FEDERAL COURT OF AUSTRALIA Haematite Proprietary Limited v Ristevski [2002] FCA 408 SUPERANNUATION – appeal from decision of Superannuation Complaints Tribunal –claim for disablement benefit – determination that complainant disabled – failure to consider whether Trustee's decision fair and reasonable. Superannuation (Resolution of Complaints) Act 1993 (Cth) – ss 14, 37 Lykogiannis v Retail Employees Superannuation Pty Ltd (2000) 97 FCR 361 applied National Mutual Life Association of AustralasiavCampbell (2000) 99 FCR 562 distinguished National Mutual Life Association of Australia Ltd v Jevtovic (Sundberg J, 8 May 1997, unreported) applied Adkins v The Health Employees Superannuation Trust Australia Ltd (Heerey J, 15 August 1997, unreported) applied HAEMATITE PROPRIETARY LIMITED as Trustee for the BHP Superannuation Fund v TOME RISTEVSKI V 752 of 2000 GOLDBERG J MELBOURNE 9 APRIL 2002 IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 752 of 2000 On Appeal from the Superannuation Complaints Tribunal BETWEEN: HAEMATITE PROPRIETARY LIMITED as Trustee for the BHP Superannuation Fund Applicant AND: TOME RISTEVSKI Respondent JUDGE: GOLDBERG J DATE OF ORDER: 9 APRIL 2002 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The appeal be allowed. 2. The decision of the Superannuation Complaints Tribunal on 24 August 2000 is set aside. 3. The matter is remitted to the Superannuation Complaints Tribunal for further consideration and determination according to law. 4. The respondent pay the applicant's costs of the application. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 752 of 2000 On Appeal from the Superannuation Complaints Tribunal BETWEEN: HAEMATITE PROPRIETARY LIMITED as Trustee for the BHP Superannuation Fund Applicant AND: TOME RISTEVSKI Respondent JUDGE: GOLDBERG J DATE: 9 APRIL 2002 PLACE: MELBOURNE REASONS FOR JUDGMENT Introduction 1 The applicant, Haematite Pty Ltd ("the Trustee"), appeals from a determination of the Superannuation Complaints Tribunal ("the Tribunal") of 24 August 2000 setting aside the Trustee's decision not to pay the respondent a disability benefit and substituting a decision that the respondent was entitled to be paid a disability benefit. Background 2 The respondent was born on 20 September 1950. On 20 January 1971, he commenced working for The Broken Hill Proprietary Company Limited as a labourer and later worked as plant operator. He joined the BHP Superannuation Fund on 6 July 1976. The respondent injured himself on 30 December 1992 when undertaking heavy lifting and developed bilateral inguinal hernias. In March 1994, he developed pain in his right elbow while screwing a large bolt during the course of his work. On 25 November 1994, he fell backwards against a fence during the course of his employment and injured his back. In 1995, the respondent noticed pain in his left knee which increased when he knelt, squatted or stood. On 12 July 1996, he accepted a voluntary redundancy from The Broken Hill Proprietary Company Limited and finished work that day. The respondent lodged a claim for the payment of a total and permanent disablement benefit on 3 October 1996. 3 The relevant trust deed executed by The Broken Hill Proprietary Company Limited and the Trustee is dated 9 December 1994. The trust deed confirmed the rules pursuant to which the BHP Superannuation Fund was to be administered. The trust deed and the rules were relevantly amended on 16 December 1994, 9 October 1995 and 23 November 1995. Under the rules, the respondent was a member who was entitled to the benefits set out in Pt 10 of Div B of the rules: r A.1.11. The rules provided that the Trustee shall pay a disablement benefit to a member whose services were terminated by the member's employer at a time when, "in the absolute opinion of the Trustee", the member was in a state of, or suffering from, disablement: r 5.2 in Pt 10 of Div B. In making a determination as to the member's disablement, the Trustee could act upon such medical and other evidence as it thought fit, but was required to take into consideration any evidence submitted by, or on behalf of, the member: r 5.1 in Pt 10 of Div B. 4 Rule A.2.1 defined "Disablement" as meaning: "physical or mental disablement caused through illness infirmity or accident to a degree which the Trustee in its absolute discretion, after obtaining the advice of a registered medical practitioner, considers likely to render the Member permanently incapable of obtaining or continuing suitable employment as determined by the Trustee having regard to the Member's qualifications training and experience." 5 The Trustee reviewed the respondent's claim on 16 October 1996, 14 May 1997, 16 February 1998 and 25 June 1999 and determined that the respondent did not qualify for a disablement benefit at the date the respondent's employment terminated on 12 July 1996 for the following reasons: · The respondent was not suffering from a condition that precluded him from performing the functions of his position; · His incapacity was not likely to be permanent; · The incapacity was not likely to render the respondent incapable of obtaining or continuing in suitable employment; · Such a condition was not likely to render the respondent permanently incapable of performing suitable employment with reference to the respondent's training, education and experience. Medical Evidence before the Tribunal 6 The following medical evidence was before the Tribunal: · Report from Dr BW, occupational physician, dated 20 January 1994. Dr BW provided a work certificate after the respondent's operations for repair of bilateral hernias. The certificate stated, inter alia, that the respondent was fit for selected duties and that his restrictions were permanent. · Report from Dr BO, treating – general practitioner, dated 21 August 1996. The report stated that the respondent's physical limitations were significant. · Report from Dr BO dated 13 January 1998. The report stated that the respondent suffered from long term back pain which was constant and was not responding well to symptomatic treatment. In Dr BO's opinion the respondent was permanently disabled and could not find suitable work or obtain new skills. · Report from Dr D, a qualified medical practitioner and a Fellow of the Australian Faculty of Occupational Medicine, dated 30 August 1996. He stated that the hernias had been well repaired, the back problem was vague lumbosacral pain in which no specific aetiology was apparent and the range of movement and strength were good. He said that in a working environment, it may be necessary for there to be a restriction on frequent, heavy lifting, but there would be no other restriction on the duties the respondent was trained to do. In his opinion, the respondent was not disabled and did not have any medical or surgical conditions which would prevent him working. · Report of Dr P, surgeon, dated 20 December 1996. His opinion was that the respondent appeared to be suffering from some genuine discomfort and disability in the right elbow, continuing lumber strain, pain in the left groin, retro‑patellar chondritis in the left knee, and some continuing disability in his left leg resulting from the problem in the left groin and as a result of which there was a permanent loss of efficient use of the left leg at and above the knee. He expressed the opinion that the respondent was only fit for light duties which did not place strains on the various sites where he was complaining of pain and that it appeared that his current complaints would continue indefinitely. · Report of Dr M, rehabilitation and musculo‑skeletal specialist, dated 15 April 1997. Dr M initially assessed the respondent on 12 December 1996. Dr M identified the respondent's problems as muscular strain of the left sacroiliac region, chronic pain syndrome and probable disc lesion. Dr M saw the respondent again on 21 December 1996, 16 January 1997 and 18 February 1997 and on 10 April 1997. Dr M stated in his report of 15 April 1997 that the respondent had pain in the right elbow, the lumbosacral region and the left knee. Dr M concluded that the respondent would not be capable of re‑entering the work force as a labourer in the production section. Legislation 7 Under s 14(2) of the Superannuation (Resolution of Complaints) Act 1993 (Cth) ("the Act") a person may make a complaint to the Tribunal that a decision of a trustee in relation to a member of a regulated superannuation fund was unfair or unreasonable. Section 37 of the Act, which sets out the Tribunal's powers in relation to complaints under s 14 of the Act, provides, relevantly: "(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). … (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 or 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. … (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) so far as concerns a complaint regarding the payment of a death benefit – any person (other than the complainant, a trustee, insurer or decision‑maker) who: (i) has become a party to the complaint; and (ii) has an interest in the death benefit or claims to be, or to be entitled to benefits through, a person having an interest in the death benefit; was fair and reasonable in the circumstances." Tribunal's decision 8 The Tribunal set out the relevant background to the complaint, the medical reports, the submissions of the Trustee and the respondent, in particular in relation to the medical reports, and the relevant education, training and experience of the respondent. The Tribunal's reasons, then continued under a heading "Tribunal's consideration". In this section of the reasons the Tribunal set out its consideration. First, the Tribunal considered the injuries which the respondent had suffered and noted that he had received a workers' compensation pay‑out of $98,000 in respect of the injuries he received in the workplace. The Tribunal noted that this confirmed that the respondent had suffered injuries, but said that, this decision was not relevant to the determination of the permanency of any injury found to exist. The Tribunal considered the permanency of the respondent's injuries. After referring briefly to the principal evidence of each of the doctors, the Tribunal stated that "In summary, all doctors considered part or all of the Complainant's disabilities to be permanent". 9 The Tribunal examined the medical evidence with respect to whether it supported the respondent's claim that he satisfied the definition of disablement in Rule A.2.1. The Tribunal found that only one of the four medical opinions before the Tribunal, that of Dr D, stated that there was no medical or surgical conditions which would prevent the respondent from working in a capacity requiring heavy manual work. As the Tribunal had reservations about the completeness of this medical opinion, it preferred the opinions of the other three doctors. The Tribunal then said that it was satisfied that the suggestion of Dr P that the respondent may be fit for modified light duties was impracticable as it was difficult to conceive of which light duties would not place strain on some part of the respondent's body which experienced pain and, further, that the respondent had no qualifications, training or experience in undertaking light work, except for that which he was doing shortly before he accepted a voluntary retirement package from his employer. 10 The Tribunal considered relevant the evidence provided by the respondent in the Registration of Complaint Form that he took a voluntary redundancy because he "… was no longer able to perform … [his] ordinary work functions effectively, …[he] was offered a redundancy package so … [he] would cease work. Due to … [his] condition, … [he] accepted the package". The Tribunal noted that in his written submission, the respondent also stated that he was "… placed on light duties as indicated by certificates and claim forms for a period of time before the termination of his employment". The Tribunal said that this was conceded by the Trustee in its submission where it stated that "the Trustee is of the opinion that, … his several injuries may have prevented him from undertaking some labouring activities…". 11 The Tribunal concluded its reasoning under the heading "Tribunal's consideration" in the following terms: "Taking all the evidence into consideration, the Tribunal is satisfied that the Complainant meets the definition of Disabled as set out in the Trust Deed and that in essence he was disabled when his services were terminated." The final section of the Tribunal's determination was under the heading "Determination of the Tribunal". It stated: "Section 37(4) of the Complaints Act provides that the Tribunal may only exercise its determination‑making power for purposes of placing a Complainant as nearly as is practicable to redress any unfairness or unreasonableness (or both) that the Tribunal determines exists in relation to the Trustee's decision. In the face of all of the evidence supporting the claim, it is unfair and unreasonable for the Trustee to deny the claim. Accordingly, pursuant to the provisions of s 37(3) of the Complaints Act the decision under review is set aside and a decision substituted that the Complainant is entitled to be paid the disability benefit." The Tribunal determined that interest should be paid on the claim from the date the Trustee received the claim. The review 12 The Trustee submitted that the Tribunal failed to consider and decide whether the decision under review, in its operation, was fair and reasonable as required pursuant to s 37(6) of the Act, rather the Tribunal substituted its view of the evidence and the law for that of the Trustee. The Trustee said that a consideration of the structure and content of the Tribunal's decision revealed that the Tribunal did not have any regard to s 37(6) of the Act until the second last paragraph of the decision in which the Tribunal stated "In the face of all of the evidence supporting the claim, it is unfair and unreasonable for the Trustee to deny the claim". The Tribunal's reasons showed that it was primarily concerned with determining whether the evidence enabled it to be satisfied that the respondent was suffering from a disablement within the meaning of the rules annexed to the trust deed. 13 The respondent accepted that the Tribunal was obliged to consider whether or not the decision of the Trustee was fair and reasonable in its operation in all the circumstances rather than whether it was of the opinion that the Trustee's decision was correct, but submitted that the Tribunal reviewed the medical and factual evidence as a means of determining whether the Trustee's decision was fair and reasonable. The Tribunal, in substance, considered whether the Trustee's decision was fair and reasonable, although it did not specifically state this until towards the end of its decision. The respondent said that, in substance, the Tribunal's consideration of whether or not the respondent satisfied the definition of disablement was central to the requirement under s 37(6) of the Act. The absence of discussion of the meaning of the concepts of "fairness" and "reasonableness" did not lead to a conclusion that the Tribunal had no regard to the meaning or content of the concepts used in s 37(6), or that it did not properly understand its function. 14 The manner in which the Tribunal should approach its review of a trustee's decision under the Act and, in particular, its obligations under s 37(6) of the Act have been considered by the Court on a number of occasions: National Mutual Life Association of Australia v Campbell (2000) 99 FCR 562 at 566‑571; Briffa v Hay (Merkel J, 20 June 1997, unreported) at 12‑13; Adkins v The Health Employees Superannuation Trust Australia Ltd (Heerey J, 15 August 1997, unreported) at 7‑8; National Mutual Life Association of Australia Ltd v Jevtovic (Sundberg J, 8 May 1997, unreported) at 10‑11. 15 In Lykogiannis v Retail Employees Superannuation Pty Ltd (2000) 97 FCR 361, Mansfield J explained the Tribunal's function on a review of a trustee's decision in the following terms, at 372: "Upon hearing a complaint, the Tribunal must make its own decision. In the course of doing so, it must make findings of fact relevant to its deliberations. The hearing by the Tribunal is a hearing de novo (see in particular the discussion by Merkel J in Oppenhuis at 598‑599 [18]‑[22]. Ultimately, whatever findings the Tribunal must make standing in the shoes of the trustee (see the observations of Merkel J in Briffa and in Oppenhuis) s 37(6) requires the Tribunal to decide whether the decision under review, in its operation, was fair and reasonable in the circumstances. The focus of s 37(6) is upon the consequence or outcome of the decision in its practical operation, rather than upon the process by which the decision under review came to be made." 16 In National Mutual Life Association of Australia v Campbell (supra), the Full Court said at 566: "When exercising its powers under s 37(3), the Tribunal is engaged in a task that results from a complaint that the decision being reviewed is or was unfair or unreasonable, or both. The claimed unfairness or unreasonableness, which was the subject of the complaint, is the central object of the review. The terms of s 37(4) confirm that this is so. The exercise of the s 37(3) power is subject to a number of constraints: · first, the Tribunal must not do anything under s 37(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 trustees is involved, to the terms of the contract (s 37(5)); · secondly, the Tribunal must affirm the decision if it is satisfied that the decision, in its operation in relation to the complainant, was fair and reasonable in the circumstances (s 37(6)); · the Tribunal may only exercise its s 37(3) powers 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 (s 37(4))." The Full Court went on to say at 570: "… the issue under s 37 is not whether the insurer's decision is impeachable under the general law. The issue is whether the s 14(2) complaint has been made out and whether, for the purposes of s 37(6) the Tribunal is satisfied that the decision, in its operation in relation to the respondent, was fair and reasonable in the circumstances. (We note that the present is not a case in which s 37(6)(b) is relevant.) The Tribunal, under s 37(2) stands in the shoes of the insurer subject only to the constraints to which we have earlier referred." 17 The Full Court decided that the Tribunal did not fail to have regard to s 37(6) of the Act. The Full Court said at 571: "It remains to consider the submission that the Tribunal misdirected itself about the task it had to perform. In National Mutual Life Association of Australia Ltd v Jevtovic,Sundberg J concluded that it was clear from the Tribunal's own statement of its understanding of its task and from the process of its reasoning, that it had not asked itself whether the decisions complained of were fair and reasonable in the circumstances (the s 37(6) inquiry) but whether in its opinion the respondent was totally and permanently disabled. Thus, the Tribunal in that case had failed to appreciate the role assigned to it by s 37(6) and had erred in law. In the present case, no such misapprehension is evident from the Tribunal's reasons. A fair reading of the Tribunal's reasons as a whole shows that it was fully aware of the nature of its task. It directed its mind to the task imposed upon it by s 37(6) as well as to its function under s 37(3). There is no basis, in the present circumstances, for saying that it exceeded the limitation imposed upon it by s 37(4)." 18 The circumstances of the present case can be distinguished from Campbell. In Campbell the Full Court noted that the Tribunal stated the issue arising for its determination as being "whether the decisions of the Trustee and insurer were fair and reasonable in all the circumstances in their operation to (the respondent)", and found that the Tribunal's reasons showed that it was fully aware of the nature of its task under s 37(6) of the Act. In the present case, unlike Campbell, the structure of the Tribunal's reasons shows that it failed to direct its attention to s 37(6) of the Act and whether the Trustee's decision was fair and reasonable in the circumstances. Rather, the Tribunal approached its task as being to determine on the evidence whether it was satisfied that the respondent was disabled when his services were terminated. So much appears from the Tribunal's finding: "Taking all the evidence into consideration, the Tribunal is satisfied that the Complainant meets the definition of Disabled as set out in the Trust Deed and that in essence he was disabled when his services were terminated." 19 This was not the issue which the Tribunal was to determine. It did not state the issue for determination in terms of determining whether the Trustee's decision to refuse the claim was fair and reasonable. As described earlier in these reasons, the whole structure and chain of reasoning was aimed at determining whether the evidence was such as to satisfy the Tribunal that the respondent came within the definition of "Disablement" in the trust deed. The Tribunal undertook this task without any consideration that it should be working and reasoning within the framework of asking and determining whether the Trustee's decision was fair and reasonable. The Tribunal's finding (in the previous paragraph) was in substance that the Trustee's decision was not correct – a different finding from one that the decision was not fair and reasonable. 20 The Tribunal did not refer to s 37(6) before reaching this conclusion and while the Tribunal thereafter referred to the terms "unfair" and "unreasonable" in its determination, towards the end of its reasons, this reference was in the context of the requirement under s 37(4) of the Act and is expressed, in effect, as an afterthought. The Tribunal did not properly address whether or not it was satisfied that the Trustee's decision was fair and reasonable before reaching the conclusion which dictated the outcome of its review of the Trustee's decision. It is clear from the structure and process of the Tribunal's reasoning that its inquiry was concerned with whether, in its opinion, the respondent was disabled, and not with the requirement under s 37(6) of the Act. 21 The present case is not unlike the appeals from decisions of the Tribunal in National Mutual Life Association of Australia Ltd v Jevtovic (supra) and Adkins v The Health Employees Superannuation Trust Australia Ltd (supra). In Jevtovic the Tribunal initially identified the correct issue before it but then showed that it misunderstood how it was to resolve that issue. Sunberg J explained the error in the process of reasoning in the following passage, at 10: "In my view the Tribunal did not address itself to the question posed by sub‑s(6). It initially asked itself the right question – 'whether or not the decision of the Trustee was fair and reasonable in its operation to' the respondent. But then the Tribunal showed that it misunderstood what that question involved it doing, by saying that this 'will involve the Tribunal considering whether the evidence before it enables the Tribunal to conclude that [the respondent] satisfies the requirements to be classified as totally and permanently disabled…'. The emphasis is mine. The sub‑s(6) inquiry is not whether the Tribunal is of the opinion that the respondent is totally and permanently disabled, but whether it is satisfied that the trustee's and the insurer's decisions that he was not so disabled were fair and reasonable in the circumstances. The Tribunal repeated what in my view is the erroneous understanding of its task when it said 'the role of a tribunal is to decide whether or not the correct or preferable decision has been made'." 22 In Adkins (supra) the applicant claimed that the Tribunal determined whether in its opinion the applicant was totally and permanently disabled, rather than determining whether the decision of the Trustee was fair and reasonable in the circumstances. Heerey J agreed with Sunberg J's explanation of the legislation in Jevtovic and continued at 7‑8: "While conscious of course of the warning in Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 against over‑zealous or pedantic scrutiny of the reasons of administrative tribunals, I am satisfied that a fair reading of the Tribunal's reasons shows that it misunderstood its task. This is made particularly clear by the passages at the outset and in the second last paragraph where it defines the issue which it saw as being before it. But the issue in truth was not whether the applicant was entitled to be paid a total and permanent disablement benefit, or whether she was unable to return to any occupation for which she was reasonably qualified by education, training or experience. The issue was, in terms of s 37(6), whether the decision appealed against was 'fair and reasonable in the circumstances'." 23 I am satisfied that, on a fair reading of the Tribunal's decision, the Tribunal misunderstood its task. It fell into error by failing to identify and address the issue required by s 37(6) of the Act, namely whether the Trustee's decision was fair and reasonable. The whole thrust of the Tribunal's consideration of, and reasoning, on the matter before it was directed to whether it was satisfied, on the evidence before it, that the respondent came within the definition of "Disablement" and was so disabled when his services were terminated. That was not the task required of the Tribunal under s 37(6) of the Act. 24 It is therefore not necessary to consider the Trustee's submission that the Tribunal misapprehended or ignored the evidence concerning the respondent's ability and capacity to perform light duties, as I have decided this appeal on the ground that the Tribunal did not undertake a s 37(6) inquiry, but rather misunderstood the question involved by considering whether, in its view, the respondent satisfied the definition in the trust deed of "Disablement". 25 The appeal will, therefore, be allowed. The decision of the Tribunal should be set aside and the matter remitted to the Tribunal, differently constituted, for re‑consideration according to law. The respondent should pay the Trustee's costs of the appeal. I certify that the preceding twenty‑five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg. Associate: Dated: 9 April 2002 Counsel for the Applicant: T J McLean Solicitor for the Applicant: Allens Arthur Robinson Counsel for the Respondent: N Canosa Solicitor for the Respondent: Verekers Date of Hearing: 14 September 2001 Date of Judgment: 9 April 2002