W E Bassett & Partners Pty Ltd (ACN 004 873 634) (as Trustees of the W E Bassett and Partners Pty Ltd Superannuation Plan) v John Francis Doherty

[1997] FCA 715

W E BASSETT & PARTNERS PTY LTD (as Trustees of the W E BASSETT AND
PARTNERS PTY LTD SUPERANNUATION PLAN) v. JOHN FRANCIS DOHERTY
No. VG
498 of 1996
FED No. 715/97
Number of pages - 15
Superannuation

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

GENERAL DIVISION

NORTHROP J

Superannuation - termination of employment - dispute as to whether termination was a retrenchment - Retrenchment defined in Trust Deed - appeal from determination of Superannuation Complaints Tribunal - consideration of requirement of s 14, s 36 and s 37 Superannuation (Resolution of Complaints) Act 1993 - whether Tribunal erred in law - whether exercise of judicial power - proper construction and application of words "that the decision was unfair or unreasonable" in s 14(2).

Superannuation (Resolution of Complaints) Act 1993

Superannuation Industry (Supervision) Act 1993

Precision Data Holdings Ltd v Wills (1991) 173 CLR 167

MELBOURNE, 15 May and 24 June 1997 (hearing), 31 July 1997 (decision)

#DATE 31:7:1997

#ADD 5:8:1997

Counsel for the applicant: Dr I Hardingham

Solicitors for the applicant: Mallesons Stephen Jaques

Counsel for the respondents: Mr P Cosgrave

Solicitors for the respondents: Arthur Robinson & Hedderwicks

1. Appeal allowed with costs.

   2. Determination of the Superannuation Complaints Tribunal be set aside.

   3. The Complaint be remitted to the Superannuation Complaints Tribunal for determination in accordance with the law after considering such further material, if any, as the Tribunal determines.

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

NORTHROP J

At all relevant times the respondent ("Mr Doherty") was a member of the W.E. Bassett and Partners Pty Ltd Superannuation Plan ("the Plan"). The Plan is a regulated superannuation fund within the meaning of the provisions of the Superannuation (Resolution of Complaints) Act 1993 ("the Resolution of Complaints Act"). At all relevant times, W.E. Bassett & Partners Pty Ltd ("the Plan Trustee") was the trustee of the Plan. At all relevant times Mr Doherty was employed by W.E.Bassett & Partners Pty Ltd which carried on the business of a consulting engineering company. Mr Doherty is an electrical engineer. On 13 May 1994, the Plan Trustee, acting in its capacity as employer, terminated the employment of Mr Doherty without notice. According to the letter dated 16 May 1994 given by the Plan Trustee in its capacity as employer to Mr Doherty informing him of the reasons for the termination, the employer had decided to terminate the "employment with immediate effect by payment in lieu of notice of 70% of your nominal annual salary of $48,000 (that is, a gross payment of $33,600)". The letter stated that his employment was terminated because of his poor work performance, but the reasons given for the termination, in the events which have happened, are not relevant to the matters before the Court.

As from 1 July 1989 Mr Doherty had been a member of the Plan. For present purposes, it can be accepted that the Plan comes within the regulations imposed by the provisions of the Superannuation Industry (Supervision) Act (1993) ("the Supervision Act"). The Plan was constituted under and is regulated by a trust deed dated 30 September 1991, as amended from time to time ("the Trust Deed"), although the commencing date of the deed is 1 October 1971. The Plan Trustee is the trustee under the Trust Deed. Thus the Plan Trustee has a dual capacity namely as the employer of Mr Doherty and as the trustee of the Plan. When the Plan Trustee is exercising powers, care must be taken to distinguish between the powers and obligations conferred and imposed on it as the employer of Mr Doherty and those conferred and imposed on it as the trustee of the Plan. The latter powers and obligations are conferred and imposed on it with respect to all members of the Plan. Implicit in this is that the Plan Trustee cannot confer benefits on a member of the Plan to which the member is not entitled since to do so would impose detriments on other members. Essentially a member of the Plan is an employee of the Plan Trustee, as employer, who has been accepted by the Plan Trustee, as trustee. The Trust Deed contains provisions for different types of membership but for present purposes, this is not of any importance. The essential fact is that when his employment was terminated on 13 May 1994, Mr Doherty was a member of the Plan.

A dispute arose between Mr Doherty and the Plan Trustee in its capacity as trustee as to the amount of benefits to be paid to Mr Doherty under the Trust Deed upon his termination of employment. The dispute was whether Mr Doherty's termination of employment was a retrenchment within the meaning of the Trust Deed. If his termination was not a retrenchment, the Plan Trustee is not liable to make any further payment of benefit under the Plan. The amount of a retrenchment benefit is calculated in conformity with the provisions of clause 9 of the First Schedule to the Trust Deed. There are three provisos to clause 9, one of which is relevant to the matter before the Court. The relevant proviso is set out:-

"PROVIDED THAT

(1) ........ .. (2) ........ .. (3) if a Member is leaving the Service as a result of Retrenchment the amount payable under this clause shall be the amount calculated by an Actuary as being the Member's equitable share of the Plan if he remained in the Service "

The word "Retrenchment" is, for the purposes of the Trust Deed, defined in Clause 1 as follows:

""Retrenchment" means the termination by the Company of the employment of a Member before his Normal Retirement Date for all or any of the following reasons

(1) that the work for which he was engaged has been completed

or (2) that the position for which he was engaged has ceased to exist and his services are no longer necessary

or (3) that the amount of work to be carried out by the Company has diminished and has rendered a reduction in the number of Employees necessary or expedient

or (4) that as a result of the Reorganisation of the Company or rearrangement of staff for business policy reasons the Member's services have become redundant

PROVIDED THAT in the opinion of the Trustees the Company has not offered comparable alternative employment to that Member."

Mr Doherty claimed that he was entitled to a benefit under the Fund on the basis that his employment was terminated as a result of retrenchment; see proviso 3 to Clause 9 of the First Schedule to the Trust Deed. The amount of the benefit is not relevant for present purposes but is said to be of the order of $90,000.00.

Initially, there appears to have been some confusion on the part of the Plan Trustee, in its capacity as trustee, with respect to the nature of the claim for the retrenchment benefit being claimed by Mr Doherty under proviso 3. The confusion was not assisted by the fact that on 27 May 1994 Mr Doherty commenced proceedings in the Industrial Relations Court of Australia seeking a declaration that the termination of his employment was in contravention of Division 3 of Part VI A of the Industrial Relations Act 1988 and for an order that the Plan Trustee, in its capacity as employer, pay compensation to him. The Plan Trustee., in its capacity as employer of Mr Doherty, was named as the respondent to the proceedings. Each party had legal representation. In accordance with the practice and procedures of the Industrial Relations Court, the proceedings were referred to the Australian Industrial Relations Commission for conciliation. As a result of the conciliation, the proceedings were settled. The parties entered into a deed of settlement called "the Agreement" dated 30 June 1994. The Agreement was lengthy. It was entered into between Mr Doherty ("Doherty"), the Plan Trustee in its capacity as employer of Mr Doherty ("Bassett") and W.E.Bassett Services Pty Ltd ("Bassett Services"). The Recitals to the Agreement are set out:-

"RECITALS:

A. Until 13 May 1994, Doherty was employed as a Principal of Bassett.

B. On 13 May 1994, the employment of Doherty was terminated with effect on that date pursuant to a letter to him from Bassett dated 16 May 1994.

C. On 27 May 1994, Doherty instituted proceedings against Bassett in the Industrial Relations Court of Australia in matter number VI539 of 1994 ("the proceedings").

D. Pursuant to the provisions of the Industrial Relations Act 1988, the matter was referred to the Australian Industrial Relations Commission for conciliation, and a conciliation hearing took place on 30 June 1994 before Senior Deputy President ("the conciliation proceedings").

E. Bassett Services is the Trustee of the Webmec Unit Trust.

F. For the purpose of avoiding time, cost and expense of further litigation the parties have agreed to resolve all disputes between them on the terms set out in this agreement."

Under the Agreement, Bassett agreed to pay the sum of $6,000.00 "to Doherty as a bona fide redundancy payment, in addition to the payments upon termination so treated made prior to the date of this agreement."

It is to be observed that the Agreement was entered into by the Plan Trustee in its capacity as employer of Mr Doherty. The position of the Plan Trustee in its capacity as trustee of the Plan seems to have had no relevance to the Agreement reached between the parties to the proceedings in the Industrial Relations Court. Under the Agreement, Doherty gave a release in the following terms:-

"3.2 In consideration of the payments by Bassett pursuant to this agreement, Doherty hereby releases and forever discharges Bassett, Bassett Services and any related body corporate of Bassett within the meaning of the Corporations Law ("a related body corporate") and their respective directors and officers, servants, agents, successors and assigns ("the releasees") from all actions, suits, causes of action, claims, demands, damages and costs whatsoever (whether at common law, equity or under any statute including the Industrial Relations Act 1988 as amended to date) past present and future and howsoever arising which Doherty may have had, may now have or but for the execution of this agreement may have at any future time against the releasees or any of them jointly or severally for or in respect of or in any way related to: (a) Doherty's contract of employment; (b) his terms and conditions of employment; (c) units held by him in the Webmec Unit Trust; and (d) the termination of the contract of employment."

More followed. On 22 July 1994 the solicitors for Mr Doherty made an application to the Plan Trustee in its capacity as trustee for payment of a retrenchment benefit relying on proviso 3 to Clause 9 of the First Schedule.

On 19 August 1994 the Plan Trustee, in its capacity as trustee, rejected the application. This rejection would constitute a decision by a trustee within the meaning of the word "decision" appearing in the Resolution of Complaints Act. In September 1994 the Plan became a regulated superannuation fund under the Supervision Act. In conformity with the provisions of section 101 of the Supervision Act, the matter, being the claim by Mr Doherty for the payment of a retrenchment benefit, was considered by the Plan Trustee in its capacity as trustee. The Plan Trustee again rejected the claim by Mr Doherty. This rejection constituted a decision by the Plan Trustee. The formal notice of the decision was given to Mr Doherty on 12 January 1995. The substance of the reasons for making the decision as set out in the letter of 12 January and as quoted in the reasons of the Tribunal, were:-

"4. At the time your employment was terminated in May 1994 there was no evidence that could lead the Trustee to the conclusion that any of paragraphs (1) to (4) of the definition of "Retrenchment" was satisfied .......

6. The "Evidence of Retrenchment " ..... (in) ..... your 8 November letter does not demonstrate that any of paragraphs (1) to (4) of the definition of "Retrenchment" was satisfied ......."

By a registration of complaint dated 24 March 1995, Mr Doherty made a complaint under section 14 of the Resolution of Complaints Act to the Superannuation Complaints Tribunal ("the Tribunal"). The decision, the subject of the complaint, was described as:-

"Decision of the Trustee not to pay me a Retrenchment Benefit pursuant to Proviso 3 to Clause 9 of the Plan Trust Deed."

The reason for the complaint was stated:-

"I consider that I am entitled to receive a Retrenchment Benefit. Full Details are set out in the attachment."

The attachment was a very lengthy document setting out the dealings between Mr Doherty and the Plan Trustee in both its capacities. The attachment shows that on 22 June 1994 (that is before the Agreement) a payment of $8,213.96 had been made by the Plan Trustee in its capacity as trustee, to Mr Doherty in conformity with Clause 9 to the First Schedule but without reference to Proviso 3.

The form of the complaint clearly identifies the issue that had arisen between Mr Doherty and the Plan Trustee in its capacity as trustee. The Plan Trustee in its capacity as trustee had made a decision that Mr Doherty had not left his employment as a result of Retrenchment. Mr Doherty claimed he was entitled to a retrenchment benefit. Resolution of this issue involved the proper construction and application of the definition of "retrenchment" contained in Clause 1 of the Trust Deed to the facts found in relation to his termination of employment before his normal retirement date. Normally the resolution of the issue so expressed would involve the exercise of a judicial power. The issue involves a dispute about the existing rights and obligations of the Plan Trustee in its capacity as trustee and Mr Doherty. Once those rights and obligations had been determined, if in favour of Mr Doherty, the amount of the retrenchment benefit to be paid is a matter of calculation only. This formulation of the issue raises for consideration the question whether the adjudication of the issue is judicial or not. The formulation is adapted from the opinions expressed in Precision Data Holdings Ltd v Wills (1991) 173 CLR 167 at 188-190:-

"The acknowledged difficulty, if not impossibility, of framing a definition of judicial power that is at once exclusive and exhaustive arises from the circumstance that many positive features which are essential to the exercise of the power are not by themselves conclusive of it. Thus, although the finding of facts and the making of value judgments, even the formation of an opinion as to the legal rights and obligations of parties, are common ingredients in the exercise of judicial power, they may also be elements in the exercise of administrative and legislative power. Again, functions which are ordinary ingredients in the exercise of administrative or legislative power can, in some circumstances, be elements in the exercise of what is truly judicial power.

It follows that functions may be classified as either judicial or administrative according to the way in which they are to be exercised. So, if the ultimate decision may be determined not merely by the application of legal principles to ascertained facts but by considerations of policy also, then the determination does not proceed from an exercise of judicial power. That is not to suggest that considerations of policy do not play a role, sometimes a decisive role, in the shaping of legal principles.

Furthermore, if the object of the adjudication is not to resolve a dispute about the existing rights and obligations of the parties by determining what those rights and obligations are but to determine what legal rights and obligations should be created, then the function stands outside the realm of judicial power. In Re Ranger Uranium Mines (1987) 163 CLR 656 the Court said: "The power of inquiry and determination is a power which properly takes its legal character from the purpose for which it is undertaken. Thus inquiry into and determination of matters in issue is a judicial function if its object is the ascertainment of legal rights and obligations. But if its object is to ascertain what rights and obligations should exist, it is properly characterized as an arbitral function when performed by a body charged with the resolution of disputes by arbitration."

The Court was then speaking with reference to an arbitral function of the Conciliation and Arbitration Commission but, as the judgment shows, the remarks apply with equal force to determinations made for administrative, executive or legislative purposes."

These matters will be discussed later in these reasons.

The Court as presently constituted considered the provisions of the Resolution of Complaints Act in Clerical Administrative and Related Employees Superannuation Pty Ltd v Bishop (........ .... 1997, unreported). That consideration need not be repeated in these reasons. The Tribunal is established as an administrative body. Its functions are to inquire into a complaint and to try to resolve it by conciliation and, if it cannot be resolved by conciliation "to review the decision ...to which the complaint relates"; see section 12. Where conciliation has not been successful in settling a complaint, the Tribunal Chairperson "must fix the date, time and place for a review meeting", section 32. A review meeting is to be in private; section 38. Normally the Tribunal must conduct a review meeting without oral submissions, section 34, but a party to the review meeting may make written submissions to the Tribunal for the purposes of the review meeting, section 33.

Section 36 provides:-

"36. The Tribunal, in reviewing a decision or conduct: (a) is not bound by technicalities, legal forms or rules of evidence; and (b) is to act as speedily as a proper consideration of the review allows, having regard to the objectives laid down by section 11 and the interests of all the members of the fund to which the complaint relates; and (c) may inform itself of any matter relevant to the review in any way it thinks appropriate."

Mr Doherty made his complaint under section 14. Reference will be made to this later. Section 37 contains provisions relating to the powers of the Tribunal with respect to complaints under section 14. These provisions are the genesis of the difficulties arising in the present case. The parts of section 37 relevant for present purposes are:-

"37(1) For the purpose of reviewing a decision of the trustee of a fund that is the subject of a complaint under section 14: (a) the Tribunal has all the powers, obligations and discretions that are conferred on the trustee; and (b) subject to subsection (6), must make a determination in accordance with subsection (3).

(2) ......

(3) On reviewing the decision of a trustee, insurer or other decision-maker that is the subject of, or relevant to, a complaint under section 14, the Tribunal must make a determination in writing: (a) affirming the decision; or (b) remitting the matter to which the decision relates to the trustee, insurer or other decision-maker for reconsideration in accordance with the directions of the Tribunal; or (c) varying the decision; or (d) setting aside the decision and substituting a decision for the decision so set aside.

(4) The Tribunal may only exercise its determination-making power under subsection (3) for the purpose of placing the complainant as nearly as practicable in such a position that the unfairness, unreasonableness, or both, that the Tribunal has determined to exist in relation to the trustee's decision that is the subject of the complaint no longer exists.

(5) The Tribunal must not do anything under subsection (3) that would be contrary to law, to the governing rules of the fund concerned and, if a contract of insurance between an insurer and trustee is involved, to the terms of the contract.

(6) The Tribunal must affirm a decision referred to under subsection, (3) if it is satisfied that the decision, in its operation in relation to: (a) the complainant; and (b) ...... was fair and reasonable in the circumstances."

This section will be considered in some detail later in these reasons.

Under section 39 the Tribunal has power to refer a question of law arising in relation to a complaint to the Federal Court for decision. Section 40 requires the Tribunal to give written reasons for its determination. Under section 46, any party may appeal to the Federal Court, on a question of law, from a determination of the Tribunal.

In the present case, Mr Doherty made a complaint under section 14 of the Resolution of Complaints Act. By reason of definitions contained in section 3, he is a complainant and has made a complaint. There can be no doubt that the Plan Trustee, in its capacity as trustee, made a decision. The provisions of section 4 do not assist in this regard. The parts of section 14 relevant to this appeal are set out:-

"14.(1) This section applies if the trustee of a fund has made a decision ... in relation to: (a) a particular member ... of a regulated superannuation fund; or (b) ......

(2) Subject to subsection (3) and section 15, a person may make a complaint ... to the Tribunal, that the decision is or was unfair or unreasonable.

(3) ......

(7) A complaint under subsection (2) is to be made by sending or delivering a written complaint to the office of the Tribunal."

Mr Doherty was entitled to make a complaint under section 14 because he was a member or former member of a regulated superannuation; see paragraph 15(1)(b)(i).

Subsection 18(1) specifies the parties to a complaint under section 14 as being the complainant, the trustee, other persons where the complaint relates to a death or disability benefit and any other person who applies to be made a party and where the Tribunal decides that the person should be a party. In the present case, the only parties to the complaint are Mr Doherty as complainant and the Plan Trustee in its capacity as trustee.

The Resolution of Complaints Act contains detailed provisions relating to what is to be done by a trustee and the Tribunal following a complaint being made. It is not necessary to refer to all of these provisions. Section 20 prohibits the Tribunal from dealing with a complaint if a proceeding has been commenced in a court about the subject matter of the complaint and the proceeding has not been finally disposed of. Under section 24, the trustee, on notification of the making of a complaint, must forward to the Tribunal all documents in its possession relating to the matter. Under section 25, the Tribunal has further powers to obtain information and documents.

At this stage one observation is made. Under subsection 37(1), for the purpose of reviewing a decision of a trustee that is the subject of a complaint under section 14, the Tribunal has all the powers, obligations and discretions conferred on the trustee. These powers, obligations and discretions would include those contained in the relevant rules regulating the superannuation fund as well as those conferred or imposed by the general law. The Plan Trustee in its capacity as trustee, is a party to the review. As the trustee which made the decision being reviewed it was required to forward to the Tribunal all documents relating to that decision. As a party it was empowered to make written submissions to the Tribunal for the purposes of the review-making. In making its determination the Tribunal is required to exercise and comply with all the powers, obligations and discretions that were conferred on the Plan Trustee but under subsection 37(4) of the Resolution of Complaints Act the Tribunal's power to make a determination under subsection 37(3) was limited to the placing of the complainant as nearly as practicable in such a position that the unfairness, unreasonableness, or both, that the Tribunal has determined to exist in relation to the trustee's decision that is the subject of the complaint no longer exists. This subsection, when read in conjunction with subsection 37(6), seems to suggest that in every case a complaint is made under section 14, the Tribunal must determine, as a preliminary matter, whether the decision the subject of the complaint is or was unfair or unreasonable.

The Tribunal held its review meeting on 22 March 1996. On 12 July 1996 the Tribunal published its determination and reasons for determination on the complaint. The determination was as follows:-

"Determination:

The Determination of the Tribunal under section 37(3)(b) of the Superannuation (Resolution of Complaints) Act 1993 (SRC Act) is that the matter to which the decision relates is remitted to the Trustee with the following directions: - that the Complainant be treated as falling under the Trust Deed Definition of 'Retrenchment'; - that the amount payable as a result of his Retrenchment shall be determined under clause 9 of the First Schedule to the Trust Deed including especially proviso (3); - that full payment of the outstanding benefit shall be effected as soon as reasonably possible; - that interest shall be included in the payment figure at the relevant Fund crediting rate for the period between 13 May 1994 and the date of payment."

The Plan Trustee in its capacity as trustee appealed to the Federal Court from the determination of the Tribunal. The substantive question of law raised on the appeal was whether the Tribunal erred in holding that Mr Doherty was entitled to a retrenchment benefit pursuant to clause 9 proviso (3) of the First Schedule to the Trust Deed. Other questions of law raised in the notice of appeal were variations to the substantive question or were in the nature of particulars of the error that was alleged to have been made.

It is not necessary to refer in any great detail to the reasons for determination. The Tribunal set out the background material as described in more detail earlier in these reasons. Reference was made to the termination on 13 May 1994 and part of the letter of 16 May 1994 setting out the reasons for termination (poor performance of duties) and the payment in lieu of notice. Reference was made to the events following 16 May 1994, the proceedings in the Industrial Relations Court, the conciliation meeting and the settlement agreement and in particular clause 1 of the agreement and the submission made by "the Complainant" that a "bona fide redundancy payment" is equivalent for all practical purposes to "a retrenchment payment", that the reasons for termination given in the letter of 16 May 1994 should be rejected because of the agreement to pay the settlement amount as a "bona fide redundancy payment".

The Tribunal referred to the decision of the Plan Trustee in its capacity as trustee, not to pay the retrenchment benefit and its reasons for that decision as contained in its letter of 12 January 1995 and set out those extracts quoted earlier in these reasons. The Tribunal referred to the complaint of Mr Doherty that "My complaint is that the Trustee has refused to pay my Retrenchment benefit in accordance with the Trust Deed".

Under the heading "The Review Issues" the Tribunal set out proviso 3 to clause 9 and the definition of "Retrenchment". There then appears the sub-heading " 'Redundancy' and 'bona fide redundancy' ". This part of the reasons forms the basis of the substantial attack made by the Plan Trustee in support of its appeal. The text of the reasons under this sub-heading is set out:-

"The parties appear to agree that the use of these terms is in the sense of their meaning for purposes of section 27F of the Income Tax Assessment Act (as explained by Taxation Ruling 94/12 dated 31 March 1994). In paragraph 12 of the Ruling redundancy is explained in the following terms: Redundancy can be described as the situation where an employer no longer requires employees to carry out work of a particular kind or to carry out work of a particular kind at the same location. Redundancy refers to a job becoming redundant and not to an employee becoming redundant. An employee's job is considered to be redundant if: - an employer has made a definite decision that the employer no longer wishes the job the employee has been doing to be done by any one; - that the decision is not due to the ordinary customary turnover of labour; - that decision led to the termination of the employee's employment; and - that termination of employment is not on account of any personal act or default of the employee.

On the meaning of redundancy the Complainant's solicitors made two further submissions as follows:

The CCH Macquarie Dictionary of Employment and Industrial Relations (1992) describes redundancy in the following terms: an employment situation in which employees for economic, technological or other reasons are superfluous to, in excess of, or unnecessary for the requirements of their employer's enterprise. In a sense it is the jobs that become redundant and not the persons performing them. Similarly, in the 1984 Job Protection Case (Print no's F6230 and F72262) a Full Bench of the Australian Industrial Relations Commission stated that a redundancy comes into being where an employer "has made a definite decision that he or she no longer wishes the job the employee has been doing done by anyone and this is not due to the ordinary and customary turnover of labour"."

The next sub-headings are "The Settlement Agreement" and "The Submissions". Under the former, the relevant aspect is the quotation of clause 1 of the settlement agreement. Under the latter, the Tribunal set out the various submissions made by the parties. Four main submissions are referred to, three of which were decided against Mr Doherty. The fourth submission was based on the existence and effect of clause 1 of the settlement agreement entered into between the Plan Trustee in its capacity as employer and Mr Doherty in settlement of the proceedings in the Industrial Relations Court.

At the end of the section of the reasons under the sub-heading "The Submissions" is the heading "Conclusion". This section is set out in full:-

"CONCLUSION

In the Complainant's response to the submission for the Trustee it is accepted that: it is quite correct that (the Complainant) was dismissed, and that the reason originally given by the Company as employer for the dismissal was poor performance.

It may well be that the Employer at that point was objectively justified in dismissing for poor performance, but we make no determination on that issue. Whatever the original position, a significant change occurred with the adoption of the terms of the Settlement Agreement. Clause 1 of that Agreement describes the amount agreed to be paid as 'a bona fide redundancy payment'. Though this clause was not specifically directed to superannuation implications, the Tribunal has accepted that if it properly describes the agreed payment by the Employer then it cannot be suggested that the termination on 13 May 1994 was not a redundancy termination.

Consequently it falls under the Trust Deed definition for 'Retrenchment'. The Complainant's lawful entitlement should therefore be determined under clause 9 of the First schedule to the Trust Deed recognizing that proviso (3) applies to his case."

From a consideration of the determination made by the Tribunal and its reasons for making its decision, it appears that the Tribunal has exercised the power conferred upon it by paragraph 37(3)(b) of the Resolution of Complaints Act namely "On reviewing the decision of a trustee ........ ...... that is the subject of a complaint under section 14, the Tribunal must make a determination in writing ........ ........ (b) remitting the matter to which the decision relates to the trustee for reconsideration in accordance with the directions of the Tribunal". On no view could it be said that it affirmed the decision of the trustee (paragraph (a)), varied the decision of the trustee (paragraph (c)) or set aside the decision of the trustee and substituted a decision for the decision so set aside (paragraph (d)). This is despite the fact that the Plan Trustee had made a decision rejecting the claim by Mr Doherty for the payment of a retrenchment benefit and that decision, apparently, has not been set aside.

During the course of the hearing, the Court directed the attention of the parties to the question whether, on the facts of this appeal, the Tribunal had purported to exercise a judicial power and in so doing had exceeded its powers. Submissions were directed to this question. The matter is of some importance since the orders to be made on the appeal would depend upon the answer to the question.

There is no doubt that the Tribunal is constituted as an administrative body. In many respects it is similar to the Administrative Appeals Tribunal ("the AAT") constituted under the Administrative Appeals Tribunal Act 1975 ("the AAT Act"). The AAT is an administrative body constituted to review decisions made by persons in the exercise of powers conferred by statute. The review may be sought by a person whose interests are affected by the decision sought to be reviewed; see section 27 AAT Act. The procedures of the AAT are very similar to the procedures to be followed by the Tribunal. Provision is made with respect to parties before the AAT, see section 30 AAT Act. The procedures of the AAT are very similar, see section 33 AAT Act but normally the hearings of the review are public and persons appearing may be represented and powers are conferred on the AAT by section 40 AAT Act. Section 43 of the AAT Act is of importance and subsection 43(1) is set out:

"43.(1) For the purpose of reviewing a decision, the Tribunal may exercise all the powers and discretions that are conferred by any relevant enactment on the person who made the decision and shall make a decision in writing: (a) affirming the decision under review; (b) varying the decision under review; or (c) setting aside the decision under review and: (i) making a decision in substitution for the decision so set aside; or (ii) remitting the matter for reconsideration in accordance with any directions or recommendations of the Tribunal."

This is a clear and simple provision to be contrasted with section 37 of the Resolution of Complaints Act.

The authorities make it clear that in exercising its powers of review the AAT stands in the place of the person whose decision is being reviewed. Because of the wide range of decisions that can be reviewed it is always important to understand the nature of the powers and discretions conferred on the person whose decision is being reviewed. In some cases, that person may be exercising powers similar to arbitrating between competing parties. Powers of that kind are very different from the great bulk of cases where a person is claiming an entitlement conferred by an enactment and the person exercising the power has to decide whether the entitlement should be granted. Here, there are no parties in any legal sense before the decision-maker. Similarly, on review before the AAT no parties in the traditional sense appear before the AAT. The decision-maker appears before the AAT to assist the AAT. The true position can be illustrated by reference to authority. In McDonald v Director-General of Social Security (1984) 1 FCR 354, the issue was whether the applicant was entitled to a social security payment. In a very helpful passage at 356 to 359 Woodward J discusses the nature of the proceedings before the AAT and the fact that the concepts of "onus of proof" have no application to these proceedings. Northrop J expressed similar views at 365-366.

Similar opinions have been expressed with respect to claims for pensions under the Veterans' Entitlements Act 1986. A very helpful opinion in this regard is contained in the judgment of Brennan J in Bushell v Repatriation Commission (1992) 175 CLR 408. After setting out section 120 of the relevant Act, his Honour said at 425-426:

"This section is not concerned with an onus of proof. Sub-section (6) says so expressly. It is concerned with a standard of satisfaction to which the administrative decision-maker must attain in finding the relevant facts, and it directs the decision-maker to act on the material before the Commission, the Board or the A.A.T., as the case may be. Proceedings before the A.A.T. may sometimes appear to be adversarial when the Commission chooses to appear to defend its decision or to test a claimant's case but in substance the review is inquisitorial. Each of the Commission, the Board and the A.A.T. is an administrative decision-maker, under a duty to arrive at the correct or preferable decision in the case before it according to the material before it. If the material is inadequate, the Commission, the Board or the A.A.T. may request or itself compel the production of further material. The notion of onus of proof, which plays so important a part in fact-finding in adversarial proceedings before judicial tribunals, has no part to play in these administrative proceedings. Nor does s. 120 create any presumption which has to be dispelled by the material before the decision-maker."

In conducting a review, the AAT as a matter of necessity needs to determine questions of law in the sense discussed in the extract from the judgment in Precision Data Holdings Ltd set out earlier in these reasons. Nevertheless it is exercising a non-judicial function.

Similar considerations should be expected to apply with respect to a review of a decision of a trustee by the Tribunal under section 37 of the Resolution of Complaints Act. There is, however, a major difference between the provisions of the AAT Act and the Resolution of Complaints Act with respect to complaints under section 14 of the latter. Under the AAT Act, any person whose interests are affected by the decision of an administrator has a right to seek a review of that decision by the AAT; see section 27 of the AAT Act. Subject to the decision being in the nature of a final decision, see Director-General of Social Services v Chaney (1980) 47 FLR 80, there is no limitation on the right to seek a review. Under section 14 of the Resolution of Complaints Act the right to a review is limited namely to the case where a person may "make a complaint ... to the Tribunal, that the decision is or was unfair or unreasonable". Even then, under subsection 37(6) the Tribunal must affirm the decision that is the subject of the complaint "if it is satisfied that the decision, in its operation in relation to the complainant was fair and reasonable in the circumstances".

The use of the words "unfair or unreasonable" and "fair and reasonable" in sections 14 and 37 respectively, must be given some meaning. The words have overtones of "palm tree justice" namely justice which makes orders which appear to be fair and just in the special circumstances of the case but not necessarily according to law, compare Newgrosh v Newgrosh 100 LJ 525 per Bucknill LJ as cited by Evershed MR in Rimmer v Rimmer (1953) 1 QB 63 at 68.

Normally the words "fair or reasonable" or "unfair or unreasonable" connote some exercise of a discretion by the decision-maker. A court exercising a judicial power, is required to apply the law to the facts found. The court has no discretion not to do this even if the decision is considered to be "unfair or unreasonable".

It is not every decision by a trustee that can be made the subject of a complaint under section 14 of the Resolution of Complaints Act. It is only those decisions which involve an element of the exercise of a discretion conferred upon the trustee. In the present case, the Plan Trustee, in its capacity as trustee had no discretion. Mr Doherty claimed a retrenchment payment. The word "retrenchment" was defined in the Trust Deed. The Plan Trustee formed the view, on the material before it, that none of the provisions of the definition of retrenchment applied and therefore Mr Doherty was not entitled to a retrenchment benefit. Mr Doherty could have challenged that decision by legal proceedings. It was not a decision that could come within section 14 of the Resolution of Complaints Act as being unfair or unreasonable. Therefore there was no valid complaint before the Tribunal. The Tribunal purported to exercise a judicial power only. It could not do this. Therefore its determination should be set aside.

In coming to this conclusion I am aware of other judgments of this Court which take a different view, see for example Briffa v Hay 20 June 1997, Merkel J unreported. The facts of that case were very different from the facts of the present case.

Pope v Lawler (1996) 41 ALD 127 is an illustration of case where a trustee exercised a discretion in making a decision between persons claiming under the interests of a deceased member of a superannuation fund. It should be noted that an appeal succeeded against the order of the Court in Pope on the basis of an error of law arising with respect to the principles of law applicable to mutual wills. The Full Court gave no reasons for allowing the appeal apart from comments made during the course of the hearing of the appeal which are contained in the transcript of the hearing of the appeal on 17 March 1997.

In any event, if the Tribunal was exercising administrative powers, the appeal should be allowed. The issue before the Tribunal was whether Mr Doherty left his employment as a result of retrenchment. This meant was Mr Doherty's employment terminated by his employer before his normal retirement date for all or any of the four reasons set out in the definition of "Retrenchment" contained in the Trust Deed. Of necessity this involved a consideration of all the relevant material directed to the reason for the termination of the employment. It was not for the employer to establish the reason for termination was poor work performance. The issue was whether the material established the termination for any one or more of the following reasons:-

1. that the work for which Mr Doherty was engaged had been completed;

   2. that the position for which he was engaged had ceased to exist and his services were no longer necessary;

   3. that the amount of work to be carried out by the employer had diminished and had rendered a reduction in the number of employees necessary or expedient; or

   4. that as a result of the reorganisation of the employer or management of staff for business policy reasons, Mr Doherty's services had become redundant.

This is the very exercise the Tribunal did not do. In its conclusion, the Tribunal referred to the reason given by the employer for the termination. It said "It may well be that the Employer at that point was objectively justified in dismissing for poor performance, but we make no determination on that issue". The Tribunal referred to the Settlement Agreement and the use of the phrase "a bona fide redundancy payment". The Tribunal said that though the agreement was not specifically directed to superannuation implication, "the Tribunal has accepted that if it properly describes the agreed payment by the Employer then it cannot be suggested that the termination on 13 May 1994 was not a redundancy termination".

There are a number of difficulties with this line of reasoning. The Settlement Agreement was entered into as a compromise reached in legal proceeding for unlawful termination of employment. The word "redundancy" is different from the word "retrenchment" which is given a specific meaning in the Plan. The phrase "bona fide redundancy payment" has a specified meaning given to it in respect of complex provision of the Income Tax legislation designed to give a redundant employee in the defined sense a tax benefit with respect to a bona fide redundancy payment. This is made very clear by a reference to what appears in the reasons for decision of the Tribunal under the heading "'Redundancy' and 'bona fide redundancy'".

In my opinion, the Tribunal made an error of law in concluding that the agreement by the employer to make a bona fide redundancy payment to Mr Doherty supported a conclusion that any of the reasons specified in the definition of retrenchment in the Plan had been satisfied.

In its reasons, the Tribunal did not consider the proper construction and application of the words "that the decision is or was unfair or unreasonable" appearing in subsection 14(2) of the Resolution of Complaints Act. It did not consider whether the decision involved any and what exercise of discretion by the Plan Trustee. It did not consider the proper construction and application of subsections 37(6) and 37(4) of the Resolution of Complaints Act. It made no reference to the constraints imposed by subsection 37(5). These provisions seem to support the view that the relevant law is to be applied and that concepts of what is fair and reasonable in the circumstances apply where, within the relevant law, a trustee, insurer or other decision-maker has a discretion of some kind with respect to a decision to be made. In the present case, the complaint may not be a complaint within section 14 of the Resolution of Complaints Act.

In all the circumstances, the appeal should be allowed with costs. The determination of the Tribunal should be set aside. The complaints should be remitted to the Tribunal for determination according to law after considering such further material, if any, as the Tribunal determines.