, clubs, tourism and retail sectors" and claimed to have "designed our products and services to suit those sectors". In effect, Mr Long submitted that the Fund identified itself as targeted at and catering to industries well known for their high rates of casual employment.

398. The thrust of this submission was that, if clause 2.2(a) were construed as requiring 15 hours of work every week for a full six-month period before the Date of Disablement, it would exclude a great many of the employees that the Fund was created to protect.

399. The second argument put by Mr Long in support of his construction of the term was that the construction contended for by Hannover "has the capacity to lead to seemingly ludicrous outcomes".

400. The first such outcome was that, even a full-time employee who had taken a week's leave, and thus worked no hours within a particular week, within the six month period, would be excluded.

401. The second argument was that a worker who had worked for only, say, one shift of eight hours for the first two months, but then increased the worker's shifts to two shifts of eight hours per week for the final four months of the six months period would be excluded.

402. I reject Mr Long's claim concerning the proper construction of clause 2.2(a) of the Policy for the following reasons.

403. First, I do not consider that the use of the word "each" in the provision introduces the ambiguity for which Mr Long contends. I consider that, in the context in which "each" was used, it had the same meaning as if the word "every" was used. The provision does require that the claimant was employed for the period of six months before the Date of Disablement, which was the real reason upon which Hannover acted.

404. Whatever the full meaning of clause 2.2(a) may be, it does not cover a claimant, in the position of Mr Long, who, having been employed from 27 October 2014 to 17 December 2014, was employed for a period of less than two months in total.

405. As I have observed above, Issue [1], as it applies to the alternative claim, is a question that must be determined on the objective facts. It is not a question that is to be resolved on the basis of the opinion formed by Hannover concerning whether the Issue is satisfied. Consequently, the determination of this question is not a matter that falls within the question for separate determination. However, as I have recorded at [390], Mr Long accepted that his alternative claim would fail if the Court found that the construction of the Policy that was implemented by Hannover was correct. As I have found that it was correct, it is clear that Mr Long’s alternative claim must fail.

Conclusion

406. The separate question, the terms of which are set out above at [31], must in substance be answered in the affirmative, but only in relation to the third and fourth rejections of Mr Long’s TPD claim. Given that result, Mr Long may wish to submit that the Court should make an appropriately worded declaration to give effect to the Court’s conclusions.

407. The parties should confer and provide to my Associate draft short minutes of order that give effect to these reasons and provide for the future case management of these proceedings.

408. The costs of the proceedings to date should probably be reserved to the final hearing. However, I will receive any submissions that the parties wish to make on the question of costs.

**********

Decision last updated: 28 August 2020