AIA Australia Ltd v Sharma [2023] FCAFC 42

Federal Court of Australia

AIA Australia Ltd v Sharma [2023] FCAFC 42 Appeal from: Sharma v H.E.S.T. Australia Ltd [2022] FCA 536

File number: VID 319 of 2022

Judgment of: STEWART, HALLEY AND BUTTON JJ

Date of judgment: 17 March 2023

Catchwords: INSURANCE – life insurance – where life insured made fraudulent misrepresentations to group life insurer regarding his cardiac history in application for additional death and income protection cover pursuant to group life insurance policy – where insurer entered into additional cover – where trustee of superannuation fund subsequently changed group life insurer – where second insurer issued new insurance policy without reassessing risk of insured members – where life insured died from heart failure – where second insurer denied payment of additional death and income protection benefits by avoiding the policy in respect of the life insured pursuant to s 29(2) of the Insurance Contracts Act 1984 (Cth) (the ICA) on the basis of the fraudulent misrepresentations – where trustee and Australian Financial Complaints Authority (AFCA) upheld second insurer's decision on the basis that it was fair and reasonable – where primary judge set aside AFCA's determination and remitted matter for reconsideration – whether continuing misrepresentations were made to second insurer – whether misrepresentations were "spent" when relied on by first insurer – whether second insurer could rely on misrepresentations – whether primary judge erred in holding that s 29 of the ICA was not available to the second insurer because misrepresentations were made to the first insurer – appeal allowed

Legislation: Corporations Act 2001 (Cth) ss 1053, 1055, 1057 Insurance Contracts Act 1984 (Cth) ss 7, 25, 26(2), 27A, 29, 32, 33 Handley KR, Spencer Bower & Handley Actionable Misrepresentation (5th ed, 2014, LexisNexis)