MLC Nominees Pty Limited v McNally

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FEDERAL COURT OF AUSTRALIA

MLC Nominees Pty Limited v McNally [2018] FCA 1950

Review of: D18-19\002
File number: NSD 1410 of 2018
Judge: ROBERTSON J
Date of judgment: 4 December 2018
Catchwords: SUPERANNUATION – appeal against determination of and direction by Superannuation Complaints Tribunal – whether denial of procedural fairness – whether errors of law on the part of the Tribunal
Legislation:

1           Administrative Decisions (Judicial Review) Act 1977 (Cth) s 5

2           Corporations Act 2001 (Cth) s 1017B

3           Superannuation Industry (Supervision) Act 1993 (Cth) s 52

Superannuation (Resolution of Complaints) Act 1993 (Cth) ss 14, 37, 44, 46
Cases cited:

Human Rights and Equal Opportunity Commission v Mount Isa Mines Ltd (1993) 46 FCR 301

Kalymnian Shipping Pte Ltd v Rose [2000] FCA 614; 61 ALD 668

Merkel v Superannuation Complaints Tribunal [2010] FCA 564

Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6; 185 CLR 259

Stead v State Government Insurance Commission [1986] HCA 54; 161 CLR 141
Date of hearing: 3 and 4 December 2018
Registry: New South Wales
Division: General Division
National Practice Area: Administrative and Constitutional Law and Human Rights
Category: Catchwords
Number of paragraphs: 114
Counsel for the Applicant and the Second Respondent: Ms K Richardson SC with Ms S Palaniappan
Solicitor for the Applicant and the Second Respondent: MinterEllison
Counsel for the First Respondent: The First Respondent submitted save as to costs

ORDERS

NSD 1410 of 2018
BETWEEN:

MLC NOMINEES PTY LIMITED ABN 93 002 814 959

Applicant
AND:

MAUREEN ANGELA MCNALLY

First Respondent

NULIS NOMINEES (AUSTRALIA) LIMITED

Second Respondent

JUDGE:

ROBERTSON J

DATE OF ORDER:

4 DECEMBER 2018

THE COURT ORDERS THAT:

1.Leave is granted to the applicant to amend and rely on its further amended notice of appeal in the form dated 4 December 2018.

2.The appeal be allowed.

3.The determination and the direction of the Tribunal given on 3 July 2018 be set aside.

4.The matter be remitted to be determined again by the Tribunal in accordance with law.

5.There be no order as to costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT

ROBERTSON J:

Introduction

  1. The applicant trustee applies for judicial review of the determination of the Superannuation Complaints Tribunal under s 37 of the Superannuation (Resolution of Complaints) Act 1993 (Cth) (the ComplaintsAct) given on 3 July 2018.  The trustee also applies for judicial review of the direction made by the Tribunal on the same date under s 44 of the Complaints Act. The application is brought pursuant to s 46(1) of the Complaints Act and s 5 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (ADJR Act).

  2. The first respondent, the complainant to the Tribunal, has filed a submitting appearance. No costs order is sought against her.  The first respondent is referred to in these reasons as the complainant or Ms McNally.

  3. The complainant had commenced the process in the…

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Details
Case
[2018] FCA 1950
Decision Date

CaseChat Overview and Summary

The appeal in MLC Nominees Pty Limited v McNally was against a determination and direction made by the Superannuation Complaints Tribunal, challenging the decision on procedural fairness and alleged errors of law. The Tribunal had found that the trustee had not informed the complainant of a business decision from 2008 to remove contribution fees if there was no financial adviser on the member's account, which resulted in the complainant not being able to take steps to avoid these fees. The Tribunal had also directed the trustee to inform all relevant members of the Fund about the Tribunal's determination, a direction which was contested by the applicant. The primary legal issues before the court were whether the Tribunal had denied procedural fairness and whether it had committed errors of law in its determination and direction.

The court found that the Tribunal had indeed denied procedural fairness by not informing the complainant about the 2008 decision, which could have enabled her to avoid the fees. Additionally, the court held that the Tribunal had erred by involving ASIC in its direction, despite there being no legal basis for ASIC's involvement in the section of the act under which the Tribunal was operating. The court also noted that the Tribunal's extensive findings on various issues might not have been necessary for its statutory conclusion but were part of the reasons the court had to consider. The applicant's submission that if the court found for the applicant on procedural fairness, it need not go further, was accepted.

The court allowed the appeal, set aside the Tribunal's determination and direction, and remitted the matter back to the Tribunal for reconsideration in accordance with the law. No order was made as to costs. The decision underscores the importance of procedural fairness and adherence to legal mandates in administrative tribunals.

Orders

Orders of the court

1. Leave is granted to the applicant to amend and rely on its further amended notice of appeal in the form dated 4 December 2018.

2. The appeal be allowed.

3. The determination and the direction of the Tribunal given on 3 July 2018 be set aside.

4. The matter be remitted to be determined again by the Tribunal in accordance with law.

5. There be no order as to costs.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The Tribunal, at [33] of its written determination, identified as the 2008 decision of the trustee “a business decision to remove the contribution fee if there was no adviser on the member’s account”. At [62], the Tribunal found that the fee would no longer apply if the member requested the removal of a financial adviser linked to the member’s account. The Tribunal also found, at [61], that members were not told about this “business decision”. Although there does not appear to be a formal determination document, at [86] of the Tribunal’s written determination the trustee’s decision not to refund any of the contribution fees debited to the complainant’s account was set aside and a decision was substituted that the trustee compromise the complainant’s claim by paying to the complainant, or in accordance with her directions, the amounts debited to her account in the Fund as contribution fees in 2013 and 2015 respectively. The Tribunal also, at [79] of its written determination, directed the trustee to inform the members and former members of the Fund who were members at the date of the 2008 decision of the Tribunal’s determination in this complaint, unless the Australian Securities and Investments Commission (ASIC) decided otherwise. This is the direction which is also challenged on this judicial review application. The more detailed findings and reasons of the Tribunal were as follows. On 9 November 1990 the complainant signed a proposal addressed to the life insurer, MLC Life Limited, for her to be included in a master life insurance policy owned by the trustee, in its capacity as trustee of the Predecessor Fund, The Individuals Superannuation Fund, for a monthly premium. She selected the “balanced” investment option. The complainant’s signature was witnessed by a person identified in the proposal as an “agent”. On the same date the complainant also signed an application for membership of the Predecessor Fund in which she declared her annual income and agreed to make an annual contribution to the Predecessor Fund. Her signature was witnessed by the person identified in the proposal as the “agent”. On 22 September 1991, the complainant signed a document called an “Application for proposal alteration”, to alter her monthly contribution and declared her annual salary to be a different, lower, amount. On 16 August 1999, a letter from the principal company, MLC Limited, advised the complainant that she had been transferred to another superannuation arrangement, which appeared to be part of the Fund. An accompanying statement showed employer contributions paid into her account for the year ended 30 June 1999 from which a contribution fee had been deducted. The statement also included, under the heading “Contribution fee”: “We charge a fee of up to 5% on all contributions, including transfers and rollovers”. There was no mention of the trustee in these documents. On 10 December 2013, the complainant completed a form entitled “Consolidate your super” in which she requested that her total account balance in an unrelated superannuation fund be transferred or rolled over to the Fund.

Ratio Decidendi

Legal Principle Established

Ninth, the applicant submitted the power of the Tribunal under s 44(2) was to direct the trustee. Nowhere was ASIC mentioned. Yet when the terms of the Tribunal’s direction at [79] were considered, the Tribunal had given ASIC a role “as the regulator”. This was ultra vires where the section made no provision for ASIC’s involvement.Consideration I accept the applicant’s evidence. As I have already said there was no contradictor. This makes it necessary, in my opinion, for the Court to be cautious in avoiding considerations not essential to disposing of the application for judicial review. So far as possible, I will consider the applicant’s grounds separately from each other. On the facts before it, what the Tribunal decided was that the complainant should have been told, but was not, that in 2008 there had been a business decision to remove contribution fees if there was no longer an adviser linked to a member’s account. If the complainant had been told about it, the Tribunal found, she could have removed the nominal adviser who was not giving her any advice and who played no part in the rollover contributions she made. The Tribunal decided the complainant was entitled to be told by the trustee that the 5% fee, that had previously been advised to her, would no longer apply if she removed any financial adviser linked to her account. The removal of the contribution fee for members who complained and not for those who did not complain was not justifiable, the Tribunal said, because of the unfairness of it. The Tribunal said the decision made in 2008 should have been disclosed to the complainant and it was not fair in its application to her because the result of it was that some other members of the Fund in her position no longer paid a contribution fee but it continued to apply to her. In my opinion, the Tribunal’s essential reasoning was that the trustee’s decision was not fair and reasonable in relation to the complainant because she was not told of the 2008 decision: those beneficiaries who were told of it were able to take steps, to remove their financial adviser from their account, whereby they did not have to pay the relevant fees. Because she was not told of the 2008 decision, the applicant was not able to take the same steps. It may well have been simpler for the Tribunal to limit its consideration to whether the decision of the trustee not to refund the amounts to the complainant was or was not fair and reasonable in the circumstances, with reference to s 37(6) of the Complaints Act. Many of the matters the subject of complaint in this Court by the applicant may not have been important to that statutory conclusion. Nevertheless, it is the reasons of the Tribunal as they stand which the Court must consider. I will endeavour to deal with the issues in the order in which they were the subject of oral submissions. As I have said, I do this in part because there is no contradictor and, therefore, I should keep to what it is necessary to decide. Further, the applicant submitted that if I found for the applicant in relation to the procedural fairness points it was not necessary for the Court to go further, and the Court should go no further as the facts found by the Tribunal may change once procedural fairness is afforded to the applicant. Reference was made, in support of this course, to the decision of Gray J in Merkel v Superannuation Complaints Tribunal [2010] FCA 564. I accept this submission.