TPD – Practical Employability Assessment Issues: Hannover Life Re v Jones

This seminar note addresses the practical issues that may arise for vocational assessors from the much discussed decision in Hannover Life Re v Jones[i].

To start with, there is a real question whether Jones constitutes a ground-breaking revision of the law relevant to EAs for TPD cases, or is a case decided mainly on it’s facts and heavily influenced by the fact the particular EA relied upon did not address the psychological impairment.

All impairments must be considered

All impairments which potentially impact on capacity must be considered or the Employability Assessment (EA) cannot be safely relied on by the Insurer. There was no separate psychological assessment of the member despite the presence of clearly identified secondary psychological symptoms. The Court of Appeal held that as the psychological issue had not been properly considered by the EA in selecting work options the Insurer’s assessment based on the EA was unreliable and should be set aside.

Clearly an EA which does not frankly address and select work options with regard to all relevant physical and psychological factors is not reliable. This has always been the law.

Unfortunately this factual matter significantly impacted every element of this Judgment and makes extracting specific guidance on what is required of an EA, and determining whether this is more than just a case on it’s facts, extremely difficult.

From ETE to work options

This decision confirmed that an EA must start with the insured member’s “education, training or experience” (ETE) and move outwards to identify suitable work options within their capacity, rather than working backwards from residual capacity to identify work options within that capacity and to then assessing if the insured member could do that work.

Given the language of the standard ETE clause that result was anticipated.

It is important to remember that while TPD and IP policies insure the capital asset of “earning capacity”, so that the same expert issues underlie the assessment of TPD and IP claims as well as common law and workers compensation claims, the contractual nature of the arrangement means that there are significant differences in how a TPD or IP claim is to be assessed by the experts and those relying on them.

Fortunately this approach will not require any change of approach for experienced vocational assessors, as good practice in the assessment of employability, as well as earning and work capacity, has always involved this approach both for forensic reasons and because of this likely legal requirement in TPD.  In this respect the decision merely reflects current best practice.

“Fitted by” – Prepared or shaped by “vocational” history?

The Court of Appeal held that the word “by” in “fitted by” or “suited by”, “directs attention to the insured’s vocational history to date, and to occupations for which that vocational history fits the insured, that is, to the link or connection between the suggested job or jobs and the claimant’s past education, training or experience”[ii].  Again, there is nothing novel in that.

However, the Court of Appeal went on to say that this also “requires the Insurer to examine the occupations for which the claimant is “fitted” in the sense of the occupations for which his education, training and experience has prepared him. That naturally is shaped by his vocational history.”[iii]

On one view the decision appears to impose an additional requirement that occupations for which a member is “fitted by” their ETE are only those for which the member has been “prepared” specifically by their “vocational history”.

If that is correct then this would, in effect, interpolate the word “vocational” into the ETE clause.  In effect the clause would then read as “fitted by their vocational education, training or experience.” The effect of that would be to turn every “any occupation” policy into an “own”, “own prior” or “usual” occupation policy.

However, the Court of Appeal specifically rejected the argument that they were requiring that work options be limited to the insured member’s “usual occupation” or affecting “any occupation” policies in that way.

Accepting the Court of Appeal’s rejection of that argument at face value the focus on prior “vocational history” would then appear to be a question of emphasis regarding the practical importance of the vocational history as one aspect only of the analysis of ETE in most cases rather than the imposition of a new test.

In discussing the issue the Court of Appeal referred to the leading cases of Halloran and Dargan. In Dargan[iv] it was held that taxi driving was within the ETE of a truck driver despite his never having driven taxi’s before, whereas in Halloran[v] it was held that an administrative job negotiating traditional land rights on behalf of aboriginal communities after a 3 year TAFE course was held not to be within the ETE of a machinery greaser. These are standard cases often referred to in describing the spectrum from within to outside ETE and the extent to which some retraining is acceptable and are not indicative of an intention to impose a major change to the law.

It would have been far more interesting to see whether or not the Court considered the work options in Birdsall,[vi] in which the Court of Appeal accepted that work as a spare parts interpreter, sales assistant or customer service / advisor in the automotive industry was within the ETE of a motor mechanic despite his never having had specific experience in sales or customer service before, were still appropriate given the current formulation.[vii]

The fact that the Court of Appeal rejected the submission that it was converting “any” to “own” occupation policies and did not suggest that leading cases such as Birdsall were being overturned, tends to support the view that this may have been a case decided on it’s facts and heavily influenced by the fact that the EA did not take the relevant psychological factors into account noting that those psychological factors largely excluded the work options selected by the EA and relied on by the Insurer.

Time and future Judgments will tell.

Makita reasoning standard for EA’s [viii] 

The Court’s analysis of the EA confirmed that the Courts will, quite reasonably, apply a very high standard to the reasoning processes in an EA relied upon by an Insurer to decline a case.

As discussed previously, while the law of expert evidence as stated does not change, in practice different standards are applied by Courts depending on the nature and size of the case, the jurisdiction, the issue the opinion addresses, and the expertise involved.

In practice the standard rehabilitation report prepared for a work capacity decision, to which the rules of evidence do not apply, is probably not going to be adequate for a Court. That is not to criticise such reports nor to suggest that they are not fit for the purpose for which they are prepared, but to note that a report prepared for use in a jurisdiction to which the rules of evidence explicitly do not apply is unlikely to be suitable for use in the Supreme Court.  This should not be a surprise to anyone, and is consistent with Justice’s Ball’s interlocutory decision refusing outright to admit into evidence a rehabilitation style report in Erzurumlu v Kellogg Superannuation (discussed previously).

Reasonably Accessible Labour Markets – “Geographical limitation on employment”

As discussed in this previous seminar there is a real question about whether TPD policies incorporate the common law concept of a “reasonably accessible” labour market and also the extent to which that may be related to the debate about “unable” v “unlikely” policies.

The Court of Appeal noted the debate but stated that as it was obiter dicta at first instance and not necessary for the determination of the Appeal they would not provide an “advisory opinion” as it was not fully argued.

This issue remains a live one for some future case!

It is anticipated that it will arise in a case involving a person with good ETE and capacity for employment if they were living in a capital city but who is TPD only by reason of the lack of suitable employment in their reasonably accessible labour market, and particularly if they have moved there post the relevant date / date for assessment.

For this reason an EA may validly be asked to address this question in the alternative.

Practical Summary

In practice, regardless of whether or not the ETE question has in effect been changed to “vocational ETE”, you need to continue to take into account all impairments, start with ETE and work outwards which will provide the best and most naturally related and forensically persuasive work options flowing from the insured member’s ETE and, critically, provide a report which complies with the high standards of reasoning explained in Makita recognising that the standards required of an EA in TPD is full compliance with s79 of the Evidence Act.

For the time being the starting point should be that the geographical element incorporated in the analysis of the reasonably accessible labour market applies.

Bruce Smith

Questions or feedback on this topic welcome to: or

Enquiries about Employability Assessments by the ECA division of Expert Experts:  or or 02 8078 0700.

These seminar notes are not legal advice.  I regularly conduct discussion groups on discrete issues in different areas of expert evidence to promote thinking amongst expert witnesses in the field.  It’s been suggested my short synopses of these seminars might be of interest to others.  If they are I’ll post more.

Legal Seminars: I regularly present seminars on different areas of expert evidence for the Law Society of NSW. Many of these are co-seminars with experts discussing the interaction of the law and their field of expertise and allowing solicitors an opportunity to meet and ehar from the experts they brief.  I also present these seminars with experts to larger firms and insurers for whom sending large numbers of people to the Law Society seminar is not practical.

Next Law Society seminars – Forensics 6 Part Series – February 2018:

[i] Hannover Life Re of Australasia Ltd v Jones [2017] NSWCA 233

[ii] Ibid Gleeson JA [148]

[iii] Ibid [150]

[iv] Hannover Life Re v Dargan [2013] NSWCA 57

[v] Halloran v Harwood Nominees Pty Ltd [2007] NSWSC 913

[vi] Birdsall v Motor Trades Association of Australia Superannuation Fund Pty Ltd [2015] NSWCA 104

[vii] Marcia Lee, ECA’s Quality Assurance Manager, was the vocational consultant who prepared that report and gave evidence at the Trial.   The Court’s acceptance of her opinion clearly relied heavily on the detail and quality of the explanation of the linkages between the ETE and the work option selection.

[viii] See Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305 esp Hayden JA at [85]. See also Dasreef Pty Ltd v Hawchar (2011) 277 ALR 611


TPD: Can Employability Assessments address whether a member meets the TPD definition?

The question of whether or not an Employability Assessment can, or should, provide an opinion on whether an individual member meets a specific TPD definition arises regularly.

Opinion evidence – expert opinion exception

Opinion evidence is prima facie not admissible (s76 Uniform Evidence Acts) because it is unreliable and potentially usurps the Judicial decision making role of interpreting facts.

An exception to the general opinion rule is expert opinion evidence (s79). Where there is a field of specialised knowledge (field of expertise) and the person has that specialised knowledge because of their training, study and experience (an expert) and provides an opinion within their expertise (expert opinion) it is likely to be sufficiently reliable to assist the Court and is therefore admissible.

Ultimate Issue Rule

There is a long history of argument that an expert should not comment on the ultimate issue for determination because that goes further than just providing an opinion within their field of expertise and, at that point, becomes inadmissible because it usurps the Judicial role.

Because of that view of the Ultimate Issue Rule expert opinions often went right up to the point where it was (hopefully) obvious what the expert thought the answer to the question for the Court was, but they did not write the concluding sentence or paragraph.

However, a proper analysis of the law relating to the Ultimate Issue Rule shows that it was always more accurately characterised as an example of the requirement that an opinion not be a mere ipsa dixit (because I say so!) statement. As the Full Federal Court stated in Arnotts v TPC:

“It is often said that an expert cannot give an opinion as to the ultimate fact that the court has to decide. This is inaccurate, as experts, especially valuers, often give evidence as to the ultimate fact, and in many cases the question whether that fact exists can be answered only by experts … What the rule really means is that an expert must not express an opinion if to do so would involve unstated assumptions as to either disputed facts or propositions of law.” (See: Arnotts Limited v Trade Practices Commission (1990) 24 FCR 313, 350 (Lockhart, Wilcox and Gummow JJ) quoting R Eggleston, Evidence, Proof and Probability (2nd ed, 1983), 147–148.)

Given the above understanding the ultimate issue rule was specifically abolished (s80) in 1995 in NSW and in other jurisdictions which apply the Uniform Evidence Act. In jurisdictions which technically retain the rule it’s proper application should not constrain an expert in the way it was so often suggested it did.

Ultimate Issue Rule – Dead but Not Buried

Despite it’s abolition, and the fact that it didn’t actually mean what it was so often cited to mean, the principles underlying the Ultimate Issue Rule are often cited to seek to constrain experts from applying a legal standard to facts, including facts which are established by their opinion.

To be clear, the expert who provides an opinion may apply a stated legal standard to facts founded on their opinion in order to fully explain their opinion, but is not entitled to purport to apply the law to the facts generally. (See Allstate Life Insurance Co v ANZ Banking Group Ltd (No 6) (1996) 64 FCR 79, esp at 83-84.)

So can an Employability Assessment provide an opinion on whether or not a member is TPD?

Yes. So long as the opinion fully expresses all of their assumptions and the reasoning process by which they have applied their expertise to those assumed facts, and how they have applied the explicitly stated legal standard to the facts reached by their opinion.

The complicating factor is that the application of the legal test of TPD to the facts of any given case usually requires opinions on at least 3 of the 4 different factual elements to be proved by expert opinion evidence (medical and physical functional capacity, psychological functional capacity, vocational / employability capacity, labour market factors), which no single expert is likely to be in a position to address.

However, this can be overcome by the application of the principle of transparency and statement of assumptions. While it will of course be far easier to do this in a multi-disciplinary assessment, it can still be done by each expert commenting on one of the elements of an Employability Assessment so long as they make clear the assumptions they are relying upon in relation to each other element when expressing that ultimate opinion.

General Application

This note is of general application to Expert Evidence, but the issue does seem to arise most often in the context of Employability Assessments.

Bruce Smith

Questions or feedback welcome to: or

This is not legal advice.  I regularly conduct discussion groups on discrete issues in different areas of expert evidence to promote thinking amongst expert witnesses and those who retain them.  It’s been suggested my short synopses might be of interest to others.  If they are I’ll post more.

Seminars: I regularly present seminars on different areas of expert evidence for the Law Society of NSW, sometimes with experts in those fields.  I am open to presenting these seminars in-house to larger firms and insurers for whom sending large numbers of people to the Law Society seminars is not practical.

Next Law Society seminar is 12 September 2017:

Dealing with clients with (possible) impaired mental capacity: with Therese Catazariti of 13 Wentworth, Professor Coyle and Alicia Tyler psychologists.