TAL Life Ltd v Shuetrim  NSWCA 68 is a significant intermediate appellate decision in the area of life insurance. Of particular relevance are the following findings:
- In relation to the construction of total and permanent disablement (TPD) clauses, it is not correct to construe “unlikely” as meaning “a probability of less than 50%”. The correct question is whether there is “no real chance” that the insured person will ever return to work for which they are reasonably qualified by education, training or experience;
- Medical reports coming into existence after the date of assessment are relevant and must be taken into account by the insurer provided they are pertinent to the determination of the insured person’s condition as at the date of assessment; and
- There is no sound reason to overturn Edwards v The Hunter Valley Co-op Dairy Co Ltd (1992) 7 ANZ Ins Cas 61-113. Accordingly, when a Court finds that an insurer has breached a duty enforceable by an insured person, the Court will substitute the insurer’s opinion for its own.
A summary of the case follows.
TAL and MetLife challenged the decision of the primary judge that TAL and MetLife pay the trustee of Mr Shuetrim’s superannuation fund TPD benefits.
The following four issues were in dispute:
- Whether the primary judge erred in construing the TPD definition;
- Whether the insurers in refusing the claims breached a duty enforceable by Mr Shuetrim;
- Whether, in the event of breach, the Court should remit Mr Shuetrim’s claim to the insurers for determination; and
- Whether the primary judge erred in concluding that Mr Shuetrim satisfied the definition of both policies.
About Mr Shuetrim
Mr Shuetrim was born in 1976. In 1994, Mr Shuetrim completed his Higher School Certificate. For about the next ten years, Mr Shuetrim worked as a mechanic. In 2006, Mr Shuetrim completed an Associate Degree in Policing Practice and, in February 2007, Mr Shuetrim became a probationary constable with the NSW Police Force.
On 21 September 2011, while undertaking police training, Mr Shuetrim sustained an injury to his left elbow. Over the next two months, Mr Shuetrim attended work on modified duties. Mr Shuetrim’s last day of work was 21 November 2011. Mr Shuetrim was 35 at the time.
On 9 May 2012, Mr Shuetrim had arthroscopic surgery to his left elbow.
On 16 May 2012 and 27 June 2012, Mr Sheutrim’s surgeon noted satisfactory progress but opined that ongoing physiotherapy was required and that Mr Shuetrim was unfit for lifting anything greater than 3.5 kilograms for two months.
On 17 July 2012, Dr West (Mr Shuetrim’s first general practitioner) opined that Mr Shuetrim was fit to resume normal duties on a graded basis.
On 26 January 2013, Dr Jones (Mr Shuetrim’s second general practitioner) provided a medical certificate in which she stated that Mr Shuetrim would never be able to resume duties as a police officer or mechanic. In relation to future employment in other fields, Dr Jones considered that this was unknown and dependent upon Mr Sheutrim’s progress. In her clinical notes of the same day, Dr Jones wrote:
I am not willing to say permanently and completely [incapacitated] as there is hope for employment [in] other fields in the future.
On 27 May 2013, Dr Pillemer (orthopaedic surgeon) opined that Mr Shuetrim was not fit for his pre-injury duties but that it was “almost certain” that Mr Shuetrim’s condition would improve significantly with the passage of time.
By letter dated 25 June 2013, Mr Shuetrim’s solicitors requested Dr Patrick (general surgeon) to provide an expert report. The letter included the following instruction:
If you are supportive of his claim could you kindly state your opinion as follows:
In my opinion, Mr Shuetrim is incapacitated to such an extent as to render him unlikely ever to engage in any gainful profession, trade or occupation for which he is reasonably qualified by education, training or experience.
Dr Patrick prepared a report dated 9 July 2013 in which he opined that Mr Shuetrim had suffered 12% whole person impairment. Dr Patrick did not state his opinion in the terms requested by Mr Sheutrim’s solicitors.
Subsequently, by letter dated 14 October 2013, Dr Patrick stated that:
I do believe that Ben Shuetrim does satisfy the definition. As he is not able to perform regular employment day in and day out – he is essentially, largely ‘one armed’ and given the nature and extent of his ongoing symptomology as described, and considering the fact that there are both physical and psychological factors of significance here I do believe that the definition is satisfied.
What caused Dr Patrick to prepare this subsequent letter, employing the language suggested by Mr Shuetrim’s solicitors, is unknown.
On 15 January 2014, Dr Breit (orthopaedic surgeon) opined that Dr Patrick’s assessment was “totally invalid” and that Mr Shuetrim had suffered 1% whole person impairment.
On 19 June 2014, Dr Wong (general surgeon) advised that he shared Dr Breit’s reservations about Dr Patrick’s findings but that, by reason of an unexplained deterioration in the range of motion at the left elbow, Mr Shuetrim had suffered 5% whole person impairment.
On 12 September 2014, Dr Sher (Mr Shuetrim’s third general practitioner) opined that Mr Shuetrim would never be fit to work in the police force again or as a mechanic, but that with retraining and rehabilitation Mr Shuetrim would be able to perform some sort of meaningful work.
By letter dated 22 October 2014, Mr Sheutrim’s solicitors invited Dr Sher to review a vocational assessment report. The letter included the following instruction:
Could you kindly review the report and advise whether you are of the opinion that our client meets the definition. If so could you kindly state your opinion as follows:
In my opinion, on the balance of probabilities, after reviewing APM’s report of 24 July 2014 Mr Shuetrim satisfied the definition of total and permanent disablement.
In a document dated 29 October 2014, Dr Sher stated:
I think on the balance of probabilities, after reviewing APM’s reports of 24th July 2014, Mr Shuetrim satisfied the definition of total and permanent disablement.
In May 2012, Dr Calthorpe opined that it was highly unlikely that Mr Shuetrim would return to work within the police force, but that Mr Shuetrim’s personal, marital and work history pointed to eventual restabilisation.
On 28 June 2012, Dr George opined that Mr Shuetrim suffered from an anxiety disorder and did not have any capacity to work in an operational or non-operational role within the police force. Dr George recommended medical discharge from the police force.
On 28 May 2013, Dr Martin opined that it was not likely that Mr Shuetrim would return to work within the police force or as a mechanic. Dr Martin suggested, however, that a vocational assessment should be undertaken as Mr Shuetrim may be able to work in the field of gardening or farming.
The trustee of Mr Shuetrim’s superannuation fund had entered into two group life policies of insurance: one with TAL and one with MetLife.
Pursuant to the group life policy issued by TAL, TPD was defined as:
… The Insured Person having been absent from their Occupation through Illness or Injury for 3 consecutive months (where the Insured Person’s condition is unclear it is reasonable to defer assessment) and having provided proof to the satisfaction of us that the Insured Person has become incapacitated to such an extent as to render them unlikely ever to engage in work for reward in any occupation or work for which he or she is reasonably qualified by reason of education, training and experience.
Pursuant to the group life policy issued by MetLife, TPD was defined as:
… 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.
It was common ground that the first limb of both clauses was satisfied (namely, absence from work through injury or illness for three, or six, consecutive months). The critical issue was the second limb which turned on whether Mr Shuetrim was “unlikely ever” to return to work for which he was reasonably qualified by reason of education, training or experience.
First issue – Proper construction of the TPD definition
In the course of construing the TPD definition, the primary judge relied upon what had been said in Halloran v Harwood Nominees Pty Ltd  NSWSC 913 at  that “unlikely” in the context of a TPD definition means “a probability of less than 50%”. The authority cited was White v The Board of Trustees  2 Qd 659 at 673.
On that basis, the primary judge framed the question for determination as whether “it is probable that Mr Shuetrim would actually obtain work for reward for which he is qualified by education, training or experience”.
TAL submitted that, in Halloran and elsewhere, the holding in White had been misstated, principally because of an error in the headnote in the Queensland Reports. TAL referred to Beverley v Tyndall Life Insurance Co Ltd  WASCA 198 as the “leading intermediate appellate decision” where the interpretation of “unlikely” was described as “no real chance or even improbable”.
The Court accepted TAL’s submission and made the following statements:
- To make an assessment of TPD, it is not sufficient for the insurer to be satisfied that it is more likely than not that the person will never return to work;
- Where there is a real chance that a person may return to relevant work, even though it could not be said that it is more likely than not that the person will never return to work, the insurer will not be satisfied that the definition applies;
- If there is merely a remote or speculative possibility that the person will at some time in the future return to relevant work, an insurer will not be satisfied that the person is not TPD;
- The critical distinction is between possibilities which are readily contemplateable even though they may not be more probable than not, and possibilities which are remote or speculative; and
- A real chance that a person will return to relevant work, even if it is less than 50%, will preclude that person being unlikely ever to return to work.
Second issue – Did the insurers breach a duty enforceable by Mr Shuetrim?
By letter dated 17 December 2014, TAL refused Mr Shuetrim’s claim.
TAL was of the opinion that the date of assessment was July 2012 on the basis that this was after Mr Shuetrim had arthroscopic surgery to his left elbow. TAL summarised the medical and psychological opinions available to it in the period around July 2012 and determined that Mr Shuetrim was not TPD within the meaning of the policy.
The primary judge was of the view that TAL was in error by not considering all of the available medical and psychiatric evidence. On that basis, the primary judge held that TAL had breached a duty enforceable by Mr Shuetrim. This was upheld on appeal.
In coming to its decision, the Court referred to McArthur v Mercantile Mutual Life Insurance  2 Qd R 197 in which Muir J stated that:
Medical reports coming into existence after the relevant time will be admissible provided that they are pertinent to the determination of the appellant’s condition at the relevant time.
The Court also referred to Finch v Telstra Super Pty Ltd (2010) 242 CLR 254 in which the High Court said that the member was entitled to submit that:
It can now be seen that the reason why I ceased to be a Telstra employee was a state of affairs making it unlikely that I will ever engage in any gainful work again. What matters is that that state of affairs arose while I was a Telstra employee. It does not matter that the symptoms of that state of affairs emerged more clearly after I left Telstra’s employment.
Accordingly, the Court held that TAL had breached its duty to Mr Shuetrim by knowingly excluding relevant information from its consideration.
By letter dated 10 February 2015, MetLife refused Mr Shuetrim’s claim.
MetLife refused Mr Shuetrim’s claim on the basis that Mr Shuetrim had failed to provide proof to its satisfaction that Mr Shuetrim fell within the TPD definition. This is to be distinguished from a situation in which an insurer refuses a claim on the basis that it is positively satisfied that a member does not fall within the TPD definition.
The critical paragraph of MetLife’s declinature letter was as follows:
However, there is a lack of findings among the large volume of medical evidence that demonstrates that Mr Shuetrim was, at the relevant date, then unlikely ever to engage in any gainful profession, trade or occupation for which he is reasonably qualified by reason of education, training or experience. There are instead, expressed within the medical evidence, a number of conclusions that Mr Shuetrim could return to work in a vocation outside of policing or mechanics.
Therefore, MetLife is not satisfied that, on the balance of probabilities, Mr Shuetrim was TPD as at the relevant date.
MetLife’s declinature letter was six and a half pages long and was single spaced. The primary judge found that MetLife’s declinature letter contained a reasonably balanced view of all medical opinions and an accurate summary of Mr Shuetrim’s education, training and experience. These findings were not challenged on appeal.
The primary judge, however, did find that there was a “fatal flaw” in MetLife’s declinature letter in that it failed to give proper weight to a vocational assessment report prepared by Ms Strinic on 24 July 2014.
In her report, Ms Strinic identified a number of vocational roles for Mr Shuetrim but was of the view that a definitive opinion could not be provided until further medical and psychological evidence was obtained.
On appeal, the Court disagreed with the primary judge’s criticism of MetLife’s declinature letter and found that Ms Strinic’s highly equivocal opinion was not one which was required to be given any more weight than what was given by MetLife. The Court was also of the view that Ms Strinic’s findings were wholly consistent with MetLife’s opinion that Mr Shuetrim had failed to provide proof to MetLife’s satisfaction that Mr Shuetrim fell within the TPD definition.
On that basis, the Court held that MetLife did not breach any duty enforceable by Mr Shuetrim.
Third issue – Should the Court remit the claim to TAL for reconsideration?
TAL submitted that the Court, having found that TAL breached a duty enforceable by Mr Shuetrim, should remit the claim to TAL for reconsideration. In order to accept this submission, the Court would be required to overturn Edwards v The Hunter Valley Co-op Dairy Co Ltd (1992) 7 ANZ Ins Cas 61-113. In Edwards, it was stated that:
The formation by Zurich of the relevant opinion is of the nature of a condition of Zurich’s liability under the policy. Zurich cannot rely on non-fulfilment of such a condition if fulfilment was prevented by its own default, and in such an event the issue upon which Zurich’s opinion was required to be formed would become one for determination by the Court …
The Court rejected TAL’s submission for two reasons. First, TAL had made a forensic decision at trial to run the case on the basis that Edwards applied. If TAL was permitted to depart from this forensic decision, there was a real possibility of unfairness to Mr Shuetrim.
Secondly, the practical reality is that the issue is settled throughout and beyond Australia. The issue has been the subject of considered appellate decisions in New South Wales, Queensland and Western Australia that have been consistently applied throughout the country by a large number of decisions at first instance.
The Court was ultimately of the view that there was no sound reason to depart from what was said in Edwards and confirmed that, when a Court finds that an insurer has breached a duty enforceable by an insured person, the Court will substitute the insurer’s opinion for its own.
Fourth issue – Was Mr Shuetrim TPD?
The Court ultimately held that Mr Shuetrim did not fall within the TPD definition for the following reasons.
First, Mr Shuetrim’s posts on social media established an undoubted tendency for Mr Shuetrim to exaggerate.
Second, the thrust of the medical evidence was that Mr Shuetrim’s left elbow was almost certain to improve with time. While it was noted that Dr Patrick disagreed, the Court discounted Dr Patrick’s view because of the criticisms advanced by Drs Breit and Wong, and because Dr Patrick’s opinion was derived from language provided to him by Mr Shuetrim’s solicitors.
Third, the Court considered that the evidence from Mr Shuetrim’s general practitioners was powerful. In that regard:
- Dr Shuetrim’s first general practitioner, Dr West, considered that Mr Shuetrim’s operation was a success. Mr Shuetrim ceased seeing Dr West and started seeing Dr Jones.
- When Dr Jones was asked by Mr Shuetrim’s solicitors to express an opinion that corresponded with the TPD definition, Dr Jones recorded in her notes that “I am not willing to say permanently and completely incapacitated as there is hope for employment in other fields in the future”. The Court was of the view that this note reflected a resistance by Dr Jones to tailer her opinion to that which Mr Shuetrim’s solicitors had urged upon her. Mr Shuetrim ceased seeing Dr Jones and started seeing Dr Sher.
- Dr Sher initially expressed hope that Mr Shuetrim would return to work. Subsequently, Dr Sher used, verbatim, the words suggested to him by Mr Shuetrim’s solicitors that Mr Shuetrim satisfied that TPD definition.
The Court accepted that there was a conflict in the evidence given by the three general practitioners; however, the Court preferred the evidence of Drs West and Jones. This was because their opinions were closer to the relevant time and also because Dr Sher’s opinion that Mr Shuetrim satisfied the TPD definition was inconsistent with other opinions expressed by him. This inconsistency was not explained by Dr Sher but did coincide with an invitation by Mr Shuetrim’s solicitors to express precisely that opinion.
Fourth, in relation to the psychiatric evidence, the psychiatrists’ opinions had proceeded on an incorrect premise given Mr Shuetrim’s exaggerations.
Fifth, relatively young people whose medical or psychological condition is uncertain will find it harder to prove to an insurer’s or court’s satisfaction that they are unlikely ever to return to work.
While the Court found that TAL had breached a duty enforceable by Mr Shuetrim, the Court allowed TAL’s appeal on the grounds that Mr Shuetrim did not fall within the TPD definition.
The Court allowed MetLife’s appeal on the grounds that MetLife had not breached any duty enforceable by Mr Shuetrim.