Resolution Life Australasia Limited v Mitchell

Federal Court of Australia|2024-03-28|Before: Mr J, Wigney J

The determination made by the third respondent dated 16 March 2022 in respect of the first respondent's complaint be set aside.
The matter be remitted to be determined again by the third respondent in accordance with law.
The first respondent pay the applicant's costs of the appeal. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

WIGNEY J: 1 Resolution Life Australasia Limited (formerly AMP Life Limited) (the Insurer) was the owner of an insurance policy, the Group Superannuation Policy, with AMP Superannuation Limited (the Trustee), in its capacity as trustee of the AMP Superannuation Savings Trust. Employees of employers who participated in superannuation plans that were part of the Trust could apply for and be offered insurance cover under the Policy. Nova Professional Services Pty Ltd was a participating employer in one of those superannuation plans, the Defence Contractors Superannuation Plan. Mr Albertus Mitchell was employed by Nova for just over three weeks in May and June 2016. He became a member of the Plan and an application was made on his behalf for cover under the Policy. After his employment with Nova ended, Mr Mitchell made a claim under the Policy for a total and permanent disablement benefit. That claim was not accepted by either the Trustee or the Insurer. 2 Mr Mitchell lodged a complaint with the Australian Financial Complaints Authority (AFCA) concerning the Trustee's decision not to accept his claim under the Policy. AFCA is the operator of the scheme (the AFCA scheme) for external dispute resolution authorised by the responsible Minister pursuant to s 1050 of the Corporations Act 2001 (Cth). AFCA joined the Insurer to Mr Mitchell's complaint. It then proceeded to address Mr Mitchell's complaint in accordance with, or purportedly in accordance with, the complaint resolution processes in AFCA's published rules. Those processes included, relevantly, providing procedural fairness to the parties, providing the parties with an opportunity to make submissions, making a preliminary assessment, and, if the preliminary assessment was not accepted by one of the parties, proceeding to make a determination. 3 AFCA received submissions from the parties to Mr Mitchell's complaint, made a preliminary assessment which was adverse to Mr Mitchell, which he did not accept, and then, without hearing, requesting or entertaining any further substantive submissions from the parties, made a final determination which was adverse to the Insurer and the Trustee. That determination effectively proceeded on the basis that Mr Mitchell had insurance cover under the Policy and that the decision by the Trustee and the Insurer not to accept his claim was in breach of the duty utmost good faith implied in the Policy by s 13 if the Insurance Contracts Act 1984 (Cth). The potential application of the duty of utmost good faith had not been raised in any of the parties' submissions or identified by AFCA as an issue. AFCA also dealt with another issue relating to Mr Mitchell's eligibility for cover in a way which had not been referred to in the submissions or previously identified as an issue by AFCA. 4 The Insurer appealed to this Court from AFCA's determination of Mr Mitchell's complaint. The appeal raised several questions of law. Those questions of law included, in short summary: whether AFCA denied the Insurer procedural fairness in making the determination; whether, in either finding or assuming that Mr Mitchell had cover under the Policy, AFCA erred in law in misconstruing the terms of the Policy; and whether AFCA erred in law in finding that s 13 of the Insurance Contracts Act relevantly applied in the circumstances. The main issue for resolution is whether AFCA erred in any of the ways contended by the Insurer. The Trustee (now N.M. Superannuation Pty Ltd) and AFCA filed submitting notices.

Factual background 5 The factual background was largely not in dispute.

Mr Mitchell's prior employment and compensation claim 6 Mr Mitchell started working full time with the Department of Defence in October 2006. 7 The Department dismissed Mr Mitchell from his employment on 14 October 2009 because he engaged in threatening behaviour in breach of the Department's Code of Conduct. 8 In December 2009, Mr Mitchell lodged a worker's compensation claim under the Safety, Rehabilitation and Compensation Act 1988 (Cth). He claimed that he had suffered a psychiatric injury in the course of his employment and subsequent dismissal. In April 2011, Comcare accepted that Mr Mitchell was suffering from an "adjustment disorder with anxious and depressed mood" and that Mr Mitchell's employment with the Department had aggravated or significantly contributed to that condition. Comcare therefore accepted that it was liable to make compensation payments to Mr Mitchell pursuant to the Compensation Act. 9 In January 2016, following an updated medical review in respect of Mr Mitchell's condition, Comcare determined that Mr Mitchell was no longer entitled to compensation under the Compensation Act. His payments under the Compensation Act were accordingly stopped. Mr Mitchell sought an internal review of Comcare's determination. When Comcare affirmed its initial determination, Mr Mitchell lodged an application for review of the determination in the Administrative Appeals Tribunal. That application was lodged in March 2016.

Mr Mitchell's Employment with Nova 10 In the meantime, Mr Mitchell was offered employment with Nova. His employment commended on 23 May 2016. 11 Mr Mitchell's employment contract with Nova stated that employer funded superannuation contributions would be made into a fund nominated by Mr Mitchell or, if he did not nominate a fund, into Nova's default superannuation fund. 12 The employment contract also stated that Mr Mitchell's continuing employment with Nova was subject to him "continuing to satisfy the Australian Department of Defence Security requirements whenever required". On 24 May 2016, Nova requested the Department to reactivate Mr Mitchell's security clearance. On 14 June 2016, however, the Department advised Mr Mitchell that Nova's request for reactivation had been rejected. That was because his last security clearance process had been conducted in 2003 and he had not held any level of security clearance since October 2009. That period was said to exceed the time allowed for a security clearance to be reactivated without a "full vetting process" being conducted. The Department advised Mr Mitchell that it had sent him a link to enable him to complete the paperwork for a security assessment. 13 Mr Mitchell did not complete the paperwork for a security assessment. Instead, he took sick leave on 15 and 16 June and, on 17 June 2016, he sent a letter to Nova which indicated that he would not be returning to work. In that letter, he claimed that the Department was "interfering" with his "re-employment with Nova Systems" by "blocking" his security clearance and that he therefore would not be able to obtain the clearance. He also claimed that his inability to get a security clearance had aggravated his "condition" to the point that he was unfit for work. 14 Mr Mitchell's letter to Nova amounted to a resignation. The period during which Mr Mitchell was employed with Nova was accordingly just over three weeks: 23 May 2016 to 17 June 2016.

Mr Mitchell's membership of the Plan 15 Nova was a relevant participating employer under the Plan, which was under the umbrella of the Trust. As noted earlier, the Trustee was the trustee of the Trust. 16 During the brief period that he was employed by Nova, Mr Mitchell did not nominate his own superannuation fund in accordance with his contract of employment with Nova. As a result, "Employer funded superannuation payments" referrable to Mr Mitchell were to be made into Nova's default superannuation fund. The Plan was Nova's default superannuation fund. The requirement for Nova to make superannuation payments into the Plan on Mr Mitchell's behalf no doubt prompted it, in due course, to apply for Mr Mitchell to become a member of the Plan. Nova did not, however, submit that application until 26 July 2016, over a month after Mr Mitchell's employment with Nova had ceased. 17 On 27 July 2016, the day after Nova had applied for Mr Mitchell to become a member of the Plan, the Trustee sent a "welcome" letter to Mr Mitchell. That letter indicated that the Trustee had "set up" Mr Mitchell's superannuation account "as of 23 May 2016", that date being the date that Mr Mitchell's employment with Nova had commenced. The Trustee's letter was accompanied by information about the Plan. That information included information concerning the insurance cover that was "automatically" provided as part of the Plan if the eligibility requirements were met by the member.

The Tribunal's decision in respect of Mr Mitchell's review application 18 On 4 November 2016, the Tribunal handed down its decision in respect of Mr Mitchell's application for review of Comcare's determination that he was no longer entitled to compensation under the Compensation Act. The Tribunal set aside that decision and in substitution decided that Mr Mitchell continued to be entitled to compensation from Comcare in accordance with Comcare's original determination made in 2011. 19 Following the Tribunal's decision, Comcare wrote to Mr Mitchell and provided him with the details of the periods of "compensation leave and incapacity payments (compensation amounts)" that Comcare had determined he was entitled to under the Compensation Act. The compensation periods commenced on 27 January 2016 and ended on 17 May 2017. For the period 25 April 2016 to 30 June 2016 - which covered the brief period that Mr Mitchell was employed at Nova - Comcare had determined that Mr Mitchell was entitled to receive compensation totalling $14,338.28. Comcare's letter also advised that Mr Mitchell was required to advise Comcare of all employment undertaken by him and any superannuation payments he had received.

Mr Mitchell's claim under the Policy and its rejection 20 On 3 June 2018, almost 18 months after the Tribunal's decision, Mr Mitchell lodged a claim under the Policy for a total and permanent disablement benefit and temporary salary continuance. Mr Mitchell's claim form stated that he suffered from a "Mixed Adjustment Disorder with Severe Anxiety and Depression". The form included details of Mr Mitchell's employment with the Department and Nova, but noted that he was no longer able to work. 21 On 20 November 2019, the Insurer wrote to Mr Mitchell and advised him that he was not entitled to receive any payment of benefits under the Policy. The letter stated that for him to be entitled to the payment of benefits under the Policy it was necessary for him to be entitled to "Automatic Cover" under the Policy. The letter noted that the terms of the policy were such that Automatic Cover only applied to employees who, among other things, were "At Work" on the date that the application for cover was made. The definition of "At Work" included that the employee was not "in receipt of or entitled to claim income support benefits from any source". The letter went on to refer to the Tribunal's decision that Mr Mitchell continued to be entitled to receive compensation from Comcare. It noted, in that context, that following the Tribunal's decision Comcare had "retrospectively" paid Mr Mitchell benefits for the period 23 May 2016 to 17 June 2016. The letter concluded: Based on this information at the time you joined the [Plan], you were entitled to claim on your ComCare benefits and you were in receipt of funds during that period, albeit retrospectively meaning that you did not meet the policy definition of "At Work", meaning that you were not entitled to Automatic Cover under the policy. 22 The letter noted Mr Mitchell's rights and options in respect of an internal review and the complaints resolution process with AFCA.

Mr Mitchell's complaint to AFCA 23 Mr Mitchell requested an internal review of the Insurer's decision to reject his claim. On 23 October 2020, an "AMP Customer Advocate" confirmed the Insurer's initial decision that Mr Mitchell did not meet the eligibility criteria for Automatic Cover under the Policy. The advocate's reasoning was essentially the same as the reasoning that underlay the original decision. The advocate found that the Tribunal's decision had confirmed that, at the time Mr Mitchell joined the Plan, he was entitled to claim income support from Comcare and therefore did not meet the definition of "At Work" in the Policy. Mr Mitchell was therefore not eligible for automatic cover under the Policy. 24 On 6 November 2020, Mr Mitchell submitted a complaint to AFCA. 25 AFCA's conduct of the complaint process and its determination are dealt with in detail later in these reasons. It suffices at this point to note that AFCA determined the complaint favourably to Mr Mitchell and adversely to the Insurer and the Trustee. 26 Before addressing AFCA's determination, it is useful to set out the relevant terms of the Policy.

The terms of the Policy 27 The terms of the Policy are set out in an Amending Deed between the Trustee and the Insurer which was executed on 28 April 2015. 28 Clause 1.1(b)(i) of the Deed provides that Schedule 1 to the Deed contains the terms which apply when the Insurer has agreed to provide insurance cover to employees who have been nominated for insurance cover by a participating employer and the Trustee. Nova was a participating employer as defined in Schedule 1. 29 Clause 1.2 of the Deed provides that insurance cover in respect of each person nominated by the Trustee pursuant to clause 1.1(b) commences on the date nominated by the Insurer in accordance with the Policy on the terms set out in Schedule 1. 30 Clause 1.1 of Schedule 1 provides, in effect, that the Insurer and the Trustee will agree on the types of insurance cover that will be available to "Eligible Persons". The types of cover include total and permanent disablement cover (TPD Cover) and temporary salary continuance cover (TSC Cover). An Eligible Person is defined in clause 11 of Schedule 1 as being "a person or groups of persons in an Employer Plan or category within an Employer Plan nominated by the Trustee that [the Insurer] may agree to provide [insurance cover] from time to time under this Schedule 1". The Plan was an Employer Plan as defined. 31 Clause 1.4(a)(vi)(A) and (b) of Schedule 1 provides, in effect, that the Trustee must advise the Insurer of information material to the granting of Automatic Cover under clause 2.1 of Schedule 1 and that, after considering that information, the Insurer will decide whether, and if so, on what terms it will issue insurance cover in respect of an eligible person. 32 Clauses 2 and 3 of Schedule 1 define four types of insurance cover that may be available under the Policy. Clause 2 deals with Automatic Cover. Clause 3 deals with Default Cover, Additional Cover and Interim Cover. In short summary, a person may, under the terms of the Policy, be entitled to Automatic Cover without having to go through any underwriting processes. If a person is not eligible for Automatic Cover they may be able to obtain Default Cover (and Additional Cover and Interim Cover), but that generally requires an underwriting process. 33 The critical question in Mr Mitchell's case was, and is, whether he was eligible for, or entitled to, Automatic Cover. 34 Clause 2.1(a) and (b) of Schedule 1 provide, in effect, that Automatic Cover is the amount of insurance cover, if any, that the Insurer will issue in respect of employees without evidence of health and that Automatic Cover may be offered in respect of employees for any of the types of insurance cover nominated under clause 1.1 "provided that the terms on which [the Insurer] offers the Automatic Cover are satisfied". Clause 2.1(c) of Schedule 1 provides that if Automatic Cover applies, the Insurer will automatically cover employees who are nominated for insurance cover in accordance with clauses 2.1 and 2.2 of Schedule 1. 35 Clause 2.2 of Schedule 1 is the critical clause for the purposes of this matter. It provides as follows: 2.2 When Automatic Cover applies If Automatic Cover applies for an Employer Plan or a category in an Employer Plan, it will apply to all eligible Employees of the Employer Plan or category: (a) who applies, or for whom the Trustee applies, for Default Cover within 3 months of first becoming eligible for Cover; (b) who are At Work or were absent for reasons other than illness or injury on the date the application was made in accordance with this clause; (c) whose Participating Employer has not previously made Superannuation Guarantee contributions to another superannuation arrangement in respect of the Employee; and (d) who satisfies any other criteria agreed between AMP and the Trustee from time to time. 36 Paragraphs (a) and (b) of clause 2.2 are the paragraphs which are of particular relevance in this matter. By virtue of those paragraphs, Automatic Cover will only apply in respect of eligible employees who applied, or for whom the Trustee applied, for default cover within three months of first becoming eligible for cover, and who, relevantly were "At Work" on the date that that application was made. 37 The definition of "At Work", which is of particular importance in this matter, is in clause 11 and is relevantly in the following terms: At Work means: (a) in respect of an Employee, in the service of the Participating Employer, actively performing all that Employee's normal duties of his or her usual occupation during that Employee's normal work hours and not being in receipt of or entitled to claim income support benefits from any source including, without limitation, Workers' Compensation, statutory transport accident benefits and disability income benefits; and (b) …. 38 Clause 2.3 of Schedule 1 provides, relevantly, that employees of a participating employer who are eligible for Automatic Cover as identified in clause 2.2 will be eligible for Automatic Cover "provided all of the criteria set by [the Insurer] for eligibility for Automatic Cover are met and continue to be met". 39 Clause 7.3 of Schedule 1 relevantly provides that the Insurer will pay a TPD benefit on the total and permanent disablement of "an Insured person with TPD Cover". Clause 11 of Schedule 1 relevant defines "Insured person" as an eligible person who has insurance cover under Schedule 1 and that cover has not ceased. 40 As can be seen, the Insurer was only liable to pay Mr Mitchell a TPD benefit if he was an "Insured Person" because he was an eligible person who had insurance cover under Schedule 1. Mr Mitchell was only an eligible person with insurance cover if he met the eligibility criteria for Automatic Cover under clause 2.2 of Schedule 1. Mr Mitchell only met the eligibility criteria if, relevantly, he was "At Work", as defined, on the date that an application for Default Cover was made by him or the Trustee on his behalf.

The AFCA scheme - legislative framework 41 Subsection 1050(1) of the Corporations Act provides that the Minister may, by notifiable instrument, authorise an external dispute resolution scheme if the Minister is satisfied that the mandatory requirements under s 1051 will be met. The Minister has authorised an external dispute resolution scheme pursuant to s 1050(1). That scheme, which is operated by AFCA, is known as the AFCA scheme: see the definitions of AFCA and AFCA scheme in s 761A of the Corporations Act. 42 Section 1053(1)(a)(i) of the Corporations Act provides that a person may, subject to s 1056, make a complaint relating to superannuation under the AFCA scheme only if, relevantly, the complaint is a complaint that the trustee of a regulated superannuation fund has made a decision relating to a particular member or a particular former member of a regulated superannuation fund that is or was unfair or unreasonable. 43 Subsection 1055(1) of the Corporations Act relevantly provides that in making a determination of a superannuation complaint, AFCA has all the powers, obligations and discretions that are conferred on the trustee or insurer who made a decision to which the compliant relates. Subsection 1055(2) relevantly provides that AFCA must affirm a decision if it is satisfied that the decision, in its operation in relation to the complainant was fair and reasonable in all the circumstances. Subsections 1055(4) and (6) relevantly provide that if AFCA is satisfied that a decision, in its operation in relation to the complainant, is unfair or unreasonable, or both, it may set aside the decision and substitute a decision for the decision so set aside, or remit the decision to the person who made it for reconsideration in accordance with any directions or recommendations of AFCA. 44 Subsection 1055(7) relevantly provides as follows: AFCA must not make a determination of a superannuation complaint that would be contrary to: (a) law; or (b) …, or (c) subject to paragraph (6)(d), the terms and conditions of [a] … contract of insurance … to which the complaint relates. 45 Subsections 1057(1) and (3) provide 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 and the Federal Court is to hear and determine the appeal and may make such order as it thinks appropriate. The Court's orders may include an order setting aside the determination and an order remitting the matter to be determined again by AFCA in accordance with the directions of the Court: s 1057(4) of the Corporations Act. 46 AFCA has published Complaint Resolution Scheme Rules which detail how it conducts and resolves complaints made to it pursuant to s 1053 of the Corporations Act. The Rules are said to form part of a contract between AFCA and Financial Firms and complainants: r A.1.2. The expression "Financial Firms" includes, where the complaint is a superannuation complaint, a person whose decision is referred to in s 1053 of the Corporations Act. 47 Rule A.2.1(c)(ii) provides that AFCA will consider complaints submitted to it in a manner which provides procedural fairness to the parties. 48 Rule A.8.1 relevantly provides that AFCA will generally try to resolve a complaint by informal methods, including by conducting a conciliation conference and providing a "preliminary assessment" in accordance with r A.12. Rule A.12.1 provides as follows: After collecting relevant information and obtaining submissions from the parties to a complaint, AFCA may choose to provide the parties with a preliminary assessment of the complaint. AFCA's preliminary assessment will set out reasons for any conclusions made about the merits of the complaint and will provide a recommendation as to how the complaint should be resolved. 49 Rule A.12.2 provides that AFCA must inform the parties to the complaint that they can either accept the preliminary assessment or request a determination. Rule A.12.3 provides that the complaint must proceed to a determination if, among other things, either a complainant or a Financial Firm requests that the complaint proceeds to a determination and provides reasons for disagreeing with the preliminary assessment within the time specified by AFCA. 50 Rules 14.1 and 14.2 provide that, when determining a superannuation complaint, the AFCA decision maker must, among other things, apply the approach specified in s 1055 of the Corporations Act and do what the decision maker considers is fair in all the circumstances having regard to legal principles. 51 Rule A.15.3 provides, among other things, that a determination by an AFCA decision maker in respect of a complaint (other than a type of complaint that is not presently relevant) is "final, and is binding upon the parties if accepted by the Complainant within 30 days of the Complainant's receipt of the Determination". 52 In QSuper Board v Australian Financial Complaints Authority Ltd and Another (2020) 276 FCR 97; [2020] FCAFC 55, the Full Court observed (at [155]) that AFCA's "power to intervene" was concerned with "whether there existed any unfairness or unreasonableness" in the decision which was the subject of the complaint "in its operation in relation to the complainant" and that AFCA "is not concerned with the legality or veracity of the exercise of power by the trustee (or, in some cases, by the insurer), but only with the manner in which the decision operates". The Full Court went on to state (at [157]): … AFCA may make decisions or form opinions as to the application of various statutory provisions and the rights of the parties inter se under the fund's trust deed. But such decisions or opinions are merely steps in the determination of whether the operation of the trustee's decision is fair and reasonable. Alternatively put, AFCA's opinions about those matters are "a step in arriving at the ultimate conclusions … intended to regulate the future rights of the parties". (Citations omitted) 53 In Sharma v H.E.S.T. Australia Ltd (2022) 159 ACSR 635; [2022] FCA 536 at [35], McElwaine J referred to a party's right of appeal to this Court on a question of law pursuant to s 1057 of the Corporations Act and stated: It follows that if in determining a superannuation complaint, AFCA materially misdirects itself as to the legal rights or obligations of the parties in order to found the statutorily required state of satisfaction (that a decision in its operation in relation to the complainant was fair and reasonable in all of the circumstances), the determination is reviewable for legal error: Craig v South Australia (1995) 184 CLR 169 at 179. 54 The first instance decision in Sharma was overturned on appeal (AIA Australia Ltd v Sharma (2023) 408 ALR 490; [2023] FCAFC 42), though no issue was taken in respect of McElwaine J's statement of principle at [35].

AFCA'S conduct of the complaint process 55 Following is a short summary of the significant steps in AFCA's complaint process in Mr Mitchell's case. 56 Mr Mitchell submitted his complaint to AFCA on 6 November 2020. 57 On 19 January 2021, AFCA joined the Insurer to the complaint pursuant to s 1054(1) of the Corporations Act. 58 On 21 January 2021, AFCA sent letters to both Mr Mitchell's legal adviser and the Insurer. In those letters, AFCA set out its understanding of the complaint and indicted that the issues it would investigate were whether Mr Michell met the "At Work" definition in the Policy and whether the Insurer was entitled to decline the claim. The letters also requested information or submissions from Mr Mitchell and the Insurer. 59 On 11 February 2021, the Insurer provided information and submissions in accordance with AFCA's request. The Insurer's submissions relevantly focussed on the basis upon which it was contended that Mr Mitchell did not meet the "At Work" definition. At this point in time, the submission focussed on the contention that, as a result of Mr Mitchell's successful review application in the Tribunal, he was in receipt of, or entitled to, income support benefits or compensation on the date that the application for cover was made on Mr Mitchell's behalf. 60 On 25 February 2021, Mr Mitchell's solicitor provided responses to AFCA's request for information. In answer to AFCA's question concerning the basis upon which Mr Mitchell met the "At Work" definition, Mr Mitchell's solicitor stated: "[h]e was working / employed earning salary equivalent to pre injury and not entitled to compensation over that period". 61 On 4 March 2021, Mr Mitchell's solicitor sent an email to AFCA which included further submissions in support of the contention that Mr Mitchell met the "At Work" definition. The submissions included the following: Additionally the Applicant submits he was not entitled to Workers Compensation for the period of full time employment with NOVA from 23/5/2016 - 17/6/2016 as he was fit for and performing full time employment in his pre injury position but with NOVA. Section 19(2) Safety Rehabilitation and Compensation Act 1988 provides the formula that entitlement is determined by deducting pre injury Work Capacity earnings from current Work Capacity. The Applicant by engaging in the same position has no loss of Work Capacity under Section 19(2) and is not entitled over that period to claim Compensation benefits. The Applicant was not entitled to "Income Support" by way of Workers Compensation over the period employed at NOVA. He was subsequently entitled to claim for periods under Section 19 in which he as incapacitated. Comcare was aware of the employment / income from NOVA. The Decision of the AAT November 2016 was in relation to whether the Applicant continued to suffer a Compensable injury and was not a Decision in relation to entitlement benefits flowing from a Compensable injury. Comcare requested details of employment / income subsequently and made payments based on entitlements. 62 On 4 March 2021, AFCA conducted a conciliation conference by telephone with the parties. The complaint was not resolved at the conference. On 5 March 2021, AFCA advised the parties that it would proceed with the "next step", which involved the provision of a preliminary assessment. 63 On 8 June 2021, AFCA advised the parties that it had made a "recommendation" in relation to the complaint. The recommendation included the following statements under the heading "[i]ssues and key findings": Does the complainant meet the 'at work' definition in the insurance policy? No. To satisfy the 'at work' definition, the complainant must be actively performing all his usual occupation including normal working hours without limitations and not be in receipt of or entitled to WC payments. The complainant received WC payments which were backdated to the 27 January 2016. Given this, he does not meet the 'at work' definition which is detailed in the relevant insurance policy dated 1 January 2015. Was the decision to decline the claim fair and reasonable? Yes. The complainant did not meet the policy's 'at work' definition. This means, he was not eligible for cover and did not hold cover when he lodged his TPD claim. As such, the insurer was entitled to decline the claim. 64 AFCA's recommendation was therefore "in favour of the trustee and the insurer" and that "[n]o further actions is required". 65 AFCA's reasons for that recommendation included the following: 2.1 Does the complainant meet the 'at work' definition in the insurance policy? No. To satisfy the 'at work' definition, the complainant must be actively performing all his usual occupation including normal working hours without limitations and not be in receipt of or entitled to WC payments. The complainant received workers compensation payments which were backdated to the 27 January 2016. Given this, he does not meet the 'at work' definition which is detailed in the relevant insurance policy dated January 2015. The 'at work' definition must be met for a member to be eligible for cover On 23 May 2016, the complainant was provided with automatic TPD cover when he joined the fund. However, this cover was subject to him meeting the 'at work' definition which is defined in the relevant insurance policy dated 1 January 2015. This means, if the complainant does not meet the 'at work' definition when he joined the fund, he would not be eligible for TPD cover. The complainant does not meet the 'at work' definition To satisfy the 'at work' definition, the complainant must be actively performing his normal duties of his usual occupation including normal working hours without limitations and not be in receipt of or entitled to WC payments. The complainant was receiving WC payments for a psychological injury he suffered on 11 July 2009. His condition was accepted on the 9 April 2011. These payments ceased on 27 January 2016 as it was deemed his condition was no longer related to his employment. The complainant returned to work on the 23 May 2016 and resigned on the 17 June 2016. During this period, he received an income. The complainant's solicitor asked for the decision to decline the complainant's WC payments to be reviewed. The review occurred, and the decision was affirmed on the 2 March 2016. The complainant's solicitor then lodged an appeal with the tribunal. On the 4 November 2016, the tribunal determined the complainant continued to suffer from his injury and he was entitled to ongoing WC payments from 27 January 2016. The complainant was not in receipt of WC payments when he was employed. However, between 23 May 2016 and 17 June 2016, he was entitled to claim WC. This was evidenced when the tribunal determined the complainant was entitled to ongoing WC payments from 27 January 2016 (when they were stopped). I acknowledge the complainant's solicitor says the complainant was not entitled to WC payment for the period he was employed in 2016. Additionally, I acknowledge the complainant's solicitor says the tribunal made an error by paying the complainant between 23 May 2016 to 17 June 2016. While I acknowledge the complainant's solicitor's position, I am not persuaded the above is evidence the complainant meets the 'at work definition'. This is because although the complainant worked, he was entitled to WC payments from 27 January 2016 as the tribunal deemed he continued to suffer from his injury. Additionally, no evidence has been provided showing the tribunals decision has been overturned/changed. As the 'at work' definition not only refers to complainant receiving but also if he is entitled to WC payments, I am satisfied he does not meet the 'at work' definition. This means, the complainant was not eligible for TPD cover. 2.2 Was the decision to decline the claim fair and reasonable? Yes. The complainant did not meet the policy's 'at work' definition. This means, he was not eligible for cover and did not hold cover when he lodged his TPD claim. As such, the insurer was entitled to decline the claim. The decision to decline the application was fair and reasonable Based on the available information, I am satisfied the trustee and insurer's decision to decline the complainant's TPD claim is fair and reasonable. This is because the complainant did not meet the 'at work' definition when he joined the fund and was not eligible for TPD cover. This means, the complainant did not hold cover when he lodged his TPD claim. 66 On 16 June 2021, Mr Mitchell's solicitor advised AFCA by letter that Mr Mitchell did not accept AFCA's recommendation and requested AFCA to issue a determination. The letter repeated the submission that Mr Mitchell met the "At Work" definition because he had "returned to full time pre-injury duties [at Nova] and hence, was not entitled to be compensated from 23 May 2016 for the period he was in receipt of income or to claim Workers Compensation". 67 On 21 June 2021, AFCA wrote to both Mr Mitchell's solicitor and the Insurer and advised that, in light of Mr Mitchell's rejection of AFCA's recommendation, AFCA would proceed to determine the complaint. AFCA's letters requested Mr Mitchell and the Insurer to provide any further information or submissions by 8 July 2021. Neither party provided any further submissions prior to 8 July 2021. 68 Nothing occurred for a number of months. Then, on 10 January 2022, AFCA sent an email to the Insurer requesting a copy of the Policy. The Insurer provided AFCA with a copy of the Policy on 12 January 2022. AFCA then sent a copy of the Policy to Mr Mitchell's solicitor and invited him to make any submissions he wanted to make concerning the Policy. On 17 January 2022, Mr Mitchell's solicitor sent AFCA an email advising that he did not wish to make any further submissions concerning the Policy. That email also attached a copy of a decision of the Tribunal which had been published on 17 September 2021 and asserted that the decision indicated that Mr Mitchell "is not entitled to Workers Compensation in any event". 69 It would appear that AFCA contacted the Trustee on 17 January 2022 and requested additional "comments and documents" concerning the question whether Mr Mitchell satisfied the "first part" of the "At Work" definition - that is, the requirement that Mr Mitchell was "in the services of the participating employer, actively performing all the employee's normal duties of his usual occupation during work hours". The request did not indicate at what point in time Mr Mitchell was required to satisfy that requirement. 70 The Trustee responded to AFCA's request by letter dated 21 January 2022. In that letter, the Trustee submitted that Mr Mitchell did not meet the first part of the "At Work" definition because, while he was employed at Nova during the period 23 May 2016 to 17 June 2016, the fact that he had not satisfied the Department's "security requirements, which was a condition of his employment, [meant] he would have been prevented from performing all the 'normal duties of his usual occupation during his normal work hours'". The Trustee's letter also reiterated its submission that Mr Mitchell also did not meet the second part of the "At Work" definition because he was entitled to receive Comcare benefits during the period 23 May 2016 to 17 June 2016. The Trustee's letter also stated that the Tribunal decision that Mr Mitchell's solicitor had forwarded to AFCA on 17 January 2022 was irrelevant. 71 On 25 January 2022, AFCA sent an email to Mr Mitchell's solicitor which attached a copy of the Trustee's submissions and requested that Mr Mitchell provide submissions concerning the question whether he met the first part of the "At Work" definition. Mr Mitchell's solicitor responded to that request by email dated 31 January 2022 in which he indicated that Mr Mitchell's instructions were that while employed by Nova he performed his "normal duties with that employer as a System Engineer". 72 On 31 January 2022, the Insurer wrote to AFCA and provided its response to the correspondence which had flowed between AFCA, the Trustee and Mr Mitchell's solicitor during January 2022. The letter stated, in short, that: the Tribunal's decision in 2021 which Mr Mitchell's solicitor had sent to AFCA was irrelevant; it was "arguable" that Mr Mitchell did not satisfy the first part of the "At Work" definition for the reasons given by the Trustee in its letter dated 21 January 2022; and that Mr Mitchell did not meet the second part of the "At Work" definition for the reasons previously given. 73 It should be emphasised that up to this point none of the correspondence which had flowed between AFCA and the parties to the complaint had adverted to the issue concerning the date on which Mr Mitchell was required to satisfy the "At Work" definition. AFCA and the parties either did not advert to that issue at all, or appeared to assume that Mr Mitchell was required to satisfy the "At Work" definition during the period 23 May 2016 to 17 June 2016 when he was employed by Nova. Some of the correspondence from representatives of the Trustee and the Insurer was also somewhat poorly worded and ambiguous, in the sense that it referred, on the one hand, to the insurance benefits or cover which were provided as part of Mr Mitchell's superannuation plan, and yet, on the other hand, proceeded to contend that Mr Mitchell did not have insurance cover because he did not meet the "At Work" definition and therefore did not meet the eligibility requirements for Automatic Cover. 74 On 28 February 2022, AFCA twigged to the importance of the question concerning the date on which Mr Mitchell was required to meet the "At Work" definition. It sent an email to the Trustee and the Insurer which noted that clause 2.2(b) of the Policy required the "member" to be "at work" as defined "on the date the application for cover was made". AFCA indicated that it had not been provided with any evidence as to the date the application for cover was made and requested the Trustee and the Insurer to confirm the date the application for cover was made and provide all supporting evidence. 75 The Insurer replied to AFCA's email on 7 March 2022. It stated that it was unable to comment on when Nova notified the Trustee of Mr Mitchell's employment and noted that the question was "properly a matter for the Trustee to provide comment on". 76 The Trustee provided its response to AFCA's query by letter dated 7 March 2022. It stated, in short, that Nova submitted an application to the Trustee for Mr Mitchell to become a member of the Plan on 26 July 2016. It followed that the relevant "application" for the purposes of clause 2.2(b) of the Policy was made on 26 July 2022, after Mr Mitchell's employment with Nova had ceased. The Trustee submitted, on that basis, that Mr Mitchell was not relevantly "at work", as defined, on that date. 77 The previous correspondence between AFCA and the Trustee and the Insurer must be read in light of this, albeit somewhat last-minute, submission by the Trustee. It is clear that ultimately the Trustee's case was that Mr Mitchell did not have any insurance cover under the Policy, not only because he did not meet the second part of the "At Work" definition (receipt or entitlement to compensation), but also because he did not meet the first part of the "At Work" definition (in the service of the employer), on 26 July 2022 when the application for cover was made. 78 Mr Mitchell provided no submissions in respect of the issue concerning the date of the relevant application. AFCA did not request or receive any further submissions from any of the parties.

AFCA'S determination 79 AFCA made its determination in respect of Mr Mitchell's complaint on 16 March 2022. The determination was, in summary, that both the decision by the Insurer to decline Mr Mitchell's total and permanent disablement claim, and the Trustee's decision to agree with the Insurer's decision, were unfair and unreasonable. AFCA set aside those decisions and remitted them with certain directions. 80 The critical point to highlight at the outset concerning AFCA's reasons for arriving at that determination is that the reasons hinged on two findings that had not been the subject of any of the parties' submissions and had not been adverted to at all in any of the communications between AFCA and the parties or, perhaps more significantly, in AFCA's preliminary assessment or recommendation. 81 The first finding by AFCA was that it would be a breach of the Insurer's duty of utmost good faith to decline Mr Mitchell's claim because Nova did not apply for cover on his behalf until after he ceased employment with Nova. Mr Mitchell had not referred to the duty of utmost good faith in any of his submissions. Nor had AFCA ever identified that as an issue or potential issue for consideration in respect of the complaint. 82 The second finding was that Mr Mitchell was not entitled to Comcare payments during the period 23 May to 17 June 2016 because, when the formula in s 19(2) of the Compensation Act was applied to figures derived from Comcare's payment summary and one of Mr Mitchell's payslips from Nova, Comcare's "liability" to Mr Mitchell was nil. Mr Mitchell had not made any submission concerning any calculation pursuant to s 19(2) of the Compensation Act based on his payslip. Nor had AFCA ever identified that as an issue for consideration in respect of the complaint. 83 In relation to the first of those two findings, AFCA appeared to accept and proceed on the basis that no application for cover by, or on behalf of, Mr Mitchell was made, for the purposes of clause 2.2(b) of the Policy, until 26 July 2016. That was after Mr Mitchell had ceased employment with Nova. It followed that he did not meet the "At Work" definition in the policy and did not meet the eligibility criteria for Automatic Cover in clause 2.2(b) of the Policy. He was therefore not eligible for, or entitled to, Automatic Cover under the Policy. 84 AFCA found, however, that in declining Mr Mitchell's claim, the Insurer had not acted in accordance with the duty of good faith. AFCA's reasoning in that regard was as follows: The insurer has not acted in accordance with the duty of utmost good faith The trustee has provided information to show that it was not until 26 July 2016 (well after the complainant ceased employment with [Nova]) that [Nova] made an application to the trustee for the complainant to become a member of the plan. The insurer says the complainant was not 'at work' at the time of the application and therefore, did not satisfy clause 2.2 (b) of the policy. In my view, for the insurer to decline the claim because [Nova] did not make a prompt application for the complainant to join the fund, is a breach of the duty of utmost good faith. This is because the duty of utmost good faith applies to all aspects of the relationship between the insurer, the trustee and the complainant. Part II of the Insurance Contracts Act 1984 (Cth) implies the duty into the insurance policy. Although there is no definition of the duty in the legislation, the High Court of Australia in CGU v AMP [2007] HCA 36 has described the duty as a requirement to 'act, consistently with commercial standards of decency and fairness, with due regard to the interests of the insured.' It would not be acting with decency and fairness for the insurer to backdate the complainant's cover and premiums to 23 May 2016 but then later say the application for cover was not made until 23 July 2016 so he was ineligible because by then he ceased employment so could not have been at work. In these circumstances, it would be consistent with commercial standards of decency and fairness to treat the application as made around 23 May 2016. 85 In relation to the second finding, AFCA accepted that the Tribunal's decision in November 2016 reinstated Comcare's initial determination that it was liable for a compensable injury sustained by Mr Mitchell when he was employed at the Department. AFCA also accepted that, following the Tribunal's decision, Comcare paid workers compensation benefits to Mr Mitchell, including in respect of the period when he was employed at Nova. AFCA concluded, however, that Mr Mitchell was not in receipt of Comcare benefits during the period he was employed at Nova because the benefits were not actually paid until 23 November 2016. 86 AFCA also found that Mr Mitchell was not entitled to receive any Comcare benefits during the period that he was employed at Nova. That conclusion was based on AFCA's own calculation of the benefits that Comcare was liable to pay Mr Mitchell having regard to the formula in s 19(2) of the Compensation Act. AFCA concluded, based on its own calculations, that the payments Comcare made to Mr Mitchell in respect of the period he was employed by Nova were "erroneous". AFCA's reasoning in that regard was as follows: The complainant was not 'entitled to' Comcare benefits After the AAT determination in November 2016, Comcare paid the complainant benefits including for the period 23 May to 17 June 2016. This of itself does not mean the complainant did not satisfy the third part of the 'at work' test, because the relevant question for determination is whether he was 'entitled' to Comcare benefits. The AAT determination in November 2016 did no more than reinstate the Comcare determination of 8 April 2011. The Comcare determination of 8 April 2011 accepted liability for the complainant's 'compensable injury', but the entitlements associated with that liability are determined by reference to the Safety, Rehabilitation and Compensation Act 1988 (Compensation Act): see sections 3.3 and 3.5 of this determination. Section 19(2) of the Compensation Act says when Comcare is liable to make payments to an incapacitated employee in respect of a 'maximum rate compensation week'. Under section 19(2), Comcare is only liable to pay the employee an amount using the formula NWE - AE. NWE is the employee's normal weekly earnings before incapacity. AE is any amount the employee earns from employment during that week. The evidence provided includes a Comcare payment summary which indicates the complainant's NWE rate for the period from 25 April 2016 to 30 June 2016 was $1,467.09. The complainant's payslip from [Nova] shows for the period 16 June 2019 to 29 June 2019 the base rate was $2,769.21. Therefore, when the formula in the Compensation Act is applied for the weeks from 23 May 2016 to 17 June 2016, the resulting amount of Comcare liability is nil (and in fact, negative). Liability and entitlement are the inverse of one another. If Comcare was liable to pay nil in workers' compensation benefits for a period, it cannot be fairly said the complainant was entitled to claim workers' compensation benefits for that period. Therefore, I consider the payments made by Comcare for this period are properly characterised as erroneous. In the circumstances, I am satisfied on the evidence available and on the balance of probabilities, the complainant met the third element of the 'at work' definition in the policy. This is because he was not entitled to workers' compensation benefits while he was receiving his salary from [Nova]. 87 It should also be noted that AFCA was not persuaded by the Trustee's submission that Mr Mitchell did not meet the first part of the "At Work" definition because the fact that he had not obtained security clearance precluded him from performing his normal duties. AFCA reasoned that the provision of Mr Mitchell's employment contract which required security clearance "related to his 'continuing employment' only" and "did not, on its face, prevent [Mr Mitchell's] performance of his normal duties as a systems engineer". The Insurer did not take issue with that finding in this appeal. 88 Having made those findings, AFCA concluded that the "appropriate remedy" was to "set aside and remit the decisions" to the Trustee and the Insurer with three directions, being: first, if insurance premiums had been refunded to Mr Mitchell, the Trustee was to inform Mr Mitchell of the premiums payable for his default cover for the period 23 May 2016 to 17 June 2016 within 28 days of receipt of the determination; second, if insurance premiums were payable, Mr Mitchell was to pay the premiums to the Trustee within 28 days of receiving the Trustee's information and the Trustee was to promptly pay the premiums to the Insurer; and third, the Trustee and the Insurer were to assess Mr Mitchell's total and permanent disablement claim within a reasonable time on the basis the complainant met the eligibility criteria for a total and permanent disablement benefit.

Questions of law and appeal grounds and contentions 89 The Insurer's notice of appeal identified five errors of law that the Insurer contended were made by AFCA. The questions of law said to be raised by the appeal were, in essence, whether AFCA made those errors of law. 90 The first error of law was said to be that AFCA either found, or assumed, that Mr Mitchell was eligible for, or entitled to, Automatic Cover under the Policy in circumstances where, upon a proper construction of the terms of the Policy, Mr Mitchell was not eligible for cover on the uncontested or undisputed facts. The Insurer submitted that AFCA's application of s 13 of the Insurance Contracts Act must have been premised on the assumption, or finding, that Mr Mitchell was a third party beneficiary under the Policy. That assumption or finding was wrong in law because, once it was accepted that the application for cover by or on behalf of Mr Mitchell was not made until 26 July 2016, Mr Mitchell could not have met the eligibility criteria in clause 2.2(b) of the Policy. That was because, on any view, he was not "at work", as defined, on that day. 91 The second error of law was said to be that, in finding that s 13 of the Insurance Contracts Act applied and that the Insurer acted in breach of the duty of utmost good faith, AFCA denied the Insurer procedural fairness. That was said to be because, in the circumstances, AFCA did not give the Insurer any opportunity to adduce evidence, or make submissions, concerning the application or potential application of s 13 of the Insurance Contracts Act. 92 The third error of law was said to be that AFCA erred in law in finding that the Insurer owed Mr Mitchell a duty of utmost good faith by reason of s 13 of the Insurance Contracts Act. The Insurer submitted that it could only owe Mr Mitchell a duty of good faith pursuant to s 13 of the Insurance Contracts Act if he was a party to the Policy. In the Insurer's submission, Mr Mitchell was never a party to the Policy because he was never entitled to any cover under it. 93 The fourth error of law was said to be that AFCA denied the Insurer procedural fairness in finding that Comcare was not liable to pay workers compensation benefits to Mr Mitchell during the period he was employed at Nova. The Insurer submitted that it was never given an opportunity to adduce evidence, or make submissions, in respect of AFCA's calculation pursuant to s 19(2) of the Compensation Act which led it to conclude that Comcare was not liable to pay any workers compensation benefits to Mr Mitchell in respect of the period he was employed at Nova and that the payments that were made were made in error. 94 The fifth error of law was said to be that AFCA erred in law in finding that Mr Mitchell met the second part of the "At Work" definition because he was not in receipt of, or entitled to claim, workers compensation benefits from Comcare at the time the application for cover by, or on behalf of, Mr Mitchell was made on 26 July 2016. The Insurer submitted that the effect of the Tribunal's decision in November 2016 was that Mr Mitchell was in receipt or, or entitled to claim, benefits from Comcare on that day, and it was an error of law for AFCA to conclude otherwise.

Jurisdiction - questions of law or questions of fact? 95 It is necessary to first address an issue raised by Mr Mitchell concerning the Court's jurisdiction to entertain the appeal. As noted earlier, s 1057(1) of the Corporations Act provides that a party to a superannuation complaint may appeal to this Court from AFCA's determination of the complaint, but only on a question of law. Mr Mitchell contended that none of the questions specified in the Insurer's notice of appeal involved questions of law. In his submission, the questions were all questions of fact and the Court was therefore not "seized of jurisdiction". 96 That contention may be dealt with shortly. Where the Court has jurisdiction to hear an appeal from a tribunal or other decision-maker on a question of law, the Court has jurisdiction to decide whether or not the appeal is on a question of law and that question is to be approached as a matter of substance rather than form: Haritos v Commissioner of Taxation (2015) 233 FCR 315; [2015] FCAFC 92 at [62]. 97 Considered as a question of substance rather than form, each of the questions raised by the Insurer in this appeal are, or involve, questions of law. 98 Questions 2 and 4 raise the question whether AFCA denied the Insurer procedural fairness. A denial of procedural fairness is an error of law and an appeal from a tribunal or other decision-maker on the ground that the applicant was denied procedural fairness raises a question of law: Clements v Independent Indigenous Advisory Committee (2003) 131 FCR 28; [2003] FCAFC 28 at [8]; Haritos at [202]. 99 Questions 1, 3 and 5 each raise, among other things, the question whether AFCA misconstrued the Policy, or reached a conclusion which was inconsistent with the terms of the Policy properly construed. The misconstruction of an insurance policy, or the making of a finding which is inconsistent with the terms of an insurance policy, is an error of law, and an appeal from a tribunal or other decision maker which alleges such an error raises a question of law: see for example Lykogiannis v Retail Employees Superannuation Pty Ltd (2000) 97 FCR 361; [2000] FCA 327 at [42]; Host-Plus (Qld) Pty Limited v Kelley [2009] FCA 1504 at [25] and AIA Australia Ltd v Lancaster [2017] FCA 962 at [42]. Questions 1 and 3 also involve the contention that AFCA misconstrued or misapplied s 13 of the Insurance Contracts Act. That contention plainly raises a question of law. 100 It follows that there is no merit in Mr Mitchell's contention that the questions raised by the Insurer in this appeal are not questions of law and that the Court has no jurisdiction to hear the appeal.

Questions 2 & 4 - did AFCA deny the Trustee and the Insurer procedural fairness? 101 It is appropriate to first address questions 2 and 4. Those questions involve the contention that AFCA denied the Insurer procedural fairness. If that contention is made out, the complaint must be set aside and remitted to AFCA for redetermination. 102 As noted earlier, AFCA's own rules require it to consider complaints in a manner which provides procedural fairness to the parties. The requirement that AFCA provide procedural fairness to the parties to a complaint would in any event be readily implied given the nature of AFCA's complaint resolution processes and the determinations AFCA may make, particularly in respect of superannuation complaints. Mr Mitchell did not contend that AFCA was not obliged to provide procedural fairness to the parties to his complaint. His submission, in substance, was that AFCA had provided procedural fairness to the Trustee and the Insurer. 103 The relevant principles in respect of procedural fairness are well-established and may be shortly stated. In SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 228 CLR 152: [2006] HCA 63, the High Court (at [32]) approved the following statement made by the Full Court in Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd (1994) 49 FCR 576 at 590-591; [1994] FCA 293: It is a fundamental principle that where the rules of procedural fairness apply to a decision-making process, the party liable to be directly affected by the decision is to be given the opportunity of being heard. That would ordinarily require the party affected to be given the opportunity of ascertaining the relevant issues and to be informed of the nature and content of adverse material. (Citation omitted) 104 The Full Court in Alphaone also stated as follows (at 591-592): Where the exercise of a statutory power attracts the requirement for procedural fairness, a person likely to be affected by the decision is entitled to put information and submissions to the decision-maker in support of an outcome that supports his or her interests. That entitlement extends to the right to rebut or qualify by further information, and comment by way of submission, upon adverse material from other sources which is put before the decision-maker. It also extends to require the decision-maker to identify to the person affected any issue critical to the decision which is not apparent from its nature or the terms of the statute under which it is made. The decision-maker is required to advise of any adverse conclusion which has been arrived at which would not obviously be open on the known material. Subject to these qualifications however, a decision-maker is not obliged to expose his or her mental processes or provisional views to comment before making the decision in question. 105 That passage from Alphaone was also referred to with apparent approval in SZBEL (at [29]), though the High Court observed (at [31]) that "it is far from clear that the two categories that are identified (conclusions not obviously open on the known material, and mental processes of decision-making) encompass all possible kinds of case that may fall for consideration". 106 Turning then to question 2, there could be no doubt that AFCA's finding that s 13 of the Insurance Contracts Act applied to the circumstances of Mr Mitchell's complaint was a critical finding in respect of AFCA's determination of the complaint. AFCA found, in effect, that the application of that provision enabled or entitled it to treat the application for insurance cover that was made on Mr Mitchell's behalf as having been made on 23 May 2016, whereas it had in fact been made on 26 July 2016. That was critical to AFCA's finding that Mr Mitchell was eligible for, and entitled to, Automatic Cover under the Policy. 107 The fundamental difficulty for AFCA and Mr Mitchell is that Mr Mitchell's complaint and submissions made no reference at all to the application or potential application of s 13 of the Insurance Contracts Act. Moreover, AFCA never identified to the Insurer or Trustee that the application of that provision was an issue which may be important to its determination. Nor could it possibly be said that the issue concerning the potential application of s 13 of the Insurance Contracts Act to the complaint was apparent from the nature of the complaint. AFCA said nothing whatsoever about the application of s 13 of the Insurance Contracts Act in its preliminary assessment and recommendation, or in any of its communications with the parties. 108 AFCA's reliance on s 13 of the Insurance Contracts Act in those circumstances was fundamentally unfair and constituted a denial of procedural fairness. Mr Mitchell's submission that AFCA was not required to identify the issue concerning the application of s 13 of the Insurance Contracts Act because it comprised nothing more than AFCA's "mental processes or provisional views" has no merit. The application of s 13 of the Insurance Contracts Act was not merely a mental process or provisional view on the part of AFCA. It turned out to be a critical issue in the determination of the complaint. Procedural fairness required AFCA to identify that critical issue and give the parties, including the Insurer, an opportunity to be heard in relation to it. 109 There could be no doubt whatsoever that, had the Insurer been put on notice by AFCA that the potential application of s 13 of the Insurance Contracts Act was a critical issue in respect of the determination of the complaint, the Insurer could, and would, have made submissions concerning that issue. Those submissions were likely to include the submission that was made by the Insurer in this appeal in respect of questions 1 and 3, namely that s 13 of the Insurance Contracts Act could not apply in the circumstances of this case because Mr Mitchell was not a party to the Policy. For the reasons that follow in respect of questions 1 and 3, that submission is correct. For present purposes, however, it suffices to say that, had the Insurer been given the opportunity to make submissions concerning s 13 of the Insurance Contracts Act, there is a realistic possibility that a different decision could have been made: MZAPC v Minister for Immigration and Border Protection (2022) 273 CLR 506; [2021] HCA 17 at [39]. There will "generally be a realistic possibility that a decision-making process could have resulted in a different outcome if a party was denied an opportunity to present evidence or make submissions in an issue that required consideration": Nathanson v Minister for Home Affairs (2022) 276 CLR 80; [2022] HCA 26 at [33]. It follows that AFCA's denial of procedural fairness was material and constituted a jurisdictional error. Mr Mitchell's submission to the contrary is rejected. 110 The alleged denial of procedural fairness which is the subject of question 4 is perhaps not so clear. The Insurer had denied Mr Mitchell's claim on the basis that he did not meet the "At Work" definition and therefore was not eligible for, or entitled to, Automatic Cover because he had been in receipt of, or entitled to, workers compensation payments from Comcare during the period he worked at Nova. The issue whether Mr Mitchell did or did not meet the "At Work" definition for that reason was, and was known to be, a central issue in the complaint. 111 In his submissions to AFCA, Mr Mitchell drew attention to s 19(2) of the Compensation Act and contended, albeit not in entirely pellucid terms, that when he worked at Nova he engaged in the same position as he had at the Department, that there was therefore no loss of "work capacity", and that he was therefore not entitled to claim compensation benefits. He did not, however, attempt to apply the formula in s 19(2) of the Compensation Act to the circumstances of his case by reference to the wage or salary payments he actually received while at Nova. 112 More importantly, in its preliminary assessment and recommendation, AFCA acknowledged Mr Mitchell's submission that he was not entitled to workers compensation payments while he worked at Nova, but said that it was nevertheless not persuaded that Mr Mitchell met the "At Work" definition because "he was entitled to WC payments from 27 January 2016 as the tribunal deemed he continued to suffer from his injury" and there was no evidence that "the tribunal's decision has been overturned/changed". None of the communications emanating from Mr Mitchell or AFCA following AFCA's preliminary assessment suggested that the precise calculation, pursuant to s 19(2) of the Compensation Act, of the Comcare benefits Mr Mitchell was entitled to, taking into account the salary or wages he earned while employed at Nova, was an issue, let alone a critical issue, in the complaint. In those circumstances, the Insurer was entitled to assume and proceed on the basis that it was not required to address that issue in its submissions. 113 In those circumstances, AFCA denied the Insurer procedural fairness when it made its determination based, in part, on its calculation, purportedly pursuant to s 19(2) of the Compensation Act, of the amount that Comcare was liable to pay Mr Mitchell while he was employed by Nova based on Comcare's payment summary and Mr Mitchell's payslip. The Insurer had no notice that such a calculation may have been an issue in relation to the resolution of the complaint and was given no fair or reasonable opportunity to make submissions concerning AFCA's calculation, or the appropriate figures to use if the formula in s 19(2) of the Compensation Act was to be employed. That denial of procedural fairness was also material in the circumstances. The calculation required by s 19(2) of the Compensation Act is complex and by no means straightforward. As discussed later in the context of question 5, there is good reason to believe that AFCA's calculation was erroneous. There is, in those circumstances, a realistic possibility that there could have been a different outcome if the Insurer had been given the opportunity to make submissions in respect of that issue. 114 The conclusion that AFCA denied the Insurer procedural fairness in material respects means that its determination must be set aside and the complaint remitted to AFCA to be determined in accordance with law.

Questions 1, 3 & 5 - did AFCA err in law in applying s 13 of the Insurance Contracts Act and finding that Mr Mitchell was covered under the Policy? 115 It is convenient to address questions 1, 3 and 5 together. While they relate to different aspects or elements of AFCA's reasons for determining the complaint in favour of Mr Mitchell, they each raise the central question whether AFCA misconstrued the terms of the Policy, or made a finding which was inconsistent with the terms of the Policy. Questions 1 and 3 also raise the question whether AFCA misconstrued or misapplied s 13 of the Insurance Contracts Act. 116 As has already been noted, AFCA's critical finding was that s 13 of the Insurance Contracts Act applied to the circumstances of Mr Mitchell's complaint. According to AFCA's reasoning, the application of s 13 of the Insurance Contracts Act effectively enabled or entitled it to treat the application for insurance cover that was made on Mr Mitchell's behalf as having been made on 23 May 2016, whereas it had in fact been made on 26 July 2016. That was critical to AFCA's finding that Mr Mitchell was eligible for, and entitled to, Automatic Cover under the Policy. 117 There are fundamental problems with AFCA's reasoning and finding that s 13 of the Insurance Contracts Act applied to the circumstances of Mr Mitchell's case and entitled it to treat the application as if it had been made on 23 May 2016. 118 Section 13 of the Insurance Contracts Act provides as follows: (1) A contract of insurance is a contract based on the utmost good faith and there is implied in such a contract a provision requiring each party to it to act towards the other party, in respect of any matter arising under or in relation to it, with the utmost good faith. (2) A failure by a party to a contract of insurance to comply with the provision implied in the contract by subsection (1) is a breach of the requirements of this Act. (2A) An insurer under a contract of insurance contravenes this subsection if the insurer fails to comply with the provision implied in the contract by subsection (1). Civil penalty: 5,000 penalty units. (3) A reference in this section to a party to a contract of insurance includes a reference to a third party beneficiary under the contract. (4) This section applies in relation to a third party beneficiary under a contract of insurance only after the contract is entered into. 119 As can readily be seen, s 13 can only apply as between parties to a contract of insurance. In Mr Mitchell's case, therefore, the Insurer only owed him a duty of utmost good faith if he was a party to the Policy. Plainly Mr Mitchell could only be said to have been a party to the Policy, which was a Deed between the Trustee and the Insurer, if he was taken to be a party by reason of s 13(3) because he was a third party beneficiary under the Policy. 120 Section 11 of the Insurance Contracts Act defines a "third party beneficiary" under a contract of insurance as meaning "a person who is not a party to the contract but is specified or referred to in the contract, whether by name or otherwise, as a person to whom the benefit of the insurance cover provided by the contract extends". 121 The question whether Mr Mitchell was a third party beneficiary under the Policy was, in effect, the central issue in the complaint. He could only have been a third party beneficiary under the Policy if he had insurance cover under the Policy, and he could only have had insurance cover under the Policy if he met the eligibility criteria for Automatic Cover in cl 2.2(b) of the Policy. It was not suggested that the benefit of any relevant insurance cover under the Policy extended to Mr Mitchell in any other way. 122 Mr Mitchell did not, and could not, meet the eligibility criteria in cl 2.2(b) of the Policy on the uncontested and undisputed facts as found by AFCA. That is because the application for cover which was made on Mr Mitchell's behalf was not made until 26 July 2016, after he had ceased working for Nova. Mr Mitchell could not satisfy the "At Work" definition on that date, as required by cl 2.2(b) of the Policy, because, among other things, he was not in the service of Nova as at that date. 123 AFCA effectively circumvented or avoided that difficulty by applying s 13 of the Insurance Contracts Act. AFCA reasoned, in effect, that the Insurer would breach its duty of good faith towards Mr Mitchell if it maintained that the application for cover was not made until 26 July 2016 and that "it would be inconsistent with commercial standards of decency and fairness to treat the application as made around 23 May 2016". In other words, AFCA construed or applied s 13 of the Insurance Contracts Act in such a way as to permit it to effectively deem the relevant application as having been made at or around the time that Mr Mitchell commenced his employment with Nova, even though it was in fact made well after that employment had ceased. 124 There are a number of fundamental problems with that reasoning and finding. 125 First, the reasoning is hopelessly circular and involves an erroneous interpretation or application of s 13 of the Insurance Contracts Act. As already noted, s 13 can only operate between the parties to an insurance contract. Mr Mitchell was not a party to the Policy and was not a third party beneficiary under it. Section 13 cannot be applied so as to effectively make or deem Mr Mitchell to be a party to the Policy so that s 13 can then apply to him and the Insurer as parties to the Policy. The circularity of that reasoning is obvious. 126 Second, AFCA's reasoning misconstrues the terms of the Policy. Indeed, it effectively rewrites the terms of the Policy. Clause 2.2(b) of the Deed provides, in effect, that to be eligible for Automatic Cover, a person must be "At Work", as defined, on the date that the application for cover was made by or on behalf of the person. Clause 2.2(b) does not provide that a person is eligible for Automatic Cover if he or she was relevantly "At Work" on a date that "commercial standards of decency and fairness" might suggest the application for cover should be treated as having been made. Section 1055(7)(c) of the Corporations Act relevantly provides that AFCA must not make a determination of a superannuation complaint that would be contrary to the terms of the contract of insurance. AFCA's reasoning and finding was contrary to the Policy because it essentially involved a rewriting of clause 2.2(b). 127 Third, AFCA's reasoning largely relied on a finding that was unsupported by any evidence and was not open on the basis of the material that was before it. AFCA reasoned that, in dealing with Mr Mitchell's claim, the Insurer breached the duty of utmost good faith because it "backdated" Mr Mitchell's cover and premiums to 23 May 2016 and then later said that the application for cover was not made until 23 July 2016. There was no evidence that the Insurer did any such thing. 128 The evidence established no more than that in a "welcome letter" dated 27 July 2016, the Trustee - not the Insurer - stated that it had "set up" Mr Mitchell's superannuation account as of 23 May 2016. The information concerning the superannuation plan which accompanied that letter referred to the insurance cover that, in the ordinary course, was "automatically" provided as part of the plan. It was, however, made clear that the insurance cover was only provided as part of the plan if the eligibility requirements in respect of that cover were met. Moreover, it was also made clear that if there was any inconsistency between the information that accompanied the letter and the terms of the insurance policy, the terms and conditions of the insurance policy would prevail. 129 The terms of the Trustee's letter dated 27 July 2016, and the information that accompanied it, do not support AFCA's finding that the Insurer "backdated" Mr Mitchell's cover. The Trustee's conduct in setting up Mr Mitchell's superannuation plan as of 23 May 2016 cannot be attributed to the Insurer and, in any event, says nothing about whether Mr Mitchell was eligible for insurance cover, let alone the date on which the cover was to commence. 130 For all the foregoing reasons, AFCA erred in law in finding, in effect, that Mr Mitchell's circumstances fell within the first part of the "At Work" definition and that he was therefore eligible or entitled to Automatic Cover under the Policy. AFCA's finding and reasoning in that regard involved a misconstruction and misapplication of s 13 of the Insurance Contracts Act, a misconstruction of the terms of the Policy, and was inconsistent with the terms of the Policy. 131 It remains to briefly address question 5, which relates to AFCA's finding that Mr Mitchell met the second part of the "At Work" definition despite the Tribunal's decision in November 2016 concerning Comcare's liability to Mr Mitchell under the Compensation Act. As noted earlier, AFCA found that Mr Mitchell met the second part of the "At Work" definition because he did not receive, and was not entitled to claim, any Comcare benefits during the period he was employed at Nova. The conclusion that Mr Michell was not entitled to claim any benefits during that period was based on AFCA's purported calculation of the benefits which Comcare was liable to pay Mr Mitchell pursuant to s 19(2) of the Compensation Act. AFCA's calculation in that regard utilised the figures in Comcare's payment summary and one of Mr Mitchell's payslips from Nova. 132 AFCA erred in law in concluding that Mr Mitchell satisfied the second part of the "At Work" definition. AFCA misconstrued the terms of clause 2.2(b) and the "At Work" definition in the Policy by interpreting those provisions as if they required that Mr Mitchell not be in receipt of, or be entitled to, workers compensation benefits during the period 23 May 2016 to 17 June 2016. It was on that basis that, when purporting to calculate Comcare's liability to pay Mr Mitchell benefits pursuant to s 19(2) of the Compensation Act, AFCA fed the details from Mr Mitchell's payslip from Nova into the formula. In fact, clause 2.2(b) and the "At Work" definition required that Mr Mitchell not be in receipt of, or be entitled to, workers compensation benefits on the date that the application for insurance cover was made on his behalf. As has already been made clear, that date was 26 July 2016. On that date, Mr Mitchell was not receiving any income from Nova. 133 In short, AFCA's calculation of the benefits that Comcare was liable to pay Mr Mitchell based on the formula in s 19(2) of the Compensation Act was based on the legally erroneous premise that the calculation was to be performed in respect of the period that Mr Mitchell was employed by Nova. The calculation should have been performed in respect of the date that the application for insurance cover was made on Mr Mitchell's behalf, namely 26 July 2016. If the s 19(2) calculation had been performed in respect of that date, it is tolerably clear that the result would have been that Comcare was liable to pay Mr Mitchell benefits on that date because Mr Mitchell was not receiving any income from Nova on that date. 134 It should also be noted that, while the Tribunal's decision that Comcare remained liable to Mr Mitchell in respect of a compensable injury under the Compensation Act was not made until November 2016, the decision clearly operated retrospectively by reason of s 43(6) of the Administrative Appeals Tribunal Act 1975 (Cth). 135 It should finally be observed that, even putting to one side the fact that AFCA's calculation under s 19(2) of the Compensation Act was based on a false premise concerning the relevant date, there is merit in the Insurer's contention that there were other errors in the calculation. As noted earlier, the formula in s 19(2), when read with the other subsections of s 19, is complex and by no means straightforward. AFCA, however, approached the formula and the calculation in a very simplistic way. The two figures that AFCA fed into the s 19(2) formula were a figure for Mr Mitchell's normal weekly earnings prior to his incapacitation (NWE) and a figure which supposedly represented Mr Mitchell's weekly earnings when he worked at Nova (AE). The use of those two figures by AFCA appeared to be erroneous because, as the Insurer metaphorically put it, the use of those figures "compared apples and lemons". In short, the figure used by AFCA for Mr Mitchell's NWE was based on a 37.5 hour week, whereas the figure for Mr Mitchell's AE, which AFCA derived from Mr Mitchell's payslip, appears to have been based on a 72 hour period. It does not appear to have been the correct figure for Mr Mitchell's weekly earnings when he worked at Nova. Moreover, it would appear that if AFCA had calculated and used the figure for Mr Mitchell's earnings from Nova based on a 36 hour week (half the figure in fact used by AFCA), the outcome would likely have been that Mr Mitchell was entitled to some, albeit fairly modest, compensation from Comcare. 136 It is unnecessary to reach a concluded view as to whether AFCA's simplistic calculation using the figure derived from Mr Mitchell's payslip was erroneous and that some other figure for Mr Mitchell's weekly earnings while employed at Nova should have been applied to the formula. That is because, for the reasons given earlier, the figure that AFCA should have used for Mr Mitchell's weekly earnings was in any event zero because Mr Mitchell was not employed at Nova and not earning any income as at 26 July 2016, which was the critical date.

Conclusion and disposition 137 Each of the five questions of law raised by the Insurer's appeal must be resolved in favour of the Insurer. AFCA denied the Insurer procedural fairness because it effectively denied the Insurer the opportunity to advance evidence and submissions in respect of issues that turned out to be critical to the resolution of the complaint. That was particularly the case in respect of the issue concerning the application of s 13 of the Insurance Contracts Act to the circumstances of the complaint. AFCA also erred in law in concluding that Mr Mitchell satisfied the "At Work" definition at the relevant time and therefore met the eligibility requirement for Automatic Cover in clause 2.2(b) of the Policy. AFCA misconstrued and misapplied s 13 of the Insurance Contracts Act, misconstrued terms in the Policy, and arrived at a finding that was inconsistent with the terms of the Policy. 138 The appropriate orders to make in the circumstances are that AFCA's determination of Mr Mitchell's complaint be set aside and that the matter be remitted to be determined again by AFCA in accordance with law and the findings made in this judgment. In relation to costs, s 1057(5) of the Corporation does not preclude the Court awarding costs against Mr Mitchell because he defended the appeal. Mr Mitchell did not submit that a costs order should not be made against him if the appeal succeeded. Nor is there any apparent reason why costs should not follow the event. It is, in those circumstances, appropriate to order that Mr Mitchell pay the Insurer's costs of the appeal. I certify that the preceding one hundred and thirty-eight (138) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Wigney.

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