Australia: TPD Policies - Will I ever be "Reasonably Fit" for work again?
Curwoods Case Note

Hannover Life Re of Australasia Ltd v Dargan [2013] NSWCA 57

In Brief

• The term 'reasonably fitted by education, training or experience' is not limited to forms of work which the insured individual has previously performed.
• 'Regular Remunerative Work' is not limited to full-time or part-time work. Rather, the limitation is that the work in question must be regular and for reward or hope of reward.

Background

Mr Dargan (respondent) had a history of employment as a truck driver and labourer. On 5 July 2007 he injured his lower back. At that time he was working 40 hours a week. After the required 6-month period, the respondent made a claim for total and permanent disablement (TPD) with his 2 insurers; Hannover Life and United Super. He made that claim on the basis that he could no longer work full-time hours or work as a labourer or truck driver.

In June 2008, the respondent obtained an ancillary certificate under s 15(1) of the Vehicles and Traffic Act 1989 (Tas). He also successfully completed a 4-day Road Transport Training Course. Once both certificates were obtained, the respondent commenced driving a taxi for 20 hours a week.

Given that the respondent was able to perform regular remunerative work, his claim for total and permanent disablement was rejected. Hannover Life Re of Australia Ltd (appellant) rejected his claim on the basis that the respondent was reasonably fit to perform the work of a taxi driver based on his previous work experience as a truck driver.

Findings at First Instance

Gzell J held that the respondent was totally and permanently disabled based on the policy requirements. At the relevant time of assessment (6 months post injury), the respondent was unable to engage in work for which he was reasonable fitted by education, training and experience.

His Honour held that there must be a link between the job which is to be undertaken and past education, training or experience. His Honour took the view that the respondent's requirement to undertake additional training meant that he was not reasonably fitted to that work based on the training and experience that he already possessed. It was held that the respondent's requirement to obtain an ancillary certificate meant that until such time as the respondent received that training, he did not have the capacity to undertake that work.

Court of Appeal

At appeal, the appellants submitted that the respondent was reasonably fit to be a taxi driver based on his education, training and experience. It was submitted that the primary judge erred by limiting his consideration to whether or not the respondent had previously worked as a taxi driver. The appellants submitted that the insurer did not need to demonstrate that the respondent had undertaken that specific type of work for such work to be reasonably fit for him or her to undertake that work.

Further, it was submitted that merely because the respondent was required to undertake a basic training course, it did not follow that work as a taxi driver was not reasonable given the respondent's previous work as a truck driver.

The respondent submitted a Notice of Contention at appeal on the basis that, merely because he was able to undertake part-time work, it does not follow that he was not entitled to make a claim under the TPD policy. It was submitted by the respondent's representatives that the relevant test for a person who was previously engaged in full-time work is whether or not they can again engage in full-time work.

The respondent submitted that, based on the policy wording and its construction, the words 'reasonably fitted' meant that the work history of the person making the claim was the relevant factor. It was submitted that given the respondent could no longer undertake full-time work, he met the relevant condition.

Further, it was submitted that, to ensure a sensible commercial construction, the policy should be measured with reference to work which had previously been undertaken by the claimant prior to the relevant event.

Reasoning Bathurst CJ

His Honour proceeded on the basis that both parties had agreed that a person making a TPD claim is to do so at a date 6 months after the incident occurs which gave rise to the claim. It was also agreed by both parties that, at that time, the respondent was able to undertake part-time work with some additional training.

Bathurst CJ took the view at paragraph 37:

His Honour established that 'incapacity' for further employment excluded employment for which a claimant could be fitted to if reasonable training was undertaken. A reasonable construction of the policy wording in this matter would be that, to be able to make a claim under a TPD policy, the incapacity must be permanent or substantially permanent. In consideration of this point, Bathurst CJ found that the respondent's ability to undertake a simple and short training course in order to obtain part-time work as a taxi driver was not an unreasonable undertaking and therefore he was not totally and permanently disabled.

Further, it was held that the term Regular Remunerative Work is not limited to whether or not the work in question is full-time or part-time. Rather, the matter for consideration is whether or not the work is regular and for reward or hope of reward. This construction is consistent with the purpose of the policy which his Honour suggests is total and permanent disablement as opposed to 'partial disablement'.

Implications

In TPD policies of this type, the requirement to undertake basic training in order to obtain Regular Remunerative Work is not unreasonable.

When considering the term 'reasonably fit' by training, education or experience; it is not limited to types of work which have previously been undertaken by a claimant. The requirement to obtain a licence or undergo basic training does not preclude a person from being reasonably fit for a role of a different kind of which they may have similar experience.

The term 'Regular Remunerative Work' as used in this policy is not limited to full-time or part-time work. There is no limitation that either of the above criteria be met. The requirement in this case is that the work be regular as per the common meaning of regular and, for example, not casual or intermittent.

Footnotes

¹ Bathurst CJ, Macfarlan, Meagher, Hoeben JJA, Tobias AJA

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