In the decision of Ward v MetLife Insurance Ltd [2014] WASCA 119, the Western Australia Court of Appeal overturned the decision of the District Court and ordered that the Defendant Insurer, MetLife, pay an Income Protection Benefit to the Plaintiff, Mr Ward.

MetLife subsequently challenged the decision of the Court of Appeal to the High Court, arguing that the decision of the Court of Appeal was not one that they could have reached given the evidence presented.  On 14 November 2014, the High Court dismissed Metlife’s application for special leave.

The Facts & the Policy

Mr Ward was employed by PriceWaterHouseCoopers (PWC) as a Director in the Tax and Legal Services Group.  In early 2009, Mr Ward suffered from a major depressive illness.  He took 6 weeks off work, before returning to work on a part-time basis.  After Mr Ward returned to work, he was not coping and his performance deteriorated.  In November 2009, Mr Ward’s employment at PWC was terminated.

Pursuant to the terms and conditions of his Income Protection Policy (the Policy), Mr Ward was paid a Partial Disability Benefit for a period and subsequently, a (full) Disability Benefit for a period.  On 31 December 2010, Mr Ward’s benefits ceased after MetLife decided he was no longer “Disabled” as defined by the Policy.

Clause 12 of the Policy provided for a limitation of the amount of the Benefit payable in respect of disability as follows:        

“We will reduce a Disability Benefit or Partial Disability Benefit payable to a Covered Person by:

(b) the amount of any income we believe the Covered Person could reasonably be expected to earn in his or her Occupation whilst Disabled or Partially Disabled.”

The District Court Decision

The primary issue for determination in the District Court was whether Mr Ward was Disabled under the Policy for the whole or part of the period from 1 January 2011 (i.e., the day after Mr Ward’s benefits ceased) to the last day of the trial, being 27 September 2012 (the Relevant Period).

Therefore, Mr Ward needed to prove he was still Disabled during the Relevant Period as a result of the original illness (i.e., his depressive illness) which occurred in 2009. 

The District Court held that:

  • Mr Ward was not Disabled during the Relevant Period because he did not have an Illness;
  • even if he did have an Illness, he had not established that he was unable to perform at least one income producing duty; and
  • even if he did have an Illness and was unable to perform at least one income producing duty, he was unable to prove that was not solely as a result of the Illness.

The trial judge further held that “Occupation” should be construed generally or by reference to the generic nature of Mr Ward’s occupation (i.e., as a tax and legal adviser) and not by reference to his actual duties at PWC.  As such, the trial judge found that Mr Ward could undertake some kind of other employment and agreed with the counsel for MetLife who suggested that although he may not be able to work full-time at PWC, he could work as an independent tax consultant.

The Court of Appeal Decision

Mr Ward appealed the District Court Decision.  The Court of Appeal overturned the decision at trial and determined that Mr Ward was entitled to be paid Benefits for the Relevant Period.

The Court of Appeal found that Mr Ward was Disabled (i.e., not Partially Disabled) and held that “there is no support in the expert evidence for allocating some of the plaintiff’s symptoms to his personality type and others to his mental illness.”

In regards to Mr Ward’s ability to perform his Occupation by reference to clause 12 of the Policy, the leading judgment of McLure J stated:

“Having regard to the type of work undertaken by the appellant (advising clients on taxation and legal matters (focusing on the GST), supervising, managing and generating work for the staff in his team, marketing and other ‘rain making’ duties and his level of seniority reflected in his high charge out rate) the only reasonable finding open on the evidence is that the performance of the appellant’s duties involved problem- solving, multi-tasking and simultaneously managing a number of projects.

The trial judge should have found that the appellant’s deficiencies in problem solving, multi-tasking and managing a number of projects, in combination impaired his capacity to perform all facets of his duties with the consequence that throughout the relevant period the appellant was unable to perform at least one or more duties of his position at [the firm] (sic) that generated at least 20% if his monthly salary as at mid-2009.” (emphasis added)

As noted, the High Court dismissed Metlife’s application for Special Leave.

Lessons 

This decision provides some clarity on the meaning of “occupation” in clauses similar to clause 12 of the Policy.  In such clauses, it appears that a reference to an insured’s occupation is referable to the “occupation” the insured had prior to their disability and is not referable to the insured’s ability to work in a reduced capacity albeit in similar area or industry.