Frost v Alcoa of Australia Retirement Plan Pty Ltd
[2011] VCC 1229
•26 August 2011
| IN THE COUNTY COURT OF VICTORIA | Revised |
Not Restricted
AT WARRNAMBOOL
CIVIL DIVISION
DAMAGES AND COMPENSATION
GENERAL DIVISION
Case No. CI-10-02203
| JAMIE GLEN FROST | Plaintiff |
| v | |
| ALCOA OF AUSTRALIA RETIREMENT PLAN PTY LTD | Defendant |
---
| JUDGE: | HIS HONOUR JUDGE O'NEILL |
| WHERE HELD: | Warrnambool |
| DATE OF HEARING: | 17 and 18 August 2011 |
| DATE OF JUDGMENT: | 26 August 2011 |
| CASE MAY BE CITED AS: | Frost v Alcoa of Australia Retirement Plan Pty Ltd |
| MEDIUM NEUTRAL CITATION: | [2011] VCC 1229 |
REASONS FOR JUDGMENT
---
Catchwords: Claim for total and permanent disablement under Retirement Plan – determination of directors of trustee to refuse application – whether trustees gave proper and genuine consideration – whether trustees ought to have made decision on the basis of material available – determination void.
---
| APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr I R Fehring | Stringer Clark |
| For the Defendant | Mr P Bingham | Mallesons Stephen Jaques |
| HIS HONOUR: |
1 This is an application to review a decision of the directors of the Alcoa of Australia Retirement Plan (“the fund”) of 19 November 2009 to reject the plaintiff’s claim for a total and permanent disablement (“TPD”) benefit. The trustee of the fund is the defendant.
2 The issue is whether that decision should be declared void and the question of whether the plaintiff is entitled to a TPD benefit be remitted to the trustees for further determination.
Relevant Background
3 The case proceeded on the basis largely of documentary evidence, although the defendant called David John Thomas, a director of the trustee.
4 The plaintiff was born on 13 September 1967. He commenced work at the Alcoa smelter plant at Portland (“Alcoa”) on 14 June 1988 when he was twenty years of age. He worked for Alcoa for eighteen years until 22 December 2006, when his employment was terminated. Thus, throughout his working life, he has worked only with Alcoa.
5 There was no evidence given by the plaintiff as to his duties at Alcoa, but according to the evidence of Mr Thomas, the plaintiff worked in the anode and the green mill areas. Although a description of work undertaken in those areas was given by Mr Thomas,[1] there was no precise detail of the various tasks undertaken by the plaintiff. I accept, however, that the plaintiff’s work was largely manual. According to the medical report of Mr John O’Brien of 24 February 2009,[2] the plaintiff was involved in labouring duties, including driving a forklift.
[1] Transcript (“T”) 33-34
[2] Court Book (“CB”) 127
6 According to the history provided to that practitioner, in late 2001, the plaintiff injured his low-back when he jumped from a forklift and suffered severe pain, mainly to the right side. He received medical treatment, including physiotherapy, and was off work for approximately six weeks. He returned on modified duties, although some mild low-back pain persisted.
7 In February 2004, the plaintiff was lifting his disabled fourteen-year-old daughter out of a bath and slipped on the floor, jarring his lower back. Again, he suffered acute right-sided low-back pain and on this occasion with pain radiating into his right buttock and thigh. Again, he sought medical treatment, and the pain eased, with him returning to modified duties.
8 In May 2005, he attempted to lift a duct cover in the course of his employment and suffered a recurrence of back pain, including pain into the buttock and thigh. Again, he received physiotherapy treatment. The pain persisted and, as a result, he was put off work in March 2006. His employment was terminated on 22 December 2006 as a result of his back condition. In the course of his treatment, the plaintiff was seen on a number of occasions by Mr Paul Kierce, orthopaedic surgeon, and was treated by his general practitioner, Mr Das.
9 By “Claim for Total and Permanent Disablement Benefit Member Application Form” (“the application form”), dated 8 July 2009,[3] the plaintiff made application to the fund for TPD benefit. Under “Nature of Disability”, the plaintiff stated:
“Previous episodes of back pain since 2001. In 2004 while lifting my daughter and in 2005 while at work. Ceased work in March 2006 due to pain. Employment terminated in December 2006.”
[3] CB 131
10 Under the heading “Attending Medical Doctors and Specialists”, the plaintiff said:
•
Mr Das, general practitioner – consultations: 29 December 2001 and “regularly since then”;
•
Mr Kierce, orthopaedic surgeon – consultations: 9 June 2004, 3 August 2005, 13 April 2006, 27 April 2006 and 30 May 2006;
• Mr O’Brien, orthopaedic surgeon – consultation: 19 December 2007 11 The application form authorised medical practitioners to provide the defendant with medical reports and information relevant to the claim. The form further authorised Alcoa to provide the trustees with any medical reports in its possession. The form further stated:
“I understand that in making this application, it is my contention that I can no longer perform any work for which I am reasonably suited for at Alcoa, nor indeed in any other external workplace.”
12 The application form was supported by a statutory declaration declaring the contents to be true and correct. Annexed were reports of Mr O’Brien of 24 February 2009, and Mr Das of 7 June 2009.
13 The plaintiff’s application was considered at a meeting of the trustees on 27 August 2009.[4] According to the evidence of Mr Thomas, the directors were Mr John Phillips, a prominent corporate director and former Governor of the Reserve Bank; four elected member representatives, generally union members; and three employer representatives, generally from Alcoa management. According to the minutes of that meeting,[5] a number of TPD claims were considered, including the plaintiff’s. The minutes recited:
“New claim – request medical evidence at time of resignation.”
[4] CB 146
[5] CB 148
14 By letter dated 31 August 2009, the fund wrote to the plaintiff’s solicitors (who had made the original application on behalf of the plaintiff), relevantly stating:
“Unfortunately the trustee was unable to form a judgment of your claim with the medical evidence provided, as these medical reports outline your present condition. The trustee’s task is to assess your condition at the point in time when your service with Alcoa ended (i.e. 22 December 2006). In order for the trustee to determine if your claim satisfies the definition of total and permanent disablement, it requires evidence that demonstrates your condition at the time of termination. I consider that further reports from these doctors (if provided) along with the rest of your claim documents will be re-considered by the trustee as soon as practicable … . “
15 In response, the solicitors for the plaintiff wrote by letter dated 12 October 2009,[6] enclosing a further medical report of Mr Kierce dated 5 June 2006.
[6] CB 137
16 When the matter was first considered at the meeting of 27 August 2009, the directors had a “Claim for Total and Permanent Disablement Benefit Employer Report” (“the employer report”) dated 12 August 2009. That report, under the heading “Employee’s Employment and Education History”, stated the following:
“Education/Qualification – not available.
Work Experience – not available.”
17 Further, under the heading “Nature of Disability”, the employer stated:
“Jamie reported an injury to his back on 29 December 2001 after slipping on coke dust when getting off a forklift. Jamie had a further incident on 13 May 2005 when he experienced pain in his back after lifting a side main cover weighting approximately 15 kilograms. Following this incident Jamie was absent from work from 7 June 2005 when he returned to work on restricted duties until October 2005, when he returned to normal duties, which he continued until 15 March 2005 (this should be 2006). From 16 March until his termination on 22 December 2006 Jamie remained off work as a result of his condition.”[7]
[7] CB 139
18 The directors next met on 19 November 2009. According to the agenda circulated a week or so before the meeting, reference was made to the plaintiff’s application and his entitlement (if approved) to the following benefits:[8]
[8] CB 153
Resignation benefit $156,128 TPD benefit $403,088 Ill-health benefit $185,017
19 According to the minutes of the directors meeting of 19 November 2009,[9] the plaintiff’s application for TPD benefit was declined. The Ill-health Benefit was accepted.
[9] CB 160
20 There was no detail in the agenda, nor the minutes, for either the August or November meetings as to what was discussed and considered by the directors in respect of the plaintiff’s application. According to the evidence of Mr Thomas, the non-union and management directors toured Alcoa’s plants on a regular basis.[10] Mr Thomas knew the plaintiff, as they had been to school together. He said he was aware of the duties undertaken by the plaintiff at Alcoa and said that in discussion amongst the directors, it was his usual practice to give a background of the person making the application and other information which may not be known to the directors. He said the directors were aware of the work carried out in the anode area and green mill area.[11]
[10] T 29
[11] T 35-36
Medical Reports in Support of the Application
21 By the meeting of November 2009, in addition to the information provided in the application form and the employer report, a number of medical reports were considered.
22 According to the report of Mr Kierce of 5 June 2006,[12] he first saw the plaintiff on 9 June 2004 at the referral of Mr Das. He gave a history of having hurt his back some three years before, then having treatment and time off work. He gave a further history of the incident in February 2004, when he lifted his daughter and suffered an aggravation of his back problem. Mr Kierce reviewed a CT scan of the lumbar spine which showed minimal degenerative changes and slight spondylolisthesis of the fifth lumbar vertebra on the first sacral vertebra. He did not see any evidence of bulging on the scan. He advised the plaintiff to cease smoking, get fit by walking, swimming or bike riding, avoid work involving prolonged bending or lifting and avoid driving machinery over rough terrain. At that point, he considered the plaintiff fit to return to work with the restrictions as stated.
[12] CB 123
23 Mr Kierce reviewed the plaintiff on 3 August 2005, with the recurrence of low- back pain, although gave a history that his back was “not too bad”. He complained of difficulty with sitting and standing, lifting and sleep. Despite the advice that he ought restrict his employment duties, he continued to do his normal work.
24 Mr Kierce next saw the plaintiff on 13 April 2006 when the plaintiff said he was not able to manage at work. According to the report, Alcoa had provided him with the same work as before, despite Mr Kierce’s advice. He suggested the plaintiff submit a WorkCover claim. Again, he suggested giving up smoking and taking up exercise.
25 When reviewed on 27 April 2006, the back pain continued. When seen finally on 30 May 2006, Mr Kierce noted the plaintiff was still smoking cigarettes and he urged him to become motivated towards an exercise program, including walking, swimming and bike riding. He recommended the plaintiff return in four weeks, which he did not do. Mr Kierce concluded that the plaintiff was not fit to return to work involving prolonged or frequent bending, lifting of weights of greater than 15 kilograms or the use of heavy implements and tools. He said it was likely the plaintiff would suffer recurrent backache for the rest of his life, but it would be less severe if he gave up smoking, got fit and undertook an occupation which placed less stress on his back.
26 A report of Mr John O’Brien, orthopaedic surgeon, of 24 February 2009 was before the directors.[13] He saw the plaintiff on 19 December 2007 and had, at the time of examination, reports of Mr Kierce and Mr Das. He received a history similar to that received by Mr Kierce. At the time of his examination, the plaintiff complained of constant low-back pain extending to the right buttock, which was aggravated by prolonged sitting or standing or use of mechanical equipment jarring the spine. The plaintiff said that he was capable of all activities of daily living and his treatment at that time was confined to medication only. Mr O’Brien noted that he was in discomfort in the course of examination. There was no evidence of nerve root compromise. He examined x-rays of December 2001 and CT scans of 4 January 2002 and 15 June 2005. He said the latter confirmed the presence of Grade 1 spondylitic spondylolisthesis at L5-S1, with some degenerative change and disc bulging at L4-5.
[13] CB 127
27 Mr O’Brien noted that the plaintiff’s low-back pain remained severe and incapacitating following the May 2005 incident. He thought the plaintiff’s injury was discogenic in origin and that he was suffering quite severe, chronic discogenic pain without evidence of nerve root compromise. He said the plaintiff’s prognosis was poor. He concluded:
“At the time of my examination I considered that this patient was significantly disabled and considered that the situation would be ongoing. I certainly considered that the patient was not capable of his pre-injury occupation and I did consider that he would certainly be incapable of any form of manual labour. Indeed I considered that the patient was totally and permanently disabled and considered that he was unlikely ever to engage or work for reward in any occupation or work for which the member is reasonably suited by his education, training or experience. In addition, I considered this patient’s lumbar pathology would have a major impact on his general, domestic, social and recreational activities and I felt that this would be a permanent situation.”[14]
[14] CB 128
28 Finally, a report of the plaintiff’s general practitioner, Mr Das, of 7 June 2009, was provided to the directors. That report simply adopted the opinion of Mr O’Brien and concluded the plaintiff was:
“… unlikely ever to engage or work for reward in any occupation or work for which he is reasonably suitable by his education, training or experience.”[15]
[15] CB 129
Relevant Provisions of the Trust Deed
29 There is no issue that at all relevant times the plaintiff was a member of the fund. The entitlement of members to benefits under the fund is governed by the provisions of the Alcoa of Australia Retirement Plan Trust Deed (“the trust deed”). The relevant provisions of the trust deed are as follows:
“’Total and permanent disablement’ means, relevantly:
… having, in the opinion of the trustee after consideration of medical evidence, become incapacitated by reason of any physical injury … to such as an extent as to render the member unlikely ever to engage or work for reward in any occupation or work for which the member is reasonably suited by education, training or experience.”
30 Clause 2.3.4 provides:
“Total and permanent disablement benefit:
If a member leaves employment with the employer by reason of total and permanent disablement prior to the retiring age[16] the trustee shall … pay to the member … a benefit … .”[17]
[16] The retiring age is defined to be sixty-five.
[17] CB 93
31 Clause 2.3.5 provides:
“Ill-health benefit:
Notwithstanding any other provision of the deed, if a member prior to the retiring age resigns from employment with the employer’s consent or the employer terminates the member’s employment, in either case because in the opinion of the trustee the member has become medically unfit to continue in the employment of the employer, although not entitled to benefits pursuant to Clause 2.3.4, such member shall … be entitled to a benefit … . “[18]
[18] CB 93
32 Clause 1.5.4 provides:
“Absolute discretion:
The trustee, in the exercise of the powers, authorities and the discretions vested in it by the deed shall have an absolute and uncontrolled discretion and may exercise or enforce all or any of those powers, authorities and discretions at any time and from time to time or may refrain from exercising all or any of them from time to time or at all.”[19]
[19] CB 58
The Plaintiff’s Claim
33 The plaintiff advances two propositions as to why the decision of the directors ought be set aside:
(a) The medical and other material before the directors was such that no reasonable trustee could have come to the conclusion that, at the time of the termination of his employment, the plaintiff was not so incapacitated by injury that it was unlikely he would ever engage in work thereafter, for which he was suited by education, training or experience.[20] (b) The directors failed to give “real and genuine consideration” to the questions before them in order to make a properly informed determination.[21] This was because there was insufficient information or materials as to: [20] Referred to as the “severe” test by Byrne J in Finch v Telstra Super Pty Ltd [2008] VSC 481 at paragraph 44
[21] See Karger v Paul [1984] VR 161 at 165
(i) the nature and extent of the plaintiff’s disability arising from his lower back injury as at the date of termination; and
(ii) the plaintiff’s education, training and experience and the work for which that education, training and experience suited him for.
34 In the event the plaintiff’s argument on either of these grounds was successful (the onus being upon him), then the decision of the directors ought be declared void and the plaintiff’s application remitted for further consideration.
The Authorities
35 The following legal principles are not in contention:
(a)
The time at which an assessment is to be made by the directors as to whether the plaintiff was rendered totally and permanently disabled was at the date of his termination, although retrospective opinions as to the effect of his injuries may be made at a later time.[22]
(b)
The occupation or work to which the member of the fund may be reasonably suited by education, training or experience includes part-time employment and employment upon modified or restricted duties.[23]
(c)
The decision of the directors cannot be impugned on the ground that a court would have come to a different decision.
(d)
There is no obligation on the directors to give reasons for the exercise of their discretion.[24]
(e)
Given the directors granted the “Ill Health Benefit”, they therefore determined that the plaintiff had become “medically unfit to continue in the employment of the employer” as at the termination date.
[22] Finch v Telstra Super Pty Ltd [2010] HCA 36 at paragraph 24
[23] Marbett v Watson Wyatt Superannuation Pty Ltd [2008] NSW SC 365 at paragraph 71
[24] See, however, Finch [2010] HCA 36 at paragraph 39 – “The problems that arise in cases where trustees do not give reasons for a conclusion to which they have come are not present here. ….”
36 A significant proportion of the submissions centred upon the decision of the High Court in Finch v Telstra Super Pty Ltd.[25] In the decision at first instance,[26] the trial judge, Byrne J, applied the principles established by Karger v Paul.[27] He confirmed the test that the decision of a trustee may be impugned for want of good faith, for failure to give real and genuine consideration to the issues in question, and for failure to act for a proper purpose as required in the trust deed. The High Court upheld Byrne J’s reasoning and set aside the decision of the Court of Appeal which had overturned the decision. In doing so, the Court addressed a number of issues relevant for determination in this trial.
[25] [2010] HCA 36
[26] Finch v Telstra Super Pty Ltd [2008] VSC 481
[27] (supra); see further Telstra Super Pty Ltd v Flegeltaub (2000) 2 VR 276
37 The Court confirmed the trustee ought to have made further inquiries in respect of the medical opinions which were presented upon the question of whether the plaintiff, as a member of the fund, was likely to be rendered a total and permanent invalid. The Court said further that the decision of the trustee required the identification and valuation of various factual matters.[28] The duty of the trustee was a duty to distribute the benefit to those who fell within the definition of “total and permanent invalidity”, together with a duty not to distribute to those who did not fall within that definition. The Court analysed the purpose for which a trustee may make a distribution under a superannuation fund. It said:
“Thus the public significance of superannuation and the close attention paid to it through statutory regulation support the conclusion that the decisions of superannuation trustees are not likely to be largely immunised from judicial control without clear contrary language in the relevant trust document. Decisions like those which the Trustee made in this case are not discretionary decisions in the sense used in Karger v Paul.”[29]
[28] at paragraph 29
[29] at paragraph 36
38 The Court cited with approval the concerns Byrne J expressed in respect of the decision made by the trustee upon the medical evidence it had before it.[30] By failing to pursue further inquiries, the trustee had failed to give genuine consideration to the decision.[31]
[30] at paragraph 42
[31] at paragraphs 43-45
39 From this I conclude that in a case such as the present where the trustee of a superannuation fund is making a determination as to whether a member achieves the relevant level of incapacity to enable a benefit to be paid, the obligation is upon the trustee, where the material under consideration is deficient such as to prevent proper and informed consideration of the issues and make a determination of the question before it, to make appropriate further inquiries.
40 While the Court did not state categorically that the principles established in Karger v Paul do not apply to superannuation trusts, it said:
“However, save in one respect, it is not necessary further to evaluate the merits of the competing contentions about how far Karger v Paul principles were applicable and whether other principles should be adopted. That is because it is sufficient for the resolution of the present case to hold that Byrne J’s reasoning in favour of the applicant is sound and the Court of Appeal’s criticisms of it are unsuccessful. To offer answers to wider questions which might arise in disputes different from the present where it is not necessary to do so would have an unsettling effect on the law which may not be beneficial.
Byrne J’s reasoning is, however, reinforced by one qualification to Karger v Paul principles in the present context. There is no doubt that under Karger v Paul principles, particularly as they have been applied to superannuation funds, the decision of a trustee may be reviewable for want of ‘properly informed consideration’. If the consideration is not properly informed, it is not genuine. The duty of trustees properly to inform themselves is more intense in superannuation trusts in the form of the Deed than in trusts of the Karger v Paul type. It is extremely important to the beneficiaries of superannuation trusts that where they are entitled to benefits, those benefits be paid. Here, for example, the applicant was claiming a Total and Permanent Invalidity benefit to support himself for the rest of his life. His claim depended on the formation of an opinion by the Trustee about the likelihood that he would ever engage in ‘gainful work’: that was not a mere discretionary decision. In the Deed there was a power to take into account ‘information, evidence and advice the Trustee may consider relevant’, and that power was coupled with a duty to do so. It would be bizarre if knowingly to exclude relevant information from consideration were not a breach of duty. And failure to seek relevant information in order to resolve conflicting bodies of material, as here, is also a breach of duty. The Scheme is a strict trust. A beneficiary is entitled as of right to a benefit provided the beneficiary satisfies any necessary condition of the benefit. Whether or not it will be decided hereafter that, consistently with s.14 of the Complaints Act, the duty of a trustee in forming an opinion of the present type is a duty to form a fair and reasonable opinion, or even a duty to form a correct opinion, there is because of the importance of the opinion and its place in the Scheme a high duty on the Trustee to make inquiries for ‘information, evidence and advice’ which the Trustee may consider relevant. The existence of that duty in a more intense form than exists under Karger v Paul principles in their standard application is further support for the correctness of Byrne J’s decision.”[32]
[32] at paragraphs 65-66
The Defendant’s Contentions
41 The defendant contends its determination received “real and genuine consideration” upon all of the available medical and other material and there was no need for the directors to seek any further information. Further, it submits its decision cannot be impugned on the basis that no reasonable trustee could have come to that decision.
42 The defendant says there were two requirements for the payment of the TPD benefit:[33]
[33] Paragraph 6 of the defendant’s submissions
(a) The plaintiff had to establish that he left employment with Alcoa by reason of total and permanent disablement prior to the retiring age; (b) The defendant must form the opinion, after consideration of medical evidence, that the plaintiff had become incapacitated by reason of physical injury to such an extent as to render him unlikely ever to engage in work for reward in any occupation for which he was reasonably suited by education, training or experience. 43 The medical and other material before the directors disclosed the plaintiff did have a work capacity, albeit for restricted duties.
44 There was no obligation upon the directors to obtain any further medical material and the onus was upon the plaintiff in that regard. It was appropriate, after the meeting of 27 August 2009, for the directors to write to the plaintiff’s solicitors seeking further information as to the plaintiff’s medical state as at the date of his termination on 22 December 2006. In response, the solicitors provided a report of Mr Kierce of the 5 June 2006. Mr Bingham submitted that over the period from 20 May 2006 to 8 July 2009, the only specialist practitioner seen by the plaintiff in relation to his lower back injury was Mr O’Brien, and then on only one occasion. There was no detail of any treatment received by the plaintiff, particularly over the period 20 May 2006 to 22 December 2006, save for a passing reference in the application form to the plaintiff being treated by Mr Das, the general practitioner, on 29 December 2001 and “regularly since then”. There was, further, no information as to any WorkCover claim made by the plaintiff and any reports related thereto.
45 Given the history of the plaintiff’s lower back condition as provided in the report of Mr Kierce of flare-ups on a number of occasions in 2001, 2004 and 2005, after which the plaintiff was able to return to his employment after some treatment and a period on modified duties, the directors were entitled to take the view that his condition as at December 2006 was again a flare-up which, with appropriate treatment, would resolve, at least to the extent of enabling the plaintiff to return to some form of work. This was particularly so given the opinion of Mr Kierce where, as late as May 2006, it was his intention, subject to the plaintiff undertaking a fitness and exercise program, and giving up smoking cigarettes, to return him to the workforce on limited duties.[34] Mr Kierce’s conclusion was that the plaintiff was not fit to return to work which involved prolonged or frequent bending, lifting of weights greater than 15 kilograms or the use of heavy implements or equipment. This, said Mr Bingham, was a long way short of an opinion that the plaintiff was totally and permanently incapacitated for all work for the rest of his life. It was clear, said Mr Bingham, that Mr Kierce was of the view that the plaintiff did have a capacity to return to work subject to certain qualifications.
[34] CB 125
46 While the opinion of Mr O’Brien was that the plaintiff was incapacitated for all work on a permanent basis, the report suffered a number of flaws:
•
Mr O’Brien received a history that the plaintiff was capable of performing his activities of daily living and that his treatment was confined to medication only. This was inconsistent with his opinion[35] that his injury would have a major impact on his general, domestic, social and recreational activities.
•
While Mr O’Brien’s opinion was that the plaintiff was totally and permanently disabled to engage in work for reward in any occupation, he was not specifically asked whether that opinion applied to part-time work on light or modified duties, and after retraining.
•
Importantly, Mr O’Brien’s opinion was given as to the plaintiff’s condition as at the date of his examination, 19 December 2007, and not the date of the plaintiff’s termination, 22 December 2006.
[35] CB 128
47 It was open to the directors, said Mr Bingham, to accept the opinion of Mr Kierce as to the plaintiff’s work capacity and prefer it to the opinion of Mr O’Brien. Further, the opinion of Mr Das in his report of 7 June 2009 was brief, without history or detail, and merely adopted Mr O’Brien’s findings.
48 As to the plaintiff’s education, training and experience, Mr Bingham submitted that Alcoa had been effectively the plaintiff’s only employer over a period of eighteen years from a young age. Mr Bingham said the evidence disclosed the directors were aware of the work which was available at Alcoa and which the plaintiff had undertaken, and either from their own knowledge, or from the information provided by Mr Thomas, knew of the plaintiff’s skills and capacities, the nature of the work he had undertaken and the training and experience obtained in the course of that work. From that knowledge, the directors were in a position to make a determination in respect of the work to which the plaintiff was suited by reason of his “education, training and experience”. Again, the onus was upon the plaintiff to provide all necessary information and material, and if there was any deficiency, it was the fault of the plaintiff and not the directors.
49 Mr Bingham submitted that the principles established by Karger v Paul applied and the decision of the High Court in Finch v Telstra[36] did not significantly alter those principles. There was no obligation upon the trustees to give reasons for their decision, and no inference ought to be drawn from that failure.[37]
[36] (supra)
[37] Maciejewski v Telstra Super Pty Ltd (1998) 44 NSWLR 601 at 604. See further Flegeltaub v Telstra Super Pty Ltd [1998] VSC 144 at paragraphs 15-18; Clayton v Alcoa of Australia Retirement Plan Pty Ltd [2011] VCC 454 per Judge Kennedy.
50 Mr Bingham further submitted that the granting by the directors of an Ill Health benefit acted as no admission in respect of the plaintiff’s entitlement to a TPD benefit. The criteria were significantly different. The Ill Health benefit was no more than an acceptance that the plaintiff was medically unfit to continue employment with Alcoa as at the date of termination. It said nothing as to capacity for employment on a total and permanent basis and in respect of other types of employment. Specifically, the Ill Health benefit was awarded only if a member did not satisfy the criteria of a TPD benefit.
Conclusions
51 There is no issue that in making their determination to accept or reject the plaintiff’s application for the TPD benefit, the directors were required to act in good faith, upon real and genuine consideration and in accordance with the purposes set forth in the trust Deed.
52 However, as the High Court said in Finch,[38] the situation in respect of a distribution under a superannuation fund is different from distribution under a trust of the Karger v Paul type. The determination as to the entitlement of a member of a superannuation fund to a TPD benefit is extremely important. So much is evident from the quantum of the benefit itself. It is intended to provide financial support to a member for the rest of his life, given the nature and extent of the injury suffered. In such circumstances, the decision of the directors required “properly informed consideration”.[39] As the High Court said:
“And failure to seek relevant information in order to resolve conflicting bodies of material, as here, is also a breach of duty. The Scheme is a strict trust. … .”[40]
[38] (supra) at paragraph 66
[39] Finch (supra) at paragraph 66
[40] Finch (supra) at paragraph 66
53 The obligation was upon the directors in such circumstances to seek further material or reports as may be necessary to ensure their decision was properly informed. In order to be properly informed, the directors ought to have had before them for consideration material which addressed the various criteria for TPD benefit as defined in the Deed. Those criteria included:
•
As at the date of the termination of the plaintiff’s employment, 22 December 2006, what was the nature and the extent of the plaintiff’s medical condition?
•
Was it such as to render him unlikely to engage in work until retirement age?
•
Was it likely to render him unable to engage even in work of a part-time nature or on modified or restricted duties?
•
Was that situation likely to remain permanent notwithstanding retraining, rehabilitation or appropriate treatment?
•
What precisely was the plaintiff’s experience, skills and capacities obtained in the Alcoa workplace or otherwise?
•
What precisely was the plaintiff’s level of education both as a result of secondary and tertiary schooling, and other educational achievements while at Alcoa or elsewhere?
•
Having considered the plaintiff’s education, training and experience, what, if any, occupation would he be suited for given his injury?
54 Given the significance of the benefit to the plaintiff, in my view, these criteria could not be satisfied by cursory or imprecise medical opinions or material which did not specifically address the criteria in detail.
55 In my view, the information before the directors at the time of the meeting of 19 November 2009 was deficient in a number of areas:
(a)
Firstly, the material as to the plaintiff’s education, training and experience was deficient. The employer report of 12 August 2009 stated that information as to education, qualification, work experience was “not available”. There is no explanation given as to why such material was not available. One would have thought that an important source of the plaintiff’s work experience and trade qualifications would have been Alcoa.
This then left only information provided by Mr Thomas, the union appointed director, or within the general scope of knowledge of the other directors. While I accept the directors would probably have known of the work undertaken in the various areas of the Alcoa plant where the plaintiff had been employed, I do not accept they would have any knowledge specifically as to his training and experience. While Mr Thomas did know the plaintiff, and knew where he worked, his only recollection of what he told the trustees was that he had been to school with the plaintiff and competed in some sporting events.
While it was his general practice to inform the other directors as to the background of the applicant and to explain the work the applicant had undertaken, there was nothing to suggest Mr Thomas had any specific knowledge of the plaintiff’s experience and capacities within the workplace. In particular, there was nothing to suggest any information was provided as to:
• The specific work duties he undertook throughout his employment; • any tickets or certificates obtained in any particular areas; •
whether he had any particular licences, such as forklift driving and the like;
•
whether he had achieved any level of seniority in his eighteen years, such as to the position of a supervisor, or overseer;
• whether he had undertaken any in-house or outside training in any • whether he had any particular skills or experience in any area; and •
even whether he was regarded as a competent and capable employee.
Absent this information, then, in my view, the directors could not have properly considered the nature and extent of the plaintiff’s education, training and experience.
(b)
Secondly, in my view, the medical information before the directors was deficient:
•
The report from the plaintiff’s general practitioner, Mr Das, was cursory and simply adopted the views of Mr O’Brien. There was no detail as to Mr Das’s treatment, particularly over the period from March 2006 to December 2006 when the plaintiff was off work because of his injury. The directors ought to have had a more detailed report setting out the nature and extent of treatment and Mr Das’s view as to the plaintiff’s capacity for employment, even part- time and restricted.
•
The opinion of Mr O’Brien, while supportive of the plaintiff’s application, was given as of December 2007. Specifically, Mr O’Brien ought to have been asked whether the opinion he provided in the report applied as at December 2006. He further ought to have been asked whether his opinion as to the plaintiff’s disablement included part-time and modified work duties.
•
The opinion of Mr Kierce did not address whether the plaintiff was totally and permanently disabled at all. While it would appear his view was that the plaintiff did have the capacity to return to some form of employment, providing his fitness improved, and that employment was restricted to lighter duties, there is nothing in his report to suggest he had any knowledge of the plaintiff’s education, training and experience and whether he would be thus suited to modified duties. Further, he ought to have been requested to provide an opinion of the plaintiff’s condition (if he was able to do so) as at the termination date.
56 Thus, in my view, the determination by the directors was not based upon a properly informed consideration given the deficiency in the materials before them.
57 The defendant argues that the onus lay with the plaintiff to provide such further materials as was necessary, and it was not a matter for the directors to “seek out evidence or strain to obtain evidence relevant to the formation of the necessary opinion and attempt to bring within the definition a member not otherwise within its terms”.[41]
[41] Paragraph 18 of defendant’s submissions and cases referred to.
58 However, the duty upon the directors extended to seeking relevant information to resolve conflicting bodies of material.[42] While the duty of the directors undoubtedly does not extend to seeking more and more information, both medical and otherwise, so that the plaintiff eventually achieved the level necessary to attain a TPD benefit, it necessary in my view they have sufficient information to make a properly informed decision, taking into account the criteria the definition required. In the present case, that information was not available.
[42] Finch [2010] HCA 36
59 For these reasons, the decision of the directors to refuse the plaintiff the TPD benefit made 19 November 2009 should be set aside.
60 The further issue contended by the plaintiff was that on the basis of the material before the directors, no reasonable trustee could have refused the application. In Finch,[43] Byrne J described this as the “severe” test. The test is not whether a court would decide the application differently from the trustee. The trustee was faced with competing reports on the one hand of Mr O’Brien and Mr Das, and, arguably, on the other hand from Mr Kierce. On the basis of Mr Kierce’s opinion, setting aside the deficiencies to which I have referred, I am unable to determine that the decision was not open to the trustee or that it was so unreasonable that no trustee could make it. The High Court in Finch left open whether the duty of the trustee was to form a fair and reasonable opinion, or even a correct opinion. Given my findings, I am not required to determine this issue.
[43] [2008] VSC 481
61 I am satisfied that it is appropriate to remit the application for further consideration by the directors. The decision of 19 November 2009 is void and of no effect. The question of whether the plaintiff is entitled to a TPD benefit should be remitted for further determination upon appropriate material.
62 I shall hear further from the parties as to the appropriate order and costs.
- - -
0
6
0