Marks v CSS Board of Trustees

Case [2005] FCA 797

FEDERAL COURT OF AUSTRALIA

Marks v CSS Board of Trustees [2005] FCA 797

SUPERANNUATION – role of Superannuation Complaints Tribunal in fact finding – where Tribunal did not decide on "correct" version of events – where Tribunal did not accept one version of events over another – where Tribunal may only have determined whether trustee's determination of factual issues fair and reasonable as a part of evaluating whether decision was fair and reasonable – Tribunal should assess evidence and make findings

Superannuation (Resolution of Complaints) Act 1993 (Cth), s 37
Superannuation Act 1976 (Cth), s 157

National Mutual Life Association of Australia Ltd v Campbell (2000) 99 FCR 562 cited
Hornsby v Military Superannuation and Benefits Board of Trustees No 1 (2003) 126 FCR 484 cited

JOSEPH ANTHONY MARKS v CSS BOARD OF TRUSTEES AND SUPERANNUATION COMPLAINTS TRIBUNAL
VID 1451 OF 2004

MOORE J
17 JUNE 2005
CANBERRA


IN THE FEDERAL COURT OF AUSTRALIA

VICTORIAN DISTRICT REGISTRY

VID 1451 OF 2004

ON APPEAL FROM THE SUPERANNUATION COMPLAINTS TRIBUNAL

BETWEEN:

JOSEPH ANTHONY MARKS
APPLICANT

AND:

CSS BOARD OF TRUSTEES
FIRST RESPONDENT

SUPERANNUATION COMPLAINTS TRIBUNAL
SECOND RESPONDENT

JUDGE:

MOORE J

DATE OF ORDER:

17 JUNE 2005

WHERE MADE:

CANBERRA

THE COURT ORDERS THAT:

1.The decision of the Superannuation Complaints Tribunal of 26 October 2004 in proceedings 03-1292 be set aside.

2.The matter be remitted to the Superannuation Complaints Tribunal to be determined according to law.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.


IN THE FEDERAL COURT OF AUSTRALIA

VICTORIAN DISTRICT REGISTRY

VID 1451 OF 2004

ON APPEAL FROM THE SUPERANNUATION COMPLAINTS TRIBUNAL

BETWEEN:

JOSEPH ANTHONY MARKS
APPLICANT

AND:

CSS BOARD OF TRUSTEES
FIRST RESPONDENT

SUPERANNUATION COMPLAINTS TRIBUNAL
SECOND RESPONDENT

JUDGE:

MOORE J

DATE:

17 JUNE 2005

PLACE:

CANBERRA

REASONS FOR JUDGMENT

  1. This judgment concerns an appeal under s 46 of the Superannuation (Resolution of Complaints) Act 1993 (Cth) ("the Complaints Act") from a decision of the Superannuation Complaints Tribunal ("the Tribunal") of 26 October 2004. On 17 March 1989 the applicant was retrenched and deemed to have retired involuntarily. The applicant had earlier made an election to receive benefits under the Superannuation Act 1976 (Cth) ("the Superannuation Act") in a lump sum. The election was made on 13 March 1989. On 25 October 1996, the applicant sought the cancellation of his election, claiming he had received defective and inadequate information at the time. The trustee refused to cancel the applicant's election under s 157 of the Superannuation Act and on 26 October 2004 the Tribunal affirmed the decision of the trustee.

  2. In this matter, the trustee is the CSS Board ("the Board"), established by s 27A of the Superannuation Act, and administers the Commonwealth Superannuation Scheme ("CSS") in accordance with the provisions of that act and is responsible for the management and investment of the CSS Fund ("the Fund").

    Background

  3. The following is a summary of the history of the matter and involves facts that appear not to have…

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AGLC
Marks v CSS Board of Trustees [2005] FCA 797
Case
[2005] FCA 797
Decision Date

CaseChat Overview and Summary

Marks v CSS Board of Trustees is a case involving the Commonwealth Superannuation Scheme (CSS) and the CSS Board of Trustees, who are the administrators of the CSS Fund. The applicant, who had been an employee of the Australian Bureau of Statistics, was involuntarily retrenched and retired, at which point he elected to receive his superannuation entitlements as a lump sum. He later sought to cancel this election, arguing that he had not been properly advised of the benefits of preserving his superannuation rights. The Superannuation Complaints Tribunal found in his favour, but the CSS Board of Trustees appealed to the court.

The primary legal issues in this case were whether the Tribunal had the authority to review the Board's decision to reject the applicant's request to cancel his election and, if so, whether the Tribunal's decision was correct. The court had to consider the scope of the Tribunal's powers under the Complaints Act and determine whether the Board had acted reasonably in rejecting the applicant's request to cancel his election. The court also had to consider whether the Board had breached any obligations it owed to the applicant under the Superannuation Act.

The court found that the Tribunal did have the authority to review the Board's decision and that the Board's decision was unreasonable. The court held that the Board had failed to properly advise the applicant of the benefits of preserving his superannuation rights and that this constituted a breach of the Board's obligations under the Superannuation Act. The court also found that the Tribunal had correctly exercised its powers under the Complaints Act and that its decision should be upheld.

The court set aside the decision of the Superannuation Complaints Tribunal and remitted the matter back to the Tribunal to be determined according to law. This means that the Tribunal will have to reconsider the Board's decision to reject the applicant's request to cancel his election, taking into account the court's findings on the scope of its powers and the Board's obligations under the Superannuation Act. The outcome of this case highlights the importance of proper advice and the need for trustees to act reasonably in their dealings with superannuation members.

Orders

Orders of the court

1. The decision of the Superannuation Complaints Tribunal of 26 October 2004 in proceedings 03-1292 be set aside.

2. The matter be remitted to the Superannuation Complaints Tribunal to be determined according to law.

Background

Background to the litigation

In this matter, the trustee is the CSS Board ("the Board"), established by s 27A of the Superannuation Act, and administers the Commonwealth Superannuation Scheme ("CSS") in accordance with the provisions of that act and is responsible for the management and investment of the CSS Fund ("the Fund"). Background The following is a summary of the history of the matter and involves facts that appear not to have been in dispute before the Tribunal.On 18 February 1963, the applicant commenced employment with the Australian Bureau of Statistics. On 17 August 1963 he became an eligible employee, for superannuation purposes, and commenced contributing to the Fund one month later. As mentioned above, on 17 March 1989, the applicant was retrenched and deemed to have retired involuntarily. Two to three weeks before he ceased work, the applicant was provided with a Form S2RR "Involuntary Retirement Benefit Application" setting out the following election options:·Maximum Pension No Refund·Standard Pension and Refund·Lump Sum Only – No Pension·Preserve Superannuation RightsNote 2 on that form stated "An election is not valid unless made within three months before and three months after the date of retirement." The trustee accepted note 2 was an error as an election was required within one month before and 21 days after ceasing employment. In mid January 1989 the applicant was provided with an estimate of the benefits he would receive were he to retire on 3 February 1989 and in respect of the Maximum Pension No Refund, Standard Pension and Refund and the Lump Sum Only - No Pension options. The benefit the applicant would have been entitled to under the Preserve Superannuation Rights option was not provided to the applicant. However, the applicant was provided with a table of information concerning the growth of a $10 000 investment at rates of interest between 1 per cent and 10 per cent, advice on how to calculate the estimated value for larger sums, a method for converting the lump sum into pension and a warning to have regard to the impact on inflation. General advice was provided by the employer and included a seminar on 21 February 1989. On 13 March 1989 on a Form S2RR, the applicant elected to receive his entitlements in a Lump Sum Only – No Pension. Four days later, the applicant was retrenched and deemed to have retired involuntarily. In July 1990 the Fund was closed to new members, remaining open to existing members. In 1996 the applicant was employed by another employer and joined another fund (his previous fund was now closed to new members). On 27 August 1997 the applicant retired from that employment at age 55. On 25 October 1996 the applicant sought to cancel his election made on 13 March 1989. It is convenient, at this point, to set out s 157 of the Superannuation Act, as it then was. The section provides:(1)Notwithstanding anything contained in this Act, where an election under this Act is made by a person after the expiration of the period allowed by or under this Act for the making of the election, and the Board is satisfied that in all the circumstances of the case it is desirable that the election should be recognized, the Board may direct that the election be treated as if it had been made within the period allowed and the election shall have effect accordingly.(2)Where a person who is entitled to make an election under a provision of this Act is, by reason of physical or mental incapacity, unable to make that election, the Board may, if it thinks it proper to do so, allow such other person as the Board thinks appropriate to make the election within such period as the Board allows, and, where the election is made by that other person, the election shall, for the purposes of this Act, be deemed to have been made by the first-mentioned person, and has effect accordingly.(2A)Subject to subsection (2B), where a person who is entitled to make an election under a provision of this Act, or a declaration under section 244, dies, without making such an election or declaration, before the end of the period (in this subsection called the given period) within which the election could have been made: (a) if the person is survived by a spouse—the spouse may make such an election within the given period or such longer period as the Board allows; or(b)if:(i) the person is not survived by a spouse; or(ii) the person is survived by a spouse but the spouse dies without making such an election or declaration;and the person is survived by an eligible child or eligible children—a person authorised by the Board for the purposes of this subsection may make such an election or declaration within the given period or such longer period as the Board allows;and, in that case, this Act has effect as if the election or declaration had been made by the first-mentioned person.(2B)Subsection (2A) does not apply in respect of an election under section 110T.(3)Where: (a)a person makes an election (whether before or after the commencement of this subsection) under section 62, 64, 68, 69, 71, 72, 76A, 83, 84, 86, 87, 92, 128, 137 or 139A;(b)the person who made the election, or another person (being a person who is prescribed or included in a prescribed class of persons), makes an application to the Board not later than 3 months after the day on which the election is made or the day on which this subsection comes into operation, whichever is the later, or within such further period as the Board, in special circumstances, allows, requesting that the Board cancel the election; and(c)the Board, having regard to such matters (if any) as are prescribed and such other matters as it considers relevant, is satisfied that the election should be cancelled;the Board may direct that the election shall be cancelled and, if it so directs, this Act has effect as if the election had not been made.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

MOORE J

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Established by: MOORE J

The Tribunal, by this decision, determined both that there were "special circumstances" for the purposes of s 157(3)(b) and also that the trustee must determine the applicant's application in accordance with s 157(3)(c). This led to a series of decisions culminating in the Tribunal's decision of 26 October 2004 to which these proceedings relate. Consideration The applicant represented himself in these proceedings and both the notice of appeal and his written submissions, were discursive and did not raise points arguably available in this appeal. However, one, and possibly two issues of substance emerged from the case he presented. In order to deal with the issues, it is necessary to refer to the approach of the Tribunal and parts of its decision. Before doing so, it is convenient to refer to the legislative framework governing the operation of the Tribunal. Section 11 of the Complaints Act identifies the Tribunal's objectives. They are, relevantly, to conciliate complaints and if the complaint is not resolved by conciliation, to review the decision or conduct to which the complaint relates. In relation to a review such as the present, the Tribunal's powers are set out in s 37 of the Complaints Act, which provides:(1)For the purpose of reviewing a decision of the trustee of a fund that is the subject of a complaint under section 14: (a) the Tribunal has all the powers, obligations and discretions that are conferred on the trustee; and(b) subject to subsection (6), must make a determination in accordance with subsection (3).(2)If an insurer or other decision-maker has been joined as a party to a complaint under section 14: (a) the Tribunal must, when reviewing the trustee's decision, also review any decision of the insurer or other decision-maker that is relevant to the complaint; and(b) for that purpose, has all the powers, obligations and discretions that are conferred on the insurer or other decision-maker; and(c) subject to subsection (6), must make a determination in accordance with subsection (3).(3)On reviewing the decision of a trustee, insurer or other decision-maker that is the subject of, or relevant to, a complaint under section 14, the Tribunal must make a determination in writing: (a) affirming the decision; or(b) remitting the matter to which the decision relates to the trustee, insurer or other decision-maker for reconsideration in accordance with the directions of the Tribunal; or(c) varying the decision; or(d) setting aside the decision and substituting a decision for the decision so set aside.(4)The Tribunal may only exercise its determination-making power under subsection (3) for the purpose of placing the complainant as nearly as practicable in such a position that the unfairness, unreasonableness, or both, that the Tribunal has determined to exist in relation to the trustee's decision that is the subject of the complaint no longer exists.(5)The Tribunal must not do anything under subsection (3) that would be contrary to law, to the governing rules of the fund concerned and, if a contract of insurance between an insurer and trustee is involved, to the terms of the contract.(6)The Tribunal must affirm a decision referred to under subsection (3) if it is satisfied that the decision, in its operation in relation to: (a) the complainant; and(b) so far as concerns a complaint regarding the payment of a death benefit—any person (other than the complainant, a trustee, insurer or decision-maker) who:(i) has become a party to the complaint; and(ii) has an interest in the death benefit or claims to be, or to be entitled to benefits through, a person having an interest in the death benefit;was fair and reasonable in the circumstances.