Beck v Colonial Staff Super Pty Ltd - [2015] NSWSC 723

Supreme Court

New South Wales

Summary available
Amendment notes

Medium Neutral Citation: Beck v Colonial Staff Super Pty Ltd & Ors [2015] NSWSC 723
Hearing dates: 7, 21 & 22 August 2014 and supplementary written submissions on 14 September 2014.
Date of orders: 06 July 2015
Decision date: 06 July 2015
Jurisdiction: Common Law
Before: Slattery J
Decision:
See paragraphs [380] to [382] of judgment.

Catchwords:
SUPERANNUATION – change to superannuation deed to delete rule granting discretion to confer long service retirement benefits – consideration of power to amend trust deeds of regulated superannuation funds –whether rule change contrary to interests of members at general law – whether rule change in breach of the Superannuation Industry Supervision Act (Cth) 1993 – consideration of scope of superannuation fund trustees’ discretion – actuarial expert evidence.

CONTRACT – consideration of principles of construction of superannuation fund deeds – consideration of duties of good faith in contracts of employment.
EQUITY – equitable estoppel – where representation made that power of termination in employment contract would not be exercised without good cause – unconscionable conduct.
Legislation Cited: Choice of Law (Limitation Periods) Act 1993 (NSW)
Limitation of Actions Act 1958 (VIC)
Limitation Act, 1969 (NSW)
Superannuation Industry Supervision Act (Cth) 1993
Superannuation Industry (Supervision) Regulations 1994
Uniform Civil Procedure Rule (“UCPR”) 2005
Cases Cited:
SUPERANNUATION – change to superannuation deed to delete rule granting discretion to confer long service retirement benefits – consideration of power to amend trust deeds of regulated superannuation funds –whether rule change contrary to interests of members at general law – whether rule change in breach of the Superannuation Industry Supervision Act (Cth) 1993 – consideration of scope of superannuation fund trustees’ discretion – actuarial expert evidence.

CONTRACT – consideration of principles of construction of superannuation fund deeds – consideration of duties of good faith in contracts of employment.
EQUITY – equitable estoppel – where representation made that power of termination in employment contract would not be exercised without good cause – unconscionable conduct.
Texts Cited: Meagher, Gummow and Lehane, Equity Doctrines and Remedies, 5th Edition, 2015
JD .Heydon & MJ Leeming, Jacobs’ Law of Trusts in Australia, (7th ed 2006, LexisNexis)
M.J. Leeming, “Chameleon Hued Words: A Note on Discretionary Trusts” (2015) 89 ALJ 371
Category: Principal judgment
Parties: Plaintiff: Peter Beck
First Defendant: Colonial Staff Super Pty Ltd (ACN 074 962 628)
Second Defendant: Commonwealth Bank Officers Superannuation Corporation Pty Limited (ACN 074 519 798) as trustee for the Commonwealth Bank Officers’ Superannuation Fund
Third Defendant: Commonwealth Bank of Australia (ACN 123 123 124)
Representation:
Counsel:
Plaintiff: J.C. Kelly SC; J. Merkel; P. Godkin
Second and Third Defendants: Scott Nixon; James Hutton
Solicitors:
Plaintiff: Angela Wong, Slater & Gordon Lawyers
Second & Third Defendants: Greta Gingell, Jones Day

File Number(s): 2011/220432
Publication restriction: No

Judgment

In December 1996 the plaintiff, Mr Peter Beck was a member of the Colonial Group Staff Superannuation Fund (“the Colonial Fund”). The first defendant, Colonial Staff Super Pty Limited (“CSS”), was at relevant times the trustee of the Colonial Fund.
That month CSS made an amendment to the trust deed of the Colonial Fund, to delete one of its existing fund rules, clause A11.3, a rule that provided for certain discretionary benefits in the event of a fund contributor’s early retirement before age 55 but after a long period of service. Mr Beck contends that CSS’s exercise of this power to amend breached CSS’s general law duty to act in the best interests of the Colonial Fund’s beneficiaries, including himself, and that it contravened the CSS’s co-extensive statutory duties under the Superannuation Industry Supervision Act (Cth) 1993 (“the SIS Act”), s 52(2)(c) and the Superannuation Industry (Supervision) Regulations 1994 (“the SIS Regulations”).
In December 1996 at the time of these amendments, Mr Beck was an employee of Colonial Limited. Four years later, in 2000, the Commonwealth Bank of Australia (“CBA”) acquired all the share capital in Colonial Limited and Mr Beck then became an employee of CBA. Within a further three years, in 2003, the Colonial Fund had been absorbed into the Officer’s Superannuation Fund (“OSF”), the superannuation fund for CBA officers.
Mr Beck contends: (1) these amendments deprived him of the right to apply for these discretionary early retirement benefits under the rules of the Colonial Fund or its successor funds, when he left CBA in 2005; and, (2) that both the SIS Act and doctrines of estoppel now prevent CSS, CBA, or any successor Trustee, from acting on the amendments.
Mr Beck’s claim is disputed. CSS is in liquidation and did not appear in these proceedings. The second defendant, the Commonwealth Bank Officers Superannuation Corporation Pty Limited (“CBOSC”), the trustee entity for OSF, the ultimate successor fund to the Colonial Fund, and CBA, his former employer, both deny that any estoppels apply or that CSS contravened the SIS Act. The second and third defendants, CBOSC and CBA, are collectively referred to in these reasons as “the CBA parties”.
The proceedings were argued on 7 August, 21 August and 22 August 2014. Mr J. Kelly SC, Ms J. Merkel and Mr P. Godkin of counsel appeared for the plaintiff, Mr Beck, instructed by Slater and Gordon, solicitors. Mr J. Nixon and Mr J. Hutton of counsel appeared for the CBA parties, instructed by Jones Day, solicitors.
These reasons first set out the narrative of the Court’s findings concerning Mr Beck’s employment and superannuation fund arrangements between 1981 and 2005. This narrative of findings does not contain the detailed provisions of the various superannuation deeds that governed his entitlements. Those provisions are reserved for a later section of these reasons, where they can be more readily understood together in context.

Mr Beck’s Employment and Superannuation Arrangements – 1981 to 2005

From South Africa to Australia. Mr Beck was born on 7 February 1954. He is an actuary by profession. He attained his primary professional qualifications in the Republic of South Africa. He ultimately became a fellow of the Institute of Actuaries of Australia, the Institute of Actuaries (UK) and the Society of Actuaries (USA).
In February 1981 Mr Beck commenced employment with the Colonial Mutual Life Assurance Society Limited (“Colonial Mutual”) in South Africa performing various roles in its life insurance and pensions businesses. As a term of his employment he commenced contributing to Colonial Mutual’s South African superannuation fund (“the South African fund”).
In February 1987 Mr Beck migrated with his family from South Africa to Australia, relocating his employment with Colonial Mutual to its Melbourne office, where Mr Beck worked until 2000.
Upon his transfer to Australia, Mr Beck became a member of and contributed to Colonial Mutual’s Australian superannuation fund, constituted for the benefit of its Australian employees. His transfer to Colonial Mutual in Australia was on the basis that his existing superannuation arrangements with Colonial Mutual in South Africa would continue.
Achieving this was not without its complications. At the time of his emigration to Australia, Mr Beck agreed with Colonial Mutual that benefits that had accrued on his behalf in the South African fund would be transferred to Colonial Mutual’s superannuation fund in Australia, so he would be treated as a contributor with continuous Colonial Mutual service from 1981. But the currency exchange controls then applicable in South Africa prevented this. So the agreed solution was that Colonial Mutual would pay out to Mr Beck his reserve entitlement in the South African superannuation fund and he could in turn pay that amount (devalued to a degree by tax and South African currency exchange control penalties) into the Australian fund. In the end Mr Beck was given the choice of paying the net refund to him from the South African fund into the Australian fund or not making any payment and getting credit for his prior service only from April 1985 rather than 1981. As will be seen from later developments, he seems at emigration to have chosen the latter option.
The Australian Colonial Mutual fund was originally constituted by deed dated 30 June 1978. It was then known as the “Colonial Mutual Australian Administrative Staff Superannuation Fund”. It later changed its name to the “Colonial Group Staff Superannuation Fund”. For convenience in these reasons this early fund is called “the Old Colonial Fund”, as it was reconstituted in 1998 into a fund that ultimately came to be named the “Colonial Group Staff Superannuation Scheme” and which these reasons for convenience call the “the New Colonial Fund”. When it is not necessary to distinguish between these two funds in these reasons, they are simply referred to as the “the Colonial Fund”. The rules of the Old Colonial Fund were amended from time to time before the New Colonial Fund was created in 1998, including relevantly, by three deeds of principal importance to these proceedings, made respectively in August 1985, July 1996 and December 1996.
Like the South African fund, the Old Colonial Fund in Australia was what is commonly called a “defined benefit” superannuation fund, which guaranteed certain financial outcomes defined according to agreed formulae upon termination of employment and membership.
In the case of the retirement of a member at the agreed retiring age of 62 the contributor was entitled to a retirement pension, calculated by a defined formula on the basis of 1/60th of the contributor’s pensionable salary averaged over the last three years of his or her service, for each year of pensionable service from commencement and payable from age 62. The pension was payable for life (or a minimum of 7.5 years) and 60% of the pension would continue to be payable to a contributor’s spouse for his or her lifetime after the contributor’s death.
But a lump sum or “reserve” was also held in the Colonial Fund in respect of the contributor’s prospective pension. This reserve could be calculated by the actuary of the Fund, based on certain assumptions so as to represent an amount that would be sufficient to pay the pension from the contributor’s normal retirement age of 62. These general concepts of a pension and an associated reserve are analysed in more detail later in these reasons, after the provisions of the applicable superannuation deed are set out.
The benefit could be attained in a modified form upon the contributor’s early retirement. The contributor might attain the age of 55, and retire before the age of 62. The contributor might retire even before the age of 55 after showing loyalty, evidenced by a long period of contributory service. In the former case (retirement between 55 and 62) the contributor could get the benefit of either (i) a deferred pension from age 62, or (ii) an immediate pension calculated on certain assumptions, including converting the reserve held in the fund in respect of the pension into an immediate pension, together with a lump sum equal to the reserve held in the fund in respect of his pension. These benefits are called in these reasons “the 55 to 62 retirement benefit”. A generic name is given to the benefit in these reasons because the numbering and names of the clauses containing the benefit alter over the period 1985 to 2005.
But if the contributor retired before the age of 55, the contributor was not entitled to a pension but was entitled to receive a return of contributions, together with a defined return on those contributions (“the pre-55 resignation benefit”). On a pre-55 retirement of the contributor after a long period of service the contributor could call for the trustee of the Fund to exercise a discretion to award the contributor the whole or part of the reserve held in the Fund in respect of this pension. But this was a discretionary benefit, not a presently enforceable entitlement on resignation pre-55. This discretionary payment is called in these reasons a “pre-55 discretionary benefit”. The concepts are refined later in these reasons, in the context of the full terms of the superannuation deeds.
Amendments to the Colonial Fund – 1985 to 2000. Two years before Mr Beck arrived in Australia in 1987, a deed dated 28 August 1985 (the August 1985 deed) had amended the rules of the Old Colonial Fund, which at least from 1985 included a rule for a pre-55 resignation benefit (clause 22(a)) and a rule for a pre-55 discretionary benefit (clause 22(b)). It also contained a rule permitting the trustee, CSS, to amend the trust deed without prejudicing members’ benefits, an “amendment rule” (clause 32). These clauses will be detailed later in these reasons. But the general effect of these two clauses is relevant to this narrative of findings.
Clause 22 of the August 1985 deed provided for the pre-55 discretionary benefit on retirement for a contributor’s long service. It provided that if a contributor had a long period of contributory service then the trustees might “at their absolute discretion and with the approval of the board” pay to the contributor a further sum, not exceeding the contributor’s reserve value at the date of the contributor ceasing employment.
Clause 32 of the August 1985 deed protected contributors when the trust deed of the Old Colonial Fund was being amended. Clause 32 gave powers to the trustees to amend, to add or to delete from the provisions of the trust deed provided “no such amendment … shall be made whereby the value of the benefits accrued in respect of any contributor prior to the date of such amendment … is detrimentally affected … without the consent in writing of the contributor concerned” (“the amendment rule”).
Both these provisions were in the Old Colonial Fund trust deed when Mr Beck came to Australia and began contributing. The subsequent deletion of the pre-55 discretionary benefit is Mr Beck’s central complaint in these proceedings.
The structure of the Old Colonial Fund was affected by two corporate acquisitions involving Colonial Mutual, the first in 1994 and the second in 2000.
In 1994 Colonial Mutual acquired the State Bank of New South Wales. As part of that acquisition, the assets and liabilities of the Old Colonial Fund were transferred to and became part of another superannuation fund, then known as the State Bank Superannuation Benefit Scheme. In 1994 this reconstituted fund was renamed the “Colonial Group Staff Superannuation Scheme”. But it was still in substance the Old Colonial Fund.
Whilst these changes were taking place Mr Beck was moving into a new employment role with Colonial Mutual in Melbourne. From 1993 to 1996 he acted as the General Manager of Jacques Martin Investment and Insurance, Colonial Mutual’s administrative arm.
In the second half of 1996 the rules of the Old Colonial Fund were revised and amended twice more. On 2 July 1996 the rules were first relevantly amended by deed (“the July 1996 deed”) by the trustees of the Old Colonial Fund. Neither Mr Beck nor the CBA parties contend that the July 1996 deed was anything more than a restatement of the existing fund rules, without any relevant intention to change their substance. Although, as will be seen, there were some slight material differences between the benefits available under the August 1985 deed and the July 1996 deed.
The July 1996 deed contained two important provisions of the Old Colonial Fund’s rules that feature in the parties’ present contest. The July 1996 deed, clause A11.3 largely replicated (although with some differences) the existing clause 22(b) provisions of the August 1985 deed for the pre-55 discretionary benefit). And the July 1996 deed, clause 33.2 largely replicated (although in slightly different words) the existing clause 32 provisions of the August 1985 deed.
In December 1996 the rules of the Old Colonial Fund were amended again. By deed dated 30 December 1996 (the December 1996 deed) CSS made the change that is important to the central contest in these proceedings: it removed Clause A11.3 from the Fund Rules. It is not in issue that Mr Beck was unaware of this change and was not asked to and did not consent to it.
On 19 May 1997 Colonial Mutual was demutualised. It listed on the Australian Stock Exchange under the new name “Colonial Limited”. In 1998 Mr Beck was made Group General Manager Strategic Development and Appointed Actuary of Colonial Limited, a role he performed until 2000.
In July 1998 the Old Colonial Fund was reconstituted yet again. Reflecting Colonial Limited’s then development from a life insurance and pension provider into a single financial services group after its absorption of the State Bank, its board wanted to merge the different superannuation arrangements for its various parts into a single superannuation fund. By deed dated 31 July 1998 (“the July 1998 deed”) the assets CSS held for the benefit of the contributors to the Old Colonial Fund were henceforth held for the benefit of what was by then called the “Colonial Group Staff Superannuation Scheme” (often called in the contemporaneous correspondence “CGSSS” but as earlier indicated, called in these reasons “the New Colonial Fund”). The July 1998 deed did not contain a pre-55 discretionary benefit rule (being clause 22(b) under the August 1985 deed and clause A11.3 under the July 1996 deed). Given the alterations that had already taken place through the December 1996 deed this is not surprising. Mr Beck says, and I accept, that he was not asked to consent to the changes to his situation effected by the July 1998 deed. It was an enterprise-wide change.
Upon the introduction of the New Colonial Fund, Mr Beck was offered the opportunity to transfer from the “Defined Benefits Division”, operating in accordance with the rules of the Old Colonial Fund, to what was called the “Accumulation Division” of the New Colonial Fund. This Accumulation Division was not a defined benefit scheme but a scheme in which contributors such as Mr Beck made defined contributions and would have to accept the risk of lower than expected investment returns over time. He did not elect to transfer to the Accumulation Division. Mr Beck was told in a letter dated 18 May 1998 from CSS at the time that the Accumulation Division provided benefits that “were consistent with those now generally offered in the finance industry in particular and industry in general”. But Mr Beck’s own circumstances and expertise persuaded him to reject this offer. He stayed in the Defined Benefits Division.
One of his reasons for rejection was that he thought that the Transfer Benefit under the 18 May 1998 offer (on transfer from the Defined Benefits Division to the Accumulation Division) would be calculated on the basis of paying out to him the reserve value of his pension under the Old Colonial Fund, something to which he thought by then in a practical sense he was already entitled under the rule for the pre-55 discretionary benefit, because of his already long service with Colonial Mutual (by then 17 years). In other words in his mind he was being offered something to which he was already entitled in exchange for electing to transfer to the Accumulation Division. So he rejected the offer.
As these reasons will later explain his reasoning about this was not correct: before the age of 55 he did not have an entitlement to the reserve value of his pension under the Old Colonial Fund. Instead he had rights to seek that CSS give due consideration to the exercise of a discretion, which if favourable, would give him the benefit of that reserve. But his thought processes during this May 1998 opportunity to elect, leading him to reject the 18 May 1998 offer show his belief about the value to him of the pre-55 discretionary benefit under the Old Colonial Fund, a belief that is entirely consistent with his later conduct when offered employment with CBA.

CBA employs Mr Beck – June 2000. In July 2000 CBA acquired Colonial Limited. As part of the takeover arrangements Mr Beck was offered and accepted employment with CBA in Sydney. Mr Beck initially left his family in Melbourne and commuted to Sydney to discharge his new employment duties with CBA. In the short term his superannuation benefits remained in the New Colonial Fund.
Mr Beck had conversations with CBA executives in June 2000 about his future employment with CBA. The legal effect but not the substance of these conversations is in contest in these proceedings. At the time of the July 2000 takeover Mr Beck says that as part of the discussions leading to his employment with CBA he was encouraged to believe: that if he were to remain in CBA’s service then he would receive a pension under clause 16.1 (retirement at 62) or 19(a) (a 55 to 62 retirement benefit) of the rules of the New Colonial Fund on retirement between the ages of 55 and 62; or, that if his employment were terminated for any reason other than his resignation before he reached age 55, he would receive the reserve value held in respect of him in that fund, or any successor fund, without any reduction of superannuation benefits and that this benefit would be paid to him by way of pension or lump sum, at his option.
Mr Beck gives a reliable and realistic account of how CBA offered him a job. On 31 May 2000 Colonial Limited shareholders approved CBA’s takeover offer. From then on Mr Beck and other Colonial Limited employees were required to conduct their own individual negotiations with CBA in relation to their future employment.
In anticipation of this development it is significant that Mr Beck corresponded with Colonial Limited to ensure that he would obtain the maximum possible withdrawal benefit from the New Colonial Fund. On Mr Beck’s transfer to Australia only one third of his past service in South Africa was being recognised for retirement benefit purposes; he was being treated as having commenced on 1 April 1985, not in 1981. To ensure that he was treated for actuarial purposes as having commenced in the New Colonial Fund on the earlier date of 1 March 1981, Mr Beck negotiated the payment into the New Colonial Fund of an additional $18,304. That amount represented the then (in 2000) equivalent value within the New Colonial Fund as if he had paid his full South African fund withdrawal benefit into the Australian fund in 1987 and maintained the benefit of his full Colonial Mutual employment history back to March 1981, instead of just to April 1985.
The New Colonial Fund agreed to backdate his service to 1981 to include all his South African service with Colonial Mutual. Mr Beck paid an additional $18,304 into the fund. This in turn resulted in a significant increase (by approximately $164,400) in Mr Beck’s then expected withdrawal benefits. This episode shows Mr Beck’s attention at the time of the CBA takeover to preserving and enhancing the value of his long service status in relation to his withdrawal benefits from the New Colonial Fund.
Before Mr Beck’s negotiations with CBA executives took place in June 2000, Mr Peter Smedley, Colonial Limited’s CEO, had told Mr Beck and other senior group executive employees of Colonial Limited that some Colonial Limited employees would be offered employment with CBA and some would not. Mr Smedley foreshadowed that Mr David Murray, the CEO of CBA, would individually contact each Colonial Limited employee about any CBA job offer.
Mr David Murray did approach Mr Beck at that time. Speaking personally to Mr Beck at a meeting with senior employees of Colonial Limited, Mr Murray said “we want to offer you a role reporting to a CBA group executive, Mr John Mulcahy. It will not be a CBA group executive position. You should have a conversation with him.”
Mr Beck met with Mr Mulcahy. During this meeting Mr Mulcahy outlined to Mr Beck in summary the terms on which CBA would offer him employment. These terms included base pay of $360,000 with an additional short term incentive potential of 50% of base pay. Mr Mulcahy gave Mr Beck a memorandum of the main terms of his proposed employment on 15 June 2000.
Between 15 June 2000 and 26 June 2000 Mr Beck attended a number of meetings with senior CBA executives at CBA’s head office in Martin Place in Sydney. These meetings principally took place with Mr Mulcahy and a Mr Les Cupper, another CBA senior executive. I accept that during the course of these meetings Mr Beck stated his position to Mr Mulcahy and Mr Cupper thus: “I won’t be accepting this offer, as there is insufficient financial incentive to justify disrupting my family by moving from Melbourne to Sydney or even commuting from Melbourne to Sydney.”
CBA were keen to secure Mr Beck’s services. Mr Mulcahy and Mr Cupper then offered Mr Beck an enhanced short term incentive potential of 70% of base pay.
Mr Beck also declined this offer. He wanted higher base pay. I accept that he pointed out to the CBA executives the importance for him of his retirement benefits. Mr Beck said to Mr Mulcahy and Mr Cupper, “I will only accept the position if you enhance my base remuneration, because what’s important to me is my accrued retirement benefits, which only accrue on salary and not on bonuses. I want CBA to confirm that I will continue to receive the superannuation benefits that I would have received had I continued to be an employee of Colonial”.
Mr Beck then turned the conversation to focus more upon his pension entitlements. Mr Beck said to the two CBA executives, “I won’t come to CBA unless I can protect and enhance my pension that I’m entitled to under my defined benefit pension scheme. I have been a member of that scheme for many years, including my time in South Africa and I have a significant accrued pension in the fund.”
According to Mr Beck, and I accept, after Mr Beck said this Mr Mulcahy responded with words of broad assurance; “Whatever your pension rights were under the Colonial Fund, we undertake to protect those going forward.”
Mr Beck says, and I accept, that as a result of Mr Mulcahy making this statement, Mr Beck assumed Mr Mulcahy meant that CBA would protect Mr Beck’s pension and pay him the reserve that was held on his behalf in the New Colonial Fund. Mr Beck says he also believed as result of this statement that if he were to be employed by CBA and did not thereafter resign his employment with CBA, then he would be paid his pension or the reserve in respect of his pension that had accumulated so far on his behalf during his employment with Colonial and that would continue to accumulate with CBA.
Mr Mulcahy’s recollection of these meetings is less detailed. Mr Mulcahy’s evidence makes clear that CBA were keen to retain Mr Beck’s services at this time. He says CBA had evaluated Mr Beck as a “key keep” and was prepared to work with him and be generous in relation to his employment conditions because of CBA’s desire to retain him as an employee. Mr Mulcahy recalls concern within CBA executive ranks at this time that Mr Beck might take a redundancy payment and leave.
Mr Mulcahy said that he recalled saying to Mr Beck words to the effect “you will be better off and certainly no worse off staying with the bank [CBA] than taking your redundancy payment and leaving”. Mr Mulcahy said that apart from this statement, he could not specifically recall any conversations that he had with Mr Beck about Mr Beck’s future employment with CBA.
Mr Beck read Mr Mulcahy’s affidavit in his case. Mr Mulcahy was no longer employed by CBA. The CBA parties elected not to cross-examine either Mr Beck, or Mr Mulcahy about these conversations. I accept Mr Beck’s version of them as supplemented by Mr Mulcahy’s version, which was generally consistent. It was pointed out to Mr Nixon, counsel for the CBA parties that the decision not to cross-examine made it likely that the Court would infer that Mr Beck actually held the beliefs and made the assumptions that he claimed based upon the representations made by the CBA executives. The CBA parties did not change their election.
These discussions resulted in a written employment agreement between CBA and Mr Beck. The agreement dated 26 June 2000 confirmed Mr Beck’s appointment in the senior executive level position of “General Manager, Investment and Insurance Products, AFS”. Mr Mulcahy signed the 26 June 2000 employment agreement on behalf of CBA and directed that Mr Beck report to him with effect from 1 July 2000.
Mr Beck’s agreed 26 June 2000 remuneration package was on a Total Cost less Incentives less Superannuation Basis (TC-I-S): $500,000 plus performance payment (bonus) potential up to a maximum of 50% of TC – I – S ($250,000). Thus, his total remuneration was said to be $750,000 per annum, reviewable annually from 1 July 2001.
The 26 June 2000 employment agreement dealt with a number of other subjects, including performance benchmarks, executive options, a special gross payment of $660,000 to be made in three instalments over three years, and transition arrangements in respect of Mr Beck’s current Colonial Limited bonus arrangements, together with detailed provisions in respect of long service leave, retrenchment and applicable professional standards. The agreement also covered the subject of superannuation: “Your existing superannuation arrangements will continue to apply. Superannuation “salary” will be $400,000 or 80% of TC–I–S”, that is Total Cost less Incentives less Superannuation, or “TC-I-S”.
After accepting employment with CBA, Mr Beck worked in the role of General Manager Insurance and Investments from 2000 to 2001. During this period CBA began integrating Colonial Limited’s various businesses into its operations.
The Becks Move to Sydney – July 2001. The first 18 months of his employment with CBA were very difficult for Mr Beck and his family. Once Mr Beck accepted employment with CBA he was required to attend the office in Sydney within days. His wife, Mrs Ann Beck remained in Melbourne with their three children. She had her own professional career commitments in Melbourne and their children were in school and university there. During the next 18 months she and her husband lived in different cities, sharing the commuting on weekends between Sydney and Melbourne. To add to their uncertainty, Mrs Beck’s continuing employment in Melbourne meant that neither of them knew exactly how long this arrangement would last. For the first nine months, CBA paid for the Becks’ Sydney accommodation and for their travel expenses between Melbourne and Sydney. For the remaining 9 months Mr and Mrs Beck paid for the commuting and the Sydney accommodation costs.
CBA seemed keen to persuade Mr and Mrs Beck to come permanently to Sydney. So in mid-2001 the bank arranged to fly Mrs Beck up to Sydney for a dinner at Aria Restaurant, near the Sydney Opera House. Mrs Beck had not met either Mr Mulcahy or Mr Cupper before this dinner. There were six people present. Mrs Beck was seated at the dinner between Mr Mulcahy and Mr Cupper and Mr Beck between Mr Cupper’s and Mr Mulcahy’s respective partners.
Mrs Beck has a recollection of her conversation with either Mr Mulcahy or Mr Cupper at this dinner, although she cannot remember with which executive she spoke. One of them said to her, “When does your contract finish and how long will you and the children stay in Melbourne?” She responded saying “I recently signed a contract for a year but since the project is running late, I’ve just been asked to sign another one.” Then either Mr Mulcahy or Mr Cupper said to her, “When will you and the family move to Sydney? It doesn’t show commitment to the bank, if you [and Mr Beck] are living apart.”
Mrs Beck got the message. CBA wanted the Becks to move to Sydney, so that CBA would know that it had a committed employee. Mrs Beck spoke to her husband straight after the dinner. Interpreting the message given, she conveyed to him the substance of what had been said to her. She said to him, referring to the words of Mr Mulcahy or Mr Cupper, “They are putting pressure on me and the children to move to Sydney, as they say that staying in Melbourne does not show commitment to the bank. It’s not good for your career.” His recollection of this post-dinner conversation with his wife is to similar effect.
The very next day Mr and Mrs Beck decided that they would move to Sydney. They made considerable personal and financial sacrifice to do so. I infer this dinner conversation had a similar powerful effect on them both. As a result of the decision Mrs Beck decided not to extend her employment contract in Melbourne. The Beck family prepared to sell their house in Melbourne, which they achieved by September 2001. Although the family did not finally move to Sydney until January 2002, after their daughter had finished her year 12 studies.
Mrs Beck says, and I accept, that it was clear to her from her conversation with Mr Mulcahy or Mr Cupper that CBA appeared to have in mind for Mr Beck a long-term career plan and a long-term commitment to the bank. She interpreted what had been said to her, not unreasonably, as meaning that her husband would preserve and enhance his pension by his continued employment with CBA. And I infer from the nature of their rapid joint decision making after this conversation, that these were shared views. I accept Mr Beck’s evidence that one of the factors that featured in his and his wife’s discussions about their move to Sydney was that despite the inconvenience of the move, it would ultimately be a worthwhile decision, because Mr Beck’s pension would continue to accrue and be enhanced by additional years of contributory service, something which would not be possible should Mr Beck take another position rather than move to Sydney.
The personal and financial effects of relocating from Melbourne to Sydney were considerable for the Beck family. Mrs Beck took time off from work to resettle the children, who had to move to a new social environment, to new educational institutions and who were distressed by the move. To help the family to adjust to these changes Mrs Beck did not seek new employment in Sydney for about another 18 months. Mrs Beck was being paid $100,000 per annum in Melbourne. Terminating her employment there caused her a loss of income.
CommInsure MD to Termination – 2002 to 2005. CBA gave Mr Beck further duties in 2002, appointing him as the managing director of its insurance arm, CommInsure. Mr Beck served in this role from 2002 until 2005.
On 3 October 2003 the assets and liabilities of the New Colonial Fund, including the reserves held in respect of Mr Beck were transferred to the “Commonwealth Bank Officers Superannuation Fund”, the fund of which the second defendant, CBOSC is the trustee (and which fund is called “the OSF” in these reasons). At the same time Mr Beck’s superannuation benefits were transferred to the OSF.
Although the OSF had received all the assets of the New Colonial Fund, Mr Beck believed that nothing had otherwise changed and that all his rights to either his pension or the reserve in respect of his pension would be preserved. He was aware in general terms of the protection offered by superannuation law that his rights must be protected unless he were to give permission for their variation. This was a change for all New Colonial Fund members. It is not in dispute that Mr Beck’s permission for the change was not obtained.
This transfer to the OSF did not diminish the benefits already available to Mr Beck under the New Colonial Fund. As Mr Beck assumed, the SIS Regulations, reg 6.29 prevents a trustee of a superannuation fund from transferring the benefits of a member from one fund to another without the consent of the member, unless the successor fund confers equivalent benefits on the member.
Mr Beck does not contend that there was any breach of that duty on transfer by either CSS as trustee for the Colonial Fund or CBOSC as trustee for the OSF. Rather the breach complained of in these proceedings relates back to the December 1996 amendment to the New Colonial Fund, when the trustee, CSS sought to delete clause A11.3.
On 13 August 2004 Mr Stuart Grimshaw, the Group Executive, Investment and Insurance Services for CBA told Mr Beck that CBA intended to replace him as CEO of CommInsure with another officer, a Mr Simon Swanson, an executive from New Zealand. Mr Beck’s response to this was to say, “Does this mean I can retire early?” Mr Grimshaw responded, “I’ll support it.” The reason Mr Grimshaw gave for this change, as recorded in Mr Beck’s 18 August 2004 email back to Mr Mr Grimshaw, setting out his understanding of the conversation of 13 August, seems to have been that “Simon wants to return to Australia”.
For the rest of 2004 Mr Beck engaged in discussions with senior CBA executives about his possible retirement.
Mr Beck’s 18 August 2004 email to Mr Grimshaw shows that Mr Beck was asked at the meeting with Mr Grimshaw to consider what other Australian roles he might be interested in, including serving on some bank boards, so that CBA did not lose the benefit of his experience. It was made clear to Mr Beck that he would not be given his normal long service incentive plan allocation for 2004, unless an alternative role was found for him. It was also made clear that any alternative role would be at his current level as he had been “boxed” at that level and that he was unlikely to be promoted further. Mr Beck expressed an interest in pursuing board opportunities. Mr Beck reminded CBA that he had joined Colonial in January 1981. He said “after nearly 24 years of service I’m disappointed that I’m unlikely to be able to continue until at least early retirement. I will be 51 in February 2005 and as such will be four years from an early retirement benefit in the pension fund. I have long service leave, accrued annual leave and a period of notice to serve and if you include the annual leave I was instructed to cash in, I will be just short of an early retirement option. I respectfully ask you to consider an early retirement benefit for me in case other roles are not available, which seems quite likely.”
Mr Beck sought to have a pension paid to him on the basis of his early retirement. He corresponded further with Mr Grimshaw and Ms Cathy Doyle about this possibility during September 2004. Both of these officers had been supportive of Mr Beck’s early retirement request. But in an email dated 30 September 2004 Ms Doyle informed Mr Beck that the early retirement request had been considered and “the outcome is no”. She wrote in her email “it will not be supported due to op risk and total $$...” Presumably the decision-makers thought that an aspect of the proposal was too risky and that the payout figure was too high. Ms Doyle offered to get a more detailed response to Mr Beck on the issue.
On 7 October 2004 Mr Grimshaw told Mr Beck “You will be aware that both Cathy [Ms Doyle] and I support the early retirement option and the determination was made whilst I have been on leave, which is why I asked Cathy to deal with it in my absence.” Mr Grimshaw indicated that “we will still continue looking for other opportunities within the bank”.
On 12 November 2004 Mr Beck attended another meeting with Mr Grimshaw and Ms Doyle to discuss the effect of his termination and to consider options to defer the termination or redundancy date by accessing his accrued leave. The subject of superannuation benefits was also discussed. Mr Beck requested that CBA write to the trustee of OSF, CBOSC, requesting a deferred pension. According to Mr Beck’s file note of the meeting, CBA’s response was “the Commonwealth Bank’s approach is that superannuation benefits apply in terms of normal arrangements for the exit situation and the division that the person is a member of.” CBA was apparently declining to write to CBOSC in the manner requested. Perhaps expressing his own personal interpretation of this somewhat opaque response, Mr Beck has written against this part of his file note in his own handwriting “No”.

On 4 January 2005 Mr Grimshaw on behalf of CBA gave Mr Beck written notice that CBA no longer had a role for him in CommInsure’s business. The letter identified that a suitable permanent placement had not yet been found for Mr Beck and he was encouraged to apply for other suitable positions within the bank. Mr Grimshaw told him that at the end of the “redeployment period”, if he had not been appointed to a permanent position, the bank would unfortunately have to proceed with his retrenchment effective from 11 February 2005, “Your retrenchment would occur on 11 February 2005 as agreed.”
Mr Beck advanced a number of possible options with CBA to try to avoid a loss of pension, if he were retrenched before age 55. He would turn 51 in February 2005. These options essentially involved trying to extend his service to age 55. He corresponded with Mr Grimshaw and Mr Cupper between November 2004 and April 2005 to request CBA to consider ways to secure his pension. He requested the use of leave without pay to take his service to the age of 55 (which age he would attain in February 2009), so that he could then be paid either his accrued pension and/or the reserve. Utilising the device of leave without pay, the possible options Mr Beck canvassed with CBA were: (1) allowing him to continue in the OSF until age 55 even though his service had ceased, as a “paid-up” member; (2) granting him a career break up to age 55 on unpaid and paid leave, with the option to contribute to and continue to accrue his pension; or (3) granting him a career break up to age 55 on unpaid and paid leave, without the option to contribute and where his pension would not further accrue during this period.
Mr Beck summarised his position on these various options in an email of 24 January 2005 to Mr Cupper. He set out the two broad ways that he could receive an early (that is before age 55) retirement pension. The first involved the various options already canvassed, to extend his actual employment to age 55 to then access the 55-62 retirement benefit. The second involved accessing the reserve value of his pension using what he then thought was still a discretion available to CBOSC as the trustee of a successor fund to the Colonial Fund, the pre-55 discretionary benefit. Ultimately both of these pathways were rejected. Mr Beck’s email was as follows:

“Thank you for meeting with me on 7 January 2005. I appreciate the time and effort you are taking to understand my situation. I would like to cover three areas in this letter.
(a)   The two ways of granting me an early retirement pension,
(b)   Why this does not create any precedents that do not already exist and
(c)   The reasons why an early retirement pension is appropriate in my situation rather than a resignation benefit.
I believe the circumstances leading up to my termination is relevant to my situation.
I was employed by CBA about 4 1/2 years ago at the time of the Colonial takeover. I moved my family from Melbourne to Sydney about 3 years ago after being pressurised by you and John Mulcahy to make a long-term commitment to CBA.
I sold two properties in Melbourne and purchased and renovated a home in Sydney. I got my eldest son to transfer from Melbourne to Sydney University midway through his degree, persuaded my daughter to go to Sydney University instead of Melbourne and got my youngest son to start at a new school in year 11. My wife had to give up work to make this commitment. I did all of this on the expectation of continuous employment with CBA at least to early retirement.
The performance of my business unit has exceeded expectation with a scorecard of over 70% and my personal Gallup score reflecting my own leadership ability is one of the highest in CBA at 4.5 out of 5. There is no reason why I should not continue in my existing role. Despite the fact that CBA regards my role as redundant, I do not share this view.
I am disappointed that I have not been given the option of continuing to retirement and I have not resigned. I have made myself available for alternative roles and have not been offered any positions.
There are two ways of granting me an early retirement pension
1) CBA allows me to continue employment to age 55
CBA can continue my employment for 4 years to age 55 within company policy. This would be partly on a paid basis and partly on an unpaid basis. I am entitled to take annual leave and long service leave. It is stated company policy to grant up to 3 years as a career break and 12 months of unpaid leave after 4 years of service. It was also company policy when I joined CBA to allow long service leave to be taken on half pay for double the period.
My retrenchment benefit is over 64 weeks including a 6 months notice period. This could be paid as a lump sum or preferably used for a period of paid leave. Either way I continue in employment to age 55 and get paid 2 years remuneration.
I believe that it would be unreasonable and unconscionable to withhold consent to unpaid leave or to paid leave in lieu of a retrenchment benefit in my situation.
2) The Trustees exercise appropriate discretion
The rules of the fund define "Resignation", "Retrenchment" and "Retire". I believe in my situation I will Retire from the super fund as the definition of Resignation and Retrenchment do not apply.
The Colonial defined benefit super fund has a major discontinuity between the resignation benefit and the early retirement benefit at age 55 for those with long periods of service. The impact for me is a pension around $50 000 pa versus $150 000 pa. The old rules of the fund contemplate this discontinuity and incorporated a special provision for benefits to be individually calculated by the Actuary based upon reserves at the discretion of the Trustees. The current rules continue to provide for Trustee discretion.
There have been precedents of members receiving their reserve values before age 55. For example Graham Rogers received a reserve value when he left Colonial before age 55. All members were offered reserve values or accrued benefits when the company tried to convert members from defined benefits to defined contributions. At the time my accrued benefits were 2.5 times the resignation benefit.
The Colonial defined benefit scheme is the scheme with this discontinuity problem and the special provision to avoid inequities. The precedent already exists in this fund and so exercising discretion creates no new precedents. The other defined benefit divisions (Division B and D) both allow for special benefits to be paid on retrenchment and for those benefits to be deferred to early retirement and paid as a pension.
I believe that if this special provision is not used by the Trustees to provide an early retirement pension, then my interests as a beneficiary under the scheme may not have been dealt with properly and with good faith.
I look forward to your response.”

CBA first declined to accept the first pathway Mr Beck had suggested of extending his service to age 55. CBA thought this was too artificial. Its response to Mr Beck’s 24 January 2005 email came on 8 February 2005, when Mr Grimshaw wrote to Mr Beck in the following terms:

“In your email of 24 January 2005 you requested various confirmations and a response to your request for a period of leave until 11 February 2009. On the same day you wrote to Les Cupper, Group Executive People Services, requesting that the Bank and its Superannuation Trustees exercise discretion to enable you to receive an early retirement pension on 11 February 2009.
I have considered your requests, discussed them with Les Cupper, and respond as follows.
You will finish in your current roles as Managing Director, Responsible Officer and Principal Executive Officer of Colonial Mutual Life Assurance Limited, Commonwealth Insurance Holdings Limited, Commonwealth Insurance Limited and Colonial Protection Limited, effective 11 February 2005.
I would like to make it clear that the Bank has not made the position you currently occupy redundant. The Bank has exercised its right under your employment contract with the Bank to terminate your services and will meet its contractual obligations.
Peter, you will recall our discussions in August 2004 concerning your future employment and the prospect of termination. I agreed to give you a sufficient time, until the end of the year, to canvass [sic] alternative roles within the Bank. You subsequently asked for an extension to February 2005 to which I agreed. As I informed you in my letter of 4 January 2005, your termination is scheduled to take effect on 11 February 2005 as no suitable alternative role is available for you in the Bank, having regard to your skills and experience. However, the Bank is prepared to agree to your request to take annual leave or long service leave, or a combination of both, from 11 February 2005 to 1 July 2005.
During this period of leave you would remain an employee of the Bank and the terms of your current employment contract would continue to apply.
If you decide to take leave until 1 July 2005, your termination would take effect on that day, or earlier by agreement. Should a suitable alternative position in the Bank become available during your period of leave the prospect of continuing in the Bank will be discussed with you. I have given consideration to your request to continue as an employee of the Bank until 11 February 2009. Your proposal involves converting your termination payments into paid leave and taking a further period of unpaid leave so as to qualify for an early retirement pension when you turn 55 in February 2009. At the same time as being an employee of the Bank during this period you propose to be in alternative employment with another employer. Your proposal is totally unacceptable as it exposes the Bank to being party to a contrived employment arrangement for the purpose of obtaining a more favourable pension than otherwise would have been available. The Bank does not agree with your claim that the OSF could discriminate against you if you are terminated before age 55.
Could you please advise whether you intend to take leave until 1 July 2005
and, if so, the type of leave so that it can be recorded, or if not so that termination payments and associated documentation can be prepared.”

Mr Beck had requested to take annual leave/long service leave from 11 February 2005 to 11 July 2005. CBA agreed to this much.
Mr Cupper also replied to Mr Beck’s email of 8 February 2005. He vigorously disputed that either he or Mr Mulcahy had applied any pressure to Mr Beck to make a long term commitment to CBA. Despite this, he was not called to give evidence for CBA, which took a position far closer to Mr Beck’s account. Mr Cupper said the following:

“I have given your email of 24 January 2005 serious consideration.
You are clearly disappointed that the Bank has exercised its right to terminate your services under your employment contract with the Bank. However, I totally reject your claim that you were pressured by myself and John Mulcahy to make a long term commitment to CBA following the Colonial acquisition. Your Colonial employment arrangements gave you the option to leave as a consequence of the merger and receive a two year payout. We preferred that you stayed on and as part of our discussions we agreed with you to compensate you $660,000.00 for forgoing the benefit you would have received if you had exercised your contractual right. Peter, you must have given the matter long and hard consideration, backed yourself to succeed in CBA, and decided to join the Bank. The movement of your family to Sydney followed as a consequence of this decision. The Bank provided you with generous relocation assistance. No discussion occurred between us on your expectation to continue working with the Bank until age 55 and no undertakings were given to this effect.”

Mr Beck took issue with CBA’s opinion about his first pathway to an early retirement pension and rejected CBA’s characterisation of his idea as “contrived”. He replied on 11 February as follows:

“Thank you for your email of 8 Feb 2005.
As requested I will resign as Managing Director, Responsible Officer and Principal Executive Officer of Colonial Mutual Life Assurance Limited, Commonwealth Insurance Holdings Limited, Commonwealth Insurance Limited and Colonial Protection Limited, effective 11 February 2005.
My notes of our meeting in August 2004 records that you requested me to continue in my current role until early 2005 when Simon Swanson would become available. I suggested 11 February 2005 as a termination date to give Simon a one month handover period and so that performance reviews could be completed based upon year end results which would only be available towards the end of January 2005. In my view I have therefore remained in employment to cover a business need.
Your rejection of my request to continue employment until age 55 seems to be based on what you consider to be my proposal "to be in alternative employment with another employer". To clarify my request, therefore, would CBA consider allowing me to continue in employment until age 55 partly on a paid and partly on an unpaid basis if I did not take up alternate employment with another employer.
I am not, as you suggested, trying to contrive an employment arrangement. I
am simply trying to understand what my options are, Thank you for allowing me to take leave until at least 1 July 2005. I will apply for this on a monthly basis until I understand my options in respect of continuing employment and the super fund.
I look forward to your response.”

But so far the bank had only dealt with Mr Beck’s first suggested pathway. The second pathway was still to be considered. Mr Beck wrote to Mr Gerard Parlevliet, the Secretary of CBOSC on 11 February 2005, submitting that it was “unfair and unequitable that he should be treated as though he had resigned and not retired. He pointed out that when the Fund was set up, retirement benefits were only clearly defined for people over 55 and that he was being forced to be assessed as a resignation. He again pointed out that if he were allowed to continue his membership of the Fund for a further four years, on top of his actual service of 24 years, he would then be entitled to a pension of 37 per cent of pensionable salary from age 55.
But he then turned to his second pathway. He submitted to Mr Parlevliet that if the OSF trustee exercised its discretion under clause 22(b) that he would get roughly that 37 per cent and that “this would be fair”, and that is what CBOSC should do. He said in contrast that his pre-55 resignation benefit “could only be used to purchase an equivalent pension of about 12.5 per cent of pensionable salary, which was, as he explained, “what someone with less than ten years of service would get”. Moreover, he pointed out that pre-55 resignation benefit could only be taken as a lump sum whereas a pre-55 discretionary benefit “has the choice of a lump sum or an annual pension”. Finally he said that if CBOSC did not consider and grant him the pre-55 discretionary benefit then CBA would be making a profit; “Unless CBA intends to make a profit in the fund at my expense, I believe there is no reason for them to not agree to this”.
Mr Beck was still proceeding upon the assumption that an equivalent of clause 22(b) in the August 1985 deed was available to him.
CBOSC considered Mr Beck’s request for an exercise of discretion to pay him a clause A11.3 benefit based upon the value of his reserve. But as Mr Parlevliet recorded in a file note of 6 May, and a letter to Mr Beck of 11 May, CBOSC decided to reject Mr Beck’s request. In his letter of 11 May Mr Parlevliet corrected Mr Beck’s misunderstanding about clause 22(b) as follows:

“We advise that this rule does not exist in the OSF having been removed from the CGSSF Trust Deed by way of a Deed Amendment effective 1 January 1997. We also note that the terms of Rule 22(b) did not provide the Trustee with an absolute discretion to adjust the member’s benefit as any decision to pay an additional amount required the consent of the Employer”.

Mr Parlevliet then re-iterated that upon ceasing employment with the bank prior to reaching the age of 55 Mr Beck would be entitled to a leaving service benefit as currently defined in the OSF, clause CH13 – leaving service benefit.
The relevant part of Mr Parlevliet’s internal file note of 6 May was the following:

“2.16 As indicated earlier in this paper, the motive for Mr Beck's approach to the Trustee is that the Leaving Service Benefit payable to him is below the value of the pension that would be payable to him at age 55. By way of comparison, his leaving service benefit is $1,316,027 whilst his projected pension at age 55 would have been $147,194 pa (around $2,362,000 in lump sum terms)
2.17 Whilst we can understand Mr Beck's position, the Trustee can only act in accordance with the Trust Deed and Rules (OSF Rules). In terms of the OSF Rules, there is no discretion available to the Trustee to agree to his request.”

On 11 July 2005, at the conclusion of his leave period, Mr Beck’s employment ended. Mr Beck did not resign from his employment with CBA. His employment was terminated. CBA did not suggest at any time in these proceedings that Mr Beck’s employment had been terminated for cause.
As at the date of his termination Mr Beck was being paid a salary of $500,000 per annum (producing a pensionable salary of 80% of this, namely $400,000). Throughout his employment with Colonial Mutual and CBA Mr Beck had always been a member of and contributor to the Colonial Fund and the OSF.
On his July termination Mr Beck was entitled to be paid a lump sum of $1,397,008, representing the amount of the leaving service benefit payable to him to that date under clause CH13.1 of the OSF rules. He was not paid a pension and he left this sum in the Fund pending the outcome of these proceedings. Through his counsel he made an open offer to the Court on the first day of the hearing: that this sum in the OSF could be retained and applied by the CBOSC if the CBOSC were minded to exercise a discretion to grant him a pre-55 discretionary benefit out of the OSF in the form of a pension.
After the termination of Mr Beck’s employment in July 2005 he corresponded further with CBOSC and with the Superannuation Complaints Tribunal concerning his superannuation entitlements. The evidence of that correspondence through to early 2006 shows Mr Beck seeking further information from CBOSC about how the pre-55 discretionary benefit rule was deleted from the Old Colonial Fund and whether he suffered any disadvantage as a result of the transfer of his benefits from the New Colonial Fund to the OSF. The detail of this correspondence need not be considered in these reasons.
It is now useful to look at the terms of the various deeds and the rules for the Colonial Fund and for the OSF as they stood from time to time.

The Old and New Colonial Funds and the OSF – deeds from 1985 to 2003

Some general provisions and relevant rules of the Colonial Fund and its successor fund, the OSF, must now be examined through its five main relevant changes: August 1985, July 1996, December 1996, July 1998 and finally the OSF in 2003. The 1996 changes are of most significance.
The Old Colonial Fund’s June 1978 deed need not be considered as the August 1985 deed had superceded it by the time Mr Beck arrived in Australia in early 1987.

The August 1985 Deed

The August 1985 deed substantially amended the rules governing the Old Colonial Fund, and provided the predecessor provision which became clause A11.3 of the July 1996 deed.
A number of defined terms of the August 1985 deed appear in its relevant terms. “Board” or “Directors” were defined as the Board of Directors of Colonial Mutual. A “Contributor” means a member of an Employer’s staff admitted as a contributor to the Fund. “Contributory Service” means service in the employment of an Employer, during which an employee has contributed to the Fund and includes any additional period in which the Trustees, as defined, at the request of the Board, deem in special circumstances to be Contributory Service for the purpose of the Rules”. The expression “Employer” means Colonial Mutual or any associated company of Colonial Mutual. “Pensioner” means a person who receives a pension under the rules after retirement. And “Retiring Age” in the August 1985 deed means a contributor’s 62nd birthday.

The August 1985 deed structures pension and other benefits that are retained in substance throughout future amendments to the rules of the Colonial Fund. Under the August 1985 deed the Fund was vested in Trustees (clauses 2 and 3). The August 1985 deed provided: the Trustees with general powers of investment and for their management of the affairs of the Fund (clauses 4-12); and for regular periodic actuarial investigation and valuation of the Fund (clause 13). Each Contributor was required to contribute to the Fund at a rate of 5 per cent of salary, and upon the actuary’s advice, together with such further annual additional sums as were required to ensure the “financial soundness of the Fund”, with information about these further sums to be advised to the Board of Colonial Mutual (clause 15(a)), which could resolve to increase the percentage rate for contributions.
The August 1985 deed provides for the following benefit structure: a pension upon retirement at the Retiring Age, calculated as a proportion of the annual salary of the Contributor on retirement in an amount equal to the Contributor’s years of service, divided by 60 (clause 16); a benefit to the spouse of a Pensioner who has retired at the Retiring Age (clause 17); death benefits upon the death of a Contributor, while in the service of the Employer (clause 18); a pension for a Contributor who retires from employment before the Retiring Age of 62 but after the age of 55, according to a formula that discounts the pension payable from that which would otherwise be payable at the Retirement Age (clause 19); and, provision for lump sum and pension payments upon permanent and total disablement (clause 20).
In addition to these defined benefits, clause 22 of the August 1985 deed included the predecessors of clauses A11.1, A11.2 and A11.3 in the July 1996 deed, which provided for benefits where no benefit was otherwise payable under clauses 16, 18, 19 or 20 of the August 1985 deed. Clause 22, entitled “Withdrawal”, made benefits payable to a contributor who ceased relevant employment and resigned from the Fund before the age of 55. This comprised two kinds of benefits called in these reasons the pre-55 retirement benefits: (1) an automatic benefit payable (under clause 22(a)) as of right, the pre-55 resignation benefit; and (2) a discretionary benefit payable to the Contributor (under clause 22(b)) in circumstances where the Contributor had rendered long service (clause 22(b)), the pre-55 discretionary benefit. Clause 22(a) was the predecessor of clauses A11.1 and A11.2. Clause 22(b) was the predecessor of clause A11.3.
In his January 2005 correspondence with CBA Mr Beck explained the policy reasons behind the additional discretionary benefit conferred by clause 22(b). Given his expertise the Court accepts this explanation. The pre-55 resignation benefit available under clause 22(a) is significantly lower in monetary value than the pension entitlements that would arise under clause 19(a) upon “early” retirement at age 55 (called “early” retirement in this context because it is retirement before the Colonial Fund’s contemplated standard retiring age of 62). Mr Beck estimated for example that in January 2005 a retiring age pension at age 55 (payable under clause 19(a)) for someone such as himself, could be worth as much as $150,000 per annum, as distinct from the pre-55 resignation benefit of about $50,000 that would be payable as of right under clause 22(a). He explains that the pre-55 discretionary benefit in clause 22(b) was inserted to smooth out the effect of this potentially substantial financial discontinuity between the operation of clauses 19(a) at age 55 and clause 22(a) pre 55. Thus the rules provided for an additional bridging benefit to be individually calculated by the actuary for the Contributor caught in this financial gap, based upon the available reserves held for that Contributor. The same policy idea is inherent in the successor pre-55 discretionary benefit provision, clause A11.3 of the July 1996 deed.
Clause 22(a) provides for the Trustees to pay to the Contributor a pre-55 resignation benefit calculated as follows:

(a) 5% of final salary (called the “basic sum”) for each year of contribution (effectively a refund of contributions made), and

(b) where contributions exceed 5 years, a further 5% for each year of contribution in excess of 5 years.

In contrast to the clause 22(b) payments shortly to be considered, the text of clause 22(a) shows these are payments made as of right to the Contributor, who retires before the retiring age of 55:

“22.   If a Contributor ceases employment with an Employer in circumstances where no benefit is payable pursuant to Rule 16, 18, 19 or 20-
(a)   the Trustees shall pay to the Contributor out of the Fund-
(i)   a sum equal to five per centum of a basic sum (as determined hereinafter) for each year he contributed to the Fund or the Old Fund, and a proportionate amount for any part of such year, but excluding any period in respect of which a benefit has already been paid. […]
(ii)   […]; and
(iii)   where the Contributor has contributed to the Fund for not less than 5 years – a further additional sum equal to five per centum of the total sum payable pursuant to the last two preceding sub-paragraphs for each year in excess of five during which he contributed to the Fund or the Old Fund but excluding any period in respect of which a benefit has been paid.”

After the August 1985 deed clause 22(b) of the Old Colonial Fund, provided for the discretionary payment upon retirement of a Contributor after long service but before age 55 (the pre-55 discretionary benefit), as follows:

“in exceptional circumstances, and usually only if such Contributor has had a long period of Contributory Service, the Trustees may, without being obliged so to do and at their absolute discretion and with the approval of the Board, pay to such Contributor out of the Fund a further sum of such amount as will increase the total payment to such Contributor to an amount not exceeding the reserve value, as determined by the Trustees after considering the advice of the Actuary, held in the Fund in respect of such Contributor at the date of his ceasing to be employed by his Employer Provided that in Lieu of paying the additional or further sum aforesaid the Trustees may apply such sum or sums to provide the Contributor with an annuity of such amount as the Trustees deem to be appropriate after considering the advice of the Actuary, commencing at the age of sixty-two years or such other age as the Trustees may decide upon, in which case, if requested by the Contributor, the Trustees should they in their discretion decide so to do may apply any other sum payable pursuant to this Rule in like manner.”

Clause 22(b) gives the Trustees a discretion to “pay to [a qualifying] Contributor out of the Fund” “to an amount not exceeding the reserve value … held in the fund in respect of such Contributor”. The provision envisages a possible future discretionary payment being limited by an amount identified as the “reserve value” that is “held” in the Fund “in respect of such Contributor”, concepts that seem to imply a relationship between a part of the Fund and a Contributor. But that “reserve value” part of the Fund so related to the Contributor cannot be paid before the age of 55 without the exercise of the Trustee’s clause 22(b) discretion. As will be seen, the “reserve value” part of the fund so held for each Contributor, is reserved so as to provide for the pensions of the various kinds that may become payable to the Contributor under Rules 16, 18, 19 or 20.
The Old Colonial Fund after the August 1985 deed could be amended. Clause 32 of the August 1985 deed provided a mechanism for the amendment of the rules of the Fund, in a form which protected the value of benefits accrued in respect of a member, as follows:

“The Trustees with the consent of the Board may at any time and from time to time by resolution amend add to or delete from all or any of the provisions of the Trust Deed or the Rules (including the provisions of this Rule) in such manner as they in their absolute discretion think fit Provided That no such amendment addition or deletion shall be made whereby the value of the benefits accrued in respect of any Contributor prior to the date of such amendment addition or deletion is detrimentally affected without the consent in writing of the Contributor concerned (for the purposes of this proviso the value of the benefits accrued shall be such amount as the Trustees, after considering the advice of the Actuary, determine has accrued) Provided Further That any amendment addition or deletion which the Trustees consider necessary or desirable for better securing relief in respect of the income or profits of the Fund from taxation or relief from taxation or duties in respect of benefits paid or payable in respect of the Trust Deed or for ensuring that the Trust Deed as amended added to or deleted from conforms to any present or future State or Commonwealth laws governing or regulating the operation or maintenance of superannuation or pension funds shall not be deemed detrimentally to affect the value of the benefits accrued in respect of any Contributor prior to the date of such amendment addition or deletion and may be given effect without such consent.”

Clause 32 was used to amend the Old Colonial Fund in the July 1996 deed, which in turn introduced a successor amendment provision, clause 33.1, 33.2 and 33.3. Clause 32’s prohibition on amendments that detrimentally affected the “value of the benefits accrued in respect of any Contributor” prior to the amendment, was a formula that survived and continued through the future amendments of the July 1996 deed and the December 1996 deed using almost identical words.

The July 1996 deed

The July 1996 deed is divided into three parts: Division 1, containing provisions relating to the conduct and general administration of the Fund itself; Division 2, containing rules governing eligibility for, contributions to and membership of the Fund, and Division 3, containing rules governing the payment of pensions and other benefits from the Fund. Clause A11 in Division 3 contained the equivalent of clause 22 of the August 1985 deed.
Division 1 of the July 1996 deed contains definitions that are utilised throughout all its Divisions. Many of those definitions were similar to those in the August 1985 deed and need not be repeated. But some are of special significance in the construction of clause A11.1. “Actuary” was defined as a person appointed pursuant to clause 31.1. A “Leaving Service Benefit” was defined as “a benefit payable on the cessation of employment under Rule A11”. The July 1996 deed was executed by seven trustees. But the definition of “Trustees” contemplated that a company could be appointed as a sole trustee (clause 4.3) as was by then required by the SIS Act. And CSS was appointed the Trustee before the December 1996 deed.
By the time of the July 1996 deed, the Commonwealth Parliament had in 1993 passed the SIS Act, which was included within the definition of “Relevant Requirements” in the July 1996 deed. The “Relevant Requirements” were defined as follows:

“’Relevant Requirements’ means the standards, covenants or other requirements set out in:
(a) the Superannuation Industry (Supervision) Act 1993; and
(b) the Income Tax Assessment Act 1936; and
(c)   the Superannuation Entities Taxation Act 1987; and
(d) the Superannuation (Resolution of Complaints) Act 1993; and
(e)   any regulations made under any of those Acts; and
(f)   any other law which the Trustees and the Company agree is a Relevant Requirement for the purposes of the Deed.”

Division 1’s interpretation provision (clause 1(b)) provided that references to statutes should be read as including amendments to or re-enactments of legislation and included delegated legislation. The parties used a version of the SIS Act and Regulations as at 11 December 1996, just before the making of the December 1996 amendments.
After its amendment through the July 1996 deed, Division 1 of the Old Colonial Fund contained relevant general administration provisions, that among other things required a broad scope to the Trustees’ discretionary powers, as follows:

“5.1   Subject to the Relevant Requirements the Trustees shall have the complete management and control of all proceedings, matters and things in connection with the Fund and may do such acts and things as the Trustees consider necessary, desirable or expedient for the proper administration, maintenance and preservation of the Fund or in order to comply with or satisfy any Relevant Requirements.
5.2   The Trustees may delegate any power, duty or discretion to any person upon such terms and conditions (including remuneration) as they think fit. The Trustees may revoke any such delegation and may exercise any such power, duty or discretion themselves concurrently with or to the permanent or temporary exclusion of a delegate.
5.3.   The Trustees and Employers are completely unrestricted in the exercise of their powers and discretions under the Deed and, subject to the Relevant Requirements, are not bound to give to any person any reason or explanation for the exercise, non-exercise or partial exercise of any such power or discretion.”

Division 1 (clause 15, “Alternative Form of Benefit”) allowed a beneficiary to elect to take a benefit, with the Trustee’s and Colonial Mutual’s consent, in a form or in circumstances different to those specified in the deed.
Division 1 of the Old Colonial Fund after the July 1996 deed also provided for the appointment of an Actuary for the Fund (clause 31). The Actuary was empowered to make actuarial investigations of the Fund, and held ancillary powers to seek information from Members, as defined, and then to report to the Trustees:

“31.   APPOINTMENT OF ACTUARY
31.1   The Trustees shall with the consent of the Company appoint an Actuary to provide actuarial services to the Fund. The Actuary shall meet the Relevant Requirements.
31.2   The Trustees shall cause the Actuary to make an actuarial investigation of the Fund at intervals of not more than 3 years or at such lesser intervals as the Trustees may require, and the Trustees, each Employer and each Member shall supply the Actuary with all such information as the Actuary may require. The Actuary shall furnish to the Trustees and the Company a report in writing on the investigation within the time stipulated in the Relevant Requirements. The Actuary's report shall address the matters stipulated by the Relevant Requirements, including recommendations on the level of contributions to be made by Employers.
31.3   The Trustees shall obtain certificates from the Actuary on the matters and at the times stipulated by the Relevant Requirements.”

Division 1 also provided for the Trustees to deal with any surplus disclosed by an actuarial investigation, in a way that must benefit Members (clause 32):

“32.   SURPLUS
32.1   The Trustee may, with the approval of the Company, deal with any surplus disclosed by any actuarial investigation referred to in Clause 31.2 in any one or more of the following ways:
(a)   by increasing any benefits payable out of the Fund or paying new benefits from the Fund;
(b)   by reducing any contributions payable to the Fund.
32.2   Subject to Clause 32.1, no contribution or any part of a contribution under the Deed shall in any circumstances whatever revert to or become charged in favour of an Employer.”

The Actuary’s role was a periodic one to be performed at minimum intervals. The Actuary could also be called upon to give advice to the Trustees from time to time under powers conferred under specific provisions of the July 1996 deed. Such specific provisions for the Actuary’s opinion occur in clauses 33.1, 10, and A11.3, which are considered immediately below.
The July 1996 deed also provided in Division 1, the Division concerned with the Fund’s general administration, the Trustees with a power of amendment (clause 33) in slightly different terms to the August 1985 deed:

“33   AMENDMENT
33.1   Subject to Clause 33.2, and to the Relevant Requirements, the Trustees may, with the consent of the Company, by supplemental deed or resolution, amend, add to, delete or replace (together ‘amend’) all or any of the provisions of the Deed including this Clause with effect from such date (whether before, on or after the date on which the supplemental deed is executed or the making of such resolution) as may be specified in that deed or that resolution. In the absence of express specification, the date of the execution of the deed or the making of the resolution shall be deemed to be specified. Each such amendment is binding on each Employer, each Member and any other person claiming under or bound by the Deed. Any amendment made by resolution shall be confirmed by supplemental deed as soon as practicable after it has been made.
33.2   Subject to Clause 33.3, no amendment shall be made whereby the value of the benefits accrued in respect of any Member prior to the effective date of the amendment is detrimentally affected without the written consent of that Member (the value of the benefits accrued being such amount as the Trustees, after considering the advice of the Actuary, determine has accrued).
33.3   Any amendment which the Trustees consider necessary or desirable for better securing taxation concessions or for ensuring conformity to the Relevant Requirements or any other present or future State or Commonwealth laws governing or regulating the operation or maintenance of superannuation funds shall be deemed not detrimentally to affect the value of the benefits accrued in respect of any Member prior to the effective date of such amendment, and may be given effect without the consent of that Member.”

Division 1 of the July 1996 deed also creates an overriding provision (clause 35) that ensures that parts of the rules of the Colonial Fund that would otherwise be invalid as subjecting the Trustees to direction by another, should be construed as requiring the Trustees’ consent for the giving of the direction.
Division 2 of the July 1996 deed provides for eligibility for membership (clause 1), accession to and ceasing of membership (clause 3), and Members’ contributions (clause 6). But it also provides for the growth and recording Members’ entitlements. The Trustees are required under clause 7 “Accumulation Accounts” to record for each Member, in what is called an “Accumulation Account”, that Member’s contribution adjusted for various matters, including “amounts credited or debited from time to time to the Account being allocations of earnings at the appropriate fund crediting rate” (clause 7.2(d)) and “any other amounts determined by the Trustees having regard to the provisions of the Deed” (clause 7.2(f)). Clause 7 provides for the creation of something like a fund ledger for each Member, as follows:

“7.   ACCUMULATION ACCOUNTS
7.1   The Trustees shall record for a Member:
(a)   in a Voluntary Contribution Account, additional Member and Employer Contributions paid under Rule A1.1(b), A1.2 or A1.6 or otherwise; and
(b)   in a Transfer Account, amounts transferred to the Fund in respect of a Member which the Trustees decide to credit to this Account.
7.2   The Trustees must also record in the relevant Accumulation Account:
(a)   insurance premiums (if any) which the Trustees decide to debit to the Account:
(b)   amounts debited (if any) to the Account for Tax;
(c)   amounts paid as benefits or transferred to an Approved Benefit Arrangement from the Account;
(d)   amounts credited or debited from time to time to the Account, being allocations of earnings at the appropriate Fund Crediting Rate;
(e)   such part (if any) of the costs and expenses incurred in the management and administration of the Fund as the Trustees consider appropriate to debit to the Account under Rule 8.4; and

Mr Beck’s case is that as a result of these statements he assumed or expected that CBA would pay him the reserve that was held on his behalf in the New Colonial Fund if he called for it in the future. I doubt this assumption or expectation can be inferred from the words used. The words do not mention an immediate right to his reserve. And such a right would have gone even beyond Mr Beck’s understanding of his pre-55 discretionary benefit under the old clause 22(b). Mr Nixon for CBA says that this inference goes too far and I agree with him.
But the words used did lead to Mr Beck holding a closely related assumption or expectation. He says he also assumed that if he were to be employed by CBA and did not resign then he would be paid his pension (when he became entitled to it at age 55), or the reserve in respect of his pension that had accumulated. In my view Mr Beck reasonably took away from his conversations with Mr Mulcahy that CBA would not interfere with Mr Beck protecting and enhancing his pension rights by continuing to work on as an employee of CBA up to the age of 55. This inevitably brought with it the legal effect that CBA would not exercise its right under the employment agreement to terminate Mr Beck’s employment other than for cause before that date.
In my view this is the assumption or expectation that Mr Beck held as a result of what Mr Mulcahy said to him. He continued to hold it thereafter. What happened in mid-2001 strengthened it.
Mr Mulcahy also took part in the mid-2001 Aria restaurant conversation. This was not just a pleasant three course meal in a fine harbourside restaurant among six friends. Mr Mulcahy had a purpose for the dinner. It was no accident Mr Mulcahy and Mr Cupper raised with Mrs Beck the subject of her and the family moving to Sydney and seeking that they do so to “show commitment to the Bank”. I infer that their fear was that because she and the family and Mr Beck were “living apart”, he might be tempted to give notice under his contract to cease his employment to the Bank. They did not want this, so they asked for what they described as a “commitment” in Mr Beck’s relationship with the Bank. Asking for “commitment” in a relationship such as this cannot sensibly be understood as being other than mutual commitment. Although it was not expressly stated, in my view, CBA’s equivalent commitment was inherent in the bank’s request to Mr Beck. Mr Mulcahy was asking Mrs Beck and the family to support Mr Beck’s relationship with the Bank. It is repugnant to the request being made that Mr Mulcahy or Mr Cupper could have consistently added to their words to Mrs Beck, “and when you and your husband and family move here to Sydney we may of course give him six months’ notice of termination, if and when it suits us”. Mr Mulcahy and Mr Cupper knew that Mrs Beck would speak to her husband quickly about this important subject and she did. To speak to her was to communicate with him on this matter. The commitment then being sought, and in my view also being “offered” was in the mutually understood background that Mr Beck had already been promised, that his pension rights would be protected and enhanced. From this time he could reasonably assume and expect that he would not be terminated other than for cause before he became entitled to a pension at 55.
The burden of what the Bank was asking for should not be overlooked. The CBA executives were asking Mr and Mrs Beck to overcome an 18 month reluctance to uproot established family relationships and move to Sydney, something they were clearly disinclined to do after moving from South Africa fourteen years earlier.
The CBA parties argue that the representations Mr Beck relies on are insufficiently precise to found an estoppel. Citing the High Court’s decision in Legione v Hateley (1983) 152 CLR 406, at 435-6 that a representation must be unambiguous to found an estoppel in pais, and must also be clear before it can found a promissory estoppel, they argue that none of the CBA executives’ representations is precise enough to found an estoppel here.
But this argument is not persuasive. First the representations are clear enough in the context of the high level of expertise that Mr Beck and Mr Mulcahy were dealing with one another about Mr Beck’s superannuation future. Mr Mulcahy knew he was talking to an actuary. Both men should be credited in their use of language with the intelligence and precision that their professional backgrounds imply. They each well understood what “protect” and “enhance” Mr Beck’s “pension” meant in that context.
Secondly, the argument does not correctly state the law. Equitable estoppel does not require the precision of a representation necessary to enforce a legally binding promise: Tadrous v Tadrous [2012] NSWCA 16 at [38] – [42], per Meagher JA. What attracts the intervention of equity on the basis of this principle is assurance or encouragement which creates an expectation that an interest will be granted and then conduct in reliance on that expectation: Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101 at [35] and Riches v Hogben (1985) 2 Qd R 292.
(2) Inducement to Adopt the Assumption. The circumstances strongly suggest that CBA induced Mr Beck to adopt his assumption or expectation. The representations occurred in the course of negotiations in which Mr Beck sought an assurance that CBA would “protect and enhance” his pension. For Mr Mulcahy, Mr Beck was a “key keep”. He intended Mr Beck to act on what he said, so CBA would secure his services. Mr Beck took firm negotiating positions that show he was not going to be induced to go to CBA except on terms that were satisfactory to him. He only gave his assent after he had obtained the promise he had sought. Only then did he sign Mr Mulcahy’s 26 June letter. I accept Mr Beck’s evidence that he was induced by the mid-2000 representations.
But he was also induced by the mid-2001 representations to continue to hold the stated assumption or expectation. The Beck family’s move to Sydney is strong evidence of the power of the assumption Mr Beck then held.
(3) Acting in Reliance on the Assumption. Mr Beck acted in reliance on this assumption or expectation as a result of both the mid-2000 and the mid-2001 representations. He took employment with CBA. He did not explore his other options.
(4) Intention to Rely. CBA’s intention that Mr Beck should rely on the assumption or expectation so induced can be inferred from its conduct both in mid-2000 and in mid-2001. Mr Mulcahy’s own evidence about his motivation in mid-2000 is that he thought that Mr Beck was a “key keep”. His (and Mr Cupper’s) mid-2000 representations are consistent with an intention to secure the services of a “key keep” in the long term.
But CBA’s conduct in mid-2001 is equally significant in showing its intentions. CBA intended to convey to Mr (and Mrs) Beck that his long term employment with CBA was assured in the terms of the assumption the Court has found. That is why Mr Mulcahy and Mr Cupper went to the trouble of having the Becks dine with them and their partners at Aria Restaurant, after Mr Beck had already been working for CBA for 12 months.
(5) Detriment is Occasioned. Mr Beck will suffer detriment if the assumption or expectation is not fulfilled. The relevant detriment that makes such an estoppel enforceable is that which the parties asserting the estoppel would suffer as a result of his or her original change of position. The assumption which induced it was repudiated by the parties estopped: Delaforce v Simpson-Cook [2010] NSWCA 84; (2010) 78 NSWLR 483 (“Delaforce”) at [41] –[42] per Handley AJA (Allsop P and Giles JA agreeing). As Dixon J said in Grundt v Great Boulder Pty Gold Mines Ltd [1937] HCA 58; (1937) 59 CLR 641 (“Grundt”), at 674-5:

“That other must have so acted or abstained from acting upon the footing of the state of affairs assumed that he would suffer a detriment if the opposite party were afterwards allowed to set up rights against him inconsistent with the assumption. In stating this essential condition, particularly where the estoppel flows from representation, it is often said simply that the party asserting the estoppel must have been induced to act to his detriment. Although substantially such a statement is correct and leads to no misunderstanding, it does not bring out clearly the basal purpose of the doctrine. That purpose is to avoid or prevent a detriment to the party asserting the estoppel by compelling the opposite party to adhere to the assumption upon which the former acted or abstained from acting. This means that the real detriment or harm from which the law seeks to give protection is that which would flow from the change of position if the assumption were deserted that led to it. So long as the assumption is adhered to, the party who altered his situation upon the faith of it cannot complain. His complaint is that when afterwards the other party makes a different state of affairs the basis of an assertion of right against him then, if it is allowed, his own original change of position will operate as a detriment.”

CBA contends that Mr Beck has not proven what he would have done and in particular that he would have been in a better position had he stayed in Melbourne rather than take up employment with CBA in Sydney. But Allsop P explained in Delaforce (at [5]) that this is not necessarily a deficiency in the case of a party alleging an equitable estoppel:

“That the party encouraged cannot show that he or she would have been better off in the posited alternative reality is not fatal to the making out of the estoppel. Indeed, the inability to prove such things reveals a central aspect of the detriment: being left, now, in that position.”

The relevant detriment is “one that the plaintiff’s action or inaction (ie, what the plaintiff has done or not done in reliance on the assumption or expectation) will bring about if the assumption or expectation is not fulfilled”: Waddell at [66] per Campbell JA; see also Meagher JA in Walsh v Walsh [2012] NSWCA 57 at [13] and Meagher, Gummow and Lehane, Equity Doctrines and Remedies, 5th Edition, 2015 [17-040]. For that purpose, “equitable estoppel looks backwards from the moment when a promise falls due to be performed and asks whether, in the circumstances which have actually happened, it would be unconscionable for the promise not to be kept”: Waddell at [66].
When in accordance with authority one looks backward and asks whether it would occasion detriment if the assumption or expectation is not fulfilled, the actuarial evidence shows the acuteness of Mr Beck’s position. He did not make any alternative arrangements for his pension future from 2000 other than committing himself to CBA. His history immediately before the CBA takeover shows that he is someone who would probably have taken careful steps to preserve his pension future. He now finds himself in the position where if he does not receive the pension he was led to expect, the cost of finding an equivalent pension on market will be prohibitively expensive.
(6) Avoiding the Detriment. It is not in contest that CBA has failed to avoid this detriment. If the Augmentation Rule were available to provide an equivalent benefit, as CBA now contends it is, the Augmentation Rule could satisfy the equity created. CBA must in conscience now satisfy that equity. It may wish to do so by exercising the power under the Augmentation Rule in Mr Beck’s favour on termination: see Milling v Hardie [2014] NSWCA 163; Harrison v Harrison [2013] VSCA 170; and Delaforce.
But it may prefer to do so by other means. I am mindful that the estoppel as found only operates against CBA. It is not at all clear that Mr Mulcahy or Mr Cupper were making any representations on behalf of OSF in 2000 or 2001. The CBA parties should be given an opportunity to consider these reasons before deciding on their course.
Mr Beck says that the equity to which Mr Beck is entitled as a pension under clause 19(a) of the August 1985 deed (and later clause A3 of the July 1996 deed and now clause CH4.1 of the OSF deed) could perhaps be the subject of a declaratory judgment, without the need to remit the matter for any further exercise of discretion by CBOSC. The Court will hear further submissions about relief.

Unconscionable Conduct

Mr Beck’s unconscionable conduct claim relies upon the same facts as his claim in estoppel. But Mr Beck adds that he was in position of special disadvantage so far as the CBA parties are concerned, because they were in a position to control the reserve in the OSF through the powers and the discretions they held and that Mr Beck was to their knowledge vulnerable to any misuse of those powers, particularly in the circumstances that clause A11.3 was deleted without his consent.
Mr Beck points to the well-known statements in Commercial Bank of Australia v Armadio (1983) 151 CLR 447; [1983] HCA 14 (“Armadio”) at 462 per Mason J, citing Fullagar and Kitto JJ in Blomley v Ryan (1956) 99 CLR 362 (“Blomley”); [1956] HCA 81 at [33] and [34] to the effect that the categories of special disadvantage are not closed for claims for unconscionable conduct.
The relevant unconscionable conduct is said to be CBA’s conduct in encouraging Mr Beck to expect an early retirement benefit and then failing to fulfil that expectation by capturing the reserve at Mr Beck’s expense.
It is difficult to see that Mr Beck was under “special” disadvantage in the Armadio sense. There is considerable force in Mr Nixon’s submissions that as an actuary Mr Beck was far better placed than most to understand the rules of his own superannuation scheme. Indeed it is that very insight on his part that allows the estoppel case to work in his favour.
Nor can it be said that there is any misuse of CBA’s power in relation to Mr Beck, as a beneficiary. CBA has never sought to use clause A11.3 against Mr Beck. If the amendment in December 1996 is posited as the point of abuse of power, in my view it was not. Everything in the contemporaneous documents suggests that the December 1996 amendments had a proper purpose, to make the Old Colonial Fund compliant with contemporary anti-discrimination legislation. And Mr Beck has not sought to bring a case that he was in a position of special disadvantage because he was not told about the December 1996 amendments. That would be quite a different case from the one that was argued. In my view Mr Beck’s unconscionability case fails.

The Limitation Act Defences

The CBA parties have pleaded defences under the Limitation Act 1969 (the NSW Limitation Act”). CSS has not filed a defence. The CBA parties contend that if any accrued benefit of the plaintiff was adversely affected by entry into the 1996 deed then a claim against CBOSC must fail as: (1) any claim for breach of the July 1996 deed by entry into the December 1996 deed was statute barred as at 31 December 2008 (12 years later) by NSW Limitation Act, s 16; (2) as any claim against CSS for breach of the s 52(2)(c) covenant was statute barred (after 6 years) as at 31 December 2002 by reason of the SIS Act, s 55; and (3) any claim for breach of a general law duty was barred (after 6 years) as at 31 December 2002 by analogy with the breach of s 52(2)(c) covenant pursuant to NSW Limitation Act, s 23. The present proceedings were commenced against CSS and CBOSC on 6 July 2011 and against CBA on 2 November 2011.
The CBA parties’ NSW Limitation Act defences do not succeed for several reasons. Mr Beck’s contentions on these defences are generally persuasive.
First, the law of the July 1996 deed is the law of Victoria, not the law of New South Wales. The Victorian Limitation Act, the Limitation of Actions Act 1958 (VIC) (“the Victorian Limitation Act”) is the applicable legislation. The Choice of Law (Limitation Periods) Act 1993 (NSW), s 5 makes clear that the applicable law for limitation purposes (including by analogy) is the law of the deed, which is the law of the State of Victoria.
Applying the VictorianLimitation Act shows Mr Beck’s action is within time. The Victorian Limitation Act, s 5(3) provides as follows:

“5(3) An action upon a bond or specialty shall not be brought after the exploration of 15 years from the date in which the cause of action accrued.”

Smart AJ explained the operation of this provision in Tuftevski v Total Risk Management Pty Ltd [2009] NSWSC 315 (“Tuftevski”) at [149] – [152]. Thus even if the plaintiff’s cause of action accrued on 31 December 1996, proceedings were commenced against the CSS and CBOSC (6 July 2011) and CBA (2 November 2011) within time, within 15 years. The 15 year limitation period would have expired on 31 December 2011, about two months after proceedings were commenced.
Secondly, Mr Beck’s cause of action has accrued within 6 years of proceedings being commenced. Mr Beck’s cause of action does not accrue until CBOSC makes a decision under clause A11.3 and notice of that decision is given to him, or alternatively CBOSC declines or fails to make a decision within a reasonable period after its investigations and procuring specialist advice had completed: Tuftevski at [152]. CBOSC first to have decided not to exercise any clause A11.3 discretion on 6 May 2005. It gave notice of this decision to Mr Beck on 11 May 2005. At that point CBOSC declared it did not have any relevant discretion. Mr Beck has 15 years from May 2005 to commence proceedings. He is within that time.
But alternatively Mr Beck submits that no decision has yet been made for the purposes of clause A11.3. CBOSC has taken the view that clause A11.3 was not available to it for it to exercise a discretion to grant Mr Beck a long service pre-55 retirement benefit. It did not make a decision. So Mr Beck says time did not begin to run. Moreover, any cause of action Mr Beck had was only prospective until its termination on 11 July 2005. Mr Beck argues that it was only upon his termination on that date that he suffered loss and the reasoning in Wardley Australia Limited v Western Australia (1992) 175 CLR 514 is applicable; and see Kenny & Good v MGICA (1999) 199 CLR 413 at 425.
Mr Beck does not seek compensation under SIS Act, s 55. So the limitation period in SIS Act, s 55(4) is irrelevant.

Remedies

The proprietary estoppel cases provide examples of Equity granting relief but making adjustments in order to do equity between the parties: see for example ER Ives Investment Limited v High [1967] 2 QB 379 and Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582 at 607-8 per Priestley JA. Similar adjustments can be made in promissory estoppel cases.
If Mr Beck is to be treated as if he had worked with CBA until the age of 55 for the purposes of calculating a pension from that age under the OSF, some adjustments will need to be made. As Mr Beck did not work beyond the age of 51, CBA did not have the benefit of his services and he did not have the benefit of income from CBA for that period. Moreover no salary from CBA was used during those years to make contributions to the OSF. The reserve held in the fund in respect of a pension for Mr Beck on 11 July 2005 will need to be adjusted for factors such as these, and no doubt others. Unless these adjustments can be agreed a supplementary hearing as to relief may need to be held on these issues. Parties should include directions in draft short minutes in relation to any supplementary hearing that is required in relation to these adjustments.

Conclusion and Orders

For the reasons given, the plaintiff, Mr Beck, has been successful in challenging the validity of the decision to amend the rules of the Old Colonial Fund in December 1996 to remove clause A11.3. He is now entitled to consideration of possible benefits under that clause.
But he has also been successful in his estoppel case and is now entitled to relief on the basis that he was entitled to a pension at age 55, subject to the adjustments and other relief considerations above.

There will need to be a supplementary hearing to deal with these matters and perhaps with costs.
Therefore the Court orders:

Direct the parties to bring in short minutes of order to give effect to these reasons; and

Adjourn these proceedings for any argument as to the form of short minutes of order or as to costs to 9.30am on 24 August 2015.

**********

Amendments

10 February 2016 - [296] reg 13.16 changed to clause A11.3

02 December 2015 - [60] "which would be possible" to "which would not be possible"

03 August 2015 - [298] (first line), reg 13.15 changed to reg 13.16.

27 July 2015 - para 296 - line 6 - reg 13.16 changed to clause A11.3.

08 July 2015 - Reformatting of styles.

Decision last updated: 10 February 2016

Medium Neutral Citation:	Beck v Colonial Staff Super Pty Ltd & Ors [2015] NSWSC 723
Hearing dates:	7, 21 & 22 August 2014 and supplementary written submissions on 14 September 2014.
Date of orders:	06 July 2015
Decision date:	06 July 2015
Jurisdiction:	Common Law
Before:	Slattery J
Decision:	See paragraphs [380] to [382] of judgment.
Catchwords:	SUPERANNUATION – change to superannuation deed to delete rule granting discretion to confer long service retirement benefits – consideration of power to amend trust deeds of regulated superannuation funds –whether rule change contrary to interests of members at general law – whether rule change in breach of the Superannuation Industry Supervision Act (Cth) 1993 – consideration of scope of superannuation fund trustees’ discretion – actuarial expert evidence. CONTRACT – consideration of principles of construction of superannuation fund deeds – consideration of duties of good faith in contracts of employment. EQUITY – equitable estoppel – where representation made that power of termination in employment contract would not be exercised without good cause – unconscionable conduct.
Legislation Cited:	Choice of Law (Limitation Periods) Act 1993 (NSW) Limitation of Actions Act 1958 (VIC) Limitation Act, 1969 (NSW) Superannuation Industry Supervision Act (Cth) 1993 Superannuation Industry (Supervision) Regulations 1994 Uniform Civil Procedure Rule (“UCPR”) 2005
Cases Cited:	SUPERANNUATION – change to superannuation deed to delete rule granting discretion to confer long service retirement benefits – consideration of power to amend trust deeds of regulated superannuation funds –whether rule change contrary to interests of members at general law – whether rule change in breach of the Superannuation Industry Supervision Act (Cth) 1993 – consideration of scope of superannuation fund trustees’ discretion – actuarial expert evidence. CONTRACT – consideration of principles of construction of superannuation fund deeds – consideration of duties of good faith in contracts of employment. EQUITY – equitable estoppel – where representation made that power of termination in employment contract would not be exercised without good cause – unconscionable conduct.
Texts Cited:	Meagher, Gummow and Lehane, Equity Doctrines and Remedies, 5th Edition, 2015 JD .Heydon & MJ Leeming, Jacobs’ Law of Trusts in Australia, (7th ed 2006, LexisNexis) M.J. Leeming, “Chameleon Hued Words: A Note on Discretionary Trusts” (2015) 89 ALJ 371
Category:	Principal judgment
Parties:	Plaintiff: Peter Beck First Defendant: Colonial Staff Super Pty Ltd (ACN 074 962 628) Second Defendant: Commonwealth Bank Officers Superannuation Corporation Pty Limited (ACN 074 519 798) as trustee for the Commonwealth Bank Officers’ Superannuation Fund Third Defendant: Commonwealth Bank of Australia (ACN 123 123 124)
Representation:	Counsel: Plaintiff: J.C. Kelly SC; J. Merkel; P. Godkin Second and Third Defendants: Scott Nixon; James Hutton Solicitors: Plaintiff: Angela Wong, Slater & Gordon Lawyers Second & Third Defendants: Greta Gingell, Jones Day
File Number(s):	2011/220432
Publication restriction:	No