Edser v QSuper Board

Case [2021] FCA 1437

FEDERAL COURT OF AUSTRALIA

Edser v QSuper Board [2021] FCA 1437  

File number: NSD 400 of 2021
Judgment of: PERRAM J
Date of judgment: 18 November 2021
Catchwords: ADMINISTRATIVE LAW – appeal from Australian Financial Complaints Authority determination – whether question of law – whether Authority erred by misconstruing phrase ‘not related to’ under relevant insurance terms
Legislation:

Constitution s 51(xiv)

Acts Interpretation Act 1901 (Cth) s 25D

Corporations Act 2001 (Cth) ss 1053, 1055, 1057

Insurance Contracts Act 1984 (Cth) ss 8, 9(2), 47

Superannuation (State Public Sector) Act 1990 (Qld)

Cases cited:

Edington v Board of Trustees of the State Public Sector Superannuation Scheme [2016] QCA 247

Joye v Beach Petroleum NL (1996) 67 FCR 275

Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30; 206 CLR 323

Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259

Preston v AIA Australia Ltd [2014] NSWCA 165

Division: General Division
Registry: New South Wales
National Practice Area: Administrative and Constitutional Law and Human Rights
Number of paragraphs: 82
Date of hearing: 22 October 2021
Counsel for the Applicant: Mr D Kelsey-Sugg
Solicitor for the Applicant: Harmers Workplace Lawyers
Counsel for the First Respondent: Mr K F Holyoak
Solicitor for the First Respondent: Mills Oakley
Counsel for the Second Respondent: Mr A R Di Stefano
Solicitor for the Second Respondent: Becketts Lawyers

ORDERS

NSD 400 of 2021
BETWEEN:

SHANON EDSER

Applicant
AND:

QSUPER BOARD

First Respondent

AUSTRALIAN FINANCIAL COMPLAINTS AUTHORITY LIMITED

Second Respondent

ORDER MADE BY:

PERRAM J

DATE OF ORDER:

18 NOVEMBER 2021

THE COURT ORDERS THAT:

1.The determination made by the Australian Financial Complaints Authority on 26 February 2021 be set aside.

2.The matter be remitted to the Australian Financial Complaints Authority for redetermination in accordance with these reasons.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT

PERRAM J:

  1. The Applicant, Mr Edser, appeals from a determination of the Second Respondent, the Australian Financial Complaints Authority Ltd (‘AFCA’), made on 26 February 2021.  It affirmed a decision of the First Respondent, the QSuper Board (‘QSuper’), not to pay him a total and permanent disablement (‘TPD’) benefit under the auspices of the superannuation account he maintained with it.  QSuper provides superannuation products and services to members of the Queensland Public Service.

    BACKGROUND

  2. Mr Edser commenced working as a security guard for Queensland Health in October 2011 and became a member of QSuper on 31 October 2011.  By mid-2012 he was working as a security officer at the Princess Alexandra Hospital in the employ of Queensland Health.  Of significance for present purposes is that in mid-2012 he claimed, and it does not now appear to be in dispute, that he had reported workplace incidents involving the abuse of psychiatric patients at the hospital.  Mr Edser says that as a result of his reporting of these incidents he himself was bullied and indeed, threatened in his workplace.  He alleges that as a…

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Details
AGLC
Edser v QSuper Board [2021] FCA 1437
Case
[2021] FCA 1437
Decision Date

CaseChat Overview and Summary

In the matter of Edser v QSuper Board, the applicant, Mr Edser, sought to appeal against the decision of the Australian Financial Complaints Authority (AFCA), which affirmed a decision of the QSuper Board not to pay him a total and permanent disablement (TPD) benefit. The dispute arose from Mr Edser's claim for TPD benefits under the superannuation account he maintained with QSuper. The case involved complex issues surrounding the interpretation of insurance terms, particularly the phrase 'not related to' in the context of Mr Edser's claim based on mental health conditions resulting from workplace incidents. The Federal Court was tasked with determining whether AFCA had erred in its interpretation of the insurance terms and whether the TPD benefit was payable.

The primary legal issues before the court included whether AFCA had failed to consider a mandatory relevant consideration, specifically the duration of Mr Edser's insured membership under the insurance scheme. Another key issue was the interpretation of the phrase 'not related to' in clause 6.2(b) of the insurance scheme and whether this phrase correctly excluded Mr Edser's claim. The court also had to consider whether the Insurance Contracts Act 1984 (Cth) applied and if so, how it influenced the interpretation of the insurance terms. These issues were central to resolving whether the TPD benefit should be paid to Mr Edser.

The court found that AFCA had not erred in failing to consider the duration of Mr Edser's insured membership as a mandatory relevant consideration. The court clarified that Mr Edser's entitlement to a claim under clause 6.2(c) was contingent on his status as an 'insured member' for a specified period. However, it was determined that Mr Edser was not an 'insured member' for the required duration, making the consideration irrelevant. Regarding the phrase 'not related to', the court held that AFCA's interpretation was correct, and this phrase excluded Mr Edser's claim. The court also found that the Insurance Contracts Act did not alter the interpretation of the insurance terms. Based on these findings, the court concluded that AFCA's decision was correct, but the matter was remitted for redetermination to ensure consistency with the court's reasoning.

The court set aside the determination made by AFCA on 26 February 2021 and remitted the matter to AFCA for redetermination in accordance with the court's reasons. The court made no order regarding the costs of the appeal, indicating that QSuper should bear Mr Edser's costs and that no order would be made in relation to AFCA’s costs unless the parties wished to further discuss it.

Orders

Orders of the court

1. The determination made by the Australian Financial Complaints Authority on 26 February 2021 be set aside.

2. The matter be remitted to the Australian Financial Complaints Authority for redetermination in accordance with these reasons.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

The Applicant, Mr Edser, appeals from a determination of the Second Respondent, the Australian Financial Complaints Authority Ltd (‘AFCA’), made on 26 February 2021. It affirmed a decision of the First Respondent, the QSuper Board (‘QSuper’), not to pay him a total and permanent disablement (‘TPD’) benefit under the auspices of the superannuation account he maintained with it. QSuper provides superannuation products and services to members of the Queensland Public Service.BACKGROUND Mr Edser commenced working as a security guard for Queensland Health in October 2011 and became a member of QSuper on 31 October 2011. By mid-2012 he was working as a security officer at the Princess Alexandra Hospital in the employ of Queensland Health. Of significance for present purposes is that in mid-2012 he claimed, and it does not now appear to be in dispute, that he had reported workplace incidents involving the abuse of psychiatric patients at the hospital. Mr Edser says that as a result of his reporting of these incidents he himself was bullied and indeed, threatened in his workplace. He alleges that as a result of the bullying and threats he received he went on to develop an adjustment disorder with mixed anxiety and depressed mood, together with a major depressive disorder and post-traumatic stress disorder (‘PTSD’). Mr Edser went on stress leave on 3 January 2013 from which he was unable to return. On 5 June 2013 his employment with Queensland Health was formally terminated. He then made an unsuccessful application for workers compensation. He has now made a claim on QSuper under the terms of the total disability insurance scheme it provided to some of its members including Mr Edser. The basis of his claim was that the mental conditions from which he was by then suffering had rendered him totally and permanently disabled from working. The superannuation scheme in question is conducted under the auspices of the Superannuation (State Public Sector) Act 1990 (Qld), which also provides for a statutory corporation, QSuper, to be its trustee and for the scheme to be administered under the terms of a trust deed. The deed requires QSuper to provide TPD insurance for its members on terms which are to be determined by it. The insurance terms relevant to this case were determined by QSuper on 1 July 2011. I shall refer to these terms as the ‘insurance scheme’. Initially, QSuper concluded that Mr Edser was not TPD under the terms of the insurance scheme but, following an internal review, the opposite conclusion was reached. Both of these decisions by QSuper were made on its behalf by delegates. However, whilst the internal review resulted in the conclusion that Mr Edser was TPD, it did not result in payment to him of any TPD benefit under the scheme. This was because the internal review delegate concluded that the benefit was not payable as a result of the operation of cl 6.2(b) of the insurance scheme which circumscribed a member’s entitlement to a TPD benefit. I will return to that clause shortly.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

I would thus answer Questions 2 and 6 ‘not necessary to answer’ and ‘no’ respectively.CONCLUSIONS Question 5, the only question not already dealt with, was not pressed. Similarly, although the amended notice of appeal sought to have this Court make a finding of fact, this was abandoned at the hearing. In light of my conclusions on Question 4, Mr Edser is entitled to the relief he seeks. The orders I will make are that:(1)The determination of AFCA dated 26 February 2021 be set aside.(2)The matter be remitted to AFCA for redetermination in accordance with these reasons. My impression is that QSuper must bear Mr Edser’s costs of the appeal and that I should make no order in relation to AFCA’s costs. However, I will hear the parties if they wish by arrangement with my Associate.

Ratio Decidendi

Legal Principle Established

Mr Edser appeals to this Court on six questions of law. The fifth of these questions was not pressed, and as will be seen, Questions 2 and 6 are related. Accordingly, the resolution of these proceedings essentially turns on four matters: whether AFCA failed to consider a mandatory relevant consideration, the definition of ‘pre-existing medical condition’, the proper construction of the words ‘not related to’ in cl 6.2(b), and the alleged application of the Insurance Contracts Act 1984 (Cth). Question 1: Failure to consider a mandatory relevant consideration Turning then to the first of Mr Edser’s arguments, which was a contention that the panel had not determined the duration of his insured membership with QSuper. From this it followed, he said, that the panel did not consider his eligibility for a benefit under cl 6.2(c) and as such, that it did not properly inform itself as to whether the decision was a ‘fair and reasonable’ one within the meaning of s 1055. This argument was encapsulated by Question 1 of the Amended Notice of Appeal, which was in these terms: 1.Whether the Authority erred in law by failing to take into account a mandatory relevant consideration, being the duration of the Applicant’s insured membership of ‘QSuper’ for the purposes of clause 6.2 of the Insurance Terms, or otherwise failed to properly inform itself as to the duration of the Applicant’s insured membership of QSuper. I do not accept this submission because it is clear that if the panel had considered whether Mr Edser was eligible under cl 6.2(c) it would have been bound to conclude that he was not. Why? The Applicant’s entitlement to make a claim under cl 6.2(c) does not turn only upon the conclusion that his TPD was related to a pre-existing medical condition (cl 6.2(c)(ii)). It also turns on his having been an ‘insured member’ for between 2 and 7 years (cl 6.2(c)(i)). By cl 1.1, an insured member is a member insured under the terms of the insurance scheme. The implication of this apparently innocuous definition is that the periods of time being discussed in cl 6.2 concern not the length of time a person is a member of the superannuation fund itself but instead the period of time that the person is covered by the insurance scheme. Whilst it is natural to think that it is likely that a person will become covered by the insurance scheme at the same time as they join the superannuation fund (and this, no doubt, will usually be the case), the converse is by no means true. It is possible that a member might continue to be a member of the superannuation fund whilst ceasing to be covered by the insurance scheme. Indeed, as will shortly be seen, that is precisely what has happened in this case. I make this point so as to reject Mr Kelsey-Sugg’s submission on behalf of Mr Edser that whilst he remained a member of the superannuation fund it was possible for QSuper to deduct the relevant premium from his accumulation account and thus possible that he had continued to pay a premium for a period of more than two years. No doubt this true – but Mr Edser’s membership of the superannuation fund and the fact that QSuper may have had an entitlement to deduct (or indeed, did deduct) any premium which was due throw no light on when his membership of the insurance scheme came to an end. To determine the answer to that question one must consult the terms of the insurance scheme itself. What are the relevant terms of that scheme?