TPD definition change extends law

The NSW Supreme Court has clarified the definition of total and permanent disablement.

In allowing a superannuation fund member's claim for a total and permanent disablement (TPD) benefit in Jones v United Super Pty Ltd, the court said: "… a job which a person may be able to perform without further education, training or experience is not necessarily one for which he or she is reasonably fitted by education, training or experience."

The court said the phrase "reasonably fitted by education, training or experience" was to provide a benefit for people unable to pursue "those employments or careers for which the insured has been prepared and shaped by his or her past vocational history".

Background

Clinton Jones was born in 1982. He left school in NSW at age 16, having obtained his school certificate.

He completed an apprenticeship with a roofing contractor and qualified as a tradesman roof plumber. He subsequently gained additional tickets.

In 2002, he suffered a lower back injury while lifting metal roof and wall sheets over a parapet wall to a fellow worker. That caused pain to radiate down the back of his left leg. His condition worsened and, in 2003, he had a successful back operation. He returned to work three months later with a different employer, as a roofing supervisor.

From 2003 until 2011, he worked in a series of supervisory roles with different roofing companies that required significant manual labour. In early 2007, he took up a supervisory position with CMC Metal Roofing in Townsville, Queensland.

Although the 2003 operation had been successful, Jones continued to have pain in his lumbar spine that radiated down the back of his left leg and was worse when bending or lifting or standing or sitting for long periods.

In mid-2011 he was loading heavy asbestos sheeting into a bin when he noticed soreness in his back, which increased significantly, and he developed right leg pain, which became more severe than the back pain.

On 7 September 2011, a CT scan of the lumbar spine revealed a prominent central disc protrusion with calcification.

At about that time Jones stopped working and on 10 October 2011 his employer closed down. Its jobs and employees were transferred to other contractors but Jones did not resume work.

In 2012, Jones lodged a claim with his superannuation fund's trustee for a TPD benefit.

In October 2012, he had another operation, which resulted in some improvement. However, he still had pain in the right calf and walked in a restricted fashion.

In August 2012 Jones first saw neurosurgeon Dr Marshman.  

Dr Marshman provided a report dated 22 August 2013 to the superannuation trustee, which said the two operative medical conditions were:

• cytokine-mediated right sciatica, and
• psychological factors, such as fear-avoidance and opiate dependence.

Dr Marshman said both were equally limiting on a successful return to work and Jones was unfit to return to his previous employment. He could retrain for a desk job which could use his previous knowledge and experience and be re-employed as a building supervisor with no manual duties.

Later in August 2013, the trustee asked the fund's group life insurer to assess the claim.

The policy defined TPD as: "the Insured Person is unable to follow their usual occupation by reason of accident or illness for six consecutive months and, in our opinion, after consideration of medical evidence satisfactory to us, is unlikely ever to be able to engage in any Regular Remunerative Work for which the Insured Person is reasonably fitted by education, training or experience; or …"

In January 2014, the insurer declined the claim. The trustee agreed with the insurer's decision. Jones asked for the decisions to be reviewed and provided a further medical report. In March 2014, the insurer confirmed its earlier decision. The trustee again agreed. That was communicated to Jones in April 2014.

The insurer said Jones could be employed in retail sales (hardware); as a courier/delivery driver; a console operator; a customer service adviser; or a telemarketer.

Later in 2014, Jones launched proceedings against the trustee and the insurer in the NSW Supreme Court.

The court held the insurer's and the trustee's decisions were void and Jones was TPD because he satisfied both limbs of the TPD definition.

On the first limb  – unable to follow their usual occupation by reason of accident or illness for six consecutive months – the court found Jones was unable to follow his usual occupation of roof plumber for six months from 10 October 2011. It did not matter that his employer had ceased to trade.

On the second limb – unlikely ever to be able to engage in any Regular Remunerative Work for which the Insured Person is reasonably fitted by education, training or experience – the court noted Jones's "employment history was entirely in the roofing industry" and "there is nothing to suggest that ability to work is to be judged only by physical factors, to the exclusion of the psychological".

The insurer's reasons for declining the claim addressed only Jones's physical capacity, not his psychological makeup, most significantly his fear-avoidance syndrome. Dr Marshman had said: "… the prognosis for a return to work (both medium and long-term) was poor without successfully addressing both his right sciatica and psychological factors including fear avoidance; and that psycho-social factors, especially fear-avoidance beliefs, which had been present all along, had become predominant."

The insurer's approach also failed to consider the competitive disadvantages Jones would face in seeking employment.

On whether the suggested occupations were ones for which Jones was "fitted" by his past education, training and experience, the court said: " … a job which a person may be able to perform without further education, training or experience is not necessarily one for which he or she is reasonably fitted by education, training or experience."

The court illustrated the point by saying a surgeon whose tertiary education was in medicine and whose entire vocational history was in surgery, who lost the fine motor skills required for surgery, but was otherwise physically fit, would not be reasonably fitted by education, training or experience for work as a manual labourer, even though he or she might be perfectly capable of performing it without further training.

The only work for which Jones was reasonably fitted by education, training or experience was manual labour, in which he had been consistently engaged since he left school, and in which the insurer accepted he was never again likely to engage in.

The suggested occupations involved customer contact and service, for which Jones's education, training and experience has not prepared or fitted him.

The court held Jones was fitted by his education, training and employment for work was as a labourer and for no other employment. In April 2012, at the end of the six-month qualifying period, he was unable, and never likely to become able, to perform the duties of a labourer.

The court held Jones was TPD, ordered the insurer to pay the benefit with interest, and ordered the trustee to pay that sum to Jones. The court said the insurer and the trustee should pay Jones's costs.

Comments

The judgement's salient feature is the view of the concept of work for which a person is reasonably fitted by education, training or experience, in the definition of TPD.  The concept is limited to "those employments or careers for which the insured has been prepared and shaped by his or her past vocational history".

That extends the law in this area. Many people change careers over their working life for many reasons. Some people undertake part-time study and obtain qualifications that enable them to make a career change. Other people change careers as their interests change, the opportunities for employment change, or their capacity to do heavy manual work diminishes as they get older. Some industries decline, while new ones emerge. While many career changes are voluntary, many are involuntary.

Many people take jobs they are not particularly fond of to make ends meet.

Against this background, the proposition that a surgeon who loses the fine motor skills required for surgery, but is otherwise physically fit and capable of working as a manual labourer without further training, is not thereby excluded from qualifying for a TPD benefit, might be regarded as surprising. It seems to go beyond the question of capacity for work and introduce notions of personal inclination and preference.

The definition of "permanent incapacity" in the Superannuation Industry (Supervision) Regulations 1994 (Cth) uses the expression "reasonably qualified by education, training or experience", not "reasonably fitted by education, training or experience". It remains to be seen whether, in the TPD context, "qualified" and "fitted" have the same or different meanings.

Jones v United Super Pty Ltd [2016] NSWSC 1551

* Stanley Drummond is Adjunct Head of Superannuation and Wealth Management at Thomson Geer. This is an edited version of a longer article.