TPD: Reasonably Accessible Labour Markets

lma picThe assessment of the reasonably accessible labour market arises in employability assessments in TPD, as well as in earning capacity assessments at common law or in workers compensation.

However, because the substantive legal principles and issues for determination in TPD are different to those at common law the application of the vocational assessor’s expertise to the TPD problem must also be different for the opinion to be relevant, reliable and admissible.  Merely adopting the standard rehabilitation style report is clearly inadequate in a TPD case. (see Justice’s Ball’s interlocutory decision rejecting such a report in Erzurumlu v Kellogg Superannuation).

While a reasonably accessible labour market test always applies in common law cases it may apply in TPD cases.

“Unable to”: The issue is highlighted by Hannover Life Re of Australia v Cesario Collella [2014] VSCA 205 at [34].   The policy term was “unable to do any work”.  Overturning the Judgment at first instance the Victorian Court of Appeal found that imposing a test of “the existence of work ‘which is reasonably accessible  in the market place and in an area in which it could be expected an insured in the position of the claimant could reasonably apply’ … went too far”.

The legal test was “unable to” which did not require a job in a reasonably accessible labour market.

This means that the question of a reasonably accessible labour market is not necessarily inherent to the definition of TPD, as it is at common law, but may or may not be a requirement depending on the terms of each policy.  It also suggests that the specific labour market factors which must be considered may vary from policy to policy.

“Unlikely ever to”: The Courts generally apply a reasonably accessible labour market test to “unlikely ever to” definitions.  However, unlike common law cases in which the reasons for applying a reasonably accessible labour market test are clear, in many TPD cases it is just assumed.

The Courts have (apparently) adopted and applied the common law view by way of an implicit argument that a reasonable interpretation of the policy does not envisage the member would be required to move address to seek work.  The member’s current address and the reasonably accessible labour market are therefore factors relevant to the “likelihood” of the member ever working again.

While the above interpretation is clearly open, it is not clear that it has been fully tested, and nor is it clear that it is generally appropriate to apply that test to “unlikely ever to” policies without closer analysis (given that it is not necessarily an inherent criteria of a TPD definition per Collella).

For example, it may be open to argue that a reasonable commercial interpretation of a TPD contract would be to extend the concept of assumed motivation to exercise residual capacity to include an assumed motivation to move in order to get work.  This is something that people do across Australia every day and many statutory compensation schemes now make this assumption.  If this reflects current views of what is reasonable that is arguably relevant to the interpretation of a TPD policy.

Also highlighting this question is the issue of which address to use when a member moves after the date for assessment?  Does the “likelihood” relate to the labour market accessible from:

(i) Their address at the date for assessment?

(ii) The address the member has moved to?

(iii) Either address ( ie would the likelihood of work in either labour market exclude them from the TPD definition?

Further, how does this evidence that the member chose to move sit with an underlying assumption that you need to review a specific reasonably accessible labour market because people don’t move, and what if they’ve moved to an area of lower likelihood of employment?

A lot of interesting questions to consider, and hopefully see determined by the Courts, regarding this important but often misunderstand and unexplored expert issue in employability and TPD.

Bruce Smith

This is not legal advice.  I regularly present short seminars on very discrete issues in different areas of expert evidence to promote thinking amongst expert witnesses in those areas.  It’s been suggested my short written summaries might be of interested to others.  If they are I’ll post more.

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The evidentiary onus of proving earning capacity

It is so easy to focus on the issue of liability when preparing to defend a claim for personal injury that the importance of obtaining the reliable (usually multi-disciplinary) expert evidence required to defend claims for lost earning capacity is often overlooked, despite economic loss often being the largest single head of damage claimed.

The result is often significant difficulty when attempting to negotiate an early settlement, or later in CARS or at trial when expert evidence to defend earning capacity is required.

Money hand LWA1

The defendant bears the evidentiary onus of proving residual capacity to earn

While the Plaintiff bears the legal onus of proving loss of earning capacity the Defendant bears theevidentiary onus of establishing that there is a real residual earning capacity and it’s likely value.

“…it is not incumbent upon the injured plaintiff to prove what employment he or she ‘is not incapacitated from performing’. It is for a defendant which contends that the plaintiff has a residual earning capacity to adduce evidence of what the plaintiff is capable of doing and what jobs are open to such a person:” see: Raby v Bristow [2005] NSWCA 199 at [73]

“The real defendant [insurer] must have resources from which evidence can be produced to show what sort of employment is within the residual capacity of an injured litigant, and what sum it is likely to produce.  It has, in my view, an evidentiary burden requiring it to adduce material of this kind.” See Kallouf v Middis [2008] NSWCA 61 at [53] citing  Linsell v Robson [1976] 1 NSWLR 249 (at 254 – 255). Continue reading

Grappling with issues in Total and Permanent Disablement (TPD)

Increased awareness amongst lawyers of group life TPD policies within superannuation packages, and reductions in benefits in statutory schemes, have lead to very significant increases in claims on and litigation over TPD policies in recent years.  The number of firms acting on both sides of the record has grown rapidly, with more and more lawyers now grappling with issues in TPD.LifeInsurance.jpg.pagespeed.ce.QRPegAOn0B

While the underlying factual questions about capacity for work or employability are the same as those that arise in other areas of personal injury law, the contractual basis of the cause of action means that the legal tests to be applied are particular to this field, and to the terms of each policy. Continue reading