Supreme Court New South Wales Medium Neutral Citation: Sargeant v FSS Trustee Corporation [2018] NSWSC 1997 Hearing dates: 18, 19, 20, 21, 22 June 2018 Date of orders: 21 December 2018 Decision date: 21 December 2018 Jurisdiction: Equity Before: Parker J Decision: See [136] Catchwords: INSURANCE – accident and sickness insurance – where policy taken out by trustee of superannuation fund with insurer for benefit of its members – claim for "total and permanent disablement" (TPD) benefit – benefit for TPD payable if claimant provided proof to satisfaction of insurer that he or she was so incapacitated as to be "unlikely ever" to return to employment for which he or she was reasonably qualified by education, training or experience – onus on claimant to provide proof to satisfaction of insurer INSURANCE – duties to act reasonably and in good faith – content of duties – effect of delay – where delay is the result of the claimant routinely serving new evidence on insurer – whether the insurer breached its duties by delaying the determination of the claim PRACTICE AND PROCEDURE – separate questions – insurance – claim for TPD benefit – entitlement to benefit subject on proof to insurer's satisfaction – "two stage" approach – discussion of whether the "two stage" approach is necessary in all cases – discussion of whether the Court can decide the second stage "on the papers" Legislation Cited: Evidence Act 1995 (NSW), s 79 Industrial Relations Act 1996 (NSW), s 154 Cases Cited: Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588; [2011] HCA 21 Hahn v Commissioner of Police [2014] NSWIRComm 13 Hahn v Commissioner of Police (No 2) [2014] NSWIRComm 46 Hearne v Street (2008) 235 CLR 125; [2008] HCA 36 Hellessey v MetLife Insurance Ltd [2017] 19 ANZ Insurance Cases 62-152; [2017] NSWSC 1284 Makita (Aust) Pty Ltd v Sprowles (2001) 52 NSWLR 705; [2001] NSWCA 305 Mehmet v IOOF Investment Management Ltd [2015] NSWSC 1914 MetLife Insurance Ltd v Hellessey [2018] NSWCA 307 Newling v FSS Trustee Corporation (No 2) [2018] NSWSC 1405 Shuetrim v FSS Trustee Corporation [2015] NSWSC 464 TAL Life Ltd v Shuetrim (2016) 91 NSWLR 439; [2016] NSWCA 68 Category: Principal judgment Parties: Bronwyn Sargeant (Plaintiff) FSS Trustee Corporation (First Defendant) MetLife Insurance Limited (Second Defendant) Representation: Counsel: RA Cavanagh SC/CJ Callaway (Plaintiff) M Windsor SC/P Glover (Second Defendant) Solicitors: Cardillo Gray Partners (Plaintiff) TurksLegal (Second Defendant) Submitting Appearance: FSS Trustee Corporation (First Defendant) File Number(s): 2015/86321 Publication restriction: Nil Judgment 1. These proceedings concern a claim by the plaintiff, Ms Bronwyn Sargeant, for total and permanent disability benefits under two life insurance policies. Ms Sargeant is a former officer of the New South Wales Police Force. In April 2011 she was discharged from the Force on medical grounds. 2. The first defendant, FSS Trustee Corporation ("FSS") is the trustee for the First State Superannuation Scheme ("the Fund") which provides superannuation benefits for, among others, members of the Police Force. Ms Sargeant was a member of the Fund. 3. The Crown Employees (Police Officers Death and Disability) Award 2005 provides for death, total and permanent disablement, and partial and permanent disablement benefits to be provided to NSW police officers through the Fund. As trustee, FSS provided those benefits by obtaining insurance cover for the benefit of the members of the Fund. For the purposes of this case, the relevant insurance was provided by two policies issued by the second defendant MetLife Insurance Limited ("MetLife"). The policies were issued to FSS in its capacity as trustee for the Fund. FSS is therefore the insured under the policies, but exercises its rights as insured in the interests of Ms Sargeant as the Fund member. Policy terms 1. Each of the policies is a Group Life Insurance Policy. One is known as the "Basic Policy". The other is known as the "Blue Ribbon Policy". The relevant terms of the two policies are substantially the same, if not identical. Neither party suggested that there was any relevant difference in wording. For convenience, I will refer in what follows to the terms of the Blue Ribbon Policy without setting out the corresponding terms of the Basic Policy. 2. The insuring clause in the Blue Ribbon Policy provided: If an Insured Member: (a) dies; (b) suffers TPD; or (c) suffers from a Terminal Illness on or after 1 July 2008, while this policy is in force, subject to the provisions of this policy, we will pay to the policy owner the sum insured in respect of the insured member, subject to clause 2. 1. The Policy is triggered by the happening of an Insured Event. That term was defined as meaning: an illness (including sickness, disease or disorder) suffered, or, bodily injury occurring, to a Police Officer while an Insured Member. 1. Two levels of benefit are provided by the Policy: The Sum Insured will be determined as being payable on the On-Duty or Off-Duty basis according to whether the Insured Member was On-Duty or Off-Duty at the time that the Insured Event giving rise to the claim occurred. An illness which is contracted by the Insured Member in the course of Employment is an Insured Event which occurred On-Duty. Where an Insured Member's illness is aggravated, accelerated, exacerbated or is subject to deterioration, and the insured Member's Employment while covered as an Insured Member was a substantial contributing factor to such aggravation, acceleration, exacerbation or deterioration, the illness is an Insured Event which occurred On-Duty. Ms Sargeant's claim is for an On-Duty TPD benefit. 1. The term "TPD" is defined as "Total and Permanent Disablement" in the following terms: TOTAL AND PERMANENT DISABLEMENT While covered under this policy, Total and Permanent Disablement shall have the following meaning: (a) The Insured Member suffering the loss of use of two limbs or the sight of both eyes or the loss of use of one limb and the sight of one eye (where limb is defined as the whole hand or the whole foot), or (b) In the case of an Insured Member whose Normal Hours are 15 hours each week or more at the time of the Insured Event giving rise to the claim – the Insured Member having been absent from their Occupation with the Employer through injury or illness for six consecutive months and having provided proof to our satisfaction that the Insured Member has become incapacitated to such an extent as to render the Insured Member unlikely ever to engage in any gainful profession, trade or occupation for which the Insured Member is reasonably qualified by reason of education, training or experience. (c) In the case of an Insured Member whose Normal Hours are less than 15 hours each week at the time of the Insured Event giving rise to the claim – the Insured Member, because of injury or illness becomes permanently unable to perform the basis activities normally undertaken as part of everyday life. This will be evidenced by being unable to undertake any two of the activities listed below: (i) Bathing – to shower or bathe (ii) Dressing – to dress or undress (iii) Toileting – to use the toilet including getting on and off (iv) Feeding – to eat & drink (v) Mobility – to get in or out of their wheelchair (vi) Continence – to control bladder and bowel function If the Insured Member can perform the activity on their own by using special equipment the Insured Member will not be considered unable to perform the activity. 1. Sub-paragraph (b) is the relevant part of the definition for present purposes. It requires that the Insured Member have been absent from their occupation through injury or illness for six consecutive months. Ms Sargeant ceased work as a result of her injury on 19 February 2010 and, as events turned out, did not return to work. 2. The six month period referred to in sub-paragraph (b) expired on 18 August 2010. It was agreed between the parties that the question whether Ms Sargeant satisfied the requirements of sub-paragraph (b) was to be determined as at that date, even though the actual assessment might (and in this case, did) take place after that date. 3. It follows that the underlying issue, as now agreed between the parties, is whether Ms Sargeant had, as at 18 August 2010, "through injury or illness … become incapacitated to such an extent as to render [her] unlikely ever to engage in any gainful profession, trade or occupation for which [she was then] reasonably qualified by reason of education, training or experience". Ms Sargeant was required to provide "proof to [MetLife's] satisfaction" of this. 4. Clause 7 of the Policy deals with claims. Clause 7.3 provided: 7.3 It is a condition of payment of any Benefit that the Insured Member provides us with such evidence to substantiate the claim as we may reasonably require. The Insured Member must submit at our expense to a medical examination conducted by a legally qualified medical practitioner appointed by us as we deem necessary. Satisfactory proof of age may be required prior to any payment of Benefits. 1. Clause 9 of the Policy deals with disputed benefits. It relevantly provides: 9.1 Where we do not agree with the Policyowner about paying a Benefit, or the Policyowner or an Insured Member disputes a decision in relation to payment of a Benefit or application for insurance cover, that dispute must be referred to the Claims Review Committee. 9.2 The Claims Review Committee shall consist of one representative of the Policyowner, our representative and one independent representative as agreed between the Policyowner and us or, failing agreement, to be nominated by the Chief Executive for the time being of the Financial Ombudsman Service. 9.3 We will abide by the decision of the Claims Review Committee. Issues for determination 1. Usually, in a case such as the present, trust law would require the trustee, who is the insured, to bring any proceedings against the insurer under the policy; the member beneficiary would have no standing to do so. But, as explained in TAL Life Ltd v Shuetrim (2016) 91 NSWLR 439; [2016] NSWCA 68 at [53]-[55], claims of the type made in this case are a recognised exception to this general rule. In effect, Ms Sargeant as plaintiff sues in these proceedings to enforce the rights of FSS as insured, on the basis that if she is successful MetLife will pay the benefit to FSS who will then account for it to Ms Sargeant. FSS played no active part in the hearing. No point was taken about this by MetLife. 2. It is common ground that Ms Sargeant's claim under the policy must be analysed in accordance with the "two stage" approach described in Shuetrim at [157]-[158]. The terms of the policy do not require MetLife to pay unless proof to its satisfaction has been presented that the claim is valid. MetLife has not formed any such view. The first stage of the analysis requires that Ms Sargeant demonstrate that MetLife's failure to be so satisfied results from a breach of its obligations as insurer. If, but only if, this is established, the Court moves to the second stage of determining whether the conditions of the policy were in fact satisfied (describing the second stage in this way is sufficient for present purposes but may involve an oversimplification: see [131] below). 3. These proceedings originated in the Industrial Court in March 2014. The Court's jurisdiction was challenged and the proceedings were transferred to this Court in March 2015. The transfer was opposed, MetLife contending the proceedings were a complete nullity and therefore could not be transferred to this Court, but nothing turns on this except, potentially, costs. It did not affect the progress of proceedings in this Court. 4. A Statement of Claim was filed on behalf of Ms Sargeant in September 2015. The case was fixed for hearing by the Registrar in July 2017. It came on for hearing before me in June 2018. 5. Ms Sargeant's claim under the policy was lodged in June 2011. When the proceedings were fixed for hearing in 2017, MetLife had still not made a formal decision on the claim. I was informed by the parties that in May 2018, about three weeks before the hearing was to commence, MetLife purported to make a decision rejecting the application. This decision is not the subject of evidence before me. 6. It is common ground that MetLife owed an obligation of good faith and reasonableness in handling Ms Sargeant's claim. Ms Sargeant's contention is that this obligation required MetLife to determine the claim long before May 2018 and, as a result, the purported determination in May 2018 was invalid. Ms Sargeant contends that MetLife's obligations of good faith and reasonableness required the claim to be determined by 3 September 2015 (the day after Ms Sargeant's Statement of Claim was filed in this Court) or, at the latest, within 12 months from that date (3 September 2016). 7. The case was prepared for hearing on the basis that the Court would determine all issues at a single hearing. That is, the Court would determine whether MetLife breached its obligations of good faith and reasonableness in handling the claim (first stage) and, if so, whether Ms Sargeant was entitled to the benefits claimed under the policy (second stage). Lay evidence as to the merits of the claim, together with expert evidence on both sides, was filed, and a five day hearing period was allocated. 8. But in the course of the hearing, the parties' position changed. Counsel for Ms Sargeant submitted that if she proved successful in the first stage, the second stage should be determined "on the papers". The contention was that the Court should find, without the need to hear oral evidence from any lay or expert witnesses, that the material before MetLife established Ms Sargeant's entitlement to the benefits under the policies. Counsel for MetLife disputed this analysis, contending that if Ms Sargeant succeeded on the first stage, there would need to be a full second stage hearing. 9. By the time these matters had been exposed in argument, it appeared to be unlikely the hearing, if it included cross-examination on the affidavit evidence and expert reports filed in the proceedings, would be completed within the five day period. The parties accordingly agreed for the Court to make an order for the separate determination of preliminary questions. The questions, as agreed, were as follows: 1. Did the Second Defendant act in breach of its obligations in failing to make any decision on the Plaintiff's claim under the Blue Ribbon and Basic policies on or before 3 September 2015? 2. In the alternative did the Second Defendant act in breach of its obligations in failing to make any decision on the Plaintiff's claim under the Blue Ribbon and Basic policies on or before 3 September 2016? Plaintiff's further questions (after 1 and 2): 3. Had the Plaintiff provided proof which should have satisfied the Second Defendant acting reasonably of her entitlement to the TPD benefits under the policies before 3 September 2015? 4. In the alternative, had the Plaintiff provided proof which should have satisfied the Second Defendant acting reasonably of her entitlement to the TPD benefits under the policies before 3 September 2016? 5. Should the Second Defendant have made a decision to pay the benefits either at some time before 3 September 2015 or at some time in the next 12 months? 6. Is the plaintiff entitled to payment of the benefit in accordance with prayers (xii) and (xiii) [of the Statement of Claim]? 7. If entitled to payment of the benefit is the Plaintiff entitled to an order in accordance with prayer (xvi) that the Second Defendant pay interest to the Plaintiff assessed under the Insurance Contracts Act, 1984 and if so from what date? Defendant's further questions (after 1 and 2) 1. If 'No' to Question 1 or 2, does the Court enter Judgment for the Second Defendant? 2. If 'Yes' to Question 1, whether in determining if the plaintiff is 'TPD' within the terms of the Policies, does the Court consider evidence not available to the Second Defendant as at the date of breaches (if any). 1. Counsel for Ms Sargeant accepted that if she failed on questions one and two, the proceedings should be dismissed. Counsel did not seek to preserve an entitlement, in these proceedings, to challenge MetLife's decision of May 2018. Accordingly, MetLife's further question number one does not need to be addressed. Summary and analysis of evidence 1. Ms Sargeant was born in June 1972. She worked in a number of administrative jobs and started training for the Police Force in May 2002. She graduated in December 2002 and was assigned to general duties. In December 2007, she was promoted to Senior Constable and joined the detectives branch of the Force. She became a Detective Senior Constable in June 2009. 2. In November 2009, Ms Sargeant was living with her family near Port Macquarie performing general duties with the Manning-Great Lakes Area Command, based at Taree. She was one of several officers called out to rescue some men on a boat which was sinking near a breakwater. The men on the boat, who had apparently been drinking, had to be helped off the boat and onto the breakwater. They were abusive and uncooperative. While climbing along the breakwater, Ms Sargeant fell when climbing over boulders; she also had to help lift the men off the boat. Later that night, and the next day, severe pain developed in her lower back. She was unable to work and went on sick leave. 3. Ms Sargeant returned to work in January 2010 on light duties but complained of flare-up of pain in her back. As already stated, her last day of service with the Police Force was 19 February. 4. Ms Sargeant was initially treated for her back pain by her general practitioner, Dr Kylie Lucas. She underwent CTs and an MRI on her spine. The CTs showed some disc bulging. In May 2010 she was referred to a specialist neurosurgeon, Dr Brindha Shivalingham. Dr Shivalingham reported to Dr Lucas that the MRI was "absolutely clear" and showed no disc prolapse or nerve impingement. It thus did not explain the severe and significant pain reported by Ms Sargeant. One possibility was that Ms Sargeant had piriformis syndrome. This is the name given to a condition believed to result from compression of the sciatic nerve by the piriformis muscle, one of the muscles in the buttocks. 5. Dr Shivalingham concluded: Therefore unfortunately today, I do not have a solution for Bronwyn. It is extremely difficult when you have someone in significant pain without an obvious cause. Bronwyn understands that I do not have a solution for her problem. If it is a piriformis syndrome then the only option is to continue with intensive physiotherapy. 1. In June Ms Sargeant underwent a CT-guided hydrocortisone injection into her piriformis muscle but this was ineffective and she suffered an allergic reaction. She was then referred to pain management classes. 2. From March 2010, Ms Sargeant had been complaining of depression as a result of her pain. In July she was referred to Shirley Liffman, a psychologist at Taree. Ms Liffman describes herself as a "clinical psychologist". She holds bachelor's and master's degrees in psychology. 3. In September 2010, for workers compensation purposes, Ms Sargeant was referred by the Police Force to Dr John Bentivoglio, an orthopaedic surgeon. Dr Bentivoglio said that the CT and MRI investigation showed that she had not sustained any damage to her lumber spine. He said she might well have symptoms coming from somewhere but had not sustained spinal damage. He said his physical examination did not support her diagnosis of piriformis syndrome and that there were some signs that Ms Sargeant was exaggerating her complaints. His opinion was that, so far as Ms Sargeant's spinal and orthopaedic condition was concerned, she did not have any impairment and would be "perfectly capable of performing her full pre-injury duties". 4. In November 2010, Ms Sargeant was referred by the Police Force to Professor Noel Dan, a neurosurgeon. Professor Dan strongly believed that Ms Sargeant had piriformis syndrome. He recommended investigations to confirm and localise the diagnosis. He referred to Dr Bentivoglio's report. He said he did not agree that Ms Sargeant presented in a manner which exaggerated her complaints. His opinion was that she would not be able to return to any duties and certainly not her pre-injury duties; if a correctable lesion was not identified Professor Dan believed that Ms Sargeant was permanently incapacitated to return to work with the Police Force. He said that should no correctable pathology be identified or should the treatment be unsuccessful, he would recommend her medical discharge. 5. In late January 2011, Ms Sargeant underwent a further MRI of her right hip. The radiologist, Dr Alisdair Robertson, reported to Dr Lucas observations of fibris bands and anatomic variation of piriformis muscle and thickening of the sciatic nerve which he considered was suggestive of sciatic nerve irritation and piriformis syndrome. 6. Ms Sargeant later reported to Dr Paul (see [43] below) that once the diagnosis of piriformis syndrome was confirmed, the workers compensation insurer ceased funding treatment. Dr Paul reported that this happened around late 2010. The evidence did not explain why this was. 7. At around this time, Ms Sargeant retained Stuart Gray, solicitor, to advise her on her workers compensation rights and rights under the TPD policies. Mr Gray was then with a firm of solicitors in Newcastle, Harris Wheeler ("HW"). 8. Mr Gray obtained a report from Dr AJ Bookallil, a neurosurgeon, in April 2011. The report was obtained for the purposes of what Dr Bookallil referred to as Ms Sargeant's "workers compensation claim". Dr Bookallil's diagnosis was that: There has probably been sciatic nerve damage in the numerous falls and this could be described as a piriformis syndrome. 1. The preparation of Ms Sargeant's insurance claim apparently began in about April 2011 when she obtained a medical discharge from the Police Force. The claim was lodged on 23 June. It was supported by a form entitled "Statement of Claim" and completed by Ms Sargeant. Ms Sargeant described her injury as: Disc prolapse with right nerve impingement Piriformis syndrome/scarred sciatic nerve 1. Ms Sargeant's claim was also supported by two FSS forms headed "Confidential Medical Report on Permanent Incapacity" completed by Dr Lucas and Professor Dan. Dr Lucas described the present diagnosis as right side piriformis syndrome and depression. Under "Current Incapacity" Professor Dan referred to Ms Sargeant's condition as being piriformis syndrome. Each doctor indicated, by marking a box on the form, that in his or her opinion Ms Sargeant would never be able to be employed in her normal occupation and would never be able to be employed in any form of paid occupation, due to her incapacity. 2. FSS forwarded the claim to MetLife with a large volume of associated employment and medical material. The medical material included records of Ms Sargeant's GP attendances; reports of Dr Shivalingham and Professor Dan; and reports on the CT and MRI scans, including that of Dr Robertson. 3. In response to the claim, MetLife obtained a report from Dr Lucas. Dr Lucas provided this report in July 2011. She described Ms Sargeant as having chronic but stable back pain and, consequent upon this injury, "severe reactive depression" for which she was taking an anti-depressant and attending counselling with Ms Liffman. Dr Lucas also referred to pain having developed in Ms Sargeant's left elbow more recently, which Dr Lucas thought had been exacerbated by her chronic pain state. Dr Lucas' opinion was that Ms Sargeant was not currently fit for work and that she would be unable, indefinitely, to return to work. 4. MetLife also retained its own experts in response to the claim. MetLife obtained reports from Dr Matthew Paul, an occupational physician; Professor Michael Robertson, a psychiatrist (not to be confused with Dr Alisdair Robertson, the radiologist); and a vocational assessment report from a company called Purple Co Pty Limited ("Purple Co"). The Purple Co report was prepared by Ms Jo Muirhead, an injury management consultant. 5. Ms Muirhead's report for Purple Co was completed in August 2011. Her report identified twenty-eight different occupations which Ms Muirhead thought would suit Ms Sargeant's skills based on her work career. It contained only limited information, however, on whether such work was available. 6. Dr Paul's report was completed in April 2012. Dr Paul diagnosed Ms Sargeant as having piriformis syndrome, depression and bilateral elbow pain. In his opinion, Ms Sargeant was fit to attempt to a graduated return to work in a light sedentary role. He thought that initially she was fit to return for eight hours a week but this could slowly be increased to twenty hours a week over a period of three to six months. Dr Paul believed that Ms Sargeant required independent psychiatric assessment to confirm the diagnosis of depression. He thought that from a physical perspective she required no further treatment other than vocational rehabilitation and return to work. 7. Dr Paul recorded that Ms Sargeant had professed a desire to return to work but felt she was unable to work on the basis of the medical opinions that had been obtained. Dr Paul thought her motivation appeared questionable and that her delay in returning to work might be effected by behaviour or motivational aspects. He thought it was possible that secondary gain (that is, financial benefits from her claim) was possibly perpetuating her current status and presentation. In this regard he noted what Dr Bentivoglio had said in his report. 8. Dr Paul doubted that Ms Sargeant would achieve full recovery and thought it was likely that she would have ongoing pain for the foreseeable future but that her tolerance of pain and level of function should be expected to improve over time. In his opinion, return to work should be included as part of her rehabilitation. He thought she could be expected to be able to return to full-time light sedentary work within twelve months. 9. Professor Robertson's report was completed in May 2012. He described Ms Sargeant as presenting with a "chronic adjustment disorder with mixed disturbances of depression and anxiety". This was secondary to her chronic pain that was the predominant cause of any work impairment. 10. Professor Robertson agreed with Dr Paul about the presence of a "pain disorder". Professor Robertson thought this was evident both from a "disproportionate level of disability" and "the presence of pain-rewarding behaviours". He believed that Ms Sargeant's psychiatric symptoms, while having a synergistic effect with her pain, were not a substantive barrier to her work, because any restrictions on her ability to work were attributable to pain. 11. Professor Robertson said that Ms Sargeant appeared resigned to her disability and this was consistent with a pain disorder. This was not a lack of motivation but rather the effects of a psychosomatic condition. He thought that she did not have any limitation on her ability to work based on her mood or anxiety symptoms. Further intervention was required and Professor Robertson was not able to put any time for return to work as this depended on experience of chronic pain. 12. In August 2012, Dr Lucas provided a report responding to Dr Paul and Dr Robertson. Dr Lucas maintained her earlier view that Ms Sargeant satisfied the TPD definition. 13. On 18 September 2012, MetLife retained a private investigation firm, AHC Investigations, to conduct surveillance. AHC identified from Facebook pages that Ms Sargeant was mentioned as the club "Registrar" and "Registrar (Competition)" for a local surf lifesaving club. Surveillance was carried out between 21 and 24 September. On 24 September Ms Sargeant was seen attending an iron man or paddling training event with two other people, apparently her husband and son. 14. On 25 September, one of MetLife's claims assessors sent FSS a list of questions to be forwarded to Ms Sargeant about her involvement with the surf lifesaving club. Ms Sargeant wrote a letter to FSS on that issue denying that she held any paid or official position with the club. She said that both of her children were heavily involved in surf lifesaving. She said she attended surf lifesaving events so as not to let her injury interfere with her children's lives, but had to heavily medicate herself in order to do so. 15. Ms Sargeant's response was delayed due to a transmission error and MetLife did not receive it until early November. In the meantime, MetLife had further surveillance done by another private investigation firm, Brooksight Investigations. Some further footage of Ms Sargeant was obtained. 16. In December 2012, MetLife issued what was referred to by the parties as a "procedural fairness" letter. Before the letter was issued to Ms Sargeant, it was discussed between representatives of MetLife and FSS. The letter included two lists, one was a list of material to which MetLife would have regard in addressing the claim, the other was a list of potentially adverse material. There was apparently some discussion about what material should be included in the adverse material list. The letter itself appears to have been issued on or about 17 December (a version dated 5 December is in evidence, but that appears to be a draft). The response time was extended until early March to allow Ms Sargeant's solicitors, HW, to reply. 17. Early in March 2013, HW, acting for Ms Sargeant, wrote to FSS responding to the "procedural fairness" letter. The letter took issue with the conclusions of Dr Robertson and Dr Paul. HW also argued that the surveillance footage showed nothing unexpected and the recommendations in the skills analysis report by Ms Muirhead were "broad brush and quite misleading". The letter enclosed two reports by Dr Lucas, clinical notes of Dr Lucas and Ms Liffman and reports by Dr Shivalingham, Professor Dan and Dr Bookallil, CTs, MRIs, and other material including a statement from Ms Sargeant. The letter referred to HW having sought a report from Ms Liffman and reserving the right to submit this report if it became available within 21 days. The report was subsequently submitted early in April. 18. Ms Liffman's report, prepared in March 2013, referred to Ms Sargeant's initial session as having taken place in May 2011. Ms Liffman reported that Ms Sargeant attended eight sessions in 2011 and a further session in February 2013. No mention was made of the referral which took place in July 2010 (see [30] above). 19. Ms Liffman recorded Ms Sargeant's reported experience of frequent severe pain in her lower back and shoulder and also symptoms consistent with major depressive disorder. Ms Liffman added that Ms Sargeant reported "clinically significant anxiety symptoms consistent with a diagnosis with post-traumatic stress disorder (chronic)". These included intrusive memories of traumatic events during Ms Sargeant's work as a police officer, anxiety concerning the safety of her children, and panic when viewing television news stories reminding her of previous work in the Police Force. Ms Liffman also recorded that Ms Sargeant reported anxiety about leaving the house which she said had been triggered by an incident where an investigator employed by her WorkCover insurer asked her questions about being employed by a local school, but which had apparently been a case of mistaken identity. Ms Liffman's opinion was that work would preclude Ms Sargeant from carrying out her activities of daily living at home and undertaking exercise and family interaction. 20. MetLife then obtained a further report from Dr Paul. The report was completed in June 2013. For the purpose of the report, Dr Paul was provided with surveillance footage from September/October 2012. He thought that the surveillance material appeared to contradict what he had been told by Ms Sargeant when she saw him in March 2012 for the purpose of the first report. He said there appeared to be no sign of physical impairment and Ms Sargeant appeared to be socially and physically active. He said he believed from the footage she was fit for full-time work without the need for any specific restriction. 21. MetLife also obtained a report, described as a "labour market analysis", from an organisation called Rehab Management. A report was completed in July 2013. It stated that there were limited jobs for reception and administrative assistance but identified seven positions for reception or administrative/clerical roles. 22. MetLife obtained further supplementary reports from Dr Lucas and Ms Liffman. Dr Lucas' report, issued in June 2013, answered a number of specific questions but she was not asked for, and did not give, any further details of diagnostic or other opinions. Ms Liffman's report, issued in September 2013, referred to her March 2013 report, repeating that Ms Sargeant qualified for a diagnosis of chronic post-traumatic stress disorder. Ms Liffman referred to the then recently published DSM-V, stating how Ms Sargeant's reported symptoms satisfied the DSM-V criteria for PTSD. 23. In March 2014 MetLife issued a further "procedural fairness" letter. The letter, which was dated 3 March, set out what it described as "new information" which "should properly" be put to Ms Sargeant. This included Dr Lucas' June 2013 report; Dr Paul's June 2013 report; the July 2013 Rehab Management Labour Market Research report; and Ms Liffman's September 2013 report. 24. On 19 March HW filed proceedings on behalf of Ms Sargeant in the Industrial Court of New South Wales. The Court was formerly the Industrial Relations Commission in Court Session and I will refer to it as the "IRC". Ms Sargeant's proceedings took the form of an application for a declaration pursuant to the Industrial Relations Act 1996 (NSW), s 154 (a provision, since repealed, which conferred power on the IRC to make binding declarations of right "in relation to" a matter in which the IRC had jurisdiction). 25. The application sought declarations that Ms Sargeant was totally and permanently disabled for the purposes of cl 3 of the Award and cl 6(b) of the Blue Ribbon Policy. Among other orders, a "declaration" was sought that MetLife pay the amount of the benefit to FSS, and a further "declaration" was sought that FSS pay the amount, once received from MetLife, to Ms Sargeant. 26. Ms Sargeant's proceedings named the Commissioner of Police as first respondent, MetLife as second respondent and FSS as the third respondent. MetLife retained Turks Legal to represent it in the proceedings. The Commissioner of Police and FSS were also represented. 27. Ms Sargeant's was one of a number of applications made to the IRC, in which HW was acting for former police officers who were seeking the payment of claimed benefits under the police TPD insurance scheme, and where MetLife was the insurer. At the time Ms Sargeant's proceedings were begun, MetLife had made applications in four of those matters challenging the jurisdiction of the IRC. The applications had come before Boland AJ for argument, and he had reserved his decision. 28. It was agreed between the solicitors for the parties that Ms Sargeant's IRC application should be stood over until the decision on jurisdiction was handed down. On 10 April Boland AJ handed down his judgment. The judgment was inconclusive and the proceedings were stood over: Hahn v Commissioner of Police [2014] NSWIRComm 13. 29. A few days afterwards, on 16 April, HW responded (via FSS) to MetLife's second "procedural fairness" letter. The response was more than seven pages long. It canvassed the medical opinion, labour market analysis and the surveillance. It enclosed a further statement from Ms Sargeant responding to the surveillance in detail, and Ms Liffman's reports of 27 March and 12 September. 30. There appears to have been no response from MetLife to HW's letter of 16 April for more than three months. On 29 July Ms Sargeant wrote to Greg Laws, the claims assessor at MetLife, complaining about the delay in determining her claim. Ms Sargeant asserted that the "majority of medical evidence" confirmed that she had a total and permanent disability. Ms Sargeant asserted that MetLife had been obtaining evidence to deny the claim rather than accepting the evidence "that is available to the CRC". She called upon MetLife to accept the claim. 31. On 25 August, MetLife replied to Ms Sargeant's letter of 29 July. MetLife's letter acknowledged that there had been delays in assessment of the claim and offered apologies to Ms Sargeant for that. The letter stated that referral to the CRC was a matter for "the Fund" (presumably a reference to FSS) to address. It continued: CURRENT STATUS We confirm that the claim has been referred for a Management Review which is indicative of likely decision being reached in relation to the Member's claim. We will notify the Fund of the outcome of this review and or any further requirements in relation to the Member's claim. INQUIRIES AND COMPLAINTS PROCESS If you remain dissatisfied with our decision, you may contact the Financial Ombudsman Service. A referral to the Financial Ombudsman Service must be made within 2 years from the date of this letter. The Financial Ombudsman Service is an independent body which provides free assistance for consumers. The letter went on to give contact details for the Financial Ombudsman Service. 1. Meanwhile, the jurisdictional challenge returned for further argument before Boland AJ on 1 August. The lead applicant, Mr Hahn, now wished to have his proceedings transferred to the Supreme Court. MetLife opposed this course, on the ground that the IRC lacked jurisdiction to hear the proceedings at all, and therefore could not make a transfer order. Boland AJ delivered his decision on 29 August. He rejected MetLife's contention and made the transfer order in Mr Hahn's matter. The other three applications remained, pending further argument, in the IRC: Hahn v Commissioner of Police (No 2) [2014] NSWIRComm 46. 2. There was no evidence before me about the course of the management review referred to in MetLife's letter of 25 August 2014. Nor was any action taken by FSS or Ms Sargeant to refer the claim to the CRC as had been adverted to in that letter. 3. On 6 March 2015, Ms Sargeant's application was listed for mention in the IRC. The IRC ordered that the proceedings be transferred to the Supreme Court. There is no evidence about when the decision to apply for the proceedings to be transferred was taken, or whether there were any communications between the representatives of Ms Sargeant and MetLife on that question. 4. On 23 June Mr Gray wrote a letter directly to MetLife. The letter was headed with a reference to the IRC proceedings (now transferred to this Court). The letter stated that HW acted for Ms Sargeant and enclosed five medical reports "by way of service upon you, for your consideration". 5. Among the reports was one from Dr Alexander Murray, a consultant psychiatrist. The report was dated 30 May 2015 and addressed to EML, the workers compensation insurer. Dr Murray stated that Ms Sargeant had been referred to him by Dr Lucas; it appears that this had been in February 2015. The report referred to twenty-one earlier medical reports. It quoted from a report from a Dr Pavan Bhandari dated December 2014, which referred to an earlier report by a Dr Hynes dated March 2014. Dr Bhandari apparently diagnosed Ms Sargeant as suffering from Major Depressive Disorder, and said that she might also suffer from PTSD but symptoms of that condition were not apparent. Dr Murray found this surprising "given the number of police Dr Bhandari sees". 6. Dr Murray's opinion was that Ms Sargeant had chronic pain and disability and as a result had been significantly depressed. He said she also suffered PTSD as a result of "cumulative exposure to psychologically injurious material over years of service" with the Police Force. He noted that Ms Sargeant was "running the gauntlet of TPD assessment" and appeared to have been under surveillance. He said that she seemed to have a "high level of pain behaviour" which he said in the circumstances was "hardly surprising". 7. Another report served under cover of the letter of 23 June was from Dr Jeff Bertucen, a consultant psychiatrist. The report had been provided to HW earlier in June. His diagnosis of Ms Sargeant was that she was suffering from PTSD and "co-morbid major depressive disorder which is complicated by chronic pelvic pain". He said that prognosis was uncertain given that Ms Sargeant had only recently engaged in therapy with Dr Murray and commenced a pharmacological regime. 8. Dr Bertucen said he was unable to provide an accurate estimate of Ms Sargeant's degree of permanent impairment at the time of the report and suggested that she be reviewed again at a more advanced stage of her treatment. He said it would be difficult for Ms Sargeant to find and maintain gainful employment in the open labour market. She might be able to work part time in a quiet sedentary environment (for example, a book store) but this was speculative and depended upon the effects of treatment over the next six to nine months. 9. HW's letter also enclosed Dr Bookallil's report from April 2011 (see [36] above) and Ms Liffman's reports of March and September 2013 (see [55] and [59] above respectively). MetLife already held these reports. 10. On 30 June the proceedings came before this Court for the first time, for the purposes of directions by the Common Law Registrar. Orders were made, presumably by consent, for a Statement of Claim to be filed on behalf of Ms Sargeant by 21 July and for the proceedings to be transferred to the Equity Division. 11. On 9 July HW sent a further letter to the "Proper Officer" of FSS serving medical reports. Again the letter was headed with a reference to "Bronwyn Sargeant v NSW Police Force & Ors", although there was no reference to the matter number. The letter stated that HW acted on behalf of Ms Sargeant and enclosed "by way of service" two medical reports of Dr Murray dated 2 July and 7 July. 12. Dr Murray's report of 2 July was to Dr Lucas. It dealt with the prescription of medication to treat her psychiatric condition. The report of 7 July was addressed to Mr Gray and supplemented his report of 30 May. In particular, Dr Murray referred to Dr Bertucen's June report. Dr Murray said he was less optimistic than Dr Burtucen about Ms Sargeant's prognosis. Dr Murray said he could not imagine reaching the point where she was able to compete successfully against uninjured and unimpaired applicants for work unless such work was very far below her uninjured capacities (that is, well below her education, training and experience). 13. Meanwhile, Ms Sargeant's Statement of Claim had not been filed in accordance with the Court's directions. On 28 July the proceedings were stood over to 7 September with a fresh timetable. 14. On 13 August Ms Sarika Sud of Turks wrote to Mr Gray. The letter was headed with a reference to the proceedings brought by Ms Sargeant. Ms Sud referred to Mr Gray's letter dated 9 July "addressed to MetLife" (I assume this is a mistake and is a reference to the letter of 9 July addressed to FSS). Ms Sud asked for a copy of the letter of instruction to Dr Murray and the documents provided to him as referred to in his report. It stated: In absence of MetLife being provided such material, MetLife will not be positioned to consider the reports of Dr Murray. 1. On 14 August Mr Gray replied to Ms Sud by email attaching the letter of instructions from Dr Murray together with two other medical reports which he described as being enclosed "by way of service". The letter stated: Whilst we do not agree or concede the necessity for such consent, we consent to your client considering the above material in determining our client's claim. 1. This email was sent at 12.17 pm. At 2.15 pm that afternoon Mr Gray sent a further email to Fiona Hanlon, the partner at Turks responsible for the conduct of the proceedings on behalf of MetLife. The letter attached a copy of the letter of instructions to Dr Murray and stated: We consent to your client considering same as part of the determination process of our client's claim. 1. In the meantime Mr Gray had obtained a report from a new expert, Professor Geoffrey Boyce, a neurologist. Professor Boyce's report was delivered to Mr Gray by email that day. At 12.57 pm Mr Gray sent a further email to Ms Sud enclosing the report "by way of service". The email again stated: Whilst we do not agree or concede the necessity for such consent, we consent to your client considering the above material in determining our client's claim. 1. Professor Boyce's opinion was that Ms Sargeant had piriformis syndrome. He thought her prognosis was for chronic neuropathic pain. From the questions asked, it appears that Professor Boyce's report may have been prepared for the purpose of a workers compensation claim. There were no questions directed specifically towards the conditions in the Blue Ribbon Policy. 2. On 21 August Ms Sud responded to the service of Professor Boyce's report by letter. The letter sought copies of all material forwarded to Professor Boyce including the letter of instruction. It again stated: In absence of MetLife being provided such material, MetLife will not be positioned to consider the report of Dr Boyce. 1. On 2 September Mr Gray wrote on HW letterhead to Ms Sud enclosing a copy of the letter of instruction to Professor Boyce and attachments. The letter was headed: Bronwyn Sargeant – Workers Compensation Claim Registered number 38518 DOB 30/6/72 1. Further report of Dr Murray dated 27 August 2015 was sent under a letter dated 28 August with the same heading. The report was addressed to Mr Gray. It "confirmed" Dr Murray's opinion that Ms Sargeant satisfied the definition of TPD for the purposes of the Blue Ribbon Policy. 2. Ms Sargeant's Statement of Claim in these proceedings was filed on 2 September. That Statement of Claim alleged that the failure by MetLife to pay the TPD benefits was a breach of the terms of the policies, on the basis, so it was alleged, that MetLife should have determined that Ms Sargeant satisfied the TPD definition in the policies. In particular, it was alleged that Ms Sargeant provided proof to the satisfaction of MetLife, "such satisfaction being reasonably determined", that she satisfied the TPD definition. 3. The Statement of Claim also pleaded that MetLife owed a duty of good faith and fair dealing towards Ms Sargeant, and that the failure by MetLife "to properly determine the claim" and the conduct of the claim by MetLife up to the date of the filing of the Statement of Claim constituted a breach of that duty. The particulars of this allegation were as follows: (i) the Second Defendant has failed to make an informed, timely and reasonable decision; (ii) the Second Defendant has failed to give due and proper consideration to the Plaintiff's claim; (iii) the Second Defendant has failed to have regard to the interests of the Plaintiff in considering and assessing the Plaintiff's claim; (iv) despite being provided with sufficient evidence that the Plaintiff satisfied the definitions of TPD in the Policies, the Second Defendant has failed to pay the benefits; (v) despite obtaining its own medical evidence which supported payment of the TPD benefits under the Policies, the Second Defendant has failed to pay the benefits; (vi) despite being in receipt of sufficient information to satisfy the definitions of TPD and entitle the Plaintiff to payment of the TPD benefits, the Second Defendant continued to carry out enquiries into the condition of the Plaintiff; (vii) Conducting litigation without reference to the interests of the Plaintiff in circumstances where the Second Defendant had in its possession sufficient information to satisfy the definitions of TPD and entitled the Plaintiff to payment of the TPD benefits. 1. The Statement of Claim went on to plead that this conduct on MetLife's part had caused loss and damage to the plaintiff in the form of non-payment of the benefit and "distress and anxiety". 2. On 29 October HW served a further report from Dr Ash Takyar, a psychiatrist. The letter was addressed to "The Proper Officer" of MetLife at its address in Park Street, Sydney, but was headed with a reference to the proceedings. The letter stated that the report was being provided "by way of service" and stated that HW looked forward to hearing from MetLife in due course. This report from Dr Takyar is not in evidence, but a later report, dated August 2016, is. From the later report, it appears that Dr Takyar's October 2015 report noted a diagnosis of PTSD, panic attacks with agoraphobia, and a chronic major depressive disorder. 3. The service of Dr Takyar's report resulted in a letter to Mr Gray from Max Hardy, who had taken over handling the matter from Ms Sud at Turks. On 6 November Mr Hardy wrote to Mr Gray as follows: I refer to the report of Dr Takyar served under cover of your letter dated 4 November 2015. Noting that my client's assessment of the plaintiff's TPD claim is ongoing, can you please indicate whether this report is served for the purposes of the proceedings only, or also provided in support of the TPD claim. I would be grateful if you could provide me with copies of your "letters of referral" dated 3 September 2015 and 28 May 2015. 1. Mr Gray responded by email later that afternoon. The email stated: It was served. That the report was served speaks for itself. If your client chooses to take it into account or ignore same is a matter for them. Please do not respond with some general reference to Hearne v Street as the principle therein are [sic] clearly not understood by your client. 1. Mr Gray's reference to Hearne v Street ((2008) 235 CLR 125; [2008] HCA 36) indicates that there must have been some discussion between the solicitors about the rule that documents obtained on discovery or subpoena in legal proceedings, and statements served for the purposes of legal proceedings, may be used only for the purposes of those proceedings. On 25 November Mr Hardy wrote to the Registrar, with a copy to Mr Gray and the representatives of the other parties, as follows: I act for the second defendant in the above matter. The other active parties to these proceedings are aware of, and join us in this application for consent orders, and have been copied in to this email. The third defendant, NSW Police, has filed a submitting appearance. In the current proceedings the plaintiff seeks the payment of a benefit under an insurance policy which provides for a payment of a benefit if an insured member suffers total disability as defined. My client's assessment of the plaintiff's claim is ongoing. Since proceedings have commenced, the parties have served various documents in the proceedings and material has been produced under subpoena. The parties have now agreed that my client and the first defendant may use and rely upon this material for the dual purposes of the proceedings and the assessment of the plaintiff's claim. Accordingly, I attach signed short minutes of order which provide as follows: 1. To the extent that the "implied undertaking" described in Hearne v Street [citation omitted] would prevent the use of material produced pursuant to subpoena in these proceedings, or material served by the parties in the proceedings, in the first and second defendants' assessment of the plaintiff's claim (the subject of these proceedings) it is waived and the first and second defendant may inspect, copy and rely upon such documents for the dual purposes of: a) the conduct of the proceedings; and b) the assessment of the plaintiff's claim. 1. There was no opposition from Mr Gray. The Registrar made the orders as asked. 2. The preparation of the proceedings for hearing continued to the following year. In March, MetLife filed its defence. MetLife admitted that Ms Sargeant had been diagnosed with piriformis syndrome, depression and PTSD. It did not admit that she was entitled to the TPD benefit. The defence specially pleaded that MetLife was still considering its decision, based in particular on the subpoena material. 3. By letter of 27 July 2016, HW sent to MetLife a list of evidence in chief. The list consisted of thirty-nine medical reports and other items. A separate list of correspondence concerning the claim was also sent. On 2 September a supplementary medical report was served. An affidavit of Ms Sargeant was later served in February 2017. 4. In response, extensive further evidentiary material was prepared and served by MetLife. This involved further surveillance undertaken from 2016 onwards, and medical reports going to the extent of Ms Sargeant's claimed disability. Delay in deciding claims 1. As already noted, the question is whether MetLife's failure to make a decision on Ms Sargeant's claim by 3 September 2015 or, alternatively, by 3 September 2016, was a breach of MetLife's obligations to act reasonably and fairly in dealing with the claim. Stevenson J considered such a question in Shuetrim v FSS Trustee Corporation [2015] NSWSC 464. An appeal from his Honour's judgment succeeded in part (TAL Life Ltd v Shuetrim, referred to above at [14]) but this particular issue was not addressed in the appeal. 2. Mr Shuetrim was a former police officer making a claim for TPD cover where the policy terms were similar to, or the same as, those in this case. Mr Shuetrim lodged his claim in February 2013. In September 2013, the claim not having been determined, he commenced proceedings against MetLife. The claim was formally declined by MetLife in January 2015. The case came on for hearing in March 2015. 3. It was argued on behalf of Mr Shuetrim that MetLife had already, before its decision to decline the claim in January 2015, breached its obligations as insurer by failing to decide the claim. It was not necessary for Stevenson J to decide this point, but his Honour indicated that he did not accept it. One of the factors his Honour took into account in reaching his conclusion was that during the period from February 2013 up until the end of 2014, the solicitors acting for Mr Shuetrim were regularly (and often repetitively) serving medical reports and other material on the insurer. 4. A similar issue arose before Robb J in Hellessey v MetLife Insurance Ltd [2017] 19 ANZ Insurance Cases 62-152; [2017] NSWSC 1284, another TPD claim by a former police officer. Ms Hellessey's claim was made in January 2012 and rejected (for the first time; it was subsequently reconsidered and rejected on a number of further occasions) in December 2014. It was contended on behalf of Ms Hellessey that the delay between the making of the claim and the December 2014 decision was such that MetLife had breached its duty by not deciding the claim at an earlier point. The contention was described by the parties as involving "constructive rejection" of Ms Hellessey's claim (as his Honour noted at [131], the term is not entirely apt). 5. His Honour stated (at [775]) that a finding of constructive rejection should not be made merely on the basis of the passing of time and it was necessary to consider the reasons for MetLife's delay. His Honour added (at [779]): An important factor weighing against a finding of constructive rejection is that, given the length of time that did elapse, neither Ms Hellessey nor the Trustee communicated to MetLife a warning that if it did not make a determination within a reasonable, specified time, MetLife's failure to act would be treated as a constructive rejection. Where a significant period of time has elapsed with the insurer taking various steps from time to time to put itself in a position to make its determination, it may be difficult for a trustee or a claimant to establish constructive rejection if they have not, so to speak, made time of the essence by giving an appropriate notice to the insurer. 1. His Honour's decision was upheld on appeal (MetLife Insurance Ltd v Hellessey [2018] NSWCA 307). This aspect of it was not challenged and so it was not dealt with by the Court of Appeal. 2. As already noted, the particulars in Ms Sargeant's Statement of Claim alleged, in substance, that the evidence provided on Ms Sargeant's behalf in support of her claim had been sufficient to satisfy MetLife of its validity, but that MetLife, rather than accepting the claim, sought out contrary material and conducted further investigations in the hope of being able to find a way to refuse it. 3. In evaluating this allegation, I think that there are a number of features of Ms Sargeant's claim which need to be taken into account. The claim was dependent on self-reporting by Ms Sargeant. As early as 2010, the possibility of exaggeration had been raised by Dr Bentivoglio. This had nothing to do with MetLife; Dr Bentivoglio's report was written before the insurance claim was even made. 4. Dr Paul's April 2012 report, produced as part of MetLife's initial investigation of the claim, suggested that Ms Sargeant was in fact fit to work. Dr Paul's report of June 2013, based on the surveillance of 2012, confirmed that view. This was not a case where MetLife was dependent solely on its own interpretation of the surveillance; Dr Paul's own opinion was that the surveillance appeared inconsistent with what Ms Sargeant told him and her claimed level of disability. There was no suggestion that Dr Paul's opinion in this regard was other than an independent one given in good faith. 5. The timing of the PTSD claim was also potentially relevant. The claim that Ms Sargeant was experiencing flashbacks, and the suggestion that she was suffering from PTSD, first appeared in Ms Liffman's report of March 2013, based on a consultation with Ms Sargeant in February 2013. This was after MetLife's "procedural fairness" letter of December 2012, and during the period when HW was preparing Ms Sargeant's response to that letter. The diagnosis was not supported by someone holding medical qualifications until Dr Murray put it forward in May 2015. 6. None of this necessarily meant that Ms Sargeant's claim was invalid. These features of the claim might not ultimately have been decisive. But they are sufficient to dispose of the allegation that MetLife was not acting in good faith or reasonably in considering the claim between 2011 and 2014. I am not satisfied that the position was so clear as to preclude further investigation and consideration of the claim. 7. There was a delay of more than three months after 16 April 2014 when HW responded to MetLife's second "procedural fairness" letter. MetLife apologised for the delay, and indicated that the claim would be the subject of a "management review". But there was no evidence before me of what happened with that review. Earlier investigations had taken a long time, and there was a long gap between the first and second "procedural fairness" letters. But there had also been periods of time (such as the period from December 2012 to March 2013) when MetLife was waiting for Ms Sargeant. 8. The references in MetLife's letter of 25 August 2014 to the CRC and the Financial Ombudsman Service are significant. In effect, MetLife was acknowledging that if FSS or Ms Sargeant was dissatisfied with the way in which the claim had been handled thus far, a referral to the CRC or a complaint to the Ombudsman was available. Neither FSS nor Ms Sargeant took this up. MetLife was entitled to treat this response as an intimation that it should continue to consider the claim. 9. The position became more complicated in March 2014 when Ms Sargeant's proceedings were commenced, especially once the proceedings were transferred to this Court in March 2015 and started to move towards hearing. 10. The service of further medical reports by Mr Gray from June 2015 onwards put MetLife in an awkward position. On the one hand, MetLife had an obligation to proceed to determine Ms Sargeant's claim with reasonable despatch. On the other hand, MetLife was at risk of breaching its obligations of good faith and fair dealing if it did not take material which was provided to it and was relevant to Ms Sargeant's claim into account (see Hellessey at [106], citing Mehmet v IOOF Investment Management Ltd [2015] NSWSC 1914 at [33]). And it was not just a question of reviewing any further material which came forward. Properly addressing the new material might require MetLife to reconsider views it had already formed, suggest lines of further enquiry, or require fresh reports from MetLife's experts. 11. In theory, there was a distinction between evidence served for the purposes of Ms Sargeant's insurance claim and evidence served for the purposes of her legal proceedings. Evidence served for the purposes of legal proceedings should have been served on Turks, as the solicitors acting for MetLife. Further material served so it could be taken into account in evaluating Ms Sargeant's claim should have been served directly on FSS as the insured, for transmission to MetLife. 12. But this distinction was not adverted to by either party. It was further blurred by Mr Gray's correspondence. 13. Mr Gray's letter of 23 June was sent before any directions had been made for the conduct of the court proceedings. It was not sent to Turks, who were MetLife's legal representatives in the proceedings. It described the enclosed reports as being provided "for your consideration". All this tended to imply is that the letter was served for the purposes of the claim. But it was not addressed to FSS, and it was headed with a reference to the proceedings. 14. Mr Gray's letter dated 9 July was addressed to FSS but it was headed with a reference to the court proceedings and it did not identify the purpose for which the enclosed reports were being served. The heading of HW's later letters of 28 August and 2 September suggested that the enclosed documents were being served for the purposes of the claim, but the letters were addressed to Turks rather than MetLife or FSS. HW's letter of 29 October was addressed to MetLife rather than Turks and stated that HW looked forward to hearing from MetLife in due course. But the heading to that letter referred to the court proceedings. 15. Despite these ambiguities and inconsistencies, I think that the better interpretation of this correspondence is that HW, on behalf of Ms Sargeant, was inviting MetLife to treat the reports being served as supplementary material which should be taken into account in considering Ms Sargeant's claim. Certainly it was open to MetLife to interpret it in this way. That this is how MetLife did interpret it is shown by Turks' correspondence of August requesting the letters of instruction for the reports on the basis that the reports could not be considered by MetLife without the letters of instruction. 16. As already noted, Ms Sargeant's Statement of Claim alleged that MetLife, in failing to decide Ms Sargeant's claim, was in breach of its obligations under the policies and in breach of its duty of good faith and fair dealing toward Ms Sargeant. It would have been open to Ms Sargeant's legal advisors to take the position that the first stage of the analysis (breach by failure to decide the claim) was already established by 2015, and that further medical and lay evidence was relevant only to the second stage analysis. But Ms Sargeant's legal representatives did not take this position, or at least not clearly. 17. Counsel for Ms Sargeant submitted that the question of whether she was suffering from PTSD was a distraction. Counsel argued that her ongoing pain and depression was sufficient on their own to satisfy the TPD requirement of the policy. But this was not the position taken on behalf of Ms Sargeant at the time. Even if the diagnosis of piriformis syndrome and depression were accepted, there was still a question about whether these conditions were sufficiently disabling to satisfy the terms of the policy. Mr Gray never told MetLife to ignore the references to PTSD in Ms Sargeant's medical evidence; instead, he continued to serve fresh material in support of the claim, implicitly requesting that MetLife take that material into account in making a decision on the claim. It was reasonable for MetLife to consider and test that material (including the PTSD material) before it made any decision. Ms Sargeant could not have it both ways. 18. The difficulty MetLife was facing was brought out by the letter by Mr Hardy concerning Dr Takyar's report sent on 6 November and Mr Gray's email response later that afternoon. If Mr Gray wanted MetLife to ignore the reports being served in the proceedings and decide the claim based on the material which MetLife already had, this was his opportunity to say so. Instead his response, probably deliberately, left the uncertainty unresolved (I pass over the discourteous tone of the email; Mr Gray may have written it in a hurry). Given the position taken by her solicitor on her behalf, Ms Sargeant cannot complain if thereafter MetLife adopted a cautious approach to ensuring that it had all relevant material before taking its decision. 19. The material from the court proceedings to which MetLife might have regard in dealing with the claim was not, of course, necessarily confined to the material which was put forward on behalf of Ms Sargeant in support of her claim. This was made clear by MetLife's request to use documents produced on subpoena for purposes other than the proceedings. It was not unreasonable for MetLife to take this position. For practical purposes, the onus lay on Ms Sargeant to sustain her claim. MetLife was not obliged to accept her assertions and the opinions of her doctors at face value. It was entitled to test those assertions and opinions by reference to independent evidence. 20. It seems to me that, in effect, by 2016, MetLife had adopted the approach that Ms Sargeant's claim should be evaluated by reference to the whole of the evidence and the other material which was to come forward in the proceedings. This was never explicitly stated by MetLife or agreed on behalf of Ms Sargeant. But there was no protest about it from her side either. 21. The fact is that at no stage prior to 3 September 2016 did Mr Gray, on behalf of Ms Sargeant, seek to make "time of the essence". Like Robb J in Hellessey, I think this is important. It must be borne in mind that the insurer's duty is one of good faith and fair dealing. Such a duty is not breached merely because of inefficiency or mistake in handling the claim. And I do not think it was unreasonable for MetLife to fail to make a formal determination of the claim while the proceedings were continuing and there was no request for it to do so. 22. So far, I have been considering the position as between Ms Sargeant on one hand and MetLife on the other. But it should not be forgotten that the insured under the policy was FSS, not Ms Sargeant. Up to and including HW's response to MetLife's second "procedural fairness" letter in March 2014, MetLife and Ms Sargeant had maintained the correct formal position of communicating with each other through FSS as the insured. After that date, apart from the single letter to FSS of 9 July 2015, that indirect channel of communication dried up. This fact, in itself, emphasises that once the proceedings were commenced, Ms Sargeant and MetLife came to deal with each other as litigants. 23. Had a letter making "time of the essence" been sent, it should have been sent by FSS. The fact that HW on behalf of Ms Sargeant never suggested to FSS that such a letter be sent, and FSS never considered it appropriate as insured to do so, emphasises the artificiality of the argument now made on Ms Sargeant's behalf that MetLife should have ignored what was going on in the proceedings and simply gone on and decided the claim. 24. For these reasons, I consider that there was no breach by MetLife in failing to decide Ms Sargeant's claim before 3 September 2015 or 3 September 2016. I am not asked to decide whether delay after 3 September 2016 gave rise to a breach. Effect of breach 1. The effect of my decision on the breach question means that it is unnecessary to consider the other issues raised. Nevertheless, I will make some brief observations. 2. I discussed the two stage analysis and the consequence of that analysis for the content of the second stage, in Newling v FSS Trustee Corporation (No 2) [2018] NSWSC 1405 at [226]-[237]. It is clear on the authorities that if the insurer breaches its obligation of good faith and fair dealing, it is open to the Court to step in and decide the factual questions posed by the claim (ignoring the requirement of the insurer's satisfaction of any conditions) for itself. But in my view, the authorities do not necessarily require that that has to be done in every case. In the present case, however, the parties agreed that there should be a second stage hearing. 3. Had I proceeded to a second stage hearing, I would not have considered it possible to have decided the claim "on the papers" as counsel for Ms Sargeant sought. The difficulty can be illustrated by the course of preparation for the hearing before me. In accordance with the usual directions for hearing, both parties lodged objections to the material which was in evidence. Many of their objections were to the expert evidence on the ground that there was insufficient exposition of reasoning to demonstrate that the opinions expressed were based on relevant expertise (Makita (Aust) Pty Ltd v Sprowles (2001) 52 NSWLR 705; [2001] NSWCA 305 at [85]; Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588; [2011] HCA 21 at [37]). In a conventional trial governed by the rules of evidence, many of these objections would have been sound. But the claim process is not one which is governed by the rules of evidence. MetLife was entitled (and, unless it gave specific notice to the contrary, was arguably obliged) to take such opinions into account even if they do not comply with the requirements of the Evidence Act 1995 (NSW), s 79. How was the Court to rule on the objections? And if the evidence was allowed in, what weight should the Court have given it? 4. What this underlines is that when the Court makes a decision on a factual question, it must do so in its own way and following its own rules, including the rules of evidence. The Court cannot readily (or, perhaps, at all) determine what a non-curial decision maker not bound by curial rules, would or should have decided. This in itself may be a factor to consider when deciding whether the Court should routinely undertake a factual investigation of its own as part of the second stage of proceedings of this type. Conclusions and orders 1. For the reasons set out at [101]-[129] above, I conclude that questions 1 and 2 should both be answered "no". The other questions are unnecessary to answer. 2. In accordance with the agreed result, the proceedings must be dismissed. I will hear the parties on costs. 3. The orders of the Court are: (1) The questions reserved by order of the Court on 21 June 2018 be answered as follows: 1. No 2. No Other questions: Unnecessary to answer. (2) Order that the proceedings be dismissed. ********** 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: 21 December 2018