Mickovski v Financial Ombudsman Service Ltd
[2012] VSCA 185
•17 August 2012
SUPREME COURT OF VICTORIA
COURT OF APPEAL
| S APCI 2011 0097 | |
| CANE MICKOVSKI | Appellant |
| v | |
| FINANCIAL OMBUDSMAN SERVICE LIMITED (ACN 131 124 448) | First Respondent |
| and | |
| METLIFE INSURANCE LIMITED (ACN 004 274 882) | Second Respondent |
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| JUDGES | BUCHANAN, NETTLE JJA and BEACH AJA |
| WHERE HELD | MELBOURNE |
| DATE OF HEARING | 3 August 2012 |
| DATE OF JUDGMENT | 17 August 2012 |
| MEDIUM NEUTRAL CITATION | [2012] VSCA 185 |
| JUDGMENT APPEALED FROM | [2011] VSC 257 (Pagone J) |
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ADMINISTRATIVE LAW – Judicial review – Datafin principle – Alternative dispute resolution scheme, established pursuant to s 912A of Corporations Act 2001 – Decision by Financial Ombudsman Service (FOS) – Whether decision susceptible to judicial review – R v Panel on Take-overs & Mergers; Ex parte Datafin plc [1987] QB 815; R v Insurance Ombudsman Bureau; Ex parte AEGON Life Assurance Ltd [1995] LRLR 101, considered; Neat Domestic Trading Pty Ltd v AWB (2003) 216 CLR 277; Gould v Magarey (2003) 234 ALR 618 referred to.
CONTRACT – Whether decision of FOS susceptible to review in contract – Final decision – Terms of reference providing that decision ‘Final’ – Whether final decision susceptible to contractual review – Australian Football League & Carlton Football Club Ltd [1998] 2 VR 546; Commonwealth v Limerick Steamships Co Ltd (1924) 35 CLR 69, applied.
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| Appearances: | Counsel | Solicitors |
| For the Appellant | Mr P G Cawthorn SC with Mr P Bingham | Maurice Blackburn |
| For the First Respondent | No appearance | |
| For the Second Respondent | Mr P J Riordan SC with Ms C L Welsh | Turks Legal |
BUCHANAN JA
NETTLE JA:
BEACH AJA:
This is an appeal from a judgment given in the Common Law Division, whereby the judge refused relief by way of judicial review and declaration of right.
The facts
On 3 November 2008, the appellant (‘Mr Mickovski’) notified the Financial Ombudsman Service Limited (‘FOS’) of a complaint concerning his entitlements under a salary continuance insurance policy (‘the SCI policy’) issued by MetLife Insurance Limited (‘MetLife’). The SCI policy had been provided by MetLife through Mr Mickovski’s employer, Visy Board Pty Ltd. In addition to being a beneficiary of the SCI policy, Mr Mickovski was a member of Visy Industries Superannuation Fund and as such a beneficiary of a total and permanent disability insurance policy (‘the TPD policy’).
The background circumstances of Mr Mickovski’s complaint are that he suffered serious injuries in February 1995 after slipping on leaking oil at work. He sustained an injury to his lower back which caused him pain which radiated into both legs. He was off work for about six weeks and returned to work on light duties. He was diagnosed with ankylosing spondylitis which became symptomatic after the fall. He also suffered from hypertension. He ceased work on 30 September 1998 and he has not worked since then.
At the outset, Mr Mickovski claimed and was paid salary continuation payments under the SCI policy. Then, on 12 April 1999, Buck Consultants on behalf of Mr Mickovski[1] informed MetLife (then named Citicorp Life Insurance Ltd) that
Mr Mickovski had advised that his situation had not improved, that it was unlikely that he would be returning to work and, accordingly, that he then wished ‘to lodge a claim for Total and Permanent Disablement’ under the TPD insurance policy. The TPD benefit was paid to Mr Mickovski on 11 August 1999 and salary continuance payments under the SCI policy ceased as at 23 July 1999.
[1]As found by the judge. Counsel for the appellant suggested in the course of argument that Buck Consultants were not acting on behalf of the appellant but we reject that suggestion. There is no ground of appeal disputing the judge’s finding of fact and no notice was given of the appellant’s intention to dispute it.
At that time, both Mr Mickovski and MetLife were acting under the misconception that the effect of the SCI Policy was that, upon MetLife accepting that the appellant was entitled to the TPD benefit, he ceased to be entitled to SCI benefits.
Some years later, MetLife instituted proceedings in the New South Wales Supreme Court for rectification of the SCI Policy to provide that the Benefit Period for SCI benefits concluded at ’65 years of age or [if] the member is earlier totally and permanently disabled and/or paid the TPD benefit’.
On 13 November 2007, Brereton J ordered[2] that the SCI policy be rectified by substituting in the First Schedule, item 4, Benefit Period, for the matter ’65 years’ the matter ‘to age 65, ceasing on TPD’. His Honour further declared that, upon the proper construction of the policy as rectified, the SCI benefit period expired on the earlier of a member attaining the age of 65 years or, inter alia, ‘having been absent from his or her occupation with the employer through accident or illness for six consecutive months and having become incapacitated to such an extent as to render the member unlikely ever to engage in any gainful profession, trade or occupation for which the member is reasonably qualified by reason of the education, training or experience’ (‘the MetLife decision’).
[2]MetLife Insurance Limited v Visy Board Pty Ltd [2007] NSWSC 1481.
The significance of the MetLife decision for present purposes is that the definition of ‘TPD’ in the SCI policy as rectified differs from the definition of ‘TPD’ in the TPD policy. Under the SCI policy as rectified, the definition of TPD is objective in that it requires the member to be TPD in fact whereas, under the
SCI Policy, the definition of TPD is subjective inasmuch as it requires MetLife to be satisfied that the member is TPD. Brereton J explained the distinction as follows:
That then leads to the question of construction: which is the meaning of the words ‘age 65, ceasing on TPD’ in the rectified contract? Again, context is provided by the TPD policy. By inserting the words ‘ceasing on TPD’ the parties meant no more than ‘ceasing on the member becoming totally and permanently disabled’. They did not further address the content of the phrase ‘totally and permanently disabled’, because they did not need to: that concept was already understood by them, by reason of the pre-existing TPD policy.
Nor did they address the process by which TPD would be established. In distinction from the TPD policy, in which TPD was a matter which a claimant would have to prove to become eligible for a benefit, in the SCI policy TPD was a terminating event, which the insurer would have to prove to justify cessation of benefits. Accordingly, although I accept that the parties plainly had in mind the concept of total and permanent disablement under the TPD policy, they did not have in mind the process of proof referred to in that policy. They simply specified TPD, as a matter of fact, as an event of cessation. As Bryson J explained in Sayseng v Kellogg Superannuation Pty Ltd,[3] contractual entitlement depends primarily on the facts, and not on the means of ascertaining them:
The grounds upon which the opinion of an insurer may be challenged are generally similar but the consequences of a successful challenge are more radical. The Court regards the reference to the insurer’s opinion, in the context of a contract of insurance, as means adopted by the parties for ascertainment of the facts to which the opinion relates: contractual entitlement depends on the facts, not, primarily, on the opinion which is the means of ascertaining them, …
In the context that a claimant has, in effect, the burden of proving a claim that he or she is totally or permanently disabled, it is understandable that a definition of ‘total and permanent disablement’ would contemplate proof to the insurer’s satisfaction, as does the definition in the TPD policy. The same cannot be said, however, in the context of the insurer having the onus of proving total and permanent disablement as an event of cessation. In my view, the reference in the Schedule to cessation on total and permanent disablement contemplates satisfaction of the requirements of the definition in the TPD policy objectively, rather than to the satisfaction of the insurer.[4]
[3][2003] NSWSC 945.
[4]The MetLife decision, [36]–[38]. See further, Finch v Telstra Super Pty Ltd (2010) 242 CLR 254, [30]–[37] and [57]–[66] (French CJ, Gummow, Heydon, Crennan and Bell JJ).
Following rectification of the SCI policy, Mr Mickovski claimed that, although he had sought and been paid TPD benefits under the TPD policy upon the basis that MetLife had accepted he was TPD, he had not been TPD in fact and, therefore, was not disentitled from continuing to receive SCI benefits. He sought to reinstate and backdate the SCI benefits payable on the basis that he was not TPD in fact. MetLife rejected the claim.
MetLife is a member of FOS. On behalf of its members, FOS conducts a superannuation industry alternative dispute resolution scheme approved by ASIC pursuant to s 912A(1)(g) of the Corporations Act 2001. Following MetLife’s rejection of Mr Mickovski’s claim, Mr Mickovski lodged a complaint with FOS for resolution of the dispute pursuant to FOS’ constitution and terms of reference. After initial consideration by a FOS delegate, the complaint was referred to the Panel Chair, pursuant to clause 15.3 of the terms of reference, to rule as to whether the complaint should be dismissed as being beyond FOS’s jurisdiction by reason of cl 14.1(p) of the terms of reference.
Clause 14.1(p) excludes complaints where the complainant knew or should reasonably have known of all of the relevant facts more than six years before first notifying FOS of the complaint. It provides that:
14.What types of complaint are excluded?
14.1The Service [FOS] cannot deal with the following complaints:
…
(p) where the complainant knew or should reasonably have known of all the relevant facts more than six years before first notifying the Service about the complaint.
Clause 15.3 states:
If a party to the complaint objects to the decision of the delegate, that objection will be considered either by the Investments, Life Insurance & Superannuation Ombudsman or by a different delegate of the Investments, Life Insurance & Superannuation Ombudsman (‘the second delegate’) of equal or greater seniority to the original delegate. If the Investments, Life Insurance & Superannuation Ombudsman or the second delegate is satisfied the party’s objection has substance, he or she will refer the decision to a Panel Chair for review, whose decision on the issue will be final.[5]
[5]Emphasis added.
Before the Panel Chair, Mr Mickovski contended that there were a number of relevant facts of which he did not know and should not reasonably have been expected to know more than six years before his complaint was lodged. They were:
(1) The MetLife decision, inasmuch as it altered the policy wording in a way which affected his rights to benefits.
(2) MetLife’s rejection by letter dated 7 October 2008 of Mr Mickovski’s claim for SCI benefits, and the reasons for rejection.
(3) The ongoing non-payment of SCI benefits.
(4) Eight medical reports concerning Mr Mickovski, in MetLife’s possession, which were said not to have been provided to Mr Mickovski at the time of his being accepted as TPD.
The Panel Chair found that the MetLife decision was not a relevant fact but that it bore on when Mr Mickovski first knew or should reasonably have known of the SCI Policy terms, and that the terms of the SCI policy under which Mr Mickovski was seeking SCI benefits were a relevant fact. As the Panel Chair put it:
I am satisfied the judgment is not itself a relevant fact in relation to the complainant’s claim against the member. To the extent, however, that it sheds light on a relevant fact – the terms of the insurance contract under which the complainant wishes to claim SCI benefits – the judgment may affect when he first knew or should reasonably have known that relevant fact.
The Panel Chair held, however, that the differences between the SCI policy definition of TPD and the TPD policy definition of TPD were of no more than theoretical significance, because:
… FOS could not reasonably conceive a set of circumstances in which the medical evidence was sufficient to satisfy the member an insured employee was totally and permanently disabled for the purposes of paying TPD benefit, and yet not be objectively totally and permanently disabled under the same definition, for the purposes of SCI benefits ceasing
…
I am satisfied that the complainant, on his own evidence, understood that SCI benefits and TPD benefits were mutually exclusive. Necessarily, he understood there was a common definition of total and permanent disablement which, once satisfied, caused payments of one to cease and the other to commence.
The Panel Chair was not persuaded that the rejection of the claim for SCI benefits was a relevant fact. He said that:
The member’s refusal to pay SCI benefits beyond 1999, set out in letter of 7 October 2008, is not a relevant fact. This letter was sent in response to a complaint made nine years after the cessation of the SCI benefits following the settlement of a claim lodged by the complainant. The response itself might found a basis for complainant but cannot be used as a basis or a relevant fact for reviving a claim.
The Panel Chair also rejected Mr Mickovski’s contention that the non-payment of benefits was a relevant fact:
I accept the member’s submission that benefits under the SCI policy having been terminated in 1999, the termination is the relevant fact rather than the passage of each subsequent month without payment after the termination. Further, the complainant has had knowledge of the ongoing non-payment for a number of years prior to 3 November 2008.
The Panel Chair found, too, that the medical reports were not relevant facts, because:
The complainant was in a position to obtain those reports (with the sole exception of one GP report dating from 2008) and may indeed have had them by, of course, early 2001 at the latest. He was therefore sufficiently placed by that time to be aware that not all the evidence supported the conclusion that he was totally and permanently disabled.
On the basis of those findings, the Panel Chair held that FOS did not have jurisdiction to entertain Mr Mickovski’s complaint.
The proceeding below
By originating motion filed on 19 February 2010, Mr Mickovski challenged the Panel Chair’s ruling. In the originating motion, he sought relief by way of judicial review or alternatively declaratory relief on the basis of breach of contract. The proceeding was heard by Pagone J on 18 and 19 April 2011. The issues at trial were as follows:
(a)Whether the Panel Chair’s decision that FOS lacked jurisdiction to deal with Mr Mickovski’s complaint was subject to review in accordance with the principle enunciated in R v Panel on Take-overs & Mergers; ex parte Datafin plc[6] (‘the Datafin principle’);
(b)whether there was a contract between the parties concerning Mr Mickovski’s complaint which required FOS to deal with the complaint in accordance with FOS’s terms of reference; and
(c)whether, by reason of the Panel Chair’s decision that FOS lacked jurisdiction to deal with Mr Mickovski’s complaint, FOS had breached the contract.
[6][1987] QB 815.
On 17 June 2011, the judge dismissed Mr Mickovski’s claim. His Honour held that:
(a)the Datafin principle applies in Victoria but that the Panel Chair’s decision did not come within the principle; and
(b)there was a tripartite contract between Mr Mickovski, MetLife and FOS in accordance with the terms of reference but FOS had not breached the contract by reason of the Panel Chair’s determination that FOS lacked jurisdiction to deal with Mr Mickovski’s complaint.
In dealing with the application of the Datafin principle, the judge said that he took into account that MetLife operated under a licence of which it was a condition that MetLife be a member of an alternative dispute resolution scheme approved by ASIC, and that FOS conducted such a dispute resolution scheme specifically approved by ASIC under an instrument made pursuant to the Corporations Act 2001. His Honour also said he accepted that there is a public interest in a private company like FOS providing ‘an external dispute resolution scheme which complies with’ the
Corporations Act 2001. But, in his Honour’s view, that was insufficient to engage the Datafin principle, because:
The insurance industry like many others is regulated by government and that circumstance alone is not sufficient to invoke the Datafin principle. Nor is it sufficient that the decision being challenged has public consequences (as was made clear by D’Souza). MetLife operates under a licence which is conditional upon it being a member of an alternative dispute resolution scheme approved by ASIC. FOS conducts a dispute resolution scheme specifically approved by ASIC under an instrument made pursuant to the Corporations Act 2001. That scheme is governed by a constitution and terms of reference. It is a company limited by guarantee whose objects are directed to the purpose, like its predecessor, of providing ‘an external dispute resolution scheme which complies with’ the Corporations Act 2001.[7] There is no doubt a public interest in a private company providing an alternative dispute resolution mechanism for the benefit of those who come within its terms. The same, however, may be said of the very many private entities, arrangements or industries which are regulated by government and legislation. It may, of course, be said of private law generally. The public interest in the existence of a dispute resolution mechanism to resolve private disputes, however desirable from the point of view of public policy, does not in my view constitute a public function or element which of its nature is sufficient to invoke the principle in Datafin. The public interest evident in the regulatory framework is that there should be a mechanism for private dispute resolution but I do not think it can be said that FOS is exercising a public duty or public element when its jurisdiction is consensually invoked by the parties to a complaint. Mr Mickovski was under no obligation to make use of FOS and the terms of reference makes clear that complainants are not bound by decisions of FOS. Complainants may wish to pursue whatever rights they may have against the member, in this case MetLife, in any other forum. There is in my view no relevant public ‘duty’[8] or public ‘element’[9] in FOS being invoked as the means by which a private controversy or complaint may be resolved in a non binding manner. In that regard I agree with, and respectfully adopt, the conclusion in R v Insurance Ombudsman Bureau; Ex parte AEGON Life Assurance Ltd.[10]
[7]AXA Australia v Financial Industry Complaints Service Ltd (2006) 14 ANZ Insurance Cas 61-695 [12] (Bongiorno J).
[8]R v Panel on Take-overs and Mergers; Ex parte Datafin Plc [1987] 1 QB 815, 847 (Lloyd LJ).
[9]Ibid 838 (Lord Donaldson).
[10][1995] LRLR 101, 106 (Ross LJ, McKinnon J agreeing).
The judge accepted that the Panel Chair’s determination was reviewable as a matter of contract. His Honour reasoned that, upon Mr Mickovski and MetLife submitting their dispute to the FOS process, there came into existence a binding contract to abide the terms of reference and for the rules of the process correctly to be applied. As his Honour put it:
The making of a complaint to FOS changes the position. It seems to me that a tripartite contract was established between Mr Mickovski, as complainant, MetLife, as respondent, and FOS, as the decision maker of the complaint, upon a complaint being made pursuant to the facility for alternative dispute resolution. Mr Mickovski is not a member of FOS and is not ordinarily bound by its terms, however, the terms of reference invited him, and entitled him, to make a complaint, and upon the making of a complaint he became bound to comply with the terms of reference to the extent to which they applied to him and, correspondingly, became entitled to expect the rules to be applied correctly. Clause 7.1 provided that the procedure was available to all persons with respect to any dealing or transactions that any person had directly or indirectly with a member. Clause 8.1 laid down the conditions that had to be met before a complainant could invoke the provisions. Clause 19 required the complainant to provide information, which cl 21 provided would not be disclosed to any other person other than pursuant to its terms. Clause 24.1 permitted the complaint to be dismissed if the complainant failed to respond to correspondence.
Clause 37 was relied upon by MetLife to contend that no contract between Mr Mickovski and FOS had come into existence. That clause provided that a complainant would not be bound by the decisions of FOS, however the impact of that provision does not mean that there was not a binding agreement with respect to the process to be undertaken up to the making of a decision once Mr Mickovski had invoked the complaints procedures. Indeed, cl 37 contemplates a process whereby a complainant is required to elect whether or not to accept a decision and, where the complainant elects to accept a decision, the complainant would thereupon be bound by all aspects of that decision and, in any event, would bind the member as against the complainant. Accordingly I consider the proceeding in this court to be competent upon the basis of contract.
The judge nevertheless upheld the Panel Chair’s ruling that FOS did not have jurisdiction to entertain the dispute because Mr Mickovski had failed to demonstrate that there were relevant facts of which he was not aware before 3 November 2002:
Mr Mickovski’s case before this court maintained, in effect, that it was sufficient to establish an entitlement to have FOS consider his complaint by relying upon an absence of certainty about whether or not he would have maintained a claim had he known of the terms of the SCI policy as rectified…
It was this reasoning which the FOS ruling rejected. In its view jurisdiction under cl 14.1(p) required more than theoretical possibilities, especially in the context of the facts in question where the one applicant claimed to be totally and permanently disabled under the two policies. FOS was not satisfied that pointing to theoretically relevant facts was sufficient to give it a jurisdiction that had specifically been narrowed through cl 14.1(p). The task faced by FOS was to ensure that it did not exceed its legal jurisdiction and I do not find legal error in its construction of cl 14.1(p) as requiring a complainant to establish the contentions beyond claims of possibility…
Finally, the judge referred to the medical reports of which Mr Mickovski claimed not to have been aware and which he said cast new light on his medical condition. His Honour concluded that the reports were not relevant facts within the meaning of clause 14.1(p), because:
The absence of the 1999 and 2000 medical reports was not said to have prevented or hindered Mr Mickovski from concluding that he ought to have taken action before 3 November 2002. The submission was that the failure to make available the reports to Mr Mickovski amounted to a breach of its duty of utmost good faith. I doubt that there was any breach of MetLife’s duty of utmost good faith because the reports were not obtained prior to, or in making, an adverse decision, on undisclosed facts, against Mr Mickovski. However, what must be shown to come within cl 14.1(p) is some fact which may fairly be described as ‘relevant’ to a claim. The concept of ‘relevant facts’ for the purposes of cl 14.1(p) is necessarily wide and is not limited to knowledge of a cause of action. FOS’s conclusion that the reports did not reveal lack of knowledge of a relevant fact was fundamentally that they supported the claim he had made for payment of the TPD benefits. The issue at the time was whether his condition was such as to justify accepting the application made on his behalf for payment of the TPD benefits. The reports confirmed the entitlement for which he had claimed.
In para 91 of the FOS ruling it was accepted that some of the medical reports ‘could have provided support for an argument that [Mr Mickovski] was not totally and permanently disabled in 1999 when SCT benefits ceased and TPD benefits were paid’. This, it seems, was conceded by MetLife in the submissions before FOS. However, FOS did not consider that anything in the material before the panel member suggested that the contents of those reports ‘would have altered the view on this question of fact, such that the complainant could not reasonably have known the relevant fact until he had the chance to review those reports’. The material before me does not suggest that FOS was in error in reaching that conclusion on the facts. It was submitted for Mr Mickovski that if he had been made aware of the material in the reports ‘it may well have altered his view about what steps he could take’, but that statement of possibility was not considered sufficient foundation to enliven the jurisdiction conditioned by cl 14.1(p). Indeed, if it be relevant, it may be contrasted with the opposite view suggested by the medical reports in the possession of MetLife at the time of the claim for the TPD benefit which indicated that Mr Mickovski was objectively totally and permanently disabled. The jurisdiction of FOS is conditional upon specified factual preconditions including, relevantly, those in cl 14.1(p). It was required to determine whether the factual preconditions to the exercise of its jurisdiction had been satisfied and I do not consider FOS to have mistaken its legal task or to have determined the facts other than as it was permitted to do.
Leave to appeal
By summons filed on 1 July 2011, Mr Mickovski sought leave to appeal from the judge’s decision and, on 2 September 2011, this court[11] adjourned the application for leave to appeal to the court hearing the appeal.
[11]Constituted by Mandie and Bongiorno JJA.
We are inclined to think that leave to appeal is not required. The judge’s decision was final in that it finally determined that Mr Mickovski has no jurisdiction under clause 14.1(p) to determine his dispute with MetLife. In a sense that determined the lis between the parties.[12] But in case there is any doubt about it, we would grant leave to appeal.
[12]A-Pak Plastics Ltd v Merhone Pty Ltd (1995) 120 FLR 277; cf Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corp Ltd (2007) 212 FLR 56, [111].
Issues in the appeal
The issues to be decided in the appeal are:
(a)Mr Mickovski’s challenge to the judge’s conclusion that the Datafin principle did not apply in the circumstances of this case and thus that Panel Chair’s decision was not amenable to judicial review;
(b)Mr Mickovski’s challenge to the judge’s conclusion that FOS did not breach the tripartite contract identified by his Honour; and
(c)a contention by MetLife (by way of notice of contention), supporting the judge’s conclusion but upon an alternative basis that the judge erred:
(i)in deciding that the Datafin principle is part of the law of Victoria;
(ii)in concluding that there was a tripartite contract between Mr Mickovski, FOS and MetLife; and
(iii)in concluding that there was an implied term of the tripartite contract that the FOS terms of reference would be applied correctly.
Mr Mickovski abandoned his challenge to the judge’s conclusion that the medical reports earlier referred to were not relevant facts within the meaning of clause 14.1(p).
The Datafin point
It is convenient to deal first with the question of whether the judge erred in holding that the Datafin principle was not engaged. Counsel for Mr Mickovski argued that the judge’s reasoning was erroneous because it ignored the practical importance of FOS to consumers, the courts (by relieving the pressure of business) and the insurance industry. In counsel’s submission, FOS’ significance was manifest in the requirement in s 912A(1)(g) of the Corporation Act 2001 that a person holding a financial services licence and who services retail clients must have an external dispute resolution procedure approved by ASIC; and that ASIC had approved FOS as one of only three such organisations. Counsel also contended that the decision in R v Insurance Ombudsman Bureau; Ex parte AEGON Life Assurance Ltd[13] belonged to an earlier era and was distinguishable on the basis that ‘[t]he foundations of the bureau conspicuously lacked any trace of governmental underpinning’, in contradistinction to FOS which was created with Commonwealth involvement.
[13][1995] LRLR 101, on which the judge relied – see [22] above.
Arguably, there is some force in those submissions. Putting aside doctrinal difficulties which it has been suggested[14] could stand in the way of extending judicial review beyond the realms of statutory[15] and prerogative[16] decision making, the Datafin principle is appealing. In face of increasing privatisation of governmental functions in Australia, there is a need for the availability of judicial review in relation to a wider range of public and administrative functions. The Datafin principle offers a logical, if still to be perfected, approach towards the satisfaction of that requirement. There have also been a number of first instance decisions in which it has been held or suggested that the Datafin principle does apply in Australia,[17] and indeed in the past there has been some limited recognition given to the principle in this court.[18]
[14]See Aronson, Dyer, Groves, Judicial Review of Administrative Action 4th Ed, [3.220].
[15]Ainsworth v Criminal Justice Commission (1992) 175 CLR 564, 584 (Brennan J).
[16]Minister for the Arts, Heritage and Environment v Peko-Wallsend Ltd (1987) 75 ALR 218.
[17]See, for example, Chapmans Ltd v Australian Stock Exchange Ltd (1994) 123 ALR 215, 223–4; Adamson v Rugby League Ltd (1991) 31 FCR 242, 279 and 292; Australian Stock Exchanges Ltd v Hudson Securities Ltd [1999] NSWSCC 1237, [83]; McClelland v Burning Palms Surf Life Saving Club (2002) 191 ALR 759, [80]–[117]; Masu Financial Management Pty Ltd v Financial Industry Complaints Service Ltd (No 1) [2004] NSWSC 826 and (No 2) 829, [7]; Grocon Constructors Pty Ltd v Planit Cocciardi Joint Venture (No 2) [2009] VSC 426, [75]; CECA Institute Pty Ltd v Australian Council for Private Education and Training (2010) 245 FLR 86, 109 [100]; and see also the analysis of the cases undertaken by Kyrou J in Judicial review of decisions of non-governmental bodies exercising governmental powers: Is Datafin part of Australian law (2012) 86 ALJ 20.
[18]The State of Victoria v The Master Builders Association of Victoria [1995] 2 VR 121 (the majority deciding on the basis of an application of judicial review to the exercise of prerogative power; and only Eames JA arguably invoking the Datafin principle).
That said, however, the clear implication of the High Court’s decision in Neat Domestic Trading Pty Ltd v AWB Ltd[19] and of the observations of Gummow and Kirby JJ in Gould v Magarey[20] is that we should avoid making a decision about the application of Datafin unless and until it is necessary to do so. In this case, we do not consider that it is necessary to do so. For, assuming without deciding that Datafin has some operation in this county, we agree with the judge that it could not have applied in the circumstances of this case. Taken at its widest, it is doubtful that the principle has any application in relation to contractually based decisions[21] and, even if it does, we agree with the judge that the public interest evident in having a mechanism for private dispute resolution of insurance claims of the kind mandated by s 912A is insufficient to sustain the conclusion that FOS was exercising a public duty or a function involving a public element in circumstances where FOS’ jurisdiction was consensually invoked by the parties to a complaint.
[19](2003) 216 CLR 277.
[20](2007) 234 ALR 618; see also Khuu & Lee Pty Ltd v Corporation of City of Adelaide (2011) 110 SASR 235, 242 [29] (Vanstone J); Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd (2010) 78 NSWLR 393, 410 [74]–[76] (Basten JA).
[21]Westminster City Council v Haywood [1998] Ch 377, 386 (Robert Walker J); D’Souza v Royal Australian and New Zealand College of Psychiatrists [2005] 12 VR 42, 58 [110]–[111] (Ashley J).
We accept that there are some differences between the circumstances in this case and those in R v Insurance Ombudsman Bureau,[22] on which the judge based his reasoning. It is apparent that the IOB was set up privately before the advent of any legislative recognition of procedures for self-regulation and only later was recognised in legislation as a self-regulating organisation for the purposes of the statutory scheme. In this case, the FOS was set up privately in order to comply with the legislative requirements of s 912A(1)(g) of the Corporations Act 2001. In R v Insurance Ombudsman Bureau, membership of the IOB was optional whereas here membership of an alternative dispute-resolution organisation (although not necessarily of FOS) was mandatory. But we do not regard those differences as significant. To adopt and adapt the language of Rose LJ in R v IOB,[23] we consider that what is ultimately determinative of the issue is that:
Since the Act, as before, the public do not have to use the [FOS]. They can instead sue insurers in the courts. If they go before the [FOS], because [it] is not limited to purely legal considerations, in many cases their prospects of success will be better. But they have the choice of forum…
The [FOS's] power over its members is … still, despite the Act, solely derived from contract and it simply cannot be said that it exercises government functions. In a nut shell, even if it can be said that it has now been woven into a governmental system, the source of its power is still contractual, its decisions are of an arbitrative nature in private law and those decisions are not, save very remotely, supported by any public law sanction. In the light of all these factors, the [FOS] is not in my judgment a body susceptible to judicial review.
[22][1995] LRLR 101.
[23]Ibid 105–106.
The contract point
Moving then to the contract point, we take a similar view to the judge, but ultimately for different reasons.
To start with, we agree with his Honour that, upon Mr Mickovski and MetLife agreeing to submit their dispute to the processes of FOS, they became bound in
contract to observe the rules of the process and entitled as a matter of contract to require that FOS proceed in accordance with those rules.[24]
[24]See and compare Financial Industry Complaints Service Ltd v Deakin Financial Services Pty Ltd (2006) 157 FCR 229 (Finkelstein J); McLelland v Burning Palms Surf Life Saving Club (2002) 191 ALR 759; Rose v Boxing NSW Inc [2007] NSWSC 20.
We reject the respondent’s submission that the agreement was not supported by sufficient consideration. As we see it, the consideration which moved from Mr Mickovski was his submission to the processes of FOS and the consideration which moved from the FOS and the respondent, respectively, was their promise to arbitrate the dispute in accordance with the terms of reference and be bound by FOS’ decision. It does not detract from that conclusion that, under the terms of reference, it was open to Mr Mickovski to withdraw from the arbitration before it was completed or to elect not to be bound by the determination once completed. It was enough that, so long as Mr Mickovski submitted himself to the process of the FOS dispute resolution service and conformed to the terms of reference, he was entitled to have FOS and the respondent perform their parts of the process in accordance with the terms of reference.
Secondly, were it not for clause 15.3 of the terms of reference, we would also agree with the judge that the Panel Chair’s decision would be reviewable as a matter of contract.
As Tadgell JA stated in Australian Football League v Carlton Football Club Ltd,[25] if a domestic tribunal’s decision owes its binding quality to a contract, the courts will recognise that the decision must be consonant with the contract and, if not, a declaration to that effect may be obtained and an appropriate injunction granted at the suit of an aggrieved person whom the decision purports to bind.[26] Hence, although it is not open to turn what should be a hearing before a domestic tribunal into a hearing before the court, and of course there is no right of appeal as such from the decision of a domestic tribunal, if there is a doubt about the exact meaning of a law which it is the function of the domestic tribunal to interpret, a party to the contract is entitled to seek the opinion of the court about it.
[25][1998] 2 VR 546, 550.
[26]As Tadgell JA observed, there are several bases on which the courts may adjudge such a decision to be inconsistent with the contract on which it depends for its authority. They include a declaration of invalidity for restraint of trade, or as the result of the decision being plainly contrary to the agreement from which it purports to draw its authority, or as the result of bad faith, bias, dishonesty or breach of natural justice, or because the decision is one to which no reasonable tribunal could properly come on the evidence.
Here, the question is whether the Panel Chair proceeded in accordance with the rules and there is a dispute as to whether the Panel Chair erred in the interpretation of clause 14.1(p) of the rules. In those circumstances, we should have thought that, but for clause 15.3, it would be open to either party to seek a declaration of right as to the correct interpretation of that clause.
Clause 15.3
We earlier set out the terms of clause 15.3 and it will be recalled that they provide that the determination of the Panel Chair will be ‘final’. Although it was not argued before the judge, it was submitted before this court that the effect of ‘final’ was to preclude a review of the Panel Chair’s decision. We accept that contention.
As was stated by Isaacs and Rich JJ in Commonwealth v Limerick Steamship Co Ltd,[27] the word ‘final’ in relation to a determination derives its meaning of being ‘the last’ from the context in which it appears. Hence, where the context is one of further examination or review by a superior court, the word imports the meaning that there is to be no appeal. Accordingly, where a statute provides that a decision is ‘final’, it is ordinarily taken to preclude a right of appeal except in cases where the tribunal has acted without jurisdiction or otherwise such that its decision is a nullity.[28] Similarly, where parties agree that a determination is to be ‘final’, they are taken to have agreed that the determination will not be subject to review unless affected by fraud or dishonesty or lack of good faith or (by analogy with jurisdictional error) unless it is otherwise apparent that the determination has not been carried out in accordance with the agreement.[29]
[27](1924) 35 CLR 69, 88–9.
[28]South East Asia Fire Bricks Sdn Bhdv Non-Metallic Products Manufacturing Employees Union [1981] AC 363, 370 (PC); Hockey v Yelland (1984) 157 CLR 124, 130 (Gibbs CJ).
[29]Legal & General Life of Australia Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314, 336 (McHugh JA); Holt v Cox (1994) 15 ACSR 590, 597 (Mason P); AGL Victoria Pty Ltd v SPI Networks (Gas) Pty Ltd [2006] VSCA 173, [51]–[52].
For the reasons which follow, we consider that, although the Panel Chair erred in law in his construction of clause 14.1(p) of the Terms of Reference, that was not a sufficient error to vitiate his determination.
Non-jurisdictional error
Logically, the question of whether the correct interpretation of the SCI policy was a relevant fact for the purposes of clause 14.1(p) should depend on whether knowledge of the correct interpretation of the SCI Policy could (as opposed to would necessarily) rationally have affected the way in which the appellant might have behaved if he had been aware of it.[30]
[30]Cf Washer v Western Australia (2007) 234 CLR 492, 497–8 [5] (Gleeson CJ, Heydon and Crennan JJ).
On 24 December 2008, Mr Mickovski swore a statutory declaration concerning his lack of knowledge of the correct interpretation of the SCI policy, as follows:
1.I commenced employment at Visy Board Pty Ltd, Warwick Farm in 1978 and worked as a machine operator, process worker and foreman. I became a member of the Pratt Industries Employees Superannuation Fund.
2.I suffered a low back injury whilst at work when I slipped and fell on a set of stairs in 1995.
3.I ceased working at Visy Board due to my injuries in late September 1998 and my employment was terminated in April 1999.
4.After I ceased work I was told I was insured under the Citicorp Life Insurance Group Salary Continuance Policy (the [SCI] policy) taken out by my employer which commenced in or about September 1998, although I was never given a copy of the Policy.
5.I made a claim for salary continuance benefits under the [SCI] policy in early 1999 and I was paid benefits for a short period. … My salary continuance payments ceased in July 1999 when I was paid a superannuation Total and Permanent Disability (TPD) benefit.
6.I did not receive any further payments under the [SCI] policy and I was led to believe that because I had been paid the TPD benefit, I was not entitled to any further salary continuance payments.
7.Eight years later I received a letter from Deacons dated 13 July 2007 … advising me of legal proceedings that it had commenced in the Supreme Court of New South Wales. After receiving the letter, I contacted Maurice Blackburn as was suggested in the letter and became a party to the New South Wales Supreme Court proceedings with 24 other people.
8.The first I became aware that the [SCI] policy may not have specified that salary continuance payments cease upon payment of a superannuation TPD benefit was when I was advised by Maurice Blackburn after I contacted them following receiving the letter from Deacons as above.
9.After the decision was made by the New South Wales Supreme Court, Maurice Blackburn obtained medical reports on my behalf and then lodged a review of a decision to stop my salary continuance payments. The medical evidence showed that I was totally disabled from performing my job at Visy Board since September 1998 but that I was not totally and permanently disabled.
10.By letter dated 7 October 2008, MetLife rejected the claim. In the letter rejecting the claim, MetLife referred to and relied on the decision of the New South Wales Supreme Court.
11.On 3 November 2008, I lodged a complaint against MetLife’s decision in the Financial Ombudsman Service (FOS).
As the declaration makes clear, it was not until Mr Mickovski learned of the interpretation of the SCI policy which resulted from the MetLife decision that he knew or could reasonably have been expected to know that, upon the correct interpretation of the SCI policy, an insured who MetLife was satisfied was TPD, but who was not in fact TPD, was not in terms ineligible for SCI benefits.
Logically, it follows that it was not until Mr Mickovski learned of the MetLife decision that he was capable of understanding that he had a basis for claiming SCI benefits of which he had been unaware and could not have been expected to be aware before 3 November 2002. It is for that reason that the correct interpretation of the SCI policy was a relevant fact within the meaning of clause 14.1(p).
As was earlier noticed, the Panel Chair held that, although the correct interpretation of the SCI policy was a relevant fact, it was of no more than theoretical significance. He so concluded on the basis that he could not conceive of a set of circumstances in which the medical evidence would be sufficient to satisfy a member that an insured employee was totally and permanently disabled for the purposes of paying TPD benefit when, as a matter of objective fact, that insured was not totally and permanently disabled within the meaning of the SCI policy.
In our view, that process of reasoning confused relevance with probative value and resulted in the Panel Chair coming to the wrong conclusion.
The judge said that he agreed with the Panel Chair’s decision because there was no more than a theoretical possibility that, if Mr Mickovski had known of the correct interpretation of the SCI policy, he would have applied for SCI policy benefits and because the mere theoretical possibility that Mr Mickovski would have made such an application was not a sufficient basis to conclude that knowledge of the correct interpretation of the SCI policy was a relevant fact. As his Honour put that reasoning:[31]
[31]Reasons [27].
Mr Mickovski’s case before this court maintained, in effect, that it was sufficient to establish an entitlement to have FOS consider his complaint by relying upon an absence of certainty about whether or not he would have maintained a claim had he known of the terms of the SCI policy as rectified. In the submissions on his behalf it was said:
It cannot be asserted that if Mr Mickovski had been informed, in 1999 or in 2001, that the policy, as written, did not give MetLife a legal right to cease making payments of the SCI benefits because of the making of payment of the TPD benefit and that there was no certainty that the policy would be rectified by a Court, that Mr Mickovski would have taken no action. Indeed, the actions he took after he was so informed suggest that he would have taken action.
Once that conclusion is reached, it follows that each of the facts referred to [in paragraph 26] above were relevant facts.
It was this reasoning which the FOS ruling rejected. In its view jurisdiction under cl 14.1(p) required more than theoretical possibilities, especially in the context of the facts in question where the one applicant claimed to be totally and permanently disabled under the two policies. FOS was not satisfied that pointing to theoretically relevant facts was sufficient to give it a jurisdiction that had specifically been narrowed through cl 14.1(p). The task faced by FOS was to ensure that it did not exceed its legal jurisdiction and I do not find legal error in its construction of cl 14.1(p) as requiring a complainant to establish the contentions beyond claims of possibility.
With respect, however, that was not the way in which the Panel Chair reasoned and it would not have been correct if he had. As has been noted, the Panel Chair proceeded correctly up to the point that knowledge of the correct interpretation of the SCI policy was a relevant fact because it could have (as opposed to necessarily would have) affected Mr Mickovski’s failure to apply for SCI policy benefits until after he learned of the correct interpretation of the SCI policy. The Panel Chair’s error was to go on in effect to hold that, because he regarded it as inconceivable that Mr Mickovski might succeed in his claim for SCI policy benefits, FOS had no jurisdiction to determine whether the claim should succeed.
The consequences of the error
In one sense, the Panel Chair’s error may be described a jurisdictional error in that it went to the question of whether FOS had jurisdiction under clause 14.1(p) to determine the dispute in the circumstances which obtained. In the sense which matters for the purposes of clause 15.3, however, it was not a jurisdictional error but rather an error made in the exercise of jurisdiction or more accurately within the ambit of decision-making power conferred on the Panel Chair by clause 15. That is to say, the Panel Chair was not guilty of fraud or lack of good faith; he was not prejudiced; and he did not misconceive the task which he was required to undertake. He simply made an error in the process of reasoning which he adopted in the execution of his decision making responsibility.
In view of the terms of clause 15.3, such an error is not reviewable.
Conclusion and orders
In the result, the appeal will be dismissed.
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