Nafar v BT Funds Management Limited

This case arose from a claim for total and permanent disability, or TPD, benefits under a group life insurance policy linked to a superannuation plan. Mr Nafar said he injured his back on 13 December 2017 while working as a labourer. He also said he later developed psychological stress. According to the judgment, he stopped work the next day and claimed he had been unable to return to employment since then.

His case was that, from 14 December 2017 onwards, his injuries left him unable to perform a number of activities of daily living without assistance. He said that meant he met the policy definition of TPD and was entitled to a benefit. The policy was issued by AIA Australia Limited to BT Funds Management Limited as trustee for the BT Lifetime Super Employment Plan, and Mr Nafar was a member of that plan between 8 December 2017 and 30 June 2019.

Mr Nafar lodged his TPD claim on 11 February 2019. AIA denied the claim on 7 October 2020. BT, as trustee, upheld that denial on 26 March 2021. Even after further information was provided, both respondents maintained their position. Mr Nafar then brought proceedings in the Federal Court seeking relief connected with the policy and declarations that would effectively support payment of the benefit.

The respondents did not wait for a full trial. They applied for summary judgment, arguing that the claim could not succeed because the policy's threshold requirements for payment had never been satisfied. That procedural move became central to the case.

The judgment set out the TPD definition that applied to Mr Nafar. It was not a simple test of whether he could work. The relevant definition required two things.

First, there had to be certification by a qualified medical practitioner appointed by the insurer that the insured member was continuously and totally unable to perform at least two listed activities of daily living. The listed activities included bathing, dressing, eating, toileting and transferring. The Court described this as an objective requirement.

Second, the insurer had to form the opinion, after considering medical and other evidence satisfactory to it, that the member was unlikely ever to be able to follow their usual occupation and any other occupation for which they were reasonably suited by education, training or experience. The Court described this as a subjective requirement on the insurer's part.

That structure mattered. The Court treated the first requirement as a gateway. If there was no certification from the kind of doctor specified by the policy, the claim could not get off the ground. This is an important distinction for business readers. A policy may require more than proof of illness or incapacity. It may require proof in a very particular form, from a very particular source, before any entitlement can arise.

The Court's power to grant summary judgment came from section 31A(2) of the Federal Court of Australia Act 1976 (Cth), together with rule 26.01 of the Federal Court Rules 2011 (Cth). The test was whether Mr Nafar had no reasonable prospect of successfully prosecuting the proceeding.

Derrington J emphasised that summary judgment must be approached with caution. The judgment referred to the High Court's comments in Spencer v Commonwealth that powers to summarily terminate proceedings should be exercised carefully and only where there is a high degree of certainty about the ultimate outcome. In other words, courts do not lightly deprive a party of a full hearing.

At the same time, the Court also referred to more recent authority confirming that courts should not shy away from summary judgment where the outcome is clear and a trial would not alter it. If the legal and factual position already shows that the claim cannot succeed, requiring the parties to go through a full trial is contrary to the proper administration of justice.

That is why the summary judgment issue mattered so much here. The respondents said the policy wording itself made the claim untenable. If they were right, there was no point in a trial about broader medical disputes, fairness arguments or the correctness of the insurer's decision-making process. The Court accepted that framing.

The Court held that Mr Nafar's claim had no reasonable prospect of success because the first requirement in the policy definition had not been met. Although his statement of claim referred to numerous reports from several medical practitioners, none of those practitioners had been appointed by the insurer for the purpose required by the policy. On the Court's reading of the contract, that was a fundamental problem.

Derrington J said the law on this point was relatively clear and relied on earlier authority. In Gomes v Austchem Nominees Pty Ltd, a policy required certification from a duly qualified medical practitioner acceptable to the insurer. The appointed practitioner did not provide the required certification, and the insured tried to rely on other medical evidence. The New South Wales Court of Appeal treated the absence of the required certification as an insurmountable hurdle. The Federal Court considered that reasoning directly relevant.

The Court also relied on Stevedoring Employees Retirement Fund Pty Ltd v Gilberg, where a policy required reports from medical practitioners appointed by the trustee. In that case too, the Court held that the contractual process for obtaining the relevant medical opinions controlled the entitlement question. Broader medical material from other sources did not displace the policy's own mechanism.

Applying those authorities, Derrington J concluded that Mr Nafar could not establish an entitlement to a TPD benefit under the policy. The Court also noted that this was not a case where the insurer and trustee had simply ignored the claim. The evidence showed that the insurer had referred Mr Nafar for assessment by several doctors, including Drs Dunn, Ng, Trifiletti and Navin. None certified that he met the relevant TPD definition.

The judgment summarised those reports in some detail. Dr Dunn said that if Mr Nafar was unable to perform the activities of daily living, it appeared to be for physical rather than psychiatric reasons. Dr Ng said that from a psychiatric point of view Mr Nafar did not satisfy the activities of daily living TPD definition before 30 June 2019. Dr Trifiletti accepted high level disability following the back injury with psychiatric comorbidity, but did not consider there was demonstrable evidence of medical requirement for standby care to perform at least two out of five activities of daily living before 30 June 2019. Dr Navin also considered that Mr Nafar did not meet the ADL TPD definition before that date.

The insurer had also engaged Dr Johnson and Dr Nielsen to review surveillance footage. Their observations were said to be inconsistent with the severe functional limitations alleged. The Court said those observations buttressed the inability of the other doctors to conclude that the policy requirements were met. The Court added that even if there had been some defect in the insurer's opinion, the Court would not, on the evidence available, substitute a more favourable opinion.

Mr Nafar had sought declarations that the benefit was payable under the policy, that the insurer should pay the trustee, and that the trustee should then pay him. The Court held that those declarations could not be made because the preconditions for entitlement under the policy had not been satisfied.

The Court also rejected the proposed declaration that the insurer's decision was void and of no effect. Derrington J said the insurer's decision was not the real legal issue. The real issue was whether an entitlement arose under the policy. If the policy preconditions were not met, the correctness of the insurer's decision did not arise in any useful way.

The same reasoning applied to the trustee. The Court said there was no utility in addressing whether the trustee's decision was void because the case turned on construction of the policy and whether an entitlement had arisen under it. The Court also accepted the respondents' point that the trustee's obligation was to pay to Mr Nafar the amount paid to it by the insurer. Since no amount was payable by the insurer, the trustee had no obligation to pay anything to him.

There was also a procedural point about jurisdiction. The originating application had not identified a basis for Federal Court jurisdiction. However, the statement of claim sought interest from the insurer under section 57 of the Insurance Contracts Act 1984 (Cth). The Court held that this was enough to bring the matter within the Court's original jurisdiction under section 39B(1A)(c) of the Judiciary Act 1903 (Cth).

On costs, the Court applied the ordinary rule that costs follow the event. Mr Nafar was ordered to pay the respondents' costs of the proceeding, including the summary judgment application, with costs to be taxed on a party and party basis if not agreed. The Court rejected the suggestion that disparity in economic power justified a different result. It also noted that the applicant and those assisting him had been urged from an early stage to consider whether to proceed given the apparent lack of merit.

For businesses, this case is a practical lesson in the difference between workplace incapacity and insurance entitlement. An employee may be injured, may stop work, and may need significant support. But whether they qualify for a TPD benefit depends on the wording of the policy and the evidence pathway built into that wording. Those are separate questions.

If your business offers insurance through superannuation, provides employee benefit summaries, or helps workers after injury, the safest approach is precision. Do not describe TPD cover in broad, reassuring language that skips over the policy definition. Do not suggest that a worker will be paid simply because they cannot return to their current role. And do not assume that any doctor's report will do if the policy requires certification by a doctor appointed by the insurer or trustee.

This case also highlights the importance of distinguishing between general medical evidence and policy-specific certification. General reports may support a worker's account of pain, psychiatric symptoms or functional difficulty. But if the contract requires a particular certification from a particular category of doctor, those reports may not establish entitlement. Businesses should understand that distinction before communicating with staff or taking a firm position in a dispute.

Another practical point is to keep employment decisions separate from insurance decisions. A business may need to manage return to work, leave, role changes or termination issues under employment law. Those decisions should not be conflated with whether an insurer must pay a TPD benefit. Mixing the two can create confusion and increase the risk of complaints or allegations that the business made promises it could not control.

Finally, this case is a reminder to keep records and communications disciplined. If a worker asks about cover, direct them to the policy terms and formal claim process. If the business provides summaries of benefits, make sure they accurately reflect the policy wording. If managers are involved in injury management, train them not to make informal assurances about claim outcomes.

This page reflects the Federal Court's published reasons in Nafar v BT Funds Management Limited [2026] FCA 479. The reasons record that judgment was given on 7 April 2026 and the revised reasons were published on 21 April 2026. The Court granted summary judgment for the respondents, dismissed the proceeding and ordered the applicant to pay costs.

The judgment supports the account of the policy wording, the summary judgment standard, the reliance on Gomes and Gilberg, the insurer-appointed medical assessments, the surveillance-related medical comments, the treatment of the declaratory relief, the jurisdiction point and the costs order.