Cradock v United Super Pty Ltd as Trustee of the Construction and Building Unions Superannuation Fund
[2021] FCA 305
•24 March 2021
FEDERAL COURT OF AUSTRALIA
Cradock v United Super Pty Ltd as Trustee of the Construction and Building Unions Superannuation Fund [2021] FCA 305
File number: SAD 12 of 2021 Judgment of: CHARLESWORTH J Date of judgment: 24 March 2021 Date of publication of reasons: 30 March 2021 Catchwords: PRACTICE AND PROCEDURE – Application for an extension of time to commence an appeal from a decision of the Australian Financial Complaints Authority (AFCA) – AFCA affirming a decision of a superannuation trustee in relation to the distribution of death benefits – s 1055B and s 1057A of the Corporations Act 2001 (Cth) providing that AFCA’s decision comes into immediate effect unless AFCA provides otherwise or unless the Federal Court of Australia stays the decision appealed from – no application for a stay of AFCA’s decision – decision appealed from implemented by trustee before the time to commence an appeal expired – recipient of benefit of the trustee’s decision receiving payment and expending funds – recipient asserting prejudice in the nature of a risk that the law might operate to require that she disgorge the payment – unsatisfactory explanation for delay in commencing appeal – public interest in proper construction of the provisions of the Corporations Act 2001 (Cth) conferring powers of remittal – consideration of whether there could or should be remittal for reconsideration of a decision that has been implemented – extension of time granted on limited grounds Legislation: Corporations Act 2001 (Cth) ss 1055B, 1057, 1057A Cases cited: Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344
Minister for Immigration and Citizenship v Li (2013) 249 CLR 332
MZABP v Minister for Immigration and Border Protection (2015) 242 FCR 585
MZABP v Minister for Immigration and Border Protection (2016) 152 ALD 478
Division: General Division Registry: South Australia National Practice Area: Administrative and Constitutional Law and Human Rights Number of paragraphs: 39 Date of hearing: 24 March 2021 Counsel for the Applicants: Ms S Mackenzie Solicitor for the Applicants: Belperio Clark Counsel for the First Respondent: Mr C Corns Solicitor for the First Respondent: K & L Gates Counsel for the Second Respondent: The Second Respondent filed a Submitting Notice Counsel for the Third Respondent: Mr S Ower QC Solicitor for the Third Respondent: Tindall Gask Bentley
Table of Corrections 1 April 2021 Paragraph 28: “to be finally balanced” replaced with “ to be finely balanced” ORDERS
SAD 12 of 2021 BETWEEN: SHEKIRA DAWN CRADOCK
First Applicant
BREONY ELIZABETH CRADOCK
Second Applicant
AND: UNITED SUPER PTY LTD AS TRUSTEE OF THE CONSTRUCTION AND BUILDING UNIONS SUPERANNUATION FUND
First Respondent
AUSTRALIAN FINANCIAL COMPLAINTS AUTHORITY
Second Respondent
SHANTAL LOUISE GIDDINS
Third Respondent
ORDER MADE BY:
CHARLESWORTH J
DATE OF ORDER:
24 MARCH 2021
THE COURT ORDERS THAT:
1.Pursuant to s 1057(2) of the Corporations Act 2001 (Cth) the time to commence an appeal from the decision of the Australian Financial Complaints Authority made on 10 December 2020 be extended nunc pro tunc to 4 February 2021 on the conditions specific in paragraph 2.
2.The questions of law to be argued on the appeal are confined to those specified in grounds 2 and 3 of the proposed notice of appeal contained at annexure “SDC2” to the affidavit of Shekira Cradock affirmed 3 February 2021.
3.On or before 26 March 2021 the appellants are to file a notice of appeal in the terms consistent with annexure “SDC2” to the affidavit of Shekira Cradock affirmed 3 February 2021 save that the question of law at paragraph 1 is not to be included.
4.Costs be reserved.
5.There be liberty to apply.
6.There be a further case management hearing at 10.00am (ACST) on 10 May 2021.
7.The first respondent has liberty to apply to vary the order in paragraph 6.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
CHARLESWORTH J
On 24 March 2021 I made orders granting the applicants an extension of time in which to appeal from a decision of the Australian Financial Complaints Authority (AFCA). Oral reasons for allowing the application were given on that day. What follows is a written record of those oral reasons, with minor modifications to improve expression.
Record of oral reasons given on 24 March 2021
The Court has before it an application for an extension of time in which to commence an appeal from AFCA. The decision subject to the proposed appeal was made on 10 December 2020. These proceedings were commenced on 4 February 2021, although additional respondents were not joined until early March.
The right to appeal is that conferred by s 1057(1) of the Corporations Act 2001 (Cth). It provides that a party to a superannuation complaint may appeal to the Federal Court on a question of law from AFCA’s determination of the complaint. Section 1057(2) provides that an appeal by a person under subs (1) is to be instituted not later than the 28th day after the day on which a copy of the determination of AFCA is given to the person, or within such further period as the Federal Court whether before or after the end of that day allows.
It is common ground that the time to commence an appeal from AFCA’s decision expired on 8 January 2021. The delay is in the order of about a month. It is also common ground that the principles guiding the exercise of the Court’s discretion under s 1057(2) of the Corporations Act are the same as those discussed by Wilcox J in Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344. The principles are well settled.
Without being exhaustive, it is relevant to consider the length of the delay, the adequacy of any explanation given for the delay, the prejudice to the parties should the extension of time be granted (or not granted as the case may be) and, perhaps encompassed in the last mentioned consideration, the apparent merits of the proposed grounds of appeal. An assessment of the apparent merits of the grounds of appeal is to be undertaken at an impressionistic level in accordance with the analysis of Mortimer J in MZABP v Minister for Immigration and Border Protection (2015) 242 FCR 585 as discussed and elaborated upon to an extent by the Full Court on appeal from that decision: see MZABP v Minister for Immigration and Border Protection (2016) 152 ALD 478.
In the decision subject to the proposed appeal, AFCA affirmed a decision made by the trustee of a superannuation fund. The fund was that of the deceased father of the first and second applicants in the proceeding. Each of the applicants claims to be a dependent of the deceased at the time of his death in 2018.
In the proceedings before AFCA, submissions were made by or on behalf of the deceased’s partner, Ms Shantal Giddins. Ms Giddins has been joined as the third respondent on the application for the extension of time to appeal and opposes the application. The other respondents are the trustee of the superannuation fund and AFCA.
Section 1055B(1) of the Corporations Act provides that, subject to subs (2), a determination of a superannuation complaint by AFCA comes into operation immediately upon the making of the determination. Section 1055B(2) provides:
AFCA may specify in the determination that the determination is not to come into operation until a later date specified in the determination and, if a later date is so specified, the determination comes into operation on that date.
Section 1057A(1) provides:
Subject to this section the institution of an appeal to the Federal Court from AFCA’s determination of a superannuation complaint does not affect the operation of the determination or prevent the taking of action to implement the determination.
Under s 1057A(2) the Federal Court, on an appeal, may make such orders staying or otherwise affecting the operation or implementation of either or both of the following:
…
(a) the determination or a part of the determination;
(b)if the complaint relates to a decision of another person—the whole or part of the decision that is complained of, or of a decision of an insurer or other person who is a party to the complaint;
…
Explanation for the delay
As I have said, the decision in the present case was made by AFCA on 10 December 2020 and notified to the applicants’ solicitor, Mr Eugene Reinboth, on that day. The accompanying notices made it plain that an appeal lay from the decision and specified that there was a 28 day period in which to appeal. Consistent with the provisions in s 1055B and s 1057A of the Corporations Act the notice emphasised that AFCA’s determination otherwise had immediate effect and that the superannuation trustee would implement the decision.
The applicants’ solicitor subsequently received correspondence from the trustee to the effect that additional identification documents were required so that the trustee could pay to the applicants their portions of the distribution of the death benefit under the superannuation policy in accordance with AFCA’s decision.
Between the date of the decision on 10 December 2020 and the expiration of the time prescribed to commence an appeal, I find that the solicitor made an attempt to seek instructions from the mother of the first and second applicants in respect of whether or not an appeal should be commenced. By reference to the correspondence passing from the solicitor to the applicants’ mother, taken together with the notification given by AFCA, I am satisfied that the solicitor was aware that a 28 day appeal period applied.
The explanation given for the delay by the applicants’ mother is twofold: first she had written to AFCA on 23 December 2020 in relation to death benefits that might be payable under other policies held by the deceased and understood that that correspondence equated to an appeal in relation to the policy in issue and, secondly she was very busy over the Christmas period with work commitments and that, as she understood it, her solicitor had some difficulty engaging counsel in respect of an appeal.
However, the correspondence in evidence discloses that the mother did not respond to communications from the solicitor sent on 15 December 2020 and 12 January 2021 urging a response to his correspondence about whether or not there should be an appeal. In each of those correspondences, the solicitor emphasised that he did not recommend an appeal but wished to discuss that recommendation with the applicants’ mother.
I am satisfied in relation to all of the above correspondence that the applicants put their dealings between them and Mr Reinboth in the hands of their mother, and I consider they should be bound by the acts and omissions of their mother in those dealings.
I find that a reason for not commencing the appeal in time – that is, by 8 January 2021 – is that, as at that date, the solicitor did not have instructions to commence an appeal and, indeed, was recommending against one. After that time, I am also satisfied that some of the delays are explained by a misapprehension on the part of the solicitor as to whether or not the reckoning of time to commence the appeal was affected by the rules of the Court providing for the closure of the Court’s registry over the Christmas period. However, I consider Mr Reinboth was disabused of any such misunderstanding from at least 21 January 2021 when he had a discussion with counsel about the effect of the rules.
As I have mentioned, the proceedings were commenced on or around 4 February 2021. Whilst the delay is not long, I consider that the explanation provided for the delay is unsatisfactory. I do not consider the explanation to be compelling. That consideration weighs against the grant the extension of time.
Prejudice
No prejudice is asserted by either the first or the second respondent.
As to Ms Giddins, it is common ground that after AFCA affirmed the trustee’s decision, the trustee acted promptly to implement it. That occurred in the context in which AFCA had made no determination under s 1055B(2) that its decision should come into operation at a later date and in circumstances where the trustee had not been joined on any appeal and no application for a stay of the implementation of the decision had been made to this Court.
As a consequence, Ms Giddins received 85% of the death benefit, as previously determined by the trustee and as subsequently affirmed by AFCA. It is common ground that the payment was received before the time to appeal expired.
Ms Giddins has deposed to expenditures from that payment. As a result of the expenditure there remains, at the date of affirming her affidavit, the sum of a little over $188,000.00 from the original payment of $311,000.00. Much of the expenditure occurred after 3 February 2021, when Ms Giddins was first notified that these proceedings would be commenced.
A considerable proportion of the expenditure includes payments made into the trust fund of the law firm Tindall Gask Bentley. It is reasonable to infer that those payments may well be applied by Ms Giddins in the defence of the appeal, should the extension of time be granted, although that is not expressed on the affidavit material before me.
The nature of the prejudice asserted by Ms Giddins, should an extension of time be granted to commence the appeal, is that of a risk that she may ultimately be required to disgorge monies that she has already expended, or otherwise lose the benefit of the payment made to her by the trustee, in accordance with AFCA’s decision.
The relief sought on the appeal includes an order that the complaint in respect of the trustee’s decision be remitted to AFCA for reconsideration. Counsel for Ms Giddins submitted that that circumstance gave rise to a risk that the general law of trust and equitable principles may apply. Whether or not that asserted risk may transpire may turn, to a large extent, or perhaps exclusively, on the proper interpretation of s 1055B(1) of the Corporations Act and other provisions to which I have referred.
Relatedly, an issue may arise on the appeal as to whether or not the Court has a discretion to decline to grant relief, even if the grounds of appeal or the errors of law, alleged on the proposed ground of appeal, are established on their merits. In that respect, I consider that the facts upon which Ms Giddins relies in asserting prejudice as a relevant factor for refusing to grant an extension of time, is the same prejudice that may be argued on a substantive appeal, particularly on the question of whether or not the remedy of remittal can or should be granted. On any appeal, the Court would be concerned to avoid directing an order to AFCA that concerns a decision that has, at least in the Court’s preliminary view (formed without the benefit of full submissions) been lawfully implemented. An issue may arise as to whether an order for remittal may operate to require AFCA to do something it does not have the power to do.
I consider that the prejudice described in the submissions and evidence upon which Ms Giddins relies, is in truth, a prejudice arising from the circumstance that she received the benefit of the death benefit before these proceedings were commenced. Her receipt of those benefits is explained by the applicants’ failure to urge AFCA to rule that the determination not come into operation immediately. In my view, the same prejudice would have arisen even if the appeal had been commenced prior to 8 January 2021, the implementation of the decision having occurred before that date.
I consider the interests of the applicants and the interests of Ms Giddins on the application for an extension of time, to be finely balanced.
Substantive merits
An appeal lies from AFCA’s decision only in relation to a question of law. There are three asserted errors.
I turn first to the second and third proposed grounds. They each allege that AFCA’s decision is affected by legal unreasonableness, for reasons that need not be elaborated upon here.
Should the extension be granted all of the proposed grounds of appeal are to be determined having regard to the powers of the trustee under the superannuation trust, together with the statutory context in which those powers are to be exercised, which in turn includes the provisions of the Corporations Act.
The task of AFCA in determining the complaint is circumscribed in a way that compels AFCA to affirm the trustee’s decision, unless it is satisfied that the decision is not fair and reasonable. The word “reasonable” as it appears in the Corporations Act is not to be confused with the concept of legal unreasonableness, as discussed by the High Court in Minister for Immigration and Citizenship v Li (2013) 249 CLR 332.
Whilst referring to the different conceptualisations of “reasonableness”, Counsel for Ms Giddins did not seek to argue that the proposed grounds of appeal founded in legal unreasonableness were not arguable. Counsel did, however, submit that the Court should assess the prospects of success of those grounds as being weak, including because of AFCA’s confined statutory task. I do not consider it to be necessary or appropriate to make that assessment. If the extension of time were not granted, I accept that the first and second applicants would be deprived of the opportunity to advance the arguable grounds.
I take a different view in relation to the first proposed ground of appeal. It poses a question of law in the following terms:
Whether the authority in determining that the Respondent’s decision was fair and reasonable failed to take into account a critical matter, being the then current financial circumstances of the Applicants and Ms Giddins, respectively.
I do not consider that ground of appeal to enjoy any reasonable prospect of success. That is because the reasons given by AFCA for its decision deal in considerable detail with the financial circumstances of the applicants and Ms Giddins respectively. It may be that the applicants are unhappy with the evaluation made by AFCA in undertaking that task, but the submission that AFCA failed to take into account the applicants’ current financial circumstances at all simply can’t be sustained.
I do not consider that the applicants would suffer any prejudice if the Court were to refuse the extension of time in relation to the first ground. An extension of time in relation to that ground will not be granted.
On balance, however, I have determined that there should be an extension of time in which to appeal confined to the second and third proposed grounds. I consider there to be a public interest in the proper construction of the provisions of the Corporations Act in relation to decisions that appear to have been implemented, apparently lawfully, before an appeal from a decision of AFCA affirming the decision is commenced. The public interest extends to consideration of the implications for the exercise of this Court’s powers on such an appeal in relation to an implemented decision. It is reasonable to infer that circumstances such as those arising in the present case are not altogether uncommon. I consider there is a public interest in the Court hearing full argument in respect of them. That interest tips the balance in favour of granting the extension of time.
I take that view, notwithstanding that neither AFCA nor the trustee have taken a position in relation to the grounds of appeal or the question of what orders, if any, can and should be directed to AFCA, should the asserted errors of law be established on their merits.
I should not otherwise be understood as expressing any view as to the substantive merits of the grounds of appeal.
I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Charlesworth. Associate:
Dated: 24 March 2021
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