Insurance: Case Note – Insurance Offset Clauses and Common Law Claims: Susan Buswell v TAL Life Limited [2018] NSWSC 1507


The Plaintiff, Susan Buswell, was employed a Senior Constable in the New South Wales Police Force. The Plaintiff was medically discharged from the Force on 28 August 2014, commencing a common law claim for damages for injuries sustained through the course of her employment thereafter. Additionally, the Plaintiff began to receive monthly payments under a group salary continuance (‘GSC’) policy underwritten by the Defendant. 

The Plaintiff was ultimately successful in her common law claim for damages, settling via deed for the sum of $350,000.00 inclusive of costs and clear of workers’ compensation payments. Following settlement, the Defendant sought to reduce the amounts payable to the Plaintiff under the GSC policy, allegedly in accordance with an ‘offset’ clause within the policy. The wording of this clause was as follows: –

1.9.1 The amount of any Benefit payable in respect of an Insured Person for a month will be reduced by any Other Disability Income which accrues to that person during that month…Other Disability Income means any income (other than Return To Employment Income) which an Insured Person may derive during a month for which the benefit is payable and includes; 

  1. any benefit under any workers compensation, statutory compensation, pension, social security or similar schemes or other similar State, Federal or Territory legislation; and 
  2. any benefit paid under state or federal legislation such as the Department of Veteran Affairs; and 
  3. any other income payments including Employer funded sick leave entitlements. 

Any Other Disability Income which is in the form of a lump sum or is commuted for a lump sum, has a monthly equivalent of one sixtieth (1/60) of the lump sum over a period of sixty (60) months.  

If it can be shown that a portion of the lump sum represents compensation for pain and suffering; or the loss of use of a part of the body, we will not take that portion into account as Other Disability Income.” 

The Plaintiff commenced proceedings, seeking a declaration that her common law damages did not fall within the definition of ‘Other Disability Income’ within the policy underwritten by the Defendant, as well as an order that the Defendant reinstate her monthly benefits plus interest assessed under the Insurance Contracts Act 1984 on any arrears.  


The court opined that the declaration and orders sought by the Plaintiff should be made.  

The court concluded that the common law damages did not fall within the definition of ‘Other Disability Income’ within the policy, and as such, the Defendant could not rely on the subject clause to reduce the Plaintiff’s monthly benefits.

Central to the court’s judgment was the operation of the word ‘income’ in the opening line, referred to as “the chapeau” in the judgment, of the ‘Other Disability Income’ definition. According to the court, the word ‘income’ should be given its ordinary meaning, and that “the receipt of damages for personal injury, or a settlement sum in compromise of a claim for damages for personal injury, is capital and not income.” The court noted that sub-clauses a) – d) may operate to extend or clarify the definition of the operative term, but it did not accept that those sub-clauses had “the effect of allowing he word “income” where it is used in the chapeau to the definition to be read as “benefit” or “monetary benefit”, whether capital or income.” 

Consistent with the above contractual construction, the Court accepted that the common law damages could still fall within the definition of ‘Other Disability Income’ if it fell within one of the sub-clauses. The Defendant submitted that the common law damages should be considered as being a benefit under ‘any workers compensation…scheme’, per sub-clause b). The court was not swayed by this submission, asserting that it was inconsistent with Grljak v Trivan Pty Ltd (in liq) and Berowra Holdings Pty Ltd. 

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