Tutty and Commonwealth Superannuation Corporation

[2020] AATA 2636

Tutty and Commonwealth Superannuation Corporation [2020] AATA 2636 (14 July 2020)

Division:GENERAL DIVISION

File Number(s):     2020/3724          

Re:Malcolm Tutty

APPLICANT

AndCommonwealth Superannuation Corporation

RESPONDENT

DECISION

Tribunal:Member W Frost

Date of decision:   14 July 2020

Date of

written reasons:     3 August 2020

Place:Canberra

Pursuant to subsection 42A(4) of the Administrative Appeals Tribunal Act 1975, the Tribunal dismisses the application.

............................................................

Member W Frost

Catchwords

PRACTICE AND PROCEDURE – dismissal for lack of jurisdiction – decision not made under an enactment – application dismissed

Legislation

Administrative Appeals Tribunal Act 1975, ss 25, 42A
Corporations Act 2001, s 1053
Defence Force Retirement and Benefits Act 1973, ss 49B, 49C, 49D, 49E, 99, 107

Secondary Materials

Administrative Appeals Tribunal, AAT Reviewable Decisions List, 31 May 2019
Australian Financial Complaints Authority, Operational Guidelines, April 2020

Pearce, Dennis, Administrative Appeals Tribunal (LexisNexis Butterworths, 4^th ed, 2015)

REASONS FOR DECISION

Member W Frost

3 August 2020

INTRODUCTION

1. On 21 June 2020, the Applicant, Dr Malcolm Tutty, lodged an ‘Application for Review of Decision’ (Application) with the Administrative Appeals Tribunal (Tribunal).

2. Dr Tutty contended that the Respondent, Commonwealth Superannuation Corporation (CSC), had made a decision that was reviewable by the Tribunal, following CSC’s implementation of an order made by the Family Court of Australia (Court Order). 

3. On 14 July 2020, the Tribunal dismissed the Application because it found that CSC had not made a decision in relation to Dr Tutty’s matter that was reviewable by the Tribunal under the relevant legislation. Dr Tutty requested written reasons for the Tribunal’s decision and confirmation of which entity could review the matters he had raised. The Tribunal sets out its reasons as follows and seeks to explain the proper avenue for pursuing any complaint.

   BACKGROUND

4. On 6 November 2019, the Family Court made an order by consent, being the Court Order, in relation to the division, with Dr Tutty’s former spouse, of his defined benefit superannuation interest in the Defence Force Retirement and Death Benefits Scheme (DFRDB Scheme). The Court Order stated that the trustee of the DFRDB Scheme, being CSC, ‘has been notified of the proposed superannuation split pursuant to paragraph 1.4 herein’. That paragraph of the Court Order stated that in relation to Dr Tutty’s interest in the DFRDB Scheme:

   (a) In accordance with section 90XT(1)(a) of the Family Law Act 1975 (the Act), whenever a splittable payment within the meaning of section 90XE of the Act becomes payable to or on behalf of MALCOLM TUTTY from his interest in the Defence Force Retirement and Death Benefits Scheme (DFRDB), the wife is entitled to be paid (by the Trustee of the DFRDB) the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001, using a base amount of SIX HUNDRED SIXTY-FIVE THOUSAND FOUR HUNDRED AND SEVEN DOLLARS ($665,407) and there is a corresponding reduction in the entitlement of MALCOLM TUTTY would have had but for these Orders;

   (b) That paragraph 1.4(a) herein has effect from the operative time;

   (c) We note that the operative time for these Orders will be four (4) days after service of a certified sealed copy of the final Orders on the Trustee, and the Trustee advises they have no objection;

   (d) That these Orders bind the Trustee of the Fund; and

   (e)That the Trustee of the Fund, and the husband and the wife shall do all such acts and things and sign all such documents as may be necessary to that, in accordance with the obligations set out under the Act and the Family Law (Superannuation) Regulations 2001, the Trustee can calculate the entitlement of, and make payment to the wife in accordance with paragraph 1.4(a) herein. [emphasis added]

5. On 23 December 2019, CSC wrote to Dr Tutty advising that his superannuation interest in the DFRDB Scheme had been split in accordance with the Court Order of 6 November 2019.

6. On 21 January 2020, Dr Tutty wrote to CSC stating that it had incorrectly implemented the Court Order in relation to the calculation of the division of his interest in the DFRDB Scheme and requested that this be addressed by CSC.

7. On 18 February 2020, CSC advised Dr Tutty that it had reviewed his complaint and concluded that CSC had correctly given effect to the intent of the Court Order. The email attaching CSC’s response noted that any complaints should be directed to the Australian Financial Complaints Authority (AFCA). The response itself stated, among other things, that:

   In relation to splitting the interests of members currently in the growth phase of the Defence Force Retirement and Death Benefit (DFRDB) scheme, the value of the benefit is calculated with reference to the Family Law (Superannuation) (Methods and Factors for valuing Particular Superannuation Interests) Approval 2003 Volume 2, part of the Family Law (Superannuation) Regulations 2001, which are established under the Family Law Legislation Amendment (Superannuation) Act 2001.

   This is in conjunction with Rules 92 and 93 of the MilitarySuper Trust Deed and 49D and 49E of the Defence Force Retirement and Death Benefits Act 1973. As well as the Defence Force Retirement and Death Benefits (Family Law Superannuation) Orders 2004, part of the Defence Force Retirement and Death Benefits Act 1973. The relevant legislation also incorporates amendments made under the Superannuation Legislation Amendment (Family Law and Other Matters) Act 2004…

   The legislation outlined above sets out the basis for valuing and splitting superannuation interests for family law purposes. This is done by calculating the family law value, which is a figure that takes into account the value of the interest over the life time of the member. The family law value is calculated by using the methods established under the Family Law (Superannuation) (Methods and Factors for Valuing Particular Superannuation Interests) Approval 2003 Volume 2. It includes factors for the life expectancy of the member.

   …

   Although the valuation and splitting process is quite complex, it is designed to cater for the complex nature of the DFRDB scheme. I understand this is not the outcome you had hoped for, but we must enact the legislation as it is written and do not have any discretion in this regard.

8. On 3 March 2020, Dr Tutty sought further clarification of CSC’s implementation of the Court Order and the calculation of the split of his superannuation interest in the DFRDB Scheme.

9. On 1 May 2020, CSC advised Dr Tutty that it had ‘complied with the Court Order as it is legally required to do’ and further that:

   it was the responsibility of the parties to the Court Orders, their legal or financial representatives to calculate the Base Amount or Percentage split that was acceptable to the parties and the resulting effect.

   In considering what Base Amount or Percentage split to include in the Court Orders the parties had the opportunity to take into account any preliminary matters they wished to, such as the commutation, this was not the responsibility of the Trustee, as the CSC does not provide valuations or financial advice.

   If the Base Amount or Percentage split arrived at by the parties has not resulted in the outcome they intended, then that is a matter for you to revisit as appropriate with the Court. CSC must implement the Order in accordance with the legislation as written and is not responsible for any misunderstanding by the parties of its legal effect. [emphasis added]

10. On 29 May 2019, Dr Tutty requested ‘reconsideration’ of CSC’s implementation of the  Court Order. CSC responded to Dr Tutty on the same day, again stating that it had ‘complied with the Court Order as it is legally required to do’, and that ‘CSC had no discretion in relation to the implementation of your family law court orders and has compiled [sic] with them’. Most relevantly, CSC concluded that ‘[a]s this is not a matter where CSC had discretion to make a decision there is nothing for CSC to reconsider in this matter’.     

11. On 21 June 2020, Dr Tutty lodged an Application for Review of Decision with the Tribunal. Dr Tutty sought review of CSC’s ‘decision’ of 29 May 2020 in relation to its implementation of the Court Order. In the section of the Application requesting details of why the decision is wrong and should be reviewed by the Tribunal, Dr Tutty stated as follows:

    1. This application seeks an independent review of the decision to pay Mrs E.A. Tutty the amounts proposed for a divorce settlement draw down of her entitlements and for corrections to be made to my corresponding lump sums and pension at retirement with consideration of both the Family Law and DFRDB Acts and associated differing implementing rules/regulations/methods in my case.

    2. C SC does not apparently have the terms of reference to consider the different Acts in terms of their Delegates discretionary powers and their internal implementing methods being inconsistent with the Family Law Act 1975 in terms of recalculating residual pensions as per the Attachment 1.

    3. Their legal counsels feels that they have complied with the Court Order but manifestly have not. They also failed to disclose assumptions made in their Form 6 disclosure.

    4. All correspondence disclosed to me has been included as best I can with your online application mechanisation. [errors in original]

12. On 23 June 2020, the Tribunal wrote to Dr Tutty and relevantly stated that ‘[t]he Defence Force Retirement and Death Benefits Act 1973 says that you must have this decision confirmed or varied by the respondent [CSC] before we can look at it. It is not clear to us that this has happened. Further, the material you have provided to us suggests that the respondent cannot reconsider the application of the Court Order’. The Tribunal requested that Dr Tutty explain why the Tribunal had jurisdiction to review CSC’s ‘decision’ of 29 May 2020.

13. On 3 July 2020, Dr Tutty responded to the Tribunal relevantly as follows:

    I seek independent review of the circumstances associated with Commonwealth Superannuation Corporation (CSC or Comsuper) decisions regarding my DFRDB pension resulting from a recent divorce. The circumstances requiring such a review are much broader than the respondent claiming they cannot reconsider the Consent Order. The circumstances include poor advice to the court and then misinterpreting the Consent Order despite the Consent Order being rather straight forward. More importantly, then there are the differences between the Family Law Act 1973 (Cth) and the DFRDB Act 1973 that have different factors to be used that are ostensibly the same criteria which significantly affects the future pension. These factors have not been logically explained and seem to be different due to internal processes in the different jurisdictions of Family Law versus DFRDB Acts. I therefore request review as to why two different jurisdictions of the Commonwealth seem to have different factors. Comsuper were never going to be able to work through such differences with their internal procedures and methods. The Administrative Appeal Tribunal is perfect for that.

    The DFRDB Act 1973 says that I must have the decision confirmed or varied by the respondent before you can look at it. You thought that it was not clear at Reference A that this had been done. The submission at Reference B included that information to you in that the Attachment 1 included the formal Application of Reconsideration form used against the decision at Reference C (see Attachment 2) that Comsuper uses and given the legal counsels response I was subsequently advised that I should now use the Administrative Appeals Tribunal as per Comsuper DF18 12/18 at DF18-dfrdb-appeal-rights, should I so choose.

    The requested review Administrative Appeals Tribunal includes:

    a. Form 6 Disclosures. The disclosure of what I and Mrs E.A. Tutty would be entitled to as a part of a Divorce with a Sealed Consent Order dated 6 November 2019 is key. In the “Form 6 Disclosure” at Reference D (see Attachment 3) Comsuper failed to include the Commutation Payable to be deducted equally to both parties – which Comsuper later advised is $100,406.23 as of 12 October 2021 at Reference G (at Attachment 6) - which adversely affected the Actuarian advice to the Court at Reference E (at Attachment 4). As a result of this lack of disclosure, Comsuper now wish me to pay all of the Commutation Payable at retirement! Comsuper should be directed to fully disclose Commutation Payable amounts in the Form 6 disclosure not just in my case but in all cases. Based on Comsuper’s lack of transparency in the disclosure, the Actuarian may have derived incorrect amounts for the Consent Order. This should be corrected by Comsuper without being referred to the Court again with future payments still to be made to Mrs E.A. Tutty. If it must return to Court, Comsuper should be directed to pay the associated legal costs due to their lack of transparency. I do not believe this was wilful or negligent – presumably just poor processes and disclosure.

    b. Using the Court mandated 50%. It is not transparent that Comsuper applied the 50% directed by the Court in the amount itself by not understanding the Consent Order explicitly cites that and had to factor in equalisation of Material versus Superannuation amounts. It would appear Comsuper may have therefore assumed a 56% split rather than the 50% directed because of that. I would like the Consent Order direction to use 50% confirmed. I do not believe this was wilful or negligent and was probably due to the differing jurisdictions and internal methods.

    c. Reduction Factors. The Reduction Factor is incorrect given the above differing amounts between Form 6 Disclosure figures, DFRDB Act methods internal to the CSC and those of the Consent Order - which affects drastically the resulting Pension. The same criteria should be used. Comsuper should be directed to recalculate my figures and to use the same factors not just in my case but all such cases. [emphasis in original]

14. The Tribunal notes that the CSC factsheet titled ‘Appeal rights’ attached to Dr Tutty’s above response to the Tribunal provides that a person affected by a decision of a delegate of CSC can request reconsideration of the decision, which may relate to ‘invalidity classification/reclassification’; ‘distribution of a death benefit’; or ‘any other decision made by a Delegate of CSC’.

15. On 14 July 2020, the Tribunal dismissed Dr Tutty’s application, pursuant to subsection 42A(4) of the Administrative Appeals Tribunal Act 1975 (AAT Act), without proceeding to review the ‘decision’, because it was satisfied the decision was not reviewable by the Tribunal. 

    ISSUE

16. The issue before the Tribunal was whether CSC had made a decision that was reviewable by the Tribunal.

    LEGISLATION

    AAT Act

17. Section 25 of the AAT Act relevantly states that:

    (1)   An enactment may provide that applications may be made to the Tribunal:

    (a) for review of decisions made in the exercise of powers conferred by that enactment; or

    (b) for the review of decisions made in the exercise of powers conferred, or that may be conferred, by another enactment having effect under that enactment.

18. Subsection 42A(4) of the AAT Act provides that the Tribunal may dismiss an application without proceeding to review the decision if the Tribunal is satisfied that the decision is not reviewable by the Tribunal.

    Defence Force Retirement and Death Benefits Act

19. The Defence Force Retirement and Death Benefits Act 1973 (DFRDB Act) establishes the DFRDB Scheme for eligible members of the Australian Defence Force.

20. The DFRDB Act, among other things, deals with retirement benefits of a contributing member and the payment of invalidity and death benefits. Part VIA of the DFRDB Act relates to ‘family law superannuation splitting’, including the benefits for a non-member spouse[1] and the reduction of benefits for a member spouse.[2] 

    [1] At sections 49B and 49C of the DFRDB Act.

    [2] At sections 49D and 49E of the DFRDB Act.

21. Section 99 of the DFRDB Act provides that a person who is dissatisfied with a ‘decision’ of CSC may ‘request CSC to reconsider the decision’. Subsection 99(4A) of the DFRDB Act states that:

    If CSC reconsiders a decision, it may:

    (a)  confirm the decision; or

    (b)  vary the decision; or

    (c)  set aside the decision and substitute a new decision.

22. Section 107 of the DFRDB Act provides that applications may be made to the Tribunal for:

    (a)  review of a decision of CSC that has been confirmed or varied by CSC under paragraph 99(4A)(a) or (b); and

    (b)  review of a decision of CSC that has been confirmed or varied by the Panel under paragraph 102(1)(a); and

    (c)  review of a decision of CSC that has been confirmed or varied by CSC under paragraph 106(1)(c) or (d). [emphasis added]

    CONSIDERATION

23. The Tribunal has no general inherent power or jurisdiction to review any decision or action taken under an enactment, being an Act of Parliament or other legislative instrument. The effect of subsection 25(1) of the AAT Act is that the Tribunal can only review decisions if an enactment specifically provides the Tribunal with jurisdiction. In determining jurisdiction, the Tribunal must consider whether an enactment confers jurisdiction; whether a ‘decision’ has been taken and whether that decision has been taken under the enactment conferring jurisdiction.[3]

    [3] Pearce, D., Administrative Appeals Tribunal, 4^th edition, LexisNexis Butterworths, 2015, p. 20.

24. The ‘AAT Reviewable Decisions List’ as at 31 May 2019, sets out those Acts of Parliament or other legislative instruments that provide for certain decisions made pursuant to those instruments to be reviewed by the Tribunal.[4] One of those Acts is the DFRDB Act and, more specifically, section 107 of that Act which, as noted above in these reasons, relevantly provides that an application can be made to the Tribunal for review of a decision made by CSC that has been ‘confirmed or varied’ by CSC under subsection 99(4A) on reconsideration of its original or initial decision.

    [4] accessed on 15 July 2020.

25. For the avoidance of doubt, the Tribunal notes that the listing of the DFRDB Act in the Tribunal’s Reviewable Decisions List does not mean any decision or action of CSC regarding retirement or superannuation benefits of eligible members is reviewable by the Tribunal; the jurisdiction of the Tribunal is limited to decisions made by CSC that have been ‘confirmed or varied’ following CSC’s reconsideration under subsection 99(4A) of the DFRDB Act.

26. As noted above in these reasons, general information provided by CSC to its members notes that a person affected by a decision of a delegate of CSC, including a DFRDB member, can request reconsideration of a decision that may relate to ‘invalidity classification/reclassification’; ‘distribution of a death benefit’; or ‘any other decision made by a Delegate of CSC’.[5]

    [5] Document produced by CSC and titled ‘Appeal rights’, DF18, 12/18, page 1.

27. In relation to Dr Tutty’s Application before the Tribunal, there was no ‘decision’ made by a delegate of CSC under the DFRDB Act. There was consequently no confirmation or variation of a decision, which is required under the DFRDB Act to enliven the jurisdiction of the Tribunal to review a reconsidered decision. CSC acted pursuant to the Court Order. CSC implemented the terms of that order in accordance with the relevant legislation and associated instruments. For the reasons that follow, any issue Dr Tutty may have with the terms of the Court Order or its implementation or other actions of CSC in relation to the split of his superannuation interest in the DFRDB Scheme is properly pursued with the Family Court or with a complaint being made to the AFCA.

1. It is evident from the material before the Tribunal that CSC provided information in the Family Court proceeding regarding Dr Tutty’s superannuation interest in the DFRDB Scheme for the purpose of the agreed split of that interest between Dr Tutty and his former spouse, as set out in the Court Order. As it was legally bound to do pursuant to paragraph 1.4 of the Court Order, CSC implemented the relevant terms of the Court Order made by the Family Court to effect the superannuation split of Dr Tutty’s interest in the DFRDB Scheme.

2. However, CSC’s implementation of the relevant terms of the Court Order did not amount to CSC making a ‘decision’ under the DFRDB Act in relation to Dr Tutty’s Family Court proceeding or the associated split of his superannuation interest in the DFRDB Scheme. CSC also did not ‘confirm’ or ‘vary’ a decision following a reconsideration of a decision, which confirmation or variation would have provided the Tribunal with jurisdiction to review that subsequent decision pursuant to section 107 of the DFRDB Act. Accordingly, the Tribunal does not have jurisdiction in relation to this matter; there is no decision of CSC, including any decision that would provide such jurisdiction under section 107 of the DFRDB Act.

3. In this regard, CSC informed Dr Tutty on 29 May 2020 that it had ‘no discretion in relation to the implementation’ of the Court Order and, because CSC did not have ‘discretion to make a decision’, there was ‘nothing for CSC to reconsider’. The Tribunal agrees with this summary of the position that CSC conveyed to Dr Tutty.  

4. As detailed above in these reasons, Dr Tutty requested the Tribunal review multiple ‘decisions’ made by CSC in relation to the split of his superannuation interest in the DFRDB Scheme as a result of the Family Court proceeding involving his former spouse. These included, in Dr Tutty’s submission, CSC providing ‘poor advice’ to the Family Court that formed the basis of the Court Order that split Dr Tutty’s interest in the DFRDB; CSC misinterpreting the Court Order in CSC’s implementation of that split; and differences between the Family Law Act 1975 and the DFRDB Act affecting Dr Tutty’s future pension amount.

5. However, any complaint of Dr Tutty’s in relation to the terms of the split of his superannuation interest in the DFRDB Scheme, that was agreed to by the parties to the Family Court proceeding and contained in the Court Order, should be raised in the forum provided by that Family Court proceeding. Similarly, any complaint in relation to CSC’s implementation of the Court Order, including the alleged error in the split of Dr Tutty’s superannuation interest in the DFRDB Scheme, is most properly directed to the AFCA.   

6. The AFCA relevantly has jurisdiction to consider ‘a range of complaints relating to decisions and the conduct of superannuation trustees’.[6] In its Operational Guidelines dated April 2020,[7] AFCA states that a complaint may be received from a member of a ‘Regulated Superannuation Fund’. CSC is listed on the AFCA website as having become a member of AFCA on 1 November 2018 and therefore a ‘Regulated Superannuation Fund’ for the purpose of any complaints made against it to AFCA.[8]

   [6] accessed 16 July 2020.

   [7] Accessed via on 16 July 2020.

   [8] accessed 16 July 2020.

7. A ‘Superannuation Complaint’ is defined by AFCA to be, among other things, ‘the decisions (and related conduct) of trustees of regulated superannuation funds’.[9] The Operational Guidelines further note that, pursuant to subsection 1053(5) of the Corporations Act 2011, a ‘decision’ includes making a decision, and failing to make a decision, while ‘conduct’ includes acts, omissions and representations.[10] AFCA’s Operational Guidelines set out a list of examples of ‘Superannuation Complaints’ that AFCA describes as ‘within jurisdiction’ and reviewable by AFCA which, most relevantly for Dr Tutty, includes ‘[e]rrors or delay in splitting a superannuation benefit in accordance with a binding agreement or Family court order’[11].

   [9] Accessed via on 16 July 2020.

   [10] ibid.

   [11] ibid.

8. As a result, should Dr Tutty wish to pursue his complaint against CSC’s actions, the most appropriate forum is with AFCA, and not with the Tribunal which, pursuant to the terms of the DFRDB Act, does not have jurisdiction in relation to this matter.

   DECISION

9. The Tribunal is satisfied that Dr Tutty’s Application contains no ‘decision’ made by CSC under the DFRDB Act that can be reviewed by the Tribunal. Pursuant to subsection 42A(4) of the Administrative Appeals Tribunal Act 1975, the Tribunal dismisses the Application.

I certify that the preceding 36 (thirty-six) paragraphs are a true copy of the reasons for the decision herein of Member W Frost.

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Associate

Dated: 3 August 2020