Resolution Life Australasia Limited v Teagle

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FEDERAL COURT OF AUSTRALIA

Resolution Life Australasia Limited v Teagle [2024] FCAFC 140   

Appeal from: Resolution Life Australasia Ltd v Teagle [2023] FCA 1607
File number(s): NSD 101 of 2024
Judgment of: PERRY, DOWLING AND NEEDHAM JJ
Date of judgment: 1 November 2024
Catchwords: SUPERANNUATION – Appeal from decision of primary judge, where primary judge decided that AFCA had jurisdiction to determine a “superannuation complaint” under Division 3 of Part 7.10A of the Corporations Act 2001 (Cth) to which an insurer had been joined by making a determination against the insurer – whether “a decision” within s 1053(1)(a) of the Corporations Act2001 (Cth) included a decision by an insurer joined to the complaint – whether an alternative route to compensation was legally unreasonable – whether AFCA’s remit to determine fairness and reasonableness should be bounded by reference to duties of trustees
Legislation:

Corporations Act2001 (Cth) Pt 7.10A Div 3, ss 1053(1)(a) –(j), 1053(5), 1054(1), 1054(2), 1055(1), 1055(2), 1055(4) to (7), 1057

Insurance Contracts Act 1984 (Cth)

Superannuation (Resolution of Complaints) Act 1993 (Cth) ss 17A, 18, 37(3)(b) to (d), 37(5), 37(6)

Treasury Laws Amendment (Putting Consumers First — Establishment of the Australian Financial Complaints Authority) Bill 2017 (Cth)
Cases cited:

CGU Insurance Ltd v AMP Financial Planning Pty Ltd (2007) 235 CLR 1

Connor v Australian Financial Complaints Authority [2024] FCA 711

Distillers Co Bio-Chemicals (Aust) Pty Ltd v Ajax Insurance Co Ltd (1974) 130 CLR 1

MetLife Insurance Ltd v Australian Financial Complaints Authority & Anor (2022) 295 FCR 1; [2022] FCAFC 173

Minister for Aboriginal Affairs v Peko-Wallsend (1986) 162 CLR 24

NBMZ v Minister for Immigration and Border Protection [2014] FCAFC 38

QSuper Board v Australian Financial Complaints Authority Limited (2020) 267 FCR 97; [2020] FCAFC 55

Resolution Life Australasia Ltd v Teagle (Stay Application) [2023] FCA 1244

Resolution Life Australasia Ltd v Teagle [2023] FCA 1607

Retail Employees Superannuation Pty Ltd v Crocker (2001) 48 ATR 359; [2001] FCA 1330

Sharma v H.E.S.T. Australia Ltd [2022] FCA 536

Telstra Corp Ltd v Seven Cable Television Pty Ltd (2000) 178 ALR 707

Tratter v Aware Super [2024] FCAFC 36

Wan v BT Funds Management Limited [2020] 160 ACSR 81
Division: General Division
Registry: New South Wales
National Practice Area: Commercial and Corporations
Sub-area: Commercial Contracts, Banking, Finance and Insurance
Number of paragraphs: 126
Date of hearing: 8 August 2024
Counsel for the Appellant: D A Lloyd SC and J G Duncan
Solicitor for the Appellant: Turks Legal
Counsel for the First Respondent: Submitting appearance
Counsel for the Second Respondent: Submitting appearance, save as to costs
Counsel for the Third Respondent: E Holmes
Solicitor for the Third Respondent:  Becketts Lawyers

ORDERS

NSD 101 of 2024
BETWEEN:

RESOLUTION LIFE AUSTRALASIA LIMITED

Appellant
AND:

GREGORY TEAGLE

First Respondent

N.M. SUPERANNUATION PROPRIETARY LIMITED

Second Respondent

AUSTRALIAN FINANCIAL COMPLAINTS AUTHORITY

Third Respondent

ORDER MADE BY:

PERRY, DOWLING AND NEEDHAM JJ

DATE OF ORDER:

1 NOVEMBER 2024

THE COURT ORDERS THAT:

1.   The appeal is dismissed.

2.   The appellant…

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Details
Case
[2024] FCAFC 140
Decision Date

CaseChat Overview and Summary

Resolution Life Australasia Limited appealed against a decision of Stewart J, who dismissed Resolution Life's application for review of a determination by the Australian Financial Complaints Authority (AFCA) in favour of Mr Teagle. The dispute arose from a complaint by Mr Teagle about a total and permanent disability insurance policy linked to his superannuation, which was originally made against AMP Financial Planning Pty Ltd (AFP). The key legal issue was whether AFCA had jurisdiction to determine a complaint against an insurer, Resolution Life, which had been joined to the original complaint against the trustee, AMP Superannuation Ltd. The court had to decide if AFCA's jurisdiction was limited to the decision made by the trustee or if it could also consider decisions made by the insurer.

The Full Court held that the primary judge was correct in finding that AFCA had jurisdiction to determine the complaint against Resolution Life. The court reasoned that once Resolution Life was joined to the complaint, it became part of the superannuation complaint, and AFCA had the authority to assess the fairness and reasonableness of Resolution Life's decision. The Full Court upheld the primary judge's interpretation that the joinder of Resolution Life expanded AFCA's remit to include decisions by Resolution Life, as an "other person" who made "a decision to which the complaint relates." Therefore, the Full Court dismissed the appeal and ordered that Resolution Life pay the costs of the third respondent.

Orders

Orders of the court

1. The appeal is dismissed.

2. The appellant is to pay the costs of the third respondent as agreed or assessed.

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

Background

Background to the litigation

It was not in dispute that the complaint by Mr Teagle was a “superannuation complaint” within the meaning of s 1057(1) of the Corporations Act, nor that the appellant was entitled to appeal to this Court from the decision of the primary Judge by way of the Notice of Appeal filed on 2 February 2024.Factual Background The facts in this matter as set out in the primary Judgment in paragraphs [1] to [34] of the decision under appeal do not appear to be in dispute. What follows is a brief summary. This appeal arises out of a complaint by Mr Teagle made on 1 June 2022 to AFCA in which he sought compensation pursuant to a total and permanent disability insurance policy (TPD policy) he had taken out through his superannuation with Flexible Lifetime – Super (FSL), the trustee of which was AMP Superannuation Ltd (ASL). The complaint however was originally made against AMP Financial Planning Pty Ltd (AFP) (Appeal Book Part C (AB-C) Doc 20 page 1). AFP was the employer of the financial planner who then assisted Mr Teagle with his financial affairs (AB-C-20 at 1). Mr Teagle was at the time a motor mechanical engineer and ran his own business (AB-C-2 at 4). On his application for insurance to AFP, he had disclosed a “lower back strain” between 12 January 2003 and 12 February 2003, which had resolved in fairly short order after a massage and electronic current therapy (AB-C-2 at 11). On 12 August 2004, AMP Life Limited (AMP Life) – on letterhead headed “AMP Financial Services” – wrote to Mr Teagle (AB-C-3 at 2). The letter was signed by a Mr Sainsbury and set out details of the FSL plan. That letter noted:Your insurance benefits You have applied for the following insurance benefits: Ÿextra death benefit of $1,000,000.00 Ÿtotal and permanent disablement benefit of $500,000.00We are currently assessing these benefits. When we have finished, we’ll send you a letter to confirm whether they can be added to your plan. On 29 November 2004, Mr Teagle received a letter providing an offer of insurance (AB-C-5 at 1). This letter was also signed by Mr Sainsbury, but was not on the same letterhead as the 12 August 2004 letter, in that the letterhead did not include a reference to “AMP Financial Services”. However, both letters included the contact details of AMP Life and referred to the FSL superannuation policy. It is not disputed that AMP Life was, at the outset, the insurer which provided the TPD cover to the trustee, for the benefit of Mr Teagle (J[7]). The 29 November 2004 letter advised that Mr Teagle’s insurance of $1,000,000 Extra Death Benefit and $500,000 of TPD insurance was granted subject to an exclusion in the enclosed Advice of Revised Terms as follows (AB-C-5 at 3):Exclusions Lumbar/Sacral Spine: Total and Permanent Disability Benefit under this plan shall not be payable for injury or illness that is caused wholly or partly, directly or indirectly by any injury to or disorder of the lumbar and sacral spine or any part of the lumbar and sacral spine including its muscles, ligaments, discs or nerve roots. (exclusion).

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Before the Full Court is an appeal from the judgment of Stewart J in NSD 732 of 2023, Resolution Life Australasia Ltd v Teagle [2023] FCA 1607, delivered on 18 December 2023 (primary Judgment or J). By the primary Judgment, the Court dismissed an application made by Resolution Life Australasia Limited (Resolution Life or the appellant) seeking review of a Determination, made by the Australian Financial Complaints Authority Limited (AFCA or the respondent), on 20 June 2023 (Determination). The first respondent, Mr Teagle, was the complainant in the original complaint to AFCA and has since had the benefit of the Determination in his favour. Mr Teagle has filed a Submitting Notice, as did N.M. Superannuation Proprietary Limited (NM Super), the second respondent. Accordingly AFCA, as the only active respondent, has provided assistance to the Court by acting as a contradictor before the primary Judge, and on this appeal. By the Determination, AFCA determined that (J[34]): This determination sets aside the decision of insurer 2 [Resolution Life] to not compensate the complainant. AFCA substitutes a decision that insurer 2 must compensate the complainant for an amount equivalent to the TPD cover.This determination otherwise affirms the decision of insurer 2 to not pay the TPD claim. It also affirms the decision of the trustee to agree with insurer 2’s decision to not pay the TPD claim.However, if it is beyond insurer 2’s power to compensate the complainant for an amount equivalent to the TPD cover, then AFCA does not affirm insurer 2’s decision not to pay the TPD claim. Instead, it sets aside that decision in the alternative and substitutes a decision that insurer 2 must pay the TPD claim on the basis that it would be unfair and unreasonable to rely on the exclusion to defeat the TPD claim in these circumstances. The appellant is seeking to set aside the Determination on the basis that AFCA exceeded its authority under Part 7.10A Division 3 (Division 3) of the Corporations Act2001 (Cth) (Corporations Act). As an alternative, Mr D A Lloyd SC, who appeared with Mr Duncan for the appellant, fairly conceded that, if this Court were to find that there were an error, and that the error raised matters which could have been dealt with by AFCA but were not, the matter should be remitted for re-determination. It was not in dispute that the complaint by Mr Teagle was a “superannuation complaint” within the meaning of s 1057(1) of the Corporations Act, nor that the appellant was entitled to appeal to this Court from the decision of the primary Judge by way of the Notice of Appeal filed on 2 February 2024.Factual Background The facts in this matter as set out in the primary Judgment in paragraphs [1] to [34] of the decision under appeal do not appear to be in dispute. What follows is a brief summary. This appeal arises out of a complaint by Mr Teagle made on 1 June 2022 to AFCA in which he sought compensation pursuant to a total and permanent disability insurance policy (TPD policy) he had taken out through his superannuation with Flexible Lifetime – Super (FSL), the trustee of which was AMP Superannuation Ltd (ASL). The complaint however was originally made against AMP Financial Planning Pty Ltd (AFP) (Appeal Book Part C (AB-C) Doc 20 page 1). AFP was the employer of the financial planner who then assisted Mr Teagle with his financial affairs (AB-C-20 at 1).

Ratio Decidendi

Legal Principle Established

It was further submitted for AFCA that the alternative nature of the Determination (the Reversal Decision) was a pragmatic finding, given the overall context of AFCA’s findings and the fact that there was medical evidence before AFCA which pointed to the original injury giving rise to the exclusion, and the injury giving rise to the TPD claim, were unrelated. In those circumstances, it was submitted, AFCA’s Determination sought to provide a fair and reasonable outcome for Mr Teagle.Consideration of Grounds 1 and 2Introduction This appeal turns on issues of statutory construction. Cutting through the unnecessary parts of Division 3, and substituting NM Super for “the trustee” and the appellant for “the insurer”, the process of AFCA’s acceptance of, and determination of, Mr Teagle’s complaint must follow the below process:-(a)The complaint must be a “superannuation complaint”, in other words, it must be “a complaint … that [NM Super] has made a decision relating to [Mr Teagle] that is or was unfair or unreasonable” (s 1053(1)(a));(b)For the purposes of determining whether a decision has been made “for the purposes of [s 1053])” NM Super makes a decision if it makes, or fails to make, a decision (s 1053(5)).(c)Once a superannuation complaint has been made to AFCA, it may then join Resolution Life as “an insurer”, if it decides that Resolution Life should be a party to the superannuation complaint: (s 1054(1)(c));(d)AFCA may then make a determination of the superannuation complaint. In its determination, it has the powers, obligations, and discretions conferred on NM Super or other person who made “a decision to which the complaint relates”, or “engaged in conduct (including any act omission or representation) to which the complaint relates”: s 1055(1);(e)In its determination, AFCA must be satisfied that “a decision … in its operation in relation to” Mr Teagle, or conduct, is unfair or unreasonable: s 1055(4); and(f)In that determination, AFCA may, if so satisfied, vary or set aside the decision, or substitute its own decision. It may also remit the decision “to the person who made it for reconsideration”: (s 1055(6)). The question to be determined is whether AFCA is confined in its determination under s 1055(4) to assessing the fairness and reasonableness of the decision which was the “gateway” or “trigger” for the superannuation complaint, or whether the words in 1055(4) “to which the complaint relates” is, in the context of the power to join Resolution Life as the insurer, a broader power to determine a decision which may not necessarily be the decision of NM Super which grounded the superannuation complaint, but is a decision “to which the complaint relates” which in its operation in relation to Mr Teagle was unfair or unreasonable. As noted above, the primary Judge found (at J[48]-J[49]) that the question of whether Resolution Life’s decision (or failure to decide) fell within s 1053 of the Corporations Act was answered by the joinder of the appellant to the original superannuation complaint against NM Super. It was further held that on the basis of the analysis in [107] of Metlife, the joinder of Resolution Life to the complaint brought its decision (or failure to make a decision in this case) in as part of the superannuation complaint. Accordingly, once Resolution Life was joined, the primary judge held that AFCA could look at how “a decision” made by Resolution Life (being an “other person” referred to in s 1055(1)) who made “a decision to which the complaint relates”) was, in its operation in relation to Mr Teagle, not fair or reasonable in all the circumstances.Ground 1