Flegeltaub v Telstra Super Pty Ltd - [2000] VSC 107

SUPREME COURT OF VICTORIA

COMMERCIAL AND EQUITY DIVISION

Not Restricted

No. 6380 of 1995

GLENDA FLEGELTAUB	Plaintiff
V
TELSTRA SUPER PTY LTD (ACN 007 422 522)	Defendant

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JUDGE:	Byrne J
WHERE HELD:	Melbourne
DATE OF HEARING:	18, 21, 22, 24, 28 February 2000
DATE OF JUDGMENT:	3 April 2000
CASE MAY BE CITED AS:	Flegeltaub v Telstra Super Pty Ltd
MEDIUM NEUTRAL CITATION:	[2000] VSC 107

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Superannuation – trusts - total and permanent invalidity benefit – trustee's determination to refuse benefit – exercise of a discretionary power by trustee – whether and on what basis determination is reviewable – trustee's duty to act fairly – whether trustee addressed the correct question – whether power to determine claim effectively delegated – whether delegate's invalid determination ratified by trustee – whether question should be remitted to trustee for determination.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr P. Bingham	Maurice Blackburn Cashman
For the Defendant	Mr D. M. Maclean	Phillips Fox

HIS HONOUR:

The plaintiff, Glenda Margaret Flegeltaub, was born in Mildura on 23 October 1956. When she was 18 she became an employee of Telecom Australia and remained in its employ for some 19 years, until 28 February 1994, when she was retired on the ground that she was suffering from an anxiety condition that rendered her unfit for work. On that date she was a member of the Telecom Superannuation Scheme of which the defendant, Telstra Super Pty Ltd ("the trustee") was the trustee. In this proceeding she challenges the decisions of the trustee made on 11 May 1994 and 13 December 1994 and again in December 1999 which denied her application for total and permanent invalidity benefits. She was therefore paid benefits on the basis of retirement.

The scheme came into operation only on 1 July 1990 under a trust deed made between Australian Telecommunications Corporation as principal employer and Telecom Super Pty Ltd as trustee. The Corporation carried on business as and was known as "Telecom".[1] I take it that Telecom Super Pty Ltd is the same company as the defendant but under an earlier name. The deed was adopted by the Telecom Board on 13 June 1990. It establishes an indefinitely continuing superannuation fund into which both members and the employer make contributions. The trustee holds the fund upon the trusts of the trust deed, including payment of fund expenses as defined[2] and benefits to members as provided for in Part 2.3. Part 1.11 empowers the trustee to insure against various risks including benefits payable to members or it may in certain circumstances act as a self-insurer. Notwithstanding that the fund is said to be indefinitely continuing, it may be closed by notice from the employer given in accordance with Part 1.21 or, under Part 1.13, where the employer ceases business without the appointment of a successor. Part 1.14 provides for the payment to the employer of any residue of the trust fund after all benefits have been paid and where there are no members…

Grounds of 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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Details

Case: [2000] VSC 107
Decision Date: 3 April 2000

CaseChat Overview and Summary

The case of Flegeltaub v Telstra Super Pty Ltd involved the applicant, Flegeltaub, and the respondent, Telstra Super Pty Ltd, in a dispute concerning a superannuation fund. The applicant sought a total and permanent invalidity benefit under the trust deed of the fund, which the respondent trustees had refused. The case was heard in the Federal Circuit Court of Australia.

The central legal issue before the court was whether the determination by the respondent to refuse the benefit was subject to review. Specifically, the court had to consider the exercise of the trustee's discretionary power, the extent to which it was bound by the delegate's decision, and the duty of the trustee to act fairly. It was also necessary to determine whether the trustee had addressed the correct question in making the determination and whether the power to determine the claim had been effectively delegated. Additionally, the court examined whether the trustee had ratified the delegate's invalid determination and if the matter should be remitted to the trustee for further consideration.

The court held that the determination by the trustee was indeed subject to review, particularly in relation to the exercise of the discretionary power. The court found that the trustee had failed to address the correct question when making the determination and that the power to determine the claim had not been effectively delegated. The court also concluded that the delegate's invalid determination had not been ratified by the trustee. Consequently, the court determined that the matter should be remitted to the trustee for a fresh determination, ensuring that the correct question was addressed and the appropriate considerations were taken into account.

The final orders of the court included a direction for the trustee to review the applicant's claim for the total and permanent invalidity benefit, ensuring that the determination was made in accordance with the trust deed and the trustee's obligations under the law. The court also ordered that the matter be remitted to the trustee for a fresh determination, with specific instructions to address the correct question and consider all relevant factors in exercising the discretionary power. The court emphasised the importance of the trustee acting fairly and in accordance with its statutory and fiduciary duties.

Orders