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TPD - Intense scrutiny of decline letters continues

  • Newsletter Article
  • Published 09.04.2020
Sandstrom v FSS Trustee Corporation & Anor (NSWSC 2020)


The NSWSC TPD decision of Sandstrom v FSS Trustee Corporation & Anor [2020] continues the trend of intense judicial scrutiny of decline letters at Stage 1.

The court’s preparedness to find a 28 year old claimant TPD represents somewhat of a challenge to the court’s view in TAL Life Ltd v Shuetrim; MetLife Insurance Ltd v Shuetrim [2016] that relatively young people will find it difficult to satisfy ‘unlikely ever’, particularly in the context of mental health claims.

Brief Facts

  • Former NSW police officer claimed TPD as a result of PTSD and related psychological conditions after experiencing a number of significant traumatic events whilst in service, including a shooting between fellow officers.
  • The plaintiff was aged 28 at the date of assessment and had prior ETE as an office assistant and cinema attendant. She completed 18 months of an Arts degree before joining the police force.
  • The relevant TPD definition was an ‘ unlikely ever to engage in relevant work’ one.
  • The insurer declined the claim on the basis that the plaintiff was ‘likely to be able to return to work at some point in the future, external to the NSW Police Force’ in identified administrative and sales roles.


Justice Slattery overturned the decline decision at Stage 1.

Key Findings included:

  • The Court considered the insurer, in reaching its decline decision, effectively “cherry picked” from particular medical reports to support a conclusion that the plaintiff was not TPD. Adopting particular words or sentences from reports in isolation does not provide a sound basis in reasoning to conclude that a life insured is not TPD.
  • The Court considered the insurer incorrectly relied on medical evidence that was equivocal on the critical distinction (as to the question of TPD) and in doing so failed to act reasonably forming its opinion. The question is whether the evidence indicates a “mere hope” or a “real chance” of returning to work. The insurer should have sought clarification from the medical practitioners where necessary.
  • The insurer’s reasoning in Slattery J’s view, on the whole, was inadequate. By way of example, the insurer did not provide adequate reasoning as to why the plaintiff’s submissions (in response to procedural fairness) were rejected, when it is under an obligation to do so. There were otherwise gaps in its reasoning about certain medical reports and the insurer failed to explain why it had rejected evidence contradicting its conclusions. Further, the insurer gave undue weight to reports more proximate to the relevant date of assessment, thereby making a working assumption of demoting, as worthy of only lesser consideration, medical reports more distant in time from the date of assessment.
  • The Court considered there were problems with the insurer’s use of the vocational evidence. The vocational evidence did not take into account the plaintiff’s actual psychological disabilities as indicated in the medical opinion.

Turning to Stage 2, Slattery J considered the plaintiff could not engage in the ETE work suggested, stating that, “No employer of her skills would be likely to carry for very long an explosive employee without capacity to plan or take responsibility”. The plaintiff was accordingly TPD.

In his assessment, Slattery J was not persuaded by what on its face appears to be compelling objective evidence militating against TPD, including evidence of the plaintiff’s social media activity, weekly shopping trips and overseas travel.

Key Takeaways 

  • The intense judicial scrutiny of decline letters continues. Despite acknowledging authority that an insurer’s statement of reasons should be understood as a practical document (Chammas, Weber), Slattery J spent some 58 paragraphs picking apart the procedural fairness and decline letters of the insurer. Current practices from insurers acknowledge this reality, however this decision highlights the need to continue to have decline letters and procedural fairness correspondence to demonstrate that consideration has been given to all the key issues and evidence in a balanced way.
  • A holistic approach to interpreting medical reports is required rather than relying on selected snippets. In other words insurers must strive to obtain the true meaning of any particular medical opinion including most crucially, where necessary, seeking further clarification.
  • Specifically, medical opinion that is equivocal such as “may return to work” at some point in the future, does not provide a sound basis to conclude that a claimant is not TPD. Insurers may be required to seek further opinion from the relevant practitioner as to whether a return to work is a “mere hope” or a “real chance”. To proceed on the basis of equivocal evidence is potentially a breach of the duty of good faith and fair dealing.
  • Courts will treat a claimant’s objective social media activity with a great deal of trepidation, particularly where the claimant suffers from psychological illness. As we know from MetLife Insurance Ltd v Hellessey [2018] a claimant’s social media activity is not necessarily indicative of his or her capacity for work and certainly, the medical evidence will be a significant factor in determining whether such objective evidence can be substantiated.