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ARTICLE · 03 FEBRUARY 2026

Policy interpretation and section 54: federal court sets aside AFCA determination

Barry Nilsson
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Recent decision demonstrates that section 54 will not apply to an inherent restriction or limitation in the policy.

AustraliaInsurance
David Kim
David Kim
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The Federal Court of Australia set aside an AFCA determination, finding that section 54 of the Insurance Contracts Act 1984 (Cth) does not overrule an insurer's decision in circumstances where a requirement of a clause in question in a policy is an inherent limitation of cover.

In issue

  • What was the correct 'Date of Disablement' under the policy of insurance in question?
  • Whether the plaintiff could rely on section 54 of the Insurance Contracts Act 1984 (Cth) (ICA) to claim Total and Permanent Disablement (TPD) benefits under a policy of insurance, at an earlier point in time.

The background

Ms Buckland was a member of the Australian Retirement Trust, a superannuation fund of which Australian Retirement Trust Pty Ltd (ART) is a trustee. ART held an insurance policy issued by Art Life Insurance Ltd (Insurer) that included provisions for Total and Permanent Disablement (TPD) benefits; Ms Buckland was an insured person under that policy (policy).

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