Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Hannover Life Re of Australasia Ltd v Jones [2017] NSWCA 233 Hearing dates: 23 June 2017 Decision date: 14 September 2017 Before: Macfarlan JA at [1] Meagher JA at [4] Gleeson JA at [11] Decision: (1) Appeal dismissed. (2) Appellant to pay the costs of the first respondent. Catchwords: INSURANCE – accident and sickness insurance – where policy taken out by trustee of superannuation fund with insurer for benefit of its members – respondent claimed benefit for "total and permanent disablement" after suffering back injury while working as a roofing supervisor – insurer's liability contingent on it forming a favourable opinion that claimant meets definition of total and permanent disablement (TPD) – where insurer formed unfavourable opinion that claimant did not satisfy definition of TPD – standard of review adopted by Court – whether unreasonableness in the Wednesbury sense – whether Court undertakes "merits review" of insurer's opinion on entirely objective basis – whether opinion open to insurer acting reasonably and fairly on the material before it. INSURANCE – accident and sickness insurance –construction of phrase "reasonably fitted by education, training or experience" (ETE clause) – where respondent has discrete transferable skills relevant to non-labouring customer service roles but no vocational history in such roles – whether ETE clause requires a connection between suggested future work and the claimant's education, training and experience. Legislation Cited: Trade Practices Act 1974 (Cth), s 82 Uniform Civil Procedure Rules 2005, r 42.1 Cases Cited: Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 Bartlett v Australia & New Zealand Banking Group Ltd (2016) 92 NSWLR 639; [2016] NSWCA 30 Beverley v Tyndall Life Insurance Co Ltd (1999) 21 WAR 327; (1999) WASCA 198 BP Refinery (Westernport) Pty Ltd V Shire of Hastings (1977) 180 CLR 266 Braganza v BP Shipping Ltd & Anor [2015] 4 All ER 639; [2015] UKSC 17 Buck v Bavone (1976) 135 CLR 110 Byrne v Australian Airlines Ltd (1995) 185 CLR 410 Chammas v Harwood Nominees Pty Ltd (1993) 7 ANZ Ins Cas 61-175 Chapman v United Super Pty Ltd [2013] NSWSC 592 Cromwell Property Securities Ltd v Financial Services Ombudsman Service Ltd and Ors (2014) 288 FLR 374; [2014] VSCA 179 Doyle v City of Glasgow Life Insurance Co (1884) 53 LJ Ch 527 Duncan v Independent Commission Against Corruption [2016] NSWCA 143 Edwards v The Hunter Valley Coop Dairy Co Ltd (1992) 7 ANZ Ins Cas 61-113 Finch v Telstra Super Pty Ltd [2010] 242 CLR 254; [2010] HCA 36 Halloran v Harwood Nominees Pty Ltd (2007) 16 ANZ Ins Cas 90-142; [2007] NSWSC 913 Hannover Life Re of Australasia Ltd v Dargan (2013) 83 NSWLR 246; [2013] NSWCA 57 Hannover Life Re of Australasia Ltd v Colella (2014) 47 VR 1; [2014] VSCA 205 Hannover Life Re of Australasia Ltd v Sayseng (2005) 13 ANZ Ins Cas 90-123; [2005] NSWCA 214 Heitman v Guardian Assurance Co Ltd & Anor (1992) 7 ANZ Ins Cas 61-107 Jones v United Super Pty Ltd [2016] NSWSC 1551 McArthur v Mercantile Mutual Life Insurance Co Ltd [2000] 2 Qd R 197 Legal and General Life of Australia Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314 McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579; [2000] HCA 65 Minister for Immigration and Border Protection v Stretton (2016) 237 FCR 1; [2016] FCAFC 11 Minister of Immigration and Citizenship v Li (2013) 249 CLR 332; [2013] HCA 18 Nile v Club Plus Superannuation Pty Ltd [2005] NSWSC 55 Repatriation Commission v Hill (2005) 142 FCR 88; [2005] FCAFC 7 Riley v National Mutual Life Association of Australasia Ltd (1985) 4 ANZ Ins Cas 74,061 TAL Life Limited v Shuetrim; Metlife Insurance Ltd v Shuetrim (2016) 91 NSWLR 439; [2016] NSWCA 68 Tonkin v Western Mining Ltd (1998) 10 ANZ Ins Cas 61-397; [1998] WASCA 101 Wardley Australia Ltd v The State of Western Australia (1992) 175 CLR 514 Wells v Australian Aviation Underwriting Pool [2004] QCA 43 Wheeler v FSS Trustee Corporation ATF First State Superannuation Scheme [2016] NSWSC 534 Ziogos v FSS Trustee Corporation as trustee of the First State Superannuation Scheme [2015] NSWSC 1385 Texts Cited: Enright & Merkin, Sutton on Insurance Law (4th ed), Vol 2 Category: Principal judgment Parties: Hannover Life Re of Australasia Limited (Appellant) Clinton Keith Robert Jones (First Respondent) United Super Pty Ltd (Second Respondent) Representation: Counsel: Mr J Sexton SC / Ms B Nolan (Appellant) Mr M Rayment QC / Mr M Gollan & Mr A Coombes (First Respondent) Solicitors: Turks Legal (Appellant) Amond Legal (First Respondent) Greenfields Lawyers (Second Respondent) File Number(s): 2016/353144 Decision under appeal Court or tribunal: Supreme Court of New South Wales Citation: [2016] NSWSC 1551 Date of Decision: 02 November 2016 Before: Brereton J File Number(s): 2014/339415 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] HEADNOTE [This headnote is not to be read as part of the judgment] The first respondent, Clinton Jones, was injured at work as a roof plumber in mid-2011. He was a member of the Construction and Building Unions Superannuation Fund (the Fund), of which the second respondent, United Super Pty Ltd, is the trustee (the Trustee). The Fund provided certain benefits to members in respect of the disablement of a member, including "Insured Benefits" where a member satisfied the definition of "Total and Permanent Disablement" under the Trust Deed. Mr Jones injured his back while lifting heavy asbestos sheeting into a bin, having earlier suffered a lower back injury when working in 2002. In 2012, Mr Jones made a claim for an Insured Benefit available under a group life policy issued by the appellant, Hannover Life Re of Australasia Ltd (the Insurer), to the Trustee in its capacity as trustee of the Fund. Mr Jones claimed that he was totally and permanently disabled within the meaning of the definition in the policy. The definition of Total and Permanent Disablement in the policy required that the Insured Person be "unable to follow their usual occupation by reason of accident or illness for six consecutive months and in [the Insurer's] opinion, after consideration of medical evidence satisfactory to us, is unlikely ever to be able to engage in any Regular Remunerative Work for which the Insured Person is reasonably fitted by education, training or experience". The Insurer and the Trustee both declined Mr Jones' claim. Both accepted that Mr Jones would never return to his pre-injury tradesman work but the Insurer considered that Mr Jones had capacity to engage in work in a number of entry-level positions that required no retraining. Four positions were identified in a vocational assessment – retail sales (hardware), courier/delivery driver, console operator and customer service advisor/telemarketer. The Insurer formed the opinion that Mr Jones did not meet the definition of Total and Permanent Disablement in the policy and the Trustee concluded that he did not met the same definition as it applied under the trust deed. In November 2014, Mr Jones commenced proceedings in the Equity Division against the Insurer and the Trustee seeking declarations that (1) their decisions were void and (2) that he was Totally and Permanently Disabled within the meaning of the trust deed and the policy. Mr Jones sought further orders that the Insurer pay the sum of $100,000 (being the agreed benefit under the policy) plus interest to the Trustee and the Trustee thereupon pay that sum to Mr Jones. The primary judge upheld Mr Jones' claim and made the orders and declarations that he sought. The primary judge proceeded upon the basis that the Court may review and avoid an insurer's decision where the insurer has (1) asked the wrong question; (2) taken into account an irrelevant consideration or failed to take into account a relevant consideration; or (3) otherwise not acted fairly, in good faith and reasonably in forming an opinion as to the plaintiff's disability. The primary judge concluded that the Insurer's decision to decline an Insured Benefit to Mr Jones had miscarried, that is, the Insurer had breached its contractual obligation to act reasonably in considering and determining the claim. That was because, in making its decision, the Insurer had failed to take into account Mr Jones' psychological make-up, which was a significant component of his incapacity to perform the suggested occupations. The primary judge also found that the Insurer's decision had miscarried on the basis that it had erred in its application of the phrase "reasonably fitted by education, training or experience" (the ETE clause) in the policy by treating jobs for which Mr Jones had some discrete transferrable skills but no vocational history as being jobs for which he was fitted by education, training or experience. Rather, his Honour found that there must be a link (represented by the word "by" in the ETE clause) between the proposed future occupations and insured person's vocational history. Having concluded that the Insurer's decision was "erroneous", the primary judge proceeded to determine that Mr Jones did satisfy the definition of Total and Permanent Disablement, relevantly, because Mr Jones was reasonably fitted by education, training or experience only for work as a manual labourer and it was accepted that Mr Jones would never again do such work. The primary judge further found that the suggested occupations in the vocational assessment involved customer service, and Mr Jones had no relevant experience or aptitude for such duties, and that work as a courier/delivery driver would contravene Mr Jones' medical restrictions and place him in potentially dangerous situations, as well as aggravating the psychological obstacles to Mr Jones' pursuit of such work. The Insurer appealed against that decision. The following issues arise on the appeal: (1) whether the primary judge erred in his approach to the task of the Court in reviewing the Insurer's opinion that Mr Jones was not Totally and Permanently Disabled; (2) whether the primary judge erred in construing the ETE clause in the policy; (3) contingent on the other grounds of appeal failing, whether the primary judge erred determining that Mr Jones satisfied the definition of Total and Permanent Disablement in the policy. In respect of issue (1), the Court (Gleeson JA, Macfarlan JA and Meagher JA agreeing) concluded: * The relevant inquiry for the Court is neither a "merits review" of the Insurer's decision based on entirely objective criteria (as Mr Jones submitted), nor is it an inquiry into whether the Insurer's decision is unreasonable in the Wednesbury sense, that is, so unreasonable that no reasonable insurer could have so decided (as the Insurer submitted). * Rather, the relevant inquiry is whether the opinion formed by the insurer was not open to the insurer acting reasonably and fairly in considering and determining the claim. Edwards v The Hunter Valley Co-Op Dairy Co Ltd (1992) 7 ANZ Ins Cas 61-113 and Hannover Life Re of Australasia v Sayseng (2005) 13 ANZ Ins Cas 90-123; [2005] NSWCA 214 applied; Braganza v BP Shipping Ltd [2015] 4 All ER 639 and Bartlett v ANZ Banking Group Ltd (2016) 92 NSWLR 639; [2016] NSWCA 30 referred to. * Per Macfarlan JA, the concept of legal reasonableness is not amenable to minute and rigidly defined categorisation, and application of the two different formulations referred to above, that is, unreasonableness in the Wednesbury sense and determination of whether the opinion formed was open to an insurer acting reasonably and fairly, would lead to different results in few, if any, cases. * The primary judge did not undertake a review on the merits of the Insurer's decision and there was no error in his Honour's conclusion that the Insurer had failed to take into account Mr Jones' psychological make-up in forming its opinion. In respect of issue (2), the Court concluded: * There was no error in the primary judge's construction of the ETE clause. In respect of issue (3), the Court concluded: * There was no error in the primary judge's conclusion that the only work for which Mr Jones was reasonably fitted was manual labour. * His Honour did not err in dealing with the medical evidence before him, or fail to take account of the possibility that Mr Jones' condition would improve with further treatment. The appeal was dismissed. Judgment 1. MACFARLAN JA: I agree with the judgment of Gleeson JA and add the following observations in relation to the decision in Bartlett v Australia and New Zealand Banking Group Ltd (2016) 92 NSWLR 639; [2016] NSWCA 30 to which his Honour refers in particular at [108] and [119]. 2. The relevant finding in Bartlett was that, under Mr Bartlett's employment agreement, "the bank was obliged to act reasonably, at least in the Wednesbury sense and at least so far as its process, as distinct from the result, was concerned" (at [49]). Thus it was held that the bank's decision would be invalidated if its decision-making process was "so unreasonable that no reasonable [decision-maker] would ever have [adopted] it" (at [46] citing Braganza v BP Shipping Ltd (2015) 1 WLR 1661; [2015] UKSC 17). As the bank's decision was unreasonable in this sense, it was unnecessary to determine whether it might have been invalidated by a test that was more stringent from the bank's point of view, hence the use of the words "at least" in [49] of the judgment. In particular, it was unnecessary in that case to determine whether the bank's decision failed the arguably more stringent test which Gleeson JA concludes is applicable in the present case (see [121]): namely "whether the opinion formed by the insurer was not open to an insurer acting reasonably and fairly in the consideration of the claim". 3. Furthermore, I repeat the observation of Allsop CJ in Minister for Immigration and Border Protection v Stretton (2016) 237 FCR 1; [2016] FCAFC 11 at [10], quoted by Gleeson JA in the present case at [105]), that the "concept of legal unreasonableness is not amenable to minute and rigidly-defined categorisation or a precise textual formulary". In my opinion, application of the different formulations referred to in [2] above would produce different results in few, if any, cases. 4. MEAGHER JA: I agree with Gleeson JA that the appellant insurer's appeal should be dismissed with costs. Subject to what follows, which assumes a familiarity with his Honour's judgment, my reasons for doing so accord with those of his Honour. 5. As Gleeson JA notes at [64], it is accepted that the relevant principles are stated by McLelland J (as his Honour then was) in Edwards v Hunter Valley Co-op Dairy Co Ltd (1992) 7 ANZ Ins Cases 61-113 and approved by this Court in Hannover Life Re Australasia Ltd v Sayseng (2005) 13 ANZ Ins Cases 90-123; [2005] NSWCA 214. Those principles include that an insurer whose liability depends on its having formed an opinion on a matter must, in considering and determining whether it should form that opinion, address the correct question and, in doing so, act reasonably and fairly. 6. If such an opinion fails to satisfy these requirements, it is not an opinion which has effect under the terms of the insurance. In that respect, its contractual efficacy is the same as that of a purported final and binding expert determination under a dispute resolution clause which is not in accordance with the contract: see, eg, Legal and General Life of Australia Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314 at 335–336 (McHugh JA). Furthermore, the result of such an opinion being found to have no contractual effect is that the court must determine the disablement question which the contract requires be addressed: see TAL Life Ltd v Shuetrim; Metlife Insurance Ltd v Shuetrim (2016) 91 NSWLR 439; [2016] NSWCA 68. 7. These principles do not, however, permit the court merely to substitute its own view for that of the insurer. In Edwards, when addressing the content of the insurer's duty to act reasonably and fairly, McLelland J explained that, as a range of reasonable views may be available in particular circumstances, unless "the view taken by the insurer can be shown to have been unreasonable on the material then before the insurer, the decision of the insurer cannot be successfully attacked on this ground". Of course, that is not the only ground on which it might be concluded that the insurer's opinion is of no effect. The other grounds referred to by McLelland J include that the insurer has not considered the correct question and that, in considering that question and informing itself as to matters relevant to its determination, the insurer has not acted fairly and reasonably. This latter ground would include taking or failing to take particular matters into account if doing so or omitting to do so would constitute not acting fairly and reasonably having due regard for the interests of the insured claimant. 8. The focus of the parties' arguments in relation to grounds 1 and 2 was on the unreasonableness ground for attacking the insurer's opinion, as distinct from whether the insurer acted unreasonably in the opinion-forming process. The appellant contended for the standard of unreasonableness adopted in Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 at 234. Applied in the present context, that standard would invalidate an insurer's decision not to form the relevant opinion only if that decision was so unreasonable that no reasonable insurer could have made it on the material available when the decision was made. In response, the insured submitted that the contractual efficacy of such a decision would turn on whether, "considered objectively, the insurer's opinion was fair and reasonable", a form of merits review. 9. I agree with Gleeson JA that there is a breach of the implied obligation of the insurer to act reasonably and fairly in forming or declining to form an opinion if that opinion was not open to an insurer acting reasonably and fairly in the consideration of the relevant claim. As is emphasised above, that is not the only ground on which the insurer's opinion may be held to be of no contractual effect. If there is any difference of substance between that formulation and the Wednesbury standard of unreasonableness, that difference is not material in the present case. I also agree with Gleeson JA that the primary judge did not undertake a merits review of the insurer's decision. The primary judge's further conclusion that the insurer's failure to take into account Mr Jones' fear-avoidance syndrome was a breach of its implied obligation to act fairly and reasonably did not involve a merits review. 10. For the reasons given by Gleeson JA, grounds 4 and 5 should be rejected. The primary judge held that the insurer did not correctly interpret and apply the ETE clause. I agree with Gleeson JA's reasons for rejecting the challenge to that holding which led to the primary judge's conclusion that the only work for which Mr Jones was reasonably fitted by education, training or experience was manual labour. It follows that the insurer's contrary opinion was materially affected by its wrong interpretation of the ETE clause and, for that reason, of no contractual effect. 11. GLEESON JA: In mid-2011, the first respondent, Mr Clinton Jones, was injured at work as a roof plumber. He was a member of the Construction and Building Unions Superannuation Fund (the Fund), of which the second respondent, United Super Pty Ltd, is the trustee (the Trustee). The Fund provided certain benefits to members in respect of the disablement of a member, including "Insured Benefits" where a member satisfied the definition of "Total and Permanent Disablement" under the Trust Deed. The injury to Mr Jones' lower back resulted from lifting heavy asbestos sheeting into a bin. He had previously suffered a lower back injury when working in 2002. 12. In 2012 Mr Jones made a claim for a benefit available under a group life policy (the policy) issued by the appellant, Hannover Life Re of Australasia Ltd (the Insurer) to the Trustee in its capacity as trustee of the Fund. 13. Both the Insurer and the Trustee declined the claim, essentially for the same reasons. While the Insurer accepted that Mr Jones would not return to his pre-injury tradesman duties, it considered that Mr Jones had a work capacity based on his education, training and experience, to undertake four occupations which had been identified in a vocational assessment as entry level positions that required no retraining - retail sales (hardware), courier/delivery driver, console operator, and customer service advisor/telemarketer. The Insurer concluded that Mr Jones did not meet the definition of Total and Permanent Disablement in the policy, and the Trustee concluded that he did not meet the same definition which relevantly applied under the trust deed. 14. In November 2014 Mr Jones commenced proceedings in the Equity Division against the Trustee and the Insurer seeking declarations that the decisions of the Trustee and the Insurer were void and declarations that he was Totally and Permanently Disabled within the meaning of the trust deed and the policy. He sought orders that the Insurer pay the sum of $100,000 being the agreed benefit under the policy to the Trustee and that the Trustee pay the Insured Benefit to Mr Jones. 15. The primary judge (Brereton J) upheld Mr Jones' claim: Jones v United Super Pty Ltd [2016] NSWSC 1551. His Honour adopted a two-stage approach. First, his Honour determined that the Insurer had breached its contractual duty to Mr Jones to act reasonably in considering and determining his claim, by failing to take into account Mr Jones' psychological make-up which was a significant component of his incapacity; and had erred in its application of the closing words of the definition of Total and Permanent Disablement ("reasonably fitted by education, training or experience"), commonly known as the "ETE clause". These breaches were held to be "errors of law" that vitiated the Insurer's decisions, and the Trustee's decisions, which relied upon and adopted the Insurer's decisions, were vitiated by the same matters. Second, his Honour determined that Mr Jones did satisfy the definition of Total and Permanent Disablement and made declarations to that effect with respect to the policy and the trust deed. His Honour ordered the Insurer to pay the sum insured of $100,000 (and interest of $14,000) to the Trustee, and the Trustee thereupon to pay that sum to Mr Jones. 16. The Insurer has appealed against that decision. The Trustee filed a submitting appearance in this Court (except as to costs). 17. Two essential issues are raised by the appeal. The first is whether the primary judge erred in finding that the Insurer breached its contractual obligation to act reasonably in forming its "opinion" that Mr Jones is not incapacitated within the meaning of the definition of Total and Permanent Disablement. That question directs attention to what it means to say that the decision of a contracting party must be reasonable, and the standard of review adopted by the court to such decisions. The second is whether the primary judge erred in his determination that Mr Jones satisfied the policy definition of Total and Permanent Disablement. 18. For the reasons that follow, I have concluded that the appeal should be dismissed with costs. The trust deed and the policy 1. Under the trust deed governing the terms of the Fund, the benefits payable to members included "Insured Benefits" (cl 5.12(b)). Those benefits were relevantly defined in cl 7.2 as the proceeds of any "Policy" effected by the Trustee in respect of the disablement of a Member, and "Policy" was defined as "any policy of assurance, including any policy which provides that benefits shall be payable to the Trustee on the disablement of a Member". 2. The trust deed provides that a benefit is payable to a member of the Fund if the member ceased to be gainfully employed prior to attaining age 65 and having suffered Total and Permanent Disablement (cl 5.12). The definition of "Total and Permanent Disablement" in cl 7.2 of the trust deed relevantly provides that where all or part of the benefit payable in the event of total and permanent disablement is an "Insured Benefit", then the term "total and permanent disablement" bears the meaning ascribed in the relevant policy in lieu of the definition in the trust deed. 3. It is common ground that the relevant benefit was an Insured Benefit, under "Group Life Policy VGL 4163" issued by the Insurer, and accordingly the applicable definition is that in the policy, which provides: What is Total and Permanent Disablement? 1.3 Total and Permanent Disablement in respect of an Insured Person who was gainfully employed within the six months prior to the Date of Disablement is where: 1.3.1 the Insured Person is unable to follow their usual occupation by reason of accident or illness for six consecutive months and in our opinion, after consideration of medical evidence satisfactory to us, is unlikely ever to be able to engage in any Regular Remunerative Work for which the Insured Person is reasonably fitted by education, training or experience; or … 1. The Glossary in the policy contains the following relevant definitions: Date of Disablement Total and Permanent Disablement is treated as having occurred on the Date of Disablement which is the earlier of: (a) the date on which the six (6) months consecutive inability to work that results in Total and Permanent Disablement began; or … Regular Remuneration Work [sic] an Insured Person is engaged in regular remunerative work if they are doing work in any employment, business or occupation. They must be doing it for reward – or the hope of reward – of any type. 1. The definition of Total and Permanent Disablement relevantly contains two limbs. The first limb requires that the "Insured Person" is unable to follow his usual occupation by reason of accident or illness for six consecutive months from the Date of Disablement. The second limb requires the Insurer to form the opinion that the "Insured Person" is incapacitated to the required extent, that is, "is unlikely ever to be able to engage in regular remunerative work for which the Insured Person is reasonably fitted by education, training or experience." 2. It is common ground that the relevant Date of Disablement for the purpose of the policy was 10 October 2011 and that the relevant date for assessment of Mr Jones' claim for the total and permanent disablement benefit was 11 April 2012 (the relevant date). At the relevant date, Mr Jones was 29 years of age. Factual background 1. The following abridged outline of the facts is taken from his Honour's summary, which was not in dispute in this Court. Mr Jones' work history and injuries 1. Mr Jones was born on 30 June 1982. He left school, aged 16, having obtained his school certificate (in New South Wales) in 1998. He completed an apprenticeship with a roofing contractor in March 2003 and qualified as a tradesman roof plumber. He subsequently gained a number of additional tickets, including from the Professional Association of Climbing Instructors, and for asbestos removal class B, safe work at heights, elevated work platforms over 11 metres, 20-tonne non-slew cranes, occupational health and safety induction, and explosive power tools. 2. On 10 December 2002, Mr Jones suffered a repetitive injury of the lower back when lifting metal roof and wall sheets over a parapet wall to another worker. This caused pain to radiate down the back of his left leg. He was diagnosed with a disc prolapse at the lumbro-sacral level of a moderate degree on the left posterolateral side with displacement of the left S-1 nerve root. He underwent a hemi-laminectomy in June 2003, which was successful in providing immediate relief, but did not entirely resolve his symptoms. Following physiotherapy, he returned to work with a different employer as a roofing supervisor in October 2003. From 2003 until 2011, he worked continuously as a roofing supervisor with different roofing companies. His last employer, from 2007 onwards, was in Townsville. All of these roles involved significant manual labour. 3. In mid-2011 when he was lifting heavy asbestos sheeting into a bin, Mr Jones noticed soreness in his back, which increased significantly, and he developed sciatica pain in his right leg, which became more severe than the back pain. Mr Jones had a CT-scan of his lumbar spine on 7 September 2011. It was reported as showing, at L5/S1, a prominent central disc protrusion with calcification, somewhat more pronounced towards the left side. Mr Jones ceased working at about this time. On 10 October 2011, his employer, CMC Roofing, ceased to trade. Mr Jones did not resume work thereafter. 4. It is not necessary to summarise the subsequent medical investigations and assessments of Mr Jones, given the Insurer's acceptance that Mr Jones will not return to his pre-injury tradesman duties. The claim by Mr Jones 1. Mr Jones completed a claim form (for submission to the Insurer) on or about 30 October 2012, attaching a Confidential Medical Report of Dr Lawrence Marshman dated 31 October 2012, which referred to the L5/S1 laminectomy operation he had performed on Mr Jones on 12 October 2012. Dr Marshman described Mr Jones' post-operative course as "Excellent. Now has residual right sciatica". In response to the question of whether "at the current time, can the claimant do his/her job?" Dr Marshman ticked "No", and added "Unable to work safely as roofer or plumber given continued R sciatica". In response to the question: "If you do NOT expect the claimant to EVER return to his/her normal work do you think he/she will ever do a job for which he/she is reasonably fitted by education, training or experience?", Dr Marshman first ticked "Yes", then changed his answer to "No". In response to "If 'yes', please list examples of jobs which in your opinion would be appropriate", he responded "Desk work, non-labouring work in stores". 2. On 30 August 2013, the Trustee requested the Insurer to assess Mr Jones' claim. Subsequently, at the request of, and as agent for the Insurer, the Trustee obtained a functional capacity evaluation (FCE) and a vocational assessment from Rehab Management Pty Ltd. 3. Dr Marshman reported in March 2013 to Dr Jose Pioc, Mr Jones' general practitioner, that Mr Jones continued to have right-sided sciatica which limited his activities and that there were a lot of "fear-avoidance mechanisms" to which Mr Jones freely admitted. Dr Marshman recommended that Mr Jones read up on the psychology of that area as "such education may help him to condemn his negative, non-productive trait to a lower level in his consciousness". Dr Marshman noted that Mr Jones had "a degenerative disc (solely at L5/S1) that appeared the source of all his problems". He expressed the view that "in principle, … a radical discectomy and interbody fusion should be the solution", while noting that he understood Mr Jones' reluctance to have further surgery. 4. Dr Marshman provided a further report dated 22 August 2013 answering specific questions as follows (emphasis added): 2. The clinical diagnosis is persistent right L5 sciatica. The cause is considered to be cytokine-mediated irritation of the exiting L5 nerve root as a result of the co-localisation of a residual protruded and degenerate L5/S1 disc after prior surgery. Fear-avoidance mechanisms (which Clinton freely acknowledges) also compound this case, and Clinton has become somewhat dependent upon opiate analgesia. … 5. The two operative medical conditions are: 1) cytokine-mediated right sciatica, and 2) psychological factors such as fear-avoidance and opiate dependence. 6. The two operative medical conditions outlined in Q5 above are both equally limiting upon a successful return to work. … 8. The prognosis for a return to work (both medium and long-term) is currently poor without successfully addressing both conditions outlined in Q5 above. 9. Clinton has continued pain and operates fear-avoidance mechanisms: both render him unfit to return to his previous employment. 10. It is possible for Clinton to retrain for a desk job which can capitalise up-on his previous knowledge and experience. 11. Yes, I believe that Clinton could be re-employed as a Building Supervisor with no manual duties. Functional capacity assessment 1. The functional capacity assessment dated 31 October 2013 was prepared by Ms Hanrahan, occupational therapist. She described Mr Jones' duties before ceasing employment in September 2011 as "a heavy physical demand level". Ms Hanrahan carried out various tests, including a pain questionnaire, lifting of weights, postural tolerance testing and a psycho-social assessment. She reported that Mr Jones' score of 161 on the Orebro Pain Screening Questionnaire indicated that he is at high risk of developing long-term disability as a result of his injury. She also noted: In particular, Mr Jones' responses suggest the following factors may be a barrier to his recovery: • High reported pain levels • Fear Avoidance • Low Work Satisfaction • Psychological Distress • Low Perceived Function. 1. The report concluded that given his assessed restrictions, Mr Jones would not be able to perform the main duties of a metal roofing tradesman. It was recommended that Mr Jones select work classified as "light" because, given his past injury history, a medium classification would carry a moderate risk of further injury. The report stated: In Summary, the findings of the standard FCE testing battery demonstrated that Mr Jones has the capacity to work with a low risk of injury in a "light" job load classification. At present, Mr Jones' back would not be able to tolerate repetitive movements without compromising safety whilst performing activities close to the ground. Vocational assessment 1. The vocational assessment dated 28 October 2013 was prepared by Ms Allison, a rehabilitation consultant, who had been provided with the FCE report (presumably a draft report), as well as the reports of Dr Marshman, statements of Mr Jones and his employer, and a copy of the Gallagher Bassett workers compensation file. In the executive summary, the report noted that each of Dr Marshman, Dr Bookallil and Dr Conrad had advised that Mr Jones should avoid all activities associated with roof plumbing and continued: Based on an examination of Mr Jones' education, training and previous work experience, the following vocational options have been identified for consideration: • Retail Sales (Hardware) • Courier/Delivery Driver • Console Operator • Customer Service Advisor/Telemarketer. 1. After referring to Mr Jones' medical history and the FCE report, including Mr Jones' functional tolerances (both self-reported and measured), psychological status and psychological screening, and his educational and employment history, the report identified a list of "transferable" employment skills of Mr Jones, including communication skills, administrative skills, computer skills, and organisational skills. 2. The report assessed Mr Jones as being suitable for the four identified vocational options (mentioned at [36] above), given that they were entry-level positions and that he had transferrable skills in a trade based customer environment. The report stated that there were sufficient opportunities in each of those suggested occupations in the Townsville area (where Mr Jones lived) to make each a viable vocational option. The first refusal 1. The Insurer declined the claim in a letter to the Trustee dated 28 January 2014, which stated (emphasis added): Discussion and Summary The Member is now a 31-year-old qualified roof plumber who first sustained a disc bulge in 2003. After undergoing a successful L5/S1 disc excision on the left, he returned to tradesman's duties after a four-month post-operative period and continued working for another eight years. However, before he completely stopped all work in October 2011 due to the employer ceasing to trade, in 2009, the Member experienced right leg pain including pins and needles whilst working in asbestos removal. He continued to work and trialled a range of pharmaceutical interventions, which had no overall impact on his right-sided sciatica symptoms. After initially having a causal epidural with no significant results in 2009 and 2011, he later underwent a revision laminectomy and discectomy in October 2012. The Member's current restrictions include no heavy lifting and manual work in his previous role as a roofing plumber/tradesman. The Member's treating doctor specialist, Dr Marshman, believes that he has a fitness for office or sedentary occupations and non-manual store type work. Given the Member's relatively young age and his education, training and work experiences, HLRA decided to have the Member assessed by way of a functional capacity evaluation to determine what sedentary or light impacting manual duties he could perform. In conjunction with the FCE, the Member was also asked to undertake a vocational assessment to determine what skills he has in order to undertake suitable or alternative employment. Based on the examination of the Member's education, training and previous work experience, the following vocational options have been identified for consideration: Retail Sales (Hardware) Courier/Delivery Driver Console Operator Customer Service Advisor/Telemarketer. The above vocations were considered level entry positions that required no retraining; the Member was considered a very suitable candidate and had the functional capacity to undertake all four occupations. Also, the Townsville area in which the Member resides had numerous opportunities in each of the occupations listed above. Although we agree that the Member will not return to his pre-injury tradesman duties, we are not convinced that based on his current physical restrictions along with his education, training and experiences, that he will never return to some form of meaningful employment. Again, the above occupations are well within the member's current physical restrictions, and given he is only 31 years of age, it should not be a closed book that the member will never return to some form of work in the future. Therefore, as the Member has a work capacity based on his education, training and experience, we do not believe he meets the policy definition for Total and Permanent Disablement and the claim is declined. The onus of establishing an entitlement to the total and permanent disablement benefit rests with the member. The evidence does not persuade Hannover Life Re to reach an opinion that the member is Totally and Permanently Disabled in line with the policy definition. 1. On 10 February 2014, the administrator of the Trustee informed Mr Jones of the Insurer's decision and indicated that his claim had been referred to the Trustee for review. The Trustee concluded on 26 March 2014 that the claim should be declined because: Taking into consideration the available medical information and occupational rehabilitation information, we believe the Member is not TPD. We believe the Member has capacity to engage in a suitable job that he is reasonably fitted by his education, training and experience and in line with the job options identified by Rehab Management. We therefore believe the Member does not fit the policy definition and we agree with the Insurer's decision to deny the claim. 1. The Trustee communicated that decision to Mr Jones by letter dated 31 March 2014. The second refusal 1. In the meantime, on 21 February 2014, solicitors acting for Mr Jones sought a reconsideration of the Insurer's decision. In support of that request, Mr Jones' solicitors provided the Trustee with a report from Dr Giblin dated 27 November 2013, in which Dr Giblin expressed the following opinion under the heading "Prognosis": His condition is stable but his prognosis is guarded. His symptoms are not going to resolve satisfactorily and he will have permanent physical limitation. Specifically, I assess him as permanently unfit for repetitive bending, lifting and twisting, or medium periods of sitting, standing or walking. His back will permanently prevent him from being engaged in his pre-injury work environment. Theoretically, he might be fit for a sedentary job, avoiding the aforementioned physical restrictions, preceded by the appropriate vocational rehabilitation, but his work environment will need to be very friendly in terms of generous sick leave, an understanding boss, and strict occupational health and safety parameters. Even so, his lumbar spine will remain susceptible to repeat soft tissue injury from innocuous physical events. 1. The Insurer confirmed its earlier decision in a letter to the Trustee dated 21 March 2014, which stated (emphasis added): Summary: … Dr Giblin further opines that he might be fit for a sedentary job, as long as he avoids bending, lifting and twisting. He was capable of medium sitting, standing and walking. He notes that appropriate vocational rehabilitation and an understanding employer would also benefit the member. Opinion: We note the comments of Dr Giblin and agree with him to a point, it is clear the Member has no capacity for pre-injury roof plumbing duties as suggested. We have never doubted this fact. However, what we do dispute is the Member's capacity to perform suitable or alternative duties within his education training and experience. As previously discussed in our decline letter dated 28 January 2014, the Member was assessed by way of vocational and functional capacity assessments, with the following occupations certified as suitable: Retail Sales (Hardware) Courier/Delivery Driver Console Operator Customer Service Advisor/Telemarketer. We note that Dr Giblin does not address the rehabilitation reports that were attached with our previous procedural fairness letter and subsequent decline. Dr Giblin focuses solely on his pre-injury duties which we all agree he is not fit to undertake. Therefore, Dr Giblin's opinion only takes in one aspect of the Member's vocational history as a roof plumber, he does not expand on alternative or suitable roles for which we have a number of medical investigations that cover this subject. 1. The Trustee reviewed and agreed with the Insurer's decision on 8 April 2014, and communicated its decision to Mr Jones by letter dated 16 April 2014. Subsequent developments 1. The primary judge referred to the evidence concerning Mr Jones' subsequent developments (at [83] – [86]). After much deliberation, on 4 November 2014, Mr Jones underwent a fusion of the L5/S1 by Dr Marshman. He reported, on 23 December 2014 that Mr Jones had been doing extremely well, but after ceasing analgesia had suffered increased back pain and "restless legs", which had improved since re-instituting Endep. 2. On 3 February 2015, Dr Marshman reported to Dr Pioc that Mr Jones was "stable now on the Lyrica and Amitriptyline". On 12 May 2015, Dr Marshman discharged Mr Jones from his care. 3. On 28 October 2015, Dr Marshman provided a report to the Insurer's solicitors, which was tendered at the hearing, answering specific questions relevantly as follows: 4. In my clinical opinion, the primary cause of Clinton's pain syndrome in 2012 was a disc at L5/S1. 5. Clinton has successfully undergone an L5/S1 ALIF in 2014 to exclude the L5/S1 disc as the most significant likely pain generator in his pain syndrome. Post-operative CT had confirmed a satisfactory technical result. Furthermore, Clinton had ceased ALL pain medication by 6 weeks post-operatively, even though he had previously been opiate-dependent. He remained on pregabalin and amitriptyline, had review in Feb 3 2015, and was stable at review on 12 May 2015. My prognosis was hopeful for a further gradual improvement, over the next 12 months. 6. Given his satisfactory improvement after his fusion operation of 4/11/14, I do not believe that Clinton has suffered any permanent injury in his physical capacity as a result of his injuries in 2011. The primary diagnosis, i.e. that of L5/S1 degenerative disc disease, was formally addressed at the fusion operation of 4/11/14. Although it is possible that Clinton may have developed a musculo-ligamentous injury at some stage, either in 2011, or after one (or both) surgical procedures under myself, back pain per se had always been minor in relation to radicular symptoms. Radicular symptoms were not complained of after the fusion operation of 4/11/14; back pain was not noted as a significant issue. I believe that psycho-social factors, especially fear-avoidance beliefs, which have been present all along, may have become increasingly pre-eminent, such that they now actually predominate. 7. Yes, Clinton had the capacity, in or around 2012, to perform 'a desk job or non-labouring work in stores'. Please note that I am not an expert on occupational medicine and rehabilitation. Desk work would include duties such as till work. Non-labouring work would ideally incorporate Clinton's knowledge of building. A comprehensive list could best be supplied by an expert on occupational medicine and rehabilitation. Please note that this prognosis, as outlined in my report of 12/10/12, was based on the L5/S1 disc acting as the most significant pain generator at that time. This was subsequently formally targeted by a radical discectomy and fusion on 4/11/14. At final review on 12 May 2015, Clinton's clinical condition was continuing to improve: thus his prognosis was, at that stage, good for further physical recovery. 1. Despite Dr Marshman's optimism, the primary judge found (at [86]) that the fusion operation in November 2014 did not resolve Mr Jones' back pain. His Honour accepted Mr Jones' evidence that the fusion provided "a little bit" of relief in that it reduced "a little bit of tingling in my legs, but that's since come back, now". Primary judge's reasons 1. After referring to relevant provisions of the trust deed and the policy, his Honour set out the history of Mr Jones' lower back injury, the medical and occupational evidence, and the reasons given by the Insurer and Trustee for declining the claim, which have been summarised above. 2. In a passage critical to the task of the court, his Honour said, under the heading "Review of insurer's decision" (at [55]) (citations in footnotes included): In the present context, where under a contract of insurance, an element of the insurer's liability is expressed in terms of the opinion of an insurer, the insurer has an implied obligation to consider and determine whether it should form the relevant opinion, which involves a consideration and determination of the correct question; and in the exercise of powers affecting the interests both of itself and of a claimant such as Mr Jones, the insurer is under a duty of good faith and fair dealing requiring it to have regard to the interests of the claimant, and an obligation to act reasonably in determining and considering the matter. (TAL Life Ltd v Shuetrim [2016] NSWCA 68 at [61]; Edwards v Hunter Valley Co-Op Dairy Co Limited (1992) 7 ANZ Ins Cas 61-113; Chammas v Harwood Nominees Pty Limited (1993) 7 ANZ Ins Cas 61-175; Hannover Life Re of Australia Limited v Sayseng [2005] NSWCA 214; (2005) 13 ANZ Ins Cas 90-123; Halloran v Harwood Nominees Pty Ltd [2007] NSWSC 913 at [31]). Thus the insurer's decision will be liable to be reviewed and avoided by the court where: (1) The insurer misdirects itself in law, that is to say, it asks the wrong question; (2) The insurer takes into account an irrelevant consideration or fails to take into account a relevant consideration; or (3) The insurer otherwise does not act fairly, in good faith and reasonably in forming an opinion as to the plaintiff's disability. (TAL Life Ltd v Shuetrim [2016] NSWCA 68 at [61], [66]; Wyllie v National Mutual Life Association of Australasia Ltd (1997) 217 ALR 324 at 339-341). The Insurer submitted that sub-pars (2) and (3) of [55] disclosed error. This complaint is addressed at [82]-[85] below. 1. His Honour summarised the Insurer's reasoning for rejecting Mr Jones' claim as follows (at [56]): (1) Mr Jones' physical restrictions did not preclude him from engaging in Regular Remunerative Work as a hardware retail salesperson, as a courier/delivery driver, as a console operator, and as a customer service adviser/telemarketer ("the suggested occupations"); (2) these were entry level positions, so that no retraining was required; (3) employment in those occupations was available in Townsville; and (4) given that he was relatively young, it could not be said that he was unlikely ever to be able to engage in work in one or more of those occupations. No complaint is made with respect to that summary. 1. His Honour then considered whether the Insurer's decision had miscarried. He answered this question affirmatively, finding that the Insurer had failed to take into account a significant component of Mr Jones' incapacity, relevantly his psychological make-up, concluding (at [69]): Accordingly the insurer's reasons reveal a failure to take into account the impact of the plaintiff's fear-avoidance syndrome, and his competitive disadvantages, and thus to take into account significant components of the plaintiff's incapacity and properly and fairly to assess whether he was likely to be able to engage in the suggested occupations. 1. His Honour further found that the Insurer had erred in its application of the ETE clause in the policy, concluding (at [79]): The insurer erred in law in its application of the ETE clause, in treating jobs for which no further training was required, although unrelated to Mr Jones' education, training or experience as jobs for which he was fitted by education, training or experience. The insurer should first have identified the occupation(s) for which Mr Jones' education, training or experience fitted him, of which in reality there was but one – that of manual labour, in which the insurer accepted that he was never likely to engage. 1. The Insurer challenges each of these findings. 2. After noting (at [82]) that the Court can substitute its own decision for that of the Insurer, his Honour determined that Mr Jones satisfied both of the two limbs of the definition of Total and Permanent Disablement, following the approach in TAL Life Ltd v Shuetrim; Metlife Insurance Ltd v Shuetrim (2016) 91 NSWLR 439; [2016] NSWCA 68 at [168]-[188] (Leeming JA, Beazley P and Emmett AJA agreeing). 3. There is no challenge to his Honour's finding (at [95]) that Mr Jones satisfied the first limb of the TPD definition. 4. As to the second limb of the TPD definition, his Honour found that Mr Jones was fitted by his education, training and experience for work as a labourer, and for no other employment, and that as at April 2012, he was not able, or likely to be able, to perform the duties of a labourer: at [97]. The Insurer challenges this finding. 5. His Honour also found that, with the possible exception of courier/delivery driver, all of the suggested occupations in the vocational assessment involved customer contact and service, and Mr Jones' vocational history revealed no experience in or aptitude for customer service: at [78]. Accordingly, Mr Jones' education, training and experience had not prepared or fitted him for customer service positions: at [100]. The Insurer challenges these findings. 6. With respect to work as a courier/delivery driver, his Honour found (at [103]-[104]) that, even if it could be said that Mr Jones' education, training and experience fitted him for such work (since he had a driver's licence and could carry light goods), he was unlikely ever to be able to engage in regular remunerative work as a courier or delivery driver given that such work would involve getting into and out of a vehicle, lifting and carrying parcels, and walking up and down stairs which his medical restrictions excluded; and his fear-avoidance syndrome provided a real, if psychological, obstacle to his undertaking such employment. The Insurer challenges this finding on the basis that it took into account Mr Jones' fear-avoidance syndrome. 7. His Honour further found that while Mr Jones tentatively accepted that he may be able to perform up to 12 hours of casual work and had applied to Bunnings, this fell far short of "regular remunerative work" and the restrictions which would have to obtain in connection with him engaging in such occupations would place Mr Jones at such a disadvantage in competing for such employment as to make it practically unlikely that he would ever be able to do so: at [108]. There is no challenge to this finding. That is unsurprising. It is well-established that casual work (which the work at Bunnings plainly was) does not answer the description of "regular remunerative work" as that term is defined in the policy: see Hannover Life Re of Australasia Ltd v Dargan (2013) 83 NSWLR 246; [2013] NSWCA 57 at [46] (Bathurst CJ) in relation to a clause in the same terms as the TPD definition in the present case. 8. His Honour summarised his conclusions as follows (at [112]): … It is not in dispute that Mr Jones was gainfully employed within the six months prior to the postulated Date of Disablement, that is to say 10 October 2011. I am satisfied that the plaintiff was unable to follow his usual occupation – that of roof plumber – by reason of accident or illness for six consecutive months from 10 October 2011. The only type of work for which he is reasonably fitted by his education, training and experience is manual labour. It is universally accepted that he is unlikely ever to be able to engage in manual labour. Even if he were reasonably fitted by education, training or experience to be a courier or delivery driver, in my judgment, he is unlikely ever to be able to engage in regular remunerative work in that capacity. Grounds of appeal 1. The first part of the appeal concerns the task of the court when reviewing the decision of the Insurer that Mr Jones is not incapacitated within the meaning of the definition of Total and Permanent Disablement (grounds 1 and 2). Related to this is a challenge by the Insurer to his Honour's construction of the ETE clause (grounds 4, 5 and 6). 2. The second part of the appeal concerns the Insurer's challenge to the primary judge's application of the ETE clause at the second stage of the inquiry (ground 4) and his Honour's determination that Mr Jones satisfied the policy definition of Total and Permanent Disablement (grounds 3, 7 and 8). A. Whether the Insurer breached the policy Legal principles - Insurer's duties of good faith and fair dealing, and to act reasonably 1. Before the primary judge and again on appeal, both parties accepted that the principles enunciated by McLelland J (as his Honour then was) in Edwards v Hunter Valley Co-op Dairy Co Ltd (1992) 7 ANZ Ins Cas 61-113 (Edwards) applied to the Insurer's decision in the present case. 2. In Edwards at 77,536, McLelland J discussed the obligations of an insurer under a clause similar to the present. His Honour stated that in that case, there was an implied obligation on the insurer to consider and determine whether it should form the relevant opinion. He observed that this involved a consideration and determination of the correct question; and that, in the exercise of powers affecting the interests both of itself and the claimant, the insurer was under a duty of good faith and fair dealing, which required it to have due regard for the interests of the claimant. He went on to say that in the field of insurance, it was well established that where, under a contract of insurance, an element of the insurer's liability is expressed in terms of the opinion of the insurer, the insurer is obliged to act reasonably in considering and determining that matter. As to the task of the court when deciding whether the insurer is entitled to form the opinion which it did, McLelland J remarked as follows: To say that an insurer must act reasonably in forming or declining to form an opinion is not to say that a Court can substitute its own view for that of the insurer. As North J pointed out in Doyle at 529 (Doyle v City of Glasgow Life Insurance Co (1884) 53 LJ Ch 527), "reasonable persons may reasonably take different views". Unless the view taken by the insurer can be shown to have been unreasonable on the material then before the insurer, the decision of the insurer cannot be successfully attacked on this ground. 1. The statement by McLelland J in Edwards extracted above, was approved by the Full Court of the West Australian Supreme Court in Beverley v Tyndall Life Insurance Co Ltd (1999) 21 WAR 327; (1999) WASCA 198 at [36] (Ipp J, Malcolm CJ and Anderson J agreeing). 2. In Hannover Life Re Australia Ltd v Sayseng (2005) 13 ANZ Ins Cas 90-123; [2005] NSWCA 214, this Court (Santow JA, Spigelman CJ and Tobias JA agreeing) approved Edwards and accepted (at [36]), without any adverse comment, the trial judge's (Bryson J) summary of principles that he had derived from Edwards as follows: (a) There was an implied obligation on Hannover to consider and determine whether it should form an opinion on the matter which was a condition of its own liability; (b) That obligation involved consideration and determination of the correct question; (c) Hannover was under a duty of good faith and fair dealing which required it to have due regard for the interest of the claimants, meaning Mr Sayseng, as well as the Trustee; (d) Hannover was also obliged to act reasonably in considering and determining what its opinion was; (e) If the view taken by Hannover can be shown to have been unreasonable on the material before it, its decision can be successfully attacked; (f) If Hannover's decision is successfully attacked, the matter upon which its opinion was required becomes one for determination by the Court; … 1. Hannover Life Re v Sayseng is also authority for the proposition (at [54]) that a court must not substitute its own view for that of the insurer, by reference to additional material not before the insurer. 2. The summary of principles in Hannover Life Re v Sayseng was accepted by the Victorian Court of Appeal in Hannover Life Re of Australasia Ltd v Colella (2014) 47 VR 1; [2014] VSCA 205 at [73] (Garde AJA, Ashley and Beach JJA agreeing). In TAL Life Ltd v Shuetrim at [60], this Court described the principles stated in Edwards as uncontroversial. 3. Two further matters should be mentioned. First, there are limits to what flows from the obligation to act reasonably, and in this regard in TAL Life Ltd v Shuetrim at [60], Leeming JA cited the remarks of McLelland J in Edwards at 77,536 (which are set out at [65] above). 4. Second, as Ball J noted in Ziogos v FSS Trustee Corporation as trustee of the First State Superannuation Scheme [2015] NSWSC 1385 at [65]-[68], the insurer's duty of utmost good faith (which is sometimes described as a duty of good faith and fair dealing) in dealing with the claim – is independent of the implied term to act reasonably. Further, the duty of utmost good faith is broader than the implied term to act reasonably because the former duty applies to all aspects of the claim handling process. Grounds 1 and 2: Breach of the policy 1. Grounds 1 and 2 are connected. Ground 1 challenges his Honour's finding that the Insurer's decision to decline Mr Jones' claim was a breach of the policy. Ground 2 asserts that his Honour ought to have found that the Insurer's decision that the policy did not respond to Mr Jones' claim was not so unreasonable that no reasonable insurer could have made that decision on the material available to the Insurer when it made that decision. Parties' submissions 1. The Insurer submitted that an "opinion" decision by an insurer, that is, the outcome of the opinion-forming process, may only be relevantly set aside if the decision is one that no reasonable insurer acting reasonably could have made on the material available to it when the decision was made. 2. That approach was supported, the Insurer argued, by analogy with the court's task when reviewing administrative decisions. There the court is similarly in the position of not being the primary decision-maker, and the assessment by the court of the legal standard of unreasonableness is in the Wednesbury sense (Associated Provincial Picture Houses Ltd. v Wednesbury Corporation [1948] 1 KB 223). The Insurer pointed to contract cases that had applied the test of unreasonableness in the Wednesbury sense to the exercise of a contractual discretion or power: Braganza v BP Shipping Ltd & Anor [2015] 4 All ER 639; [2015] UKSC 17 (Braganza); and Bartlett v Australia & New Zealand Banking Group Ltd (2016) 92 NSWLR 639; [2016] NSWCA 30 (Bartlett v ANZ). 3. The correct enquiry, the Insurer submitted, is not whether the Court thinks the decision is the only reasonable conclusion, being the approach the Insurer attributed to his Honour; rather, it is whether a reasonable insurer acting reasonably could come to that conclusion. 4. Turning to the facts of the present case, the Insurer submitted that the entry level positions identified in the vocational assessment were assessed by the vocational and rehabilitation experts to be within Mr Jones' physiological and psychological capabilities, and that those reports and opinions were considered by the Insurer and formed the basis for its decision. Accordingly, the Insurer had not failed to take into account a relevant consideration. 5. The Insurer pointed to Mr Jones' relatively young age, and submitted that it was reasonable for the Insurer to infer that there was a real chance that he would engage in an occupation for which he was reasonably fitted by reason of his education, training and experience. In oral argument the Insurer complained that the primary judge had based his decision on "idiosyncratic notions" of what somebody who was previously a roof plumber could do in other jobs. 6. The Insurer's decisions, it was submitted, were not unreasonable in the sense that they "lacked an evident and intelligible justification"; being a reference to Minister for Immigration and Citizenship v Li (2013) 249 CLR 323; [2013] HCA 18 at [76]. 7. Mr Jones submitted that Edwards established that the court is required to undertake a review of the merits of an insurer's decision. On this approach it was sufficient for an insured to demonstrate that an insurer's opinion was unreasonable by reference to entirely objective criteria. Senior counsel for Mr Jones went so far as to submit that a merits review of reasonableness is a "special rule" in insurance cases. 8. Mr Jones also submitted that the Wednesbury test of unreasonableness is inapplicable to decisions of a contracting party, such as an insurer, where liability depends upon the formation of an "opinion". Analysis 1. It is convenient to address the issues raised by the parties' submissions in the following order. First, did his Honour mis-state the relevant principles concerning an insurer's obligations to a claimant? Second, what criterion or standard of review should be adopted by the court when determining whether an insurer has breached its obligation to act reasonably? Third, did his Honour (incorrectly) undertake a review of the merits of the Insurer's decision? (1) Did the primary judge mis-state the applicable principles? 1. As mentioned, the Insurer complained that his Honour mis-stated the applicable principles in subpar (2) and (3) of [55] of his reasons (set out at [50] above). I do not agree. 2. Plainly, his Honour's reference in [55(2)] of his reasons to an insurer taking into account an irrelevant consideration, or failing to take into account a relevant consideration was directed to considerations that are material. The qualification suggested by the Insurer in this Court, that the consideration must be of "great importance", invoking the language used in the administrative law context (see Minister of Immigration and Citizenship v Li at [72]), is unnecessary. 3. Further and in any event, the Insurer did not suggest that the consideration which his Honour found the Insurer had failed to take into account in the present case, namely, Mr Jones' psychological make-up, was not a material consideration. This complaint goes nowhere. 4. Second, there is no error in his Honour's statement in [55(3)] of his reasons. That statement is consistent with well-established authority: see Edwards at 77,536; Hannover Life Re v Sayseng at [36]; Hannover Life Re v Colella at [73]; and TAL Life Ltd v Shuetrim at [61]. The complaint by the Insurer that his Honour's reasons did not go far enough to explicate what that proposition meant in the context of the present case is unfair when the Insurer did not direct submissions at trial as to the criterion or standard of review by the court of an insurer's decision. (2) The task of the court and the criterion of unreasonableness 1. The task of the court is to determine whether the insurer breached its contractual obligation to act reasonably in considering and determining the claim. The authorities referred to above establish that the court is not to substitute its own view for that of the insurer. Plainly, the court is performing a reviewing function. However, the insurer is not entitled to refuse a claim for a reason which depends on the efficacy of an opinion in relation to the formation of which it has not acted reasonably and fairly or which does not address the correct question. And if the insurer does form and rely on such an opinion, that constitutes a breach of its contractual obligations, and the court itself may determine whether on the material available to it the claim falls within the policy: Edwards at 77-537; Hannover Life Re v Sayseng at [36]; TAL Life Ltd v Shuetrim at [175]; Beverley v Tyndall Life Insurance at [24]; and Hannover Life Re v Colella at [73]. 2. The debate in this Court focused on whether the assessment of the reasonableness of the Insurer's "opinion" should be undertaken in the Wednesbury sense, as the Insurer contended; or by reference to entirely objective criteria, that is, a review of the merits of the insurer's decision, as Mr Jones contended; or by reference to some other criterion or standard of review. 3. It is convenient to begin with Mr Jones' submission that the court is required to undertake a review of the merits of the Insurer's decision. Rejection of merits review of unreasonableness 1. The short answer to Mr Jones' submission is that it is tantamount to saying that the implied reasonableness term in insurance contracts such as the policy, involves a duty to form a fair and reasonable opinion, or even a duty to form a correct opinion. As will be seen that is not the current state of the authorities. 2. Statements can be found in the authorities prior to Edwards, concerning the task of the court when reviewing an insurer's "opinion", which is a condition of its liability under the policy. It is sufficient to refer to the following. In Riley v National Mutual Life Association of Australasia Ltd (1985) 4 ANZ Ins Cas 74,061, Cosgrove J, in the Supreme Court of Tasmania, held (at 74,064) that the court must direct itself to the question whether the rejection of the plaintiff's claim was "so unreasonable as to require the intervention of the court". 3. In Heitman v Guardian Assurance Co Ltd (1992) 7 ANZ Ins Cas 61-107, the insurer had not formed the relevant opinion that the claimant satisfied the definition of Total and Permanent Disablement. Franklyn J said (at 77,487) that the claimant must establish that the medical evidence before the insurer for its consideration was such that "it would be unreasonable for it, on a consideration thereof, to form any opinion other than that he had become incapacitated as a result of such injury or illness". 4. In Tonkin v Western Mining Corporation Ltd (1998) 10 ANZ Ins Cas 61-397; [1998] WASCA 101, the Full Court of the Supreme Court of Western Australia (Malcolm CJ, Pidgeon J and Franklyn J), considered a claim against the trustee of a superannuation fund that had rejected a claim for a total and permanent disablement benefit by a member in light of all the medical evidence. Franklyn J (Malcolm CJ and Pidgeon J agreeing) said that the court could intervene "only if the Court was of the view that it was unreasonable of it [the trustee] to have not formed that necessary opinion". Subsequently, in Chapman v United Super Pty Ltd [2013] NSWSC 592, Young AJ at [53] referred to Tonkin v Western Mining Corporation Ltd and described the test as "so unreasonable in all the circumstances that the Court is required to intervene". 5. Although variously expressed, none of the above statements support the view that the court is to undertake a review of the merits of the insurer's decision. 6. The remarks of McLelland J in Edwards (set out at [65] above), are also inconsistent with an assessment of reasonableness by reference to entirely objective criteria. Further and importantly, nor did McLelland J embrace the concept of reasonableness in the Wednesbury sense. McLelland J preferred the statement in Doyle v City of Glasgow Life Insurance Co (1884) 53 LJ Ch 527 at 529), that "unless the view taken by the insurer can be shown to have been unreasonable on the material then before the insurer, the decision of the insurer cannot be successfully attacked on this ground" (emphasis added). 7. In Hannover Life Re v Sayseng, this Court approved Edwards and accepted (at [54]) that a court must not substitute its own view for that of the insurer, by reference to additional material not before the insurer. That statement is also inconsistent with a merits review. 8. Hannover Life Re v Colella adopted a similar approach. There Garde AJA (at [73]) rejected the insurer's submission that the correct test is whether "the decision of the insurer was so unreasonable that a reasonable person in that situation could [not] have made it". (The word "not", between the words "could" and "have", does not appear in either the medium neutral version or the reported version of the judgment in Colella, but its absence seems to be a typographical error.) Ashley and Beach JJA agreed with the reasons for Garde AJA. 9. Beach JA added the following remarks at [6] (emphasis added): … like Garde AJA, I see no error in the approach of the trial judge to what has been called the second limb of the total and permanent disablement clause. The judge did not substitute, or purport to substitute, his opinion for the opinion of the appellant. The judge conducted a detailed analysis that led him to the conclusion that the appellant had 'cherry-picked' that part of the material that supported a denial of the respondent's claim. In my view, the judge was correct, for the reasons he gave, to so characterise the formation of the appellant's opinion. Further, the judge was correct to conclude from his analysis that the appellant had not acted reasonably and fairly in considering the respondent's claim. As the judge concluded, and as Garde AJA has shown, the opinion formed by the appellant was not open to an insurer acting reasonably and fairly in the consideration of the respondent's claim. That said, whether it might one day be decided that the duty of an insurer in forming an opinion of the present type is a duty to form a fair and reasonable opinion, or even a duty to form a correct opinion, will have to wait for another day. 1. I agree with Beach JA's statement of the criterion of reasonableness in cases such as the present. 2. Mr Jones' submission that the court must undertake a review of the merits of the insurer's decision must be rejected. Nor is there any basis for thinking, as Mr Jones suggested, that there is some special rule in insurance cases. The task for the court is not to assess what it thinks is reasonable and thereby conclude that any other view displays error. That would be contrary to the decisions of three intermediate appellate courts: Hannover Life Re v Sayseng at [36], and TAL Life Ltd v Shuetrim at [175] and [188] in New South Wales; Beverley v Tyndall Life Insurance at [36] in Western Australia; and Hannover Life Re v Colella at [73] in Victoria. The concept of Wednesbury unreasonableness 1. It is necessary to say something briefly about the label "Wednesbury unreasonableness", and how that criterion for judicial review of administrative discretion is now understood in Australia following the High Court's decision in Minister for Immigration and Citizenship v Li. 2. First, as Gageler J explained in Li at [106]: The label "Wednesbury unreasonableness" indicates "the special standard of unreasonableness which has become the criterion for judicial review of administrative discretion". Expression of the Wednesbury unreasonableness standard in terms of an action or decision that no reasonable repository of power could have taken "attempts, albeit imperfectly, to convey the point that judges should not lightly interfere with official decisions on this ground". [citations omitted] 1. Further and in contrast to the approach now taken in England (see Braganza at [30] (Hale LJ) and [52] (Hodge LJ)), the use of the term "irrationality" as a separate or differently formulated concept from "unreasonableness" has not been adopted in Australia: Li at [30] (French CJ) and [68] (Hayne, Kiefel and Bell JJ). 2. Second, the stringency of the test of Wednesbury unreasonableness remains: Li at [108] - [113] (Gageler J). That is exemplified where the matter of which the decision-maker is required to be satisfied is a matter of opinion. As Gibbs J remarked in Buck v Bavone (1976) 135 CLR 110 at 118-119, in such cases "it may be very difficult to show that ….. [the decision] could not have been reasonably reached." Gageler J similarly noted in Li at [111]: …. the inability of a court "effectively" to review a state of satisfaction forming a precondition to an exercise of a statutory power or performance of a statutory duty "where the matter of which the [repository] is required to be satisfied is a matter of opinion or policy or taste". 1. Third, the judgments of the Chief Justice and the plurality in Li may be taken to invite consideration of proportionality in the exercise of administrative discretion when assessing legal unreasonableness in the Wednesbury sense: Li at [30] (French CJ), and [72] (Hayne, Kiefel and Bell JJ). 2. Fourth, defining the concept of Wednesbury unreasonableness is not easy. As Allsop CJ (Wigney J agreeing) remarked in Minister for Immigration and Border Protection v Stretton (2016) 237 FCR 1; [2016] FCAFC 11 (Stretton) at [10] –[12]: [10] This concept of legal unreasonableness is not amenable to minute and rigidly-defined categorisation or a precise textual formulary. For instance, in argument, the submission was put that [76] of Li in the judgment of Hayne, Kiefel and Bell JJ contained two (different) 'tests': (1) if upon the facts the result is unreasonable or plainly unjust and (2) if the decision lacks an evident and intelligible justification. The submission reflected the dangers of overly emphasising the words of judicial decisions concerning the nature of abuse of power, and of unnecessary and inappropriate categorisation. The plurality's discussion of unreasonableness at [63]-[76] in Li should be read as a whole – as a discussion of the sources and lineage of the concept: [64]-[65], of the limits of the concept of reasonableness given the supervisory role of the courts: [66], of the fundamental necessity to look to the scope and purpose of the statute conferring the power to find its limits: [67], of the various ways the concept has been described: [68]-[71], of the relationship between unreasonableness derived from specific error and unreasonableness from illogical or irrational reasoning: [72], of the place of proportionality or disproportion in the evaluation: [73]-[74] (as to which see also French CJ at [30] and see also McCloy v New South Wales [2015] HCA 34; 325 ALR 15 at [3] (French CJ, Kiefel, Bell and Keane JJ)), of the guidance capable of being obtained from recognising the close analogy between judicial review of administrative action and appellate review of judicial discretion: [75]-[76]. … [12] Crucial to remember, however, is that the task for the Court is not to assess what it thinks is reasonable and thereby conclude (as if in an appeal concerning breach of duty of care) that any other view displays error; rather, the task is to evaluate the quality of the decision, by reference to the statutory source of the power and thus, from its scope, purpose and objects to assess whether it is lawful. The undertaking of that task may see the decision characterised as legally unreasonable whether because of specific identifiable jurisdictional error, or the conclusion or outcome reached, or the reasoning process utilised." (These remarks were cited with approval by Bathurst CJ in Duncan v Independent Commission Against Corruption [2016] NSWCA 143 at [289].) Contract cases applying Wednesbury unreasonableness 1. As the Insurer pointed out, authorities can be found involving contractual disputes where the court has assessed the contracting party's obligation to act reasonably by analogy to unreasonableness in a Wednesbury sense. Braganza and Bartlett v ANZ are two examples. 2. Braganza involved a contract of employment that provided for the payment of compensation to the widow of a deceased employee. However, the compensation was not payable if the employer or its insurers formed a particular opinion concerning the circumstances of the employee's death. It was held that the employer was obliged to act reasonably in the Wednesbury sense in forming that opinion. The UK Supreme Court took the Wednesbury standard to mean that a decision is invalid where "the right matters have [not] been taken into account in reaching the decision" or the decision is "so unreasonable that no reasonable [decision-maker] would ever come to it": Braganza at [24]. Consistent with substituting the more modern term "irrationality" for "unreasonableness", the Supreme Court conducted a rationality review of the contracting party's decision: Braganza at [30] and [52]. 3. Bartlett v ANZ involved a contract of employment which provided that the employer could dismiss an employee for any reason without notice if, in the employer's opinion, the employee engaged in serious misconduct, serious neglect of duty or serious breach of the employment contract. After considering a number of authorities dealing with obligations of good faith and fair dealing, as well as Braganza, this Court (Macfarlan JA, Meagher JA and Simpson JA, relevantly, agreeing) held (at [49]) that in forming the opinion that the employee had engaged in serious misconduct, the employer was obliged to act reasonably, at least in the Wednesbury sense and at least so far as its process, as distinct from the result, was concerned. 4. In Braganza, Lady Hale, at [19], left open the question whether the standard of review generally adopted by the courts to the decisions of a contracting party should be any less demanding than the standard of review adopted in the judicial review of administrative action. Her Ladyship continued at [20]: The decided cases reveal an understandable reluctance to adopt the fully developed rigour of the principles of judicial review of administrative action in a contractual context. But at the same time they have struggled to articulate precisely what the difference might be. 1. After noting in Braganza at [24] that the first limb of Wednesbury unreasonableness focuses on the decision-making process – whether the right matters have been taken into account in reaching the decision; while the second limb focuses upon its outcome – whether even though the right things have been into account, the result is so outrageous that no reasonable decision-maker could have reached it, Lady Hale observed at [28] that "the contractual cases do not in terms discuss whether both limbs of the Wednesbury test apply". 2. Lady Hale did not need to come to a conclusion on this question, and was understandably cautious as to the precise extent to which an implied contractual term to act reasonably may differ from the principles applicable to judicial review of administrative decisions, remarking at [30]-[32] (emphasis added): [30] It is clear, however, that unless the court can imply a term that the outcome be objectively reasonable - for example, a reasonable price or a reasonable term - the court will only imply a term that the decision-making process be lawful and rational in the public law sense, that the decision is made rationally (as well as in good faith) and consistently with its contractual purpose. For my part, I would include both limbs of the Wednesbury formulation in the rationality test. Indeed, I understand Lord Neuberger PSC (at para 103 of his judgment below) and I to be agreed as to the nature of the test. [31] But whatever term may be implied will depend on the terms and the context of the particular contract involved. I would add to that Mocatta J's observation in The Vainqueur Jose that it would be a mistake to expect [of a lay body] the same expert, professional and almost microscopic investigation of the problems, both factual and legal, that is demanded of a suit in a court of law [1979] 1 Lloyds Rep 337, 577). Nor would 'some slight misdirection' matter, at least if it were clear that, had the legal position been properly appreciated, the decision would have been the same. It may very well be that the same high standards of decision-making ought not to be expected of most contractual decision-makers as are expected of the modern state. [32] However, it is unnecessary to reach a final conclusion on the precise extent to which an implied contractual term may differ from the principles applicable to judicial review of administrative action. Given that the question may arise in so many different contractual contexts, it may well be that no precise answer can be given. The particular context of this case is an employment contract, which, as Lord Hodge JSC explains, is of a different character from an ordinary commercial contract. Any decision-making function entrusted to the employer has to be exercised in accordance with the implied obligation of trust and confidence. This must be borne in mind in considering how the contractual decision-maker should approach the question of whether a person has committed suicide. Rejection of Wednesbury unreasonableness 1. In the present case, cl 1.3.1 of the policy specifies how the issue of Total and Permanent Disablement is to be determined. The Insurer is required to form the relevant opinion as to disablement, after consideration of medical evidence that is satisfactory to the Insurer. In forming that opinion, the Insurer is subject to an implied obligation to act reasonably. 2. In Braganza at [31], Lady Hale observed that the implication of the reasonableness term in a contract will depend on the terms of the contract and the context of the particular contract involved. Such terms are specific to the contract in question. The implication of a reasonableness term reflects the well-established principles governing the implication of terms into contracts to provide for "business efficacy": BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283. The well-known conditions for implication of such a term which must be satisfied are: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract so that no term will be implied if the contract is effective without it; (3) it must be so obvious that it "goes without saying"; (4) it must be capable of clear expression; (5) it must not contradict any express terms of the contract. 3. A reasonableness term is implied in contracts of insurance where the formation of the insurer's opinion is a condition of its liability, because it is necessary to do so for the reasonable and effective operation of the contract. Relevantly, the insurer's opinion has the ability to seriously affect the interests of the claimant. As McLelland J explained in Edwards at 77,536: ….. 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 (see Moore v Woolsey (1854) 4 E1 and B1 243, 119 ER 93, Braunstein v Accidental Death Insurance Co (1861) 1 B and s782, 121 ER 904, London Guarantie Co v Fearnley (1880) 5 App Cas 911 at 916, 921, Doyle v City of Glasgow Life Insurance Co (1884) 53 LJ Ch 527, Harvey v Ocean Accident and Guarantee Co (1905) 2 IR 1, Butcher v Port (1985) 1 NZLR 491, cf Teur v London Life Insurance Co (1936) 1 DLR 161). See also Hannover Life Re v Sayseng at [53] – [54] 1. Although commonly described as implication in fact, such terms have also been called implications "ad hoc". They are based on the presumed or imputed intention of the parties: Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 422 (Brennan CJ, Dawson and Toohey JJ), 440 (McHugh and Gummow JJ). See also: Cromwell Property Securities Ltd v Financial Services Ombudsman Service Ltd and Ors (2014) 288 FLR 374; [2014] VSCA 179 at [60]. By contrast terms implied by law are, in general, implied as a matter of necessity as a legal incident of a particular class of contract: Byrne v Australian Airlines Ltd at 448. Neither party suggested that the reasonableness term in the present case might also be implied under the policy as a matter of law. It is not necessary to address that question. 2. While courts are conscious of not exceeding their supervisory role in cases of judicial review (Li at [66]), just as they are conscious of not exceeding their reviewing function in cases involving reasonableness terms in contractual disputes (see [89] - [99] above), it does not follow that the considerations that mandate the assessment of "unreasonableness" in the Wednesbury sense in judicial review cases equally apply in contractual disputes involving reasonableness terms. 3. First, many of the difficulties which confront a court in judicial review cases of being satisfied that "a purported exercise of power is so unreasonable that no reasonable repository of the power could have so exercised the power" (Li at [108]), do not arise in the context of reasonableness terms in contractual disputes. The difficulties in judicial review cases generally arise from matters particular to the function of the primary decision-maker, such as the nature of the administrative discretion which is generally wide in its scope or is affected by policies of which the court has no experience. Further, as Buck v Bavone makes clear, it may be difficult to show that an administrator's state of satisfaction forming a precondition to the exercise of a statutory power or performance of a statutory duty is unreasonable. 4. Second, insofar as the Wednesbury test is now also seen as inviting considerations of proportionality having regard to the scope of the power, there is no similar notion when assessing breach of a contractual duty to act reasonably. This is a further reason for distinguishing the criterion of unreasonableness in the Wednesbury sense from the present case. 5. Third, I do not consider that Bartlett v ANZ determines the outcome of the present case. The point raised in this case does not seem to have been raised there. Further, that the reasonableness of the formation of the employer's opinion, and at least its process, was assessed in Bartlett v ANZ by analogy with reasonableness in the Wednesbury sense, does not require that the implied reasonableness term in the present case must conform with the Wednesbury sense of reasonableness: Braganza at [30] – [32]. 6. Fourth, in the present case, unlike judicial review, the court is undertaking a comparatively familiar task of evaluating the quality of the insurer's decision by reference to the insurer's contractual obligations to the claimant to act reasonably and fairly in considering the claim. As explained in TAL life Ltd v Shuetrim at [61], the implied term to act reasonably and fairly in considering and determining the claim has a long history worked out in a series of cases dating from the mid - 19th century, to which McLelland J referred in Edwards at 77,536. The court can be expected to be more sensitive to an unreasonable formation of an insurer's opinion and more confident of its ability to detect error vitiating the insurer's decision, than in cases of judicial review: cf the observations of Gageler J in Li at [111] contrasting the comparative familiarity of appellate review of judicial discretions with judicial review of administrative discretions. 7. As I have said, the task for the court in the present case is not to assess what it thinks is reasonable and thereby conclude that any other view displays error. It may also be accepted that there can be a range of opinions available to an insurer acting reasonably and fairly on the material before it. However, the suggested analogy with judicial review is not so close as to require the adoption of the stringent test of unreasonableness in the Wednesbury sense. Rather, the criterion of reasonableness of an insurer's decision is whether the opinion formed by the insurer was not open to an insurer acting reasonably and fairly in the consideration of the claim. (3) Did the primary judge undertake a review of the merits of the Insurer's decisions? 1. Contrary to the Insurer's submissions, I do not read his Honour's reasons as undertaking a review of the merits of the Insurer's decisions. His Honour did not assess the reasonableness of the Insurer's opinion by reference to entirely objective criteria. It seems to me that his Honour's approach was consistent with the criterion of reasonableness identified at [121] above. That this is how his Honour approached the matter can be seen from the way in which he addressed the material that was before the Insurer concerning Mr Jones' psychological makeup. I now turn to that issue. Did the Insurer fail to consider Mr Jones' psychological makeup? 1. The decisions of the Insurer to decline Mr Jones' claim were recorded in the Insurer's letters to the Trustee dated 28 January 2014 and 21 March 2014. It is clear that the Insurer accepted the conclusion expressed in the vocational assessment that Mr Jones was a suitable candidate for the suggested occupations of retail sales (hardware), courier/delivery driver, console operator and customer service/telemarketer, taking into account his assessed functional capacity "to work with a low risk of injury in a "light" job load classification", and decided the claim should be declined on the basis that this did not amount to Total and Permanent Disablement within the meaning of the policy. 2. The Insurer accepted in this Court that his Honour's finding (at [62]) of the likelihood of an insured being able to engage in suitable work was affected not only by physical capacity, but also other factors, such as psychological makeup. His Honour found (at [68]): The insurer's reasons do not go beyond a conclusion that physically Mr Jones should be able to perform the tasks of the suggested jobs. Mr Jones' well-evidenced fear-avoidance syndrome provided a strong reason why, even if he could theoretically physical perform them, he would not psychologically be able to do so. There was a substantial body of evidence before the insurer that his fear-avoidance syndrome was an obstacle to his performing work. 1. His Honour continued (at [68]) as follows: In particular, Dr Marshman had stated that the prognosis for a return to work (both medium and long-term) was poor without successfully addressing both his right sciatica and psychological factors including fear-avoidance; and that psycho-social factors, especially fear-avoidance beliefs, which had been present all along, had become predominant. 1. The Insurer submitted that both of these passages disclosed error. 2. As to the second passage from [68] of his Honour's reasons, the Insurer's complaint is well founded. His Honour erred in taking into account at the first stage of the enquiry a report prepared by Dr Marshman dated 28 October 2015 for the purpose of the proceeding, which was not before the Insurer at the time of its decisions. Nevertheless that error is immaterial because there was other evidence, to which his Honour had referred in his reasons that justified his Honour's finding at [68] that there was a substantial body of evidence before the Insurer that Mr Jones' fear-avoidance syndrome was an obstacle to his performing work. That evidence comprised: 1. the evidence of Dr Marshman concerning Mr Jones' fear-avoidance mechanisms, contained in his letter to Dr Pioc dated 20 March 2013 and in his report to the Trustee dated 22 August 2013. 2. the evidence of the occupational therapist, Ms Hanrahan, who had referred to Mr Jones' "fear-avoidance" under the heading "Psycho-social Assessment" in the functional capacity assessment. 1. As to the first passage from [68] of his Honour's reasons, the Insurer contended that his Honour had erred by ignoring the references in the functional capacity assessment to Mr Jones' fear-avoidance syndrome (which were also noted in the vocational assessment). The argument ran that since these reports were before the Insurer at the time of its decisions, the Insurer can be taken to have given consideration to Mr Jones' psychological capacity when forming its opinion as to his disablement. 2. In support of this contention, the Insurer pointed to two references in the functional capacity assessment under the heading "Postural Tolerance Testing". That report noted that the tasks described as "Bending/Squatting" and "Floor to Bench" lift were not completed, as Mr Jones reported that he felt that this activity would cause aggravation of his lumbar spine pain. Under the heading "Functional Tolerances", the report stated: • Lumbar flexion/bend: Mr Jones attempted to complete lumbar flexion, however declined to continue this task due to reports of pain (pain rated at 6/10 on the VAS). Mr Jones reported he felt that that this activity would aggravate his back condition. • Squat: Mr Jones attempted to complete one squat, however declined to continue this task. Mr Jones reported he felt that this activity would aggravate his back condition, and that he felt unstable when rising to a standing position. 1. The context in which Mr Jones had not undertaken those tasks was explained in the report as follows: Mr Jones reported pain when attempting to complete both squatting and lumbar flexion movements. The highest level of report pain was reported whilst attempting to perform repetitious lower back exercises measured at 6/10 on the VAS. 1. That explanation was consistent with Dr Marshman's relatively contemporaneous assessment in his report dated 22 August 2013 that one of Mr Jones' operative medical conditions was persistent right L5 sciatica. The references in the functional capacity assessment to Mr Jones not completing certain bending/squatting and lifting tasks, clearly related to his "persistent right L5 sciatica", not his "fear-avoidance" syndrome. 2. Similarly, while the vocational assessment noted the reference to Mr Jones' fear avoidance in the functional capacity assessment, no consideration was given in the vocational assessment to whether Mr Jones' fear-avoidance syndrome might impact upon his ability to gain employment in any of the suggested occupations. 3. In accepting the views in the vocational assessment (which were based on the functional capacity assessment), the Insurer may be taken, as his Honour found, to have considered Mr Jones' capacity for engaging in any of the suggested occupations by reference solely to his physical condition and without regard to his psychological makeup. 4. Contrary to the Insurer's submissions, his Honour did not disregard that there may be a range of opinions open generally to an insurer acting reasonably on the material then before it. Nor did his Honour assess the reasonableness of the Insurer's decisions by reference to the only reasonable conclusion available to an insurer acting reasonably. Here the Insurer failed to take into account a significant component of Mr Jones' incapacity. That failure by the Insurer was a failure to take into account a relevant consideration. Plainly, the failure by the Insurer to take into account a relevant consideration was a failure to act reasonably and fairly in undertaking the task of forming the opinion as to Mr Jones' disablement because an insurer acting reasonably and fairly on the material before it would not have omitted to take that matter into account. There was no error in his Honour's finding that the Insurer had breached its obligation to act reasonably in forming its opinion as to Mr Jones' disablement. 5. Grounds 1 and 2 are not made out. Grounds 4 and 5: The proper construction of the ETE clause of the policy 1. Grounds 4 and 5 challenge his Honour's construction of the ETE clause, which his Honour applied both at the first and second stage of the inquiry. Ground 4 contends that his Honour erred in finding that the definition of Total and Permanent Disablement was satisfied if Mr Jones was incapable only of working in his "usual (pre-injury) occupation as a roof plumber/roofing tradesman/manual labourer in the roofing industry". 2. Ground 5 asserts error in his Honour's reasoning (at [71]), that the concluding words in the ETE clause ("reasonably fitted by reason of education, training and experience") require the relevant work to be that for which the claimant has been "prepared and shaped" by his or her past vocational history. 3. It is convenient first to deal with ground 5. Parties' submissions 1. The Insurer's submissions emphasised the breadth of the ETE clause and the defined term "Regular Remunerative Work" which denotes doing work in "any employment, business or occupation" so long as it is "done for reward – or the hope of reward – of any type". 2. The effect of his Honour's construction, the Insurer submitted, was to read the ETE clause as though it was limited to unfitness for a person's "usual occupation", when it is properly to be understood as referring to an occupation other than the person's "usual occupation". 3. The Insurer also submitted that the ETE clause does not, unlike "own occupation" type policy wordings, preclude the Insurer from identifying jobs requiring less than the full complement of the Insured's education, training or experience for jobs with lower income or lower status than the "usual occupation". 4. Mr Jones sought to uphold his Honour's reasoning. Mr Jones submitted that a finding that a person is reasonably fitted by education, training or experience only to manual labour does not mean that person could not adapt to some other field of employment in the future, it simply means that their training and experience to date (given that the relevant enquiry necessarily looks to the past) do not extend to that field. Interpretation of ETE clause 1. Three preliminary observations should be made. First, it is not in dispute that the policy should be given a businesslike interpretation giving attention to the language used by the parties, the commercial circumstances which the document addressed and the object which it was intended to secure: McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579; [2000] HCA 65 at [22]; Hannover Life Re v Sayseng at [35]. 2. Second, it may be accepted that the ETE clause materially narrows the scope of the coverage given by the TPD definition, from the perspective of the claimant: see the remarks of Leeming JA in TAL Life Ltd v Shuetrim at [66] in relation to the words of the ETE clause in that case ("any occupation or work for which he or she is reasonably qualified by reason of education, training or experience"), which are not materially different from the words of the ETE clause in this policy - "any Regular Remunerative Work [work in any employment, business or occupation for reward – or the hope of reward – of any type] for which the Insured Person is reasonably fitted by education, training or experience". 3. Third, the question of whether a person is reasonably fitted for a particular type of work will always depend on the facts of the particular case: Hannover Life Re v Dargan at [37] (Bathurst CJ). 4. His Honour observed (at [71]) that a job which a person may be able to perform without further education, training or experience is not necessarily one for which he or she is reasonably fitted by education, training or experience. No complaint is made by the Insurer in relation to that statement. In the context of the ETE clause, the word "by" in the phrase "reasonably fitted by education, training or experience" clearly expresses the notion of a link or connection between the suggested future work, and the insured's past education, training and experience: cf Wardley Australia Ltd v The State of Western Australia (1992) 175 CLR 514 at 525 in relation to the word "by" in s 82 of the Trade Practices Act 1974 (Cth). 5. His Honour continued (at [71]), in a passage which it is necessary to set out in full as it provides the context of the particular finding which is challenged by the Insurer (emphasis added): [71] …. It is not necessary, in order to satisfy the TPD definition, that the insured must be incapable of any regular remunerative work, but only that he or she be incapable of regular remunerative work for which he or she is reasonably fitted by education, training or experience. The ETE clause confines the scope of the "regular remunerative work" from which the insured is disabled to that for which the insured is reasonably fitted by education, training or experience. In that phrase, the word "by" is important – it postulates a connection between the suggested future work, and the insured's past education, training and experience. The concept of an occupation or work "for which the Insured Person is reasonably fitted by education, training or experience" directs attention to the insured's vocational history to date, and to occupations for which that vocational history fits the insured. It refers not to any work for which the insured might have physical and mental capacity without further training, but to work for which the insured has been prepared and shaped by education, training and/or experience. The purpose of the provision is to provide a benefit for those who are disabled from following the vocations for which their past education, training and experience has prepared them – not any occupation which may be conceived, however far removed from his or her vocational history, which can be performed without further education, training or experience. The policy insures the capacity of an insured to perform regular remunerative work, not simpliciter, but in an occupation for which the insured's education, training and experience has prepared him or her. In that way, it insures against loss of the ability to pursue those employments or careers for which the insured has been prepared and shaped by his or her past vocational history. The point is illustrated by the reverse of the current type of situation: a surgeon whose tertiary education was in medicine and whose entire vocational history was in surgery, who lost the fine motor skills required for surgery, but was otherwise physically fit, would not be reasonably fitted by education, training or experience for work as a manual labourer, even though he or she might be perfectly capable of performing it without further training. 1. The Insurer complained that the sentence emphasised in the above passage disclosed error because his Honour's construction read the ETE clause as though it was limited to unfitness for a person's "usual occupation" and overlooked the import of the phrase "any employment, business or occupation" in the definition of Regular Remuneration Work . I do not agree. The reference by his Honour to "prepared and shaped" is to be read in the context of the whole passage. His Honour is to be taken as emphasising that the concept of an occupation or work "for which the Insured Person is reasonably fitted by education, training or experience" directs attention to the insured's vocational history to date, and to occupations for which that vocational history fits the insured, that is, to the link or connection between the suggested job or jobs and the claimant's past education, training or experience. 2. That his Honour's reasons should be read in this way is made plain in the following paragraph of his Honour's reasons where his Honour identified the relevant question raised by the ETE clause in these terms: [72] Thus the first question should be, for what occupations is this claimant fitted by his or her education, training and employment. It is a mistake to first search for occupations which an insured might be able physically and mentally to perform without further education, training or experience, rather than to examine the insured's vocational history and to identify from it the occupation or occupations for which his education, training or experience has prepared the insured. 1. In this passage, his Honour correctly observed that the ETE clause requires the Insurer to examine the occupations for which the claimant is "fitted" in the sense of the occupations for which his education, training and experience has prepared him. That naturally is shaped by his vocational history. There is no error in that approach. Contrary to the Insurer's submissions, his Honour correctly focused upon the language of this ETE clause ("reasonably fitted by reason of education, training or experience), not some different notion of the claimant's capability for his or her "usual occupation". 2. Ground 5 should be rejected. Did the primary judge err in finding that Mr Jones' aptitude was only for manual labour? 1. The Insurer challenged his Honour's finding, at the first stage of the inquiry, that the only work for which Mr Jones was reasonably fitted by education, training or experience, was manual labour, and in which the Insurer accepted that he was never again likely to engage. The relevance of this finding is that his Honour found that the inquiry need have proceeded no further and that the Insurer erred in its application of the ETE clause in treating jobs for which no further training was required, although unrelated to Mr Jones' education, training or experience, as jobs for which he was fitted by education, training or experience. That error, which his Honour described as an "error of law", was the second basis on which his Honour found that the Insurer had breached its contractual obligation to act reasonably in considering and determining Mr Jones' claim under the policy. In support of this challenge, the Insurer pointed to the following matters: that Mr Jones had worked in a supervisory position, not merely as an employed tradesman; that the vocational assessment had taken into account Mr Jones' functional and work capacity and identified his transferrable skills; and that the positions identified in the vocational assessment were entry-level positions which did not require prior experience in the field or profession, although they may require some on-site training. 2. In oral argument, the Insurer submitted that this finding was contrary to the medical evidence, particularly that of Dr Marshman in his 22 August 2013 report. 3. The Insurer also contended that it would be an absurd outcome if a person who had no formal qualifications and experience in relatively low-skilled manual labour, but who had worked on construction sites for 20 years as a labourer could only be considered reasonably fitted to do heavy manual work as a labourer and not suited to the entry level occupations he or she would have been fitted to as a school leaver. 4. Mr Jones submitted that there is no "absurdity" in his Honour's conclusion that a person who is educated only to School Certificate level and who has been engaged in manual labour for the duration of his working life, is reasonably fitted "by education, training or experience" only to manual labour. 5. Mr Jones further submitted that his Honour correctly identified that the vocational assessment evidence relied on by the Insurer did no more than identify discrete transferrable skills said to be possessed by Mr Jones and then identify other less physically taxing forms of employment which were said to require those skills and minimal re-training. Mr Jones argued that the enquiry as to whether a person is "reasonably fitted by education, training or experience" for some particular job requires a holistic approach and that his Honour made a finding of fact about that matter which contains no appealable error. Analysis 1. In Hannover Life Re v Dargan, Bathurst CJ said at [36] that some context needs to be given to the word "reasonably" in the phrase "reasonably fitted by education, training or experience", and that the words "education, training or experience" are used both disjunctively and conjunctively. Accordingly, "[a] person can be reasonably fitted for Regular Remuneration Work by reason of education or training or experience or a combination of those factors": Hannover Life Re v Dargan at [36]. 2. The present case may be contrasted with both Hannover Life Re v Dargan and Halloran v Harwood Nominees Pty Ltd (2007) 16 ANZ Ins Cas 90-142; [2007] NSWSC 913. Those cases both concerned the question of retraining. 3. In Hannover Life Re v Dargan, the TPD definition in the policy was in the same terms, relevantly, as the present case. The issue was whether the fact that further training was necessary for Mr Dargan to pursue the occupation of a taxi-driver meant that for the purpose of the policy he was totally and permanently disabled. That depended on the construction of the phrase "reasonably fitted by education, training or experience". Mr Dargan had been an experienced truck-driver whom, it could be inferred, was familiar with the rules of the road and the demands involved in driving commercial vehicles. He was able to obtain a certificate to drive a taxi without undertaking a test. He was able to comfortably pass the test required as a condition of maintaining the certificate. Given his experience with driving heavy vehicles and having passed the necessary test at the time his employment came to an end, Bathurst CJ concluded that Mr Dargan was reasonably fitted to carry out the occupation of a taxi-driver at least on a part-time basis: at [44]. 4. Mr Dargan's position could be contrasted, as Bathurst CJ observed at [39], with that considered by Brereton J in Halloran v Harwood Nominees Pty Ltd, where the policy contained a definition of disablement in the following terms: In relation to a Life Assured means having been absent from employment with the Company through injury or illness for six consecutive months and in the opinion of the Association after consideration of medical evidence having become incapacitated to such an extent as to render the Life Assured unlikely ever to engage in or work for reward in any occupation or work for which he is reasonably qualified by education training or experience provided that a Life assured shall be deemed to have become Totally and Permanently Disabled if he has suffered the loss of two limbs or the sight of both eyes or the loss of one limb and the sight of one eye where "limb" means the whole hand or the whole foot. 1. Bathurst CJ continued at [40] – [41] explaining the result in Harwood as follows: [40] The plaintiff in that case was injured in 1995 whilst being employed with the responsibility of greasing machinery. From 1996 to 1998 he completed a TAFE course in Office Administration and Computer Studies. He obtained employment thereafter as a contract officer with the Aboriginal Land Council as its Regional Project Officer in eastern New South Wales, responsible for the negotiation of traditional land rights on behalf of Aboriginal communities. Brereton J unsurprisingly held that at the time of suffering his injury he was not qualified for this work by reason of his education, training and experience. The position may be contrasted with the present case involving the obtaining of a certificate and a subsequent week-long course to ensure he was capable of retaining it. [41] In Harwood supra Brereton J emphasised (at [35]) that the assessment under the claim in question had to be made at the expiration of six months and could only take into account work for which the employer was suited at the expiration of that period. That may be accepted but his Honour did not have to deal with the question which arose in the present case. That is, whether the need to complete a training course which the claimant at the time of assessment had the education, training and experience to successfully complete, leads to the conclusion that at that time he was incapable of performing the work within the meaning of the policy. 1. No question arises in this case concerning retraining. The position here is that the suggested jobs in the vocational assessment were entry level jobs that required no retraining. The Insurer's complaint is that his Honour's finding that the only work for which Mr Jones was reasonably fitted by education, training or experience was manual labour, is contrary to the medical evidence and the vocational evidence. The Insurer pointed to the opinion of Dr Marshman in his 22 August 2013 report that Mr Jones could be employed in a desk job which capitalised on his previous knowledge and experience, or as a building supervisor with no manual duties (see pars 10 and 11, set out at [33] above). There are two answers to this submission. 2. First, none of the suggested occupations in the vocational assessment answered the description of work the subject of Dr Marshman's opinion. It is not in dispute, as his Honour found, that a supervisory job in the roofing industry without manual labour does not exist (at [98]) and that there is no suitable "desk job" in the roofing industry (at [99]). 3. Second, as his Honour explained when rejecting Dr Marshman's opinion at [69]: Dr Marshman's view that the suggested occupations were within his capacity, on which the insurer chiefly relied, when read in the context of the whole of his evidence, was plainly a view about physiological capacity, shorn of the psychological overlay. 1. His Honour continued at [69] as follows: The insurer's reasons also indicate that while consideration was given to the availability of such employments, little heed was given to the difficulties which Mr Jones would encounter in competing for such employment, given what Dr Giblin described as his need for an understanding boss and a very friendly work environment. 1. Whilst the medical reports of Dr Marshman and the functional capacity assessment both referred to Mr Jones' fear-avoidance syndrome, and this material was before the rehabilitation consultant, as I have said, the vocational assessment did not consider Mr Jones' psychological capacity for the suggested jobs, and in particular the impact of his fear-avoidance syndrome. The Insurer has not demonstrated error in his Honour's finding that given Mr Jones' level of schooling and his entire work history as a roof plumber, and having regard to his psychological capacity, the work for which he was fitted, that is, suitable or qualified, by his education, training or experience was limited to manual labour. 2. Let it be assumed however (contrary to his Honour's finding), that the work for which Mr Jones was reasonably fitted by education, training or experience is not limited to manual labour. As indicated, his Honour went on to consider whether at the first stage of the inquiry any of the suggested occupations in the vocational assessment were occupations for which Mr Jones was "reasonably fitted by education, training or experience". 3. His Honour found that none of the suggested occupations answered that description, giving the following reasons (at [77]) (emphasis added; footnotes included): The work of a retail sales assistant, service station console operator, courier/delivery driver or customer service adviser/telemarketer was not work for which he was reasonably fitted by his education, training or experience; even if it is conceivable that he might be able to adapt to it, without undergoing further formal training, that has nothing to do with his education, training and experience. Although he may have had some discrete transferable skills, that is not the same as being fitted for an occupation by education training and experience. In this respect, the vocational assessment, focussing as it does on so-called transferable skills, misses the point. The identification of some skills acquired or developed in one occupation, which may be applied in another, does not necessarily mean that the worker is fitted by experience for the second occupation. Having some of the requisite individual skills does not equate to being fitted for the employment as a whole: capacity to perform remunerative work is different from capacity to perform a work task. It does not follow that because a person is physically capable of performing one or more work tasks that there is an ability to engage in remunerative work: Hannover Life Re v Collela at [30]. The insurer engaged in a theoretical exercise, removed from reality, in identifying possible employments, unconnected with Mr Jones' employment history, for which he might have had transferable skills for discrete tasks, but for which as a whole he had no education, training or experience. The insurer's error is manifested in the comment in its second decision that "Dr Giblin's opinion only takes in one aspect of the Member's vocational history as a roof plumber, he does not expand on alternative or suitable roles …" – which rather disregards that the plaintiff's entire vocational history was as a roof plumber. 1. The Insurer submitted that this passage disclosed error because his Honour encroached on the Insurer's decision-making discretion. I do not agree. As observed in Hannover Life Re v Collela at [30], to which his Honour referred, it is unrealistic to isolate some aspects of work (for which the insured may have some individual skills) in the face of significant injury that deprives a person of the capacity to perform work in other respects. Here his Honour found (at [78]): ….. but the communication skills which he may have as a roofing supervisor – with the other workers – are quite different from those required of a person dealing with customers (whether as a salesperson, a console operator, or a customer service adviser). 1. That finding did not involve, as the Insurer suggested, his Honour "substituting his own idiosyncratic view of the world based on no evidence" as to the work to which a roof plumber was fitted by his training, education and experience. The finding was based on the material before the Insurer at the time of its decisions, which plainly demonstrated that Mr Jones' vocational history revealed no experience or aptitude for customer service. As the vocational report recorded, Mr Jones told the author of that report that he was a "hands on person": at [78]. 2. In my view, no error has been demonstrated in his Honour's application of the ETE clause at the first stage of the inquiry. The Insurer's challenge to his Honour's application of the ETE clause at the second stage of the inquiry is addressed at [178] – [181] below. That challenge should be rejected for the reasons there given. 3. Ground 4 is not established. Ground 6: Geographical limitation on employment 1. By ground 6, the Insurer contended that the primary judge erred in finding that the policy definition of Total and Permanent Disablement was satisfied if Mr Jones was incapable of finding available employment in or near the location of where he lived. This ground is directed to challenging his Honour's remarks at [67]: I find it difficult to accept that someone who has always resided and worked in a regional town may be regarded as not TPD because there are jobs which he or she could physically perform, but only on the other side of the country. They would have lost the ability, which they formerly had, to work in any employment for which they were fitted by education, training or experience, where they live. 1. In expressing that view, his Honour recognised that some authorities supported a narrower view that the concept of "unlikely ever to (be able to) engage" in work is concerned solely with the capacity of the Insured to perform suitable work, and not the availability of such work: Repatriation Commission v Hill (2005) 142 FCR 88; [2005] FCAFC 7 at [57]-[58]; Wells v Australian Aviation Underwriting Pool [2004] QCA 43 at [17]; and Hannover Life Re of Australasia Ltd v Collela (2014) 47 VR 1; [2014] VSCA 205 at [30] and [34]. His Honour also noted that a similar view had been expressed by the current authors of Enright & Merkin, Sutton on Insurance Law (4th ed), Vol 2 at [21.360]. Against this, was the view expressed in decisions in this State which, his Honour noted, have emphasised that the practical availability of suitable work for the insured is relevant to the likelihood of his or her engaging in it: Chammas v Harwood Nominees Pty Ltd (1993) 7 ANZ Ins Cas 61-175; Nile v Club Plus Superannuation Pty Ltd [2005] NSWSC 55 at [64]; and in Wheeler v FSS Trustee Corporation ATF First State Superannuation Scheme [2016] NSWSC 534 at [74]-[80]. 2. It is not necessary to deal with this ground of appeal. As the Insurer accepted, his Honour's remarks were obiter dicta; they were not essential for his decision, there being no issue as to the availability of employment in the Townsville area (where Mr Jones lived) with respect to the alternative jobs suggested in the vocational assessment. 3. Further, the Court should refrain from accepting the Insurer's invitation to give, in effect, an advisory opinion particularly when the issue was not fully argued and has the potential to impact other parties' rights. B. Whether the policy responded to Mr Jones' claim 1. As mentioned, the Insurer challenged his Honour's application of the ETE clause at the second stage of the inquiry (ground 4), and the finding that the policy responded to Mr Jones' claim (grounds 3, 7 and 8). Ground 4: The ETE clause 1. With respect to the ETE clause, the Insurer challenged his Honour's finding that, for the reasons he had already given, Mr Jones was fitted by his education, training and experience for work as a labourer, and for no other employment: at [97]. The Insurer reiterated its submissions advanced at the first stage of the inquiry, when challenging his Honour's finding at the second stage of the inquiry. The Insurer's submissions should be rejected for essentially the same reasons as given above when dealing with the first stage of the inquiry. I would add the following observations. 2. First, it is not in dispute in this Court that as at April 2012 Mr Jones was not able, and never likely to be able, to perform the duties of a labourer. In this regard, there is no challenge to his Honour's findings that whilst Mr Jones might well have been fitted by his experience for an on-site supervisory job in the roofing industry (if such a job without manual labour existed), the unchallenged evidence of Mr Jones was that such a job without manual labour does not exist in that industry (at [98]) and that there is no suitable "desk job" in that industry (at [99]). 3. Second, as to the four suggested occupations – hardware retail salesperson, courier/delivery driver, service station console operator, or customer service advisor/telemarketer – the finding was open to his Honour that even if Mr Jones was able to engage in these occupations, they were not occupations for which he is fitted by his education, training and experience, not the least because they are customer service positions in respect of which he had no training, experience, or aptitude (at [100]), and given Mr Jones' evidence in cross-examination, which his Honour accepted, that: * Mr Jones had no prior experience in customer service; he had never worked in an office, explaining "it's not my scene" (at [100]); * his communication skills were all related to roofing in a job site situation dealing with his crew (at [101]); and, * he had no experience in telemarketing, and that he would be extremely nervous but with time and training he expected his nerves would ease (at [102]). No error has been demonstrated. 1. Third, as to work as a courier or delivery driver, the finding was open to his Honour that it is unlikely that Mr Jones will ever engage in regular remunerative work in such a job (at [103]), given: * the nature of that work would involve getting into and out of the vehicle, lifting and carrying parcels, and walking up and down stairs (which his medical restrictions exclude); * that sitting in a vehicle for lengthy periods would risk aggravating his medical condition (Pilonidal Sinus) as it has every time he has engaged in prolonged driving; * that Mr Jones, reasonably, avoids driving so far as possible given he has been advised that even a minor motor accident could cause his disc implant to sever, snapping his spine; and * that these difficulties were compounded by Mr Jones' fear avoidance syndrome which provided a real, if psychological, obstacle to his undertaking such employment. Again, no error has been demonstrated. Grounds 3, 7 and 8: Whether no real chance that Mr Jones would ever work again 1. Grounds 3, 7 and 8 are directed to challenging the primary judge's finding (at the second stage of the inquiry), that the policy responded to Mr Jones' claim. These grounds assume that the earlier grounds fail. 2. By ground 3, the Insurer contended that the primary judge ought to have found that Mr Jones failed to discharge his onus of proving that his fear-avoidance syndrome would not respond to treatment during his working life expectancy. By ground 7, the Insurer contended that the primary judge erred in considering the evidence relating to fear-avoidance syndrome after April 2012 in assessing whether Mr Jones satisfied the policy definition of Total and Permanent Disablement. By ground 8, the Insurer contended that the primary judge ought to have found that Mr Jones failed to establish that he had no real chance of obtaining employment for which he is reasonably suited by education, training or experience during his working life expectancy. Parties' submissions 1. In writing, the Insurer submitted that a consideration of Mr Jones' pain avoidance did not arise at the relevant date for the assessment of his claim, namely, 11 April 2012, and accordingly, the primary judge was wrong to take it into account on the second stage of inquiry. 2. In oral argument, senior counsel for the Insurer qualified this submission and accepted that Dr Marshman gave evidence that Mr Jones' fear-avoidance mechanism had always been prevalent. 3. Nonetheless, the Insurer complained that the primary judge had failed to address the evidence of treatment that was available for Mr Jones' fear-avoidance syndrome. The Insurer pointed to evidence given by Dr Pioc that two weeks before the hearing, he had made a recommendation to Mr Jones with respect to treatment options. The Insurer submitted that the recommended treatment involved a pain management course and that Mr Jones had not demonstrated that such treatment would not be effective. 4. The Insurer submitted that Mr Jones' prognosis was that he was likely to return to a functionality that would permit him to work. Reference was made to the lumbar spinal fusion which Mr Jones underwent in November 2014, the subsequent opinion expressed by Dr Marshman in his 28 October 2015 report, and the oral evidence given by Dr Marshman that the November 2014 spinal fusion had removed the physiological cause for Mr Jones' pain symptom, and his prognosis was generally good, but he that needed to sort out the other issues with his fear-avoidance. 5. The Insurer also submitted that the primary judge could not reasonably conclude that there was a real chance that Mr Jones would never work again. The Insurer contended that the psychological overlay of pain avoidance, if addressed by treatment, would likely ameliorate and clarify Mr Jones' prognosis and capacity. 6. Mr Jones submitted that medical evidence coming into existence after the "relevant date" is pertinent to the consideration of whether an insured has suffered total and permanent disablement. Reference was made to McArthur v Mercantile Mutual Life Insurance Co Ltd [2000] 2 Qd R 197 at [74]; and TAL Life Ltd v Shuetrim at [150]. 7. It was submitted that Mr Jones' pain avoidance mechanisms were directly related to his back injury and there was no evidence to suggest any significant change in his condition as a consequence of some supervening event. 8. Senior counsel for Mr Jones also disputed the terms of the advice given by Dr Pioc to Mr Jones two weeks prior to the hearing. It was submitted that there was no evidence that Mr Jones had been referred to a pain management course. Analysis 1. It is convenient first to address ground 7. The starting point is to note the Insurer's concession that Dr Marshman gave unchallenged evidence that Mr Jones' fear-avoidance mechanism had always been prevalent. That concession was properly made, given the unchallenged opinion by Dr Marshman in his 28 October 2015 report that: I believe that psycho-social factors, especially fear avoidance beliefs, which have been prevalent all along, may have become increasingly pre-eminent, such that they now actually predominate. 1. This may be taken to be evidence of the position as at the relevant date for the assessment of Mr Jones' incapacity, being 11 April 2012. 2. Plainly, the medical opinion expressed by Dr Marshman in October 2015 was relevant to the consideration of the probability of Mr Jones being able to engage in the suggested occupations after April 2012: TAL Life v Shuetrim at [150]; McArthur v Mercantile Mutual Life Insurance at [74]. As McPherson JA explained in McArthur v Mercantile Mutual Life Insurance at [23], this accords with "the principle that the court does not speculate when it may know". (See also Finch v Telstra Super Pty Ltd [2010] 242 CLR 254; [2010] HCA 36 at [18] in relation to a similar, but not identical, clause in a Trust Deed which provided benefits to members who had suffered a disablement.) 3. There was no error by his Honour in the way in which he dealt with the medical evidence, including Dr Marshman's October 2015 report, concerning the effect of Mr Jones' fear-avoidance on his capacity for work as at April 2012. 4. Ground 7 is not made out. 5. Turning to grounds 3 and 8, the focus of the Insurer's argument was that there was evidence that treatment was available for fear-avoidance and Mr Jones had not demonstrated that such treatment would not be effective. 6. It is necessary to briefly refer to the evidence to which the Insurer drew attention. The question of possible treatment first arose in cross-examination, when Mr Jones gave evidence that he did not recall Dr Pioc talking to him about pain avoidance. No specific time period was put to Mr Jones by the cross-examiner concerning when such advice had been given by Dr Pioc. Subsequently, Dr Pioc gave evidence in cross-examination that he had recommended Mr Jones be seen by an additional psychologist about two weeks (before the hearing). The relevant passage of Dr Pioc's cross-examination is as follows: Q. No, my question is, you have not made any recommendations with respect to treatment options as to his fear avoidance issues? A. I did that but it was just recently. It was just about two weeks ago. Q. What did you recommend that he do? A. I recommended that the patient be seen by an additional psychologist and I have made the details. Q. So you would accept, then, by reason of that recommendation that the main issue which would appear to be present in Mr Jones's presentation is this fear avoidance issue. Correct? A. I cannot confirm it as of yet, now, ma'am. I haven't really full (sic) assessed the patient … (not transcribable) … 1. Importantly, while Dr Pioc gave evidence of a recommendation to see a psychologist, there was no mention of referral of Mr Jones to a pain management course. 2. Mr Jones was later recalled for further cross-examination. However, counsel for the Insurer did not put to Mr Jones the proposition that Dr Pioc had recommended that he consult a psychologist about pain management or fear-avoidance, nor was he asked whether he intended to consult a psychologist or seek treatment for his fear-avoidance mechanisms. 3. The weight to be given to such evidence was a matter for his Honour at the second stage of the inquiry. The evidence of Dr Pioc went no higher than that he had recommended that Mr Jones be seen by another psychologist. Given the very general nature of this evidence, and the absence of any evidence suggesting that Mr Jones' fear-avoidance syndrome was likely to respond to treatment, his Honour was entitled to put this evidence aside. 4. Next, the Insurer pointed to oral evidence given by Dr Marshman that when he last saw Mr Jones on 3 February 2015, he did not recall Mr Jones complaining of back or other pain and that he considered that he was stable and his scan looked satisfactory. Dr Marshman said that he would not have discharged Mr Jones if he had any major issues. However, it does not follow, as the Insurer submitted, that treatment for Mr Jones' pain avoidance mechanisms would likely ameliorate and clarify his prognosis and capacity. Dr Marshman described the effect of Mr Jones' fear-avoidance in the following terms: A. Yeah, it's his not testing himself, I suppose, is a pretty general way of saying it. He wouldn't try to do certain things, for example, mowing the lawn or, you know, mending the wheel on a car or something that he would normally have otherwise done because of the fear that led into making the situation come back again or get worse. 1. Dr Marshman accepted that pain avoidance could initiate a vicious circle where pain is catastrophised. In response to the question of whether Mr Jones had sufficient insight into his pain avoidance issues to be able to resolve them for himself, Dr Marshman said (in reference to a consultation with Mr Jones on 22 August 2012): At that stage I obviously did, but when I saw him at a later date I did say that this still seems to be there in the background. 1. There was no evidence before his Honour that Mr Jones was going to obtain treatment for his pain avoidance mechanisms or that, even if treatment was obtained, it was likely to succeed in improving his capacity to engage in regular remunerative work, within his education, training or experience. I reject the Insurer's submission that it was not open to his Honour to find that Mr Jones satisfied the TPD definition in the policy, and the, relevantly, same definition under the trust deed. 2. Grounds 3 and 8 are not made out. Conclusion and Orders 1. The appeal has failed. There is no reason why costs should not follow the event (Uniform Civil Procedure Rules 2005 (NSW), r 42.1). I propose the following orders: 1. Appeal dismissed. 2. Appellant to pay the costs of the first respondent. ********** Amendments 15 September 2017 - Amendments made to [102], [107], [110] and [113] 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: 07 December 2018