Paul Weber v Tiss Pty Limited & Ors [2005] NSWSC 67

New South Wales Supreme Court

CITATION : Paul Weber v Tiss Pty Limited & Ors [2005] NSWSC 67

HEARING DATE(S) : 02/12/04; 03/12/04; 03/02/05; 04/02/05

JUDGMENT DATE : 18 February 2005

JUDGMENT OF : Nicholas J

DECISION : Para 67

CATCHWORDS : Superannuation - claims for benefit - total and permanent disablement - insurance - challenge to opinion of insurer on TPD where insurer's opinion was element in whether insurance was available to trustee - insurer did not form such opinion - whether failure to form such opinion was unreasonable - whether insurer's decisions to refuse the claims were invalid

Alessi v National Mutual Life Association of Australia Limited (1982) 2 ANZIC 60-481 Chammas v Harwood Nominees (1993) 7 ANZIC 61-175 Edwards v The Hunter Valley Co-op Dairy Co Limited (1992) 7 ANZIC 61-113 CASES CITED : Heitman v Guardian Assurance Co. (1992) 7 ANZIC 77-483 Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 Muinos v Johnson & Johnson Retirement Benefits Limited (5 December 1996, BC9605916)

Paul Weber - Plaintiff Tiss Pty Limited - First Defendant PARTIES : NRG Victory Australia Pty Limited - Second Defendant Hannover Life Re of Australasia Limited - Third Defendant

FILE NUMBER(S) : SC 6052/03

D A Baker - Plaintiff COUNSEL : V M Heath - Defendants

Firths The Compensation Lawyers - Plaintiff SOLICITORS : Blake Dawson Waldron - Defendants

LOWER COURT JURISDICTION :

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

Nicholas J

18 February 2005

6052/03 Paul Weber v Tiss Pty Limited & Ors JUDGMENT 1 His Honour: Mr Paul Weber (the Plaintiff) as a member of the Timber Industry Superannuation Scheme (the fund) of which Tiss Pty Limited, the First Defendant, was the trustee (the trustee), sought the payment of benefits from the fund on the basis of his total and permanent disablement resulting from injuries to his left arm and shoulder. The First Defendant held a policy of insurance with NRG Victory Australia Pty Limited (the Second Defendant) which was succeeded by Hannover Life Re of Australasia Limited, the Third Defendant, as the insurer (the insurer) under which the fund was insured for total and permanent disablement benefits payable to members of the fund. 2 The Plaintiff first applied for the benefits on about 4 March 1997. The trustee informed him that his application was refused by letter of 1 December 1997. He was informed of the refusal of subsequent applications by the trustee's letters of 13 May and 27 November 2003. In each case the trustee gave effect to the insurer's decision to decline the claim under the policy. 3 It was accepted by both parties that the question for determination in these proceedings was whether each of the decisions of the insurer of 22 July 1997, 14 April and 7 November 2003 was invalid in that it was unreasonable. 4 The plan was constituted by a trust deed and rules dated 22 March 1985. The term "total and permanent disablement" is defined in rule 1.2 of the first schedule to the deed in the following terms: ""total and permanent disablement" means disablement of a Member resulting from an illness accident or injury to the Member which commenced or occurred whilst a Member and as a result of which: (a) the Member has been precluded for a period of six consecutive months after the date of occurrence of such event from following any occupation for which the Member is reasonably suited by education training or experience, and (b) the Member will, in the opinion of the Trustee after consideration of medical evidence satisfactory to it, continue to be so disabled to such an extent as to render the Member unlikely ever again to resume work in or attend to any such occupation; and "totally and permanently disabled" shall have a corresponding meaning PROVIDED THAT where at any time all or part of the benefit payable in the event of total and permanent disablement is insured with an insurance company, the term "total and permanent disablement" shall bear the meaning ascribed to it in the relevant policy in lieu of the above definition;" 5 The policy of insurance affected by the trustee with the insurer relating to members of the fund contained a definition of the term "total and permanent disablement". Relevantly, it is in these terms: ""Total and Permanent disablement" means a Member … (b) Having been absent from work through injury or illness for an initial period of six (6) consecutive months and in The Victory's opinion being incapacitated to such an extent as to render the Member unable ever to engage in or work for reward in any occupation or work which he or she is reasonably capable of performing by reason of education, training or experience". 6 It was common ground that if the Plaintiff became totally and permanently disabled within the policy definition the benefits which would be payable to him under the fund, and for which insurance cover was provided under the policy, is the sum of $31,200.00. 7 It was accepted on both sides that the court should approach the matter in accordance with the principles stated in Edwards v The Hunter Valley Co-op Dairy Co Limited (1992) 7 ANZIC 61-113 at p 77,536. There it was held that in forming an opinion relevant to its liability under a contract of insurance the insurer is obliged to act reasonably in considering and determining the matter. It also held that unless the view taken by the insurer can be shown to have been unreasonable on the material then before it, the decision of the insurer cannot be successfully attacked on this ground. (See also e.g. Heitman v Guardian Assurance Co. (1992) 7 ANZIC 77-483). 8 It was also accepted that the insurer is not required to undertake the detailed consideration required of a court hearing (Chammas v Harwood Nominees (1993) 7 ANZIC 61-175 at p 78,001); and that 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. The reality must be recognised "… that the reasons of an administrative decision-maker are meant to inform and not to be scrutinised upon over-zealous judicial review by seeking to discern whether some inadequacy may be gleaned from the way in which the reasons are expressed". (Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at p 272). Background 9 The following are matters of common ground and, in any event, are established on the evidence. 10 The Plaintiff was born on 17 March 1965 and on 24 January 1990 became a member of the fund. On 22 June 1992 he commenced employment with Peter Furnivale at a sawmill at Bowraville, New South Wales. G & M Langham Pty Limited (the employer) became his employer when it purchased the sawmill on 23 January 1995. 11 On 23 October 1995 the Plaintiff reported to the employer that he had sustained an injury to his left shoulder. He undertook light duties as a Canadian saw operator until 5 December 1995. By reason of absence from work and holiday closure of the mill he did not resume these light duties until 22 January 1996. He worked intermittently until 7 June 1996 when he ceased work. He has not returned to work since. The decision of 22 July 1997 12 On about 4 March 1997 the Plaintiff applied to the trustee for the insured benefit. The application and related material were sent to the insurer for its consideration. 13 The evidence to which the insurer had regard for the purpose of considering whether it should form the opinion referred to in cl (b) of the policy definition comprised: