Citicorp Life Insurance Ltd v Smith [2005] FCAFC 102 (3 June 2005)

Last Updated: 12 October 2005

FEDERAL COURT OF AUSTRALIA

Citicorp Life Insurance Ltd v Smith [2005] FCAFC 102

SUPERANNUATION – Claim for total and permanent disability benefit – Claim refused by trustee and insurer – Decision affirmed by the Superannuation Complaints Tribunal – Appeal to Federal Court against Tribunal’s decision allowed on ground that there was no evidence in relation to three findings made by Tribunal in relation to claimant’s employment prospects – Appeal by insurer against that decision allowed – Appeal turns on the proper interpretation of a psychologist’s vocational assessment report accepted by the Tribunal – Discussion of requisites of case required to be established by claimant.



Superannuation (Resolution of Complaints) Act 1993 (Cth) ss 14, 37 and 46




Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6; (1996) 185 CLR 259 applied














CITICORP LIFE INSURANCE LIMITED v DARLENE SMITH and CLUB PLUS SUPERANNUATION PTY LIMITED

NSD 1879 of 2004




WILCOX, GYLES and DOWNES JJ
3 JUNE 2005
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
DISTRICT REGISTRY	No. NSD 1879 of 2004

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	CITICORP LIFE INSURANCE LIMITED APPELLANT
AND:	DARLENE SMITH FIRST RESPONDENT
AND:	CLUB PLUS SUPERANNUATION PTY LIMITED SECOND RESPONDENT

JUDGES:	WILCOX, GYLES AND DOWNES JJ
DATE:	3 JUNE 2005
PLACE:	SYDNEY

THE COURT ORDERS THAT:

1. The appeal be allowed.

2. The decision of Jacobson J of 25 November 2004 be set aside and, in lieu thereof, it be ordered that the appeal to this Court from the decision of the Superannuation Complaints Tribunal be dismissed with costs.
3. The first respondent, Darlene Smith, pay the costs of the appeal incurred by the appellant, Citicorp Life Insurance Limited.
4. The said first respondent have a costs certificate pursuant to s 6 of the Federal Proceedings (Costs) Act 1981 (Cth).

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 1879 2004

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	CITICORP LIFE INSURANCE LIMITED APPELLANT
AND:	DARLENE SMITH FIRST RESPONDENT
AND:	CLUB PLUS SUPERANNUATION PTY LIMITED SECOND RESPONDENT

JUDGES:	WILCOX, GYLES AND DOWNES JJ
DATE:	3 JUNE 2005
PLACE:	SYDNEY

REASONS FOR JUDGMENT

THE COURT:
Introduction

1 Darlene Smith suffered a back injury while working as a bar steward in 1998. She was a member of a superannuation scheme underwritten by Citicorp Life Insurance Limited (‘Citicorp’). The trustee was Club Plus Superannuation Pty Limited (‘Club Plus’). Ms Smith claimed a total and permanent disablement benefit. This was refused by Citicorp on 8 November 2001. Club Plus also declined Ms Smith’s claim. She applied for review of that decision by the Superannuation Complaints Tribunal (‘the Tribunal’) pursuant to s 14 of the Superannuation (Resolution of Complaints) Act 1993 (Cth) (‘the Act’). The Tribunal affirmed the decision. Ms Smith appealed to the Federal Court under s 46 of the Act. Jacobson J allowed the appeal. Citicorp now appeals to the Full Court against his Honour’s decision.

2 Ms Smith was a bar steward at the Dubbo Railway Institute Bowling Club. Her duties included serving drinks and cleaning and attending games machines. She worked part-time for 25 hours per week. Ms Smith suffered her injury on 1 August 1998 when she was picking up a tray of glasses from the lower shelf in a rack beneath the bar. Her last day of active employment was 8 August 1998, apart from an unsuccessful return to work on light duties in February/March 1999 during which she injured her back again.

3 The policy provided for a total and permanent disablement benefit when a member was absent from work for six consecutive months and "provided proof to the insurer’s satisfaction" that the member had:

"become incapacitated to such an extent as to render the Member ... unlikely ever to engage in any gainful profession, trade or occupation for which the member is reasonably qualified by reason of education, training or experience."

4 Section 14 of the Act permits a person to "make a complaint ... to the Tribunal, that [a] decision is or was unfair or unreasonable." By subs 37(3) the Tribunal may affirm, vary or set aside the decision, in the last case substituting its own decision, or remit the matter for reconsideration in accordance with its directions. However, if the Tribunal "is satisfied that the decision, in its operation in relation to ... the complainant ... was fair and reasonable in the circumstances" it must affirm the decision: s 37(6).

5 In allowing the appeal, Jacobson J upheld an argument that the Tribunal had erred in law because it made three findings for which there was "no evidence". He described the findings as follows:

‘The three "no evidence" points were: first that there was no evidence that the applicant had any education, training or experience to undertake work as an Aboriginal liaison officer; second, that there was no evidence as to what work an Aboriginal liaison officer did; and third, that there was no evidence that part time work was available in this field.’

The Tribunal’s decision

6 The material before the Tribunal included medical and vocational assessments. The Tribunal effectively found that Ms Smith was unable to undertake bar work and was unfit to return to her pre-injury work. It accordingly proceeded to consider her ‘capacity for sedentary work and duties’.

7 Amongst the vocational assessments before the Tribunal was an assessment of 16 July 1999 prepared by a registered psychologist, Natalie Green. The Tribunal referred to this assessment in the body of its reasons as follows:

‘16 July 1999 - Ms NG completed a vocational assessment of the Complainant. The assessment identified that she had a range of previous jobs. In particular, the Complainant previously work [sic] as a receptionist with an indigenous organization and that she enjoyed working with Aboriginal people. The Complainant identified her preferred vocational choices as,

1. working with aboriginal people, and
2. teacher’s aid.

Ms NG noted that for the first option (working with Aboriginal people) there were many suitable positions in the relevant area requiring minimum qualifications and training is generally on the job. For the second option there was one position for a school assistant advertised on the weekend in the local paper. Ms NG also considered that receptionist as a suitable vocational option which may require some upgrading of her computer skills. Ms NG recommended counselling to identify the most appropriate vocational goal, assistance with job seeking and encouragement to pursue a work trial and gradually increasing her hours and gaining skills and on the job experience.’

8 The Tribunal returned to this assessment in its conclusions:

‘As the weight of the medical evidence indicates that she could carry out sedentary duties part-time, the question therefore becomes whether the Complainant is fit for part-time (about 25 hours per week) work in other occupations for which she has relevant education, training or experience. Her eduction level is low. It appears to the Tribunal that the only relevant prior training and/or experience is her 8 months experience in reception work with an Aboriginal organisation. There is insufficient detail available to the Tribunal for it to be able to determine whether that experience would qualify the Complainant for reception work generally, or whether she would require retraining and new skills (as distinct from mere updating) for that work.

However, the Tribunal notes that the Vocational Assessment by Ms NG states:

1. Working with Aboriginal People

[The Complainant] has indicated her preference to work with Aboriginal people in any capacity. There are numerous openings with the [relevant city] community through [the Complainant’s] current contacts that may enable her to obtain a work trial and seek long-term employment in a role liaising with Aboriginal people, or in Aboriginal health and welfare.

[The Complainant] has a number of leads to pursue within the local aboriginal community, and a further suitable contact is ... [name] at Family Support in ... [relevant city], who may be aware of potential positions coming up.

There are many suitable positions requiring no minimum education or qualifications and training is generally on-the-job.

It therefore appears to the Tribunal that the Complainant has relevant experience for this kind of work, a liking for it and certain transferable skills. Moreover, it appears that the work is available in the area in which the Complainant lives, at least part-time.

Given all the circumstances, the Tribunal concluded that the decisions of the Trustee and the Insurer were fair and reasonable in their operation in relation to the Complainant.’

The decision of Jacobson J

9 At [5] above, we noted the three ‘no evidence’ points argued before Jacobson J. His Honour effectively dealt with the first two points together. At [65] to [73] he said:

‘I accept the submission of Ms Guilfoyle, who appeared for the insurer, that the Tribunal was required to put itself in the position of the insurer and review the decision for fairness and reasonableness, and that this task involved a process of speculation as to the likelihood of whether the applicant would engage in an occupation by reason of her education, training or experience.

However, as Ms Guilfoyle accepted, the process of speculation was as to whether the applicant would gain employment in an occupation for which she was "reasonably qualified" by reason of one of the three criteria, ie "education, training or experience". The Tribunal, which stood in the shoes of the insurer, was required to reach a state of satisfaction as to the establishment of this nexus.

I also accept Ms Guilfoyle’s submission that there was evidence in the Vocational Assessment that the applicant had some prior experience from which it was open to the Tribunal to reach a state of satisfaction that she was likely to gain employment in a sedentary occupation.

But what was entirely lacking was any evidence before the Tribunal of the applicant’s capacity to work as a liaison officer with Aboriginal people.

All that the Vocational Assessment established was that the applicant had an aptitude for work as a liaison officer and that she had contacts and leads which may enable her to obtain such a position. What is missing from this is the necessary link between likelihood of employment and qualification for the job by reason of education, training or experience.

Without a job description stating precisely what is involved in the role of liaison officer, there was no evidence, and no reasonable basis, for the Tribunal to conclude that the applicant had any education, training or experience in such an occupation.

Accordingly, there was no basis for the Tribunal to engage in the process of speculation and arrive at the state of satisfaction required by the definition.

It may be accepted that the officer who prepared the Vocational Assessment was qualified to make it. But aptitude for a possible occupation does not provide evidence of the nature of the occupation in which it was said to be likely that the applicant would engage in employment by reason of her education, training or experience.

The Tribunal’s analysis of the likelihood of the applicant gaining employment as a liaison officer stands in stark contrast to its finding that there was insufficient detail to enable the Tribunal to determine whether her experience would qualify her for work as a receptionist.’

10 In relation to the third ground, Jacobson J said at [76] to [79]:

‘The passages quoted by the Tribunal from the Vocational Assessment provided an evidentiary basis for a finding that it was likely that work may be available.

However, those passages are silent as to the question of whether the work was part-time in the sense referred to by the Tribunal, ie about 25 hours per week.

Nor is there anything in the Vocational Assessment which provided any evidence that part-time work was available in the nominated field.

Accordingly, this "no evidence" ground must also succeed.’

The Law

11 There is no doubt that it is an error of law for a tribunal to make a finding of fact for which there is no support. In court proceedings, where rules of evidence apply, the error is generally described as making a finding of fact for which there is no evidence. However, the Tribunal is not a court. It does not exercise judicial power. It exercises executive or administrative power. It is not bound by rules of evidence. It may inform itself in any way it thinks appropriate (s 36).

12 Provided that they accord procedural fairness to the parties, many tribunals are able to act on material which would not be admissible in a court. It follows that the absence of evidence which would be admissible and persuasive in a court will not necessarily mean that there is no sufficient material before a tribunal. In Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6; (1996) 185 CLR 259 at 282 (‘Wu Shan Liang’), Brennan CJ, Toohey, McHugh and Gummow JJ said:

‘[T]he term "evidence" as used to describe the material before the delegates ... seems to be borrowed from the universe of discourse which has civil litigation as its subject. The present context of administrative decision-making is very different and the use of such terms provides little assistance.’

13 The clearest Australian statement of the common law relating to the absence of evidence is that of Mason CJ in Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321 at 355, 356:

‘The question whether there is any evidence of a particular fact is a question of law: McPhee v. S. Bennett Ltd ((1934) 52 W.N. (N.S.W.) 8, at p. 9); Australian Gas Light Co. v. Valuer-General ((1940) 40 S.R. (N.S.W.) 126, at pp. 137-138). Likewise, the question whether a particular inference can be drawn from facts found or agreed is a question of law: Australian Gas Light ((1940) 40 S.R. (N.S.W.) 126, at pp. 137-138); Hope v. Bathurst City Council ((1980) [1980] HCA 16; 144 C.L.R. 1, at pp. 8-9). This is because, before the inference is drawn, there is the preliminary question whether the evidence reasonably admits of different conclusions: Federal Commissioner of Taxation v. Broken Hill South Ltd ((1941) [1941] HCA 33; 65 C.L.R. 150, at pp. 155, 157, 160). So, in the context of judicial review, it has been accepted that the making of findings and the drawing of inferences in the absence of evidence is an error of law: Sinclair v. Maryborough Mining Warden ((1975) [1975] HCA 17; 132 C.L.R. 473, at pp. 481, 483).

But it is said that "[t]here is no error of law simply in making a wrong finding of fact": Waterford v. The Commonwealth ((1987) [1987] HCA 25; 163 C.L.R. 54, at p. 77), per Brennan J. Similarly, Menzies J. observed in Reg. v. District Court; Ex parte White ((1966) [1966] HCA 69; 116 C.L.R. 644, at p. 654):

"Even if the reasoning whereby the Court reached its conclusion of fact were demonstrably unsound, this would not amount to an error of law on the fact of the record. To establish some faulty (e.g. illogical) inference of fact would not disclose an error of law."

Thus, at common law, according to the Australian authorities, want of logic is not synonymous with error of law. So long as there is some basis for an inference – in other words, the particular inference is reasonably open – even if that inference appears to have been drawn as a result of illogical reasoning, there is no place for judicial review because no error of law has taken place."

14 In Sinclair v Maryborough Mining Warden [1975] HCA 17; (1975) 132 CLR 473 at 481, Barwick CJ said:

‘It was essential that there be material before him ... which would warrant an affirmative conclusion on the substance of the applications that the recommendations should be made.’

Consideration

15 Even in a curial context the "no evidence rule" is strict. The complaint of no evidence will be defeated by the presence of some probative evidence. Where no rules of evidence apply, and a tribunal can "inform itself ... in any way it thinks appropriate", the complaint may be even more easily satisfied. It seems to us there was sufficient material for the Tribunal to reach its conclusion in the present case.

16 The question which the Tribunal was required to address was whether it was satisfied that Ms Smith was unlikely ever to engage in gainful employment for which she was reasonably qualified. Ms Smith bore the onus. The test required satisfaction that she would not be employed at all. The Tribunal was not required to identify a particular occupation in which she would be able to find work before it declined her claim. It was inevitable that the Tribunal would consider areas of possible employment, as part of its consideration of the matter, but that should not be allowed to cloud the actual issue it was required to consider.

17 We must determine whether Jacobson J was correct in holding that the Tribunal erred in law by making an essential finding of fact or coming to a critical conclusion where there was no material to support the finding or conclusion. It will be useful first to examine precisely what task the Tribunal was required to perform.

18 The ultimate task for the Tribunal, standing in the shoes of the trustee, was to consider whether it was satisfied ‘that the Member has become incapacitated to such an extent, as to render the Member unlikely ever to engage in any gainful profession, trade or occupation for which the member is reasonably qualified by reason of education, training or fitness’. It is common ground between the parties that the reasonable qualification referred to is the member’s existing qualification, rather than any qualification that would be achieved by retraining. We agree and will proceed on this basis.

19 The actual question for the Tribunal was whether the decision under review was ‘unfair or unreasonable’ (s 14). If the Tribunal was satisfied that the decision was ‘fair and reasonable, it was required to affirm the decision (s 37(6)). It has been said that the role of the Tribunal is to consider ‘whether the actual decision, as opposed to the process by which the decision was reached, was fair and reasonable in the circumstances’ (Colonial Mutual Life Assurance Society Limited v Brayley [2002] FCA 1333 at [31] per Branson J; see also National Mutual Life Association of Australia Limited v Scollary [2002] FCA 695 at [24] per Ryan J). However, depending upon the circumstances, unfairness in process may lead to unfairness in decision.

20 The Tribunal had the following evidence before it from the report prepared by Natalie Green, to which it referred:

1. Ms Smith had worked as a receptionist with an indigenous organisation.
2. She enjoyed working with Aboriginal people which was her preference.

3. There were many suitable positions (presumably working with Aboriginal people in the relevant area) that required no minimum education or qualifications and training was generally on the job.

21 The reasoning which lead the Tribunal to its conclusion was as follows:

1. The question was whether Ms Smith was fit for part-time sedentary duties in occupations for which she had the relevant education, training or experience.
2. There was evidence before it, in the Natalie Green report, that Ms Smith has relevant experience for work in the Aboriginal community, a liking for it and transferable skills;
3. It appears from that report that such work is available, at least part time, in the area in which she lives.
4. Given those circumstances, the decisions under review were fair and reasonable.

22 There was other material before the Tribunal (much of it post-dating Ms Green’s report) that bore on the question the Tribunal had to decide. The Tribunal noted that material in its reasons for decision, although it did not say to what extent it accepted the accuracy of the facts stated and opinions expressed in that material nor what bearing (if any) that material had on its ultimate conclusion. This omission is disappointing but it is not relevant to our consideration of the ‘no evidence’ ground. It was for the Tribunal to determine what evidence it would accept and the weight to be given to such evidence.

23 We are of the respectful opinion that Jacobson J erred in concluding that the Tribunal’s decision was unsupported by evidence. The Tribunal was ultimately concerned with whether the decision under review was fair and reasonable, as it recognised. It was not ultimately concerned with whether identifiable work was actually available to Ms Smith at the time of its decision. The Tribunal based its conclusion on ‘all the circumstances’, not just the possibility of Ms Smith working as an Aboriginal liaison officer. The Tribunal was entitled to, and did, base its decision on broader evidence such as that there were many suitable positions working with Aboriginal people in the relevant area.

24 In its deliberations paragraph, the Tribunal did not itself refer to ‘employment in a role liaising with Aboriginal people’. However, it did quote a reference to this from Ms Green’s report. That description was wider than employment as a liaison officer. When the Tribunal referred to ‘this kind of work’ it seems to have had in mind more than one particular position. Accordingly, we do not agree with Jacobson J that it was necessary for the Tribunal to have had before it ‘a job description stating precisely what is involved in the role of liaison officer’. Nor was it necessary for the Tribunal to have had precise evidence about the availability of suitable work in the Aboriginal community. It must be remembered that Ms Green was an expert. Her report was before the Tribunal. Her reference to liaison work was itself evidence that such work existed without the need for an exposition as to precisely what it was.

25 We are conscious of the direction of Brennan CJ, Toohey, McHugh and Gummow JJ, in Wu Shan Liang at 272, endorsing the words of Neaves, French and Cooper JJ in Collector of Customs v Pozzolanic [1993] FCA 456; [1993] 43 FCR 280 at 37, that the reasons of tribunals "are not to be construed minutely and finely with an eye keenly attuned to the perception of error." Although there is ample ground for criticism of the Tribunal’s expression of its reasons, we think none of the ‘no evidence’ points is made out. In relation to the first and third points, there was material in Ms Green’s report that provided a basis for the Tribunal to conclude that Ms Smith had the qualifications necessary to undertake work in the Aboriginal community and that work (at least part-time) in this field would probably be available to her. In relation to the second point, although we agree that there was no evidence before the Tribunal as to the nature of the work that might be performed by an Aboriginal liaison officer, we think that, properly understood, the Tribunal’s conclusion did not depend upon an assumption that Ms Smith would find work in that precise position.

26 The appeal should be allowed and the decision of the Tribunal reinstated. The first respondent should be ordered to pay the costs of the appeal and of the hearing below. However, the first respondent should have a costs certificate pursuant to s 6 of the Federal Proceedings (Costs) Act 1981 (Cth).

I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Court.

Associate:

Dated: 3 June 2005

Counsel for the Appellant:	Mr D Davies SC
Solicitors for the Appellant:	Deacons
Counsel for the First Respondent:	Mr J Dodd
Solicitors for the First Respondent:	McCabe Partners
The Second Respondent filed a Submitting Appearance
Date of Hearing:	9 May 2003
Date of Judgment:	3 June 2005