PETER CRAIG METCALF and COMMONWEALTH SUPERANNUATION CORPORATION
[2012] AATA 261
•4 May 2012
[2012] AATA 261
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2011/4416
Re
PETER CRAIG METCALF
APPLICANT
And
COMMONWEALTH SUPERANNUATION CORPORATION
RESPONDENT
DECISION
Tribunal Senior Member Dr K S Levy RFD
Date 4 May 2012 Place Brisbane The decision under review is affirmed.
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Senior Member Dr K S Levy RFD
CATCHWORDS
PUBLIC ADMINISTRATION – Superannuation – Defence Force Retirements and Death Benefits – Periods of continuous full-time service – Election required to remain in Defence Force Retirement and Death Benefits Scheme – Automatic transfer to Military Superannuation and Benefits Scheme – Legislative interpretation – Decision under review affirmed
LEGISLATION
Acts Interpretation Act 1901 (Cth) s 15AA
Defence Force Retirement and Benefits Act 1948 (Cth)
Defence Force Retirement and Death Benefits Act 1973 (Cth) ss 3, 5A, 23, 61B
Military Superannuation and Benefits Act 1991 (Cth) s 6Superannuation Act 1976 (Cth)
CASES
CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 141 ALR 618
Commissioner of Stamps v Telegraph Investment Co Pty Ltd (1995) 133 ALR 130
Defence Force Retirement and Death Benefits Authority v Gregory [2009] FCA 875
Defence Force Retirement and Death benefits Authority v Mathews [2011] FCA 160
Mills v Meeking (1990) 91 ALR 16
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 153 ALR 490
Re Marston and Defence Force Retirement and Death Benefits Authority [2011] AATA 291
Re May v The Commissioner for Superannuation (1979) 2 ALD 951Sweeney v Fitzhardinge (1906) 4 CLR 716
REASONS FOR DECISION
Senior Member Dr K S Levy RFD
4 May 2012
INTRODUCTION
The applicant is Commander Peter Craig Metcalf. He served in the Royal Australian Navy (RAN) for 33 years. After retiring, he received a retirement pension under s 23 of the Defence Force Retirement and Death Benefits Act 1973 (Cth) (the DFRDB Act). He later undertook two periods of continuous full time service (CFTS) and remained a member of the Defence Force Retirement and Death Benefits Scheme (DFRDB scheme) for both of those undertakings. Prior to completing the second period of CFTS, he undertook to perform a third period of service and completed the relevant form to elect DFRDB as his Superannuation Fund for that period. However, the form was not received by the Commonwealth Superannuation Corporation (CSC) until after he commenced that period of CFTS. He was then deemed to be a member of the Military Superannuation and Benefits scheme (MSB scheme).
Commander Metcalf has now almost completed that third period of CFTS. Shortly after commencement of that period, he was advised by the CSC that as his election form for that period of CFTS was received after the commencement date of the present period of service, he could not be regarded as being a member of the DFRDB scheme for that period but, rather, he is deemed to be a member of the MSB scheme. He applied for review of that decision not to accept his application to be part of the DFRDB scheme to the Defence Force Case Assessment Panel. That review resulted in the original decision being affirmed on 12 September 2011.
He now appeals to this Tribunal on the basis that his application should have been accepted as being within the DFRDB scheme.
ISSUES
The issue here is whether Commander Metcalf ceased to be a member of the DFRDB scheme with effect from the date of commencement of his present CFTS on 1 May 2011. In legal terms, there are two questions to be answered by the Tribunal:
(1)Did Commander Metcalf elect not to be a member of the MSB scheme (s 61B(3) of the DFRDB Act); and
(2)Is Commander Metcalf, an eligible member of the Defence Force for the purpose of the DFRDB Act (s 5A(2)) or is he, by default, a member of the MSB scheme?
THE FACTS
Commander Metcalf joined the RAN on 5 January 1970 and ceased service as an officer of 2 February 2003. He has since received retirement pay under s 23 of the DFRDB Act.
He then undertook CFTS for the following periods:
(1)29 October 2007 to 14 December 2009 – a period greater than two years;
(2)15 December 2009 to 24 April 2010 – a period of less than 12 months; and
(3)1 May 2011 to 20 April 2012- a period less than 12 months.
By legislative action, the DFRDB scheme and the MSB scheme are now both managed by an overarching statutory authority, the Commonwealth Superannuation Corporation (CSC).
Commander Metcalf told the Tribunal that he rang the CSC prior to completing the D100 form, the latter of which is required prior to commencement of a term of CFTS for his superannuation election to be relevant. He said the form was completed on 8 March 2011, a copy of which was provided to the Tribunal. There is no dispute that the form was completed on that date. Commander Metcalf said he then took the form to the orderly room and asked a Chief Petty Officer, a person in a responsible position, to fax that form (and another form) relevant to the period of service to the appropriate addressees. He recalled that his family had arranged a period where they would be away shortly after that date until the end of April 2011, and wanted to complete all the administration required before he ceased his second period of CFTS and prior to the commencement of the third period. He was advised by the Chief Petty Officer that not all the forms needed to be faxed.
Commander Metcalf commenced the third period of CFTS on 1 May 2011 and he was stationed in Darwin from that date. On 9 May 2011, he spoke to a visiting representative of CSC and learned that CSC had not in fact received the election form which he completed on the 8 March 2011 (T-documents, folio 83). He then sent an email to the CSC on 9 May 2011 informing it of the facts. Also, on the same date, he telephoned Chief Petty Officer Lea and asked him to fax the form, which was then on file, to CSC.
The D100 form completed by Commander Metcalf shows that Part C of the D100 form is relevant to a member receiving retirement pay and who is going to undertake a period of CFTS in the Reserve Forces for less than 12 months. That is the situation relevant to Commander Metcalf. There were two options available and he had to choose one election – either he agreed to join the MilitarySuper Scheme (an election which was then irreversible); or he could elect, for the period of that engagement only, to continue to received his DFRDB scheme retirement pay and remain with the DFRDB scheme. Commander Metcalf’s form showed he had elected not to become a member of MSB scheme but, rather, remain with the DFRDB scheme. He signed that election which was dated 8 March 2011. It is also noted that there was a declaration on that form, which the applicant acknowledged, that he would have to complete a separate election for any future periods of CFTS. However, if he joined the MSB scheme, then it was “final” and “irreversible”. These words are shown in bold type so that a member would be aware that if they chose the MSB scheme, then any future service would result in them having superannuation contributions managed by the MSB scheme.
Part E of the D100 form deals with lodgement of the form. It states:
It is your responsibility to send this completed form to DFRDB/MilitarySuper before resumption of service in the ADF. This form can be:
Posted to: PO Box 22, BELCONNEN ACT 2616
Faxed to: (02) 6272 9616.
You must also send a copy of this form to your Pay Unit before resumption of service. Doing both of these things will help to ensure your election is valid, avoid possible overpayments and safeguard your entitlement to future benefits.
CONSIDERATION
I have considered all the evidence presented and the relevant law. The statutory scheme which applies in this case involve the following statutory provisions:
Defence Force Retirement and Death Benefits Act 1973 (the DFRDB Act)
61B Election by recipient member intending to resume full‑time service
(1) Where a person:
(a) who is a recipient member; or
(b) in respect of whom deferred benefits are applicable under section 78;
intends to resume full‑time service:
(c) as a member of the Permanent Forces; or
(d) as a member of a Reserve for a continuous period of not less than 12 months;
the person must, before resuming service, in writing addressed to CSC, elect:
(e) to become a contributing member; or
(f) to become a member of the MSB scheme.
(2) Subsection (1) does not apply if the person has previously:
(a) made an election under that subsection; or
(b) made, under subsection (3), an election to become a member of the MSB scheme.
(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 CSC, elect whether or not to become a member of that scheme.
Military Superannuation and Benefits Act 1991 (the MSB Act)
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.
For the purpose of s 6(2) of the MSB Act, a person is an “eligible member of the Defence Force” as defined in s 3 of the DFRDB Act. That definition encompasses a person in the position of Commander Metcalf, but does not include:
…
(c) a person who, under s 5A, is excluded from this definition.
…
Section 5A(1) of the DFRDB Act excludes a person who, broadly, becomes a member of the Defence Force on or after 1 October 1991. Section 5A(2)(b) however, says an exclusion will not apply to
…
(b) a person to whom s 61B applies and who has elected under that section to become a contributing member;
…
Commander Metcalf is a person to whom s 5A(2)(b) was intended to apply and, prima facie, is not excluded from being an eligible member of the Defence Force under the DFRDB Act. He is also a “recipient member” as defined in s 3 of that Act as he is entitled to retirement pay.
Having satisfied those fundamental definitions, the primary question is: does he satisfy s 61B of the DFRDB Act? It is clear ss 61B(1) and 61B(2) do not apply in these circumstances. Section 61B(3) applies and Commander Metcalf was then required to “… elect whether or not to become a member of that scheme”; that is, the MSB Scheme. The DFRDB Act is silent on what occurs if he does not make an election at all. However, that question appears to be answered unequivocally by s 6(1)(c) of the MSB Act which provides that a member performing CFTS will be a member of the MSB Scheme:
(1)Unless the member has elected not to be a member of the MSB scheme; and
(2)Unless he is “… an eligible member of the Defence Force for the purposes of the DFRDB Act”.
When one examines the wording of the statutes, these two questions can be seen to be complementary.
Considering the above statutory provisions in the context that Commander Metcalf had completed the D100 form but it had never been received by the CSC prior to his commencement of CFTS on 1 May 2011, the question is: has he given effective notice? He prepared the form and ‘delegated’ its transmission to CSC to the Chief Clerk, a Chief Petty Officer of the RAN.
Whether such action is sufficient for the purposes of the DFRDB Act depends on the statutory meaning of the provisions concerned. Here, it is concerned with the interpretation of the DFRDB Act, which has been amended (or its effect amended in some respects or circumstances) by the MSB Act. The effect of these Acts interacting together depends on principles of statutory interpretation. Section 15AA of the Acts Interpretation Act 1901 (Cth) (effective by amending Act number 27 of 1984), gives statutory recognition of the ‘purposive’ approach preferred by the High Court of Australia (see Mills v Meeking (1990) 91 ALR 16 at 30-31 per Dawson J; CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 141 ALR 618 at 634-635 per Brennan CJ, Dawson, Toohey and Gummow JJ; Project Blue Sky Inc v Australian Broadcasting Authority (1998) 153 ALR 490 at 509 per Brennan CJ).
The purpose of the statutory provisions in issue here is compounded by the fact that there are two statutes involved – the DFRDB Act and the MSB Act, the latter amending the application of certain provisions of the DFRDB Act. The principles involved in interpreting the relevant provisions are that the two Acts are to be regarded as a statement of the integrated intention of Parliament (Sweeney v Fitzhardinge (1906) 4 CLR 716 at 735 per Isaacs J.; approved by the High Court in the Commission of Stamps v Telegraph Investment Co Pty Ltd (1995) 133 ALR 130 at 135 per Brennan CJ, Dawson and Toohey JJ and 147 per McHugh and Gummow JJ). Even in the circumstance where there is a transitional provision, it has been regarded by the Administrative Appeals Tribunal as an amending provision (see Re May v The Commissioner for Superannuation (1979) 2 ALD 951).
The historical facts show that there was stability of the non-Military Commonwealth Government superannuation scheme from 1922 – 1976. After that time there was an indexed pension payable to members based on the income earned from the corpus of the contributions that a member had made to the relevant Fund. An ad hoc contribution to boost the index was then paid from time to time by the Federal Government by enacting separate legislation. The Superannuation Act 1976 (Cth) for non-military employees introduced indexation of pensions linked to CPI. In a similar way, the Military superannuation scheme was developed from 1948 to 1973 in the Defence Force Retirement Benefit Scheme. The Defence Force Retirement and Benefits Act 1948 (Cth) was seen to be rigid and complex and members did not understand it well. Prior to and shortly after the Whitlam Government of the mid 1970’s, a review of the Military Superannuation Scheme was again undertaken and new legislation was proposed. Proposed new legislation, the Defence Force Retirement and Death Benefits Bill (DFRDBS) was introduced in 1973, and the Act which was proclaimed resulted in a contributory scheme for eligible members of the Defence Force, which were those who served for at least one year full time. There was some updating of the scheme including provision for commutation of part of pension entitlements to a lump sum. Also, pension entitlements were linked to a percentage of a member’s final salary, the percentage increasing with the greater length of service. That scheme also was ultimately replaced by the Military Superannuation and Benefits Scheme, effective from 1 October 1991. With some grandfathering of provisions for those who were already members of the DFRDB Scheme, this has resulted in questions arising about the statutory provisions which have changed over that period of time and for situations that arise for members such as Commander Metcalf.
In relation to the present facts, it is not in dispute that Commander Metcalf completed the D100 prior to 1 May 2011. Equally, it is not in dispute the CSC did not receive the form until 9 May 2011. It is also common ground that Commander Metcalf asked Chief Petty Officer Lee to fax it on 8 March 2011. Can this be regarded as an effective delegation and that the Australian Defence Force (ADF) should be seen to be an agent of the CSC and, therefore, liable for the omission in transmission of Commander Metcalf’s form?
This question must also be answered by ascertaining the intention of the statute and by reference to the facts. The facts show that the D100 form was intended to be the personal responsibility of the member. On the basis of that form, it seems clear from the express wording of Part E of the D100 form that it is not the responsibility of the ADF and the ADF could not be seen to be an agent of the CSC.
Is that factual evidence consistent with the statutory law? The intention of the statutes clearly had the purpose of merging members of the current and former schemes together where possible, while leaving an option for members of the former DFRDB scheme to elect to remain a member of the former scheme if they so desired, particularly when undertaking Reserve service after ceasing full time service with the ADF. The statute required that desire to be made express – both in writing and in its communication to the CSC prior to the commencement of the actual reserve service in question. The statute requires a strict liability be imposed personally on the member concerned.
Applying that interpretation then, Commander Metcalf did not effectively elect to remain a member of the DFRDB Scheme for his current period of reserve service. He therefore did not comply with s 61B(3) of the DFRDB Act. The wording of the statute is strict and is consistent with the application of s15AA of the Acts Interpretation Act 1901 (Cth) for the purpose of interpreting the current wording of the DFRDB Act. As he did not make an effective election, he therefore does not come within the terms of the saving provision of the definition “eligible member of the Defence Force” in s 5A(2)(b) of the DFRDB Act. The consequential effect of applying those provisions is that s 6(2) of the MSB Act is not applicable and, therefore, Commander Metcalf is a member of MSB Scheme by virtue of s 6(1) of the MSB Act.
Mr Dillon, for the respondent, submitted that there are a number of relevant precedents which indicate the interpretation of these provisions. Essentially, these precedents are consistent with the analysis above. For example, in Defence Force Retirements and Death Benefits Authority v Gregory [2009] FCA 875 and Defence Force Retirements and Death Benefits Authority v Mathews [2011] FCA 160, the Federal Court in both of those cases held that the late submission of the election form was fatal to retention of membership of the DFRDB Scheme. In Re Marston and Defence Force Retirements and Death Benefits Authority [2011] AATA 291, that interpretation was also adopted despite noting that the Act does not specifically require the notice to be received by CSC prior to the commencement of service, but, nevertheless, observing that without clear statutory authority to the contrary, a Tribunal should not widen what is contained expressly in the statutory provisions.
While I accept Commander Metcalf as a witness of truth and appreciate he has a view that future reserve service will not be attractive if he loses his DFRDB pension while he performs that service, I must nevertheless determine the matter according to law. The law seems to me to be clear, taking the legislative scheme as a whole, and it shows that the relevant statutory provisions and the imperatives put in the D100 form have been inserted to urge the responsibility to be placed on the member and adherence to strict time requirements. Without such adherence to those requirements, member’s superannuation for future service will converge into the latest scheme for their future entitlements, that is, the MSB scheme. In this case, it cannot be said that the election has been satisfied as required by the statutory provisions, despite the early attention to the completion of the D100 form and the intention which the applicant had.
DECISION
The decision under review is affirmed.
I certify that the preceding 28 (twenty eight) paragraphs are a true copy of the reasons for the decision herein of Senior Member Dr K S Levy RFD.
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Associate
Dated 4 May 2012
Date(s) of hearing 15th March 2012 Applicant In person
Solicitor for the Respondent Mr A Dillon
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