MARSTON and DEFENCE FORCE RETIREMENT AND DEATH BENEFITS AUTHORITY
[2011] AATA 291
•4 May 2011
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2011] AATA 291
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2010/2537
GENERAL ADMINISTRATIVE DIVISION ) Re IAN MARSTON Applicant
And
DEFENCE FORCE RETIREMENT AND DEATH BENEFITS AUTHORITY
Respondent
DECISION
Tribunal Mr S. Webb, Member Date4 May 2011
PlaceWagga Wagga, NSW
Decision The decision under review is set aside and in place thereof the Tribunal decides that Captain Marston made a valid and effective election under section 61B(3) of the Defence Force Retirement and Death Benefits Act 1973 not to become a member of the Military Superannuation and Benefits Scheme prior to resuming continuous full-time service in the Army Reserve on 4 January 2010. .....................[sgd]............................
Mr S. Webb, Member
CATCHWORDS
DEFENCE FORCE RETIREMENT & SUPERANNUATION - recipient member - intention to resume continuous full-time service as a member of a Reserve for less than 12 months - option to elect applicable superannuation scheme - requirement for election prior to resuming service - construction of 'must, before resuming service, in writing addressed to the Authority, elect' – no strict requirement for written election to be received by the Authority prior to resumption of service - proof of written election prior to resumption of service - decision set aside
Defence Force Retirement and Death Benefits Act 1973 (Cth) ss 3, 5A, 61B
Military Superannuation and Benefits Act 1991(Cth) s 6
Defence Act 1903 (Cth) ss 4, 30, 31
Austral Pacific Group Limited v Airservices Australia [2000] HCA 39
Brien v P & E Phontos Pty Ltd [1999] FCA 1072
Brown v Comcare [2003] FCA 261
Chapman v Defence Force Retirement and Death Benefits Authority (2001) 108 FCR 537
Commonwealth v Verwayen (1990) 170 CLR 394
Defence Force Retirement and Death Benefits Authority v Gregory [2009] FCA 875
Defence Force Retirement and Death Benefits Authority v Mathews [2011] FCA 160
Grogan v Commonwealth of Australia [1999] 1 Qd R 30
Meriton Apartments Pty Ltd v Industrial Court of New South Wales [2008] FCAFC 172
Sargent v ASL Developments Ltd (1974) 131 CLR 634
Scarf v Jardine (1882) 7 App Cases 345
REASONS FOR DECISION
4 May 2011 Mr S. Webb, Member 1. Ian Marston gave more than 20 years service in the Australian Army before retiring. He attained the rank of Captain. Following retirement, periodically, he resumed service in the Army Reserve. He elected to remain in the Defence Force Retirement and Death Benefits Scheme (the DFRDB Scheme). In December 2009 he received a signal inviting him to resume service in the Reserve for a period of less than 12 months, to which he acceded[1]. Captain Marston wanted to continue in the DFRDB Scheme rather than becoming a member of the Military Superannuation and Benefits Scheme (the MSB Scheme). He knew that he had to make an election to that effect prior to resuming service on 4 January 2010, but he encountered a number of difficulties. The Defence Force Retirement and Death Benefits Authority (the Authority) did not receive Captain Marston’s written election until a few hours after he resumed service on that day[2].
[1] T7.
[2] T8.
2. The Authority decided by primary determination[3] and on reconsideration[4] that his election was not made prior to resuming service and, by default, Captain Marston was taken to be a member of the MSB Scheme as a result of which his DFRDB pension would not be payable during the period of his resumed service. Captain Marston has applied for review of this decision[5].
[3] T10.
[4] T20.
[5] T1.
3. The short facts arising from the materials and the oral evidence that are established on the balance of probabilities follow.
(a)On 31 May 1993 Captain Marston retired from the Defence Force having completed in excess of 20 years eligible service. Subsequently, he resumed service in the Army Reserve for varying periods. In each case he elected not to become a member of the MSB Scheme[6].
(b)On 13 March 2009 Captain Marston completed a D100 election form for the purposes of section 61B(3) of the Defence Force Retirement and Death Benefits Act 1973 (the DFRDB Act) in respect of a period of resumed service from 23 March 2009 to 30 November 2009[7]. Captain Marston’s oral evidence is that he provided this and previous election forms to his paymaster prior to resumption of service. It appears that the form was received by Defence on 18 March 2009 and by the Authority on 19 March 2009[8].
(c)On 17 December 2009 Captain Marston was sent an Australian Army signal concerning a period of resumed service from 4 January 2010 to 30 June 2010. On 18 December 2009 he expressed his intention to resume service as signalled[9].
(d)Between 0600 and 0700 hours on 4 January 2010 Captain Marston accessed the DFRDB Scheme website and downloaded a D100 election form. At approximately 0700 hours he completed and signed the election form[10].
(e)Between 0900 and 0930 hours Captain Marston arrived at the Kapooka Military Area and left the D100 election form in his car. He contacted the Authority by telephone to check that he had the correct form for the 61B(3) election and the particular kind of service (being continuous full-time service for less than 12 months). In the course of that telephone conversation he informed the Authority of his election, but he was told that the election was too late and should have been received the day before[11]. In all likelihood the Telephone Contact Record at T11 refers to this contact even though that Record was created on 15 January 2010.
(f)Captain Marston was unhappy about the Authority’s response, but he accepted what he was told and changed into his uniform. He was due to resume service later - after lunch - on 4 January 2010[12]. It appears, however, that he resumed service at approximately 1100 hours in order to urgently reset an armoury combination.
(g)At 1337 hours on 4 January 2010, despite the earlier telephone advice from the Authority, he sent his election form to the Authority by facsimile[13].
[6] See T3, T4 and T5, for example.
[7] T6.
[8] T17 folio 40; T20 folio 48 refers.
[9] T7.
[10] T8; Exhibits A2 and A3 refer.
[11] Oral evidence; Exhibit A2 and T12 folio 28 refer.
[12] Exhibit A1.
[13] T8 folio 20.
4. The issue in dispute arises in relation to section 61B(3) of the the DFRDB Act and has a narrow compass: did Captain Marston elect not to become a member of the MSB Scheme prior to resuming continuous full-time service on 4 January 2010?
5. In order to answer that question it is necessary to consider the relevant provisions of the DFRDB Act and the complementary provisions of the Military Superannuation and Benefits Act 1991 (the MSB Act). Section 61B(3) of the DFRDB Act requires that:
61B(3) A recipient member who:
(a)intends to resume full‑time service as a member of a Reserve for a continuous period of less than 12 months; and
(b)has not previously made, under this section, an election to become a member of the MSB scheme;
must, before resuming service, in writing addressed to the Authority, elect whether or not to become a member of that scheme.
6. It is agreed that paragraphs 61B(3)(a) and (b) are satisfied – Captain Marston intended to resumed continuous full-time service for a period of less than 12 months commencing on 4 January 2010 and he had not previously made an election to become a member of the MSB Scheme.
7. The MSB Act came into effect in 1991 and, in effect, closed the DFRDB Scheme, with only very narrow exclusions. Section 6 of the MSB Act is in the following terms:
6 Membership of Superannuation Scheme
(1) Subject to subsection (2), each of the following persons is, by force of this section, a member of the Scheme:
(a) a member of the Permanent Forces;
(b) a member of the Reserves who is rendering continuous full‑time service under an undertaking to serve for a period of not less than 12 months;
(c) a member of the Reserves who is rendering continuous full‑time service under an undertaking to serve for a period of less than 12 months unless that member has elected not to become a member of the Scheme under section 61B of the DFRDB Act.
(2) In spite of subsection (1), a person is not a member of the Scheme if the person is an eligible member of the Defence Force for the purposes of the DFRDB Act.
8. As can be seen, by operation of paragraph 6(1)(c) a member of the Reserves will be a member of the MSB Scheme unless a contrary election has been made under section 61B of the DFRDB Act. Importantly, the phrase ‘who is rendering’ refers to a state of affairs that starts when the person commences Reserve service. It is for this reason that an election under section 61B of the DFRDB Act must be made prior to the commencement of the particular period of resumed service if the operation of section 6 of the MSB Act is to be avoided: there is an absolute symmetry between these sections[14].
[14] Defence Force Retirement and Death Benefits Authority v Mathews [2011] FCA 160 at [33].
9. In reference to section 6(2) of the MSB Act, I note in passing that an ‘eligible member of the Defence Force’ is defined by section 3 of the DFRDB Act, but does not include a person who is excluded by operation of section 5A of that Act. Section 5A excludes a person who becomes a member of the Defence Force after 1 October 1991 or a member of a Reserve giving continuous full-time service of not less than 12 months after that date unless the person, relevantly, has made an election under section 61B. Following Chapman v Defence Force Retirement and Death Benefits Authority[15] and Defence Force Retirement and Death Benefits Authority v Gregory[16], paragraph 5A(1)(a) applies to Captain Marston’s resumption of service on 4 January 2010 as a member of the Army Reserve. By operation of sections 4, 30 and 31 of the Defence Act 1903, on resuming service in the Army Reserve he became, again, a member of the Defence Force. Thus, section 6 of the MSB Act and paragraph 5A(1)(a) of the DFRDB Act will apply unless Captain Marston elected not to become a member of the MSB Scheme prior to resuming service, whereupon the exclusions in paragraph 5A(2)(b) of the DFRDB Act and paragraph 6(1)(c) of the MSB Act would have effect.
[15] (2001) 108 FCR 537.
[16] [2009] FCA 875.
10. It is in this context that the requirement ‘must, before resuming service, in writing addressed to the Authority, elect whether or not to become a member of the [MSB Scheme]’ in section 61B(3) of the DFRDB Act is to be construed.
11. The Authority says that an election under 61B(3) is not made until it has been communicated in writing and this does not occur until the communication has been received by the Authority. Authority for this proposition was said to flow from Scarf v Jardine[17], Sargent v ASL Developments Ltd[18] and Grogan v Commonwealth of Australia[19]. In the Authority’s submission this must occur prior to the resumption of service if the election is to have force in respect to section 6 of the MSB Act.
[17] (1882) 7 App Cases 345 at 360-1.
[18] (1974) 131 CLR 634 at 655-656.
[19] [1999] 1 Qd R 30 at 34-5.
12. I do not accept the Authority’s submission that an election of the requisite kind is made only when it has been served on the Authority or communicated in writing.
13. It is clear enough that a written election must be made prior to the resumption of service: between the time the undertaking to serve is given by a person and the time that person actually resumes service[20]. But this does not mean in all cases that the election must be received by the Authority prior to that point in time. The section does not expressly require it; the requirement is for the election to be effectively made prior to the resumption of service. As will appear, to my mind, for an election to be effective it must be properly made in writing and telegraphed or communicated to the Authority. These are matters for proof in the face of uncertainty.
[20] Defence Force Retirement and Death Benefits Authority v Mathews [2011] FCA 160 at [41].
14. Unless an election not to become a member of the MSB Scheme prior to the resumption of service can be proved, section 6 of the MSB Act renders the person a member of that Scheme. Clearly, service of the written election on the Authority prior to the resumption of the service puts the matter beyond doubt and provides certainty. But to my mind this is simply an administrative convenience that does not rise to the level of a statutory requirement. While proof may most easily be achieved by service of the written election prior to the resumption of service, this is not the only proof.
15. Without an express requirement for lodgement of a written election with the Authority prior to the particular service, I would not too readily accept the rigid construction for which the Authority contends. A construction of that kind would not take into any account of the wide variety of circumstances in which a person may have exercised the choice conferred by statutory right and made an election in writing addressed to the Authority, without serving the written election on the Authority prior to the resumption of the particular period of service. Under the Authority’s construction an election would not be effective if it was sent by registered post and communicated orally to the Authority before the start of the particular period of service but was not received until after the service had commenced. Nor would it be effective if the election was received by Defence, a paymaster for example, and communicated orally to the Authority prior to the period of service but was not received by the Authority until after the service had commenced. One can conceive of many such examples.
16. The only guidance the DFRDB Act provides is the direction that the person ‘must, before resuming service, in writing addressed to the Authority, elect whether or not to become a member of [the MSB Scheme].’ The election to be made under 61B(3) for the purposes of the DFRDB Act and the MSB Act is a statutory right to opt out of the default MSB Scheme. This is a right that requires the exercise of choice. It is crystal clear that section 61B(3) imposes express limits on the exercise of that choice, once properly preconditioned, concerning the manner and the timeframe of the election, where failure to comply, or failure to elect, will result in the default statutory scheme being applied[21]. The election is to be made prior to the resumption of a period of service and it is to be in writing and addressed to the Authority. Satisfaction of these requirements does not require service of the written election on the Authority prior to the commencement of the period of service; service is not expressly or impliedly required by the section, nor do the objects and purposes of the DFRDB Act and the MSB Act require it. Nevertheless, for the election to be effective, it must be communicated to the Authority prior to the commencement of the particular period of service. I would not proceed too readily to accept any further limit on the exercise of the statutory right without express provision in the terms of the DFRDB Act or the MSB Act.
[21] Defence Force Retirement and Death Benefits Authority v Mathews [2011] FCA 160 at [41]; Defence Force Retirement and Death Benefits Authority v Gregory [2009] FCA 875 at [62].
17. The D100 election form Captain Marston used sets out the following instruction for lodgement: “It is your responsibility to send this completed form to DFRDB/MilitarySuper before you re-enter the ADF”[22]. This instruction requires no more than the sending of the completed form prior to resumption of service. It does not require receipt of the form by the Authority prior to that time.
[22] T6 folio 17.
18. To my mind the construction for which the Authority contends is not preferred. Having reviewed the authoritative cases to which I was referred, the following principles provide some assistance when deciding when an election is made and whether service is required for the purposes of the DFRDB Act or the MSB Act.
19. An election requires knowledge on the part of the elector and words or conduct sufficient to amount to the making of the election[23]. There is no dispute that Captain Marston knew that he must make an election to opt out of the MSB Scheme if he wanted the DFRDB Scheme to apply during the period of his resumed service from 4 January 2010. In some cases it is not necessary for the person to exercise “a consciously ‘choosing mind’, as there must, in fraud, be a ‘wicked mind’”[24], with that task being assigned to another, but this is not such a case. Section 61B(3) of the DFRDB confers a statutory right on a person to make an election to opt out of the MSB Scheme; as I have said, an election of that kind requires the exercise of choice. Ordinarily, unequivocal words or conduct are required to constitute an election – one cannot approbate and reprobate; it ensures that there is no inconsistency in the enforcement of the person's rights[25]. There is no ambiguity in the election Captain Marston made in the D100 election form or in his subsequent communications with the Authority on 4 January 2010.
[23] Sargent v ASL Developments Ltd (1974) 131 CLR 634 per Stephen J (with whom McTiernan ACJ agreed) at 642.
[24] Sargent v ASL Developments Ltd (1974) 131 CLR 634 per Stephen J at 648-9.
[25] Brown v Comcare [2003] FCA 261 at [28] to [30]; Commonwealth v Verwayen (1990) 170 CLR 394 per Brennan J at 423-4; Sargent v ASL Developments Ltd (1974) 131 CLR 634 per Stephen J at 646.
20. A statutory requirement for an election in writing, as in this case, may be satisfied by deciding a course of action and arranging for the conduct of the action[26]. That is what Captain Marston did, albeit on his own account – he made an election in writing and contacted the Authority to ensure its effectiveness and to arrange service. In the absence of an express requirement for service of a written election, such a requirement may be implied or inferred, but it should not be assumed – one should consider the significance of the written requirement of the election[27]. To my mind, as I have said, service of a written election on the Authority prior to resumption of the particular period of service has the dual benefit of administrative convenience and certainty: proof of election. But that does not lead me to conclude that a requirement for service of the written election on the Authority prior to commencement of a particular period of service is implied or should be inferred. The words ‘addressed to the Authority’ do not convey any such requirement; nor do the instructions on the D100 election form.
[26] Meriton Apartments Pty Ltd v Industrial Court of New South Wales [2008] FCAFC 172 per Greenwood J at [125]; Brien v P & E Phontos Pty Ltd [1999] FCA 1072 at [14] and [15].
[27] Austral Pacific Group Limited v Airservices Australia [2000] HCA 39 per Gleeson CJ, Gummow and Hayne JJ at [34].
21. In the ordinary course, whether or not service of a written election is required, for an election to be effective it is necessary, by words or conduct, to make the content of the election known to the other party[28]. That, to my mind, is what section 61B(3) requires. The making of an election under section 61B(3) is completed when the election is communicated to the Authority. In the usual run of cases it may be that the communication includes the written election itself, but what is required, at the minimum, is communication of the content of the election. Captain Marston communicated the content of his election, but not the written form, in his telephone contact with the Authority at or about 0930 hours on 4 January 2010, prior to resuming service.
[28] Sargent v ASL Developments Ltd (1974) 131 CLR 634 per Mason J at 655-6; Grogan v Commonwealth of Australia [1999] 1 Qd R 30 at 34.
22. Once an election is overtly made, or at least not later than when it is communicated to affected parties, it is binding on the person who made it[29]. That is so even if the election has not been acted on[30]. Thus Captain Marston was bound by the terms of the election he made, as communicated to the Authority, on the morning of 4 January 2010; subject to proof, so too was the Authority. Ultimately, ‘an election is the effect which the law attributes to conduct justifiable only if such an election had been made’[31]. It is that point, whether an election had been made prior to Captain Marston resuming service at 1100 hours on 4 January 2010, that must be proved on the balance of probabilities, applying the reasonable satisfaction standard.
[29] Sargent v ASL Developments Ltd (1974) 131 CLR 634 per Stephen J at 646-7; Brown v Comcare [2003] FCA 261 at [24] and [27].
[30] Commonwealth v Verwayen (1990) 170 CLR 394 per Brennan J at 421-2; Sargent v ASL Developments Ltd (1974) 131 CLR 634 per Stephen J at 646-7; Scarf v. Jardine (1882) 7 App Cas 345 at 361.
[31] Sargent v ASL Developments Ltd (1974) 131 CLR 634 per Stephen J at 646.
23. Presently, applying that standard, the necessary facts are established:
(a)Captain Marston completed and signed the D100 election form at 0700 hours on 4 January 2010;
(b)at approximately 0930 hours on that day he informed the Authority of his election and was told that he was already too late;
(c)he resumed service in the Army Reserve at 1100 hours; and
(d)at 1337 hours he sent the election form, in the terms already communicated, by facsimile to the Authority.
24. To my mind these facts are sufficient to prove that Captain Marston made an effective election not to become a member of the MSB Scheme prior to resuming continuous full-time service at 1100 hours on 4 January 2010. The fact that he did not send and the Authority did not receive the written election until 1337 hours on that day does not disturb this finding. The essential preconditions for an election are made out: Captain Marston formalised his election in writing, he addressed it to the Authority, and he communicated its content to the Authority prior to resuming service.
25. It follows that the decision under review must be set aside and in place thereof the Tribunal decides that Captain Marston made a valid and effective election under section 61B(3) of the DFRDB Act not to become a member of the MSB Scheme prior to resuming continuous full-time service in the Army Reserve on 4 January 2010. In consequence Captain Marston did not cease to be a member of the DFRDB Scheme and section 6 of the MSB Act did not apply to him on that date and during the ensuing period of his resumed continuous full-time service in the Army Reserve.
I certify that the 25 preceding paragraphs are a true copy of the reasons for the decision herein of Mr S. Webb, MemberSigned: .......[sgd].........................................................................
H. Choi (Associate)Date of Hearing 5 April 2011
Date of Decision 4 May 2011
Representative for the Applicant Self representedSolicitor for the Respondent Australian Government Solicitor
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