In May 2009, Mr Birdsall suffered an injury to his right wrist and shoulder while lifting a heavy box at work. He was a member of the Motor Trades Association of Australia Superannuation Fund (the Fund) and made a claim for a benefit available under a group life insurance policy issued by Metlife Insurance Limited in favour of the Fund. Both Metlife and the trustee rejected his claim. He then commenced proceedings in the Equity Division of the Supreme Court seeking declarations that he was, and had been since October 2010, totally and permanently disabled within the meaning of the policy issued by Metlife.
He alleged that both the trustee and Metlife owed him a "duty of good faith and fair dealing". He alleged that the trustee had breached this duty as it had "delegated" to Metlife the authority to exclusively determine whether he suffered from a relevant incapacity. As against Metlife, he alleged that there had been a failure to consider the evidence from his treating medical practitioners and the fact that he had made several applications for employment without success.
The judge at first instance agreed that Metlife and the trustee had both failed to consider the medical evidence and job applications. The bundle of unsuccessful job applications was described as "a relevant consideration that each ought to have considered and it was unreasonable for each not to have done so".
However, having made that determination, the judge at first instance ultimately concluded that, having considered all of the evidence, he was not satisfied that it had been established that Mr Birdsall was within the definition of Total Permanent Disability (TPD) in the policy and the trust deed. He therefore held that he was not entitled to the TPD benefit.
Mr Birdsall challenged the correctness of that determination in the Court of Appeal.
On appeal, the Court noted that Mr Birdsall had accepted that he was physically capable of performing each of the 3 roles identified by Metlife. He also gave evidence 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 skill could be obtained by completing a TAFE course. He agreed that with "suitable training" he should be able to do that job. However, Mr Birdsall challenged the primary judge's conclusion that the description "work which [he was] reasonably capable of performing by reason of education, training or experience" did not exclude the possibility of a need for further training where that training would not change the character of the work for which he was already fitted but would enable him to use his existing skills to pursue work of that character. He also challenged the primary judge's conclusion that any further training he would have required would have been minimal and it would have been reasonable in the circumstances for him to undertake that training to enable him to utilise his existing skills.
He argued that the commercial 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, Mr Birdsall relied upon the decision of Brereton J in Halloran v Harwood Nominees Pty Limited [2007] NSW SC 913. This submission was not accepted by the Court of Appeal, which referred instead to the decision in Hannover Life Re of Australasia Limited v Dargan [2013] NSWCA 57. The appeal judges agreed with the primary judge's conclusion that the need for further training did not mean that Mr Birdsall was not already capable of performing the roles to which it was directed. The expression "reasonably capable" recognises 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 is otherwise qualified by education, training or experience. That training or certification may be available in the form of a TAFE or other certification course or from the employer.
The Court of Appeal also agreed with the primary judge's conclusion that any further training or certification required would have been minimal and that, in the circumstances, it was reasonable for Mr Birdsall to undertake that training in order to gain employment utilising his existing skills and experience. The Court of Appeal therefore upheld the primary judge's decision in not being satisfied that Mr Birdsall was within the definition of TPD in the policy.
The Appeal judges also raised a number of issues which, due to the way in which the appeal was framed, did not require determination. Specifically, the parties had agreed that it was appropriate for the Court to decide Mr Birdsall's entitlement to the benefit. Basten JA in particular was troubled by this assumption, noting that the Superannuation Industry (Supervision) Act 1983 (SIS Act) provided for an alternative independent decision-making process for a dissatisfied insured and beneficiary. As the SIS Act conferred on the Superannuation Complaints Tribunal all the powers, obligations and discretions that are conferred on the trustee, the Tribunal is therefore placed in the position of the trustee and its decision is substituted for that of the trustee. Although Mr Birdsall did not seek to exercise any rights he may have had under the SIS Act, the existence of the legislative scheme, which provides for challenge to decisions on the basis that they were "unfair or unreasonable", militates against departure by the Supreme Court from the conventional approach to decisions of trustees.
The Court also referred to the tension between the definition of permanent incapacity in the SIS Act and that contained within the policy, which required Metlife to form an opinion as to Mr Birdsall's entitlement to the benefit. Specifically, Basten JA noted that neither the trustee, nor the parties, nor the Court at trial, considered how the phrase "in our opinion", as it appeared in the policy operated for the purposes of the trustee's decision. He also commented that, given that the Superannuation Regulations required a trustee to be reasonably satisfied that an application met the standard test of incapacity before payment of a benefit could be made, the courts may need to re-examine the way in which they dealt with contractual provisions making an entitlement to benefits conditional on the opinion or satisfaction of the insurer.
However, as the appeal was dismissed, it was not necessary to further explore these issues. It will be interesting to see how these issues are dealt with in future TPD cases.
The decision follows in the footsteps of Hannover Life Re of Australasia Limited v Dargan and recognises a person may need to undertake specific training or certification to enable him or her to engage in particular employment for which he or she is otherwise qualified by education, training or experience.
