Wilson and Defence Force Retirement and Death Benefits Authority

[2006] AATA 81

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 81

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2005/815

GENERAL ADMINISTRATIVE DIVISION		)
Re		TRACY PHILIP WILSON

Applicant

And DEFENCE FORCE RETIREMENT AND DEATH BENEFITS AUTHORITY

Respondent

DECISION

Tribunal Senior Member M D Allen

Date3 February 2006

PlaceSydney

Decision The decision under review is set aside and the Tribunal substitutes its decision that the election made by the Applicant on 4 August 2002 be treated as if it were an election made within the period permitted by ss.76(1) of the Defence Force Retirement and Death Benefits Act 1973.

(Sgd) M. D. ALLEN

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

Senior Member

CATCHWORDS

DEFENCE FORCE RETIREMENT AND DEATH BENEFITS – applicant’s claim to extend time in which to make an election to preserve benefits – whether special circumstances exist – lack of explanation given to applicant about options to preserve his benefits – evidence of circumstances surrounding the applicant’s divorce sufficiently unusual, uncommon or exceptional – decision under review set aside and substituted with Tribunal’s decision that the election made by applicant be treated as if it were made within the period permitted by the DFRDB Act.

Defence Force Retirement and Death Benefits Act 1973; s.76(1), (2)

Beadle v Director-General of Social Security (1985) 7 ALD 670

Re Beadle and Director-General of Social Security (1984) 6 ALD 1

Groth v Department of Social Security (1995) 40 ALD 541

Ex parte Bucknel (1936) 56 CLR 221

Re Manion’s Appeal (1962) 9 FLR 91

Re Ward and Commissioner for Superannuation (1995) 36 ALD 287

Chalk v Commissioner for Superannuation (1994) 33 ALD 420

Commissioner for Superannuation v Boardman (1994) 123 ALR 239

REASONS FOR DECISION

Senior Member M D Allen

1.      By application made 28 June 2005, the Applicant sought review of a decision of the Respondent made 23 May 2005 affirming a prior determination rejecting the Applicant’s claim for an extension of time in which to make an election to preserve benefits which had accrued to him while a member of the Defence Force Retirement and Death Benefit Scheme.

2. Section 76 of the Defence Force Retirement and Death Benefits Act 1973 (the DFRDB Act) states inter alia:

(1)Subject to this section, where, a person, being a contributing member, ceases to be an eligible member of the Defence Force and is not entitled to a pension benefit, or is not a person to whom section 36 applies, he may by notice in writing given to the Authority within a period of 21 days after the date on which he ceases to be such a member, elect that this Division shall apply in relation to him.

(2)The Authority may, if it is satisfied that there are special circumstances that justify it in so doing, extend the period for the making of an election under subsection (1).

…

3. Unlike s.157 of the Superannuation Act 1976 to which s.76 has some superficial similarities, s.76 of the DFRDB Act has two important differences. The first is that the right to elect to preserve benefits only exist if the ex-member becomes a member of certain specified superannuation schemes (see ss.76(4) and s.73 of the DFRDB Act) but, more importantly, the right to a late election can only be exercised if “special circumstances” exist.

4.      Thus, whilst cases such as Chalk v Commissioner for Superannuation (1994) 33 ALD 420 and Commissioner for Superannuation v Boardman (1994) 123 ALR 239 deal with analogous matters, they are distinguishable as applying to quite different legislative provisions.

5.      The term “special circumstances” has been referred to in many cases both before this Tribunal and the common law courts.  The classic statement for the purposes of this Tribunal is that by the Tribunal in Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at page 3, namely:

“An expression such as ‘special circumstances’ is by its very nature incapable of precise or exhaustive definition.  The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional.  Whether circumstances answer any of these descriptions must depend upon the context in which they occur.  For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases.  This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special.”

6.      Of that explanation the Full Court said on appeal (Beadle v Director-General of Social Security (1985) 7 ALD 670 at 675):

“While we would place less emphasis on one dictionary definition of ‘special’ we are in broad agreement with the approach of the Tribunal…”

7.      In Ex parte Bucknel (1936) 56 CLR 221 at 224, the High Court in a joint judgment said of the phrase “special circumstances” where it related to a special leave application:

“It is not necessary or desirable to attempt to enumerate all the classes or circumstances which may be regarded as special in this connection.  Indeed, the very use of the word ‘special’ is designed to make it possible for the court to deal with each case individually in relation to its own particular circumstances. …”

8.      Cf Kiefel J in Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545:

“… for present purposes it is sufficient to observe that it would require something to distinguish Mr Groth’s case from others, to take it out of the usual or ordinary case.  That was, I consider, the only enquiry to be undertaken in this case.  It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary. …”

9.      The Applicant who was born on 3 November 1961, entered the Australian Regular Army at age 15 as an army apprentice.  He completed his trade training but at the time of his discharge on 13 January 1986, was a member of the Special Air Services Regiment.

10.     Prior to discharge the Respondent wrote to the Applicant setting out in some detail the amounts which would be paid to him regarding the refund of contributions and gratuity upon discharge.

11.     Paragraphs 8 and 9 of that letter read:

8.In order to ‘roll over’ an amount, the recipient must make an election within 90 days of payment of the lump sum.  For further information about ‘roll over’ and ‘roll over’ elections, please contact any Taxation Office.

9.As an alternative to accepting the refund of contributions and gratuity you could elect to preserve your rights and qualify for one of two preservation benefits, these being a transfer value or a deferred pension benefit.  Should further information be required please do not hesitate to contact this office.

12.     In these proceedings and previously, the Applicant stated that at the time of his discharge he was given no advice regarding the option to preserve his benefits in the fund.  At discharge he was paraded before an officer with the rank of captain who said words to him to the effect, “sign this form, it is a form to get a refund of your contributions”.  No further advice was given regarding other options available.

13.     The Applicant then joined the Australian Federal Police.  In fact he had made that decision prior to discharge and was then discharged when the term of service for which he had enlisted expired.  At the time of discharge the officer dealing with the Applicant made disparaging comments to him regarding his failure to seek re-engagement after the training the army had invested in him.

14.     The Applicant also stated that although there is a document in existence bearing his signature which asserts that he was provided with a brochure entitled “Preserving of Superannuation Benefits”, he did not see that brochure nor was any similar brochure provided to him during his discharge process.

15.     The Applicant did not elect to take a refund of contributions but “rolled over” the sum into a civilian superannuation scheme.  Those funds were dissipated after a period of 12 months.  The Applicant stated that there had been general information available at the time of his discharge regarding the availability of rolling over funds.

16.     Some four years later the Applicant was informed by another Federal Police officer that other options apart from taking his benefits as a cash payment or rolling them over to a civilian fund may have been available to him as he had continued in the employ of the Commonwealth.  He therefore wrote to ComSuper on 17 May 1990 asking whether he could “buy back” his army service.

17.     This enquiry by the Applicant was actioned by both the Commonwealth Superannuation Scheme and the Respondent.  On 26 October 1990, the Respondent wrote to the Applicant informing him that to be eligible to have a transfer value paid to the Commonwealth Superannuation Scheme he would:

(a)have to lodge a late election application with the Respondent; and

(b)if that application was accepted, pay to the Respondent the sum of $6,595.87.

A notice of late election form (form DB83) was enclosed with that letter.

18.     That correspondence was followed up by a further letter dated 12 March 1991, which reminded the Applicant of the necessity of making an application for late election.

19.     A further letter to the Applicant was forwarded dated 30 August 1991.  That letter, apparently in response to a letter by the Applicant to the Respondent dated 4 June 1991, sets out the sums to which he would be entitled if an application for a late election was successful.

20.     The next communication by the Applicant to the Respondent was by way of facsimile dated 21 July 1996 in which the Applicant requested details of death benefits or invalidity benefits he would have been entitled to receive had he died or been invalided out of the ARA on 1 June 1995.  Those details were required for a divorce settlement.

21.     On 4 August 2002, the Applicant communicated with the Respondent by email.  A reply, also by email, reads inter alia:

“Your e-mail regarding a complaint about the fact that you were not aware that you could preserve your DFRDB benefit has been received.

Your e-mail was originally forwarded to the Complaints Officer.  The Complaints officer has discussed the matter with me and agreed that before treating your e-mail as a complaint, you should be firstly given an opportunity to apply for a late election to preserve your DFRDB benefits.”

22.     Although at that time the Applicant’s file was requested by the Respondent from Australian archives, I was informed from the bar table that an incorrect number had been given to Australian archives and by the time the error was found out, the file had been destroyed.  This is of course to the disadvantage of the Respondent and a good reason why time limits should be enforced (cf the remarks of McHugh J in Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 551).

23.     By letter dated 20 October 2002, the Respondent wrote to the Applicant stating inter alia:

“If you wish to proceed with a late election for preservation you will need to set out a detailed statement setting out reasons as to why you consider that special circumstances exist in your case…”

24.     No reply was obtained from the Applicant and on 1 October 2003, the Respondent again wrote to him stating that if no contact was made with the Respondent within 30 days it would be presumed the Applicant no longer wished to pursue his late election to preserve benefits.

25.     On 14 October 2003, the Applicant advised the Respondent by telephone that he had been posted to Christmas Island and “lost” the letter of October 2003.  He advised that he wished to pursue his late election.

26.     By a submission dated 17 October 2003, the Applicant made out his case for a late election to preserve benefits.

27.     In that submission to the Respondent by the Applicant he addressed criteria set out by the Respondent in its letter of 20 October 2002.  The relevant passage of that letter read:

In general, for special circumstances to be found to exist, it is necessary that they be unusual, uncommon or exceptional.  Examples include:

·undue administrative delay;

·misleading or incomplete advice from a responsible person of the Office of the DFRDB Authority;

·whether the circumstances are something outside the control of the applicant;

·whether the circumstance prevents a free election by the applicant; and

·whether the effects of the circumstance cannot be avoided by the applicant.

28. The above criteria are consistent with guidelines produced by the Respondent. Those guidelines have no statutory basis and are not binding upon the Administrative Appeals Tribunal. All that the DFRDB Act requires is that there exist special circumstances.

29.     While matters such as delay (by either party), misleading advice and the other matters referred to by the Respondent in its letter of 20 October 2002 may be relevant in ascertaining whether special circumstances exist, the category of events and situations amounting to special circumstances in any particular case is not closed.

30.     In this matter, the Applicant states that at the time of his discharge from the ARA he was ignorant of his right to preserve his benefit in the scheme and was given no information to disabuse him of this ignorance.

31.     The Respondent for its part points to the letter of 12 November 1985 in which a reference is made to preservation of rights.

32.     The letter of 12 November 1985 must be considered according to its terms.  It commences by stating:

“I refer to your correspondence of 21.10.85 regarding the refund of contributions and gratuity due to you on completion of your service with the Defence Force”. 

The letter is a standard form letter with the words “correspondence 21.10.85” written in hand as are the various amounts set out in later paragraphs of the letter.

33.     The Applicant gave evidence that at no time during his army service had he been given any information regarding preservation of benefits.  He stated that the common belief was that you “did” twenty years service and then, and only then, you got a DFRDB pension.  No other options were ever notified or discussed and there is no evidence that the Applicant ever attended any pre-discharge seminars or briefings where options were explained.  It was only four years after discharge that the possibility of other benefits became known to him.

34.     This belief is, to my mind, corroborated by the letter of 17 May 1990 to ComSuper.  That letter evidences an ignorance of what benefits were available.  It commences by asking:

“I am seeking advice as to having prior Commonwealth service recognised for superannuation.” 

The letter then concludes by referring to “buying back” army service.

35.     At the time of discharge the Applicant signed an election form.  The form appearing at T3 is not the form that would have been completed by the Applicant in 1986 but in any event, I accept the Applicant’s evidence that he was simply told by a superior officer to sign here to get your refund.

36.     That the Applicant then took no further action after the preliminary enquiries in 1990 and follow up letters in 1990 and 1991 is explained by his personal circumstances.  He was, during the period 1991 to 1996, involved in protracted litigation, at one time being suspended from the Australian Federal Police and after seven months, cleared of any wrongdoing.  Later, he was engaged in bitter divorce proceedings and custody applications.  During this period the Applicant also received a one year’s posting to Cyprus.  The Applicant’s evidence is that it was only in 2003 when posted to Christmas Island that he became mentally competent to continue with the late election.

37.     The enquiry in 1996 was made for the purposes of a divorce settlement.

38.     I find that the circumstances attaching to the Applicant’s discharge from the ARA can be regarded as “special”.  It is clear that he was still a young man (24 years) who had been cocooned in the army since age 15.  The letter of 12 November 1985, clearly invites a payout of benefits and gratuity and preservation is referred to obliquely and with no explanation of what it entailed.  Then, at discharge, no further explanation was forthcoming except a direction by a superior officer to “sign here to get your refund”.

39.     In assessing that direction, I take into account the difference in rank between the Applicant and the discharging officer plus, as was pointed out in Re Manion’s Appeal (1962) 9 FLR 91, “discipline does not depend upon the mere nicety of words used”.

40.     The Applicant, after becoming aware in 1990 of the possibility of “buying back” service, acted but then became sidetracked by events in his personal and work life.

41.     The degree of delay is extreme but the test imposed for the extension of time is not delay or even a discretion at large but whether “special circumstances” exist to justify the extension.  I find that the circumstances deposed to by the Applicant are special.  No doubt many other ex-servicemen and women go through periods of intense emotional turmoil and it could not be said that divorce itself is a special circumstance.  However, the circumstances surrounding the divorce may, when considered in totality, amount to circumstances that can properly be categorised as unusual, uncommon or exceptional so that it would be unfair to the Applicant not to grant the extension.

42.     In this matter apart from the divorce itself, there were situations where he received a transfer on compassionate grounds, there was litigation which involved him being suspended from his duties in the AFP and subsequently cleared, plus of course, a transfer with the AFP to Cyprus.

43.     When making a decision, I also have regard to the fact that the Applicant has continually been in the employ of the Commonwealth.  As was pointed out in Re Ward and Commissioner for Superannuation (1995) 36 ALD 287 at 293:

“One might expect that where an employee has made a mature and considered decision to switch from the public to the private sector to take a different career path, considerations of justice could be different from those applicable where the applicant has demonstrated a commitment to a consistent career in the public sector…”

44. I find that the circumstances of the Applicant are special and therefore the decision under review will be set aside and the Tribunal substitutes in lieu thereof, its decision that the election made by the Applicant on 4 August 2002 is to be treated as if it were an election made within the period permitted by ss.76(1) of the DFRDB Act.

I certify that the 44 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member Allen

Signed:         (E.Pope)           .....................................................................................

Associate

Date of Hearing  19 January 2006
Date of Decision  3 February 2006

Counsel for the Applicant               Mr C S Ward

Solicitor for the Applicant               David Lardner & Associates

Solicitor for the Respondent          Ms B Eales, Australian Government Solicitor