FEDERAL COURT OF AUSTRALIA
Resolution Life Australasia Limited v Mitchell [2024] FCA 310
File number(s): NSD 263 of 2022 Judgment of: WIGNEY J Date of judgment: 28 March 2024 Catchwords: INSURANCE – appeal from determination of the Australian Financial Complaints Authority (AFCA) – whether AFCA erred in law in failing to provide the applicant procedural fairness by failing to identify and give the applicant notice of certain issues which turned out to be material to its determination and thereby failing to give the applicant an opportunity to adduce evidence or make submissions concerning those issues – whether AFCA erred in law by applying s 13 of the Insurance Contracts Act 1984 (Cth) in circumstances where the respondent was not a party to the insurance policy – whether AFCA erred in law by misconstruing terms of the insurance policy or making a decision inconsistent with the terms of the policy – appeal allowed Legislation: Administrative Appeals Tribunal Act 1975 (Cth), s 43(6)
Corporations Act 2001 (Cth), Pt 7.10A
Insurance Contracts Act 1984 (Cth), ss 11 (definition of ‘third party beneficiary’), 13
Safety, Rehabilitation and Compensation Act 1988 (Cth), s 19(2)
Cases cited: AIA Australia Ltd v Lancaster [2017] FCA 962
AIA Australia Ltd v Sharma (2023) 408 ALR 490; [2023] FCAFC 42
Clements v Independent Indigenous Advisory Committee (2003) 131 FCR 28; [2003] FCAFC 28
Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd (1994) 49 FCR 576; [1994] FCA 293
Haritos v Commissioner of Taxation (2015) 233 FCR 315; [2015] FCAFC 92
Host-Plus (Qld) Pty Limited v Kelley [2009] FCA 1504
Lykogiannis v Retail Employees Superannuation Pty Ltd (2000) 97 FCR 361; [2000] FCA 327
MZAPC v Minister for Immigration and Border Protection (2022) 273 CLR 506; [2021] HCA 17
Nathanson v Minister for Home Affairs (2022) 276 CLR 80; [2022] HCA 26
QSuper Board v Australian Financial Complaints Authority Ltd and Another (2020) 276 FCR 97; [2020] FCAFC 55
Sharma v H.E.S.T. Australia Ltd (2022) 159 ACSR 635; [2022] FCA 536
SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 228 CLR 152: [2006] HCA 63
Division: General Division Registry: New South Wales National Practice Area: Administrative and Constitutional Law and Human Rights Number of paragraphs: 138 Date of hearing: 1 February 2023 Counsel for the Applicant: Mr J.G. Duncan Solicitor for the Applicant: TurksLegal Counsel for the First Respondent: Ms E Grotte Solicitor for the First Respondent: Ian Collins Solicitors ORDERS
NSD 263 of 2022 BETWEEN: RESOLUTION LIFE AUSTRALIASIA LIMITED ACN 079 300 379
Applicant
AND: ALBERTUS MITCHELL
First Respondent
N.M. SUPERANNUATION PROPRIETARY LIMITED (ACN 008 428 322)
Second Respondent
AUSTRALIAN FINANCIAL COMPLAINTS AUTHORITY (AFCA) (ACN 620 494 340)
Third Respondent
ORDER MADE BY:
WIGNEY J
DATE OF ORDER:
28 MARCH 2024
THE COURT ORDERS THAT:
1.The determination made by the third respondent dated 16 March 2022 in respect of the first respondent’s complaint be set aside.
2.The matter be remitted to be…
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Details
- Case
- [2024] FCA 310
- Decision Date
CaseChat Overview and Summary
Resolution Life Australasia Limited sought to appeal against a decision made by the Australian Financial Complaints Authority (AFCA) regarding a complaint made by Mr Mitchell. The main issue was whether AFCA erred in various respects, including in providing procedural fairness, interpreting the insurance policy, and applying section 13 of the Insurance Contracts Act 1984 (Cth). The factual background of the case involved Mr Mitchell's employment history, his compensation claim for a psychiatric injury, and his subsequent employment with Nova, which led to the dispute over his entitlement to benefits under an insurance policy.
The legal issues before the court centred on whether AFCA denied Resolution Life procedural fairness by not identifying certain material issues and giving notice to Resolution Life, whether AFCA misconstrued the terms of the insurance policy or made a decision inconsistent with the policy, and whether section 13 of the Insurance Contracts Act was correctly applied. The court needed to determine if AFCA made any legal errors in its determination that ultimately affected Resolution Life’s appeal.
In its reasoning, the court found that AFCA did indeed err in several respects. Firstly, AFCA failed to provide Resolution Life with procedural fairness by not identifying and notifying it of certain issues that turned out to be material to the determination, thus denying Resolution Life the opportunity to adduce evidence or make submissions on those issues. Secondly, the court held that AFCA erred by applying section 13 of the Insurance Contracts Act in circumstances where Mr Mitchell, the respondent, was not a party to the insurance policy. Lastly, the court determined that AFCA misconstrued the terms of the insurance policy, leading to a decision inconsistent with the policy terms.
The court allowed the appeal and set aside AFCA's determination. The matter was remitted back to AFCA for reconsideration in accordance with the law. Additionally, the court ordered that Resolution Life pay the costs of the appeal.
The legal issues before the court centred on whether AFCA denied Resolution Life procedural fairness by not identifying certain material issues and giving notice to Resolution Life, whether AFCA misconstrued the terms of the insurance policy or made a decision inconsistent with the policy, and whether section 13 of the Insurance Contracts Act was correctly applied. The court needed to determine if AFCA made any legal errors in its determination that ultimately affected Resolution Life’s appeal.
In its reasoning, the court found that AFCA did indeed err in several respects. Firstly, AFCA failed to provide Resolution Life with procedural fairness by not identifying and notifying it of certain issues that turned out to be material to the determination, thus denying Resolution Life the opportunity to adduce evidence or make submissions on those issues. Secondly, the court held that AFCA erred by applying section 13 of the Insurance Contracts Act in circumstances where Mr Mitchell, the respondent, was not a party to the insurance policy. Lastly, the court determined that AFCA misconstrued the terms of the insurance policy, leading to a decision inconsistent with the policy terms.
The court allowed the appeal and set aside AFCA's determination. The matter was remitted back to AFCA for reconsideration in accordance with the law. Additionally, the court ordered that Resolution Life pay the costs of the appeal.
Orders
Orders of the court
1. The determination made by the third respondent dated 16 March 2022 in respect of the first respondent’s complaint be set aside.
2. The matter be remitted to be determined again by the third respondent in accordance with law.
3. The first respondent pay the applicant’s costs of the appeal.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
The Insurer appealed to this Court from AFCA’s determination of Mr Mitchell’s complaint. The appeal raised several questions of law. Those questions of law included, in short summary: whether AFCA denied the Insurer procedural fairness in making the determination; whether, in either finding or assuming that Mr Mitchell had cover under the Policy, AFCA erred in law in misconstruing the terms of the Policy; and whether AFCA erred in law in finding that s 13 of the Insurance Contracts Act relevantly applied in the circumstances. The main issue for resolution is whether AFCA erred in any of the ways contended by the Insurer. The Trustee (now N.M. Superannuation Pty Ltd) and AFCA filed submitting notices. Factual background The factual background was largely not in dispute. Mr Mitchell’s prior employment and compensation claim Mr Mitchell started working full time with the Department of Defence in October 2006. The Department dismissed Mr Mitchell from his employment on 14 October 2009 because he engaged in threatening behaviour in breach of the Department’s Code of Conduct. In December 2009, Mr Mitchell lodged a worker’s compensation claim under the Safety, Rehabilitation and Compensation Act 1988 (Cth). He claimed that he had suffered a psychiatric injury in the course of his employment and subsequent dismissal. In April 2011, Comcare accepted that Mr Mitchell was suffering from an “adjustment disorder with anxious and depressed mood” and that Mr Mitchell’s employment with the Department had aggravated or significantly contributed to that condition. Comcare therefore accepted that it was liable to make compensation payments to Mr Mitchell pursuant to the Compensation Act. In January 2016, following an updated medical review in respect of Mr Mitchell’s condition, Comcare determined that Mr Mitchell was no longer entitled to compensation under the Compensation Act. His payments under the Compensation Act were accordingly stopped. Mr Mitchell sought an internal review of Comcare’s determination. When Comcare affirmed its initial determination, Mr Mitchell lodged an application for review of the determination in the Administrative Appeals Tribunal. That application was lodged in March 2016.Mr Mitchell’s Employment with Nova In the meantime, Mr Mitchell was offered employment with Nova. His employment commended on 23 May 2016. Mr Mitchell’s employment contract with Nova stated that employer funded superannuation contributions would be made into a fund nominated by Mr Mitchell or, if he did not nominate a fund, into Nova’s default superannuation fund. The employment contract also stated that Mr Mitchell’s continuing employment with Nova was subject to him “continuing to satisfy the Australian Department of Defence Security requirements whenever required”. On 24 May 2016, Nova requested the Department to reactivate Mr Mitchell’s security clearance. On 14 June 2016, however, the Department advised Mr Mitchell that Nova’s request for reactivation had been rejected. That was because his last security clearance process had been conducted in 2003 and he had not held any level of security clearance since October 2009. That period was said to exceed the time allowed for a security clearance to be reactivated without a “full vetting process” being conducted. The Department advised Mr Mitchell that it had sent him a link to enable him to complete the paperwork for a security assessment.
Evidence
Evidence Before The Court
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Decision
Reasons for decision
On 27 July 2016, the day after Nova had applied for Mr Mitchell to become a member of the Plan, the Trustee sent a “welcome” letter to Mr Mitchell. That letter indicated that the Trustee had “set up” Mr Mitchell’s superannuation account “as of 23 May 2016”, that date being the date that Mr Mitchell’s employment with Nova had commenced. The Trustee’s letter was accompanied by information about the Plan. That information included information concerning the insurance cover that was “automatically” provided as part of the Plan if the eligibility requirements were met by the member. The Tribunal’s decision in respect of Mr Mitchell’s review application On 4 November 2016, the Tribunal handed down its decision in respect of Mr Mitchell’s application for review of Comcare’s determination that he was no longer entitled to compensation under the Compensation Act. The Tribunal set aside that decision and in substitution decided that Mr Mitchell continued to be entitled to compensation from Comcare in accordance with Comcare’s original determination made in 2011. Following the Tribunal’s decision, Comcare wrote to Mr Mitchell and provided him with the details of the periods of “compensation leave and incapacity payments (compensation amounts)” that Comcare had determined he was entitled to under the Compensation Act. The compensation periods commenced on 27 January 2016 and ended on 17 May 2017. For the period 25 April 2016 to 30 June 2016 – which covered the brief period that Mr Mitchell was employed at Nova – Comcare had determined that Mr Mitchell was entitled to receive compensation totalling $14,338.28. Comcare’s letter also advised that Mr Mitchell was required to advise Comcare of all employment undertaken by him and any superannuation payments he had received. Mr Mitchell’s claim under the Policy and its rejection On 3 June 2018, almost 18 months after the Tribunal’s decision, Mr Mitchell lodged a claim under the Policy for a total and permanent disablement benefit and temporary salary continuance. Mr Mitchell’s claim form stated that he suffered from a “Mixed Adjustment Disorder with Severe Anxiety and Depression”. The form included details of Mr Mitchell’s employment with the Department and Nova, but noted that he was no longer able to work. On 20 November 2019, the Insurer wrote to Mr Mitchell and advised him that he was not entitled to receive any payment of benefits under the Policy. The letter stated that for him to be entitled to the payment of benefits under the Policy it was necessary for him to be entitled to “Automatic Cover” under the Policy. The letter noted that the terms of the policy were such that Automatic Cover only applied to employees who, among other things, were “At Work” on the date that the application for cover was made. The definition of “At Work” included that the employee was not “in receipt of or entitled to claim income support benefits from any source”. The letter went on to refer to the Tribunal’s decision that Mr Mitchell continued to be entitled to receive compensation from Comcare. It noted, in that context, that following the Tribunal’s decision Comcare had “retrospectively” paid Mr Mitchell benefits for the period 23 May 2016 to 17 June 2016. The letter concluded:Based on this information at the time you joined the [Plan], you were entitled to claim on your ComCare benefits and you were in receipt of funds during that period, albeit retrospectively meaning that you did not meet the policy definition of “At Work”, meaning that you were not entitled to Automatic Cover under the policy.
Ratio Decidendi
Legal Principle Established
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