Constantinides v Du Pont Superannuation Fund Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Constantinides v Du Pont Superannuation Fund Pty Ltd [2002] FCA 534

ADMINISTRATIVE LAW – appeal on questions of law from decision of Superannuation Complaints Tribunal affirming decision of Second Respondent rejecting the applicant’s claim for a Total and Permanent Disablement Benefit – whether Tribunal adopted an incorrect definition of “Total and Permanent Disablement” – whether Tribunal incorrectly construed the word “unable” – whether Tribunal erred in law by not considering fresh evidence – role of Tribunal under s 37 of the Superannuation (Resolution of Complaints) Act 1993 (Cth) – whether Tribunal ought to have considered for itself whether the applicant was totally and permanently disabled

Superannuation (Resolution of Complaints) Act 1993 (Cth) ss 14, 37, 46

Australian Telecommunications Corporation v Lambroglou (1990) 12 AAR 515 referred to
National Mutual Life Association of Australia Ltd v Campbell [2000] FCA 852, (2000) 99 FCR 562 applied
Davis v Rio Tinto Staff Superannuation Fund Pty Ltd [2002] FCA 376 followed
Ivkovic v Australian Casualty & Life Ltd (1994) 10 SR (WA) 325 followed
Briffa v Hay (1997) 75 FCR 428 followed
Seafarers’ Retirement Fund Pty Ltd v Oppenhuis (1999) 94 FCR 594 followed
Retail Employees Superannuation Pty Ltd v Crocker [2001] FCA 1330 followed
Alcoa of Australia Retirement Plan Pty Ltd v Thompson [2002] FCA 256 followed
National Mutual Life Association of Australia Ltd v Jevtovic (Unreported, Federal Court of Australia, Sunberg J, 8 May 1997) followed
Haematite Pty Ltd v Ristevski [2002] FCA 408 cited

Pamela McAlister, “The Demise of the Superannuation Complaints Tribunal: The Decisions in Wilkinson v Care and Breckler v Leshem” (1998) Melbourne University Law Review Vol 22, 282 referred to

ANDREAS CONSTANTINIDES V DU PONT SUPERANNUATION FUND PTY LTD & ANOR

V 362 OF 2001

MARSHALL J
MELBOURNE
30 APRIL 2002

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

V 362 OF 2001

BETWEEN:

ANDREAS CONSTANTINIDES
APPLICANT

AND:

DU PONT SUPERANNUATION FUND PTY LTD
FIRST RESPONDENT

HANOVER LIFE RE OF AUSTRALASIA LTD
SECOND RESPONDENT

JUDGE:

MARSHALL J

DATE OF ORDER:

30 APRIL 2002

WHERE MADE:

MELBOURNE

THE COURT ORDERS THAT:

1.The application be dismissed.

2.The applicant pay the respondents’ costs of the proceeding, including reserved costs, to be taxed in default of agreement.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.


IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

V 362 OF 2001

BETWEEN:

ANDREAS CONSTANTINIDES
APPLICANT

AND:

DU PONT SUPERANNUATION FUND PTY LTD
FIRST RESPONDENT

HANOVER LIFE RE OF AUSTRALASIA LTD
SECOND RESPONDENT

JUDGE:

MARSHALL J

DATE:

30 APRIL 2002

PLACE:

MELBOURNE

REASONS FOR JUDGMENT

  1. This is an appeal on questions of law arising from a determination of the Superannuation Complaints Tribunal (“the Tribunal”) affirming a decision of the second respondent, Hanover Life Re of Australia Ltd (“the Insurer”). The appeal is brought pursuant to s 46 of the Superannuation (Resolution of Complaints) Act 1993 (Cth) (“the Act”).

  2. The Insurer rejected the applicant’s claim for a Total and Permanent Disablement…

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Details
Case
[2002] FCA 534
Decision Date

CaseChat Overview and Summary

In the case of Constantinides v Du Pont Superannuation Fund Pty Ltd, the applicant sought a Total and Permanent Disablement (TPD) benefit under the Du Pont (Australia) Ltd Super Fund. The Insurer and the Trustee both rejected the applicant's claim, and the matter was remitted to the Tribunal for review. The central legal issues concerned the appropriate definition of TPD and the extent of the Tribunal's powers in reviewing the Trustee's decision.

The court found that the definition of TPD under the insurance policy was the appropriate one to apply, as the Trust Deed defers to the insurance policy in its definition of TPD. The court also held that the Tribunal's role in reviewing the Trustee's decision is limited to determining whether the decision was fair and reasonable, rather than engaging in a de novo review. The court noted that the Tribunal steps into the shoes of the Trustee and reviews the decision based on all the information available at the time, but does not decide whether the Trustee's decision was the correct one.

Based on these findings, the court dismissed the applicant's appeal and ordered that the applicant pay the respondents' costs of the proceeding, including reserved costs, to be taxed in default of agreement.

Orders

Orders of the court

1. The application be dismissed.

2. The applicant pay the respondents’ costs of the proceeding, including reserved costs, to be taxed in default of agreement.

Background

Background to the litigation

The Insurer rejected the applicant’s claim for a Total and Permanent Disablement (“TPD”) benefit under the Du Pont (Australia) Ltd Super Fund (“the Fund”). The Tribunal remitted the matter to the first respondent, Du Pont Superannuation Fund Pty Ltd (“the Trustee”) to determine whether the applicant’s claim should be augmented under cl 22(2) of the Trust Deed as amended on 4 May 1992.FACTUAL BACKGROUND The applicant was born on 25 March 1935. He began work for Du Pont (Australia) Limited as a Textile Machine Operator on 27 October 1986. He joined the Fund on 23 July 1990. The applicant was injured on 27 April 1994 while vacationing and visiting family in Cyprus. In a letter dated 3 May 1994, the applicant was notified that he would be made redundant effective from 19 May 1994. Upon returning home, the applicant was unable to resume employment after visiting a doctor on 7 May 1994. On 6 February 1995, he lodged a claim for a TPD benefit. After the Insurer had rejected the applicant’s claim, the Trustee, on 26 July 1996, also rejected the applicant’s claim for a TPD benefit. On 7 July 1997, the Trustee, after reviewing its decision, affirmed its rejection of the applicant’s claim. The matter then went before the Tribunal. Two versions of the Trust Deed were tendered in the proceeding. One is a version amended on 19 May 1994 and effective from 1 July 1992. The second is a version which pre-dated the 19 May 1994 amendment (“the pre-19 May 1994 Trust Deed”). With regard to the pre-19 May 1994 Trust Deed, Rule 1 of Part A of the Rules of the Fund defines TPD with reference to the insurance policy:“‘Total and Permanent Disablement’ in relation to a Member has the following meaning:(a)where the Trustee has effected a current Policy to secure part or all of the benefits payable or prospectively payable to or in respect of that Member pursuant to Rule 11 the term shall, in respect of that Member have a meaning that corresponds to the cover for that risk provided under the Policy….” The insurance policy defines TPD as:“(a) …(b)having been absent from work through injury or illness for an initial period of six (6) consecutive months and in our opinion being incapacitated to such an extent as to render the Insured Person unable ever to engage in or work for reward in any occupation or work which he or she is reasonably capable of performing by reason of education, training or experience.” [emphasis added] The Trust Deed as amended on 19 May 1994 also makes reference to the insurance policy in cl 14(1) which deals with TPD benefits:“…. Where a policy is in force to insure this benefit the Trustee shall in this matter rely for the relevant medical evidence upon the opinion of the Chief Medical Officer of the insurance company which has issued the Policy. ….” However, the 19 May 1994 Trust Deed amendment defines TPD separately to mean in relation to a member:“having been continuously absent from Service with the employer as a result of injury or illness and in the opinion of the Trustee after consideration of medical evidence having become incapacitated by that injury or illness to such an extent as to render the Member unlikely ever to engage in or work for reward in any occupation or work for which the Member is reasonably qualified by education or training or experience….” [emphasis added]

Evidence

Evidence Before The Court

In answer, the respondents referred to Australian Telecommunications Corporation v Lambroglou (1990) 12 AAR 515, to support the view that the meaning given to a plain English word, is a question of fact. Thus, it was well within the Tribunal’s power to interpret the word “unable” as being more stringent than “unlikely”.3) Review of Evidence The applicant further submitted that the Tribunal placed an impermissible limitation upon the fresh evidence that was brought to its attention. In doing so, the Tribunal limited the de novo aspect of its proceeding such that it did not encompass all the evidence before the Tribunal. In effect, it was argued, the Tribunal’s review was useful only to the extent that it retrospectively portrayed information at the date of the trustee’s review. The respondents claimed that the later development of some condition after the employment has ceased should not be taken into account. Reference was also made to Rule 10 of the pre-19 May 1994 Trust Deed and Rule 14 of the 19 May 1994 Trust Deed amendment, both of which state that a total and permanent disablement must occur while in the service of the employer.4) Conclusion of Tribunal The applicant submitted that the Tribunal ought to have considered for itself whether the applicant was totally and permanently disabled and failed to do so. The applicant argued that the Tribunal could not decide whether a decision, in its effect on the complainant, was fair and reasonable without also deciding whether the complainant is totally and permanently disabled. The respondents replied that it is not for the Tribunal to ask whether it would have reached the same conclusion on the evidence. It is for the Tribunal to simply ask whether the decision was fair and reasonable in the circumstances.CONSIDERATION In my opinion, the definition of TPD under the insurance policy is the appropriate definition. Rule 1 of Part A of the Rules of the Fund of the pre-19 May 1994 Trust Deed states that the definition of TPD will have a definition that corresponds to the definition under the current insurance policy. While the 19 May 1994 Trust Deed Amendment includes its own definition of TPD, it still defers to the insurance policy in cl 14(1). Regardless of which deed one turns to, it is the insurance policy that takes precedence. The Trust Deed itself guarantees the member no entitlement; rather, it provides a way in which the Trustee may vary the benefit received in a situation where a member’s claim under the insurance policy has been rejected. I see no need to decide which Trust Deed was applicable for the purposes of determining which definition of TPD should be applied because it is the insurance policy definition which must be satisfied in order for the applicant to receive a benefit from such policy. As to the position of an insurer within the scheme provided by the Act, see National Mutual Life Association of Australia Ltd v Campbell [2000] FCA 852, [13], (2000) 99 FCR 562 at 566.

Decision

Reasons for decision

MARSHALL J
Section 37 of the Act then sets forth the Tribunal’s powers in reviewing a decision which is the subject of a complaint under s 14:“(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)…(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)…(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.”TRIBUNAL’S DECISION After setting out the relevant background to the complaint, the Tribunal discussed which Trust Deed was the applicable one. The Tribunal decided that the 19 May 1994 Trust Deed amendment was not applicable because “rule 10 of the pre-19 May 1994 Trust Deed states that the question of whether a member is TPD under the Trust Deed is to be determined prior to the date on which a Member ceases employment (ie “while in Service”)”. The Tribunal said that “(e)ven though the 19 May 1994 Trust Deed amendment was retrospective, a retrospective deed variation will not apply if a benefit has already crystallised before the amendment was made.” The Tribunal then referred to Rule 1 of the pre-19 May 1994 Trust Deed which defines TPD by reference to the insurance policy. In a section entitled “Tribunal’s Deliberations”, the Tribunal examined the medical evidence before the Trustee and Insurer. As part of its review, the Tribunal then decided to take into account further medical reports submitted by the complainant. In discussing whether the Trustee had sufficient evidence before it, the Tribunal stated:“The onus is on the trustee to ensure that it has adequate and sufficient material to be satisfied it has taken into account all relevant considerations. The Tribunal considers that the operation of the decisions of the Trustee were fair and reasonable in the full circumstances of this complaint.”

Ratio Decidendi

Legal Principle Established

Established by: MARSHALL J

The respondents replied that it is not for the Tribunal to ask whether it would have reached the same conclusion on the evidence. It is for the Tribunal to simply ask whether the decision was fair and reasonable in the circumstances.CONSIDERATION In my opinion, the definition of TPD under the insurance policy is the appropriate definition. Rule 1 of Part A of the Rules of the Fund of the pre-19 May 1994 Trust Deed states that the definition of TPD will have a definition that corresponds to the definition under the current insurance policy. While the 19 May 1994 Trust Deed Amendment includes its own definition of TPD, it still defers to the insurance policy in cl 14(1). Regardless of which deed one turns to, it is the insurance policy that takes precedence. The Trust Deed itself guarantees the member no entitlement; rather, it provides a way in which the Trustee may vary the benefit received in a situation where a member’s claim under the insurance policy has been rejected. I see no need to decide which Trust Deed was applicable for the purposes of determining which definition of TPD should be applied because it is the insurance policy definition which must be satisfied in order for the applicant to receive a benefit from such policy. As to the position of an insurer within the scheme provided by the Act, see National Mutual Life Association of Australia Ltd v Campbell [2000] FCA 852, [13], (2000) 99 FCR 562 at 566. I find no compelling argument for the applicant’s claim that the Tribunal committed an error in determining that a definition containing the word “unable” sets a more difficult threshold than one containing the word “unlikely”. In Davis v Rio Tinto Staff Superannuation Fund Pty Ltd [2002] FCA 376, Heerey J adopted the reasoning of Commissioner Roberts-Smith QC, sitting as a Commissioner of the District Court of Western Australia, when he determined that the word “unlikely” in the definition of total and permanent disability set a much lower test “than would be posed if an insured had to establish that he was incapable of following his usual or any other occupation.” (citing Ivkovic v Australian Casualty & Life Ltd (1994) 10 SR (WA) 325). I find this analysis consistent with the decision of the Tribunal. The applicant’s third and fourth contentions are intertwined, and I will deal with them together in discussing the extent of the Tribunal’s power of review. The Tribunal is not to act as an objective, impartial observer but rather, in the words of the Full Court in Campbell, stands in the “shoes” of the trustee or insurer; see also Briffa v Hay (1997) 75 FCR 428 at 443 and Seafarers’ Retirement Fund Pty Ltd v Oppenhuis (1999) 94 FCR 594 at 598. In doing such, the Tribunal engages in limited administrative review. In Retail Employees Superannuation Pty Ltd v Crocker [2001] FCA 1330 (20 September 2001), Allsop J observed that:“The Tribunal's task is not to engage in ascertaining generally the rights of the parties, nor is it to engage in some form of judicial review of the decision of the trustee or insurer. Rather it is to form a view, from the perspective of the trustee or insurer, as to whether the decision of either was (recognising the overriding framework given by the governing rules and policy terms, respectively) unfair or unreasonable.”This point is further elucidated by Pamela McAlister, “The Demise of the Superannuation Complaints Tribunal: The Decisions in Wilkinson v Care and Breckler v Leshem” (1998) 22 Melbourne University Law Review 281, 287 where the following was said:“The Tribunal can only exercise its determination-making power under s 37 for the purpose of eliminating any unfairness or unreasonableness or both. It must affirm the trustee’s decision if it is satisfied that it is fair and reasonable in its operation in relation to the complainant in the circumstances. In practice this means that the Tribunal conducts what might be termed a ‘limited merits review’. The Tribunal ‘steps into the shoes’ of the trustee and addresses the actual trustee decision de novo, based on all of the information before it. In awarding a remedy, however, it does not ask itself whether the trustee’s decision was the correct or preferable decision, but rather asks whether the trustee’s decision was within a range of decisions which were fair and reasonable.”