Overview TPD Assessments : Colella v Hannover & Anor Folan v - - PowerPoint PPT Presentation

Overview

• TPD Assessments:

Colella v Hannover & Anor Folan v United Super & Anor Lazarevic v United Super & Anor Banovic v United Super & Anor

• Advisor Cases

Commonwealth Financial Planning v Couper Swansson v Harrison

• Policy Interpreation

MetLife v FSS Trustee & FSS Trustee v Maund

Hannover Life Re v Colella [2014] VSCA 205

• Plaintiff was a despatch manager at a paper/cardboard company.
• DLW= April 2007; due to a “significant and continuing knee condition”.
• Claimed a TPD benefit – declined 5 times.
• Judge O’Neill (trial judge) found the plaintiff was TPD and ordered benefit paid.
• Hannover appealed to Court of Appeal – 13 grounds of appeal.
• TPD definition:

“A person suffers TPD if they are unable to do any work as a result of injury or illness for 6 consecutive months… and continue to be so disabled that he or she is in our opinion unable to resume their previous occupation at any time in the future and will be unable at any time in the future to preform any Other Occupation.”

• “Other Occupation”: qualified to do by ETE, including part-time & lower status/pay.

Hannover Life Re v Colella [2014] VSCA 205

13 grounds of appeal – Hannover contended (inter alia):

• The word “work” means the performance of tasks within an occupation.
• The phrase “unable to do any work as a result of injury” means incapacity to perform

any work, even light duties.

• The availability of work in the labour market and availability of work in an area is not

relevant. Court of Appeal found:

• Trial judge was correct in finding ‘any work’ to mean ‘any job’ (not tasks of a job).
• “[the trial judge] was clearly correct when he described as unrealistic the isolation of

‘some aspects of work’ in the face of significant injury that deprived the person of capacity to perform the work in other respects”.

Hannover Life Re v Colella [2014] VSCA 205

Re Availability of Work, Court of Appeal stated:

“to the extent.. that the trial judge’s construction of the expression ‘unable to work’ is dependent on the existence of work, ‘which is reasonably available in the marketplace and in an area in which it could be expected an insured in the position of the claimant could reasonably apply’, the trial judge went too far”. “The policy does not insure the actual availability of work for the insured… in the town or region in which the insured resides”.

• This is a shift from recent case law (see Baker, Sayseng & Erzurumlu) which all discuss

availability of work in the context of an “unable” definition.

Folan v United Super [2014] NSWSC 343

• Labourer. DLW = 20 Feb 2009, MVA on 6 March 2009. Suffered injury to left elbow.
• ETE: Year 10 schooling , licences: crane driver’s, dogman, hoist, skid steer & heavy vehicle.
• Not in issue that Folan could not return to pre-injury work.
• Insurer/ Trustee argued the plaintiff was able to perform other work within ETE.
• Dr Burrow advised CRS that the plaintiff was functionally able to work as a traffic

controller or school-crossing supervisor... “manipulating a traffic stop/go sign with the right arm and left arm was acceptable.” 5kg lifting restriction.

• Dr Burrow “an opinion from an occupational physician may be more helpful in clarifying

his ongoing workability…”

• Dr Phoon (GP): Folan was unfit and didn’t need to undergo physio if he didn’t want to.
• Plaintiff indicated that he would not pursue a role as a traffic controller as it was below his

intelligence.

Folan v United Super [2014] NSWSC 343

• TPD definition at paragraph [7] of the judgment.
• Re the evidence, Justice Nicholas stated:

“There was no information which supported the opinion that there were suitable

• ptions or forms of employment available to the plaintiff either at 6 September

2009, or at all… No assessment of his suitability for future employment had been made... No information was provided as to the likely availability of suitable employment in the area where the plaintiff lived.”

• No issue as to whether traffic controller was “retraining” (Re Dargan).

Folan v United Super [2014] NSWSC 343

“Real World” Employment Justice Nicholas: “In my opinion, there was no evidence which supported the proposition that there existed forms of employment for the plaintiff of value in the open market in which he could reasonably engage… the decision reflects a failure to adequately consider whether, in the real world, work which required only the use of one arm and restricted use of the other was reasonably available for a manual labourer, such as the plaintiff.”

Folan (continued)

Contrast Justice Ball’s comments in Erzurumlu (August 2013) re availability of work:

• “Normally… it could be expected that the Insurer would make further enquiries

about the jobs that were available and whether Mr Erzurumlu was likely to obtain any of them.”

• “There are likely to be a broad range of manufacturing jobs which vary in nature and

the physical activity they require. It was not unreasonable for the Insurer to conclude that less strenuous manufacturing jobs than those offered by Kellogg were available”.

• No evidence of an actual job with an actual employer was before Ball J.

Lazarevic v United Super [2013] NSWSC 96

• Plaintiff employed as a scaffolder.
• Injured on 11 April 2008 – suffered an injury to his back when lifting a metal plank.
• Claimed a TPD benefit.
• ETE = Born in Bosnia – completed school & trade qualifications in forestry - 1 year of

compulsory military service – worked on a fruit farm (1990-1993) driving a tractor – worked as a tree feller (1994-1998) in Bosnia – returned to work driving a tractor – arrived in Australia in 2000.

• As a scaffolder, the plaintiff used a forklift about 20 times over a 3 month period.
• TPD claim declined – could work as process worker, crane operator & forklift driver.
• TPD definition – same as per Folan.
• Plaintiff alleged that he was entitled to the TPD benefit and attacked the declines.

Lazarevic v United Super [2013] NSWSC 96

• Hearing focussed on plaintiff’s ability to work as forklift driver.
• Evidence before the Court re the course requirements of obtaining a forklift licence.
• Dr Home: Plaintiff would be able to operate a forklift in a factory, but not in a yard

due to vibrations.

• Hallen J: “There was no evidence at all that the plaintiff would be able to complete

any of the courses referred to”.

• Hallen J had regard to availability of work as the definition referred to “unlikely”.
• “[TPD] requires consideration of whether or not, on the evidence, it is probable that

the plaintiff would actually obtain paid employment for which he was qualified by [ETE].”

Lazarevic v United Super [2013] NSWSC 96

• Re Forklift driving (Retraining):

“At the date of each decision, he was unable to drive a forklift because he did not have the relevant licence. Thus, he had no training or education in relation to that work. As I have earlier found, the previous occasions when he drove a forklift, did not constitute relevant “experience”. Contrast Dargan

• Re medical evidence regarding forklift driving:

“As a matter of reality and common sense, the difficulty of envisaging the probability of the existence of paid employment as a forklift driver, bearing in mind the medical restrictions that the plaintiff has, was clear”… “There was no evidence of such a job being available”

• Ordered insurer and Trustee to pay the TPD benefit.

Banovic v United Super [2014] NSWSC 1470

• Decision of Justice Hall – Supreme Court of NSW dated 27 October 2014.
• His Honour applied the same “real world” principles as per Folan and Lazarevic.
• Same TPD definition as Folan and Lazarevic.
• Found TPD benefit payable to Mr Banovic.

Summary – TPD Determinations

• ‘unable’ vs ‘unlikely’. Back to historical position?
• Generic jobs such as “light factory work” or “light process work” may not be

accepted as jobs in the ‘real world’. Does the work require “retraining”?

• Take a job as a ‘whole’. When identifying a role a claimant can perform, it is

important to analyse each aspect/duties of that role. If a claimant cannot perform

• ne part of the role (i.e. due to a medical restriction), evidence may be needed that

jobs exist which caters for that restriction.

• It is easier to obtain evidence regarding availability of work during claims assessment

than it is during litigation.

Commonwealth Financial Planning v Couper [2013] NSWCA 444

• Appeal from Stevens v CFP – Ms Couper the executor of Mr Stevens’ Estate.

Facts

• Mr Stevens had a life insurance policy with Westpac.
• Mr Stevens met with an authorised rep of CFP (Mr Galloway). Mr Stevens took out a

CommInsure Policy and cancelled his Westpac policy.

• Mr Stevens was later diagnosed with pancreatic cancer. CommInsure avoided under

s.29(3) of the ICA for innocent misrepresentation/ non-disclosure (<3 years).

• The 3 year period had expired under the Westpac policy at cancellation.
• Trial judge (Levy DCJ) found that CFP was negligent and engaged in misleading or

deceptive conduct.

• No appeal that CommInsure validly avoided the policy.

Commonwealth Financial Planning v Couper

• Main issues on appeal

Credibility and inconsistent evidence – Court of Appeal found:

• Findings of fact at trial failed to address the inconsistent evidence by Mr Stevens and

his daughter re alcohol consumption, alcohol purchasing and medical history.

• To the extent that the trial judge’s findings are based on credibility of Mr Stevens and

Ms Couper, the findings cannot sustain the judgment.

• However, judgment can be upheld as there was evidence, independent to the trial

judge’s credibility findings, to show that the advice given was misleading and deceptive.

Commonwealth Financial Planning v Couper

“The Advice” – the Court of Appeal

• Mr Stevens relied on the advice and his Westpac policy was cancelled.
• The advice wrongly assumed that a comparison could be made between the

CommInsure and Westpac policies. Difference in the premium structure.

• When the advice was given it was not known whether the CommInsure policy would

insure Mr Stevens and on what terms. Not ‘like-for-like’ with the Westpac policy.

• The CFP representative was not permitted to recommend that Mr Stevens maintain

his Westpac policy. Bound to recommend ‘approved’ products.

• The CFP representative failed to advise of the effect of s.29(3) of the ICA.

Commonwealth Financial Planning v Couper

Court of Appeal found:

• Although the Statement of Advice did disclose the risk of avoidance for non-

disclosure, it failed to disclose the important effect of s.29(3) of the [ICA].

• Important to explain the distinction between policies over/ under 3 years old.
• The operation of s.29(3) was, in Mr Galloway’s words “news to me”.
• Appeal dismissed.

Swansson v Harrison [2014] VCS 118

Facts

• Mr Swansson had a TPD/ terminal illness policy with AXA from 2004.
• Mr Swansson and Mr Harrison (advisor) met on 7 March 2012 to complete an AIA

application.

• Mr Swansson disclosed a consultation with doctor on 5 March 2012 for a “sore

stomach” and the result being “giardia – antibiotics- resolved”.

• AIA accepted application and commenced on 23.3.2012. Cancelled AXA policy.
• Between 7.3.12 and 23.3.12, Mr Swansson was diagnosed with mild pancreatitis.
• Mr Swansson did not provide Mr Harrison with updated diagnosis. Believed that

stomach soreness was of no interest to AIA and not aware of obligation to inform AIA

• May 2012: Mr Swansson diagnosed with pancreatic cancer. Lodged claim with AIA.
• AIA exercised its rights under s.29 of the ICA. Mr Swansson sued Mr Harrison.

Swansson v Harrison [2014] VCS 118

• Mr Swansson alleged:
• failed to explain the continuing nature of the duty of disclosure;
• trivialised the stomach complaint by inserting “resolved” in the application.
• misrepresented that there was no significant difference between AXA and AIA

cover, as the AXA policy was no longer avoidable (except for fraud) , whereas the AIA policy could be avoided for innocent misrep/ non-disclosure.

• failed to check his medical condition before cancelling the AXA policy.
• Mr Harrison defended the proceedings:
• Denied liability. Alleged contributory negligence (Wrongs Act (Vic), not s.56 ICA).
• Mr Swansson was responsible for his loss as he failed to comply with his duty of

disclosure to inform AIA of the test results after 7 March.

Swansson v Harrison [2014] VCS 118

Critical Issues  Whether Mr Harrison gave adequate advice re DoD, relevance of the stomach condition and the value of keeping the AXA policy.  Was Mr Harrison negligent by failing to check medical status before cancelling?  If Harrison was liable, did Mr Swansson contribute to his loss – if so % of reduction? HELD - Adequacy of the advice  No evidence of dishonesty or recklessness by Mr Swansson.  DoD had been explained – signed documents acknowledging DoD – ‘intelligent man’.  Unlikely Mr Harrison, an experienced advisor, would have failed to advise of DoD.  Mr Swansson was advised of ongoing DoD, that AIA policy could be avoided < 3years and did not trivialised the stomach complaint by inserting ‘resolved’.

Swansson v Harrison [2014] VCS 118

HELD – Enquiry before cancelling  Duty to make further enquiries depends on foreseeability of risk of harm.  Mr Harrison failed to exercise the standard of care required. Found Negligence:



Mr Harrison knew of the special value of the AXA policy vs AIA policy.



Mr Harrison was aware Mr Swansson had seen a doctor 2 days early – short time to be sure of recovery.



Mr Harrison was aware the condition may take time to clear – own wife’s experience.



3 weeks elapsed since application and information re condition was out of date.



Relatively easy to make an enquiry with Mr Swansson re current status. HELD- Contributory Negligence  Same ‘reasonable care’ principles operate against Mr Swansson.  Failed to exercise the care a reasonable person in his position would have taken.  Mr Swansson was an intelligent man. Applica on ≠ acceptance. 50% reduc on

Advisor Cases

Tips

• Advisors should be aware how s.29 of the ICA operates. Must be able to clearly

explain it to clients.

• Along with clearly explaining the DoD, the risks associated with cancelling existing

cover should be made very clear.

• When advising on like-for-like cover, is the advisor aware of the final terms of the

policy? A policy over 3 years old may not be ‘the same’ as a new policy.

• If there is a gap between application and acceptance, are there any ‘red flags’ which

need following up?

• Lastly, take contemporaneous and detailed notes.

MetLife Insurance Ltd v FSS Trustee Corporation / FSS Trustee Corporation v Maund [2014] NSWCA 281

• Ms Maund made a TPD claim under the MetLife ‘Blue Ribbon’ policy.
• MetLife admitted the TPD claim and paid the benefit calculated as at 8.5.07 (DLW).
• Ms Maund alleged the TPD benefit should be calculated as at Jan 2010 (medical discharge)

+ $128,000.

• Lindsay J (trail judge) found that TPD calculated as at 8.11.07 – 6 months after DLW +

$29,000.

• Appeal to Court of Appeal – Heard by Macfarlan JA and Meagher JA and Ward JA.
• Issue was calculating the ”Sum Insured” as determined by ”the time of the Insured Event”
• Policy defined ”Insured Event” to mean ”an illness (including a sickness, disease or

disorder) suffered, or, bodily injury occuring, to a Police Officer while an Insured Member”.

• Court of Appeal found ”Insured Event” = January 2007 – date illness was first contracted

(or agravated) – determined by reference to medical evidence.

• This decision is limited to the Blue Ribbon Policy.