On 14 September 2018, Parker J of the NSW Supreme Court found that MetLife and First State Super (FSS) had not breached their duties in determining that Ms Newling was not entitled to a TPD benefit and ordered Ms Newling to pay the defendant’s costs. The hearing only related to the ‘first stage’ enquiry, namely whether in declining the claim the defendants had breached their duties. The hearing did not consider the question of whether Ms Newling was TPD. This was because the parties had earlier agreed that the two questions, or stages, were to be determined separately. FSS played no role in the proceedings.

Ms Newling was a police officer who, in May 2012, was medically discharged from the police force. In April 2012, she claimed a Total and Permanent Disablement (TPD) benefit from MetLife and FSS. TPD was relevantly defined in the policy 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.

Ms Newling ceased work on 2 September 2011, hence the six month period expired on 2 March 2012. The parties agreed that the assessment of TPD was to be made as at 2 March 2012. Ms Newling alleged that she was TPD because of mental illness and severe chronic low back pain. There was no dispute that she had at least a degree of impairment as a result of the back injury. The issue was the extent of her psychiatric and physical injuries. There were numerous medical reports providing contradictory opinions regarding whether she was TPD. There was also surveillance footage which showed her shopping, bending, and walking her dog. Some of the doctors changed their opinions (adversely to Ms Newling), after viewing the surveillance footage. Additionally, a vocational assessor determined that she was suited to a range of office jobs as she had done desk work at the police for over a decade.

The determination of the claim occurred in the usual way of a procedural fairness letter, a response from the plaintiff, and a response from MetLife inviting Ms Newling to respond. In
August 2015, Ms Newling responded and requested the claim be immediately determined.

Thereafter, FSS advised MetLife it was of the view that Ms Newling met the policy definition for TPD at the relevant date and invited MetLife to reconsider its position. MetLife responded, stating that it maintained its decision. The proceedings were then commenced.

Parker J confirmed that the test to be applied to a ‘first stage enquiry’ was whether the opinion formed by the insurer was not open to an insurer acting reasonably and fairly in the consideration of the claim. It is only if that is established that the insurer’s decision can be set aside. The test is not specific to the particular insurer in question. If the decision is one which could have been made by an insurer acting reasonably, then it must be sustained. Parker J based this finding on the decision of the NSW Court of Appeal in Hannover Life Re of Australasia Ltd v Jones (2017) NSWCA 233.

Parker J also made the following findings, which provide guidance when determining TPD ‘own opinion’ clauses:

No duty to give reasons

• Parker J held that MetLife did not have an obligation to give reasons for its decision. The basis for this finding was that the insurance contract contained no express obligation on MetLife to give reasons for its decision and that an inability to understand what the insurer’s particular process of reasoning was, does not necessarily mean that breach is established. Parker J held that an obligation to give reasons must arise expressly or by implication from the terms of the policy. In making this finding, Parker J noted that in the decision of Ziogos v FSS Trustee Corporation [2015] NSWSC 1385, Ball J held that there was a duty to give reasons. Parker J thought that this aspect of Ball J’s findings had been overruled by the decision of the NSW Court of Appeal in Hannover Life Re of Australasia Ltd v Jones (2017) NSWCA 233.
• His Honour also held that if the insurer does not give reasons in its claims correspondence, that does not prevent the insurer later providing evidence of its reasons by means of tendering documents such as internal minutes, or by direct oral testimony from the officer(s) who made the decision
• If he was wrong and there was a duty on MetLife to give reasons, the obligation was no higher than an explanation of the ‘actual path of reasoning’ by which the conclusion was arrived at.

Fairness in assessment process

As the process of assessing the claim was under MetLife control, it was obliged to adopt an assessment procedure which gave Ms Newling a full and fair opportunity to prove her claim to MetLife’s satisfaction. Examples of the way that MetLife had acted fairly included:

• Requesting a report from Ms Newling’s treating psychiatrist, asking him to comment on the psychiatric and vocational reports MetLife had obtained and noting his comments on surveillance
• Disregarding the opinion of the treating psychiatrist as he had not fully grappled with the implications of the surveillance
• Not necessarily preferring the opinions of the treating doctors – the Court found that MetLife did not have to have a sound basis for preferring the opinions of the IMEs over the treating doctors
• A reasonable expectation by MetLife that if Ms Newling was genuinely disabled from her back condition, she would have undergone the recommended surgery, including by having it done in the public system.

An error is not necessarily fatal

Parker J held that even if MetLife had proceeded on some mistaken basis, such as accidentally overlooking something in the course of its assessment, it was not necessarily a breach of its obligation to conduct the assessment fairly and reasonably.

Onus and plaintiff’s self report

Parker J also held that the onus lay on Ms Newling in the sense that she was required to put forward material proving her claim to MetLife’s satisfaction. She was required to prove affirmatively to MetLife’s satisfaction that there was no real chance that she would work again. In this context – since the issues were, to an extent, critically dependent on Ms Newling’s self- report – MetLife was not obliged to accept everything that was said by her or on her behalf and was entitled to be doubtful or even sceptical ‘if doubt or scepticism was reasonably open’.

No real chance of working again

Parker J said that the best evidence of inability to obtain work would have been evidence of actual unsuccessful attempts to obtain, or to hold down, relevant employment. The second best evidence would have been some form of expert assessment. Ms Newling did not present evidence of either. In addition, it was reasonable to consider the availability of work in the location where the plaintiff was living as at the date of assessment (March 2012) rather than where she was living (on the NSW north coast) at the time of trial.

Alex Bolton, Partner and Nathan Jessop, Senior Associate from Moray & Agnew acted for MetLife in the above matter.