Australian Petroleum Nominees Pty Ltd v The Members of the Superannuation Complaints Tribunal
[1997] FCA 1466
•12 NOVEMBER 1997
FEDERAL COURT OF AUSTRALIA
Superannuation - judicial review of a decision of the Superannuation Complaints Tribunal that it had jurisdiction to entertain a complaint - statutory construction - whether complainant a “member” for the purposes of s 15(1)(b)(i) of the Superannuation (Resolution of Complaints) Act 1993 - whether complainant a notional member of the fund - whether complainant’s interest in the fund a present substantive entitlement or inchoate - meaning of “regulated superannuation fund” - form of relief to be granted.
Trusts - fiduciary obligation of the trustees to act for the benefit of all members of the fund and in accordance with the provisions of the constating instrument.
Superannuation (Resolution of Complaints) Act 1993 - s 15(1)(b)(i)
Superannuation Industry (Supervision) Act 1993 - ss 10(1) and 19
Income Tax Assessment Act 1936 - s 23F(2)(h)
Collins v AMP Superannuation (1997) 147 ALR 243 - cited
Alphapharm Pty Ltd v Smithkline Beecham (Australia) Pty Ltd (1994) 49 FCR 259 - cited
ANZ Banking Group Ltd v Westpac Banking Corporation (1988) 164 CLR 662 - cited
Caddy v McInnes (1995) 58 FCR 570 -cited
Metropolitan Gas Company v Federal Commissioner of Taxation (1932) 47 CLR 621 - appl.
Brown v Heffer (1967) 116 CLR 344 - appl.
Sankey v Whitlam (1978) 142 CLR 1 - cons.
Byron Environment Centre Inc. v Arakwal People (1997) 148 ALR 46 - cons.
AUSTRALIAN PETROLEUM NOMINEES PTY LIMITED V THE MEMBERS OF THE SUPERANNUATION COMPLAINTS TRIBUNAL AND ROBERT JAMES HARMER
NG 543 OF 1997
JUDGE: BEAUMONT J.
PLACE: SYDNEY
DATE: 12 NOVEMBER 1997
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NG 543 of 1997
BETWEEN:
AUSTRALIAN PETROLEUM NOMINEES PTY LIMITED
APPLICANTAND:
THE MEMBERS OF THE SUPERANNUATION COMPLAINTS TRIBUNAL
FIRST RESPONDENTROBERT JAMES HARMER
SECOND RESPONDENTJUDGE:
BEAUMONT J.
DATE OF ORDER:
12 NOVEMBER 1997
WHERE MADE:
SYDNEY
ORDERS:
Decision of the first respondent conveyed in its letter dated 23 April 1997 set aside.
Declare that the second respondent is not a "member" of the Australia Petroleum Superannuation Plan for the purposes of s 15(1)(b)(i) of the Superannuation (Resolution of Complaints) Act 1993.
First respondent restrained from proceeding further with the applicant's purported complaint.
Second respondent to pay the costs of the first applicant.
No order as to the costs of the first respondent.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NG 543 of 1997
BETWEEN:
AUSTRALIAN PETROLEUM NOMINEES PTY LIMITED
APPLICANTAND:
THE MEMBERS OF THE SUPERANNUATION COMPLAINTS TRIBUNAL
FIRST RESPONDENTROBERT JAMES HARMER
SECOND RESPONDENT
JUDGE:
BEAUMONT J.
DATE:
12 NOVEMBER 1997
PLACE:
SYDNEY
REASONS FOR JUDGMENT
BEAUMONT J:
INTRODUCTION
The following is the background to this application for judicial review of a decision by a tribunal that a party had standing to make a complaint to it.
Part 4 of the Superannuation (Resolution of Complaints) Act 1993 (“the Act”) makes provision for the making of complaints to the Superannuation Complaints Tribunal (“the Tribunal”). Section 15 deals with those who may make such a complaint. Relevantly s 15(1)(b)(i) provides:
“15.(1) A person may make a complaint only if:
(b) ...the person is
(i)a member or a former member of the regulated superannuation fund...” (Emphasis added).
Since there is no dispute as to the facts, the question for the Tribunal and now for this Court, in essence, is whether, as a matter of law, the second respondent, Mr Robert James Harmer, had standing to complain as a "member" of a "regulated superannuation fund".
Central to this litigation is the meaning of "member" and "former member" of the "regulated superannuation fund" in the present context. However, there is no statutory definition of "member" or of "former member".
"Regulated superannuation fund" is defined by cognate legislation, namely the Superannuation Industry (Supervision) Act 1993 (“the Supervision Act”) (s 10(1)), to have the same meaning as is given by s 19 of that legislation. Section 19(1) provides that a regulated superannuation fund is a fund in respect of which there has been compliance with subs 19(2)-(4). By subs (2), it is required that the fund have a trustee. By subs (3) it is provided that either the trustee must be a constitutional corporation pursuant to a requirement contained in the governing rules or the governing rules must provide that the sole or primary purpose of the fund is the provision of old-age pensions. By subs 19(4), provision is made for an election by the trustee that the Supervision Act is to apply in relation to the fund.
HISTORY OF THE DISPUTE
The history of the present dispute is as follows.
By an instrument in writing dated 18 September 1987, Mr Harmer and his wife, Maureen Emily Harmer addressed the following to the trustees of the Caltex Oil (Australia) Pty Limited Pensions Plan:
“1.I Robert James Harmer hereby apply for 100% commutation of my pension. In accordance with the Pensions Plan lump sum commutation formula, the commutation of my pension as at August 31 1987 amounts to $418,703.50. However, I acknowledge that the Australian Taxation Commissioner limits lump sum benefits payable from Superannuation Funds. The maximum amount that the Trustees are entitled to pay in accordance with the Trust Deed is $310,265.30.
2.Subject to any entitlement that may at any time exist to the further benefits referred to in clause 3 below, I clearly understand that by making this election to receive $310,265.30 I am irrevocably surrendering my pension in favour of this lump sum.
3.I clearly understand in signing this application that no further benefits will be payable to me or my spouse except such benefits as I may be eligible to receive as a result of amendments to the Trust Deed and Rules and the Australian Taxation Commissioner’s reasonable benefits guidelines which permit retrospective adjustments to commuted pensions or unless other circumstances prevail which allow the Trustees to make such additional payments. I clearly understand that in the event of amendments being made which would permit a further lump sum being paid it is unlikely that the amount would exceed the difference between my entitlement of $310,265.30 and the commutation amount calculated in accordance with the Plan formula of $418,703.50.
4.I Maureen Emily Harmer being the spouse of Robert James Harmer hereby request you to consent to the above application for 100% commutation of the pension of my spouse and I acknowledge that in consequence of such commutation I will cease to be entitled to any present or future benefits under the Pensions Plan except in those circumstances referred to in paragraph 2 of this application.”
The Pensions Plan there mentioned was constituted by a trust deed made on 17 April 1967 between Caltex Oil (Australia) Pty Limited and named individual trustees. By its interpretation provision, cl 3, "Member" was defined to mean:
“[A]n employee who has been admitted to membership of the Plan as hereinafter provided or where the context so permits has a benefit as hereinafter provided.” (Emphasis added).
By cl 8 of the trust deed it was provided that each member "will remain a member so long as he has a benefit in terms of the Plan" (emphasis added). By cl 9 of the trust deed it was provided that the Fund shall be vested in the Trustees upon the terms and conditions and subject to the trusts, powers, authorities and provisions contained in the deed, and that the Fund shall be managed, administered and applied solely by the Trustees in accordance with the deed and the Rules and any alterations or modifications thereof made as provided in the deed.
By cl 19 it was provided, relevantly, that the Trustees -
“shall pay out of the Fund the amounts of all benefits due and payable in terms of this Trust Deed and the Rules so far as those benefits are provided by the Society and as far as payment of monies in respect of those benefits is made by the Society to the Trustees.”
The Rules provided for a lump sum option relevantly in these terms:
“LUMP SUM OPTION
19.Any contributing member may apply in writing to the Trustees to surrender up to fifty per cent of the pension payable to him in terms of Rules 10, 11, 15, 27 or 28 at a rate agreed upon between the Trustees and the Society and in place of such part of pension so surrendered shall receive a lump sum payment subject to the following conditions:
(i)Application for approval to such surrender must be made by the member to the Trustees before pension payments to him have commenced.
(ii)The acceptance by such member of the lump sum payment in terms of this Rule will be final and irrevocable.
PROVIDED HOWEVER and subject to the conditions in sub-paragraphs (i) and (ii) of this Rule and bearing in mind at all times that the Plan is intended to be a pensions plan and not a lump sum on retirement plan, the Trustees may either...”
Provision is then made for the exercise of discretion by the Trustees, upon application by a member, in the case of hardship or in the case of substantial prejudice to the receipt of benefits otherwise receivable under government social services schemes, neither of which are of present significance.
As from 1 October 1986, changes were made to the Pensions Plan. According to a summary of the changes made to retirement benefits, a 100 per cent commutation was thereafter permitted. The summary describes these changes in the following terms:
“100% Commutation
Members are currently restricted to a maximum commutation of 50% of their pension. From October 1, 1986, all members will be given the further option to commute 100% of their annual pension to a lump sum. The commutation factors that will be used to convert the pension to a lump sum have not been altered and appear in the Appendix to this summary. The lump sum benefit will be subject to limits imposed by the Taxation Commissioner.” (Emphasis added).
Although neither party sought to introduce any formal evidence of the Rule change in this regard, nothing appears to turn on this for present purposes. The summary is in evidence without objection from either party. Further, it is accepted that the summary accurately reflects the amendments then made. It is common ground that the passage quoted from the summary of changes to the Plan refers to the provisions of s 23F(2)(h) of the Income Tax Assessment Act 1936 or its later equivalent provision. Exemption is there provided for the income of certain superannuation funds established for the benefit of employees, but subject to the fulfilment of a number of conditions. Relevantly for present purposes, it should be noted that it is a condition of this exemption (as s 23F(2)(h) provides) that the benefits that any employee has, or the dependants of any employee have, the right to receive from the fund are not "excessive in amount" having regard to the factors there mentioned.
It is also common ground that, from time to time, the Taxation Commissioner has issued "guidelines" in the form of Taxation Rulings which publish the Commissioner's opinion of what he proposes to treat as "an excess benefit amount" for the purposes of s 23F(2)(h) or its equivalent. It is not disputed that in July 1990 the Taxation Commissioner relaxed his guidelines. This relaxation has given rise to the present dispute.
The Pensions Plan (“the old Plan”) was wound up on 1 April 1991. Shortly before this, on 28 March 1991, the Caltex Superannuation Plan (“the new Plan”) was established. On 1 April 1991, all members of the old Plan and all assets of the old Plan were transferred to the new Plan. The present applicant is now the trustee of the fund constituted under the new Plan.
Section 6 of the constating instrument of the new Plan sets out membership provisions. By cl 6.1.3, it is provided that every person who becomes "an Eligible Employee" upon the nomination of the employer must be admitted to membership of the Plan by the trustee. The interpretation clause, cl 1.2, defines "an Eligible Employee" to mean "an Employee who is in the full-time or part-time Employment of an Employer..." (emphasis added). Clause 6.3 makes provision for special arrangements in respect of an individual member in the following terms:
“6.3Special Arrangements
(a)Subject to Clause 8.1 and Relevant Law, the Trustee, at the request of the Principal Employer and with the agreement of the Employee or Member concerned, must admit an Eligible Employee to membership on, and/or vary the terms of a Member’s membership of the Plan to be subject to, special terms and conditions as to benefits, contributions or otherwise (including such terms as to additional contributions by the Employer as the Trustee, with the advice of the Actuary, determines). Any such agreement must be evidenced in writing by the Trustee, the Principal Employer and the Employee or Member concerned in a form acceptable to the Trustee, and each such agreement is for the purposes of this Deed deemed to form part of this Deed.
(b)Subject to Relevant Law, but without limiting the generality of paragraph (a), the Trustee, with the approval of the Employer and having received the advice of the Actuary, may adjust on a fair and equitable basis benefits to which a Member is entitled where the Member has any period of Employment as a part-time Employee.”
In July 1994, the applicant, resolved to elect that the new Plan become a "regulated superannuation fund". In September 1994 the Insurance and Superannuation Commissioner accepted the application. In July 1996 the new Plan became known as the Australian Petroleum Superannuation Plan.
In the meantime, in November 1995, Mr Harmer wrote to the trustees of the new Plan with reference to the instrument of waiver executed by him and his wife in September 1987. In the course of his letter Mr Harmer said:
"It is my view that the relevant reasonable benefit limits guidelines first altered in a fashion relevant to my arrangement with the Trustees in July 1990. Shortly thereafter I contacted the Trustees of the Superannuation Plan in order to ascertain their preparedness to provide the Residual Benefit to me. At that time, however, there was argument concerning the nature of the arrangement concluded on my retirement. The Trustees denied that there was any liability to me in relation to the additional amount. The Trustees further declined to provide any information as to what had been done with the forfeited component of my benefit.
In light of the current reasonable benefit limits regime, I request by this letter that the Trustees provide to me:
1.Information as to what steps were taken in relation to the forfeited component of my lump sum benefit (the “Residual Benefit”) immediately following my retirement in order to accommodate the exception created by my arrangement with the Trustees whereby the Residual Benefit may be provided to me if circumstances prevail which allow the Trustees to do so;
2. Payment of the Residual Benefit plus interest accrued; and
3.Reasons for any decision by the Trustees in response to 1 and 2 above.”
In April 1996, Mr Harmer lodged a complaint with the Tribunal in respect of the new Plan.
By letter to the Tribunal dated 29 May 1996, the trustee of the new Plan contended, inter alia, that the Tribunal had no jurisdiction in the matter because Mr Harmer had no standing to make a complaint. The trustee now seeks judicial review of the Tribunal’s decision that Mr Harmer has standing before it.
MR HARMER’S ARGUMENTS
On behalf of Mr Harmer, in contending that he had standing, reliance is placed upon the observations of O’Loughlin J in Official Trustee v Inglis (1992) 36 FCR 250 (at p 254):
“... the present right of a member of a superannuation fund is no more than a mere expectancy. His entitlements are all in the future and are all dependent upon the happening of a prescribed event, of which the most common was the attainment of an agreed retirement age.”
It is said that these observations provide further support for the proposition advanced by the second respondent that in the present case, no valid distinction exists between a “member” and a “beneficiary”, in terms of satisfying the requirement of standing to complain.
Mr Harmer also places reliance upon some observations of Merkel J in Collins v AMP Superannuation (1997) 147 ALR 243 (at 252) to the effect that the present legislation "is clearly intended to be beneficial [so that] a narrow construction is not appropriate".
It is further submitted that the promotion of the objects and purposes of the legislation, as providing a summary method of disposition of disputes of the present kind, leads to the conclusion that Mr Harmer's contended construction of s 15(1)(b)(i) should be accepted. Particular reliance is placed upon the observations of Gummow J in Alphapharm Pty Ltd v Smithkline Beecham (Australia) Pty Ltd (1994) 49 FCR 250 (at 272) as follows:
"The day is long gone when there was any general presumption that in such statutes the ‘interests’ concerned must be proprietary or even legal or equitable in nature, or that the affectation be of a nature as understood in private law.”
CONCLUSIONS ON THE APPLICATION
I have difficulty accepting Mr Harmer's argument that he should be treated as a member of the new Plan.
The present question, in my view, is purely one of statutory interpretation in the present context of the word "member", that is, a present, as distinct from a former, member of the new Plan for the purpose of s 15(1)(b)(i) of the Act. For that purpose, it is plain that Mr Harmer is not an actual member (that is, as a matter of formal status) of the new Plan. Nonetheless, in my opinion, the definition of "member" extends so as to include a person without that formal status, but who, albeit informally, has a substantive present entitlement to be treated as if he or she were an actual member. This extensive approach would accord with the modern view that substance is, generally speaking, to be preferred to form (see, e.g., ANZ Banking Group Ltd v Westpac Banking Corporation (1988) 164 CLR 662 (at 674); Re Wagner; Ex parte Stapleton v Bennett (1964) 20 ABC 133 (at 140); cf. Caddy v McInnes (1995) 58 FCR 570 (at 583)). Put differently, I would accept that "member", for present purposes, would include a notional member, in the sense of a person presently entitled in law or in equity to membership of the new Plan.
But, in my opinion, Mr Harmer has no such present entitlement. In my view, any entitlement that Mr Harmer may have depends upon the outcome of further and no doubt contentious litigation which would need to be brought in proceedings under the general law to establish what Mr Harmer would contend to be his entitlement.
As I mentioned in the course of argument, the present matter is to be viewed in the context of the true relationship between the trustee of the fund and its members; that is, as a fiduciary relationship in the sense that the trustees are bound to act for the benefit of all members (see Metropolitan Gas Company v Federal Commissioner of Taxation (1932) 47 CLR 621 (at 633); Wilson v Metro Goldwyn Mayer (1980) 18 NSWLR 730; Lock v Westpac Banking Corporation (1991) 25 NSWLR 593 (at 609)).
A number of important consequences flow from this relationship. In the first place, it is not open to the trustees to distribute any part of the fund except in accordance with the provisions of the constating instrument; and, in the exercise of any power given by that instrument, the power must, as has been said, be exercised for the benefit of all members. It may be possible, in a particular instance, to exercise a specific power in favour of an individual member in accordance with the provisions of the new Plan under cl 6.3, to which reference has already been made. But there was no counterpart of that provision in the old Plan; in any event, it is plain that there is nothing in the language, or in the evident purpose, of a provision such as cl 6.3 to suggest that the power, there to be exercised in an appropriate case, could be utilised in a way that is inconsistent with the clear fiduciary duty imposed upon the trustee to act in the interests and for the benefit of all members. It is for this reason that, as has been noted, cl 6.3 of the new Plan makes provision for adjustment or rights so as to secure the position of members generally.
I accept that it may well be possible that Mr Harmer could proceed to litigate under the general law some of the issues that he now seeks to agitate. I say nothing, of course, about the prospects of success of such litigation as those issues are not before me for decision or resolution in any sense. However, it is apparent that if any such litigation were to be instituted, it could not, on any arguable basis, be seen as having any prospect of establishing that Mr Harmer has, at this stage, any present entitlement to the funds held pursuant to the new Plan. At the most, as I see it, Mr Harmer's rights at this point must be limited to no more than a right to require the trustee to direct its mind to the question whether an amendment should be made to the present deed so as to provide for persons in Mr Harmer's position; and if so, then to direct its mind to the terms and conditions upon which any such amendment might depend, so that the interests of all of the members of the fund might be adequately catered for. It is not necessary for me to speculate about the outcome of any such contest under the general law. It is sufficient for me to say that any rights that Mr Harmer has in this connection are, to use the language of the High Court in Brown v Heffer (1967) 116 CLR 344 (at 350) - "inchoate". That is to say, there is no present substantive entitlement vested in Mr Harmer to claim a beneficial interest in any part of the fund. It must follow, in my opinion, that not only is Mr Harmer not an actual member of the fund, but in terms of any extensive definition, he is not a notional member either.
RELIEF
In the circumstances, the applicant has made out a case for relief by way of judicial review. Since a pure question of law is involved and since, on the view I take, the Tribunal lacks jurisdiction to entertain Mr Harmer's complaint, it is appropriate that, in addition to setting aside the Tribunal's decision, it should be declared that Mr Harmer is not a "member" of the new Plan for the purposes of s 15(1)(b)(i) of the Act (see, as to the suitability of declaratory relief in such a case, Sankey v Whitlam (1978) 142 CLR 1 at 24; cf. Byron Environment Centre Inc. v Arakwal People (1997) 148 ALR 46 at 64). Prohibition should also be ordered restraining the Tribunal from proceeding further upon the complaint, given its lack of jurisdiction (see Aronson & Dyer, “Judicial Review of Administrative Action” at 729).
ORDERS
I make the following orders:
Decision of the first respondent conveyed in its letter dated 23 April 1997 set aside.
Declare that the second respondent is not a "member" of the Australia Petroleum Superannuation Plan for the purposes of s 15(1)(b)(i) of the Superannuation (Resolution of Complaints) Act 1993.
First respondent restrained from proceeding further with the applicant's purported complaint.
Second respondent to pay the costs of the first applicant.
No order as to the costs of the first respondent.
I certify that this and the preceding nine (9) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Beaumont
Associate:
Dated: 12 November 1997
Counsel for the Applicant: Dr Flick SC with N Abadee Solicitor for the Applicant: Abbott Tout Counsel for the Second Respondent: B Pape Solicitor for the Second Respondent: Michael Harmer & Associates Date of Hearing: 11 November 1997 Date of Judgment: 12 November 1997
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