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Federal Court of Australia |
SUPERANNUATION - Superannuation Complaints Tribunal - death benefit - whether employee in service of employer at time of death - function of Tribunal - whether confined to review of discretionary decisions - whether exercise of judicial power
Constitution Ch III
Superannuation (Resolution of Complaints) Act 1993 (Cth): ss 14(2), 36, 37
Brandy v Human Rights and Equal Opportunity Commission [1995] HCA 10; (1995) 183 CLR 245 mentioned
Precision Data Holdings Ltd v Wills [1991] HCA 58; (1991) 173 CLR 167 discussed
Re Zantiotis [1993] FamCA 32; (1993) 113 ALR 441 applied
R v North; Ex parte Oakey [1927] 1 KB 491 applied
In re The Electrolytic Refining and Smelting Company of Australia Proprietary Limited Staff Provident Fund; Taylor v Roberts [1947] VLR 498 applied
Briffa v Hay (1957) 147 ALR 226 not followed
Collins v AMP Superannuation Limited (1997) 147 ALR 243 not followed
Pope v Lawler (1996) 41 ALD 127 mentioned
Federal Commissioner of Taxation v Munro [1926] HCA 58; (1926) 38 CLR 153 applied
Huddart, Parker and Co Pty Ltd v Moorehead [1909] HCA 36; (1908) 8 CLR 330 applied
R v Trade Practices Tribunal; ex parte Tasmanian Breweries Pty Ltd [1970] HCA 8; (1970) 123 CLR 361 applied
Karger v Paul [1984] VR 161 applied
Prentis v Atlantic Coast Line Co 211 US 210 (1908) mentioned
National Mutual Life Association of Australia Ltd v Jevtovic (Sundberg J , 8 May 1997, unreported) applied
Adkins v The Health Employees Superannuation Trust Australia Ltd (Heerey J, 15 August 1997) applied
R v Wicks [19997] 2 WLR 876 applied
Hoffman-La Roche & Co v Secretary of State for Trade and Industry [1975] AC 295 mentioned
Comptroller-General of Customs v Kawasaki Motors Pty Ltd (No 1) [1991] FCA 519; (1991) 32 FCR 219 mentioned
NEIL WILKINSON, TONY TUOHEY and MARITA WALL -v- CLERICAL ADMINISTRATIVE AND RELATED EMPLOYEES SUPERANNUATION PTY LTD & ORS
VG 459 of 1997
JUDGES: LOCKHART, HEEREY AND SUNDBERG JJ
DATE: 12 FEBRUARY 1998
PLACE: MELBOURNE
|
IN THE FEDERAL COURT OF AUSTRALIA | |
| VICTORIA DISTRICT REGISTRY | VG 459 of 1997 |
|
BETWEEN: | NEIL WILKINSON, TONY TUOHEY AND MARITA WALL
AppELLANTS |
|
AND: | CLERICAL ADMINISTRATIVE AND RELATED EMPLOYEES SUPERANNUATION PTY LTD (as trustee of Clerical Administrative and Related Employees
Superannuation Plan) and LIFE REINSURANCE OF AUSTRALASIA LIMITED and DARYL BISHOP
Respondents |
|
JUDGES: | LOCKHART, HEEREY AND SUNDBERG JJ |
| DATE OF ORDER: | 12 FEBRUARY 1998 |
| WHERE MADE: | MELBOURNE |
THE COURT ORDERS THAT:
1. Appeal is allowed to the extent necessary to set aside Northrop J's order that the matter be remitted to the Superannuation Complaints Tribunal.
2. Otherwise the appeal is dismissed.
3. The appellants pay the respondents' costs of the appeal and the proceeding before Northrop J.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
|
IN THE FEDERAL COURT OF AUSTRALIA | |
| VICTORIA DISTRICT REGISTRY | VG 459 of 1997 |
|
BETWEEN: | NEIL WILKINSON, TONY TUOHEY and MARITA WALL
AppElLantS |
|
AND: | CLERICAL ADMINISTRATIVE AND RELATED EMPLOYEES SUPERANNUATION PTY LTD (as trustee of Clerical Administrative and Related Employees
Superannuation Plan) and LIFE REINSURANCE OF AUSTRALASIA LIMITED and DARYL BISHOP
RespondentS |
JUDGES:
LOCKHART, HEEREY AND SUNDBERG JJ DATE: 12 FEBRUARY 1998 PLACE: MELBOURNE
I have had the advantage of reading the reasons for judgment of Heerey J in draft form. I agree with his Honour's reasons and the orders which he proposes.
|
I certify that this page is a true copy of the Reasons for Judgment herein of the Honourable Justice Lockhart |
Associate:
Dated: 12 February 1998
|
IN THE FEDERAL COURT OF AUSTRALIA | |
| VICTORIA DISTRICT REGISTRY | VG 459 of 1997 |
|
BETWEEN: | NEIL WILKINSON, TONY TUOHEY and MARITA WALL
AppELLANTS |
|
AND: | CLERICAL ADMINISTRATIVE AND RELATED EMPLOYEES SUPERANNUATION PTY LTD (as trustee of Clerical Administrative and Related Employees
Superannuation Plan) and LIFE REINSURANCE OF AUSTRALASIA LIMITED and DARYL BISHOP
Respondents |
JUDGES:
LOCKHART, HEEREY and sundberg jj DATE: 12 FEBRUARY 1998 PLACE: MELBOURNE
The late Katrina Joy Bishop died on 13 September 1994. She was survived by her husband, the third respondent Daryl Bishop, and her son Michael, aged ten years.
This appeal arises out of a complaint made by Mr Bishop to the Superannuation Complaints Tribunal ("the Tribunal"), a body constituted under the Superannuation (Resolution of Complaints) Act 1993 (Cth) ("the Complaints Act"). Mr Bishop claimed that there was payable to him, as personal representative of his late wife, a Member's Insured Benefit under a superannuation scheme called The Clerical Administrative and Related Employees Superannuation Plan ("the Plan"). The Tribunal upheld Mr Bishop's complaint but on appeal by the trustee of the plan (the first respondent, hereafter "the Trustee") and the insurer under the Plan (the second respondent, hereafter "the Insurer") Northrop J set aside the Tribunal's determination. The members of the Tribunal have now appealed against his Honour's judgment.
The issues which have been argued on this appeal raise questions whether:
(i) on the proper construction of the Plan and an associated insurance policy a Member's Insured Benefit was payable in respect of the death of the late Mrs Bishop;
(ii) the jurisdiction of the Tribunal under the Complaints Act is limited to the review of trustees' decisions which are discretionary;
(iii) the Complaints Act invalidly purports to confer on the Tribunal judicial power of the Commonwealth, contrary to Chapter III of the Constitution.
II THE PLAN
The Plan is constituted by a Deed dated 18 December 1986 and Rules which form part of the Deed. The liabilities of the Trustee under the Plan are covered by a re-insurance agreement dated 8 December 1989 (hereafter "the Policy") made between the Trustee and the Insurer. Rule 8 specifies the benefits payable where a member of the Plan dies before reaching the normal retirement date while Rule 9 empowers the Trustee, in the exercise of a wide discretion, to decide to whom the death benefits are to be paid. Rule 8.1 relevantly provides:
"8. DEATH BENEFITS
8.1 Death in Service
If the Member dies whilst the Member is in the Service of the Employer prior to the Normal Retirement Date the Benefit payable shall subject to Rule 9 be an amount equal to the aggregate of:
(a) the Member's Retirement Account at the date of payment of the Benefits following the death of the Member: and
(b) the Member's Insured Benefit (if any)." (Emphasis added)
Rule 9.1 provides:
"9. PAYMENT OF DEATH BENEFITS
9.1 Dependant
If the Member dies the Trustee shall pay or apply the Benefits payable in accordance with this Deed and the Rules to or for the benefit of such one or more Dependants of the deceased Member and the Legal Personal Representative of the deceased Member and in such shares and proportions and in such manner as the Trustee in its discretion determines and without limiting the generality of the foregoing the Trustee may utilise the whole or part of the Benefit payable to provide for payment of an Annuity (to any one or more of the Dependants of the deceased Member) of such nature as the Trustee in its discretion determines."
It is to be observed that death benefits comprise two components, the Member's Retirement Account and the Member's Insured Benefit. In the present case the Trustee paid the first component but denied a liability to pay the second.
The Rules contain the following definitions:
"`Employee' means a person who is classified by an Employer as being in the Service of the Employer for the purposes of the Plan.
...
`Insured Benefit' in respect of a Member means the amount (if any) in addition to the Member's Retirement Account payable on the Member's death or Total and Permanent Disablement, the amount of which is determined from the election made by the Member in the Member's Application.
...
`Member' means an Employee who has been admitted as a Member of the Plan or a person in respect of whom a Benefit is payable in accordance with these Rules PROVIDED THAT a person shall cease to be a Member in the event of the death of that person or when all Benefits to which that person is entitled under the Rules have been paid or have otherwise ceased or been terminated as provided in the Deed and Rules whichever is the later.
...
`Service' means continuous service with an Employer and for the purposes of this definition an Employee's service shall not cease to be continuous by reason only of:
(a) a transfer from the service of one Employer to the service of another Employer PROVIDED THAT the Member makes the election referred to in sub-clause 18.4; or
(b) the Employee's temporary absence from the service of the Employer
(i) while the employee is engaged in compulsory military service or in service in the armed forces of Australia or its allies in time of war; or
(ii) in any other circumstances which for the purposes of the Plan the Employer regards as not resulting in a break in the continuity of the Employee's service,
and `Service of the Employer' shall have a corresponding meaning." (Emphasis added)
By Rule 2.2 an Eligible Employee (ie an Employee who has not attained the Normal Retirement Date - for present purposes age 65) shall become a member upon submitting to the Trustee a completed Member Application in a form approved by the Trustee.
In order to determine whether an Insured Benefit is "payable", it is necessary to consider the Policy.
Clause 6 of the Policy provides that benefits in respect of death shall cease in
respect of a Member on the happening of certain events, including:
"At the expiry of a period of 60 days after leaving the service of a Participating Employer"
The following definitions in the Policy are relevant:
"`Member' means an employee of a Participating Employer accepted by (the Insurer) for a benefit.
`Employee' means an employee of a Participating Employer and includes `Part-time Employees'. A `Part-time Employee' means an Employee who works for a Participating Employer for a certain number of hours each and every week."
III MR BISHOP'S CLAIM
On 31 July 1992 Mrs Bishop commenced employment with Axiom Advertising Pty Ltd trading as Sanctuary Cove Fruit and Vegetable Trading Co. She joined the Plan in August 1993. The Trustee had provided an Employee/Member Information leaflet which included the following statements ("CARE" meaning the Plan):
"ELIGIBILITY FOR MEMBERSHIP.
Membership is available to employees of any employer which participates in CARE
...
INSURANCE PROTECTION
On joining CARE, you are automatically provided with basic insurance cover for death or total permanent disability (casuals and part-times are only covered for death benefits)."
Mrs Bishop signed the Plan's printed employee membership application form. The form included, in the section dealing with employment, the following details:
"BASIS OF EMPLOYMENT (TICK APPROPRIATE BOX)
FULL-TIME PART-TIME CASUAL "
Mrs Bishop ticked the casual box.
The form contained the following relating to insurance cover:
"E. INSURANCE COVER (REFER TO THE TABLE OF INSURANCE BENEFITS)
* YOU ARE AUTOMATICALLY PROVIDED WITH BASIC INSURANCE COVER FOR DEATH & PERMANENT DISABILITY AT $1.00 PER WEEK N.B. PART-TIME AND CASUAL EMPLOYEES HAVE DEATH ONLY COVER AT 50c PER WEEK.
* IF YOU ARE EMPLOYED FULL-TIME, DO YOU WANT A HIGHER LEVEL OF COVER AT THE RATE OF $1.50 PER WEEK? YES
NOTE: ALL COST OF INSURANCE COMES OUT OF THE EMPLOYER'S CONTRIBUTIONS - THERE IS NO CASH COST TO YOU!
* You may chose to have no insurance cover but please think of your spouse and dependants and what you will do if you become permanently disabled. I do not require any insurance cover: "
Mrs Bishop did not tick the second box; she did not opt out of insurance cover.
Mrs Bishop thereafter made voluntary contributions of $10 per pay period. Her employer made contributions to the Plan, including arrears for the period July 1992 to August 1993. The total contributions, including interest, amounted to $545.54. This amount has been paid to Mr Bishop. The last occasion on which a contribution by Mrs Bishop was recorded was about 15 March 1994. She was ill and unable to work after 3 February 1994. She died on 13 September 1994.
Mr Bishop made a claim on the Trustee for the Member's Insured Benefit. The Trustee referred the claim to the Insurer for comment. On 14 March 1995 the Insurer advised the Trustee that the Insured Benefit was not payable under the Policy since Mrs Bishop had died outside the period of extended cover ie 60 days after "ceasing work" (an expression which does not appear in the Deed or the Policy). On 28 March 1995 the Trustee made a decision to accept the view of the Insurer and refused Mr Bishop's claim. On 30 June 1995 Mr Bishop, through his solicitor, made a complaint under s 14 of the Complaints Act.
IV THE TRIBUNAL'S DECISION
There was before the Tribunal (although not before the Trustee and the Insurer at the time of the decisions complained of) a statutory declaration by a director of the company which had employed Mrs Bishop. It included the following:
"2. KATRINA JOY BISHOP commenced employment with the company on the 31st day of July, 1992 on a casual basis.
3. KATRINA JOY BISHOP continued in the employ of the company from that time until the date of her death, namely the 13th September 1994.
4. Notwithstanding that she was employed by the company from the 31st day of July 1992 until the date of her death, she was on leave from the company solely for medical reasons. She contracted cancer and as a result was unable to return to her normal duties at her place of employment, although, it was made clear to KATRINA JOY BISHOP that she could return to work immediately she recovered from her illness.
5. KATRINA JOY BISHOP died on the 13th September 1994 and had not had the opportunity to return to her place of employment to physically carry out her work for the company, however, remained in the service of the company up until the date of her death. She did not resign from her employment, was never dismissed and remained in the service of the company until her death.
6. On the last day that KATRINA JOY BISHOP physically attended at the workplace to carry out her tasks in her capacity as an employee of the company was the 3rd day of February, 1994."
In its reasons, the Tribunal said:
"The Deceased was employed on a casual basis and had not worked for over 7 months prior to her death. The Complainant and the Employer claim that she was on leave without pay during this period. However, the Trustee submitted that she was not continuously employed. While this might be an accurate reflection of her employment status under employment law or the relevant award, as casuals cannot go on leave without pay, it is important to note that the definition of `Service' in the Trust Deed can override these other bases for assessing whether or not she was still in Service at the date of her death. The Tribunal therefore rejects the following Trustee's statement:
`It is submitted that in order to satisfy the element of continuity it must be established that the deceased member was engaged in regular remunerative employment activity as at the date of her death.'
The Tribunal is of the view that this submission does not reflect the extended definition of Service in the Trust Deed, where certain situations are deemed not to constitute a break in employment. In particular, sub-rule (b)(ii) requires consideration.
In order to qualify under this sub-rule, it is necessary that the Deceased's absence from work due to sickness was a `temporary absence'. The Trustee has correctly pointed out that the absence was in fact permanent, as she died before returning to work. However, the Tribunal accepts the evidence of both the Employer and the Complainant that it was intended that the Deceased's absence be only temporary and that she would return to work when she had fully recovered, as was expected. Further, there is no medical evidence to suggest that the Deceased was aware that she would not be well enough to resume her normal duties.
Sub-rule (b)(ii) of the definition of Service in the Trust Deed is the section which governs the impact on `Service' of leave without pay, such as parental leave. The Employer gave clear evidence that it regarded the Deceased's absence as not resulting in a break in the continuity of her service. The Trustee submitted that it did not accept the Employer's assertions and that the sub-rule required an objective assessment of the employment relationship. However, the Tribunal is of the opinion that the Employer's view was reasonably formed in the circumstances and was the clear point of reference under the terms of the Trust Deed.
The Trustee also submitted that sub-rule (b)(ii) was not intended to apply to members of the Fund who were employed on a casual basis. However, no distinction between casual and part-time employment appears in Rule 8.1 or the definition of Service. As far as the Tribunal is aware, only Rule 13 distinguishes part-time and casual employment and this Rule does not relate to benefits but only to the adjustment of contributions.
The failure to distinguish between casual and part-time employees is consistent with the information provided in the Administration Handbook as follows: Members employed on a part-time or casual basis will be provided with the basic death only cover at a cost of 50 cents a week, or they may elect to have no cover.
The Tribunal finds that the Deceased died while in Service. Therefore, Rule 8.1 applies and the Deceased's accumulated benefit and the `Insured Benefit (if any)' is payable."
The Tribunal then dealt with and rejected an argument that the status of insured benefits in respect of Mrs Bishop was affected by her having been on leave without pay. It then proceeded to hold that, within the meaning of cl 6 of the Policy, Mrs Bishop did not leave her employer's service on her last day of work.
After considering the Employee/Member Information Leaflet, the Tribunal stated:
"The Tribunal finds that the information set out in this Leaflet accords with the earlier interpretation of the provisions of the Trust Deed and of the Insurance Policy. In the view of the Tribunal, therefore, the expectations of the members derived from the information readily available is consistent with the legally binding requirements under the Trust Deed and Policy. In no way does it provide any suggestion of the interpretation adopted in the Trustee submission on this matter."
CONCLUSION
The Tribunal is of the opinion that Insured Benefits are payable in respect of the Deceased under both the terms of the Trust Deed and the Policy."
IV THE LEGISLATION
The Complaints Act establishes the Tribunal: s 6. The Tribunal must pursue the objectives of providing mechanisms for the review of the decisions to which complaints relate that are fair, economical, informal and quick: s 11. Section 4 provides that a trustee makes a decision if the trustee makes or fails to make a decision or engages in any conduct, or fails to engage in any conduct, in relation to making a decision: s 4. "Decision" is not otherwise defined.
A complaint is defined in s 3(1) to include a complaint made under s 14. For present purposes s 14 applies where a trustee of a fund has made a decision in relation to a particular member or a particular former member of a regulated superannuation fund. Under s 14(2), as originally enacted, a person could make a complaint to the Tribunal that the decision:
"(a) was in excess of the powers of the trustee; or
(b) was an improper exercise of the powers of the trustee; or
(c) is unfair or unreasonable."
An amendment in 1995 introduced by the Superannuation (Resolution of Complaints) Act 1995 (Cth) ("the amending Act") deleted the grounds in s 14(2)(a) and (b). The only ground of complaint now available under s 14(2) is that "the decision is or was unfair or unreasonable" (the words "or was" having been inserted by the amending Act). The Explanatory Memorandum to the Bill for the amending Act makes it clear that the amendment to s 14(2) was prompted by concern that a determination of the Tribunal that a trustee's decision was in excess of or an improper exercise of power would be an exercise of Commonwealth judicial power, having regard to the decision of the High Court in Brandy v Human Rights and Equal Opportunity Commission [1995] HCA 10; (1995) 183 CLR 245.
The parties to a complaint are the complainant, the trustee and any other person who has applied to the Tribunal to be made a party and who the Tribunal believes ought to be made a party to the complaint: s 18. In the present case the Tribunal ruled that the Insurer should be a party to the complaint by Mr Bishop.
Sections 36 and 37 as originally enacted were as follows:
"36. The Tribunal, in reviewing a decision or conduct:
(a) is not bound by technicalities, legal forms or rules of evidence; and
(b) is to act as speedily as a proper consideration of the review allows, having regard
(i) to the objectives laid down by section 11; and
(ii) the interests of all the members of the fund to which the complaint relates; and
(c) may inform itself of any matter relevant to a review of a decision in any way it thinks appropriate."
37. (1) Subject to subsection (2), for the purpose of reviewing a decision of the trustee of a fund, the Tribunal has all the powers, obligations and discretions that are conferred on the trustee by law or under the governing rules of the fund or otherwise and is to make a determination in writing:
(a) affirming the trustee's decision; or
(b) remitting the matter to which the trustee's decision relates to the trustee for reconsideration in accordance with the directions of the Tribunal; or
(c) varying the trustee's decision; or
(d) setting aside the trustee's decision and substituting a decision for the decision so set aside.
(2) The Tribunal must affirm the decision if it is satisfied that the decision, in its operation in relation to the complainant was fair and reasonable in all the circumstances.
(3) The Tribunal must not do anything under subsection (1) that would be contrary to law or to the governing rules of the fund."
The amending Act came into operation on 12 December 1995. The complaint the subject of the determination by the Tribunal relevant to the present case was made by Mr Bishop on or about 30 June 1995 under s 14 of the Complaints Act then in operation, apparently based upon the then s 14(2)(c). Provision was made preserving the rights of complainants making a claim before 12 December 1995 and the power of the Tribunal to review their complaints. However in the exercise of the power the complaint was to be treated as if it had been made under the Complaints Act as amended.
The amending Act substituted new sections 36 and 37 as follows:
"36. Tribunal, in reviewing a decision or conduct:
(a) is not bound by technicalities, legal forms or rules of evidence; and
(b) is to act as speedily as a proper consideration of the review allows, having regard to:
(i) the objectives laid down by section 11; and
(ii) if the complaint relates to a fund the interests of all the members of the fund.
(c) may inform itself of any matter relevant to the review in any way it thinks appropriate."
37. (1) For the purpose of reviewing a decision of the trustee of a fund that is the subject of a complaint under section 14:
(a) the Tribunal has all the powers, obligations and discretions that are conferred on the trustee; and
(b) subject to subsection (6), must make a determination in accordance with subsection (3).
(2) If an insurer or other decision-maker has been joined as a party to a complaint under section 14:
(a) the Tribunal must, when reviewing the trustee's decision, also review any decision of the insurer or other decision-maker that is relevant to the complaint; and
(b) for that purpose, has all the powers, obligations and discretions that are conferred on the insurer or other decision-maker; and
(c) subject to subsection (6), must make a determination in accordance with subsection (3).
(3) On reviewing the decision of a trustee, insurer or other decision-maker that is the subject of, or relevant to a complaint under section 14, the Tribunal must make a determination in writing:
(a) affirming the decision; or
(b) remitting the matter to which the decision relates to the trustee, insurer or other decision-maker for reconsideration in accordance with the directions of the Tribunal; or
(c) varying the decision; or
(d) setting aside the decision and substituting a decision for the decision so set aside.
(4) The Tribunal may only exercise its determination-making power under subsection (3) for the purpose of placing the complainant as nearly as practicable in such a position that the unfairness, unreasonableness, or both, that the Tribunal has determined to exist in relation to the trustee's decision that is the subject of the complaint no longer exists.
(5) The Tribunal must not do anything under subsection (3) that would be contrary to law, to the governing rules of the fund concerned and, if a contract of insurance between an insurer and trustee is involved, to the terms of the contract.
(6) The Tribunal must affirm a decision referred to under subsection (3) if it is satisfied that the decision in its operation in relation to:
(a) the complainant; and
(b) so far as it concerns a complaint regarding the payment of a death benefit - any person (other than the complainant, a trustee, insurer or decision-maker) who:
(i) has become a party to the complaint; and
(ii) has an interest in the death benefit or claims to be, or to be entitled to benefits through, a person having an interest in the death benefit;
was fair and reasonable in the circumstances."
These provisions applied with respect to the determination by the Tribunal of Mr Bishop's complaint.
Section 41(1) provides that a determination of the Tribunal comes into operation immediately upon the making of the determination. By s 41(3) a decision of a trustee as varied by the Tribunal is taken to be a decision of the trustee. Unless otherwise ordered, on the coming into effect of the Tribunal's determination the decision as varied has effect from the day on which the original decision had effect.
Section 44 of the Complaints Act requires the Tribunal to give copies of its determinations to the parties to a complaint. It may direct the trustee to inform other members of the decision.
Under s 46, a party to a review by the Tribunal may appeal to the Federal Court on a question of law from the determination of the Tribunal. An appeal to the Federal Court "does not affect the operation of the determination or prevent the taking of action to implement the determination" but the Court may grant a stay: s 47.
Provisions complementary to the Complaints Act, are contained in the Superannuation Industry (Supervision) Act 1993 (Cth) ("the Supervision Act").
Section 31(1)(b) of the Supervision Act provides that standards may be prescribed by regulation. A trustee must ensure compliance with such standards: s 34. A person who intentionally or recklessly contravenes s 34(1) is guilty of an offence punishable on conviction by a fine not exceeding 100 penalty units: s 34(2).
Regulation 13.17B of the Superannuation Industry (Supervision) Regulations 1993 (Cth) provides that a standard applicable to the operation of a regulated superannuation fund is that:
"... the trustee must not fail without lawful excuse, to comply with an order, direction or determination of the Superannuation Complaints Tribunal..."
Under s 42 of the Supervision Act regulated status and the tax advantages therefrom can be lost for contravention of the Supervision Act or regulations made thereunder.
Section 315 of the Supervision Act provides for the grant of an injunction by the Federal Court to restrain contravention of the Act or (under ss (5)) an injunction in mandatory form.
VI THE TRIAL JUDGE'S DECISION
His Honour referred to the High Court's statement of principles as to the characterisation of judicial power in Precision Data Holdings Ltd v Wills [1991] HCA 58; (1991) 173 CLR 167 at 188-190. His Honour noted the argument of counsel for the Trustee and the Insurer that the words in s 14(2) "that the decision is or was unfair or unreasonable" must have some meaning and should be construed as limiting the right of a member or other persons to make a complaint as to those decisions which involve the exercise of a discretion of the trustee or insurer. His Honour accepted the submissions of counsel as to the authorities which restrict the right to challenge in legal proceedings (apart from the Complaints Act) the exercise of a discretion of a trustee:
"Where a trustee exercises a discretion, it may be impugned on a number of different bases such as that it was exercised in bad faith, arbitrarily, capriciously (Re Pauling's Settlement Trusts [1964] Ch 303 at p 333), wantonly, irresponsibly (Lutheran Church of Australia South Australian District Incorporated v Farmers' Co-Operative Executor and Trustees Ltd [1970] HCA 12; (1970) 121 CLR 628 at p 639), mischievously or irrelevantly to any sensible expectation of the settler (Re Manisty's Settlement [1974] Ch 17), or without giving a real or genuine consideration to the exercise of the discretion (Karger v Paul [1984] VR 161, which includes a survey of the authorities). The exercise of a discretion by trustees cannot of course be impugned upon the basis that their decision was unfair or unreasonable (see Dundee General Hospital's Board of Management v Walker [1952] UKHL 1; [1952] 1 All ER 896) or unwise (Gisborne v Gisborne (1877) 2 AC 300 at p 307). Where a discretion is expressed to be absolute it may be that bad faith needs to be shown (Gisborne v Gisborne supra at p 305). The soundness of the exercise of a discretion can be examined where reasons have been given, but the test is not fairness or reasonableness (see Re Londonderry's Settlement [1965] Ch 918 at pp 928-9: Karger v Paul at pp 165-6."
The opposing submission by counsel for Mr Bishop and counsel for the members of the Tribunal was that if the Trustee had made an error of law in arriving at its decision then, of necessity, the decision of the Trustee was, as a matter of ordinary and common English usage both unfair and unreasonable.
His Honour did not accept the latter submissions. His Honour said:
"Some meaning must be given to the words `unfair or unreasonable' in subsection 14(2). This conclusion is supported by the limitations and restrictions contained in section 37. All these restrictions can be contrasted with the wider and almost unlimited powers conferred upon the AAT under the AAT Act 1901 . This conclusion is supported by a reference to the difficulties facing a member of a superannuation fund attempting to challenge the exercise of discretion of a trustee by proceedings in a court. The use of the words `unjust or unreasonable' in subsection 14(2) of the Resolution of Complaints Act must be given the meaning that a person may make a complaint if, and only if, the decision the subject of the complaint contains some discretionary element.
In the present case, there appears to be no suggestion that the decisions of the trustee and the insurer sought to be made the subject of the complaint involved any exercise of discretion by the trustee or insurer. The decision the subject of the complaint is the decision of the trustee that on the facts before the trustee, Mr Bishop is not entitled to an insurance benefit under Rule 8.1. There was no complaint that the decision of the trustee was unfair or unreasonable. The decision was based upon the wording of the rule and definitions contained in the Rules to the relevant facts."
His Honour then concluded that in making its determination the Tribunal purported to exercise judicial power. The Tribunal's determination, in his Honour's view, was based upon the application of legal principles, being the construction of the provisions of the Rules of the Plan, to facts found. The Tribunal erred in failing to consider whether the decision involved "any and what exercise of discretion by the Trustee or the Insurer".
His Honour ordered that the determination of the Tribunal "should be set aside on the basis that it was the result of the exercise of a judicial power". His Honour ordered that the complaint be remitted to the Tribunal for determination according to law. It is implicit in his Honour's reasoning that if on such remittal the Tribunal characterised the decision as the exercise of a discretion (which his Honour thought could possibly arise under Rule 9) the Tribunal could validly exercise powers under s 37.
His Honour also found a further ground on which the determination of the Tribunal should be set aside. His Honour held that the Tribunal had made an error of law, viz that it "held that Mrs Bishop was a part-time employee even though there was no material before it to support such a finding".
VII THE RIGHTS OF MR BISHOP
It will be convenient to turn at once to the second ground on which his Honour held the Tribunal's determination should be set aside.
The term "part-time employee" is not mentioned in the Deed. It is part of the definition of "Employee" in the Policy. His Honour was informed by the parties that the Trustee and the Insurer were not going to take any point based on the Policy. Their counsel stated that:
"... I have instructions from the insurer and the trustee and that neither will take - propose to take any point based upon the definition of part-time employee."
and later:
"But your Honour will not be troubled to construe the insurance policy or be troubled with any issue in relation to insurance as such. Your Honour will only be asked to determine the questions under the trust deed."
Counsel for Mr Bishop re-iterated the point:
"I put the preface in as a result of my learned friend's submissions. It seems to me that my learned friend is, in fact, conceding that the point that he has taken in his notice of appeal in relation to the deceased not falling within the definition of part-time employee has been conceded now, that he no longer intends to press that point. Does that accord with your Honour's understanding?
His Honour said:
"I am not worried about the insurance policy. I am told I am not required to examine that."
As counsel for Mr Bishop assumed that no point would be taken in relation to the Insurance Policy, the issue of whether Mrs Bishop fell within the definition of "part-time employee" was not addressed. In this respect his Honour's decision operated to deny Mr Bishop the opportunity to be heard on matters concerning the Policy. In itself this was an error of law: Re Zantiotis [1993] FamCA 32; (1993) 113 ALR 441; R v North; Ex parte Oakey [1927] 1 KB 491. But in any case, the conclusion the Tribunal reached was correct.
The issue argued before the Tribunal and the Court was whether Mrs Bishop died "whilst... in the Service of the Employer" within the meaning of Rule 8.1. The definitions of the terms "Member, "Employee" and "Service" in the Rules have already been noted.
The terms of the Deed make it clear that it is the Employer's subjective determination of whether a person is an employee at any particular time that is conclusive of that issue. A similar issue was considered by the Supreme Court of Victoria in In re The Electrolytic Refining and Smelting Company of Australia Proprietary Limited Staff Provident Fund; Taylor v Roberts [1947] VLR 498. Lowe J stated (at 503).
"I must give to `service' its meaning in the rules: `continuous service with the company as an employee as hereinbefore defined'. `Employee' is there defined as `a permanent staff member engaged in duties of a managerial technical clerical or supervisory nature who is of the male sex and who has attained the age of 21 years, or such other servant of the company who may be declared by the directors to be an employee for the purpose of these rules'. Roberts was an employee of the company up to the time of his enlistment. Continuous service does not involve a condition that the person has throughout the whole period been engaged continuously in rendering service to his employer. It includes periods of, e.g., rest, holidays and leave. Continuous service means service recognised by both parties as continuing." (Emphasis added)
In the present case too, Mrs Bishop's service was recognised by both her and her employer as continuing.
The Tribunal correctly had regard to the Employer's subjective determination in coming to its conclusion that Mrs Bishop was in the "Service" of the Employer when she died. The material considered by the Tribunal included a letter dated 27 January 1995 written by Mr Bishop's solicitor to the Administrator of the Plan. In part, that letter stated:
"Mrs Bishop's employer has indicated that it does not regard Mrs Bishop's absence from work as a break in the continuity of Mrs Bishop's service.
At no stage had Mrs Bishop given notice of her resignation nor had her services been terminated by her employer. She was merely absent from her employment on leave without pay in an attempt to recover from her illness, which was unfortunately unsuccessful."
If the Trustee had correctly interpreted the Deed, the letter was material, not inherently improbable, which was logically probative of the proposition that Mrs Bishop at the time of her death was still "in the Service of the Employer". At the very least the letter should have set the Trustee on a train of inquiry to obtain confirmation from the Employer as to whether it regarded Mrs Bishop as being in its service when she died.
In addition to this letter, the Tribunal also considered the statutory declaration already referred to. That clearly stated that the Employer regarded Mrs Bishop as continuing its service until she died.
The reason the Trustee failed to ask any question of the Employer would seem to be its misunderstanding of the terms of the Deed. In its submissions to the Tribunal, the Trustee claimed that a casual employee could never be continuously employed:
"The contract of employment ceases on the day when the employee last performed paid work for the employer... On the basis of the principles stated in these cases, it is clear that a contract of casual employment cannot result in the employee being continuously employed or in continuous service."
If this argument is correct, a casual employee could never be classified as being in the "Service" of an Employer and thus could never be an "Employee". If a casual employee could never be an "Employee", no casual employee could ever be a member of the Fund. This is clearly contrary to the representations made in the Employee/Member Information Leaflet, to the terms of the application form, and Rule 13.1(d), which treats casual employment as a category of part-time employment. As a matter of contract and trust law Mrs Bishop, as a casual employee, was entitled to the benefits of membership applicable to her. Authorities dealing with the concept of casual employment in other contexts, such as industrial legislation, are not to the point.
Quite apart from the concession of counsel that the Policy was not relevant, Mrs Bishop never left the service of the Employer before she died and thus cl 6 of the Policy did not apply.
Whatever the outcome of the present proceedings, it would seem Mr Bishop has a right enforceable in an appropriate court for payment of the Member's Death Benefit.
VII THE NATURE OF THE TRIBUNAL'S FUNCTION
In a judgment handed down shortly before the judgment of Northrop J in the present case, Merkel J held that the jurisdiction of the Tribunal was not confined to the review of discretionary decisions: Briffa v Hay (1997) 147 ALR 226. Northrop J referred to Briffa, but declined to follow it. In a later decision, Collins v AMP Superannuation Limited (1997) 147 ALR 243, Merkel J applied and expounded the view adopted in Briffa.
In Briffa Merkel J said (at 234) that the Complaints Act had provided a "new substantive right that is granted to members of a regulated fund, that is to say a right to challenge certain decisions of trustees, which were otherwise valid and intra vires, on the ground that they were `unfair and unreasonable' ".
His Honour said:
"As was pointed out by Sundberg J in National Mutual Life Association of Australia Ltd v Jevtovic, 8 May 1997, unreported (at 10-11), the question for the Tribunal, under the Complaints Act is not whether it is of the opinion that the trustees decision was correct as a matter of law or fact. Rather, it is whether the Tribunal is satisfied that the trustee's decision in relation to a member or former member is unfair or unreasonable: see ss 14(1),(2), 37(3) and (4)."
His Honour went on to say:
"Obviously, in arriving at a determination the tribunal might form its own views on the legal obligations of the trustee in relation to the decision or refer questions of law to the Court: see s 39. However, the view of the tribunal or of the court, in respect of those obligations is not determinative of the issue of unfairness or unreasonableness which the tribunal is to determine or of the compensatory relief the tribunal might grant."
In rejecting the argument that the jurisdiction of the Tribunal was limited to discretionary decisions, Merkel J relied on the absence of any such restriction in the language of the Complaints Act and on the inconvenience that would flow from disputes over non-discretionary matters having to be resolved in the slower and more expensive procedures of the ordinary courts. His Honour also considered the argument that the Tribunal would be exercising judicial power if its jurisdiction extended to non-discretionary matters. If that were the case s 15A of the Acts Interpretation Act (Cth) might result in the legislation being read down to avoid an unconstitutional operation. His Honour discussed Precision Data and Brandy and concluded that the Tribunal exercised administrative rather than judicial power because, in his Honour's view, the determination of the Tribunal created new rights and obligations as between the Trustee and the beneficiaries and did not determine rights and duties based on existing facts and law. Rather its function was to determine what rights and obligations should be created.
In Collins, Merkel J examined more closely the functions of the Tribunal. His Honour concluded (at 254) that if the trustee's decision is legally correct "it will also be fair and reasonable". If the Tribunal finds that the trustee's decision is wrong in law it need not necessarily follow that it is unfair and unreasonable; those aspects still have to be considered.
In my respectful opinion, Northrop J was correct in holding that the Tribunal's jurisdiction is confined to discretionary decisions. The opposing construction would mean that s 14 in its present form is to be construed as though it included decisions falling within the former s 14(2)(a) and (b).
Moreover, as already noted, Collins accepts that there can be no question of unfairness or unreasonableness where a non-discretionary decision of a trustee is legally correct. On that view, the only room left for the criterion of fairness and reasonableness to apply in the case of a non-discretionary decision is where the decision is legally wrong. The Tribunal could determine the decision was also unfair and unreasonable - which would be quite superfluous. Or it could determine the decision was fair and reasonable - in which case the trustee would be faced with a dilemma. If it implements the original decision it would be acting contrary to law and liable to action at the suit of member beneficiaries. If it did not implement the decision it would be disobeying the Tribunal's determination, committing an offence and laying itself open to injunctive remedy and the loss of approved status.
In short, the express terms of s 37(5) make it impossible for the fairness and reasonableness standard to have application otherwise than in relation to discretionary decisions. There are many such decisions falling to be made under the Plan; the choice of a dependent under cl 9.1 being one example. A decision of a trustee under a comparable provision was considered in Pope v Lawler (1996) 41 ALD 127.
VIII HAS JUDICIAL POWER BEEN CONFERRED?
In my opinion, the following factors lead cumulatively to the conclusion that the power purportedly conferred on the Tribunal by the Complaints Act is judicial power of the Commonwealth.
First, the Tribunal's function is essentially different from that of a body which makes, albeit in a forensic setting, essentially the same decision as a Government official, as for example the Administrative Appeals Tribunal sitting on an appeal against an assessment by the Commissioner of Taxation: Federal Commissioner of Taxation v Munro [1926] HCA 58; (1926) 38 CLR 153 at 176-178, 200, 212. While superannuation funds today are subject to a complex regulatory regime, the rights and obligations of members, trustees, employees and insurers as between themselves are governed by trust and contract law, enforceable in the ordinary courts. This area is not within the province of administration. It is not concerned with the rights and obligations of individuals or corporations vis-à-vis government like the tax, social security or migration systems.
Into this area of private law the Complaints Act has inserted the Tribunal as a body with power to "decide controversies" between subject and subject as to rights which relate to property, and to give a "binding and authoritative decision": Huddart, Parker and Co Pty Ltd v Moorehead [1909] HCA 36; (1908) 8 CLR 330 at 357 per Griffith CJ.
Secondly, the Tribunal's jurisdiction is enlivened by the complaint of an individual (s 14(2)). By contrast, one of the indicia of administrative as opposed to judicial functions is that only a governmental body can initiate proceedings: Precision Data at 190, R v Trade Practices Tribunal; ex parte Tasmanian Breweries Pty Ltd [1970] HCA 8; (1970) 123 CLR 361 at 375.
Thirdly, the Tribunal does not create new rights. It adjudicates on claims that rights conferred by law have been breached. The Complaints Act creates a new substantive right for members of superannuation funds to which the Act applies. Such members are given a right not to be adversely affected by decisions of a trustee which are not fair and reasonable. This is not a right previously known to trust law. A decision of a trustee, otherwise within power and not mala fide, could not be attacked on the grounds of unfairness or unreasonableness: Karger v Paul [1984] VR 161 at 164-166 and the cases there cited.
In determining a complaint, the Tribunal is adjudicating "a dispute about rights and obligations arising solely from the operation of the law on past events or conduct": Precision Data at 188. In the words of Holmes J in Prentis v Atlantic Coast Line Co (1908) 211 US 210 at 226, cited by Windeyer J in Tasmanian Breweries at 396:
"A judicial enquiry investigates, declares, and enforces liabilities as they stand on present or past facts and under laws supposed already to exist. That is its purpose and end."
Some of the High Court formulations of the concept of judicial power refer only to past facts. However there is no suggestion in these cases that a power, otherwise judicial, loses that character if it involves a determination on present as well as past facts. Courts frequently deal with present facts: What is the present medical condition of the plaintiff? Is the defendant's conduct which the plaintiff seeks to enjoin still continuing? In the present case s 37(4) of the Complaints Act requires the Tribunal to make an order to achieve the result that the unfairness or unreasonableness "no longer exists".
The function of the Tribunal involves an application to the trustee's decision of the criteria of fairness and reasonableness. In Jevtovic, a case involving a dispute as to whether a member of a fund was totally and permanently disabled, Sundberg J said (at 10):
The matter to which the Tribunal must first direct its attention under s 37, in a case as the present, is whether it is satisfied that the decision, in its operation in relation to the complainant, was fair and reasonable in the circumstances. That is made clear by s 37(1)(b) - the obligation to make a determination under sub-s(3) is "subject to subsection(6)" - and by sub-s(4) - the Tribunal's power to make a determination under sub-s(3) is conditional upon it having found that the decision was unfair or unreasonable or both.
Shortly after that passage his Honour said:
The sub-s (6) inquiry is not whether the Tribunal is of the opinion that the respondent is totally and permanently disabled, but whether it is satisfied that the trustee's and the insurer's decision that he was not so disabled were fair and reasonable in the circumstances.
In Adkins v The Health Employees Superannuation Trust Australia Ltd (unreported, 15 August 1997) I followed Jevtovic . In my respectful opinion, Sundberg J's analysis demonstrates that the Tribunal is considering present or past facts - the trustee's decision in its operation in relation to the complainant - and asking whether the decision is fair and reasonable.
Fourthly, the Tribunal's function does not involve the application of policy considerations: Precision Data at 191, Tasmanian Breweries at 399-400. Fairness and reasonableness are objective, albeit indeterminate, criteria and no different in that regard from those applied in other contexts by courts: Did the defendant take reasonable care? Is the alleged implied term reasonable?
Fifthly, a decision of the Tribunal can be enforced by civil injunction and criminal penalty. It is not to the point that the actual enforcing is not done by the Tribunal itself: Brandy. Nor does it matter that the determination takes effect as a decision of the trustee.
I do not accept the argument of counsel for the Attorney-General that a decision of the Tribunal, unlike the judgment of a court, is open to collateral attack. The comprehensive review of the law by the House of Lords in R v Wicks [1997] UKHL 21; [1997] 2 WLR 876 supports the proposition that the question is one of construction of the legislation under which the impugned order is made. In the present case does "order, direction or determination" of the Tribunal in reg 13.17B of the Superannuation Industry (Supervision) Regulations mean (i) an order etc not liable to be quashed on any of the standard grounds in public law, or (ii) an order etc which complies with formal requirements of the Complaints Act and has not actually been quashed on appeal or judicial review? ([1997] 2 WLR at 893). In my opinion, the scheme of the Complaints Act, and in particular the provision for appeals on questions of law to the Federal Court under s 46, indicates the latter. See also Hoffman-La Roche & Co v Secretary of State for Trade and Industry [1975] AC 295 and 365, Comptroller-General of Customs v Kawasaki Motors Pty Ltd (No 1) [1991] FCA 519; (1991) 32 FCR 219 at 228-230.
In any event, it is not an answer to the argument on enforceability to say that some decisions of the Tribunal may be invalid on one or other administrative law grounds and may therefore be ignored - or attacked in collateral proceedings. The legislation at the very least provides effective machinery for the enforcement of valid orders of the Tribunal . A trustee faced with an adverse determination of the Tribunal cannot ignore it without fear of sanctions following as a matter of law from the fact of the determination and its being disobeyed. That is an indicium of judicial power.
Finally, my conclusion would be the same if the Complaints Act on its proper construction applied to non-discretionary decisions.
The appeal should be allowed to the extent necessary to set aside his Honour's order that the matter be remitted to the Tribunal. Otherwise the appeal should be dismissed. The appellants should pay the respondents' costs. The Attorney-General did not seek costs.
|
I certify that this and the preceding twenty-three (23) pages are a true copy of the Reasons for Judgment herein of the Honourable
Justice Heerey. |
Associate:
Dated: 12 February 1998
Counsel for the appellants: G T Pagone QC and G J Davies
Solicitor for the appellants: Australian Government Solicitor
Counsel for the first and B J Shaw QC and D M McLean
second respondents:
Solicitor for the first and IFS Fairley
second respondents:
Counsel for the third Ms J J Batrouney
respondent:
Solicitors for the third Trumble Szanto Braham
respondent:
Counsel for the Attorney-General H C Burmester and K R Kennett
of the Commonwealth, intervening:
Solicitor for the Attorney-General Australian Government Solicitor
of the Commonwealth:
Date of Hearing: 2,3 October 1997
|
IN THE FEDERAL COURT OF AUSTRALIA | |
| VICTORIA DISTRICT REGISTRY | VG 459 of 1997 |
|
BETWEEN: | NEIL WILKINSON
First Applicant
TONY TUOHEY Second Applicant
MARITA WALL Third Applicant |
|
AND: | CLERICAL ADMINISTRATIVE AND RELATED EMPLOYEES SUPERANNUATION PTY LTD (as trustee of Clerical Administrative And Related Employees
Superannuation Plan)
First Respondent
LIFE REINSURANCE OF AUSTRALIA LIMITED Second Respondent
DARYL BISHOP Third Respondent |
|
JUDGES: | LOCKHART, HEEREY AND SUNDBERG JJ |
| DATE: | 12 february 1998 |
| PLACE: | MELBOURNE |
SUNDBERG J
THE SUPERANNUATION PLAN
(a) The Rules
The Clerical Administrative and Related Employees Superannuation Plan ("the Plan") was established by deed made on 18 December 1986 by the first respondent, the trustee named therein ("the trustee"). Rule 8.1 of the Plan's Rules provides for the payment of a death benefit where a member dies "whilst ... in the Service of the Employer prior to the Normal Retirement Date". The benefit has two components. The first is the amount in the member's retirement account at the date of payment of the benefit. The second is "the Member's Insured Benefit (if any)". The word "Service" is defined as
continuous service with an Employer and for the purposes of this definition an Employee's service shall not cease to be continuous by reason only of
...
(b) the Employee's temporary absence from the service of the Employer
(i) while the Employee is engaged in compulsory military service in the armed forces of Australia or its allies in time of war; or
(ii) in any other circumstances which for the purposes of this Plan the Employer regards as not resulting in a break in the continuity of the Employee's service.
and "Service of the Employee" shall have a corresponding meaning.
(b) The Insurance Policy
The trustee's liabilities under the Plan are covered by a reinsurance agreement ("the Policy") dated 8 December 1989 between the trustee and the second respondent ("the insurer"). Clause 6(c) of the Policy provides that death benefits "shall cease in respect of a Member ... at the expiry of a period of 60 days after leaving the service of a Participating Employer". The word "Member" is defined as "an employee of a Participating Employer who is accepted by [the insurer] for a benefit". The word "Employee" includes a "Part-time Employee", which in turn means "an Employee who works for a Participating Employer for a certain number of hours each and every week".
MRS BISHOP
Katrina Joy Bishop commenced employment with Axiom Advertising Pty Ltd ("the employer") in July 1992. She joined the Plan in August 1993, describing her employment as "casual", a type of employment for which the application form made provision. She made contributions each pay period until March 1994 by which time she had become ill and was unable to work. She died on 13 September 1994. Her husband, the third respondent ("Mr Bishop"), is her personal representative. Mr Bishop claimed to be entitled to the death benefit under the Plan in respect of his wife's death. The trustee paid him the first component of the benefit (the amount in the retirement account) but not the second (the insured benefit). The second component was not paid because the trustee accepted the insurer's position that Mrs Bishop had last worked on 31 January 1994, and that since she had died more than sixty days after that date, no benefit was payable because of clause 6(c) of the Policy. Pursuant to s 14 of the Superannuation (Resolution of Complaints) Act 1993 ("the Act") Mr Bishop made a complaint to the Superannuation Complaints Tribunal about the trustee's refusal to pay the second component.
THE TRIBUNAL'S DECISION
(a) Under the Rules
Since the first component of the benefit had been paid without demur, and the refusal to pay the second component was because the view had been taken that Mrs Bishop had died outside the sixty day period, one would have expected that the only issue before the Tribunal would have been whether Mrs Bishop in fact left the service on the last day she worked, as the insurer and the trustee contended, or when she died, as Mr Bishop contended. However both that question (clause 6(c)) and whether she died whilst in continuous service (rule 8.1) were agitated before the Tribunal.
The Tribunal had before it a statutory declaration made by a director of the employer stating that Mrs Bishop continued in its employment until the date of her death, though from 3 February 1994 until her death she was on leave for medical reasons. The employer had made clear to Mrs Bishop that she could return to work when she had recovered from her illness.
The Tribunal rejected the trustee's contention that because Mrs Bishop was not engaged in regular remunerative employment at the date of her death, she had not died in service. It also rejected the trustee's contention that par (b)(ii) of the definition of "Service" in the Rules did not apply to members engaged on a casual basis. The Tribunal appears to have concluded that Mrs Bishop fell within par (b)(ii) (which applies only to a "temporary absence" from service), even though it accepted the trustee's contention that her absence was in fact permanent. It said:
However, the Tribunal accepts the evidence of both the Employer and the Complainant that it was intended that the Deceased's absence be only temporary and that she would return to work when she had fully recovered, as was expected ....
Sub-rule (b)(ii) ... is the section which governs the impact on "Service" of leave without pay, such as parental leave. The Employer gave clear evidence that it regarded the Deceased's absence as not resulting in a break in the continuity of her service. The Trustee submitted that it did not accept the Employer's assertions and that the sub-rule required an objective assessment of the employment relationship. However, the Tribunal is of the opinion that the Employer's view was reasonably formed in the circumstances and was the clear point of reference under the terms of the Trust Deed.
The Tribunal then found that Mrs Bishop had died in service, that rule 8.1 applied, and that Mrs Bishop's "accumulated benefit and the `Insured Benefit (if any)' is payable".
(b) Under the Policy
The Tribunal noted that the expression "leaving the service" in clause 6(c) of the Policy is not defined. However it regarded as "pertinent" the definitions of "Member", "Employee" and "Part-time Employee" which I have set out under the sub-heading The Insurance Policy. The Tribunal was of the view that Mrs Bishop fell within the definition of "Part-time Employee", and was accordingly "still a Member and did not leave the Employer's service on her last day at work", with the result that clause 6(c) did not apply.
(c) Tribunal's conclusion
The Tribunal's conclusion was that the insured benefit was payable in respect of Mrs Bishop under both the Rules and the Policy. It set aside the decisions of the trustee and the insurer and substituted a decision that the insured benefit be paid without further delay.
THE ACT
Section 14 of the Act applies if the trustee of a regulated superannuation fund has made a decision in relation to a particular member or former member of the fund: sub-s (1). Sub-section (2) provides that a person may make a complaint to the Tribunal that the decision "is or was unfair or unreasonable". For the purposes of the Act a trustee makes a decision if it makes or fails to make a decision or engages in any conduct, or fails to engage in any conduct, in relation to making a decision: s 4. The parties to a complaint are the complainant, the trustee and, where the complaint relates to a death benefit or a disability benefit under a contract of insurance between the trustee and an insurer and the Tribunal decides that the insurer should be a party, the insurer: s 18. (The Tribunal ruled that the insurer should be a party to Mr Bishop's complaint). Section 37(1) provides that for the purposes of reviewing a decision of a trustee under s 14 the Tribunal has all "the powers, obligations and discretions that are conferred on the trustee". Sub-section (2) provides that where an insurer has been joined as a party, the Tribunal must also review the insurer's decision, and for that purpose has all "the powers, obligations and discretions that are conferred on the insurer". Sub-section (3) provides that on reviewing a decision the Tribunal must make a determination in writing affirming the decision, remitting the matter to the decision-maker for reconsideration, varying the decision, or setting it aside and substituting its own decision. The remaining sub-sections are as follows:
(4) The Tribunal may only exercise its determination-making power under subsection (3) for the purpose of placing the complainant as nearly as practicable in such a position that the unfairness, unreasonableness, or both, that the Tribunal has determined to exist in relation to the trustee's decision that is the subject of the complaint no longer exists.
(5) The Tribunal must not do anything under subsection (3) that would be contrary to law, to the governing rules of the fund concerned and, if a contract of insurance between an insurer and trustee is involved, to the terms of the contract.
(6) The Tribunal must affirm a decision referred to under subsection (3) if it is satisfied that the decision in its operation in relation to:
(a) the complainant ...
...
was fair and reasonable in the circumstances.
Section 41(3) provides that a determination of a trustee or insurer as varied by the Tribunal, or a decision of the Tribunal in substitution for a decision of a trustee or insurer, is to be taken to be a decision of the trustee or insurer, and has effect on and from the day on which the original decision had effect. A party to a review by the Tribunal may appeal to the Federal Court on a question of law: s 46. An appeal does not affect the operation of the determination or prevent the taking of action to implement the determination, but the Court may grant a stay: s 47.
PRIMARY JUDGE'S DECISION
Although before the Tribunal the case was contested under both rule 8.1 and clause 6(c), only the former was in issue before the primary judge. His Honour was told that the insurer and the trustee would not be taking any point based on the definition of "Part-time Employee", and that no issue under the Policy would arise. The primary judge held that
* the decisions of trustees susceptible of complaint under s 14 are limited to those of a discretionary character, and the decision in question was not of that character
* Section 37 purports to confer on the Tribunal the judicial power of the Commonwealth
* The Tribunal had made an error of law in holding that Mrs Bishop was a part-time employee because there was no material before it to support such a finding.
His Honour set aside the determination "on the basis that it was the result of the exercise of a judicial power", and on the basis that the Tribunal had made the error of law referred to above. He remitted the matter to the Tribunal for determination according to law after receiving such further evidence as it considered appropriate.
His Honour made no finding as to whether at the time of her death Mrs Bishop was in the continuous service of the employer. He noted that the issue before the Tribunal was whether Mrs Bishop was entitled to an insured benefit, which he said depended on whether she had died whilst in the service of the employer. He observed that the Tribunal appeared to have accepted that par (b)(ii) of the definition of "Service" resulted in there being no break in Mrs Bishop's service. He then noted that the essential question of law raised was whether on the proper construction of rule 8.1 and on the material before it, it was open to the Tribunal to reach the conclusion it did. He said:
The question was stated in a number of different ways but all the formulations come down to this question as to whether there was material before the Tribunal to support the conclusion that Mrs Bishop was a part-time employee. Clause 6 of the relevant insurance policy provided that the insured benefit payable on death ceased to be payable at the expiry of 60 days after leaving the service of a participating employer.
His Honour then recorded the Tribunal's conclusion that Mrs Bishop fell within the definition of "Part-time Employee" in the Policy and thus within the definition of "Member", and said that there was no material before the Tribunal relating to the number of hours each and every week that Mrs Bishop had worked.
THE APPEAL
Five questions were argued on the appeal. The first is whether the Tribunal's determination that Mr Bishop is entitled to be paid the "insured benefit" under rule 8.1 was made in accordance with the requirements of s 37 of the Act. The second is whether Mrs Bishop died whilst in the continuous service of the employer. The third concerns the propriety of the primary judge's conclusion that the Tribunal had wrongly held that Mrs Bishop was a part-time employee when there was no material before it to support that finding. The fourth is whether the jurisdiction of the Tribunal under s 37 is limited to the review of trustee's decisions which are of a discretionary character, or whether it extends to all decisions made by trustees. The fifth is whether s 37 purports to confer on the Tribunal the judicial power of the Commonwealth.
NON-DISCRETIONARY DECISIONS
(a) The original s 14(2)
As originally enacted s 14(2) enabled a person to complain to the Tribunal that a trustee's decision
(a) was in excess of the powers of the trustee; or
(b) was an improper exercise of the powers of the trustee; or
(c) is unfair or unreasonable.
For the purposes of reviewing a trustee's decision the Tribunal had all the powers, obligations and discretions of the trustee, and was required to make a determination in writing affirming the decision under review, varying the decision, substituting a decision for the one under review, or remitting the matter for reconsideration by the trustee: s 37(1). The obligation to make a determination was expressed to be subject to sub-s (2), which required the Tribunal to affirm the trustee's decision if it was satisfied that the decision, in its operation in relation to the complainant, was fair and reasonable in all the circumstances. Sub-section (3) precluded the Tribunal from doing anything under sub-s (1) that would be contrary to law or to the governing rules of the fund.
If on reviewing a complaint that a trustee's decision was in excess of power the Tribunal was of the view that the complaint was made out, it would have been obliged to set aside the decision, vary it or remit the matter for reconsideration. It could not have affirmed the decision, because that would have been contrary to law or to the governing rules of the fund: sub-s (3). Because of sub-s (3) the issue of fairness and reasonableness under sub-s (2) would not have arisen. Thus under the original form of ss 14(2) and 37, the Tribunal plainly had power to review decisions of a non-discretionary character.
(b) The amended s 14(2)
Amendments effected by the Superannuation Industry (Supervision) Legislation Amendment Act 1995 removed the excess of power and improper exercise of power grounds from s 14(2), so that the only ground of complaint is that the trustee's decision "is or was unfair or unreasonable", and inserted the new s 37. This, it was submitted for the trustee and the insurer, had the result that the Tribunal's power under s 37 was limited to the review of discretionary decisions.
In my view ss 14(2) and 37 require the conclusion that the Tribunal's jurisdiction is limited to the review of discretionary decisions. A non-discretionary decision of a trustee, for example that a person is not entitled to a benefit because he is not totally and permanently disabled, is either correct or incorrect in law. If the Tribunal is of the view that the decision is correct, it cannot set it aside and make a different decision, vary the decision, or remit the matter to the trustee for reconsideration: cf pars (b), (c) and (d) of s 37(3). To do any of those things would be contrary to law and to the governing rules of the fund. All the Tribunal can do under sub-s (3) is to affirm the decision. There is no occasion for it to consider whether the decision is fair and reasonable. In any event, given that the Tribunal regards the trustee's decision as correct, it could hardly hold that it is unfair or unreasonable. If it did so hold, sub-s (5) would preclude it from doing anything under sub-s (3) other than to affirm the trustee's decision. It is to be noted that while sub-s (4) refers generally to the Tribunal's determination-making power under sub-s (3), sub-s (6), if nothing else, shows that it is the power to make determinations under pars (b) to (d) alone of sub-s (3) to which sub-s (4) intends to refer.
If the Tribunal concludes that the trustee's decision is incorrect, it can, if it determines that the decision is unfair or unreasonable, set it aside and make a different decision, vary the decision, or remit the matter to the trustee for reconsideration. Given that the Tribunal regards the decision as incorrect, it could not decide that it is nevertheless fair and reasonable because, if it did, it would be obliged by sub-s (6) to affirm the decision, and that course is precluded by sub-s (5). I am accordingly unable to agree with the view expressed in Collins v Australian Mutual Provident Society (1997) 147 ALR 243 at 255 that having concluded that a trustee's decision is incorrect in law, the Tribunal can nevertheless find that it is fair and reasonable.
Thus the only scope for the fair and reasonable standard to apply in the case of a non-discretionary decision is where it is superfluous - ie where the Tribunal has concluded that the trustee's decision is wrong, in which case it is inevitable that it will also find it to be unfair or unreasonable or both. A power to determine whether or not a decision is unfair or unreasonable contemplates an ability in the decision-maker to decide that it is fair and reasonable, fair but unreasonable, reasonable but unfair, or unfair and unreasonable. In the case of non-discretionary decisions the Tribunal is denied that ability by s 37(5). In conferring jurisdiction on the Tribunal by reference to what is fair and reasonable or unfair and unreasonable, while directing the Tribunal that it cannot do anything that would be contrary to law or to the rules of the fund, the draftsman must have been directing attention to situations in which it is open to the trustee properly to decide to do one thing or another, but not to situations in which there is only one thing it can lawfully do.
It follows that I agree with the primary judge that the Tribunal's power under s 37 is limited to review of discretionary decisions of trustees.
In Briffa v Hay (1997) 147 ALR 226 at 236 Merkel J gave a number of reasons for not reading down the word "decision" in ss 14 and 37 to mean "discretionary decision". One was that there is no textual or contextual reason for doing so. It will be apparent from what I have said that s 37, especially sub-s (5), provides a contextual reason for limiting reviewable decisions of trustees to discretionary decisions. His Honour also relied, as did the appellants, on the fact that s 37(1) confers on the Tribunal "all the powers, obligations and discretions that are conferred on the trustee". His Honour said that imposing obligations on the Tribunal "suggests that the tribunal might also be exercising power in non-discretionary matters". That seems to me to overlook the fact that even in the exercise of powers and discretions a trustee has obligations - for example, to consider whether the power or discretion should be exercised, and to consider and take into account all the possible beneficiaries before exercising it.
(c) Section 14(6A) to 6(D)
The appellants submitted that sub-ss (6A) to (6D) of s 14 are inconsistent with the view that the Tribunal's powers are limited to the review of trustees' decisions which are of a discretionary nature. Those sub-sections were inserted at the same time as grounds of review (a) and (b) were removed from s 14(2) and s 37 assumed its present form. It is sufficient to set out sub-s (6A):
The Tribunal cannot deal with a complaint under this section about a decision of a trustee relating to the payment of a disability benefit because of total and permanent disability unless:
(a) the decision is made on or after 1 November 1994; and
(b) the complaint is made within a period of one year after the making of the decision to which the complaint relates.
It was submitted that a decision referred to in this sub-section will typically be that a member is not entitled to a benefit because he does not suffer from total and permanent disability. The member either is or is not relevantly disabled. No element of discretion arises. It was said by the appellants that at the same time as Parliament was supposedly restricting reviewable decisions to those of a discretionary nature, it was underlining that decisions that had always been reviewable under s 14 included those relating to payment of a benefit because of total and permanent disability, which typically are not decisions of a discretionary character.
Sub-secton (6A) is expressed in the most general language - "complaint about ... a decision ... relating to the payment of a disability benefit because of total and permanent disability". The language is not restricted to the narrow non-discretionary issue of whether a person is totally and permanently disabled, but is wide enough to encompass discretionary issues. For example, under a particular scheme a trustee may have a discretion to pay a benefit or part of it to someone other than the disabled person. Or there may be a discretion as to the manner in which a benefit is to be paid. It will all depend on the terms of the rules governing the particular scheme.
But for the context provided by s 37, s 14(2) would apply to all decisions of trustees and sub-ss (6A) to (6D) would apply to all decisions relating to the payment of total and permanent disability benefits. However, that context limits those sub-sections to decisions of a discretionary nature. None of the sub-sections is left without an area of operation by the restriction required by s 37. Accordingly I do not consider that sub-ss (6A) to (6D) are inconsistent with the view that the Tribunal's decision-making powers under s 37 do not extend to non-discretionary decisions.
If, contrary to my view, there is a collision, inconsistency or repugnancy between sub-ss (6A) to (6D) on the one hand and s 37 operating on s 14(2) on the other (in the sense that the former have no work to do if the Tribunal's powers are limited to the review of discretionary decisions), the later provision prevails in accordance with the rule of last resort to that effect. See Pearce and Geddes, Statutory Interpretation 4th ed (1996) at 111 and the cases there cited. Although ss 14(2) and 37 together produce the result I favour, the crucial provision is of course s 37, the later provision.
(d) Conclusion
For the reasons I have given, I am of the view that the only decisions of trustees that are reviewable under ss 14(2) and 37 are those of a discretionary nature.
JUDICIAL POWER
(a) New rights?
It was contended for the trustee that the Tribunal exercises judicial power because it makes its determinations by applying the law found in ss 14 and 37 of the Act to a trustee's decision. The distinction which Palles CB drew in Reg v Local Government Board [1902] 2 IR 349 between a determination of existing rights and the creation of new rights remains central to the identification of judicial power for Ch III purposes. In Precision Data Holdings Ltd v Wills (1991) 173 CLR 157 at 188-189 the High Court said:
True it is that the making of binding declarations of right by way of adjudication of disputes about rights and obligations arising from the operation of the law upon past events or conduct is a classical instance of the exercise of judicial power.
...
... if the object of the adjudication is not to resolve a dispute about the existing rights and obligations of the parties by determining what those rights and obligations are but to determine what legal rights should be created, then the function stands outside the realm of judicial power.
The Act creates a new substantive right for members of superannuation funds to which the Act applies. The right is not to be adversely affected by discretionary decisions of trustees which are unfair or unreasonable. It is a right not previously known to trust law: Dundee General Hospital Board of Management v Walker [1952] UKHL 1; [1952] 1 All ER 896 at 901; Karger v Paul [1984] VR 161 at 165-166; Jacobs' Law of Trusts in Australia 6th ed (1997) at 411.
In the conduct of its review the Tribunal considers the trustee's decision (a past event) and asks whether in its operation to the complainant it is unfair or unreasonable (the statutory criterion). I respectfully differ from Merkel J's conclusion in Briffa v Hay (1997) 147 ALR at 238 that a determination of the Tribunal "creates new rights and obligations as between the trustee and the beneficiary" and "does not determine rights and duties based on existing facts and the law". The rights and obligations are created by the Act. What the Tribunal does is apply them to the facts of the particular case, namely the decision of the trustee in its application to the complainant. The determination of the Tribunal is the manner in which the right and the correlative obligation created by the Act are enforced.
(b) Broad subjective criteria
For the Attorney-General it was submitted that the Tribunal's determinations are made by reference to broad considerations of fairness rather than legal principle or objective standards, and are thus not judicial in nature. In my view the inquiry as to whether the decision of a trustee is or was unfair or unreasonable in its operation in relation to the complainant does involve the application of objective standards. In Reg v Commonwealth Industrial Court; Ex parte Amalgamated Engineering Union [1960] HCA 46; (1960) 103 CLR 368 the question was whether the power conferred on the Industrial Court to declare that a rule of an organisation was "oppressive, unreasonable or unjust" was part of the judicial power of the Commonwealth. It was held that it was. Kitto J, with whom Dixon CJ agreed, said at 383:
Emphasis has been placed by the prosecutors upon the scope which there is in some of the provisions of sub-s (1) for uncertainty of opinion. It must be conceded that the words "oppressive", "unreasonable" and "unjust", in relation to conditions, obligations or restrictions imposed by a rule upon applicants for membership or upon members, describe attributes which are not demonstrable with mathematical precision, and are to be recognised only by means of moral judgments according to generally acknowledged standards. There is a degree of vagueness about them which, in the context of the former section, assisted the conclusion that the intention was to confer on the Court a general administrative discretion for the amelioration of rules. But the notions which the words convey, more readily to be associated with administrative than with judicial decisions though they be, must be conceded, having regard to the nature of criteria with which courts are familiar in other fields, to be not so indefinite as to be insusceptible of strictly judicial application ....
In Precision Data at 191 the Court distinguished between a discretionary authority to be exercised by reference to policy considerations or other matters not specified by the legislature and such an authority to be exercised "according to legal principle or by reference to a standard or test prescribed by the legislature". In Reg v Spicer; Ex parte Waterside Workers Federation [1957] HCA 96; (1957) 100 CLR 312 at 317 the distinction was drawn between a discretion of an arbitrary kind and one governed or bounded by some ascertainable tests or standards. See also Reg v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd [1970] HCA 8; (1970) 123 CLR 361 at 377 and Steele v Defence Forces Retirement Benefit Board [1955] HCA 34; (1955) 92 CLR 177 at 187-188. Although the words "fair" and "reasonable" describe attributes that are "to be recognised only by means of moral judgments according to generally acknowledged standards", they do constitute an objective standard. Because in the present context fairness and reasonableness are firmly tied to the effect of the trustee's decision in its operation in relation to the complainant (s 37(4) and (6)), they are less ample and open-ended than other concepts regularly applied by courts, such as whether a restriction is reasonable in the public interest or whether someone has exercised reasonable care.
(c) The AAT analogy
It was argued for the Attorney that the powers of the Tribunal are "completely analogous" to those of the Administrative Appeals Tribunal ("the AAT") established by the Administrative Appeals Tribunal Act 1975 ("the AAT Act"). The AAT's functions are administrative in nature: Drake v The Minister [1979] AATA 179; (1979) 24 ALR 577 at 584. Like the AAT the Tribunal stands in the shoes of the primary decision-maker (ss 37(1) and 41 of the Act and s 43(1) and (6) of the AAT Act), and may affirm or vary the decision under review, set aside the decision and substitute its own, or remit the matter to the primary decision-maker (s 37(3) of the Act and s 43(1) of the AAT Act). Like the AAT the Tribunal must determine issues of law for the purpose of reaching its decisions, but this does not mean that in performing its administrative functions it is exercising judicial power: Drake at 584-585. And like the AAT the Tribunal's determinations are subject to appeal on questions of law (s 46 of the Act and s 44 of the AAT Act).
As Burchett J pointed out in Walker v Department of Social Security (1997) 147 ALR 263 at 268, s 43 of the AAT Act reflects the provisions that governed the Boards of Review set up some seventy years ago to provide administrative review of taxation decisions. These provisions were held not to confer judicial power on the Boards: Shell Co of Australia Ltd v Federal Commissioner of Taxation [1931] AC 275. The essence of the reasoning of both the High Court and the Privy Council in that case was that the Boards were assimilated to the Commissioner. They were given the powers and functions of the Commissioner. They had no other powers or functions: at 541.
The essential feature of the revised scheme established by the Income Tax Assessment Act 1925 (upheld in Shell) was that the Boards of Review were part of the executive continuum. Thus in Federal Commissioner of Taxation v Munro [1926] HCA 58; (1926) 38 CLR 153 (Shell in the High Court) Isaacs J said at 177 that he could see no reason why Parliament could not entrust "successive administrative functionaries to consider and review assessments". And at 178, when considering the hypothetical case where the Treasurer, rather than the Court, was the ultimate official to settle the accuracy of the Board's assessments, his Honour said that the Treasurer's function would be "departmental and administrative". According to Higgins J at 201 the Board was "auxiliary to the Commissioner in his administrative functions" - the Board was "to assist him as to law or facts". It was a "mere piece of administrative machinery". Starke J at 212 said that the Commissioner's function was "administrative". The Board's decision stood "precisely in the same position". Its functions are "in aid of the administrative functions of government". It was on this point that Knox CJ dissented. He was unable to regard the Board as "a mere administrative body or as a mere adjunct to, or agent or instrument of, the Executive Government, exercising portion of the executive power of the Commonwealth": at 165. On appeal the Privy Council endorsed the language of Starke J quoted above: [1930] AC at 295. Putting the matter in their own words their Lordships at 298 said that the Boards of Review are "another administrative tribunal which is reviewing the determination of the Commissioner who admittedly is not judicial but executive".
Those were the passages relied on in Drake for the conclusion that the AAT, in reviewing decisions of the Minister, was making determinations which were "plainly administrative": (1979) 124 ALR at 584-585.
Whereas the Boards of Review, the AAT and comparable tribunals such as the Social Security Appeals Tribunal considered in Walker provide a mechanism for review of the decisions of an executive officer within the executive framework, and for that purpose are given all the executive and administrative powers of the officer, the Tribunal is given the power to review the decisions of a trustee: a private corporate citizen which is not part of the structure of government and does not exercise executive power. The trustee is not part of any executive continuum. The trustee and the Tribunal are not "successive administrative functionaries". The Tribunal's functions are not "in aid of the administrative functions of government", for the trustee is not part of the structure of government.
Section 19(5) of SIS enables a trustee to elect that the trust fund become a regulated fund and thus subject to the regime in SIS. But the trust fund remains a private fund with private assets. The trust assets do not become assets of the Commonwealth. The trustee, and the Tribunal when it stands in the shoes of the trustee, is not exercising power in relation to the administration of government assets.
For the above reasons I do not accept that the Tribunal's powers are completely analogous to those of the AAT.
(d) Power of enforcement
(i) General
The Tribunal has no power to enforce its determinations. In Rola Co (Australia) Pty Ltd v The Commonwealth [1944] HCA 17; (1944) 69 CLR 185 the absence of any power in the Committee of Reference to enforce its determinations led Latham CJ at 200 to conclude that it did not exercise judicial power. Other justices have said only that where a body has the power to enforce its binding decisions, it undoubtedly exercises judicial power. Thus in Waterside Workers' Federation v J W Alexander Ltd [1918] HCA 56; (1918) 25 CLR 434 at 451 Barton J expressed the view that where a body has power to carry its judgment into effect "the judicial power is undeniably complete". But his Honour left open whether such a power of enforcement is an essential characteristic of judicial power. Even Latham CJ in Rola at 199 said only that when a body with power to give a binding and authoritative decision is able to enforce its decision "all the attributes of judicial power are plainly present".
In Reg v Davison [1954] HCA 46; (1954) 90 CLR 353 Dixon CJ and McTiernan J reviewed a number of definitions and descriptions of judicial power, some of which emphasised different features said to identify a power as judicial - a controversy between parties, the determination of existing rights as distinguished from the creation of new rights, and the submission of a case by the parties for adjudication and enforcement of the judgment. Their Honours pointed out that each of these features is lacking from many proceedings falling within the jurisdiction of various courts of justice in English law. As to the enforcement element, they said at 368:
Again the enforcement of a judgment or judicial decree by the court itself cannot be a necessary attribute of a court exercising judicial power. The power to award execution might not belong to a tribunal, and yet its determinations might clearly amount to an exercise of the judicial power. Indeed it may be said that an order of a court of petty sessions for the payment of money is an example. For warrants for the execution of such an order are granted by a justice of the peace as an independent administrative act.
In Brandy v Human Rights and Equal Opportunity Commission [1995] HCA 10; (1995) 183 CLR 245 the Commission's determinations under the Racial Discrimination Act 1975 were "not binding or conclusive" between the parties: s 25Z(2) of that Act. The Commission, however, was required to lodge a determination in the Federal Court and the Registrar was required to register it: s 25ZAA. Upon registration the determination had effect as if it were an order made by the Federal Court: s 25ZAB. It was held that ss 25ZAA and 25ZAB and associated sections purported to invest judicial power in the Commission. Mason CJ, Brennan and Toohey JJ, after referring to Rola and Davison, said at 257:
The fact that the Commission cannot enforce its own determinations is a strong factor weighing against the characterisation of its powers as judicial; though it must be recognised that this is not an exclusive test of the exercise of judicial power.
It is necessary, however, in order that a tribunal's powers be judicial, that some mechanism exist for the enforcement of the tribunal's determinations. Thus their Honours said at 260 that an order which takes effect as an exercise of judicial power cannot be made except after the making of a "judicial determination", which they had earlier defined (at 258) as an "enforceable decision reached by applying the relevant principles of law to the facts as found". Their Honours went on to hold that in providing for registration of a determination of the Commission and its enforcement as if it were an order of the Federal Court, the Act purported to provide for an exercise of judicial power by the Commission.
Deane, Dawson, Gaudron and McHugh JJ said at 268-269:
... there is one aspect of judicial power which may serve to characterise a function as judicial when it is otherwise equivocal. That is the enforceability of decisions given in the exercise of judicial power.
...
However ... it is not essential to the exercise of judicial power that the tribunal should be called upon to execute its own decision. As Dixon CJ and McTiernan J observed in R v Davison, an order of a court of petty sessions for the payment of money is made in the exercise of judicial power, but the execution of such an order is by means of a warrant granted by a justice of the peace as an independent administrative act.
Their Honours also made it clear that if a tribunal's determinations cannot be enforced at all, it does not exercise judicial power: at 269. Their Honours then said that were it not for the registration and enforcement provisions it would be clear that the Commission did not exercise judicial power, because under s 25Z(2) its determinations were not binding on the parties. That situation was, they said, reversed by the registration provisions.
For the Attorney-General it was contended that the absence of any power of enforcement of the Tribunal's decisions denied to them the character of judicial power. The primary judge's statement that "inquiry into and determination of matters in issue is a judicial function if its object is the ascertainment of legal rights and obligations" was criticised on the ground that the crucial factor is not the ascertainment of rights and obligations but the ability to enforce them. It was said that all that happens when the Tribunal makes a determination is that its determination replaces that of the trustee. There are no special enforcement or registration provisions, unlike the position in Brandy.
(ii) SIS
Section 31(1) of the Superannuation Industry (Supervision) Act 1984 ("SIS") provides that the regulations may prescribe standards applicable to the operation of regulated superannuation funds. Section 34(1) requires the trustee of a superannuation entity to ensure that the applicable prescribed standards are complied with. Under sub-s (2) the intentional or reckless contravention of sub-s (1) is an offence. Regulation 13.17B of the Superannuation Industry (Supervision) Regulations prescribes a standard applicable to the operation of regulated superannuation funds that the trustee "must not fail, without lawful excuse, to comply with an order, direction or determination" of the Tribunal. Thus it is an offence under s 34(2) for a trustee, without lawful excuse, intentionally or recklessly to fail to comply with a determination of the Tribunal.
Section 315(1) of SIS provides that if a person has engaged or is engaging in conduct that constituted or constitutes a contravention of the Act, the Federal Court or the Supreme Court of a State or Territory may grant an injunction in accordance with sub-s (2). Under sub-s (2) the injunction may restrain the person from engaging in the conduct or require him to do any act or thing. The injunction may only be granted on the application of the Insurance and Superannuation Commissioner, who has the general administration of SIS, or of a person whose interests have been, are, or would be affected by the conduct. Sub-section (3) provides that if a person has refused or failed or is refusing or failing to do an act or thing that he is required by the Act to do, the Court may grant an injunction requiring him to do that act or thing. Sub-section (11) empowers the Court to award damages either in addition to or in substitution for an injunction. The expression "do an act or thing" includes "give effect to a determination made by the Superannuation Complaints Tribunal": sub-s (12). SIS requires a trustee to comply with orders, directions or determinations of the Tribunal: s 34(1) and reg 13.17B. Accordingly, a trustee who, without lawful excuse, fails to comply with a determination of the Tribunal engages in conduct that constitutes a contravention of SIS for the purposes of s 315.
Section 65 of the Act requires the Tribunal to report to the Commissioner any refusal or failure of a trustee to give effect to a determination made by the Tribunal. The significance of a contravention coming to the Commissioner's attention is that he may conduct an investigation of the trustee's affairs: s 263. For the purposes of an investigation the Commissioner may require the trustee to provide information, direct the trustee not to dispose of assets, and examine on oath persons having relevant information. By s 285 it is an offence for a person, without reasonable excuse, intentionally or recklessly to refuse or fail to comply with a requirement of the Commissioner under SIS. Under s 289 the Commissioner may, if satisfied that a person has, without reasonable excuse, failed to comply with a requirement made under the Act, certify the failure to the Federal Court or a Supreme Court, and the Court may order the person to comply with the requirement as specified in the order. Under s 313(1A), where an investigation is being carried out in relation to an act or omission by a person that constitutes or may constitute a contravention of SIS, the Commissioner may apply to the Court for a range of orders, including the appointment of a receiver or trustee of the property of a contravening individual or, if the contravener is a body corporate, a receiver or receiver and manager of its property. A person who intentionally or recklessly contravenes an order under the section is guilty of an offence and liable on conviction to imprisonment: s 313(12). Nothing in SIS that provides that a person must not contravene an order of the Court or that a person who contravenes such an order contravenes a provision of SIS or is guilty of an offence, affects the power of the Court in relation to the punishment of contempts of the Court: s 317.
(iii) Mandatory injunction
On an application under s 315(3) of SIS for an injunction requiring the trustee to give effect to a determination of the Tribunal, the claimant will have to prove the determination (as to which see s 43) and the trustee's failure to give effect to it. If the claimant establishes the failure, the Court is empowered to require the trustee to give effect to the determination. This is to be contrasted with the position of the Court under the Sex Discrimination Act considered in Aldridge v Booth [1988] FCA 170; (1988) 80 ALR 1. Determinations of the Human Rights Commission were "not binding or conclusive" between the parties. The Commission or a complainant could institute a proceeding in the Federal Court for an order enforcing the Commission's determination. Where the Court was satisfied that the respondent had engaged in unlawful conduct, it could make such order as it thought fit, including an order giving effect to the Commission's determination. Spender J held that since the proceeding in the Court was to "enforce" a non-binding and non-conclusive determination, the complainant would have to establish the unlawful conduct by evidence, and any findings by the Commission were of no assistance to the Court in its task.
The situation was similar under the 1986 amendments to the Racial Discrimination Act. The Commission or a complainant was empowered to institute a proceeding in the Federal Court to enforce a non-binding and non-conclusive determination. Where the Court was satisfied that the respondent had engaged in conduct that was unlawful under the Act, it was empowered to make such orders as it thought fit. As Mason CJ, Brennan and Toohey JJ said in Brandy at 261, "an independent exercise of judicial power by the Federal Court was required to give effect to a determination". And at 270 Deane, Dawson, Gaudron and McHugh JJ contrasted the position in Brandy with that obtaining under the 1986 legislation where "the Federal Court had to be satisfied of a breach of the Act before making an order for itself". In Brandy, the automatic effect of compulsory registration of the Commission's determination was that it became binding on the parties and enforceable as an order of the Federal Court. As Deane, Dawson, Gaudron and McHugh JJ said at 270:
Nothing that the Federal Court does gives the determination the effect of an order. That is done by the legislation operating upon registration. The result is that a determination of the Commission is enforceable by execution under s 53 of the Federal Court Act. It is the determination of the Commission which is enforceable and it is not significant that the mechanism for enforcement is provided by the Federal Court.
Unlike the position under the Sex Discrimination Act and the Racial Discrimination Act, the Act does not provide that the Tribunal's determinations are not binding and conclusive. Under s 41(1) the Tribunal's determination comes into operation when it is made. Under sub-s (3) a decision of the Tribunal in substitution for that of the trustee
is for all purposes ... taken to be a decision of the trustee and, upon coming into operation of the determination of the Tribunal ... has effect, or is taken to have had effect, on and from the day on which the decision under review has or had effect.
Section 47(1) provides that the institution of an appeal to the Federal Court from a determination of the Tribunal "does not affect the operation of the determination or prevent the taking of action to implement the determination". Sub-section (2) empowers the Court to stay the operation or implementation of the Tribunal's determination so as to secure the effectiveness of the hearing and determination of the appeal. Although the words "binding and conclusive" are not used, that is the effect of ss 41 and 47. So in that respect the Act differs from the legislation considered in Aldridge v Booth and in Brandy.
The SIS enforcement provisions also differ from the enforcement provisions in the Sex Discrimination Act and the 1986 amendments to the Racial Discrimination Act. Under the former the court does not engage in the same inquiry as that already carried out by the Tribunal. Under the Sex Discrimination Act the Federal Court had to be satisfied that the respondent had engaged in discriminatory conduct before it could make an order, including an order giving effect to the Commission's determination. Under the 1986 amendments to the Racial Discrimination Act the Federal Court had to be satisfied that the respondent had engaged in discriminatory conduct before it could make such order as it thought fit, including an order giving effect to a determination of the Commission. Under s 315 of SIS the court does not revisit the matters canvassed before the Tribunal. It merely asks whether the trustee has failed to give effect to the Tribunal's determination. If it is satisfied that the trustee has so failed, it may grant an injunction, on such terms as it thinks appropriate, requiring the trustee to give effect to the Tribunal's determination.
A body with power to decide controversies between parties by the determination of rights and duties based upon existing facts and the law does not without more exercise judicial power. In my view Brandy establishes that the body must as well have power to enforce its determinations, or there must be provided some other enforcement mechanism which does not involve an independent exercise of judicial power by some other body. The enforcement machinery in the Sex Discrimination Act and the 1986 amendments to the Racial Discrimination Act involved a full inquiry by the Federal Court into the allegations of discrimination and a determination of contravention by the Court itself before an enforcement order could be made. No such full enquiry is involved under SIS. But before the court can order the trustee to give effect to the Tribunal's determination, it must satisfy itself that the trustee has failed to give effect to it, and then decide whether, on the material before it, it is appropriate to make a mandatory order. It will also consider whether the order should be made upon terms.
Although the task for the court under s 315 of SIS is more confined than that performed by the Federal Court under the 1986 amendments to the Racial Discrimination Act, it is still "an independent exercise of judicial power" involving the exercise of a discretion as to whether a mandatory order should be made, and if so on what terms: cf Brandy at 261. Under s 25ZAB of the Racial Discrimination Act nothing the Federal Court did gave the Commission's determination the effect of an order. That was done by the legislation operating upon registration of the determination. Under s 315 of SIS a court's intervention is necessary before a mandatory order can be made: cf Brandy at 270.
What I have said about s 315 applies to proceedings under ss 289 and 313(1A).
(iv) "Enforcement" by prosecution
A trustee which has contravened s 34(1) of SIS by failing to comply with a determination of the Tribunal may be fined up to 100 penalty units: sub-s(2). On the assumption that prosecution for an offence under s 34 can be described as a mode of enforcing the determination, the mechanism involves the court hearing the charge being satisfied, beyond reasonable doubt, that the trustee has, without lawful excuse, intentionally or recklessly failed to comply with the Tribunal's determination. Again, there is an independent exercise of judicial power involved in the enforcement process. What I have said about s 34 applies to prosecutions under ss 285 and 313(12).
(v) Conclusion on enforcement
In my view an essential characteristic of judicial power is absent in the present case. The Tribunal cannot enforce its determinations, and the enforcement machinery provided by each of ss 289, 313(1A) and 315 of SIS involves an independent exercise of judicial power by the Federal Court or a Supreme Court, and that provided by each of ss 34(2), 285 and 313(12) of SIS involves an independent exercise of judicial power by a court of competent jurisdiction.
THE OTHER QUESTIONS
Because of the conclusion I have reached on the non-discretionary decision issue, it is not necessary for me to consider the remaining issues. However, my view that the Tribunal lacks power to review the trustee's decision does not affect Mr Bishop's ability, in an appropriate court, to recover any benefit to which he is entitled. As his entitlement was fully argued, I propose to deal with what I have described as the second and third questions - his entitlement, and the propriety of the primary judge's holding that the Tribunal had wrongly held that Mrs Bishop was a part-time employee.
I will deal with the second question first. Although before the Tribunal the case was conducted on the basis of both clause 6(c) of the Policy and rule 8.1, only the latter was in issue before the primary judge. His Honour was told that the insurer and the trustee would not be taking any point based on the definition of "Part-time Employee", and that no issue under the Policy would arise. The only issue was under rule 8.1. Despite this his Honour held that the Tribunal's decision should be set aside because the Tribunal had made an error of law in concluding that Mrs Bishop was a part-time employee when there was no evidence before it to support such a finding. Because the parties had informed his Honour that the part-time issue was no longer in contention, and that Mr Bishop's entitlement was to be treated as dependent on rule 8.1, Mr Bishop had no opportunity to deal with the point. To decide that issue against him in those circumstances was an error of law. Cf R v North; Ex parte Oakley [1927] 1 KB 491.
Furthermore, the primary judge failed to deal with the rule 8.1 question. In this he was in error. Putting to one side the concession referred to above, the case potentially raised two issues. The first was whether Mrs Bishop died whilst in service within rule 8.1. If she did, the second issue was whether clause 6(c) of the Policy operated to deny any entitlement to the insured benefit. If Mrs Bishop did not die in service, the second issue would not arise. The first issue depends on whether Mrs Bishop died in service, and involves a consideration of the definition of "Service" in the Rules. The second depends on whether Mrs Bishop died more than sixty days after leaving the service of the employer. That in turn depends on whether she left the service on the last day on which she worked or on the day she died. Whatever the relevance to the second question of the definition of "Part-time Employee" in the Policy, it has no relevance to the first question. Accordingly, in my respectful opinion, the primary judge was wrong when he said that the answer to the first question depends on whether Mrs Bishop was a "Part-time Employee" within the definition in the Policy. The true question under rule 8.1 is whether at the date of her death Mrs Bishop was in the "continuous service" of the employer. I do not regard par (b)(ii) of the definition of "Service" as applicable here. It is true that the employer did not regard Mrs Bishop's absence while ill as resulting in a break in the continuity of her service. But the absence was not a "temporary absence", for she never returned to work. Nevertheless, I am of the view that the Tribunal correctly treated Mrs Bishop's service as "continuous". The statement in the definition of "Service" that certain events do not cause service to cease to be continuous does not mean that any other interruption necessarily has that effect. In In re The Electrolytic Refining and Smelting Co of Australia Pty Ltd Staff Provident Fund; Taylor v Roberts [1947] VLR 498 at 503 Lowe J said:
I must give to "service" its meaning in the rules: "continuous service with the company as an employee as hereinbefore defined" .... Roberts was an employee of the company up to the time of his enlistment. Continuous service does not involve a condition that the person has throughout the whole period been engaged continuously in rendering service to his employer. It includes periods of, eg, rest, holidays and leave. Continuous service means service recognised by both parties as continuing. (Emphasis added)
The employer's statutory declaration shows that Mrs Bishop was regarded by the employer as being in continuous employment notwithstanding her absence from work in the period before her death. It is proper to infer from the fact that the employer made it clear to Mrs Bishop that she could return to work as soon as she recovered, that she too regarded her illness as not breaking the continuity of her service.
But for the concession, it would have been necessary for his Honour to have dealt with the second question - when Mrs Bishop left the service. I agree with the primary judge that there was no evidence before the Tribunal relating to the number of hours each and every week that Mrs Bishop worked for the purposes of the definition of "Part-time Employee". However there was evidence to enable the date on which she left the service to be determined. Indeed the only evidence was the employer's evidence that she remained in the service of the company until her death. But the concession made it unnecessary for the primary judge to decide that question.
In my view Mr Bishop is entitled to be paid the amount of the insured benefit, and can recover it in a court of competent jurisdiction.
CONCLUSION
The primary judge set aside the Tribunal's decision and remitted the complaint to it for determination according to law. Since in his Honour's view the Tribunal's decision was a purported exercise of judicial power and was thus wholly ineffective, it is not clear why he remitted the matter to the Tribunal. Although I differ from his Honour's conclusion that s 37 of the Act purported to confer judicial power on the Tribunal, I agree with him that the Tribunal has no power to review a non-discretionary decision of a trustee. In my view the trustee's decision in the present case was of that variety. I would allow the appeal to the extent only of setting aside the remittal. I would otherwise dismiss the appeal. The appellants should pay the respondents' costs.
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I certify that this and the preceding eighteen (18) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice
Sundberg |
Associate:
Dated: 12 February 1998
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Counsel for the Appellants: | A G Pagone QC and G Davies |
| Solicitor for the Appellants: | Australian Government Solicitor |
| Counsel for the first and second Respondents: | B J Shaw QC and D M Maclean |
| Solicitors for the first and second Respondents: | IFS Fairley |
| Counsel for the third Respondent: | J Batrouney |
| Solicitors for the third Respondent: | Trumble Szanto Braham |
| Counsel for the Attorney-General of the Commonwealth, intervening: | H C Burmester and G R Kennett |
| Solicitor for the Attorney-General of the Commonwealth: | Australian Government Solicitor |
| Date of Hearing: | 2, 3 October 1997 |
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