FEDERAL COURT OF AUSTRALIA

Australian Retirement Trust Pty Ltd ATF Australian Retirement Trust v Buckland [2025] FCA 1563

ORDERS

THE COURT ORDERS THAT:

1.    The appeal be allowed.

2.    The determination made by the Australian Financial Complaints Authority on 26 March 2025 be set aside.

3.    There be no order as to costs.

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

REASONS FOR JUDGMENT

DERRINGTON J:

Introduction

1    By a Notice of Appeal filed 23 April 2025, the applicants, Australian Retirement Trust Pty Ltd (ARTPL) and ART Life Insurance Ltd (previously QInsure Limited (QInsure)) (ARTL), appeal from a determination of the second respondent (AFCA) given on 26 March 2025 in relation to a claim lodged by the first respondent, Ms Kate Buckland, in April 2023 (the Determination).

2    In short, the Determination concerned the extent of certain benefits provided to members of a superannuation fund, operated by ARTPL, pursuant to a policy of insurance issued by QInsure. That policy provided, inter alia, for the payment of Total and Permanent Disablement (TPD) benefits in specific circumstances and, in particular, where certain defined events occurred in the course of a policy. One of those occurrences was that the relevant insured person satisfied the requirements of the term, “Date of Disablement”. One such requirement, and one that fixed the date from which the TPD benefit was payable, was that a medical practitioner certify that the insured person was unable to work again. As it so happened, that requirement was satisfied during the course of the policy and, as such, a TPD benefit was paid to Ms Buckland from the date of certification. Some 16 months later, AFCA determined that, although Ms Buckland did not satisfy the requirements for TPD cover in the year immediately prior to the identified Date of Disablement, she was nonetheless entitled to be paid such benefits from that earlier time. In doing so, it purported to apply s 54 of the Insurance Contracts Act 1984 (Cth) (s 54 and the Act, respectively) on the basis that an act or omission had occurred by reason of which QInsure was refusing to pay the claim from that earlier date. Seemingly, the relevant “omission” was that, in the prior year, a doctor had not certified that Ms Buckland was unable to ever return to work. On that footing, it found QInsure’s decision to pay Ms Buckland as it did to be unfair and unreasonable, and that she should be paid TPD benefits dated from the previous year.

3    For the reasons that follow, the Determination was not in accordance with law or the policy of insurance. Section 54 of the Act was not able to be relied upon by AFCA in the way that it was. An essential element of the TPD cover, and the date from which the TPD benefit was to be paid, was the occurrence of a specified event, being that of a medical practitioner reaching a conclusion that the insured person would not return to work (and certifying the same). That requirement of the cover could not be circumvented by s 54. Moreover, the alleged omission on which s 54 might operate did not exist. There was no evidence that any medical practitioner could (or would) have issued the required certificate any earlier than had actually occurred.

4    It follows that the Determination proceeded upon a misunderstanding of the application of s 54 to the circumstances before it and should be set aside. There is no possible outcome in respect of Ms Buckland’s complaint to AFCA other than that it be rejected. Accordingly, all that is required to finally dispose of the matter is to set the Determination aside.

Context

5    At all relevant times, Ms Buckland was a member of the Australian Retirement Trust (ART), a superannuation fund of which ARTPL is trustee. From time to time, ARTPL held group insurance policies issued by ARTL; they relevantly included QInsure Insurance Policy No. 1.7 (effective from 1 July 2021) and QInsure Insurance Policy No. 1.8 (effective from 28 February 2022). Given that the terms of such policies are substantively the same insofar as they concern the clauses relevant to this proceeding, they will be referred to interchangeably as “the Policy”.

6    As a member of ART, Ms Buckland was insured under the Policy (see s 11 of the Act).

The relevant terms of the Policy

7    A general statement of the cover provided by the Policy appears in cl 4.1. It provides:

4        Policy

4.1     This policy is evidence of a contract of insurance between QInsure and the QSuper Board for the payment of certain Insurance Benefits where:

4.1.1     a Member dies while this policy is in force; or

4.1.2     a Member suffers Terminal Illness, Total and Permanent Disablement, Total and Temporary Disablement or Partial and Temporary Disablement, and the Date of Disablement is a date while this policy is in force;

upon the conditions set out in this policy in consideration of the payment of premiums by the QSuper Board.

8    An important element of this clause is a temporal one, being the identification of the cover provided when a defined event – the Date of Disablement – occurs whilst the Policy is in force.

9    The specific cover provided in respect of TPD appears in cl 27.3 of the Policy. It reads:

27.3     Total and Permanent Disablement Benefit

27.3.1     Subject to any relevant exclusion in this policy, if an Insured Person with Total and Permanent Disablement Cover in force suffers Total and Permanent Disablement, QInsure will pay the Sum Insured that applied to them at their Date of Disablement.

10    In this context, the expression “Date of Disablement” is used, simply enough, to fix a date from which the “TPD Benefit” is to be calculated (the other relevant date being defined by reference to the Policy’s presumed age of retirement of its members). In turn, and generally speaking, that benefit is determined having regard to the length of time that elapses between those dates.

11    For the purposes of TPD cover, the following definitions (in cl 1) are relevant:

Total and Permanent Disablement means that, in the opinion of QInsure:

a)    the Insured Person meets the definition of Medical Care; and

b)    the Insured Person meets the “Permanent Incapacity” definition contained in the SIS Regs, as amended from time to time; and

c)    from the Date of Disablement, the Insured Person has been unable to work as a result of an Illness or Injury; and

d)    after obtaining the advice of not fewer than two Medical Practitioners, which QInsure may require to be a specialist in the condition or related conditions, solely because of the same Illness or Injury the Insured Person is unlikely ever to be able to work again in any occupation for which the Insured Person is reasonably qualified by education, training or experience that they have acquired or could reasonably be expected to able to acquire in the future within a sustainable rehabilitation/retraining program;

In determining what could be acquired in the future, QInsure will consider if the Illness or Injury prevents the Insured Person from being able to undertake retraining or rehabilitation to acquire education, training or experience;

…

Date of Disablement means:

a)    for Total and Temporary Disablement insurance benefits or Partial and Temporary Disablement insurance benefits, the date on which the Insured Person is temporarily unable to work due to the Illness or Injury for which the Insurance Benefit is being claimed;

b)    for Total and Permanent Disablement insurance benefits:

(i)    where an Insured Person is Gainfully Employed, the later of:

(A)    the date the Insured Person ceases all work whether or not for reward, due to the Injury or Illness for which the Insurance Benefit is being claimed; and

(B)    the date on which a Medical Practitioner (having examined the Insured Person) certifies in writing that the Insured Person is permanently unable to work again due to the Injury or Illness for which the Insurance Benefit is being claimed;

(ii)    where an Insured Person is not Gainfully Employed, the date on which a Medical Practitioner (having examined the Insured Person) certifies in writing that the Insured Person is permanently unable to work again (including Home Duties if applicable) due to the Injury or Illness for which the Insurance Benefit is being claimed;

c)     for Terminal Illness insurance benefits, the date on which the Insured Person first has a Terminal Illness;

12    More generally, it is noted that TPD Benefits comprise one of three subtypes of “benefit” which fall under the umbrella of “Death Benefit Cover” within the Policy – such cover also comprises “Death Benefit” and “Terminal Illness Benefit”. Further insurance benefits, albeit of a different character, are defined in Part E of the Policy and fall under the umbrella of “Income Protection Cover” – namely, “Partial and Temporary” and “Total and Temporary” Disablement Benefits (together, Temporary Disablement). Those latter incapacities are defined (in cl 1) as follows:

Partial and Temporary Disablement means:

a)    immediately following a period of at least 7 out of 12 consecutive calendar days of Total and Temporary Disablement during the Waiting Period and in the opinion of QInsure, solely due to the same Illness or Injury that caused Total and Temporary Disablement, the Insured Person after the Waiting Period has been served:

(i)    from the start of the Benefit Period to the first 24 months of the Benefit Period – is unable to perform some but not all of the Material and Substantial Duties of the Insured Person’s Own Occupation; or

(ii)    from 24 months of commencing the Benefit Period to the end of the Benefit Period – is unable to perform some but not all of the Material and Substantial Duties of any occupation for which the Insured Person is reasonably able to perform by reason of education, training or experience; and

b)    from the Date of Disablement to the end of the Benefit Period, the Insured Person:

(i)    satisfied one of the conditions in item (a) of the definition of Total and Temporary Disablement or the definition of Partial and Temporary Disablement as a direct result of the same Injury or Illness and received Insurance Benefits;

(ii)    is under the regular care of a Medical Practitioner whose specialty is appropriate for the Illness or Injury at a frequency that is appropriate for the condition and in accordance with generally accepted medical standards and, is complying with the advice and treatment given by the Medical Practitioner; and

(iii)    is not engaged in any occupation whether or not for reward, unless otherwise agreed to in writing by QInsure;

…

Total and Temporary Disablement means:

a)    in the opinion of QInsure, solely due to the Injury or Illness that caused the Insured Person to cease work, the Insured Person, after the waiting Period has been served:

(i)    from the start of the Benefit Period to the first 24 months of the Benefit Period – is unable to perform all of the Material and Substantial Duties of the Insured Person’s Own Occupation; or

(ii)    from 24 months of commencing the Benefit Period to the end of the Benefit Period – is unable to perform all of the Material and Substantial Duties of any occupation for which the Insured Person is reasonably able to perform by reason of education, training or experience; and

b)    from the Date of Disablement to the end of the Benefit Period, the Insured Person:

(i)    satisfied one of the conditions in item (a) of the definition of Total and Temporary Disablement or the definition of Partial and Temporary Disablement as a direct result of the same Injury or Illness and received Insurance Benefits; and

(ii)    is under the regular care of a Medical Practitioner whose specialty is appropriate for the Illness or Injury at a frequency that is appropriate for the condition and in accordance with generally accepted medical standards and, is complying with the advice and treatment given by the Medical Practitioner; and

(iii)    is not engaged in any occupation whether or not for reward, unless otherwise agreed in writing by QInsure;

The relevant claims

13    On 17 September 2021, Ms Buckland ceased work due to an illness.

The Income Protection Claim (from 18 October 2021)

14    On 1 October 2021, Ms Buckland lodged an “Income Protection Benefit Claim” (the IP Claim) with QInsure (pursuant to the insurance provided through the ART).

15    At the relevant times, she was under the care of a Dr S Burgess, her regular general practitioner, who provided treatment in relation to her illness. It appears that Dr Burgess had, for a period of time, hoped that Ms Buckland might return to work. For instance, on 8 October 2021, and in aid of the IP Claim, she completed a form entitled “Income Protection Benefit Claim (Part C) – Doctor’s Statement” which certified, inter alia, that Ms Buckland was “unfit” to work from “17/09/2021 to 01/11/2021 inclusive” and was “expected to return to work” by February 2022. On 2 November 2021, Dr Burgess issued a further certificate which indicated that Ms Buckland would be “unfit” to work from “01/11/2021 to 10/12/2021 inclusive”.

16    On 17 January 2022, the IP Claim was approved on the basis that Ms Buckland was suffering from a Temporary Disablement; she commenced receiving a monthly benefit effective from 18 October 2021.

The TPD Claim (from 22 August 2022)

17    On 22 August 2022, a Dr B Jacobs completed a form entitled “Total and Permanent Disability (TPD) Benefit Claim (Part C) – Doctor’s Statement” (Jacobs Certificate). Therein, Dr Jacobs, a psychiatrist, indicated his belief that Ms Buckland’s symptoms presented “a barrier to [her] return to work”. There was nothing in the Jacobs Certificate which tended to suggest its author believed that Ms Buckland had been permanently unable to return to work at some earlier time.

18    On 14 September 2022, Ms Buckland lodged a claim for a “TPD Benefit” under the Policy (the TPD Claim). After making various inquiries in relation to that claim – including by obtaining further reports from Ms Buckland’s treating doctors – QInsure determined it in her favour on 4 November 2022. Importantly, the relevant benefit was calculated from 22 August 2022. This was because, to adopt the language of a document produced by QInsure and dated 7 July 2023:

The first medical report supporting Kate Buckland as is permanently unable to work again due to the Injury or Illness for which the Insurance Benefit is being claimed was the Total and Permanent Disability (TPD) Benefit Claim (Part C) – Doctor’s Statement dated 22 August 2022. Prior to this report, the medical was supporting a likely return to employment.

(Emphasis in original).

19    Following payment of the final benefit under the IP Claim on 2 December 2022, QInsure paid the benefit under the TPD Claim ($312,960; the TPD Benefit) to Ms Buckland one week later.

The Burgess Certificate of 2 February 2023

20    On 2 February 2023, Dr Burgess issued another medical certificate in respect of Ms Buckland (the Burgess Certificate). It relevantly provided:

RE: Total Permanent Disability claim with Qsuper

Kate Buckland

…

To whom it may concern,

Mrs Buckland ceased paid employment September 21st 2021 due to [an illness]. A report to Qsuper was done on April 17th 2022. At the time of that review the goal for Mrs Buckland was to return to work … with full work duties and hours. However, in hindsight with access to reports from her multidisciplinary team including her psychiatrist …, her psychologist … and from my various consultations with Mrs Buckland it is clear that she has in fact been incapacitated since she ceased working on September 21st 2021.

21    On 10 February 2023, Ms Buckland’s solicitors wrote to QInsure. In short, that correspondence attached the Burgess Certificate, claimed that it relevantly identified that Ms Buckland “first became incapacitated for her claimed TPD condition on 21 September 2021” and requested that the insurer recalculate Ms Buckland’s insurance benefit under the Policy.

22    Although substantial correspondence ensued between the parties, no further determination was made by QInsure in relation to the calculation of the TPD Benefit payable to Ms Buckland.

23    Ultimately, on 6 April 2023, Ms Buckland applied to AFCA seeking a review of the decision that had been made in relation to the quantum of the TPD Benefit payable to her. The complaint was made against ARTPL, with ARTL (QInsure) joined to the dispute in early August 2023.

The AFCA determination of 26 March 2025

24    The core question before AFCA can be briefly stated: for the purposes of calculating the TPD Benefit, was the Date of Disablement (a) the date on which a medical practitioner first certified that Ms Buckland was permanently unable to return to work – 22 August 2022 (being the date of the Jacobs Certificate); or (b) the date from which Ms Buckland is said to have first satisfied the definition of TPD – 21 September 2021 (being the date set out in the Burgess Certificate)?

25    The answer given by AFCA to that question was “21 September 2021”. Its reasons for doing so (the Reasons) require some explication given the issues in dispute between the parties:

(1)    at paragraph [1.2] of the Reasons, AFCA summarised its determination: although Ms Buckland did not meet the definition of “Date of Disablement” on 21 September 2021, she was entitled to rely upon s 54 of the Act in order to “prevent the insurer from relying on the ‘date’ of the certification, as opposed to the substance of the medical evidence to determine the [Date of Disablement], to partly refuse payment of the [TPD Claim]”.

(2)    at paragraph [2.2] of the Reasons, AFCA determined that Ms Buckland did not satisfy the “Date of Disablement” definition as of 21 September 2021. In so concluding, it:

(a)    identified that, for the purpose of the definition, the relevant date was, “at a high level”, the later of the date upon which a member ceases all work or a medical practitioner certifies that the member is permanently unable to work again.

(b)    accepted a construction of the second limb of the definition to the effect that the relevant date was the date on which the relevant medical practitioner certifies the member is unable to work again. It rejected a competing construction that the relevant date was that which a medical practitioner retrospectively identified as being the date upon which the member was unable to work again.

(c)    concluded that, on the evidence available, the first respondent “did not meet the definition of [Date of Disablement] until 22 August 2022 … because she was not certified by a medical practitioner as unable to work until this date”.

(3)    at paragraph [2.2] of the Reasons, AFCA expressed “sympathy” for the position of Ms Buckland on the basis “the insurer appears to be taking a form over substance approach … because the better view of the evidence shows the complainant was unable to work from 17 September 2021”. In this respect, it found, at paragraph [2.3] of the Reasons, that the “Date of Disablement” definition appeared to “operate arbitrarily” and focused “on the technical need to have a medical certificate, and the date of the certificate, as opposed to the substance of the medical evidence”. In turn, this “focus on a technical requirement over the substance of the evidence” was said to “lead[] to” a consideration of whether s 54 had any application to the circumstances.

(4)    at paragraph [2.3] of the Reasons, AFCA found that s 54 could apply to the “medical certification requirement” of the “Date of Disablement” definition. It held that:

(a)    the definition was not an “inherent requirement” of the Policy – it only operated to fix the amount of the sum insured; it did not form part of the TPD definition; it did not reflect whether someone was, in fact, totally and permanently disabled.

(b)    the definition, “if treated strictly as written”, focused on the technical form (the actual date of the certification provided) rather than the substance of the medical evidence and, therefore, was liable to operate arbitrarily.

(c)    the conclusions reached in AFCA determination 845342 were irrelevant.

(d)    the “strict operation of the medical certification requirement” was “somewhat reminiscent” of the timely claim clauses in FAI General Insurance Company Limited v Australian Hospital Care Pty Ltd (2001) 204 CLR 641 (FAI General Insurance).

(e)    in effect, s 54 serves to permit an insured to recover under a policy where the insurer purports to rely upon “a technicality” to avoid the substance of the claim.

(5)    at paragraph [2.3] of the Reasons, AFCA found Ms Buckland’s “omission” of obtaining an earlier medical certificate had not caused QInsure loss or prejudice. It held that:

(a)    the “better view” of the evidence was that Ms Buckland was unlikely to work again from on or about 17 September 2021 (notwithstanding that a diagnosis that Ms Buckland would not return to work was not possible at that time).

(b)    the suggestion that the relevant “omission” had led to prejudice to QInsure (because it paid income protection benefits longer than it would have otherwise done (i.e., under the IP Claim)) was incorrect.

(6)    at paragraph [2.4] of the Reasons, AFCA concluded that the decision of the insurer (not to pay the TPD Benefit from 21 September 2021 to 22 August 2022) was not “fair and reasonable” given its construction of s 54 of the Act.

26    In the result, AFCA held that the TPD Benefit was payable to Ms Buckland from 21 September 2021; thus, she was entitled to the difference between the Sum Insured at that date ($349,440) and the Sum Insured at 22 August 2022 ($312,960), being $36,480 (the Determination).

The issues on appeal

27    The applicants appeal from the Determination pursuant to s 1057(1) of the Corporations Act 2001 (Cth) (the Corporations Act). In doing so, they pose three questions to the Court, which can all be reasonably understood to fall within the rubric of “whether s 54 of the Act is capable of applying to the facts of this case in the manner adopted by AFCA”. They are as follows:

(1)    was the failure by Ms Buckland to obtain, prior to 22 August 2022, a medical certificate certifying (or the failure by a medical practitioner to certify) her as permanently unable to work again due to injury or illness an “act or omission” within the scope of s 54?

(2)    was AFCA’s approach in determining the relevant Date of Disablement to be a date other than 22 August 2022 open to it having regard to the scope and operation of s 54?

(3)    was it open to AFCA to make the findings it did about fairness and reasonableness in light of its conclusion as to the operation of s 54?

(collectively, the Section 54 Issue).

28    While a faint issue was raised as to the proper identification of the relevant claim, it sufficiently appears to have been Ms Buckland’s claim for TPD cover under the Policy and in respect of which QInsure made a substantial payment in late 2022. Her application to AFCA in April 2023 makes this clear, in that she identified her concern as being one to the effect that whilst her claim for TPD had been accepted by QInsure, she disputed the amount which she received.

29    By a Notice of Contention (filed 16 September 2025), Ms Buckland raised an antecedent issue as to the correct interpretation of the Policy and, in particular, as to the meaning of the definition of “Date of Disablement” (in clause 1). On Ms Buckland’s case, AFCA’s construction of the Policy (recall supra [25(2)]) was erroneous because the “correct approach” was “to identify the date on which the doctor certifies as being the date that the person is permanently unable to work again due to injury or illness” – in other words, “it is not the date that the doctor actually writes the certificate, but the date that the doctor believes was the date that the person was permanently unable to work again” (emphases added) (the Policy Construction Issue). If such a construction were to be applied, it was said to follow that Ms Buckland would be entitled to the TPD Benefit from 21 September 2021 without the need to rely upon the operation of s 54. For convenience, it is appropriate to deal with this issue before turning to the Section 54 Issue.

The Policy Construction Issue

30    For the purposes of that which follows, it must be borne steadily in mind that policies of the current nature are of a particular genus. They are offered to trustees of superannuation funds, which then provide benefits to members of the fund consequent upon them encountering some form of disablement or death. In the context of the Policy, such benefits relate to the occurrence of “Terminal Illness”, “TPD”, “Death” and “Temporary Disablement”. It is important to note that those benefits may be paid consecutively to the member depending on their circumstances. For instance, in this case, Ms Buckland was paid a Temporary Disablement benefit between 21 September 2021 and 22 August 2022 on the basis that it had been determined that her incapacity was only temporary at that time (see supra [12], [16]). However, with time, it became possible for a medical practitioner to certify that her illness was such that she would not be able to return to work again and, from 22 August 2022, being the date on which certification of that specific fact occurred, the corresponding lump sum TPD Benefit was paid (see supra [11], [19]).

The construction of the definition of “Date of Disablement”

31    The gravamen of the Notice of Contention concerns the correct construction of the expression “Date of Disablement”. Its definition has been set out above (supra [11]) and, as appears therein, it bears several meanings that are dependent upon the nature of the relevant disability. For convenience, it is appropriate to repeat the contentious element of that definition to the extent that it applies to TPD cover (being subclause b)(i)(B)):

… the date on which a Medical Practitioner (having examined the Insured Person) certifies in writing that the Insured Person is permanently unable to work again due to the Injury or Illness for which the Insurance Benefit is being claimed …

(the Contentious Subclause).

32    AFCA determined that the relevant “date”, for the purposes of the Contentious Subclause, was that on which the medical practitioner made the relevant certification (i.e., the date on which the Jacobs Certificate was issued: 22 August 2022), as opposed to the date, in the practitioner’s opinion (and with the benefit of hindsight), that the insured person was permanently unable to work again (i.e., the date identified in the Burgess Certificate: 21 September 2021). It was right to do so. Despite submissions to the contrary, there is both textual and contextual support for AFCA’s conclusion and, indeed, little which is suggestive of any alternative construction.

33    Turning first to the textual matters and, in particular, the meaning of the expression “the date on which …” in the Contentious Subclause. Such language is noteworthy in two interrelated respects: (a) use of the preposition “on” conveys that the relevant “date” is a singular time or instance when something takes place; and (b) in the context of the expression, that “something” is referable to the subject that next follows; here, that is the doing of a specific act – certification of the existence of a specific state of affairs – by a specific person – a “Medical Practitioner”.

34    In this respect, it is noted that such particular state of affairs is defined by the Contentious Sub-clause to comprise the circumstance where an insured person “is” relevantly incapacitated. It is undoubted that, when the relevant certification is issued, the person in question was, at some previous point in time, not incapacitated to the requisite degree but subsequently became so, such that the certificate itself serves to identify that the person has reached a level of incapacity whereby they will be unable to return to work in the future (i.e., “is” TPD). Whilst, no doubt, uncertainty is liable to intrude upon the issue of whether a person will be able to return to work, as the person’s disabilities increase or are found not to be capable of remediation, there will be some point at which a medical practitioner can reach a satisfactory conclusion about the future. That is the fulcrum on which the member’s entitlement to TPD benefits turns under the Policy.

35    Had it been the intention of the parties to the Policy that the “Date of Disablement” was to be defined by reference to the date upon which the insured person became permanently unable to work again, it would have been relatively easy to so provide. For instance, such result could have been achieved by jettisoning the relevant verb and its subject from the Contentious Sub-clause and altering the tense of the object of the clause so that it read: “Date of Disablement” means “the date on which … the Insured Person was permanently unable to work again …”. Similarly, variation of the preposition in the phrase “the date on which” would seemingly also achieve that result: “Date of Disablement” means “the date from which a Medical Practitioner (having examined the Insured Person) certifies the Insured Person was permanently unable to work again …”. The fact simple language could have been used to generate the meaning for which Ms Buckland contends, but was not, tends to support the construction adopted by AFCA.

36    Turning second to the various contextual matters in the Policy that support AFCA’s conclusion.

37    It is to be remembered that the Policy offers several different benefits to the members of ART. At its highest, it generally responds to the formation of an opinion, by the insurer, that the member’s circumstances fall within the terms of one of the several types of benefits. In relation to “disability” benefits, the insurer is required to be satisfied of the relevant conditions for TPD or Temporary Disablement as the case may be. For TPD, the matters of which the insurer must be satisfied are set out in the definition in clause 1 of the Policy (see supra [11]) and include that, from the Date of Disablement, the insured person is unlikely to be able to work again due to illness or injury. Similarly, as regards Temporary Disablement, the insurer is to be satisfied of certain matters, including that a state of affairs existed as at the relevant Date of Disablement (see supra [12]). Where QInsure is of the opinion that such matters are satisfied, the benefits payable under the Policy are calculated by reference to the relevant Date of Disablement. On any view, that date, as defined, is an important element in relation to both the identification of the benefits available under the Policy and the date from which they are payable to the insured.

38    In this context, there exists a material difference between the Policy’s definition of “Date of Disablement” for, on the one hand, “Terminal Illness” and Temporary Disablement and, on the other, TPD. Though it is true that the definition assumes a broadly consistent theme across each categorisation – the “Date of Disablement” is referable to the objective fact of the insured person being relevantly incapacitated (subparagraphs a), b)(i)(A) and c) at supra [11]) – it also, and only in the context of TPD benefits, identifies that date by reference to another, different objective fact – that of a medical practitioner certifying the required state of incapacity (subparagraph b)(i)(B); see also subparagraph b)(ii)). Whilst Mr Mullins KC, on behalf of Ms Buckland, urged the Court to ignore such difference and instead read the definition of “Date of Disablement” as simply being the date on which the Insured Person had the required degree of incapacity, the opposite is true. Where, in contracts, as in the interpretation of statutes, different words or usages occur, the natural inference is that different meanings were intended.

39    It is also likely, as Mr Walker SC submitted on behalf of ART, that to construe the “Date of Disablement” for TPD as being the date from which a “Medical Practitioner” identifies that the insured person became sufficiently incapacitated, would produce incongruous results. That is particularly so because the Policy provides for a structured regime of benefits consequent upon the Insured Person suffering incapacity. As a matter of common sense, it will often be the case that where a person first suffers a degree of incapacity, it may not be readily apparent whether that person meets or will, in the future, meet the definition of TPD. In the interim, they may nevertheless be entitled to various benefits, such as for Temporary Disablement: clauses 34.1 – 34.2 of the Policy. Those benefits will become payable from the date on which the relevant criteria for those respective benefits are satisfied and will continue until the insurer deems that they no longer suffer from those disablements: clause 42.4 of the Policy. Certainly, where an insured person’s condition worsens such that it is possible for a medical practitioner to certify, on the evidence available, that they will be permanently unable to work again, the person may become entitled to a TPD benefit (upon the insurer’s determination that they meet the relevant criteria) and QInsure will, necessarily, make the correlative determination that they no longer meet the requirements for temporary disablement: clause 42.4.2 of the Policy.

40    This continuum in the payment of insurance benefits, alongside the fact that the Policy does not provide for financial adjustment in circumstances of retrospective certification, renders it most unlikely that an Insured Person was intended to be able to receive benefits for Temporary Disablement during a period of time which is subsequently included within the period used for the calculation of TPD benefits. That is, once it is concluded that the insured is TPD (in the sense defined by subparagraph b) of the definition of “Date of Disablement”), the Policy leaves no room to find that they are, or remain, entitled to benefits on the basis that their disablement is temporary. To conclude otherwise would be to give an un-commercial interpretation to the Policy: McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579, 589 [22]; Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522, 528 – 529 [15]; Onley v Catlin Syndicate Ltd (as the Underwriting Member of Lloyd’s Syndicate 2003) (2018) 360 ALR 92, 100 – 101 [33].

41    In this respect, it is noted that Ms Buckland’s proposed construction of the definition of “Date of Disablement” (recall supra [29]) would inevitably give rise to the circumstance wherein the insurer pays to the insured person benefits for temporary and permanent disablement in respect of the same period of time. The circumstances of the present case offer a neat exemplar. Here, Ms Buckland was paid (a) monthly Income Protection benefits between 18 October 2021 (the date on which QInsure accepted her to have met the definition of Temporary Disablement) and 22 August 2022 (the date on which QInsure accepted her to have met the definition of TPD); and (b) a lump-sum TPD benefit ($312,960) on 9 December 2022 (such benefit having been calculated as at 22 August 2022). Now, if Ms Buckland’s construction was correct, the Burgess Certificate would have the effect of entitling her to TPD benefits from 21 September 2021 to the date of her presumed retirement, such that she would receive, between 21 September 2021 and 22 August 2022, Income Protection payments (to reflect her “temporary” disablement at that time) and TPD payments (to reflect her “permanent” disablement for the same period).

42    As above, that would be a most unlikely construction of the Policy. Whilst it might be expected that a slight overlap of benefits could occur from time to time due to reasons flowing from the administration of the Policy, it would not be expected, particularly given the type and structure of the Policy, that it would work such that an insured person would receive two types of benefit over an extended period of time. In the result, giving the definition of “Date of Disablement” a construction in accordance with the natural meaning of the words, so that the relevant date is the date on which the required certification occurs, affords the Policy a coherent and congruent operation. Importantly, it also provides certainty in relation to the Policy’s operation from time to time, which permits the parties to organise their affairs accordingly.

43    It should also not be overlooked that Ms Buckland’s proffered construction could foreseeably render persistent complications in the administration of the Policy. Imagine the circumstance where an insured person is considered, by the insurer, to have fallen under some Temporary Disablement on date “X” and has been receiving monthly benefits accordingly. Now, Doctor 1 may diagnose the insured to have been TPD six months before date X and, on Ms Buckland’s construction, that would compel the payment of TPD benefits from that time. However, Doctor 2 may subsequently form the view that the insured was TPD 9 months before date X and, again, payment of TPD benefits would be required from that earlier time. And so on. In this sense, the construction proposed by Ms Buckland creates a real risk that a TPD claim may, in practice, never settle. On any view, let alone that of a sensible commercial party, a construction that would render such an unreasonable result is not likely to have been intended.

44    In light of the foregoing, the construction of the definition of “Date of Disablement”, as reached by AFCA, provides greater logic, coherence and certainty for the operation of the Policy. It is correct and the submissions on behalf of Ms Buckland to the contrary should be rejected.

The Section 54 Issue

45    The conclusion reached above means that it is necessary to consider whether the operation of the Policy is affected by the operation of s 54. In context, that section relevantly provides:

Division 3 –– Remedies

54        Insurer may not refuse to pay claims in certain circumstances

(1)     Subject to this section, where the effect of a contract of insurance would, but for this section, be that the insurer may refuse to pay a claim, either in whole or in part, by reason of some act of the insured or of some other person, being an act that occurred after the contract was entered into but not being an act in respect of which subsection (2) applies, the insurer may not refuse to pay the claim by reason only of that act but the insurer’s liability in respect of the claim is reduced by the amount that fairly represents the extent to which the insurer's interests were prejudiced as a result of that act.

    …

(6)    A reference in this section to an act includes a reference to:

(a)    an omission; and

(b)    an act or omission that has the effect of altering the state or condition of the subject-matter of the contract or of allowing the state or condition of that subject-matter to alter.

Preliminary: the nature of s 54

46    It is not unfair to observe that s 54 has proved problematic over many years and, indeed, since its inception in the mid-1980’s. Undoubtedly, that is in part due to its wording and the varied attempts of the Australian judiciary to keep its operation within limits.

47    The intention of s 54 was summarised by the Australian Law Reform Commission in Insurance Contracts, Report No 20 (1982) (the ALRC Report) at pages xxxi – xxxii:

Contractual Obligations

36.    Obligations during the Period of Cover. Many contracts of general insurance and some contracts of life insurance contain terms which have the effect of placing obligations on the insured in order to protect the insurer against increases in the risk during the period of cover. Legislation should provide that, whatever the form of the relevant terms, the penalty placed on the insured for a failure to comply with an obligation imposed by the contract should be the same (para. 229). …

(see, also, the ALRC Report at 113 [186]; Explanatory Memorandum, Insurance Contracts Bill 1984 (Cth) at 80 [182]).

48    As the ALRC Report makes clear, the mischief at which the Commission’s recommendation was aimed was the existence and operation of warranties within policies of insurance which, if breached, permitted the insurer to cancel the policy. This had the consequence of insurers refusing to indemnify or cover claims in circumstances where they discovered a breach of the warranty, even though it was unrelated to the loss sustained. The response to this problem was appropriate though, later in the report, the scope of the proposed s 54 was widened to include restrictions or limitations in the description of the cover. At paragraph [229], it was said:

Possible Means of Evasion

229.             The Commission has already pointed out that its present recommendations should extend not only to strict warranties and other terms imposing obligations on the insured, but also to exclusions from cover of certain risks. Were they not to extend to temporal exclusions, legislation based on the present recommendations might be avoided simply by rephrasing an obligation (‘the insured warrants that the car will be kept in a roadworthy condition’) as a temporal exclusion (‘the insurer will not be liable while the car is in an unroadworthy condition’). That legislation might also be avoided if obligations and exclusions were omitted and the cover itself stated in such a way as to achieve the same end (‘cover is granted in respect of the roadworthy car’). Once again, the form in which the insurer seeks to protect itself from an increase in risk should not be allowed to affect the extent of that protection. The relevant provisions of the draft legislation attached to the report are designed to ensure that implementation of the present recommendations would be unaffected by the form in which policies were drafted.

49    It follows that the extended nature of s 54 was, prima facie, intended to prevent insurance policies from being written in a manner that effectively incorporated what were hitherto warranties into the cover. However, if that was the intent, the express drafting of s 54 did not make that explicit. On the contrary, its wording would appear to negate the scope of any defined cover to the extent to which it might be affected by the act of the insured or of some other person that occurs after the contract was entered into. Necessarily, this has given rise to a lack of clarity about how exactly the section operates.

50    Such uncertainty is, for instance, identifiable in the judgment of the High Court in FAI General Insurance. That authority is well known and there is no need to recite the precise circumstances then before the Court: but see Allianz Australia Insurance Ltd v Uniting Church in Australia Property Trust (NSW) (2025) 308 FCR 308, 403 – 404 [467] – [470] (Allianz v UCPT). Instead, it is important to appreciate the attempt of the plurality (McHugh, Gummow and Hayne JJ), in their Honours’ construction of s 54, to differentiate between that which was the cover provided by the policy and that which constituted an attempt, conscious or otherwise, to diminish the cover by reformulated warranties. This was said to be achieved (at 659 [40] – [41]) by requiring a precise identification of the effect, on the insurer, of the policy’s operation vis-à-vis the claim “which the insured has in fact made” (emphasis in original); in turn, that was said to “require[] a precise identification of the event or circumstances” in respect of which the insured claims indemnity. In all cases, that will include an identification of any temporal aspect of the cover. Put another way, a purported delineation was sought to be made as between the scope of the cover provided in some broad sense and other provisions which circumscribed that cover.

51    Though that methodology may well be applied without difficulty in some cases, it will present problems in others. That is particularly so in relation to policies where the cover is structured or designed in the historically orthodox manner of identifying a general area of cover (be it loss of property or the incurring of liability) and then defining the limits of that cover by reference to exclusions or other limitations: see, eg, Attree Pty Ltd v Certain Underwriters at Lloyds of London Subscribing to Policy Number P_ML/0/272375/20/L-7 [2024] FCA 1408 [44].

52    For present purposes, there is little need to consider the impact of FAI v Australian Hospital Care much further. It is sufficient to note the following general principles which were referred to in the applicants’ written outline of submissions:

(1)    key to the application of s 54 is the identification of the effect of the policy of insurance as between the parties, the claim that was made, and the reasons for the insurer’s refusal to pay that claim: FAI v Australian Hospital Care 658 [39]; see also Watkins Syndicate 0457 at Lloyds v Pantaenius Australia Pty Ltd (2016) 244 FCR 5, 12 [33] (Watkins).

(2)    the relevant inquiry concerns the effect of the contract of insurance on the claim that was in fact made and not with some other claim that the insured might have made at some other time (or some other event or circumstance): FAI v Australian Hospital Care 659 [40]; Allianz v UCPT 404 [470].

(3)    it is not permissible to reformulate the claim in question, as the concern is as to that on which the insurer relies for the purposes of refusing to pay the particular claim: FAI v Australian Hospital Care 659 [41]; Allianz v UCPT 404 [470], 404 – 405 [472].

(4)    central to the application of s 54 is determining whether that relied upon by the insurer for refusing the claim is something that takes the claim outside of the cover provided by the policy. That is said to be a question of substance, and it does not matter that the matter relied upon is stated to be a condition of cover, or a limitation on cover, or an exclusion of cover: East End Real Estate Pty Ltd v CE Health Casualty & General Insurance Ltd (1991) 25 NSWLR 400, 403 – 404; Prepaid Services Pty Ltd v Atradius Credit Insurance NV (2013) 302 ALR 732, 764 – 765 [128] – [130]; Watkins 12 [34].

(5)    s 54 does not operate to overcome restrictions or limitations that are inherent in the claim having regard to the nature (or “essential character”) of the insurance contract under which that claim is made: Maxwell v Highway Hauliers Pty Ltd (2014) 252 CLR 590, 598 [23]; Watkins 17 [40].

53    It is to be noted that, in this case, no point was taken as to which policy was applicable to the claim. It can also be assumed that there was continuing cover for the relevant benefits and the policy period in which the claim arises is irrelevant to the outcome.

s 54 does not apply to the present circumstances

Ms Buckland’s argument reformulates the claim made

54    As the recitation at supra [17] – [19] reveals, the TPD Claim was fundamentally founded upon the Jacobs Certificate. That claim was met following QInsure’s acceptance of the veracity of the evidence on which Ms Buckland staked her claim; Ms Buckland was accordingly paid the TPD Benefit (i.e., $312,960) on 9 December 2022.

55    Having regard to that substratum of fact, it is correct to assert, as Mr Walker SC does, that any accession to Ms Buckland’s later demand for additional payment by reference to the Burgess Certificate would be to depart from the claim that was “in fact made” against QInsure. What is sought to be done is to reformulate the claim as one based upon new and different evidence – being a subsequent, retrospective diagnosis that was made by Dr Burgess in early 2023 (i.e., at a time after Ms Buckland’s claim had been assessed and settled) and which could not have been made prior to 22 August 2022. Moreover, it is an attempt to reformulate the cover provided by the Policy and does so by ignoring the definition of “Date of Disablement”. This would offend the principle in relation to the application of s 54 that the Court looks at the claim that was, in fact, made and not one that might have been made or made “at some other time”.

There was no “omission” and the “Date of Disablement” is confined to the Policy period

56    Notwithstanding the foregoing, it is not inappropriate to proceed upon the assumption that Ms Buckland’s approach to QInsure for additional payment should be treated as a second claim on the Policy. Albeit slightly artificial, it advances Ms Buckland’s case in its best light. On this premise, the relevant question becomes whether, in relation to a claim for TPD benefits under the Policy from September 2021, QInsure is prevented from relying upon some act or omission of some third party (within the meaning of s 54) in refusing to pay such benefits for the period from 21 September 2021 to 22 August 2022. What that act or omission was, however, was not identified with any real clarity by the first respondent. At best, it appears to rest on the assertion that no certification was provided as at 21 September 2021, by a Medical Practitioner, which certified that Ms Buckland had the relevant level of incapacity.

57    The immediate difficulty with such proposition is that there is a distinct dearth of evidence that any such “omission” occurred. From the facts before AFCA, and as they pellucidly appear, it was not possible for a medical practitioner to make the diagnosis of the level of Ms Buckland’s incapacity in September 2021 or, indeed, any earlier than 22 August 2022. So much seems to have been accepted by AFCA; at pages 7 and 8 of the Reasons, the following appears:

On these facts, I do not think the insurer could have determined the complainant was TPD any earlier than it did. The complainant clearly maintained hope that she would be able to return to work as late as 17 April 2022, as confirmed by a report from Dr SB. However, this appears to have changed by 22 August 2022 when the complainant lodged a TPD claim. Dr BJ issued a report on 14 October 2022, and the insurer made a decision to admit the claim on 24 November 2022. …

58    From this, there is no suggestion that any earlier diagnosis could have been made, and rightly so. Ms Buckland’s illness was not of a character that, at the time of diagnosis, unequivocally rendered her unable to return to work again. Instead, as revealed by the opinion of Dr Burgess as at September 2021, it was necessary to consider and monitor the progress of such incapacity with the benefit of time (and, in particular, having regard to the responsiveness of Ms Buckland to treatment). In that sense, at all times prior to 22 August 2022, there was a real and recognised prospect that she would return to work in the future and, by the same token, a possibility that she would not. Although that latter possibility might have existed at all relevant times, there is nothing before the Court to suggest that a medical practitioner, acting properly, could have reached the conclusion that she was TPD at any time before 22 August 2022.

59    AFCA did not suggest to the contrary. Instead, it circumvented this issue and considered that the “medical certification requirement” in the definition of “Date of Disablement” comprised a technicality that, somehow, s 54 rendered redundant. That approach gave an operation to s 54 beyond anything that has hitherto been suggested in the authorities and is, plainly, incorrect.

60    Even if it be assumed in favour of Ms Buckland that a medical practitioner could, at some later stage (and without the benefit of any contemporaneous assessment), retrospectively determine that she was unable to ever return to work again, in the context of the Policy, s 54 would still have no application. On the Policy’s proper construction, a TPD benefit is payable where the Insured Person “suffers” TPD and “the Date of Disablement is a date while [the Policy] is in force” (clause 4.1.2; recall supra [7]). It follows that, any Insured Person who makes a claim must assert that the “Date of Disablement” occurred in the policy period; on any view, that is an essential aspect of the making of a valid claim under the Policy. It reflects the essential element of the disablement cover, which is the making of a prediction by a medical practitioner (and embodied in a certification) during the policy period, that the insured will be unable to return to work in the future. In this manner, the certification requirement is a restriction or limitation which is inherent in the cover, in the sense of a limitation arising from the type of insurance offered, and an essential character of the policy: see Watkins 17 [40]. It is no mere technicality which is extraneous to the occurrence in respect of which the benefit is payable. In this respect, the certification during the policy period is akin to the requirement in a “claims made” policy that the relevant claim against them occurred during the relevant policy period.

61    On this basis, s 54 does not operate to extend the Policy’s cover to provide benefits in respect of the period prior to the satisfaction of the terms of the definition of “Date of Disablement”.

62    Whilst that would be sufficient to warrant the conclusion that satisfaction of the requirements of the “Date of Disablement” definition is fundamental to the insurer’s obligation to pay, the same conclusion can be drawn from other aspects of the Policy. In the first instance, the Policy is multifaceted and provides a series of benefits arising from several identified circumstances, consequent upon the member encountering incapacity to varying degrees while the Policy is in force. It is relevant that each of the benefits (as set out at supra [12]) are payable by reference to specific temporal occurrences. The Death benefit is payable by reference to the date of death; the Terminal Illness benefit is payable from the date on which the person first has the relevant illness; the TPD benefit is payable by reference to the Date of Disablement as defined for that benefit; and the Temporary Disablement benefits are payable by the Date of Disablement as defined for them. Moreover, some of the benefits payable under the Policy, in particular TPD or Temporary Disablement benefits, are limited in duration (in that they may be payable only until the occurrence of certain events, such as the member reaching Cover Expiry Age for the benefit or the member ceasing to suffer the incapacity). From this, it follows that the temporal elements underlying the benefits payable are important or fundamental aspects of the cover provided and, that conclusion is only strengthened by an understanding of the sequential nature of some of the available benefits as has been discussed above (see, eg, supra [39]).

63    It is further to be kept in mind that the “Date of Disablement” has other relevance under the Policy. It regulates, amongst other things, the value of the member’s salary for the purposes of calculating benefits (see the definition of “Insured Salary”); the calculation of the period in respect of which the Temporary Disablement benefits are calculated; the assessment of the hours per week that a member works; and the entitlement to receive TPD if, inter alia, the member dies within three months of the Date of Disablement (see clause 11.9) In addition, by clause 6.2.5 of the Policy, the rights of the members to receive benefits post-termination of the contract are fixed, in some respects, by reference to the Date of Disablement.

64    The unavoidable conclusion is that it is not possible to disregard the Date of Disablement when identifying the event in respect of which the TPD benefit becomes payable under the Policy and, necessarily, QInsure’s refusal to pay a benefit for the period prior to the occurrence of the Date of Disablement is not a refusal that falls within the scope of s 54. Additionally, the alleged “omission” of some hypothetical medical practitioner to certify, in September 2021, that Ms Buckland was unable to ever return to work, is not an omission within the scope of that section.

65    The foregoing is supported by the observation that, if s 54 could be used in the manner claimed, an insured would be able to receive benefits for Temporary Disablement and TPD in respect of the same period. Having satisfied the criteria for the former categorisation and received the benefits in respect of that cover, Ms Buckland now seeks to have her condition in that period recharacterised so as to obtain an additional benefit. As indicated above, that is objectively not how sensible, commercial parties would have intended the Policy to operate and it underscores the inapplicability of s 54 in the present circumstances.

Prejudice and the making of double payments

66    It might be added that, even if by some mechanism, it was possible to reach the position that s 54 applied, given that which has been said above, it is difficult to conclude other than that the insurer would suffer prejudice as a result of the alleged “omission”. Simply put, that prejudice would be that the insurer, having already paid a Temporary Disablement benefit to the member, would be required to then pay a TPD benefit for the same period of time. That said, as this was not the subject of submissions, there is no reason to consider it further.

Relief

67    The decision under appeal rests upon a misconception as to the application of s 54. It reached the conclusion that the additional amount of TPD benefit was payable by assuming that s 54 prevented the insurer from relying upon the Policy terms which provided benefits from the “Date of Disablement” as defined. It was that misunderstanding that, in turn, opened the gateway for it to determine that requiring QInsure to make the additional payment was a result that was “fair and reasonable in all the circumstances” per s 1055(3) of the Corporations Act. That was the sole basis of the decision and there was no suggestion to the contrary.

68    Thus, for the purposes of s 1055(7) of the Corporations Act, AFCA has made a determination that is contrary to law and the contract of insurance. Although there was some suggestion that merely because in the formulation of the Reasons, AFCA relied on a misunderstanding of the legal rights as between the insured and the insurer and its determination reflected that, it could not be said that the Determination was contrary to law. That should be rejected. Here, AFCA’s error was fundamental to the determination that was made – it resulted in the apportionment between the parties in a manner that was contrary to their legal rights inter se. It follows that the decision was contrary to law and the policy of insurance.

69    By ss 1057(3) and (4) of the Corporations Act, the Court is afforded wide powers of disposition in relation to appeals from AFCA. Those provisions relevantly provide:

1057     Appeals to the Federal Court from determination of superannuation complaint

…

(3)    The Federal Court is to hear and determine the appeal and may make such order as it thinks appropriate.

(4)     Without limiting subsection (3), the orders that may be made by the Federal Court on an appeal include:

(a)     an order affirming or setting aside the determination of AFCA; and

(b)     an order remitting the matter to be determined again by AFCA in accordance with the directions of the Court.

70    Here, there is only one possible answer to Ms Buckland’s complaint to AFCA, being that she is not entitled to any further amount under the Policy in relation to her claim for TPD benefits. She has been paid her full entitlement. It follows that QInsure’s decision was correct, with the consequence being that an order that AFCA’s decision be set aside is all that is needed to ensure that the parties’ positions accord with their contractual and legal rights.

71    It follows that the orders of the Court should be as follows:

(1)    The appeal be allowed.

(2)    The Determination be set aside under s 1057(4)(a) of the Corporations Act.

(3)    There be no order as to costs.

Associate:    

Dated:    12 December 2025