Retirement Benefits Fund Board v Harrison
[2007] TASSC 11
•9 March 2007
[2007] TASSC 11
CITATION: Retirement Benefits Fund Board v Harrison [2007] TASSC 11
PARTIES: RETIREMENT BENEFITS FUND BOARD
v
HARRISON, Ann Rebecca
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: Original
FILE NO/S: M17/2003
DELIVERED ON: 9 March 2007
DELIVERED AT: Hobart
HEARING DATE: 27 September 2006
JUDGMENT OF: Tennent J
CATCHWORDS:
Superannuation – Public Service Funds – Other matters – Tasmania – Retirement Benefits Fund Board – Discretion to certify break in service as not affecting continuity of service – Extent of discretion.
Retirement Benefits Regulations 1994 (Tas), regs3, 97 and 106.
Aust Dig Superannuation [40]
REPRESENTATION:
Counsel:
Applicant: A J Abbott
Respondent: A I Gaggin
Solicitors:
Applicant: Finlay Watchorn
Respondent: Murdoch Clarke
Judgment Number: [2007] TASSC 11
Number of paragraphs: 39
Serial No 11/2007
File No M17/2003
RETIREMENT BENEFITS FUND BOARD v ANN REBECCA HARRISON
REASONS FOR JUDGMENT TENNENT J
9 March 2007
By this application, the applicant seeks the following:
"A declaration as to whether or not the determination of the applicant made on the 27th day of November 2002, that the respondent could not, pursuant to Regulation 97 of the Retirement Benefits Regulations 1994, qualify for recognition of continuous membership of the Contributory Scheme as constituted by Part 4 of the Retirement Benefits Regulations 1994 for the period of broken service being the period commencing on the 14th day of December 1996 and ending on the 28th day of June 1998, was valid."
The application is brought before the Court by the applicant pursuant to the Retirement Benefits Regulations 1994 ("the Regulations"), reg106(1), as a consequence of its having determined a question adversely to an employee and that employee having required it to seek a declaration in relation to that determination.
The employee in the present case is the respondent.
Circumstances giving rise to adverse determination
The respondent was appointed to a casual teaching position with the Education Department ("the department") in May 1993. From 28 August 1993 to 13 December 1996, she was employed in a part-time temporary position with the School of Distance Education ("SDE"). After two years continuous temporary part-time service, she commenced her membership of the contributory scheme ("the scheme") of the Retirement Benefits Fund ("the RBF") on 27 July 1995. As a temporary teacher, the respondent's employment was terminated in December each year. She was then re-employed in January or February the next year for a set contractual period. Temporary staff such as the respondent usually had to wait until colleges had assessed their needs before being offered re-employment each year.
In 1996, the respondent was teaching years 11 and 12 students. The department conducted a review and determined that the SDE students being taught by the respondent would be absorbed into the normal college system. On 13 December 1996, when the respondent's temporary contract of employment ended, her employment was terminated and, as a consequence, her status as a contributor to the RBF ended. The respondent was not re-employed for the 1997 school year. However she remained available to work for the department and did not seek alternative work outside it.
Between 12 March 1997 and 28 June 1998, the respondent worked for 42 days as a relief teacher at various department schools. From 16 June 1997 to 13 December 1997, (181 days) the respondent was employed as a temporary part-time teacher at Rosny College. On 29 June 1998 she was appointed to a temporary part-time position at Elizabeth College and, after completing two years' continuous temporary employment, became eligible to rejoin the RBF on 29 June 2000. She was obliged to take up the opportunity to rejoin within 12 months. She did not do so, but did after the applicant agreed to extend the time to allow her to do so to 9 July 2001. She thus became a contributor to the RBF again on that date.
By a letter dated 19 April 2002 the respondent requested the applicant, pursuant to the Regulations, reg97, to link her periods of membership of the RBF and regard her membership as continuous. The applicant determined to reject the respondent's request for continuous membership of the scheme for the period when her membership was broken between 14 December 1996 and 28 June 1998. It is that decision which has given rise to this application.
The respondent was, of course, not a contributor to the RBF during the period 29 June 1998 to 9 July 2001 either, although she was actually working within the department system during that period but not entitled to be a contributor. She is, however, now entitled as a consequence of a regulation introduced in 2005, to repurchase that period of service subject to certain conditions. The respondent and the applicant have agreed that, if this application is determined in the respondent's favour, she will do that.
It is only the applicant's decision as it relates to the period from 14 December 1996 to 28 June 1998 to be considered in this application.
Nature of hearing
The Regulations, reg106, provides:
"106 (1) If the Board, after a hearing as provided in regulation 105, has determined a question or an application adversely to an employee or pensioner, the employee or pensioner may require the Board to apply to the Supreme Court for a declaration in relation to that determination.
(2) Subject to subregulation (3), the Supreme Court, on an application under subregulation (1), may make a declaration, having regard to facts existing and events that have occurred at the time the declaration is made, as to the validity or otherwise of the determination in respect of which the application is made.
(3) The Supreme Court must not make a declaration under subregulation (2) in respect of a determination the validity of which cannot be decided at the time when the Court is asked to make the declaration.
(4) For the purpose of reviewing a determination by the Board, the Supreme Court has all the powers and discretions that are conferred on the Board by law or under the Act or these regulations.
(5) The Supreme Court may make a declaration -
(a) affirming the Board's decision; or
(b)remitting the matter to which the Board's determination relates back to the Board for reconsideration in accordance with the directions of the Supreme Court; or
(c) varying the Board's determination; or
(d)setting aside the Board's determination and substituting a decision for the determination set aside.
(6) Except as provided in subregulations (7) and (8), the cost of making the application to the Supreme Court is to be met by the Board from the Fund.
(7) If an employee or pensioner requires the Board to apply to the Supreme Court for a declaration, he or she must pay to the Board at the time of making that request an application fee of $200.
(8) If the Supreme Court is of the view that the request made by the employee or pensioner is frivolous or not in good faith, the Court may award costs in full or part against that employee or pensioner."
There was no dispute between the parties that although the applicant has initiated these proceedings, it has done so only because it was required to do so by the respondent. In those circumstances it has put before the Court the fact of the making of the determination being challenged and the circumstances which gave rise to it. This has been in the form of agreed facts and an affidavit of Garry Fletcher sworn 26 November 2001. An affidavit of the respondent sworn 30 June 2003 has been read into evidence on her behalf. There was also no dispute that the hearing was a hearing de novo with this Court to make any declaration having regard to the facts existing and events which had occurred at the time the determination was made.
The issue is the interpretation of the relevant legislation, particularly reg97, and the manner in which the discretion afforded to the applicant by that regulation should be exercised.
The law
The Regulations, reg97, provides:
"97 (1) If, in the opinion of the Board –
(a)the period of service of an employee has been broken through causes beyond his or her control; or
(b) a break in the service has been of a technical character only -
the Board may certify that the break does not affect the continuity of the employee's service.
(2) If the Board gives a certificate under subregulation (1) in respect of an employee, the Board, subject to these regulations, may assess the amount of contributions to be paid by the employee, on any basis it thinks equitable, as if there had been no break of service.
(3) Notwithstanding subregulation (2), the Board must not make an assessment in respect of a period exceeding 3 months during which an employee's service was broken."
Regulation 3 contains a definition of "service" in the following terms:
"'service' in relation to a contributor means a period or periods of any of the following kinds:
(a)a period in respect of which a contributor made contributions to the Fund under Part 4;
(b) ...;"
Issues sought to be determined
Each party put before the Court in written form the issues they sought to have determined. For the applicant, those issues were:
"1Whether, in terms of sub-reg 97(1) of the Retirement Benefits Regulations 1994:
a) 'period of service' is to be taken, despite the definition of 'service' set out under reg 3, to mean employment by reason of which the employee is entitled or required to be and remain a contributor; and
b) whether the period of service of the respondent was broken between 13th December 1996 and 28th June 1998 through causes beyond her control.
2Whether, on the proper construction of reg 97 read as a whole and taking into account the limitation imposed by sub-reg 97(3), the Board:
a)in its discretion may certify under sub-reg 97(1) that a break in a period of service longer than 3 months does not affect the continuity of the employee's service; and
b) (i) must; or
(ii) in its discretion may:
refuse to so certify under sub-reg 97(1) in relation to any period longer than 3 months on the ground that the Board is unable, under and pursuant to reg 97(3), to make an assessment of contributions required to be paid for or in respect of any period longer than 3 months during which an employee's service is broken; or
(c) (i) must; or
(ii) in its discretion may;
make an assessment of contributions for a period exceeding 3 months during which an employee's service is broken.
3If the power of the Board to require the payment of contributions is limited to a period of 3 months, and further if the Board may certify under sub-reg 97(1) that a period of broken service in excess of 3 months does not affect the continuity of an employee's service, to what part or parts of the period of broken service:
(a) must; or
(b) may
the 3 months contemplated by reg 97(3) be ascribed."
For the respondent, the issues were:
"1Whether, in terms of Sub-Regulation 97(1) of the Retirement Benefits Regulations 1994 'period of service' means the 'period of employment' of an employee, namely employment which is entitled to be taken into account for the purpose of assessing whether the employee is entitled to be and/or remain a contributor of the Fund.
2Whether the period of service of the Respondent was broken between 13 December 1996 and 28 June 1998 through 'causes beyond her control'.
3Whether the provisions of Sub-Regulation 97 requires the Board to undertake two distinct functions, namely:
(a)to consider whether the period of service of an employee has been broken through causes beyond his or her control (as per 97(1)(a) );
(b)if so, such that the Board may certify that the break does not affect the continuity of the employee's service, to then assess the amount of contribution to be paid by the employee (as per 97(2) ).
4Whether, the amount to be assessed pursuant to Sub-Regulation 97(2) and 97(3) is restricted to a continuous period of 3 months during the break in service, or whether such 3 month period can be assessed on a cumulative figure of 3 months from the period of broken service."
The applicant does not contend, for the purpose of the argument, that the break in service occurred through a cause within the respondent's control. The respondent does not contend it was of a technical character only.
Period of service
The applicant contended that service for the purpose of the Regulations, reg97, was employment by reason of which the employee was entitled or required to be and remain a contributor to the RBF. The respondent, on the other hand, submitted the natural meaning of the phrase "period of service" was employment which was "entitled to be taken into account for the purpose of assessing whether the employee is entitled to be and/or remain a contributor of the contributory scheme" (see par15, respondent's submissions).
In practical terms, applying her interpretation of the term to her situation, the respondent contended her service had been continuous from 27 July 1993 to 13 December 1996 and then from 29 June 1998 to date. On the other hand, applying the applicant's interpretation, the respondent's continuity of service should run from 27 July 1995 to 13 December 1996 and then from 9 July 2001 to date.
The respondent's counsel, at par18 of his submissions, set out an example which he submitted demonstrated that the applicant's interpretation would produce harsh and unjust consequences and hence could not be correct. With respect, however, I am unable to accept that example as supporting that contention. There is insufficient information in the example about the employee's circumstances to enable the conclusions drawn by the respondent's counsel to be so drawn.
The table below sets out the respondent's employment and her status as a contributor:
Period
Nature of employment
Contributing to RBF
1
July 1993 – 26 July 1995
Continuous temporary part-time
No
2
27 July 1995 to 13 December 1996
Continuous temporary part-time
Yes
3
14 December 1996 to 11 March 1997
None
No
4
12 March 1997 to 28 June 1998
Casual relief teacher
No
5
16 June 1997 to 13 December 1997
Continuous temporary part-time
No
6
29 June 1998 to 9 July 2001
Continuous temporary part-time
No
7
9 July 2001 to date
Continuous temporary part-time
Yes
In period 1, the respondent did not, nor was she entitled or obliged to, contribute to the RBF. In period 2, the respondent was able to elect to join the RBF and became entitled to and did contribute to the RBF. In periods 3, 4, 5 and 6, she was not entitled or obliged to, nor did she, contribute to the RBF. In period 7, the respondent was able to elect to rejoin the RBF and she became entitled to and did contribute thereafter. Had the respondent's employment been resumed at the beginning of 1997 as it had the previous year, her entitlement to contribute and no doubt her contributions would have simply continued.
Regulation 97 is quite obviously designed to assist an employee/contributor, whose employment status changes effectively through no fault of their own such that they are no longer entitled to, nor do they contribute to the RBF but whose status later changes again such that they are entitled to and do contribute, to link the periods of employment before the first change and after the second. It is not designed to provide to an employee a capacity to aggregate periods of employment where no entitlement to contribute ever arose and link those as a type of deemed period of continuous service for the purpose of determining ultimate entitlements. The regulation, read with the ordinary meaning of the whole of the words, simply does not support the latter concept but clearly does the former.
Was the respondent's period of service broken between 14 December 1996 and 28 June 1998 through causes beyond her control?
The circumstances surrounding the respondent's termination in December 1996 are not in dispute. The respondent was employed in a temporary capacity and her contract of employment ended on 13 December 1996. She anticipated, as had been the case in previous years, that she would be re-employed at or around the commencement of the 1997 school year. However the situation at the end of 1996 was different. A review of SDE operations was being undertaken. The respondent's re-employment by the department, irrespective of the outcome of the SDE review, was dependent upon an assessment by the department of the level of demand which was in itself dependent on the numbers of enrolments. As a consequence of both these factors, the respondent was not re-employed.
Counsel for the respondent submitted that the respondent "remained within the system" and that she did not seek to work outside the department system. However, the facts of the matter are that she was not re-employed by the department and it was her choice not to seek alternative employment. What she did instead was choose to work as a relief teacher on odd days offered (42 in all between 12 March 1997 and 29 June 1998), no doubt in the hope that other more permanent employment might be offered in the future. In fact it was in the form of a temporary position from 16 June 1997 to 13 December 1997 and then from 29 June 1998.
Was this break between December 1996 and June 1998 through causes beyond the control of the respondent? It is arguable the cause of the break of service was the completion of the respondent's contract in December 1996 and that the SDE review and lack of demand associated with enrolment levels were supervening factors and not direct causes. However, in this case it is impossible to entirely divorce the two. The lack of demand as a consequence of enrolment numbers which gave rise to the respondent not being re-employed was no doubt a direct consequence of the review over which the respondent had no control and which she could not have reasonably anticipated when she joined the department in 1993.
While it is not completely clear from the material put to the Court whether the respondent actively sought employment within the department system upon becoming aware she would not be re-employed in 1997, I infer she did because of the work she did take. There was no suggestion in the material before the Court that there may have been some other cause for the respondent's break in service. I infer there was not.
Regulation 97
The equivalent of reg97 did not exist until the introduction of the Retirement Benefits Act 1982 ("the 1982 Act"). Section 78 of the 1982 Act, as it was initially enacted, was in similar terms to reg97. It was amended in 1983. Section 78, as so amended (with those parts added or altered by the 1983 amendments underlined and ruled out), provided:
"78(1) Where, in the opinion of the Board -
(a)the period of service of an employee has been broken through causes beyond his control; or
(b)a break in the service of an employee has been of a technical character only,
the Board may certify that the break shall not affect the continuity of the employee's service.
(1A) Where, in the opinion of the Board -
(a)the period of service of an employee or permanent part-time employee has been broken by his appointment to, and employment in, a position in Tasmania (not being a position in the service of the State or in the service of an authority of the State) for a period not exceeding 5 years;
(b)the type of work performed by him in he course of that employment is the same or substantially the same as that which he was performing as an employee or permanent part-time employee immediately before he was appointed to that position; and
(c)the appointment was made within the period of 20 years after the employee or permanent part-time employee first became an employee or permanent part-time employee, as the case may be, the Board may certify that the break shall not affect the continuity of the employee's service.
(2)Where the Board gives a certificate under sub-section (1) or (lA) in respect of an employee, the Board may, subject to this Act, assess the amount of contributions to be paid by the employee, on such a basis as it thinks equitable, as if there had been no break of service.
(3)Notwithstanding sub-section (2), an assessment for the purposes of sub-section (1) shall not be made under
that sub-sectionsub-section (2) in respect of a period exceeding 2 months during which an employee's service was broken."
The 1983 amendments were obviously directed towards allowing an employee/contributor in certain circumstances to work away from the State Service for up to five years and then apply to have the break in service certified as not affecting the continuity of service. The amendment to subs(3) made it clear that the two month limit on assessment of contributions when there had been a break in service related only to breaks in service under subs(1) and not (1A) which clearly contemplated breaks in service which could be for years. The capacity for an assessment of contributions where subs(1A) applied was unlimited in time.
In 1993, the legislative structure was altered yet again. The 1982 Act was repealed and replaced by the Retirement Benefits Act 1993 ("the Act") and the Regulations. The provisions relating to the RBF scheme were put in the Regulations rather than the Act. Section 78 of the 1982 Act became, in effect, reg97. However, neither s78(1A) nor the consequential alterations to subs(3) were carried through. In fact in reg97(3) the words "for the purpose of sub-section (1)" and "that sub-section", which identified that the short time limit for an assessment could only relate to a break of service not being one identified in s78(1A), were removed. Counsel for the applicant submitted that the failure of the legislature to carry those words through was deliberate, it being unnecessary to restrict the regulation in any way because the intention was that reg97(3) should be read as being relevant to the whole of the regulations and not just reg 97(2). In effect, reg97 should, he submitted, be read as a whole and not as three disconnected parts.
Counsel for the respondent submitted that the removal of those words was intended to have the contrary effect, namely that reg 97 provided for two distinct processes, firstly the certification and then the assessment. The time limitation imposed by reg97(3) had no relevance to the certification process.
The legislative history of reg97 is instructive in the process of its interpretation. Section 78 of the 1982 Act prior to the 1983 amendments allowed the applicant to certify that an employee's break in service caused by circumstances beyond their control or of a technical nature did not affect the continuity of their service. If such a certificate were given, the applicant could make an assessment of contributions, but could not do so for longer than a two month period. It can clearly be inferred from the wording in s78(1) that it was not intended to deal with employees who voluntarily left State Service for some reason. The 1983 amendments, on the other hand, provided for a situation where an employee voluntarily left State Service and took up similar employment in the private sector as long as they did so for no longer than five years. When those amendments were introduced they also made it clear that if it were a break in service of the involuntary type, an assessment of contributions upon certification was limited to two months, while if it were a break in service of a voluntary type, no such limitation applied. That dichotomy recognised that the second category of employees were earning an income elsewhere and would have the capacity to be assessed for the entirety of the break, whereas employees in the first category may very well not have been earning elsewhere or indeed at all. In my view it also recognised the likelihood that the "involuntary" break in service situations would necessarily, by the very fact that they were involuntary, have been short.
The Regulations effectively removed any provision for that second category of employees. However, the only category then provided for by reg97 was the "involuntary" category and there is nothing in the Regulations which suggests it should be interpreted otherwise than in the manner s78 was. In my view the intention of Parliament was that reg97 should deal with situations where the service of a State employee was broken involuntarily for a relatively short period. The limitation on the period over which contributions could be assessed recognised the likelihood that the employee was not earning at all during the break in service or perhaps only to a limited extent. However that "relatively short period" need not be three months or less, although the applicant must consider the length of the break of service as a factor.
The exercise of the applicant's discretion under reg97
The break of service being considered was between 14 December 1996 and 28 June 1998, a period of a little over 19 months. If the respondent received a certificate to the effect that service before and after the intervening period was to, in effect, be considered continuous, the applicant could only assess contributions for a period of three months. The practical effect of that would be that ultimately the respondent's entitlements in the RBF would be determined having regard, in part, to a period of over 16 months in which the respondent had contributed nothing to the RBF. The applicant submitted it was a trustee and that if a situation such as this were to occur, it would be giving a preference to one contributor to the possible detriment of others and that this should not occur. Counsel for the respondent, on the other hand, submitted that to limit the applicant's discretion when certifying to a period of broken service no longer than three months, would produce potentially unjust results for, say, an employee whose break of service were three months and a few days.
The applicant is the sole trustee of the RBF (see the Act, s10(2)). It must exercise a fiduciary responsibility over all the assets, investments and property of the RBF (the Act, s10(3)(e)). Its obligation is to provide a superannuation scheme for persons employed by the State and for their spouses and beneficiaries. The applicant is also required to ensure its functions are exercised in the best interests of beneficiaries (see the Regulations, reg8(3)(c)). The applicant must therefore, in performing its functions under the Act and Regulations, consider all beneficiaries.
Were it to perform its functions under reg97 in respect of the respondent in the manner for which the respondent's counsel contends, the applicant would, as was submitted, be potentially benefiting the respondent to a significant degree. That, in my view, cannot be what Parliament intended because it is contrary to the role of the applicant generally provided for.
Conclusions as to specific issues raised by parties
The applicant's issues:
1(a)I am of the view that the interpretation which gives effect to the legislation is the most appropriate one which, in this case, is that contended for by the applicant. For the purpose of the Regulations, reg97(1), "period of service" is to be taken to mean employment by reason of which the employee is entitled to or required to be and remain a contributor of the RBF.
1(b)I am satisfied that in the factual circumstances of this case the break in the respondent's service between 13 December 1996 and 29 June 1998 was through causes beyond her control.
2On a proper construction of reg97 read as a whole and taking into account the limitation imposed by sub-reg97(3),
(i)the applicant may in its discretion certify under sub-reg97(1) that a break in a period of service longer than three months does not affect the continuity of an employee's service, and
(ii)in its discretion may refuse to so certify under sub-reg97(1) in relation to any period longer than three months on the ground that the applicant is unable, under and pursuant to sub-reg97(3), to make an assessment of contributions required to be paid for or in respect of any period longer than three months during which an employee's service is broken.
3This issue does not arise on the findings ultimately made and no submissions were in any event directed to it.
The respondent's issues:
1 See response to the applicant's issue 1(a).
2 See response to the applicant's issue 1(b).
3As to this issue, there are two stages to the process to be undertaken by the applicant pursuant to reg97. They are, however, not unconnected to the degree contended for by the respondent. The time limitation imposed on an assessment is a relevant factor in determining whether or not to certify.
4Neither party made submissions about this issue and it is unnecessary to determine it having regard to my conclusions.
Having regard to the findings and conclusions in these reasons, I am satisfied that the applicant was correct in exercising its discretion adversely to the respondent by reason of:
(i) the lengthy period over which her service was broken;
(ii)that she was not employed at all in the State Service for periods of time during that break of service;
(iii)that she was, when employed, employed for one six month continuous period but otherwise only casually and sporadically; and
(iv)the fact that the respondent would gain a potentially not insignificant benefit over other contributors to the Fund by reason of continuity of service for a period of over 16 months with no corresponding contributions.
Orders
The order of the Court will be that there be a declaration that the determination of the applicant made on 27 November 2002 that the respondent could not, pursuant to the Regulations, reg97, qualify for recognition of continuous membership of the scheme as constituted by the Regulations, Pt4, for the period of broken service being the period commencing on 14 December 1996 and ending on 28 June 1998, was valid.
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