Background

In the case of Hannover Life RE of Australasia Ltd v Dargan [2013] NSWCA 57, Mr Dargan injured his lower back at work in July 2007 and was unable to continue working as a truck driver. He had been employed for approximately 11 years working 40 hours per week.

Six months after the injury, Mr Dargan was assessed as eligible for total permanent disablement benefits under a group life policy with Hannover Life. Just under a year after the injury, he obtained an ancillary certificate which entitled him to drive a taxi for 20 hours per week.

Mr Dargan's claim for total permanent disablement benefits was rejected by Hanover on the grounds that there was evidence to demonstrate that he was able to perform regular remunerative work as a taxi driver for which he was reasonably fit according to his previous work experience as a truck driver.

The trial judge disagreed. He found that at the time of the assessment (namely after his injury but before his taxi certificate was granted), Mr Dargan was not able to engage in regular paid work for which he was "reasonably fitted by education, training and experience" and was therefore totally and permanently disabled.

He ordered Mr Dargan to be paid the amount due to him under the policy, together with interest.

Appeal

Hannover appealed, contending that it was incorrect to conclude that Mr Dargan was not fit to carry out the work of a taxi driver.

The appeal was allowed. The purpose of the policy was to provide benefits for total and permanent disablement not partial disablement.

The requirement for total and permanent disablement meant an inability to engage in regular paid work for which the claimant was reasonably fitted by education, training or experience. The fact that he had previously worked full time did not mean that he was not reasonably fit for part-time work.

Mr Dargan was an experienced truck driver who was familiar with the rules of the road and the demands of driving commercial vehicles. He was able to obtain a taxi certificate without undertaking any tests and was able comfortably to pass the test required as a condition of maintaining the certificate. He was able to work regularly on a part-time basis and was therefore capable of regular paid work. There was nothing to suggest that he would not have been capable of performing that work at the time of the permanent disablement assessment.

Although the question of whether a person is reasonably fit for a particular type of work will depend on the particular facts, the significance of Mr Dargan's case is that a person who is capable of undertaking regular part-time work is unlikely to be regarded as totally incapacitated. Furthermore, part-time work utilising some of the skills and experience gained from previous employment is likely to be considered work for which the person is "reasonably fitted by education, training and experience".

As well as being relevant to life policy claims, the decision is worth bearing in mind in the context of workers' compensation claims.

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