By Tyra Zacker, Paralegal, and David Slatyer, Partner

Background

Ms Buckland, a member of the Australia Retirement Trust (ART), ceased work on 17 September 2021 due to illness. She received Temporary Disablement benefits from 18 October 2021 under a group insurance policy issued by QInsure.

On 22 August 2022, a psychiatrist certified that Ms Buckland was permanently unable to work and QInsure paid a Total and Permanent Disablement (TPD) benefit calculated from that date.

In February 2023, Ms Buckland’s GP issued a retrospective certificate stating she had been incapacitated since September 2021. Relying on this, Ms Buckland sought recalculation of her TPD benefit from the earlier date.

AFCA Decision

On 26 March 2025, the Australian Financial Complaints Authority (AFCA) determined that Ms Buckland was entitled to have her TPD benefit recalculated from 21 September 2021, rather than 22 August 2022. AFCA applied s 54 of the Insurance Contracts Act 1984 (Cth) (s 54), reasoning that the insurer’s reliance on the certification date was a technicality and that the failure to obtain an earlier certificate was an omission that should not prejudice the insured.

Issues

The Federal Court of Australia considered whether s 54 could apply in the manner adopted by AFCA, specifically:

1. Was the failure by Ms Buckland to obtain (or by a medical practitioner to provide) a certificate of permanent incapacity before 22 August 2022 an “act or omission” within the meaning of s 54?
2. Was AFCA entitled to determine the Date of Disablement as a date other than 22 August 2022, 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?

Decision

AFCA’s decision was set aside. Ms Buckland was not entitled to any additional TPD benefit beyond what had been paid.

Reasons for Decision

Policy Construction

With respect to TPD matters, the policy defines “Date of Disablement” as –

“the date on which a Medical Practitioner certifies in writing that the insured person is permanently unable to work again.” (cl 1(b)(i)(B)).

The Court held this refers to the date of certification, not a retrospective date the doctor believes the incapacity begins. This interpretation ensures certainty and avoids overlapping payments for temporary and permanent disablement in respect of the same period of time. Ms Buckland’s construction, based on when the incapacity begins, would allow double recovery and create uncertainty.

Section 54 Analysis

The Court held that AFCA could not rely on s 54 in the manner it did. 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 same).

This requirement is integral to the policy and cannot be displaced by s 54.

AFCA relied upon an omission that did not exist, there was no evidence that any medical practitioner could have certified permanent incapacity earlier than 22 August 2022.

Error of Law

AFCA’s decision was based on “a misconception as to the application” of s 54, assuming it prevented the insurer from relying on the policy’s definition of “Date of Disablement.” This error led AFCA to conclude that requiring QInsure to pay an additional amount was “fair and reasonable”, but AFCA’s determination is contrary to law and the contract of insurance. AFCA’s error resulted in the apportionment between the parties in a manner that was contrary to their legal rights inter se.

Significance

This decision reinforces:

1. The importance of policy wording in determining benefit entitlements; and
2. That s 54 cannot be used to override essential elements of cover or extend benefits beyond the true defined scope of the policy.

The matter is currently under appeal by Ms Buckland.