Price v MLC Nominees Pty Ltd

[2007] FCA 298

FEDERAL COURT OF AUSTRALIA

Price v MLC Nominees Pty Ltd [2007] FCA 298

ADMINISTRATIVE LAW – Review of determination of Superannuation Complaints Tribunal – whether unfair and unreasonable to not reinstate account according to Superannuation (Resolution of Complaints) Act 1993 (Cth), subs 14(2) – mixed question of fact and law – appeal on question not raised below – permissive clause in trust deed – whether account cashed in favour of member according to Superannuation Industry (Supervision) Regulations 1994, reg 6.22

Superannuation (Resolution of Complaints) Act 1993 (Cth) subs 14(2), s 46
Superannuation Industry (Supervision) Regulations 1994) regs 6.17(2), 6.22

Asgard Capital Management Ltd v Maher (2003) 131 FCR 196 applied
Australian Securities and Investment Commission v Saxby Bridge Financial Planning Pty Ltd (2003) 133 FCR 290 cited

PETER JOHN PRICE v MLC NOMINEES PTY LIMITED AND SUPERANNUATION COMPLAINTS TRIBUNAL
NSD 2202 OF 2005

EDMONDS J
9 MARCH 2007
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 2202 OF 2005

ON APPEAL FROM THE SUPERANNUATION COMPLAINTS TRIBUNAL CONSTITUTED BY GRAHAM BIRD (PRESIDING MEMBER) AND ROSS CHRISTIE (MEMBER)

BETWEEN:

PETER JOHN PRICE
Applicant

AND:

MLC NOMINEES PTY LIMITED
First Respondent

SUPERANNUATION COMPLAINTS TRIBUNAL
Second Respondent

JUDGE:	EDMONDS J
DATE OF ORDER:	9 MARCH 2007
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The applicant’s application for leave to further amend his notice of amended appeal be refused.

2.The appeal be dismissed.

3.The applicant pay the first respondent’s costs of the appeal.

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

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 2202 OF 2005

ON APPEAL FROM THE SUPERANNUATION COMPLAINTS TRIBUNAL CONSTITUTED BY GRAHAM BIRD (PRESIDING MEMBER) AND ROSS CHRISTIE (MEMBER)

BETWEEN:

PETER JOHN PRICE
Applicant

AND:

MLC NOMINEES PTY LIMITED
First Respondent

SUPERANNUATION COMPLAINTS TRIBUNAL
Second Respondent

JUDGE:	EDMONDS J
DATE:	9 MARCH 2007
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. This is an appeal from a determination of the Superannuation Complaints Tribunal (‘the Tribunal’) affirming a decision of the first respondent (‘the Trustee’) not to reinstate the applicant’s account in a superannuation fund, of which the Trustee is trustee, in the circumstances outlined below.

2. The background facts are largely not in dispute although the Trustee, through its counsel, made it clear that because the Tribunal did not make, or was not even in a position, having regard to the state of the evidence before it, to make any finding of fact that the application for payment was a forgery, the Trustee was not to be taken to be making any concession or admission on this factual issue.

   BACKGROUND

3. The background to this appeal is summarised in the Trustee’s first written outline of submissions, which I gratefully adopt:

   (1)The Trustee is the trustee of the superannuation fund of which the applicant was formerly a member.

   (2)The applicant was originally a member of the Eagle Retirement Fund pursuant to an application for membership made on 3 December 1986 to Australian Eagle Insurance Company Limited.  By a process of transfer and amalgamation, which is not in dispute, that fund became subject to the Universal Super Scheme Trust Deed (as amended from time to time relevantly up to 29 June 2001).

   (3)The applicant’s superannuation account contained only unrestricted non-preserved funds and thus could be withdrawn at any time subject to the powers and discretions of the Trustee under the deed.

   (4)The Trustee received a telephone request from the applicant’s wife on 14 August 2001 to send withdrawal forms for the applicant.  The Trustee sent the forms with a letter of advice to the applicant’s then home address on 16 August 2001.

   (5)The forms were returned to the Trustee on or about 23 August 2001 apparently completed by the applicant on or about 22 August 2001.

   (6)The applicant’s signature on the withdrawal form was verified by comparison with the specimen signature on the original application because the withdrawal request was for more than $10,000 and requested payment of the amount into a joint bank account which the applicant maintained with his wife, Robyn Joy Price.

   (7)The balance of the superannuation account in the sum of $31,455.82 was deposited by the Trustee into this joint bank account and credited on 4 September 2001.

   (8)The funds paid in by the Trustee were disbursed from the joint bank account over the course of about two months by payment of household bills, various cash withdrawals and cheque payments and, as to $18,200, for the purchase of a motor vehicle, apparently for or by the applicant.

   (9)Confirmation of the transaction was posted to the applicant’s home address on 3 or 4 September 2001.

   (10)Enclosed with the confirmation letter was an Eligible Termination Payment form which was required to be submitted with the applicant’s personal income tax return for the financial year 2002.

   (11)On or about 11 January 2005 (i.e. more than 3.5 years later) the Trustee received a letter from the applicant dated 8 January 2005, asserting that his signature on the withdrawal form had been forged by his wife and requesting that, if the fraud is proven, his account be reinstated.  The applicant supplied a statement by himself and one said to be by his wife and supporting summaries of what the applicant asserted was his financial position.  The Trustee declined to reinstate the account.

   (12)The applicant requested that the Trustee provide documents to the police for neutral examination of the claimed fraud. The Trustee provided copy documents to the applicant to pass on to the police at his discretion.

   (13)The applicant complained to the Superannuation Complaints Tribunal by letter dated 7 March 2005.  Although the terms of the complaint appear to be mainly directed to what the applicant perceived as the Trustee’s failure to ‘be part of’ the police investigation, it is apparent that the Tribunal treated the complaint as concerning the Trustee’s decision to decline reinstatement of the account or, in the applicant’s words, to give ‘a speedy and just settlement’ of the applicant’s claim.

   (14)The Tribunal received submissions from both parties and received the ‘evidence’ enclosed with the applicant’s letter to the Trustee, the relevant correspondence between the parties and the extract of the applicant’s bank records.  The Tribunal had the historical trust deeds for the fund.

   (15)The Tribunal affirmed the Trustee’s decision not to reinstate the applicant’s account.  In the course of its deliberations, the Tribunal said:

   ‘The Tribunal must determine whether the decision of the Trustee not to re-instate the Complainant’s benefit was fair and reasonable in its operation in relation to the Complainant in the circumstances.  In reaching its determination, the Tribunal took the whole of the evidence and submissions into account.

   The Tribunal believes that it is important to consider all the transactions that took place between the Complainant and the Fund in deciding whether the conduct of the Trustee was fair and reasonable.  In a document dated 16 August 2001 the Trustee wrote to the Complainant providing an illustration of the benefit he would receive if he withdrew from the Fund due to retirement.  This was sent to the address at which the Complainant resides.  Whilst the Complainant indicates that he did not receive the document he also submitted that his wife had the only keys to the letter box and he only saw items that his wife chose to hand over.  The Tribunal believes that the Complainant in consenting to this arrangement had in effect appointed his wife as his agent and therefore the Trustee could reasonably have regarded the document as having been provided to the Complainant.

   The withdrawal form that was attached to the document was completed and returned to the Fund.  The Trustee may reasonably have assumed that the form came from the Complainant on the basis that it was provided to the Complainant by the Fund.  The signature on the withdrawal form was checked by the Trustee against the Complainant’s application to join the Fund.  Almost 16 years had elapsed between the two signatures.  The Tribunal has no handwriting expertise but regards the contention of the Trustee that the signatures were very similar and therefore accepting it was the signature of the Complainant was reasonable particularly when taken in conjunction with the other details of the payment.

   The payment was made to a joint bank account in the name of the Complainant and his wife.  The Complainant submits that his wife had control of the bank account and that he did not see any of the transactions.  This explains why the Complainant did not become aware of the payment from the Fund until 2004.  Similar to the arrangement he had with his wife in respect to the letterbox the Complainant chose to allow his wife to have total control of the bank account.  The Tribunal does not believe that such an arrangement can be construed as shifting the liability to any party that pays money into that account for the Complainant if the Complainant’s wife applies the money in a manner subsequently not approved of by the Complainant.  It is, in the view of the Tribunal, fair and reasonable to regard the Trustee as having made the payment to the Complainant.

   What is clear to the Tribunal is that the Complainant is responsible for the arrangements he had with his wife in respect to the letterbox at their residence and their joint bank account.  These arrangements were such that they caused the superannuation benefit to be applied in a manner not requested by the Complainant.  However the Trustee quite reasonably believed that it was at all times dealing with the Complainant, that the Complainant signed the withdrawal form and that it made the payment to the Complainant.  Therefore the Tribunal it satisfied that the decision of the Trustee not to re-instate the Complainant’s account in the Fund was fair and reasonable in the circumstances in its operation in relation to the Complainant.’

   APPEAL TO THIS COURT

4. An appeal to this Court from a determination of the Tribunal may only be brought on a question of law: subs 46(1) of the Superannuation (Resolution of Complaints) Act 1993 (Cth).

5. Putting to one side their form, the alleged questions of law in (2) of the notice of amended appeal, even if reformulated as questions, would not be questions of law with the possible exception of (2)(b); they would be questions of fact or, at best, mixed questions of fact and law.  Mixed questions of fact and law will not found an appeal: Australian Securities and Investment Commission v Saxby Bridge Financial Planning Pty Ltd (2003) 133 FCR 290 per Branson J at [84] and Jacobson and Bennett JJ at [107], and even if (2)(b) was reformulated into a question as to whether the Trustee failed to comply with Clause 10.1(b) of the MLC Master Key Superannuation Trust Deed, that question, if a question of law, raises two difficulties:

   1.The issue was not raised below and in those circumstances the Tribunal was not required to deal with it by specific reference to the trust deed in its reasons.

   2.The clause itself is permissive rather than mandatory so that the failure of the Trustee to require a claimant for payment of a benefit to comply with the terms of Clause 10.1(b) before payment would not amount to a failure on the part of the Trustee to comply with the provisions of the trust deed.

6. During the course of the first day’s hearing of the appeal, I indicated to the parties that the only issue which caused me concern was whether the Trustee was entitled to pay the applicant’s benefit into a joint bank account in the names of himself and his wife in the face of regs 6.17(2) and 6.22 of the Superannuation Industry (Supervision) Regulations 1994 (Cth), which, relevantly, were in the following terms at the relevant date:

   ‘6.17    (2)        A member’s benefits in a fund:

   (a)may only be paid by:

   (i)being cashed in accordance with Division 6.3; or

   (ii)being rolled over or transferred in accordance with Division 6.4 or 6.4A; and

   (b)must not be paid except when, and to the extent that, the fund is required or permitted under this Part to pay them; and

   (c)must be paid when, and to the extent that, the fund is required under this Part to pay them.

   …

   6.22(1)       Subject to regulation 6.22(B), a member’s benefits in a regulated superannuation fund must not be cashed in favour of a person other than the member or the member’s legal personal representative unless:

   (a)the member has died; and

   (b)the conditions of subregulation (2) or (3) are satisfied.

   (2)The conditions of this subregulation are satisfied if the benefits are cashed in favour of either or both of the following:

   (a)the member’s legal personal representative;

   (b)one or more of the member’s dependants.

   (3)The conditions of this subregulation are satisfied if:

   (a)the trustee has not, after making reasonable enquiries, found either a legal personal representative, or a dependant, of the member; and

   (b)the person in whose favour benefits are cashed is an individual.’

7. I acknowledged that this particular issue was not raised below and that it was not encompassed by the applicant’s notice of appeal.  Nevertheless, I indicated to the parties that I would be prepared to hear them on the issue of whether, if the applicant should apply for leave to further amend his notice of amended appeal to raise this issue, leave should be granted.  For this purpose, I adjourned the proceedings to enable the parties to consider and address the issue and to file written submissions in support of their respective positions.

8. At the adjourned hearing, the applicant sought leave to further amend his notice of amended appeal to enable him to raise the reg 6.22 issue.

9. Not surprisingly, the Trustee submitted that the applicant should not be granted leave. Indeed, the Trustee submitted that even if there had been a breach of reg 6.22, that would not necessarily be a matter that the Tribunal was bound to determine (or ought to determine) having regard to the particular limited nature of its enquiry and the peculiar circumstances of this case. On the other hand, underlying my concern was that if, in the circumstances of this case, reg 6.22 prohibited the Trustee from doing what it did, that is, paying the applicant’s benefits into a joint bank account in the names of himself and his wife, then why, on any view, would the decision of the Trustee not to reinstate the applicant’s account not be one which raised the issue of whether it was ‘unfair and unreasonable’: Superannuation (Resolution of Complaints) Act 1993 (Cth), subs 14(2). So understood, review of that latter decision would be within the jurisdiction of the Tribunal: cf., Asgard Capital Management Ltd v Maher (2003) 131 FCR 196 at [5].

10. In Asgard Capital Management Ltd v Maher a Full Court of this Court was called upon to construe the nature and scope of the obligation imposed on a trustee by reg 6.22 in the context of the facts which came before it.  Those facts can be shortly stated.  The respondent was a beneficiary of the Asgard Independence Plan Superannuation fund which had been established to provide retirement benefits to its members.  As at late 1999, the respondent’s investment in the fund was $280,000.  He instructed his financial adviser to deal with this investment in the following way: $30,000 was to be credited to a joint bank account in the name of the respondent and his wife; $5,000 was to be applied to the purchase of shares in Coles Myer; the balance of $245,000 was to be transferred to a new investment with the trustee.  To enable the adviser to carry out this instruction, the respondent signed a blank payment request form (which covered three pages) directed to the trustee.  He gave the form to his adviser and left it to him to complete the form in the required manner.  It was this act which put the adviser in the position where he could misappropriate the money.  He completed the form so that the trustee was directed to pay the whole of the respondent’s entitlement into a bank account maintained by the adviser.  As directed, the trustee deposited $280,000 into the nominated account.  The adviser then transferred $30,000 to his client’s bank account.  He also purchased $5,000 worth of Coles Myer shares on his client’s behalf.  He kept the rest of the money (together with $50.65 interest) for himself.

11. Following the discovery of the theft, the respondent lodged a complaint with the trustee alleging that by paying his superannuation entitlement to his adviser, the trustee had acted negligently or illegally. He demanded that the trustee make good his loss. The trustee rejected the complaint. The respondent took his case to the Superannuation Complaints Tribunal. The Tribunal determined to set aside the trustee’s decision ‘on the grounds that it was not fair and reasonable in its operation in relation to the [respondent] in the circumstances’. In substituting its own decision for that of the trustee, the Tribunal decided that the respondent should be paid a superannuation benefit of $245,050.46. The trustee then brought an ‘appeal’ on a question of law: see s 46 of the Superannuation (Resolution of Complaints) Act 1993 (Cth). The question of law that arose was the meaning of the phrase ‘must not be cashed in favour of a person other than the member’ in reg 6.22(1). The judge who heard the appeal affirmed the decision of the Tribunal.

12. In the course of their reasons, the Full Court said (at [5]):

    ‘Although he did not expressly say so, the judge must have construed the words “must not be cashed in favour of a person other than the member” as prohibiting the payment of a superannuation benefit by the trustee to a member by making that payment not directly to the member, but rather at the member’s direction or to the member’s authorised agent.  The question raised by this appeal is whether this is the correct construction of reg 6.22.’

13. The Full Court went on (at [6], [7]):

    ‘Regulation 6.22 must be construed in its setting. …

    In addition to the regulatory context, the relevant background against which the meaning of reg 6.22 must be determined includes the general right of a beneficiary of a trust to deal with his entitlements because, on the construction which the respondent urges, that right will be interfered with.  When the time fixed by the terms of a trust for the distribution of trust property has arrived, it is the duty of the trustee to convey title to or distribute (that is give possession of) the trust property to the beneficiary.  Instead of taking the title himself, the beneficiary may require the trustee to convey or distribute the trust property to a third party.  The reason why the beneficiary has the right to give such a direction is surely obvious and probably need not be stated.  Nevertheless, so that there is no doubt about it, the reason is that the beneficiary is in substance the owner of the property and can deal with it as he likes: Wilson v Wilson (1950) 51 SR (NSW) 91 at 94; Stephenson v Barclays Bank Trust Co Ltd [1975] 1 WLR 882 at 889.’

14. Finally, the Full Court said (at [9], [10]):

    ‘The question in issue seems to come down to this.  Does reg 6.22 impose an obligation upon the trustee to ignore a direction given by a beneficiary to pay an accrued benefit (that is, a benefit in which the beneficiary has an absolute interest) to the beneficiary’s authorised agent or to any other person nominated by the beneficiary?  It would, to say the least, be a most inconvenient result if this were the proper construction of reg 6.22.  Take, for example, the following situation which, in one form or another, is often likely to occur.  A beneficiary has purchased a property.  He instructs his solicitor to attend settlement to hand over the purchase price in exchange for the title deeds.  The beneficiary wishes to fund the purchase (in whole or in part) out of his superannuation benefit.  He directs the trustee to pay the benefit to his solicitor so that the solicitor can attend the settlement.  According to the respondent’s construction of reg 6.22, if the trustee carries out this instruction it would be in breach of trust.  All the trustee is permitted to do is to pay the benefit to the beneficiary and leave it to the beneficiary to arrange for payment to his solicitor. 

    Try as we might, we cannot discern from reg 6.22 an intention that the trustee should not act on the beneficiary’s instructions and pay the benefit to his solicitor.  If the trustee were to make that payment, the trustee would, in our view, be cashing the member’s benefit “in favour of” the beneficiary.  Likewise, if the trustee were to pay the benefit to an agent who was specifically authorised to receive the benefit on the member’s behalf.  That payment would be a payment made “in favour of” the member. The respondent’s contention that the phrase “must not be cashed in favour of a person other than the member” means that a benefit must not be paid to any person other than the beneficiary personally, in effect, amounts to a redrafting of reg 6.22 and not to the proper construction of it.’

1. Having regard to the Full Court’s construction of the nature and scope of the Trustee’s obligations under reg 6.22, it is clear that had the applicant signed the withdrawal form requesting payment of the benefit into a joint bank account in the names of himself and his wife, reg 6.22 would not have prohibited the Trustee from doing so.

2. In the circumstances of the Tribunal’s finding that the applicant was responsible for the arrangements he had with his wife in respect of the letterbox at their residence and their joint bank account and the Tribunal’s finding that the Trustee quite reasonably believed that it was at all times dealing with the applicant and that the applicant had signed the withdrawal form (including the signature verification process), in my view, the Tribunal was entitled to be satisfied that the decision of the Trustee not to reinstate the applicant’s account in the fund was fair and reasonable in the circumstances in its operation in relation to the applicant.

3. In the circumstances, there would be no utility in granting the applicant leave to further amend his notice of amended appeal to raise the reg 6.22 issue; the appeal would, for the reasons given, inevitably fail.

4. The applicant’s appeal must be dismissed with costs.

I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Edmonds.

Associate:

Dated:        9 March 2007

Solicitor for the Applicant:	The applicant appeared in person
Counsel for the Respondent:	MS V M Heath
Date of Hearing:	26 July 2006 and 28 September 2006
Date of Judgment:	9 March 2007