In Birdsall v Motor Trades Association of Australia Superannuation Fund Pty Ltd[2015] NSWCA 104 the New South Wales Court of Appeal was asked to determine the correctness of the trial judge’s decision that the plaintiff appellant (Birdsall) did not satisfy the definition of total and permanent disablement (TPD) in a group life insurance policy issued by the first respondent (Metlife) to the second respondent as trustee of the Motor Trades Association of Australia (MTAA) Superannuation Fund (the Trustee).

THE TRIAL

The determination by the trial judge was made on the evidence before him, notwithstanding the definition of TPD in the policy provided that the relevant opinion as to incapacity was that of Metlife as the insurer.  The trial judge made findings as to Birdsall’s injury and resultant incapacity and made an assessment at the relevant time as to whether that incapacity was such as to render him unlikely ever to engage in, or work for reward in, any occupation which he was reasonably capable of performing by reason of his education, training or experience.

The trial judge noted the principal question for determination as follows:

“The primary question for determination is whether the decision by the insurer was invalid, in that it was unreasonable.  In the event that the Court concludes that the decision made by the insurer was invalid, it should substitute its own decision for that of the insurer: McArthur v Mercantile Mutual Life Co Ltd[2001] QCA 317 and, if appropriate, should order it to pay the amount of the claim, plus interest, to the trustee, which would then pay it to the plaintiff…”

Birdsall accepted at trial that he was physically capable of performing each of the roles identified as being appropriate to him by Metlife and the Trustee; namely that of customer service assistant, sales assistant or sales representative, and in each case in the automotive industry.  Birdsall also accepted that as a result of applying for a job as a vehicle parts interpreter he understood that he had to be familiar with a particular computer program which enabled stock parts to be located, quoted from and orders fulfilled and followed up.  He agreed that with “suitable training” he should be able to do that job.  Birdsall accepted that as part of his work experience, he used a computer to access sources of spare parts and motor vehicle technical and service specifications and further agreed that he would be able to undertake the role of sales assistant subject to being taught how to use a cash register. Birdsall also acknowledged, and the primary judge found, that he had excellent communication skills.

On the basis of the this evidence, the primary judge concluded that there was work available to Birdsall (in the areas identified) that he was reasonably capable of performing by reason of his education, training and experience. 

THE APPEAL

In summarising the issue on appeal, Meagher JA said (at [67]):

“The definition of TPD requires an assessment of the extent of a person’s incapacity to engage in or work for reward as a result of injury or illness.  The extent of that incapacity must be such as to render the person ‘unlikely ever to engage in or work for reward in any occupational work’ that he or she ‘is reasonably capable of performing by reason of education, training or experience’. This makes it necessary to consider whether, notwithstanding the person’s incapacity, there is any occupational work which the person is reasonably capable of performing by reason of his or her “education, training or experience”.  These words are used both disjunctively and conjunctively and refer to education, training and experienced assessed as at the time the question of capacity is to be addressed: Hannover Life Re of Australasia Ltd v Dargan [2013] NSWCA 57…”

There were, essentially, two grounds of appeal:

  • Birdsall argued that the purpose of the policy was to provide a benefit in the event that at the relevant date the insured person was unable to obtain employment without further training.  In support of the proposition that employment that requires re-training is not work for which a person is reasonably fitted, Birdsall relied on Halloran v Harwood Nominees Pty Ltd [2007] NSWSC.
  • That primary judge erred in finding that any training required was “minimal”. 

With respect to the first of the above issues, the Court of Appeal agreed with the primary judge’s conclusion that the need for further training did not mean that Birdsall was not already reasonably capable of performing the roles to which he was directed.  The expression “reasonably capable” recognised the reality that a person may have to undertake specific training or certification to enable him or her to engage in particular employment for which he or she was otherwise qualified by education, training or experience.  That training or certification may be available in the form of TAFE or other certification course or from the employer.  The Court of Appeal noted that the evidence indicated Birdsall had the requisite computer skills but needed to be trained in the use of particular computer software.  The Court also noted that the appellant had the innate intelligence necessary to learn how to operate a cash register without any difficulty. 

Ultimately, the Court found Birdsall’s position to be similar to that of the insured inHannover Life Re Australasia Ltd v Dargan [2013] NSWCA 57, thereby distinguishing Birdsall and Dargan from Halloran.

As regards the second issue on appeal, the Court found that the evidence supported the primary judges conclusion that any further training or certification required would indeed have been minimal and that in the circumstances, it was reasonable for Birdsall to undertake training in order to gain employment utilising his existing skills and experience.  The Court held that on no view was it likely to involve any significant course of study or training. 

CONCLUSION

Birdsall emphasises that the requirement for (re)training does not render an insured person TPD. However, Insurers and Trustees need to be mindful of the level of (re)training required and the aptitude of the insured for such (re)training.