The Supreme Court of Queensland found for the insurer and trustee in the plaintiff’s claim for a TPD benefit. In circumstances where the insurer and trustee had declined the claim as the relevant illness was a pre-existing, the court upheld the declinature and also went on to find that if mental illnesses caused disablement, they were pre-existing, so as to disqualify the plaintiff from the TPD benefit. The court also found that a separate back injury was not such as to render the plaintiff totally and permanently disabled and, in any event, that he was not absent from work ‘solely because of’ illness, providing another ground on which the TPD definition was not satisfied.

Key Takeaways

1. Where a definition requires that the absence from work be ‘solely because of’, or ‘because of’ illness or injury, insurers and trustees should carefully consider the circumstances surrounding the cessation of work to determine whether factors other than illness or injury have caused the absence. Here the loss of a drivers’ licence was significant given the plaintiff’s job as a pizza delivery driver.
2. In an appropriate case, an insurer and trustees declinature of a claim can be upheld. The court reiterated the key principles applicable to whether a declinature would be upheld, including that the process must be undertaken fairly and reasonably, answering the correct question and engage with the relevant evidence.
3. Pre-Existing condition clauses are useful tools to limit an insurers liability to illnesses or injuries that occur during the period of insurance.

Court’s Decision

Key components of the TPD definition included that ‘solely because of an Illness or Injury, the Insured Person has been absent from work and, in the opinion of QInsure, the Insured Person is unlikely ever to be able to work again in a job for which the Insured Person is reasonably qualified by education, training or experience that they have acquired or could reasonably be expected to be able to acquire in the future.’

The policy had a Pre- Existing Exclusion period, which meant that there was a period in which an insurance benefit was not payable if the Illness or Injury, of which the claim was subject, is related to a Pre-Existing Condition.

The insurer and trustee declined the claim on the basis that the mental illnesses which grounded the claim were pre-existing conditions and thus declined the claim based on the pre-existing exclusion period. The court upheld that declinature.

Despite upholding that declinature, the court went on to consider whether the plaintiff was entitled to the TPD benefit. At trial the plaintiff asserted 2 bases on which he was entitled to the TPD benefit- mental illnesses and a back injury. In relation to these the court found:

1. The mental illnesses were pre-existing and thus could not support his claim for the TPD benefit
2. His back injury was not such as to render him totally and permanently disabled.

It was also a requirement of the TPD definition that solely due to illness or injury the insured person be absent from work. The court found, that on the plaintiff’s own evidence, the ‘solely’ requirement was not satisfied because he stopped work in his then employment of pizza delivery driver because his drivers’ licence was suspended in connection with a drink driving incident and because he was going to leave the job anyway as he was not being given enough hours.

Conclusion

The case provides guidance on:

1. The circumstances in which an insurer and trustee’s declinatures will be upheld
2. The application of PEC clauses and
3. That the onus is on the plaintiff to establish that any relevant absence from work was ‘solely because of’ illness or injury.

Further information / assistance regarding the issues raised in this article is available from the author, Catherine McAdam, Partner or your usual contact at Moray & Agnew.