AIA Australia Ltd v Sharma

Solicitor for the First Respondent: Maurice Blackburn Lawyers

Solicitor for the Second Respondent: Moray & Agnew

Counsel for the Third Respondent The Third Respondent filed a submitting notice save as to costs

AUSTRALIAN FINANCIAL COMPLAINTS AUTHORITY LTD Third Respondent

order made by: STEWART, HALLEY and BUTTON JJ DATE OF ORDER: 17 march 2023

1. The appeal be allowed with costs.
2. The orders of the primary judge on 13 May 2022 and 30 May 2022 be set aside and, in their place, order that the proceeding be dismissed with costs. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Introduction 1 Dr Deepak Sharma, a medical practitioner, was a member of the H.E.S.T. Australia Superannuation Fund (previously named the Health Employees Superannuation Trust Australia). Prior to March 2011, Dr Sharma had default death/terminal illness and default income protection cover as a member of the fund. 2 On 22 March 2011, Dr Sharma applied online to the trustee of the fund, H.E.S.T,. Australia Ltd (HESTA) for additional underwritten insurance cover, being death, total and permanent disability and income protection cover. The insurer who provided the cover to the fund under a group insurance policy at that time was OnePath Life Ltd. At that time, Dr Sharma was a practising general practitioner. 3 The application form completed by Dr Sharma when he applied for the additional cover was headed "HESTA Super Fund Insurance" and contained the details for both HESTA and OnePath. The form contained a statement setting out Dr Sharma's duty of disclosure. The application form then asked: "Have you ever been diagnosed with, had symptoms or signs of, or sought (or intend to seek) medical advice, treatment or investigations for … heart trouble, murmur, chest pain, palpitations?" Dr Sharma answered: "No". 4 On 21 April 2011, Dr Sharma completed a personal statement and declaration as part of a standard medical examination form conducted by United Healthcare Group in relation to his application for the additional cover, in which he responded to two further questions: Have you EVER had any of the following … high blood pressure, chest pain, high cholesterol, stroke, rheumatic fever or any heart or vascular complaint? … Have you required medical treatment, including surgery, for any illness or injury not mentioned above? 5 Dr Sharma answered "No" to both questions. 6 The answers to the questions identified in the preceding paragraphs were false to the knowledge of Dr Sharma. In fact, Dr Sharma had previously suffered a myocardial infarction (commonly, a heart attack) and had surgery by which three stents were inserted in his coronary arteries in 1999. 7 Having assessed Dr Sharma's application, on 11 July 2011, OnePath entered into the additional cover for Dr Sharma. 8 With effect from 1 December 2011, Colonial Mutual Life Assurance Society Ltd (CommInsure) became the group life insurer and group income protection insurer of the fund. CommInsure agreed to provide group life cover for the benefit of members of the fund under the terms of the OnePath policy, with some inconsequential amendments. This reflected the common practice of trustees such as HESTA changing group insurers from time to time. CommInsure issued a new policy of insurance, the terms of which provided that the cover of an insured member in force under the OnePath policy continued without the member having to opt-in, pay additional premiums or fees or take additional steps. 9 Dr Sharma did not make any application to CommInsure, and consistently with standard practice, he was not required to provide further or updated medical information or declarations to CommInsure. CommInsure did not reassess the risk of insured members such as Dr Sharma. 10 Members of the fund were notified of the change of insurer to CommInsure, although it is not clear whether that occurred before or after the change had taken effect. The notice of the change provided the opportunity for members to opt out of the change to the new cover. Dr Sharma did not opt out. Nor did he advise CommInsure of his earlier false representations. 11 On or around 9 March 2017, Dr Sharma lodged a terminal illness claim on HESTA in relation to end-stage ischemic cardiomyopathy. Dr Sharma died from heart failure on 21 April 2017. 12 On or around 17 May 2017, CommInsure admitted the default cover portion of the terminal illness claim and paid approximately $46,500 to HESTA. 13 On 16 August 2017, CommInsure decided to avoid the additional cover and refund the premiums. CommInsure's decision was maintained on a number of subsequent occasions. It relied on fraudulent misrepresentations which had been made by Dr Sharma in obtaining the additional cover, and s 29 of the Insurance Contracts Act 1984 (Cth) (ICA). CommInsure otherwise paid the claim for posthumous income protection benefits up to the value of Dr Sharma's default cover. 14 HESTA reviewed CommInsure's decision to avoid the additional cover and determined that it was fair and reasonable. 15 Dr Sharma's widow, Mrs Sharma, lodged a complaint with Australian Financial Complaints Authority Ltd (AFCA) on 14 January 2020 challenging CommInsure's and HESTA's decisions. The AFCA panel determined that CommInsure was not entitled to rely on s 29 of the ICA to avoid the additional cover, but upheld CommInsure's decision on the basis that it was fair and reasonable in the circumstances. On that basis, HESTA's decision was also upheld. Mrs Sharma appealed from AFCA's determination to the Court. The primary judge allowed the appeal, set aside the AFCA determination and remitted the matter to AFCA for re-determination. The reasons for judgment are published as: Sharma v H.E.S.T. Australia Ltd [2022] FCA 536 (J). 16 The relevant insurer is now AIA Australia Ltd, the appellant, the business of CommInsure having been transferred to AIA on 1 April 2021. AIA is thus in the same position as CommInsure for the purposes of the appeal. Also, since HESTA's decision with respect to CommInsure avoiding the additional cover stands or falls with CommInsure's decision, for simplicity HESTA's decision will not be considered separately hereunder. 17 The notice of appeal raises three grounds. Ground 1 concerns the interpretation of s 29 of the ICA. Ground 2 concerns the interpretation of s 33 of the ICA, and arises in the alternative to ground 1. Ground 3 of the appeal only arises if grounds 1 and 2 are rejected. 18 Mrs Sharma initially relied on a notice of contention that raised six grounds, but during the course of the appeal hearing her senior counsel confirmed that none of the grounds was pressed and that the appeal is to be decided with reference only to the grounds of appeal. 19 HESTA makes brief submissions confined to the operation of s 33 of the ICA in support of the appeal being allowed. AFCA filed a submitting appearance. 20 For the reasons that follow, we have concluded that the appeal should be upheld on ground 1 which makes it unnecessary to consider grounds 2 and 3.

The AFCA external dispute resolution scheme 21 AFCA is the operator of the external dispute resolution scheme for which an authorisation is in force pursuant to Pt 7.10A of the Corporations Act 2001 (Cth). A regulated superannuation fund under the Superannuation Supervision Act 1999 (Cth) and the holder of an Australian Financial Services Licence (AFSL) under the Corporations Act may be the subject of complaints relating to superannuation made by a person as provided for in s 1053 of the Corporations Act. Those complaints may include complaints about decisions made by trustees of a regulated superannuation fund and decisions made by an insurer relating to a contract of insurance where the premiums are paid from a retirement savings account as defined in the Retirement Savings Accounts Act 1997 (Cth). HESTA is a regulated superannuation fund and holds an AFSL. 22 Under s 1055(3) of the Corporations Act, on making a determination on a complaint made to it, AFCA must affirm a decision relating to the payment of a death benefit if AFCA is satisfied that the decision in its operation in relation to the complainant was "fair and reasonable in all the circumstances". Also, under s 1055(7)(a), AFCA must not make a determination of a superannuation complaint that would be contrary to law. 23 Section 1057(1) of the Corporations Act provides that a party to a superannuation complaint may appeal to the Federal Court "on a question of law" from AFCA's determination of the complaint. The Court "is to hear and determine the appeal and may make such order as it thinks appropriate": s 1057(3). Orders that may be made by the Court include, but are not limited to, an order affirming or setting aside the determination of AFCA or an order remitting the matter to be determined again by AFCA in accordance with the directions of the Court: s 1057(4). 24 It follows that Mrs Sharma's appeal to the Court was limited to "a question of law" with the result that there was no challenge to the factual findings made by AFCA. That remains true in the further appeal to the Full Court.

The Insurance Contracts Act 25 CommInsure denied the claim and sought to avoid the additional insurance contract in reliance on s 29(2) of the ICA. Section 29 was at the material time relevantly in the following terms: 29 Life insurance (1) This section applies where the person who became the insured under a contract of life insurance upon the contract being entered into: (a) failed to comply with the duty of disclosure; or (b) made a misrepresentation to the insurer before the contract was entered into; but does not apply where: (c) the insurer would have entered into the contract even if the insured had not failed to comply with the duty of disclosure or had not made the misrepresentation before the contract was entered into; or (d) the failure or misrepresentation was in respect of the date of birth of one or more of the life insureds. (2) If the failure was fraudulent or the misrepresentation was made fraudulently, the insurer may avoid the contract. 26 Since Mrs Sharma relied on it before the primary judge, mention must be made of s 26(2). It provides that a statement that was made by a person in connection with a proposed contract of insurance shall not be taken to be a misrepresentation unless the person who made the statement knew, or reasonably ought to have known, that the statement would have been relevant to the decision of the insurer whether to accept the risk and, if so, on what terms. 27 Section 33 provides that the provisions of Div 3 (ie, the remedies for non-disclosure and misrepresentation) are exclusive of any right that the insurer has otherwise than under the ICA "in respect of a failure by the insured to disclose a matter to the insurer before the contract was entered into and in respect of a misrepresentation or incorrect statement." 28 Under a group life scheme, the life insured is not the insured. The trustee is the insured. Also, there is only one policy in respect of many life insureds. There are provisions of the ICA that are designed to deal with some of the complexities that this creates. 29 First, s 25 provides that where, during the negotiations for a contract of life insurance but before it was entered into, a misrepresentation was made to the insurer by a person who, under the contract, became the life insured or one of the life insureds, the ICA has effect "as though the misrepresentation had been so made by the insured". That is to say, the section is a device by which a misrepresentation by a person who is not a party to the insurance contract is taken to be a misrepresentation by a party, namely the insured trustee. In the present case, that means that a misrepresentation by Dr Sharma to the insurer "during the negotiations for [the] contract of life insurance but before it was entered into" has the effect as though it was a misrepresentation made by the trustee to the insurer. 30 Secondly, s 27A was introduced by the Insurance Contracts Amendment Act 2013 (Cth) with effect from 28 June 2013. That was after the relevant misrepresentations were made and the contracts of insurance were entered into, but before the decision to avoid the cover. It is uncontroversial that it therefore had relevant effect in relation to that decision: Amendment Act, Sch 5, Item 3(1). Section 27A provides for the unbundling of a group life policy into deemed separate contracts of life insurance in respect of each life insured and in respect of different groups of provisions. In the present case, that means that if there were grounds to avoid the policy that could be done on the basis that it is only the policy insofar as it insured the life of Dr Sharma in respect of the additional cover that would be affected, and not the rest of the policy insofar as the other life insureds or Dr Sharma's default cover are concerned. 31 Thirdly, there is s 32. Although it was also amended by the Amendment Act, that amendment applies only to a contract of life insurance that was originally entered into after the commencement of the relevant item: Amendment Act, Sch 6, Item 40(2). Section 32 as it applied at the relevant times provided that Div 3 extends to the case where there was a failure to comply with the duty of disclosure, or a misrepresentation was made, to the insurer under a blanket superannuation contract in respect of a proposed member of the relevant superannuation or retirement scheme as though: (a) the insurance cover provided by that contract in respect of that member were provided by an individual superannuation contract between the insurer as insurer and the trustee for the purposes of the scheme as the insured; and (b) that contract had been entered into at the time when the proposed member became a member of the scheme.

AFCA's decision 32 AFCA found that Dr Sharma fraudulently misrepresented his medical history in obtaining the additional insurance cover. 33 AFCA found that CommInsure cannot rely on s 29 of the ICA to avoid the policy in relation to Dr Sharma. Its reasoning on CommInsure's ability to avoid the policy under the ICA was as follows: (1) An insurer can only rely on the remedy in s 29(2) if the misrepresentation in question was made to the insurer that is seeking to exercise the remedy. (2) There is no clear evidence that there was a misrepresentation by the life insured (Dr Sharma) to the insurer seeking to exercise the remedy, namely CommInsure. (3) AFCA went on to consider whether, even if the misrepresentation to OnePath could be considered as a misrepresentation to CommInsure (against its finding), s 29(1)(c) nevertheless excluded the operation of s 29(2). After considering evidence from OnePath on what it would have done had Dr Sharma disclosed the truth to it, AFCA "could not be satisfied" that s 29(1)(c) did not apply, with the consequence that it could not be satisfied that CommInsure was able to exercise the remedy in s 29(2). 34 Notwithstanding the finding that CommInsure could not rely on s 29(2) to avoid the additional cover in respect of Dr Sharma, AFCA found that the decision by CommInsure was fair and reasonable in its operation in relation to Mrs Sharma. That is because there is no unfairness or unreasonableness in refusing to pay insurance benefits in respect of Dr Sharma or his beneficiaries (who include Mrs Sharma) where the ICA does not contemplate a change in group insurer and the common law or equity would allow CommInsure to recover those benefits due to Dr Sharma's fraudulent misrepresentation. 35 AFCA's "fair and reasonable" finding was made on the following further reasoning: (1) The ICA does not adequately contemplate a situation where a group life insurer assumes cover from a previous insurer to whom any representations prior to the insurance contract being entered into were made. It is nevertheless common, and to be encouraged, for a superannuation trustee to change group insurers from time to time, and it would be rare to find a new group insurer re-underwriting or reassessing the risk on the insured's members who were given cover under the former insurance arrangements. (2) Section 33 of the ICA does not bar the second insurer (here, CommInsure) from exercising rights under the general law in this situation. Noting s 7 which provides that the ICA is not intended to affect the operation of any principle or rule of the common law or equity unless by express or necessary intendment, AFCA could not conclude that s 33 operated to exclude an insurer's rights under the general law in circumstances where the insurer has assumed cover, for an already insured member, from another insurer in the superannuation group context. (3) Although CommInsure was not able to avoid cover under the general law as there was no contract of insurance between the deceased and the insurer, other remedies are available at common law and equity. These include that a party who suffers a loss as a result of fraudulent misrepresentation can take action for damages under the tort of deceit at common law, which may have been available to CommInsure. Also, equity may have been available to CommInsure to protect it from Dr Sharma's fraud where the statute offers no protection. (4) It was unlikely that Dr Sharma cared whether it was OnePath or CommInsure, or another insurer altogether, that relied on his false answers to provide additional cover; instead, his focus in making the misrepresentations was to obtain additional cover through his superannuation arrangements. It would therefore have been within his contemplation that the trustee's insurer (and subsequent insurers) would have relied on his statements in his application for the purpose of deciding whether to accept the risk of providing additional cover and whether to pay a claim based on the additional cover. (5) Having scrutinised CommInsure's underwriting guidelines, AFCA was satisfied that had CommInsure known Dr Sharma's cardiac history at the time that it took over the cover from OnePath, it would have declined cover to Dr Sharma. On that basis, the misrepresentation made by Dr Sharma to OnePath had continuing effect because CommInsure was within the class of persons who might reasonably be contemplated as relying, and did in fact rely, on that misrepresentation to its detriment. (6) There is no unfairness or unreasonableness in refusing to pay insurance benefits in respect of Dr Sharma or his beneficiaries where the ICA does not contemplate a change of group insurers, in a superannuation context, and the common law or equity would allow CommInsure to recover those benefits due to Dr Sharma's fraudulent misrepresentation. CommInsure may have rights in common law and equity to recover any losses that it incurs from paying out additional insurance benefits obtained by Dr Sharma's fraudulent misrepresentations, due to its detrimental reliance on those misrepresentations in continuing his additional cover when it would not have provided cover if his cardiac history had been correctly represented. 36 On that basis, AFCA affirmed the decision of CommInsure to avoid Dr Sharma's additional cover. 37 At first glance, it might be thought that AFCA's finding that there was no clear evidence before it that there was a misrepresentation made to CommInsure is inconsistent with its later finding that Dr Sharma's misrepresentation was of continuing effect and was relied on by CommInsure to its detriment. However, a closer reading of AFCA's determination reveals that there is no inconsistency. 38 The first finding referred to was made by AFCA in addressing AIA's argument that it stepped into the shoes of OnePath and was therefore entitled to exercise the statutory rights available to OnePath in relation to the original policy. AFCA rightly rejected that submission on the basis that, in order for an insurer to be able to avoid a policy under s 29(2) by reason of a misrepresentation, the misrepresentation must have been made to the insurer seeking to exercise the remedy. Consistent with the way in which it put its case to AFCA, the evidence on which AIA relied on the question of misrepresentations for the purposes of s 29(2) was all directed to the misrepresentations made to OnePath. 39 The second finding referred to was made by AFCA in addressing the availability of remedies outside the ICA. It was in that context that AFCA focused on the question of misrepresentations made to CommInsure and, once its focus was on that matter, it found that continuing misrepresentations had been made to CommInsure and relied on by it to its detriment. Those findings are critical to the disposition of the appeal.

The primary judge's reasons 40 On the appeal from AFCA to the primary judge under s 1057 of the Corporations Act, Mrs Sharma identified six questions of law and six grounds of appeal. The primary judge decided the appeal with reference to two of the questions of law and two grounds of appeal. They may be summarised as follows: (1) Whether, not being satisfied that s 29(1)(c) of the ICA applied, s 26(2) prevented a conclusion that the deceased made a misrepresentation to CommInsure in December 2011? (2) Whether s 33 of the ICA would have prevented AIA from taking an action for damages for deceit at common law or in equity against the estate of the deceased? 41 AIA relied on a notice of contention before the primary judge which identified three grounds of contention. Those grounds can be summarised as follows: (1) CommInsure was entitled to avoid the additional cover under s 29(2) because one or more of Dr Sharma's fraudulent misrepresentations was a continuing misrepresentation made to CommInsure before it entered into the additional cover with effect from 1 December 2011. (2) Alternatively, CommInsure was entitled to avoid the additional cover under s 29(2) because, properly construed, "the insurer" in s 29 includes not only the insurer who accepted the risk of providing insurance cover and to whom the relevant misrepresentation was made but also the insurer that ultimately assumes the risk of providing the relevant insurance cover, ie, "the insurer" for the purpose of ss 29(1)(b) and (c) is OnePath and "the insurer" for the purpose of s 29(2) is CommInsure. Also, had one or more of the fraudulent misrepresentations not been made, OnePath would not have entered into the additional cover on the same terms, ie, s 29 was not disapplied by s 29(1)(c). (3) In the further alternative, CommInsure was entitled to avoid the additional cover at common law because Dr Sharma breached his duty of good faith and fair dealing, which he owed to CommInsure, by failing to inform CommInsure of one or more of the misrepresentations before it entered into the additional cover with effect from 1 December 2011. 42 The primary judge dealt first with what we have identified as appeal ground 1 and notice of contention ground 2 together. His Honour concluded that AFCA reached the correct conclusion that s 29 did not apply in that the relevant misrepresentation must be made to an identifiable insurer at an identifiable point in time (ie, OnePath before the insurance is entered into), and not a subsequent insurer which assumes the risk at a later point in time. That is to say, the "insurer" referred to in s 29(1) must be the same "insurer" as referred to in s 29(2); since the misrepresentation referred to in s 29(1)(b) was made to OnePath, CommInsure cannot avoid the policy under s 29(2). (J[75]-[77].) 43 Next, the primary judge dealt with what we have identified as appeal ground 2 and notice of contention grounds 1 and 3 together. His Honour did not accept the reasoning of AFCA that s 33 does not operate as a code so as to exclude general common law or equitable principles (J[91]). His Honour concluded that s 32, as applied retrospectively by s 27A, does not address the lacuna in the legislative scheme. That is because it is only applicable to a failure to comply with the duty of disclosure or a misrepresentation "made, to the insurer under a blanket superannuation contract in respect of a proposed member" and Dr Sharma was already a member of the fund (ie, he was not a proposed member) when he made his application for additional cover (J[92]). 44 The primary judge found that, having misunderstood the effect of s 33, AFCA posed for itself the wrong question. It should have concluded that s 33 operates as a code, the effect of which is to limit the rights of AIA (really CommInsure) to those provided for in the ICA, but instead it looked speculatively to the general law (J[94]-[95], [106]). His Honour rejected AIA's submission that Dr Sharma breached his duty of utmost good faith such that CommInsure would have had common law remedies to avoid the contract (J[97]-[98]). His Honour thus upheld the ground of appeal on the basis that AFCA materially misdirected itself as to the meaning and effect of s 33, which misunderstanding underpinned its ultimate conclusion of fairness and reasonableness (J[108]). 45 On AIA's ground of contention 1 that Dr Sharma made a continuing misrepresentation to CommInsure entitling it to avoid the additional cover under s 29(2), the primary judge held (at J[111]) that the principles with regard to a continuing misrepresentation, including that such a misrepresentation may be made not only to a particular person but also to a member of an identified class of persons known or reasonably known to the defendant: do not assist AIA because s 29 cannot be relied on and Division 3 of the ICA is a code. The statutory scheme simply does not afford the remedy of avoidance in favour of CommInsure. 46 On AIA's ground of contention 3 with regard to breach of a duty of utmost good faith, the primary judge reiterated that any rights to avoid the contract were required to have been found within the statute (J[112]). 47 As a result, the primary judge upheld the appeal, set aside AFCA's determination and remitted Mrs Sharma's complaint to AFCA for redetermination. The primary judge ordered that AIA pay Mrs Sharma's costs of the proceeding.

The appeal grounds 48 By appeal ground 1, AIA contends that the primary judge erred in finding that AIA/CommInsure could not rely on s 29(2) of the ICA to avoid the additional cover afforded to Dr Sharma. 49 By appeal ground 2, AIA contends that the primary judge erred in holding that s 33 of the ICA acted as an "exclusive code" and ought to have concluded that it did not limit the rights of AIA to those provided for in the ICA. 50 By appeal ground 3, AIA contends that the primary judge erred in failing to uphold AFCA's determination that the decisions of HESTA and CommInsure did not operate unfairly or unreasonably in the circumstances.

Appeal ground 1: consideration 51 AIA's submissions on this part of the case accept that the relevant contract of insurance is that between HESTA and CommInsure and that the operative misrepresentation must be a misrepresentation to CommInsure. AIA submits that there were two such misrepresentations. First, there was a continuing misrepresentation by Dr Sharma by not correcting the false representations that he made to HESTA and OnePath in March 2011. The misrepresentations were also not corrected when members were advised of the change of insurer in (about) December 2011. Secondly, it is said that Dr Sharma made a further misrepresentation to CommInsure by silence when he failed to correct his fraudulent misrepresentation prior to 1 December 2011. 52 It is submitted on behalf of Mrs Sharma that any relevant misrepresentation made by Dr Sharma to OnePath was "spent" when the contract of insurance was made between the trustee and OnePath such that it could not be "revivified" by the making of a new contract of insurance between the trustee and CommInsure. 53 It is well established that for a fraudulent misrepresentation to be actionable it is not necessary that it should be made to a particular person; it can be made to a group to which the plaintiff belongs so that the plaintiff is one of those intended to be deceived: Commercial Banking Co of Sydney Ltd v RH Brown & Co [1972] HCA 24; 126 CLR 337 at 343 per Menzies J, Barwick CJ agreeing. See also at 346 per Gibbs J, McTiernan J agreeing, where Swift v Winterbotham (1873) LR 8 QB 244 at 253 is quoted with approval: "[I]t is sufficient if the representation is made to a third person to be communicated to the plaintiff, or to be communicated to a class of persons of whom the plaintiff is one, or even if it is made to the public generally with a view to its being acted on, and the plaintiff as one of the public acts on it and suffers damage thereby." See also Esanda Finance Corporation Ltd v Peat Marwick Hungerfords [1997] HCA 8; 188 CLR 241 at 252 per Brennan CJ. 54 In Commercial Banking Co, the fraudulent misrepresentation was made by a manager of one bank to a manager of another on the latter's enquiry as to the credit of a customer of the former. It was held that in answering the enquiry, notwithstanding that the answer was expressly qualified as being "confidential" and for the "private use" of the person to whom it was given and "without responsibility", the answer was supplied to be passed on to a customer or customers of the enquiring bank (at 344 per Menzies J and 350 per Gibbs J). On that basis, the customer who relied on it had a good cause of action against the reporting bank. 55 We will return to the facts of the present case, but for now it can be said that as a matter of law it is possible that Dr Sharma's misrepresentations made initially to HESTA and OnePath could be regarded as also being made to CommInsure. Mrs Sharma's answer to that would be that once acted on by OnePath, the misrepresentations could have no continuing effect to later be relied on by CommInsure. It is to that issue that we now turn. 56 The learned author of Handley KR, Spencer Bower & Handley Actionable Misrepresentation (5th ed, 2014, LexisNexis) at [4.09] cites a number of cases where representations, even if acted on, are considered to be continuing and capable of being acted on again and, in that sense, not spent. For example, in Smith v Kay (1859) 7 HL Cas 750, bills procured by misrepresentation were replaced by a bond. In answer to the argument that the plaintiff was not induced to execute the bond by any false statement, Lord Cranworth stated (at 769) that the representation was a continuing representation that does not end when made, but continues on. 57 In Briess v Woolley [1954] AC 333, a fraudulent misrepresentation by an agent that was made before he was given the authority of his principals was sheeted home to the principals on the basis that it was a continuing representation until it was either withdrawn or acted upon. Lord Cohen (at 358) adopted what had been said by Lord Cranworth in Smith v Kay and the statement in Spencer Bower on Actionable Misrepresentation (2nd ed, Butterworths, 1927) p 3 that unless withdrawn or modified, "the representation is deemed to be repeated at each successive moment". The idea that the statement is continuously repeated is first identified in Meluish v Milton (1876) 3 Ch D 27 at 35 where Mellish LJ memorably said that a woman who was already married and who went through a ceremony of marriage with another man "in effect represented to him that she was capable of becoming his lawful wife, and every day while they were living together she must be taken as continuously representing to him that she was his lawful wife". 58 There is a full discussion of pre-contractual continuing representations by Mason P in Macquarie Generation v Peabody Resources [2000] NSWCA 361 at [3]-[22] (see also at [84]-[87] per Beazley JA). Citing Cussen J in Dalgety and Co Ltd v Australian Mutual Provident Society [1908] VLR 481 and Smith J in Jones v Dumbrell [1981] VR 199, the President identified (at [9]-[15]) that there is a general rule that a representation, once made in the course of a negotiation for a contract, prima facie continues in force until it is withdrawn or altered or the contract is completed. See also Cramaso LLP v Ogilvie-Grant [2014] UKSC 9; [2014] AC 1093 at [16]-[23] per Lord Reed JSC. 59 As mentioned, in the present case, once its focus was on misrepresentations made to CommInsure, AFCA made the factual findings that Dr Sharma made the fraudulent misrepresentations for the purpose of obtaining insurance cover, and it was unlikely that he cared whether it was one insurer or another that relied on his false answers to provide additional cover. Instead, his focus in making the misrepresentations was to attain additional cover through his superannuation arrangements. It was also found, as a fact, that CommInsure was within the class of persons who might reasonably be contemplated as relying on the misrepresentations. Further, AFCA made the factual finding that CommInsure relied on the misrepresentations in the sense that had it known the true position in relation to Dr Sharma's heart problems it would not have taken over Dr Sharma's cover from OnePath. (See [35(5)] above.) 60 By its notice of contention ground 1 before the primary judge, AIA contended that CommInsure validly avoided the cover under s 29(2) of the ICA in reliance on the "continuing" misrepresentations to it. The primary judge dealt with this contention as set out at [45] above. With respect to the primary judge, his Honour seems to have overlooked, or misunderstood, that the contention was that there was a misrepresentation to CommInsure that enabled CommInsure to rely directly on s 29(2), and it was not that there was a misrepresentation made to OnePath that CommInsure could rely on or that CommInsure sought to rely on rights outside of the ICA. As a consequence, it was no answer to the contention to say, as his Honour did, that s 29 "cannot be relied on" and that Div 3 of the ICA is a code. 61 The point is that on the factual findings of AFCA, albeit that they were made in the context of a discussion of common law and equitable remedies in order to underpin a finding of "fair and reasonable", Dr Sharma made continuing misrepresentations to CommInsure as a member of a class of persons who could be expected to act on the misrepresentations. Those misrepresentations were made, in a continuing sense, by the life insured "during the negotiations for a contract of life insurance [and] before it was entered into" (the ICA, s 25), the relevant contract being the new cover between HESTA as insured and CommInsure as insurer with effect from 1 December 2011. Therefore, s 29(1)(b), when read with s 27A, was satisfied in that the misrepresentations were made to the insurer before the relevant "unbundled" contract was entered into. Also, s 29 was not disapplied by s 29(1)(c) because, on AFCA's finding, CommInsure would not have entered into the contract in respect of Dr Sharma's additional cover had Dr Sharma not misrepresented his relevant cardiac history. On that basis, CommInsure could rely on s 29(2) directly to avoid the contract of insurance insofar as it related to Dr Sharma's additional cover in reliance on the fraudulent misrepresentations made to it. 62 There is no identifiable error by AFCA on a question of law in making the factual findings that underpin the conclusion that Dr Sharma made continuing misrepresentations to CommInsure that CommInsure was entitled to rely on in avoiding cover under s 29(2). AIA accepts on the appeal that the conclusion as to there being continuing misrepresentations, which were not "spent" when acted upon by OnePath, is a mixed finding of fact and law, but once the critical findings of fact that underpin that finding are accepted, as they must be, there is no error in the mixed finding. The critical underpinning findings of fact are those identified in [59] above. The misrepresentations were not spent as having been acted on by the acceptance by OnePath of the application for additional cover because, on AFCA's finding, CommInsure was a member of a class of persons who could be expected to act (again) on the misrepresentations. That was presumably on the basis of the common practice of trustees to change group insurers from time to time and that new group insurers in such a scenario typically do not re-underwrite or reassess the risk. Although the submissions on behalf of Mrs Sharma are critical of that finding, it remains a finding of the AFCA panel and there is no error on a question of law that displaces it in the appeal process to this Court under s 1057 of the Corporations Act.

Disposition 63 On that basis, appeal ground 1 in this Court should be upheld and the orders below should be set aside. In lieu thereof it should be ordered that the appeal against the determination of AFCA be dismissed with costs. That is because although AFCA decided in the insurer's favour on a different basis, the outcome before AFCA would be the same. The first respondent (ie, Mrs Sharma) should pay the appellant's (ie, AIA's) costs in this Court. HESTA did not seek a costs order in its favour. 64 In view of those conclusions, it is unnecessary to consider the remaining grounds of appeal which would only arise in the event that ground 1 were unsuccessful. I certify that the preceding sixty-four (64) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Stewart, Halley and Button.