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(December-2001) The Tribunal’s role re-examined ... again
For a body which was established to provide a simple and low-cost way of resolving disputes between super funds and their members, the Superannuation Complaints Tribunal (SCT) has had to travel a difficult road, made more so by an array of confusing and contradictory road signs put up by statutory draftsmen and the courts.
It appears that we are still some way from resolving some basic issues concerning how the SCT should go about its business of determining disputes between members and funds.
It is noteworthy that, when a SCT decision is appealed to the Federal Court, the court has sometimes reversed the SCT’s decision, not because the SCT got the merits of the case wrong, but because, in the court’s view, the SCT approached its task incorrectly, or misunderstood its very function.
That this is still happening, that members of the court still feel it necessary to give directions to the SCT about what it can and cannot do, is a little disturbing. And it is not necessarily the SCT’s fault. Judges have gone this way and that, and attempts to reduce confusion by patching up the statute (the Superannuation (Resolution of Complaints) Act) seem only to have produced further confusion. It is an object lesson in how an apparently simply worded law can give rise to all manner of interpretational problems.
A very recent decision by the Federal Court is a good example of this process. The case is REST v Crocker, a decision by Justice Allsop handed down on September 20, 2001. The actual dispute and decision in this case turned very much on the detailed facts about the fund’s provision of death and TPD benefits, the insurance policy and the member’s medical condition, and there is little point describing these things in detail. It is enough to say that it was a dispute about whether the member had death cover only (as the trustee and insurer decided), or both death and TPD cover (as the member claimed).
The SCT decided that the decision of the trustee to deny her claim for a TPD benefit was unfair and unreasonable, and remitted the matter to the trustee and insurer for reconsideration on the basis that the member did have TPD cover. The SCT went on to say that, if the TPD claim were to be approved, the trustee should also pay an extra amount to “remedy the unfairness and unreasonableness” arising from the trustee’s supposed misrepresentation about the member’s entitlement to an extra unit of TPD cover.
On appeal, the Federal Court reversed the SCT’s decision, and sent it back to be reconsidered and determined again. The court decided that, on the facts of the case, the member was not and never had been entitled to TPD cover, and this settled the matter for both trustee and insurer.
The wider significance of this case lies in the court’s analysis of the SCT’s functions, in the light of the terms of section 37 of the Resolution of Complaints Act.
In the first place, the court said that it is not the SCT’s task to determine the legal rights and obligations of the parties. Rather, its task is confined to the role given to it by the Act. That is, in a given case, the task of the SCT is to review the decisions of the trustee and insurer, if the insurer is joined as a party, as to whether they were (or either was) unfair or unreasonable and to make a determination under section 37(3) in the light of that consideration. In the light of section 37(5) (which says the SCT cannot do anything that would be contrary to law, or to the trust deed or to the insurance policy), it is the decision of the trustee, recognising its obligation to act in conformity with the trust deed, and the decision of the insurer, recognising its obligation (and entitlement) to act in conformity with the terms of the policy, which must be reviewed for unfairness or unreasonableness. The unfairness or unreasonableness must be of the decision under, and in conformity with, the governing rules or the terms of the policy. It is not some other perceived (rightly or wrongly) unfairness or unreasonableness in the conduct of the fund.
Sometimes, the trustee’s decision will be both in conformity with, and required by, the trust deed or policy, in which case it cannot be unfair or unreasonable. In other cases, a decision may be in conformity with the trust deed or policy, but not required by either, in the sense that there is room for the trustee (or insurer) to reach different decisions, for instance, involving weighing competing expert or lay opinion about a state of affairs. In these cases, the SCT may find elements of the decision to be unfair and unreasonable and may substitute its own view of the merits of the case.
Finally, if the SCT finds that the decision is contrary to the governing rules or the terms of the policy, it may well be an easy step to conclude that it is unfair or unreasonable.
But whatever happens, the SCT’s task is not to engage in ascertaining generally the rights of the parties, nor is it to engage in some form of judicial review of the decision of the trustee or insurer.
— Brian Egan is a freelance commentator on superannuation, tax and corporations law matters, and a principal of Sirius Information Services.
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