Court takes firm line on TPD
Insurance eBulletin - 22 March 2013
In the recent decision of Hannover Life Re of Australasia Ltd v Dargan,1 the New South Wales Court of Appeal overturned the Supreme Court's findings in relation to an injured claimant's entitlement to TPD benefits. The Court of Appeal found that the injured claimant was not entitled to TPD benefits just because he was unable to perform the same type of work or perform such work on the same basis as he had prior to his injury.
On 5 July 2007, Mr Dargan injured his lower back at work and was unable to continue working as a full-time truck driver and labourer, as he had done for many years beforehand.
In June 2008, Mr Dargan obtained a certificate which entitled him to drive a taxi, subject to him completing a four day Road Transport Training course, which he did. Mr Dargan was, however, only able to work as a taxi driver on a part-time basis.
Mr Dargan claimed a benefit for TPD under the terms of his Group Life policy of which the first appellant, United Super, was the Trustee and the second appellant, Hannover Life, was the insurer.
At trial, the Supreme Court found that at the relevant time for assessing Mr Dargan's condition for the purpose of determining whether he was entitled to a TPD benefit, in this case 6 months after the date of injury, Mr Dargan was not able to engage in "Regular Remuneration Work" for which he was "reasonably fitted by education, training and experience" as required under the definition of TPD in the policy.
The Trial Judge considered that the words "education, training or experience" constituted a link between the job and past education, training or experience. His Honour said that Mr Dargan was not reasonably fitted for work as a taxi driver because he had not been a taxi driver before his accident and he had to complete the Road Transport Training course in order to be adequately qualified.
The Court of Appeal overturned the primary judgment and held that Mr Dargan's work as a taxi driver was "reasonably" within his education, training or experience as he had previously been a truck driver. The Court said that the fact that Mr Dargan had to undertake a short course to retain his certificate to work as a taxi driver, did not impact on his fitness for this type of work.
The Court also considered whether Mr Dargan's inability to work on the same full-time basis that he had prior to the injury, impacted on his entitlement to TPD benefits. It found that part-time work was "Regular Remuneration Work" as defined by the policy and that the only limitations contained in this definition were that the work be remunerative and regular (which ordinarily means something occurring at fixed times or uniform intervals). Mr Dargan's part-time work as a taxi driver was both remunerative and regular.
Accordingly, the Court allowed the appeal and ruled that Mr Dargan was not entitled to TPD benefits under the policy.
This decision is consistent with the purpose of the TPD provisions in a life policy which is to provide benefits for total and permanent disablement, not partial disablement. It is an important decision as it helps clarify the correct interpretation of TPD clauses under life insurance policies. It also reaffirms the position taken by the Supreme Court in Manglicmot v Commonwealth Bank Officers Superannuation Corporation,2 that an injured claimant who can work part-time following his or her injury is not necessarily entitled to TPD benefits.
Hannah Rose | Senior Associate
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