Stay not granted in TPD claim

By Stanley Drummond*

The Federal Court has dismissed a life insurer’s application for a stay pending a hearing of the insurer’s appeal from an Australian Financial Complaints Authority determination in favour of a superannuation fund member claiming a total and permanent disablement (TPD) benefit of more than $1.2 million.

Background

Gregory Teagle, a member of the AMP Flexible Lifetime Superfund, claimed a TPD benefit.

When the benefit was not paid, he complained to Australian Financial Complaints Authority (AFCA) which, on 20 June 2023, made a determination in his favour of $1,240,203.77.

The insurer, Resolution LifeAustralasia Ltd, appealed to the Federal Court against Mr Teagle, the fund’s trustee, NM Superannuation Pty Ltd, and AFCA.

Resolution applied for a stay pending the appeal hearing, which had been listed for hearing on 29 November 2023.

The court’s decision

Justice Stewart dismissed the insurer’s stay application.

He said that, in an appeal from an AFCA determination, section 1057A(2) of the Corporations Act 2001 (Cth) provides that the court “may make such order or orders staying or otherwise affecting the operation or implementation of  … the determination as the court thinks appropriate to secure the effectiveness of the hearing and determination of the appeal”.

There had been no decided cases on section 1057A or its predecessor provision, section 47 of the Superannuation (Resolution of Complaints) Act 1993 (Cth) (repealed).

Resolution advanced four reasons why a stay should be granted:

• there were good arguable grounds of appeal
• the balance of convenience was in favour of granting a stay
• “most tellingly”, there was a real risk that, if the determination were paid pending the appeal and the appeal were ultimately successful, the insurer would not be restored to its former position, ie, there was a risk the member would not, or could not, repay the insurer. The insurer pointed to evidence indicating Mr Teagle was in straitened financial circumstances:
  • he had said in an email to the court that he did not wish to burden his family with the risk of an adverse costs order and he was “only on a disability pension”, and
  • the trustee had advised Mr Teagle he had an active superannuation account with a balance of $58,485 and he had been paid $10,000 from that account on his request “based on financial hardship”, and
• Mr Teagle had not sought to argue for any interim or part payment of the determination sum to relieve his position pending the appeal, which would reduce the insurer’s risk of losing the full determination sum if it had to pay it pending the appeal.

Judge not persuaded

Justice Stewart was not persuaded by those reasons and said: “There is no evidence [Mr Teagle], or anyone else, intends enforcing the determination in some way pending the appeal. Although … the effect of the law is that the determination takes immediate effect, [Resolution] has been content not to pay the determination sum to [Mr Teagle] since the determination was made in June, and it delayed bringing the interlocutory application until September, a period of more than two months.

“Given the appeal hearing is only some six weeks away, a real question arises as to the need for or utility of a stay of the determination. The [insurer] has not identified any way in which it may be penalised, or otherwise faces prejudice, if it continues simply not to pay. That, of course, is a position the court cannot and does not condone but, in the absence of some enforcement steps being taken, or at least threatened, and in light of the [insurer’s] attitude thus far, it remains unclear why a stay is required.”

Justice Stewart then said: “But more to the point, the discretion to grant a stay is limited to circumstances where the court finds it appropriate to grant the stay ‘to secure the effectiveness of the hearing and determination of the appeal’. No submissions are directed to the establishment of those circumstances.

“It is not said how the effectiveness of the hearing may be jeopardised if a stay is not granted, nor how the determination of the appeal may be adversely affected. The limitation on the exercise of the discretion to grant a stay, which Parliament has regarded as appropriate to impose, stands in contrast to the broad discretion, unlimited by statutory language, that a court has to grant a stay pending an appeal against a judgement.”

The insurer’s stay application was dismissed, and the insurer’s appeal would proceed in the usual way to a hearing.

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

*Stanley Drummond is a partner with Thomson Geer in Sydney.