Federal Court of Australia

MetLife Insurance Ltd v Hart [2021] FCA 410

ORDERS

THE COURT ORDERS THAT:

1.    The determination of the Superannuation Complaints Tribunal is set aside.

2.    It is declared that the Superannuation Complaints Tribunal erred in determining that MetLife Insurance Ltd had “constructively rejected” the claim of the first respondent.

3.    The matter is remitted to the Superannuation Complaints Tribunal or such other body lawfully authorised to undertake the responsibilities of that Tribunal, as the case may be, to be determined according to law and these reasons.

4.    There be no order for costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

DERRINGTON J:

introduction

1    This is an appeal brought by MetLife Insurance Ltd (MetLife) from a decision of the Superannuation Complaints Tribunal (the Tribunal) that set aside a purported “constructive rejection” of a claim by the first respondent, Ms Marie Hart, for a total and permanent disability (TPD) benefit pursuant to the Group Life Insurance policy called the “Blue Ribbon” policy, policy number CGI3261 (the PBR Policy), and substituted a decision that the claim be accepted. The Tribunal also directed MetLife to pay interest to Ms Hart on the amount of the benefit payable in respect of the accepted claim pursuant to s 57 of the Insurance Contracts Act 1984 (Cth) from 14 August 2020 until MetLife made payment.

2    For the reasons which follow, MetLife’s appeal should be upheld. It is apparent that in reaching its decision the Tribunal failed to appreciate the consequences of the terms upon which MetLife ceased being “on risk” pursuant to the PBR Policy. Those terms limited its liability in respect of claims made after 30 September 2011 to, inter alia, those related to any injury or illness which had resulted in a member of the superannuation fund being unfit for the purposes of their ordinary duties (referred to herein as “not at work”) on 30 September 2011. While Ms Hart was “not at work” on that day by reason of her back injuries, she only ceased work permanently some three years later as a result of psychiatric illness. When her claim for a TPD benefit was ultimately made on MetLife, it sought to investigate the causal issues relevant to its potential liability, but Ms Hart refused to co-operate. The Tribunal’s failure to appreciate the issues relevant to the limitation of MetLife’s liability with respect to claims made pursuant to the PBR Policy after 30 September 2011 had two consequences. First, it failed to identify and answer the correct questions relating to MetLife’s liability, and, second, it also led it to the erroneous conclusion that MetLife’s attempted investigations were not fair and reasonable. The Tribunal’s misunderstanding of the real issues gave rise to several substantive legal errors which infected its determination setting aside the “constructive rejection” of the claim and substituting the acceptance of that claim. Its determination must itself be set aside and the matter remitted to it for determination according to law and in accordance with these reasons.

3    It ought to be acknowledged that this result will be a great disappointment for Ms Hart who has not only suffered significant personal distress through injury and illness, but has also endured an extended period during which her entitlements have not been recognised or determined. As is discussed in greater detail in these reasons, the causes of that delay are varied, but they do not include the conduct of MetLife which has dealt with her claim in an expeditious and professional manner. What appears to have happened is that, prior to Ms Hart turning her attention to MetLife’s potential liability, there had been a significant delay by the trustee of her superannuation fund in dealing with her claim as well as a further delay by the current insurer to the fund in considering it. Unfortunately, in expressing her understandable frustration arising from that situation, Ms Hart appears to have failed to differentiate between the respective insurers and has tended to attribute the delay of others to MetLife. In the light of that lamentable delay, the decision of the Court in this appeal has been expedited and it is hoped that these reasons will assist in the resolution of the relevant issues.

Background facts

4    Ms Hart was a member of the New South Wales Police Force (NSWPF) from 29 August 2003 until her official discharge on 3 July 2016.

5    At all relevant times, the First State Superannuation Scheme provided superannuation benefits to members of the NSWPF and the second respondent, formerly known as FSS Trustee Corporation (FSS), was the trustee of that scheme (the FSS Scheme). With effect until 30 September 2011, MetLife, pursuant to the PBR Policy, provided death and TPD cover for scheme members who were New South Wales police officers. In the material before the Court, the PBR Policy was occasionally referred to as the “Enhanced Policy”. The benefits under that policy were greater than those provided under MetLife’s standard cover (“the Basic Policy”) which were available to members of the scheme until 30 November 2010.

6    It is important to appreciate that the cessation of MetLife’s cover under the respective policies corresponded with the assumption of liability by TAL Life Limited (TAL Life) for any new claims arising under them from the date of such cessation, except for certain claims in respect of which MetLife remained “on risk”. In effect, TAL Life was substituted for MetLife as the provider of insurance to the fund members pursuant to those policies.

7    Unfortunately, Ms Hart’s time in the police force was somewhat problematic. On 19 February 2007, she made a claim for workers’ compensation pursuant to an unrelated policy in respect of a back injury. The material suggests that the onset of this injury commenced not long after she had joined the police force and was the consequence of her wearing a gun belt in the course of her general duties. It would seem that the sequelae of her injuries worsened over time and it is uncontroversial that, from 6 October 2010, she was placed on permanently restricted duties in the role of an exhibits officer. In that position, she worked three, eight hour days per week.

8    In August 2014, Ms Hart was diagnosed with post-traumatic stress disorder (PTSD) and, as a result, she ceased performing any kind of work with the NSWPF on 19 December 2014. Her employment with the NSWPF terminated on 3 July 2016 upon her official discharge.

9    In March 2016, she made a claim to FSS, as the trustee of the FSS Scheme, claiming that she was totally and permanently disabled (TPD) and she completed a claim form directed to the current insurer, TAL Life. The circumstances as to how that claim was dealt with by FSS and TAL Life are not before the Court, but it should be noted that it was not until 8 December 2017 that TAL Life responded indicating that it did not consider itself “on risk” in relation to the claim. It confirmed that view on 3 January 2018. While it is apparent that in that 21 month period there was substantial investigation of Ms Hart’s claim by TAL Life and FSS, it is not possible to ascertain whether the delay by TAL Life in reaching the conclusion that it was not “on risk” was justified or not.

10    Following TAL Life’s rejection of her claim, Ms Hart made a formal claim to MetLife for TPD under the two policies. That claim was made on 18 February 2018. MetLife had been informed by FSS in December of the previous year of the possibility of such a claim being made.

11    Subsequent to the claim being made, a number of arbitrations took place in which MetLife and TAL Life disputed their liability for Ms Hart’s condition pursuant to the terms of the Basic Policy. Despite that ongoing disputation, on 10 May 2019, MetLife informed FSS of its requirements to progress the assessment of Ms Hart’s TPD claim under the PBR Policy. They included that Ms Hart present herself for examination by a physiotherapist and an orthopaedic surgeon for which appointments had been made. Most regrettably, Ms Hart refused to attend those examinations and MetLife was required to pay cancellation fees in respect of the aborted appointments.

12    MetLife also sought copies of documents pertaining to Ms Hart’s overseas travels and, in particular, documentation recording her departure from and entry into Australia. In the present dispute, these are referred to as the “Border Force documents”. They were sought because, whilst Ms Hart had claimed that she suffered from a serious and ongoing back problem, MetLife had become aware that she had, relatively recently, travelled internationally on long haul flights. Ms Hart has refused to provide an authority to enable those documents to be obtained.

13    In those circumstances, MetLife asserted that it was not in a position to make a decision in relation to the claim on the PBR Policy until it was possessed of sufficient information from which it could sensibly reach a conclusion as to the issues central to its liability.

Policy wording

14    The chapeau to the PBR Policy provided as follows:

In consideration of receiving from the Policyowner Premiums as and when they fall due, we shall subject to these terms and conditions pay to the Policyowner the individual amounts of insurance set out in this Policy.

15    The policy provided benefits for death and total and permanent disablement as follows:

3.     DEATH, TPD AND TERMINAL ILLNESS

If an Insured Member:

(a)     dies

(b)     suffers TPD; or

(c)     suffers from a Terminal Illness on or after l July 2008,

while this Policy is in force, subject to the provisions of this Policy, we will pay to the Policyowner the Sum Insured in respect of the Insured Member, subject to clause 2.

16    For the purposes of the policy, “TPD” was defined as having the meaning given to “Total and Permanent Disablement” by cl 6 of the First Schedule to the policy, which was relevantly in the following terms:

6.    TOTAL AND PERMANENT DISABLEMENT

While covered under this policy, Total and Permanent Disablement shall have the following meaning:

…

(b)    In the case of an Insured Member whose Normal Hours are 15 hours each week or more at the time of the Insured Event giving rise to the claim - 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 or education, training or experience.

…

17    Clause 7 imposed requirements on the making of claims upon the insurer. It provided:

7.     CLAIMS

7.1     The Policyowner must notify us in writing as soon as is reasonably practicable of an event entitling the Policyowner to a Benefit.

7.2     The accuracy and timeliness of a claim investigation, and subsequent payment, will be diminished if we are not notified in writing within one year after the event giving rise to the claim.

7.3     It is a condition of payment of any Benefit that the Insured Member provides us with such evidence to substantiate the claim as we may reasonably require. The Insured Member must submit at our expense to a medical examination conducted by a legally qualified medical practitioner appointed by us as we deem necessary. Satisfactory proof of age may be required prior to any payment of Benefits.

18    By clause 10.1, MetLife’s liability ceased on any of the enumerated occasions. It provided:

10.     CESSATION OF LIABILITY

10.1     We shall have no liability under this Policy to pay a Benefit in respect of an Insured Member from the time any of the following circumstances occurs:

…

(f)    Where the Insured Member dies, is diagnosed as being Terminally Ill or the Insured Event causing TPD occurs after this Policy is cancelled or terminated for any reason;

(g)    Where the Insured Member dies, is diagnosed as being Terminally Ill or the Insured Event causing TPD occurs after the day the Insured Member ceases to be a Police Officer;

19    The policy also defined the expression “Insured Event” in the following terms:

Insured Event means an illness (including sickness, disease or disorder) suffered, or, bodily injury occurring, to a Police Officer while an Insured Member. For a Terminal Illness Benefit, the insured event will be taken to occur on the later of the date of notification to us and the date that we receive both of the certifications referred to in paragraph (a) of the definition of Terminal Illness.

20    As mentioned, from 30 September 2011, MetLife’s liability for new claims under the PBR Policy ceased at which time TAL Life became the new insurer. The manner in which the liability between the insurers under the PBR Policy was apportioned is considered in more detail below.

Legislative background

21    The Superannuation (Resolution of Complaints) Act 1993 (Cth) (SRCA) establishes the Tribunal and provides for the review of certain decisions and conduct in respect of which complaints may be made. The functions of the Tribunal relate to complaints about decisions and conduct by, inter alia, a trustee of a regulated superannuation fund or an insurer: s 12.

22    Section 4 identifies the circumstances in which a decision-maker makes a decision for the purposes of the SRCA:

4    Definition of decision made by a trustee, insurer, RSA provider or another decision-maker

For the purposes of this Act, … an insurer … makes a decision if:

   (a)    the … insurer … makes, or fails to make, a decision; or

(b)    the … insurer … engages in any conduct, or fails to engage in any conduct, in relation to making a decision.

23    Section 14 provides for complaints to be made to the Tribunal about decisions made by a trustee:

14    Complaints about decisions of trustees other than decisions to admit persons to life policy funds

(1)    This section applies if the trustee of a fund has made a decision (whether before or after the commencement of this Act) in relation to:

(a)    a particular member or a particular former member of a regulated superannuation fund; or

(b)    a particular beneficiary or a particular former beneficiary of an approved deposit fund.

…

(2)     Subject to subsection (3) and section 15, a person may make a complaint (other than an excluded complaint) to the Tribunal, that the decision is or was unfair or unreasonable.

Note: Although a complaint is about the decision of a trustee, the Tribunal may join an insurer or other person as a party to the complaint (see subsection 18(1)). The Tribunal may then review any decision of a person joined as a party that may be relevant to the complaint.

24    The Tribunal may join an insurer to a complaint under s 14 if the subject matter of the complaint relates to a “disability benefit” under a contract of insurance between the trustee and the insurer, and the Tribunal decides that the insurer should be a party to the complaint: s 18(1)(c). The consequence of such joinder is that, in reviewing the trustee’s decision, the Tribunal must also review any decision of the insurer relevant to the complaint: s 37(2)(a).

25    Where a complaint is made, the Tribunal must inquire into it and attempt to settle the complaint by conciliation: s 27. If conciliation is unsuccessful, the Tribunal must undertake a review of the complaint at a “review meeting”: s 32.

26    A party to a complaint may make written submissions to the Tribunal for the purposes of a review meeting: s 33. If the Tribunal thinks it necessary, it may also permit the parties to make oral submissions at the review meeting: s 34(1)-(2).

27    As is not uncommon in administrative review schemes of this nature, the Tribunal is “not bound by technicalities, legal forms or rules of evidence”, is required to act as speedily as proper consideration of the reviews allows, and may inform itself of any matter relevant to the review in any way it thinks appropriate: s 36.

28    The powers of the Tribunal relevant to the review of complaints made pursuant to s 14 are set out in s 37 which relevantly provides:

37     Tribunal powers—complaints under section 14

…

(2)     If an insurer or other decision-maker has been joined as a party to a complaint under section 14:

(a)     the Tribunal must, when reviewing the trustee’s decision, also review any decision of the insurer or other decision-maker that is relevant to the complaint; and

(b)     for that purpose, has all the powers, obligations and discretions that are conferred on the insurer or other decision-maker; and

(c)     subject to subsection (6), must make a determination in accordance with subsection (3).

(3)     On reviewing the decision of a trustee, insurer or other decision-maker that is the subject of, or relevant to, a complaint under section 14, the Tribunal must make a determination in writing:

    (a)     affirming the decision; or

(b)     remitting the matter to which the decision relates to the trustee, insurer or other decision-maker for reconsideration in accordance with the directions of the Tribunal; or

    (c)     varying the decision; or

(d)     setting aside the decision and substituting a decision for the decision so set aside.

(4)     The Tribunal may only exercise its determination-making power under subsection (3) for the purpose of placing the complainant as nearly as practicable in such a position that the unfairness, unreasonableness, or both, that the Tribunal has determined to exist in relation to the trustee’s decision that is the subject of the complaint no longer exists.

(5)     The Tribunal must not do anything under subsection (3) that would be contrary to law, to the governing rules of the fund concerned and, if a contract of insurance between an insurer and trustee is involved, to the terms of the contract.

(6)     The Tribunal must affirm a decision referred to under subsection (3) if it is satisfied that the decision, in its operation in relation to:

(a)     the complainant; and

(b)     …

was fair and reasonable in the circumstances.

29    The essence of the Tribunal’s function in reviewing a complaint pursuant to s 37 is to identify and remediate any unfairness, unreasonableness, or both, that exists in relation to the decision or conduct that is the subject of the complaint.

30    It may also be observed that, despite the generality of the scope of powers conferred on the Tribunal to review complaints, the SRCA does impose some restraints on the Tribunal’s exercise of those powers and the discharge of its review function. The entitlement of parties to a complaint to make written submissions must necessarily give rise to an obligation on the Tribunal to consider such submissions in the performance of its statutory task. The same may be said of any oral submissions the Tribunal permits to be made. This is consistent with the Tribunal being obliged to undertake “proper consideration” of a review of a complaint (s 36) and it being obliged to pursue the objective of providing review mechanisms that are, inter alia, “fair”: s 11. More generally, it might also be thought that the legislature did not intend to empower a body to negatively affect parties’ rights without affording them an opportunity to be heard and to have their contentions taken into consideration.

Consideration

Appeal on a question of law

31    Appeals to this Court from decisions of the Tribunal may only be made “on a question of law”: SRCA, s 46(1). Although the respondents submitted there was no such appeal in this case, little assistance was given with respect to the nature of the concept of “an appeal on a question of law” or as to how the issues on appeal did or did not satisfy that characterisation. Admittedly, the concept of “an appeal on a question of law” is elusive and one which numerous judges have attempted to comprehensively define without substantial success. Whilst the application of the concept may be difficult enough in relation to purely administrative bodies dealing with statutory rights, an additional dimension arises when the concept concerns appeals from administrative bodies which must apply statutory rules, taking into account the legal rights of private parties pursuant to contractual arrangements.

32    The submissions of FSS to this Court did helpfully refer to the Full Court’s decision in Haritos v Federal Commissioner of Taxation (2015) 233 FCR 315. There, it was observed that no judicial exegesis should be given to the expression “appeal on a question of law”, although it was identified (at 384 [194]) that the mere fact that an appeal raises a question of law is not sufficient. The Court adopted the observations of Hill J in Sharp Corporation of Australia Pty Ltd v Collector of Customs [1995] 59 FCR 6 (at 16) that, where the question is whether facts found fall within or without the description used in a statute, the decision on where they fall is a question of fact and not law. However, the Court also accepted that a finding of fact may be vitiated by an error of law where the finding is based on a misdirection of law: at 384 [197]: and that cases involving mixed questions of law and fact may give rise to an appeal on a question of law where the error involved is one of law.

33    It was also submitted by FSS that an appeal on a question of law will fail unless it is established that, but for the error of law, the decision below would, or may have been, different: Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 353.

34    In this case, the issues raised by MetLife primarily concern the meaning and interpretation of the PBR Policy and of an agreement between MetLife and FSS concerning the cessation of MetLife’s liability under that policy. Those issues give rise to an appeal on questions of law even though the identification of the Tribunal’s legal errors requires a consideration of its approach to the making of factual findings.

Ground 1 – constructive rejection

35    MetLife submitted that because no “decision” had been made by it, s 14 of the SRCA had no operation and the Tribunal had no jurisdiction to determine the matter. Properly speaking, the Tribunal’s jurisdiction with respect to MetLife arises pursuant to ss 18 and 37. In any case, the essence of this ground was that the Tribunal’s conclusion that MetLife had “constructively rejected” Ms Hart’s claim, and therefore made a “decision”, proceeded upon a misapplication of the test of what might constitute the “constructive rejection” of a claim. It was further submitted that an application of the correct test would have established the absence of any rejection and, therefore, the absence of any decision which might found the Tribunal’s jurisdiction. These issues gave rise to two matters which might each be said to raise a “question of law” in this appeal. Firstly, what is the true nature of a “constructive rejection” of a claim under a life policy? Secondly, was there a decision for the purpose of s 37(2)(a) of the SRCA?

The Tribunal’s decision

36    Relevantly for the present purposes, the Tribunal identified, at [2] of its reasons, the alleged decisions of MetLife, as the insurer, and of FSS, as the trustee, which it regarded as being the subject of its review. It specifically identified as one of the decisions:

1.    That of the former insurer [MetLife] constructively rejecting the Complainant’s total and permanent disablement (TPD) claim, pursuant to the cover arising under the Trustee’s Enhanced Policy (Enhanced Policy); …

37    It is not in dispute that the identification of a decision “constructively rejecting” the claim was a conclusion reached by the Tribunal of its own accord. As set out at [66] of the Tribunal’s reasons, MetLife’s submission had been that it had not yet made a decision in respect of Ms Hart’s claim because the occasion for it to do so had not yet arisen due to her refusal to provide documents and attend at medical examinations.

38    Nevertheless, summarising its ultimate conclusions at [7], the Tribunal held:

7.    Accordingly, the Tribunal determines to:

•    …

•    In respect of the Former Insurer’s decision 1, the Tribunal sets this aside and substitutes another decision the Complaint’s TPD claim under the cover provided by the Former Insurer’s Enhanced Policy is to be accepted.

39    Later, at [68], the Tribunal recorded that it must initially determine whether, inter alia, MetLife’s putative decision rejecting Ms Hart’s TPD claim under the PBR Policy was “fair and reasonable” in its operation in relation to her.

40    At [74], it stated that it felt it was necessary to make some comments about MetLife’s assertions that it had not delayed or acted unreasonably or unfairly in dealing with Ms Hart’s claim. In this respect it said, at the commencement of [75], “[t]he timeline associated with assessment of the Complainant’s TPD claim, is, quite simply, totally unacceptable; consider the following”. Thereafter, it set out a chronology of events commencing with the making of the claim by Ms Hart to FSS on 15 March 2016, and dealing generally with the denials of liability by the two insurers. It then said, referring to MetLife as, “the Former Insurer”:

76.    It is quite clear from the above facts that at no time has the Complainant done other than accede to the requests of the Trustee, the Current Insurer and the Former Insurer. Further, the Tribunal notes that after three and a half years from original TPD claim lodgement, the Complainant is none the wiser as to the outcome.

77.    The Tribunal considers the Former Insurer has been provided with ample medical evidence (as summarised by the Tribunal in the ‘Medical Summary’), sufficient to enable it to make a decision concerning the Complainant’s TPD claim, from the medical perspective. The Tribunal does not consider the Former Insurer needs any other evidence to make a decision concerning the Complainant’s TPD claim from the ETE perspective.

78.    In these circumstances the Tribunal determines paragraphs 1 and 2 of the Former Insurer’s Summary have no merit.

41    It was accepted by Dr Austin for FSS that the effect of these comments was that the Tribunal concluded that MetLife had constructively rejected Ms Hart’s claim. This was in contrast to FSS’s written submission that the Tribunal had concluded MetLife had “failed to make a decision” in relation to the claim. Although it is undoubtedly correct that Courts should not read the reasons of administrative tribunals “minutely and with an eye keenly attuned to the perception of error”: Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 271 – 272 (Wu Shan Liang): here, the Tribunal repeatedly used the expression “constructive rejection” to describe MetLife’s decision and that is an expression which has a particular legal meaning in the context of the determination of claims on life policies. Its use was no mere slip or looseness of language. It is sufficiently clear that the Tribunal did not proceed on the basis that MetLife had failed to make a decision in relation to Ms Hart’s claim.

Tribunal’s failure to conclude that no decision was made

The nature of “constructive rejection”

42    MetLife’s first submission on this issue was that the Tribunal misunderstood and, therefore, misapplied the concept of “constructive rejection”. It submitted that the concept was derived from a number of decisions, in particular, Shuetrim v FSS Trustee Corporation [2015] NSWSC 464 (Shuetrim) at [153] (partly overturned on another ground: TAL Life Ltd v Shuetrim (2016) 91 NSWLR 439); Hellessey v MetLife Insurance Ltd [2017] NSWSC 1284 (Hellessey) at [131] – [134] and Sargeant v FSS Trustee Corporation [2018] NSWSC 1997 (Sargeant) at [101] – [104]. In that latter decision, Parker J adopted what was said at first instance in Hellessey as to the nature of “constructive rejection”.

43    In Shuetrim, the Court was called upon to construe the PBR Policy presently under consideration. The member had claimed that MetLife had “constructively denied” his claim by not having made a decision in relation to it by a particular date. Stevenson J proceeded upon the basis that the relevant question was whether the manner in which the insurer had dealt with the member’s claim constituted a breach of its duty of good faith and fair dealing to the insured. However, his Honour was not satisfied the insurer’s conduct could be so characterised. There had been a refusal by Mr Shuetrim to attend a vocational assessment and an issue arose as to whether cl 7.3 of the PBR Policy entitled MetLife to require him to attend. His Honour found (at [168] – [170]) that it did not, but that the obligations of good faith were bilateral (although “mutual and reciprocal” might be a better description) and, in the context of Mr Shuetrim’s claim that he was TPD, it was reasonable for MetLife to require, as a condition of its considering his claim, that he attend a vocational assessment. It followed that MetLife had not breached its obligations of good faith and fair dealing by requiring the member to attend such an assessment. His Honour subsequently concluded (at [180]) that it was not unreasonable or in breach of its duty of good faith and fair dealing for MetLife to insist on a vocational assessment before considering the claim and (at [196]) with the consequence that it had not “constructively denied” its liability to Mr Shuetrim.

44    It should be emphasised that the decisions in Shuetrim, Hellessey and Sargeant were decisions concerning contractual rights under the relevant policies of insurance. They did not concern complaints made pursuant to the SRCA or the fairness or reasonableness of an insurer’s decision. A court making a determination that an insurer has constructively rejected a claim arises in a different context to that of the Tribunal’s review under the SRCA. A court has no express power to substitute its own decision with respect to a claim for that of an insurer: cf SRCA, s 37.

45    The approach set out in Shuetrim and Hellessey is that a court must consider whether the insurer’s failure to make a determination as to whether or not it is satisfied that the claimant’s circumstances meet the relevant criteria constituted a breach of its duty of good faith and fair dealing: Hellessey at [131]. This will inevitably involve a consideration of the reasonableness of the insurer’s conduct in their consideration of the claim. If the court concludes that there has been a breach of the duty, the insurer is treated as having made a determination to reject the claim: Hellessey at [131]. The court may then make a determination, on the evidence presented at the trial, whether or not the claimant is entitled to the benefit claimed because their claim does in fact satisfy the relevant criteria (absent the requirement for the insurer’s satisfaction): Hellessey at [135]; Sargeant at [131].

46    It is not entirely clear whether it is necessary or appropriate for the Tribunal to apply that approach when performing its statutory function under the SRCA, but that need not be considered as neither party took issue with it on this appeal. Rather, MetLife contended, by Ground 1, that the Tribunal made an error or errors of law in its application of the concept of “constructive rejection”.

Misapplication of the principles of “constructive rejection”

47    MetLife submitted that the Tribunal’s misapplication of the principles of “constructive rejection” is revealed by the manner in which it considered MetLife’s conduct when dealing with Ms Hart’s claim; namely, that it did not seek to ascertain whether it had failed to observe its obligation of good faith and fair dealing to her. Instead, it purported to address a much broader question and omitted consideration of the matters relevant to MetLife’s attempt to ascertain whether it would be liable in respect of Ms Hart’s claim. In order to assess the correctness of this submission, it is necessary to contextualise its conduct in the circumstances of the claim made to it.

The chronology of events

48    Mr Williams SC for MetLife was especially critical of the Tribunal’s reliance on the matters listed in [75] of its reasons which partially chronicled the history of Ms Hart’s claim from 2016. That criticism was justified given the absence from the chronology of many matters relating to MetLife’s dealings with FSS and Ms Hart. Mr Williams SC submitted that a more complete chronology was required in order to understand the appropriateness of MetLife’s conduct.

49    As MetLife’s liability under the PBR Policy had ceased in relation to new events from September 2011, Ms Hart’s claim was quite naturally first made to TAL Life. That claim was lodged in March 2016, and, for reasons which are not disclosed, there was a hiatus of approximately 21 months before TAL Life advised that it believed that it was not on risk.

50    A claim was first made on MetLife on 18 February 2018 (although it had been informed of the likelihood of a claim a few months earlier). MetLife’s response was prompt and, on 27 April 2018, it advised that it believed that it was not “on risk” in relation to the claim, although the reasons for its rejection were based on the limited information with which it had been provided. Nevertheless, it indicated in its letter of rejection that it remained prepared to consider further information if made available and to reassess the claim.

51    FSS responded to MetLife’s letter of 27 April 2018 on 12 October of that year. Again the reasons for FSS’s lengthy delay are unexplained. MetLife replied one week thereafter reaffirming that, on the basis of the information it possessed, it did not consider it was “on risk”.

52    The evidence indicates that it was only on 16 April 2019 that MetLife was provided with Ms Hart’s personnel file from the NSWPF. On 2 May 2019, it wrote to FSS advising that the file had disclosed many documents which had not previously been seen by it, but that it had considered them and had revised its views. It observed that Ms Hart was regarded as being “not at work” on the “takeover date” of 1 October 2011, being the day on which its liability under the PBR Policy ceased, because she was on restricted duties as a consequence of her back pain as identified in the medical certificates of Dr Soni, and because she was in receipt of income support benefits. Those comments concerning her being “not at work” and the “takeover date” relate to the agreement between FSS and MetLife as to the terms on which MetLife’s liability under the PBR Policy ceased. However, in its letter, MetLife appeared to accept that it might be responsible for Ms Hart’s claim and it indicated:

MetLife will now proceed with assessing the member’s TPD claim under the PBR Policy for TPD arising from the conditions certified on the Workcover certificate identified above, these being the conditions for which the member was not at work on the takeover date. MetLife will advise the Fund of its requirements for doing so, by 3 May 2019.

53    That foreshadowed assessment was directed to ascertaining whether Ms Hart’s TPD claim arose from the conditions which caused her to be “not at work” on 30 September 2011, because, as is discussed below, MetLife accepted that, if that were the case, its limited continuing liability under the PBR Policy would include Ms Hart’s claim. In furtherance of its attempt to ascertain whether it was, in fact, liable, MetLife sent another letter on 10 May 2019 to FSS seeking the provision of further information from Ms Hart. It stated that the information which it had to hand did not deal with the issues relating to its liability for the TPD claim under the PBR Policy and that there were gaps in the information in relation to the “member’s medical history, treatment and activities etc”. The letter observed that, in order to progress her claim, certain additional information was required, including her Border Protection records which were relevant to whether she had travelled on long haul flights despite medical records indicating that she was unable to sit for periods of 30 minutes or more. It also advised, “We have arranged for the member to be examined by the following experts. MetLife will meet the member’s reasonable costs of attending the examinations including accommodation the evening before the Procare appointment”. It then set out the details of appointments with a physiotherapist and an orthopaedic surgeon.

54    A copy of MetLife’s letter was emailed to Ms Hart by FSS on 29 May 2019, which also provided an explanation as to why it was sent and offered her assistance in relation to her compliance with MetLife’s requests.

55    By an email response on the same date, Ms Hart indicated her refusal to authorise the provision of information to MetLife and stated that she would not attend the appointments which had been made for her until a final determination had been made as to which of the insurers were on risk in relation to her claim.

56    MetLife sent to FSS a letter on 31 May 2019, in which it advised of Ms Hart’s refusal to attend the previously arranged medical appointments, her refusal to be assessed by an orthopaedic surgeon, and her refusal to provide authorisations for MetLife to review her medical records. In a letter of 4 July 2019, it repeated the same and also noted that it had possession of several medical reports which indicated that Ms Hart may have travelled overseas despite her claimed incapacities and that she was or would be fit for work. It further advised that, because Ms Hart was working reduced hours on 30 September 2011, and therefore “not at work”, it remained on risk for TPD arising out of the conditions which had prevented her from being “at work” as at that date and, consequently, it was necessary for it to consider whether she was unlikely to return to relevant work until a date in 2031 and, for that purpose, was entitled to inquire into her circumstances since she left work. In particular, it said that it needed to inquire into her actual level of physical capacity and that circumstance was highlighted as a result of a doctor, in March 2016, reporting that she was fit to travel to Italy on holidays when some medical certificates indicated that she was unable to walk. MetLife further referred to the need for it to acquire an objective assessment of her physical capability by a qualified expert and an examination by an orthopaedic surgeon. The letter also identified its requirement for Ms Hart to be psychologically examined and that MetLife wished to make the necessary appointment but required her unqualified undertaking she would attend before doing so. Finally, it sought the provision of further medical information from former treating medical practitioners and the Border Force documents.

57    On 16 July 2019, FSS sent an email to Ms Hart advising her of the receipt of MetLife’s further letter and attaching a copy. By return email on the same day, Ms Hart advised FSS that it should deal with her solicitors.

58    As it had not received a response by 11 September 2019, MetLife again wrote to FSS summarising the position to that date and setting out the information which it had previously sought but had not received.

59    After MetLife was joined to Ms Hart’s complaint against FSS before the Tribunal, it wrote to the Tribunal on 7 April 2020 advising that it was still assessing Ms Hart’s claims and had not yet made a decision about those claims. It further added that, as it had not made a decision in respect of the claim, the Tribunal did not have jurisdiction.

60    On 15 April 2020, the Tribunal emailed Ms Hart seeking advice as to her progress in providing the requested medical information to the insurers and stressed the importance of attending to that task. It also advised of its intention to progress the complaint and, for that, a final decision was required by the insurer.

61    On 16 April 2020, the Tribunal wrote to Ms Hart inquiring whether she had or will be attending certain independent medical examiners as had been requested by MetLife. Ms Hart responded asserting that “the insurers” had received enough medical information to make a decision about her injury. She also made some incorrect allegations that she had not refused to attend medical appointments although, when the email is read as a whole, she was apparently only referring to those requests which had been passed on to her via her solicitors.

The Tribunal’s erroneous consideration

62    The submission advanced by MetLife that the Tribunal’s misunderstanding of the nature of “constructive rejection” caused it to ask itself the wrong questions and to consider erroneous material in answering them should be accepted. By failing to undertake a qualitative analysis of MetLife’s conduct in relation to its dealing with Ms Hart’s claim, it failed to address the correct issue in relation to “constructive rejection”; namely whether MetLife had failed to comply with its obligations of good faith and fair dealing. By failing to address the correct issues, the Tribunal wrongly attributed to MetLife responsibility for the delay of approximately 23 months prior to Ms Hart first making a claim on it. Its conclusion that three and a half years had elapsed since the original lodgement of the claim was logically irrelevant to MetLife’s conduct given the claim was only made upon it in February 2018. More than half of the time which the Tribunal considered as being “unacceptable” in relation to the dealing with Ms Hart’s claim was not relevant to the issue of whether MetLife had breached its duty of good faith and fair dealing and thereby constructively rejected her claim. It is clear the Tribunal mistakenly thought that it was, and that strongly supports the proposition that the Tribunal was applying an erroneous test.

63    Whilst Dr Austin for FSS submitted that the Tribunal’s comments in this respect were somewhat “intemperate”, they were much more than that. They reflected the erroneous conclusion that in assessing whether there had been a constructive rejection, it should take into account the extended delays by FSS and TAL Life in the period prior to any claim being made upon MetLife.

64    The first sentence of the Tribunal’s reasons at [76] further supports the determination that it misunderstood the nature of the task which it had posed for itself. There, the Tribunal stated that “[i]t is quite clear from the above facts that at no time has [Ms Hart] done other than accede to the requests of [FSS], [MetLife] and [TAL Life]”. Even allowing for the nature of decisions from administrative decision-making bodies, that sentence is somewhat obscure. It is not clear what were the “above facts” to which the Tribunal referred. Its reasons suggest they were those set out in the chronology at [75] and the parties before the Court seemed to accept that was so. However, nothing in any of the facts stated in the chronology concerned or were related to the making of requests of Ms Hart or of her compliance with them.

65    Dr Austin, accepting that first sentence referred to the facts set out at [75], submitted the Tribunal was not referring to all of the medical evidence which had been requested by MetLife, but to “whether the forms were properly lodged and whether the complainant [Ms Hart] has filled out the paperwork … to the requests” made of her. There is, with respect, no textual or contextual support for that proposition. Given the history of the matter and of MetLife’s complaint about Ms Hart’s lack of positive responses to requests for medical evidence, the statement was intended to respond to that complaint. It is apparent that the Tribunal had accepted Ms Hart’s assertion that she had complied with all requests to attend medical appointments. The most probable explanation for this fundamental and egregious error is, again, that the Tribunal had conflated the position of the two insurers. In the period prior to 18 February 2018, Ms Hart had attended at medical appointments on numerous occasions and an array of reports, letters and certificates were produced. It is unclear whether these attendances were required by FSS, TAL Life, the NSWPF, or Ms Hart’s lawyers, or were for the purpose of medical treatment. Nevertheless, they included psychiatric reports, including a number from an Associate Professor Robertson who seemed to regard Ms Hart as being unable to work as a result of PTSD consequent upon “numerous traumatic events”. These were no doubt relevant to the claim which she had made to TAL Life to the effect that she was unable to work due to her psychological conditions.

66    The difficulty is that the medical information obtained to that point in time related to Ms Hart’s claim on TAL Life whereas MetLife’s position is that its liability only arises in respect of Ms Hart’s physiological condition and it has no responsibility for her TPD claim resulting from her psychological condition which occurred after it ceased to be on risk. The issue of whether MetLife had responsibility for Ms Hart’s claim raised questions not specifically considered in the material gathered prior to the claim being made upon it. In particular, whether Ms Hart’s PTSD was causally linked to her physiological injuries, and whether her psychological injuries by themselves cause her to be TPD.

67    In the above context, the import of MetLife’s propositions number 1 and 2 (set out in [73] of the Tribunals’ reasons) to the effect that there had been no failure on its part to determine the claims due to Ms Hart’s failure to act in good faith, and that it had not acted unreasonably and unfairly, is self-evident. Its requests related to the provision of medical records and Ms Hart’s attendance at independent medical examinations were concerned with its potential liability and not the differently based liability of TAL Life. The Tribunal’s erroneous conclusion that Ms Hart had satisfied the relevant requests could only have been reached because it conflated the requests made by TAL Life, which were complied with, with the subsequent requests by MetLife, which were refused. It, like Ms Hart, had difficulty distinguishing between the two separate insurers. The result is that it did not direct itself to the correct question of whether MetLife, in respect of its own conduct and its own potential liability, acted fairly and reasonably in dealing with the claim on its policy. The Tribunal must have directed itself to a more general question, being whether the conduct of both insurers and FSS, taken together, provided a fair and reasonable response to the claim and, then, to visit its negative conclusion on MetLife. As Mr Williams SC for MetLife submitted, this demonstrated a serious error of law on its behalf.

68    Mr Williams SC alternatively submitted that the Tribunal’s approach must have resulted from it overlooking a substantial amount of evidence as well as MetLife’s submission that its evidence had demonstrated its good faith and reasonableness in dealing with Ms Hart’s claim. Support for that conclusion can be gained from the contents the Tribunal’s reasons at [77] where it asserted that MetLife was in receipt of sufficient medical information on which it might decide the claim made to it. That conclusory statement lacked any reference to the evidence or the findings on the material questions of fact which supported it: cf s 25D of the Acts Interpretation Act 1901 (Cth). One of the important issues which MetLife had to decide was whether Ms Hart’s circumstances met the criteria for TPD under the PBR Policy as affected by the IFSA Guidance Note. In the circumstances, that meant whether she was, by reason of her injuries, incapacitated to such an extent as to render her unlikely ever to engage in any gainful profession, trade or occupation for which she is reasonably qualified by reason of education, training or experience. Or, in colloquial terms, whether she had no real chance before she reached her retirement age in 2031. Necessarily, any conclusion to that effect that would have required an assessment of her functional capacity into the future; being an issue which MetLife had openly sought to investigate by requesting Ms Hart attend the medical assessments it had arranged. As MetLife’s liability would only arise if Ms Hart’s incapacity for work was directly or indirectly related to the condition which rendered her “not at work” on the working day immediately preceding the “takeover date” – namely her back pain – a distinction had to be drawn between that incapacity and any lack of capacity consequent upon Ms Hart’s psychological conditions. This issue was not fanciful. In its recitation of the medical evidence, the Tribunal (at [60] – [62]) referred to reports of psychiatrists which indicated that Ms Hart was unfit for work by reason of suffering PTSD which arose as a result of the “numerous traumatic events [Ms Hart] witnessed in a (sic) work as a police officer from 2003 to 2014” or as a result of “cumulative exposure to traumatic stressors”. Statements by Ms Hart recite numerous events which she claimed to have witnessed in the course of her duties and the impact which she claimed they had on her psychologically. Necessarily, any reasonable insurer would need to consider whether any causal connection existed between Ms Hart’s back pain and her PTSD or whether her PTSD was an unrelated condition.

69    It follows that in performing its proper function the Tribunal was obliged to consider whether the accumulated medical evidence, which was not necessarily directed to the issues of MetLife’s liability, was sufficient for the evaluative purposes. Its omission to do so, which included failing to consider MetLife’s attempts to ascertain further material, was a serious departure from its statutory function and a misapplication of the provisions of the SRCA.

70    The respondents submitted that the finding in [77] was one of fact and, therefore, immune from review on an appeal on a question of law: SRCA, s 46(1). However, although it is factually conclusory, it was neither directed to nor answered the multiple questions to which a determination was required in the proper performance of the Tribunal’s function.

71    They also submitted that the question of law relied upon by MetLife purported to read into the definition of “decision” an additional requirement that the failure to make a decision must involve a lack of reasonableness. That submission should be rejected. MetLife’s submissions did not involve any embroidery on the words of the definition. It was the Tribunal which identified the relevant decision as being a constructive refusal of the claim, a term that is given a particular meaning by the several authorities. Such a decision is quite different to a mere refusal and involves questions of the insurer’s compliance with the duty of good faith and fair dealings. Contrary to the respondents’ submissions, the Tribunal did not approach its task on the basis that MetLife had not made a decision, but that that it had constructively rejected the claim. In those circumstances, it should have, but failed to, ask itself or answer the question whether, in the manner in which it dealt with the claim, MetLife breached its duties of good faith and fair dealing. To exacerbate its error, in reaching the conclusion it did, it attributed the earlier delays by FSS and TAL Life in dealing with Ms Hart’s claim to MetLife.

72    In the course of his submissions, Mr Williams SC also framed the error of law as being a misapplication of the Tribunal’s obligations under the SRCA. He submitted that the conclusions in [76] shows the Tribunal “simply failed to have regard to the claim that MetLife was making”. There is force in that submission. As identified above, given s 33 of the SRCA permits those who might be affected by the Tribunal’s decisions to make written submissions, there is a necessarily implication that, in its deliberative process, the Tribunal is required to have regard to the contentions made in any such submissions. Here, one of MetLife’s central submissions was that it had not acted unfairly or unreasonable, as a result of Ms Hart’s failure to respond to its requests for information and the undertaking of assessments. The Tribunal’s finding in [76] shows that it overlooked that submission and the substantial evidence advanced in support of it. In doing so, it erred in law by its misapplication of s 33 of the SRCA.

73    Although the respondents attempted to clothe the Tribunal’s reasons in the above respect with a different complexion and sought to rely upon the principle that reasons should not be construed too carefully: Wu Shan Liang at 271 – 272: ultimately, the meaning of the reasons is apparent and reveals an erroneous approach was adopted by the Tribunal in relation to the questions before it.

74    Dr Austin submitted that the Court cannot assess the Tribunal’s conclusion that MetLife had failed to act reasonably, fairly or in good faith, as that would require it to descend into a factual analysis which was not consistent with a limited appeal on a question of law. The difficulty with this submission is that MetLife does not ask the Court to examine whether the Tribunal’s factual conclusions were correct. Its submissions were to the effect that an examination of the Tribunal’s factual findings evidenced that it posed for itself the wrong legal question and that it misunderstood its statutory obligation to have regard to the contentions advanced to it. Each of those are legitimate issues of consideration in support of an appeal on a question of law.

75    For Ms Hart it was also submitted that, even if it be accepted that the Tribunal misunderstood the nature of the decision MetLife made, so long as there existed a “failure to make a decision”, the Tribunal had jurisdiction in relation to the matter and no error could arise. FFS supported this submission. However, the difficulty with that approach is that it is not at all clear that MetLife “failed” to make a decision. It could not have done so unless the time had arisen whereby it was obliged to make one. Prior to such a time there could be no “failure”, but merely an absence of a decision. In order to ascertain whether MetLife had failed to make a decision, it would have been necessary to ascertain what were the circumstances on which the obligation to make it were conditioned and, then, whether they had occurred. Here, MetLife submitted that, by reason of Ms Hart’s failure to provide the information which it reasonably required to assess her claim, it was under no obligation to make a decision. Although the Tribunal made some generalised findings concerning the sufficiency of the information provided to FSS and the insurers, it did not turn its mind to these specific issues which needed to be addressed in order for it to conclude that MetLife had, relevantly, “failed to make a decision”. Had it sought to found its jurisdiction on that basis, it would have undertaken the necessary considerations and made the required findings. It is pellucidly clear that it did not approach the matter in that way, but determined that MetLife had rejected the claim, albeit constructively. With respect, the respondents’ submission on this issue did not accord sufficient respect to the words used by the Tribunal when it explicitly concluded that MetLife had “constructively rejected” Ms Hart’s claim.

76    It is not appropriate to leave this issue without observing that each of the respondents filed written submissions asserting that MetLife had failed to make a decision on Ms Hart’s claim for over three years. That inflammatory submission was false and demonstrably so. It would seem that the respondents’ legal representatives fell into the same error as the Tribunal by attributing responsibility for the delays by FSS and TAL Life in dealing with Ms Hart’s initial claim on TAL Life to MetLife. That was most inappropriate and particularly so when the evidence disclosed that MetLife’s responses to the claim and issues arising therefrom were, on all occasions, timely and apposite. It is clear that Ms Hart became angry and frustrated with the manner in which her claim was being assessed, which was understandable in the circumstances. Unfortunately, she vented her frustrations towards MetLife, even though its actual involvement arose only from February 2018.

Conclusion as to Ground 1

77    It follows that MetLife is entitled to succeed on Ground 1. The Tribunal sought to found its jurisdiction on the existence of a “decision” by MetLife which was a “constructive rejection” of Ms Hart’s claim. In doing so, it proceeded upon a misunderstanding as to that concept and applied an incorrect test as to how it might arise. Had it applied the correct test, it is likely that it would have reached a different conclusion. The Tribunal neither addressed nor considered whether MetLife had failed to make a decision in relation to the claim. Had it done so and taken into consideration the issues arising under the PBR Policy and the Guidance Note, it is not likely that it would have been able to ascertain any relevant failure.

Ground 2 – Conditions for which MetLife was “on risk”

78    This second ground assumed a central role in the course of the appeal and was to the effect that the Tribunal committed an error of law by failing to consider and determine that MetLife was not “on risk” in relation to Ms Hart’s claim for PTSD. Central to this issue was the circumstance of MetLife ceasing to provide life cover for members of the FSS Scheme pursuant to the PBR Policy from 30 September 2011.

IFSA Guidance Note 11.00

79    It was uncontroversial as between the parties that the cessation of MetLife’s liability pursuant to the PBR Policy is regulated by a deed entered into between FSS and MetLife on 6 July 2011. It was also not in dispute that by cl 1.2 of that deed, “MetLife remained ‘on risk’ in respect of Insured Members under the IFSA Terms until it goes ‘off risk’ for such Insured Members pursuant to the IFSA Terms.” The “IFSA Terms” were defined in cl 2 to mean the “IFSA Guidance Note No 11.00 – Group Insurance Takeover Terms” (the Guidance Note) which relevantly apply where cover provided by the outgoing insurer pursuant to a policy is, thereafter, to be assumed by the incoming insurer. In this case, on and after the takeover date – being from 1 October 2011 – TAL Life was responsible for new claims of the FSS Scheme members pursuant to the PBR Policy, except to the extent provided by that policy and the Guidance Note.

80    The Guidance Note states in cl 6 that it provides guidance to insurers as to when cover under a current Group Insurance Policy is transferred to another insurer, the commencement of an incoming insurer’s liability for claims, and the incoming insurer’s acceptance of the terms on which it takes over the cover. The overriding general principles applicable to the transfer of cover are stated in cl 8.1 as follows:

8     Principles of Group Insurance Takeover Terms

8.1     This Guidance Note will assist all insurers when cover under a current Group Insurance Policy is transferred between insurers. The following guidelines should be applied:

§     generally the previous insurer is responsible for claims arising prior to the takeover date;

§     generally the incoming insurer is responsible for claims arising on or after the takeover date;

§     takeover should be “seamless” as far as insured members are concerned; and

  §     there must be continuity of cover through the takeover period.

81    Clause 7 of the Guidance Note provided the meanings of the following defined terms:

§     “takeover date” means the date at which a policy commences with the incoming insurer.

§     “at work” means the member is actively performing all the duties of his usual occupation with the Employer and is not in receipt of and/or entitled to claim income support benefits from any source including workers’ compensation benefits, statutory transport accident benefits and disability income benefits. A member who does not meet these requirements is correspondingly described as “not at work”.

§     “new events cover” means cover other than cover in relation to the medical condition or any directly or indirectly related condition arising from sickness or injury which has caused the insured member either:

-     to be not at work on the working day immediately preceding the takeover date; or

-     in respect of an event occurring in the period after the last working day and prior to the takeover date, to be absent from work or to be working in a reduced capacity on the takeover date.

82    Clause 13.3 made provision for members of the fund who had suffered an injury or illness prior to the takeover date to receive cover in respect of new events which occurred after that date:

13.3     Insured members who are not at work on the member’s normal working day immediately preceding the takeover date due to sickness or injury will be provided with new events cover with the incoming insurer from the takeover date. This provision enables the insured members to be covered by the incoming insurer for events arising on or after the takeover date unrelated to the reason they were absent prior to that date.

(The bold text is the substantive rule and the plain words are explanatory notes).

83    Clause 13.3 is to be read with the definitions of “not at work” and “new events cover”, and has the general effect that members who are not performing their normal work duties on the working day immediately preceding the takeover date will be covered by the new insurer for claims arising after that date, other than in respect of conditions which arise directly or indirectly from the sickness or injury which caused the member to be not performing their normal duties on that date. This gives effect to the second guideline expressed in cl 8.1 that “generally the incoming insurer is responsible for claims arising on or after the takeover date”, on the basis that liability for conditions which exist on the working day immediately preceding the takeover date or which relate to such conditions has arisen before the takeover date.

84    The converse of clause 13.3 is that the previous insurer remains on risk in respect of claims arising from events which do not attract new events cover. This was made clear by cl 13.4:

13.4     The previous insurer remains ‘on risk’ to provide cover for any TPD claim arising from any condition caused by sickness or injury, which is not new events cover.

The previous insurer remains ‘on risk’ for any claim eventuating from an event or, any condition caused by sickness or injury from which an insured member:

§     was absent from their work on the last working day prior to the takeover date;

§     suffered in any period occurring after the last working day but prior to the takeover date, which causes the member to be not at work on the takeover date;

§     was in receipt of workers compensation, rehabilitation benefits or other income support benefits on the takeover date; or

§     was attending work on the takeover date but was not at work on that date.

85    The complementary nature of the positions provided by cll 13.3 and 13.4 of the Guidance Note gives effect to the third and fourth guidelines stated in cl 8.1, in particular that the takeover is to be “seamless” and that there must be continuity of cover.

86    FSS acknowledged that it was common ground between the parties that the Guidance Note applied to the terms of the PBR Policy and formed part of the contract of insurance.

The issue arising from the Guidance Note

87    It is also not in doubt that, before the Tribunal, MetLife contended that it was not on risk in relation to Ms Hart’s claim by reason of the operation of the Guidance Note. It had submitted that Ms Hart was a member who was “not at work” due to her back injuries as at 30 September 2011, being the date on which it went “off risk”, and that the condition which caused her to cease work in December 2014 was her unrelated PTSD condition. At the very least, it advanced the submission that it was entitled to investigate the veracity of that contention.

88    At [66] of its reasons, the Tribunal incorporated a lengthy extract from the written submissions which MetLife had made to it. Those submissions included MetLife’s contention that, whilst it accepted that it was “on risk” in respect of certain conditions to the extent that they give rise to TPD claims, they did not include Ms Hart’s conditions consequent upon her psychological disorders. The quoted submissions included the following:

On 2 May 2019, [the Former Insurer] advised the Fund that it accepted that on the termination of the [Enhanced] Policy [the Insurer] remained on risk for TPD for the [Complainant] in respect of the injury which caused her to be certified as not at work on the termination date of the [Enhanced] Policy (IFSA Guidance Note 11.00 - the IFSA Terms).

…

There is no evidence that the [Complainant] was not at work on the termination date because of any other condition including depression/anxiety and or PTSD.

89    The Tribunal also recorded the following summary of MetLife’s submission in its reasons (at [73]):

... There is no basis to suggest or find that after termination of the [Enhanced] Policy, [Former Insurer] remained on risk for “any directly or indirectly related condition” because [Former Insurer] only remained on risk for “the medical condition or any directly or indirectly related condition arising from sickness or injury” which caused the [Complainant] to be not at work on takeover. This accords with the IFSA principles that the outgoing insurer is responsible for claims in respect of an insured event arising prior to takeover. [Paragraph 4]

90    The reference to “Paragraph 4” corresponded with MetLife’s summary of its written submissions to the Tribunal.

91    Before this Court, it was submitted that the material of which the Tribunal was possessed established that, as at the working day immediately preceding the takeover date, Ms Hart was a member who was “not at work” for the following reasons:

(a)    she was not actively performing all the duties of her usual occupation with the NSWPF;

(b)    she was in receipt of income support benefits from workers’ compensation benefits; and

(c)    she was entitled to claim workers’ compensation benefits.

92    On this basis, so MetLife submitted, Ms Hart was entitled to the “new events cover” provided by TAL Life, as the incoming insurer of the PBR Policy, in respect of any new conditions which arose, including her psychological condition which caused her to cease work some three years later. MetLife acknowledged it remained “on risk” for any condition arising from the sickness or injury which caused Ms Hart to be “not at work” on the working day immediately preceding the takeover date. In this respect, it submitted that the only such condition was her physiological injuries which caused her back pain. It supported that submission by reference to a NSW WorkCover certificate which had been provided to Ms Hart by a medical practitioner and which evidenced that, as at the working day immediately preceding the takeover date, she was unfit for work by reason of her back condition.

93    That certificate had been issued by a Dr Soni on 10 September 2011 (being three weeks before the takeover date). It identified, under the heading, “Medical Certification”, Ms Hart as having suffered, “left neck/shoulder pains, T8-9 disc protrusion, lower lumber pains radiates to left lateral foot”. It further indicated that she was fit for suitable duties from 11 September 2011 to 11 November 2011, but at a restricted level of 6 hours a day for three days per week on alternate days. It was also noted she was restricted to lifting up to 10 kg, sitting up to 30 minutes, standing to 30 minutes and traveling up to 30 minutes, and could undertake “no climbing twisting spine or bending”. The certificate, which contained no reference to any other contributing condition, psychological or otherwise, was signed by Ms Hart as confirming that the information given by her for the purposes of the certificate was true and correct. MetLife submitted the only conclusion to be drawn was that Ms Hart was “not at work” on the working day immediately preceding the takeover date due to the injury which she had sustained to her back and there was no evidence which called that into question.

94    The respondents referred to a letter from the Carnes Hill Medical Centre, dated 14 February 2013. It too was authored by Dr Soni and was a referral to a specialist. In part, it stated:

Please see this pt who is a police officer. She has been suffering from neck pains and lower back pain since 2003. She 35 has seen a neurosurgeon, but the last two years has been suffering from anxiety and depression, and workplace issues. She has been seeing a psychologist … . Thinks about suicide but has never attempted. … She is on [name of drug withheld] for a long time for pain and depression. She has been advised to continue psychology. This is a WorkCover and she feels that she is being harassed at work.

95    It was submitted that this indicated that Ms Hart’s psychological condition was a reason as to why she was “not at work” on the working day immediately preceding the takeover date. In particular, it says that the reference to suffering anxiety and depression for the two years prior to 14 February 2013, evidenced her having psychological conditions prior to the takeover date on 30 September 2011. The inference sought to be drawn from this letter by the respondents is not logically available. As Mr Williams SC submitted, no inference can arise from Dr Soni’s letter that Ms Hart was “not at work” on 30 September 2011 as a consequence of her suffering psychological injuries. It may be that she suffered from such a psychological condition at that time, but the letter does not suggest that it was of such a nature that incapacitated her from work to any degree. Rather, Dr Soni’s assessment as identified in the certificate of 10 September 2011, which covered the period including 30 September 2011, identified the cause of her incapacity as being her back pain and the recommended limits on her activities were related to its sequelae. If her psychological condition was a cause of her inability to work, one might have expected Dr Soni to identify it.

96    From a relatively early point in time in respect of the claim made upon it, MetLife adopted the position that it did not have any liability for Ms Hart’s TPD claim based on her deteriorated psychological condition. This had been articulated in its letter of 2 May 2019, wherein it identified that she had been on permanent restricted duties of eight hours per day for three days per week from 17 October 2010, and that her back injuries thereafter kept her in that role. It said:

MetLife will now proceed with assessing the member’s TPD claim under the PBR Policy for TPD arising from the conditions certified on the WorkCover certificate identified above, these being the conditions for which the member was not at work on the takeover date. MetLife will advise the fund of its requirements for doing so, by 3 May 2019.

97    It would appear that, as at the time of the Tribunal’s hearing, the trustee was of the view that Ms Hart was TPD for the purposes of the PBR Policy. Its submission, recorded in the Tribunal’s reasons (at [65]), was:

The trustee further submits that the Complainant is TPD for the purposes of the Former Insurer’s policies due to what may broadly be described as her back problems, either taken alone or in combination with secondary psychological problems, including the stress the complainant experienced as a result of pressure from her superiors to increase her hours when she was on reduced hours and restricted duties because of her back problems.

98    The trustee submitted to the Tribunal that this was “clearly made out in reports and certificates of the Complainant’s doctors”. The use of the word “clearly” was an obvious overstatement and the reports did not all support the trustee’s contention. Mr Williams SC took the Court to the report of a Dr George dated 11 December 2012, wherein it is said that “[b]ecause of the neck pain, thoracic pain and back pain [Ms Hart] had been limited into permanently restricted duties.” That comment supports MetLife’s contention that the cause of Ms Hart being “not at work” on 30 September 2011 was the consequence of her back pain. Dr George also opined that as a result of a meeting on 12 September 2012, Ms Hart had “an acute stress disorder superimposed on another illness”, which is indicative that Ms Hart’s serious psychiatric injuries arose from around that time.

99    MetLife also sought to support its submission that Ms Hart was “not at work” as at 30 September 2011 by reference to the Tribunal’s Registration of Complaint form in which Ms Hart acknowledged that she had been in receipt of workers’ compensation payments from February 2008. By reason of the definition of “at work” in the Guidance Note that, of itself, would suffice to deny Ms Hart the characterisation of a member who was “at work” on the working day immediately preceding the takeover date. Ultimately, there was no question that Ms Hart was “not at work” on the working day immediately preceding the takeover date. The more important question was whether the cause of her being “not at work” on that date is relevantly connected to her TPD.

The Tribunal’s failure to deal MetLife’s claim that it was not “on risk” by reason of the Guidance Note

MetLife’s submissions

100    The Tribunal’s reasons did not deal with MetLife’s submissions that its liability for Ms Hart’s TPD existed only in respect of her back pains, being the condition which rendered her to be “not at work” on the working day immediately preceding the “takeover date”, or any injury or illness directly or indirectly related thereto. Instead, it referred at [79] to the referral of Dr Soni of 14 February 2013 and his reference to Ms Hart suffering from psychological issues for the past two years. It then stated:

80.     Drawing a two-year line from 14 February 2013, takes one back to 14 February 2011. Further, Dr RS has identified the Complainant was ‘on Endep for a long time for pain and depression’. Accordingly, the Tribunal is satisfied the Complainant’s ‘psychological problems’ (adopting the language of the Former Insurer) had been ‘diagnosed/manifested’, at least by February 2011.

81.     This finding is further supported by the report of Dr GG of 11 December 2012 who reports an underlying chronic major depression present due to chronic pain and the letter from Dr CB dated 28 February 2013 who states the Complainant ‘reported mixed depressive and anxiety symptoms which have been present for some time.’

82.     As a result, the Tribunal agrees with the Former Insurer, given it ceased to be on-risk for the Basic Cover on 30 November 2010, that consideration of its liability, in that regard, is limited to the Complainant’s ‘physical conditions’ (again adopting the Former Insurer’s language).

83.    However, as the Former Insurer remained on-risk for the Enhanced Cover until 30 September 2011, it follows that consideration of its liability, in that regard, must include the Complainant’s ‘psychological problems’.

84.     In light of the Tribunal’s factual findings in the preceding two paragraphs, the Former Insurer’s contentions in paragraphs 4 and 5 are rendered otiose.

101    MetLife submitted that these findings failed to address its core submission which was ultimately directed to the attribution of liability as between it and the incoming insurer, TAL Life. It also submitted the Tribunal did not attempt to address the key issues of the definitions in the Guidance Note and, consequently, did not consider the relevant evidence. It said the Tribunal concluded that Ms Hart’s having exhibited some signs of anxiety or other psychological condition prior to the takeover date was sufficient to put it on risk in relation to the existing psychological condition generally. It did not consider whether that condition, or any progenitor thereof, played any part in Ms Hart being “not at work” on the relevant date. It further submitted that the Tribunal did not inquire whether any psychological condition caused the absence from work and that it eschewed that inquiry.

102    There is nothing in the Tribunal’s reasons which suggests that it directed itself to the submissions raised by MetLife relevant to it not being on risk in respect of the TPD claim. It did not, in terms, ask itself or address the questions of, what was the medical condition which caused Ms Hart to be “not at work” on 30 September 2011, or, whether the conditions in respect of which she claimed TPD were directly or indirectly related to that injury.

The respondents’ submissions

103    The respondents did not directly join issue with the above submissions advanced by MetLife.

104    In her written submissions, Ms Hart sought to rely upon the decision in MetLife Insurance Ltd v FSS Trustee Corporation [2014] NSWCA 281, although that case was concerned with identifying when an insured event arose under the PBR Policy. It was held (at [110]) that the relevant date was when, as later diagnosed, the member first came to suffer the illness which led to the incapacity and resulted in them satisfying the definition of TPD in the policy. It was submitted by Mr Ower for Ms Hart that the Tribunal performed that same factual inquiry for the purposes of ascertaining when Ms Hart first began to suffer the psychological illness which later developed into Major Depressive Disorder and PTSD which met the TPD criteria. However, that submission tended to lend support to MetLife’s submission that the Tribunal did not turn its mind to the determinative question under the Guidance Note. By considering when liability might arise under the BPR Policy, assuming MetLife remained the insurer under it, the Tribunal did not focus on the issue which had been raised for its consideration in respect of the attribution of liability under the Guidance Note.

105    In his oral address, Mr Ower made the somewhat inconsistent submission that the Tribunal did deal with the issues arising under the Guidance Note and in a logical manner. He submitted the Tribunal took care to apply the principles of the Guidance Note, and that the conclusion in the Tribunal’s reasons at [81] identified a report that Ms Hart had suffered chronic major depression due to chronic pain and another which reported that she had “mixed depressive and anxiety symptoms which have been present for some time”.

106    In support of this, reference was also made to the letter of Dr Soni of 14 February 2013, the substance of which is set out above, and it was said that it affords a description of an entrenched psychological problem which clearly has some connection to the physical injuries. However, the necessary connection is not drawn by Dr Soni in that letter, either directly or indirectly. Reference was made to other reports and letters from doctors who had seen Ms Hart, including that of Dr George of 11 December 2012, although that latter report might tend to suggest that the psychological injuries were caused by other stressors.

107    In substance, Mr Ower submitted that Ms Hart’s orthopaedic issues were of a serious and complex nature and the evidence before the Tribunal pointed to a relationship between them and Ms Hart’s psychological condition. He also submitted that, ultimately, Ms Hart left her employment in December 2014, as a result of the combination of orthopaedic and psychological injuries and it was the latter which came to the fore and precipitated her departure. Whilst that may well be true, it was not relevant to the issue which the Tribunal was required to consider. The essential question concerned the conditions being suffered by Ms Hart three years earlier on 30 September 2011, and any sequelae of them.

108    In its written submissions, FSS asserted that the Tribunal’s findings were sufficient to justify its conclusion that liability attached to MetLife as a result of the operation of the Guidance Note. It submitted that the findings, including that Ms Hart’s psychiatric condition had been diagnosed and had manifested before the takeover date, supported that conclusion. As has been identified above, that analysis is erroneous. The extended liability of MetLife was concerned with the illness or injury, or any direct and indirect consequences thereof, which resulted in Ms Hart being “not at work” on the working day immediately preceding the takeover date. The Tribunal’s findings neither addressed nor answered those matters.

The Tribunal asked itself the wrong question

109    The difficulty in this matter is that the Tribunal failed to appreciate that an essential issue was whether Ms Hart’s current psychological conditions, which have caused her to be TPD, were directly or indirectly related to her back pain which caused her to be “not at work” on the working day immediately preceding the takeover date. Having not considered that question, it failed to appreciate MetLife’s contention that it was entitled to investigate it and that it had been doing so fairly and reasonably. As appears from its discussion in its reasons at [80], the Tribunal’s concern was the timing of the diagnosis or manifestation of Ms Hart’s psychological issues (which it found had occurred prior to February 2011). That was apparently directed to ascertaining whether, absent MetLife’s liability on the policy ceasing, the claim would have fallen within the cover provided. Dr Austin submitted that the Tribunal’s discussion in [81] demonstrates that it made the necessary linkage because it there referred to the reports of Dr George of 11 December 2012 which connected Ms Hart’s chronic major depression with chronic pain. However, the finding sought to be supported by the Tribunal was the timing of the onset of the psychological injuries and not the connection between the back pain and subsequent PTSD disability. Further, if the Tribunal concluded the existence of such linkage it was supposition rather than analysis, and it is difficult to ascertain how it was reached given the contents of the report. But, more importantly, the Tribunal merely referred to the content of the report rather than making a finding or conclusion of fact on which it might base its decision.

110    MetLife has made good its submission that the Tribunal did not address its contention that its liability to Ms Hart turned upon the operation of the Guidance Note and, specifically, whether her TPD resulted from her back injury or its sequelae, and that its proposed investigations were directed to that issue. The respondents did not dispute that MetLife raised the issue of whether it was “on risk” in respect of Ms Hart’s claim as a result of the operation of the Guidance Note or that it was a matter which the Tribunal needed to decide. Unfortunately, it was not addressed and the Tribunal instead focused on whether the TPD claim, absent the termination of MetLife’s risk, would have been covered because Ms Hart’s psychological problems had been diagnosed or had manifested by, at least, February 2011. In those circumstances, it applied the wrong test for the purposes of ascertaining both whether MetLife was liable under its policy and whether MetLife’s attempted investigations were fair and reasonable. That is a further error of law which vitiates the Tribunal’s decision and warrants it being set aside.

111    In his address, Dr Austin repeatedly exhorted the Court to find that the Tribunal had taken a “holistic approach” to the whole of Mr Hart’s problems and it was prepared, on that basis, to find that her problems existed prior to 30 September 2011. If the word “holistic” was there being used as a euphemism for “unprincipled”, “undirected” or “confused”, that submission might well be correct. The Tribunal made no attempt to identify the actual issues which it ought to have considered – being those concerning MetLife’s actual liability under the PBR Policy as affected by the Guidance Note – but merely adopted a generalised approach which amounted to little more than concluding that Ms Hart’s psychological illnesses had their origin prior to the takeover date and, therefore, MetLife was “on risk” for her claim. Whilst it may be that the scheme under the SRCA did not have the object of providing for the enforcement of the parties’ precise legal rights, it cannot be taken as facilitating the wholesale abandonment of the contractual basis upon which those rights are to be determined. At the very least, the Tribunal was obliged to consider the contentions advanced by the parties, address the questions raised by them, and not make a decision contrary to the terms of the policy. Here, it failed in relation to each of these matters.

112    The Tribunal’s decision should also be set aside on this more fundamental ground as well.

Ground 3 – The PBR Policy – Definition of TPD

113    The submissions advanced by MetLife’s in respect of Ground 3 concerned the construction of the PBR Policy. They commenced with a consideration of the definition of “TPD” relevant to the present case and the requirement in the first limb that the member be absent from their occupation for a period of six consecutive months “through injury or illness”, and, in the second limb, that the member has become incapacitated to the required degree. It was submitted that the definition required the illness or injury referred to in the first limb – that which kept the member absent from employment for six months – must also be the cause of them being totally incapacitated. It was further submitted that, in this case, Ms Hart was prevented from working for the relevant six month period from 19 December 2014 by reason of the onset of a psychological condition and not from the back injuries which she had been suffering in September 2011 when MetLife’s liability under policy came to an end. The first part of that submission was supported by the report of a treating psychiatrist, Associate Professor Robertson which was dated 11 December 2014, shortly prior to Ms Hart ceasing work for the last time, and which stated:

Sen Constable Hart is suffering from chronic posttraumatic stress disorder and a major depressive illness. She clearly has physical injuries; however the PTSD and depression arise as a consequence of numerous traumatic events she has encountered in the course of her General Duties policing.”

114    The latter part of the submission – that Ms Hart was not prevented from working by reason of her back injuries – was supported by reference to the several medical certificates which had been provided by Dr Soni covering the period from March 2015 to May 2015. The first of those, dated 7 January 2015, identified Ms Hart’s then symptoms as being “left shoulder scapular pains, T8/T9 right disc protrusion, lower back pains radiate to left foot (L3/4 L4/5 L5/S1 broad based disc bulge with facet joint degeneration) Pains SI joints. L3-4 disc replacement 20/2/14)”. This will, compendiously, be referred to by the inadequate nomenclature, “back pains”. The cause of the injury was identified as, “Long term wearing of gun belt” and the date of the injury was identified as being 29 November 2006. The certificate indicated that it related to the period from 7 January 2015 to 7 February 2015, and that Ms Hart had capacity to undertake some employment for five hours a day for three days a week but not to work and not to climb. Several subsequent certificates were issued in almost identical terms by Dr Soni in respect of consecutive periods until the end of May 2015, all of which identified the back pains as the cause of Ms Hart’s inability to work full time, but which also indicated her ability to work limited hours. In the result MetLife submitted that the certificates evidenced that even in 2014 when she ceased work, Ms Hart was not prevented from working as a result of her physiological conditions which only restricted her to part-time work of 15 hours per week.

115    It follows, so the submission went, that the cause of Ms Hart’s being absent from work and of her lasting incapacity was her psychological illness of PTSD alone which was caused by factors other than her back condition. The consequence was that the policy did not respond because MetLife’s liability arose only in relation to the consequences of her back condition.

116    The Tribunal dealt with this issue by referring to the decision of the High Court in Finch v Telstra Super Pty Ltd (2010) 242 CLR 254, concluding that the High Court had there held that a person may be considered PTSD if they show symptoms of an illness and those symptoms subsequently develop into, or are later clarified as being, an illness amounting to total and permanent disablement. It then said (at [87]):

87.     In this regard, the Tribunal considers the medical evidence, as summarised in the ‘Medical Summary’ section above, clearly indicates the Complainant’s depression, as referred to in Dr RS’s referral letter of 14 February 2013, had, by 19 December 2014, ‘developed’ (in the language of Finch’s Case) into PTSD and Major Depressive Illness.

117    It also noted at [91] that, in 2018, a treating psychiatrist had described Ms Hart’s chronic PTSD as being due to “cumulative exposure to traumatic stressors” and noted that she had been unable to work since December 2014 and “[was] totally permanently incapacitated and [had] no current or future work capacity”. It was, apparently, for this reason that the Tribunal (at [89]) concluded that cover under the Basic Policy was not enlivened, as it related only to physical injury.

118    The Tribunal then considered Ms Hart’s ongoing psychological problems and the medical opinion that they rendered her permanently incapacitated for work. It then focused on MetLife’s submission that Ms Hart had not provided sufficient proof that she is so permanently incapacitated by her physical injuries that she is unlikely to ever return to relevant work. It identified Ms Hart’s long history of back pain, the numerous treatments for it and that no treatment was able to alleviate the pain in the long-term (at [95]), and then referred to the observations of the NSWPF Claims Technical Adviser, Employee Compensation Claims had accepted that she had a whole person incapacity for her physical injuries of 42%. Although it is not clear whether that was a medical opinion or not, it seems to have been accepted by the Tribunal as it concluded at [97]:

97.     The Tribunal therefore determines the Complainant’s ‘physical injuries’ (adopting the Former Insurer’s language as bolded above in paragraph 7) permanently preclude her from future employment in the kind of manual roles (as identified in the ETE section above), the Complainant had undertaken prior to becoming a police officer.

119    In relation to Ms Hart’s suitability for other forms of work it found that her tertiary qualifications, which she obtained for her policing career, did not enable her to undertake other forms of work with the result that she would be required to undertake complete retraining. The consequence was that the prospect of her “obtaining future employment to be, in the words of Shuetrim’s Case [2016] NSWCA 68 ‘merely a remote or speculative possibility’” (at [103]).

MetLife’s submissions

120    MetLife submitted the Tribunal erred by failing to identify how the first limb of the TPD definition was met; namely to ascertain the condition which caused Ms Hart to be absent from work for six consecutive months and, had it done so, it could only have concluded the cause was her psychiatric condition of PTSD. It did not seem to be seriously in contest, given the several medical certificates of Dr Soni, that Ms Hart’s physical conditions did not prevent her from engaging in full time work for the six months following her cessation of work in December 2014, but only confined her to restricted duties. MetLife submitted that the consequence of this was the Tribunal ought to have determined that it had no liability under the PBR Policy because, as a consequence of cl 13.4 of the Guidance Note, it was only “on risk” for the consequences of Ms Hart’s physiological injuries.

121    Next it submitted the Tribunal failed to accept that, for the purposes of the definition of TPD, it was necessary that the same injury cause the cessation of work for six consecutive months and be the cause of the ongoing incapacity. It can be accepted that there are textual considerations in favour of that construction. As cl 10.1(f) of the PBR Policy, which concerns the cessation of liability, contemplates TPD is assumed to have been caused by a singular “Insured Event” occurring prior to the policy’s cancellation. The same might be inferred from the terms of cl 10.1(g) and supported by the definition of “Sum Insured” which again identifies it as a single instance.

122    Whilst that accords some coherency in the interpretation of the policy, it cannot be taken too far and it might be thought that reference to a singular event might also include the plural.

123    Nevertheless, what can be taken from cll 10.1(f) and 10.1(g) is that there exists a temporal limitation on the occurrence of the “Insured Event” which might cause the policy to respond. Naturally enough, the Insured Event (or Insured Events if there are two of them) must occur before the policy is cancelled. For instance, if a member were to suffer an injury or illness which caused them to be absent from work for six months but not totally incapacitated, and, after the policy ceases suffers a further separate injury which renders them totally incapacitated the policy could not respond. In order for it to provide cover, both injuries (including diseases) would need to occur prior to the policy’s termination.

124    In addition, the cause of the subsequent ongoing incapacity does not necessarily need to be only the direct consequences of the initial injury and it must be undoubted that it would extend to secondary or more indirect consequences. For instance, if a person suffered a serious physical incapacity which caused them to be absent from work for six months and, although they recovered from it and not permanently incapacitated by it, but as a consequence of it they have suffered a further debilitating psychological illness which did prevent them from working, it is likely the policy would respond. On the other hand, such a scenario is really only concerned with one originating cause.

125    FSS submitted the policy ought to be read consistently with its purpose of providing benefits for total and permanent disablement and there is no necessary reason for any requirement that the illness or injury which prevents a member from working for six months should be that which renders them totally incapacitated for work. There is force in that submission and, as has been indicated, in the ordinary course of the policy’s operation the TPD cover may exist where an insured satisfies the criteria by reason of the consequences of two different injuries or illnesses.

126    Nevertheless, the real difficulty for Ms Hart arises from the cessation of MetLife’s liability pursuant to the PBR Policy from 30 September 2011 and the application of cl 13 of the Guidance Note. The latter has the consequence that TPD cover under the PBR Policy provided by MetLife was available thereafter, only in respect of the condition, or any directly or indirectly related condition arising from it, which caused the relevant member to be “not at work” on the working day immediately preceding the takeover date. So whilst it may have been that, in the ordinary operation of the PBR Policy, it would not have mattered that the illness or injury which caused the lasting incapacity was separate and distinct from that which caused the member to be absent from work for six months, the same cannot be said when the division of liability as between MetLife and TAL Life pursuant to the Guidance Note is taken into account.

127    The application of cl 13.4 of the Guidance Note to the PBR Policy is that MetLife will only be liable for a TPD claim arising from any condition caused by sickness or injury which does not attract “new events cover”. That is, a medical condition (or directly or indirectly related condition) arising from sickness or injury which caused the member to be “not at work” on working day immediately preceding the “takeover date”. Here, according to the Tribunal the claim for TPD sought to be imposed on MetLife arose from two causes or conditions: the psychiatric illness which caused Ms Hart to be absent from work for six months and her physiological injuries which (concurrently with her psychological injuries) have rendered her unemployable. Even if that were the case, the TPD claim imposed by the Tribunal did not arise only from a condition or conditions caused by the physiological injuries which caused Ms Hart to be “not at work” on the working day immediately preceding the takeover date. It arose from two causes, only one of which met that description. Had it been the case that MetLife remained “on risk” in respect of the policy, it may have been liable on such a claim. Moreover, as Ms Hart’s psychological injuries caused her to be both off work for six months and permanently incapacitated, prima facie, it would have been responsible for the TPD claim on that basis. However, as its liability became limited following the takeover date as provided by the Guidance Note, and she was not absent from work for six months as a result of her back pain, MetLife has no liability in respect of the claim.

128    The Tribunal’s approach to this issue was somewhat confused which seems to be a result of its failure to appreciate the importance and effect of the Guidance Note on MetLife’s liability. It concluded that the cause of Ms Hart ceasing work for six consecutive months was her psychiatric illness (at [87]) and then later identified that her physical injuries had rendered her incapable of obtaining employment in the future (at [97]), but yet concluded that MetLife was liable for the TPD claim. This approach encountered the dual difficulties of failing to anchor the liability for the psychiatric injuries within MetLife’s obligations under the PBR Policy as affected the Guidance Note, and failing to ascertain whether those injuries were causative of the ongoing incapacity.

129    MetLife further submitted that the Tribunal failed to have regard to the condition of payment under the PBR Policy in cl 7.3 that Ms Hart provide it with such evidence as it reasonably required and to submit to medical examinations. As previously discussed, the Tribunal did not consider the issues which MetLife sought to investigate and its reasons for doing so. In those circumstances it could not and did not ascertain whether the evidence which MetLife sought was “reasonably required”. It simply attributed to MetLife the consequences of delay by FSS and TAL Life and formed an overly generalised view that Ms Hart’s conditions had been fully examined. Had the Tribunal addressed the correct question, it is quite possible that it would have concluded that the conditions on which MetLife might be liable to make a payment had not occurred.

130    The conclusion that the Tribunal ignored the terms of the PBR Policy to the extent its operation was altered by the Guidance Note is also clear from its reliance on the decision in Finch which was misplaced. That case did not concern the policy terms relevant to the determination of the issues before the Tribunal or, indeed, the impact of the cessation of cover from a particular date.

131    It follows from the foregoing that MetLife is entitled to have the determination set aside on this ground as well.

Ground 4 – Fair and Reasonable – Constructive Decision

132    This ground of appeal was derivative upon Ground 1 and the submissions in relation to that first ground are equally applicable. Broadly, it was submitted that, by s 37(6) of the SRCA, the Tribunal was obliged to affirm MetLife’s decision (the constructive rejection) if satisfied that in relation to Ms Hart it was fair and reasonable in the circumstances, and that it erred in law by finding that the decision was not fair and reasonable. So the submission went, the Tribunal’s conclusion that MetLife’s decision was not fair and reasonable was vitiated by the application of the wrong test as to what amounted to a constructive rejection of a claim, which required it to consider whether there was a failure to fulfil the obligations of good faith and fair dealings. Mr Williams SC submitted that, for the reasons referred to in relation to Ground 1, the Tribunal’s conclusions revealed that it misunderstood and misapplied the duties owed by an insurer to an insured in respect of a claim and, rather, assessed the reasonableness of MetLife’s conduct towards Ms Hart by wrongly aggregating it with the conduct of FSS and TAL Life. For the reasons which have been given in relation to Ground 1, those submissions should be accepted as far as they go.

133    An additional submission advanced was that the Tribunal’s consideration paid no attention to the policy terms and, in particular, cl 7.3 (set out above) which made it a condition of payment under the policy that the member provides MetLife with such evidence to substantiate the claim as “[it] may reasonably require” and that the member must submit to medical examinations. It was submitted that, as compliance with this clause was a condition to payment, the claim could not be accepted unless it had been fulfilled. That characterisation of the contractual terms may be accepted, subject to an important caveat; namely, that it could be within the Tribunal’s remit to determine that condition has been satisfied (or, rather, that MetLife’s conduct or decision in requiring further evidence and Ms Hart’s submission to further medical examinations was unfair, unreasonable, or both). However, in doing so, it must act according to law.

134    The respondents relied upon the Tribunal’s statements at [77] as purportedly satisfying that requirement. It is true that those statements are broad in asserting that MetLife had ample medical evidence sufficient to enable it to make a decision on the claim from a medical perspective and that no further evidence was required to make a decision in relation to education, training and experience. However, at no time had the Tribunal identified the relevant questions to be determined in relation to the claim, the requests made by MetLife, and the reasons for them. In that sense, its broad statements did not address and did not answer the question of whether Ms Hart had provided all of the evidence to substantiate the claim as MetLife had reasonably required. As the Tribunal did not identify the particular requests and the reasons for them, it could not address the question of whether the requests were reasonable.

135    MetLife submitted that as it had not been provided with the substantiating evidence it reasonably required in respect of the condition in cl 7.3, the Tribunal fell into error in directing that the claim be accepted and that it should have only concluded that MetLife was entitled to await Ms Hart’s compliance with the policy terms. In the relief sought in the Notice of Appeal it seeks, in effect, a declaration to that effect.

136    Although the error in the Tribunal’s decision is evident, a question arises as to how to deal with this issue. It can be accepted that, on the limited material to which the Court was taken on appeal, there is a very strong likelihood that MetLife is correct in its assertion that its requirements of Ms Hart were fair and reasonable in the circumstances. It was entitled to query what appear to be serious inconsistencies in relation to Ms Hart’s claims as to the nature and extent of her physiological injuries as well as the obvious causation issues which must be addressed between the back pain she experienced in September 2011, her subsequent and permanent cessation of work in 2014, and her present and ongoing incapacity. In the ordinary course, an insurer’s investigation of these issues would include having Ms Hart examined by medical professionals of its choice. Whilst Mr Ower for Ms Hart agreed with that proposition, in broad terms he submitted that the present case was exceptional on the basis that the large amount of medical information obtained was sufficient to enable MetLife to make a decision. Unfortunately, the Court was not taken to any parts of the nearly 6,000 pages of information in Part B of the appeal book which could be taken to have reasonably satisfied the insurer’s concerns. On that basis, it should be concluded that Mr Ower failed to establish the factual foundation of his submission.

137    Nevertheless, and despite the strength of MetLife’s argument, it should be for the Tribunal to consider the issue once it has addressed itself to the correct questions and considered the relevant material. On the basis of the conclusions reach in relation to Grounds 2 and 3, it may be unlikely that this question would need to be addressed by the Tribunal in any event when it is called upon to reconsider Ms Hart’s claim. However, if it is to be reconsidered, it ought be done on a full assessment of the available information once the Tribunal has addressed the correct issues. On the other hand, whilst the positive declaration sought by MetLife is not granted, it is entitled to a declaration that the Tribunal erred in reaching the conclusions which it did.

Relief

138    It necessarily follows from the foregoing that the Tribunal’s decision must be set aside.

139    As the Tribunal posed for itself the wrong questions, it is now difficult to make orders which might resolve any issues between the parties which might turn on facts which remain to be investigated by the Tribunal. It is appropriate to take a cautious approach so as not to prematurely inhibit the advancing of any legitimate claims when the matter returns to the Tribunal. As was discussed during the hearing of the appeal, a properly instructed Tribunal will join TAL Life to any further hearing in relation to Ms Hart’s complaint.

140    In relation to the declarations sought, MetLife is entitled to a declaration to the effect that the Tribunal erred in determining that MetLife had “constructively rejected” Ms Hart’s claim or, to the extent to which it did, determining that MetLife had failed to make a decision in respect of Ms Hart’s claim. That declaration is sufficient in the circumstances and it is not necessary, despite the apparent strength of MetLife’s argument, to make any further declaration.

Remittal

141    The power of the Court to make orders in relation to an appeal are conferred by s 46 of the SRCA and specifically include the power to remit the matter back to the Tribunal for reconsideration: s 46(4). In this case, there was some doubt as to the identity of the entity to which the matter should be remitted. As the matter presently stands, the Tribunal still exists although its functions will, from some date in the future, be undertaken by the Australian Financial Complaints Authority. In the circumstances, the appropriate order is that the matter be remitted to the Tribunal or to that entity duly authorised to undertake the responsibilities of the Tribunal in the determination of complaints under the SRCA.

Costs

142    Although MetLife would normally be entitled to its costs of the appeal, Mr Williams SC informed the Court that it did not press for such an order. In those circumstances the appropriate order is that there be no order for costs.

Associate:    

Dated:    30 April 2021