Wheeler v FSS Trustee Corporation as trustee for the First State Superannuation Scheme

[2016] NSWSC 534

Supreme Court

New South Wales

Medium Neutral Citation:	Wheeler v FSS Trustee Corporation as trustee for the First State Superannuation Scheme [2016] NSWSC 534
Hearing dates:	7-10 September 2015 and 22-26 February 2016
Decision date:	29 April 2016
Jurisdiction:	Equity
Before:	Robb J
Decision:	The parties are to bring in short minutes of order to give effect for these reasons for judgment: see in particular pars 370 to 372.
Catchwords:	INSURANCE – life insurance – plaintiff was member of superannuation fund – trustee of fund effected insurance policies with second defendant (insurer) – totally and permanently disabled (TPD) benefit payable if insured proved to the satisfaction of insurer that he or she was so incapacitated as to be “unlikely ever” to return to employment for which he or she was reasonably qualified by education, training or experience – plaintiff sought declarations that the insurer constructively denied her claims under policies by not having made any decision until certain dates, and that decisions themselves were void and of no effect - insurer conducted investigations and commissioned medical reports – plaintiff had little opportunity to put forward evidence and had no access to materials gathered by the insurer until a procedural fairness letter was sent – whether rejection of plaintiff’s claim reasonable – consideration of evidence until date of determination necessary – reasonableness in weight given to varied opinions of medical experts considered – HELD Insurer failed to act reasonably and accordingly, rejection of claim invalid – whether there was breach of good faith and fair dealing by the insurer – considered insurer’s refusal to share materials gathered on the plaintiff with her – considered unnecessary delay by the insurer in determining claim and inadequate opportunity for plaintiff to put her case forward despite onus on her to prove satisfaction of TPD definitions – HELD constructive denial by insurer established – court to determine whether the insured entitled to TPD claim – assessment of varied opinions in multiple expert medical reports as to significance of plaintiff’s disabilities – consideration of alcohol abuse and marital breakdown – HELD neither were intervening factors - HELD plaintiff satisfied definition of TPD in policies and entitled to receive TPD benefits WORDS AND PHRASES – proper construction of the words “unlikely ever”
Legislation Cited:	Privacy Act 1988 (Cth)
Cases Cited:	Birdsall v Motor Trades Association of Australia Superannuation Fund Pty Ltd [2014] NSWSC 632 Davis v Rio Tinto Staff Superannuation Fund Pty Ltd [2002] FCA 376; (2002) 118 FCR 170 Erzurumlu v Kellogg Superannuation Pty Ltd [2013] NSWSC 1115 Folan v United Super Pty Ltd [2014] NSWSC 343 Hannover Life Re of Australasia Ltd v Dargan [2013] NSWCA 57; (2013) 83 NSWLR 246 Halloran v Harwood Nominees Pty Ltd [2007] NSWSC 913 Hannover Life Re of Australasia Ltd v Sayseng [2005] NSWCA 214; 13 ANZ Ins Cas 90-123 Ivkovic v Australian Casualty & Life Ltd (1994) 10 SR (WA) 325 Jeffrey Guy Baker v Local Government Superannuation Scheme Pty Ltd [2007] NSWSC 1173 Kenan Berk v Westpac Securities Administration Ltd & Anor [2010] NSWSC 28 Lazarevic v United Super Pty Ltd [2014] NSWSC 96 Sayseng v Kellogg Superannuation Pty Ltd [2003] NSWSC 945 Baker v Local Government Superannuation Scheme Pty Ltd [2007] NSWSC 1173 Nile v Club Plus Superannuation Pty Ltd [2005] NSWSC 55 Davis v Rio Tinto Staff Superannuation Fund Pty Ltd [2002] FCA 376; (2002) 118 FCR 170 Panos v FSS Trustee Corporation [2015] NSWSC 1217 Shuetrim v FSS Trustee Corporation [2015] NSWSC 464 TAL Life Ltd v Shuetrim; Metlife Insurance Ltd v Shuetrim [2016] NSWCA 68 Weber v Tiss Pty Ltd & Ors [2005] NSWSC 67 Ziogos v FSS Trustee Corporation [2015] NSWSC 1385
Category:	Principal judgment
Parties:	Joanne Grindley Wheeler (plaintiff) FSS Trustee Corporation (first defendant) MetLife Insurance Ltd (second defendant)
Representation:	Counsel: B Rayment QC/ D O’Dowd (plaintiff) J Morris SC/E Elbourne/N Simpson (second defendant)   Solicitors: Slater & Gordon (plaintiff) de Mestre & Company (first defendant) Turks Legal (second defendant)
File Number(s):	2014/174195
Publication restriction:	None

Judgment

Introduction

1. The plaintiff, Ms Joanne Grindley Wheeler, was formerly a member of the New South Wales Police Force. She was medically discharged as hurt on duty from the Police Force on 2 February 2012. Ms Wheeler was unable to work from 21 September 2010.

2. It is common ground between the parties that, at the time she ceased to carry out her duties, Ms Wheeler suffered from post-traumatic stress disorder (PTSD) and major depressive disorder, as a result of a number of her experiences whilst a member of the Police Force. At the end of the hearing, it was also common ground that Ms Wheeler continued to suffer from the psychological illness that had caused her to be discharged from the Police Force, and that, at that time she was incapable of engaging in any work for which she was reasonably qualified by reason of education, training or experience.

3. In these circumstances, it is not necessary to set out the series of frightening and horrifying events that Ms Wheeler experienced, while a member of the Police Force. It is sufficient to say that, although it is tragic that as competent and committed a member of the Police Force as Ms Wheeler was has developed the serious psychological illness that she has come to suffer, as a result of her actions in the line of duty, a consideration of those events makes the outcome readily understandable.

4. Ms Wheeler was 36 years of age at the time when the second defendant, MetLife Insurance Ltd (the Insurer), rejected her claim. She had a remaining work life of 29 years, based upon a retirement age of 65 years.

5. Ms Wheeler was, at all relevant times, a member of the First State Superannuation Scheme (the Fund) of which the first defendant, FSS Trustee Corporation (the Trustee), was the trustee.

6. Under the terms of the trust deed governing the Fund, the Trustee was entitled to insure its obligations to pay benefits to members, and it did so by means of two insurance policies issued by the Insurer. The two insurance policies were respectively called Group Life Insurance Policy Document, and Group Life Insurance Policy Contract Blue Ribbon (collectively, the Policies).

7. On 8 May 2012, Ms Wheeler lodged a claim for total and permanent disablement (TPD) benefits with the Trustee. Shortly thereafter, the Trustee made a claim on Ms Wheeler’s behalf against the Insurer.

8. Ms Wheeler claims to be entitled to a benefit of $170,100, under the Basic Cover Insurance, and $625,451, or alternatively $578,270, under the Police Blue Ribbon Insurance. Each of the benefits claimed is based upon Ms Wheeler’s entitlement, both under the trust deed that constitutes the Fund, and the Policies, to receive benefits for being totally and permanently disabled within the meaning of those documents.

9. The Insurer concedes that if Ms Wheeler succeeds in these proceedings, she is entitled to be paid the amount of $170,100, and the alternative amount of $578,270. I am not sure whether Ms Wheeler has abandoned her claim for the greater sum of $625,451. I will leave this issue to be resolved after judgment, if Ms Wheeler succeeds in her claim.

10. By 11 June 2014, the Insurer had not made a determination on Ms Wheeler’s claim, and on that date she filed the statement of claim by which these proceedings were commenced.

11. In essence, Ms Wheeler claimed that the Insurer had constructively denied her claim, so that the court should proceed to determine her entitlement to each of the TPD benefits that she has claimed.

12. The Trustee, on 17 November 2014, filed a cross claim, in which it claimed a declaration that its liability to Ms Wheeler for the payment of any TPD benefit be limited to the extent that it receives payment from the Insurer under the Policies.

13. The Trustee did not seek positive relief against the Insurer, to oblige the Insurer to pay to it any TPD benefits to which Ms Wheeler was entitled as a member of the Fund, notwithstanding that the Insurer had not determined the application made on behalf of Ms Wheeler for a period of over two years.

14. On 4 September 2015, a few days before the commencement of the hearing of Ms Wheeler’s claim by this court, the Insurer sent to the Trustee a letter in which it stated that it had rejected Ms Wheeler’s TPD claims, and set out its reasons for the rejection. This letter followed the Insurer having sent to Ms Wheeler, on 13 August 2015, what is generally called a procedural fairness letter, in which the Insurer outlined the effect of the material it had, both for and against Ms Wheeler’s claims. The Insurer provided the material upon which it proposed to make its determination to Ms Wheeler with the letter. It gave Ms Wheeler 14 days to make any submissions in response.

15. On 7 September 2015, which was the first day of the hearing, the Trustee filed, by consent of the other parties, a notice of submitting appearance, in which it submitted to the making of all orders sought by Ms Wheeler, and the giving of entry of judgment in respect of all claims made, save as to costs.

16. The proceedings between Ms Wheeler and the Insurer have been conducted on the basis that Ms Wheeler is personally entitled to prosecute a claim against the Insurer, for an order that it pay the Trustee the amounts of the TPD benefits to which the Trustee is entitled under each of the Policies, in respect of Ms Wheeler’s claim against the Trustee.

17. The Insurer accepted that, if the court finds that, at some point, the Insurer constructively denied Ms Wheeler’s claim, or that its rejection of Ms Wheeler’s claim is invalid, then the court should proceed to determine Ms Wheeler’s entitlement itself; in the sense of determining whether the Insurer has become obliged to pay to the Trustee under the Policies the TPD benefits to which Ms Wheeler claims she is entitled as a member of the Fund. The Court of Appeal has recently decided, in TAL Life Ltd v Shuetrim; Metlife Insurance Ltd v Shuetrim [2016] NSWCA 68 (Shuetrim), at [188], that the Insurer’s concession was sound, and if the court finds that its determination of Ms Wheeler’s claim is invalid, then the court should decide whether Ms Wheeler is entitled to the TPD benefits.

18. Also on the first day of the hearing, the court gave Ms Wheeler leave to file an amended statement of claim. The effect of the amendments was to remove the claim against the Trustee, and the allegations of fact relevant to that claim, and also to delete aspects of the claim pleaded against the Insurer, which the legal representatives for Ms Wheeler evidently thought were surplus to her needs.

19. The Insurer was accordingly given leave to file a defence to the amended statement of claim. Relevantly, the Insurer asserted, in par 25 of its defence, that on 2 September 2015, it declined Ms Wheeler’s TPD claim, and provided reasons for its decision by letter dated 4 September 2015.

20. This aspect of the Insurer’s defence introduced a significant new issue into the proceedings. Formerly, the issues were whether the Insurer had constructively denied Ms Wheeler’s claim, and if so, was Ms Wheeler entitled to the TPD benefits claimed, by reason of the obligation upon the Insurer to pay the amount of those benefits to the Trustee under the Policies. Now that the Insurer has determined Ms Wheeler’s claim by rejecting it, there is the additional issue of whether or not the Insurer’s rejection of the claim was invalid.

21. The introduction of this new issue obliged Ms Wheeler to further amend her statement of claim, which she did by leave granted on 9 September 2015. In substance, the effect of the further amended statement of claim is to maintain Ms Wheeler’s claim that the Insurer constructively denied her claim, and that the court ought itself to determine on the evidence that she is entitled to the TPD benefits that she claims. Ms Wheeler now also claims that the circumstances in which the Insurer decided to reject her claim, immediately before the commencement of the hearing, constituted a breach by the Insurer of its duty to Ms Wheeler, so that the determination is invalid. Alternatively, even if the determination is not invalid because the Insurer did not act reasonably in making that determination, because of the circumstances and the timing in which it was made, the determination is nonetheless invalid, because it involved a breach of the Insurer’s duty of good faith and fair dealing, and to act reasonably, in considering and determining the validity of Ms Wheeler’s claim.

The Fund rules

22. As the Trustee has submitted to the order of the court, and as neither of the remaining parties has made any issue that requires any consideration of the rules of the Fund, it will not be necessary to consider those rules in any detail.

23. However, it may be noted that the rules define “insured benefits” in rule 23.1 as meaning “the amount payable to the Trustee from an insurance policy in respect of the death or disability of that member”. Rule 11 relevantly provides:

11.1   The Trustee may acquire, hold, vary or dispose of one or more insurance policies to provide insured benefits for members.

11.2   The Insured benefit of a member is:

(a)   limited to the extent that the Trustee is able to effect cover under an insurance policy;

(b)   only payable to the extent that the Trustee receives payment from the insurer under an insurance policy.   

The Policies

24. As I have noted above, Ms Wheeler has made claims under two insurance policies issued by the Insurer to the Trustee.

25. The first Policy is called Group Life Insurance Policy Document.

26. The only issue that arises under the first Policy is whether Ms Wheeler’s claim falls within the definition of TPD in the definitions section of the policy wording, the relevant part of which (par (a)(ii)) reads:

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

27. There is no issue about whether Ms Wheeler was at the relevant time a Covered Person, or that she was absent from her Occupation as a member of the Police Force through illness for six consecutive months. The date for assessing Ms Wheeler’s claim is accepted by the parties as being six months after 21 September 2010, which is 21 March 2011. That is the date at which the effect of Ms Wheeler’s illness must be determined for the purpose of her claim for the TPD benefit under this Policy.

28. It will be convenient at this point to set out the term of the first Policy that deals with the making of claims under the Policy.

13.   CLAIMS

13.1.   The Policyowner must notify us in writing as soon as is reasonably practicable of an event entitling the Policyowner to a Benefit.

13.2.   It is a condition of payment of any Benefit that the Covered Person provide us with such evidence to substantiate the claim as we may reasonably require.

13.3.   The Covered Person must submit at our expense to a medical examination conducted by a Medical Practitioner or other health professional appointed by us as we deem necessary…

29. The second Policy upon which Ms Wheeler has based her claim is called Group Life Insurance Policy Contract Blue Ribbon. The criterion that must be established for eligibility to a TPD benefit under this Policy is set out in Item 6(b) of the First Schedule to the policy wording, which relevantly reads as follows:

The Insured Member having been absent from their Occupation with the Employer through injury or illness for six consecutive months and having provided proof to our satisfaction that the Insured Member has become incapacitated to such an extent as to render the Insured Member unlikely ever to engage in any gainful profession, trade or occupation for which the Insured Member is reasonably qualified by reason of education, trading or experience.

30. While the wordings of the two TPD definitions are not identical, they are to the same effect, and raise the same issues in respect of their application, for the purposes of the present case.

31. I will also set out the term of the second Policy that deals with the making of claims:

7.   CLAIMS

7.1.   The Policyowner must notify us in writing as soon as is reasonably practicable of an event entitling the Policyowner to a Benefit.

7.2.   The accuracy and timeliness of a claim investigation, and subsequent payment, will be diminished if we are not notified in writing within one year after the event giving rise to the claim.

7.3.   It is a condition of payment of any Benefit that the Insured Member provides us with such evidence to substantiate the claim as we may reasonably require. The Insured Member must submit at our expense to a medical examination conducted by a legally qualified medical practitioner appointed by us as we deem necessary…

32. A number of aspects of these clauses may have significance in the present case. First, the TPD definitions in the Policies require the insured member of the fund to provide proof that the definitions have been satisfied to the satisfaction of the Insurer. These terms lie at the heart of the dispute, and the Insurer ultimately rejected Ms Wheeler’s claim on the basis that she had not provided the necessary proof.

33. Secondly, the terms in the Policies dealing with claims appear to contemplate that the Insurer will carry out an investigation, and the fund member is required to provide such evidence to substantiate the claim as the Insurer may reasonably require. These terms are not inconsistent with the TPD definitions on their face. However, as will be seen, the manner in which the Insurer carries out any investigation that it undertakes may have a real and practical influence on the ability of the fund member to provide the proof required by the TPD Definitions.

34. Thirdly, the claims terms include provisions that deal with when claims should be made by the Trustee. In each case, the Trustee must notify the Insurer as soon as reasonably practicable of an event entitling the Trustee to a benefit. If the relevant event is a level of incapacity in the fund member that satisfies the TPD definitions, and if that event occurs at the end of the six months period of absence from work, then a question arises as to when it is reasonably practicable for the Trustee to notify the Insurer of that event. This raises subtle but important issues. In cases where the relevant injury or illness does not have a clear and immediate practical effect on the level of incapacity of the fund member, but it takes some time for the effect of the injury or illness to stabilise, and for the level of incapacity to become known, then the timing of the notification to the Insurer may have a significant effect on the Insurer being satisfied that the fund member is unlikely ever to be employed in work of the nature contemplated by the TPD definitions.

35. There is a further, practical issue that should not be ignored. The Trustee is the policy owner, and the Policies require the Trustee to make the claim, and for the fund member to provide the proof required by the TPD definitions. In reality, the manner in which Ms Wheeler’s claim was made and determined was not consistent with what the Policies appear to contemplate; particularly in relation to her having to provide proof to the satisfaction of the Insurer that the TPD definitions were satisfied. The Trustee required Ms Wheeler to make a claim on it by filling out pro forma documents. Those forms did not require, or even make provision for, ample evidence of the incapacity suffered by Ms Wheeler, or the prospects of her gaining work over the remainder of her working life. The Trustee provided those documents to the Insurer, which constituted the making of the claim. The Trustee did not in any real way prosecute the claim itself. At most, the Trustee acted as a conduit between Ms Wheeler and the Insurer. The Insurer carried out the investigation to its own satisfaction. The Insurer required Ms Wheeler to cooperate in various ways to assist the Insurer to obtain the material that it thought was relevant. The Insurer felt no obligation to provide any of the material that it had gathered to the Trustee or Ms Wheeler until, shortly before it made its determination, it provided what is customarily called a procedural fairness letter to Ms Wheeler directly, which included all the material upon which the Trustee intended to act, and a summary of the information for and against Ms Wheeler’s claim. It then offered to receive additional material from Ms Wheeler. While Ms Wheeler could, perhaps, have obtained her own material at any time during the investigation, the refusal by the Insurer to share the information that it had, inhibited the ability of Ms Wheeler to provide proof that was responsive to the material already in the hands of the Insurer. The Insurer then determined the claim made by the Trustee on behalf of the fund member. That happened only a short time after the delivery of the procedural fairness letter (in which Ms Wheeler was given only 14 days to respond). The insurer rejected the claim on the basis that Ms Wheeler had not provided adequate proof to satisfy the Insurer. That was so, even though almost all the proof was gathered by the Insurer, and Ms Wheeler had not been given any real or practicable opportunity to provide responsive proof.

Legal principles

36. The publication of the Court of Appeal’s decision in Shuetrim has intervened between the completion of the hearing and the publication of my reasons for judgment in these proceedings. The decision settles one of the issues that was in dispute between the parties. That issue is the meaning of the expression “unlikely ever” in the TPD definitions, and in particular, the degree of probability involved in determining whether a fund member is unlikely ever to be employed in the manner contemplated by the TPD definitions.

37. As it has happened, these reasons were largely complete at the time the judgment in Shuetrim was handed down. I have revised these reasons where appropriate to accommodate the reasons in Shuetrim. The principles laid down by the Court of Appeal have not altered the decision that I had reached before the judgment was published.

The nature of the problem

38. It will be convenient to consider a number of practical issues that arise in this case, before the legal principles that are relevant to its determination are considered.

39. Ms Wheeler is a physically able person, who at present suffers from chronic PTSD and major depression disorder. As stated above, the medical evidence is unanimous that at the present time she is unable to work as a police officer, or in any other employment for which she is reasonably qualified by reason of education, training or experience.

40. Ms Wheeler had, at the date her application for TPD benefits was rejected, a remaining expected working life of 29 years. The issue of whether she is unlikely ever to engage in relevant employment depends upon the likelihood that her present psychiatric condition will change over the balance of her working life, in a way that now makes it sufficiently likely, in accordance with the true meaning of the term “unlikely ever”, that she will be relevantly employed.

41. A number of features of Ms Wheeler’s psychiatric disorders may be relevant to the proper determination of whether the TPD definitions are satisfied in her case. First, of course, her injuries are psychological and not physical. They are not immediately visible, except to the extent that they may be manifested by her behaviour. Realistically, there is a risk that persons who consider the consequences of Ms Wheeler’s psychological disorders may be influenced, honestly and unintentionally, by societal attitudes to psychological disorders. Such disorders, if they are not manifested in extreme forms of conduct, may not appear to be real.

42. Secondly, as the evidence in this case shows, it may take considerable time, measured in years, before the level of incapacity caused by PTSD, with comorbid major depression disorder, stabilises in a way that permits qualified psychiatrists to determine whether or not the disorders are chronic, what the stabilised symptoms of the disorders are, and the likelihood that some improvement will occur over time, in a way that may give Ms Wheeler some capacity to engage in relevant work.

43. There was evidence that the literature shows that 30% of persons with PTSD become chronic sufferers of PTSD (T 143). This was not considered expert evidence, but it may be taken as indicative for present purposes. It follows that in a population of PTSD sufferers, some 70% may recover, although perhaps not without residual disabilities. As I understand the evidence, the question of whether a particular sufferer will recover, or whether that person’s psychological illness will become chronic, can only be answered after the passage of time, after the person is given all available treatments but without success. The outcome is not readily predictable on an individual basis.

44. Consequently, if an expert psychiatrist is asked to give an opinion early in the course of the illness, the experience that only about 30% of cases become chronic might naturally cause the psychiatrist to say that there is a likelihood of recovery. However, if that statistical approach is applied to all PTSD sufferers, all will be said to be likely to recover, when in fact 30% of cases will not.

45. The problem therefore, is that a correct determination of whether the psychological injury of a particular PTSD sufferer is chronic may depend upon when the determination is made, in the course of a history of treatment that may take years. As the chronicity of the illness may only emerge as treatments continually fail, too early a determination of whether the illness is permanent may produce a false negative.

46. In the case of psychological illnesses of the nature suffered by Ms Wheeler, there will be a number of sources of uncertainty relevant to the application of the TPD definitions. The amplitude of the uncertainties may depend upon when they are considered. As I have said, at a particular time there may be uncertainty as to whether the illness has had time to stabilise, so that it can be known with reasonable confidence what the true extent of the incapacity is; whether there is any residual capacity for work; and whether there are prospects that future treatment or spontaneous recovery will improve the capacity for work. If there is residual capacity, or if there is some chance of recovery of capacity, there will then be uncertainty about the real prospects of the sufferer gaining relevant employment over the balance of his or her working life.

47. As I have noted above, Ms Wheeler ceased to work as a police officer on 29 September 2010, but was not discharged from the Police Force, as being medically unfit, until 2 February 2012. In the meantime, Ms Wheeler received psychological treatment, and medical investigations were undertaken, in order for a decision to be made by the Police Force as to whether Ms Wheeler was capable of continuing to undertake any of the duties of a police officer. Shortly after 2 February 2012, the Trustee provided to Ms Wheeler the forms necessary to make an application for the TPD benefits, in circumstances which invited Ms Wheeler to make the claim, if she thought that she satisfied the TPD definitions. The claim was made on 8 May 2012. Presumably, the Trustee took the view that it was not reasonably practicable to notify the Insurer that an event had occurred that might entitle the Trustee to a benefit, while it was still possible that Ms Wheeler might be capable of continuing to work as a police officer. Consequently, the timing of the application was temporally connected to a decision having been made that Ms Wheeler was incapacitated from continuing to be a police officer. However, there had not by that time been any comprehensive consideration of whether Ms Wheeler was permanently incapacitated from engaging in any other relevant occupation. There was therefore, no necessary temporal connection between the timing of the application and the stabilisation of Ms Wheeler’s psychological disorders, which may be necessary to determine the true nature of her incapacity in relation to other forms of employment.

48. As I understand the expert medical evidence, the symptoms suffered by a person with PTSD and major depressive disorder are not constant, just like they are not always visible in the behaviour of the sufferer. The illness is in a number of respects insidious. It affects employability because it undermines the sufferer’s cognitive capacity, reliability, sociability, energy and motivation, among other disabilities. It is possible for a person to suffer PTSD and major depressive disorder with symptoms that in fact entirely incapacitate them from engaging in any form of employment, but which do not have the result that they are entirely unable to engage in ordinary day-to-day activities, albeit intermittently and unreliably. Evidence of sufferers engaging in normal pursuits does not necessarily correlate with capacity to engage in employment. There is a heightened risk of error if the question whether a sufferer satisfies the TPD definitions is determined on the basis of evidence that would be suitable for physical illnesses or injuries. A more exacting approach may be required, if the applicability of the TPD definitions is to be determined accurately.

What are the insurer’s duties?

49. In Shuetrim at [47] to [58], Leeming JA made a number of observations on the subjects of whether a member of a superannuation fund in Ms Wheeler’s position is entitled to sue the insurer directly for relief to which the trustee of the fund is entitled; and also the nature of the duty owed by the insurer to the trustee. The latter issue raised the consideration of whether the duty owed by an insurer was in part a duty of utmost good faith, or a duty of good faith. As his Honour said at [58], it was not necessary for him to express a final view on these subjects.

50. The Insurer did not raise any opposition to Mrs Wheeler’s claim that she could enforce the Trustee’s rights under the Policies against the Insurer, and if successful, obtain an order that the Insurer pay the TPD benefits to the Trustee. The case was conducted on the basis that Mrs Wheeler was entitled to make the claim that she has made.

51. In her further amended statement of claim, at pars 30, 32 and 33, Mrs Wheeler dealt with the issue of the nature of the duty owed by the Insurer by alleging that the Insurer “failed to act with utmost good faith and failed to act in good faith and fairness and failed to act reasonably”. Mrs Wheeler had, so to speak, a bet each way on the issue of whether the duty involved a requirement that the Insurer act with utmost good faith, or only good faith. Nothing was made of this distinction by the parties in these proceedings. As will be seen from the reasons that follow, I have adopted the description of the duty owed as requiring the Insurer to act in good faith and with fair dealing, and to act reasonably.

52. I have considered the duties imposed upon insurers in determining claims of the nature made by Ms Wheeler in Panos v FSS Trustee Corporation [2015] NSWSC 1217 at [148] to [154]. It will be sufficient to restate the following extract from the judgment of Santow JA in Hannover Life Re of Australasia Ltd v Sayseng [2005] NSWCA 214; 13 ANZ Ins Cas 90-123:

35. Turning to the challenge to Hannover’s decision as insurer, the matter in issue on this appeal, the trial judge observed that when the decision of an insurer is challenged, while the grounds of challenge are generally similar to those applicable to trustees, the court proceeds to determine the facts should the insurer have actually failed to form the relevant opinion or have constructively failed to do so by proceeding on the wrong basis ([77] Red, 55M-S).

36. The nature and content of Hannover’s obligations vis-à-vis Mr Sayseng were derived by the trial judge from the principles stated in Edwards v The Hunter Valley Co-op Dairy Co Ltd (1992) 7 ANZ Ins Cas 61-113 at 77,536. The relevant principles were said to be these ([81] Red, 57K-58Z):

(a)There was an implied obligation on Hannover to consider and determine whether it should form an opinion on the matter which was a condition of its own liability;

(b) That obligation involved consideration and determination of the correct question;

(c) Hannover was under a duty of good faith and fair dealing which required it to have due regard for the interest of the claimants, meaning Mr Sayseng, as well as the Trustee;

(d) Hannover was also obliged to act reasonably in considering and determining what its opinion was;

(e) If the view taken by Hannover can be shown to have been unreasonable on the material before it, its decision can be successfully attacked;

(f) If Hannover’s decision is successfully attacked, the matter upon which its opinion was required becomes one for determination by the Court;

(g) It has been held to be unfair for an insurer to act upon detailed and adverse medical reports obtained by the insurer itself without giving the claimant an opportunity to balance the report by obtaining a detailed report from a treating doctor, or giving the claimant a chance to answer the adverse elements in the report ([88], Red, 60L-O) citing Chammas v Harwood Nominees Pty Ltd (1993) 7 ANZ Ins Cas 61–175, Hodgson J at 78000 and 78001; Wyllie v National Mutual Life Association Ltd (Hunter J, 18 April 1997, unreported) and Beverley v Tyndall Life Insurance Co Ltd (1999) WAR 327 per Ipp J at [25], [33–37] and [84–95] and Malcolm CJ at [6], [12] and [13], [14] and [15]. Anderson J who agreed in the result of the appeal did not agree with this holding: see [97]–[98].

53. In Shuetrim, Leeming JA, with whom Beazley P and Emmett AJA agreed, said on this subject:

[60] I do not regard the following as controversial. First, the clause does not turn upon the fact that the Insured Person is unlikely ever to undertake employment, but instead is expressed to turn upon the state of mind of the insurer.

[61] Secondly, in considering the matter and reaching a state of satisfaction, the insurer is required to act reasonably. That has been worked out in a series of decisions dating from the mid-nineteenth century, to which McLelland J referred in Edwards v The Hunter Valley Co-op Dairy Co Ltd at 77,536:

Where under a contract, rights or liabilities depend upon the subjective state of mind of a party, eg the party’s approval, opinion or satisfaction, of or about something, it can be a difficult question whether the party is subject to an implied obligation in reaching that state of mind, or failing to reach it, as the case may be, to be bound by objective standards of reasonableness.... However in the field of insurance, it is well established that where under a contract of insurance an element of the insurer’s liability is expressed in terms of the satisfaction or opinion of the insurer, the insurer is obliged to act reasonably in considering and determining that matter.

[62] Thirdly, there are limits to what flows from the obligation to act reasonably. As McLelland J added:

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

[63] Fourthly, the words “proof to the satisfaction of us” reflect an obligation on the part of the Insured Person to provide evidence in support of his or her claim.

[64] Fifthly, the clause does not turn on the insurer being satisfied that the Insured Person will never be able to resume employment, but the lesser threshold that he or she is “unlikely ever” to do so. The clause is thus more readily satisfied than the language in Manglicmot v Commonwealth Bank Officers Superannuation Corporation Pty Ltd [2011] NSWCA 204; 282 ALR 167 regarded by Giles JA as “quite emphatic”: at [88].

[65] Sixthly, all of the foregoing is subject to the obligations of good faith on the part of the insurer, as well as the (overlapping) implied obligations to act reasonably and to do all that is necessary to enable the other party to have the benefit of the agreement (see Mackay v Dick (1881) 6 App Cas 251 at 263, Butt v M’Donald (1896) 7 QLJ 68 at 70-71 and Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 450), as set out in the passage in Edwards reproduced above.

54. A number of principles governing the issue of how the Insurer is to determine whether or not the TPD definitions have been satisfied, emerge out of a number of recent decisions of this court.

55. First, the requirement in the definition that the fund member provide proof to the satisfaction of the Insurer has the effect of “placing an evidential burden on the insured person”: Shuetrim v FSS Trustee Corporation [2015] NSWSC 464 at [43] ff, and Ziogos v FSS Trustee Corporation [2015] NSWSC 1385 at [77] per Ball J. This is not the same thing as to say that the fund member has a burden of proof, as the process of determining claims is not the same as a judicial process.

56. Secondly, having regard to the terms of the Policies, the Insurer’s duty of good faith and fair dealing does not require the Insurer to undertake its own investigations: Ziogos at [77].

57. Thirdly, as the onus is on the insured person to bring forward adequate material, an obligation arises from the duty of good faith and fair dealing for the Insurer to give the insured person a reasonable opportunity to bring forward that material: Ziogos at [78].

58. Fourthly, if (for example in the case of an unrepresented person) the insured person does not put forward sufficient material to enable the Insurer to address the substantive issues that it is required to address, then the duty of good faith and fair dealing would require the Insurer to say so, and to give the applicant an opportunity to put forward additional material: Ziogos at [78].

59. Finally, the Insurer’s “statement of reasons for declining a claim should be understood as a practical document intended to inform the claimant of the basis of the decision rather than detailed reasons with reference to the evidence relied upon comparable to a judgment of a court or tribunal”: Weber v Tiss Pty Ltd& Ors [2005] NSWSC 67 at [8]. While that is true, it is directed to the nature and complexity required of the letter informing the fund member of the reasons for the Insurer’s rejection of the application. It does not obviate in any way, the need for the Insurer to comply with its duty of good faith and fairness, and to process and determine the application in a way that is reasonable in the circumstances.

60. As I have said, in practice, the way in which the evidence that supports the claim for the TPD benefits is gathered may not be entirely consistent with the expectation that the fund member will provide the proof. In practical terms, it may be the Insurer who controls and undertakes almost the whole of the investigation, and the fund member may be given relatively little opportunity to provide proof, in a convenient and effective way, to support the claim that the TPD definitions have been satisfied.

61. If the fund member, or the Trustee on his or her behalf, in fact controlled the process of proof, then the fund member could deal proactively with many of the problems that I have outlined above, concerning in particular, the timing of the application in relation to the stabilisation of the symptoms of the injury or illness, and the possible reduction in the level of uncertainty concerning the satisfaction of the TPD definitions that flows out of the assessment of the nature and duration of the incapacity, rather than out of the likelihood that a fund member with a particular level of incapacity will be able to engage in relevant employment in the future.

At what time must the TPD definition be satisfied?

62. The question arises as to the time as at which the test for the entitlement to the TPD benefit must be satisfied. The authorities appear to establish that the answer to this question is: where the TPD definition is in the terms applicable in the present case, as at the end of the six consecutive months of absence from work: see the decision of Brereton J in Halloran v Harwood Nominees Pty Ltd [2007] NSWSC 913 at [33], which was approved by Bathurst CJ in the Court of Appeal in Hannover Life Re of Australasia Ltd v Dargan [2013] NSWCA 57; (2013) 83 NSWLR 246 at [41] (the other four judges of appeal agreeing). See also Erzurumlu v Kellogg Superannuation Pty Ltd [2013] NSWSC 1115, and Folan v United Super Pty Ltd [2014] NSWSC 343.

63. Speaking on this subject, Stevenson J in Shuetrim v FSS Trustee Corporation [2015] NSWSC 464, said at [67]:

An insured person cannot be TPD within the meaning of the MetLife definition unless he or she is absent from his or her occupation through illness or injury for six consecutive months. It is, in my opinion, implicit in the definition that such incapacity must arise from the injury or illness that caused the six month absence from work. The definition thus requires consideration of whether the incapacity results from that injury or illness. The TPD definition thus directs attention to the insured person’s capacity, or lack of it, at the end of that period. That is, in my opinion, the time at which the insurer must consider whether the insured person is incapacitated in the manner called for by the definition. Otherwise, it would be open to an insured person to seek to satisfy the insurer, at any time after having been absent from work for six months, and perhaps many years later, that he or she was relevantly incapacitated by reason of the injury or illness that led to his or her absence from work.

64. According to his Honour, it is the insured person’s capacity at the end of the period of absence that is relevant. I will call this time the “assessment date”. If that were not so, it would be open to the insured person to claim many years later that he or she had become incapacitated in the manner required by the TPD definition, as a result of the injury or illness that had caused the absence from work, even though the insured person was not incapacitated in the relevant manner as at the end of the period.

65. As stated above, I do not understand the parties to the present case as having disputed the proposition that the issue is whether the TPD definitions were satisfied as at the assessment date. I note that the Court of Appeal in Shuetrim did not have to deal with a submission that the time at which the TPD definition was to be applied was not confined to the assessment date, “but extended to subsequent times”: see Shuetrim at [155].

66. If the question of whether the TPD definitions have been satisfied is to be determined as at the assessment date, a subsidiary question is: what evidence concerning the level of incapacity of the insured person should be taken into account when the determination is made?

67. The answer to this question that has been given in previous authorities has now been clearly established by the decision of the Court of Appeal in Shuetrim, where Leeming JA said:

[150] There can be no doubt that the medical and psychiatric opinions expressed in 2013 and 2014 were relevant to the consideration by TAL of the probability of Mr Shuetrim being able to return to work after July 2012. In McArthur v Mercantile Mutual Life Insurance at [74], Muir J said:

Medical reports coming into existence after the relevant time will be admissible provided that they are pertinent to the determination of the appellant’s condition at the relevant time.

McMurdo P agreed with Muir J. McPherson JA also agreed with this aspect of Muir J’s reasons, adding that it accorded with “the principle that the court does not speculate when it may know”: at [23]. The primary judge relied upon that statement of principle.

[151] More recently, the High Court’s decision in Finch v Telstra Super Pty Ltd [2010] HCA 36; 242 CLR 254 at [18] is confirmatory of the position. Of a materially identical clause in a trust deed, the High Court said that the member was entitled to submit that:

It can now be seen that the reason why I ceased to be a Telstra Employee was a state of affairs making it unlikely that I will ever engage in any gainful Work again. What matters is that that state of affairs arose while I was a Telstra Employee. It does not matter that the symptoms of that state of affairs emerged more clearly after I left Telstra’s employment.

68. Leeming JA found, at [153], that TAL was in breach of its duty to act reasonably in determining the application because it based its failure to be satisfied only on material from around the date of assessment, being around the end of the period of absence of work, but it had not properly taken into account more recent material.

What is meant by unlikely ever?

69. The Insurer made the following submission (omitting footnotes):

55.   There are a number of single instance decisions in which “unlikely” has been assessed separately, first, as being an assessment on the balance of probabilities.

57.   As noted above, the genesis of this reasoning is the decision of White v Board of Trustees (1997) 2 Qd. R 659 per White J at 672, at which she considered the terms “unlikely” and “ever” separately and found:

“The addition of ‘ever’ to the condition allows the Board to look well into the future but does not, in my view, affect the degree of unlikelihood to which regard must be had.”

58.   The effect of a disjunctive analysis is to lower the evidential onus on a Stage 2 assessment, and lower the level of satisfaction to the question of a probability.

59.   [The Insurer] submits that to treat the words disjunctively so as to resolve the question of “unlikely” on the balance of probabilities is in error. [The Insurer] submits the use of the words “unlikely” and “ever” are conjunctive, and is not disjunctive. It is a composite phrase used in the commercial document.

70. The issue of principle has now been decided by the Court of Appeal in Shuetrim, in that Leeming JA said:

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

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

[90] I would reach this conclusion independently of authority, but note that it accords with what was said in Beverley by the Western Australian Court of Appeal.

[91] To anticipate what follows, for an Insured Person to be unlikely ever to return to relevant work does not mean merely that it is more probable than not that he or she will not ever return to relevant work. The primary judge, understandably following what was stated in the headnote of White and in two recent first instance decisions, applied an incorrect test.

71. Given that the nature of the probability inherent in the expression “unlikely ever” has now been determined authoritatively, there is no need for me to consider the authorities that predate Shuetrim in any detail.

72. However, the issues that require determination in the present case make it necessary for me to consider a number of additional questions of principle.

73. The Insurer relied on the decision of Hallen J in Birdsall v Motor Trades Association of Australia Superannuation Fund Pty Ltd [2014] NSWSC 632 (which was upheld on appeal) at [124], as being an instance of a case where the word “ever” was treated merely as giving rise to an indication of the obligation to look well into the future. I do not accept that submission. Hallen J canvassed in a comprehensive way a number of authorities that dealt with the meaning of the expression “unlikely ever”: see [109] to [118].

74. Apart from the now rejected proposition that “unlikely” required a probability of less than 50%, the authorities establish two propositions, which in my view, survive the decision in Shuetrim.

75. The first is that the word “unlikely” sets a much lower test than would be posed if an insured had to establish absolute incapacity: see Ivkovic v Australian Casualty & Life Ltd (1994) 10 SR (WA) 325, at 351, and Davis v Rio Tinto Staff Superannuation Fund Pty Ltd [2002] FCA 376; (2002) 118 FCR 170. Leeming JA repeated this proposition in Shuetrim at [64].

76. The second is that the court must consider the actual, or real possibility of employment, rather than a theoretical possibility: see Halloran v Harwood Nominees Pty Ltd [2007] NSWSC 913; Nile v Club Plus Superannuation Pty Ltd [2005] NSWSC 55; Jeffrey Guy Baker v Local Government Superannuation Scheme Pty Ltd [2007] NSWSC 1173; Sayseng v Kellogg Superannuation Pty Ltd [2003] NSWSC 945; Kenan Berk v Westpac Securities Administration Ltd& Anor [2010] NSWSC 28; Lazarevic v United Super Pty Ltd [2014] NSWSC 96; and Folan v United Super Pty Ltd [2014] NSWSC 343.

77. It will be sufficient to set out only the following extracts from the authorities as samples of the views expressed by the judges. In Nile, Brownie AJ wrote:

[64] As Hodgson J pointed out in Chammas … one must consider not just the theory that someone is physically fit to do particular work, but also the actual likelihood of that person obtaining employment, meaning full time employment (or, I take it, substantially full time employment, generally comparable with the plaintiff’s employment before his 1996 injury) that was reasonably open to the plaintiff. Given the plaintiff’s education, training and experience, the prospects of his actually obtaining employment in any of the jobs suggested by Dr Innes-Brown were remote, and perhaps non-existent.

…

[65] The notion that some employer might employ him to do “clerical work“ had to be reconsidered in the light of the plaintiff’s affidavits, and one is left to wonder who might realistically be expected to employ him in that capacity, given his education, training and experience; and the proposition that he might be employed as a parking patrolman, standing and walking all day, is equally unpersuasive, given the plaintiff’s statements in his affidavit, and the medical evidence.

78. I should observe that it is now established that permanent part-time employment may be sufficient: see Hannover Life Re of Australasia Ltd v Dargan [2013] NSWCA 57; (2013) 83 NSWLR 246.

79. Nicholas J said in Sayseng v Kellogg Superannuation Pty Ltd [2007] NSWSC 583 at [64]:

The definition relates to disability to obtain future employment. It requires consideration of whether or not, on the evidence, it is probable that the insured would actually obtain work for reward (i.e. paid employment) for which he is qualified by education, training or experience, and whether his condition has disabled him from doing what he is qualified to do. The court is expected to take a realistic and common sense approach in its assessment. The application of the definition is directed to the realities affecting the capacity of the insured under consideration. It is not about theory. (Sayseng v Kellogg Superannuation Pty Ltd [2003] NSWSC 945, per Bryson J para 54; Ivkovic p 351; Nile v Club Plus Superannuation Pty Ltd [2005] NSWSC 55, paras 64, 65, 68).

80. The Court of Appeal did not expressly consider these principles in Shuetrim; they must be taken to continue to operate. Stevenson J, at first instance in Shuetrim [2015] NSWSC 462, restated these principles at [39], specifically by reference to the judgments in Nile and Lazarevic. The Court of Appeal did not make any adverse comment on this aspect of the judgment.

81. Leeming JA stated the effect of the expression “unlikely ever” in the following terms, at [89]: “On the other hand, if there is merely a remote or speculative possibility that the person will at some time in the future return to relevant work, an insurer will not, acting reasonably and in compliance with its duties, be able to be satisfied that the person is not TPD”. A “remote or speculative possibility” is to be distinguished from a “real chance”. There may be scope for debate about the relationship between Leeming JA’s observations, and the principles that I have described immediately above. In my view they are entirely consistent, and are merely different expressions of the effect of the term “unlikely ever”. Leeming JA focused on the degree of probability that is involved, while the judges in the authorities referred to above were concerned with what is required in the practical application of the “unlikely ever” test.

82. It is still necessary, in making a determination as to whether the TPD definitions are satisfied, to start with the medical evidence concerning the nature of the fund member’s incapacity at the time of the determination, and the prognosis for recovery and improvement in the level of capacity. It is necessary to look forward from that date in a way that is real or practical, and not theoretical, and which has regard to the actual objective and subjective circumstances of the fund member. There will be many cases where the fund member has a residual capacity to undertake work, or a real chance of recovery, so that looking forward over a considerable number of years justifies a conclusion that there is a real chance that the fund member will obtain relevant employment. However, the decision in Shuetrim does not give licence, in cases where there remains a considerable number of years of potential working life, to an immediate focus on the length of the period and an intuitive assessment that there is a real chance of relevant employment, on the basis that anything might happen given a long enough time for it to happen in.

83. In practical terms, the application of the “unlikely ever” test, as explained in Shuetrim, is likely to be influenced substantially by two factors; being first, whether the fund member may have some residual capacity for relevant work at the time of the determination; and secondly, whether the symptoms of the injury or illness have had time to stabilise by the time the determination is made.

84. These factors have limited application in Ms Wheeler’s case. First, the expert psychiatric evidence that was contemporaneous with the rejection by the Insurer of Ms Wheeler’s application was that she was then incapacitated from all forms of employment, and at the time of the hearing the Insurer conceded that position. Consequently, in Ms Wheeler’s case, she did not have some residual capacity that would justify an enquiry as to the likelihood that she would gain relevant employment during the balance of her working life. The question is whether, by further treatment or natural spontaneous recovery, Ms Wheeler will gain additional capacity. It is only if that question is answered positively, that there will be scope for considering the possibility that she will gain relevant employment. Secondly, although it took a number of years to happen, by the time the Insurer rejected Ms Wheeler’s claim, some five years had elapsed since the end of the period of her six months absence from work, and Ms Wheeler’s psychological disorders had stabilised in a way that enabled the reporting psychiatrists to conclude that her PTSD had become chronic, and her level of incapacitation was unlikely to change over the balance of her working life. Accordingly, the problem did not actually arise in the present case that the determination was made at a time when there was substantial uncertainty as to Ms Wheeler’s prognosis, because her disorders had not yet stabilised.

85. Therefore, it is not, necessary for me in this case to consider the two factors to which I refer above in any detail.

86. I merely observe, in relation to the first factor, that it will usually be important to distinguish cases where the fund member is currently totally incapacitated from work, from those in which the fund member has some apparent residual capacity to engage in employment. In the former, the focus must be on the likelihood and consequences of any recovery of capacity. In the latter, the focus is likely to be on the likelihood, in a real and practical but not theoretical sense, that the fund member is capable of undertaking work within the relevant category, and is actually likely to obtain work of that nature.

87. In relation to the second category, a number of observations by Leeming JA in Shuetrim warrant note. It will be convenient to recapitulate the problem from above. Speaking generally, and no doubt simplistically, 70% of persons who suffer from PTSD are likely to recover, at least sufficiently to give them capacity for relevant employment. Thirty percent of sufferers are likely to become chronic, and may lose all capacity for relevant employment. If the determination of the fund member’s entitlement to the TPD benefits is made early in the treatment process, a medical conclusion that the fund member has a 70% chance of recovery will clearly cause the fund member to fail the “unlikely ever” test. That will be so, even though 30% of claimants may in fact have a level of incapacity for employment that satisfies the TPD definitions.

88. Leeming JA, at [74], referred to a submission made by senior counsel for TAL in the following terms:

[74] Mr Jackman SC also made the following submission:

[I]n the particular context of our clause ... there is a further reason which doesn’t appear in all of these definitional clauses to [prefer] the stronger view of no real chance and that is that the parenthetic words in our definition deal with the situation where a condition is unclear. Now, if something is unclear, then the scales are finely balanced and in those circumstances the insurer has the ability to defer assessment, but when the insurer comes to making the assessment, the way that our definition operates, it proceeds on an assumption that the condition is no longer unclear, that is it’s clear one way or the other and if it’s clear one way or the other, one then wouldn’t construe ‘unlikely’ by adding the extra words in the sense of more unlikely than not. If it’s clear, then there’s no difficulty applying the test of no real chance, but there has been confusion in the authorities which seems to have been occasioned more by the head note and, perhaps, some of the reasoning of White J which at one point seemed to proceed on the basis that there wasn’t a significant difference between the rightful formulations, but we would submit there is and her Honour was correct in the ultimate conclusion that was reached.

89. This submission was based upon certain wording contained in TAL’s definition of TPD that is not present in the TPD definitions in the Policies. The relevant TPD definition was:

…The Insured Person having been absent from their Occupation through Illness or Injury for 3 consecutive months (where the Insured Person’s condition is unclear it is reasonable to defer assessment) and having provided proof to the satisfaction of us that the Insured Person has become incapacitated to such an extent as to render them unlikely ever to engage in or work for reward in any occupation or work for which he or she is reasonably qualified by reason of education, training or experience. (Emphasis added)

90. This TPD definition therefore expressly dealt with, at least to some extent, the problem of the fund member’s condition being unclear at the date of the application for the TPD benefit. The definition contemplates that the assessment may be deferred until the condition has become clear.

91. TAL’s submission was that, where the fund member’s condition is unclear, and “the scales are finely balanced”, then the insurer has the ability to defer assessment. If the assessment is then made, when the fund member’s condition has become clear, then there is no difficulty in applying the test of no real chance. If it is right to say that the uncertainties involved in applying a particular TPD definition may include: first, uncertainty as to the nature of the incapacity; secondly, uncertainty as to prospect of recovery; and thirdly, likelihood of obtaining relevant employment with residual capacity, the TAL definition deals appropriately with the first of those uncertainties. If it be accepted that the real commercial purpose of the Policies is to give the TPD benefits to fund members who in fact are incapacitated in a way that satisfies the TPD definitions, then the TAL TPD definition removes an uncertainty that should not lead to the TPD claim being rejected.

90. Leeming JA responded to TAL’s submission by saying, at [88]:

[88] … I also agree with TAL’s submission that the bracketed words in the TAL policy tell against the construction in the headnote. Those words confirm what flows from the ordinary meaning of the language of “unlikely ever”, namely, that where there is a real chance that a person may return to relevant work, even though it could not be said that a return to relevant work was more probable than not, the insurer would not be satisfied that the definition applies. “Unlikely ever” is, in this context, much stronger than “less than 50%”.

93. The head note referred to is the head note in the report of the decision of White J in White v The Board of Trustees [1997] 2 Qd R 659. It is not necessary to refer to that headnote. The point is that Leeming JA accepted TAL’s argument that the bracketed words in TAL’s TPD definition supported the submission that “unlikely ever” did not mean “less than 50%”. That must involve an acceptance of the argument that, if the TPD definition contemplated that the assessment would take place after the condition, being the nature of the incapacity suffered by the fund member, has become clear, it was appropriate to equate “unlikely ever” to “no real chance”.

94. Clearly, Leeming JA gave the same meaning to “unlikely ever” in the Insurer’s TPD definition (which was in the same terms as the TPD definition in the Blue Ribbon Policy in the present case) as he gave to that term in the TPD definition in the TAL policy. The inclusion of the bracketed words was not essential to the conclusion that Leeming JA reached. However, it may be respectfully wondered what underlying assumption was made by Leeming JA as to the issue of whether the application of the TPD definition in the Blue Ribbon Policy permitted the assessment of whether the TPD definition was satisfied at a time when there was substantial uncertainty as to the level of incapacity caused by the fund member’s condition.

95. One possible pointer to his Honour’s view is an observation that he made at [111], in response to submissions concerning the likelihood of a return to work that would satisfy the TPD definitions: “…it might also warrant deferring the assessment date”. This peripheral observation may support the proposition that in some cases, the assessment should be deferred to give at least a reasonable time in the circumstances for the level of incapacity suffered by the fund member to become as clear as possible before the assessment is made.

96. It is, of course, unlikely that all illnesses and injuries will neatly fall into a division that allows for a period in which it will be possible to determine the real long-term incapacity that is caused to the fund member, and then to separately consider the possibilities of partial recovery and residual capacity for work. Many illnesses and injuries will lead to substantial long-term uncertainty of outcome. The question will be whether the Insurer’s duty of good faith and fairness to the fund member will require, in an appropriate case, that the Insurer defer the assessment of the fund member’s complaint until there has been at least a reasonable opportunity for the condition of the fund member caused by the illness or injury to stabilise, at least to the greatest extent reasonably possible, to give a sound basis for the application of the TPD definition. That would involve an attempt to remove, as far as reasonably possible, the degree of uncertainty of outcome caused by uncertainty about the level of incapacity suffered by the fund member. It would lead to a conscious attempt to minimise the possibility that claims by fund members with genuine TPD are wrongly rejected, because of an irrelevant uncertainty as to the true level of incapacity as at the assessment date. Realism requires that it be accepted that these considerations would need to be applied at times when the claimant fund member is likely to be demanding as early an assessment of the claim as is possible.

Insurer’s determination of Ms Wheeler’s claim

Ms Wheeler’s application

97. As stated above, the last day that Ms Wheeler worked as a member of the New South Wales Police Force was on 21 September 2010. Ms Wheeler was retired hurt from her employment on or about 2 February 2012.

98. On 5 March 2012, the Trustee sent to Ms Wheeler a number of forms and a questionnaire to be completed, in order for her to make her TPD benefit application. The letter contained the following:

… After the insurer has conducted an initial review of the claim, it will advise what further information will be required to continue with the assessment. This may include obtaining a copy of any relevant workers compensation file, requesting further information from you or your employer and/or obtaining more detailed reports from one or more of your treating doctors. In some cases you may be requested to have one or more independent medical examinations. [The insurer will cover the cost of any information they request from third parties]…

Please note that any decision made by an Insurer must be reviewed by the Trustee of the FSS before the outcome is advised to you. This is to ensure that the outcome is fair and reasonable and in the case of an accepted claim, to check the correct amount of insurance has been paid.

99. This instruction may reflect the terms of the Policies which dealt with the making of claims. I have set those terms out above at pars 28 and 31. As I have observed above, those terms contemplate that the Insurer will carry out an investigation, and that Ms Wheeler will provide to the Insurer such evidence to substantiate her claim as the Insurer may reasonably require.

100. While the fact remains that the TPD definition speak in terms of the insured person “having provided proof to our satisfaction”, as a practical matter, the process of investigation appears to be governed by the claims term in each of the Policies.

101. Ms Wheeler made her application for the TPD benefit by completing by hand, the pro forma documents sent to her by the Trustee. She signed an application for payment of the disabled benefit, which was printed under the letterhead of the Trustee, on 8 May 2012. She also provided a medical statement, under the letterhead of both the Trustee and the Insurer, which was partly filled out by herself, and partly by her treating psychiatrist, Dr Selwyn Smith. That document was completed on 31 May 2012. On 8 May 2012, Ms Wheeler also completed a form called a statement of claim, under the letterhead of both the Trustee and the Insurer. It appears that the claim was forwarded by the Trustee to the Insurer on about 2 July 2012.

102. In response to Question 5 in the medical statement, being: “Please provide a summary of the patient’s present condition including causes, symptoms and diagnosis”, Dr Smith wrote, in the three lines made available: “Ms Wheeler has been exposed to a significant number of distressing and traumatic events causing her to significantly decompensate with symptoms of PTSD”. His response to the question of what the patient’s capabilities and limitations were was “Totally incapable” and “Totally limiting”. He stated that Ms Wheeler was “Not likely to return to work”. His comment in the space provided for “Other comments” was simply “Not capable of working”.

103. On 12 July 2012, the Insurer wrote a letter to Ms Wheeler, in which it sought provision of certain information and authorities, and advised her that it would request information directly from Dr Smith, and Ms Wheeler’s GP, Dr Doan.

104. On 2 August 2012, the Insurer wrote to Ms Wheeler requesting her to attend a consultation with Dr Richard Burek, for the purpose of his providing an independent psychiatric opinion to the Insurer.

105. On 17 September 2012, the Insurer arranged for Ms Wheeler to attend upon a senior rehabilitation consultant, on 16 October 2012, for the purpose of the Insurer being given a vocational assessment.

106. Then, on 19 November 2012, the Insurer arranged for Ms Wheeler to participate in a factual interview, to be conducted by Brooksight on 10 December 2012.

107. The Trustee wrote to Ms Wheeler, on 5 March 2013, requesting that she provide the Trustee with tax returns and notices of assessment for the years 2010 and 2011.

108. Instead of the Insurer requiring Ms Wheeler to put forward all of the material necessary to satisfy the Insurer that she had satisfied the TPD definition, as at the assessment date, it accepted an application based upon the completion of a number of forms, which required Ms Wheeler to provide very little information at all to support her application. Ms Wheeler was unrepresented by any lawyer when she made her application. Contrary to its entitlement not to make any investigations, the Insurer made nearly all of the investigations that were made.

Insurer’s investigation of Ms Wheeler’s claim

109. Before I deal with this issue, I will mention a number of matters that have affected my ability to determine why the Insurer’s investigation proceeded in the manner in which it did.

110. First, the Insurer has not called evidence from any claims manager to explain the reasons for the course adopted by the Insurer. That may be the usual course in matters such as the present, but it does limit the ability of the court to work out what was really happening within the Insurer’s office.

111. Secondly, the Insurer’s file is not in evidence, in the sense of there being a sufficiently complete file to enable the court to be confident that it can understand what happened, when, and why.

112. Elements of the Insurer’s file are in evidence; principally, the documents that the Insurer puts forward on the basis of an implication that the documents constituted the whole of the material that influenced the Insurer in making its determination. The assertion that that implication should be drawn is not supported by evidence. The evidence also includes documentary communications received and sent by the Insurer, in some cases being letters of instructions to experts for the provision of reports. However, the correspondence is disconnected from the claims material, so that it is not possible for me to reconstruct the file with confidence.

113. The Insurer commissioned its own psychiatric reports from two psychiatrists, shortly after it received Ms Wheeler’s claim. One was Dr Selwyn Smith, who was Ms Wheeler’s treating psychiatrist; who has seen her regularly from at least early 2011 to date; and who has provided a number of medical reports to various correspondents, as well as two reports to the Insurer.

114. The other psychiatrist was Dr Richard Burek, who has provided two medico-legal reports to the Insurer. Dr Burek only interviewed Ms Wheeler on one occasion, being 6 August 2012. Ultimately, the Insurer was not able to rely upon the evidence of Dr Burek for medico-legal purposes in these proceedings, because it discovered shortly before the date on which the hearing began, that Dr Burek was suffering from dementia.

Dr Selwyn Smith’s reports

115. As disclosed in the Insurer’s 13 August 2015 procedural fairness letter, the Insurer obtained from some source, I assume probably from the workers compensation insurer, a number of earlier reports prepared by Dr Selwyn Smith, which it relied upon in making its determination of Ms Wheeler’s claim.

116. It will be convenient, for the sake of clear exposition, to deal with Dr Selwyn Smith’s reports in chronological order, even though that will not reflect the order in which the Insurer received those reports.

117. In a report dated 24 March 2011, which was coincidently three days after the end of the six months, during which Ms Wheeler had been absent from work, Dr Smith reported to Allianz Australia Insurance Ltd:

… Ms Wheeler in my opinion is not currently fit to work within the NSW Police Force.

Ms Wheeler is currently not fit to work externally to the NSW Police Force. I do anticipate however that over time she will be able to engage productively in work outside the NSW Police Force.

In my opinion Ms Wheeler’s prognosis for returning to the NSW Police Force on pre-injury duties must be viewed as poor. This is in light of the chronicity of her symptomatologies…

As stated treatment will not reintegrate Ms Wheeler into work with the police but will assist her in reintegrating into alternative work outside the NSW Police Force… (Emphasis added).

118. Dr Smith gave a report to Employers Mutual Ltd on 29 April 2011. He said:

… I anticipate that her attendance at the Post-traumatic Stress Disorder (sic) will considerably assist in the amelioration of her Post-Traumatic Stress Disorder symptoms.

It is difficult to be categorical in regard to Ms Wheeler returning to police Force duties following her attendance at the Counselling and Therapy Centre Post-traumatic Stress Disorder program. I would anticipate that she will be able to engage in alternative work shortly after the program has been completed.

I am guarded in regard to her re-engaging at pre-injury duties. (Emphasis added)

119. It will be convenient here to interpolate reference to a report prepared by Dr Graham George on 29 August 2011, which was addressed to Employers Mutual Indemnity (Workers Compensation) Ltd. The reason for the interpolation is that Dr Smith responded to this report, in the next report that is considered below. Dr George diagnosed Ms Wheeler with having chronic PTSD, and major depression with anxious mood. He gave the opinion that Ms Wheeler was not capable of participating in employment and other life roles. However, in response to a question as to whether Ms Wheeler’s symptoms were likely to improve with psychiatric treatment, Dr George responded: “Hopefully, her symptoms will improve with treatment”. Dr George said that Ms Wheeler was not currently or in the future able to return to work as an operational officer within the NSW Police Force. Significantly, in response to a question as to why there had been no substantial improvement in Ms Wheeler’s psychiatric condition since leaving work, Dr George responded:

There has been some improvement in her condition, but often, in cases of post-traumatic stress disorder, a patient has to learn to live with ongoing symptoms over time. Often, full recovery does not occur.

120. On 23 September 2011, Dr Smith wrote a report to the NSW Police Force, in which he had been asked to respond to Dr George’s report. Dr Smith said that he had re-examined Ms Wheeler on 21 September 2011. His report included:

1.   I do agree with the recommendations following Dr George’s examination and in particular that Ms Wheeler is unable to return to the NSW Police Force in any capacity…

3.   In my opinion Ms Wheeler may be able to engage in work in the future outside the NSW Police Force. She previously worked in nursing but has no desire to reintegrate into nursing work. Exactly what other work she could do I am unable to advise you. (Emphasis added)

121. Dr Smith wrote a further report to Employers Mutual Ltd on 27 January 2012, which included:

3.   Ms Wheeler may have the capacity to work in an alternative job and with a new employer. She does have qualifications as an enrolled nurse but has not worked in that field since 1998. She may require a separate vocational evaluation to determine what she can do.

4.   Ms Wheeler should avoid police related activities in any future occupation.

I would be supportive of further exploration in regard to her alternative work within the next few weeks.

5.    I do believe that Ms Wheeler does have the capacity to participate in a vocational assessment with an approved rehabilitation provider in order to establish a new return to work goal… (Emphasis added)

122. On 1 May 2012, Dr Smith wrote a letter to Strategic Rehab Solutions, which prepared a vocational assessment report, dated 10 April 2012, for Employers Mutual Ltd. The report found that Ms Wheeler was capable of working in six occupations, which were said to be suitable by reference to her training, experience and qualifications. The Insurer relied upon this vocational assessment report, when it decided to decline Ms Wheeler’s application. Dr Smith said:

In general she would be able to undertake all the options you have suggested. I would however exclude her from undertaking work as an investigator or engaging in security or working as an insurance investigator as these would in all probability be difficult for her in the light of the previous adverse experiences with the NSW Police Force.

You should be advised that Ms Wheeler continues to experience psychiatric symptomatology of significance and may not be able to participate in such work. A trial job option may be in order. (Emphasis added)

123. These series of reports reflected Dr Smith’s professional understanding of Ms Wheeler’s capacity, and her ability to undertake work outside the NSW Police Force, at the time when he was requested by the Insurer to provide it with a report.

124. Dr Smith’s final word was that he thought that “in general”, Ms Wheeler would be able to undertake some of the work options identified by Strategic Rehab Solutions, but she “may not be able to participate in such work”. He suggested that a trial job may be in order.

125. These reports were all prepared in the year after the assessment date. It is reasonably clear that, on the basis of the evidence that was then available, the incapacity caused to Ms Wheeler by her PTSD did not appear to satisfy the TPD definition.

126. The Insurer wrote a letter of instructions to Dr Smith, on 12 July 2012, which materially asked:

We refer to the claimant’s Total & Permanent Disablement claim with [the Insurer]

To assist us in assessment of this claim, it would be appreciated if you could provide us with the following information…

2)   What is the current psychiatric diagnosis? Would you please express this in DSM IV terms and make some comment as to the severity of this condition?

3)   Please outline the specific criteria satisfied to make this diagnosis…

5)   Would you please outline your management plan including treatment, frequency of appointments (please provide dates), treatment, medication and dosages.

6)   What alternative strategies would you consider should the current management plan be unsuccessful?

7)   Which symptoms are preventing the claimant from returning to work and why?

8)   What is the claimant’s current work capacity?

9)   Your short and long-term prognosis including the likelihood of return to previous work responsibilities in either full or partial capacity.

10)   Are there any other factors which you believe may be contributing to or perpetuating this condition (e.g. relationship, family, medical, substance abuse, personality issues or financial problems).

11)   Is the claimant’s condition stabilising/deteriorating/improving?

…

The information we are requesting is for the primary purpose of the assessment and investigation of this claim…

127. Dr Smith provided a report to the Insurer on 31 July 2012. Dr Smith gave the following psychiatric opinion:

It was my opinion following my initial examination that Ms Wheeler demonstrated diagnostic criteria for a Post-traumatic Stress Disorder in association with heightened levels of anxiety and depression… She has remained under my clinical care. In the light of her ongoing symptomatologies it was my opinion that Ms Wheeler could not engage in productive work with the NSW Police Force and it was against this background that I supported her discharge on medical grounds, hurt on duty. This was accepted.

128. Dr Smith evaluated Ms Wheeler, from a DSM-IV perspective, as having chronic PTSD and major depressive disorder, and that her current condition was moderately severe.

129. Relevantly, in response to the Insurer’s questions 8, 9 and 11, Dr Smith answered:

8.   In my opinion Ms Wheeler is currently incapacitated for work.

9.   In the short-term her prognosis must be viewed as poor. She may in the future return to alternative work. As stated however at the present time this is not possible…

11.   Her condition in my opinion has stabilised. (Emphasis added)

Q. When you say you can't remember anything

A. I can't remember dates.

Q. Is the best you can do that it was possible that you were on occasions drinking up to two bottles of wine per night as at September 2010/October 2010, is that what you tell the Court?

A. I don't understand what you're asking, you've confused me.

Q. On occasions were you drinking excessively as at September and October 2010?

A. On occasions yes.

Q. What about outside that occasional use, in September 2010 would you drink every night?

A. In September?

Q. In September 2010 were you drinking every night?

A. I don't recall. I can drink nights in a row and then I can go weeks without a drink before I get stressed and then I need another one. That's the best I can answer that question.

Q. Do you say that that's been the pattern over the last six years?

A. Yes.

331. I accept the evidence given by Ms Wheeler that she has not, for the last five years, consumed alcohol in the amounts that Dr Sydney Smith understood her to have done. Ms Wheeler definitely did not present in the witness box as if she had consumed such an extreme amount of alcohol, for so long a period. The cause of the misunderstanding is unclear. It is likely that the misunderstanding occurred because of some false impression unintentionally conveyed by Ms Wheeler, during her short examination by Dr Smith, while she was affected by her mental disorders and the increase in anxiety that she suffered following the adjournment of the first hearing.

332. Ms Wheeler was cross-examined at length about responses she had given to questions asked by Strategic Rehab Solutions, about voluntary work that she had done at Christmas in Narellan, about her participation in the P&C committee at her children’s school, about her ability to drive a motor vehicle, about her attending the local shops and doing grocery shopping and other shopping, about her playing in the local netball team, and about a holiday she took with her husband and children to London and Paris for about six weeks. As I have said, in my view, Ms Wheeler responded to the questions in a very candid way.

333. As to the holiday, Ms Wheeler said (T 51):

Q. On that holiday did you feel that you drank too much, while you were out on that holiday?

A. I did drink a lot, I had a lot of panic attacks. I was very uncomfortable being away so far from home. Not long after the return, I was admitted to hospital for four weeks.

334. Ms Wheeler was cross-examined about the circumstances in which she participated in the showing of her Boston terrier (T 55 and 56):

Q. You'd acquired a small Boston Terrier which actually had some show potential?

A. Well, I actually bought him as a pet, but when I took him back to the breeder for a visit, she said he's turned out really lovely, can we show him, so I didn't show him, she showed him.

Q. It's common enough for the owner not to be the shower at a dog show; is that right? You have a show, somebody to show the dog?

A. No, I've got friends that show their own dogs.

Q. Did you ever involve in showing Rory yourself?

A. No.

Q. But you attended these shows from time to time, didn't you?

A. From time to time I went to watch him.

…

Q. You've travelled widely with the dog showing circuit, that's correct isn't it?

A. I wouldn't say widely.

Q. You've been to Canberra on dog shows.

A. I went down to Canberra, yep.

Q. You've been to the South Coast, is that right, on dog shows?

A. Yep. That's just a drive for the day, yep.

Q. You've been to Queensland on the dog shows?

A. Yes, once I went to Queensland, in the last three years, once. I've been to Canberra show once, and the Queensland show once. Rory goes, but I just don't go everywhere.

Q. But that's something that you've found to be a satisfying activity, isn't it? You've enjoyed that activity?

A. I have, yep.

Q. Just out of interest, and you may be able to help me, does the name or the entity Easy Dog Entries mean anything to you?

A. Is that when you enter the dogs into shows? I don't do the entries. I've never done an entry…

335. It is clear that from time to time, Ms Wheeler has been able to engage in activities that are consistent with the behaviour of ordinary and psychologically healthy people. Those activities have consistently been occasional, and relatively infrequent. The effect of the expert medical evidence was that the ability of Ms Wheeler to engage in activities of these types was not inconsistent with her being totally incapacitated from engaging in any form of ordinary employment, because of the effect of the PTSD and major depressive disorder from which she was suffering.

336. In my view, the proper course for the court to take is to rely upon the expert medical evidence, and in properly considering the evidence, to make any necessary findings concerning the effects of the mental disorders from which Ms Wheeler suffers.

337. Ms Wheeler relied on three additional medico-legal reports prepared by Dr Selwyn Smith on 2 September 2015 and 15 October 2015, and then on 9 December 2015, in response to Dr Sydney Smith’s first report.

338. The opinion expressed by Dr Selwyn Smith is encapsulated in the following extracts from his 2 September 2015 report:

2.   Ms Wheeler continues to display significant psychiatric disability related to her Post-Traumatic Stress Disorder, chronic in duration, and comorbid Major Depressive Disorder…

There has been no significant change in Ms Wheeler’s condition that would cause me to alter my previously expressed opinions in regard to her being incapacitated to undertake her former career as a police officer…

I remain of the opinion that Ms Wheeler continues to be incapacitated for alternative work and in particular such occupations as suggested in the vocational capacity report namely that of insurance operator, welfare officer, office manager, investigator, security, loss prevention, control room, alarm monitoring and insurance investigator.

Ms Wheeler would not be able to muster the ability to undertake such work because of her ongoing psychiatric symptoms. She lacks the ability to focus and concentrate to any extent. Her self-esteem and self-confidence have been markedly lowered. Her psychiatric disability in my opinion would be apparent to the public at large as well is any prospective employer.

4.   I remain of the opinion that Ms Wheeler is presently not able to return to the workforce in any capacity, either on a full-time or part-time basis because of her psychiatric conditions.

5.   At no time have I observed any clinical signs that indicate to me that there is a real chance that she will return to the workforce whether in full or part-time role in the future. Since leaving the NSW Police Force Ms Wheeler has not displayed significant improvements. My opinion accords closely with that of Dr Robert Wotton in regard to her poor prognosis pertaining to her psychiatric disorder and her ability to work.

6.   It is my opinion that Ms Wheeler is incapacitated to such an extent as to render her unlikely ever to engage in or work in any occupation (either on a full-time or part-time basis) for which she is reasonably qualified by means of education, training or experience…

339. In the course of his lengthy response to Dr Sydney Smith’s primary report, dated 15 October 2015, Dr Selwyn Smith said, in his 9 December 2015 report:

I respectfully disagree with Dr Smith’s conclusion that Ms Wheeler’s Post-Traumatic Stress Disorder is secondary to her depression. Her Post-Dramatic Stress Disorder is a primary psychiatric disorder. There is no such clinical entity as a secondary Post-Traumatic Stress Disorder as stated by Dr Smith. His opinion is at striking variance with those of other clinicians who have examined Ms Wheeler, none of whom have suggested “a secondary Post-Traumatic Stress Disorder”…

Dr Sydney Smith’s opinion is also at striking variance with clinical personnel at St John of God Hospital Richmond who have treated Ms Wheeler. All clinical personnel have been consistent in emphasising the extent of her post-Traumatic Stress Disorder and comorbid Major Depressive Disorder. Dr Burek is also quite clear in his opinion that Ms Wheeler suffers from chronic Post-Traumatic Stress Disorder and Major Depressive Disorder…

Ms Wheeler does demonstrate diagnostic criteria for an Alcohol Use Disorder. Her Alcohol Use Disorder in my opinion is secondary to her Major Depressive Disorder and Post-Dramatic Stress Disorder. The alcohol intake has fluctuated with time. It is directly related to the degree of distress she is experiencing.

Ms Wheeler’s alcohol utilisation has been discussed with her. As referred to in Dr Smith’s own report Ms Wheeler did benefit from her inpatient stay where she was detoxified and her reliance on alcohol was discussed. It should be noted that her comorbid Major Depressive Disorder was also addressed during her inpatient stay at the hospital (Xavier Unit) during her hospitalisation…

At the present time it is my opinion that Ms Wheeler is not in need of the addition of a further antidepressant… She is not a candidate for electroconvulsive therapy. She is not in need of admission to a mood disorder clinic such as the Prince of Wales Hospital.

I have difficulty in accepting Dr Smith’s conclusion that she has never received appropriate treatment for her mental disorder. Dr Smith has for some inexplicable reason dismissed the significant impact of her Post-Traumatic Stress Disorder has had on her. He has instead emphasised her Major Depressive Disorder that in my opinion is currently in partial remission. His opinion is at striking variance with those expressed by other experienced clinicians who have a significant and broader knowledge of Ms Wheeler’s clinical state that accords closely with my own as her treating psychiatrist…

Given the length of time that Ms Wheeler has experienced her psychiatric disorders and that she has been deemed to have stabilised from a psychiatric perspective by other examiners I have considerable difficulty in accepting Dr Sydney Smith’s opinion that the introduction of further medication will ameliorate her symptoms. I also have marked difficulty in accepting his conclusion that voluntary work at the children’s school will transfer into paid work…

Dr Smith has not considered that in addition to Ms Wheeler experiencing distinctive features of a Post-Traumatic Stress Disorder and her Post-Traumatic Stress Disorder has also resulted in persistent and exaggerated negative beliefs and expectations about herself. She has experienced distorted cognitions about the consequences of traumatic events she has experienced. She has continued to experience fear, guilt and shame with a markedly diminished interest in participation in significant activities. She has avoided stimuli including social interaction to any extent, particularly in interpersonal situations that arouse recollections of the traumatic experiences. Such symptoms are also reinforced by her underlying Depressive Disorder.

In my clinical experience having dealt with a large number of police officers and other patients who have developed Post-Traumatic Stress Disorder that despite intensive treatment of the type that Ms Wheeler has undergone they nevertheless continue to experience a marked degree of chronicity that significantly intrudes into their capacity to engage in productive employment. Indeed my clinical experience has revealed that only a minority of police officers are able to return to police work or engage in productive work roles on the open labour market. Often they remain unemployable, socially avoidant and expeience a marked degree of chronicity pertaining to their Post-Traumatic Stress Disorder symptoms. Many patients do not recover despite active psychiatric treatment. At best many can only undertake menial tasks.

I respectfully disagree with the opinion of Dr Sydney Smith who has discounted the extent of Ms Wheeler’s post-traumatic symptomatologies and the impact these, together with her depressive symptoms, are having on her capacity to reintegrate into work. The fact remains that there are some patients who do not respond to the panoply of treatment suggested by Dr Smith that he has directed to the depressive component of her psychiatric condition. He has not addressed at all the fact that she has undergone extensive treatment for her Post-Traumatic Stress Disorder at a highly regarded hospital program for Post-Traumatic Stress and has only partially ameliorated but not to the extent that she would in my opinion be capable of integrating into the open labour market.

In conclusion there is nothing within Dr Smith’s report that causes me to modify the original opinion is that I have expressed.

340. I found Dr Selwyn Smith to be a very impressive expert witness under cross- examination. Although he prepared a number of medico-legal reports for Ms Wheeler in the period leading up to the hearing, he was also her treating psychiatrist for a period of about five years, and treated her regularly over that period.

341. Dr Selwyn Smith was sometimes aware in detail, but in other times aware in outline, of the day-to-day activities that have formed the basis of the Insurer’s case that Ms Wheeler is sufficiently capable at present, and that the court should not find that she will be unlikely ever to undertake the requisite employment. Dr Selwyn Smith was unmoved in his view that these occasional and short-term activities were not inconsistent with the basis of his opinion that Ms Wheeler has no realistic likelihood of being able to engage in any form of employment in the future. The doctor said that he encouraged these activities, because they were likely to ameliorate Ms Wheeler’s suffering, as it is damaging to people with her psychological disorders to lock themselves in their homes.

342. The essential point made by Dr Selwyn Smith was that he was aware, sometimes in specific terms and in others more generally, of the activities that Ms Wheeler undertook, on days when she was feeling more hearty; and he in fact encouraged her to undertake those activities for her own good. The fact that she could engage in activities of this type intermittently was not inconsistent with her being permanently incapable of employment.

343. Dr Selwyn Smith said in examination in chief concerning his awareness of Ms Wheeler’s alcohol consumption (T 99):

A. Her alcohol intake has fluctuated, fluctuated wildly and it’s usually directly linked to her emotional state, or adverse experiences…

A. In my view, Ms Wheeler’s alcohol intake is secondary to her underlying and predominant psychiatric program, namely her post-traumatic stress disorder, chronic in duration in association with a major depressive disorder. Her alcohol is predominantly used to numb her, to assist her in sleeping predominantly and that is not unusual in my experience.

Q. What opinion do you have about the proposal of Dr Sydney Smith that she be sent off to drug and alcohol counsellors? At this stage at any rate?

A. I don’t see any particular benefit. Ms Wheeler has a good rapport with the treating personnel she’s seeing. She sees me, she is open and frank. She discusses her alcohol intake… She’s done three hospital programs, two of which were inpatient programmes and in my judgment, the inpatient program has been the most efficient if you will in allowing her to cease her reliance on alcohol. I think that’s far superior than going to a drug counsellor who in my experience doesn’t have the broad experience of a psychologist or psychiatrist, who can deal if you will with co-morbid conditions.

Q. Is it likely to assist her with her PTSD?

A. No.

344. Dr Smith’s fundamental disagreement with Dr Sydney Smith was in his opinion that the primary disorder was PTSD (T 100). He said that there is no such clinical entity as secondary PTSD.

345. Dr Smith explained in detail (T 101) why he disagreed with Dr Sydney Smith’s opinion that Ms Wheeler’s condition would be improved if she was placed on a combination of additional antidepressants. He said:

“… it is often times dangerous to combine medications, and in my judgment there is really no firm reliable scientific evidence that it is effective. Dr Smith refers to a stacking approach of addition (sic) more medications, increasing the dosage, and in my judgment that is likely to result in adverse effects. Ms Wheeler is already experiencing adverse effects. She’s gained weight. She did gain weight with the Avanza of 16 kg. There’s been sexual dysfunction. I’m concerned about her weight again, which carries a risk of metabolic syndrome, diabetes, and there is a very serious condition, particularly with antidepressants which one must always be cautious of, of serotonin syndrome. Particularly when you raise levels of antidepressants, serotonin is the chemical in which you’re attempting to raise at the nerve ending, synapses in the brain. If you are not careful and you raise the levels too high, the patient would experience significant side-effects, if not death. There are a whole host of other adverse effects, I’m talking about neuroleptic syndrome, I could go on and on but the side effects of these drugs are significant…

346. Cross-examined about Ms Wheeler’s volunteering to read at her son’s school, Dr Smith said (T 104):

A. I was encouraging Ms Wheeler as were others to engage in some activity to get her out of the house, she was becoming housebound, volunteer activity. The involvement in the school was a key step for her, but one should also emphasise the importance of that was also related to her need to be close to her children. She was given the background extremely concerned for the well-being of her children. She had been exposed to a number of deaths involving children. She was fearful that her children would be harmed and so in engaging in the school in a voluntary capacity with the P & C committee she did, it was a method if you will of being close to the children and ensuring the children were safe. And in that sense it helped her and I encouraged her.

347. Questioned about his agreement to an arrangement suggested by Ms Gow, of Strategic Rehab Solutions, that Ms Wheeler undertake voluntary work for up to 10 hours a week at the Sackville Road Primary School, Dr Smith said (T 106):

A. The clinical problem Ms Wheeler is confronted with pertains to a markedly fluctuating picture. There are some days when she has the capacity to make an effort and mobilise herself and get up and do what she is supposed to do and there are other days when she is quite immobile and she is withdrawn and she is isolated and she doesn’t want to move at all other than just to stay at home in her pyjamas. My recollection is that she could not engage in that school activity she was down. She had no motivation, no drive, and it wasn’t possible for her.

348. Asked about whether he enquired about Ms Wheeler’s alcohol consumption, Dr Smith said (T 107):

A. Yes. I would enquire about her alcohol. I know Dr Sydney Smith’s made an issue that I haven’t enquired. This is not true. I would always ask her about her alcohol intake, which was a frank question I would ask patients, because it’s important, and she would reply. To me, I accepted what she was telling me. I didn’t think she was distorting how much. Sometimes she tells me she was drinking a lot, two or three bottles at a time. Sometimes just two or three gin and tonics, and it varied.

349. When it was put to him that the issue in dispute between himself and Dr Sydney Smith was whether alcohol use exacerbated Ms Wheeler’s PTSD, or vice versa, Dr Smith said (T 109)

A. It’s not a fair comment at all. If you look at the progression of her exposure to traumatic events, there is no question in my mind that the prime diagnosis is post-traumatic stress disorder followed by an emerging depressive disorder of a major kind. That’s where we differ.

350. Dr Smith agreed that the presence of the alcohol abuse disorder did complicate the clinical picture.

351. Asked about his knowledge of Ms Wheeler’s involvement with her children’s School, Dr Smith said (T 117): “I knew she was involved in the school in a variety of ways, reading and being near her children, and serving on committees… But it was a minimal extent, and the prime thrust was to be near her children”. When it was put to him that he may not have been told by Ms Wheeler of all of the activities in which she was engaged, Dr Smith said (T 118):

A. That may well be. That’s what I was told, that’s what I’ve reported. Be that as it may, if I may; irrespective of all the activities you’ve mentioned, chaired a meeting, went to the fetes et cetera, I made the point that irrespective of whatever activities she was doing as a volunteer, this would not translate into paid work because of her problems, and I still maintain that.

352. Dr Smith’s cross-examination ended with an investigation of whether Ms Wheeler may not have informed Dr Smith of all of the day-to-day activities in which she engaged, because Ms Wheeler hoped to make a secondary gain. Dr Smith responded by stating (T 119): “but if you are asking my opinion do I consider Ms Wheeler malingering or prone to secondary gain, no I don’t buy that, don’t accept that at all”.

353. Ms Wheeler called Dr Wotton to give evidence, and relied upon the reports that Dr Wotton provided to the workers compensation insurer. Dr Wotton was called to the witness box, but the Insurer made the election not to cross-examine Dr Wotton. The Insurer did not challenge the views expressed by Dr Wotton in his reports. It did not suggest that those opinions were based upon any unreliable history given by Ms Wheeler to Dr Wotton. It was not put to Dr Wotton that Ms Wheeler’s marital problems were the cause of her incapacity becoming permanent.

354. I prefer the evidence given by Dr Selwyn Smith and Dr Wotton to that given by Dr Sydney Smith.

355. In forming that preference, I have been substantially influenced by the fact that Dr Selwyn Smith has been Ms Wheeler’s treating psychiatrist for a period of five years. Over that time, he has given a significant number of reports to various different correspondents, and it has been only relatively recently, that he has been qualified in addition as a medico-legal expert for Ms Wheeler. In cases such as the present, the regular and long-term exposure of the treating psychiatrist to the patient is likely to make the treating psychiatrist’s evidence more reliable and valuable for a number of reasons. First, the treating psychiatrist will have a longitudinal perspective. Secondly, by reason of the substantial number of examinations, the treating psychiatrist will not be dependent upon the history given by the patient in a few short examinations. The treating psychiatrist will have had an opportunity to witness the symptomatology of the patient over a considerable period. The treating psychiatrist will have a working understanding of the clinical notes of other treating professionals, such as those at the St John of God Hospital.

356. Further, I am not persuaded by the reasoning behind Dr Sydney Smith’s opinion, that the primary disorder suffered by Ms Wheeler is major depressive disorder, to which her PTSD is secondary. I accept Dr Selwyn Smith’s opinion on that issue, which appears to be consistent with what has been stated in all of the other medical reports that are in evidence. Consequently, I reject the suggestion that Ms Wheeler’s prospects of gaining relevant employment in the future will be enhanced by her being given a new regime of treatment for her depression. I accept that that is a matter for the treating psychiatrist, and I am persuaded that Dr Selwyn Smith is well aware of the risks involved in increasing her medication, for what is in fact the secondary disorder, so that it is unlikely that Ms Wheeler’s treatment regime will be changed.

357. I find that Dr Sydney Smith’s opinion that alcohol abuse disorder is a substantial cause of Ms Wheeler’s symptomatology, so that her employment prospects will be improved, if she receives additional treatment for alcohol abuse, is based upon a false assumption, as to the extreme level of alcohol consumption in which Ms Wheeler has engaged over a period of some five years.

358. I am satisfied that the medical evidence establishes that, over the period of what is now more than five years since the cessation of Ms Wheeler’s employment with the Police Force, enough time has elapsed, and enough treatments have been given to Ms Wheeler, to support the medical opinion that her psychiatric condition has stabilised, and is unlikely to be substantially improved by further treatment or medication. Unfortunately for Ms Wheeler, it has turned out that she is one of the 30% odd of persons who suffer from PTSD whose condition becomes chronic.

359. I am also satisfied that the evidence that has been put before the court that shows that Ms Wheeler is capable, on an irregular basis, of engaging in activities that would, in the case of psychologically healthy people, is not for medical reasons inconsistent with her claim that she satisfied the TPD definitions as at the assessment date.

Shuetrim

360. As the decision of the Court of Appeal in Shuetrim appears to have brought about a change in the accepted meaning of the expression “unlikely ever” in the TPD definitions, and as the decision contains some guidance as to how the issue of whether the definitions have been satisfied should be determined, it is perhaps appropriate that I specifically address the reasons why the outcome for Ms Wheeler in this case is different from that experienced by Mr Shuetrim.

361. As I have discussed above under the heading “What is meant by unlikely ever?”, the question is whether there is a real chance that the applicant will return to relevant work over the balance of the applicant’s expected working life, even if it is less than 50%, where a real chance must be a possibility which is not remote or speculative. Leeming JA, at [89], likened a real chance to a possibility which is “readily contemplatable”. It is necessary to address the significance of these principles to the present case.

362. One similarity between Ms Wheeler’s and Mr Shuetrim’s cases is that the former had a remaining expected working life of 29 years, and the latter 30 years. Both applicants were relatively young, in terms of Leeming JA’s observation at [208] that:

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

363. In Shuetrim, as appears from the judgment of Stevenson J at [21], [83], [99] and [100], Mr Shuetrim suffered from lateral epicondylitis (or “tennis elbow”) and a secondary anxiety and adjustment disorder, which were injuries caused by the way he was treated by his fellow members of the Police Force, after he suffered his orthopaedic injury. In Ms Wheeler’s case, it was the unanimous opinion of the psychiatrists who were called to give evidence that, as at the date of the hearing, Ms Wheeler was totally incapable of engaging in any occupation, by reason of chronic PTSD and major depressive disorder, and the issue was as to which expert opinion should prevail as to whether there was any prospect of her recovering sufficiently to be able to undertake some form of relevant employment, by reason of additional therapy or changes to her medication.

364. It is instructive to look not only at what Leeming JA said concerning the meaning of the relevant TPD definitions, but also what he did in determining that they were not satisfied. Ultimately, Leeming JA found at [209] that he did not consider that the evidence supplied by Mr Shuetrim satisfied him that Mr Shuetrim was, as at the relevant assessment date, “unlikely ever to return to relevant work (which is to say in an occupation for which he was qualified by education, training or experience, even if only on a part-time basis). His Honour reached that conclusion by the following process of reasoning:

1. He found that Mr Shuetrim had exaggerated his physical and mental conditions in his evidence: see [192], [198] and [199].

2. He found that the thrust of the medical evidence was that Mr Shuetrim’s left elbow was “almost certain to improve over time”: see [200]. His Honour noted that he had to “bear in mind that the question is one of ‘unlikely ever’, which requires an opinion as to the extent (if any) Mr Shuetrim will recover use of his dominant left arm over the remainder of his working life”.

3. He regarded the evidence of Mr Shuetrim’s general practitioners “to be a relatively powerful consideration”, and preferred the evidence of those general practitioners who in effect expressed the view that there was hope for employment in the future: see [201] to [203].

4. He noted that the evidence of the medical practitioners took the form of the tender of their reports without cross-examination: see [205]. The reports were therefore admissible for all purposes, and it was for the court to weigh the cogency of the competing opinions.

5. In dealing with the psychiatric evidence at [207], his Honour noted that Mr Shuetrim had exaggerated his claims and “to the extent that the history provided by Mr Shuetrim is exaggerated, the psychiatrists’ opinions proceed on an incorrect premise”.

6. He noted that ultimately, the onus was on Mr Shuetrim “to provide evidence sufficient to support the opinion required by the TPD definition, which is an opinion concerned with the remainder of his working life”: see [207].

7. Finally, at [208], his Honour noted the difficulty, which I have extracted above, that young people whose medical and psychological condition is uncertain will have difficulty in satisfying insurers and the court that they have satisfied the TPD definitions.

365. Relevantly, in Ms Wheeler’s case the following considerations apply:

1. While the Insurer in the present case relied upon much the same sort of evidence concerning Ms Wheeler’s day to day activities that the insurers in Mr Shuetrim’s case successfully relied upon to establish that Mr Shuetrim had exaggerated his claims, I rejected their submission to that effect in Ms Wheeler’s case. I found that Ms Wheeler did not exaggerate her physical and mental conditions. She was candid about the day to day activities she was able to achieve.

2. Importantly, in Ms Wheeler’s case, the psychiatrists who had prepared reports on her mental and consequential physical condition, and her prognosis for recovery, were called to give evidence, and were cross-examined. One significant consequence was that it was established in her case that the psychiatrists’ opinions did not proceed upon an incorrect premise, because, particularly in the case of Dr Selwyn Smith, the treating psychiatrist did not alter his expert opinion, even where he was aware of the activities upon which the Insurer’s case relied upon. In Ms Wheeler’s case the risk that lay opinion would be misled by unwarranted reliance upon evidence that Ms Wheeler was capable of engaging in certain activities in the same way as healthy people was dispelled by positive expert evidence that the ability to engage in that conduct was not inconsistent with total incapacity for employment caused by Ms Wheeler’s psychiatric conditions.

3. Mr Shuetrim suffered from ‘tennis elbow’, and the expert evidence supported the conclusion that the disability was almost certain to improve over time, particularly when time was viewed in terms of a 30 year working life. The expert evidence that I accepted supported the conclusion that Ms Wheeler’s injury was chronic and had stabilised, and there was no reason to believe it would improve at any time in the future. Consequently, the possibility of improvement was rationally only a matter for speculation.

4. In Ms Wheeler’s case, the equivalent evidence to that given by Mr Shuetrim’s general practitioners was the evidence of Ms Wheeler’s long-term treating psychiatrist, Dr Selwyn Smith. His evidence comprehensively supported Ms Wheeler’s claim, after allowance is made for his change of opinion following the failure of all treatments to cause an improvement in Ms Wheeler’s symptoms.

5. Consequently, in Ms Wheeler’s case, it would have been a matter of intuitive speculation to draw a conclusion that there was a real likelihood that Ms Wheeler’s capacity would improve over the remainder of her working life that would be sufficient to give her a real chance of obtaining relevant employment.

Conclusion

366. I conclude that the evidence justifies a finding that, as at the assessment date, Ms Wheeler was incapacitated to such an extent as to render her unlikely ever to engage in any gainful profession, trade or occupation for which she was reasonably qualified by reason of education, training or experience, within the meaning of the TPD definitions in the Policies.

367. Ms Wheeler is therefore, entitled to appropriate orders to ensure that she receives the TPD benefits to which she is entitled, together with any interest to which she is also entitled. The Insurer must pay Ms Wheeler’s costs of the proceedings.

368. The parties are to bring in short minutes of order to give effect for these reasons for judgment. If agreement can be reached, I will make the orders in chambers. If not, the matter can be relisted by arrangement with my associate.

**********

Decision last updated: 09 May 2016