Resolution Life Australasia Ltd v Teagle

STEWART J: 1 The applicant, Resolution Life Australasia Ltd, applies by interlocutory application to stay the operation of a superannuation determination of the third respondent, the Australian Financial Complaints Authority (AFCA), made on 20 June 2023, pending the determination of the applicant's appeal against the determination. 2 By that determination, AFCA upheld the claim of the first respondent, Gregory Teagle, for a total and permanent disablement (TPD) benefit as a member of the AMP Flexible Lifetime Superfund. The second respondent, NM Superannuation Pty Ltd, is the trustee of the fund. It has filed a submitting notice. 3 The applicant filed its notice of appeal against the determination on 18 July 2023. 4 Mr Teagle is self-represented. Although he has filed a notice of address for service, and he has stated in correspondence that he opposes the stay that is sought by the applicant, he has also stated that he intends taking no active part in the appeal and he has not actively opposed the stay. 5 Mr Teagle's complaint to AFCA was made under s 1053(1) of the Corporations Act 2001 (Cth) on the basis that the trustee's refusal of his TPD claim was "unfair or unreasonable". The determination was made under s 1055. The effect of the determination is that the applicant must pay Mr Teagle a sum equivalent to his TPD cover, namely the sum of $1,240,203.77. Under s 1055B(1), the determination came into operation immediately upon its making. 6 The appeal from the determination to this Court is brought "on a question of law" under s 1057 of the Act. Section 1057A(1) provides that the institution of the appeal does not affect the operation of the determination or prevent the taking of action to implement the determination. 7 However, s 1057A(2) provides that if such an appeal is brought, the Court may make such order or orders staying or otherwise affecting the operation or implementation of the determination "as the Court thinks appropriate to secure the effectiveness of the hearing and determination of the appeal." 8 Although from early August 2023 there was correspondence between the parties on the applicant wanting a stay of the determination pending the appeal, the interlocutory application with supporting affidavit was not filed until 1 September 2023. Following a direction from me, a further affidavit and brief submissions were filed on 22 September 2023. That was three months after the determination took effect. 9 Other than Mr Teagle's firmly stated opposition to the stay, which is not backed up by any active opposition by way of evidence or submissions, the respondents do not oppose the stay. 10 The applicant does not identify any authority dealing with the nature of the court's power to order a stay under s 1057A(2), and in particular the requirement that "the Court thinks [the stay] appropriate to secure the effectiveness of the hearing and determination of the appeal." The applicant relies only on authorities on the more broadly expressed discretionary power of the Court to order the stay of a judgment of the Court pending an appeal from the judgment under s 29 of the Federal Court of Australia Act 1976 (Cth) and r 36.08(2) of the Federal Court Rules 2011 (Cth). Those provisions do not have any equivalent limitation on the exercise of the power to secure the effectiveness of the hearing and the determination of the appeal. 11 Before 6 March 2018, when the Treasury Laws Amendment (Putting Consumers First - Establishment of the Australian Financial Complaints Authority) Act 2018 (Cth) introduced the AFCA complaints system into Pt 7.10A of the Corporations Act (see QSuper Board v Australian Financial Complaints Authority Ltd [2020] FCAFC 55; 276 FCR 97 at [13]), what is now s 1057A was contained in s 47 of the Superannuation (Resolution of Complaints) Act 1993 (Cth) (repealed). That section also provided for the stay of a determination "as the Court thinks appropriate to secure the effectiveness of the hearing and determination of the appeal." There is also no authority on that provision. 12 The contentions that the applicant makes in support of the stay are the following. 13 First, the applicant says that there are good arguable grounds of appeal. I do not consider that it is fruitful to speculate at this stage about the applicant's prospects of success, particularly in the absence of any competing submissions, but I accept that there are at least arguable grounds of appeal and that the appeal is bona fide. On that basis I assume that there is a reasonable prospect that the appeal may be successful. Equally, it may not. 14 Secondly, the applicant says that the balance of convenience is in favour of granting the stay. In that regard, it says that there is no doubt with regard to its ability, being a registered life insurer, to pay the determination in the event that the appeal is unsuccessful. It also points to the provisions for interest payable on the proceeds of an insurance claim under s 57 of the Insurance Contracts Act 1984 (Cth). I accept all of that. 15 Still on the question of balance of convenience, the applicant notes that the appeal hearing has been listed for 29 November 2023. That means that even if he is ultimately successful, Mr Teagle is not likely to be kept from his money for much longer. 16 Most tellingly, the applicant submits that there is a real risk that if the determination is paid pending the appeal and the appeal is ultimately successful, the applicant will not be restored to its former position. That is to say, it submits that there is a real risk that Mr Teagle will not, or will not be in a position to, repay the applicant. In that regard it points to evidence that indicates that Mr Teagle is in straitened financial circumstances, namely: (1) Mr Teagle stated in an email to the Court on 3 August 2023 that he does not wish to burden his family with the risk of an adverse costs order and he is "only on a disability pension." (2) The second respondent advised the applicant on 4 September 2023 that Mr Teagle has an active super account with it with a balance of $58,485 and that on 22 August 2023 Mr Teagle had been paid an amount of $10,000 from that account on his request "based on financial hardship." 17 Finally, the applicant notes that Mr Teagle has not sought to argue for any interim or part payment of the compensation sum to relieve his position pending the appeal, which would reduce the risk of the applicant losing the full determination sum if it had to pay it pending the appeal. That is true, of course, but it is also true that the applicant has not offered any interim or part payment to relieve Mr Teagle's position pending the appeal. 18 I note that there is no evidence that Mr Teagle, or anyone else, intends enforcing the determination in some way pending the appeal. Although, as identified, the effect of the law is that the determination takes immediate effect, the applicant has been content not to pay the determination sum to Mr Teagle since the determination was made in June, and it delayed bringing the interlocutory application until September, a period of more than two months. Given that the appeal hearing is only some six weeks away, a real question arises as to the need for or utility of a stay of the determination. The applicant has not identified any way in which it may be penalised, or otherwise faces prejudice, if it continues simply not to pay. That, of course, is a position that the Court cannot and does not condone, but in the absence of some enforcement steps being taken, or at least threatened, and in light of the applicant's attitude thus far, it remains unclear why a stay is required. 19 But more to the point, the discretion to grant a stay is limited to circumstances where the court finds it appropriate to grant the stay "to secure the effectiveness of the hearing and determination of the appeal." No submissions are directed to the establishment of those circumstances. It is not said how the effectiveness of the hearing may be jeopardised if a stay is not granted, nor how the determination of the appeal may be adversely affected. The limitation on the exercise of the discretion to grant a stay, which Parliament has regarded as appropriate to impose, stands in contrast to the broad discretion, unlimited by statutory language, that a court has to grant a stay pending an appeal against a judgment. 20 I acknowledge that on one view the effectiveness of the hearing and the determination of the appeal may be jeopardised if AFCA's determination is paid but later overturned on appeal and the payment cannot be recovered. That is because the effect of the determination of the appeal would be that the money not be paid, and if it had been paid and could not be recovered then the appeal would lose its effectiveness. However, in this case the evidence does not go far enough to establish a well-founded apprehension that the payment will not be able to be recovered. For example, there is no asset search. It may be that although Mr Teagle is "only on a disability pension" and he sought a lumpsum payment of $10,000 from his super account in August, his cashflow is tight but he has significant illiquid assets that would in effect secure repayment. One just does not know. 21 In short, in the absence of at least some threat of enforcement action, there is at present no apparent need for a stay, and the evidence of Mr Teagle's financial position, in particular his asset position, does not support a conclusion that a stay is appropriate to secure the effectiveness of the hearing and determination of the appeal. 22 In the circumstances, I am not satisfied that it is appropriate to grant a stay of AFCA's determination pending the appeal. The interlocutory application must accordingly be dismissed. As no party actively opposed the stay, there is no need for any costs order. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Stewart.