Supreme Court New South Wales Medium Neutral Citation: Ziogos v FSS Trustee Corporation as Trustee of the First State Superannuation Scheme [2015] NSWSC 1385 Hearing dates: 3 to 5 and 7 August 2015 Decision date: 23 September 2015 Jurisdiction: Equity Before: Ball J Decision: See paragraphs 125 to 126 of this judgment Catchwords: INSURANCE – general – total and permanent disablement – psychiatric impairment – requirements of the duty of "utmost good faith" within the facts of the case – whether insurer acted with the utmost good faith in determining whether the insured had provided proof to its satisfaction that a particular state of affairs existed – whether insurer could reasonably have reached the conclusions it did on the evidence available to it – whether insured "unlikely to ever engage in any gainful profession for which she is suited by education, training or experience" Legislation Cited: First State Superannuation Act 1992 (NSW) Insurance Contracts Act 1984 (Cth) Superannuation (State Public Sector) Act 1990 (Qld) Cases Cited: AMP Financial Planning Pty Ltd v CGU Insurance Ltd [2005] FCAFC 185; (2005) 146 FCR 447 Banovic v United Super Pty Ltd [2014] NSWSC 1470 Beverley v Tyndall Life Insurance Co Ltd [1999] WASCA 198; (1999) 21 WAR 327 Birdsall v Motor Trades Association of Australia Superannuation Fund Pty Ltd [2015] NSWCA 104 CGU Insurance Ltd v AMP Financial Planning Pty Ltd [2007] HCA 36; (2007) 235 CLR 1 Edwards v The Hunter Valley Co-op Dairy Co Ltd (1992) 7 ANZ Ins Cas 61-113 Erzurumlu v Kellogg Superannuation Pty Ltd [2013] NSWSC 1115 Giles v National Mutual Life Association of Australasia Ltd (1986) 4 ANZ Ins Cas 60-751 Hannover Life Re of Australasia Limited v Sayseng [2005] NSWCA 214; (2005) 13 ANZ Ins Cas 90-123 Halloran v Harwood Nominees Pty Ltd [2007] NSWSC 913 Lazarevic v United Super Pty Ltd [2014] NSWSC 96 Shuetrim v FSS Trustee Corporation [2015] NSWSC 464 Sayseng v Kellogg Superannuation Pty Ltd [2003] NSWSC 945 White v Board of Trustees [1997] 2 QdR 659 Category: Principal judgment Parties: Anastasia Ziogos (Plaintiff) FSS Trustee Corporation as Trustee of the First State Superannuation Scheme (ABN 11 118 202 672) (First Defendant) MetLife Insurance Limited (Second Defendant) Representation: Counsel: BW Rayment SC with D O'Dowd (Plaintiff) M Gollan (First Defendant) MA Jones SC with SJ Walsh (Second Defendant) Solicitors: Slater & Gordon (Plaintiff) Mills Oakley (First Defendant) Turks Legal (Second Defendant) File Number(s): 2014/135309 Publication restriction: Nil Judgment Introduction 1. The plaintiff, Ms Ziogos, was employed by the NSW Police Force between 17 November 1995 and 12 May 2011. In that capacity, she became a member of the First State Superannuation Scheme (the Scheme) established by the First State Superannuation Act 1992 (NSW). The first defendant, FSS Trustee Corporation (FSS), is the trustee of the Scheme. The Scheme is operated in accordance with a trust deed and rules made for that purpose as amended from time to time. 2. Under cl 11 of Section 1 of the rules, FSS may acquire one or more insurance policies for the benefit of members. To the extent that it does so, it may credit the proceeds it receives from an insurer in respect of a member to the superannuation account of the member. 3. In exercise of the power granted by cl 11.1 of Section 1 of the rules, FSS obtained two policies of insurance with the second defendant, MetLife Insurance Ltd, to provide cover to members in respect of members' total and permanent disablement (TPD) referred to respectively as the "Police Blue Ribbon Policy", entered into with effect from 1 July 2005, and the MetLife GL Policy, entered into with effect from 1 December 2007 (the Policies). As a member of the Scheme, Ms Ziogos was an insured person under the Policies. 4. On 22 March 2011, Ms Ziogos lodged a claim with FSS claiming that she suffered from TPD as a result of post-traumatic stress disorder (PTSD), anxiety and depression consequent on her work in the police force. FSS lodged that claim with MetLife on 7 April 2011. On 17 January 2013, following investigations, MetLife advised FSS that that claim had been declined. That decision was notified to Ms Ziogos on 19 March 2013. At Ms Ziogos's request, MetLife's decision was reviewed by a claims review committee that had been established in accordance with the Policies. The committee met on 3 October 2013 and, by letter dated 4 October 2013, MetLife advised Ms Ziogos that the committee had determined that the decision to decline her claim was correct. Subsequently, on 5 May 2014, Ms Ziogos commenced these proceedings. 5. Originally Ms Ziogos made claims against both FSS and MetLife. However, during the course of the hearing, she filed an amended statement of claim abandoning the substantive claims against FSS and FSS then filed a submitting appearance. Background 1. Ms Ziogos was born in October 1975. She grew up in Sydney and lived with her parents until the age of 22. She has two older sisters. She describes her childhood as a "great one" and says that her family continues to be close knit. Ms Ziogos was educated at Orange Grove Public School and Abbotsford Public School before moving to Riverside Girls High School, where she completed Year 12 in 1993. 2. After completing her HSC, Ms Ziogos applied to join the Police Force, which had been her ambition since the age of 5. Her application was successful and she commenced training at Goulburn Police Academy in February 1995. After some delay because she failed a physical test, Ms Ziogos was attested on 21 November 1995 and commenced as a Probationary Constable assigned to the Flemington Local Area Command for 6 months performing general duties. 3. In May 1996, Ms Ziogos was transferred to Parramatta Local Area Command, again performing general duties. Those duties including responding to reports of crime, including domestic assaults, theft, break and enters and other street crimes. In January 2001, she transferred to the Endeavour Region Highway Patrol, which involved policing major roads such as freeways and motorways and attending fatal motor vehicle accidents. Ms Ziogos was transferred to Blacktown Highway Patrol in January 2006 and, in December 2007, she was promoted to a sergeant in the highway patrol unit at Blacktown, where she was in charge of 11 staff on a shift. In that capacity, she was required to do some administrative work, although she was still involved in patrols on a daily basis. During the time she was a police officer, Ms Ziogos attended a number of courses including a highway patrol course, a breath analysis course and a "train the trainer" course. 4. While a police officer, Ms Ziogos was exposed to a number of very stressful situations. She gave a substantial number of examples in a statement she prepared for her workers' compensation claim. The details of the incidences are not important for present purposes. However, they included a case where a baby had died and begun to leak bodily fluids, another case where a baby had died, a case where an 18 year old male was found hanging in a shower, a case where an intoxicated male with a sword chased her, many other cases in which a person had died, sometimes as a result of a serious accident, and cases in which she was required to inform a family of the death of a family member. 5. From about 2006, Ms Ziogos says that she began to feel nauseous prior to going to work and had difficulties sleeping the night before. Sometimes, she says, she felt so anxious and nauseous that whilst driving to work she wanted to turn around and go home. Those symptoms persisted for the next four years. 6. In mid‑2009, Ms Ziogos started to cry on occasions when driving home from work for no apparent reason. In April 2010, after crying all the way home, she contacted a friend in the Police Force and spoke to him for about 45 minutes, crying uncontrollably. He gave Ms Ziogos the number of Dr Selwyn Smith, a psychiatrist, and subsequently Ms Ziogos obtained a referral from her GP, Dr Park, to see him. 7. Ms Ziogos saw Dr Smith on 18 May 2010 at St John of God Hospital, Richmond. Ms Ziogos says that during the consultation she cried uncontrollably and felt very anxious and tense. Her arms became irritated and her fingers and legs numb. Dr Smith gave her a workers' compensation certificate and placed her on restricted duties. He also prescribed 10mg of Lexapro (an antidepressant) once a day, 1mg Ativan (for anxiety) when required and 7.5mg of Imovane (a sleeping tablet) when required. Ms Ziogos returned to work the following day. However, she suffered further anxiety attacks and was given a workers' compensation certificate for one week off work by Dr Hanni Bittar. At the same time, she was referred to Ms Jenny Wong, a clinical psychologist. She never returned to work. 8. Ms Ziogos gave evidence that, at the time she initially saw Dr Smith, she suffered from the following symptoms: • I found it difficult to wind down • I couldn't experience any positive feeling at all • I had dryness of the mouth • Breathing difficulties and hyperventilation • I found it difficult to do things • I had a tendency to overreact to situations • I was using a lot of nervous energy • I felt agitated • I had difficulty relaxing • Intolerant • Hypersensitive • I felt scared without any good reason • Irritability • Muscle tension • I lost interest in social and recreational activities and hobbies • I suffered from sleeplessness and restless sleep • Diminished ability to think clearly, problem solve and concentrate • I continually thought about work incidents 1. According to Ms Ziogos, many of those symptoms have continued through until today. Ms Ziogos also describes herself as severely depressed and unable to motivate herself. She says that she has a complete loss of energy, impaired concentration, impaired memory and is socially withdrawn. She has put on approximately 30kgs in weight. 2. Following her initial consultation, Ms Ziogos continued to be treated by Dr Smith at St John of God Hospital, initially at the Richmond campus. Dr Smith originally diagnosed her as suffering from a chronic adjustment disorder with depressed and anxious mood and also significant symptoms of PTSD. He prescribed cognitive behavioural therapy, pharmacotherapy and attendance at an anxiety and depression program. From that time, Dr Smith has seen Ms Ziogos approximately once every six weeks. Until about mid-2011 Ms Ziogos was also treated by Ms Natasha Garwood, a psychologist, who Ms Ziogos saw at least once a fortnight. In late February 2011, Ms Ziogos also attended a closed program run by St John of God Hospital at Richmond. The "closed" program was an intense in-patient program lasting about a month which was only available to police officers. Dr Smith explained the program in these terms: The closed program involves living in a special part of the hospital, it involves a three to four week intensive program of orientation to post-traumatic stress disorder, it involves interaction with psychologists fairly intensively. It involves learning better coping strategies of dealing with traumatic memories, it involves desensitisation to traumatic events of significance that would be troubling the patient. Those essentially are the principles. Ms Ziogos did not respond well to the program, and in fact Dr Smith expressed the opinion that Ms Ziogos's condition became worse as a result of it. 1. On or about 30 March 2011, Ms Ziogos lodged with FSS a TPD benefit claim. The claim was supported by standard forms completed by each of Dr Park and Dr Smith. Both Dr Park and Dr Smith completed a form entitled "Confidential medical report on permanent incapacity". One section of that form was entitled "Report on permanent incapacity" and had a number of subheadings. Under the subheading "Any current incapacity for which you have treated this member", Dr Smith wrote "Chronic PTSD". Under the heading "Present Diagnosis" Dr Smith wrote "Chronic PTSD anxiety/depression". Under the heading "Any other comments" he wrote "Not able to work". 2. The following section was headed "Opinion on permanent incapacity". In that section, Dr Smith ticked the option stating "In my opinion, the member will never be able to be employed in his/her normal occupation due to this incapacity …" Dr Smith also ticked the option stating "In my opinion, this member will never be able to be employed in any form of paid occupation due to this incapacity". 3. Ms Ziogos also completed a document apparently addressed to both FSS and MetLife described as a "Statement of Claim", which was dated 22 March 2011. That form gave some information concerning her employment and some details concerning her disability. 4. The form completed by Dr Smith is dated "15/02/2011". However, the likelihood is that it was actually completed on 15 March 2011. Dr Smith also completed a form entitled "Medical Statement". That form was dated 15 March 2011. It is not likely that Dr Smith would have completed the forms a month apart. The form completed by Dr Park was dated 24 March 2011 and, as I have said, the Statement of Claim was completed by Ms Ziogos on 22 March 2011, which is also the date on which Ms Ziogos completed the application form in support of her claim. The clear inference is that Ms Ziogos made her claim shortly after completing the closed program and that she obtained reports from Dr Smith and Dr Park at that time. 5. On or about 7 April 2011, FSS lodged Ms Ziogos's TPD benefit claim with MetLife. 6. In mid‑2011, Ms Ziogos sold her home in Toongabbie and bought a property in Gipps Street, Concord to be closer to her family. From that time, she saw Dr Smith at the Burwood campus of St John of God Hospital and she has been treated by Dr Wooding, a psychologist based in Balmain, whom she sees once a fortnight. 7. After seeking additional information concerning Ms Ziogos's income, MetLife arranged for her to see Mr Allan Anderson, a psychologist, and Dr Ian De Saxe, a psychiatrist. 8. Mr Anderson saw Ms Ziogos on 1 August 2011 for approximately 3 hours. During that time, he administered a number of psychometric tests, including the Personality Assessment Inventory (PAI) and the Minnesota Multiphasic Personality Inventory (MMPI). 9. Commenting on the results of the tests he performed, Mr Anderson said: It is clear from the above that Ms Ziogos is definitely unfit to perform any work at this time and that she needs behavioral [sic] intervention to help her to regain her emotional wellbeing. Whilst she cannot work at the moment, I would not like to suggest or recommend that she be permanently barred from returning to the work force in the future. I believe that the problems confronting Ms. Ziogos are treatable. The intervention necessary is intense and at least medium term in duration. At this time Ms. Ziogos is not in a state of mind to be particularly receptive to psychological intervention. The results again from the PAI indicate that she is not too dissatisfied with the person that she is and does not truly believe that she is able to be helped. This will be the biggest obstacle to be overcome. Ms. Ziogos needs to be helped to believe, which is in fact the true situation in respect to her emotional health, that she can be returned to a useful and productive live [sic]. Whilst Ms. Ziogos can almost certainly never return to the type of work she undertook before she would certainly be able to have a useful, productive and happy work life experience if her attitudes can be turned around and her serious problems of depression and anxiety can be adequately treated. I would not at this time suggest what type of work Ms. Ziogos should perform in the future. This is a matter for later consideration. But the main point here is to reiterate that she should be able to return to work at some time in the future and she should not be discarded in terms of her ability to work, at this point in time. 1. Mr Anderson did point out in his report that the internal checks in the MMPI test revealed "a great deal of inconsistent responding and over reporting in this test". However, as is apparent from his report and as he explained when giving evidence, that did not necessarily mean that Ms Ziogos was over reporting her symptoms. The results simply meant that it was necessary "to be extremely careful in interpreting the results". 2. Dr De Saxe saw Ms Ziogos on 25 August 2011. It is not entirely clear for how long he saw her, although the likelihood is that it was approximately 45 minutes to an hour. Dr De Saxe prepared a report dated 28 September 2011. He sets out in some detail the history he took from her. He was asked to address a number of specific questions. In answer to the question "[W]hat is the claimant's current mental state examination?" he said: She presented as a mildly depressed and somewhat withdrawn woman whose clinical presentation was not consistent with the history of intense anxiety. However her affect became more anxious when she was talking about her experience of policing work and the thought of going back to it. She was certainly not psychotic and the main impression created was that of a somewhat depressed and currently apathetic person. 1. Dr De Saxe's formal diagnosis in accordance with DSM-IV was: major depression, chronic, in partial remission panic disorder with agoraphobia some symptoms of post-traumatic stress, but not of sufficient intensity or severity to merit the diagnosis of full post traumatic stress disorder. 1. In relation to questions concerning Ms Ziogos's treatment regime and its likely effect, Dr De Saxe said: She has been compliant with the treatment regime. However, I don't believe the current regime will return her to full-time employment. This is not necessarily the a [sic] consequence of an inadequate pharmacological treatment regime, but a complex set of circumstances in which Ms Ziogos has become burnt out and mildly traumatised by her work. … Her rehabilitation is likely to involve a significant period of insight oriented psychotherapy which would provide her both with some ongoing support as well as help to mature her understanding of herself and restore a sense of purpose in life. It is notable that she commented that her original ambition had been to get into forensics and yet she has never done this. She told me she maintains an interest in forensics. Therefore the question arises as to why she has not done anything about it. My impression is that she is financially secure as she told me she had bought and sold a number of properties. It is possible therefore that once she found herself suffering from traumatic burnout in relation to police work she has lost direction in life and doesn't know how to regain it. 1. In answer to the question "[W]hat is the claimant's current work capacity?", Dr De Saxe said "I believe she could work up to 20 hours per week". In relation to the question whether she was totally and permanently disabled, Dr De Saxe said: She's totally and permanently disabled from returning to work in her normal occupation. She is not TPD for other occupations which she may be suited to by means of education, training or experience. 1. Dr De Saxe concluded by giving the following prognosis: I believe she will return to work before retirement age. In summary, as already noted, there are likely to be significant personality issues at play here which have firstly, caused Ms Ziogos to not be able to continue in her career, and secondly which are preventing her from finding a new direction in life. She should therefore be referred to a psychotherapist. I am aware that she sees Dr Smith. Hence it might be essential for her to be referred to such a therapist. She needs to do some therapy work on herself to understand herself better, to regain some motivation in life and even possibly to find a career in forensics, although I note that she is studying the massage course. 1. Following receipt of those reports, MetLife arranged for Ms Ziogos to undertake a vocational assessment by Ms Helen Wallace of ECA. That occurred on 8 December 2011. Ms Wallace prepared a report dated 21 December 2011. In that report, she concluded that: The following work options are considered suitable having regard to [Ms Ziogos's] education, training and experience: Program or Project Administrator General Clerk Inquiry Clerk 1. MetLife also obtained a short report from Dr Park dated 9 May 2011. In that report, Dr Park expressed the opinion that Ms Ziogos could not continue with her usual occupation as a police officer and that "in regard to the duty ANY occupation. At the present time she is unable to work. It's unknown for the future." 2. MetLife also arranged for surveillance to be made of Ms Ziogos by AHC Investigations. AHC Investigations prepared four reports dated 20 May 2011, 9 September 2011, 20 December 2011 and 3 April 2012. In all, AHC Investigations observed Ms Ziogos for a total of approximately 120 hours. The reports indicate that on occasions Ms Ziogos drove herself to medical or other appointments, to the shops and to the gym, although often when she went out she went out with her mother. Ms Ziogos also visited her parents and took her dog for walks. The reports reveal little else of significance. 3. On 29 December 2011, MetLife wrote to both Dr Smith and Dr De Saxe asking them to comment on the vocational assessment it had obtained from Ms Wallace. 4. Dr Smith responded to the request made of him on 12 January 2012. In that response he said: It is my opinion that Ms Ziogos is currently incapable of engaging in such occupations. As noted by the evaluator it has been an effort for her to get out of bed and she spends a considerable amount of time at home. She is described as having difficulties in concentration, shaking and suffering from "nerves". It is my opinion that Ms Ziogos' psychiatric symptomatologies would preclude her from successfully performing these occupations either on a part or full time basis. At the present time she is incapable of engaging in productive work. 1. Dr De Saxe replied to the request made of him on 26 January 2012. In that reply, he said: My opinion is that Ms Ziogos would be capable of performing these occupations on, initially, a part-time, and later, perhaps after six months, a full-time basis. I do qualify this by reiterating my opinion in the first report, namely, that it is necessary for her to become engaged in an ongoing psychotherapy relationship to explore the issues underlying her current withdrawal from life. I note that there was no information in your correspondence of 29 December 2011 as to whether my recommendation that she be referred for psychotherapy has been implemented. Hence I would like to restate my recommendation that she be referred for such therapy, as it is unlikely she would be able to successfully return to work without having the regular support of an experienced psychotherapist. My opinion is that she requires a minimum of once-a-week psychotherapy for two years because there are significant personality issues holding her back from fulfilling her potential. 1. On 26 April 2012, MetLife wrote to Dr Smith asking for a supplementary report commenting on ECA's report. MetLife also referred to Dr Smith's comment that Ms Ziogos had difficulty getting out of bed. It included with its letter DVDs of the video surveillance it had obtained of Ms Ziogos, which it said showed her driving, attending homes of family and friends, attending a plant nursery, attending a hardware shop and walking with her dog. In view of that material, it asked Dr Smith to provide an opinion on Ms Ziogos's ability to leave the home. Dr Smith responded to that letter on 1 May 2012. Commenting on this material, Dr Smith said: The video surveillance in my opinion, is not reflective of anything untoward in regard to Ms Ziogos' current claim. I reiterate the history that I obtained that Ms Ziogos does have difficulty getting out of bed and leaving her home. She forces herself to undertake tasks on a daily basis such as those noted in the video surveillance material. Her niece and nephew are constantly asking her sister why does not visit, particularly now that she has moved closer to the family. She has trouble leaving the home on her own. Ms Ziogos has been encouraged both by myself and her psychologist to walk as much as possible, and her dog is her companion in that regard. Walking is important for her. You have stated that these are activities. In my opinion they are essential actions and would not equate to Ms Ziogos having the capacity to engage in work along the lines you have suggested. She continues to display marked psychiatric impairments and lacks energy. She continues to feel heightened levels of activity and prefers to remain at home where she feels safe. It should also be noted that Ms Ziogos is not qualified for any of the positions quoted. Aspects of work that remind her of her adverse police experiences will result in heightened levels of anxiety and depression. Dr Smith concluded: In summary it is my opinion that the additional material you have provided me with does not cause me to modify the opinions I have expressed. I remain of the firm view that Ms Ziogos is unable to engage in productive work, and in this regard I agree with the opinion expressed by Dr Graham George. Dr George had prepared a report dated 26 March 2012 for workers' compensation purposes in which he expressed the opinion that Ms Ziogos fell within class 5 in terms of her employability in the context of assessing her Whole Person Impairment, meaning that she suffered from a total impairment to engage at work. 1. On 2 July 2012, MetLife wrote to FSS saying that "we have conducted a review of the information on file and have formed the view that we now hold sufficient information to make a determination with respect to the claim". Before making that determination, it requested FSS to send to Ms Ziogos a letter, which it described as a "procedural fairness" letter, setting out the material that it had obtained and giving Ms Ziogos 30 days to provide any submissions or any additional medical information or other evidence she believed would assist in the assessment of her claim. The letter included material in MetLife's possession on which it intended to rely in reaching its decision. 2. A similar letter dated 31 July 2012 was sent to Dr Smith. 3. Ms Ziogos instructed Walter Madden Jenkins, who it appears had been acting for her in respect of her workers compensation claim, to reply to the letters sent to her and Dr Smith. They wrote to FSS on 28 August 2012 requesting an extension of 21 days in which to reply. Subsequently, MetLife granted a 30 day extension. 4. On 12 September 2012, Walter Madden Jenkins wrote to FSS providing a substantive response to the procedural fairness letter. That response included two additional reports prepared by Dr Smith dated 19 January 2012 and 21 February 2012 which it appears were prepared for workers' compensation purposes. It also included a response prepared by Ms Ziogos relating to the surveillance video. 5. Dr Smith's report dated 19 January 2012 was addressed to Walter Madden Jenkins. Under the heading "CLINICAL EXAMINATION" Dr Smith said: Ms Ziogos presented as an anxious, agitated and depressed lady. She reported her first memories associated with her exposure to distressing and traumatic events. It was my opinion that Ms Ziogos demonstrated diagnostic criteria for a chronic Post-traumatic Stress Disorder in association with depressive and anxiety symptoms. 1. Under the heading "TREATMENT TO DATE", Dr Smith said: Ms Ziogos has received cognitive behavioural therapy, supportive psychotherapy and pharmacotherapy. She has attended the specialised Post-traumatic Stress Disorder program both the "Open" and "Closed" at St John of God Hospital Richmond. She has remained under my clinical care. She has continued to utilise Lexapro 10mg at night as well as Ativan 0.5mg to 1 mg on an as required basis. She has now been discharged from the NSW Police Force. Ms Ziogos has not been able to reintegrate into any work in the light of her symptomatologies. The "Open" program was a less intense version of the closed program and was available to all persons who suffered from PTSD. When giving evidence, Dr Smith explained that it was usual for police officers to attend an open program before attending a closed one, although at that time he suggested that Ms Ziogos had not for some reason attended an open program. 1. Dr Smith also said in his letter the following in response to the specific questions asked of him: 4. Given the length of time that Ms Ziogos has experienced her psychiatric symptomatologies I am guarded in regard to her prognosis for recovery. … 6. It is my opinion that Ms Ziogos is incapacitated for work. Her symptomatologies would prevent her from focusing and concentrating and relating to the public at large. She would in my opinion have significant difficulty obtaining work on the open labour market. 7. Ms Ziogos requires ongoing psychological and psychiatric treatment along the lines currently being received. She needs to be maintained on pharmacotherapy. Such treatment may be required indefinitely. 8. It is my opinion that Ms Ziogos has reached maximum medical improvement that is to say her injuries have become well settled or static with or without treatment and are unlikely to remit despite treatment. The letter goes on to undertake a whole person impairment evaluation in accordance with WorkCover Guidelines and concludes that Ms Ziogos suffered a whole person impairment of 26 percent. 1. Dr Smith's report dated 21 February 2012 was also prepared for workers' compensation purposes. The report answers specific questions asked of Dr Smith, although those questions are not set out in the report and were not included with Walter Madden Jenkins' letter dated 12 September 2012. The report included the following statement: Employability: Whilst it would be admirable for Ms Ziogos to re-engage at work, it is my view that she remains totally impaired for work. I have reassessed her in this regard and reiterate my opinion of total impairment. I also reiterate my opinion that maximum medical improvement has been reached. 1. Walter Madden Jenkins' letter dated 12 September 2012 also contained submissions on behalf of Ms Ziogos. In relation to Mr Anderson's report, Walter Madden Jenkins said: In our submission, the opinion of Mr Anderson is not helpful in determining whether our client meets the definition of total and permanent disablement because he suggests that any return to work is dependent upon a successful response to psychological treatment. That response is far from certain. 1. In relation to the reports prepared by Dr De Saxe, Walter Madden Jenkins pointed out an apparent inconsistency in what Dr De Saxe said. On the one hand, he concluded that Ms Ziogos was fit to work up to 20 hours per week. On the other hand, he suggested further treatment was required before Ms Ziogos would be able to become productive again. 2. In relation to the surveillance, the letter submitted: If anything, the surveillance footage verifies the history obtained by Mr Anderson and Dr De Saxe that the Claimant undertakes very little social activity. Surveillance was undertaken for a total of 120 hours and only 52 minutes surveillance was recorded.. 1. The letter concluded: It is now over two years since the Claimant last worked. Notwithstanding the treatment regime outlined by Dr Smith, there has been no substantial improvement in the Claimant's condition and, certainly, no improvement consistent with a future return to work. 1. On or about 21 September 2012, FSS sent Walter Madden Jenkins' letter dated 12 September 2012 to MetLife. 2. MetLife sent a copy of Walter Madden Jenkins' letter to both Mr Anderson and Dr De Saxe and asked for their comments. Although the position is not entirely clear, it appears that none of Dr Smith's reports was sent to either of them. 3. Mr Anderson replied on 11 October 2012. In that reply, Mr Anderson said: Whilst I had a strong opinion that Ms Ziogos was unfit to undertake any work at the time I assessed her, it was my carefully thought through idea and hope that, with concentrated and ongoing psychological treatment, she would be able to return to the workforce in some capacity in the future. The problem, as I saw it then, and as I see it now, as cited in my report and again by Ms McTegg [the solicitor who wrote the letter on which Mr Anderson was being asked to comment] was that Ms Ziogos showed every indication that she was satisfied with the person that she was and that she did not truly believe that she could be helped. I stated these words in that original report on page six: this is the biggest obstacle to overcome. … So whilst I could see that there were some serious obstacles to Ms Ziogos to return to the workforce it was my hope, and remains my hope that Ms Ziogos could be assisted towards changing her mind about herself and to regain a reasonable degree of hope and motivation that would lead her towards returning to the workforce at some stage in the future. .. What I was actually saying was that I did not see fit to consign Ms Ziogos to "the scrap heap of unemployment" and had a sincere hope and expectation that, with careful treatment, encouragement and practical assistance that she would be able to again become a contributing member of the workforce. … There are many psychological techniques and modes of instruction and learning that can be applied to assist an injured worker to return to the workplace albeit in another capacity altogether. Such techniques as CBT (Cognitive Behaviour Therapy), Mindfulness and Psychoanalytic theory and several others can be employed to bring about the changes that are necessary to help an injured worker to return to a productive working life. I believe that very few individuals should be classified as "Permanently unfit to return to the workforce". I suggest that Ms Anastasia Ziogos is one such person who can and should be helped to return to suitable employment. 1. Dr De Saxe replied on 22 October 2012. He said: My comment concerning Ms Ziogos becoming 'productive' again was made in the specific context of suggesting that with appropriate insight oriented psychodynamic psychotherapy, she might be able to fulfil her full potential, however, it was not intended to imply, as has been suggested by Ms McTegg, that Ms Ziogos had no capacity whatsoever for any 'productivity' at the time of the interview. My reference to productivity in that context, referred to her specific sense of herself, in relation to what she might regard as satisfying productivity. However, it was not intended to suggest that she had an absolute incapacity for any work whatsoever at the time of interview. I do not retract my view that Ms Ziogos is capable of up to 20 hours work per week, and I note that she said she had a moderate response to therapy, i.e. she was feeling better at the time I interviewed her. This suggested that she might be able to commence part-time work. 1. On 14 November 2012, MetLife sent copies of Mr Anderson's and Dr De Saxe's reports to FSS with a request that they be sent to Ms Ziogos via her solicitor for review and comment. 2. On 29 November 2012, Walter Madden Jenkins wrote to FSS stating "We are not instructed to make any further comments" in respect of the reports obtained from Mr Anderson and Dr De Saxe. On 6 December 2012, FSS passed on the substance of that response to MetLife. 3. By letter dated 17 January 2013, MetLife declined the claim. It set out a summary of the reports it had obtained. It then expressed its conclusion in these terms: We are of the opinion that the Dr De Saxe and Mr Anderson reports and surveillance supports Ms Ziogos to have a work capacity and note that they both were of the opinion that Ms Ziogos had the capacity to work 20 hours per week. It was also noted in the medical reports that Ms Ziogos informed that she rarely left the home and when she did she needed company. The surveillance showed Ms Ziogos was capable of attending shops and driving while on her own. … When considering TPD, the question of 'unlikely ever' allows MetLife to take into consideration the likelihood of Ms Ziogos returning to any occupation for which she is suited. In Ms Ziogos's case her current age of 37 is a factor relevant to the circumstances of the claim and where Ms Ziogos has an effective 28 years before a normal retirement age of 65, we consider that it is more likely than not that she will return to gainful employment. … The medical evidence points to the Complainant having transferable skills and experience, and a number of the medical reports before the Tribunal suggest that as the Complainant's condition is slowly improving, it is likely that she will eventually return to work, albeit not in the Police Service". Conclusion Our view is that there is sufficient evidence to show that Ms Ziogos has a capacity to work in either a full time or part time capacity, in a gainful occupation for which she is suited by education, training or experience. Accordingly, we consider that Ms Ziogos cannot be considered to be Totally and Permanently Disabled in accordance with the terms and conditions of the policies, which require that she be disabled to such an extent that she is unlikely to ever engage in any gainful profession for which she is suited by education, training or experience. As such we affirm our decision to decline the First State Super and Police Blue Ribbon TPD claims. 1. On 19 March 2013, FSS notified Ms Ziogos of MetLife's decision. 2. On 27 March 2013, Ms Ziogos, through her solicitors, requested her claim to be reviewed by the claims review committee. They asked for an additional 28 days in which to obtain further evidence in support of her claim. 3. On 10 April 2013, Cox West, who had been appointed by Ms Ziogos to replace Walter Madden Jenkins, wrote asking for a further six weeks to make submissions to the claims review committee. 4. On 20 August 2013, FSS wrote to MetLife asking it to reconsider its decision. The letter contained a detailed analysis of the material before MetLife. The letter concluded by asking MetLife to review its decision within 21 days. It said that otherwise it would be necessary for the claims review committee to review the matter when it convened on 3 October 2013. It appears that MetLife did not respond to that letter. 5. Cox West provided detailed submissions to the claims review committee on 2 and 3 October 2013. The submissions included additional medical reports, including medical reports from Dr Graham George, a psychiatrist who had provided reports at the request of the police insurer, and Dr Robert Gertler, a psychiatrist who had provided a report in connection with Ms Ziogos's workers' compensation claim. 6. The committee met on 3 October 2013. It confirmed MetLife's decision. The policy wording 1. The Policies are relevantly substantially in the same terms. It is convenient to focus on the terms of the Police Blue Ribbon Policy. Clause 3 of that policy provides that if an "Insured Member" suffers "TPD" while the policy is in force, MetLife will pay the "Sum Insured" in respect of the Insured Member. "TPD" is defined to mean "Total and Permanent Disablement" as defined in the First Schedule. Clause 6 of the First Schedule relevantly provides: While covered under this Policy, Total and Permanent Disablement shall have the following meaning: (a) … (b) In the case of an Insured Member whose Normal Hours are 15 hours each week or more at the time of the Insured Event giving rise to the claim – the Insured Member having been absent from their Occupation with the Employer through injury or illness for six consecutive months and having provided proof to our satisfaction that the Insured Member has become incapacitated to such an extent as to render the Insured Member unlikely ever to engage in any gainful profession, trade or occupation for which the Insured Member is reasonably qualified by reason of the education, training or experience. (c) … 1. It is apparent from the definition of "Total and Permanent Disablement" that in order to be entitled to a benefit, the "Insured Member" (that is, Ms Ziogos) had to provide proof to MetLife's satisfaction that a certain state of affairs existed. 2. It is now accepted at common law that a member of a superannuation fund in respect of whom the trustee has obtained insurance cover may seek an order that the insurer pay to the trustee the amount due to the trustee under the insurance contract: Sayseng v Kellogg Superannuation Pty Ltd [2003] NSWSC 945 at [78]ff. An insurer when faced with a claim by an insured owes the insured a duty of utmost good faith – sometimes described as a duty of good faith and fair dealing – in dealing with the claim. Following the decision of the Court of Appeal in Hannover Life Re of Australasia Limited v Sayseng [2005] NSWCA 214; 13 ANZ Ins Cas 90-123, it is now also accepted that that duty is also owed at common law to an insured person who is covered by the policy. The right of an insured person to enforce the contract, and in particular the duty of utmost good faith, directly is also now to be found in the Insurance Contracts Act 1984 (Cth) as a result of amendments that took effect from 28 June 2013: see ss 13, 48A. 3. The content of the duty of utmost good faith depends on the contractual rights and obligations of the parties in relation to the claim. The duty of utmost good faith does not impose obligations in the abstract. Rather, it imposes an obligation on the insurer to exercise its rights and discharge its obligations as conferred by the contract of insurance with the utmost good faith. Relevantly, in the present context, the duty required MetLife to act with the utmost good faith in determining whether Ms Ziogos had provided proof to its satisfaction that a particular state of affairs existed. 4. Independently of the duty of utmost good faith, where a contractual right depends on the formation of an opinion of one of the contracting parties, or on the satisfaction of the contracting party concerning the existence or absence of a particular state of affairs, a question will arise whether implicit in the requirement that the opinion be formed or the satisfaction be reached is a requirement that the opinion be a reasonable one or that the state of satisfaction be arrived at reasonably. In the case of a contract of insurance, it is accepted that such a term is to be implied. As McLelland J said in Edwards v The Hunter Valley Co-op Dairy Co Ltd (1992) 7 ANZ Ins Cas 61‑113: 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 … (authorities omitted) This passage was cited with approval by Santow JA (with whom Spigelman CJ and Tobias JA agreed) in Sayseng (at [47]). 1. The duty of utmost good faith is broader than the implied term. It applies to all aspects of the claims handling process. So, for example, it required MetLife to consider the claim within a reasonable time period after it was made, although what a reasonable time period is depends very much on the circumstances of the case. In Sayseng, the court held that the duty of utmost good faith required the insurer to give the insured person a reasonable opportunity to comment on material that it had obtained that was adverse to the insured person's claim. 2. In the present case, Mr Rayment QC, who appeared for Ms Ziogos, submitted that the duty of utmost good faith also imposed a higher or stricter standard than the implied term. It was not sufficient that MetLife acted reasonably in considering whether it was satisfied. Something more was required, although what more was not clearly articulated. 3. In support of that submission, Mr Rayment relied on Sayseng and on the decision of the High Court and Full Federal Court in AMP Financial Planning Pty Ltd v CGU Insurance Ltd [2005] FCAFC 185; (2005) 146 FCR 447 (Full Court); CGU Insurance Ltd v AMP Financial Planning Pty Ltd [2007] HCA 36; (2007) 235 CLR 1; [2007] HCA 36; (2007) 235 CLR 1 (High Court). However, neither of those decisions supports the proposition advanced by Mr Rayment. In Sayseng, Santow JA said (at [54]): There would be little point in a duty of good faith and fair dealing if it were essentially supplanted by the duty merely to act reasonably in those cases where rights or liabilities depended upon an opinion about something, here an opinion about total and permanent disablement. However, that statement was made to rebut the proposition, said by the appellant in that case to have been derived from the decision of McLelland J in Edwards, that unless the insurer acted unreasonably on the information before it, its decision could not be attacked. Santow JA rejected that submission. The insurer had breached its duty of utmost good faith by failing to give the insured person an opportunity to comment on the material that it had obtained. 1. Similarly, the decisions of the Full Federal Court and the High Court in AMP Financial Planning Pty Ltd do not suggest that a stricter standard than reasonableness should be applied where the claim depended on the insurer being satisfied about a particular matter. In that case, the question was whether the insurer under a professional indemnity policy was in breach of its duty of utmost good faith in failing to accept the claim and delaying in handling the claim. At first instance, Heerey J held that the breach of the duty of utmost good faith required some dishonesty on the part of the insurer and there had been no dishonesty on its part. For that reason, the claim failed. On appeal to the Full Court, a majority (Moore and Emmett JJ) held that dishonesty was not necessary and reversed Heerey J's decision. Emmett J, for example, said (at [89]) that "[w]hile dishonest conduct will constitute a breach of the duty of utmost good faith, so will capricious or unreasonable conduct …". 2. The decision of the Full Court, in turn, was reversed by the High Court. However, it is plain that the High Court did not accept Heerey J's narrow statement of the duty. But it said nothing to suggest that the duty required more than reasonableness where what was in issue was whether the insurer was satisfied about a particular thing. Gleeson CJ and Crennan J accepted the wider statement of the duty adopted by the majority of the Full Court (at [15]). Callinan and Heydon JJ agreed that "a lack of utmost good faith is not to be equated with dishonesty only". They thought that a breach of duty of utmost good faith "may have elements in common with an absence of clean hands". However, they thought that it was not necessary for the purposes of the case to attempt a comprehensive definition of the duty: at [257]. Kirby J, dissenting in the result, thought that dishonest, capricious or unreasonable conduct would breach the duty: at [131]. 3. It is apparent from these decisions that the duty of utmost good faith is not to be equated to the implied obligation to act reasonably in forming an opinion concerning, or being satisfied about, a particular matter. Nor are the two standards the same. But if an insurer forms an opinion or reaches a state of satisfaction about a matter and acts reasonably in doing so, it is difficult to see how the insurer breached its duty of utmost good faith merely because it formed that particular opinion or was satisfied about that particular matter. 4. There is a question whether the requirement that MetLife be satisfied that Ms Ziogos suffered from TPD is a purely objective one. Mr Jones SC, who appeared for MetLife, submitted that it was. In his submission, the sole question was whether objectively MetLife's decision met the standard – whether its decision was "in the range" of what was reasonable. I do not accept that submission. The policy requires MetLife to be satisfied of a particular matter. That required it to form an opinion itself. It was required to act with the utmost good faith in doing so. It is not sufficient that some other insurer acting reasonably could have reached the conclusion that it did. 5. In my opinion, it follows from the previous paragraph that MetLife was also required by its duty of utmost good faith to give reasons for its decision. It is only by examining those reasons that it is possible to determine whether it acted with the utmost good faith in forming the opinion it was required to form. To put the point another way, where an insured person's rights depend not on the objective fact (whether or not the insured suffered from TPD) but on the insurer's opinion concerning that question, the requirement of utmost good faith requires the insurer to explain how it reached the decision it did so that the insured person can be satisfied that the decision itself was reached in the utmost good faith. 6. In this case, the definition of "Permanent and Total Disablement" required Ms Ziogos to provide proof (to MetLife's satisfaction) of the relevant state of affairs. 7. In written submissions, MetLife contended that the effect of the requirement that the insured person provide proof was to place the onus of proof on the insured person. Ms Ziogos took issue with that proposition. However, the dispute in relation to this issue is more apparent than real. MetLife's submission, at least as finally put, was that Ms Ziogos bore the onus of bringing forward sufficient material that satisfied MetLife that the required state of affairs existed. As Stevenson J pointed out in Shuetrim v FSS Trustee Corporation [2015] NSWSC 464 at [43]ff (a case relied on by MetLife), the effect of that requirement might be described as placing an evidential burden on the insured person. However, at the time an insured person makes a claim under a policy, there are no proceedings on foot between the parties; and there can be no question of one party or the other bearing the onus of proof. Rather, MetLife had to be satisfied of a certain state of affairs; and it was up to Ms Ziogos to put material before it that brought about that state of satisfaction. Having regard to the terms of the policy, MetLife was not required by the duty of utmost good faith to undertake its own investigations. 8. If the onus was on Ms Ziogos to bring forward adequate material, then an obligation on MetLife arising from the duty of utmost good faith was to give her a reasonable opportunity to do so. Moreover, in some circumstances, the duty may go beyond that. If, for example, an unrepresented claimant failed to put forward sufficient material to enable MetLife to address the substantive issues that it was required to address (that is, whether the claimant suffered from TPD) then, in my opinion, the duty of utmost good faith would require it to say so and to give the claimant an opportunity to put forward additional material. However, it was not seriously suggested that Ms Ziogos was denied a reasonable opportunity to put material before MetLife. Nor could it have been. MetLife told Ms Ziogos's solicitors the material it intended to rely on and gave Ms Ziogos, through them, an opportunity to put forward additional material supportive of her claim. With the benefit of legal advice, she declined to do so. 9. The matter about which MetLife had to be satisfied was that Ms Ziogos was "unlikely ever to engage in any gainful profession, trade or occupation for which she was reasonably qualified by reason of her education, training or experience". 10. A similar phrase was considered by White J in White v Board of Trustees [1997] 2 Qd R 659, a case on which Ms Ziogos placed considerable reliance. That case involved a claim by a police officer under a deed established pursuant to the Superannuation (State Public Sector) Act 1990 (Qld). Under the terms of the deed, members of the scheme established by the deed were entitled to be paid a benefit in the event that they suffered "total and permanent disablement". "Total and permanent disablement" was defined in cl 1.4 of the deed to mean disablement "of a degree which, in the opinion of the [Board of Trustees of the State Public Sector Superannuation Scheme] after obtaining the advice of not fewer than 2 medical practitioners, is such as to render the member unlikely ever to be able to work again in the job for which the member is reasonably qualified by education, training or experience". 11. The applicant claimed to have suffered from TPD on the ground that he suffered from PTSD. The Board rejected his claim on the basis that it was not of the opinion that the applicant was unlikely ever to be able to work again. The proceedings before White J were brought by way of judicial review of the Board's decision. White J, after a detailed review of the meaning of the word "unlikely" said this: 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. There is a body of opinion to which I have referred which would say that "unlikely" means "improbable" in the sense of a less than 50 per cent chance. In ordinary usage this may be much the same as saying that there is no real as opposed to a remote chance of the designated event occurring or to take up one of the dictionary meanings, the prospect of the event occurring is unpromising. Her Honour then stated her conclusion in these terms: I conclude that in approaching the task of informing its opinion the Board did not have regard to the ordinary meaning of "unlikely" as meaning no real chance or even improbable and entertained something more remote as sufficient. (at 674) 1. White J's conclusion was approved by the Full Court of Western Australia in Beverley v Tyndall Life Insurance Co Ltd [1999] WASCA 198; (1999) 21 WAR 327 at [32] per Ipp J (with whom Malcolm CJ and Anderson J agreed); and her view that "unlikely" meant improbable in the sense of a less than 50 per cent chance was approved by Brereton J in Halloran v Harwood Nominees Pty Ltd [2007] NSWSC 913 at [76]. 2. It was not disputed that that was the meaning to be given to the word "unlikely" in this case. One point, however, should be made. Although one helpful way of giving meaning to the word "unlikely" is to say that it requires a less than 50 per cent chance, it should not be inferred from that that the test is a statistical one. The test is not concerned with what is likely in the population as a whole, but rather whether having regard to what was known about Ms Ziogos, it was unlikely that she would ever be able to engage in any gainful profession, trade or occupation for which she is reasonably qualified by reason of her education, training or experience. 3. Similarly, in answering that question, the issue for MetLife was whether it was unlikely that Ms Ziogos would actually obtain paid employment for which she was qualified by education, training or experience. The question was not whether in theory she might obtain employment of that type: see Halloran at [76]; Banovic v United Super Pty Ltd [2014] NSWSC 1470; Shuetrim at [38]-[39]; Lazarevic v United Super Pty Ltd [2014] NSWSC 96 at [108]-[109] per Hallen J. 4. It is accepted that, if the insurer did not comply with its duty of utmost good faith, the court may determine the question whether Ms Ziogos suffered from total and permanent disablement itself: Hannover Life Re of Australasia Ltd v Sayseng [2005] NSWCA 214, (2005) 13 ANZ Ins Cas 90-123 at [36(e)]; Erzurumulu v Kellogg Superannuation Pty Ltd [2013] NSWSC 1115 at [54]; Shuetrim v FSS Trustee Corporation [2015] NSWSC 464 (at [34]); cf Birdsall v Motor Trades Association of Australia Superannuation Fund Pty Ltd [2015] NSWCA 104 at [25] per Basten JA. 5. Before turning to the facts of the case, one final point should be made. Generally, and subject to the terms of the policy, the question whether a member suffers from TPD is to be determined as at the expiration of the qualifying period specified in the policy. In the normal case, it is at that point of time that the insured person's cause of action under the policy arises: see Giles v National Mutual Life Association of Australasia Ltd (1986) 4 ANZ Ins Cas 60-751 at 74,529 per Pidgeon J, cited with approval by Brereton J in Halloran v Harwood Nominees at [33]. See also Stevenson J's discussion in Shuetrim v FSS Trustee Corporation [2015] NSWSC 464 at [51]ff. However, that will not always be the case. Where the right to make a claim under the policy depends, as in this case, on the formation of an opinion by the insurer in relation to a matter concerning the future which itself is uncertain, the position is less clear. It is difficult to see how the insurer could be in breach of the policy until the claim is made and the opinion is formed or the insurer fails to form the opinion in breach of its duty of utmost good faith. In those cases, the question whether the member suffers from TPD should be determined at the time the insurer forms its opinion or fails to form its opinion consistently with its duty of utmost good faith. In addition, as Pidgeon J pointed out in Giles, it is possible to take into account subsequent events to the extent that they shed light on what was likely at the time the assessment was to be made. Did MetLife breach its duty of utmost good faith or the implied obligation to act reasonably? 1. In her Amended Statement of Claim, Ms Ziogos provides particulars of what was pleaded to be a duty "to act reasonably in considering the claim". There is no actual pleading that MetLife breached its duty of utmost good faith, although that was the basis on which the case was fought at trial. The pleaded particulars are also of little assistance, and they too were largely abandoned at trial, although not expressly. The pleaded particulars included allegations that MetLife acted unreasonably by engaging in covert surveillance of Ms Ziogos, that it failed to investigate her claim and make a determination in a timely manner and that it requested submissions in relation to material without identifying the material that it considered to be adverse. In my opinion, none of these matters amounted to unreasonable conduct. MetLife was entitled to investigate the claim, including by observing Ms Ziogos. It plainly investigated the claim. If there was delay, it cannot make MetLife liable for a claim for which it would otherwise not have been liable. MetLife did not act unreasonably in failing to draw adverse material to Ms Ziogos's attention. It was not difficult to identify the material that might have been regarded as adverse. The relevant material was sent to Dr Smith. Ms Ziogos had solicitors acting for her. Neither would have had difficulty in identifying the material that may needed to have been addressed. 2. It is not altogether easy to identify from the submissions made during the course of the hearing why it is said that MetLife breached its duty of utmost good faith. However, Ms Ziogos's complaints appear to fall into four broad categories. First, it was unreasonable for MetLife to prefer the opinions of Dr de Saxe and Mr Anderson over the opinions of Dr Smith. Dr De Saxe and Mr Anderson saw Ms Ziogos only once, whereas Dr Smith had been treating her for in excess of two years. Second, it was unreasonable to rely on the opinion of Dr De Saxe and Mr Anderson since their opinions amounted to nothing more than speculation concerning what might happen in the future with certain treatment. In this respect, their opinions, and that of MetLife to the extent that it was based on them, suffered from the same flaw as the opinion reached by the Board in White v Board of Trustees [1997] 2 Qd R 659. Third, it was unreasonable because it was based on the erroneous belief that Ms Ziogos was capable of working part-time. Lastly, MetLife acted unreasonably by refusing to reconsider its decision at the request of FSS. 3. In my opinion, the last of these considerations can be put to one side. MetLife was under no obligation to review its decision at the request of FSS. The policy provided a mechanism by which its decision could be reviewed. Ms Ziogos had elected to pursue that review process. It was not a breach of MetLife's duty of utmost good faith to let that process take its course. 4. It is helpful to begin consideration of Ms Ziogos's other three points by considering what facts and opinions MetLife had before it. 5. MetLife knew that since about May 2010 Ms Ziogos had been treated for PTSD, anxiety and depression under the supervision of Dr Smith and that the treatment consisted of pharmacotherapy, cognitive behavioural therapy administered by a psychologist, who she saw fortnightly, and attendance at a specialised PTSD program at St John of God Hospital. It also knew that at least by 19 January 2012 it was Dr Smith's opinion that her symptoms were unlikely to improve and that Dr Smith's view at that time was that Ms Ziogos was incapacitated for work. It is true that some of that information came from reports prepared for workers compensation purposes and that, on occasions, Dr Smith expressed the opinion that Ms Ziogos's prognosis was "guarded". But, in my opinion, on any fair reading of Dr Smith's reports he was saying that, in his opinion, Ms Ziogos could not work and that her condition was unlikely to improve with or without treatment. 6. MetLife also knew that it was Mr Anderson's view that as at 1 August 2011, Ms Ziogos was incapable of working but that he thought that with treatment of the type that she was receiving she would improve to the point where she could return to work (although not as a police officer). He did not change his mind when he prepared a supplementary report dated 11 October 2012. 7. Dr De Saxe's views are less clear. In his first report (dated 28 September 2011) he appears to be saying that Ms Ziogos had a current capacity to work 20 hours per week, but not as a police officer, and that she would not be able to return to full-time employment unless she had "a significant period of insight oriented psychotherapy". In his second report (dated 26 January 2012), he expressed the opinion that Ms Ziogos would be capable of carrying out the jobs identified by Ms Wallace initially on a part-time basis and then, perhaps after six months, on a full-time basis. However, that opinion was qualified by saying that it was necessary for Ms Ziogos to become engaged in an "ongoing psychotherapy relationship" and he went on to say that "it is unlikely she would be able to successfully return to work without having the regular support of an experienced psychotherapist". Dr De Saxe was asked to comment on the apparent inconsistency between these two reports. He did so in a third report dated 22 October 2012. That report is also equivocal. Dr De Saxe does say that he did not retract his view that Ms Ziogos "is capable of up to 20 hours work per week" but after referring to her response to her current therapy he says "[t]his suggested that she might be able to commence part-time work" (emphasis added). In cross-examination, Dr De Saxe was asked about these reports. He gave the following evidence: Q. A reasonable way of reading your letter [the first report] was to read it as if you were then saying "following some treatment that I think Dr Smith should prescribe she should then be able to go to work at first part time, 20 hours a week, and maybe even fulltime" is that right? A. Yes, I'd agree with that. Q. That's what you intended to write in your first report? A. Yes. Q. That's essentially what you explained in your most recent report, isn't it, that you were‑‑ A. Yes. Q. You put that forward as your current view, don't you, that if she's not being fixed yet the application of the treatment that you have referred to be afforded by those you who are responsible for it, particularly her treating psychiatrist, might still result in something or other? A. Yes, that's correct. And later: Q. What, did you really not comment on that at all in your first report, is that what you're saying, whether she had a capacity then to work or not, but rather commented on how things could be changed, is that correct? A. My impression of the first report was that I did give the impression that I felt that she was presently, at that time, capable of part time. Q. Capable of it, what, when she's at home, scared to leave the house and so on, surely not? A. Well I take your point. Possibly not. Q. Possibly not, surely not I suggest to you? She couldn't possibly have gone to work, could she, in the condition in which you met her in 2011? A. I can't be 100% certain. Q. But you weren't meaning to suggest that you had a view to that effect were you when you wrote your first report? A. That I had a view that she could work, is that what you mean? Q. Yes, you don't say that, that she can now work, "no problem, go out to work Ms Ziogos, right now" you weren't saying that were you? A. I wasn't very clear about it. Q. You didn't have that view; there was no doubt she could go straight to work from her lounge watching television, frightened to leave the house? A. No. Q. What you were dealing with was a possible future depending on decisions that might be made by others as to what treatment she should have, is that right? A. Yes. Q. If they didn't decide to do it well then your remarks did not bite, they weren't engaged by anything that you expected to happen, is that right? A. That's a fair assumption, yes. 1. Presumably, if MetLife had asked Dr De Saxe about the apparent inconsistency in his reports at the time, it would have got similar responses. 2. The upshot, then, is that, on any fair reading of the material MetLife had, Dr Smith thought that Ms Ziogos could not work and would not be able to return to work, Mr Anderson thought that she could not work but would be able to return to work with the treatment she was having and Dr De Saxe was equivocal about whether she could work but he thought the position was unlikely to change unless she had a different form of treatment (insight oriented psychotherapy). 3. None of Dr Smith, Mr Anderson or Dr De Saxe expressed the opinion that Ms Ziogos was exaggerating her symptoms. MetLife did obtain video surveillance of Ms Ziogos. That showed that, on occasions, Ms Ziogos left home, sometimes by herself. It showed nothing else of significance. 4. MetLife expressed the reasons for its conclusions briefly. It is apparent from those reasons that it relied on the conclusion that Ms Ziogos "has a capacity to work in either a full time or part time capacity". It also relied on the video surveillance and Ms Ziogos's age. 5. In my opinion, MetLife could not reasonably have reached the conclusions it did on the evidence available to it. 6. In my opinion, it could not reasonably be inferred from the evidence available to it that Ms Ziogos had the capacity to work in either a full-time or part-time capacity. The only person who arguably expressed that opinion was Dr De Saxe. However, for the reasons I have given, De De Saxe's position remained equivocal despite the fact that he was given an opportunity to clarify it and it was contradicted by the opinions given by Dr Smith and Mr Anderson, although when expressing its conclusion MetLife incorrectly said that Mr Anderson was of the view that Ms Ziogos had the capacity to work 20 hours per week. In my opinion, in the face of the opinions expressed by Dr Smith and Mr Anderson, and the equivocal nature of the opinion expressed by Dr De Saxe, it was unreasonable for MetLife to conclude that Ms Ziogos had the capacity to work in either a full-time or part-time capacity. That is particularly so where that conclusion was inconsistent with the conclusion reached by Ms Ziogos's treating psychiatrist and no reason was advanced for rejecting that conclusion. 7. The conclusion that Ms Ziogos had the capacity to work in either a full-time or part-time capacity was obviously important to MetLife's conclusion that she did not suffer from total and permanent disablement. For that reason alone, I do not think that MetLife acted reasonably or with the utmost good faith in reaching the conclusion that it did. 8. Nor, however, do I think it was reasonable for MetLife to conclude on the material before it that Ms Ziogos had the capacity to return to work at some time in the future (or, more accurately, was unlikely not to have the capacity to return to work at some time in the future). That conclusion was based on the opinions of Dr De Saxe and Mr Anderson, Ms Ziogos's age and the video surveillance. However, in my opinion, it was not reasonable for MetLife to reach that conclusion on the basis of that material. 9. In my opinion, Mr Anderson applied the wrong test when expressing the view that he did, as did MetLife to the extent that it relied on Ms Ziogos's age. Mr Anderson's position appears to be that Ms Ziogos should not be given up on and that with treatment she should be able to return to work. But these opinions do not appear to relate to any specific attributes of Ms Ziogos and her symptoms. Rather, they are expressions of general hope and expectation that could be stated in relation to anyone suffering from PTSD. Or, to put the point another way, they are statements about what may be possible not statements about what was likely or unlikely given the particular circumstances of Ms Ziogos and the way that she had responded to treatment in the past. In my opinion, it was unreasonable for MetLife to rely on Mr Anderson's report unless it took some steps to understand why Mr Anderson believed that she would respond to treatment (or expressed in terms of the requirements of the Policies, not unlikely that she would not respond to treatment) when she had not responded to treatment in the past and not all people who suffer from PTSD respond to treatment. Similarly, although Ms Ziogos's age may be a relevant factor when taken together with others, to the extent that MetLife formed the view that at some time Ms Ziogos would be able to return to work because she had so many working years left of her life, it was confusing what was possible with what was likely and unlikely. 10. It was unquestionably Dr De Saxe's opinion that, with treatment that was different from the treatment Ms Ziogos had received and was receiving she would be able to return to work. However, in my opinion, it was unreasonable for MetLife to rely on that opinion without at least taking some steps to determine whether Ms Ziogos would receive that treatment. In the absence of those enquiries, the possibility that Ms Ziogos would return to work because she would receive treatment of the type recommended by Dr De Saxe was merely speculative. 11. In my opinion, it was also unreasonable for MetLife to place any weight on the video surveillance. That surveillance indicated that Ms Ziogos was capable of undertaking the activities she was filmed undertaking. But those activities bore no relationship to the activities that she would be required to undertake in employment. It appears that MetLife attached some significance to the fact that Dr Smith had reported that Ms Ziogos had difficulties getting out of bed, yet the video surveillance showed her out of bed. But as Dr Smith pointed out, the fact that she got out of bed did not demonstrate that she did not have difficulties doing so. The only significance of the video surveillance was that it was generally consistent with symptoms that she reported, undermining any suggestion that to some extent or another Ms Ziogos was malingering. 12. It follows that MetLife was in breach of the Policies in rejecting the claims. Consistently with the authorities, it is therefore a question for the court whether Ms Ziogos suffers from total and permanent disablement. Does Ms Ziogos suffer from total and permanent disablement? 1. The answer to this question turns on whether Ms Ziogos is unlikely ever to engage in any gainful profession, trade or occupation for which she is reasonably qualified by reason of her education, training or experience. It is not disputed that Ms Ziogos bears the onus on that question. 2. In my opinion, Ms Ziogos has discharged that onus. 3. On the facts of this case, two broad issues are raised by the question. One is whether, as at the relevant date, Ms Ziogos was capable of working in a job for which she was qualified. Clearly, if she was, she did not suffer from total and permanent disablement. The other issue is whether, assuming Ms Ziogos was not capable as at the relevant date of working in a job for which she was qualified, she was unlikely ever to improve to the point where she could. 4. In its submissions, MetLife does not clearly distinguish between these two issues, although it makes submissions that go to both issues. 5. As I have said, there is some uncertainty in cases such as this concerning the relevant date at which the question of total and permanent disablement is to be answered. For the reasons I have given, I have proceeded on the basis that that date is the date on which MetLife rejected Ms Ziogos's claim. However, I do not think the choice of date is material in this case. 6. MetLife submits that in a case such as this, where there is no physical injury and no objective way of examining the extent of the claimant's incapacity, the court needs to be particularly careful since any diagnosis largely depends on self-reporting by the claimant, and there is a serious risk of over-reporting in those circumstances. I accept that submission. 7. In relation to the first issue, MetLife points to the fact that Ms Ziogos had engaged in a number of activities that suggested that she was capable of working. She had engaged in a number of property transactions during the period of her illness. On 31 March 2010, she acquired a property in Beaumont Hills and in order to do so she sold two investment properties she owned. She sold a further investment property in Toongabbie that she had bought in June 2009 in April 2013. She has travelled overseas on four occasions – to Greece in 2010, Bali in 2011, Greece in 2012 and Greece and Dubai in 2014, it appears in each case with one or more of her parents, and may have travelled to Melbourne once. She drives a car, lives by herself, has on occasions gone to the gym and sometimes meets up with friends. In addition, she had a Facebook page, and although she says that she does not want to engage in any activity that reminded her of the police she followed the Deputy Commissioner of Police on Facebook between 2010 and 2014. MetLife also relies on the fact that Ms Ziogos had no difficulty giving evidence. 8. In relation to the second issue, Ms Ziogos's case depends largely on the evidence given by Dr Smith. MetLife takes issue with that evidence on a number of grounds. It submits that Dr Smith's reports did not give any explanation for the conclusions he reached and, in particular, did not explain the precise treatment that Ms Ziogos had undergone and the results of that treatment or precisely why she would be unable to work. It also submits that Dr Smith's conclusion was based on a single clinical examination that occurred during his initial consultation on 18 May 2010 and that his prognosis was based on an incomplete understanding of the facts. In particular, Dr Smith was apparently unaware that Ms Ziogos engaged in a number of property transactions during the period of her illness, that she operated a Facebook page for a period and that she had told Mr Anderson, to whom she had been referred to by Dr Smith, that she was reluctant to do positive things for her health in case they were recorded by MetLife. MetLife also suggested that Dr Smith had tailored his evidence for the purposes of the case and it sought to contrast the reports he had written for the workers compensation insurer with the reports he had written for MetLife. He was also criticised for giving an opinion before Ms Ziogos had completed the closed program. 9. In considering the likelihood of improvement, MetLife submitted that it was also relevant that Ms Ziogos did not call either of her treating psychologists. It submits that, as a result, the court should infer that their evidence would not have assisted her case. 10. As to the first issue, there is no evidence that Ms Ziogos substantially exaggerated her symptoms or that she was malingering in order to avoid work. From the age of five, she wanted to be a police officer. She achieved that goal. She appears to have worked diligently, gained a promotion, and struggled to continue to work for several years notwithstanding the increasing severity of her symptoms. At the time that she ceased work, there can be no question that she suffered from severe stress. There is some dispute concerning her precise diagnosis, but it seems clear that it included elements of PTSD, anxiety and depression. No one suggests that she is or will ever be capable of returning to work as a police officer and the real question is whether her continuing symptoms prevent her from engaging in other forms of employment. 11. None of the psychiatrists or psychologists who examined Ms Ziogos expressed the view that she exaggerated her symptoms. The MMPI test administered by Mr Anderson showed inconsistent responding and over reporting, but, as I have said, Mr Anderson explained that that result of the test did not necessarily mean that Ms Ziogos was over reporting her symptoms. 12. The activities engaged in by Ms Ziogos are not particularly helpful in determining her capacity to work. None of the activities were so related to work that they could obviously shed light on Ms Ziogos's ability to cope with the day to day stresses of work or to attend work on a regular basis. Commenting on Ms Ziogos's ability to take on an administrative support job, Dr Smith said this: No, but if you're dealing with the public you are potentially liable to be exposed to hazard situations. Furthermore I've emphasised that I don't think Ms Ziogos has the capacity to deal with the public. I made that point. I've also emphasised I don't think she has the capacity to focus or concentrate on tasks at hand that may be required in these jobs. She's also continues to experience panic attacks; everyone agrees with that, which is quite embarrassing for her. And she becomes quite avoidant of social situations. How she can relate to the public at large I'd be very surprised. I accept that evidence. 1. Ms Ziogos was the subject of considerable surveillance. That surveillance demonstrated that Ms Ziogos engaged in activities that were consistent with her reported level of disability. Although Ms Ziogos went to the gym on occasions, it seems clear that she did not persist with it and she has put on 30 kilograms in weight. She started a massage course that she did not complete. Her failure to continue with these activities is consistent with her reported level of disability. It is true that Ms Ziogos was able to give evidence in a coherent fashion. She was combative at times. On occasions, she was also emotional and she burst into tears once. In my opinion, the way she gave evidence sheds little light one way or the other on her ability to engage in gainful employment. On the other hand, as I have said, the evidence given by Dr Smith and Mr Anderson was that at the time that Ms Ziogos was examined she continued to suffer from symptoms that meant that she could not work. Dr De Saxe's evidence was equivocal. In my opinion, the evidence of Dr Smith and Mr Anderson should be accepted. 2. As to the second issue, I do not accept a number of the criticisms of the evidence given by Dr Smith. His opinion was not based on a single clinical examination. He saw Ms Ziogos approximately once every six weeks. Although he did not keep extensive clinical notes and may not have performed further formal clinical examinations, that does not mean that he did not conduct any further clinical examinations. As Dr Smith explained: Well, the examination is ongoing. When Ms Ziogos comes in to me, I'm examining her from a psychiatric point of view. I'm not doing a physical examination but I'm doing a psychiatric examination by interacting with her. That's the nature of psychiatric practice ‑ there's an ongoing clinical observation of her every time she walks in. Again, I accept that evidence. 1. The matters that Dr Smith is said not to have known seem to me to be minor and do not go directly to whether Ms Ziogos was capable, either at the time she was examined or in the future, of working. I do not accept that Dr Smith's evidence is undermined by the reports he prepared for the workers' compensation insurer. As Dr Smith explained, those reports were prepared to address specific questions that he was asked. The fact that in them he expressed opinions concerning Ms Ziogos's short-term prognosis does not in my view undermine his opinion concerning the question whether Ms Ziogos suffered from total and permanent disablement. Moreover, he clearly expressed the opinion in some of those reports that she was incapacitated for work and that her injuries were unlikely to improve. Although Dr Smith accepted that he expressed a view on that question before Ms Ziogos had completed the closed program, in my opinion that concession was based on a misunderstanding. As I have explained, the likelihood is that the relevant opinion was wrongly dated and that Dr Smith did not express a final opinion on Ms Smith's prognosis until she had completed the closed program and it was apparent that she did not respond well to it. 2. It is true that, like so many medical reports, Dr Smith's reports do not set out his reasoning process in detail. However, it is obvious that Dr Smith has considerable experience in treating patients with PTSD and that that is one of the areas in which he and the hospital where Ms Ziogos was treated specialise. Ms Ziogos presented to Dr Smith with significant symptoms. She was given extensive treatment which was described by Dr Smith, albeit in summary form. According to Dr Smith, the improvements she exhibited were not sufficient to make it likely that she would ever return to work. Dr Smith gave evidence of at least some of the symptoms that led him to that conclusion. They included an inability to deal with members of the public, difficulties in dealing with conflict and a depressive disorder that makes it difficult for her to engage in daily activities. As I have said, there was no evidence to contradict the symptoms that Ms Ziogos described. It is apparent that it is Dr Smith's opinion that, having regard to the treatment that Ms Ziogos had undergone, there was no reason to think that her condition was likely to improve with further treatment, which is to say that further improvement was unlikely. 3. In my opinion, nothing turns on the fact that Ms Ziogos's treating psychologists were not called to give evidence. All that can be inferred from that is that they could add nothing to the evidence given by Dr Smith. 4. Dr Smith's opinion that Ms Ziogos is unlikely ever to be able to work is contradicted by Mr Anderson and Dr De Saxe. However, I have already explained why I do not accept their evidence. One other point should be made about the evidence given by Dr De Saxe. On one view, his evidence is that, in order to improve, Ms Ziogos requires treatment that he described as "insight orientated psychotherapy". The evidence is that treatment of that type is not normally prescribed for PTSD and Dr Smith expressed doubt that it would do any good and suggested that it could possibly do some harm. There is no suggestion that Ms Ziogos will undergo therapy of that type and, in my opinion, on the evidence its effect is at best speculative. Consequently, to the extent that Dr De Saxe expresses the opinion that Ms Ziogos would likely return to work with therapy of that kind, I do not accept it. 5. It follows that, in my opinion, Ms Ziogos suffered from total and permanent disablement within the meaning of the Policies. Orders 1. The precise form of orders that should be made by the court in the event that Ms Ziogos was successful was not addressed during the course of the hearing. It appears to be accepted that the Sum Insured under the MetLife GL Policy is $170,100 and the Sum Insured under the Police Blue Ribbon policy is $765,765. On that basis, it would be appropriate to make a declaration to the effect that Ms Ziogos suffered from total and permanent disablement within the meaning of the Policies and to order that MetLife pay to FSS the sum of $935,865 in respect of Ms Ziogos's claim. It seems to me that Ms Ziogos should also be entitled to recover her costs of the proceedings from MetLife. However, before making those orders, it seems appropriate to give the parties an opportunity to make submissions on the form of the orders and the question of interest, which is claimed in the Amended Statement of Claim. 2. In those circumstances, I direct that the parties bring in short minutes of order to give effect to this judgment. If the form of the short minutes of order can be agreed, I will make the orders in chambers. If they cannot be agreed within 14 days, the matter should be relisted by contacting my Associate to deal with any outstanding issues. ********** Amendments 17 December 2015 - Amend penultimate sentence in para 125 by replacing "FFS" with "MetLife". DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 17 December 2015