UndecidableInstances validity checking is wrong in the presence of QuantifiedConstraints

Consider this program:

{-# LANGUAGE ConstraintKinds #-}
{-# LANGUAGE GADTs #-}
{-# LANGUAGE KindSignatures #-}
{-# LANGUAGE QuantifiedConstraints #-}
module Bug where

import Data.Kind

data ECC :: Constraint -> Type -> Type

class Y a
class Z a

instance  c         => Y (ECC c a)
instance (c => Z a) => Z (ECC c a)

I would expect both of these instances to work. But while GHC accepts the Y instance, it rejects the Z instance:

$ ~/Software/ghc5/inplace/bin/ghc-stage2 Bug.hs
[1 of 1] Compiling Bug              ( Bug.hs, Bug.o )

Bug.hs:15:10: error:
    • Variable ‘c’ occurs more often
        in the constraint ‘c’ than in the instance head
      (Use UndecidableInstances to permit this)
    • In the instance declaration for ‘Z (ECC c a)’
   |
15 | instance (c => Z a) => Z (ECC c a)
   |          ^^^^^^^^^^^^^^^^^^^^^^^^^

That error message seems completely bogus to me, since c appears once in both the context and instance head in both instances.

Trac metadata

Trac field	Value
Version	8.5
Type	Bug
TypeOfFailure	OtherFailure
Priority	normal
Resolution	Unresolved
Component	Compiler (Type checker)
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