IN THE FEDERAL COURT OF AUSTRALIA JUDGMENT No. hes wh. NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 856 of 1996 GENERAL DIVISION ) Between: THOMAS FISCHER Applicant And: PUBLIC SERVICE SUPERANNUATION BOARD Respondent REASONS _ FOR JUDGMENT EINFELD J SYDNEY 5 DECEMBER 1996 Thomas Fischer of Bellevue Hill appeals to this Court from a decision of the Superannuation Complaints Tribunal (the Tribunal) given on 22 October 1996 in Melbourne, refusing his application to have paid to him the balance of superannuation benefits payable under and in accordance with the Superannuation Act 1990. Mr Fischer was born on 21 November 1946 and joined the public sector superannuation scheme (the scheme) on 8 February 1993 when he was employed in the public service. He resigned on 15 June 1994 at the age of 47 and shortly thereafter applied for a refund of his contributions to the scheme as well as to any other benefits that he might be entitled to in that connection. His own contributions were paid to him in due course and he was advised that a second component of his benefit, generally called the productivity component, could only be released, amongst other reasons, on the grounds of severe financial hardship, if the Insurance and Superannuation Commission gave its approval. _ 2 - Because Mr Fischer was short of money on which to live and keep his children, this approval was given in July 1994 and Mr Fischer was subsequently paid the productivity component of his superannuation as well. By letter dated 21 November 1994, he thereafter sought payment of the employer's contributions, or what is described as the preserved benefit, on the grounds of his extreme hardship. This payment was not made as the trustees of the scheme considered that this component of his benefit was only entitled to be paid early in a small selection of restricted circumstances, none of which applied to Mr Fischer. On 4 October 1995, he applied to the respondent, the Public Service Superannuation Board (the board), to have the trustees' decision reconsidered. The case was referred to a reconsideration advisory committee which on 30 October 1995 recommended to the board that it affirm the earlier decision. Again the basis was that the rules of the scheme did not permit the early payment of the employer component of superannuation except in the limited circumstances to which I have referred which did not apply to Mr Fischer. It appears that Mr Fischer was provided with this recommendation and an opportunity to comment on it. In the course of his comment, he drew attention to rule 12.2.1 of the rules applicable to the scheme and asked the board to grant his application under that rule. However, after considering the matter, the board decided on 7 December 1995 to affirm the earlier decision not to make the payment. Its reasons were that it was simply not -3- permitted to release these funds by the rules which applied to the payment of public sector superannuation. The appeal to the Tribunal was limited to the assertion that the board's view of rule 12.2.1 was erroneous and precisely the same point is taken in this appeal. Mr Fischer, who was unrepresented before me, did not contest the conclusion that he does not otherwise qualify for the early payment of this part of his superannuation entitlements. The Tribunal decided that despite his severe financial need Mr Fischer is unable to obtain early payment of the employer contributions until he attains the age of 55 years. Rule 12.2.1 says as follows: If in a particular case the Board is of the opinion that (a) the operation of the rules would otherwise produce a result that is not in the spirit of the rules, and (b) the circumstances of the case are unusual or exceptional, the Board may, having regard to the principles in the rules and the need for equity between members, including preserved benefit members, vary any of the components or factors applicable in the determination of benefits, whether or not any benefit is immediately payable. It is worth pointing out that the employer contributions to the scheme are unfunded in the sense that they are not paid into a fund as the obligation to pay accrues, but the money is held in Consolidated Revenue and paid to the beneficiaries at the time they qualify to finally leave the scheme. Three issues arose before the Tribunal in connection with this rule. The first is whether the payment to Mr Fischer: - 4 «= sess. would produce a result that is not in the spirit of the rules, second, whether the circumstances of the case are unusual or exceptional, and third, whether ordering the early payment of the employer contributions could be said to be, within the words in rule 12.2.1, a variation of one or more: s+... Of the components or factors applicable in the determination of benefits, whether or not any benefit is immediately payable. Because the Tribunal found that the early payment of the employer contributions was not such a variation, it was not necessary for it to determine whether if the payment was not made the operation of the rules would produce a result that was not in the spirit of the rules. Although it also did not need to find whether the circumstances of the case were unusual or exceptional, the Tribunal did express the opinion that Mr Fischer came within that requirement. I agree with that view. It has in any case not been challenged, and there is no issue in this case on that ground. Likewise the Tribunal did not need to decide whether the advanced payment of the employer contributions to Mr Fischer would somehow be inequitable to other scheme members. As the amount involved here was only around $3,000 it is difficult to see how anyone would be disadvantaged by its expeditious payment. -5- The Tribunal held that the power of variation given by rule 12.2.1 was in substance limited to the calculation of the amount of the benefits and not the date of payment. As it seems to me, the context of the rule is such that the board's power is only to increase the benefits payable. In other words, in an exceptional case and provided that if there was no variation the Operation of the rules would produce a result not in the spirit of the rules, and would not be inequitable to other members of the scheme, the board has the power to increase the benefits payable to a particular person. That power exists whether or not any benefit or any part of a benefit was payable at the time when the variation was made or sought, or was payable at some time later. The Tribunal held that rule 12.2.1 does not allow the trustees to release unfunded preserved benefits on the grounds of financial hardship, and that they are not permitted by the terms of the Superannuation (Resolution of Complaints) Act 1993 to make a determination which would be contrary to the governing rules of this particular fund. Accordingly, the Tribunal affirmed the decision of the board and of the trustees. This has the result of postponing for another five years or thereabouts Mr Fischer's receipt of these funds. In the meantime the moneys concerned remain both preserved and static except for the accretion of sums reflecting the consumer price index over the intervening period obviously to preserve the value of the money until it is paid. The submission made by Mr Fischer -- and may I say that he made his submissions both in writing and orally with considerable -6- skill and felicity -- was that the components or factors applicable in the determination of benefits include components or factors which affect the date of payment of the benefit. He argued that the words at the end of the clause, namely: esee. whether or not any benefit is immediately payable give force to that submission and make it the most appropriate or likely construction to be given to the clause. As might be expected, the board submitted to the Court that the decision of the Tribunal was correct. I agree with the submission made on behalf of the board that what the rule is talking about is components or factors which are applicable in the determination of all benefits covered by the fund including, no doubt, all components of pensions and superannuation payments. However, the rule commences with the words: If in a particular case ..... That means that what is required is to consider the particular case of the particular applicant and the particular benefit or superannuation payment under discussion. -7J- Prior to the hearing and during the course of argument I had the opportunity of examining the applicable components or factors in the determination of the employer contributions in this particular case. The rules reveal that the fixation or calculation of the amount of employer benefits includes a multiplier of the amount of (or of an amount which refers to) the salary of the member of the scheme during the term of employment. Clearly if this multiplier were increased in any particular case so as to increase the amount of the superannuation benefit, there would be an immediate financial advantage to the particular member or former member of the scheme, but it would say nothing about the time when the payment was due to be made. Indeed, in all the factors which go to make up the determination of benefits, there is no element of time to take into consideration except the period during which the employee was employed in the public service and contributing to the scheme. When that period finished, so did the calculation of the amount which the employer was bound to contribute other than, as I have said, the addition of the consumer price index annually so as to preserve the value of the amount payable. This is not a consideration of whether a discretion has been exercised in a kindly or niggardly way. It is a question of construction of whether the board, and the Tribunal standing in its place, may by reason of its power to vary the components or factors applicable in the determination of benefits, advance the time at which the benefit is paid. It seems to me clear that the words "the determination of benefits" mean, or at least include, - 8 - the calculation of the amount concerned. The question that has to be decided here is whether it also includes the time of payment. The matter is not particularly simple but it seems to me that in context, including the words "whether or not any benefit is immediately payable" at the end of rule 12.2.1, "determination of benefits" does not include fixing the time for payment. What the rule says is that the board can increase the amount to be paid even if the amount is not payable for some considerable time, just as it can do so if the benefit is payable immediately. In respect of somebody who is entitled to an employer contribution to his superannuation, as in this particular case, the board's power is to increase the entitlement of the member or former member either at the time the benefit is payable or at some time prior to the time when the benefit is payable. If the words "determination of benefits" included time of payment of benefits, the final words of the clause would seem to me to have little meaning because they would give the power to the board to vary the time of payment both at the time when the benefit was payable or in advance of the time it was payable. The first half of that alternative would make no sense at all. The board would hardly be advancing the time of payment if it was considering the matter at the time when the benefit was otherwise going to be payable. Thus it seems to me that "determination of benefits" cannot mean the time of payment but must mean only the calculation or fixing of the amount. -9 - In view of the fact that the amount here is of the order of only $3000, this result seems unfortunate. Superannuation is generally intended to make it possible for people in the community to provide for their own retirement so as to avoid drawing on publicly funded pensions. $3000 would hardly fund a comfortable retirement for Mr Fischer. In fact the refusal to advance his payment would produce a result that is not in the spirit of the rules because the spirit of the rules, that is the object of the scheme, is to lessen or remove members' call on other public funds in their retirement. $3,000 would seem to me to be neither here nor there in that connection. Hence, I would be of the view, if it were relevant, that to allow the rules to prevent the advance of this payment would produce a result that was not in the spirit of the rules. There is another part of rule 12.2.1 which needs to be considered viz. that in making its decision, the board must have regard to the principles of the rules and the need for equity between members. Once again, without going into detail, it would seem to me that this particular case would not offend either of those criteria. But on the question of whether the board has the power to vary the time of payment, I must conclude, with some degree of regret, in the negative. The decision of the Tribunal must be upheld and this appeal dismissed. | certify that this and the ciant preceding pages are a true' Cops of the Reasons for Judgment' here)n' of bi Justice Elnfeld Dated: YN. 4 OF