Collins v AMP Superannuation Ltd
[1997] FCA 643
•18 JULY 1997
FEDERAL COURT OF AUSTRALIA
SUPERANNUATION - appeal from determination of Superannuation Complaints Tribunal - complaint relating to decision of trustee as to the entitlement to member’s death benefit - trustee’s decision that eligible beneficiaries were those nominated by member and not member’s young dependant daughters - validity of nomination - consideration of requirements for standing to make a complaint under s 15(1) of Superannuation (Resolution of Complaints) Act 1993 (Cth) - whether dependents who claim that it is unfair or unreasonable for the trustee to decide that the death benefit is payable to the nominated dependents of deceased member have an “interest in the benefit” or an entitlement to “benefits through” a person having an “interest in the benefit” - whether standing to make testator’s family maintenance claim sufficient basis for standing under s 15(1) - consideration of principles governing jurisdiction and functions of Complaints Tribunal in respect of discretionary and non-discretionary decisions - Tribunal’s duty to determine whether Trustee’s decision is unfair or unreasonable rather than whether it is correct in law - whether Tribunal erred in law - whether a constructive failure by the Tribunal to exercise jurisdiction.
ADMINISTRATIVE LAW - determination of Superannuation Complaints Tribunal - trustee’s decision as to the entitlement to member’s death benefit - trustee and Tribunal making decision under amended trust deed rather than under unamended trust deed - whether decision made with reference to incorrect power invalid.
COSTS - indemnity costs - Trustee responsible for inaccurate standard form and decision made under incorrect deed - succeeds on appeal - whether costs should follow the event or be paid by the Trustee on an indemnity basis.
WORDS AND PHRASES - “interest” in a death benefit.
Superannuation (Resolution of Complaints) Act 1993 (Cth) ss 14, 15, 37, 46
Administration and Probate Act 1958 (Vic) Part IV
Re Eardley Wilmot (1861) 29 Beav 644; 54 ER 777
Briffa & Ors v Hay (Federal Court of Australia, Merkel J, 20 June 1997, unreported)
Gartside v Inland Revenue Commissioners [1968] AC 553
CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 141 ALR 618
Alphapharm Pty Limited v Smithkline Beecham (Australia) Pty Limited (1994) 49 FCR 250
Pate v Pate [1968] VR 404
National Mutual Life Association of Australia Ltd v Jevtovic (Federal Court of Australia, Sundberg J, 8 May 1997, unreported)
Pope v Lawler (1996) 41 ALD 127
Precision Data Holdings Limited v Wills (1991) 173 CLR 157
Lock v Westpac Banking Corporation (1991) 25 NSWLR 593
Mettoy Pension Trustees Ltd v Evans [1990] 1 WLR 1587
Re Wilcox; Ex Parte Venture Industries Pty Ltd and Others (1996) 141 ALR 727
Kuswardana v Minister for Immigration and Ethnic Affairs (1981) 54 FLR 334
Secretary, Department of Social Security v Salvona (1989) 10 AAR 521
Sinclair v Mining Warden at Maryborough & Anor (1975) 132 CLR 473
Minister for Immigration and Ethnic Affairs v Guo Wei Rong (High Court of Australia, 13 June 1997, unreported)
Walker v Secretary, Department of Social Security (Full Federal Court, 3 July 1997 unreported)
Shell Company of Australia Ltd v Federal Commissioner of Taxation (1930) 44 CLR 530
Farwell G, A Concise Treatise on Powers (1893)
JUSTIN COLLINS & NICHOLAS COLLINS v AMP SUPERANNUATION LIMITED, THE TRUSTEE OF THE MARITIME OFFICERS SUPERANNUATION FUND AND GABRIELLA JEAN PISCIONERI ON BEHALF OF KIMBERLEY ELLEN COLLINS AND EMMA MARIE COLLINS
No VG 724 of 1996
MERKEL J
MELBOURNE
18 JULY 1997
IN THE FEDERAL COURT OF AUSTRALIA ) VICTORIAN DISTRICT REGISTRY ) No VG 724 of 1996 GENERAL DIVISION )
On appeal from the SUPERANNUATION COMPLAINTS TRIBUNAL constituted by Christine Heazlewood, Deputy Chairperson, Tony Tuohey and Robert Drake, Members
BETWEEN: JUSTIN COLLINS
and
NICHOLAS COLLINS
Appellants
AND: AMP SUPERANNUATION LIMITED,
the Trustee of the Maritime OfficersSuperannuation Fund
andGABRIELLA JEAN PISCIONERI on behalf
of KIMBERLEY ELLEN COLLINS and
EMMA MARIE COLLINSRespondents
COURT: MERKEL J PLACE: MELBOURNE DATED: 18 JULY 1997
MINUTES OF ORDER
THE COURT ORDERS THAT:
The appeal is allowed.
The decision of the Superannuation Complaints Tribunal is set aside.
The matter is remitted to the Superannuation Complaints Tribunal to be determined in accordance with law.
The respondent, AMP Superannuation Ltd, out of its own funds, pay the costs of the appellants and the other respondent on the basis that such costs are to include all costs except in so far as they are of an unreasonable amount or were unreasonably incurred so that, subject to such exceptions, the other parties will be completely indemnified by the AMP Superannuation Ltd for their costs.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA ) VICTORIAN DISTRICT REGISTRY ) No VG 724 of 1996 GENERAL DIVISION )
On appeal from the SUPERANNUATION COMPLAINTS TRIBUNAL constituted by Christine Heazlewood, Deputy Chairperson, Tony Tuohey and Robert Drake, Members
BETWEEN: JUSTIN COLLINS
andNICHOLAS COLLINS
Appellants
AND: AMP SUPERANNUATION LIMITED,
the Trustee of the Maritime OfficersSuperannuation Fund
andGABRIELLA JEAN PISCIONERI on behalf of KIMBERLEY ELLEN COLLINS and
EMMA MARIE COLLINSRespondents
COURT: MERKEL J PLACE: MELBOURNE DATE: 18 JULY 1997
REASONS FOR JUDGMENT
Introduction
Rodney Collins (“the deceased”) died on 19 June 1994. At the date of his death the deceased was a member of the Masterplan, (“the Plan”) established under the AMP Masterplan Group Trust Deed made on 1 February 1990 (“the Deed”). AMP Superannuation Ltd (“the Trustee”) is the trustee of the Plan established under the Deed.
A dispute has arisen between the dependants of the deceased as to who is entitled to receive the death benefit of approximately $181,000.00 payable by the Trustee under the Plan.
At the date of his death the deceased had four children. He had two adult sons, Justin and Nicholas Collins, from his first marriage and two infant daughters, Kimberley Ellen and Emma Marie Collins, from a relationship which the deceased had with Gabriella Jean Piscioneri between 1983 and 1989. Each of the children is a dependant of the deceased for the purposes of the Plan.
The Trustee decided that, under the Deed as amended by a Deed of Amendment made 14 July 1994 (“the amended Deed”), only the two sons of the deceased were entitled to the death benefit. Ms Piscioneri, on behalf of the deceased’s two daughters, lodged a complaint in respect of the decision with the Superannuation Complaints Tribunal (“the Tribunal”) pursuant to s 14 of the Superannuation (Resolution of Complaints) Act 1993 (Cth) (“the Complaints Act”). In substance, the complaint was that the Trustee had acted unfairly and unreasonably in excluding the two dependant daughters of the deceased from any entitlement to the death benefit payable under the Plan.
The Tribunal upheld the complaint and determined that:
the nomination by the deceased of his two sons as the beneficiaries entitled to the death benefit was invalid;
accordingly, the death benefit was payable under the Plan to the legal personal representative of the deceased, being his former wife, Joanne Elizabeth Collins.
The Trustee has appealed to the Court against the determination of the Tribunal, on questions of law, pursuant to s 46 of the Complaints Act. At the hearing of the appeal counsel for the Trustee and the two sons contended that the determination of the Tribunal ought to be set aside as it erred in law in:
concluding that the nomination was invalid; and
purporting to exercise powers under s 37 of the Complaints Act which it did not have.
The Trustee also challenged the standing of the two daughters to make a complaint under the Complaints Act.
Counsel for Ms Piscioneri disputed these contentions and contended that the determination of the Tribunal was one which was open to it on the evidence and ought not to be interfered with on an appeal limited to questions of law.
The Background Facts
On 25 October 1993 the deceased applied to be a member of the Plan through the Maritime Officers Superannuation Trust. The application form, as completed by the deceased, was as follows:
“APPLICATION FOR MEMBERSHIP
MARITIME OFFICERS SUPERANNUATION TRUST
I RODNEY ALAN COLLINS (Full Name)
Born 10TH JULY 1950hereby apply to become a member of the above Plan upon the terms and conditions contained in the Trust Deed governing the Plan.
I
was/was not previously a contributor to the Plan while an employee ofDOLPHIN DRILLING
NOMINATION OF BENEFICIARY
(NOTE: A member may, but need not, nominate the person(s) (being a ‘dependant’ as defined in the Trust Deed governing the Plan) he desires to receive the benefit payable upon his death and may revoke his nomination at any time. In terms of the Trust Deed, the Trustees have full discretion as to the persons to receive the death benefit. If the member has no ‘dependant’ this part of the form should not be completed.)
I hereby nominate the following person(s) as beneficiary(ies) in respect of any benefit payable upon my death
Full Name of
Person
Relationship
or
DependencyAddress
Proportion
of Benefit
JUSTIN COLLINS
SON
NZ
SON
NICHOLAS COLLINS SON NZ SON Signature [SIGNED R COLLINS]
Date 25/10/93.”
The deceased died whilst in the service of a participating employer. Accordingly, the death benefit was payable in accordance with cl G of the Deed which provided for the payment of death benefits as follows:
“G. PAYMENT OF DEATH BENEFITS
G.1 Nomination
(a)A Member may, at any time, deliver to the Trustee a form in or to the effect of the form prescribed from time to time by the Trustee nominating one or more Dependants to receive all or part of any benefit payable on death of the Member (‘the Nomination’) and the Trustee shall, subject to the following, pay any benefit arising pursuant to Sub Rule F1 according to the Nomination.
(b)A Nomination will, unless it provides otherwise, be wholly revoked by the subsequent marriage of the Member.
(c)A Nomination shall be deemed to be revoked wholly or partially, as the case may be, in respect of any Dependant who predeceases the member, a former spouse (except by reason of the death of the Member) or person who is no longer a Dependant or by any express notice in writing to the Trustee to that effect and shall be deemed to be wholly revoked by any subsequent Nomination.
(d) Where:
(i) no Nomination has been made;
(ii)a Nomination is wholly or partly revoked, or otherwise ineffective;
the Trustee shall pay any benefit arising pursuant to Sub Rule F.1, or that part which related to the partial revocation of the Nomination, to the Legal Personal Representative of the member where one has been appointed.
G.2 Dependant
In any other case the Trustee shall pay or apply the benefits payable in accordance with this Deed and the Rules to or for the benefit of such one or more Dependants (including his Nominated Beneficiaries) of the deceased Member and in such shares and proportions and in such manner as the Trustee in its discretion determines.”
There was no evidence before the Tribunal or the Court as to whether the form completed by the deceased was a form prescribed by the Trustee although Counsel for the Trustee stated that it was a prescribed form. Clause 2.6 of the Deed made provision for a written application by an employee for membership to be in a form “approved by the Trustee”. In the absence of evidence to the contrary I would be prepared to infer that the form signed by the deceased was likely to be a form approved by the Trustee and therefore a form “prescribed” by the Trustee at the time, for the purposes of cl G. However, in view of the other conclusions I have reached it is not necessary to make a final finding on this issue.
Under the Deed the Trustee had no discretion in respect of the payment of a death benefit under cl G unless there is no valid or effective nomination and no legal personal representative of a deceased member: see cl G.1(d). Even in those circumstances the death benefit is only payable to such of the dependants of the deceased member as the Trustee determined. Accordingly, on any view the statement in the nomination form that the Trustee had a discretion as to the persons to receive the death benefit was quite inaccurate.
The facts of the present case were complicated by two additional matters. The deceased left a will appointing his then wife, Joanne Elizabeth Collins, as executrix and “if she shall survive” him for one month, as sole beneficiary. If Mrs Collins did not so survive the deceased then the estate was to devolve upon such of the children of the deceased who survived him and attained 21 years of age. Although, at the date of his death, Mrs Collins was no longer the “wife” of the deceased the dissolution of their marriage did not operate to revoke his will in her favour. The law has since changed in that regard but it was common ground that the change was not applicable to the present case. Accordingly, if the nomination is invalid or otherwise ineffective the death benefit is payable under the Deed to the legal personal representative of the deceased. In fact, on 28 April 1995, Letters of Administration CTA were granted to Terrence John Collins as Attorney for Mrs Collins.
The relevant clauses of the will are:
“2. I APPOINT my Wife JOANNE ELIZABETH COLLINS to be Executrix and Trustee of this my Will
3. I GIVE DEVISE AND BEQUEATH all my real and personal estate whatsoever and wheresoever unto and to the use of my Wife for her sole and exclusive use and benefit absolutely if she shall survive me by a period of one calendar month.
4. IF my said Wife shall not survive me by the aforesaid period then I APPOINT my brother TERRENCE JOHN COLLINS ...”
It was contended by counsel for the deceased’s daughters that:
the devise and bequeath to Mrs Collins was to the “wife” of the deceased rather than to Mrs Collins;
as Mrs Collins was not the “wife” of the deceased at the date of his death, the devise and bequest to her failed;
accordingly the estate, which included the death benefit, devolved upon the legal personal representative for the benefit of his children who survived him and attained 21 years of age.
The contentions are difficult to reconcile with the terms of the will. Although Mrs Collins is described in the will as the wife of the deceased that status is not stated as a precondition for the devise and bequest to her. Mrs Collins was named as the executrix and also as the sole beneficiary if she survived the deceased for one month. To add an additional precondition that Mrs Collins must also still be the wife of the deceased at the date of his death would rewrite the will.
If cl 3 of the will stood alone there may have been some substance in the contention of counsel for the deceased’s daughters. However any fair reading of cll 2, 3 and 4 together demonstrates that the person intended to be executrix and beneficiary is the person described as “my Wife JOANNE ELIZABETH COLLINS” rather than the person who happens to be the wife of the deceased at the date of his death.
This matter may be of some significance as it means that even if the nomination is invalid, under cl G.1 the devolution of the death benefit on the legal personal representative of the deceased will not result in the two daughters having an interest in the benefit under the terms of the will. Their only “interest” in the benefit might be as applicants under a testator’s family maintenance application pursuant to Part IV of the Administration and Probate Act 1958 (Vic). That raises a difficult question as to their standing under s 15 of the Complaints Act to which I will return later in these reasons.
The second complicating factor arises from the fact that the decisions of the Trustee and of the Tribunal were made under the amended Deed rather than under the Deed. The amendments materially changed the provisions for payment of death benefits. Instead of requiring a notice in the form or to the effect of a prescribed form the amendments required only a written notification of the member’s preference for distribution among dependants. The preference was binding on the Trustee. Further, under the amendments the discretion of the Trustee to distribute among dependants only arises if a distribution is not paid “in accordance with” a member’s nomination and there is no legal personal representative. In particular, there is no reference in the amended Deed to a nomination being “ineffective” on the basis of a ground that is not expressly provided for as a ground of invalidity.
Counsel for the Trustee contended that the fact that the Trustee and the Tribunal made a decision under the amended Deed is not fatal as even a wrong reference to the power will not prevent an exercise of a power from being valid if the intention to exercise the power is otherwise clear: See Farwell G, A Concise Treatise on Powers (1893) at 186 and Re Eardley Wilmot (1861) 29 Beav 644; 54 ER 777.
It can be accepted that an incorrect or incomplete description of the power exercised is not fatal if the intention to exercise the power is otherwise clear. However, a quite different situation arises where the exercise of the power relies upon a head of power which is materially different to the power conferred. In the circumstances of the present case I am satisfied that I need go no further than decide, as I do, that the differences to which I have referred might be material to the issues which arose for determination by the Trustee and the Tribunal. Under the amended Deed the Trustee and the Tribunal were required to consider the efficacy of the nomination having regard to the relevant provisions of the Deed and not the different provisions of the amended Deed. In these circumstances there has been a failure by the Trustee to make the decision authorised by the Deed and by the Tribunal to make the decision authorised by the Complaints Act. I shall return to the consequences of that finding later in these reasons.
The decision of the Tribunal
The Tribunal set aside the Trustee’s decision to pay the death benefit in accordance with the nomination form signed by the deceased on the ground that the form did not “truly reflect the provisions of the Trust Deed” and was therefore invalid. The Tribunal substituted its own decision which was that the death benefit be paid to the legal personal representative of the deceased in accordance with the requirements of the Deed.
The Tribunal stated the issue to be decided as “whether the Trustee has distributed the death benefit according to the provisions of the Trust Deed.”
After describing the written contentions of the parties and certain provisions of the amended Deed, the Tribunal turned to consider whether the notice was “a valid notice”.
“The Tribunal has set out the wording on the notice form which stated that the Trustee has a ‘full discretion’ as to the person to receive the death benefit. According to the Trust Deed this was not so. If there was a valid nomination the Trustee did not have a full discretion as to the persons who were to be paid the death benefit. [The deceased] completed the nominated beneficiary notice under the misapprehension that no matter who he named as the nominated beneficiary, the Trustee would exercise a discretion to pay the death benefit to the persons the Trustee believed appropriate. The notice implies that the death benefit will be paid to dependants of the member. It states that the member may nominate a dependant, and if the member has no dependant then the form should not be completed. Read together this infers that the Trustee has a discretion to pay any death benefit to the member’s dependants. In the Tribunal’s opinion the wording of the form was misleading and gave [the deceased] a mistaken impression that the Trustee could exercise its discretion to pay any death benefit to any or all of his dependants in spite of the nominated beneficiary notice.”
The Tribunal concluded:
“The Trust Deed provides that a nominated beneficiary notice will be invalid in certain circumstances. None of those circumstances apply in this case. Nonetheless the Tribunal is of the opinion that the notice completed by [the deceased] on 25 October 1993 is invalid. The Trust Deed as amended to 14 July 1994, sets out four situations which make the notice invalid. The wording does not purport to apply to all possible situations which could make a notice invalid. Given that the notice is such an important document under the Trust Deed, the Tribunal is of the opinion that the wording in this section should be construed beneficially for all potential beneficiaries. That is, the notice will be invalid if it does not clearly set out the significance of completing the notice with respect to the distribution of the death benefit. The notice should have clearly stated that if the nominated beneficiary was a dependant, the death benefit would be distributed to the nominated beneficiary only. The Trustee would not have a discretion. In this case, [the deceased] was advised that the Trustees would exercise a discretion. The notice did not truly reflect the provisions of the Trust Deed. For this reason the Tribunal finds that the notice is invalid. This means that the decision of the Trustee is not fair and reasonable in relation to [the two dependant daughters of the deceased] because the Trustee made its decision based on an invalid nominated beneficiary notice.
Therefore according to the Trust Deed the death benefit is to be paid to the legal personal representative of [the deceased].”
Although the Tribunal concluded that the Trustee’s decision was “not fair and reasonable” in relation to the two daughters of the deceased that conclusion was based solely on its finding that the nomination was invalid. It is quite clear from the decision that, in reality, the Tribunal addressed the question of whether the Trustee’s decision in respect of the death benefit was made in accordance with the amended Deed and, after concluding that it was not, it substituted its own decision on the basis that its decision was in accordance with the amended Deed. The statement by the Tribunal of the issue to be decided and the reasoning process employed in deciding that issue demonstrates that, both in form and in substance, the Tribunal made its decision solely on the basis of its view of the legal entitlements and obligations of the parties before it and did so by reference to the amended Deed.
The Complaints Act
Section 14 of the Act provides:
(1) This section applies if the trustee of a fund has made a decision (whether before or after the commencement of this Act) in relation to:
(a)a particular member or a particular former member of a regulated superannuation fund; or
(b)a particular beneficiary or a particular former beneficiary of an approved deposit fund.
(1A) ...
(2) Subject to subsection (3) and section 15, a person may make a complaint (other than an excluded complaint) to the Tribunal, that the decision is or was unfair or unreasonable.
(3) If a person has been given a written notice by the trustee of a fund setting out:
(a)the trustee’s decision in relation to the person’s objection to the payment of a death benefit; and
(b)the prescribed period within which the person must complain to the Tribunal about the decision;
the person may only make a complaint under this section to the Tribunal within that period.
The Trustee objected to the standing of the two daughters to lodge a complaint on the ground that they did not have an “interest” in the death benefit payable under the Deed as required by s 15(1)(a).
Section 15 provides, relevantly:
(1) A person may make a complaint under section 14 only if:
(a)in the case of a decision that relates to the payment of a death benefit:
(i) the person has an interest in the benefit; or
(ii)the person claims to be, or to be entitled to benefits through, a person referred to in subparagraph (i); or
(iii)the person is acting for a person referred to in subparagraph (i) or (ii); or
....
(2) A person does not have an interest in a death benefit for the purposes of paragraph (1)(a) unless:
(a) the person:
(i)has been given written notice by the trustee of the proposed payment of the benefit; and
(ii)has been given written notice by the trustee of the prescribed period within which the person may object; and
(iii)has objected to the trustee within the prescribed period; or
(b)the person has not been notified by the trustee of the proposed payment of the benefit and the failure to notify was unreasonable; or
(c)the person has been notified by the trustee of the proposed payment of the benefit but was not notified of the prescribed period to object to the payment; or
(d)the person has been notified by the trustee of the proposed payment of the benefit but was notified of a period less than the prescribed period for the purposes of subparagraph (a)(ii).
The Trustee did not rely upon s 15(2). Finally, s 37 of the Act provides:
(1) For the purpose of reviewing a decision of the trustee of a fund that is the subject of a complaint under section 14:
(a)the Tribunal has all the powers, obligations and discretions that are conferred on the trustee; and
(b)subject to subsection (6), must make a determination in accordance with subsection (3).
(2) If an insurer or other decision‑maker has been joined as a party to a complaint under section 14:
(a)the Tribunal must, when reviewing the trustee’s decision, also review any decision of the insurer or other decision‑maker that is relevant to the complaint; and
(b)for that purpose, has all the powers, obligations and discretions that are conferred on the insurer or other decision‑maker; and
(c)subject to subsection (6), must make a determination in accordance with subsection (3).
(3) On reviewing the decision of a trustee, insurer or other decision‑maker that is the subject of, or relevant to, a complaint under section 14, the Tribunal must make a determination in writing:
(a)affirming the decision; or
(b)remitting the matter to which the decision relates to the trustee, insurer or other decision‑maker for reconsideration in accordance with the directions of the Tribunal; or
(c)varying the decision; or
(d)setting aside the decision and substituting a decision for the decision so set aside.
(4) The Tribunal may only exercise its determination-making power under subsection (3) for the purpose of placing the complainant as nearly as practicable in such a position that the unfairness, unreasonableness, or both, that the Tribunal has determined to exist in relation to the trustee’s decision that is the subject of the complaint no longer exists.
(5) The Tribunal must not do anything under subsection (3) that would be contrary to law, to the governing rules of the fund concerned and, if a contract of insurance between an insurer and trustee is involved, to the terms of the contract.
(6) The Tribunal must affirm a decision referred to under subsection (3) if it is satisfied that the decision, in its operation in relation to:
(a)the complainant; and
(b)so far as concerns a complaint regarding the payment of a death benefit - any person (other than the complainant, a trustee, insurer or decision‑maker) who:
(i)has become a party to the complaint; and
(ii)has an interest in the death benefit or claims to be, or to be entitled to benefits through, a person having an interest in the death benefit;
was fair and reasonable in the circumstances.
Recently I considered the operation of ss 14 and 37 in relation to complaints concerning non‑discretionary entitlements under a trust deed for a regulated fund: See Briffa & Ors v Hay (Federal Court of Australia, Merkel J, 20 June 1997, unreported). I said at 22:
“A determination made under s37 creates new rights and obligations which are enforceable as a decision of the trustee by reason of the statute but not as a court order or in a manner analogous to a judicial determination: see ss41 and 65. In particular, a varied or substituted decision of the Tribunal is deemed to be a decision of the trustee: see s41(3).
In Walker v Secretary, Department of Social Security (Full Federal Court, 3 July 1997 unreported) at 8 - 9, Burchett J observed, in respect of statutory provisions similar to s 37, that they envisaged decision-making on the merits on the material presented to the Tribunal. The “assimilation” of the Tribunal’s powers and decision with that of the Trustee strongly suggests that its functions are in “aid of the administrative functions” of the Trustee and not an exercise of judicial power: see Shell Company of Australia Ltd v Federal Commissioner of Taxation (1930) 44 CLR 530 at 541-543 and Briffa at 19-22.
Standing
The Trustee has challenged the standing of the two daughters of the deceased to bring a complaint under s 14 of the Complaints Act.
It is necessary to identify the “interest” of the two daughters “in the death benefit”. The interest is said to be two-fold. First, it is contended that the daughters are entitled, as residuary beneficiaries, to the death benefit as children of the deceased under the will. The problem with the submission is that the entitlement can only arise if the devise and bequest to Mrs Collins fails on the ground that she was no longer the wife of the deceased at the date of his death. I have already expressed the view that that outcome requires a strained and unwarranted construction of the will.
It is then contended, in the alternative, that the interest in the death benefit arises as a result of the two daughters’ standing as potential claimants against the executor of the deceased’s estate for testator’s family maintenance under Part IV of the Administration and Probate Act 1958 (Vic).
Neither status sits comfortably with the requirement in s 15 that the complainant, in relation to a death benefit, be a person who has an “interest in the benefit” or claims to be entitled to “benefits” through a person who has an “interest in the benefit”.
Section 15(1)(a) is not happily worded given the obvious beneficent purpose of the Complaints Act. A literal reading of s 15 suggests that a complainant, directly or indirectly, must have some kind of proprietary interest in or entitlement to the death benefit. Although it is not uncommon for a Trustee to have a discretion to distribute a death benefit among dependants of a deceased member, a discretionary beneficiary is not regarded as having either an interest in or an entitlement to any part of the trust corpus or income. It is well established that prior to the trustee’s decision none of the dependants have a proprietary interest in or legal entitlement to the death benefit. Each can only require the trustee to exercise, bona fide and in accordance with law, the discretion as to the persons to whom the death benefit is to be distributed: see Gartside v Inland Revenue Commissioners [1968] AC 553 at 606. As Lord Reid said at 606 the beneficiary has no “interest’ in the capital or in the income of such a trust prior to the exercise of the discretion in favour of the beneficiary. An entitlement of a discretionary beneficiary to the due administration of the trust cannot be equated to an interest in or entitlement to any part of the corpus or income of the trust.
A literal construction of s 15 could lead to the absurd and anomalous result of excluding from the category of complainants those who are most likely to complain of an unfair or unreasonable decision of a trustee in relation to a death benefit, ie dependants of a deceased who have been denied an interest in a death benefit by a discretionary decision of the trustee granting the interest to other dependants or persons. On a literal construction the decision the subject of any statutory complaint would be a decision that, in law, operates to prevent the potential beneficiaries from acquiring an “interest” in the death benefit.
However, the courts lean against a literal construction which will produce anomalous and unintended consequences: see CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 141 ALR 618 at 635 per Brennan CJ, Dawson, Toohey and Gummow JJ and Briffa (supra) at 18.
Fortunately there is another construction which is open. In cases of standing it has been accepted that the concept of “interest” is to be construed in the light of the subject matter, scope and purpose of the statute in issue: see Alphapharm Pty Limited v Smithkline Beecham (Australia) Pty Limited (1994) 49 FCR 250 at 272 per Gummow J. Approaching the Complaints Act in that light its purpose, in relation to complaints about death benefits, is clear. The purpose is to provide a person who, subject to a lawful decision of the trustee in that person’s favour, may have an entitlement in respect of a death benefit, to lodge a complaint under the Act that a decision of a Trustee in relation to the benefit that has resulted in the person having no entitlement or an entitlement less than that claimed, was unfair or unreasonable. In my view a complainant, to fall within s 15(1)(a)(i), must be a person whose claim, if successful, would result in that person having an interest in or entitlement (or greater entitlement) to the death benefit or part thereof. This approach to s 15(1)(a) also accords with the principle that as the legislation is clearly intended to be beneficial, a narrow construction is not appropriate: see Briffa (supra) at 14.
Section 15(1)(a)(ii) entitles a person who claims to be entitled to “benefits” through a person having an interest, as so defined, to be a complainant. In the present case Ms Piscioneri is acting for her two daughters: see s 15(1)(a)(iii).
The real “interest” or “entitlement” of the two daughters is that if they have no interest under the will, their claim against the estate for testator’s family maintenance might be a strong one. Accordingly, although the two daughters may not have a direct interest in the death benefit under the will they claim to be entitled to “benefits”, ie testator’s family maintenance, “through” the estate, ie the legal personal representative who has an “interest” in the benefit. If the legal personal representative has an interest in the death benefit as a result of a successful complaint the benefit will form part of the estate of the deceased and be available for a testator’s family maintenance claim. The daughters, as testator’s family maintenance claimants, have no interest in the benefit for the purposes of s 15(1)(a)(i) until an order is made in their favour: see Pate v Pate [1968] VR 404. However, if such a claim is made the daughters, or the person acting for them, can fall within s 15(1)(a)(ii) or (iii), as they are claiming to be “entitled to benefits” through the legal personal representative. In such circumstances the daughters or their mother would have standing under s 15(1)(a).
Accordingly, in my view, if the daughters had made an application for testator’s family maintenance they, or their mother Ms Piscioneri, would have standing to make a complaint under s 14 of the Complaints Act. However, I would not arrive at the same conclusion on the basis that they may be entitled to make a claim under Part IV of the Administration and Probate Act (1958). The only reference to this issue in the decision of the Tribunal is that Ms Piscioneri stated that her two daughters “would be able to make a claim under the testator family maintenance legislation in Victoria.” Whilst I recognise that as a matter of practical reality, there may be no point in making a claim unless the death benefit forms part of the estate, the mere possibility of a claim is not a sufficient basis for standing under s 15(1)(a).
Although the issue of standing may not have been agitated before the Tribunal it is open for it to be raised on appeal particularly where, as in the present case, the question of standing is essentially one of law: see Kuswardana v Minister for Immigration and Ethnic Affairs (1981) 54 FLR 334 at 342-343; Secretary, Department of Social Security v Salvona (1989) 10 AAR 521 at 526-527.
As the issue of standing does not appear to have been considered by the Tribunal in the context of s 15(1)(a) it is appropriate to remit this aspect of the matter back to the Tribunal to be considered in the light of any further evidence and submissions of the parties.
The jurisdiction of the Tribunal
The main problem with the decision of the Tribunal is that it determined the legal rights and obligations of the parties rather than whether the Trustee’s decision was unfair or unreasonable (ss 14(2) and 37) and if so, the relief that is appropriate to remove, so far as is “practicable”, the unfairness or unreasonableness (ss 37(3) and (4)): see National Mutual Life Association of Australia Ltd v Jevtovic (Federal Court of Australia, Sundberg J, 8 May 1997, unreported) at 10 ‑ 11 and Briffa at 13-14.
The Act appears to operate in a relatively straight forward manner in respect of discretionary decisions of trustees but the same cannot be said in respect of non‑discretionary decisions.
The present case demonstrates the problems confronting a complainant and the Tribunal in relation to non‑discretionary entitlements or decisions. I discussed some of these problems in Briffa at 13 - 14:
“ ... the new ground of challenge and the consequential relief available, if the ground is made out, are preconditioned upon and governed by the criteria of ‘unfairness’ or ‘unreasonableness’. As was pointed out by Sundberg J in Jevtovic at 10-11, the question for the Tribunal under the Complaints Act is not whether it is of the opinion that the Trustee’s decision was correct as a matter of law or fact. Rather, it is whether the Tribunal is satisfied that the Trustee’s decision in relation to a member of former member is unfair or unreasonable (see ss14(1), 14(2), 37(3) and 37(4)). See also Pope v Lawler at 135-137 in respect of the Complaints Act prior to the 1995 amendments.
If the Tribunal is satisfied that, in the circumstances, the decision was fair and reasonable in its operation in relation to the complaint it must affirm the decision: see s37(2) and (6) and Pope v Lawler at 136-6. If the Tribunal is satisfied that the decision of the Trustee was unfair or unreasonable it may ‘as nearly as practicable’ place the complainant in a position in relation to the decision which eliminates the unfairness or unreasonableness: see s37(4).
Obviously, in arriving at a determination the Tribunal might form its own views on the legal obligations of the Trustee in relation to the decision or refer questions of law to the Court: see s39. However, the view of the Tribunal or of the Court, in respect of those obligations, is not determinative of the issue of unfairness or unreasonableness which the Tribunal is to determine or of the compensatory relief the Tribunal might grant. Accordingly, although the Complaints Act provides important new rights it is not the panacea for righting all wrongs that may be complained of by fund members. In particular, the Tribunal may not always be an entirely satisfactory vehicle for determining a dispute over a fund member’s actual entitlements. That may have been implicitly recognised by the legislature which provided for the review of a complaint to be suspended if there is a proceeding in a court about the subject matter of the complaint: see s20.”
In the present case it is necessary to consider, more precisely, the function of the Tribunal under the Complaints Act which, in my view, is as I have set out hereunder.
Determination of whether the trustee’s decision is fair and reasonable.
(a)The first step must be to determine whether the trustee’s decision was fair and reasonable, in the circumstances, in its operation in relation to the complainant, and if applicable, the other persons referred to in s 37(6)(b)(ii): see s 37(6).
(b)Little difficulty arises under s 37(6) in respect of discretionary decisions. The Tribunal, after considering all of the circumstances, including the legal obligations of the trustee in relation to the decision, must determine as a question of fact whether the criterion in s 37(6) has been satisfied. If so, the decision must be affirmed.
(c)The position under s 37(6) in respect of non-discretionary decisions is more difficult. In Briffa at 24 ‑ 25 I discussed the scheme of the Complaints Act:
“Under the Complaints Act:
· the Tribunal has all the powers, obligations and discretions conferred on the Trustee: see s37(1)(a);
· the Tribunal must not make a determination that would be contrary to law or to the governing rules of the fund: see s37(5);
· the decision of the Tribunal is to have effect as the decision of the trustee: see s41(3).
In my view the clear intention of these provisions, and of the scheme for the resolution of complaints under the Complaints Act generally, is to place the Tribunal in the ‘shoes’ of the trustee when making a determination in respect of a complaint. It is an essential part of that scheme that, in so far as a determination under s37(3) varies or becomes a substituted decision of the trustee, the varied or substituted decision must be one which is authorised by the governing rules of the fund. Likewise, a remittal with directions must also result in a decision which is authorised by those rules.
The statutory scheme which I have outlined is consistent with the nature of regulated funds. Such funds are, in the usual course, established by an employer for the benefit of employees. The employer, employees and the trustees are all bound by, and entitled to the benefits conferred under, the trust deed. In the usual course trust deeds contain provisions for alteration or amendment which protect existing entitlements and the required tax status of the fund. In these circumstances, it would be an extraordinary step for the legislature to empower a Tribunal to make a decision under the Complaints Act which a trustee could not have made under a trust deed. The practical effect of such a decision would be to treat a deed as if it were amended without the need to amend it. It would also be questionable whether the Commonwealth legislature had the legislative power to empower a Tribunal to alter existing entitlements under a Trust Deed if the effect was to create new entitlements in favour of one group of beneficiaries at the expense of another group: see s51(xxxi) of the Constitution. Absent a specific provision in the Complaints Act clearly conferring such a power on the Tribunal I would not imply the power.”
In my view it follows from the discussion that, if a Trustee’s decision in respect of a non‑discretionary entitlement is determined to be correct as a matter of law, the decision will also be fair and reasonable and within the criteria set out in s 37(6). It is “fair” as, given the constraints imposed by the deed which is binding on the Trustee and all persons claiming an interest in respect of any entitlements arising under the deed, the decision is “just, unbiased, equitable and impartial” in the circumstances: see Briffa at 12 and Pope v Lawler (1996) 41 ALD 127 at 135 per Nicholson J. It is “reasonable” as, given the same constraints, it is “within the limits of reason; not greatly less or more than might be thought likely or appropriate”: see Briffa at 12 and Pope v Lawler (supra) at 135.
(d)Accordingly, whenever a decision as to a non-discretionary entitlement falls to be reviewed by the Tribunal under s 37, it is incumbent on the Tribunal to affirm the decision if it is satisfied that it conformed to and was made in accordance with the Trustee’s legal obligations under the relevant deed. I would add that, so construed, s 37(6) operates to ensure that:
·the Tribunal does not disturb, or exercise power so as to interfere with, decisions made in accordance with law;
·the prohibition in s 37(5) is not transgressed; and
·the Tribunal does not exercise judicial power: see Briffa at 21-22.
(e)In exercising the functions to which I have referred there is no difficulty in the Tribunal forming views on the legal rights and obligations of the parties, as such functions are not only common ingredients in the exercise of judicial power but may also be elements in the exercise of administrative power: see Precision Data Holdings Limited v Wills (1991) 173 CLR 167 at 188-9 and Briffa (supra) at 14.
(f)If the Tribunal errs in its decision under s 37(6) as to the legal rights and obligations of the parties, its determination will usually involve an error of law.
The Tribunal’s function where it is not required to affirm the Trustee’s decision
(a)In the event that the Tribunal concludes that it is not required to affirm the decision under s 37(6), it is required to exercise the review functions set out in s 37(3) subject to the limitations set out in ss 37(4) and (5).
(b)As I pointed out in Briffa (supra) at 14-15 the new ground of challenge and the consequential relief available under ss 14(1), 14(2), 37(3) and 37(4) are preconditioned upon and governed by the criteria of “unfairness” or “unreasonableness” and not whether the decision was correct as a matter of law or fact. Usually, little difficulty arises in respect of determining whether discretionary decisions are unfair or unreasonable.
(c)However, when determining that issue under s 37(3) in respect of non-discretionary decisions or entitlements it does not follow that a wrong decision by a Trustee is necessarily unfair or unreasonable. A two step process is necessary under s 37(3). First, the Tribunal must determine the decision which is correct as a matter of law. That is a necessary step as the Tribunal cannot exercise its power other than in accordance with law and the deed: see s 37(5). Secondly, the Tribunal must conclude that the wrong decision is unfair or unreasonable. Whilst it may usually follow that a wrong decision is unfair or unreasonable, it may not necessarily be so in all cases. It is relevant to observe that the criteria under s 37(3) (ie unfairness or unreasonableness) are broader than, and are therefore not necessarily the reverse side of, the criteria in s 37(6) (ie the decision is fair and reasonable in its operation in relation to the identified persons in the circumstances). The two step process may seem incongruous but it appears that it is intended to be the legislature’s method of ensuring that the Tribunal is exercising administrative rather than judicial power.
(d)Accordingly, a decision under s 37(3) which simply concludes that a decision of a trustee as to a non‑discretionary entitlement is incorrect in law and therefore is unfair or unreasonable, without further enquiry, will constitute a failure to exercise the jurisdiction conferred under ss 14, 37(3) and 37(4) and an error of law. In such cases there will have been a constructive failure to exercise the jurisdiction conferred under the Act: see Jevtovic at 10-11; Sinclair v Mining Warden at Maryborough & Anor (1975) 132 CLR 473, 480 and 483 and Minister for Immigration and Ethnic Affairs v Guo Wei Rong (High Court of Australia, 13 June 1997, unreported) at 11.
Did the Tribunal err in law?
The Tribunal, in arriving at its determination, erred in law in three respects.
First, the Tribunal has not addressed the issue of standing under s 15(1)(a) which was raised, for the first time, by the Trustee on the appeal.
Secondly, the determination was made under and by reference to the provisions of the amended Deed, rather than the Deed which governed any entitlements to the death benefit payable as a consequence of the death of the deceased on 19 June 1994.
Thirdly, in arriving at its determination the Tribunal determined whether the decision of the Trustee was correct in law rather than whether it was unfair or unreasonable and, if so, the relief that would be appropriate having regard to the limitation under s 37(4). Indeed, the Tribunal, having concluded that the Trustee’s decision was not “fair and reasonable” in relation to the two daughters, did not address the separate issues of “unfairness” or “unreasonableness” under s 37(3) or the limitation on its power contained in s 37(4).
Accordingly, there was a constructive failure on the part of the Tribunal to address the issues required to be addressed by it under the Act on each of these grounds. That conclusion would require that the decision of the Tribunal be set aside and that the matter be remitted to the Tribunal to be considered in accordance with law.
However, I am also satisfied that the Tribunal erred in law in its decision on the substantive question of the validity of the nomination form.
I agree with Waddell CJ in Eq in Lock v Westpac Banking Corporation (1991) 25 NSWLR 593 at 602 and Warner J in Mettoy Pension Trustees Ltd v Evans [1990] 1 WLR 1587 at 1610 that although there are no special rules of construction of documents relating to pension or superannuation schemes a court’s approach to such documents should be:
“... practical and purposive, rather than detached and literal ...”
The nomination was made as part of an application by the deceased for membership of the Plan as an employee of a participating employer. Although there was no evidence as to the circumstances in which the form was executed, it appears likely that its execution was made by the deceased in the usual course without legal advice and with little concern for the legal detail of the Plan.
The substantive requirement for a nomination under cl G.1 of the Deed is that it should nominate one or more dependants to receive all or part of any benefit payable on the death of the member. The procedural requirement is that the nomination delivered to the Trustee be in “a form in or to the effect of the form prescribed from time to time by the Trustee”. It is difficult to envisage how a form that meets the substantive requirement would be invalid merely because it did not meet the procedural requirement. The deceased nominated his two sons as the two dependants to whom he desired the whole of the death benefit be payable. Applying a practical and purposive approach to the form signed by the deceased and to cll G.1(a) and (b), in my view the Trustee would be obliged to give effect to the nomination unless it was revoked or was “otherwise ineffective”: see cl G.1(d). As there was no revocation the real issue before the Tribunal was whether the incorrect statement in the form, that the Trustee had a discretion as to distribution of the death benefit notwithstanding the nomination, invalidated or otherwise rendered ineffective the nomination.
On any view by his nomination the deceased stated that, to the extent to which he was able to do so, he was nominating his two sons as the persons entitled to receive the benefits payable on his death. I am unable to envisage how the deceased’s nomination of his two sons would be likely to be influenced by or in any way affected by the incorrect statements as to the Trustee’s discretion. If the form alone is examined the alleged discretion is unfettered as to the persons who may benefit from the exercise of the discretion. Contrary to the view of the Tribunal, the form did not, expressly or impliedly, state that the exercise of the discretion was limited to dependants of the deceased. If resort is had to cl G of the Deed in construing the form as limiting the exercise of the discretion to dependants, then resort must be had to the whole of cl G of the Deed, in which event it is apparent that the discretion only arises when there is no effective nomination and no legal personal representative.
Although the inaccuracy of the form has contributed to the difficulties which have beset the present matter, I cannot accept that the inaccuracy was material to the nomination made by the deceased. In my view the finding of the Tribunal, that the inaccuracy was both material and invalidating, on the papers and in the absence of any evidence suggesting that the deceased might have been misled by the form, involved an error of law.
It is likely that the Tribunal in the present case was unduly influenced by the apparent unfairness of the result which deprived the deceased’s two dependant daughters of any entitlement in respect of their deceased father’s death benefit. However, absent a discretion on the part of the Trustee, unfairness in the result is not to be equated with unfairness in the decision. I pointed out in Briffa (supra) at 14 that the Complaints Act cannot be the panacea for righting all wrongs and may not be an entirely satisfactory vehicle in respect of decisions as to non‑discretionary entitlements. If the result in the present case is unfair then the remedy at law, if any, may lie elsewhere than under the Complaints Act.
I would add that presumably, many other nominations were made using the same form as that signed by the deceased. The view of the Tribunal in the present case that such nominations are invalid defeats the intention of the nominators and would be likely to cause havoc.
Conclusion
Section 46 of the Complaints Act confers jurisdiction on the Court to make such order, on the appeal, as may be appropriate. I have concluded that, on the material before the Tribunal, the nomination was valid and accordingly the decision of the Trustee to pay the death benefit to the two sons of the deceased was the only decision open to it as a matter of law. It follows, for the reasons given by me earlier, that in these circumstances the Tribunal would be obliged to affirm the decision as fair and reasonable under s 37(6).
However I am concerned that the Trustee, the Tribunal and the parties have not really considered the proper operation of cl G of the Deed in the light of all of the facts or material which they might wish to adduce in evidence. I would not wish to preclude that opportunity, which might put a different complexion on the material previously acted upon by the Tribunal, by any order I make. In these circumstances it is appropriate to set aside the decision of the Tribunal and remit the matter back to it for reconsideration in accordance with law but, in particular, having regard to these reasons for judgment.
Costs
In substance the Trustee and the two sons have succeeded, and the two daughters of the deceased have failed, on the appeal. Normally an order that costs follow the event would be likely to be made.
However there is nothing normal about the present case. The dispute emanated from an inaccuracy in the nomination form which was said by counsel for the Trustee to have been the prescribed form used by the Trustee. The Trustee is a corporate trustee responsible for the administration of regulated funds. Undoubtedly, the Trustee is fairly and properly recompensed for these responsibilities on the basis of its expertise and experience. However these privileges attract duties, including the duty not to use or permit the use of inaccurate forms, particularly in relation to entitlements. In the present case the Trustee’s error in respect of the form is compounded by the decision it erroneously made under the amended Deed after the death of the deceased and its failure to take steps to ensure that the Tribunal did not repeat that error.
In these circumstances the other parties in the matter, being the dependants of the deceased, ought not to have to bear any part of the costs and expenses incurred in respect of the appeal.
The Court has a broad discretion as to costs including orders for indemnity costs in appropriate cases: see Re Wilcox; Ex Parte Venture Industries Pty Ltd and Others (1996) 141 ALR 727. I am satisfied that in the special circumstances of the present case it is appropriate that the Trustee, out of its own funds, pay the costs of the other parties to the appeal on an indemnity basis.
I certify that this and the preceding twenty-seven (27) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Merkel
Associate:
Dated: 18 July 1997
Counsel for the Applicant: Mr P La Cava Solicitor for the Applicant: Secombs Solicitors Counsel for the First Respondent: Mr D MacLean Solicitor for the First Respondent: Hall & Wilcox Counsel for the Second Respondent: Mr P K Searle Solicitor for the Second Respondent Maurice Blackburn & Co Date of Hearing: 25 June 1997 Date of Judgment: 18 July 1997
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