Michael May (led by J McKenna KC) represented the appellant, instructed by McInnes Wilson Lawyers.
The respondent was a chef who ceased working because of disabling injuries. The appellant was the respondent’s insurer when his employment ended. The appellant declined to pay under the group life insurance policy on the basis the respondent was not totally and permanently disabled. The primary judge found that the respondent’s failure to satisfy the work requirement, by working consistently for 15 hours each week in the three months immediately before the date of disablement, gave the appellant a contractual basis to refuse the claim. However, s 54(1) of the Insurance Contracts Act 1984 (Cth) (ICA) prevented the appellant from refusing the claim on that basis, because the failure was an act or omission to which s 54 applied.
The appellant appealed on the sole ground that s 54(1) did not apply, so the primary judge erred in holding that the appellant could not refuse the claim. The appellant contended that the primary judge’s critical error was finding that the work requirement was not part of the policy’s essential character and could therefore be cured by s 54.
The Court dismissed the appeal, finding that the primary judge correctly applied s 54 of the ICA. As a matter of substance, a temporal limitation like the work requirement has no bearing on the policy’s essential character. The work requirement was therefore susceptible to s 54, which redressed what would otherwise be an unfair outcome, as the insurer suffered no prejudice.
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