Shepherd v ANZ Staff Superannuation (Australia) Pty Ltd
[2017] VCC 566
•15 May 2017
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMON LAW DIVISION | Revised (Not) Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-16-00204
| DAVID SHEPHERD | Plaintiff |
| v | |
| ANZ STAFF SUPERANNUATION (AUSTRALIA) PTY LTD ACN 006 680 664 | Defendant |
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JUDGE: | HER HONOUR JUDGE TSALAMANDRIS | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 10, 13 16 February 2017 | |
DATE OF JUDGMENT: | 15 May 2017 | |
CASE MAY BE CITED AS: | Shepherd v ANZ Staff Superannuation (Australia) Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2017] VCC 566 | |
REASONS FOR JUDGMENT
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Catchwords: SUPERANNUATION - Determination of trustee declining claim for Total and Permanent Disablement – procedural fairness – whether trustee gave genuine consideration - whether trustee should have made further inquiry - Determination void
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr D Kelsey-Sugg | Maurice Blackburn |
| For the Defendant | Mr C Hanson | Lander & Rogers |
HER HONOUR:
Preliminary
1 The proceedings relate to a claim by the plaintiff for a Total and Permanent Disability (“TPD”) benefit. He was a member of the ANZ Staff Superannuation Scheme (“the Fund”). The defendant is Trustee of the Fund. The plaintiff seeks a declaration that the defendant’s decision to refuse his claim be set aside, on the basis that the defendant’s decision to refuse his claim was void and of no effect.
2 The plaintiff was a senior relationship manager with the Australian and New Zealand Banking Group Limited (“the Bank”), and was a member of the Fund.[1] The Fund is regulated under the Amending Deed ANZ Staff Superannuation Scheme dated 1 December 2011 (“the Trust Deed”).[2]
[1] Joint Court Book (“JCB”) 2
[2] JCB 19-112
3 On 23 May 2013, the plaintiff was subject to a disciplinary meeting at the Bank, following which he was suspended from his employment, on full pay, whilst an investigation took place.[3] As a result, the plaintiff then suffered anxiety and depression for which he sought medical treatment. His general practitioner certified the plaintiff as being unfit for work at this time, and he has not worked since.
[3] JCB 369
4 The outcome of the investigation was that the plaintiff had engaged in unprofessional conduct, such that his employment was subsequently terminated. The plaintiff then sought to claim a TPD benefit under the Fund. The defendant rejected the plaintiff’s claim on two grounds. Firstly, that the plaintiff did not satisfy the requisite definition; being unlikely to be able to ever work again in a job for which he was reasonably qualified by reason of his education, training and experience. Secondly, that he did not cease his Service with the Bank as a consequence of his mental incapacity.
5 For the reasons I will detail below, I am satisfied that the defendant failed to exercise its discretion in a manner consistent with its obligations as identified by the High Court in Finch v Telstra Super Pty Ltd.[4] The matter is therefore to be remitted to the defendant for determination in accordance with the terms of the Trust Deed and these reasons.
[4](2010) 242 CLR 254
Relevant terms of the trust deed
6 It is accepted that the plaintiff was a Section A member of the Fund.[5]
[5]JCB 5
7 Rule 1.5.2 provides that a Section A Member who leaves Service on the grounds of Total and Permanent Disablement is entitled to receive a TPD Benefit.[6]
[6]JCB 73
8 “Total and Permanent Disablement” is defined in clause 1.1 of Part 1 – Section A of the Deed as follows:
“such state of physical or mental incapacity as renders the Section A Member unlikely ever to be able to work again in a job for which the Section A Member is reasonably qualified by education training or experience. The Trustee may at its sole discretion decide that the Section A Member is not in a state of Total and Permanent Disablement. Every question of Total and Permanent Disablement shall be decided by the Trustee after receipt of reports by two qualified medical practitioners approved by it.”[7]
[7]JCB 68
9 The term “Service” is defined in clause 2 of the Deed as follows:
“service as an Employee of any Company and such other categories of service as the Company may from time to time determine to be equivalent.[8]
[8]JCB 34
10 The term “Employee” is defined in clause 2 of the Deed to include a permanent employee of a Company.[9] The term Company includes the Bank.[10]
[9]JCB 30
[10]JCB 29 and 32
Relevant background
11 The plaintiff is 41 years of age. He was born and educated in Red Cliffs, Victoria. He completed Year 12 before subsequently obtaining employment with Westpac, where he worked for approximately 18 years in various roles.[11]
[11]JCB 129-137
12 Whilst employed with Westpac, the plaintiff obtained a Certificate in Financial Services, and commenced, but did not complete, a Diploma in Financial Services.[12] He otherwise has no additional formal qualifications.[13]
[12]JCB 129
[13]JACB 129-137
13 In January 2012, the plaintiff commenced employment with the ANZ Banking Group as a senior relationship manager at the Mildura Branch.[14] He became a Section A Member of the Fund at this time.[15]
[14]JCB 130
[15]JCB 2
14 In his resume, the plaintiff described the responsibilities of a senior relationship manager as creating a portfolio of highly-valued business banking clients in the commercial and agribusiness areas. He indicated that he had grown his portfolio from zero to 18 customers with combined exposures of $100m.[16] Further, the plaintiff claimed that he provided superior customer service to his top-end clientele, as well as playing a role in developing the skills and attitudes of other managers, within the business unit, to create a “high performance culture”.[17]
[16]JCB 130
[17]JCB 131
15 In late 2012, the plaintiff suffered some difficulties following a marriage break-up, together with some stress relating to his relationship with his mother. In December 2012, he was referred by his general practitioner to the Mildura Base Hospital, where he was assessed and diagnosed as suffering Adjustment Disorder, with depressed and anxious mood.[18] The plaintiff then consulted psychologist, Larni Baird, every three to four weeks until early April 2013.[19] He was not prescribed medication during this period and continued to work full-time with the Bank.[20]
[18]JCB 267
[19]JCB 290
[20]JCB 290
16 On 22 May 2013, the plaintiff received notification that he was required to attend a disciplinary meeting with the Bank’s management the following day.[21]
[21]JCB 368
17 On 23 May 2013, the plaintiff attended the meeting, at which time he was advised that accusations had been made against him in relation to possible breaches of the Bank’s code of conduct and ethics.[22] The Bank alleged, firstly, that the plaintiff had forwarded work emails to his home computer, and secondly, that the plaintiff had been involved in breaches relating to financial information provided in respect of personal loans for which he had applied.[23] The plaintiff was ultimately advised that he would be suspended on full pay while an investigation was undertaken.[24]
[22]JCB 368
[23]JCB 290
[24]JCB 369
18 The plaintiff suffered a panic attack on his way home. He said he had never had such an attack before.[25]
[25]JCB 291
19 At the disciplinary meeting, the plaintiff said he was told the investigation was to be kept confidential. Soon after returning home, however, he received three phone calls from people unrelated to the Bank. Each caller raised serious allegations with the plaintiff, including that he was being investigated for money laundering and involvement with drugs. The plaintiff felt very confused, and had what he described as “a meltdown”.[26]
[26]JCB 291
20 On 31 May 2013, the plaintiff attended the Ontario Avenue Medical Clinic and consulted general practitioner, Dr Xiao Liu. The clinical record indicated that Dr Liu discussed the possibility of the plaintiff seeing a counsellor, and suggested that he start medication for his depression. It noted that he denied any suicidal ideation.[27]
[27]JCB 250
21 The record also indicated that the plaintiff discussed symptoms suggestive of carpal tunnel syndrome.[28] It should be noted that this complaint did not form any basis of the plaintiff’s subsequent claim for a TPD benefit.
[28]JCB 250
22 On 4 June 2013, the plaintiff again consulted Dr Liu and discussed symptoms in relation to his hands and his depression. It was noted the plaintiff was suffering stress from work and that he was being investigated for possible misconduct. Dr Liu’s record stated the plaintiff was “unable to handle work at the moment”.[29] Dr Liu recommended that the plaintiff consult his counsellor, Ms Baird, in order to discuss an appropriate course of medication.[30]
[29]JCB 251
[30]JCB 251
23 On 5 June 2013, the plaintiff consulted Dr Aqeel Chalabi at the Ontario Avenue Medical Clinic. Dr Chalabi has been the plaintiff’s treating general practitioner since that time. Dr Chalabi noted the plaintiff was suffering from work-related anxiety, depression and stress, for which he prescribed Avanza and Serepax.[31]
[31]JCB 252
24 On 12 June 2013, the plaintiff was reviewed by Dr Chalabi, whose clinical note recorded the following:
“WC case .. issues at work .. has been advised that it will be a work cover issues .. as a result of allegations and pressures at work .. compliance issues.
Unfounded accusations at work ... is feeling like he is being bullied .. breaching security at ANZ ...
Feels like he is under a lot of pressure and stressing out a lot .. feeling like they have destroyed his reputation ...
On 24/05/2013 he was told to go home from work and not to contact any clients and was basically suspended ... and will be investigated ... was then contacted last week to return back to work again .. but is just unable to go back at the moment ... seeing Larni Baird for counselling .. through Dr Jo Pollock.
Will be having more counselling sessions regularly.
Will need a certificate of capacity.”[32]
[32]JCB 253
25 On 12 June 2013, the plaintiff lodged a claim for workers compensation in relation to his anxiety and depression. He alleged these conditions arose as a consequence of his being unfairly suspended from work (“WorkCover claim”).[33]
[33]JCB 371–372
26 The plaintiff obtained a certificate of capacity from Dr Chalabi dated 12 June 2013, in support of his WorkCover claim. The certificate stated that the plaintiff was not fit for any duties,[34] and was backdated to cover the period 24 May until 21 June 2013.
[34]JCB 244
27 On 18 June 2013, the plaintiff was again reviewed by Dr Chalabi in relation to his ongoing anxiety and depression. It was noted that he was not sleeping well and that he was “defiantly [sic] not ready to return to work”.[35]
[35]JCB 254
28 Dr Chalabi provided the plaintiff with a further certificate of capacity covering the period 20 June to 20 July 2013.[36] He thereafter continued to provide similar certificates of capacity, in which he stated that the plaintiff was unfit for any duties.[37]
[36]JCB 241–243
[37]JCB 214-240
29 ANZ Injury Management Services is the WorkCover self-insurer of the Bank. On 26 June 2013, it arranged for the plaintiff to be examined by psychiatrist, Dr Wendy Triggs, to enable it to assess his WorkCover claim. In preparation for this examination, Dr Triggs was provided with the consultation notes of both Dr Chalabi and Dr Liu from the Ontario Avenue Medical Clinic, together with a medical certificate of Dr Chalabi dated 5 June 2013 and the certificate of capacity dated 12 June 2013.[38]
[38]JCB 257
30 Dr Triggs conducted a mental status examination of the plaintiff and ultimately diagnosed him as suffering an Adjustment Disorder, in partial remission. She considered the plaintiff’s counselling and medication to be appropriate. Dr Triggs was of the opinion that the plaintiff had the capacity to perform his pre-injury duties both in the short and long-term, and the capacity to attend the proposed disciplinary meeting.[39]
[39]JCB 262
31 The plaintiff sought to criticise Dr Triggs’ opinion on primarily the following grounds:
(i) Dr Triggs did not have the subsequent certificate of capacity dated 18 June 2013, in which Dr Chalabi confirmed his opinion that the plaintiff continued to be unfit for all duties;
(ii) Dr Triggs stated that the plaintiff was capable of performing his pre-injury duties, but her report failed to disclose whether or not she had any actual knowledge of the nature and extent of such duties; and
(iii) Dr Triggs’ opinion is in direct conflict with the opinion of Dr Chalabi at that time.
32 On 4 and 8 July 2013, the plaintiff attended two meetings with the Bank’s management.[40]
[40]JCB 373
33 On 9 July 2013, the Bank terminated the plaintiff’s employment, effective 8 July 2013. The Bank found the following to constitute unacceptable behaviour by the plaintiff:
“(i) acting dishonestly and without integrity in knowingly failing to declare your true financial position when applying for personal loans with ANZ on 19 March 2013 and 9 May 2013 in order to gain a financial advantage for yourself;
(ii) using your external email account, namely Bigpond, to access internal, confidential and restricted information.”[41]
[41]JCB 373
34 Mr Kelsey-Sugg accepted that the plaintiff’s termination was unrelated to his psychiatric condition, and did not seek to attribute the plaintiff’s alleged inappropriate behaviour to any pre-existing psychiatric condition.[42]
[42]T100, L31, T101, L1-3
35 On 9 July 2013, the plaintiff was also advised that his WorkCover claim had been rejected (“WorkCover rejection letter”), on the basis that his injury was caused wholly or predominantly by management action, taken on reasonable grounds and in a reasonable manner,[43] and further, that the plaintiff was not incapacitated for work. In making this decision, ANZ Injury Management Services relied upon the report of Dr Triggs, who considered the plaintiff capable of returning to his pre-injury duties.[44]
[43]JCB 263
[44]JCB 264
36 The plaintiff thereafter continued to receive counselling from Ms Baird at Mildura Base Hospital,[45] whilst being provided with certificates of capacity from and Dr Chalabi.[46]
[45]JCB 266
[46]JCB 214-243
37 In a letter dated 3 December 2013, consultant psychiatrist at Mildura Base Hospital, Dr Jo Pollock, wrote that the plaintiff was in receipt of Centrelink benefits and that he had been attempting to look for work. She stated that the plaintiff’s:
“... capacity for work at this stage however is significantly impaired and he would more appropriately be temporarily excused on the grounds of his poor mental health. All going well he should be able to return to the workforce in the future when these matters are resolved.”[47]
[47]JCB 266
38 On 25 March 2014, the plaintiff’s solicitors, Maurice Blackburn Lawyers, made an application to the Fund’s claim’s department, for a TPD benefit on behalf of the plaintiff, who “last worked on or about 23 May 2013”.[48]
[48]JCB 113
39 On 16 April 2014, Dr Chalabi completed a medical report so as to enable the plaintiff to obtain the disability support pension from Centrelink. He stated that the plaintiff was unable to work due to his psychiatric condition.[49]
[49]JCB 185
40 On 17 April 2014, psychologist, Ms Rebecca Newman, wrote to Dr Chalabi regarding the plaintiff’s application for a disability support pension. She stated that at that time, she felt the plaintiff would have difficulty working a full eight‑hour day, as well as difficulty returning to the finance industry.[50]
[50]JCB 306
41 On 1 May 2014, the plaintiff’s solicitors received a claim form and other documents from the Fund.[51]
[51]JCB 115–116
42 In addition to the plaintiff’s claim for a TPD benefit from the defendant, he also made a TPD claim with MLC. In support of the MLC claim, Dr Chalabi completed a doctor’s report, in which he stated that, as at 12 June 2013, the plaintiff suffered anxiety and depression.[52] Dr Chalabi considered the symptoms to be of moderate to severe severity, but noted that as at May 2014, they were improving.[53] He recorded that the plaintiff had been prescribed Avanza and Serepax medication for his anxiety, depression and panic attacks.[54] Dr Chalabi noted that the plaintiff’s medical condition had stopped him working on 23 May 2013,[55] and that it continued to prevent him from working at the time of the report.[56] Dr Chalabi was “uncertain”[57] as to whether the plaintiff could return to work in the near future.
[52]JCB 172
[53]JCB 173
[54]JCB 175
[55]JCB 175
[56]JCB 176
[57]JCB 176
43 On 21 May 2014, the plaintiff’s solicitors submitted a copy of the plaintiff’s completed claim form (referred to as the “member’s statement of claim”) and his resume to the Fund.[58] The member’s statement of claim noted that the plaintiff had last worked on 23 May 2013, and that his employment had been terminated on 8 July 2013. It then referred to the plaintiff suffering depression/anxiety and the psychotherapy treatment and medication he was receiving. The plaintiff stated that his depression had resulted in severe panic attacks, anxiety, insomnia, and loss of motivation and focus. The form was completed on 15 May 2014, at which time it was noted that the plaintiff was unable to do any work.[59]
[58]JCB 118
[59]JCB 120
44 The plaintiff was also required to detail the duties he usually performed in his position as senior relationship manager. He stated as follows:
“Oversee complex borrowing transactions for businesses; provide credit analysis and risk mitigants to existing and new bank clients; ensure correct pricing mechanisms are being applied to banking clients; customer service, including submitting complex submissions to bank credit department on clients’ behalf.”[60]
[60]JCB 122
45 On 18 August 2014, Dr Chalabi completed a medical report in support of the plaintiff’s TPD claim with the defendant. He referred to the plaintiff suffering anxiety/depression and post-traumatic stress disorder, and noted that the plaintiff was receiving medication and regular counselling. In relation to the plaintiff’s prognosis, Dr Chalabi stated that it:
“... depended on the outcome of the case against ANZ and to response to the treatment, but I feel optimistic re his prognosis.”[61]
[61]JCB 126
46 In addition, Dr Chalabi stated that the plaintiff was not capable of performing any or all of the duties of his previous occupation as he was “too anxious and stressed and depressed to do so, as well as panic attacks”.[62] In response to a question as to whether the plaintiff would be able to return to work in a partial or full-time capacity, Dr Chalabi stated it was uncertain, and that as at that time, he was of the opinion that the plaintiff was unable to perform any type of work due to his ongoing symptoms and panic attacks.[63]
[62]JCB 127
[63]JCB 127
47 On 21 August 2014, occupational specialist, Dr Helen Sutcliffe, completed a doctor’s report in support of the plaintiff’s TPD claim with MLC. She diagnosed the plaintiff as suffering Adjustment Disorder with depression and anxiety, and a panic disorder. The objective factors upon which she based her diagnosis included agitation, panic, tearfulness, suicidal ideation, limited insight, fatigue and low mood.[64] Dr Sutcliffe stated that in her opinion, the plaintiff’s psychiatric condition prevented him from returning to his usual work duties. She thought he was unlikely to work again in the future.[65]
[64]JCB 158
[65]JCB 162
48 On 25 September 2014, the plaintiff’s solicitors arranged for the plaintiff to be examined by psychiatrist, Dr Nigel Strauss. Dr Strauss obtained a history from the plaintiff as to his background, the occurrences at work and his psychological condition since his problems commenced. Dr Strauss diagnosed the plaintiff as suffering a chronic Adjustment Disorder with mixed anxiety and depressed mood, which arose as a result of the plaintiff’s perception of the manner in which he was treated by his employer and by Victoria Police.[66]
[66]JCB 150
49 Dr Strauss offered the following opinion in respect of the plaintiff’s capacity to work:
“Currently this man is incapable of working. He lacks confidence. His memory and concentration are poor. He feels demoralised. He believes that the local community are superficially supportive but basically will not provide him with any further employment. He is at a loss as to know what to do. He isolates himself from people and there are a number of legal process [sic] in train. I believe that this man will not be ready for a return to work until those processes have been finalised and he will need further treatment.
He eventually will get back to some form of employment but I doubt whether he will work in the finance industry again and he may find it difficult to obtain employment at the same level as the employment that he used to have.
It is difficult to make predictions in this case but there is room for improvement in this case ultimately.”[67]
[67]JCB 150–151
50 Further, Dr Strauss stated that he considered:
“There is a possibility that this man may remain permanently disabled but at this stage there is also a possibility that he may find work although as stated he may be left with a partial psychiatric incapacity and that he will never get back into a job that requires high levels of efficiency and competency.”[68]
[68]JCB 151
51 On 26 September 2014, Dr Triggs re‑examined the plaintiff for the purpose of his TPD claim with MLC. In her report dated 27 October 2014, Dr Triggs noted that the plaintiff’s sleep was still poor and that he worried about his future. In addition, she noted that he had thoughts of not wanting to be alive, but did not have plans of suicide. The plaintiff was being prescribed Mirtazapine 10 milligrams per day and was seeing his counsellor every three weeks. [69]
[69]JCB 319
52 Dr Triggs considered the plaintiff suffered Adjustment Disorder in partial remission, and that his condition was “improving and stabilising.”[70] She considered the plaintiff fit to carry out his role in the banking industry.[71]
[70]JCB 322
[71]JCB 322
53 On 15 October 2014, the plaintiff’s solicitors provided the Fund’s claims department with copies of the reports of Dr Chalabi dated 16 April 2014 and 19 May 2014, Dr Sutcliffe dated 21 August 2014 and Dr Strauss dated 25 September 2014.[72]
[72]JCB 141
54 On 18 November 2014, Dr Triggs forwarded a further supplementary report to the defendant in relation to the plaintiff’s claim. She noted her previous examinations on 26 June 2014 [sic] for the purpose of his WorkCover claim, and 27 October 2014 for the purpose of his MLC claim. Dr Triggs again confirmed that in her opinion, the plaintiff was suffering from an Adjustment Disorder with depressed mood, in partial remission.[73] Dr Triggs considered the plaintiff had a good prognosis in terms of a return to work, with a capacity to return to his usual duties.[74]
[73]JCB 271
[74]JCB 273
55 The defendant retained Mercer Consulting (Australia) Pty Ltd (“Mercer”), to assist it with claims management.[75]
[75]T109, L10-12
56 On 1 December 2014, Mercer provided a report to the defendant’s trustees in relation to the plaintiff’s TPD claim (“the first Mercer report”). It contained a summary of “all the relevant medical and occupational evidence”[76] relating to the claim, including a summary of the medical reports provided by Dr Chalabi, Dr Triggs and Dr Pollock. The report ultimately concluded as follows:
“Given the circumstances surrounding the Member’s termination, and the lack of medical evidence to support the claim that the Member’s medical condition caused the member to cease work in July 2013, we consider it reasonable for the Trustee to conclude that for the purposes of the section A TPD benefit, the Member’s mental condition was such that he was able to continue his employment or any alternative employment within his education, training or experience in July 2013 and was not, therefore, TPD.”[77]
[76]JCB 194
[77]JCB 201
57 Further, the first Mercer report stated that the medical opinions of Dr Pollock and Dr Triggs demonstrated that the plaintiff:
“... is not suffering from a severe mental illness and that he is likely to be able to utilise his education, training and experience to work in the future.”[78]
[78]JCB 200–201
58 The first Mercer report was then incorporated into an Executive summary/PowerPoint report (“Executive summary”).[79] On 5 December 2014,[80] this Executive summary, together with the first Mercer report and all the attachments referred to therein, were provided to the members of the defendant’s claims administration committee (“claims committee”). [81]
[79]JCB 202-206
[80]JCB 201A
[81]T112, L21-27
59 On 12 December 2014, the claims committee met and considered, amongst other matters, the plaintiff’s TPD claim. The claims committee ultimately accepted Mercer’s recommendation that the claim be denied, but thought the plaintiff should be provided with the opportunity to respond to any material adverse to his claim.[82]
[82]JCB 208
60 On 19 December 2014, the defendant wrote to the plaintiff’s solicitors, providing copies of the documents it relied upon in its assessment of the plaintiff’s TPD claim (“the procedural fairness letter”).[83] Those documents were as follows:
[83]JCB 210–211
(i)the plaintiff’s TPD claim form;
(ii)the plaintiff’s resume;
(iii)medical reports obtained by ANZ Injury Management in respect of the plaintiff’s WorkCover claim, being:
(a)Certificates of Capacity from May 2013 to May 2014;
(b)clinical notes from the Ontario Avenue Medical clinic for the period 31 May 2013 to 18 June 2013;
(c)report of Dr Triggs dated 26 June 2013;
(d)letter from ANZ Injury Management Services to the Plaintiff dated 9 July 2013;
(e)reports of Dr Pollock dated 3 December 2013 and 23 June 2014;
(iv)medical report of report of Dr Pollock dated 23 June 2014;
(v)disability claim medical report from Dr Chalabi dated 18 August 2014;
(vi)medical report of Dr Triggs dated 18 November 2014.[84]
[84]JCB 211
61 The procedural fairness letter did not refer to or include the first Mercer report, nor did it refer to the reports of Dr Strauss or Dr Sutcliffe.
62 On 3 February 2015, psychologist, Rebecca Newman, wrote a medical report regarding her treatment of the plaintiff since March 2014. Ms Newman stated that she considered the plaintiff suffered an adjustment-like disorder with a prolonged duration of more than six months. At the time, she did not consider the plaintiff capable of returning to work in a role relevant to his experience and skills, as his confidence remained low and he had difficulty concentrating.[85] She also considered his capacity to engage with people had diminished, such that interacting with customers would be difficult.[86] Ms Newman noted that at times, the plaintiff expressed extreme hopelessness. She considered that if the plaintiff were to return to work, he would suit a role in which the tasks were simple and repetitive, and in which he worked with one or two people, but preferably on his own.[87]
[85]JCB 304
[86]JCB 304
[87]JCB 304
63 On 5 February 2015, Dr Chalabi provided a short certificate in which he stated that the plaintiff was unlikely ever to be able to work in a job for which he was reasonably qualified by education, training or experience, because of his severe anxiety and depression and post-traumatic stress disorder.[88]
[88]JCB 300
64 On 17 February 2015, the plaintiff’s solicitors arranged for the plaintiff to be examined by psychiatrist, Dr Michael Epstein. Dr Epstein diagnosed the plaintiff as suffering a major depressive disorder of moderate severity, associated with panic disorder and agoraphobia. He noted that while the plaintiff had some symptoms of a post-traumatic stress disorder, he did not meet the criteria for that condition.[89] Dr Epstein remarked that the plaintiff’s coping capacity appeared to be “severely damaged”, before noting that he was barely able to function; that he had ceased almost all of his usual activities and that he led a very isolated and limited existence. Dr Epstein was of the opinion the plaintiff was unfit to return to his pre-injury employment, and thought that whilst he may return to some form of employment at some stage, it would not be in the foreseeable future.[90]
[89]JCB 297
[90]JCB 297
65 Dr Epstein considered the plaintiff’s mental state would likely improve if he were to leave his residential area. However, this was not a possibility as the plaintiff regarded his children as the most positive aspect of his life,[91] and was unwilling to leave or lose contact with them. Dr Epstein ultimately concluded that on the balance of probabilities, the plaintiff:
“... will remain unfit for work as a bank manager, finance worker or any other suitable employment given the limits of his education, training or experience since he ceased work on 23 May 2013”.[92]
[91]JCB 298
[92]JCB 298
66 On 2 March 2015, the plaintiff’s solicitors wrote to the defendant in response to the procedural fairness letter. The plaintiff made submissions in relation to Dr Triggs, noting in particular that “she has consistently contradicted the opinions of other doctors who have examined our client”.[93] Additional medical material was also provided in support of the plaintiff’s claim, including reports previously served as well as fresh material, being:
[93]JCB 284
· Report of Dr Michael Epstein dated 17 February 2015
· Reports of psychologist Rebecca Newman dated 17 April 2014 and 3 February 2015
· Medical certificate from Dr Chalabi dated 5 February 2015.[94]
[94]JCB 287
67 On 6 March 2015, case manager for the defendant, Mr Watkins, wrote to the plaintiff’s solicitors and stated that the defendant had not previously received the medical reports of Dr Strauss dated 25 September 2014 and Dr Sutcliffe dated 21 August 2014.[95]
[95]JCB 307
68 On 10 March 2015, the plaintiff’s solicitors forwarded copies of the reports of both Dr Strauss and Dr Sutcliffe, reminding the defendant that such reports had been included in its letter of 15 August 2014.[96]
[96]JCB 308
69 On 22 March 2015, at the request of Mercer, Dr Triggs provided a further supplementary report in which she commented on the medical material that had been provided by the plaintiff’s solicitors in support of the plaintiff’s claim. Dr Triggs quoted extracts of the various medical records, and provided a commentary as to the differing medical opinions in relation to the plaintiff’s work capacity. She ultimately remained of the opinion, however, that the plaintiff had the capacity to return to his pre-injury duties and hours with an alternative employer, and that his psychiatric impairment was not permanent.[97]
[97]JCB 333
70 On 11 May 2015, the plaintiff’s solicitors wrote to the defendant in relation to the delay in the decision regarding the plaintiff’s TPD claim. Further submissions were also made in support of the plaintiff’s claim. The letter made reference to Dr Triggs having “steadfastly maintained that he is fit to return to his regular occupation as a finance worker”[98] but noted that her opinion contradicted that of the other doctors who had examined the plaintiff. In addition, the letter stated that the defendant’s decision to request a further medical report from a doctor whose attitude regarding the plaintiff’s disablement is “well-established and unsupported by a single other medical practitioner”[99], demonstrated the defendant was “not interested in fairly assessing”[100] the plaintiff’s claim.
[98]JCB 312
[99]JCB 312
[100]JCB 312
71 On 4 June 2015, the plaintiff’s solicitors made a further submission in relation to the plaintiff’s claim, in which it critiqued the opinion of Dr Triggs on the following grounds; that her opinion contained quotes that were out of context; that her determination regarding the plaintiff’s work capacity was questionable; and that she had given insufficient weight to the opinions of the doctors who disagreed with her.[101]
[101]JCB 336
72 On 9 June 2015, Mercer provided a further report to the trustees (“the second Mercer report”). The report summarised the further medical material and concluded that the medical reports did not establish that the plaintiff’s psychiatric state was permanent.[102] Mercer instead stated that the medical evidence suggested that the plaintiff was “currently ‘temporarily’ disabled but not ‘permanently’ disabled as required…”[103]
[102]JCB 346
[103]JCB 346
73 In considering the additional medical material, Mercer noted that it did not have cause to alter its opinion. Further, in its recommendations, Mercer stated that the latest medical evidence did not cause Mercer to change its view that the plaintiff:
“did not cease employment due to his psychiatric condition; rather, the evidence demonstrates that it was because of his work-related conduct breaches in the police investigation that the Member’s employment was terminated, and that, in all likelihood, the Member would have otherwise continued working in his job with the bank.”[104]
[104]JCB 346
74 A further Executive summary was then prepared. On 19 June 2015, this summary together with the second Mercer report and other relevant documents were forwarded to the claims committee in preparation for a meeting scheduled on 26 June 2015.[105]
[105]JCB 348
75 On 26 June 2015, the claims committee met and accepted Mercer’s recommendation and resolved that the plaintiff’s application for a TPD benefit be declined.[106]
[106]JCB 356
76 On 2 July 2015, the defendant wrote to the plaintiff’s solicitors informing them of the trustee’s decision that the plaintiff did not satisfy the definition of TPD, and further informing him that no reasons were given.[107]
[107]JCB 357
77 On 6 July 2015, the plaintiff’s solicitors wrote to the defendant expressing concern as to the absence of reasons in the rejection letter and requesting a detailed explanation.[108]
[108]JCB 360
78 On 4 August 2015, the defendant wrote to the plaintiff’s solicitors stating that, on the medical evidence available, the trustees had formed the opinion that the plaintiff’s:
“... mental incapacity does not render him unlikely ever to be able to work again in a job for which he is reasonably qualified by education, training or experience”.[109]
[109]JCB 361–362
79 It was further stated that:
“The medical evidence demonstrates that [the plaintiff’s] employment was terminated following certain workplace-related incidents and, had those incidents not occurred, he would not have ceased employment.”[110]
[110]JCB 362
Ms McKinstray’s evidence
80 The defendant also called evidence from Ms Joanne McKinstray, chair of the claims committee at the time the plaintiff’s TPD claim was considered.[111] Ms McKinstray explained that the defendant had eight directors, four of whom were either employees or retired employees of the Bank, and four of whom were Bank appointed.[112] Ms McKinstray was an employee of the Bank and one of the four employee-elected members to sit as trustee of the Fund. She said that the claims committee comprised four members, two of whom were elected members and two of whom were Bank appointed.[113]
[111]T107, L12-14
[112]T108, L26-29
[113]T109, L1-3
81 Ms McKinstray explained that the defendant outsourced the administrative work regarding the management of the fund to Mercer.[114] It relied upon Mercer to be the “face of the fund”[115] to its members, to provide information regarding the lodging of claims, to review the material lodged in support of such claims and to then ultimately make recommendations to the claims committee.[116]
[114]T109, l10-11
[115]T26, L109
[116]T109, L29-31, T110, L1-13
82 Ms McKinstray stated that the claims committee met on a monthly basis.[117] She explained that one week prior to each meeting, members of the committee would receive an agenda, compromising material relating to those claims that were scheduled for consideration at the upcoming meeting. The claims committee would receive three sets of documents for each claim – a Mercer overview report, an Executive summary and copies of all the documents relied upon by Mercer to formulate its report.[118] She confirmed that the claims committee received each of these three documents prior to the two meetings at which the plaintiff’s claim was considered. Ms McKinstray said that the circulation of agenda materials one week prior to the meeting, enabled her to read the material in its entirety, including the documents attached to the Mercer report.
[117]T110, L3
[118]T112, L4-31, T113, L1-12
83 Ms McKinstray said that Mercer’s recommendation forms the starting point for discussion at the claims committee meetings, and that non-committee members, including representatives from Mercer, were in attendance at the meeting to provide any assistance required.
84 At the meeting on 12 December 2014, Ms McKinstray recalled that the claims committee “formed the view that but for the dismissal he would have returned to work…if he had not engaged in that behaviour and been investigated and dismissed, then he would have continued to be employed.”[119] She explained that the committee members “accepted the view of the Bank that there was sufficient reasons to terminate his services.”[120]
[119]T 130, L7-13
[120]T 130, L15-17
85 Following the decision on 12 December 2014, Mercer then wrote the procedural fairness letter to the plaintiff’s solicitors on behalf of the claims committee. Ms McKinstray conceded that the procedural fairness letter could have been clearer in respect of the committee’s primary concern; being the basis upon which the plaintiff’s employment was terminated.[121]
[121]T 130, L4-28
86 Ms McKinstray also conceded that, upon reflection, it might be appropriate for the Mercer reports to be provided to claimants as part of the procedural fairness correspondence.[122]
[122]T 130, L 23-29
87 At the meeting on 26 June 2015, Ms McKinstray said that the committee members “spent quite a bit of time talking about the grounds on which he had left”,[123] when considering Mercer’s recommendation to reject the plaintiff’s TPD claim. She confirmed the decision was then made to reject the plaintiff’s TPD claim.[124]
[123]T115, L24-26
[124]T133, L12-13
88 Ms McKinstray explained that the claims committee thoroughly considers all material when declining a matter,[125] and does not always adopt Mercer’s recommendations. By way of example, Ms McKinstray said that, in the year the plaintiff’s claim was considered, the committee members rejected the advice of Mercer on two occasions, when it had recommended either declining or deferring a claim.[126]
[125]T124, L5-7
[126]T 116, L4-13
89 In cross-examination, Ms McKinstray said that she is not aware of the process in relation to the approval of the two medical practitioners as required by the Deed.[127]
[127]T126, L19-21
90 Ms McKinstray stated that she was aware of the conflict between Dr Triggs and the treating doctors, including Dr Chalabi.[128] In such circumstances, she said the committee members thought it appropriate to seek clarification from Dr Triggs.[129] Ms McKinstray could not recall having any discussion as to the possibility of seeking an alternate medical opinion.[130] She stated that the committee preferred the opinion of Dr Triggs to Dr Chalabi, as she was a specialist psychiatrist.[131]
[128]T128, L1-10
[129]T128, L13-16
[130]T128, L17-18
[131]T129, L19-21
91 Ms McKinstray said the committee formed the view the plaintiff would have returned to work if not for his dismissal,[132] but later conceded that the cessation of his employment was “decisive”[133] in the decision to reject the plaintiff’s claim. Ms McKinstray said that in such circumstances, the plaintiff’s current medical status was of no importance.[134]
[132]T130, L7-9
[133]T134, L15-16
[134]T134, L10-14
92 In addition, Ms McKinstray conceded the committee members did not consider that the term “Service”, as contained in the definition of TPD, might encompass something other than employment.[135]
[135]T134, L28-29
93 Finally, Ms McKinstray stated that the committee relied upon Mercer to collate the material necessary to consider a TPD claim. If the committee members thought there was information lacking, they could defer a decision in relation to a claim whilst Mercer obtained the additional requisite information.
94 I considered Ms McKinstray to be an honest and reliable witness, who made fair concessions in relation to matters she felt, in hindsight, could be improved upon by the defendant. I have no hesitation in accepting her evidence in its entirety.
95 Having considered Ms McKinstray’s evidence, I am satisfied of the following matters, all of which are relevant to my ultimate determination of this matter:
(1)Mercer assisted the defendant in the processing and assessment of members’ claims, however, the ultimate decision to reject the plaintiff’s TPD claim was made by the members of the claims committee.
(2)The termination of the plaintiff’s employment was the primary basis upon which the claims committee rejected the plaintiff’s TPD claim.
(3)The committee members did not consider there was a need to resolve the conflict between the opinion of Dr Triggs and the doctors relied upon by the plaintiff.
Key issues
96 Having considered the written and oral submissions of both counsel, I must now determine the following key issues:
(i)Did the defendant consider the plaintiff’s TPD claim based on an incorrect construction of the Trust Deed?
In particular, did the defendant misconstrue what was meant by “when a member leaves Service”?
Further, did the defendant misconstrue the Trust Deed to contemplate there being only one ground for a member leaving Service?
(ii)Did the defendant accord the plaintiff procedural fairness?
In particular, did the defendant’s failure to provide the plaintiff with either the first or second Mercer report deny the plaintiff procedural fairness?
Further, was the procedural fairness letter sufficient, in that it gave the plaintiff adequate notice as to the insurer’s intention to rely upon the plaintiff’s termination of employment as determinative of his TPD claim, such that the plaintiff was given a reasonable opportunity to make submissions in response?
(iii)Did the defendant act in good faith, and undertake a properly informed consideration of the plaintiff’s TPD claim?
In particular, should the defendant have obtained a fresh independent medico-legal psychiatric assessment, given the apparent conflict between Dr Triggs and the plaintiff’s medical material.
Further, prior to its decision on 26 June 2015, should the defendant have sought updated medical material in relation to the plaintiff, to ensure that it was properly informed of the plaintiff’s condition?
(iv)Did the defendant provide inadequate or invalid reasons?
In particular, was the letter of 4 August 2015, too brief and lacking in substance that I cannot be satisfied the defendant took into account all relevant considerations in its decision to deny the plaintiff’s TPD claim.
Did the defendant consider the plaintiff’s TPD claim, based on an incorrect construction of the Trust Deed?
97 Ms McKinstray conceded that the termination of the plaintiff’s employment was determinative in the defendant’s decision to reject the plaintiff’s TPD claim. Her evidence was reflected in the submissions of Mr Hanson, who stated that the plaintiff left Service with the Bank on the basis that he was terminated for misconduct, thereby rendering his medical incapacity effectively irrelevant.
98 Mr Kelsey-Sugg submitted that leaving Service was not the same as leaving employment with the Bank. He submitted that either:
(a)leaving Service should be construed to mean more than the plaintiff’s employment status; or
(b)if I accepted the narrow definition of Service as proposed by the defendant, the Trust Deed did not require there to be only one ground for leaving Service.
99 Mr Kelsey-Sugg submitted that “Service”, as defined in the Trust Deed, should be given its ordinary meaning. He relied upon a decision of Kenny J in 470 St Kilda Road Pty Ltd (ACN 006 075 341) v Robinson,[136] to submit that ‘service’ involves a concept which is broader than employment:
“ …In the context of this exclusion clause, the term “services” means the provision of something (such as work, help, advice or information) for the benefit of another person (generally, who has requested it). This is consistent with a definition of “service” in the Shorter Oxford English Dictionary (6th edition) as “an act of helping or benefitting another” and in the Macquarie Dictionary (5th edition), as “(often plural) the performance of any duties or work for another; helpful activity”.” [137]
[136](2013) 308 ALR 411
[137]Ibid at 428 [74]
100 In addition, Mr Kelsey-Sugg sought to reply upon the following clauses in the Trust Deed, to demonstrate, what he submitted, was a distinction between leaving “Service” and ceasing employment:
(a)rule 1.5.2 refers to a Member who “leaves Service”;[138]
(b)in the definition section, “Withdrawal Amount” refers to a Member who “ceased to be an Employee”;[139]
(c)clause 22.7 refers to a Member “ceasing to be an Employee”;[140]
(d)clause 22.3(a) appears to specifically contemplate the situation where the Service of a Member has ceased but they remain an Employee.[141]
[138]JCB 47
[139]JCB 35
[140]JCB 60
[141]JCB 59
101 Mr Hanson submitted that, when interpreting the term “Service”, I should have regard to the language used in the Trust Deed, in the context of the document as a whole.
102 Further, Mr Hanson submitted that I would fall into error if I were to take the single word “service” out of its context in the definition of “Service” and give it the broadest possible meaning. He submitted that the plaintiff’s reliance on 470 St Kilda Road Pty Ltd v Robinson[142] was not on point, as the term service, as referred to in that case, was considered in the context of the professional service of third parties.
[142][2013] FCA 1420
103 In relation to the interpretation of “leaving Service”, Mr Hanson submitted that the words are plain and clear. He referred me to the decision in Schreuders v Grandiflora Nominees Pty Ltd,[143] in which it was noted that the intention of the parties is to be determined from the words used, and that those words are to be given their ordinary and natural meaning.
“If a result is produced by the application of the words in which the parties have expressed themselves, it is no part of the function of a court by some process of divination as distinct from construction of the language employed to attribute to parties an intention to do something for which their express words do not provide”.[144]
[143][2016] VSCA 93
[144]Schreuders v Grandiflora [2016] VSCA 93 at [12] to [14]
104 In addition, Mr Hanson submitted that, it is essential to identify ambiguity in the language of the Trust Deed, before regard may be had to extraneous matters such as surrounding circumstances and the object of the transaction. The defendant relied upon the definitions contained in the Trust Deed to demonstrate there is no such ambiguity.
105 Mr Hanson referred me to the following clauses in the Trust Deed, to rebut the plaintiff’s contention that the references to leaving Service and ceasing employment are such that there must be a distinction between the two:
(a)in the definition section, “Career Break” is defined to mean a leave of absence, for up to five years, from “active Service”, during which time a worker is not paid, but remains “in Service”.
(b) “Section A membership” is defined to cover those periods where a Section A member remains in Service.
106 Further, the Trust Deed provides that benefits are payable to a Section A member who dies or leaves Service on the grounds of TPD whilst on a career break.
107 Mr Hanson submitted that these clauses clearly indicate that the Trust Deed does not intend leaving Service to cover the plaintiff’s situation up until his employment was terminated.
108 Having considered the submissions, I am of the opinion, that as a matter of logic, the Trust Deed must intend there to be some difference between leaving Service and ceasing Employment. I consider the clauses referring to leaving Service, ceasing to be an Employee, and taking a break from active Service, to contemplate there being a difference between each event/action.
109 In interpreting the Trust Deed, I must apply the principles, as summarised by Gibbs, J (as he then was) in Australian Broadcasting Commission v Australasian Performing Right Association[145]:
“If the words used [in a written contract] are unambiguous the court must give effect to them, notwithstanding that the result may appear capricious or unreasonable, and notwithstanding that it may be guessed or suspected that the parties intended something different. The court has no power to remake or amend a contract for the purpose of avoiding a result which is considered to be inconvenient or unjust. On the other hand, if the language is open to two constructions, that will be preferred which will avoid consequences which appear to be capricious, unreasonable inconvenient or unjust, ‘even though the construction adopted is not the most obvious, or the most grammatically accurate’”[146]
[145][1973] HCA 73
[146]At [109]-[110]
110 Leaving “Service” will usually occur when a person resigns from, or is terminated from employment. However, I am satisfied that leaving “Service” can also logically encompass a situation in which an employee is absent from work for an indefinite period, whilst the employee still remains employed. Further, it is not uncommon for a person suffering mental incapacity, to leave service, but to remain formally employed for an extensive period of time thereafter.
111 I consider that taking a break from Service, indicates an intention to return to active Service, and puts that member in a different position to someone who leaves Service, with no intention of returning.
112 When the plaintiff stopped working on 23 May 2013, his absence from work at that stage may or may not have been temporary. By 8 July 2013, his absence from work had been for a relatively brief period of time. Even on the broader construction which I contemplate above, I am not satisfied that it can be fairly said that the plaintiff ceased Service prior to that date.
113 Notwithstanding such a finding, Mr Kesley-Sugg submitted that, in the alternative, if the defendant were to find the plaintiff left Service with the Bank on 8 July 2013, it should also have considered that the Trust Deed contemplates there being more than one ground for an employee to leave Service.
114 Mr Kelsey-Sugg referred me to the decision of Mabbett v Watson Wyatt Superannuation, in which the New South Wales Supreme Court rejected a TPD claim. In that case, the plaintiff sustained a back injury on the same day as he tendered his resignation. Einstein J ultimately held that the question to be determined, was whether or not the plaintiff’s injury caused the plaintiff’s absence from work, in the sense of “being a real and effective, and proximate, cause of that absence.”[147]
[147][2008] NSWSC 365 at 55
115 Further, Einstein J noted that the TPD clause had no express requirement that the illness or injury be the sole cause of the plaintiff’s absence from employment. He contemplated there being circumstances in which there is more than one cause of the plaintiff’s absence from employment.[148]
[148]Ibid at [56]
116 I accept that such reasoning can also be applied to the grounds upon which the plaintiff left Service on 8 July 2013. Concurrent reasons may exist for the ceasing of Service. That is, both the termination of his employment and his mental incapacity could have, on their own, caused the plaintiff to cease Service.
117 In Finch, the High Court noted that a narrow construction of a Trust Deed may lead to results which are potentially so unjust as to suggest an error in the reasoning that lead to them.[149] Such an example may involve an employee rendered incapacitated from work due to a catastrophic injury, who is then subject to an involuntary redundancy for unrelated reasons. On the defendant’s construction, the employee would have ceased service due to the redundancy and not due to the catastrophic injuries.
[149]At [15]
118 In my opinion, the defendant erred in not considering that the plaintiff may have left Service for a reason other than formal termination of his employment. As such, I consider the defendant assessed the plaintiff’s TPD claim on an incorrect construction of the Trust Deed. This is sufficient to render the decision of the claims committee void.
119 The plaintiff sought an intervention by me, based on the material before me, that the plaintiff left Service, at least in part, on the grounds of his mental incapacity. Mr Kelsey-Sugg relied upon the following matters to support such a finding:
(a)the plaintiff’s evidence that he was unable to follow the normal duties of his usual occupation from May 2013 due to depression, severe panic attacks, anxiety, loss of motivation and confidence, and insomnia;
(b)the plaintiff’s resumption of treatment with psychologist, Larni Baird, at Mildura Base Hospital from May 2013, in association with Dr Jo Pollock, psychiatrist, and his taking of anti-depressant medication;
(c)the Certificate of Capacity from Dr Chalabi that the plaintiff was “unfit for any duties” from May 2013 due to severe anxiety and depression;
(d)the Plaintiff’s five consultations with Drs Liu and Chalabi between 31 May 2013 and 18 June 2013, whose contemporaneous clinical notes recorded “depressed”, “stress from work”, “unable to handle work at the moment”, “anxious”, “hyperventilating”, “still anxious and stressing out … not sleeping well at all”;
(e)the opinion of Dr Epstein that the plaintiff had been and would remain “unfit” for work as a bank manager, finance worker or any other suitable employment, given the limits of his education, training or experience since he ceased work in May 2013;
(f)Dr Sutcliffe’s description of the plaintiff’s symptoms of panic disorder, suicidal ideation, agitation and low mood as severe and as having “first appeared” on 24 May 2013, and her description of the plaintiff’s symptoms of poor concentration and memory as moderate and as having first appeared on 24 May 2013.
120 Mr Hanson submitted that it would be improper for me to determine whether the plaintiff left Service on the grounds of his mental incapacity, as this was a question of “fact and degree”. I agree that it is a matter of fact and degree, and that the plaintiff should be afforded the opportunity to provide additional evidence to the defendant, so as to enable it to make a fresh determination of the plaintiff’s TPD claim in accordance with the Trust Deed and these reasons.
Did the defendant accord the plaintiff procedural fairness?
121 A trustee is obliged to afford a claimant natural justice and to give a claimant a chance to address adverse information.
122 The plaintiff alleged that the defendant had failed to accord the plaintiff procedural fairness, on two grounds. Firstly, that the defendant failed to provide the plaintiff with either the first or second Mercer reports, and secondly, that the defendant failed to sufficiently inform the plaintiff that the committee considered his termination from employment to be fatal to the acceptance of his TPD claim.
123 Mr Kelsey-Sugg relied upon the case of Chammas v Harwood Nominees Pty Ltd.[150] In that case, Hodgson J considered the rejection of a plaintiff's disablement claim, in circumstances in which the defendant had relied upon a medico-legal report adverse to the plaintiff's claim. Hodgson J held that the defendant should have provided the plaintiff an opportunity to respond to that report. Hodgson J stated that part of the concept of natural justice requires "fairness and reasonableness"[151] be accorded to the plaintiff. He considered it "not fair"[152] to have acted on a report without giving the plaintiff the opportunity to answer it.
[150](1993) 7 A.N.Z Insurance Cases 61-75
[151]At 78,000 – 78,001
[152]Ibid
124 Mr Kelsey-Sugg also referred to comments by Santow JA in Hannover Life Re of Australasia Limited v Sayseng.[153] However, as that case related to a trustee’s failure to provide the plaintiff with medical reports and video surveillance adverse to the plaintiff’s claim, it is of little assistance to me in determining this claim.
[153][2005] NSWCA 214 at [85]
125 Mr Hanson submitted that the defendant’s failure to provide the plaintiff with the first and second Mercer reports was not significant, as the reports were merely listings of and commentary upon the reports of doctors.
126 In support of this submission, Mr Hanson relied upon the Queensland Supreme Court of Appeal decision in Edington v Board of Trustees of the State Public Sector Superannuation Scheme. In that case, the Court rejected an argument that there had been a breach of the trustee’s obligation to afford procedural fairness, by failing to forward the fund’s own submissions to the applicant.
127 In response, Mr Kelsey-Sugg submitted that the Court rejected the procedural fairness argument, as it was determined that the material in the report was not adverse to the plaintiff’s TPD claim.
128 In the alternative, Mr Kelsey-Sugg relied upon Ms McKinstray’s concession that the procedural fairness letter “could have been clearer”[154] in respect of the belief of the claims committee that the plaintiff would have returned to work if not for the termination, as evidence of procedural unfairness.
[154]T130, L22-24
129 Mr Hanson submitted that, notwithstanding Ms McKinstray’s concession, the inclusion of the WorkCover rejection letter in the procedural fairness letter, was sufficient to afford the plaintiff procedural fairness. Further, he submitted that a trustee’s duty to afford procedural fairness, extended to the provision of adverse material, but did not go so far as requiring the trustees to give “an indication of what the decision maker is thinking about it”.[155]
[155]T169, L23-24
130 I am not satisfied that, in affording the plaintiff procedural fairness, the defendant was required to provide the plaintiff with the Mercer reports. I do not consider it necessary for a trustee to provide to a claimant, a report that it obtains in confidence from its advisors. The requirement to afford procedural fairness extended so far as to ensure the plaintiff was aware of the extent of the material being considered by the claims committee, such that the plaintiff understood the adverse material the trustee was considering.
131 However, I am critical of the defendant in failing to afford the plaintiff procedural fairness in respect of the focus of its assessment; being the plaintiff’s termination from employment. Whilst the WorkCover rejection letter was included in the procedural fairness letter, it was not listed separately, but was listed amongst the numerous medical reports.
132 As was noted by Byrne J in Telstra Super Pty Ltd v Flegeltaub, the obligation to afford a claimant procedural fairness, requires:
“…the trustee to invite the applicant to bring forward material upon a particular matter and, further for the purpose, to disclose to her what is the matter which is a potential difficulty in the way of the application.”[156]
[156][2000] VSC 107 at [18]
133 These comments were approved by Calloway JA in the subsequent Court of Appeal proceedings which dealt with the construction of the definition of TPD.[157]
[157]Telstra Super v Flegeltaub [2000] VSCA 180 at [12]
134 In these circumstances, I consider the obligation on the defendant, was such that it was required to make clear to the plaintiff, that his termination from employment was likely to be determinative of his TPD claim. Had this been conveyed, it would have afforded the plaintiff an opportunity to respond with material that may further have explained the circumstances of his termination. It would also have provided his solicitors with the opportunity to make submissions to the defendant, in relation to what it considered the correct interpretation of clause 1.5.2. of the Trust Deed.
135 In this instance, the WorkCover rejection letter was listed amongst numerous medical reports. Given the WorkCover rejection letter summarised medical reports obtained as at that date, the plaintiff and his solicitors may have considered it was included in the procedural fairness letter for its summary of those reports, rather than for its summary of the grounds of the plaintiff’s termination.
136 In considering the trustee’s obligation as described by Byrne J in Flegeltaub, I am of the opinion that, to adequately afford the plaintiff procedural fairness, the defendant ought to have listed the WorkCover rejection letter as a stand-alone document. It would then have been abundantly clear to the plaintiff, that the termination of his employment was determinative in the committee’s decision to reject his claim, and would have afforded him the opportunity to respond. The medical reports should then have been listed separately, as documents of relevance to the trustee’s decision.
137 As part of its duty to act in good faith, I consider the defendant was obliged to do more than, what appears to me, effectively slip the WorkCover rejection letter amongst a bundle of medical reports. I consider this was unreasonable and sufficiently misleading as to have denied the plaintiff the opportunity to understand and respond to the material to be used against him. That is the purpose of the procedural fairness obligation, and I am not satisfied the plaintiff was afforded procedural fairness in this instance.
Did the defendant act in good faith, and undertake a properly informed consideration of the plaintiff’s TPD claim?
138 The leading authority in respect of the principles governing the exercise of a trustee’s discretion in the determination of a disability claim, is the High Court decision of Finch v Telstra Super Pty Ltd.[158] This case involved the rejection of a TPD claim. At first instance, Byrne J held that the determination of a trustee may be impugned for want of good faith, for the failure to give real and genuine consideration and for a failure to act for a proper purpose. It was ultimately held that the trustee had failed to determine the TPD claim in good faith and to give genuine consideration, in that it had failed to pursue sufficient enquiries. The decision was held to be void.
[158](2010) 242 CLR 254
139 The Court of Appeal subsequently allowed an appeal from the orders of Byrne J. The matter was then appealed to the High Court, where the decision of Byrne J at first instance was upheld. The Court was ultimately satisfied that the trustee had failed to observe due process by not giving genuine consideration.
140 The joint judgment of French CJ, Gummow, Heydon, Crennan and Bell JJ noted the following:
“Byrne J’s reasoning is, however, reinforced by one qualification to Karger v Paul principles in the present context. There is no doubt that under Karger v Paul principles, particularly as they have been applied to superannuation funds, the decision of a trustee may be reviewable for want of ‘properly informed consideration.’ If the consideration is not properly informed, it is not genuine. The duty of trustees properly to inform themselves is more intense in superannuation trusts in the form of the Deed than in trusts of the Karger v Paul type. It is extremely important to the beneficiaries of superannuation trusts that where they are entitled to benefits, those benefits be paid. Here, for example, the applicant was claiming a Total and Permanent Invalidity benefit to support himself for the rest of his life. His claim depended on the formation of an opinion by the Trustee about the likelihood that he would ever engage in ‘gainful Work’: that was not a mere discretionary decision. In the Deed there was a power to take into account ‘information, evidence and advice the Trustee may consider relevant’, and that power was coupled with a duty to do so. It would be bizarre if knowingly to exclude relevant information from consideration were not a breach of duty. And failure to seek relevant information in order to resolve conflicting bodies of material, as here, is also a breach of duty. The Scheme is a strict trust. A beneficiary is entitled as of right to a benefit provided the beneficiary satisfies any necessary condition of the benefit. Whether or not it will be decided hereafter that, consistently with s.14 of the Complaints Act, the duty of a trustee in forming an opinion of the present type is a duty to form a fair and reasonable opinion, or even a duty to form a correct opinion, there is because of the importance of the opinion and its place in the Scheme a high duty on the Trustee to make inquiries for ‘information, evidence and advice’ which the Trustee may consider relevant. The existence of that duty in a more intense form than exists under Karger v Paul principles in their standard application is further support for the correctness of Byrne J’s decision.”[159]
[159]Ibid at [66]
141 It is therefore necessary for me to consider whether, consistent with the principles in Finch, the defendant gave proper and informed consideration, when making its decision on 26 June 2015.
142 In Alcoa Australia Retirement Plan Pty Ltd v Frost,[160] the Victorian Court of Appeal considered an appeal in relation to a rejected TPD claim. In that case, the plaintiff had not worked since 2006, when his employment was terminated due to a lower back injury. The relevant definition of TPD referred to a Member who “leaves employment with the Employer by reason of Total and Permanent Disablement…”.[161] In 2009, the plaintiff applied for a TPD benefit, however, there were conflicting medical opinions as to the nature and extent of his incapacity. The plaintiff’s claim was ultimately rejected by the trustees of his superannuation fund and no reasons were given.
[160][2012] VSCA 238
[161]Ibid at [22]
143 Nettle JA stated that superannuation members are entitled to benefits, and that as a result, there is a:
“high duty on trustees to make such enquiries as they may reasonably consider relevant in order to properly determine the application.”[162]
[162]Ibid at [39]
144 However, Nettle JA noted that trustees are not required to do the impossible.[163] He went on to say that:
“Nor is it to suggest that a trustee is expected to go on endlessly in pursuit of perfect information in order to make a perfect decision. The reality of finite resources and the trustee’s responsibility to preserve the fund for the benefit of all beneficiaries according to the terms of the deed mean there must be a limit… I accept that a trustee is not under an obligation to go on endlessly seeking more and more information.” [164]
[163]Ibid at [60]
[164]Ibid at [60]
145 Mr Kelsey-Sugg submitted that the following matters required investigation by the defendant, so as to ensure it undertook a properly informed consideration of the plaintiff’s TPD claim:
(a)the conflict between Dr Triggs’ opinion that the plaintiff had “a capacity to perform his pre-injury duties”, and Dr Chalabi’s opinion that the plaintiff was “unfit for any duties”;
(b)how Dr Triggs was able to give an opinion as to the plaintiff’s capacity to perform his pre-injury duties, when she did not know what those duties were;
(c)the conflict between Dr Triggs’ opinion that the plaintiff had a capacity to carry out “these roles”, and Dr Strauss’s opinion that the plaintiff was “incapable of working”;
(d)the conflict between Dr Triggs’ opinion that there was “no reason that he is not able to perform normal duties at a cognitive level” and Dr Epstein’s opinion that “he is unfit to return to work in his pre-injury employment”;
(e)the conflict between Dr Triggs’ opinion that there was “no reason that he is not able to perform normal duties at a cognitive level” and Rebecca Newman’s opinion that the plaintiff was “not capable of returning to work in a role relevant to his experience and skills”;
(f)the conflict between Dr Triggs’ opinion that the plaintiff’s prognosis for a return to work was good, and Dr Epstein’s opinion that the plaintiff was unable to work for the foreseeable future and that the prognosis for improvement was “limited”;
(g)whether Dr Epstein’s opinions would have been any different had he been given the reports of Dr Pollock dated 23 June 2014, and Dr Triggs dated 26 June 2013 and 18 November 2014;
(h)whether Dr Epstein had been privy to Dr Chalabi’s opinions in July and August 2013 that the Plaintiff was “looking well” and “in a good place”;
(i)whether the plaintiff’s ‘clinical picture’ had deteriorated between 26 September 2014 and 22 March 2015;
(j)whether the stressors referred to by Dr Pollock ever resolved and whether the plaintiff ever regained his confidence.
146 Mr Hanson submitted that, in assessing the material, the defendant correctly focused on the period closest to the date of termination. Further, given the amount of material to analyse, the defendant was able to give genuine consideration to the matter.
147 It is apparent that there was a clear conflict between the opinion of Dr Triggs and the opinions expressed in the medical material upon which the plaintiff relied. It was not surprising, and might reasonably have been considered highly likely, that when asked to reconcile the differing medical opinions, Dr Triggs reaffirmed her previous medical opinion, over that of the other medical practitioners, in particular that of the two medico-legal psychiatrists retained by the plaintiff.
148 In such circumstances, in an attempt to reconcile the prevailing conflict, I consider the defendant ought to have arranged for the plaintiff to be examined by an additional independent medical expert. Such an approach would have been reasonable in the circumstances to allow the defendant to more fairly evaluate the differing medical opinions. Given the size of the TPD claim, the cost of obtaining a fresh opinion, when compared with the cost of obtaining a supplementary report from Dr Triggs, would not have been a particularly onerous one.
149 Accepting that there is a high duty on the defendant to make proper inquiries and considering the High Court’s statement in Finch that a trustee has a duty to seek relevant information in order to resolve conflicting bodies of material, I consider the defendant’s failure to undertake any further investigation, demonstrated a failure to engage in a genuine consideration of the plaintiff’s TPD claim.
150 Further, it was submitted that, prior to its decision on 26 June 2015, the defendant should have sought updated medical material regarding the plaintiff, to ensure that it was properly informed of the plaintiff’s condition.
151 Although the definition of TPD required an assessment as at the time the plaintiff ceased service, I consider the defendant may have been better informed had it been aware of the plaintiff’s current state of mental health.
Did the defendant provide inadequate or invalid reasons?
152 In the alternative, Mr Kelsey-Sugg submitted that the defendant’s reasons were otherwise unsound on the following grounds:
(a)the reasons do not indicate that the defendant took into account the plaintiff’s education, training and experience;
(b)the reasons provided no clear explanation as to why the opinions of Dr Triggs were preferred;
(c)the reasons do not consider the possibility that the plaintiff may need retraining;
(d)the reasons fail to identify or consider any alternative jobs for which the plaintiff may be reasonably qualified by education training or experience;
(e)the reasons do not disclose whether the defendant approved two “qualified medical practitioners” as required by the definition of Total and Permanent Disablement under the Deed, and if so, who those practitioners were.
153 Mr Hanson conceded that where a trustee gives reasons, they may be scrutinised for their validity.[165] However, as was noted in Weber v Tiss Pty Ltd & Ors,[166] reasons “should be understood as a practical document, intended to inform the claimant of the basis of the decision rather than detailed reasons with reference to the evidence relied upon comparable to a judgment of a court or tribunal.”[167]
[165]Karger v Paul [1984] VR 161
[166][2005] NSWSC 67
[167]Ibid at [8]
154 I am of the opinion that the defendant’s reasons, whilst brief, were sufficient to inform the plaintiff as to the basis upon which his claim was rejected. I therefore make no criticism of the defendant in this respect.
Conclusion
155 For the reasons detailed above, I am satisfied that the decision of 26 June 2013 is void and of no effect. The question as to whether or not the plaintiff is entitled to a total and permanent disablement benefit pursuant to the ANZ Australian Staff Superannuation scheme should be remitted to the defendant for determination in accordance with the Trust Deed and these reasons.
156 The appropriate order is therefore that the determination of the defendant, made on 26 June 2013, to reject the plaintiff’s claim for a total permanent disablement benefit under the ANZ Australian Staff Superannuation scheme is void and of no effect.
157 I will hear from the parties as to the question of costs.
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