This was an appeal against a decision of a single judge of the New South Wales Supreme Court to confirm the decision of the TPD insurer to decline a claim by a former police officer for the TPD benefit under the group policy.
The member (appellant) was discharged from the New South Wales Police Force on medical grounds in 2012. She made a claim for a TPD benefit in April 2012 in relation to both psychiatric and physical conditions.
The policy relevantly provided that the TPD benefit would be payable to the member if she satisfied the insurer that:
“… the Insured Member having provided proof to our satisfaction that the InsuredMember has become incapacitated to such an extent as to render the Insured member unlikely to ever engage in any gainful profession, trade or occupation for which the Insured Member is reasonably qualified by reason of education, training or experience.” [emphasis added]
A significant volume of medical evidence was obtained by both the member and the insurer. Surveillance obtained by the insurer led two doctors to alter their opinions with respect to the member’s level of disability.
The insurer did not accept the opinions of the member’s doctors. It was of the view that those doctors relied heavily on the member’s subjective reporting, which was demonstrated to be unreliable. The insurer therefore determined that it was not satisfied that the member was TPD, and there were a number of suitable occupations within her of education, training or experience open to her.
The Trustee had sought a review of this decision on behalf of the member. The insurer confirmed its decision.
The member commenced proceedings alleging that the insurer breached its duty to her and failed to act reasonably and fairly.
At first instance
The court held that the above emphasised phrase of the insuring clause placed the onus solely on the member. Therefore the insurer had no duty to give reasons for its decision, nor to alert the member to any deficiencies in the evidence submitted by the member. However, a failure to provide reasons may have evidentiary significance in that the court may be more readily persuaded that the insurer failed to give proper consideration to the issues.
The court seemed particularly persuaded by the fact that the member had not submitted any evidence of any unsuccessful attempt to obtain or maintain employment, stating this would have been “the best evidence” of TPD.
Further, the primary judge held that, if an insurer makes a mistake or inadvertently overlooks something in the course of the assessment, that does not necessarily amount to a breach of the obligation to conduct the assessment fairly and reasonably.
The member’s claim failed at the ‘Stage 1’ enquiry because the member failed to demonstrate that the insurer had acted unreasonably or unfairly in assessing the claim and reaching its decision.
The New South Wales Court of Appeal unanimously dismissed the member’s appeal and ordered her to pay the insurer’s costs.
The Court of Appeal held that the insurer had in fact provided adequate reasons for its decision and therefore was not necessary to decide whether the obligation to act fairly and reasonably requires an insurer to give reasons for a decision (that question of principle is better left to be decided in a case where no reasons, or inadequate reasons, were given by the insurer).
The trial judge made no error in concluding that the member had failed to make out her allegation that the insurer had not acted reasonably and fairly. The trial judge did not undertake a merits based assessment as alleged by the Appellant, but only considered whether or not the insurer’s reasoning could be characterised as going beyond what an insurer, acting reasonably and fairly, could adopt.
The Appellant’s contention that the insurer’s review of its original decision constituted a separate decision was rejected. The court held that the review simply affirmed the opinion already formed on the basis of reasons already furnished.
The Appellant advanced no submissions in support of her grounds of appeal to the effect that the primary judge erred in his ultimate conclusion. Consequently, those grounds were dismissed without further consideration.
The decision confirms that an insurer’s failure to provide adequate reasons may not be fatal for the resultant decision, but that the prudent course is for insurers to provide adequate reasons for a declinature.
The decision is helpful to insurers in that it confirms that an insurer need not necessarily accept evidence submitted by the member at face value. It is entitled to undertake a critical analysis of that evidence and give greater weight to contradictory evidence where appropriate.
Further, an insurer’s duty (unlike a trustee’s duty) may not extend to positively making inquiries or clarifying evidence if the member has not provided sufficient evidence to satisfy it of the TPD criteria.