An insurer’s application to stay the operation of an Australian Financial Complaints Authority (AFCA) superannuation dispute ruling has been dismissed by the Federal Court. 

Resolution Life Australasia is appealing against the AFCA decision and had applied for the stay of operation, saying there is a “real risk” that Gregory Teagle, who is on a disability pension, will not be in a position to repay the money should it win the appeal. 

It was one of a few reasons submitted by the insurer in its application. Resolution Life says since the appeal hearing has been listed for November 29, Mr Teagle is not likely to be kept from his total and permanent disability (TPD) payout of about $1.24 million for much longer if the insurer loses the appeal. 

But Justice Angus Stewart ruled “there is at present no apparent need for a stay” and that Mr Teagle’s financial position, in particular his asset holdings, does not “support a conclusion that a stay is appropriate to secure the effectiveness” of the hearing and determination of the appeal. 

“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,” Justice Stewart wrote in his decision. 

“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.” 

Resolution Life had flagged evidence indicating Mr Teagle’s straitened financial situation. He had a super balance of $58,485 and in August was paid $10,000 from the account after he made a request based on financial hardship. 

Justice Stewart says Mr Teagle may be on a pension and has sought a lump sum from his super but “one just does not know’ if he has significant illiquid assets that would in effect secure repayment. 

And with the appeal hearing just weeks away, Justice Stewart says “a real question arises as to the need for or utility of a stay of the determination”. 

AFCA had ruled on June 20 that Mr Teagle’s TPD claim must be paid and the determination came into operation immediately upon its making. Mr Teagle made the claim on his super-held TPD cover after suffering a spinal injury and he has since stopped working as a mechanic. 

“The [insurer] has not identified any way in which it may be penalised, or otherwise faces prejudice, if it continues simply not to pay,” Justice Stewart says. 

“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 [insurer’s] attitude thus far, it remains unclear why a stay is required.” 

Resolution Life says each claim is assessed against the applicable policy terms and conditions, and in line with industry and regulatory frameworks. 

“We want to be able to pay all claims, however we can’t pay someone who is not entitled to a claim – this simply would not be fair to all our other policyholders who pay their premiums,” the insurer says in a statement to insuranceNEWS.com.au. 

insuranceNEWS.com.au understands Mr Teagle’s policy contained a lumber/sacral spine exclusion and that his claim was declined by the insurer and trustee on the basis of that exemption.

AFCA decisions are binding but section 1057 of the Corporations Act states “a party to a superannuation complaint may appeal to the Federal Court, on a question of law” from the ombudsman’s determination of the dispute. 

Click here for the court decision.