Edington v Superannuation Complaints Tribunal

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FEDERAL COURT OF AUSTRALIA

Edington v Superannuation Complaints Tribunal [2007] FCA 1989

SUPERANNUATION – appeal from the Superannuation Complaints Tribunal – Tribunal affirmed decision of the Trustee of the Superannuation Fund not to pay any insurance benefit to the applicant who had been assessed as totally and permanently disabled after a workplace incident because the total and permanent disablement was caused by his pre-existing medical condition, namely schizophrenia – whether Tribunal’s finding that the applicant’s medical condition was related to his schizophrenia could not be supported by the evidence – whether evidence of link between applicant’s post workplace incident medical condition and schizophrenia – whether Tribunal improperly exercised its powers – relevance of the Tribunal taking into account a medical report that was not before the Trustee – whether adequate weight given to further medical report – whether Tribunal erred in law in finding decision of Trustee was fair and reasonable

Held: Application dismissed. Tribunal did not err in law in finding that the decision of the Trustee was fair and reasonable. It is clear that the Tribunal considered that the root cause of the applicant’s total and permanent disability was his schizophrenia. The findings of the Tribunal were open to it on the evidence. The Tribunal considered the medical report of Dr de Leacy. Nothing turns on the fact that the Trustee did not consider this report as this report did not exist at the time the Trustee made its decision. The Tribunal was entitled to have regard to documents not before the Trustee in exercising its powers. The Tribunal did not make a finding which could not be supported by the evidence or improperly exercise its powers.

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

Briffa v Hay (1997) 75 FCR 428 cited
Cameron v Board Trustees of the State Public Sector Superannuation Scheme (2003) 130 FCR 122 cited
Colonial Mutual Life Assurance Society Ltd v Brayley [2002] FCA 1333 cited
Commonwealth Superannuation Scheme Board v Dexter (2004) 142 FCR 151 cited
Cullinane v Mercer Benefit Nominees Ltd (2006) 152 FCR 1 cited

Flexiplan Australia Ltd v Pankhurst [2001] FCA 1535 cited

HEST Australia Ltd v Sykley (2005) 147 FCR 248 cited
Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 cited
National Mutual Life Association of Australia Ltd v Campbell (2000) 99 FCR 562 cited
National Mutual Life Association of Australia v Scollary [2002] FCA 695 cited
Retail Employees Superannuation Pty Ltd v Crocker (2001) 48 ATR 359 cited
Seafarers’ Retirement Fund Pty Ltd v Oppenhuis (1999) 94 FCR 594 cited

JOSEPH DAVID EDINGTON v SUPERANNUATION COMPLAINTS TRIBUNAL AND BOARD OF TRUSTEES OF THE STATE PUBLIC SECTOR SUPERANNUATION SCHEME
QUD434 OF 2006

COLLIER J
14 DECEMBER 2007
BRISBANE


IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY

QUD434 OF 2006
ON APPEAL FROM THE SUPERANNUATION COMPLAINTS TRIBUNAL CONSTITUTED BY DEPUTY CHAIRPERSON JOCELYN FURLAN AND MEMBERS ANNE SHANAHAN AND NOEL DAVIS

BETWEEN:

JOSEPH DAVID EDINGTON
Applicant

AND:

SUPERANNUATION COMPLAINTS…

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Details
Case
[2007] FCA 1989
Decision Date

CaseChat Overview and Summary

In the Federal Court, Edington, the applicant, appealed against a decision of the Superannuation Complaints Tribunal, which in turn had affirmed the decision of the Trustee of the QSuper Accumulation Account not to pay the applicant a Total and Permanent Disability (TPD) benefit of $991,200. The applicant had commenced employment with the Department of Primary Industries in Queensland in September 2001 and had joined the QSuper Accumulation Account on 10 September 2001. He had increased his death and TPD insurance cover on 10 December 2001. The applicant had been diagnosed with paranoid schizophrenia in 1994 and had been receiving ongoing treatment. The applicant applied for a TPD benefit on 12 February 2003 after ceasing work on 8 July 2002 due to anxiety and stress from an incident involving dogs while inspecting a property for fire ants. The Trustee declined to pay the TPD benefit, citing the applicant’s pre-existing schizophrenia as the cause of his incapacity. The applicant appealed the decision to the Tribunal, which affirmed the Trustee’s decision.

The primary legal issue in this case was whether the Tribunal erred in law by affirming the Trustee’s decision to deny the TPD benefit. The applicant argued that the Tribunal misdirected itself by not considering all the medical evidence and by failing to properly weigh the competing medical opinions. The respondent contended that the Tribunal correctly affirmed the Trustee’s decision, as the evidence showed that the applicant’s incapacity was related to his pre-existing schizophrenia. The court had to determine if the Tribunal’s decision was fair and reasonable, given the conflicting medical opinions and the statutory framework.

The court found that the Tribunal had correctly applied the statutory framework in reviewing the Trustee’s decision. The Tribunal, standing in the shoes of the Trustee, had to determine whether the decision was fair and reasonable, considering the governing rules and policy terms. The court noted that the Tribunal had considered all the available medical evidence and had not misdirected itself in its analysis. The differing medical opinions were acknowledged, but the Tribunal was not required to decide afresh on the factual findings. The court upheld the Tribunal’s conclusion that the decision was fair and reasonable, as the evidence supported the Trustee’s finding that the applicant’s incapacity was related to his pre-existing schizophrenia. Consequently, the applicant’s appeal was dismissed, and the applicant was ordered to pay the respondent’s costs.

Orders

Orders of the court

1. The application be dismissed.

2. The applicant pay the second respondent’s costs to be taxed, if not otherwise agreed.

Background

Background to the litigation

A party may appeal to the Federal Court, on a question of law, from a determination of the Tribunal: s 46 Superannuation (Resolution of Complaints) Act 1993 (Cth) (“the Act”). Such proceedings come before the Court for hearing and determination in the exercise of its original, rather than appellate, jurisdiction: Cullinane v Mercer Benefit Nominees Ltd (2006) 152 FCR 1.Background Facts The background facts to this matter can be found in the Tribunal’s Record of Decision, and the Statements of Facts, Issues and Contentions of the parties. They may be summarised as follows:· in 1994 the applicant was diagnosed with schizophrenia and commenced ongoing treatment· in September 2001, the applicant commenced employment with the Department of Primary Industries in Queensland as a field assistant in the Department’s Fire Ant Eradication Program· on 10 September 2001 the applicant joined the QSuper Accumulation Account (the Fund). The Fund automatically provided him with 4 units of death and Total and Permanent Disablement (“TPD”) insurance cover· in December 2001 the applicant applied to the Fund to increase his insurance cover to 17 units of death and TPD cover. This was approved effective 10 December 2001· so far as relevant, cl 6.2 of the QSuper Trust Deed’s Insurance Terms provides as follows:“No insurance benefit will be paid for a claim unless:...(b) (i) the member has been an insured member for fewer than 10 continuous years; and(ii) the member lodged a personal medical statement at or about the date on which the member became an insured member; and(iii) the board is of the opinion that the total and permanent disablement ... was not related to a condition that was disclosed on the personal medical statement or which in the opinion of the board should reasonably have been disclosed on the personal medical statement; or(c) (i) the member has been an insured member for fewer than 10 continuous years; and(ii) the member did not lodge a personal medical statement at or about the date on which the member became an insured member, and(iii) it is established to the satisfaction of the board that the total and permanent disablement ... was not related to a condition that ought reasonably to have been disclosed had a personal medical statement been submitted at or about the date on which the member became an insured member.”· there is some lack of clarity as to whether the applicant had disclosed his schizophrenia to the Fund prior to joining. The applicant claims he did so orally over the telephone and in a personal medical statement which was posted to QSuper, however it appears that this medical statement was not received. In any event this is not a relevant issue in this case as no insurance benefit is payable for TPD relating to a pre-existing medical condition irrespective whether it was disclosed· on 2 January 2002, while inspecting a property for fire ants, the applicant injured his right foot after running away from two dogs he thought were chasing him· the applicant ceased work on 8 July 2002 after anticipation of a repeat experience left him anxious and stressed to such a degree that he was unable to cope with his work· the applicant applied for a TPD benefit on 12 February 2003· a delegate of the Trustee of the Fund determined that the TPD was because of his pre-existing schizophrenia and declined to pay the benefit in accordance with its rules relating to pre-existing illnesses· by letter dated 26 May 2003 the applicant was informed of the Trustee’s decision· the applicant sought to appeal this decision on 17 June 2003 and then subsequently withdrew his appeal on 17 July 2003. However, by letter dated 19 May 2004 he renewed his appeal and provided various reports in support of the appeal· on 23 June 2003 the applicant was retired on ill health grounds· on 31 August 2004 the Trustee reviewed its decision at the applicant’s request, and advised the applicant that the previous decision of the delegate of the Trustee was affirmed· the applicant appealed the Trustee’s decision to the Tribunal on 5 November 2004 pursuant to s 14 of the Act, on the basis that the decision of the Trustee was unfair or unreasonable· the Tribunal affirmed the Trustee’s decision in its decision of 2 October 2006· the amount in dispute is the insured TPD benefit of $991,200.The decision of the Tribunal

Evidence

Evidence Before The Court

In summary, the second respondent submitted:· in exercising its powers under s 37(1) of the Act, the Tribunal stands in the shoes of the decision-maker: National Mutual Life Association of Australia Ltd v Campbell (2000) 99 FCR 562· the task of the Tribunal is that it must first consider whether the decision complained of was fair and reasonable in the circumstances. The words “fair” and “reasonable” are of broad content and purpose: Flexiplan Australia Ltd v Pankhurst [2001] FCA 1535· the Tribunal noted that the issue to be determined was whether the decision of the Trustee to refuse payment of the TPD benefit, on the grounds that the applicant’s total and permanent disability was caused by a condition related to his pre-existing schizophrenia, was fair and reasonable in its operation to the applicant in the circumstances· in relation to the medical evidence before it, the Tribunal noted the considerable variation in the clinical history provided by the applicant to the various medical experts, and the competing medical opinions relevant to the applicant’s case· the Tribunal ultimately concluded that it was satisfied that the Trustee’s decision to decline payment of the TPD benefit to the applicant on the grounds that, on the balance of probabilities his medical condition, be it PTSD or an anxiety disorder, was related to the pre-existing, long-standing paranoid schizophrenia, was fair and reasonable given the conflicting psychiatric opinions. After reviewing all the available medical evidence, the Tribunal also expressed the opinion that the applicant’s PTSD or anxiety disorder was sufficiently related to his schizophrenia such as to render the decision of the Trustee fair and reasonable in its operation in relation to the applicant in the circumstances· contrary to the submission of the applicant, the Tribunal did not misdirect itself as to the fundamental issue it was obliged to consider, namely whether the decision of the second respondent was fair and reasonable in the circumstances· the reasons of the Tribunal must be read as a whole and fairly· it was not necessary for the Tribunal to decide afresh all findings of fact made by the second respondent· it was open for the Tribunal to conclude that favourable opinions expressed in the expert medical reports were outweighed by countervailing considerations including the opinions of Dr Butler and Dr Reddan· the Tribunal has examined the medical evidence, was fully aware of the task it had to embark on, and had regard to all the evidence in reaching its decision· the onus is on the applicant to demonstrate that there has been an error of law. The Tribunal does not commit an error of law because it finds facts wrongly or upon a doubtful basis or because it adopts some unsound or questionable reasoning at the end of the day· the second respondent in effect relied upon the findings of Dr Reddan and Dr Butler that the conditions complained of were not related to work· the second respondent relied on the following comments of Allsop J in Retail Employees Superannuation Pty Ltd v Crocker (2001) 48 ATR 359 at 367, which were endorsed by the Full Court in Cameron v Board Trustees of the State Public Sector Superannuation Scheme (2003) 130 FCR 122:“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.”Evidence before the Tribunal

Decision

Reasons for decision

COLLIER J (dissent)
The background facts to this matter can be found in the Tribunal’s Record of Decision, and the Statements of Facts, Issues and Contentions of the parties. They may be summarised as follows:· in 1994 the applicant was diagnosed with schizophrenia and commenced ongoing treatment· in September 2001, the applicant commenced employment with the Department of Primary Industries in Queensland as a field assistant in the Department’s Fire Ant Eradication Program· on 10 September 2001 the applicant joined the QSuper Accumulation Account (the Fund). The Fund automatically provided him with 4 units of death and Total and Permanent Disablement (“TPD”) insurance cover· in December 2001 the applicant applied to the Fund to increase his insurance cover to 17 units of death and TPD cover. This was approved effective 10 December 2001· so far as relevant, cl 6.2 of the QSuper Trust Deed’s Insurance Terms provides as follows:“No insurance benefit will be paid for a claim unless:...(b) (i) the member has been an insured member for fewer than 10 continuous years; and(ii) the member lodged a personal medical statement at or about the date on which the member became an insured member; and(iii) the board is of the opinion that the total and permanent disablement ... was not related to a condition that was disclosed on the personal medical statement or which in the opinion of the board should reasonably have been disclosed on the personal medical statement; or(c) (i) the member has been an insured member for fewer than 10 continuous years; and(ii) the member did not lodge a personal medical statement at or about the date on which the member became an insured member, and(iii) it is established to the satisfaction of the board that the total and permanent disablement ... was not related to a condition that ought reasonably to have been disclosed had a personal medical statement been submitted at or about the date on which the member became an insured member.”· there is some lack of clarity as to whether the applicant had disclosed his schizophrenia to the Fund prior to joining. The applicant claims he did so orally over the telephone and in a personal medical statement which was posted to QSuper, however it appears that this medical statement was not received. In any event this is not a relevant issue in this case as no insurance benefit is payable for TPD relating to a pre-existing medical condition irrespective whether it was disclosed· on 2 January 2002, while inspecting a property for fire ants, the applicant injured his right foot after running away from two dogs he thought were chasing him· the applicant ceased work on 8 July 2002 after anticipation of a repeat experience left him anxious and stressed to such a degree that he was unable to cope with his work· the applicant applied for a TPD benefit on 12 February 2003· a delegate of the Trustee of the Fund determined that the TPD was because of his pre-existing schizophrenia and declined to pay the benefit in accordance with its rules relating to pre-existing illnesses· by letter dated 26 May 2003 the applicant was informed of the Trustee’s decision· the applicant sought to appeal this decision on 17 June 2003 and then subsequently withdrew his appeal on 17 July 2003. However, by letter dated 19 May 2004 he renewed his appeal and provided various reports in support of the appeal· on 23 June 2003 the applicant was retired on ill health grounds· on 31 August 2004 the Trustee reviewed its decision at the applicant’s request, and advised the applicant that the previous decision of the delegate of the Trustee was affirmed· the applicant appealed the Trustee’s decision to the Tribunal on 5 November 2004 pursuant to s 14 of the Act, on the basis that the decision of the Trustee was unfair or unreasonable· the Tribunal affirmed the Trustee’s decision in its decision of 2 October 2006· the amount in dispute is the insured TPD benefit of $991,200.The decision of the Tribunal

Ratio Decidendi

Legal Principle Established

Established by:

The Tribunal noted that there had been considerable variation in the clinical history provided by the applicant to the reporting health practitioners, and that there was a dissent of opinion among the reporting psychologist and psychiatrists both to the diagnosis of the applicant’s post-injury psychological condition (although all acknowledged his pre-existing paranoid schizophrenia) and the psychological cause of his total incapacity for work. In summary, the Tribunal noted that:· Ms Jooste and Dr de Leacy had diagnosed PTSD attributable solely to the incident of 2 January 2002· Dr Butler and Dr Reddan had diagnosed an anxiety disorder, and Dr Butler also diagnosed a phobia to dogs, both doctors rejecting the diagnosis of PTSD.Consideration The Tribunal is required by s 37(6) of the Act to affirm a relevant decision of a Trustee if it is satisfied that the decision was fair and reasonable in the circumstances. Relevant principles as to fairness and reasonableness in this context include the following:· the words “unfair” and “unreasonable” as used in the Act are of broad content and purpose, and not to be read restrictively: National Mutual Life v Campbell 99 FCR at 571· whether a decision, or its operation in relation to a person, is fair and reasonable in the circumstances involves a value judgment, the making of which is committed to the Tribunal: National Mutual Life v Campbell 99 FCR at 570-571· where the Tribunal forms the view that the decision was fair and reasonable it must affirm the decision even though the Tribunal might not itself have made the same decision (National Mutual Life Association of Australia v Scollary [2002] FCA 695 at [37], Colonial Mutual Life Assurance Society Ltd v Brayley [2002] FCA 1333 at [31])· a decision under review pursuant to s 37 may be one which so involves elements of fact, degree, opinion or value judgement that different minds can legitimately differ in reaching a decision. That is why the Tribunal’s task is not to ask itself whether such a decision was the correct or preferable decision, nor to engage in ascertaining generally the rights of the parties, nor 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, as to whether the decision was - recognising the overriding framework given by the rules of the fund - unfair or unreasonable (Allsop J in Crocker at ATR 366, 367, the Full Court in Cameron 130 FCR at 133)· as explained by Branson J in Brayley [2002] FCA 1333 at [32], if the Tribunal is not satisfied that the decision was fair and reasonable in the circumstances, ss 37(1) and (2) require the Tribunal put itself in the position of the trustee and, in an appropriate case, the insurer and other relevant decision-maker (National Mutual Life v Campbell 99 FCR at 570; Briffa v Hay (1997) 75 FCR 428 at 443-445). From that position or positions the Tribunal must determine whether, consistently with:(a)the general law;(b)the governing rules of the fund concerned; and(c)if a contract of insurance between the insurer and a trustee is involved, the terms of the contract,the unfairness or unreasonableness that the Tribunal has identified in respect of the trustee’s decision can be addressed in whole or in part· a decision of a trustee or insurer as varied by the Tribunal, or a decision of the Tribunal in substitution for a decision of the trustee or insurer, is for all purposes (other than the making of a complaint about the decision) taken to be a decision of the trustee or insurer and, on the coming into operation of the determination by the Tribunal, unless the Tribunal otherwise orders, has effect on and from the day on which the original decision had effect: s 41(3)· the Tribunal is obliged to consider the evidence before it by way of hearing de novo: Seafarers’ Retirement Fund Pty Ltd v Oppenhuis (1999) 94 FCR 594 at 598-599. Indeed in reviewing a decision of a Trustee of a fund, the Tribunal has all the powers, obligations and discretions that are conferred on the trustee: s 37(1)(a). In exercising its powers of review, the Tribunal is not restricted to the documents which were before the Trustee, nor is it confined to the manner in which the applicant addressed the subject matter: Commonwealth Superannuation Scheme Board v Dexter (2004) 142 FCR 151 at 166-167, Crocker 48 ATR 387-388, Oppenhuis 94 FCR at 599, HEST Australia Ltd v Sykley (2005) 147 FCR 248 at 259.