FSS Trustee Corporation v Eastaugh
[2017] VSCA 218
•29 August 2017
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2016 0162
| FSS TRUSTEE CORPORATION (ACN 118 202 672) | Applicant |
| v | |
| GARRY ROBERT EASTAUGH | First Respondent |
| ALFRED HEALTH | Second Respondent |
---
| JUDGES: | TATE and SANTAMARIA JJA and KEOGH AJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 16 May 2017 |
| DATE OF JUDGMENT: | 29 August 2017 |
| MEDIUM NEUTRAL CITATION: | [2017] VSCA 218 |
| JUDGMENT APPEALED FROM: | [2016] VSC 636 (McDonald J) |
---
SUPERANNUATION – Appeal – Construction of superannuation trust deed and rules – Benefit entitlements – Whether recall payments made to members of defined benefit scheme are salary for the purpose of determining superannuation entitlements – Hospitals Superannuation Act 1988 – First Superannuation Act 1992 (NSW) – Practical and purposive approach to interpretation of superannuation schemes – Ansett Australia Ground Staff Superannuation Plan Pty Ltd v Ansett Australia Ltd (2002) 174 FLR 1; Stevens v Bell [2002] EWCA Civ 672, considered – Leave to appeal granted – Appeal dismissed.
---
| APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr C M Caleo QC with Mr H Redd | Greenfields |
| For the First Respondent | Mr D G Collins QC with Mr P Bingham and Dr M P Barrett | Maurice Blackburn Lawyers |
| For the Second Respondent | No appearance | Lander & Rogers |
TATE JA:
I have had the benefit of reading, in draft form, the reasons of Keogh AJA. I agree, for the reasons his Honour gives, that leave to appeal should be granted but the appeal dismissed.
SANTAMARIA JA:
I agree with the reasons of Keogh AJA.
KEOGH AJA:
Between 1986 and 2011, Dr Eastaugh was employed as an anaesthetist in various public hospitals. In 1986 Dr Eastaugh applied and became a member of a defined benefits superannuation scheme called the Hospitals Superannuation Fund. In 2011 the Hospitals Superannuation Fund became part of the First State Superannuation Scheme (‘the Fund’). The applicant, FSS Trustee Corporation (‘FSS’), is trustee of the Fund. The Fund is governed by the First State Superannuation Trust Deed and by the Rules made thereunder (‘the Rules’).
In 2011 Dr Eastaugh retired from the Fund and applied to have the lump sum defined benefit in the Fund to which he was entitled rolled over into his self-managed superannuation fund. The entitlement of defined benefit members fell to be determined pursuant to Section 3 of the Rules. Calculation of the lump sum defined benefit to which a member was entitled depended on the member’s ‘salary’, a term defined by r 3B.11.1 of the Rules.
Based on statements provided to him from time to time by the trustee, Dr Eastaugh expected to receive a defined benefit lump sum of over $1.4 million. When, after a delay of some 18 months, FSS responded to Dr Eastaugh’s application, the amount of the benefit paid was just over $900,000. FSS has since sought to recover part of that amount as an overpayment. The reduction in Dr Eastaugh’s
defined benefit lump sum is in part explained by the different approach taken by the parties to the construction of the definition of ‘salary’ in the Rules. Remuneration paid to Dr Eastaugh included, in addition to his ordinary time rate of pay, payments for being rostered on call (‘on call payments’) and payments for being recalled to perform duties when rostered on call (‘recall payments’). In general terms, the definition of ‘salary’ under r 3B.11.1 of the Rules includes ‘allowances which are ordinarily payable regularly and periodically (including shift and roster related payments)’.[1] There is no dispute that during the period of his membership of the Fund, recall payments made to Dr Eastaugh were included in the amount of his salary for superannuation purposes advised by his employer to the trustee. The advices provided to Dr Eastaugh by the trustee from time to time as to his defined benefit lump sum entitlement in the Fund were based on recall payments being part of ‘salary’. FSS now argues that recall payments are not ‘salary’ for the purpose of the Rules.
[1]The full definition is set out at [28] below.
The definition of ‘salary’ under r 3B.11.1 of the Rules also includes, alternatively, that ‘salary’ may be ‘any higher amount advised to the Trustee by the Employer from time to time’. As stated, Dr Eastaugh’s employer included recall payments paid to him in the amount of his salary advised to the trustee from time to time. A further issue which arises is whether information or advice from an employer to the trustee which included in an employee’s salary components otherwise excluded from ‘salary’ as defined was advice of a ‘higher amount’ for the purposes of the definition, with the result that the higher amount advised became the employee’s ‘salary’.
There are approximately 167 participating employers and 8,220 defined benefit members to whom Section 3 of the Rules apply. The beneficial entitlement in the Fund of each of those members depends upon the meaning of ‘salary’. In the proceeding, FSS applied for and obtained orders that Dr Eastaugh represent all past and present members of the Fund, and that the second respondent, Alfred Health, represent all past and present participating employers within the meaning of the Rules. In addition, by further amended originating motion FSS sought answers to a number of questions as to the true construction of the Rules. Answering one of those questions the trial judge determined that recall payments made to members were included in ‘salary’ within the meaning of r 3B.11.1 of the Rules. The trial judge declined to answer questions as to the effect of salary information or advice from the employer to the trustee. FSS seeks leave to appeal, contending that the trial judge erred in determining that recall payments are ‘salary’ within the meaning of r 3B.11.1. Dr Eastaugh argues the trial judge was correct to determine that recall payments are ‘salary’ and, by notice of contention, that salary information provided by employers to the trustee is a ‘higher amount advised’ for the purposes of the definition of ‘salary’.
At trial, Alfred Health adopted a position consistent with that of FSS. On appeal, Alfred Health filed a notice of intention not to respond or contest, and took no part in the proceeding. The rights and entitlements of Dr Eastaugh in respect of the Fund were not to be determined in the proceeding.
Background facts
Dr Eastaugh completed training as a specialist anaesthetist in early 1986 and then took up a full-time position as director of anaesthesia at Box Hill Hospital. In the same year his application to become a member of the Hospitals Superannuation Fund defined benefits scheme was accepted. In the years 1986 to 2011 Dr Eastaugh was employed initially full time and later part time by hospitals operated by Eastern Health. He states that throughout that employment he was required by his employer to participate in an on call roster, that after hours work has always been a requirement of his employment and that he was regularly rostered for and performed such work.
Initially Dr Eastaugh was employed under award conditions. From the mid 1990s written employment contracts were provided. Each contract specified Dr Eastaugh’s duties and responsibilities including the requirement that he participate in an after-hours on call roster. The employment agreement with Eastern Health dated 23 September 2008 provides in cl 4.6:
On-call commitments with this appointment are as detailed in Part 4 of Schedule 1 and Schedule 3.
Clause 6, dealing with remuneration includes:
Remuneration in respect of any authorised on-call or recall will be in accordance with Schedule 3 of this Agreement and remunerated as described in Parts 6 and 7 of Schedule 1.
Schedule 1 Part 4 records the standard hours of work on a four-week cycle, Part 5 the hourly rate of remuneration for those hours, Part 6 remuneration for on call of a base fee plus an additional amount for ‘exclusivity’ and Part 7 remuneration for recall for ‘emergencies performed’ at a fee for service of a dollar figure ‘per RVG unit’. On call categories are defined in Schedule 3, Part 1 of which provides:
The Practitioner’s oncall commitments are an integral component of his/her appointment to Eastern Health. It is expected that he/she will be available for on-call duties as rostered by the Health Service at least to the frequency as specified in Part 4 of Schedule 1.
The four on call categories are Category 1 for exclusive or urgent on call, Category 2 for non-exclusive call, and:
Category 3:Fee-for-Service call — requiring the craft group to have their own internal roster with an associated expectation of recall;
Category 4:Referral recall — where there is no expectation of a roster and recall may very occasionally occur where the relevant on-call clinician recalls a specialist colleague from one of the craft groups.
Dr Eastaugh states that in reality ‘recall’ was ongoing work which consisted of ‘a backlog of urgent patients waiting for after-hours operations on my after-hours shifts’, and that every time he was rostered on call he actually worked. He added that hospitals offer 24-hours-a-day services requiring almost all workers, apart from administrative staff, to perform shift work which commonly involved some form of ‘on call’ arrangement. Evidence was given by Dr Lee Hamley, the executive director of medical services and chief medical officer at Alfred Health. Dr Hamley stated that whether doctors employed by public hospitals receive on call payments or recall payments depends on the relevant enterprise agreement and individual contract of employment that applies. For some doctors recall payments are included in their total salary in what is known as a ‘rolled up rate’. Most recall payments to doctors are on a fee-for-service basis. For anaesthetists that fee is calculated pursuant to the relative value guide, or ‘RVG’. The cost per RVG unit takes account of the complexity of the procedure performed, and the number of units depends on the time taken to perform the procedure. The dollar figure per RVG unit in Dr Eastaugh’s contract is higher for after-hours work than for in-hours work. Dr Hamley stated:
A doctor is on-call when that doctor is rostered on-call.
A unit will roster medical staff on-call where there is any category of staff member which is sometimes required outside the unit’s regular hours of operation but who are not always required.
Dr Hamley explained that on call rostering depends on a number of factors, including a particular medical unit’s requirements and the seniority or qualifications of staff members. A doctor rostered on call who is required to attend the hospital has been recalled to duty. Dr Hamley stated:
Whether any given doctor is recalled to duty while on-call depends upon whether there is some sort of medical necessity that requires the doctor to attend the hospital.
In 2011 Dr Eastaugh received correspondence from the Fund confirming that FSS was, from that point, trustee of the Fund, and enclosing a transfer statement detailing his benefit summary as at 30 June 2011. The transfer statement recorded Dr Eastaugh’s defined benefit lump sum in the Fund at $1,436,131.01.
On 29 August 2011 Dr Eastaugh applied to FSS for his lump sum defined benefit to be rolled over into his self-managed superannuation fund. In March 2013 FSS paid $929,814.05 (after fees and charges) as Dr Eastaugh’s lump sum defined benefit. Subsequently FSS sought to recover from Dr Eastaugh a further sum of $160,095 as an overpayment of the lump sum defined benefit.
First State Superannuation Scheme Trust Deed and Rules
The Hospitals Superannuation Fund was established pursuant to the Hospitals Superannuation Act 1965 and continued under the Hospitals Superannuation Act 1988 . Dr Eastaugh became a defined benefit member of the Hospitals Superannuation Fund in 1986.
The First State Superannuation Scheme was established by the First State Superannuation Act 1992 (NSW). The Fund is governed by a constituent deed and a number of deeds of variation, the most recent of which is dated 30 June 2014.
On 30 June 2011 the Hospitals Superannuation Fund merged with and became a division of the Fund. From that date, FSS was trustee of the Fund. The current Rules are annexed to the most recent deed of variation governing the Fund which is dated 30 June 2014. The structure of the Rules is explained in r 1A.1.2 which reads:
The Rules are divided into general provisions in Section 1, the accumulation provisions in Section 2 and the defined benefit provisions in Section 3. Each Section of the Rules is then further divided into general provisions and divisions governing specific groups and categories of members.
Rule 1A.1.3 provides that to the extent of any conflict any provision of Section 3 prevails over a rule in Section 1, unless expressly indicated otherwise. Rule 1A.1.10 provides that r 1A.22 sets out how the Rules must be interpreted. Rule 1A.1.11 provides:
Some words and expressions used in the Rules have a particular meaning. These words and expressions:
(a) have the same meaning as in SIS, if they are shown in italics; or
(b) are explained in the Dictionary in Rule 1A.23; or
(c) are explained in the Dictionary in the relevant Division of the Rules.
Rule 1A.22.1 relevantly provides:
In the Rules, unless the contrary intention appears:
…
(f)the use of the word ‘including’ does not limit a Rule to the things (or things of a similar nature) which come after that word;
SIS is defined in r 1A.23.1 to mean:
The Superannuation Industry (Supervision) Act 1993 (Cth) and the Regulations and other statutory rules made pursuant to that Act.
Section 3 of the Rules, which deals with defined benefit members, is broken into four divisions. Division 3A contains provisions which generally apply in relation to each defined benefit member. Division 3B creates the Health Super DB Fund to be maintained by the trustee as a separate trust for defined benefit members of the Health Super Fund, and provides the Rules to govern the Health Super DB Fund. Rule 3B.1.9 reads:
For the purposes of interpreting any provision of the [Health Super] DB Rules, the Trustee may have regard to the provisions of the Health Super Fund trust deed as it stood immediately before the Health Super transfer date.
Neither party made submission that the provisions of the Health Super Fund trust deed were relevant to interpretation of the definition of ‘salary’ which is contained in Division 3B of the Rules. Rule 3B.1.11 confirms that, to the extent of any conflict, any provision of Division 3B will prevail over any rule in Divisions 1A or 3A.
Member contributions are dealt with by r 3B.6. Rule 3B.6.1 provides:
The amount of a defined member’s contributions to the fund at any particular time must be determined in accordance with the relevant division of the HS DB Rules.
Pursuant to s 22 of the Superannuation Guarantee (Administration) Act 1992 (Cth), the contribution by an employer to a defined benefit superannuation scheme in respect of an employee member is determined in accordance with a ‘benefit certificate’. The term ‘benefit certificate’ is defined in s 10 of the Act to be a certificate by an actuary relating to a defined benefit superannuation scheme specifying a rate which is the notional employer contribution rate necessary to meet the long-term cost to an employer of minimum benefits accruing to employees of that employer who are members of the scheme. Consistent with these provisions r 3B.7.1 provides:
Subject to this Rule 3B.7 and 3A.5, each Employer must contribute to the Fund at any particular time the amount or rate of contributions determined by the Trustee after obtaining the advice of the actuary. As soon as practicable, the Trustee must notify the Employer of each determination in respect of that employer under this Rule 3B.7.1.
A dictionary of words and terms is contained in r 3B.11.1. The dictionary contains the following definition of ‘salary’:
Salary means in respect of a defined benefit member:
(a)who is a Casual Employee, the amount, determined and computed by the Trustee, of the total of all amounts payable to that member on an annual basis as remuneration under the relevant award determination, excluding any expense of office, uniform allowance or reimbursement of travelling or other incidental expenses; and
(b)who is not a Casual Employee:
(i)the member’s Superannuation Salary; or
(ii)if there is no Superannuation Salary in respect of the member at the relevant time, the amount equal to that member’s ordinary time rate of pay, plus any allowances (not of a cost-reimbursement type such as an expense of office, uniform allowance, tool allowance, reimbursement for travel or other incidental expenses) which are ordinarily payable regularly and periodically (including shift and roster related payments), including certificate/qualification allowances and higher duties allowances for at least a 52 week period, but excluding any other allowances which are ordinarily not paid over a 52 week cycle or do not flow from regular rostered duty or any higher amount advised to the Trustee by the Employer from time to time; and
(c)who is an employee of a union or employee organisation:
(i)the salary of that member immediately before becoming a full-time officer of the union or employee organisation; or
(ii)any greater salary as is paid to that member by the union or employee organisation and approved by the Trustee; and
(d)in relation to the benefits (other than amounts contributed by the Employer in satisfaction of the SG Act) of a defined benefit member who is a Part-time Employee, the salary which would be payable to a person performing those duties on a full-time basis; and
(e)if that defined benefit member’s salary has been reduced and the Employer and the defined benefit member have agreed (and so notified the Trustee) that the reduction is not to be taken into account, the greater, from time to time, of:
(i)the salary of the defined benefit member immediately before the reduction; or
(ii)any subsequent salary of the defined benefit member; and
(f)if that defined benefit member’s salary is increased substantially within a two year period, the Trustee may require an undertaking from the Employer that it will contribute to the Fund additional amounts or rates of contribution which the Trustee (after obtaining the advice of the actuary) considers necessary to fund any additional benefits resulting from that increase in salary.
Any notification under paragraphs (b) or (e) or undertaking under paragraph (f) made to the trustee of the Health Super Fund and in effect as at the Health Super transfer date will continue to be in effect after the Health Super transfer date until such time as a further notification or undertaking is made to the Trustee. [2]
[2]Footnotes omitted.
Division 3C contains rules governing entitlements of post-1988 defined benefit members. Division 3D, which applies to Dr Eastaugh, contains rules governing entitlements of pre-1988 defined benefit members. Rule 3D.5 provides that the lump sum benefit payable to a member is calculated by reference to the member’s ‘Adjusted Final Fund Salary’. The dictionary in r 3D.9 defines ‘Adjusted Final Fund Salary’ by reference to the member’s ‘salary’. In other words, the lump sum benefit payable to a defined benefit member depends on that member’s ‘salary’ from time to time.
The decision at first instance
Representative orders
The trial judge considered the application by FSS for representative orders[3] and determined that orders would be made in terms sought by FSS as follows:
1.[Dr Eastaugh] represents all of the past and present members of the First State Superannuation Scheme established by the First State Superannuation Act 1992 of New South Wales (‘the Fund’) within the meaning of the Deed of Variation dated 29 March 2006 (as amended) (‘the Trust Deed’) and the Rules made thereunder (as amended) (‘the Rules’).
2.[Alfred Health] represents all of the past and present participating employers within the meaning of the Trust Deed and the Rules.
[3]Relying on either r 16.01(2) or r 18.01 of the Supreme Court (General Civil Procedure) Rules 2015.
Are recall payments salary?
The question posed for consideration by the further amended originating motion filed by FSS, and the answer of the trial judge are recorded in the reasons as follows:
Are recall payments made to members who are full time or part time employees (other than casual employees) for the provision of emergency services (whether full time or part time) included in ‘Salary’ (subparagraph (b)(ii) of the definition) within the meaning of r 3B.11.1? ― Yes.
The trial judge summarised his reasons for this answer as follows:
The primary issue in the present proceedings is the meaning of ‘salary’ in r 3B.11.1 of the Rules. In particular, whether recall payments made to members are included in salary. This question is to be answered in the affirmative. A recall payment is a roster related payment. As such, it is included in the definition of salary as an allowance which is ordinarily payable regularly and periodically. This conclusion renders it unnecessary to address the question of whether recall payments are salary by reason of being a ‘higher amount’ advised to FSS by an employer.[4]
[4]FSS Trustee Corporation v Eastaugh [2016] VSC 636 [6] (‘Reasons’).
After recording the submissions made for FSS and Alfred Health the trial judge summarised the principles applicable to the construction of superannuation trust deeds, noting:
As with any commercial document, the task of interpretation requires attention to the language used by the parties, the commercial circumstances which the document addresses and the objects which it is intended to secure. [5]
[5]Ibid [14] (citations omitted).
His Honour then referred to decisions in Ansett Australia Ground Staff Superannuation Plan Pty Ltd v Ansett Australia Ltd[6] and Stevens v Bell[7] to the effect that the proper approach of the Court to the interpretation of such schemes is ‘practical and purposive’,[8] and that competing permissible constructions of superannuation rules should be tested against the consequences they produce in practice.[9]
[6](2002) 174 FLR 1 (‘Ansett Australia’).
[7][2002] EWCA Civ 672.
[8]Ansett Australia (2002) 174 FLR 1, 54 [215] (Warren J).
[9]Stevens v Bell (2002) EWCA Civ 672 [29] (Arden LJ).
His Honour accepted the submission of Dr Eastaugh that consideration of whether recall payments are roster related payments for the purposes of the definition of salary ‘is the nub of this whole case’, and stated:
If a recall payment is a roster related payment, such payments are included in ‘allowances ... which are ordinarily payable regularly and periodically’. Further, if a recall payment is salary by reason of being an allowance ordinarily payable regularly and periodically, it is not necessary for the Court to conclude that such payments:
(i) fall within the accepted meaning of ‘allowance’; and
(ii) are, in fact, payable regularly and periodically.
The need to make such findings is obviated if roster related payments are included in the class of allowances payable regularly and periodically. [10]
[10]Reasons [17].
The trial judge treated the phrase ‘related to’ as ‘of the widest import and [it] should not, in the absence of compelling reasons to the contrary, be read down’.[11] The test is ‘whether there is a sufficient nexus between the member being rostered on call and the recall payment’.[12] His Honour concluded that recall payments were roster related payments, reasoning that an entitlement to such payments only arose when an employee was rostered on call, this providing a ‘direct nexus’ between a member being rostered on call and having an entitlement to a recall payment.[13] His Honour said:
That test is satisfied because being rostered on call is a condition precedent for a member receiving a recall payment. [14]
[11]Ibid [19] (citations omitted)
[12]Ibid.
[13]Ibid.
[14]Ibid.
His Honour then focused on the word ‘including’ appearing before the words ‘shift and roster related payments’ in the definition, concluding that use of the word ‘including’ ‘extends the meaning of the phrase “any allowances … which are ordinarily payable regularly and periodically” to include roster related payments’, stating that this conclusion was consistent with relevant authorities.[15]
[15]Ibid [21]–[24]; Transport Accident Commission v Hogan (2013) 41 VR 112, 122 [47]; Corporate Affairs Commission (SA) v Australian Central Credit Union (1985) 157 CLR 201, 206–7; Sherritt Gordon Mines Ltd v Commissioner of Taxation [1977] VR 342, 353; Cohns Industries Pty Ltd v Deputy Federal Commissioner of Taxation (1979) 24 ALR 658, 660; Beqiri v The Queen (2013) 37 VR 219, 223 [28]; Zickar v MGH Plastic Industries Pty Ltd (1996) 187 CLR 310, 329–30.
His Honour then reasoned that his conclusion as to the definition of salary was consistent with a practical and purposive approach to the construction of that definition. His Honour noted that on call payments and recall payments were interrelated because, ‘[b]ut for an employee being rostered on call, he/she cannot receive a recall payment’.[16]
[16]Reasons [26].
The trial judge noted that all parties agreed that on call payments form part of salary. His Honour reasoned that a rationale which contends for a different approach to be taken to recall payments is flawed, noting that ‘[w]hether on call or recalled to work, an employee is on duty’.[17]
[17]Ibid.
His Honour emphasised that, because of the approach he had taken to the construction of the definition of ‘salary’, it was not necessary to address the additional questions of first, whether roster related payments are in fact payable regularly and periodically, and second, whether roster related payments are within the accepted meaning of allowance. However, his Honour did proceed to determine that recall payments do fall within the accepted meaning of allowance because:
Such payments are additional to ordinary wages to meet particular requirements of employment, or as compensation for unusual conditions of that service. The particular requirement is for an employee to be rostered on call, and to actually attend at work when the need arises.[18]
[18]Ibid [32].
The trial judge rejected a submission for FSS that there was a distinction between on call payments and recall payments in that the former was simply an allowance for being on call whilst the latter was payment for a service provided. His Honour reasoned first that being rostered on call is properly characterised as a period of duty, and that a recall payment came within the meaning of allowance because it met the criteria which were:
(i)the grant of something additional to ordinary wages for the purpose of meeting some particular requirement connected with the service rendered by the employee; or
(ii) as compensation for unusual conditions of that service. [19]
[19]Ibid [33].
His Honour noted that the RVG rate, which, as mentioned, was the basis on which recall payments were calculated, was a higher rate compensating for particular requirements connected with the service rendered and/or the unusual conditions of that service.
The trial judge noted that unless recall payments were automatically included in the class of allowances payable regularly and periodically, there would need to be a determination made in respect of each individual member as to whether those payments were ordinarily payable regularly and periodically. Further, it would be anomalous if recall payments received by members were part of salary as defined when received as part of a rolled up salary, but not when recall payments were paid on each occasion work was performed. This reinforced his Honour’s view that the approach he had taken to the construction of the definition of salary was consistent with a practical and purposive approach.
The trial judge rejected a submission made for FSS and Alfred Health that the words in the definition ‘but excluding any other allowances which are ordinarily not paid over a 52 week cycle or do not flow from regular rostered duty’ was an exclusion which applied to any allowances, including those referred to earlier in the definition. His Honour concluded the exclusion operated in respect of ‘other allowances’, and had no work to do in respect of allowances dealt with by the earlier part of the definition, including recall payments.
The trial judge considered the evidence as to Dr Eastaugh’s work patterns, and concluded:
However, if I am wrong and the inclusive definition does not have the effect of automatically including recall payments within allowances payable regularly and periodically, it would be necessary to consider, in respect of an individual member, whether recall payments are ordinarily payable to that member regularly and periodically. [20]
[20]Ibid [43].
Grounds of appeal
There are six proposed grounds of appeal relied on by FSS. It is not necessary to set out the grounds in these reasons. The essence of the complaint by FSS relates to construction of the definition of ‘salary’ by the trial judge, particularly the conclusions of the trial judge, first, that recall payments are ‘roster related payments’; and, second, that ‘including’ extends ‘allowances … which are ordinarily payable regularly and periodically’ to include roster related payments.
Applicant’s submissions
FSS commenced by observing that the rights and liabilities of parties under a provision of a contract are determined objectively by reference to its text, context and purpose,[21] emphasising that words in a contract do not have a ‘natural meaning’ which can be ascertained in isolation.[22] FSS submitted that in concluding that recall payments were ‘roster related payments’ the trial judge focused narrowly on those words and failed to consider the context in which they appear in the definition of ‘salary’, which in r 3B.11.1 reads:
…plus any allowances (not of a cost-reimbursement type such as an expense of office, uniform allowance, tool allowance, reimbursement for travel or other incidental expenses) which are ordinarily payable regularly and periodically (including shift and roster related payments)…
[21]Mount Bruce Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104, 116 [46] (French CJ, Nettle and Gordon JJ).
[22]Apple & Pear Australia Ltd v Pink Lady America LLC (2016) 343 ALR 112, 148 [119] (Tate JA); 178 [229] (Ferguson and McLeish JJA).
The words ‘roster related payments’ appear in that part of the definition of ‘salary’ concerned with amounts beyond the ‘member’s ordinary time rate of pay’, namely ‘allowances … which are ordinarily payable regularly and periodically’. On call payments, which are a fee to compensate for the inconvenience of being rostered on call, and shift related payments, which are extra payments to compensate for the inconvenience of a rostered shift, are included. However, recall payments made when a member who is on call is required to return to the hospital to provide emergency medical services, and are thus a fee for service, are not a payment for being on roster, and are not included.
FSS submitted that the trial judge erred when analysing the definition by focusing exclusively on periods when a member was ‘rostered on call’.[23] It was submitted that the trial judge erred by, in effect, applying a ‘but for’ test, reasoning that each payment received by a member in consequence of being rostered on call was a roster related payment. The trial judge reasoned that whenever being rostered on call was a ‘condition precedent’ to a payment being made to a member then that payment was a ‘roster related payment’. FSS submitted that the concept of being ‘rostered’ should not be confined to periods ‘on call’, but as referring to simply having rostered duties, that is, being on duty. FSS submitted that if ‘roster’ is not limited to on call but refers more broadly to the notion of being on duty then applying the reasoning of the trial judge would result in every payment made to a member by their employer being included in ‘roster related payments’. The logical consequence of that reasoning was ‘in effect to annihilate the rule’, so that salary could be simply defined as ‘the amount equal to the member’s roster related payments’. It was submitted that the conclusion of the trial judge that the phrase ‘related to’ should be given the widest operation ignored the fact that the operation of the phrase should be determined by the context in which it sits.[24]
[23]Reasons [10], [18]–[19].
[24]PMT Partners Pty Ltd v Australian National Parks & Wildlife Service (1995) 184 CLR 301, 330–331.
FSS submitted that a construction of the definition which included on call payments and shift related payments as part of salary, but excluded recall payments, is a construction which creates greater certainty in relation to contribution by employers to the Fund and therefore satisfies the need for a construction which is practical and purposive. It was submitted that recall payments are, by their very nature, unpredictable. Because by their character, viewed objectively, recall payments are not payments ‘ordinarily payable regularly and periodically’ they are excluded from the definition of salary. Funding certainty is therefore achieved.
Next FSS submitted that in context the word ‘including’ appearing in parentheses prior to ‘shift and roster related payments’ should not be understood to have created a deeming provision resulting in ‘shift and roster related payments’ being brought within the definition whether or not they are ‘ordinarily payable regularly and periodically’. FSS submitted that, in the context of the definition, ‘including’ means that roster related payments are not excluded from the definition of ‘allowances’ provided that they are ordinarily payable regularly and periodically. FSS submitted that in this case the function of the word ‘including’ was to bring the items within the parentheses within the genus of ‘allowances’, adding:
But just like the broader genus is qualified by the adverbial phrase ordinarily payable regularly and periodically, so these two species brought within the genus are similarly qualified.
FSS continued:
Our submission is that it’s tolerably clear that the words ‘Plus any allowances which are ordinarily payable regularly and periodically (including shift and roster related payments)’ [have] the natural meaning that after those words ‘shift and roster related payments’ one is meant to infer ‘which are ordinarily payable, regularly and periodically’. They’re qualified in the same way that allowances as an entire genus is also qualified.
Finally, FSS submitted that the construction for which it contended was consistent and coherent with the balance of r 3.B.11.1(b)(ii) as it dealt with allowances. For the purposes of the submission, FSS considered three limbs of r 3.B.11.1(b)(ii): first, ‘any allowances (not of a cost-reimbursement type such as an expense of office, uniform allowance, tool allowance, reimbursement for travel or other incidental expenses) which are ordinarily payable regularly and periodically (including shift and roster related payments)’; second, ‘including certificate/qualification allowances and higher duties allowances for at least a 52 week period’; third, ‘excluding any other allowances which are ordinarily not paid over a 52 week cycle or do not flow from regular rostered duty’. FSS submitted the second limb of the definition was addressed to allowances of a different character than those dealt with by the first limb. For example, higher duties allowances are not apt for consideration by reference to the first limb because it is not possible to determine objectively from their nature or character whether the allowances referred to in the second limb will be ordinarily payable regularly and periodically. Instead, it is necessary to ask whether they have been paid for at least a 52 week period in order to determine if they come within the definition of salary. The third limb applies to all allowances which have fallen within the first limb and excludes allowances by reference to either of two factors expressed as the following questions:
But is it ordinarily not paid for a 52 week cycle? And does it not flow from regular rostered duty?
Because recall payments do not fall within the first limb, neither exclusion has application in the case of recall payments. The conclusion of the trial judge that the limb three exclusion has no work to do in respect of allowances which fall within the first limb raises the question: from what class or genus or field are allowances excluded by operation of limb three? FSS submitted that the construction adopted by the trial judge caused a degree of inconsistency and incoherence between limb one and limb three of the definition of salary.
Respondents’ submissions
Dr Eastaugh focused first on the meaning of the word ‘including’ as it appears in parentheses before ‘shift and roster related payments’. It was submitted that shift and roster related payments are not of their nature payments that are ‘ordinarily payable regularly and periodically’ because that necessarily depends on shifts allocated to an employee from time to time or the rostering of the employee to perform duties from time to time. Shift related payments and roster related payments may or may not be ‘allowances ordinarily payable regularly and periodically’, depending on circumstances. Consistent with the ordinary meaning of ‘including’, and with authority,[25] its use in the definition is both to extend what would otherwise come within the definition and to avoid possible uncertainty by including shift and roster related payments as allowances regardless of whether they are ordinarily payable regularly and periodically. It was submitted that the construction for which FSS contended attributes a meaning to ‘including’, which is neither expansive nor illustrative, and is therefore inconsistent with the ordinary meaning of the word and with authority. The construction for which FSS contends results in ‘including’ meaning ‘can include’. The two are not synonyms, and such a meaning would leave the phrase in parenthesis with no work to do.
[25]Corporate Affairs Commission (SA) v Australia Central Credit Union (1985) 157 CLR 201, 206 (Mason ACJ, Wilson, Deane and Dawson JJ); Cohns Industries Pty Ltd v Deputy Federal Commissioner of Taxation (1979) 24 ALR 658, 660 (Young CJ, Starke and Gray JJ).
Dr Eastaugh submitted that if ‘including’ referred only to ‘allowances’ and was intended to be used to mean that ‘shift and roster related payments’ are ‘allowances’ provided they are ‘ordinarily payable regularly and periodically’ then the words in parentheses ‘(including shift and roster related payments)’ would follow the first occurrence of the word ‘allowances’ in the definition. In this case ‘including’ comes after the phrase ‘allowances … ordinarily payable regularly and periodically’, and applies to extend or clarify what would otherwise come within that phrase. Dr Eastaugh placed reliance on a passage from the decision of the Full Court in Cohns Industries Pty Ltd v Deputy Federal Commissioner of Taxation,[26] in which the plurality referred to a judgment of Kitto J in YZ Finance Co Pty Ltd v Cummings,[27] in which his Honour said:
Unlike the verb ‘means’, ‘includes’ has no exclusive force of its own. It indicates that the whole of its object is within its subject, but not that its object is the whole of its subject. Whether its object is the whole of its subject is a question of the true construction of the entire provision in which the word appears. [28]
In the case of the definition of salary, the object of ‘including’ is ‘shift and roster related payments’, which is then included in the subject ‘allowances … ordinarily payable regularly and periodically’.
[26](1979) 24 ALR 658.
[27](1964) 109 CLR 395.
[28]Ibid 401–2.
Dr Eastaugh submitted the construction of the definition for which he contended removes uncertainty and the need for further enquiry and thus achieves the need for a practical and purposive construction. The words in parenthesis ‘(including shift and roster related payments)’, result in shift and roster related payments being brought within the definition of salary whether or not they are allowances ordinarily payable regularly and periodically. This removes the need for an employer to make an assessment on a case by case basis whether particular shift or roster related payments satisfy the requirement of being ordinarily payable regularly and periodically, and thus removes any uncertainty with respect to an employer’s contribution to the Fund.
Next it was submitted that there is no inconsistency with the balance of the definition. Limb two, which reads ‘including certificate/qualification allowances and higher duties allowances for at least a 52 week period’ should be read in effect to exclude such allowances in circumstances in which they are paid for less than a 52 week period. Limb three, ‘excluding any other allowances which are ordinarily not paid over a 52 week cycle or do not flow from regular rostered duty’, makes it clear that what is intended to be included is payments which do flow from regular rostered duty. Recall payments may be irregular, but to the extent they flow from rostered duty they are included by limb one and they are not otherwise excluded by limb three.
Dr Eastaugh submitted that ‘roster related payments’ included two components, the aggregate of which is the fee for the service. An employee is required in the rostered period to be available for work and to attend work if required. There are two elements to the service provided by the employee, the first is standing ready to attend work, and the second is attending work if required. The employee is not paid for this service by an hourly rate, but is paid on a separate basis, the aggregate of the on call payment and the recall fee being the RGV service fee. During periods when an employee is rostered on call the employee receives remuneration which is the aggregate of the on call and recall payments.
Finally, Dr Eastaugh submitted there was no reason why payments for periods that an employee was required to be rostered to perform duties ought not be included for the purpose of calculating superannuation entitlements. This would not make the definition too expansive because services provided outside rostered duty or rostered on call periods would not come within the definition of salary. Work performed by an employee at a time when the employee was not rostered to be at work or to be on call and not part of shifts which the employee had been allocated was work which was not ‘shift and roster related’, and would therefore not come within the definition of salary.
Analysis
A superannuation trust deed is a commercial document and should be given a business like interpretation, which requires attention to be paid to the language used in the deed, the commercial circumstances which the deed addresses, the context in which it operates and the objects it is intended to secure.[29] It is necessary to consider what a reasonable person would understand by the language used in the deed and the rules.[30] The Rules must be interpreted to give the words used their ordinary and fair meaning.[31] When questions arise as to the meaning of words used in the Rules they are ‘to be answered in a practical and realistic way, not in a way which adopts an overly fine or theoretical approach that is alien to commercial agreements.’[32] The words or terms used are to be understood in the context and in relation to the circumstances in which they are used.[33] A practical and purposive approach should be applied to the interpretation of superannuation schemes.[34]
[29]Hannover Life Re of Australasia Ltd v Colella (2014) 47 VR 1, 4 [3].
[30]Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165, 179 [41] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ).
[31]McCann v Switzerland Insurance Australia Ltd (2000) 176 ALR 711, 725 [74] (Kirby J).
[32]Ibid 729 [81] (Kirby J).
[33]Apple & Pear Australia Ltd v Pink Lady America LLC (2016) 343 ALR 112, 147–8 [118] (Tate JA), 178 [229] (Ferguson and McLeish JJA).
[34]Ansett Australia Ground Staff Superannuation Plan Pty Ltd v Ansett Australia Ltd(2002) 174 FLR 1, 54 [215] (Warren J).
As mentioned, the subject of this appeal is the answer of the trial judge to the following question:
Are recall payments made to members who are full time or part time employees (other than casual employees) for the provision of emergency services (whether full time or part time) included in ‘Salary’ (subparagraph (b)(ii) of the definition) within the meaning of r 3B.11.1?
That question directs attention to sub-r (b)(ii) of the definition of ‘salary’ in r 3B.11.1 of the Rules. The definition is set out in full above.[35] It is convenient to set out the relevant passage again. This reads:
[35]See [28] above.
Salary means in respect of a defined benefit member:
…
(b)who is not a Casual Employee:
…
(ii) if there is no Superannuation Salary in respect of the member at the relevant time, the amount equal to that member’s ordinary time rate of pay, plus any allowances (not of a cost-reimbursement type such as an expense of office, uniform allowance, tool allowance, reimbursement for travel or other incidental expenses) which are ordinarily payable regularly and periodically (including shift and roster related payments), including certificate/qualification allowances and higher duties allowances for at least a 52 week period, but excluding any other allowances which are ordinarily not paid over a 52 week cycle or do not flow from regular rostered duty or any higher amount advised to the Trustee by the Employer from time to time; …
Argument proceeded on the basis that there was no Superannuation Salary. For a defined benefit member who is not a Casual Employee ‘salary’ is first comprised of ‘that member’s ordinary time rate of pay’. Next the sub-rule provides for the inclusion and exclusion of allowances from a member’s ‘salary’. Finally the sub-rule allows for a variation of ‘salary’ when a higher amount is advised to the trustee by the employer.
If recall payments paid to a defined benefit member are to be included in the salary of that member, it will be by operation of the following part of the sub-rule:
… plus any allowances (not of a cost reimbursement type such as an expense of office, uniform allowance, tool allowance, reimbursement for travel or other incidental expenses) which are ordinarily payable regularly and periodically (including shift and roster related payments), …
In order to answer the question posed, it is necessary to consider the following:
(a)What is the meaning and function of the word ‘including’ (derived from the verb ‘includes’) appearing in parenthesis before ‘shift and roster related payments’?
(b)Are recall payments roster related payments?
I will deal with these questions in turn.
What is the meaning and function of ‘including’?
Although r 1A.22.1(f) says something of the use to be made of ‘including’ in the Rules, it does not assist with the construction issues which now arise.[36] The only consequence of r 1A.22.1(f) in the case of r 3B.11.1(b)(ii) is that ‘allowances ordinarily payable regularly and periodically’ are not limited to things in the nature of ‘shift and roster related payments’.
[36]Rule 1A.22(f) provides that ‘the use of the word “including” does not limit a Rule to the things (or things of a similar nature) which come after that word’.
As noted, FSS contends that ‘including’ means that roster related payments are not excluded from the definition of ‘allowances’ provided that they are ordinarily payable regularly and periodically. Dr Eastaugh, on the other hand, contends that ‘including’ means that roster related payments are included as ‘allowances’ regardless of whether they are ordinarily payable regularly and periodically.
At issue is whether ‘including’ functions to bring ‘shift and roster related payments’ within ‘allowances … which are ordinarily payable regularly and periodically’ regardless of whether those payments are in fact payable regularly and periodically. The issue can be broken into two parts. First, is the subject of ‘including’ the noun ‘allowances’ or the phrase ‘allowances … which are ordinarily payable regularly and periodically’? Second, does ‘including’ function only to clarify and remove uncertainty that ‘shift and roster related payments’ are within its subject or does ‘including’ also function to expand by bringing within its subject ‘shift and roster related payments’ that might otherwise not fall within that subject?
The Macquarie Dictionary contains the following definition:
include vt (included, including) 1. to contain, embrace, or comprise, as a whole does parts or any part or element. 2. to place in an aggregate, class, category, or the like. 3. to contain as a subordinate element; involve as a factor. [37]
[37]Macquarie Dictionary Publishers Pty Ltd, 6th ed, 2013.
As the definition demonstrates, ‘including’ can be used both to clarify that its object is within its subject, and to expand its subject to include its object.
The object of ‘including’ is ‘shift and roster related payments’. In my view the subject of ‘including’ is the composite phrase, ‘allowances … ordinarily payable regularly and periodically’. Such a result fits the structure of the sub-rule. If the subject of ‘including’ was only the noun ‘allowances’, the structure of the sub-rule would be expected to have been different. There are many ways this could have been achieved. Just by way of example the sub-rule could read:
plus any allowances (including within allowances shift and roster related payments; but excluding from allowances payments of a cost reimbursement type such as an expense of office, uniform allowance, tool allowance, reimbursement for travel or other incidental expenses) which are ordinarily payable regularly and periodically, including certificate/qualification allowances ….
Alternatively, the topic of ‘shift and roster related payments’ could have been dealt with separately in the sub-rule, as with certificate/qualification allowances and higher duties allowance, to clarify that the subject of ‘including’ was limited to ‘allowances’, and it could have been expressly stated in the sub-rule that ‘shift and roster related payments’ are included in ‘allowances’ provided they are ordinarily payable regularly and periodically. That the sub-rule is structured with ‘including shift and roster related payments’ in parentheses following ‘allowances … which are ordinarily payable regularly and periodically’ indicates, in my view, that the subject of ‘including’ is the composite phrase which precedes the parentheses.
Prior to reaching the words in parentheses, the class or genus of ‘allowances’ with which that part of the sub-rule is concerned has been defined, first by excluding allowances of a cost reimbursement type, then by the phrase ‘which are ordinarily payable regularly and periodically’. It is to that defined class or genus of allowances that ‘including’ applies.
The ordinary meaning and function of the word ‘including’ is both to expand its subject to include its object, and to clarify or render certain that its object is within its subject. There is nothing in the context of r 3B.11.1(b)(ii) which dictates or indicates that the meaning of ‘including’ is restricted or limited so that the word functions only to clarify that its object ‘shift and roster related payments’ is within its subject ‘allowances … which are ordinarily payable regularly and periodically’, and not also to expand its subject to include its object. That part of the sub-rule dealing with allowances provides first that cost reimbursement expenses and uniform and tool allowances are excluded whether or not they are payable regularly and periodically. Shift and roster related payments are included whether or not they are payable regularly and periodically. Certificate qualification allowances and higher duties allowances are included if payable for at least a 52 week period. The next part of the sub-rule is directed to ‘any other allowances’ of a kind not specifically dealt with to that point, that is things other than cost reimbursement allowances, shift and roster related payments and certificate/qualification and higher duties allowances. An allowance not within one of those categories will be excluded if it is not ordinarily payable over a 52 week cycle or does not flow from regular rostered duty. Because it is a ‘catch-all’ part of the sub-rule designed to cover allowances not yet dealt with there may naturally be a degree to which this part of the sub-rule covers ground previously traversed. It is not possible to identify in the circumstances of Dr Eastaugh’s employment an allowance which falls into this residual category. However, this part of the sub-rule may have work to do in respect of other allowances paid to other members of the Fund. It is sufficient to conclude that no disconformity or incoherence arises by giving ‘including’ its ordinary meaning. In my view ‘including’ functions to clarify and expand ‘allowances … which are ordinarily payable regularly and periodically’ to include shift and roster related payments, regardless of whether they are payable regularly and periodically.
It is relevant to consider which of the alternative constructions contended for by the parties best achieves the purpose of the Rules and a practical outcome. It is not possible to determine whether shift and roster related payments are ordinarily payable regularly and periodically without considering the individual circumstances of an employee who is a member of the Fund, including any enterprise agreement or individual contract which applies and the circumstances of that employee’s employment including the pattern of work hours and duties. The Rules do not clarify what will qualify payments as being made regularly and periodically. There will be instances where shift and roster related payments are payable regularly and periodically, and instances where they are not. This will vary between employees, and possibly for an individual employee over time and between different payments.
Take the case of a doctor rostered on call each Thursday night who, because of the case load of the hospital, is required to attend the hospital and perform work on 90 per cent of those nights. Presumably in that instance both the on call payment paid for being rostered and the recall payment paid for attending and performing work duties would be payments made regularly and periodically. What would the outcome be if the doctor was required to work 60 per cent of those on call nights, or 35 per cent; or if the pattern changed over time? What if the same doctor was occasionally rostered on call on a Sunday night in addition to always being on call on the Thursday night? Are the Sunday night on call payments excluded, but the Thursday on call payments included? Or if the doctor was required to cover the Sunday night on call roster for a month, or two months, or six months; and was required to work every one of those nights? Or consider the case of the doctor who is rostered on call an average of one night per week and is required to attend and to perform duties an average 60 per cent of those nights, but on a variable pattern? At what point do the on call payments and recall payments meet the description ‘payable regularly and periodically’?
I accept the submission for Dr Eastaugh that shift and roster related payments are not inherently or by their nature payments which are made regularly and periodically, but depending on circumstances may meet that description. The construction of r 3B.11.1(b)(ii) for which FSS contends would result in the need for enquiry and evaluation to determine which shift and roster related payments made to an employee met the requirement of being payable regularly and periodically in order to determine the employee’s ‘salary’ from time to time. This would also be necessary to determine the contribution required by the employee and the employer to the Fund, and the employee’s ultimate entitlement in the Fund. In my view, one purpose of the Rules is to provide short-term certainty as to ‘salary’ and contributions, and long-term certainty as to funding and the benefit payable to members. The construction for which FSS contends does not appear to achieve those outcomes unless one excludes recall payments altogether and, as discussed, I consider that this conflicts with the ordinary meaning of ‘including’ construed in context. Further, given the need for enquiry and evaluation by employers as to whether payments meet the description, and the potential for those decisions to be disputed by employees, it is not a construction which is practical.
The construction of r 3.B.11.1(b)(ii) for which Dr Eastaugh contends sits best with the ordinary meaning of the language used in the definition as well as achieving certainty of outcome. All shift and roster related payments are included in ‘salary’. No enquiry or evaluation is required of the patterns of payment for individual members. It is a construction which achieves a practical and purposive outcome.
Are recall payments roster related payments?
Dr Hamley explained in her affidavit that a doctor is on call when that doctor is rostered on call. A doctor who is rostered on call and is required to be at the hospital to attend to patients has been recalled to duty. Doctors are remunerated for being rostered on call and for being recalled in a variety of ways depending on the enterprise agreement and contract of employment which applies. As mentioned above, recall payments may be included in a doctor’s total salary as part of a ‘rolled up rate’, or there may be payment calculated on the number of hours worked by the doctor on recall, or the doctor may be paid a fee for services performed while recalled to duty. Dr Hamley stated that some doctors receive both on call payments and recall payments, and some receive one but not the other.
According to Dr Eastaugh’s employment agreement with Eastern Health, on call commitments were an integral component of his appointment, with the expectation that he would be available for on call duties as rostered. In the employment agreement ‘in-hours’ were between 8.00 am and 6.00 pm Monday to Friday. ‘After-hours’ were all other hours, including public holidays. The contract contemplates Dr Eastaugh being rostered on call during after-hours periods. Dr Eastaugh confirmed this regularly occurred. Dr Hamley stated the Alfred Hospital operates 24 hours a day, seven days a week, 365 days a year. According to Dr Hamley different units in a hospital will have different hours of operation, some operating 24 hours a day, and others for hours closely aligned with traditional business hours. Dr Eastaugh stated that hospitals offer 24-hour service, and that it was common for doctors, nurses, radiographers, pathology staff, orderlies, cleaners, security staff, clerical staff and engineering and maintenance staff to perform shift work and to be involved in some form of on call arrangements. The nature of work performed by defined benefit members of the Fund varies. There is no evidence of arrangements for remunerating workers other than doctors for performing recall duties.
The evidence in this case leads to the readily available conclusion that a significant part of the operation of hospitals involves provision of services ‘after- hours’ requiring staff to perform shift work or to be rostered on call and to be recalled to the hospital to attend to patients as needed. Often the needs of patients require urgent or emergency response. Many patients require care outside usual business hours. The patient load and care requirements faced by a hospital are likely to vary. This is the usual business of hospitals. To conduct that business, hospitals often require employees to provide the service of performing shift work or of being rostered on call and attending work as patients’ needs require. That is the broader context in which the meaning of ‘shift and roster related payments’ is to be determined.
In my view, a shift related payment is the payment to an employee for providing the service of working the shift. A roster related payment is the payment to the employee for providing the service of being rostered on call holding himself or herself out as available for work, and for attending and working during that rostered period if required. Each payment to the employee is directly related to the service the employee provides by either working the shift or by being rostered on call and attending work as required. In my view there is no basis for treating recall payments differently to remuneration received by an employee for the service of working a shift, or remuneration received by an employee for the service of making himself or herself available for an on call roster. A recall payment is the remuneration paid to the employee for providing the service of being at the hospital and performing duties while rostered on call.
It is clear from the evidence of Dr Hamley that the way in which doctors are remunerated for on call work varies greatly. There would seem to be no doubt that when recall payments are included as part of a doctor’s total salary in a ‘rolled up rate’ superannuation contributions and entitlements for that doctor would be calculated on the total salary incorporating recall payments. There may be other employment arrangements between participating employers and employee members of the Fund which similarly place beyond doubt that recall payments are within that member’s ‘salary’. I agree with the trial judge that it would be anomalous if the manner of payment of remuneration to different members of the Fund for performance of the same service while rostered on duty in some instances gave rise to an entitlement to superannuation benefits and in other instances did not.
FSS submitted that construing roster related payments to include recall payments would result in roster related payments being defined so broadly as to capture all remuneration and allowances of whatever nature paid to an employee by a hospital. I do not agree. First, I note that the task for the Court was to determine whether recall payments are within shift and roster related payments. It was not the task for the Court to determine the outer boundaries of shift and roster related payments. Second, if that had been the task it would not be possible to perform on the evidence before the Court. The Court had available evidence as to Dr Eastaugh’s employment arrangements and evidence from Dr Hamley of a general nature as to the operation of hospitals and units within hospitals and as to the employment of doctors. As mentioned, there are 167 employers and over 8,000 employee members of the Fund. Dr Hamley’s evidence establishes that the employment entitlements and employment arrangements of the members of the Fund will be governed by different enterprise agreements, employment contracts and arrangements by hospitals for the performance of work. Third, while that submission may have some merit in relation to the approach to the construction of ‘roster related payments’ taken by the trial judge, I have concluded that recall payments are within shift and roster related payments because recall payments are for some members, including Dr Eastaugh, part of the aggregate remuneration paid for the service of being rostered on call and attending to perform duties while rostered. It is easy to conceive of some payments by employers to members in respect of duties which are not rostered, or for matters which do not bring them within the definition. For example, in the case of Dr Eastaugh, Category 4 and possibly Category 3 of the on call categories in Schedule 3 of his contract of employment with Eastern Health are not for rostered on call periods. Next, the cost-reimbursement expenses are neither shift nor roster related payments. Cost-reimbursement expenses are incidental to, or incidents of, the employment arrangements of an employee. Leave payments are not roster related. There may well be other payments received by employees from hospitals which are incidental to providing a service of performing shift work or being rostered on duty or on call.
As stated above, a practical and purposive approach should be taken to the definition of salary in r 3B.11.1(b)(ii). In my view an approach which includes shift and roster related payments within the category of ‘allowances ordinarily payable regularly and periodically’ as part of the definition of salary, and places recall payments in the category of ‘shift and roster related payments’, achieves that end in a number of ways. First, it avoids the anomalous result that some members receive superannuation benefits in respect of remuneration paid for rostered on call and recall while rostered, whilst others do not. Secondly, it is an approach which achieves greater certainty for members, employers and the Fund. An analysis of shift and roster related payments requiring evaluation on an individual basis to determine whether such payments were ‘ordinarily payable regularly or periodically’ is avoided. Thirdly, because contributions to the Fund are determined on the basis of salary, certainty as to what comes within salary creates certainty for the funding of member entitlements. That is a critical aspect of the operation of the defined benefits scheme.
Notice of contention
It was not in dispute that Dr Eastaugh’s employer, Eastern Health, included recall payments made to Dr Eastaugh in the amount of his salary advised to the trustee from time to time. Further questions were posed in the proceeding directed to the issue of whether such an advice from an employer to the trustee had the effect of bringing within ‘salary’ that part of the amount advised which would not otherwise meet the definition. In other words, if FSS were correct and recall payments are not ‘salary’, did advices from Eastern Health to the trustee which included recall payments made to Dr Eastaugh as part of his salary have the effect of bringing those recall payments within ‘salary’?
The questions posed in the further amended originating motion are:
2(c)Does data provided to the Plaintiff by employers from time to time which contains information about a member’s salary constitute:
(i)advice to the Plaintiff of a ‘higher amount’ within the meaning of sub paragraph (b)(ii) of the definition of ‘Salary’ in rule 3B.11.1 (‘Higher Amount’) if the data does not specifically identify that information as communicating a higher amount for the purpose of that definition?
(ii)an ‘amount advised to the Trustee by the Employer from time to time as the member’s salary for the purpose of the HS DB Rules (being an amount not less than the member’s Salary immediately before Salary Amendment Date)’ within the definition of ‘Superannuation Salary’ in rule 3B.11.1 (‘Super Salary’) if the data does not specifically identify that information as communicating an amount for the purpose of that definition?
(d)Where data provided to the Plaintiff by an employer from time to time contains information about a member’s salary which includes a recall payment by the employer is the amount communicated a Higher Amount or Super Salary for the purpose of the Rules?
The trial judge considered question 2(c)(i) was rendered moot by his conclusion that recall payments were ‘salary’, and was not satisfied the evidence and submissions before the Court provided a sufficiently clear foundation to answer questions 2(c)(ii) and 2(d). Relying on the discretion conferred by r 54.02 of the Supreme Court (General Civil Procedure) Rules 2015 the trial judge declined to answer questions 2(c)(i) and (ii) and 2(d).
Submissions
Dr Eastaugh submitted that if the appeal is allowed, this Court should proceed to determine the further questions in his favour. On appeal Dr Eastaugh submitted that the words ‘… or any higher amount advised to the trustee by the employer from time to time’ appearing at the end of r 3B.11.1(b)(ii) should be given their ordinary meaning. Where an employer advises the trustee of an amount as the salary of an employee member which is higher than ‘salary’ as otherwise defined, the additional words have the effect that the higher amount is the employee’s ‘salary’.
FSS submitted that there was no evidence that the salary amount advised by employers to the trustee was broken into components, or that there was uniformity as to the frequency, circumstances or manner of advice given to the trustee. It was submitted that the trial judge was correct to observe that advice from employers to the trustee could vary widely as to its form and content, and to conclude that the evidence did not provide a sufficiently clear foundation to answer the questions. Further, FSS submitted that on its proper construction ‘any higher amount advised to the trustee by the employer from time to time’ required more formal notice to be given by the employer to the trustee to ensure there was identification and clarity that what was being advised was a ‘higher amount’, so that there could be a degree of uniformity sufficient for the trustee to ensure financial stability of the Fund. It was submitted the notification provision at the foot of the definition applied to confirm the need for formal notification of a higher amount.
Analysis
In relation to Dr Eastaugh’s circumstances the evidence establishes that: advices from Eastern Health to the trustee included recall payments made to Dr Eastaugh in the salary amount and the salary advice did not break the amount of salary into components.
Mr Peter Blight, head of member administration of FSS, gave evidence to the effect that information relevant to fund members is supplied to the trustee by payroll providers engaged by participating employers and that the information provided includes contribution rates and contribution amounts for both employee and employer, and the salary on which those contributions are determined.
However, the evidence does not establish that:
(a) the salary amount advised to the trustee invariably or usually includes recall payments made to employee members;
(b) the salary amount is invariably or usually broken into component parts;
(c) a common approach is taken by employers and payroll providers to the information provided to the trustee;
(d) what other amounts may be included in salary by some employers and payroll providers;
(e) whether advices are invariably or usually given with the same frequency, in the same manner, and including the same content detail.
The evidence does not establish that a common or uniform approach to provision of salary advice to the trustee was invariably or unusually taken, or that there was any capacity for the trustee to interrogate the salary data provided. In my view the trial judge was, with respect, correct to determine that the evidence did not provide an adequate basis to answer the further questions relating to the effect of salary information provided by employers to the trustee from time to time. For those reasons, the notice of contention is rejected.
Conclusion
I would give leave to appeal.
For the above reasons the appeal should be dismissed.
- - -
4