Core Lint error with type families

The following file, found during investigation of #16979 (closed), fails -dcore-lint. I've checked 8.4, 8.6 and my old copy of master.

{-# LANGUAGE TypeFamilies #-}
module Bug  where

import Data.Kind

type family Param :: Type -> Type

type family LookupParam (a :: Type) :: Type where
  LookupParam (_ Char)  = Bool
  LookupParam _ = Int

foo :: LookupParam (Param Bool)
foo = undefined

The error is:

*** Core Lint errors : in result of Desugar (before optimization) ***
Min_w_inc.hs:15:1: warning:
    [RHS of foo :: LookupParam (Param Bool)]
    Bad axiom application (inconsistent with LookupParam
                                               (_ Char) = Bool
                                               -- Defined at Min_w_inc.hs:11:3)
      D:R:LookupParam[1] <Param Bool>_N

<snip>

foo :: LookupParam (Param Bool)
[LclIdX]
foo
  = (undefined @ 'LiftedRep @ Int $dIP_a20S)
    `cast` (Sub (Sym (D:R:LookupParam[1] <Param Bool>_N))
            :: Int ~R# LookupParam (Param Bool))