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Whether a worker is unable to return to work, as defined in total and permanent disability (TPD) insurance policies, often hinges on the specific phrase "unlikely ever"—a phrase that has presented challenges to the courts in its interpretation. The expression often appears along the lines of the following example:

"...having been absent from their occupation through injury or sickness for six consecutive months and having provided proof to our satisfaction that the insured member has become incapacitated to such an extent as to render them unlikely ever to engage in, or work for, reward in any occupation or work for which he or she is reasonably qualified by reason of education, training or experience."

This millennium, courts have focused on the specific word "unlikely" as opposed to looking at the phrase "unlikely ever" in its entirety when considering TPD policy claims. In doing so, the courts came to the consensus that "unlikely" means "probably less than 50%" when assessing TPD. This construction followed a line of authority that arguably started with an error in a head note (White v The Board of Trustees [1997] 2 Qd R 659) and the courts interpreted the meaning of "unlikely" to be probably less than 50%, even though the logical meaning of the phrase "unlikely ever" is only a notch below "never".

Earlier this year, in TAL Life limited v Shuetrim; MetLife Insurance limited v Shuetrim [2016] NSWCA 68 the Court of Appeal clarified that "unlikely ever" does not, in fact, mean "probably less than 50%".

Background

At first instance in Shuetrim v FSS Trustee Corporation [2015] NSWSC 464, Justice Stevenson followed the line of reasoning that "unlikely" meant a probability of less than 50% and, on this basis, the question to consider was whether "it was probable" that Mr Shuetrim would actually obtain work for reward within his education, training or experience.

When the decision went before the Court of Appeal in April 2016, it was found that Justice Stevenson's application of the definition of "unlikely" was incorrect. In coming to this conclusion, the Court cited the renowned text, Sutton on Insurance Law (Enright and Merkin 2015):

"The expression 'unlikely ever' sets a very high standard of probability; 'permanent state of affairs', 'no real chance' or 'improbable'. The words 'look well into the future' suggest a permanent state of affairs so far as can be seen based on the evidence at the time of assessment."

The Court said the question was not whether it was more probable than not Mr Shuetrim would ever return to relevant work, rather, the question was whether "there was no real chance that he would return to relevant work".

With this in mind, the Court clarified when this question would be satisfied:

"Where there is a real chance that a person may return to relevant work, even though it could not be said that a return to relevant work was more probable than not, the insurer would not be satisfied that the definition applies. 'Unlikely ever' is, in this context, much stronger than 'less than 50%'."

A significant aspect of the Shuetrim judgment is the finding that if there is a remote or speculative possibility that the person will at some time in the future return to work, an insurer acting reasonably will not be satisfied that the insured member is not TPD.

Shuetrim considered in Wheeler v FSS Trustee Corporation

Three weeks after the Court of Appeal's decision, Justice Robb of the Supreme Court handed down a judgment in Wheeler v FSS Trustee Corporation [2016] NSWSC 534. Justice Robb agreed that Shuetrim settled the meaning of the expression "unlikely ever" in TPD policies and, in particular, the degree of probability involved in determining whether a fund member is unlikely ever to be employed in the manner contemplated by the TPD definitions.

In Shuetrim, the Court observed that younger people would find it more difficult to prove they are unlikely ever to return to relevant work. Both Mr Shuetrim and Ms Wheeler were in their mid-30s.

Justice Robb also noted that the application of the "unlikely ever" test would be substantially influenced by two factors; whether the fund member may have some residual capacity for relevant work at the time of the determination and whether the symptoms of the injury or illness have had time to stabilise by the time of the determination.

In considering the reasoning in Shuetrim, the judge accepted the Plaintiff was incapacitated for employment at the time of the trial and posed the question, whether (by further treatment or natural spontaneous recovery) she would gain additional capacity. In considering the response, Justice Robb noted that it is only if this question is answered positively, that there would be scope to consider the possibility that she will gain relevant employment.

The judge sought to distinguish the facts of the case from Shuetrim and found the plaintiff was unlikely ever to engage in an occupation that she was qualified for by way of education, training or experience, even though there was statistically a 70% possibility of recovery from her post-traumatic stress disorder (PTSD) (at trial Ms Wheeler's condition was described as stable and chronic, fitting with the 30% of sufferers whose PTSD will most likely become permanent).

In Ms Wheeler's case, the judge emphasised the difficulty of dealing with mental health issues compared to physical issues. He explained how someone with mental health issues can live parts of their life as if they are unaffected by the condition and symptoms may not show outside of their behaviour.

Conclusion

While there is clarity around the meaning of the words "unlikely ever", the judgment in Wheeler demonstrates the importance of the particular facts of each matter to determine how those words operate. Insurers should thoroughly look at the facts of a particular matter before making a decision whether there is no real chance that an individual can return to relevant work.

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