Australian Super Pty Ltd v Woodward

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FEDERAL COURT OF AUSTRALIA

Australian Super Pty Ltd v Woodward [2009] FCAFC 168

SUPERANNUATION — Appeal from a single judge of the Federal Court — Appeal allowed from the Superannuation Complaints Tribunal — Total and Permanent Disability benefit — Appeal by trustee and insurer against decision of single judge — whether the primary judge erred in concluding that the Tribunal considered the wrong version of the trust deed — Whether the relevant trust deed was that in effect at the time the respondent's claimed Total and Permanent Disability arose or as the Primary Judge had found, that in effect at the time the decisions of the trustee and insurer were made — Held – As a matter of construction, governing form of trust deed was that in effect at time of claiming total and permanent disability — Cross-appeal — Whether the primary judge erred in not awarding costs against the trustee and insurer — Held no power to award costs in favour of an unrepresented litigant — Whether the Tribunal's decision inconsistent with earlier Tribunal decision – Held no inconsistency — Held no requirement for the Tribunal to follow the decision of the superannuation fund provider — Appeal allowed — Cross-appeal dismissed

Administrative Appeals Tribunal Act 1995 (Cth) s 44
Federal Proceedings (Costs) Act 1991 (Cth)
Insurance Contracts Act 1984 (Cth) s 54
Superannuation (Resolution of Complaints) Act 1993 (Cth) ss 14, 18, 32, 37, 46

Superannuation Industry (Supervision) Regulations 1994 (Cth) reg 13.16

Woodward v Australian Super Pty Ltd (formerly STA) [2008] FCA 706 considered
Davis v Rio Tinto Staff Superannuation Fund Pty Ltd (2002) 118 FCR 170 considered
Samaras v Australian Retirement Fund Pty Ltd (2008) 15 ANZ Ins Cas 90-133 considered
Duke of Portland v Topham (1864) 11 HL Cas 32 considered
Registrar of the Accident Compensation Tribunal v Commissioner of Taxation (1993) 178 CLR 145 considered
Howitt-Steven v Unisuper Ltd (2002) 193 ALR 207 considered
Auspine Staff Superannuation Pty Ltd v Henderson (2007) ANZ Ins Case 90-127 considered
Cachia v Hanes (1994) 179 CLR 403 considered
Halloran v Harwood Nominees Pty Ltd [2007] NSWSC 913 considered
Fernance v Wreckair Pty Ltd (No 2) (1992) 43 IR 300 considered
Minister for State for Immigration and Ethnic Affairs v Teoh (1995) 183 CLR 273 considered

AUSTRALIAN SUPER PTY LTD (FORMERLY STA) and COLONIAL MUTUAL LIFE ASSURANCE SOCIETY LIMITED v NIGEL WOODWARD and SUPERANNUATION COMPLAINTS TRIBUNAL

QUD 147 of 2008

FINKELSTEIN, GREENWOOD & LOGAN JJ
1 DECEMBER 2009
BRISBANE


IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY

GENERAL DIVISION

QUD 147 of 2008
ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN:

AUSTRALIAN SUPER PTY LTD (FORMERLY STA)
First Appellant

COLONIAL MUTUAL LIFE ASSURANCE SOCIETY LIMITED
Second Appellant
AND:

NIGEL WOODWARD
First Respondent

SUPERANNUATION COMPLAINTS TRIBUNAL
Second Respondent

JUDGES:

FINKELSTEIN, GREENWOOD & LOGAN JJ

DATE OF ORDER:

1 DECEMBER 2009

WHERE MADE:

BRISBANE

THE COURT ORDERS THAT:

1.The appeal be allowed, with costs.

2.The orders made on 22 May 2008 be set aside.

3.In…

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Details
Case
[2009] FCAFC 168
Decision Date

CaseChat Overview and Summary

In the case of Australian Super Pty Ltd v Woodward, the respondent, Mr Woodward, appealed against the decision of the primary judge, which had dismissed his claim for total and permanent disablement (TPD) benefits from the appellant, Australian Super Pty Ltd. The dispute arose from Mr Woodward's assertion that he was permanently disabled from continuing his employment due to injuries sustained in a motorcycle accident, which entitled him to TPD benefits under his superannuation fund and associated insurance policy. The primary judge found that the Tribunal's decision to remit the matter back to the appellant for further evidence was flawed because it incorrectly assessed the date from which the TPD definition should apply.

The central legal issue the court had to decide was whether the Tribunal's interpretation of the applicable date for assessing Mr Woodward's TPD claim was correct. Specifically, the court needed to determine if the Tribunal erred in law by considering the definition of TPD as it stood on the date Mr Woodward ceased employment with Rexel, rather than the date when the trustee's decision was made and reviewed. The court also needed to address whether the Tribunal's review of the trustee's decision was consistent with the statutory framework governing such reviews.

The court found that the Tribunal had misconstrued the relevant date for applying the TPD definition, which in turn affected the outcome of its review. The court held that the Tribunal should have reviewed the trustee's decision based on the date it was made and subsequently reviewed, rather than the date Mr Woodward ceased employment. This error led to an unfair and unreasonable outcome for Mr Woodward. The court emphasized the importance of adhering to equitable principles in trust law, particularly the prohibition against retrospectively altering trust deeds to affect accrued rights. Consequently, the court allowed the appeal, set aside the orders made by the primary judge, and dismissed the respondent's appeal against the Tribunal's decision, with costs to be borne by the respondent. The court also dismissed the cross-appeal brought by the respondent.

Orders

Orders of the court

1. The appeal be allowed, with costs.

2. The orders made on 22 May 2008 be set aside.

3. In lieu of those orders, it is ordered that the appeal against the decision of the Superannuation Complaints Tribunal’s decision of 23 March 2007 be dismissed with costs.

4. The parties have liberty to apply within seven (7) days for a certificate under the Federal Proceedings (Costs) Act 1982 in respect of this appeal.

5. The cross-appeal be dismissed with costs.

Note:

Background

Background to the litigation

Mr Woodward’s only other appeal ground claimed that the learned primary judge erred in not awarding him costs. Mr Woodward had no entitlement to seek costs. BACKGROUND On 6 November 1999, Mr Woodward became a member of the superannuation fund of which the first appellant is trustee while employed by NESS Security Products Pty Ltd. He also thereby became covered by a Group Life Insurance Policy No K003779 issued by the insurer. On 9 April 2001, Mr Woodward commenced employment with Rexel Australia Pty Ltd (Rexel). Rexel continued to make superannuation payments to the trustee on his behalf. The last contribution paid was for the period ending 30 August 2002, with the consequence that Mr Woodward’s TPD insurance cover expired on 28 February 2003. On 19 April 2002, Mr Woodward was involved in an accident while riding his motor cycle home from work. As a result of the accident, he claimed to have suffered injuries to his ankles, right knee and lower back. He continued to work at Rexel with the aid of painkillers and anti-inflammatory medication until he resigned on 2 August 2002, citing “back pain, ankle pain, nightmares and ‘an extreme amount of pressure from management’”: Woodward [2008] FCA 706 at [9]. In October 2002, allegedly on the advice of his general practitioner, Mr Woodward commenced employment at Mayne Armaguard. He said that the job involved very light duties and no stress. He nevertheless resigned in November 2002 as his pain was too intense, despite the use of painkillers and muscle relaxants. From 13 January 2003 Mr Woodward was in receipt of a Commonwealth Disability Support Pension administered by Centrelink. In August 2003 the Commonwealth Rehabilitation Service arranged for him to work as a concreter with Northside Mini Mix. He claims he took up this placement as a result of pressure exerted by Centrelink. He resigned on 30 June 2004 and has not worked since that date. The insurer received Mr Woodward’s claim for TPD against the trustee, which was then known as the STA Superannuation Fund, on 29 July 2003. He claimed to have been incapacitated from 2 August 2002, which was the date he resigned from Rexel. At the time the claim was received, the trust deed defined TPD as follows:(73)“Total and Permanent Disablement” means disablement of a Member resulting from an illness, accident or injury to the Member which commenced or occurred whilst the Member was employed and whilst a Member as a result of which –(a)the Member has been precluded for a period of six consecutive months after the date of occurrence of such event from following any occupation for which the Member is reasonably suited by education training or experience; and(b)the Member will, in the opinion of the Trustee after consideration of medical evidence satisfactory to it, continue to be so disabled to such an extent as to render the Member unlikely ever again to resume work in or attend to any such occupation;and “totally and permanently disabled” shall have a corresponding meaning PROVIDED THAT where at any time all or part of the Benefit payable in the event of Total and Permanent Disablement is insured with an insurance company, the term “Total and Permanent Disablement” shall bear the meaning ascribed to it in the relevant Policy in lieu of the above definition unless the Trustee in its absolute discretion otherwise determines; …

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Mr Woodward sought review of the decisions of ANZ and Tower before the Tribunal. The Tribunal held that ANZ and Tower did not have the necessary evidence to conclude that Mr Woodward did not meet the definition of TPD, as neither had sufficiently clarified the facts surrounding his accident or obtained appropriate specialist medical reports (“the ANZ decision”). The Tribunal found that the decisions operated unfairly and unreasonably in relation to Mr Woodward and remitted the matter to ANZ and Tower with directions that they obtain further evidence. It is with this latter Tribunal decision that Mr Woodward contends the decision of the Tribunal under appeal is inconsistent.THE PRIMARY JUDGE’S DECISION As indicated above, the ground on which the learned primary judge ultimately allowed the appeal was not included in the Notice of Appeal. Rather, it would appear that, during the course of the hearing of the appeal, his Honour perceived that there may have been a fatal error of law nonetheless in the Tribunal’s decision. His Honour then properly raised that subject with the parties as a matter for submissions. The appeal being one on a question of law, the point raised perhaps ought strictly to have been translated into an amendment to the Notice of Appeal. Nothing however turns on this as the point on which the appeal came to turn was fully exposed in a procedurally fair way. Under the heading “Other Matters” (at [80]-[104]), the primary judge addressed three different concerns that he had about the TPD definition adopted by the Tribunal. The first was that, although it had specified that the relevant version of the trust deed was that in effect on 27 June 2002, and although it had cited the definition of TPD as contained in that version of the deed, the Tribunal had numbered the definition as if it were taken from a previous version. His Honour found that this error did not affect the integrity of the Tribunal’s decision (at [89]). The second was that, although the definition of TPD in the trust deed incorporated by reference the definition of TPD in the insurance policy, the Tribunal did not specify whether it was reviewing the decisions against the definition in the trust deed or the definition in the insurance policy. His Honour found that it was implicit in the Tribunal’s reasoning that it had regard to definition in the insurance policy and that, even if it did not, the result would have been the same because there was no material difference in meaning between the definitions in the trust deed and the insurance policy (at [96]-[97]). The third concern articulated by the learned primary judge is that which has given rise to the present appeal. The Tribunal found that the relevant version of the trust deed was that in effect on the date when Mr Woodward ceased employment with Rexel. His Honour found this approach to be incorrect. His Honour held that the role of the Tribunal was to determine whether the decisions of the trustee and the insurer “were correct when they were made” (at [99]). In this regard, his Honour referred to the decision of Heerey J in Davis v Rio Tinto Staff Superannuation Fund Pty Ltd (2002) 118 FCR 170 at 173-175 at [15]:Under s 37 of the Act the function of the Tribunal was to determine whether the decision of the Trustee was fair and reasonable in the circumstances: see National Mutual Life Association of Australia Ltd v Campbell (2000) 99 FCR 562 and the cases therein cited. Counsel for the applicant submitted that the relevant time to consider whether the applicant was TPD within the meaning of the contract of insurance was 19 February 1999, that being six months from the date on which he last worked. I do not agree. What the Tribunal had to review and either affirm, vary or set aside was the decision of the Trustee made on 23 December 1999 and subsequently reviewed and affirmed by the Trustee on 1 June 2000 and 28 June 2000. Although not explicitly stated, it would seem that the Tribunal regarded its task as reviewing the decision of the Trustee as at the last mentioned date, an approach I think was correct. The system of review under the Act is to be distinguished from claims made by an insured under a policy: cf Giles v National Mutual Life Association of Australasia Ltd (1986) 4 ANZ Ins Cas 60-751.

Ratio Decidendi

Legal Principle Established

The appellants’ reply to this was that it was Mr Woodward himself who identified 2 August 2002 as the date of his TPD. The trustee’s letter of 7 March 2005 merely indicated that the insurer could only assess his claim from 7 January 2003 because Mr Woodward had provided no evidence of TPD before that date.Consideration The superannuation fund is but a particular species of trust. As a matter of general principle and in the absence of an express power of amendment to revoke the trust or statutory warrant to do so, an amendment to a trust deed which sought retrospectively to curtail rights that had already accrued, would constitute a fraud on the power of amendment. In equity, the donee of a power of amendment of a trust deed:Shall, at the time of exercise of that power, and for any purpose for which it is used, act with good faith and sincerity, and with an entire and single view as to the real purpose and object of the power, and not for the purpose of accomplishing or carrying into effect any bye or sinister object (I mean sinister in the sense of its being beyond the purpose and intent of the power) which he may desire to effect in the exercise of power- Duke of Portland v Topham (1864) 11 HL Cas 32 at 54. As the learned authors of Jacobs’ Law of Trust in Australia (Heydon JD, 7th Ed, Lexis Nexis Butterworths 2006) p 1, [101] observe by reference to Registrar of the Accident Compensation Tribunal v Commissioner of Taxation (1993) 178 CLR 145 at 175, “a trust is an institution developed by equity and cognisable by a court of equity”. An amendment of a trust deed which constituted a fraud on a power would not be cognisable by a court of equity. It would be invalid. Thus, if, under the then terms of a superannuation fund trust deed a member of that fund had a TPD entitlement, it would be contrary to equitable principle to regard any later amendment of the deed governing that fund as capable, validly, of removing or otherwise affecting that accrued entitlement. The restraint which the law of equity imposes on the ability freely to amend a trust deed so as to interfere with accrued rights is, in part, buttressed so far as regulated superannuation funds are concerned, by reg 13.16 of the Superannuation Industry (Supervision) Regulations 1994 (Cth) (SIS Regs). Subject to exceptions which are not presently relevant, that regulation provides that a standard applicable to the operation of regulated superannuation funds is that a beneficiary’s rights or claim to accrued benefits, and the amount of those accrued benefits, must not be altered adversely to the beneficiary by amendment of the governing rules or by any other act carried out, or consented to, by the trustee of the fund. Reference should also be made to cl 25 of the deed establishing the superannuation fund which expressly prohibits a variation to the deed which “adversely affects a Member’s rights or claim to accrued benefits”. Against this background, we turn to review the jurisprudence in relation to the review function consigned to the Tribunal to see whether it reveals anything which would challenge this approach. In so doing, we find it helpful first to consider what the appellants term the “relevant definition inquiry”.