Wood v The Retirement Benefits Fund Board
[2016] TASSC 15
•22 March 2016
[2016] TASSC 15
COURT: SUPREME COURT OF TASMANIA
CITATION: Wood v The Retirement Benefits Fund Board [2016] TASSC 15
PARTIES: WOOD, Helen Marie
v
THE RETIREMENT BENEFITS FUND BOARD
FILE NO: 439/2015
DELIVERED ON: 22 March 2016
DELIVERED AT: Hobart
HEARING DATE: 11 March 2016
JUDGMENT OF: Heerey AJ
CATCHWORDS:
Superannuation – Benefits – Matters affecting entitlement to and payment of – Other matters – Membership of contributory scheme – "Employee" – "Become a member" – "Undertaking" – "Ceases to be an employee" – Whether resignation as a magistrate for the purpose of appointment as a judge disturbed membership of contributory scheme.
Words and Phrases – "Employee" – "Become a member" – "Undertaking" – "Ceases to be an employee".
Magistrates Court Act 1987 (Tas), s 10(3).
Retirement Benefits Act 1993 (Tas).
Retirement Benefits Regulations 2005 (Tas), regs 3 and 34(3).
Supreme Court Act 1887 (Tas), s 8(3).
Aust Dig Superannuation [1028]
REPRESENTATION:
Counsel:
Plaintiff: S B McElwaine SC
Defendant: L Sealy SC and R Webster
Solicitors:
Plaintiff: Shaun McElwaine + Associates
Defendant: Dobson Mitchell & Allport
Judgment Number: [2016] TASSC 15
Number of paragraphs: 28
Serial No 15/2016
File No 439/2015
HELEN MARIE WOOD v THE RETIREMENT BENEFITS FUND BOARD
REASONS FOR JUDGMENT HEEREY AJ
22 March 2016
On 8 November 2009 the plaintiff resigned her office as a magistrate. The resignation was in contemplation of her appointment as a judge of the Supreme Court of Tasmania, which in due course occurred on the following day, 9 November.
While a magistrate, the plaintiff was a member of the contributory superannuation scheme under the Retirement Benefits Act 1993. Generally speaking, judges of the Supreme Court appointed on or after 25 April 2000 are members of the accumulation scheme under the Public Sector SuperannuationReform Act 1999.
The contributory scheme provides for defined benefits and is more generous than the accumulation scheme.[1] The issue in this case is whether the plaintiff still remains a member of the contributory scheme, she having acquired that status upon her appointment as a magistrate in 1994.
[1] The plaintiff called consulting actuary Brian Bendzulla to give evidence as to the value of memberships in the two schemes. He was not cross-examined and the defendant formally objected to admission of his evidence. I consider it was admissible, as establishing a basis for the construction argument against interfering with accrued rights. Realistically it cannot be disputed that the accumulation scheme is the less beneficial of the two, indeed that is its raison d'être.
The plaintiff's first submission is that her appointment to the Supreme Court does not affect her status as a member of the contributory scheme. Alternatively, she contends that she is entitled to be a member of both schemes.
Public sector superannuation
At the time of the plaintiff's appointment as a magistrate the Retirement Benefits Act 1993, together with the Retirement Benefits Regulations 1994, made provision only for the contributory scheme. The scheme was to be for "persons employed by the State or State authorities and for the spouses and beneficiaries of those persons".[2] The definition of "employee" was provided in the 1994 Regulations, viz:
"a person employed in any position or capacity under the State Service Act or in any industry or undertaking carried on by or on behalf of the State, other than a person to whom regulation 4 relates."[3]
[2] Retirement Benefits Act 1993 (Tas), s 5, as at 1 February 1997.
[3] Reg 3(1).
Regulation 4 excluded from the definition of "employee" a judge, the Solicitor-General and the Director of Public Prosecutions. Separate legislation provided for superannuation for those office-holders. However, by virtue of s 10(3) of the Magistrates Court Act 1987, a magistrate was deemed to be an employee for the purposes of the Retirement Benefits Act.
In 1999 there was a major change to the public sector superannuation system. Because very large unfunded liabilities were being incurred under the defined benefit contributory scheme, that scheme was replaced by the accumulation scheme. Under this new scheme benefits would only be available insofar as they were funded by employer and employee contributions.
The change was effected by the Public Sector Superannuation Reform Act 1999, which commenced on 15 May 1999. Section 4 of the Act provided that the contributory scheme "does not apply to an employee appointed or engaged on or after the commencement day". Thus the plaintiff, who had been appointed a magistrate in 1994, certainly remained a member of the contributory scheme, at least for the duration of her term as a magistrate.
Judges' superannuation
Under the Judges' Contributory Pensions Act 1968 a judge on retirement after 15 years' service, or disability certified by the Minister, was entitled to a pension of half judicial salary.[4] For the purposes of the Act serving judges were required to contribute 5 per cent of salary.[5]
[4] Section 5.
[5] Section 4.
This scheme was terminated for judges appointed after 1 July 1999 by s 23 of the Superannuation (Parliament, Judiciary and Statutory Legal Officers) ReformAct 1999.
Also by s 77 that Act amended s 8 of the Supreme Court Act 1887. Section 8(3) of the Supreme Court Act, as so amended, relevantly provided that "where a person is appointed as a judge on or after the transfer day [25 April 2000] (a) he or she is not eligible to become a member of the contributory scheme provided by the regulations under the Retirement Benefits Act 1993; and (b) subject to subsection (4), he or she is to be a member of the accumulation scheme". (Subsection (4) gives a judge the right to elect to be a member of a "complying superannuation scheme" that is not the contributory scheme or the accumulation scheme.)
"Become" a member
The natural meaning of "become" in this context directs attention to some point in time on or after the person's appointment as a judge. Thus the expression assumes that the person appointed is not already a member of the contributory scheme. Undoubtedly the plaintiff was a member of the contributory scheme while she was a magistrate. Did she cease to be a member upon her resignation from that office?
Ceasing to be a member
The Retirement Benefits Regulations 2005 regulate the accumulation scheme but also contain relevant provisions dealing with the contributory scheme.
Under the 2005 Regulations, continued membership of the contributory scheme is dependent on the person being a "contributor" which, relevantly for present purposes, means "an employee who is contributing to the contributory scheme by way of member contributions or salary sacrifice contributions".[6] "Employee" is relevantly defined to mean:
"a person appointed or employed in any position or capacity under the State Service Act or in any industry or undertaking carried on by or on behalf of the State …".
[6] Retirement Benefits Regulations 2005, reg 3.
Regulation 34(3) relevantly provides that contributions "cease to be payable on the day on which (a) a contributor ceases to be an employee".
It is not suggested that, as a magistrate, the plaintiff was an "employee" within the common law relationship of master and servant. Central to that relationship is the obligation of the employee to obey the lawful directions of the employer. A magistrate is not obliged to decide cases according to the direction of the government, or anybody else.
However, as a magistrate the plaintiff had duties and obligations. She was the repository of statutory powers. She received a regular salary out of monies appropriated for that purpose by Parliament. She was entitled to hold office until age 72.[7] She was part of the judicial arm of government of the State of Tasmania.
[7] Magistrates Court Act 1987, s 9(4)(a).
Even if it be thought that it is stretching the language to say she was "employed", she was certainly "appointed". (The term "appointed" had been specifically added to the 1994 regulations by the State Service (Consequential and Miscellaneous Amendments)Act 2000.) This expanded definition of "employee" in the 2005 Regulations, compared with that in the 1994 Regulations, probably makes s 10(3) of the Magistrates Court Act redundant.
Further, the term "undertaking" should be read as extending to any activity carried on by the State of Tasmania, including at least the operation of a system of justice to decide disputes between citizen and citizen and between citizen and the State.
The definition of "employee" in the 2005 Regulations extends to a judge, at least in the context of determining continuing rights to membership in the contributory scheme. In Tasmania, the appointment of a magistrate to the Supreme Court is a potentiality of which Parliament, and the regulation makers, must be taken to have been aware. So the general policy of protecting those who have rights in the contributory scheme and continue working in the public sector can be discerned in the language of the legislation and regulations. This is confirmed by the use of the term "become" in s 8 of the Supreme Court Act, discussed above. An appointee to the Supreme Court not a member of the contributory scheme cannot become a member; if already a member, it would follow that membership continues.
Continuity of service
It is pleaded in par 4.1 of the statement of claim, and admitted in the defence, that "on 8 November 2009 the plaintiff resigned her appointment as a Magistrate for the purpose of being appointed as a Judge of the Supreme Court of Tasmania" (emphasis added). This points strongly to a continuity of service in the judicial arm of government.
The common law takes no account of part of a day.[8] So the plaintiff's appointment as a magistrate continued up until midnight on 8 November 2009 and her appointment as a judge commenced immediately on the commencement of 9 November.
[8] Prowse v McIntyre (1963) 111 CLR 264 at 274.
As an analogy by way of illustration, if a sergeant was commissioned as a lieutenant, one would not say there was any cessation of service in the Army, even though there was appointment to a new office. One might say that the sergeant had been promoted, as indeed could be said about the plaintiff's elevation to the Supreme Court.
In a taxation context, Gibbs J said in Reseck v Federal Commissioner ofTaxation[9]:
"In most cases in which a workman ceased his employment on a Friday and commenced employment again with the same employer on the following Monday it would be impossible to say that his employment had ever been terminated."
[9] (1975) 133 CLR 45 at 50.
Mr Sealy SC, who appeared with Mr Webster for the defendant, pointed out that under the Superannuation (Parliament, Judiciary and Statutory Legal Officers) ReformAct 1999 there was express preservation of contributory scheme rights for the Director of Public Prosecutions and the Solicitor-General but not for the Governor or Members of Parliament. So, the argument went, the absence of a specific preservation for someone in the plaintiff's position shows Parliament did not intend preservation to be applicable.
It is a familiar argument that, because Parliament says something about A, B and C, but nothing about D, one can infer an intention about D. No doubt this can often be a useful tool in the interpreter's workshop. But here there is the competing principle that "there is a presumption in all legislation that it is not intended to interfere with vested interests".[10]
[10] Greville v Williams (1906) 4 CLR 694 at 703 per Griffith CJ.
Underlying this complicated accumulation of statutes and regulations are two general purposes. First, for obvious fiscal reasons, the State could no longer afford the contributory scheme. Secondly, those working in the public sector who had arranged their lives in dependence on rights under the contributory scheme should not be disadvantaged. In the case of the plaintiff, a reasonable reading of the language of the relevant provisions can, in my opinion, give effect to the second purpose.
I uphold the plaintiff's claim. There will be an order that the matter be adjourned for submissions as to the form of relief, and costs.
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