Sandstrom v FSS Trustee Corporation

[2020] NSWSC 200

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:	Sandstrom v FSS Trustee Corporation & Anor [2020] NSWSC 200
Hearing dates:	16, 17, 18, 19, 20 & 23 April, 16 May, 8 October and 8 November 2018
Date of orders:	09 March 2020
Decision date:	09 March 2020
Jurisdiction:	Equity
Before:	Slattery J
Decision:	The second defendant’s decision of 24 July 2015 to decline the plaintiff’s claim is set aside. The Court reassesses the plaintiff’s claim as at the date of assessment and finds she satisfies the TPD definition within the policies. Orders made for payment of the sums agreed under each policy. Directions made for the calculation of interest and for any argument in relation to costs.
Catchwords:	INSURANCE – General – total and permanent disablement – plaintiff a police officer – plaintiff discharged from police force in July 2011 – plaintiff a member of police superannuation fund – first defendant is a trustee of the fund – first defendant takes out two policies of insurance for the benefit of members of the fund with the second defendant insurer – plaintiff claims she is totally and permanently disabled (“TPD”) after being off work for six months and entitled to a benefit for the same – the first and second defendants decline the plaintiff’s claim in July 2015 – plaintiff discontinues proceedings against first defendant – whether the second defendant insurer acted with the utmost good faith in dealing with the plaintiff’s claim and acted reasonably in forming an opinion as to whether the plaintiff qualified as TPD under the policies – whether the second defendant’s decision can be set aside – whether the Court should now itself determine whether the plaintiff is TPD under the policies – whether the plaintiff was “unlikely ever to be able to engage in or work for reward in any occupation or work for which… she is reasonably qualified by education training or experience”.
Legislation Cited:	Crown Employees (Police Officers Death and Disability) Award 2005
Cases Cited:	Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 Banovic v United Super Pty Ltd [2014] NSWSC 1470 Beverly v Tyndall Life Insurance Co Ltd (1999) 21 WAR 327 Birdsall v Motor Trades Association of Australia Superannuation Fund Pty Ltd [2015] NSWLR 412 CGU Insurance Ltd v AMP Financial Planning Pty Ltd (2007) 235 CLR 1 Chammas v Harwood Nominees (1993) 7 ANZ Ins Cas 61-175 Edwards v Hunter Valley Co-op Dairy Co Ltd (1992) 7 ANZ Ins Cas 61-113 Erzurumlu v Kellogg Superannuation Pty Ltd [2013] NSWSC 1115 Finch v Telstra Super Pty Ltd (2010) 242 CLR 254 Halloran v Hardwood Nominees Pty Ltd [2007] NSWSC 913 Hannover Life Re of Australasia Ltd v Colella (2014) 47 VR 1 Hannover Life Re of Australasia Ltd v Jones [2017] 19 ANZ Ins Cas 62-149 Hannover Life Re of Australasia Ltd v Sayseng [2005] 13 ANZ Ins Cas 90-123 Hannover Life Re of Australasia Ltd v Dargan (2013) 83 NSWLR 246 Hellessey v MetLife Insurance Ltd [2017] NSWSC 1284 Jones v United Super Pty Ltd [2016] ANZ Ins Cas 62-126 Lazarevic v United Super Pty Ltd [2014] 18 ANZ Ins Cas 62-039 McArthur v Mercantile Mutual Life Insurance [2002] 2 Qd R 197 MetLife Insurance Ltd v Hellessey [2018] NSWCA 307 MetLife Insurance Ltd v MX [2019] NSWCA 228 Newling v FSS Trustee Corporation (No 2) [2018] NSWSC 1405 Savelberg v United Super Pty Ltd [2011] NSWSC 1482 TAL Life Ltd v Shuetrim; MetLife Insurance Ltd v Shuetrim [2016] 332 ALR 507 Wardley Australia Limited v the State of Western Australia (1992) 175 CLR 514 Weber v Tiss Pty Ltd [2005] NSWSC 67 Wyllie v National Mutual Life Association of Australasia Ltd (1997) 217 ALR 324 Ziogos v FSS Trustee Corporation as Trustee of the First State Superannuation Scheme [2015] NSWSC 1385
Texts Cited:	JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow & Lehane’s Equity:  Doctrines & Remedies (5th ed, 2014, LexisNexis Butterworths) Enright and Merkin, Sutton on Insurance Law, 4th ed, Thomson Reuters, 2014, Volume 2
Category:	Principal judgment
Parties:	Plaintiff: Rebecca Sandstrom First Defendant: FSS Trustee Corporation ACN 118202672 Second Defendant: Metlife Insurance Limited
Representation:	Counsel: Plaintiff: D. E. Baran; M. B. Eirth Second Defendant: G.M. Watson SC; C. Purdy   Solicitors: Plaintiff: George Petar Draca, Norwest Lawyers Second Defendant: Matthew Carter Harding, HWL Ebsworth Lawyers
File Number(s):	2015/291949
Publication restriction:	No

Judgment

1. The plaintiff, Rebecca Sandstrom, joined the NSW Police Force (“the police”) in 2005 at the age of 22. After completing her initial police recruit training at Goulburn Police Academy, she was stationed within the Bankstown Local Area Command (“LAC”), including a period in the Intelligence Response Team (“IRT”) at that Command. Throughout her service, and especially from 2007 to 2010 Ms Sandstrom claims that she was exposed to a series of confronting scenes of death, body dismemberment and grievous personal injury. She says that as a result of this exposure she began to suffer post-traumatic stress disorder (“PTSD”) and related psychiatric disorders.

2. On 8 September 2010 a police colleague of Ms Sandstrom, Detective Senior Constable William Crews, was fatally shot by another police officer during the execution of a search warrant in Bankstown. In circumstances which were initially in contest in the proceedings, Ms Sandstrom was close to the scene where Senior Constable William Crews was killed. Following the shooting, Ms Sandstrom attended the Liverpool Hospital, where she saw his grievously wounded and disfigured body.

3. Ms Sandstrom contends that these events either initiated or cumulatively aggravated her PTSD symptoms to the extent they became chronic. She claims that the earlier disturbing events during her police career compounded the effect upon her of this final traumatic incident on 8 September 2010. She was placed on sick leave that same day, on 8 September 2010. She never returned to active duties with the police.

4. Ten months after the shooting of Senior Constable William Crews, on 7 July 2011, and after medical assessment, Ms Sandstrom was medically discharged from the police, due to the psychological symptoms from which she was suffering. She has not been in paid employment since that date.

5. On 1 August 2011, Ms Sandstrom made a claim against FSS Trustee Corporation (“FSS”), the first defendant, for payment of insurance benefits. Since joining the police Ms Sandstrom had been a member of the NSW First State Superannuation Scheme (“the FSS Scheme”), of which FSS was the trustee. She was also an insured member of that scheme under two policies effected by FSS with the second defendant, Metlife Insurance Limited (“Metlife”). The two policies, the FSS Group Life Insurance Policy (“the FSS Policy”) and the Police Blue Ribbon Insurance Policy (“the PBRI Policy”), provided TPD benefits on similar terms.

6. Ms Sandstrom claimed benefits under both policies on the basis that at the relevant date for assessment, 9 March 2011 (being six months after being absent from her police work due to injury or illness) she was totally and permanently disabled (“TPD”). Her claim was founded on her PTSD and related psychological conditions. It is not in issue that if Ms Sandstrom were to be successful in her claim, the capital benefits payable to her under the FSS Policy would be $170,100 and the benefits payable to her under the PBRI Policy would be $582,718.

7. Metlife declined Ms Sandstrom’s claim on 24 July 2015. But for reasons that will be explained, her case is sometimes framed on the basis that her claim was declined in a letter sent on 23 June 2015. She commenced these proceedings by Statement of Claim against FSS and MetLife on 7 October 2015. The defences of each of FSS and MetLife were filed by mid-2016. But Ms Sandstrom discontinued proceedings against FSS in September 2017. The only major pre-trial contest, was one concerning the production of records concerning her Facebook account. This contest was determined in September 2017 with orders that she produce the material in question, which was extensively used during the trial.

8. The issues for determination are: (1) whether MetLife’s decision to decline Ms Sandstrom’s claim should be set aside on the basis that it failed to act with the utmost good faith in dealing with Ms Sandstrom’s claim or failed to act reasonably in forming an opinion as to whether Ms Sandstrom qualified as TPD under MetLife’s policy; and if MetLife did so fail, (2) whether upon a fresh assessment by this Court Ms Sandstrom now satisfies the TPD definition under Metlife’s two policies, the FSS Policy and the PBRI Policy.

9. Ms Sandstrom contends that Metlife breached its duty of utmost good faith in dealing with her claim and that it failed to act reasonably in forming an opinion that she was TPD; and that the Court can now set aside MetLife’s 24 July 2015 decision and reassess her claim, to see whether she satisfies the criteria for TPD benefits at the relevant date for assessment. She alleges that the symptoms of her PTSD condition prevent her from returning to employment for the rest of her probable working life.

10. Metlife contends that it declined liability for Ms Sandstrom’s claim and acted with the utmost good faith and reasonably in forming an opinion that it was not satisfied that she was not TPD under the terms of its policies and that its decision to decline her claim should not be set aside. Alternatively, Metlife contends that if the Court were to set aside its 24 July 2015 decision and re-assess her now, the medical evidence does not support Ms Sandstrom’s assertion that she is “unlikely ever” to engage in or work for reward in any occupation or work for which she is reasonably qualified by reason of education, training or experience”. And Metlife claims that, as Ms Sandstrom was only 27 at the relevant date that her claim should be assessed under the policies, it could not (and now the Court cannot) conclude on the medical evidence that Ms Sandstrom would be incapable of returning to suitable employment until her probable retirement age.

11. Ms Sandstrom now seeks by her statement of claim: (1) a declaration that she is TPD within the meaning of the First State Superannuation Scheme Trust Deed and Rules, and within the meaning of the FSS Policy and the PBRI Policy; and (2) a declaration that Metlife’s determination of her non-entitlement to a benefit is void and of no effect; (3) an order that Metlife pay to FSS to hold on trust for her the claimed benefit, together with interest; and (4) an order that the defendants pay her costs. MetLife resists all this relief.

12. These reasons are divided into two main parts. The first part, Stage I, deals with the validity of MetLife’s decision of 24 July 2015, to decline Ms Sandstrom’s claim under both the FSS Policy in the PBRI Policy. Stage I is essentially concerned with whether MetLife’s decision-making about her TPD status conformed with the standards that are required of it under its two contracts of insurance with FSS. Stage II of these reasons is only reached if the Court were to find that MetLife’s decision should be vitiated as a result of consideration under Stage I.

13. The Court concludes in Stage I that MetLife’s 24 July 2015 decision should be set aside. The Court therefore considers in Stage II Ms Sandstrom’s TPD status as at the relevant assessment date, 9 March 2011. In its consideration of Stage II, the law permits the Court to place itself in the position of the decision maker under each policy, and to evaluate whether or not Ms Sandstrom is TPD within the policies. The Court does so in Stage II and finds that she was TPD, as at the relevant date for assessment.

14. These proceedings were conducted over nine hearing days between 16 and 23 April 2018, 16 May, 18 October and 8 November 2018. At all times the plaintiff was represented by Mr D Baran and Mr M Eirth of Counsel instructed by Mr George Draca of Norwest Lawyers. At all times the defendant was represented by Mr G Watson SC and Mr C Purdy of Counsel instructed by Mr Matthew Harding of HWL Ebsworth Lawyers. The proceedings had considerable legal and factual complexity. The Court received excellent assistance from counsel and solicitors on both sides.

Stage I: Did MetLife Validly Decline the Plaintiff’s Claim?

15. This section of these reasons deals with the validity of MetLife’s decision of 24 July 2015, declining Ms Sandstrom’s claim. It commences by setting out the relevant terms of the FSS Policy and the PBRI Policy, followed by a statement of the legal principles that apply to judging whether or not MetLife’s decision not to accept Ms Sandstrom’s claim was validly made. Finally, this section applies those principles to MetLife’s 24 July 2015 decision.

The Relevant Terms of the FSS and PBRI Policies

16. FSS took out the FSS Policy and the PBRI Policy with MetLife pursuant to clause 11 of the Rules of the FSS Scheme (“the Rules”), which permits FSS to acquire policies “to provide insured benefits for members”: Rules, clause 11.1. The “insured benefit” of a member is “only payable to the extent that [FSS] receives payment from the insurer under an insurance policy”: Rules, clause 11.2(b).

17. Clause 11.2(b) means that Ms Sandstrom’s entitlement to benefit as a member of the FSS Scheme does not depend on FSS, but rather upon MetLife making a payment to FSS. These proceedings therefore involved no consideration of FSS’s duty to form an opinion about Ms Sandstrom’s TPD status, and the proceedings against FSS have been discontinued.

18. It is accepted on all sides that if Ms Sandstrom is successful that any insurance benefit payable on her account will be paid to FSS to be held on trust for her under the Rules of the FSS Scheme.

19. Only a few terms of the FSS Policy and the PBRI Policy are relevant. The central clause in each policy is in a form commonly used by insurers offering TPD insurance.

20. In the FSS Policy, the definition of TPD is in the following terms:

“Total/ly and Permanent/ly Disablement/Disabled (TPD) means:

(a)   When a Covered Person is Employed or Self Employed for at least the Minimum Hours, if one of the following (I) to (iv) applies:

…

(ii)   the Covered Person having been absent from their Occupation through Injury or illness for 6 consecutive months and having provided proof to the satisfaction of us that the Covered Person has become incapacitated to such an extent as to render the Covered Person unlikely ever to engage in or work for reward in any occupation or work for which he or she is reasonably qualified by reason of education, training or experience.”

21. The critical words in this TPD definition, which occasion dispute about the quality of MetLife’s decision and ultimately about Ms Sandstrom’s future working capacity are “unlikely ever to engage in or work for reward in any occupation or work for which he or she is reasonably qualified by reason of education training or experience”. Because of its use of the expression “reasonably qualified by reason of education training or experience”, such a clause is commonly referred to as an “ETE clause”. And that part of the TPD definition will be referred to in this way throughout these reasons. But at times the analysis is more focused on the words “unlikely ever” and for convenience this part of the TPD definition will often be condensed in these reasons into the words “unlikely ever to engage in relevant work”.

22. There is no dispute in these proceedings that Ms Sandstrom is a “Covered Person” within the FSS Policy and was relevantly employed “for at least the Minimum Hours [as defined]”. Nor is there any issue that she was absent from her “Occupation” [as defined] “through Injury or illness” for the requisite period of six months, so as to qualify under the first limb of the FSS Policy. In her case this consecutive six-month period was between 8 September 2010 and 9 March 2011.

23. Under the FSS Policy, upon a Covered Person such as Ms Sandstrom, being found TPD, a TPD Benefit is payable to the policy owner, FSS, in respect of that Covered Person: clause 7.1. As earlier indicated, the agreed amount to be paid in respect of Ms Sandstrom under this policy, were she to be found TPD, was $170,100.

24. A clause defining TPD in the PBRI Policy is repeated in relevantly indistinguishable wording from the FSS Policy, as follows:

“6. TOTAL AND PERMANENT DISABLEMENT:

While covered under this Policy, Total and Permanent Disablement shall have the following meaning:

…

(b)   In the case of an Insured Member whose Normal Hours are 15 hours each week or more at the time of the Insured Event giving rise to the claim - the Insured Member having been absent from their Occupation with the Employer through injury or illness for six consecutive months and having provided proof to our satisfaction that the Insured Member has become incapacitated to such an extent as to render the Insured Member unlikely ever to engage in any gainful profession, trade or occupation for which the insured Member is reasonably qualified by reason of education, training or experience.”

25. There is no dispute that for the purposes of the PBRI Policy Ms Sandstrom is an “Insured Member” and that her “Normal Hours” qualified her. Nor is there any dispute that a relevant “Insured Event” has occurred. An “Insured Event” in the PBRI Policy means an “illness (including sickness, disease or disorder) suffered, or bodily injury occurring, to a Police Officer [as defined] while an Insured Member.”

26. MetLife agreed under the PBRI Policy (clause 3) to pay to the Policy Owner, FSS, the Sum Insured in respect of the Insured Member if the Insured Member “suffers TPD”. As earlier indicated, the parties agreed that the sum payable in respect of Ms Sandstrom under the PBRI Policy would, if she were established to be TPD, the sum of $582,718.

27. Ms Sandstrom must bring herself within these respective wordings in order to succeed in her claim to be TPD under the FSS Policy and the PBRI Policy. On 24 July 2015, MetLife made a decision about whether or not “proof to our satisfaction” had taken place under the ETE clauses in both these policies. In this first stage of these reasons (Stage I) the Court examines whether or not MetLife, as a decision-maker under this part of the TPD definition, has conformed with the decision-making duties applicable to it. In order to assess whether MetLife has complied with those duties it is first necessary to state the legal principles that apply to its decision-making.

Applicable Legal Principles – Duties and Procedures of Decision-Makers

28. The law defining the scope of the duties of decision-makers dealing with claims by members of superannuation funds for whom the trustee has obtained TPD insurance cover is well established. That law and the corresponding rights of members against the funds and against the insurers providing TPD cover may be shortly stated.

29. The Member’s Standing to Sue. A member of a superannuation fund for whom the trustee has obtained insurance cover has standing to seek an order that the insurer pay the trustee the amount due to the trustee under the insurance contract: Erzurumlu v Kellogg Superannuation Pty Ltd [2013] NSWSC 1115 (“Erzurumlu”) at [54]. The member has standing to bring a claim both under the Deed against the trustee and under the Policy against the insurer: Wyllie v National Mutual Life Association of Australasia Ltd (1997) 217 ALR 324 (“Wyllie”), at 337 to 338.

30. The Trustee’s Decision-Making Duties. FSS’s decision-making as trustee is not challenged in this case. But some of the duties that lie upon it are relevant. In making its determination, a trustee has a duty to apply a trust fund, such as the Fund, in accordance with the trust deed, in this case the Deed: Finch v Telstra Super Pty Ltd [2010] HCA 36; (2008) 242 CLR 254 (“Finch”) at [30] ff. It is also required to act in good faith, on a real and genuine consideration of the material before it, for the purpose for which it was conferred, for sound reasons where the trustee has disclosed reasons, although the trustee is not obliged to give reasons for its decision: Hannover Life Re of Australasia Ltd v Sayseng [2005] 13 ANZ Ins Cas 90-123 (“Sayseng”) at [32] ff (per Santow JA).

28. The general rule where a trustee has failed to discharge its duties in considering a member’s claim is to refer the matter back to the trustee for reconsideration: Sayseng at [33]. But if the Court vitiates an insurer’s decision upon breach of an insurer’s duty of utmost good faith and embarks on a second stage inquiry, and on that inquiry finds that the plaintiff is TPD within the policy definition, there may be no further work for the trustee to perform and no need to remit the matter to the trustee for further consideration and it can be dealt with by the Court: Jones v United Super Pty Ltd [2016] ANZ Ins Cas 62-126 (“Jones v United Super Pty Ltd”) at [112].

29. This statement of applicable principles now deals with the duties on insurers in the position of MetLife.

30. The Insurer’s Duty of Utmost Good Faith. An insurer dealing with a claim against it owes an insured a duty of utmost good faith, sometimes also described as a duty of good faith and fair dealing: Sayseng at [36]. The duty of utmost good faith does not impose obligations in the abstract; it depends on the contractual rights and obligations of the parties in relation to the claim; and it imposes an obligation on the insurer to exercise its rights and discharge its obligations as conferred by the contract of insurance with the utmost good faith: Ziogos v FSS Trustee Corporation as Trustee of the First State Superannuation Scheme [2015] NSWSC 1385 (“Ziogos”) at [66].

31. The insurer’s obligation of utmost good faith is contractual not fiduciary. Conduct which would not be permissible in a fiduciary relationship will not necessarily infringe the duties of good faith and fair dealing, as the fiduciary relationship is one in which the parties are not free to pursue their separate interests: JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow & Lehane’s Equity:  Doctrines & Remedies (5th ed, 2014, LexisNexis Butterworths) (“Meagher, Gummow & Lehane”) at [5-005].

32. Some common practical examples of the discharge of the obligation of good faith and fair dealing assist in understanding its scope. The obligation may, in appropriate circumstances, require an obvious enquiry to be made: Halloran v HardwoodNominees Pty Ltd [2007] NSWSC 913 (“Halloran”) at [38]. It is important to correlate the activities that an insured is capable of undertaking, as for example activities that are demonstrated in video surveillance material, to the activities the insured is required to undertake in employment: Ziogos at [103].

33. The Duty to Form an Opinion. Under a contract for insurance, if an element of insurance liability is expressed in terms of the satisfaction, or opinion, of the insurer, the insurer is obliged to act reasonably in considering and determining that matter: Edwards v Hunter Valley Co-op Dairy Co Ltd (1992) 7 ANZ Ins Cas 61-113 (“Edwards”) and Sayseng at [47]. In Edwards (at 77,536) McLelland J stated with respect to clauses such as that in issue in this case, that there was an implied obligation on the insurer to consider and determine whether it should form the relevant opinion, which involved a consideration and determination of the correct question; and in the exercise of powers affecting the interest of both itself and the claimant the insurer was under a duty of good faith and fair dealing requiring it to have due regard to the interest of the claimant. McLelland J’s statement of the law was, once more, adopted with approval by the Court of Appeal in Hannover Life Re of Australasia Ltd v Jones [2017] 19 ANZ Ins Cas 62-149 (“Jones”).

34. Jones also approved (at [82] – [85]) Brereton J’s statement at first instance in Jones v United Super Pty Ltd at [55] that the insurer’s decision will also be liable to be reviewed and avoided by the Court if in forming an opinion (about a claimant’s disability) the insurer: (1) misdirects itself in law, that is to say asks itself the wrong question; or (2) takes into account an irrelevant consideration or fails to take into account a relevant consideration.

35. And Jones explains how concepts of reasonableness are to be applied in forming an opinion about a claimant’s level of disability. Analogies exist between the judicial review cases, in which unreasonableness is assessed in the sense described in Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 (“Wednesbury”) at 234, and the implied term of reasonableness in contracts of insurance, where the formation of the insurer’s opinion is a condition of the insurer’s liability. But the analogy is not so close as to require the adoption of the stringent test of unreasonableness in the Wednesbury sense in the insurance contract cases: Jones at [121]. Rather the criterion of reasonableness of an insurer’s decision is “whether the opinion formed by the insurer was not open to an insurer’s acting reasonably and fairly in consideration of the claim”: Jones at [121]. And the insurer’s assessment of reasonableness is not made by reference to entirely objective criteria but must be unreasonable on the material then before the insurer: Jones at [94]. Nor does the assessment of reasonableness require the Court to undertake a review of the merits of the insurer’s decision: Jones at [93] and [99].

36. In Jones (at [65]) the Court of Appeal adopted McLelland J’s remarks in Edwards, as to the Court’s task in deciding whether the insurer was entitled to form the opinion which it did:

“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.”

40. If the view taken by the insurer is shown to have been unreasonable on the material before it, then the decision can be successfully attacked: Sayseng (at [36]) and Jones (at [67] and [94]). The Court must not substitute its own view for that of the insurer by reference to additional material not before the insurer: Sayseng (at [54]) and Jones (at [68]).

41. The insurer’s duty of utmost good faith in dealing with a claim and the duty to act reasonably in forming an opinion may be compared and contrasted. The duty of utmost good faith: (a) is broader than the implied term obliging the insurer to act reasonably and applies to all aspects of the claims handling process: Ziogos at [68] and Jones at [71]; (b) does not imply a higher or stricter standard than the implied term requiring the insurer to act reasonably in considering and determining the matter: Ziogos at [69]; (c) is not to be equated with the implied obligation to act reasonably in forming an opinion concerning or being satisfied about a particular matter; nor are the two standards the same: Ziogos at [73], commenting on CGU Insurance Ltd v AMP Financial Planning Pty Ltd [2007] HCA 36; (2007) 235 CLR 1; and (d) requires the insurer to form the opinion itself and to act with the utmost good faith in doing so and it is not sufficient that some other insurer acting reasonably could have reached the conclusion that it did: Ziogos at [74].

42. And there is a distinction between acting reasonably in the formation of an opinion and the formation of a reasonable opinion. As Gleeson JA explained in MetLife Insurance Ltd v MX [2019] NSWCA 228 (“MX”), at [79]:

“The distinction is between the process of consideration and the outcome itself”.

43. This was further explained in MetLife Insurance Ltd v Hellessey [2018] NSWCA 307 at [8] (Meagher JA, McColl and White JJA agreeing):

“Thus, an insurer’s decision may be set aside if it is shown to be unreasonable on the material before the insurer. It will not answer that description merely because the Court would or could have reached a different opinion on that material, because “reasonable persons may reasonably take different views”: Edwards at 77,536. In addition, however, a decision may be set aside if the process of consideration underlying it was not undertaken reasonably and fairly, even if the outcome itself is not also shown to have been unreasonable on the material before the insurer. Again, more than one reasonable process of consideration may be open in the circumstances, but the process adopted by an insurer would not cease to be unreasonable simply because another, and reasonable, process to the same conclusion happened to exist.”

44. Some authorities have used other words to describe the obligation to act reasonably in forming an opinion. Nicholas J’s description of the obligation is useful: as one which requires the decision-maker to give an objective even-handed and realistic consideration to the whole of the evidence, uninfluenced by personal beliefs, prejudice, suspicion, or speculation: Savelberg v United Super Pty Ltd [2011] NSWSC 1482 at [13]. In accordance with authority, “objective” in Nicholas J’s formulation should be taken to mean “unbiased from the perspective of the decision-maker” and not to invite an assessment of a hypothetical claimant or a decision divorced from the actual material before the decision-maker.

45. The Duty to Give Reasons. It follows from the requirement that the insurer must itself form an opinion acting in accordance with its duty of utmost good faith, that the insurer should give reasons for its decision. As Ball J explained in Ziogos at [75]:

“[75]   In my opinion, it follows from the previous paragraph that MetLife was also required by its duty of utmost good faith to give reasons for its decision. It is only by examining those reasons that it is possible to determine whether it acted with the utmost good faith in forming the opinion it was required to form. To put the point another way, where an insured person’s rights depend not on the objective fact (whether or not the insured suffered from TPD) but on the insurer’s opinion concerning that question, the requirement of utmost good faith requires the insurer to explain how it reached the decision it did so that the insured person can be satisfied that the decision itself was reached in the utmost good faith.”

46. But an insurer is not required to undertake the detailed consideration of a claim required at a court hearing: Chammas v Harwood Nominees (1993) 7 ANZ Ins Cas 61-175 (“Chammas”) and Weber v Tiss Pty Ltd [2005] NSWSC 67 at [8], (“Weber”). An insurer’s statement of reasons for declining a claim should be understood as a practical document intended to inform the claimant of the basis of the decision rather than providing detailed reasons with reference to the evidence being relied upon, comparable to a judgment of a court or tribunal: Weber at [8].

47. In MX at [153] – [155], Gleeson JA considered that there may be little difference between the statement in Ziogos (at [75]) and the statement of Parker J in Newling v FSS Trustee Corporation (No 2) [2018] NSWSC 1405 to the effect that there should be an explanation of “the actual path of reasoning” by which the conclusion was arrived at. Gleeson JA also observed in MX (at [155]), “the insurer’s reasons had evidentiary significance as to whether the insurer’s process of consideration of the respondent’s claim was undertaken fairly and reasonably”.

48. The Use of Expert Evidence. Expert evidence was deployed on both sides in this case. Some of it was before MetLife at the time of its decision. This circumstance adds additional content to the applicable duties in the consideration and determination of this claim. The following additional statements of principle are relevant where experts are involved. If the insurer seeks an opinion from an expert, it must provide the expert with all the information relevant to the expert’s opinion; the expert must be asked the right questions; but asking the right questions of the expert does not require the insurer to ask the expert to address specific provisions in the policy, as the insurer is making the ultimate decision and not delegating it: Lazarevic v United Super Pty Ltd [2014] 18 ANZ Ins Cas 62-039 (“Lazarevic”) at [101]. Experts and the insurers who rely upon them should attend to evidence relating to the individual insured and the insured’s characteristics rather than to general statements of hope or expectation about the circumstances or conduct of anyone suffering from the condition in question: Ziogos at [102]. Where an expert’s opinion about an insured’s circumstances or capacity for employment depends upon an assumption, it may be impermissible for the insurer to rely upon the expert’s opinion as to that matter unless the assumption is verified: see for example Ziogos at [103].

49. The Consequences of Non-Compliance. If the insurer does not comply with its duty of utmost good faith the Court may itself determine the question whether the insured suffered from TPD: Sayseng at [36](e), Birdsall v Motor Trades Association of Australia Superannuation Fund Pty Ltd [2015] NSWLR 412 at [25] and Jones at [67].

50. But the reasonableness of MetLife’s decision here depends in part upon the operation of the ETE clause in the two policies. The authorities on that topic are considered next.

Applicable Legal Principles - Interpretation of the ETE Clause

51. ETE clause policy wordings similar to those in the FSS Policy and the PBRI Policy have received extensive judicial consideration both at first instance and on appeal.

52. From those cases statements of applicable principle can be refined. In the Court of Appeal’s decision in Jones (at [147] – [150]) Gleeson JA considered Brereton J’s elucidation of the meaning of an ETE clause close to the one under consideration in this case. The effect of the Court of Appeal’s decision in Jones was to approve Brereton J’s comprehensive statement at first instance in that case (Jones v United Super Pty Ltd at [71] – [72]) of the proper interpretation of the ETE clause, which is set out here in full:

“[71]   It is not necessary, in order to satisfy the TPD definition, that the insured must be incapable of any regular remunerative work, but only that he or she be incapable of regular remunerative work for which he or she is reasonably fitted by education, training or experience. The ETE clause confines the scope of the “regular remunerative work” from which the insured is disabled to that for which the insured is reasonably fitted by education, training or experience. In that phrase, the word “by” is important – it postulates a connection between the suggested future work, and the insured’s past education, training and experience. The concept of an occupation or work “for which the Insured Person is reasonably fitted by education, training or experience” directs attention to the insured’s vocational history to date, and to occupations for which that vocational history fits the insured. It refers not to any work for which the insured might have physical and mental capacity without further training, but to work for which the insured has been prepared and shaped by education, training and/or experience. The purpose of the provision is to provide a benefit for those who are disabled from following the vocations for which their past education, training and experience has prepared them – not any occupation which may be conceived, however far removed from his or her vocational history, which can be performed without further education, training or experience. The policy insures the capacity of an insured to perform regular remunerative work, not simpliciter, but in an occupation for which the insured’s education, training and experience has prepared him or her. In that way, it insures against loss of the ability to pursue those employments or careers for which the insured has been prepared and shaped by his or her past vocational history. The point is illustrated by the reverse of the current type of situation: a surgeon whose tertiary education was in medicine and whose entire vocational history was in surgery, who lost the fine motor skills required for surgery, but was otherwise physically fit, would not be reasonably fitted by education, training or experience for work as a manual labourer, even though he or she might be perfectly capable of performing it without further training.

[72]   Thus the first question should be, for what occupations is this claimant fitted by his or her education, training and employment. It is a mistake to first search for occupations which an insured might be able physically and mentally to perform without further education, training or experience, rather than to examine the insured’s vocational history and to identify from it the occupation or occupations for which his education, training or experience has prepared the insured.”

53. In the ETE clause the word “by” in the phrase “reasonably fitted by education, training or experience” expresses the notion of a link or connection between the suggested future work and the insured’s past, education, training and experience”: Jones at [146] citing Wardley Australia Limited v the State of Western Australia [1992] HCA 55; (1992) 175 CLR 514 at 525.

54. “Unlikely Ever” to Engage in Work for Reward. The words “unlikely ever” in this group of words have been closely considered. The word “unlikely” in the formulation was once said to mean improbable in the sense of a less than 50 per cent chance: Halloran at [76] and Beverly v Tyndall Life Insurance Co Ltd [1999] WASCA 98; (1999) 21 WAR 327 at 32.

55. But TAL Life Ltd v Shuetrim; MetLife Insurance Ltd v Shuetrim [2016] 332 ALR 507 (“Shuetrim”) now expresses the most authoritative exposition of these words that binds a trial judge in this State. In that case Leeming JA (at [88] – [89]) cautioned against the illusion of mathematical precision in the application of the term, as follows:

“[88]   It seems clear to me that the headnote of White has caused some subsequent decisions to depart from what was applied in Beverley (as well as by White J herself in Wiley). Further, I accept TAL’s submission that in most cases any attempt to express a likelihood in percentage terms will have merely the illusion of mathematical precision. I also agree with TAL’s submission that the bracketed words in the TAL policy tell against the construction in the headnote. Those words confirm what flows from the ordinary meaning of the language of “unlikely ever”, namely, that where there is a real chance that a person may return to relevant work, even though it could not be said that a return to relevant work was more probable than not, the insurer would not be satisfied that the definition applies. “Unlikely ever” is, in this context, much stronger than “less than 50%”.

[89]   What follows is this. To make an assessment of TPD, it is not sufficient for the insurer to be satisfied that it is more likely than not that the person will never return to relevant work. On the other hand, if there is merely a remote or speculative possibility that the person will at some time in the future return to relevant work, an insurer will not, acting reasonably and in compliance with its duties, be able to be satisfied that the person is not TPD. The critical distinction is between possibilities which are readily contemplatable even though they may not be more probable than not, and possibilities which are remote or speculative. A real chance that a person will return to relevant work, even if it is less than 50%, will preclude an Insured Person being unlikely ever to return to relevant work.”

56. As Leeming JA put it here in Shuetrim “the critical distinction is between possibilities that are readily contemplatable even though they may not be more probable than not, and possibilities which are remote or speculative”. The issue has also been stated as whether it is unlikely that the insured would actually obtain paid employment for which the insured was qualified by education, training or experience, not whether in theory the insured may obtain employment of that type: Halloran at [76]; Banovic v United Super Pty Ltd [2014] NSWSC 1470 and Lazarevic at [108]-[109].

56. The distinction between possibilities that are “readily contemplatable” and those that are “remote or speculative” may be a fine one, as Leeming JA explained in Shuetrim (at [113]). Just how fine that can be is illustrated by Leeming JA’s reasoning in Shuetrim (at [110] and [111]):

“110.   Mr Rayment QC, who appeared for Mr Shuetrim on appeal (although not at trial), explained the distinction required to be drawn by the wording of the TPD definition by reference to Whiteand Beverleyas follows:

‘So you ask yourself would this definition, in our submission, something like this, is there any clinical sign to indicate to an appropriately qualified person that the claimant is likely to go back to some form of relevant work? If you only have someone saying, ‘I hope he can’ or ‘in the ordinary course with appropriate treatment he could’, then you have crossed the line into what her Honour describes as the more remote possibilities and that is, we submit, a quite important determination about a clause such as your Honours have in this case, quite important, and what it means is that if, after an appropriate period of time, no such clinical sign [has] emerged or no such matter which shows a real chance of returning to work has emerged, then the clause is satisfied.’

111.   I substantially agree with this submission. A mere expression of hope that a person will return to a relevant form of work is insufficient to sustain an opinion that the clause is not satisfied. Conversely, clinical evidence that there is a real chance of returning to work will sustain an opinion that the clause is not satisfied. However, I would not agree that an opinion in terms that “in the ordinary course with appropriate treatment a person would return to a relevant form of work” would necessarily be insufficient to sustain an opinion that the clause is not satisfied. To the contrary, I think that it might, depending on the particular facts and degree of uncertainty; it might also warrant deferring the assessment date.”

58. The words “unlikely ever” presents special challenge for a claimant as young as Ms Sandstrom, who was barely 28 at the assessment date. As Leeming JA explained in Shuetrim (at [208]):

“Relatively young people whose medical or psychological condition is uncertain will find it harder to prove to an insurer’s or a Court’s satisfaction that they are unlikely ever to return to work for which they are fitted by education, training or experience”.

59. The relative youth of a claimant though obviously relevant to an insurer’s consideration, comes with recognised risks of error. As Ball J pointed out in Ziogos (at 102]), when an insurer reaches the view that a claimant “would be able to return to work because she had so many working years of her life” it is important not to confuse “what was possible with what was likely and unlikely”.

60. “Regular Remuneration Work”. The two MetLife policies do not contain a definition of “Regular Remuneration Work”, as that expression appears in some TPD policies. The wording in the FSS Policy and the PBRI Policy is that the Insured Member is “unlikely ever to engage in any gainful profession, trade or occupation”. In my opinion to “engage in any gainful profession, trade or occupation” is a similar concept to undertaking regular remunerative work. It is difficult to see how one could “engage in” a “gainful profession, trade or occupation” without doing something that closely approximates regular remunerative work in that profession. Therefore, the case law in relation to “Regular Remuneration Work” has some relevance to a case such as this, although it should only be viewed cautiously as it is clearly not decisive in this case, because the precise policy wording is different.

61. Looking at that case law, the capacity to perform “Regular Remuneration Work” is different from the capacity to perform a particular work task; and it does not follow that because a person is physically capable of performing one or more work tasks, that the person has an ability to engage in regular remunerative work: Hannover Life Re of Australasia Ltd v Colella (2014) 47 VR 1; VSCA 205 (“Colella”) and Jones v United Super Pty Ltd at [77].

62. A person can be reasonably fitted for “Regular Remuneration Work” by reason of education, or training, or experience, or a combination of those factors: Hannover Life Re of Australasia Ltd v Dargan (2013) 83 NSWLR 246; [2013] NSWCA 57 (“Dargan”). A claimant may require further training to pursue another occupation after the termination of his employment, leading to the assessment of whether the claimant was TPD. The fact that some further training may be required, does not preclude a conclusion that the claimant was reasonably fitted to carry out the further occupation: Dargan at [44]. In Dargan, for example, a heavy vehicle driver had already obtained a certificate to become a taxi driver and only needed to pass a subsequent week long course to ensure that he was able to retain that certificate: Dargan at [40]. He was found not to be TPD. But in Halloran the claimant had ceased to be employed in a role of greasing machinery and in the three years after leaving that employment he completed a TAFE course qualifying him for white collar work. Brereton J held in Halloran that at the time of suffering his injury the claimant was not qualified for that work “by reason of his education, training and experience”: Halloran at [35] and Dargan at [40] – [41].

63. Dargan also decides (at [46]) that even part-time work may qualify as Regular Remuneration Work but casual work or other work of an intermittent nature would not qualify as Regular Remuneration Work. Bathurst CJ said in Dargan at [46]:

“[46] The question of whether Mr Dargan suffered Total and Permanent Disable-ment, notwithstanding his ability to undertake part-time work as a taxi driver at the relevant date, depends on whether such part-time work was Regular Remuneration Work as that term is defined in the policy. The definition provides that a person is engaged in regular remunerative work if they are doing work in any employment, business or occupation. There is no limitation on the work being full-time or part-time. The limitations are that the work must be remunerative, that is done for reward or hope of reward and must be regular. The word regular means something occurring at fixed times or uniform intervals (see the definitions in the Shorter Oxford English Dictionary and the Macquarie Dictionary). Thus, it would not in the present context include casual work or other work of an intermittent nature. However, the word regular would not on a literal construction exclude part-time work. In the present case Mr Dargan was able to work regularly, albeit on a part-time basis as a taxi driver, at least from June 2008. Subject to passing the course, there was nothing to suggest he would not have been capable of doing this at the time of assessment and as I indicated the contrary was not put. It follows, in my opinion, that Mr Dargan was capable of doing Regular Remuneration Work.”

64. The Time to Determine TPD Status. The time at which a claimant suffers TPD is capable of a general answer, which was discussed by Ball J in Ziogos at [86] as follows:

“[86]   …Generally, and subject to the terms of the policy, the question whether a member suffers from TPD is to be determined as at the expiration of the qualifying period specified in the policy. In the normal case, it is at that point of time that the insured person’s cause of action under the policy arises: see Giles v National Mutual Life Association of Australasia Ltd (1986) 4 ANZ Ins Cas 60-751 at 74,529 per Pidgeon J, cited with approval by Brereton J in Halloran v Harwood Nominees at [33]. See also Stevenson J’s discussion in Shuetrim v FSS Trustee Corporation [2015] NSWSC 464 at [51]ff. However, that will not always be the case. Where the right to make a claim under the policy depends, as in this case, on the formation of an opinion by the insurer in relation to a matter concerning the future which itself is uncertain, the position is less clear. It is difficult to see how the insurer could be in breach of the policy until the claim is made and the opinion is formed or the insurer fails to form the opinion in breach of its duty of utmost good faith. In those cases, the question whether the member suffers from TPD should be determined at the time the insurer forms its opinion or fails to form its opinion consistently with its duty of utmost good faith. In addition, as Pidgeon J pointed out in Giles, it is possible to take into account subsequent events to the extent that they shed light on what was likely at the time the assessment was to be made.”

65. W.I.B. Enright and R.M. Merkin also argue that the “as at” date, or date for assessment to determine TPD status, is the expiration of the applicable qualifying period as the relevant date: Sutton on Insurance Law (4th ed, Thomson Reuters, 2014, Volume 2) at [21.430]. The parties conducted this case on the basis that the “as at” date was 9 March 2011, the expiry of the qualifying period, being six months after Ms Sandstrom commenced being absent from her employment with the police. But for reasons which will become clear in Stage II, if the “as at” date is the date of the insurer declining Ms Sandstrom’s claim, 24 July 2015, it is difficult to see how the Court’s consideration of Ms Sandstrom’s claim would produce a different result.

66. The Use of Subsequent Medical and Other Evidence. It is not uncommon in the consideration of TPD claims for a party to contend that medical and other expert opinions expressed subsequent to the date upon which the insurer is required to assess whether or not a claimant is TPD should be taken into account when examining the claim at the earlier required date for assessment. Provided medical reports are pertinent to a claimant’s condition at the relevant assessment date, such opinions may be taken into account by the Court when it is considering the probability of a claimant being able to engage in relevant work at the date at which an insurer is required to assess TPD: Shuetrim at [150]. As McPherson JA explained in McArthur v Mercantile Mutual Life Insurance [2002] 2 Qd R 197 at [23] this conclusion accords with the principle that the court does not speculate, when it may know: a statement approved in Jones at [194]; and see also Finch at [18].

Application of these Principles to MetLife’s 24 July 2015 Decision

67. Some background facts about Ms Sandstrom and her police service are required to assist in understanding the Stage I issues. These background facts do not resolve contested matters of fact concerning Ms Sandstrom’s symptoms and conduct during the period leading up to the making of MetLife’s decision. Those contests are left to be decided in Stage II. All that is required for Stage I are sufficient background facts to facilitate determination of the Stage I issues.

68. Early Life and Education. Ms Sandstrom was born in 1983 and was 35 years old at the time of the hearing. She has three children, who at the time of the trial were aged 17, three, and one, respectively. Her husband, Mr David Abbott is the father of the two younger children. The plaintiff and Mr Abbott first met in late 2012, and were married in April 2016.

69. In 1999, whilst Ms Sandstrom was still at school, at about the age of 16, she was employed part time as an office assistant for an insurance broker. This employment involved sorting documents, filing, running errands, and similar duties. She completed the Higher School Certificate in 2000, a few months before her first child was born.

70. Between August 2003 and December 2005, Ms Sandstrom had a casual job as a cinema attendant at Greater Union Cinemas. Her work involved selling tickets and snacks, as well as some cleaning duties. This casual employment also provided her with the flexibility to continue to care for her young son, although she continued to rely heavily upon her parents’ support for his care and early bringing.

71. Ms Sandstrom commenced study for a Bachelor of Arts degree in 2002. She intended to major in psychology. She had completed approximately 18 months of this degree, when she decided to alter the direction of her career ambitions.

72. In 2005, she decided to apply to become a police officer. In May 2005 she commenced a Bachelor of Policing Studies at Charles Sturt University, via distance education. In January 2006, she commenced her training at the Goulburn Police Academy.

73. Police Career - May 2005 to July 2011. Ms Sandstrom graduated from Goulburn Police Academy and attested as a Probationary Constable on 5 May 2006. She was posted to the Bankstown LAC. This was the Command in which she served for her five-year police career.

74. During her probationary period, she undertook a six week secondment at the Campsie Police Transit Unit. Later she was seconded for 12 weeks as a Domestic Violence Liaison Officer. She was confirmed in the rank of Constable on 5 May 2007.

75. Ms Sandstrom was assigned to general duties between 5 May 2006 and April 2009, when she was transferred to the IRT within the Bankstown LAC. Ms Sandstrom requested a transfer to the IRT. She wanted a change from general duties. She was not required to undertake any additional training to join the IRT. As will be seen, she did not have a smooth transition to the IRT.

76. Ms Sandstrom worked in the IRT from April 2009 until September 2010, performing duties, as was expected of IRT officers, both in plain clothes and in uniform. The responsibilities of members of the IRT such as Ms Sandstrom included proactively patrolling particular geographical areas, supporting existing police investigations, engaging with the public, finding suspects in the field and conducting stop and search operations. Typically a surge in a particular crime category in the Bankstown LAC would result in IRT officers of Ms Sandstrom’s level being tasked with patrolling the crime–affected areas to provide backup in-depth policing. Officers such as Ms Sandstrom may also be involved in the execution of low level search warrants and the giving of general support to front line police.

77. During both her general duties work and her work with the IRT, Ms Sandstrom was exposed to a series of incidents, which she identifies as having had a distressing or traumatic impact upon her. These incidents are described in detail in Stage II of these reasons. But for present purposes it need only be recorded that they included attendance at the scene of a number of fatal incidents, including motor vehicle accidents, suicides by different methods and murders. She was also required to attend at incidents of serious domestic and family violence.

78. In August 2010, the plaintiff was transferred back to general duties. The circumstances of her transfer back are disputed. The Court does not need to decide between the competing versions of what happened at this stage of her police career. According to Sergeant Alan Spence, Ms Sandstrom requested the transfer back to general duties from IRT in about August 2010. But according to Ms Sandstrom, the transfer was initiated by her superiors. Ms Sandstrom says that when she asked why she was being transferred back, she was told that there had been a number of issues with her work performance, and a transfer back to general duties would allow her to be more closely supervised. In my view, Ms Sandstrom’s version of these events is to be preferred.

79. Ms Sandstrom developed an intimate relationship with another police officer, Senior Constable Ben Crews. She lived in a domestic relationship with him between March 2010 and August 2010, when their relationship came to an end.

80. The plaintiff remained at the Bankstown LAC for the remainder of her policing career.

81. Disciplinary Issues and Re-Transfer. In February 2010, the plaintiff was the subject of a complaint in relation to her conduct as a police officer. She had allegedly failed adequately to prepare briefs of evidence and failed to attend Court in relation to an AVO matter. She was required to undertake an investigation course, and another course designed for probationary constables, which she says, and the Court accepts, she found humiliating. She was separately the subject of a complaint that she had misused her police authority for financial gain. She had allegedly attended a retail store, whilst on duty and in uniform, an occasion during which she had enquired about the price of a product.

82. But the allegation of inadequate preparation of an AVO brief of evidence appears, according to police records, to have related to an incident on 30 June 2010 and was not ultimately dealt with until the next year, when she was already on sick leave before her discharge. The records of the Police Professional Standards Command with respect to this matter under the heading “action” indicates “no action – situation does not warrant action”. But Ms Sandstrom began to come under the attention of Police Professional Standards Command in 2009 and 2010, a feature of her career which will be referred to in more detail in Stage II of these reasons.

83. On 7 May 2010, Ms Sandstrom applied for a transfer to the Penrith Police Citizen Youth Club (“PCYC”) as a Youth Liaison Officer. Her request for transfer was approved on 11 May 2010. She took 10 weeks annual leave in mid-2010, prior to her return to general duties in August 2010.

84. Detective Senior Constable Crews – 8 September 2010. On 8 September 2010, a number of police officers from the Bankstown LAC were involved in the execution of a search warrant at premises in Bankstown. At this time, Ms Sandstrom, by then back on general duties, was attending a separate incident in the same area with a fellow officer. On her account, she heard over the police radio that shots had been fired. She and her fellow patrolling constable made their way to the incident scene to provide assistance to what was still an unfolding incident. She was told by others at the scene that Senior Constable William Crews had been fatally shot. She immediately recognised that Senior Constable Crews was the brother of the police officer with whom she had recently been in an intimate relationship.

85. At trial, MetLife initially disputed that the plaintiff had been present at the premises at the time of this incident. But MetLife ultimately conceded during the trial that the plaintiff had been seen by Senior Constable Richard McNally at the scene, before police had established the crime scene perimeter cordon.

86. Later that evening, Ms Sandstrom and a number of other officers attended the home of Senior Constable Ben Crews (he was by then back living with his wife and children) to inform him of the incident. After being informed that Senior Constable William Crews had survived the shooting, Ms Sandstrom was among a number of police officers, including Senior Constable Ben Crews, who attended Liverpool Hospital where he had been admitted for treatment. But by then Senior Constable William Crews was deceased.

87. Aftermath and Discharge from the Police Force. Ms Sandstrom did not return to active duties with the police after 8 September 2010. On 13 September 2010, she was certified by WorkCover as being unfit to work from 10 September 2010 until 8 October 2010. This certification was extended a number of times until her discharge from the police.

88. Her injury diagnosis, was described in the Police Injury Management Report at the time as “grief reaction as a result of being a witness to the above [Bill Crews] incident”. A Near Miss Notification Form by Christine Margaret Morris dated 8 September 2010, noted and reported about the plaintiff, that there was a “critical incident whilst executing a search warrant”. Prior to September 2010, the plaintiff had not taken any significant or extended periods of sick leave.

89. Whilst on sick leave, on 20 September 2010, Ms Sandstrom formally withdrew her pending transfer to the Penrith PCYC. The reason she identified for the withdrawal was:

“Due to recent family issues I have had to relocate my residence from the Penrith area back to the Peakhurst area where I am now residing with my parents for support. I am a single mother of a nine year old boy who is still attending Peakhurst Public School …

At this time I wish to remain at the Bankstown Local Area Command where I feel that I will receive the required support.”

90. Just what were her reasons for this application for re-transfer was one controversy at trial. While Ms Sandstrom was on sick leave, then-Acting Inspector Alan Spence attended her home on two occasions to conduct routine welfare checks on her. He gave evidence on issues relevant to the Stage II consideration in these reasons.

91. On 16 June 2011, the Police Medical Discharge Unit received a referral for Ms Sandstrom’s medical discharge. Approval for her discharge was given on 23 June 2011. She was formally discharged from the police on 7 July 2011. Since that time, she has not sought employment, nor been employed in any capacity, either part-time or full-time.

92. Partial and Permanent Disability Payment. On 4 August 2011 Ms Sandstrom was paid a Partial and Permanent Disability (“PPD”) benefit under Clause 9 of the Crown Employees (Police Officers Death and Disability) Award 2005. This benefit was assessed and paid by the police. The receipt of a PPD Benefit did not preclude Ms Sandstrom from receipt of a future entitlement to a TPD benefit. But she formally agreed by deed in June 2011 that should she receive a TPD benefit from FSS, she would repay the PPD benefit received back to the police, a liability which could be satisfied by repayment directly from FSS to the police.

93. On 1 August 2011, Ms Sandstrom applied to First State Super for a TPD Benefit. She is currently in receipt of approximately $1,400 per fortnight in Workers Compensation payments through Employers Mutual Limited.

94. Ms Sandstrom consulted a number of medical practitioners as a result of her absence from work and her symptoms. She had her own treating doctors and she was medically examined on behalf of the police, on behalf of MetLife, and on behalf of workers compensation insurers. Reports from all the medical practitioners mentioned below were available to MetLife at the time of MetLife’s decision.

95. At the time of her discharge from the police, and in the years that followed, the plaintiff’s treating general practitioner was Dr Anita Wong. Ms Sandstrom was initially referred by Dr Wong to a psychiatrist, Dr David Grace, who gave her specialist treatment between 2010 and 2012. The police referred her in February 2011 for independent medical examination by Dr Graham George, a consultant psychiatrist. Dr George’s resulting assessments were relied upon by MetLife, which prior to its decision to decline Ms Sandstrom’s claim asked Dr Wong and Dr Grace if they agreed with Dr George.

96. A well as Dr Grace, Ms Sandstrom was treated or reviewed by a number of other consultant psychiatrists. In 2012, Ms Sandstrom was referred by MetLife for examination to a consultant psychiatrist, Dr Ian De Saxe. In 2013 the plaintiff saw Dr Selwyn Smith, a consultant psychiatrist who examined her for medico-legal purposes. She came under the care of another treating psychiatrist Dr Greg Wilkins in 2014. She continued up to the time of hearing to be under Dr Wilkins’ care. Reports from these various doctors were provided to MetLife before its 24 July 2015 decision.

97. Ms Sandstrom was also psychologically assessed. She was assessed in 2012 for treatment purposes by a psychologist, Mr Gerard Glancey. And she was assessed for medico-legal purposes by Mr Marcelo Rodriguez the same year.

98. On behalf of the police or MetLife, she also underwent vocational assessments conducted by Ms Mira Zaki and Ms Zoe Buck. She was also subject to surveillance by investigators, Brookfield Investigations, some of the results of which were given to the doctors who assessed her.

Consideration of Ms Sandstrom’s TPD Claim

99. MetLife declined Ms Sandstrom’s claim on 24 July 2015. The delay between her assessment date of 9 March 2011 and MetLife’s decision is significant. During the delay period Ms Sandstrom was urging MetLife to make a decision.

100. Four key documents provide the framework for Ms Sandstrom’s present challenge to MetLife’s decision. The contents of those four documents and a comparison of what they include and what they omit, are sufficiently important that these documents are substantially reproduced in these reasons.

101. The four documents comprise MetLife’s two “procedural fairness” letters (being letters generally giving Ms Sandstrom notice of potentially adverse material to which she should direct her attention), Ms Sandstrom’s lawyers’ response to the first of these procedural fairness letters, and then MetLife’s decision on Ms Sandstrom’s claim. The first procedural fairness letter was sent to Ms Sandstrom’s lawyers on 26 February 2015. Ms Sandstrom’s lawyers, Norwest Lawyers, responded on 22 April 2015. MetLife then sent a further procedural fairness letter dated 23 June 2015 to Norwest Lawyers. MetLife made its decision to decline Ms Sandstrom’s claim under both the FSS Policy and the PBRI Policy on 24 July 2015. This correspondence is now considered in more detail.

102. MetLife’s 26 February 2015 letter. MetLife’s first procedural fairness letter to Ms Sandstrom’s lawyers sent on 26 February 2015 commenced by referring to Ms Sandstrom’s claim and indicated that the purpose of the letter was to invite her to “review the list of documents/materials we have acquired during the course of our assessment process”. The letter then proceeded as follows:

“Our assessment into your claim is now at a stage where we would like to invite you to review the list of documents/materials that we have acquired during the course of our assessment process. This process enables you to become aware of all the documents/materials that MetLife will rely upon when making a recommendation and gives you the opportunity to review those documents/material where we consider there to be adverse or possible adverse information.

We draw your attention to the list of documents/material. As requested by the Fund Trustee, we have enclosed a copy of any adverse or possible adverse

documents/material for you to review and make any submissions with respect to these documents that you would like us to take into consideration when making a recommendation on your claim.

Along with your submission, we invite you to submit any additional medical information, including medical reports, or other evidence that you believe will assist in the assessment of your claim for total and permanent disability benefit.”

103. The first part of this 26 February 2015 letter lists all the documents that MetLife then had and would consider in making its decision. It is not necessary to reproduce that full list here. MetLife was inviting Ms Sandstrom to “submit additional medical information” to add to that list, if required.

104. But then separately, MetLife further identified (from the already listed materials) particular documents that it said “contain possible adverse information”. It should be noted that under the heading “possible adverse information” in this letter, MetLife did not elucidate the potential adverse inferences or findings that might be made against Ms Sandstrom arising from this material. Rather, the letter merely identified by name the various documents that might possibly contain information adverse to Ms Sandstrom’s interests. That second part of the letter was as follows:

““Your attention is drawn to the attached documents that contain possible adverse information:

*   Dr Ian De Saxe (Consultant Psychiatrist) report dated 28/07/2012;

*   Dr Ian De Saxe (Consultant Psychiatrist) report dated 29/09/2012;

*   ECA Vocational Assessment report dated 04/07/2012;

*   AHC Investigations Surveillance report dated 29/03/2012;

*   AHC Investigations Surveillance report dated 26/10/2012;

*   Brooksight Investigations Interim Factual Investigation report dated

08/03/2013;

*   Brooksight Investigations Additional Factual Investigation report dated

20/06/2013;

*   Brooksight Investigations Additional Factual Investigation report dated

13/05/2013;

*   Record of Interview between Peter Bailey of Brooksight Investigations and Constable Clayton Parkyns dated 24/05/2013,

*   Record of Interview between Peter Bailey of Brooksight Investigations and Detective Senior Constable Robert Howes dated 21/05/2013;

*   Record of Interview between Peter Bailey of Brooksight Investigations and Inspector Tim Chinn dated 04/04/2012;

*   Record of Interview between Peter Bailey of Brooksight Investigations and Sergeant Walid Annous dated 25/02/2013;

*   Miss Carline Hare (Forensic Psychologist) report dated 10/03/2014;

*   TMF Workers Compensation file dated 10/09/2012;

*   Dr Dr Anita Wong (General Practitioner) clinical notes dated 05/05/2014;

*   Surveillance DVD footage 04/03/2012, 07/03/2012, 08/03/2012, 10/03/2012, 19/03/2012, 20/09/2012, 24/09/2012 and 16/10/2012.

We request that you provide us within 30 days with any response you care to make on the information on your claim.”

105. The Norwest Lawyers’ letter of 22 April 2015. Ms Sandstrom’s lawyers, Norwest Lawyers, responded to MetLife’s first procedural fairness letter on 22 April 2015. They did so in a detailed letter which repeated the list of the “adverse material” which MetLife had described in that way. MetLife indicated that it might rely upon this material in making its determination.

106. Then, the Norwest Lawyers’ letter of 22 April 2015 gave a précis of the plaintiff’s claim, setting out the factual circumstances of the main relevant events during her police service, which were said to have occasioned her PTSD symptoms and her related disorders. It then gave a more detailed history of her psychiatric and psychological symptoms, her claimed employment incapacity, her medications and her inability to rectify her symptomatology. It also listed the various medical professionals that she had seen up to that point of time. The letter serves as a convenient chronology of the medical professionals that she had consulted by that time. It mostly provides a background of often undisputed history, to assist the Court’s consideration of the Stage I issues. The letter was as follows:

“Those distressing events arose in the context of an ongoing breakdown in the relationship with her ex-partner, the subsequent death of the Claimant’s grandmother and the previous anxiety symptoms highlighted above. Following the events of 8 September 2010, and perhaps not unsurprisingly, the Claimant began to experience immediate, ongoing and significant psychiatric and psychological symptoms in the form of visual and auditory hallucinations, insomnia, anxiety, panic attacks and depression amongst others. The Claimant has continued to be troubled by the vast majority of these symptoms since that date and was subsequently diagnosed as suffering from Major Depression, Anxiety and Phobic Avoidance on a background of Post-Traumatic Stress Disorder.

The ongoing symptomatology has been such that the Claimant has been prevented from returning to her previous employment as a police officer and was eventually medically discharged in, or around, June 2011. Indeed, the Claimant has been unable to undertake any other form of alternative employment, in an attempt to alleviate her symptoms and reach some manner of improvement the Claimant has undergone extensive treatment with her general practitioner, treating psychologist and treating psychiatrist with the assistance of multiple psychotropic medications (including Seroquei, Zoloft, Valium, Yasmin, Xanax, Clonidine, Pristiq, Imovane and Alprazolam

amongst others), in addition, the Claimant required two separate admissions to the St John of God Hospital on account of the severity of her psychological symptoms.

Unfortunately, and despite the best efforts of the Claimant to return her psychological utility to some form of normality, the extensive treatment to date has been unsuccessful in returning any meaningful function. The Claimant continues to be troubled by a number of significant and debilitation symptoms including, but not limited to, anxiousness, panic attacks, agitation, anger issues, depression, social isolation, lack of motivation, poor concentration, lack of self-worth, decreased ability to perform her activities of daily living and hyper-vigilance. These symptoms in turn have destroyed her ability to participate in the work force.

The Medical Evidence

As has been alluded to above, there is a significant amount of medical evidence that is available and before the insurer in respect of the current claim. Whilst the Claimant does not seek to repeat that material verbatim, the following should be noted:

1.   Dr Graham George examined the Claimant on behalf of the NSW Police Force in relation to the workers compensation claim and noted, in his report of 8 March 2011 that the she appeared to be suffering from Acute Post-Traumatic Stress Disorder and Grief Reaction. In terms of her ability to return to employment the doctor opined:

“In general terms, I do not believe that she will return as an operational police officer with NSWPF...

I do not believe that she does have the capacity for a reduced role. I believe that, as she has indicated, there would be too many triggers in any working environment, even if it was a relatively benign police environment. Even being associated with police talk, police uniforms or any other reminders of her police work, I believe could trigger symptoms for her.

She has also struggled with anxiety on a regular basis and suffers panic attacks, at least on a weekly basis. This is a significant disorder for her to overcome in the context of her current symptoms.”

2.   On 8 April 2011, the Claimant’s treating general practitioner, Dr Anita Wong, provided a medical report on permanent incapacity to First State Super in which she confirmed a diagnosis of Post-Traumatic Stress Disorder, Grief reaction, Anxiety and Parasomnias initially. The Claimant was said to be troubled by anxiety, hyper-vigilance, parasomnia in addition to depressed mood and was said to be unable to ever return to her previous employment.

3.   On 1 August 2011 the Claimant’s treating general practitioner, Dr Anita Wong, provided an attending doctors statement to First State Super in which it was noted that the Claimant continued to be hyper-vigilant, was avoiding all stimuli in addition to being unable to carry out her activities of daily living. The doctor opined in respect of the Claimant’s ability to maintain employment:

‘Cannot deal with confrontation and cannot see any uniformed police

officers without triggering flashback. [In response to question] Not as a police officer. At this stage she cannot perform any other work. At this stage she cannot resume work in her own or any other occupation. At present she is not even attending to own ADL’s.”

4.   On 24 June 2011 the Claimants treating Psychiatrist, Dr David Grace, provided a report in which he noted that the Claimant was suffering from Post-Traumatic Stress Disorder with significant triggers. The doctor opined:

‘I certify that because of Rebecca Sandstrom’s PTSD it is unlikely that

Rebecca can ever be gainfully employed in the capacity for which she is reasonably qualified because of her education, training or experience.’

5.   On 5 April 2012 Mr Gerard Glancey examined the Claimant in relation to her workers compensation claim at the request of our office. Mr Glancey issued his report on 2 May 2012 in which he provided a diagnosis of Post-Traumatic Stress Disorder and Major Depressive Disorder. He opined:

‘Her condition has stabilised. I can see nothing to suggest her potential for a positive change in her functioning. Depression will likely intensify with the passage of time...

Her functioning as reported leads to the view that she is unlikely to return to competitive employment.”

6.   On 29 May 2012, the Claimant’s treating general practitioner, Dr Anita Wong, provided a report to First State Super in which it was noted that the Claimant continued to be suffering from Post-Traumatic Stress Disorder and was triggered by anything from sirens, loud noises, TV shows, news reports and seeing or having contact with uniformed police officers. Dr Wong opined:

‘It is clear from consultation with Rebecca and her health professionals that she is not capable of returning to any work for which she is reasonably qualified from her education, training or experience.’

7.   On 31 May 2012 Mr Marcelo Rodriguez examined the Claimant in relation to her workers compensation claim at the request of our office. Mr Rodriguez issued his report on 17 July 2012 in which he provided a diagnosis of moderate to severe Post-Traumatic Stress Disorder. He opined:

“Ms Sandstrom is unlikely to be fit for police work in the foreseeable future. Further traumatic experiences would predispose her to an exacerbation of her post-traumatic stress disorder.”

8.   On 5 June 2012 the Claimant’s treating general practitioner, Dr Anita Wong, provided a report to InSite Injury Management Group, vocational rehabilitation providers, in which she commended upon the proposed employment alternatives identified by InSite. The doctor opined that the Claimant was not fit to pursue employment as a Claim Officer/Compliance Officer, Paralegal or a Clerical/Administrative Assistant.

9.   On 4 July 2012 Dr Ian De Saxe examined the Claimant on behalf of the MetLife Insurance, in his report of 28 July 2012 the doctor provided a diagnosis of Major Depression and Post-Traumatic Stress Disorder with an alternative diagnosis of Adjustment Disorder with Depressed Mood. The doctor noted that the Claimant continued to be troubled by depressed mood, loss of energy, concentration and motivation, flashbacks, hallucinations, hyper-vigilance and intrusive thoughts, in terms of treatment the doctor opined:

‘She has had a considerable amount of psychological and psychiatric

assistance, which has been of some benefit, but it appears that she is

still significantly symptomatic and has not fully worked through the trauma of this.’

The doctor considered that “secondary gain” (i.e. benefit from the policy) was not playing a role in perpetuating the Claimant's condition, noting that she became “very ill psychologically after these events”. In terms of her ability to obtain employment Dr De Saxe opined:

“Ms Sandstrom was involved in general policing duties. This was not a sedentary role. She’s currently completely unfit to do this type of work on either a full-time or part-time basis.

As noted above she currently suffers a mix of symptoms of major depression and post-traumatic stress disorder which render her totally incapable of meeting the duties and responsibilities required by a fulltime police officer.

In my opinion, at the time of interview, she would not be capable of working more than around 10 to 15 hours per week. Given the depth of her depression at the time of interview, I would have some doubt regarding whether she would even be able to fulfil even this number of hours of work adequately.’’(emphasis added)

10.   On 10 July 2012 InSite Injury Management Group undertook a vocational assessment on behalf of the workers compensation insurer. As part of that assessment the assessor identified three potential alternative employment options, Leisure Coordinator, Clerical and/or Administrative Assistance and Case Manager, it was confirmed that all three roles required the Claimant to undergo either formal refraining and/or on the job retraining. The author opined under the return to work strategy:

“Lack of training - According to the requirements of the vocational goals generated Ms Sandstrom will likely require retraining or on the job retraining. In addition a work trial would be beneficial in securing paid employment.”

11.   On 14 August 2012 the Claimant’s treating Psychiatrist, Dr David Grace, provided a report to the insurer in which he provided a detailed synopsis of his treatment of the Claimant to that date. The doctor noted that the Claimant had consulted upon him on 18 occasions and provided diagnoses of Post-Traumatic Stress Disorder, Co-Morbid Major Depression and Co-Morbid Alcohol Dependence - in remission. In terms of the Claimant’s fitness for employment the doctor opined:

458. Dr De Saxe provided a further report on 29 September 2012. The purpose of this report was to specifically provide comments on the Vocational Assessment Report the plaintiff undertook on 4 July 2012, and did not involve any further consultation with the plaintiff.

459. In the report, Dr De Saxe opined that the plaintiff would be “capable of returning” to one of the three roles identified in the vocational assessment, namely as an Inquiry Clerk, General Clerk, or Sales Assistant (general). In relation to her prognosis for recovery and return to work in “any occupation”, he opined:

“As I stated in my original report, my opinion was that Ms Sandstrom was not well enough for full-time employment at the time of interview.

However, it was also my opinion that with appropriate support and therapy, as she is a very young woman, there is no reason that she should not be able to return to work in due course.

Concerning a timetable for recovery, my opinion continues to be that with a minimum of weekly supportive cognitive behaviour therapy or psychodynamic psychotherapy, [Ms] Sandstrom should be able to return to some form of employment by the middle of 2013.”

461. Dr De Saxe responded with “yes” to “is [the plaintiff] able to work at least on a part-time or full-time basis in any occupation in the next 20+ years”.

462. Dr De Saxe’s opinion, though derived from consultations with the plaintiff closer to the assessment date than doctors such as Dr Wilkins and Dr Kneebone, is that with appropriate support and therapy and a youthful age that she should be able to return to work. But two things displace this opinion for the Court. The Court accepts Dr Wilkins’ view that only a limited number of therapies are available for the plaintiff and he, Dr Wilkins, is treating her with them. The second matter is that despite Dr Wilkins’ treating the plaintiff there has not been improvement, which time has shown contradicts Dr De Saxe’s prognosis that she should be able to return to work within 12 months of him seeing her.

463. Dr Selwyn Smith. Another doctor who was not cross-examined was Dr Selwyn Smith. He examined the plaintiff at the request of her solicitors on 8 July 2013, in relation to her Workers’ Compensation Claim. In his report dated 12 July 2013, Dr Smith opined that the plaintiff met the diagnostic criteria for Post Traumatic Stress Disorder, which was chronic in duration and of moderate severity. He observed that the plaintiff revealed clinical evidence of Major Depressive Disorder in association with Generalised Anxiety Disorder to the point of panic.

464. Dr Smith also responded to a number of specific questions provided by Norwest Lawyers. Relevantly, Dr Smith opined that:

“[T]he psychiatric injuries that Ms Sandstrom has suffered in the course of her employment has resulted in a loss of her earning capacity given her pre-injury occupation. She is unable to engage in police work. … She is unable to engage in alternative work. Her capacity to engage in alternative work is severely restricted because of her psychiatric symptomatologies and the difficulties she would experience on the open labour market.”

465. Later in his report, he agreed that the plaintiff would have very limited capacity to obtain work in the open labour market, and agreed with “pessimistic views in regard to her future employment”. Dr Selwyn Smith assessed the plaintiff’s Whole Person Impairment at 22%. In relation to “employability”, he assessed the plaintiff as falling in ‘Class 4’, “Severe Impairment”, noting:

“Ms Sandstrom is unable to work more than one or two days at a time. Her pace would be reduced and her attendance would be erratic”.

466. Dr Selwyn Smith provided a follow up report at the request of the plaintiff’s solicitors on 9 August 2013.

467. In this supplementary report, Dr Smith opined that the plaintiff:

“as a result of her significant psychiatric symptomatologies, namely the development of a chronic Post-Traumatic Stress Disorder with a comorbid Major Depressive Disorder and Generalised Anxiety Disorder to the point of panic, is totally unemployable.

It is my opinion that Ms Sandstrom satisfies the definition of total and permanent disability.

Ms Sandstrom since leaving the NSW Police Force has not engaged in alternative work and in my opinion will not be able to realistically obtain work on the open labour market.”

468. Although Dr Selwyn Smith was not called to give evidence, in my view his diagnosis of PTSD with co-morbid major depressive disorder and generalised anxiety disorder, as a basis to infer she is totally unemployable, was an early accurate diagnosis of the plaintiff’s long term future. Because Dr Selwyn Smith was not called, weighing his opinion against the other more heavily debated medical reports is difficult. But it can be said that time has proven the worth of his opinion. From an earlier stage he could see that Ms Sandstrom was unlikely to be employable in the long term.

The Psychologists

469. Only one psychologist was cross-examined, Professor Richard Mattick. But the reports of a number of others tended to negative the proposition that the plaintiff was faking her symptoms.

470. Professor Richard Mattick. The plaintiff was assessed on 14 October 2016 by Professor Richard Mattick, a clinical psychologist, on referral from Metlife’s solicitors.

471. Professor Mattick opined that the plaintiff had “really … not received adequate treatment”, but with a series of strategies, as outlined, combined with a medication review and settlement of the claim, her condition was likely to improve “markedly over the next 12 months”. He thought that the plaintiff was “somewhat exaggerating her symptoms”, but emphasised that he was not suggesting that she was “feigning dysfunction, but rather that she endorses extreme responses”.

472. In relation to the plaintiff’s ability to return to work, he opined:

“[T]he issue is whether she will be incapacitated to such an extent as to render her unlikely ever to engage in any gainful profession, trade or employment for which she is reasonably qualified by reason of education, experience, or training. I note that at the time of these events, the plaintiff was 26 or 27 years of age. She is currently 33 years of age. The notion that she

will be incapacitated so she can never return to work into the future because of these unpleasant events, effectively for the next 33 years, is, I think, unlikely. With time, the settlement of the case, and reasonable and more assertive psychological therapies, she will be quite able to return to work.”

473. Professor Mattick approached Ms Sandstrom optimistically as being treatable and having a reasonable chance of recovery as a result of that treatment. This was no better put than in a response he gave to the question from the Court, which summarised some of the evidence about what she could and could not do and about the uncontrolled emotional episodes that she suffered. Professor Mattick said the following:

“You mentioned two things which I think are important. One is the post‑traumatic stress kind of hypervigilance, the - we'll call it agoraphobia, I kind of think of it as avoidance. And I think that can be treated well with exposure. And again, you don’t need to rely on my view, you can read the Cochrane review. The other is the dysphoria, and I think she does have a fair bit of - of unhappiness. And I would be too if I was seven or so years after leaving a job and not being markedly improved. Now, if she were my relative I'd be getting her off to a decent psychologist to give her proper treatment and doing that really carefully. And she might be there for many months and - and possibly longer.

But she was 33 when I saw her, she's going to live until she's 83. She's got 50 years ahead of her. To give up. Well I think that's what these professionals often do. They give up on improvement. And that actually gets communicated to the patient. They are told "You will not change". And to a certain extent, some of the problems that arise for these patients and police that I've seen is iatrogenic, that the good doctor, the good psychologist, the authority person has told you "You're stuck with this." And they get depressed because their lives are changed. And I'm not suggesting Sandstrom didn’t suffer real symptoms or was exposed to real things. But the notion that people can't improve and when the patient takes it on, I think is really problematic.

So, to come back in my tangential way to answer your question, it is about function. You're - you're after improved function. You're after the person to be able to go past the police station without reacting, and just driving, seeing a police car, travelling. And I think she shows some of those abilities, her travel locally, but also overseas. She - she is able to get out and do some things. And that's quite positive, given the questions from counsel earlier about the implicit - I think, or explicit assertion that she's go bad she can't go into situations - undergo exposure therapy. She clearly can. She just hasn’t been afforded the treatment. ”

474. In essence, Professor Mattick’s reasoning was that she had genuine symptoms but was exaggerating them in part and that she was likely to be amenable to TFCBT and EMDR treatment and similar therapies. But in the Court’s view the risks associated for Ms Sandstrom with those treatments must give way to Dr Wilkins’ opinion, which the Court accepts.

475. Kim Malone. The plaintiff saw Kim Malone, a psychologist throughout 2012 on behalf of the Workers Compensation Insurer. She last saw the plaintiff in December 2012 and reported in March 2013. She reported that the plaintiff’s score was still in the moderate range for depression and the severe range for anxiety and stress. Although she did have contact with the plaintiff to verify current responses in March 2013. Her diagnosis for Ms Sandstrom’s injury was chronic PTSD.

476. Ms Malone’s evidence is important in showing that there was some improvement in the plaintiff in 2012 leading to “greater engagement in life and her social and interpersonal functioning is better”. The plaintiff reported to Ms Malone about her holiday with her son which does not appear to have been kept from Ms Malone. But Ms Malone recorded difficulties with travel and concentration but an improvement in social and recreational activities.

477. But Ms Malone’s opinion was that it was too hard to tell whether or not there would be permanent impact from Ms Sandstrom’s PTSD injury although she did record the fact that Ms Sandstrom’s need to “justify the psychological nature of her injury in response to the events that caused same, has increased her sense of hopelessness and low self-worth”.

478. The litigation process is undoubtedly a negative factor for her further recovery. But the Court accepts in light of Dr Wilkins’ opinion that sufficient time has now gone by to show what the long term future for Ms Sandstrom would be like.

479. Mr Gerard Glancey. On 2 May 2012, Ms Sandstorm was assessed by Gerard Glancey, a psychologist, after a referral from her solicitors. He assessed her WPI to be 22%. In the report, he opined that:

“The diagnoses in respect to the disturbance at the time of consultation are Major Depressive Disorder and Posttraumatic Stress Disorder.

The reports of Ms Sandstorm provide no evidence to support optimistic speculation regarding her prognosis. Much of her functioning is self destructive in nature.”

480. He also noted that he could not see anything to suggest her potential for a “positive change in her functioning”, and that “her functioning as reported leads to the view that she is unlikely to return to competitive employment”.

481. Mr Marcelo Rodrigues. Mr Marcelo Rodrigues, a psychologist, saw the plaintiff on one occasion at the request of her solicitors, on 31 May 2012. This was in relation to the plaintiff’s Workers’ Compensation claim. In his report of 7 July 2012, Mr Rodrigues opined that the plaintiff’s symptoms were consistent with a diagnosis of moderate to severe post-traumatic stress disorder. He considered that the plaintiff would be “unlikely to be fit for police work in the foreseeable future”, but did not otherwise deal with the plaintiff’s return-to-work prognosis.

482. Ms Caroline Hare. The plaintiff was assessed by Ms Caroline Hare, a psychologist, on 10 March 2014, at the request of MetLife. MetLife specifically requested that the present report address whether the plaintiff was ‘malingering’ (i.e., exaggerating her symptoms for external gain). The plaintiff undertook personality testing (‘MMPI-2’), but did not consent to a clinical interview or psychometric testing. Based on the material before her, Ms Hare opined that:

“Results of the current assessment suggest that [the plaintiff] responded to the MMPI-2 in an open and consistent manner. Although she reported a number of extreme symptoms, examination of her score profile suggested that it is unlikely that she was ‘faking bad’. Review of supporting documents did not highlight inconsistencies. Her behaviour during the assessment appeared consistent with aspects of her MMPI-2 profile.

Due to the lack of clinical interview, I am unable to provide detailed comment regarding the consistency between presentation and [the plaintiff’s] responses to the MMPI-2. Completion of a clinical interview would have enabled me to observe and explore any inconsistencies …

[F]or a conclusion of malingering to be provided, an individual’s symptoms must be intentionally “grossly inflated”. In [the plaintiff’s] case, it seems that she responded in a consistent manner that did not suggest she was ‘faking bad’ on the MMPI-2. As such, it is likely that she continues to experience distressing levels of symptomatology. Thus, I suggest (given the limitations expressed throughout this report) that a conclusion of Malingering (as per DSM-5) is not applicable.”

483. Ms Hare advised that she was not asked to comment specifically on the plaintiff’s capacity for future employment, and was not in a position to do so, given the limited information she had available to her. In the Court’s view Ms Hare’s assessment is correct to the extent that it is unlikely that the plaintiff was “faking bad”.

The Vocational Assessments

484. It is not necessary for the Court to review all the vocational assessments. The most comprehensive and up to date of them advanced by MetLife was that of Ms Aelan Bradley. This really displaced the assessments considered in Stage I. There was no issue concerning her credibility.

485. Ms Bradley was able to give evidence about the availability of part-time work in the three categories that she identified that were within the plaintiff’s pre-disability education, training and experience. The available work that she had identified covered Sydney’s southern suburbs, including the Sutherland shire and was divided into full-time work and part-time work. The part-time work was in turn divided into offers of work for various periods per week some of them for as little as one to 15 hours per week of regular part-time work. Her evidence does show that there are jobs available in the government and non-government sectors for fairly low levels of part-time remunerative work.

486. It may be the plaintiff is able to do three to five hours a week on a regular basis as something within her capacity for a limited period. But the unpredictable intrusion of triggers for her meltdowns and her problem with coping with planning means that her potential to be able to undertake casual work, even with relatively un-demanding hours, must be regarded as speculative.

487. At some time during employment of the kind for which she is otherwise suited she will face the obligation to take responsibility either for others or for some process. And such employment will in the Court’s view inevitably risk the intrusion of some unpredictable trigger from her past police experiences. It may just be in a conversation but the trigger is likely to be the threshold of an event which will probably result in the termination of her employment.

Ms Sandstrom’s Employability and the TPD Definition

488. If Ms Sandstrom were to respond to therapy, she probably could do regular remunerative work for periods. But one cannot see the plaintiff without believing that whatever therapy is applied to her there will be periods of time where she will continue to suffer from spontaneously triggered episodes of distress that she will be barely able to control. These deeply distressing “meltdowns”, as Mr Abbott described them, have continued for many years since she left police service and unless medical intervention is successful are, on the evidence of them since 2010, likely in my view to recur periodically in the future. This will make her holding down regular long-term employment a matter of speculation.

489. One indication of how the plaintiff would fare in a long-term work environment dealing with people who are not family, is the way she deals in long term relationships with friends. There, her explanation, which the Court accepts, is that she cannot maintain those relationships because the commitments required and expectations of her in those relationships are overwhelming to her and she has to withdraw from them either from time to time or in the long term. I accept that is an accurate self-analysis of how her non-family interpersonal relationships are conducted. This is a strong indicator of the pressures she would encounter in a work place, ultimately leading to what she would perceive to be a necessary withdrawal.

490. Ms Sandstrom’s husband, Mr Abbott, does not think with all the limitations that he has observed, that his wife would be able to work in external employment. The Court accepts that he actively wants her to work outside the home, if she can. He says, and the Court accepts, that this is his preference: “if I thought Rebecca had any capacity to work, I would get her to help out with the admin work for my business.” But rather than employing his wife, Mr Abbott has engaged an administrative assistant one day a week in his business. Mr Abbott was a practical down-to-earth self-employed businessman, conscious of the cost structure of his own business. In the Court’s view Mr Abbott would not engage an administrative assistant one day a week, if he believed Ms Sandstrom could do this kind of administrative work herself. For his own sake and for hers he would have engaged her long ago if he thought that she was capable of working. Instead, his judgment was that “she would not be able to cope with that”. The Court agrees with him.

491. His failure to engage her to work for him is not part of some conscious scheme to conceal her working capacity prior to the resolution of this case. It is the first easy option for her present and future employment and the Court accepts his evidence that this is not a step that he is prepared to take. If someone as obviously sympathetic to Sandstrom’s situation as her husband, is not prepared to take the step of employing her, it is not very difficult to infer that independent employers would be unlikely to take that step either.

492. It was put to the plaintiff that she had significant clerical and IT skills that she had acquired before she left the police and that she could now redeploy these in other employment. The question was well put, because she does have these skills. And were she unconstrained by psychological factors, in the Court’s view she has a sufficiently sound skills platform to adapt to employment of the kinds MetLife has identified.

493. Her first response to this suggestion was to say that her IT skills are out of date. But this alone would not be an answer to the proposition that she might be able to seek and have a realistic chance of securing regular employment in the future. She has sufficiently high intelligence that it would not be particularly onerous for her to brush up on her existing skills and it would be reasonable for her to do so to obtain employment.

494. But Ms Sandstrom faces different issues. She says, and the Court accepts, that she would have difficulty obtaining paid clerical employment, even if she were shielded from contact with the public and from particular places that might remind her of police or security work. I accept that she suffers unpredictable episodes of emotional distress. The Court saw enough of them in the course of her testimony to see their spontaneity. They were often triggered by discussing difficult emotional issues, some of which were not directly concerned with recounting her police work. Sometimes these were just triggered by her trying to explain her mental condition and to get across to the Court the fact that she appreciated that it was difficult for other people to comprehend, what for her was very real.

488. Planning and taking responsibility can be so overwhelming for her that it tends to produce this kind of emotional reaction in her. The trigger for her meltdowns in part seems to be the internal tension of having to meet the expectations of others in executing planning functions ot taking responsibility as would typically be required from time to time in any work for which she is suited. The pressure on her in such situations she perceives to be “too much”. Neither she nor any future employer could safely predict every workplace situation in which the variety of these triggers will occur.

489. Some triggers are obvious but many are not. So it is very difficult to construct boundaries around her workplace to avoid the risk of exposure to triggers. Ms Sandstrom’s husband and her mother, who understand her meltdown episodes well enough at a practical level, are her best support in dealing with these triggers. But she will not have their day-to-day assistance in any paid employment.

490. As a result of all these factors, the possibility of her gainful employment outside the home is best described as “remote and speculative”, rather than something which is “readily contemplatable”. Her lack of planning capacity is one basal reason why, in the Court’s view, she is presently unemployable. There are others, including her unpredictable propensity for spontaneous episodes of uncontrolled emotion, triggered often by obscure (but nevertheless real for her) associations with her traumatic policing experiences. Her intelligence is such that she is theoretically resourceful enough to turn her hand to a variety of paid occupations. But in the Court’s view, she wiil not sustain them for very long. There is a strong probability that soon after starting new employment she would be defeated. No employer of her skills would be likely to carry for very long an explosive employee without capacity to plan or take responsibility.

491. This present assessment of Ms Sandstrom throws light on what she was like on 9 March 2011, the relevant date for assessment under each Policy. There is a strong basis to infer back from her present state to what she must have been in March 2011. Over that time there has been no improvement in her condition despite some medical treatment. Both then and at the time of hearing medical opinion, which the Court accepts, supports the conclusion that she is unlikely ever to undertake any employment for which she is reasonably fitted by education training or experience.

492. In my view she meets the TPD definition in both the FSS Policy and the PBRI Policy.

Conclusion and Orders

500. For these reasons the Court will make declarations that the benefits that the parties agreed would be payable respectively under the FSS Policy and the PBRI Policy should now be paid by MetLife to FSS, on account of the plaintiff’s TPD claims against FSS. If the parties wish for these funds to be paid directly from MetLife to her, the orders made below can be varied, with the consent of FSS.

501. The plaintiff’s Statement of Claim claims interest under the Insurance Contracts Act 1994 (Cth), s 57 from 1 March 2012 up to the date of payment of the benefits under the FSS Policy and the PBRI Policy. The parties have not fully debated issues relevant to interest, namely: on which of several possible bases interest might be payable; what is the start date for the calculation of any interest that is payable; and, what rate of interest should be applied. The parties should now endeavour to agree on those issues. If they cannot, the Court will hear submissions on those various matters on Friday 27 March 2020.

502. Costs would ordinarily follow the event. The Court proposes to make an order for costs in the plaintiff’s favour on the ordinary basis, unless one or other party has a basis to apply for a special costs order. The Court will adjourn the proceedings to deal with all questions of interest and costs to Friday 27 March 2020 at 9.30am. The Court will make a costs order on the ordinary basis against the second defendant in the plaintiff’s favour on that day if no motion for a different costs order is filed by that time.

503. For these reasons, the Court makes the following declarations orders and directions:

1. Declare that MetLife’s determination on 24 July 2015 as to the plaintiff’s entitlement to any benefit in respect of claim No. 32510 (under the PBRI Policy as defined in the judgment given with these reasons) and claim No. 32511 (under the FSS Policy as defined in the judgment given with these reasons) is void and of no effect.

2. Declare that the plaintiff is and was as at 9 March 2011, the assessment date under each of the PBRI Policy and the FSS Policy, “totally and permanently disabled” within the meaning of those words in each such policy.

3. Order that the second defendant pay to the FSS Trustee Corporation Limited as trustee of the First State Superannuation Scheme the sum of $582,718 under the PBRI Policy and $170,100 under the FSS Policy within 28 days, on account of the plaintiff’s claims under each of those respective policies.

4. Note that payments made pursuant to Order 3 are exclusive of interest and that the interest rate and the period over which any such interest should be calculated are both issues reserved for further consideration.

5. Adjourn the proceedings for any argument in relation to interest and costs to Friday, 27 March 2020 at 9.30am.

6. Note that the Court proposes to make an order that the second defendant pay the plaintiff’s costs of these proceedings on the ordinary basis, unless on or before 13 March 2020 any party seeking a different costs order applies by motion for such an order.

7. Direct the parties to file and serve any submissions on issues of interest and costs by Monday, 16 March 2020.

8. Direct the parties to file and serve any submissions in reply on issues of interest and costs by Friday 20 March 2020.

9. Grant liberty to apply.

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Amendments

19 May 2020 - Coversheet – full stop after C for C. Purdy

[1] line 5 – (“IRT”) inserted

[1] line 6 – comma after 2010

[28] heading above and line 1, dash in decision-makers

[126] sub-paragraph 5, relation rather than reiation

[126] sub-paragraph 11, fit rather than fir

[139] line 1 – partially inserted

Heading above [140] – full-stop removed

[145] line 5 – removal of did not

[153] line 3 – quotation marks inserts before unlikely ever

[165] line 1 – Metlife spelling corrected

[181] line 10 – Dr Wilkins’ rather than Dr Wilkins

[183] line 4 – Dr Wilkins’ rather than Dr Wilkins

[191] line 8 – Selwyn inserted

[309] line 4 – he must inserted

[317] line 3 – His Honour’s rather than His Honour

[338] line 4 – Insert 2013

[350] line 6 – removal of to

[351] line 1 – removal of But

[359] line 8 – herself rather than yourself; she rather than cheers

[380] line 2 – comma after Crews

[389] line 3 – as rather than is

[390] line 1 – commas after Finally and 2013

[395] line 6 – comma after assessment

[399] line 9 – comma after view

[403] line 1 – was inserted after opinion

[404] line 6 – of whether inserted after question

[404] line 7 – he rather than He

[407] line 5 – commas after paragraph and Grace

[411] line 2 – CBA rather than Commonwealth Bank of Australia

[413] line 3 – to inserted after exposed

[421] line 2 – plaintiff rather than plaintigff

[426] line 2 – of removed

[432] line 6 – non-responsive rather than non responsive

[433] line 9 – comma after account

[433] line 12 - that inserted

[453] line 3 – occasions inserted

[454] line 1 – in person inserted

[462] line 3 – is rather than he reasons

[465] line 3 – Selwyn inserted

[466] line 1 – Selwyn inserted

[468] line 1 – Selwyn inserted, but removed

[468] line 3 – commas after disorder and unemployable

[475] line 4 – score rather than school

[479] line 3 - WPI instead of Whole Person Impairment

[485] line 4 – covered rather than covering

Order (1) – as after Policy

Order (8) – full stop inserted

Decision last updated: 19 May 2020