TPD claims - Appeal unsuccessful: Beware the Date of Assessment

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By David Slatyer, Partner 

Introduction

My last update concerned the case of Standley v Onepath Life Ltd, which has since gone on to appeal, with the NSW Court of Appeal having handed down its decision on 10 December 2020; Onepath Life Ltd v Standley [2020] NSWCA 321.

The appellant insurer was unsuccessful in its appeal, on these issues:

  1. whether the primary judge erred in finding that the proper construction of the policy meant that the three month ‘waiting period’ for total and permanent disablement (TPD) did not need to occur at a fixed time.
  2. whether the primary judge erred in finding that Mr Standley was TPD based on the medical evidence.

Background

Mr Standley was a call centre manager supervising about 40 people when he was involved in a motor vehicle accident that caused him to sustain a fractured wrist and two fractures to his leg.  Two-three months later he attempted to return to work but after a further two-three months he resigned due to ‘not coping’ with the demands.

Some time later a TPD claim was lodged, relying on the physical injuries alone. There was competing medical evidence regarding the effects of his physical injuries. However the claimant had made out to his doctors that his work involved physical exertion including walking around supervising staff and lifting packages, but the court did not accept that, and therefore found it difficult to accept his medical evidence on this subject.

The insurer reached a decision to reject the claim.   In doing so it fixed the date of assessment for TPD as 2 May 2016, being the conclusion of three consecutive months inability to work because of the injuries, with such waiting period starting when Mr Standley ceased work in February 2016.

Accordingly, at 2 May 2016 there was no evidence of any psychiatric injury, and there was evidence that the physical injuries were not to the extent that Mr Standley was unlikely ever to ever again be able to engage in his own occupation.

The definition of TPD in the policy was:

“…as a result of illness or injury, the life insured:

  1. has been absent from and unable to engage in their own occupation for three consecutive months; and
  2. is disabled at the end of the period of three months to such an extent that they are unlikely ever to ever again be able to engage in their own occupation”

At First instance

At first instance the Supreme Court accepted that the date for assessing TPD (i.e. whether Mr Standley’s injuries were to the extent that he was unlikely to ever again be able to engage in his own occupation) was the end of a period of three consecutive months inability to work because of the injuries.  However it agreed with Mr Standley’s counsel that the TPD definition should not be read narrowly so as to restrict the period of three consecutive months to occur at a fixed time. The court said that “the clause does not in its terms limit the three months of inability to work to any particular period, and I am not persuaded that there is any reason to read into the clause any limitation on its scope”.

This meant that Mr Standley could prove that at some later stage he met the TPD criteria.  By September 2017 there was evidence including medical evidence of a secondary psychiatric condition, which in combination with this physical injures, supported his claim.

As the insurer had not challenged Mr Standley’s psychiatric condition as at September 2017 and beyond, the court decided that the claim was made out.

The Court of Appeal

On appeal, the insurer sought to rely on another clause in the policy, which it did not invoke at the trial of the matter, to support its argument that the waiting period must commence when Mr Standley first ceases to work because of his injuries (and not later).

The further clause relied on was the definition of “Date of disablement”, which provided it “will be the date three months after the life insured permanently ceases work”.

However the Court of Appeal said that “the reference to ‘permanently ceases work’ is not, as Onepath contends, to the insured ceasing work for a particular employer. It is to their ceasing to work in an …occupation ‘permanently’ because of a disability…”.  In Mr Standley’s case this occurred by September 2017 as a consequence of the combined effect of his physical and psychiatric condition.

As for the second ground of appeal, the insurer contended that the primary judge erred by finding that the insurer did not challenge Mr Standley’s psychiatric condition as at September 2017 and beyond. To support this appeal it referred to cross-examination of Mr Standley, however the Court of Appeal said that the cross-examination did not deal with the central proposition that Mr Standley exaggerated to the medical experts the extent of his psychological condition and instead related to his physical condition, and as such the judge did not err.

The insurer’s other appeal grounds based “insufficient reasons” and “applying the incorrect test” were rejected, and the Court of Appeal found the trial judge did not err in forming a view on the evidence that Mr Standley met the TPD definition by September 2017.

Conclusion

This is another reminder to pay heed to the particular words of the policy, to be construed according to the ordinary meaning of those words in the context of a commercial contract.

Here there were no words in the definition to fix the commencement of the waiting period to the cessation of work for a particular employer, when such words could have been used.

For further information, please do not hesitate to contact us.

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