Ward v MetLife Insurance Ltd - [2012] WADC 166

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: WARD -v- METLIFE INSURANCE LTD [2012] WADC 166

CORAM: STEVENSON DCJ

HEARD: 18-20 & 27 SEPTEMBER 2012

DELIVERED : 26 NOVEMBER 2012

FILE NO/S: CIV 2840 of 2011

BETWEEN: TERENCE ANDREW WARD
Plaintiff
AND
METLIFE INSURANCE LTD
Defendant

Catchwords:

Insurance - Income protection policy - Whether plaintiff 'disabled' within meaning of policy - Whether insurer entitled to reduce payments under policy - Construction of policy terms - Whether plaintiff's symptoms are a major depressive episode or a recognisable psychiatric illness

Legislation:

Nil

Result:

Plaintiff's claim dismissed

Representation:

Counsel:

Plaintiff: Mr J R Brooksby
Defendant: Mr G R Hancy

Solicitors:

Plaintiff: Shine Lawyers
Defendant: Norton Rose Australia

Case(s) referred to in judgment(s):

Australian Casualty Co Ltd v Federico (1986) 160 CLR 513
Baldry v Jackson [1976] 2 NSWLR 415
Bensky v Mercantile Mutual Insurance Ltd (1999) 22 SR (WA) 144
Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361
Servcorp (Aust) Pty Ltd v Abgarus Pty Ltd; Abgarus Pty Ltd v Moufarrige (1995) 38 NSWLR 281
Stingel v Clark (2006) 226 CLR 442
Water Authority of Western Australia v AIL Holdings Pty Ltd (No 2) (1992) 10 WAR 233

STEVENSON DCJ:

Introduction

The plaintiff claims an entitlement to payment of disability benefits under a group income protection insurance policy issued by the defendant to the plaintiff's employer, PricewaterhouseCoopers (PWC).
Pursuant to the insurance policy the defendant paid a partial disability benefit from 31 August 2009 to 26 November 2009 and a disability benefit from 27 November 2009 to 31 December 2010 to the plaintiff.
The defendant ceased paying benefits to the plaintiff under the policy on 31 December 2010 because it determined the plaintiff was no longer 'Disabled' as that term is defined by the insurance policy.
As a result, the plaintiff commenced these proceedings seeking payment of benefits pursuant to the policy in the sum of $10,812.50 gross per month from 1 January 2011.
As mentioned, the defendant contends the plaintiff is no longer disabled for the purpose of the insurance policy and, therefore, has no contractual obligation to make any payments to the plaintiff. Alternatively, the defendant says, if the plaintiff is disabled for the purpose of the policy, then any benefit payable under the policy must be reduced by the amount of any income the defendant believes the plaintiff could reasonably be expected to earn from his occupation whilst disabled.
The primary issue the court must determine is whether the plaintiff was disabled, as that term is defined by the insurance policy, for the whole of or part of the period from 1 January 2011 to the last day of the trial (the relevant period). If the plaintiff was disabled for any part of the relevant period then, and only then, the court must determine if the defendant is entitled to reduce the disability benefit payable pursuant to cl 12 of the policy by 'the amount of any income [it] believe[s] the Covered Person could reasonably be expected to earn in his … Occupation whilst Disabled …'.

The pleadings

The plaintiff commenced this action on 30 August 2011 after engaging in correspondence with the defendant, followed by a client‑based appeals process to try to persuade the defendant to change its position. The pleadings are succinct. At the commencement of the trial, the issues for determination were clarified with counsel and further clarified during the trial. The plaintiff's claim is for alleged breach of contract. It is not a claim for damages for personal injury.
A legal issue arose at the outset as to the period for which the plaintiff's claim could be maintained. The defendant's contention is that the plaintiff's claim for damages for alleged breach of contract can, as a matter of law, only be for the period ending when the writ of summons was filed on 30 August 2011. This was posited on the basis that a cause of action must be complete in all respects when the writ is issued (see Baldry v Jackson [1976] 2 NSWLR 415; Water Authority of Western Australia v AIL Holdings Pty Ltd (No 2) (1992) 10 WAR 233; Servcorp (Aust) Pty Ltd & Anor v Abgarus Pty Ltd; Abgarus Pty Ltd v Moufarrige (1995) 38 NSWLR 281). If this contention is right, it would follow that any expert medical opinion on the plaintiff's condition after 30 August 2011 is irrelevant.
It was apparent this would have a consequential impact on the parties' expert evidence filed in the proceedings, much of which was based on opinions formed on examination of the plaintiff after the action had been commenced and an assessment of his condition at that time. To the credit of the parties, a practical agreement was reached removing the potential impact on the trial of the issue thereby allowing the trial to proceed. The parties determined they would not be prejudiced and asked the court to determine the issues between them for the period ending on the last day of trial, namely 27 September 2012. Therefore the judgment in this case covers the issue of what entitlements, if any, the plaintiff is entitled to under the policy for the period 1 January 2011 to 27 September 2012.
It is common ground that the potential liability of the defendant to the plaintiff under the policy is limited to the period before the plaintiff turns 60 years of age (the maximum benefit period under the policy). The plaintiff was born on 9 July 1954. Therefore any benefits that he might be entitled to under the policy will cease when he attains the age of 60 on 9 July 2014.
At the material time the plaintiff was employed by PWC. His position was entitled 'Director – Tax and Legal Services (GST)'. It is also common ground that the plaintiff was a 'Covered Person' under a 'Group Income Protection Insurance Policy Contract' issued by the defendant to PricewaterhouseCoopers Services Pty Ltd as Trustee for the PricewaterhouseCoopers Services Trust, with a commencement date of 1 July 2007 (the policy). Pursuant to the terms and conditions of the policy the defendant agreed to pay PWC individual amounts of insurance in respect of a covered person suffering an 'Illness' in accordance with the terms and conditions of the policy.
The basis of the plaintiff's claim is found in the following paragraphs of his statement of claim dated 30 August 2011:
5.In or about 2009 the Plaintiff developed symptoms of a major depressive illness as a consequence of which the Plaintiff claimed and was paid disability benefits in accordance with the policy from 19 October 2009 until 31 December 2010.
6.On or about 31 December 2010 the Defendant in breach of the policy and notwithstanding that the Plaintiff remained disabled within the terms of thereof, ceased paying benefits thereunder to the Plaintiff.
7.Notwithstanding that the Plaintiff remains disabled within the terms of the policy, the Defendant has refused and continues to refuse to reinstate the benefits thereunder.
In the premises, the plaintiff claims pursuant to the policy, the sum of $10,812.50 gross per month, starting from 1 January 2011 to the agreed date for the purposes of the trial, namely the last day of trial, 27 September 2012. Other claims for damages for breach of contract and a declaration are no longer relevant.
In its amended defence dated 4 July 2012 the defendant admits the plaintiff was paid a partial disability benefit under the policy for the period 31 August 2009 to 26 November 2009 and a disability benefit under the policy from 27 November 2009 to 31 December 2010.
Paragraph 6 of the defence pleads that, by letter dated 15 March 2011, the defendant notified the plaintiff 'it had determined that the plaintiff was no longer Disabled' for the purposes of the policy and otherwise denied the plaintiff's claim for payment of any benefits under the policy. Payments under the policy were made in arrears and ceased on 31 December 2010.
Paragraph 7 of the defence contains an additional plea by the defendant whereby it seeks to invoke the operation of cl 12.1 of the policy. The plea is:
7.As to paragraph 7 of the Statement of Claim the Defendant:
(1)Admits that the Defendant has refused and continues to refuse to reinstate the benefits under the PwC Policy;
(2)Says that by clause 12.1 of the PwC Policy any Benefit payable under the policy is reduced by the amount of any income the Defendant believes the Plaintiff could reasonably be expected to earn from his Occupation whilst Disabled;
(3)The Plaintiff's Occupation is business adviser, accountant, manager or director;
(4)The Defendant believes, and it is the fact, that the Plaintiff could reasonably be expected to earn income from work as a business advisor, accountant, manage, or director;
(5)The Plaintiff has chosen not to return to work; and
(6)Otherwise denies the allegations contained in paragraph 7.
In his reply, the plaintiff joined issue with the defendant, in particular in relation to par 7 of the defence and maintained that, by reason of the matters pleaded in the statement of claim, he is disabled within the terms of the policy. Accordingly, the plaintiff contends that he continues to be entitled to receive 'the Disability Monthly Benefit' as defined by the policy.

The group income protection insurance policy

After a period of illness which manifested itself in 2009 (there may have been some symptoms earlier in 2008) the plaintiff made a claim under the policy held by his employer, PWC, on 2 June 2009. During the period 31 August 2009 to 31 December 2010, the defendant paid the plaintiff benefits under the policy. The defendant ceased making payments under the policy to the plaintiff from 1 January 2011 when it determined that the plaintiff was no longer 'Disabled' within the meaning of the policy.
The obligation to pay a benefit to a covered person under the policy is contained in cl 6.1 which provides as follows:
6.DISABILITY BENEFIT
6.1We will pay a Disability Benefit if a Covered Person is Disabled after the Waiting Period has ended. This Benefit is paid monthly in arrears.
6.2The Disability Benefit will commence the day after the Waiting Period has ended and accrues pro‑rata on a daily basis.
6.3The amount of the Disability Benefit will be the Disability Monthly Benefit.
6.4We will cease to pay a Disability Benefit in respect of a Covered Person at the time the Covered Person:
(a)is no longer Disabled;
(b)dies;
(c)attains the Maximum Insurable Age;
(d)has been Disabled from the end of the Waiting Period for the Maximum Benefit Period.
The issues to be determined do not involve a need to consider the provisions of the policy which concern payment of a 'Partial Disability Benefit' (cl 7). Also, the plaintiff's claim is not dependent on payment of a 'Recurrent Disability Benefit' (cl 8).
To understand and apply the terms and conditions of the policy, it is necessary to have regard to certain defined terms. These include:
Covered Person means an Employed person who meets the Eligibility Conditions and is accepted by us for insurance cover in accordance with the provisions of this Policy.
Disabled or Disability means solely as a result of illness or injury occurring whilst this Policy is in force a Covered Person is:
(a)unable to perform at least one Income Producing Duty of his or her Occupation; and
(b)not working any occupation, whether or not for reward; and
(c)under the regular care and following the advice of a Medical Practitioner.
Disability Benefit means a benefit payable under clause 6.
Disability Monthly Benefit means the lesser of:
(a)the Insurance Percentage multiplied by Monthly Income; and
(b)the Automatic Acceptance Limit or any other amount agreed in writing by us; and
(c)the Maximum Monthly Benefit.
Illness means sickness, disease or disorder.
Income Producing Duty means a duty of the Covered Person's Occupation that generates at least 20% of the Covered Person's Monthly Income.
Occupation means the employment or activity in which the person/Covered Person is principally Employed by the Employer.
Waiting Period means the continuous period of days stated in the Policy Schedule (90 days) commencing from the date a Medical Practitioner certifies a Covered Person is Disabled and for which a Covered Person has to be Disabled or Partially Disabled before a Benefit starts to accrue under this Policy, subject to the following requirements:
(a)the Covered Person must be Disabled for at least 14 out of the first 19 consecutive days of the waiting period to qualify for a Benefit;
(b)if the Covered Person returns to work at full capacity during the waiting period, the waiting period starts again unless the Covered Person returns to work only once and it is for a period of no more than 5 consecutive days. If the Covered Person returns to work only once for a period of 5 consecutive days or less, the number of days worked will be added to the waiting period.
The defendant seeks to rely upon its right pursuant to cl 12, to reduce payments under the policy. Clause 12 relevantly provides:
LIMITATION ON AMOUNT OF BENEFITS
12.1We will reduce a Disability Benefit … payable to a Covered Person by:
(a)the amount of any income (other than the Benefits received under this Policy) and the commutation of income paid or payable in respect of a Covered Person as a result of Disability … including:
(i)any amounts payable under legislation such as workers' compensation or motor accident compensation; or
(ii)any benefits payable under any other disability, illness or injury insurance policy (except for lump sum benefits received for total and permanent disablement under such an insurance policy).
(b)the amount of any income we believe the Covered Person could reasonably be expected to earn in his or her Occupation whilst Disabled …
The issue of whether the plaintiff is 'Disabled' and if so, whether the defendant is entitled to reduce the disability benefit payable, is dependent on the definition of 'Occupation' in the policy. This term is defined to mean the employment or activity in which the plaintiff is principally employed by PWC.
In his evidence the plaintiff produced a list of tasks and requirements which he says describes the employment activities in which he was principally engaged by PWC at the relevant time (exhibit 2). Exhibit 2 states, 'The provision of a list of duties for such a role is extremely difficult'. The plaintiff described his role as 'like running a small business' with responsibility for the operation of the 'team' within the overall business of PWC. The plaintiff's evidence as to his occupation split the duties into three areas, namely; the people (for whom he was responsible); broad responsibility to PWC for the work undertaken for clients and producing fees and managing costs; and direct client relationships in relation to the work undertaken for PWC. The defendant did not adduce evidence to the contrary in relation to the 'occupation' of the plaintiff for the purposes of the policy.
On the last day of the trial, the plaintiff was recalled to clarify and better describe his work duties for the purpose of the definition of 'Income Producing Duty', which is relevant to whether he is 'Disabled' under the policy.
In par 7(3) of the defence the defendant pleads that the plaintiff's occupation can generically be described as 'business adviser, accountant, manager, or director'. By reference to this description of the plaintiff's duties and role, the defendant contends the plaintiff 'could reasonably be expected to earn income' from such work. Instead, the defendant says the plaintiff has chosen not to return to work or any form of work.

The plaintiff's evidence

The plaintiff was born on 9 July 1954 in London. There is little or no evidence of his background circumstances until he attended the University of Western Australia in 1972. Exhibit 11 is a statement of the plaintiff's academic record at the University of Western Australia, where he is presently a student. In 1972 he commenced a Bachelor of Medicine and Bachelor of Surgery. He failed first year but maintained in his evidence this was because he was not interested. According to him he found it 'boring'. Exhibit 11 records the plaintiff studied for an arts degree at the University of Western Australia between 1975 and 1978. It appears that the plaintiff withdrew from all units in which he was enrolled during the period 1976 to 1978. It is not clear from the record whether he in fact attended classes and simply elected not to sit the exams. In 1980 the plaintiff enrolled for a Bachelor of Commerce degree but withdrew, it appears, before the course was discontinued. In 1981 the plaintiff commenced a Bachelor of Economics degree and was excluded from the course because of absence.
The results he achieved above are in stark contradistinction to the results he achieved in 2011 and 2012 for a Bachelor of Arts majoring in classics and ancient history for which he has so far received six high distinctions. In 2011 he won the David Anderson Memorial Prize for ancient history.
The plaintiff said he worked with the 'taxation department' (I assume he means the Australian Taxation Office) before, according to him, his services were sought by Coopers & Lybrand when it was first thought that GST would be introduced. The plaintiff's particular area of expertise and speciality is GST.
The Perth office of Coopers & Lybrand became part of PWC, a large international firm of accountants and, in about 2003 after 17 years' employment, the plaintiff was appointed a director. A director is one level below a partner. The plaintiff said he had no aspiration to be a partner because he was not prepared to pay the lifestyle price to meet the work demands of a partner. The plaintiff said that when he left the firm, the Perth office consisted of about 350 people and he had direct supervision of between 15 to 20 people working in his team. When he was recalled at the end of the trial, the number of staff he was responsible for increased to 25 people. His group consisted of a manager reporting directly to him, then senior consultants and consultants reporting to them over whom he had overall responsibility. His personal charge‑out rate when he left PWC in 2010 was about $800 per hour. He estimated that on average over his working life at the firm he worked between 50 ‑ 60 hours per week.
As mentioned, his duties included a wide range of areas including selection of staff, training and mentoring staff and ultimate responsibility for the group meeting the firm's billing targets and budgets. The work included client responsibility and managing client relationships with PWC. In particular, he described the fee‑paying work as involving giving advice to clients on the GST implications involved in the acquisition of a target business or entity, advising clients subject to ATO audits, and assisting clients on establishing a new division on how best to comply with the GST legal obligations.
According to the plaintiff he first started noticing problems with his ability to discharge his work duties in early 2009. With hindsight he said there had been a gradual deterioration prior to that. His evidence was (ts 40):
And what did you notice? - I found it very difficult to concentrate on one particular matter at a time. Other things tended to encroach. I'd always been quite good at being able to concentrate for 20 minutes solidly on one document. I found it difficult to do that. I found I got very irritable with interruptions, whereas I'd been quite well known for being - I never had my door closed. Staff could always come in and talk to me about anything they wanted. One of them told me later 'I knew something was wrong because you started getting snappy'. I also noticed that I dreaded the phone ringing, whereas before the phone ringing was great. It meant somebody was ringing me. I now thought it was just an interruption. I stopped going out socially. I'd get home and just go to bed. I was exhausted all the time.

The plaintiff said he thought he first sought medical attention in April 2009 from Dr Downing. The medical records of Dr Downing adduced at trial show that the plaintiff attended him on 27 May 2009, at which time Dr Downing noted the plaintiff's history as including 'meltdown at work, withdrawing'. In his notes made at the time, Dr Downing noted that he gave, as he described it, 'pastoral care', to the plaintiff by suggesting, among other things, that he 'recognise things can change, accept things cannot'. Dr Downing prescribed Cymbalta (30 mg, one daily). Dr Downing also referred the plaintiff to Ms Leanne Young, a clinical psychologist, for counselling with a view to preparing a mental health plan.
On Sunday of the long weekend at the beginning of June 2009, the plaintiff had a reaction to the Cymbalta and attended Joondalup hospital. On 2 June 2009 the plaintiff consulted Dr Downing again and commenced a trial of Pristiq. In the course of the consultation, Dr Downing provided further advice as a 'counsellor and GP' (but not according to him as a psychiatrist). Dr Downing noted the plaintiff had made a 'decision to change' but 'no life‑changing decisions in next few months'. The notes indicate it was mooted that the plaintiff would discuss the situation with PWC.
The defendant's contention based on the evidence is that the plaintiff reached a point in his working life where he no longer wished to continue working and, having had some time off for illness, he determined he no longer wanted to continue working at PWC.
Dr Downing said the plaintiff had a constant concern during his consultations about his financial position. Dr Downing's opinion was that this was a strong stressor which impacted on the plaintiff's mental wellbeing. There is an issue about the plaintiff's credibility arising out of the evidence about his knowledge that he could claim under the policy. In cross‑examination on 19 September 2012, the evidence of the plaintiff was (ts 121 ‑ 122):
Well, at that point you had, by that time, November 2009, you had identified that you had insurance available to call on? - No, no.
Had you? - I had - I had realised I could no longer go on and I was trying to work out - at the time, I had no idea it would take so long. I thought that I just needed another couple of weeks. I was looking at how much leave I had left. The issue of redundancy came up because I was thinking - oh well, maybe I could get three months redundancy and that would be enough time to fix me up and while I was looking at my leave entitlements, I noticed there were deductions for what I found was salary continuance insurance and when I looked at the - the information available on there, I realised that I was entitled to it.
This was by November, you'd formed this realisation, was it? - Some time in November.
The issue of the reliability and truthfulness of the plaintiff's evidence arises out of Dr Downing's recorded note on 2 June 2009 'income protection after 90 days'. Dr Downing said the plaintiff told him that he only had 'income protection after 90 days' when asked whether he had any sick leave entitlement or income protection insurance.
Counsel for the defendant, in view of the plaintiff's evidence, and Dr Downing's evidence, quite properly put the plaintiff on notice that in his closing submissions the defendant would invite the court to draw an adverse inference against the plaintiff. After discussion between counsel, leave was granted to allow the defendant to put the discrepancy in the evidence to the plaintiff to give him an opportunity to clarify the position.
On 20 September 2012, after putting the plaintiff's earlier evidence to him fairly and taking the plaintiff to item 3 of the schedule of the policy (which provides that the waiting period is 90 days), the plaintiff's evidence was (ts 212 – 213):
HANCY, MR: I just want to show you page 20 of exhibit 1 which is the insurance policy, it's page 20 of the defendant's book of documents? - Yes.
That's the first page of the schedule to the policy and item 3 has a heading, 'Waiting period, 90 days'? - Yep.
Now, in June 2009, that is, before you went back to work part time you knew that you had income protection insurance and it had a waiting period of 90 days, didn't you? - No.
No? - No.
In June of 2009 did you tell Dr Downing that you had income protection after 90 days? - Not to my recollection, no.
In June 2009 you knew that you had income protection insurance with a waiting period of 90 days, didn't you? - No.
And that was before you went back to work? - No.
In re‑examination immediately following this further evidence of the plaintiff, the plaintiff maintained that when he left work in November 2009 he thought he was eligible to entitlements under the policy but did not, at that time, 'know how it was going to go'. In re‑examination the plaintiff was asked again about when he became aware of the 90‑day period. His evidence was (ts 214 ‑ 215):
BROOKSBY, MR: Right. And the 90 day period, are you aware of when you first became aware of the 90 day period we're talking about here? - I think it must have been when I looked at the website that time because at the time I was working three days a week and I was taking off – sorry, and the two days I wasn't working, I was either taking as long service leave or taking as annual leave or taking as leave without pay and so when I became aware that I wouldn't be reverting to five days in the future, I kept like a running tally of how much leave have I got left because I was thinking that at some point I was going to run out, I'm going to have to start to adapt to living on three days' pay a week. And so I had this tally and when I looked at the website and saw that it said about 90 days, I already had a running tally of, well, how many days have I not worked and I thought well, if it works this way I've already done 90 days. But I had no idea how it worked until HR told me, no, it does work that way, you can include all of those. That's what they told me.
So just so that I can understand this, the – your understanding, as you've relayed it to the court, is that you wouldn't be entitled to benefits for 90 days but the times you had taken off for holidays and long service would be incorporated into that 90 day period? - Yes, I think, I can't be sure of this, because I didn't do all the calculations but I think that when I got the first payment from Metlife that it covered those days and I think asked PWC, well, in that case can you reverse all that leave that I've taken and put it back again. I'm pretty sure they did that.
Right? - But that would have been February or March the next year.
Yes, thank you, Mr Ward.
In my view, the plaintiff was aware of the 90‑day waiting period when he saw Dr Downing on 2 June 2009. This was recorded as a fact by Dr Downing at the time based on his discussion with the plaintiff. I reject the plaintiff's evidence that he did not become aware of the true position, and his entitlement to claim under the policy, until November 2009 or thereabouts. The evidence he gave is set out in more detail below.
The plaintiff was plainly concerned about his financial position at all material times. He did not just forget that deductions were being made from his salary, or happen to notice the fact of the cover on the PWC staff website. I find the plaintiff was aware at all material times of the existence of the policy. My impression of the plaintiff, based on all the evidence, is that he carefully monitored his financial circumstances and commitments, consistent with his calling. He was, consistent with Dr Downing's notes and observations of the plaintiff, cognisant of the policy and the possible rights it afforded to him. The fact that he was not prepared to admit this does not in itself affect the rights he has under the policy but does in my view go to his general credibility and the extent of his investment in the outcome of these proceedings. An adverse inference can be drawn: Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361.
Following the plaintiff's hospitalisation in early June 2009 and subsequent change of medication for his symptoms, he had about six weeks off work. In this period he continued seeing Dr Downing. By 10 June 2009 Dr Downing noted the plaintiff was 'much calmer, thinking clearer' based on to the plaintiff's own self‑report. At this consultation, according to Dr Downing's notes, the subject of the availability of long service leave was again discussed.
On 10 June 2009, there was discussion about the need for the plaintiff to work out how much he needed to earn to meet his financial commitments and lifestyle. It appears from Dr Downing's notes that at this time the plaintiff felt he had paid a 'personal price' for his strong work ethic and contribution to his employer up until this point in time. It seems he felt let down and not rewarded, in his mind, sufficiently for his personal 'sacrifice'.
On 17 June 2009, Dr Downing noted the plaintiff felt that PWC was 'being supportive'. At this time Dr Downing discussed with the plaintiff 'changing priorities, perspectives' including activities being undertaken by the plaintiff at the time, given he was not at work. There is a note on this occasion – 'Good coping skills now' – which I assume was a statement made by the plaintiff as opposed to a statement of opinion by Dr Downing based on what the plaintiff had told him. The plaintiff's progress appears to have continued to be positive.
On 24 June 2009, the plaintiff reported to Dr Downing that it was 'going well, beginning to enjoy life again' and that he was 'looking forward to stuff, reading, concentration improving', although 'work is still an issue'. At this time the plaintiff said there had been a positive meeting with PWC but the position was still 'unresolved' and that 'the ball is in his court'. On this occasion Dr Downing's opinion was that the plaintiff was 'improving quite quickly' and advised him to continue counselling with Ms Leanne Young.
On 8 July 2009, the plaintiff reported to Dr Downing that he was going to go back to work three days per week commencing the following week (the week after his birthday). Dr Downing recorded the 'reason for contact' for this consultation as 'counselling'. Self‑evidentially, the pastoral care provided by Dr Downing was continuing.
The plaintiff returned to PWC on a part‑time basis, working three days per week. He recalled that in July and August he 'really enjoyed getting back' and 'a feeling of relief' but 'then slowly that changed'. He accepted he felt more confident and brighter at work and connected in his family life than before. In evidence he said a major stressor was 'internal politics' which had 'always irritated' him at work.
The plaintiff agreed that in October 2009 he was considering whether he could take a redundancy and, as mentioned, spent some time working out his work entitlements in the course of which, in November 2009 (according to the plaintiff), he says he became aware of the cover available to him under the defendant's policy. My findings in this regard are set out above.
In examination‑in‑chief on 18 September 2012, the plaintiff said that after the initial wave of enthusiasm of returning to work he was 'drained' again. He realised that it was going to be harder to stay in the workplace than he had thought. His evidence was that he did not feel the same 'self‑worth' after returning to work on a part‑time basis and he felt he was not being given the same opportunity or being valued in the same way that he had been prior to taking time off earlier in the year. In my view this is axiomatic. Most people would find it difficult to make the transition from full‑time to part‑time work with the associated loss of prestige, power and credibility in the workplace. According to the plaintiff, by mid‑November he could not face getting up and going to work any more. He said that when he got home he just went straight to bed before dinner and spent all his spare time 'sleeping, pretty much'. He said he was 'just exhausted'.
The plaintiff was asked in examination‑in‑chief whether he had made any claim for benefits under the policy at that time in November 2009. His answer was no, and he was asked why not? He said 'I'd forgotten I had it' (ts 43). The plaintiff said at the time he was going through his payslips and noticed that he had been making deductions for 'SCI' and
realised that stood for salary continuance insurance so I looked it up and thought, 'Oh, I've been paying for this the whole time, I should've claimed'. (ts 43)
As mentioned above, I reject this evidence. In my view, the plaintiff in giving this evidence was attempting to minimise the fact of the insurance cover and his ability to claim.
The plaintiff remained off work from about 27 November 2009. Up until the end of the trial, the plaintiff had not commenced any form of income‑paying work.
In examination‑in‑chief the plaintiff described the first six months off as 'very slow progress'. He said he was dealing with 'feelings of guilt' about not working (even though he has not attempted any form of work since). According to him he had never not worked or been at university. He found it very unusual and, with the assistance of Ms Young, using cognitive behaviour therapy, he learned how to put some structure into his life and to combat negative thoughts.
In re‑examination, the plaintiff said that by the end of 2010 he was feeling ready to move outside the home and the routine he had developed there. Accordingly, based on advice, he enrolled at the University of Western Australia. He described the units as 'first year Latin and an ancient history unit'. He said the purpose was to see if he could handle deadlines and set assignments and socialising with people again. He described it as seeing whether he could 'start to act normally'.
The plaintiff said PWC, after discussions, indicated he should only return to work if he was able to work full‑time and at full capacity. After further discussions, the plaintiff said his employment was terminated with effect from about November 2011.
The plaintiff said in examination‑in‑chief that he achieved good results at university based on his study and that his 'intelligence hadn't gone'. The limitation he put on it was, as long as he kept to 'fairly defined things' and he knew what the deadlines were and was not distracted, then he could cope quite well. In my view this would be a truism for most people - that is, the quality of the output will be affected by disruption and distraction. However, the plaintiff's contention is that he could only function to a limited degree subject to there being no substantial interference from outside factors or stressors on him. The plaintiff described how for the past three weeks he had not been able to concentrate on his studies and that his thoughts about his legal proceedings 'just keep pushing in'. He reckoned he could only study for about a minute. This is understandable.
The plaintiff described his hobbies and pastimes as playing computer games, reading and 'board war games'. He said he had recently started playing games and cards, but had cancelled this over the last two months because of the case 'crowding everything out'. He still complains of tiredness. He described his study method as 'just going straight at it and focusing directly on that'; for example, sitting down and doing an assignment which he said he would complete in three to four hours. He would ensure there were no interruptions so that he could just concentrate on producing the result and nothing else.
On 11 January 2010 the plaintiff saw a psychiatrist for the first time, Dr Spear, for the purpose of his claim under the policy. The plaintiff agreed that he had read the medical reports prepared for the purpose of the proceedings and this was borne out in his evidence. I am not suggesting it was improper for him to do so, but he was alive to, and understood, the issues arising out of the reports.
According to Dr Downing's notes obtained during consultations with the plaintiff, he saw the plaintiff from 27 May 2009 to 6 September 2011 (at least) (see exhibit 14).
On 17 November 2009, the plaintiff indicated to Dr Downing he required a medical certificate to 'justify leave to medical insurance'.
On 8 December 2009, the plaintiff told Dr Downing he had agreed two weeks earlier to go on indefinite sick leave because he thought he was on 'the downward slope again'. In cross‑examination Dr Downing, by reference to the notes, at this time accepted he did not make any diagnosis and that he had not decided to refer the plaintiff to a psychiatrist.
On 21 December 2009, the plaintiff gave some income protection forms to Dr Downing to complete and reported he was 'still feeling a bit flat'.
On 12 January 2010, the management programme for the plaintiff, according to Dr Downing, included a plan for return to work within two months subject to regular review.
On 25 January 2010, the plaintiff advised Dr Downing that PWC had said he should not return to work until he was 'battle ready' (Dr Downing's words).
At his next consultation on 15 February 2010, the plaintiff complained of insurance issues and financial woes. According to the plaintiff he was not sleeping well, feeling tired and was going backwards.
On 17 March 2010, Dr Downing recorded that the plaintiff had reported a gradual improvement over the last month but was still having difficulty coping with more than one task at a time. On this occasion the plaintiff said the 'insurance is sorted' (he was receiving payments).
On 19 April 2010, the plaintiff reported to Dr Downing: that is sleep had increased but was easily stressed and that he was starting to multi‑task and to look forward to challenges. On examination Dr Downing was of the opinion that the plaintiff was relaxed but not ready to go back to work.
On 22 April 2010, Dr Downing advised the defendant that, in his opinion, the plaintiff's prognosis was guarded; that the main issue was 'pressure'; that cognitive behaviour therapy was helping; and that there was no need for the plaintiff to see a psychiatrist. He considered the plaintiff's main difficulty was multi‑tasking and delegating responsibility.
On 2 August 2010, Dr Downing said the plaintiff reported feeling much better with life, had stable moods, was less stressed by events beyond his control and was sleeping better. There was discussion about alternative careers in the context of rehabilitation. The plaintiff reported a positive attitude to the prospect of teaching, although he was concerned about memory and any stress associated with the role.
On 29 October 2010, the plaintiff reported to Dr Downing he felt he had changed as a person and was better at relaxing, although he was still easily overwhelmed and felt stuck because he was not moving on.
In December 2010, Dr Downing recorded a confrontation the plaintiff had with his daughter where the plaintiff felt he had overreacted. This prompted a suggestion that the plaintiff enrol for university in order to begin moving forward with his life.
On 15 February 2011 after consulting the plaintiff, Dr Downing was of the opinion that he was ready for part‑time work and encouraged him to try it, but with the qualification that he would need significant support. The plaintiff was prescribed Pristiq again.
On 1 March 2011, the plaintiff reported to Dr Downing he would like to return to work. The opinion of Dr Downing, in consultation with Ms Young, was that the plaintiff needed to return to work with graduation and appropriate support.
On 21 March 2011, the plaintiff informed Dr Downing he required an independent psychiatric report to contest the defendant's decision to stop making payments under the policy. As a result Dr Downing referred the plaintiff to Mr Lee, a consultant psychiatrist, whom he saw on 31 March 2011.

In cross‑examination, the plaintiff maintained in early 2010 that he did not think at that time of not going back to work. He denied saying to Gabrielle Moore in August 2010 words to the effect that he would not be able to return to work unless he earned about $10,000 per month to meet his financial commitments which included a small mortgage and two daughters studying at university. The plaintiff did not think he had said that, even though he admitted he had read the report of Ms Moore. According to the plaintiff, he told the defendant this was incorrect. The plaintiff's evidence on this topic, according to him, was that the issue was whether he had thought about changing jobs and taking a clerical position and his response was 'I have a job, why would I quit a job to take a job that paid less?'. He said his intention was to recover and go back to his original job. Again, he denied that by August 2010 he was familiar with the terms of the policy (this is true except to the extent he was aware of its existence and the 90‑day period). He said he did not see the policy until after the defendant ceased making payments.
The plaintiff was cross‑examined about his personal wellbeing in 2010 and ability to cope with everyday tasks. During this time he wrote an article for the internet which he says has now had over half a million hits. According to the plaintiff he would get up at about 8.00 am, work on his computer, have breakfast, walk the dogs with his wife for about an hour, read the paper, do household duties, have lunch, sleep for about two hours in the afternoon before using his computer again. He did some cooking, involved himself in at least one social event per week, and read non‑fiction. Notwithstanding this, he maintained he had experienced a loss of confidence about returning to work.
The plaintiff accepted he had applied a considerable amount of effort and concentration in drafting a submission to the defendant on 17 February 2011 (exhibit 9) and an appeal to the defendant's dispute resolution officer dated 22 March 2011 (exhibit 10). These are lengthy documents and demonstrate the plaintiff was at the time able to critically analyse detailed material and to present cogent and credible arguments for propositions advanced by him based on that material.
In cross‑examination, he accepted he was able to concentrate and make the appropriate decisions necessary for the preparation of the material and stood by what he had written. The plaintiff was taken to various parts of what he said to the defendant in defence of his position. The parts highlighted, amongst other things, the plaintiff's concern about his ability to function in the workplace as effectively as he had done prior to his illness and that he had a concern about what might happen if he tried to return to the workplace. In his supporting documentation for his claim, the plaintiff described his illness as 'depression and acute situational crisis'. The latter term appears to have originated from something Dr Downing wrote for the plaintiff in support of his claim under the policy. In cross‑examination, the plaintiff accepted he had not suggested to any advisers that excessive workload had led to his symptoms in 2009.
The plaintiff accepted in cross‑examination that he had allowed his claim against the defendant to become prominent in his thoughts in 2011 but denied, except for the last few weeks, that he had allowed it to impact upon his lifestyle. He accepted there was a gap from January to July 2012 when he had not seen Dr Downing for any prescriptions. I note Dr Downing's medical notes adduced at trial (exhibit 14) only go up to September 2011. The plaintiff did not accept that since that date to the present, to whatever extent he had seen Dr Downing, the conferrals had been about 'the insurance claim and this litigation'. The plaintiff said he tried to find other interests so he would not focus on or get stressed about the claim. Resolution of those proceedings will remove a major stressor on the plaintiff and allow him to move forward with his life.
The determination of the plaintiff's claim requires an assessment of his evidence against the background of the medical evidence adduced at trial. The medical evidence, to some extent, contains a contemporaneous record of the plaintiff's history in relation to his symptoms as recorded at various times by the medical practitioners on examination. It is the total body of the evidence which must be considered and weighed in making any findings of fact for the purpose of determining the issues between the parties.
I found the plaintiff (understandably given the position he held) to be intelligent and fully cognisant of the issues at large in the trial. I accept he gave his evidence as best he could in the circumstances and that he did his best to assist the fact‑finding part of the determination. His memory and general recall was satisfactory. At the same time it must be noted that the plaintiff's position is largely dependent on 'self‑reporting' - there being no physical manifestation of his illness (apart from fatigue and associated sleep disruption). In my view, having heard the evidence, many of the plaintiff's subjective fears and concerns would present themselves to most normal people in his circumstances. Extended time off work for long service or illness would usually be expected to generate some anxiety and stress for an individual in the period before returning to work and for a while afterwards, until that individual had settled back into a normal work routine. I am of the opinion that I can express these views, based on the evidence adduced in this matter. To some extent the court is required to consider and assess whether the plaintiff has genuinely 'helped himself' to the best of his ability, or whether he has 'retreated to a safe position' and not made any sincere efforts to return to the workforce.
It is clear that the plaintiff is presently able to live a normal lifestyle, including that associated with student life. It is common knowledge that many large professional firms operate a business model on the basis that those employed at the top end of the business will, because of the dictates of a heavy workload, retire or step down wholly or partly from the age of 50 onwards. This in part is recognition of the high stress levels and workload associated with the performance demands in such organisations, but also takes into account that most professionals will eventually experience some diminution in their intellectual and physical ability to perform after they have peaked in their career as a result of the normal vicissitudes of life and the aging process. These are obviously general observations, but in my view are apposite to the background context in which some of the issues required to be determined in this case have to be decided. Put simply, it is not realistic to expect a person to perform at the same peak level in the later years of their professional life.
It is understandable that after a period of time out of the workplace an individual would feel some concern and uncertainty about returning to work and putting themself in a place where they will be judged by their peers on their performance and productivity (perhaps even more so if they have been a high achiever in the past). To some extent it is necessary to have regard to what the plaintiff has achieved in recent times against the backdrop of what he was able to achieve in his previous workplace at PWC as a director. These decisions are made based on the evidence adduced during the trial. The evidence of the plaintiff's wife, Mrs Ward, corroborated her husband. She was of course understandably supportive of him. There was no independent or more distant evidence adduced on behalf of the plaintiff in relation to his current symptoms and their impact upon his ability to function as a person or in the workplace.
On the final day of the trial, leave was granted to recall the plaintiff to give evidence of the overall work duties and the extent to which he says he was able to carry out those duties. On this occasion the plaintiff said that his duties involved managing and coordinating a group of up to 20 ‑ 25 managers and staff in relation to up to 20 projects at a single time. He described a project as any assignment from a client, including an internal project involving, for example, the preparation of a tender for work. He said there was no consistency to any given day and that 'the first phone call could turn the whole day upside down'. Importantly for the issues in the trial, the plaintiff was asked about the break‑up of his duties as follows. His evidence was as follows:
But in terms of managing projects and supervising your staff, approximately how much of your time did that take of your work at Pricewaterhouse? Are you able to draw a line under any particular heading of the work you did? - I doubt if it was ever less than 50 per cent. Obviously I was a director for five, six years, and at different times, different things happened, but overall the bulk of what I did was managing those staff in – in whatever projects that I had going. It – it was a requirement that a director have 50 or 60 serious clients and it would be expected that somewhere between a third and half of those had ongoing assignments at - at a particular time.
The plaintiff expressed the opinion that at present he would be unable to cope with such duties because he cannot 'handle conflicting demands or conflicting priorities'. He said he could not 'turn off the tap on one job and then swing immediately to another'. He maintains he has difficulty in focusing if there are half a dozen things going on at once. He can only think about one thing at a time. The example of the concern he gave in his evidence was that, if he was about to review a final report, he might receive a telephone phone call from a client asking him to start a new assignment and, while on the phone, a staff member might come in to the office with another project. He says that it is only recently that he has been able to handle 'small catastrophes like it starting to rain on the day that he was planning to do the washing, or something like that'. He maintains he reacts very badly to any alteration in his programme and is thrown off by change. It was put to him in cross‑examination that the concern he was expressing was just a belief on his part because he had not tested himself in this way since he stopped work in late 2009. He did not accept that he had an obsessive focus on his claim in these proceedings and that this was a distraction to his university studies. In response to the question, the plaintiff said that he did return to work but PWC, according to him, asked that he be tested again and that he did try to go back to work but was not allowed to. The fact is that he has not tested himself in any workplace in any capacity since 2009.

Medical evidence

Ms Leanne Maree Young

In May 2009, Dr Downing referred the plaintiff to Ms Young, a clinical psychologist, for assessment and treatment. Ms Young's opinions are set out in her report of 4 July 2012.
Ms Young holds degrees of BA Hons and a Master of clinical psychology. She has practiced as a clinical psychologist since 2008. Her training permits her to make diagnoses, including under the DSM manual, but not to prescribe drugs.
Ms Young assessed the plaintiff on 2 June 2009 and 19 June 2009 when, in her opinion, he presented with 'low motivation, an inability to become enthusiastic about anything, difficulty relaxing, impatience, intolerance to interruptions to what he was doing, depressed mood, early morning waking, nervous tension, loss of interest in things, worry, social withdrawal and dissatisfaction in his home and work life'. According to her, the plaintiff reported that he had been 'forcing himself to get up and go to work for a couple of years' and that he felt 'everything was an imposition'. Of note, apparently he felt redundant at work and no longer part of a team. According to Ms Young, the plaintiff's symptoms at that time were in keeping with a diagnosis of 'Major Depressive Disorder: Moderate'.
Ms Young understands that since June 2009 the plaintiff has been taking 100 mg Pristiq daily, an antidepressant medication.
Ms Young is of the opinion that the plaintiff's depressive illness has followed a recurrent course since June 2009. Her opinion is based on the self‑report of the plaintiff of 'ups and downs' in mood. In particular, Ms Young noted that during July to October 2009, the plaintiff reported enjoying work and, on 2 October 2009, feeling 'more confident, brighter, more connected with his wife and daughters'.
According to Ms Young, in November 2009 she considered the plaintiff experienced a return of his depressive symptoms. She attributed this in part, to the suicide of a 'work colleague'. The plaintiff explained the true position in cross‑examination, namely that the person in question was not a work colleague but somebody he knew through work and also socially. The plaintiff, in cross‑examination, did not accept this topic contributed to the feelings that led to him ceasing work in November 2009. Ms Young says it was a contributing cause against a backdrop of struggling with his work.
In November 2009, the plaintiff told Ms Young he thought he was 'going backwards' in terms of mood, forgetting things and was becoming snappy again, particularly with regard to others making demands on his time. According to her, he was pessimistic about himself and his future causing him to make a decision to take time off work from 27 November 2009 to recover from his illness.
In early 2010, Ms Young said the plaintiff had become more anxious, socially withdrawn and he considered that he 'was not himself'. He reported being irritable when there were too many decisions to make. Ms Young assisted the plaintiff with a recovery plan which involved applying a simple structure to his time. In her opinion he made good progress with recovery, stating on 29 June 2010, that he 'felt good and happy and was sleeping well'. Interestingly, in August 2010 the plaintiff reported his mood had deteriorated again. In particular, he maintained 'a return of irritability when others asked him to do things, or interrupted him'.
Ms Young used cognitive behaviour therapy techniques (restructuring unhelpful thoughts such as catastrophising or rigid thinking) to assist the plaintiff to manage his mood, and to put in place a daily structure to manage and overcome his illness.
According to Ms Young, on 1 February 2011, the plaintiff told her his insurance payments had been terminated. He reported this had triggered a 'negative spiral'. At this time the plaintiff told her he had experienced 'a return of sleep disturbance, difficulty making decisions, and felt "total gloom – in a pit that I can't get out of"'. I would observe that these symptoms are likely to have arisen from the plaintiff's predicament at the time, and realisation that he was going to have to return to some form of work if he wanted to earn an income.
Ms Young said that in March 2011 the plaintiff was relieved about his demonstrated ability to study at university, and in April, reported 'he felt able to work but not at his old job full‑time'.
In May 2011, the plaintiff told her that intellectually he felt fine, however was still experiencing difficulty making decisions, intolerance of interruptions and fatigue (such that he still needed a daytime sleep). For the remainder of 2011 he appears to have stagnated and his mood 'was fragile, characterised by fast drops and slow recovery'.
In August 2011, the plaintiff told her he did not feel he could go back to the same position at PWC because he was not sure if he could problem‑solve like he used to and he felt unable to make multiple decisions. According to Ms Young, the plaintiff's employment with PWC was terminated in September 2011, after which he reported a deterioration of mood and stated that he felt 'less happy than one year ago'. The plaintiff told her he had 'resumed withdrawing socially, had ceased exercising, felt hopeless, and could see nothing to look forward to'.
In January 2012, the plaintiff said he felt 'happy' and discussed the possibility of increasing his study load to four units but was concerned about putting too much pressure on himself in case he had a relapse. He reported finding interacting with others 'draining' in that he tended to try too hard to meet other people's expectations of what he should be.
According to Ms Young, the plaintiff reported some return of his depressive symptomology (e.g. low motivation) in March 2012 (after an incident in which his dog was attacked and he had to sue for repayment of the veterinary bill). He maintained he still could not multi‑task and had difficulty with decision‑making, even though he was 'not so obsessed with things now and was not as rigid in his thinking as he had previously been'.
In July 2012, Ms Young reported the plaintiff was under 'extra emotional stress' due to his mother‑in‑law's illness. At that time, according to a test, the plaintiff's 'self‑reported' level of stress was in the severe range, his anxiety was in the normal range and his depression was in the mild to moderate range. Ms Young's opinion is that the results indicate the plaintiff is continuing to struggle with low mood and stress.
In her report of 4 July 2012, Ms Young opines that the plaintiff's symptoms are 'in keeping with a diagnosis of Major Depressive Disorder: Recurrent – moderate with anxiety features – in partial remission without psychotic features'.
In re‑examination Ms Young, in respect of this diagnosis, said she believed there had been more than one episode of major depressive disorder but that she had not herself checked this against DSM‑IV‑TR. In examination‑in‑chief Ms Young said the plaintiff was, in her opinion in July 2012 (ts 154):
… He was on the borderline of between mild and moderate level of depression. Some of the symptoms that would be depressive would be he couldn't seem to get going. He felt he had nothing to look forward to. He felt sad and depressed. I'm just picking out things that I know are depression. 'Again, I - I found it difficult to tolerate interruptions to what I was doing'. That's a symptom of stress, but it's an important symptom when Terry becomes unwell.
Ms Young's prognosis is that the plaintiff's condition is recurrent and as such he 'may' be vulnerable to future depressive episodes, particularly during episodes of existential stress. In her opinion, the plaintiff 'may' be able to work part‑time in a job where he is able to work at his own pace. Ms Young said in evidence the plaintiff is able to cope, provided he can do his work and learn at his own pace and there is no pressure – 'then he is able to do it well, as evidenced by his university results'.
In her report Ms Young expressed the opinion the plaintiff would be able to cope with planning, meeting deadlines, managing budgets (based on his demonstrated ability through university study) and the performance of intellectual tasks and working to a deadline. In her opinion the difficulty, based on self-report from the plaintiff, is his inability to adequately fulfil duties which require him to multi‑task, make decisions, deal with interruptions or problem‑solve, 'given his reports of ongoing impairment in these areas'. Interestingly, at the time she wrote her report, Ms Young was of the opinion the plaintiff would remain disabled for the next two years, based on his depression being recurrent and on her understanding of the definition of 'Disabled' in the policy.
In cross‑examination, Ms Young accepted she had not herself made a diagnosis of major depressive disorder by reference to DSM‑IV‑TR. She did not understand that she was being asked to make a diagnosis and, for this reason, said in her report 'the symptoms are in keeping with' such a diagnosis. In her opinion he was in remission because he would not fulfil the criteria. She included in her report of the plaintiff's illness the insertion of 'partial' because, when she recently read DSM‑IV‑TR, it requires the person making the diagnosis to indicate whether any remission is 'partial' or 'full'.

Is the defendant entitled to invoke cl 12.1(b)?

This question only arises if the plaintiff is found to have been and remained 'Disabled' since 1 January 2011. If so, the defendant seeks to invoke cl 12.1(b) to reduce the benefit payable to the plaintiff under the policy from 21 August 2012 to 27 September 2012. The legal and evidential onus of proof in this regard is on the defendant.
Clause 12.1 is set out above. It provides a limitation on the payment of a disability benefit under the policy by 'the amount of any income we believe the Covered Person could reasonably be expected to earn in his or her Occupation whilst Disabled'.
The policy defines 'Occupation' as 'the employment or activity in which the person/Covered Person is principally Employed by the Employer'.
The defendant contends that the proper construction of 'Occupation' is to be determined by reference to the general nature of the duties involved in the employment or activity principally undertaken by the employee for the employer. The defendant says the definition is not confined to the plaintiff's employment with PWC but rather to be ascertained by reference to a general description of the work undertaken. That is something broader than the actual position held with PWC.
To aid the proper construction, the plaintiff relies upon the definition of 'Partially Disabled' where, at cl 12.1(c), reference is made to the covered person 'working in their Occupation or any other occupation but only in a limited capacity'. The plaintiff contends that, if the defendant had intended the definition of 'Occupation' to be in the broad generic concept of the word 'Occupation', then the words 'or any other occupation' ought to have been put into the contract.
In my view, the proper interpretation of 'Occupation' involves an objective categorisation or description of the duties undertaken with, if necessary, any degree of specialisation of the employed person. With respect, in my opinion, any other view would not admit commercial sense so far as the plain intention of cl 12.1(b) is concerned, namely, to permit the defendant to reduce the disability benefit payable under the policy if the covered person 'could reasonably be expected to earn'.
If 'Occupation' was interpreted in the way contended for by the plaintiff, the clause would have no work to do and not make commercial sense. The suggested interpretation by the plaintiff, namely that the clause 'if interpreted in the way contended for' makes complete sense. This is because it is to be interpreted simply on the basis that it enables the defendant to reduce a benefit if it believes the covered person could work in his 'Occupation' but, for whatever reason, chooses not to. In my view, the position adopting this approach in the circumstances of this case, results in the same end result.
The factual issue concerns the validity and basis of the decision purported to have been made by Mr McFarlane on 21 August 2012. The defendant in its closing submissions says the plaintiff was capable, bearing in mind his occupation, skills and training, to work, inter alia, as an independent tax consultant. The defendant relies upon the opinion of Dr Bowles that this is a vocation which the plaintiff could undertake having regard to his occupation and duties performed for PWC. The evidence of Ms Coleman was that in August 2012 the average salary for an independent tax consultant was about $83,000 and that there were numerous vacancies advertised in the Perth region for this type of work.
The plaintiff did not seek to adduce any evidence, apart from his own general evidence of incapacity, to rebut the defendant's specific evidence on this issue (putting the medical evidence to one side).
In my opinion, if the plaintiff was 'Disabled' for the purposes of the policy as at 21 August 2012, then the defendant has wilfully determined in accordance with cl 12.1(b) of the policy that the plaintiff could reasonably be expected to earn about $83,000 in his occupation whilst disabled and, accordingly, such sum will reduce the disability benefit payable by the defendant to the plaintiff. I find that decision was properly made in accordance with the terms of the policy.

Conclusion

In summary, I find the plaintiff is not entitled to payment of a disability benefit under the group income protection insurance policy issued by the defendant to the plaintiff's employer, PWC, for the period 1 January 2011 to 27 September 2012, because he is not 'Disabled', as that term is defined by the policy.
If I am wrong in this regard then, in my opinion, the defendant is entitled pursuant to cl 12.1(b) of the policy to deduct from the disability benefit payable to the plaintiff the sum of $83,000, calculated on a pro rata basis for the period 21 August 2012 to 27 September 20012.
For these reasons the plaintiff's claim must be dismissed.

Annexure

DSM‑IV, 4th ed published by The American Psychiatric Association, Washington DC

Criteria for Major Depressive Episode (DSM‑IV‑TR)
A.Five (or more) of the following symptoms have been present during the same 2‑week period and represent a change from previous functioning; at least one of the symptoms is either (1) depressed mood or (2) loss of interest or pleasure.
Note: Do not include symptoms that are clearly due to a general medical condition, or mood-incongruent delusions or hallucinations.
(1)depressed mood most of the day, nearly every day, as indicated by either subjective report (e.g. feels sad or empty) or observation made by others (e.g. appears tearful). Note: In children and adolescents, can be irritable mood.
(2)markedly diminished interest or pleasure in all, or almost all, activities most of the day, nearly every day (as indicated by either subjective account or observation made by others).
(3)significant weight loss when not dieting or weight gain (e.g. a change of more than 5% of body weight in a month), or decrease or increase in appetite nearly every day. Note: In children, consider failure to make expected weight gains.
(4)insomnia or hypersomnia nearly every day.
(5)psychomotor agitation or retardation nearly every day (observable by others, not merely subjective feelings of restlessness or being slowed down).
(6)fatigue or loss of energy nearly every day.
(7)feelings of worthlessness or excessive or inappropriate guilt (which may be delusional) nearly every day (not merely self‑reproach or guilt about being sick).
(8)diminished ability to think or concentrate, or indecisiveness, nearly every day (either by subjective account or as observed by others).
(9)recurrent thoughts of death (not just fear of dying), recurrent suicidal ideation without a specific plan, or a suicide attempt or a specific plan for committing suicide.

B.The symptoms do not meet criteria for Mixed Episode (see p 335).
C.The symptoms cause clinically significant distress or impairment in social, occupational, or other important areas of functioning.
D.The symptoms are not due to the direct physiological effects of a substance (e.g. a drug of abuse, a medication) or a general medical condition (e.g. hypothyroidism).
E.The symptoms are not better accounted for by Bereavement, i.e. after the loss of a loved one, the symptoms persist for longer than 2 months or are characterized by marked functional impairment, morbid preoccupation with worthlessness, suicidal ideation, psychotic symptoms, or psychomotor retardation.