Finch v Telstra Super Pty Ltd [2010] HCA 36 20 October 2010 M5/2010
ORDER
1.Special leave to appeal granted.
2.Leave to file proposed amended draft notice of appeal granted.
3.Proposed amended draft notice of appeal treated as filed in the appeal and appeal treated as instituted and heard instanter and allowed with costs.
4.Set aside the orders of the Court of Appeal of the Supreme Court of Victoria made on 23 December 2009 and 23 February 2010, and in their place order that the appeal to that Court from the order of Byrne J made on 28 November 2008 be dismissed with costs.
On appeal from the Supreme Court of Victoria
Representation
J P Brett with M C Wall for the applicant (instructed by Arnold Thomas & Becker)
A G Uren QC with R J Harris for the respondent (instructed by Freehills)
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.
CATCHWORDS
Finch v Telstra Super Pty Ltd
Superannuation – Construction of superannuation trust deed – Applicant applied for total and permanent invalidity ("TPI") benefit under superannuation trust deed – Definition of TPI required continuous absence from "all active Work" for six months – Whether "all active Work" limited to work for employer responsible for superannuation fund ("Telstra") – Whether period of absence assessed at date applicant left Telstra or date of trustee's determination.
Trusts – Superannuation – Review of decisions of trustees of superannuation trusts – Trustee required to determine whether applicant was "unlikely ever to engage in any gainful Work" – Whether Karger v Paul [1984] VR 161 applies to superannuation trusts – Whether trustee's decision discretionary – Whether trustee gave genuine consideration to application – Whether trustee failed to comply with duties to make inquiries.
Practice and procedure – Whether Court should remit matter to trustee – Whether trustee incapable of forming opinion satisfactorily – Whether only one decision open.
Words and phrases – "all active work", "genuine consideration", "total and permanent invalidity".
FRENCH CJ, GUMMOW, HEYDON, CRENNAN AND BELL JJ. The parties to this application for special leave to appeal are in controversy about the construction of a superannuation trust deed and the legal principles affecting control of decisions by its trustee. The applicant, Alan Michael Finch, is a beneficiary of the trust. The orders of which he complains are orders of the Court of Appeal of the Supreme Court of Victoria (Buchanan and Redlich JJA and Hansen AJA)[1] allowing an appeal from orders of Byrne J which were in the applicant's favour[2]. The application was argued as on an appeal.
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Finch v Telstra Super Pty Ltd [2010] HCA 36
Case
[2010] HCA 36
Decision Date
CaseChat Overview and Summary
The applicant, Finch, sought a Total and Permanent Invalidity (TPI) benefit under the Telstra Superannuation Scheme, regulated by a Trust Deed. The respondent, Telstra Super Pty Ltd, was the trustee of the Scheme. Finch's claim was rejected by the Trustee on two occasions. The Supreme Court of Victoria, at first instance, remitted the matter back to the Trustee, finding that the Trustee had failed to give genuine consideration to whether Finch was unlikely ever to engage in gainful work. However, the Court of Appeal of Victoria overturned this decision, holding that Finch did not meet the definition of TPI under the Deed. Finch then sought special leave to appeal to the High Court of Australia.
The High Court was required to determine two principal issues. Firstly, the proper construction of the definition of "Total and Permanent Invalidity" in the Trust Deed, specifically whether the requirement of continuous absence from "all active Work" for six months was to be assessed at the date the applicant ceased employment with Telstra or at the date of the Trustee's determination, and whether "all active Work" was limited to work for Telstra. Secondly, the Court considered whether the Trustee had given genuine consideration to the applicant's claim, particularly in light of medical evidence suggesting he was unlikely to ever engage in gainful work, and whether the Trustee had fulfilled its duty to make necessary inquiries.
The High Court allowed the appeal, setting aside the orders of the Court of Appeal. The Court held that the definition of TPI in the Deed required the Trustee to form an opinion as to whether the member was unlikely ever to engage in gainful work. This opinion was to be formed after consideration of all relevant information. The Court found that the Trustee had failed to give genuine consideration to this crucial aspect of the applicant's claim, particularly in light of strong medical evidence. The Court also determined that the period of absence from "all active Work" was to be assessed at the date of the Trustee's determination, not solely at the date of cessation of employment with Telstra, and that "all active Work" was not confined to employment with Telstra.
Consequently, the High Court ordered that the appeal to the Court of Appeal be dismissed with costs, effectively reinstating the decision of the trial judge to remit the matter to the Trustee for reconsideration.
Orders
Orders of the court
1. Special leave to appeal granted.
2. Leave to file proposed amended draft notice of appeal granted.
3. Proposed amended draft notice of appeal treated as filed in the appeal and appeal treated as instituted and heard instanter and allowed with costs.
4. Set aside the orders of the Court of Appeal of the Supreme Court of Victoria made on 23 December 2009 and 23 February 2010, and in their place order that the appeal to that Court from the order of Byrne J made on 28 November 2008 be dismissed with costs.
Background
Background to the litigation
The applicant was born male. He was initially known as "Alan Finch". For some years before 1988 the applicant lived as a female under the name "Helen Finch". In 1988, at the age of 21, the applicant underwent surgery to change gender from male to female. On 1 October 1992 the applicant began employment under the name "Helen Finch" with Telstra Corporation Ltd ("Telstra"). The surgery turned out to have been extremely unsatisfactory in the sense that the applicant became very distressed about the move to female gender. On 30 September 1996 the applicant took sick leave from Telstra. In October 1996 the applicant reassumed a male personality, name and dress. He underwent surgery to reverse the gender change as far as possible. He became severely depressed, suffered from adjustment disorder and was sensitive about his appearance. On 24 March 1997 he returned to work with Telstra as "Alan Finch". On 23 January 1998 he left the employment of Telstra. From 22 February 1999 until 26 March 1999 he worked for Foxtel: during that time he took two weeks' sick leave. From 29 November 1999 until 16 May 2000 he worked part-time for Qantas: during that time he took over two weeks' sick leave. The procedural background In consequence of his employment with Telstra, the applicant was a member of a superannuation fund, the Telstra Superannuation Scheme ("the Scheme"). The Scheme is regulated by a Trust Deed ("the Deed"). For more than 10 years, since 19 May 2000, the applicant has been seeking a benefit under cl 2.3.3 of the Deed – the benefit payable for total and permanent invalidity[3]. The respondent, Telstra Super Pty Ltd, is the trustee of the Scheme ("the Trustee"). [3]That clause is set out below at [7]. On 21 March 2002 the relevant committee of the Trustee made what was called in the courts below the "first determination". It rejected the applicant's claim for a total and permanent invalidity benefit. On 10 September 2002 the applicant requested a reassessment by the Trustee. On 20 March 2003, the relevant committee again dismissed the applicant's claim in the "second determination". The applicant challenged the two determinations denying his claims in the Supreme Court of Victoria.Byrne J's decision The trial judge in the Supreme Court of Victoria, Byrne J, remitted the matter to the Trustee. He did so because he set both determinations aside on the basis that the second replaced the first, and the second was flawed. The flaw arose because the Trustee had failed to comply with its obligations to give genuine consideration to one question posed by the applicant's second application. The question was whether the applicant was unlikely ever to engage in gainful work. The applicant had relied on strong medical opinion in his favour to demonstrate that he was unlikely ever again to engage in gainful work. On the other hand, the applicant had worked since the reverse gender procedures – for some months with Telstra, and thereafter for one month with Foxtel and for five months with Qantas. The Trustee relied on these periods of work to show that the applicant was likely to engage in employment in the future. Byrne J considered that, in view of the strength of the medical opinion in favour of the applicant, the Trustee ought to have made further inquiry into three matters. One comprised the circumstances of the applicant's last months with Telstra. The second comprised the circumstances of his employment thereafter with Foxtel and Qantas. The third was a statement by the applicant to the Chief Executive Officer of the Trustee that his employment with Qantas was "a real job"[4]. [4]Finch v Telstra Super Pty Ltd [2008] VSC 481 at [45]-[53].The Court of Appeal's decision
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
FRENCH CJ, GUMMOW, HEYDON, CRENNAN AND BELL JJ
The trial judge in the Supreme Court of Victoria, Byrne J, remitted the matter to the Trustee. He did so because he set both determinations aside on the basis that the second replaced the first, and the second was flawed. The flaw arose because the Trustee had failed to comply with its obligations to give genuine consideration to one question posed by the applicant's second application. The question was whether the applicant was unlikely ever to engage in gainful work. The applicant had relied on strong medical opinion in his favour to demonstrate that he was unlikely ever again to engage in gainful work. On the other hand, the applicant had worked since the reverse gender procedures – for some months with Telstra, and thereafter for one month with Foxtel and for five months with Qantas. The Trustee relied on these periods of work to show that the applicant was likely to engage in employment in the future. Byrne J considered that, in view of the strength of the medical opinion in favour of the applicant, the Trustee ought to have made further inquiry into three matters. One comprised the circumstances of the applicant's last months with Telstra. The second comprised the circumstances of his employment thereafter with Foxtel and Qantas. The third was a statement by the applicant to the Chief Executive Officer of the Trustee that his employment with Qantas was "a real job"[4]. [4]Finch v Telstra Super Pty Ltd [2008] VSC 481 at [45]-[53].The Court of Appeal's decision The Court of Appeal of the Supreme Court of Victoria allowed the Trustee's appeal, set aside Byrne J's orders and ordered judgment for the Trustee with costs. The Court of Appeal held that the applicant's claim did not fall within cl 2.3.3 of the Deed because he did not satisfy a condition stated in the definition of "Total and Permanent Invalidity". The condition was that the applicant be absent from active work for at least six months. In its view, which differed from that of Byrne J, the condition had to be satisfied as at the date when the applicant ceased to work for Telstra, and the necessary absence from work was absence from work at Telstra: it did not suffice that there had been six months' absence by the date of the Trustee's determination[5]. The question whether the Trustee had given genuine consideration to the unlikelihood of the applicant working therefore did not arise. Nevertheless, the Court of Appeal expressed disagreement with Byrne J's conclusion in that respect[6]. Both issues arise in this Court. It is convenient to start with the first issue.[5]Telstra Super Pty Ltd v Finch [2009] VSCA 318 at [58]-[63].[6]Telstra Super Pty Ltd v Finch [2009] VSCA 318 at [65]-[78].The construction of the Deed The key provisions. Division 2 of the Deed dealt with contributions and benefits, and Pt 2.3 dealt with benefits. Part 2.3 of the Deed set out five types of benefit: Retirement benefits, Death benefits, Total and Permanent Invalidity benefits, Redundancy benefits and Withdrawal benefits. Clause 2.3.3 dealt with Total and Permanent Invalidity benefits. The material part of it provided:"if a Member ceases to be an Employee during a period of Division 2 Membership because of Total and Permanent Invalidity, there is payable to the Member from the Fund a lump sum benefit of an amount equal to the benefit which would have been payable under clause 2.3.2 if the Member had died on the date on which the Member ceased to be an Employee or any other date agreed between the Trustee and the Principal Employer [Telstra] from time to time either generally or in any particular case."Clause 2.3.2 set out a formula for determining benefits which rested on, inter alia, the Member's final average salary and the years yet to elapse between the cessation of employment and attainment of the age of 60. It was common ground that the applicant was a Division 2 Member. The dispute between the parties centres on the definition of "Total and Permanent Invalidity" in cl 2.1.2. The material part was as follows:"'Total and Permanent Invalidity' means, in relation to a Member, disablement as a result of which –(a)unless otherwise agreed between the Trustee and the Principal Employer from time to time either generally or in any particular case, the Member has been continuously absent from all active Work for a period of at least six months and has been required by the Employer [in the applicant's case, Telstra] to participate in a Rehabilitation Programme; and(b)in the opinion of the Trustee after consideration of any information, evidence and advice provided to the Trustee by the Employer and any other information, evidence and advice the Trustee may consider relevant, the Member has ceased to be an Employee and is unlikely ever to engage in any gainful Work for which the Member is for the time being reasonably qualified by education, training or experience".Below, these paragraphs will be called "limb (a)" and "limb (b)". "Work" was defined in cl 1.1.1 as meaning "engagement in any business, trade, profession, vocation, calling, occupation or employment." There was no dispute about the applicant's satisfaction of the Rehabilitation Programme requirement in limb (a). The dispute was whether the applicant satisfied the requirement in limb (a) of having been continuously absent from "all active Work" for six months.
Ratio Decidendi
Legal Principle Established
Established by:
FRENCH CJ, GUMMOW, HEYDON, CRENNAN AND BELL JJ