FEDERAL COURT OF AUSTRALIA
Resolution Life Australasia Ltd v Teagle [2023] FCA 1607
File number: NSD 732 of 2023 Judgment of: STEWART J Date of judgment: 18 December 2023 Catchwords: SUPERANNUATION – appeal from determination of Australian Financial Complaints Authority Ltd (AFCA) – whether AFCA acted beyond power and in error of law in positing the existence of a relevant reviewable decision to not compensate the first respondent – whether AFCA erred in law in determining that the applicant must make a gratuitous payment to the first respondent – whether AFCA erred in law in failing to exclude the complaint as being about actuarial or underwriting factors under rule C.1.4(b) of the AFCA Complaint Resolution Scheme Rules – whether AFCA’s determination that the first respondent satisfied the total permanent disability (TPD) definition in the policy was attended by jurisdictional error or legal unreasonableness – whether having determined that the decision to not pay a TPD benefit was fair and reasonable, it was legally unreasonable of AFCA to determine that the TPD decision not to compensate the first respondent outside the policy terms was not fair and reasonable – whether AFCA erred in failing to provide procedural fairness to the applicant by making the determination, reversing its position in its prior recommendation, on a number of findings without giving notice to the applicant, and without giving the applicant a fair and reasonable opportunity to respond to them Legislation: Corporations Act 2001 (Cth), ss 1051(4)(e), 1053(1), 1053(1), 1053(5), 1055(1), 1055(2), 1055(4), 1055(6), 1055(7)(a)-(c), 1057(1), Pt 7.10A
Insurance Contracts Act 1984 (Cth), s 13
AFCA Complaints Resolution Scheme Rules, rr A.21(c), A.10.1, A.10.2, A.14.2
Cases cited: AIA Australia Ltd v Sharma [2023] FCAFC 42; 408 ALR 490
CGU Insurance Ltd v AMP Financial Planning Pty Ltd [2007] HCA 36; 235 CLR 1
Fagan v Crimes Compensation Tribunal [1982] HCA 49; 150 CLR 666
Freedom Pharmaceutical Pty Ltd v Minister for Health (No 2) [2021] FCA 1250
MetLife Insurance Limited v Australian Financial Complaints Authority (No 3) [2022] FCA 849
MetLife Insurance Ltd v Australian Financial Complaints Authority Ltd [2022] FCAFC 173; 295 FCR 1
Notesco Pty Ltd v Australian Financial Complaints Authority Ltd [2022] NSWSC 285; 160 ACSR 44
QSuper Board v Australian Financial Complaints Authority Ltd [2020] FCAFC 55; 276 FCR 97
R v Australian Broadcasting Tribunal; Ex Parte Hardiman [1980] HCA 13; 144 CLR 13
SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs [2006] HCA 63; 228 CLR 152
Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Number of paragraphs: 91 Date of hearing: 29 November 2023 Counsel for the Applicant: J G Duncan and L N Hamilton Solicitor for the Applicant: Turks Legal Counsel for the First Respondent: First respondent did not appear Counsel for the Second Respondent: The second respondent filed a submitting notice save as to costs Counsel for the Third Respondent: E Holmes Solicitor for…
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Details
- Case
- [2023] FCA 1607
- Decision Date
CaseChat Overview and Summary
Resolution Life Australasia Ltd initiated proceedings in the Federal Court of Australia against Teagle, following a determination by the Australian Financial Complaints Authority Ltd (AFCA) that Resolution Life must compensate Teagle for a total permanent disability benefit under a superannuation policy. The central issue was whether AFCA had jurisdiction to review Resolution Life's decision not to compensate Teagle, as Resolution Life argued it had never made such a decision outside of the policy terms. Resolution Life also challenged the legality of AFCA's determination that it must make a gratuitous payment to Teagle and whether AFCA failed to exclude the complaint as being about actuarial or underwriting factors.
The court examined whether AFCA acted beyond its power and in error of law by positing the existence of a "no-compensation" decision. It also considered whether AFCA erred in law by determining that Resolution Life must make a gratuitous payment and by failing to exclude the complaint under the AFCA Complaint Resolution Scheme Rules. The court found that AFCA's decision was not beyond power and did not contain jurisdictional error. The court held that AFCA's decision to require Resolution Life to compensate Teagle was not unfair or unreasonable, as the policy terms were satisfied. Furthermore, the court found that AFCA did not err in law by failing to exclude the complaint as being about actuarial or underwriting factors. The court held that the determination was not attended by jurisdictional error or legal unreasonableness.
The final orders of the court were to dismiss the proceeding and for Resolution Life to pay the costs of the third respondent. The decision underscored the importance of AFCA's role in reviewing superannuation complaints and the limits of its powers under the Corporations Act.
The court examined whether AFCA acted beyond its power and in error of law by positing the existence of a "no-compensation" decision. It also considered whether AFCA erred in law by determining that Resolution Life must make a gratuitous payment and by failing to exclude the complaint under the AFCA Complaint Resolution Scheme Rules. The court found that AFCA's decision was not beyond power and did not contain jurisdictional error. The court held that AFCA's decision to require Resolution Life to compensate Teagle was not unfair or unreasonable, as the policy terms were satisfied. Furthermore, the court found that AFCA did not err in law by failing to exclude the complaint as being about actuarial or underwriting factors. The court held that the determination was not attended by jurisdictional error or legal unreasonableness.
The final orders of the court were to dismiss the proceeding and for Resolution Life to pay the costs of the third respondent. The decision underscored the importance of AFCA's role in reviewing superannuation complaints and the limits of its powers under the Corporations Act.
Orders
Orders of the court
1. The proceeding be dismissed.
2. The applicant pay the costs of the third respondent.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
Section 1055 of the Corporations Act sets out the decision-making process which AFCA must follow in determining superannuation complaints (not involving a decision relating to payment of a death benefit):(1)In making a determination with respect to a superannuation complaint, AFCA has, subject to s 1055, all the powers, obligations and discretions that are “conferred on” the trustee who made the original decision or engaged in the conduct to which the complaint relates: s 1055(1);(2)If AFCA is satisfied that the decision or conduct is fair and reasonable in relation to the complainant, AFCA must affirm that decision/conduct: s 1055(2);(3)If AFCA is satisfied that the decision or conduct is unfair or unreasonable, AFCA may take any one or more of the remedial actions mentioned in s 1055(6) for the purpose of placing the complainant, as nearly as practicable, in such a position that the unfairness or unreasonableness no longer exists: s 1055(4);(4)The remedial actions permitted under s 1055(6) include varying the decision or setting aside the decision and either substituting an alternative decision or remitting the decision for reconsideration in accordance with any directions or recommendations of AFCA;(5)Under ss 1055(7)(a) to (c), AFCA may not make a determination contrary to: (a)law;(b)the governing rules of a regulated superannuation fund or an approved deposit fund to which the complaint relates; or(c)the terms and conditions of an annuity policy, contract of insurance or RSA to which the complaint relates. (6)A determination made by AFCA under s 1055 of the Corporations Act is binding on scheme members but not complainants. If a complainant is not satisfied with AFCA’s determination, they may ignore it and proceed as if it were not made and may pursue the trustee in the courts or in any other manner they see fit: QSuper at [67(c)] and [134], citing the Corporations Act, s 1051(4)(e).Contention 1: Jurisdictional error – no “no-compensation” decision Resolution Life identifies that in its determination AFCA stated that Resolution Life “has decided to not pay the complainant a TPD benefit”. Resolution Life refers to that as the “no-compensation” decision. Resolution Life submits that there was never a request by Mr Teagle for payment of compensation separate from payment that would arise from his claim under the policy. Also, in its recommendation the only decisions identified as being under consideration were the decisions of the trustee and the insurer to not meet the TPD claim; there was no posited separate decision of the trustee or the insurer to not compensate Mr Teagle. Resolution Life submits that, as a result, it never made any decision not to pay compensation to Mr Teagle outside of the policy. On that basis, it is said that AFCA had no jurisdiction to entertain any such posited decision with the result that its decision is beyond power. Mr Duncan, who appeared with Mr Hamilton for Resolution Life, broadened the attack somewhat in oral submissions. He submits that the posited no-compensation decision of the insurer is not a decision that meets the jurisdictional gateway in s 1053(1)(a) of the Corporations Act because it is not a decision of the trustee of a regulated superannuation fund, but rather the decision of the insurer. [T39] He also submits that the complaint in relation to the posited no-compensation decision is not a complaint “relating to superannuation” as referred to in the chapeau to s 1053(1). [T40]
Ratio Decidendi
Legal Principle Established
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