Ashmore v Commissioner for Superannuation

The factual and legislative background 2 The decisions to which these proceedings relate concern the steps that may be taken by a person to preserve benefits under the superannuation scheme created by the Superannuation Act for, relevantly, members of the Australian (or Commonwealth) Public Service when the person ceases to be a member of the Service. Of central importance is the time in which those steps are to be taken and further steps taken to review decisions made under the Superannuation Act. 3 Part IX of the Superannuation Act concerns the preservation of rights of certain eligible employees and Division 3 of that Part concerns the preservation of rights of people who cease to be eligible employees. A person who ceases to be an eligible employee may make an election under s 137 by giving written notice of the election to the respondent no later than 21 days after the person ceases to be an eligible employee. The election is that Division 3 apply. However s 157 enables the respondent to recognize an election made by a person after the expiration of the specified period. In addition, s 154 provides a mechanism for the review of a reviewable decision of the respondent. The terms of the section are set out later. The review is to be sought by notice in writing given within the period of 30 days after the day on which the decision first comes to the notice of the person affected by the decision: see s 154(2). However s 154(2) also provides that the respondent may allow a further period (beyond the 30 days) to give notice seeking a review. If a notice is given conformable with these provisions the respondent is obliged to reconsider the decision in question and confirm, revoke or vary the decision: see s 154(4). Any decision which is confirmed or varied can, itself, be reviewed, on application, by the Tribunal: see s 154(6). 4 These provisions became relevant to the applicant in the following circumstances. In 1968, the applicant commenced employment in the Commonwealth Public Service. On 1 July 1976, when the Superannuation Act commenced operation, she became a member of the Commonwealth Superannuation Scheme. In April 1988, she was offered employment in the private sector. She accepted this offer and resigned from the Commonwealth Public Service with effect from 1 June 1988. On 19 July 1988, she applied for a refund of her contributions to the Commonwealth Superannuation Scheme by signing a "Form S2R". On 8 August 1988, an amount of $30,220 (representing a refund of her contributions and interest) was paid into an approved deposit fund nominated by the applicant. 5 On 28 May 1993, the applicant wrote to the respondent "to seek consideration of reinstatement of my contributions to the Australian Government Superannuation Scheme". This was almost five years after the applicant ceased to be an eligible employee. The letter described the circumstances in which the applicant had applied to roll-over her contributions into another fund. She stated that at that time she had believed her only options were to cash in or roll-over her contributions, and that she had only recently been made aware that she had the opportunity to preserve them. On 6 July 1993, the respondent wrote to the applicant stating: "Your letter is being treated as a late election under subsection 137(1) of the Superannuation Act 1976 (the Act); however, for the election to be accepted, and for the preservation provisions of the legislation to apply to you, a delegate of the Commissioner for Superannuation must formally accept the election under subsection 157(1) of the Act." 6 On 23 March 1994, a delegate of the respondent decided, under s 157(1) of the Superannuation Act, not to recognise the late election under s 137(1). That decision read: "I, George Patrick HAYES, … am not satisfied that in all the circumstances of the case it is desirable that the election under subsection 137(1) made by Ms Ashmore on 28 May 1993 should be recognised." 7 On 24 March 1994, the respondent wrote to the applicant notifying her of the decision and informing her of her right to request, in writing within 30 days of receipt of the decision, that the decision be reconsidered. 8 On 13 December 1996, the respondent received an undated letter from the applicant requesting "an extension of time and reconsideration of [the late election decision]." This was over two and a half years after notification of the decision denying late election. The letter further stated, "In particular, I request that I be granted preservation of my superannuation benefits previously rolled-over from the Commonwealth Superannuation Scheme ("CSS") in June 1988." 9 On 18 December 1996, the respondent wrote to the applicant stating: "As you are aware, under subsection 154(2) of the Act, a request for reconsideration of a decision should normally be made within 30 days of the decision first coming to the notice of the person affected by the decision or within such further period as the Commissioner allows. It will therefore be necessary for an extension of time decision to be taken. When that decision has been taken, I will contact you again." 10 On 19 February 1997 a delegate of the respondent decided not to allow the applicant an extension of time to request reconsideration of the late election decision. That decision read: "I, Ronald Charles WHITHEAR, … do not allow Carolyn Margaret ASHMORE a further period of time until 13 December 1996 in which to request reconsideration of the decision of a delegate of the Commissioner taken on 23 March 1994 pursuant to subsection 157(1) of the [Superannuation Act]." 11 On 12 March 1997 the applicant requested that the respondent review the decision not to extend time, and on 23 April 1999 another delegate of the respondent confirmed that decision. This decision was in the following terms: "I, Hugh Alan MAJOR, delegate of the Commissioner for Superannuation (the Commissioner), under subsection 154(4) of the Superannuation Act 1976 (the Act), CONFIRM the decision taken by another delegate on 19 February 1997 under subsection 154(2) of the Act not to allow Ms Ashmore an extension of time until 13 December 1996 in which to request reconsideration of the decision which was made on 23 March 1994 in accordance with subsection 157(1) of the Act." 12 On 14 May 1999, the applicant made her application to the Tribunal. The application sought review of the decision of 23 April 1999. The application was first heard by a Senior Member on 13 December 1999. Evidence was taken from the applicant and a Dr Skapinker, documents were tendered, and submissions were made. However, s 154(7) of the Superannuation Act required the Tribunal to be constituted by three members, and after the conclusion of the hearing the Senior Member contacted the parties and advised them that the Tribunal had not been properly constituted. At a telephone directions hearing on 16 December 1999, the Senior Member proposed the application be determined by a properly constituted Tribunal on the basis of the transcript of evidence from 13 December 1999. I return later to consider in more detail what was said at the directions hearing and the applicant's response to the Senior Member's proposal. The Tribunal, constituted by three members, held a further hearing on 21 February 2000 at which the transcript of the earlier hearing was tendered, questions were put to the respondent's counsel, and additional submissions were made by both parties. 13 On 3 March 2000, the Tribunal affirmed "the decision under review".

The jurisdiction of the Tribunal 14 It is convenient to deal first with the cross-appeal as it concerns the jurisdiction of the Tribunal. 15 The Tribunal's reasons reveal that the Tribunal reviewed and affirmed both the original late election decision and the original extension of time decision. Although pars 1 and 3 of the Tribunal's reasons identify the original extension of time decision as the decision of which review was being sought, the Tribunal went on to describe, in par 5, what it saw as the scope of the issues before the Tribunal, as follows: "The prior ruling that, notwithstanding that the delegate had rejected the Applicant's claim on the basis of it being out of time, the matter of entitlement upon the merits of the application was before the Tribunal is confirmed. The reviewable decision had been considered by the delegate and confirmed. The decision in Lees v Comcare [1999] FCA 753, cited by the Respondent, is based upon the particular provisions of the Safety, Rehabilitation and Compensation Act 1988." 16 The words "prior ruling" refer to a ruling of the Senior Member made at the hearing on 13 December 1999 that he had "jurisdiction in this matter to consider the substantive issue", namely whether the applicant's late election should be recognised by the respondent. It appears from the transcript of that hearing that the Senior Member took into account that the delegate of the respondent, in his decision of 23 April 1999, canvassed the merits of the applicant's late election. The Senior Member also stated that the Tribunal "stands in the shoes of the original decision-maker". The Senior Member may be taken to have acted on the basis that, on its face, the decision of 23 April 1999 purported to confirm the original late election decision. 17 It appears to be common ground that the jurisdiction of the Tribunal was established by s 154(6) of the Superannuation Act and s 25 of the AAT Act. Section 25 of the AAT Act relevantly provides: (1) An enactment may provide that applications may be made to the Tribunal: (a) for review of decisions made in the exercise of powers conferred by that enactment; … (4) The Tribunal has power to review any decision in respect of which application is made to it under any enactment. 18 Section 154 of the Superannuation Act relevantly provides: (1) In this section: … 'reviewable decision' means a decision of the Commissioner, or a delegate of the Commissioner, under this Act, … (2) A person affected by a reviewable decision who is dissatisfied with the decision may, by notice in writing given to the Commissioner within the period of 30 days after the day on which the decision first comes to the notice of the person, or within such further period as the Commissioner allows, request the Commissioner to reconsider the decision. … (4) Upon receipt of the request, the Commissioner shall reconsider the decision and may confirm or revoke the decision or vary the decision in such manner as the Commissioner thinks fit. … (6) Applications may be made to the Administrative Appeals Tribunal for review of reviewable decisions that have been confirmed or varied under subsection (4) … 19 However, the parties' submissions diverged on two points. The first point concerned the scope and operation of s 154. 20 The respondent submitted that the original late election decision has not been reconsidered by the respondent under s 154(4) and thus the applicant could not apply for review of that decision to the Tribunal under s 154(6). Accordingly, the Tribunal would not have jurisdiction under s 25(4) of the AAT Act to review that decision. The respondent submitted that s 154 establishes a "particularised review procedure" consisting of a "three-tiered process of decision-making": Comcare v Burton (1998) 157 ALR 522 at 525. Those tiers are, firstly, a primary decision by the respondent, secondly, a reconsideration of that decision by the respondent (s 154(2)) leading to confirmation, revocation or variation of the primary decision (s 154(4)), and thirdly, review of the primary decision by the Tribunal (s 154(6)). It was submitted that to construe s 154 so as to permit the applicant to by-pass the second tier would be to defeat the legislative purpose of s 154: Repatriation Commission v Stafford (1995) 38 ALD 193 at 203. 21 The applicant conceded, correctly, that there is no formal "second tier" decision of the respondent which reconsiders and either confirms, revokes or varies the late election decision. However, it was submitted that, in making the decisions dated 19 February 1997 and 23 April 1999, the respondent's delegates considered the merits of the late election request and concluded that its prospects of acceptance were poor. It was submitted that the legislative purpose of s 154 has thereby been fulfilled. 22 Sub-section 154(6) of the Superannuation Act is plainly an "enactment" of the type contemplated by s 25(1) and (4) of the AAT Act. Accordingly, power is conferred on the Tribunal by s 25(4) to determine applications made under s 154(6). Sub-section 154(6) permits applications to be made to the Tribunal for review of decisions of the respondent "that have been confirmed or varied under subsection (4)" (emphasis added). The late election decision, made on 23 March 1994, was not such a decision. It is true that the delegates of the respondent, in their decisions of 19 February 1997 and 23 April 1999, took into account the merits of the applicant's request for her late election to be recognised. However, that does not mean the delegates reconsidered, confirmed, revoked or varied, under s 154(4), the late election decision. The decisions (set out in pars 10 and 11 above), in terms, deal with the applicant's request for an extension of time, under s 154(2), to request reconsideration of the late election decision. The application to the Tribunal nominated the extension of time decision as the decision of which review was sought (strictly the 19 February 1997 decision, rather than the 23 April 1999 decision, was the "reviewable decision" under s 154(6) - though nothing turns on that in these proceedings). The Tribunal may well have formed the opinion that, in view of the time that had elapsed since the applicant ceased to be an eligible employee, the most practical course was to deal finally with the substantive issue concerning the late election. Nevertheless, the Tribunal was not empowered by s 25 and s 154(6) to do so. There is nothing in s 154 or in any other provision to which the applicant has referred which discloses a legislative intention to confer on the Tribunal a power to review decisions that had not been reconsidered and confirmed or varied under s 154(4). 23 The second point of difference between the parties concerned the effect of s 43(1) of the AAT Act. That subsection relevantly provides: For the purpose of reviewing a decision, the Tribunal may exercise all the powers and discretions that are conferred by any relevant enactment on the person who made the decision … 24 The respondent submitted, in substance, that this did not enlarge the jurisdiction of the Tribunal. The applicant submitted that, notwithstanding that jurisdiction of the Tribunal was defined by ss 25 and 154(6), the delegate of the respondent who made the 23 April 1999 extension of time decision had the power not only to allow the applicant an extension of time in which to request a reconsideration of the late election decision, but also to recognise the applicant's late election. Accordingly, the Tribunal was empowered by s 43(1) to do likewise. 25 The proper construction of s 43(1) was considered by the Full Court in Lees v Comcare (1999) 29 AAR 350 at par 39: "…[I]t is to be noted that the powers of the AAT under s 43(1) of the AAT Act are powers "[f]or the purpose of reviewing" the reviewable decision, not powers that may be exercised at large. Further, the powers and discretions that the AAT may exercise under s 43(1) are the powers and discretions conferred by the Act on the determining authority for the purposes of reconsidering a determination under [s 154(4)] of the [Superannuation Act]. The AAT will not be authorised on review of a reviewable decision to exercise any powers and discretions which would not have been available to the determining authority at the second tier decision-making stage, albeit that such powers and discretions might have been available to the determining authority at the first tier decision-making stage." 26 This construction of s 43(1) makes plain that whatever powers the delegate could have exercised in relation to the original late election decision (a question I need not consider), s 43(1) did not enable the Tribunal to exercise any powers in relation to that decision because its jurisdiction was limited to reviewing the original extension of time decision. That is, the Tribunal could only exercise its powers under s 43(1) "for the purpose of reviewing" the extension of time decision. 27 The applicant sought to distinguish Lees v Comcare (as did the Tribunal). 28 One basis was that Lees v Comcare concerned the Safety, Rehabilitation and Compensation Act 1988 (Cth) ("the SRC Act"). Lees v Comcare concerned the decision-making process provided for in Pt VI of the SRC Act. Section 60(1) of that Act defines a "determination" as a determination, decision or requirement made by the relevant authority under specified provisions of that Act. Section 62 enables a claimant (defined in s 61(1) as a "person in respect of whom a determination is made") to request that the authority reconsider the determination. Section 62(3)(b) requires such a request to be given to the authority "within 30 days" of the claimant being notified of the decision, "or within such further period (if any) as the determining authority, either before or after the expiration of that period, allows". Section 62(5) empowers the person reconsidering the determination to affirm, revoke or vary the determination. Section 64(1) then enables the claimant to apply to the Tribunal for review of a "reviewable decision", which is defined in s 60(1) as a decision "made under … section 62". The Full Court said of these provisions: "[Pt VI] establishes a three tiered decision-making process: the original decision or determination to be made by an authorised person within [the relevant authority], a reconsidered determination to be made within the same authority as the original decision - but ordinarily by a fresh decision-maker, and a decision of the AAT reviewing the reconsidered determination. … In considering the extent of the power of the AAT when reviewing decisions under the Act, it is to be noted, first, that the AAT is authorised by s 64 of the Act to review only reviewable decisions - that is, for present purposes, second tier or reconsideration decisions made under s 62 of the Act. Decisions under s 62 of the Act are the result of the reconsideration by [the relevant authority] of a determination, as defined by s 60 of the Act …" Section 154 of the Superannuation Act, while less detailed than Pt VI of the SRC Act, establishes substantially the same decision-making process. Accordingly, the observations of the Full Court in Lees v Comcare are apt to apply to it. 29 A second basis for distinguishing Lees v Comcare, advanced by the applicant, was that the "claimants" (as that term is defined in s 60(1) of the SRC Act) in that case were seeking to agitate issues before the Tribunal which had not been before the relevant authority (Comcare) at either the first or second tier decision-making stages. It is true that Lees v Comcare was not a case in which the claimants had been seeking, unsuccessfully, an extension of time to request a reconsideration under s 62 of the SRC Act. However, I see no basis for qualifying the Full Court's construction of the relevant statutory provisions, set out above, by reference to the facts of that case. 30 In my opinion, the Tribunal did not have jurisdiction to review the original late election decision. The Tribunal's jurisdiction was limited to reviewing the original extension of time decision. Accordingly, the respondent succeeds in its cross-appeal.

The failure of the Tribunal to recall the applicant to give evidence 31 I next consider the ground of the applicant's appeal which raises the failure of the Tribunal to recall the applicant to give evidence. This ground is expressed in the notice of appeal as follows: "4.1 That the Tribunal erred in law in determining the matter on the transcript of the proceedings before [the Senior Member] sitting alone on 13 December 1999 and the evidence tendered on that date, in circumstances where the Tribunal based its decision on findings that it did not accept the Applicant's evidence that: (a) at the time of resigning from the Commonwealth Public Service, the Applicant did not understand the concept of "preservation"; and (b) the Applicant was misled by advice she received from Mr Phillip Thompson". The circumstances in which this occurred are then particularized. 32 The following is an agreed account of what was said during the telephone directions hearing on 16 December 1999. After the Senior Member proposed that the matter be heard by a reconvened three-member Tribunal with the transcript of the previous hearing before it, counsel for the applicant said words to the following effect: "There is authority for the proposition that a matter should only proceed on the basis of transcript if there are no questions of credit arising." Reference was made to McCormack v Federal Commissioner of Taxation (1979) 143 CLR 284 ("McCormack"). The Senior Member replied with words to the following effect: "Matters of this kind inevitably involve an assessment of credit." There was then discussion between the Senior Member and counsel for the applicant, at the end of which counsel for the applicant said words to the following effect: "This may not be a problem if issues of credit only arise out of the documents but I would need to get instructions." Counsel for the respondent then indicated that it wished to proceed on the basis of the transcript and if the applicant had objections to that course, the respondent would want an opportunity to test those objections at a directions hearing. The Senior Member replied with words to the following effect: "If the applicant objects to proceeding on the basis of transcript then a new hearing will be arranged. I do not want to risk an appeal." The Tribunal then adjourned on the basis that the applicant would advise the Tribunal and the respondent of its response to the Senior Member's proposal. 33 On 16 December 1999, the solicitor for the applicant wrote to the Senior Member in the following terms: "We refer to the telephone conference held this morning. We are instructed that, in the circumstances, the Applicant is prepared to have this matter proceed on the basis that: 1. the Tribunal is reconstituted as a 3 member Tribunal; 2. the Tribunal make its determination upon the evidence tendered at the hearing on 13 December 1999 and upon the transcript of the hearing on that date. The Applicant is conscious that 2 of the members of the reconstituted Tribunal will not have had the benefit of seeing her give evidence. We are instructed that should the Tribunal form the view that it is appropriate that the Applicant be recalled to answer any questions the Tribunal has, she will make herself available for this purpose." (Emphasis added.) 34 Before addressing the legal issues raised by this ground of the appeal, it is necessary to determine whether the Tribunal, in making its decision, rejected the applicant's evidence that at the time of resigning from the Commonwealth Public Service, she did not understand the concept of "preservation", and that she was misled by financial advice she received from a Mr Phillip Thompson, and, if so, why the evidence was rejected. 35 The applicant was cross-examined about a letter she had written and received by the respondent on 13 December 1996 (referred to in par 8 above) and the vocadex message sent by the applicant on 5 April 1998 (referred to in par 41 following). The transcript records: "Now, this is a letter that you sent to Comsuper in relation to your extension of time application. MR CLARKE: Yes. MR O'DONOVAN: You knew it was a serious matter, that it was important to be frank and honest in relation to that. Now, you state in that letter at the 5th paragraph: I had no knowledge of the election to preserve my benefit in the CSS. That is on the first page, the fifth paragraph on the first page?---Okay, yes, I have that. Yes, it starts: I resigned from my position. Now that is not the case, is it? You did know that you had an option to preserve?---No, I did not. That is what this is all about. Right, so it is your evidence here today that you had no idea of the existence of the option to preserve?---I had no appreciation of what the word 'preservation' meant. Well, what is stated there is that you had no knowledge of the election to preserve your benefits in the CSS, is that a true statement?---That's a true statement. So you had no knowledge of the existence of the preservation order?---That's correct. All right, okay, well if I can just take you to tab 9?---Tab 9. Yes?---This is the fax. Yes. Now, if I could just read you the bottom section. It says: All rec leave entitlements will be used by the - First of all, this is a fax to D. Mild at the Australian Government Retirement Benefits office and you admit that you sent this fax in your affidavit?---Yes, I did. All right, and that is your writing on the affidavit?---That is my writing, yes. Right and it says: All rec leave entitlements will be used by that date, however, 5.3 months long service leave will have accumulated. Is this relevant when considering preservation? So it would appear from that you did know, at least, of the existence of the concept?---The use of that word is not something that I appreciate using. I had a conversation obviously with this lady on recommendation from the staff clerk at immigration. I called her, she told me to send her a fax and address it to that section. The word 'preservation' was - held no meaning for me at all. Right, can you explain. So you used a word which has no meaning to you? Exactly. Right, so it wouldn't have been more appropriate to say: is this relevant when considering my superannuation entitlement?---It would have been more appropriate to use those words, yes. It remains your evidence that you didn't even understand a word that you used?---I had no appreciate. I did not understand. Right, but you must have known at least of the existence of the concept?---Well, no. You didn't even understand the existence of the concept?---No." (Emphasis added.) 36 On her reliance on Mr Thompson and whether she had read a document explaining her options, the applicant said: "So you accept that you did receive a document?---Well, I must. Yes, all right. Now, you will note that the information in relation to benefits is attached to that document, isn't it?---This page are you talking about? Yes?---Yes. So if you filled out the form, that information must have been made available to you?---Yes. So you don't disagree that the information on that form was made available to you?---No. If you could just look briefly at that form. If you could go to the second page, which is 32 in the T documents, paragraph 11. It says: What is a deferred benefit. A deferred benefit is a pension or pension in lump sum that becomes payable to you after attaining your minimum age under the Commonwealth Superannuation Scheme or earlier if you become medically incapacitated. Now, that is sufficient information to explain to you what the benefit is if you take a deferred benefit or at least it is sufficient to put you on inquiry?---Yes. So when you were given the options, refund of contributions or preserve your superannuation rights, you knew that there was an alternative to refund of contributions which was a pension?---My understanding of the refund of my benefits was limited to the extent that everything that I received I gave to Phillip Thompson. He came to my office. He did the letter. He brought the letter for my signature. He said: fill this out and I ticked box 8 and handed it back. I did not read the attached information so the answer to your question is no, I did not understand. The reason you did not understand is because you relied on Phillip Thompson?---Yes. Not because the information was not available?---Yes." (Emphasis added.) 37 The Tribunal dealt with this and other evidence in pars 16 to 30 of its reasons. The Tribunal first noted that, at the time of resigning from the Commonwealth Public Service, the applicant received financial advice from Mr Thompson, a representative of National Mutual Life Limited. The Tribunal observed that the relationship between the applicant and Mr Thompson was unclear but that in her letter to the respondent requesting reconsideration (referred to in par 8 above), the applicant stated that she had a personal relationship with Mr Thompson and "relied heavily on his guidance and advice and entrusted him to make financial decisions on my behalf", but that in hindsight, his advice appeared biased and commission-driven. The Tribunal then noted that the Mr Thompson was now deceased and stated that while it could be inferred that Mr Thompson was intent on selling a product from which he would draw commission, it was impossible for the respondent to cross-examine Mr Thompson as to his version of events and why he advised the applicant in the way he did. The Tribunal then stated (at par 18): "The Applicant now claims that at the time she resigned from the Commonwealth Public Service she did not understand the concept of "preservation" and was misled by the advice she received from Mr Thompson." 38 The Tribunal proceeded to summarise the applicant's employment between her resignation from the public service and her late election request to the respondent. The Tribunal then quoted extracts from the applicant's letter to the respondent requesting late election (referred to in par 5 above): "… Mr Thompson was a close personal friend who took a considerable amount of time to advise me in various matters. Unfortunately Mr Thompson is now deceased. I was extremely confident that the advice he gave me was in my best interest and that he had appraised me of all options. … … However, I submit that I acted on what I considered the best advice available to me at the time and in the belief that I was not entitled to preserve my contributions. …" 39 The Tribunal then noted (at par 23) that the applicant, "in cross-examination, maintained that at the time she resigned from the Commonwealth Public Service she did not have any appreciation of what the word "preservation" meant." The Tribunal then found (at par 24): "We do not accept that the option of preservation of contributions in the fund was not before the Applicant when she resigned. In seeking to understand the Applicant's motives at the time we bear in mind that, unlike the applicants in some other cases who were relatively junior employees or tradesmen, the Applicant held a responsible position in the Department of Immigration after 20 year's service in the Commonwealth Public Service. Her career was at an executive level and she could, no doubt, readily apprehend the contents of documents forwarded to her." 40 The Tribunal then noted that the applicant was cross-examined about a facsimile forwarded to the applicant by the personnel section of the Department of Immigration. The Tribunal observed that the facsimile: "contains a document headed "Statement of Benefits" and includes "Deferred Benefit Calculations" and a schedule of expected benefits should the Applicant preserve her funds in the Superannuation Scheme. The next two pages of the said document are information on preservation of benefits." The Tribunal then noted (at par 26) that in cross-examination the applicant stated she had received the document but not read it, and had conceded that "it was sufficiently detailed to allow her to compare options". 41 The Tribunal then set out a "vocadex" message sent by the applicant to the Australian Government Retirement Benefits Office on 5 April 1988, which read: "OUR TELECON A.M. 5.4.88 REFERS MY PARTICULARS ARE AS FOLLOWS SURNAME: ASHMORE FIRST NAMES: CAROLYN MARGARET AGS NO: 230-19724 ANTICIPATED LAST DAY OF SERVICE 3.6.88 ALL REC. LEAVE ENTITLEMENTS WILL BE USED BY THAT DATE HOWEVER 5.3 MTHS LONG SERVICE LEAVE WILL HAVE ACCUMULATED. IS THIS RELEVANT WHEN CONSIDERING PRESERVATION? POSTAL ADDRESS: 2/108 SWANN RD TARINGA" (Tribunal's emphasis) The Tribunal stated (at par 27): "Given this document, we reject the Applicant's evidence that her understanding of the options open to her were limited to receiving a cash payout or rolling over funds into another Superannuation Fund." 42 The Tribunal then noted that in a letter to the respondent dated 20 July 1993, the applicant explained that Mr Thompson encouraged the applicant to place funds with National Mutual as she would receive compound interest as opposed to the interest she had received in the Commonwealth Fund. The Tribunal found (at par 29): "We are of a view therefore that the Applicant was aware of the right to preserve benefits in the Commonwealth Superannuation Fund but that, acting on the advice she received at the time, she elected to place her funds elsewhere." 43 The Tribunal continued (at par 30): "This finding of fact is confirmed by the Applicant conceding in cross-examination that she received, signed the documents which are found at pages 32 to 34 of the documents prepared for the Tribunal pursuant to s 37 of the Administrative Appeals Tribunal Act 1975. The document at page 32 is clearly headed "Preservation Information" and a subheading reads "What is a deferred benefit". At page 34 the choice is clearly apparent. The Applicant had a 20 year career in the Commonwealth Public Service dealing with documents and their results and she conceded that the documents were sufficient to put her on enquiry. The document dated 5 April 1988 to the Australian Government Retirement Benefits Office shows that she had been put on enquiry." 44 The Tribunal did not make any express findings concerning the credit of the applicant. However, it is clear from the preceding paragraphs that the Tribunal did not accept that the applicant did not understand the concept of "preservation" at the time she left the Commonwealth Public Service and was misled by Mr Thompson's advice. Reference has already been made to the transcript of the hearing before the Senior Member on 13 December 1999 where the applicant gave evidence about these matters during cross-examination. The Tribunal referred in a summary way in pars 23, 26-27 and 30 of its reasons to the evidence the applicant gave in cross-examination. The Tribunal, in pars 26 and 30 of its reasons, relied on concessions made by the applicant in cross-examination that she had received certain documents which contained information on preservation to support its findings that she understood the option of preservation and was not misled by Mr Thompson. It can be inferred that the Tribunal disbelieved the applicant when she denied in cross-examination understanding what "preservation" meant when she received the "vocadex" message, given the use it made of the message. 45 It is clear the Tribunal disbelieved evidence given by the applicant in cross-examination about her lack of knowledge of the concept of "preservation". While the Tribunal stopped short of making express findings on credit, it went beyond merely "preferring" documentary evidence (which was the respondent's characterisation of the Tribunal's treatment of the evidence) and positively disbelieved the applicant's oral evidence. That evidence was given under oath. While it would be open to a finder of fact to view her evidence as implausible, it is not, in my opinion, so implausible as to remove from consideration in assessing her evidence, her demeanour when she gave evidence. Her demeanour might confirm that the evidence should be rejected because it was implausible or, importantly, lead the finder of fact to conclude the oral evidence should be accepted notwithstanding that, on preliminary analysis, it was implausible if that had been the view taken. 46 It is necessary now to consider the legal consequences, if any, of the foregoing having occurred. The gravamen of the applicant's complaint is that the Tribunal erred in law by basing its decision on findings involving the rejection of the applicant's oral evidence, when two of the members of the Tribunal had not observed the applicant giving evidence. The reconstituted Tribunal should have recalled the applicant to give oral evidence. 47 Central to the applicant's submissions was the judgment of the High Court in McCormack. That was an appeal by a taxpayer from a decision of the Full Federal Court in which it was held inter alia that, on an examination of the transcript of the evidence the taxpayer had earlier given to a Board of Review (reviewing an assessment of the Commissioner of Taxation), that evidence was not to be believed. Barwick CJ said (at CLR 292-293): "… Deane J, who wrote the leading judgment, examined the evidence in order to decide whether he believed the appellant. His Honour recognized that the central question was the credit to be afforded the appellant's testimony. He examined the transcript of the evidence before the Board of Review and pointed to what he regarded as inconsistencies and to what he thought were improbabilities. He concluded that the appellant should not be believed. But the dominant element was missing, namely the impression of the appellant as she gave her evidence. Nothing she said as to her purpose was, in my opinion, inherently incredible, whether or not one accepted her explanation of the earlier transactions. Whilst it is possible by combing through the transcript of her evidence to find some inconsistencies, it seems to me that it could not be said that she was shown not to be a witness of truth. Whether or not she was to be believed in relation to the instant transaction undoubtedly, in my opinion, called for a viva voce examination of her. It was essential that she be evaluated and a conclusion drawn whether or not she was a truthful person when she said what her intentions were at the time of purchase." 48 In considering this ground of review, it is convenient to commence with the AAT Act. Section 33(1) provides: "(1) In a proceeding before a Tribunal: (a) the procedure of the Tribunal is, subject to this Act and the regulations and to any other enactment, within the discretion of the Tribunal; (b) the proceeding shall be conducted with as little formality and technicality, and with as much expedition, as the requirements of this Act and of every other relevant enactment and a proper consideration of the matters before the Tribunal permit; and (c) the Tribunal is not bound by the rules of evidence but may inform itself on any matter in such manner as it thinks appropriate." 49 The respondent referred to the comments of Gleeson CJ and McHugh J in Minister for Immigration & Multicultural Affairs v Eshetu (1999) 197 CLR 611 concerning s 420 of the Migration Act 1958 (Cth). That section provides that the Refugee Review Tribunal must, in carrying out its functions under the Migration Act, "pursue the objective of providing a mechanism of review that is fair, just, economical, informal and quick", and, in reviewing a decision, "is not bound by technicalities, legal forms or rules of evidence" and "must act according to substantial justice and the merits of the case". Their Honours said (at CLR 628): "The history of legislative provisions similar to s 420 was examined in Qantas Airways Ltd v Gubbins (1992) 28 NSWLR 26. They are intended to be facultative, not restrictive. Their purpose is to free tribunals, at least to some degree, from constraints otherwise applicable to courts of law, and regarded as inappropriate to tribunals. The extent to which they free tribunals from obligations applicable to the courts of law may give rise to dispute in particular cases, but that is another question." Their Honours' observations are apt to apply to s 33(1). However this and related provisions do not relieve the Tribunal from an obligation to afford an applicant procedural fairness: see eg Fletcher v Commissioner of Taxation (1988) 19 FCR 442 at 454-5. 50 I should note that counsel for the respondent also referred to s 23B of the AAT Act which provides: "If a proceeding is reheard by the Tribunal, the Tribunal may, for the purposes of the proceeding, have regard to any record of the proceeding before the Tribunal as previously constituted including a record of any evidence taken in the proceeding." It was submitted that s 23B expressly empowered the Tribunal in this case to have regard to the transcript of the hearing before the Senior Member. Section 23B was inserted along with s 23A by the Law and Justice Legislation Amendment Act (No 1) 1995 (Cth) though it is not expressed to apply only where a Tribunal is reconstituted and rehears a matter under s 23A. This section probably only applies when there is a rehearing of the type contemplated by s 23A and perhaps s 23(1)(b). However it is unnecessary to explore that issue further because the applicant does not put in issue the Tribunal's powerto "have regard to" the transcript of the previous hearing (indeed she agreed through her solicitors to that course), but rather contends that in doing so in these proceedings, it denied the applicant procedural fairness. 51 The respondent also referred to ss 34B, 35, 39 and 40 in support of a submission that the scheme of the AAT Act affords the Tribunal a wide discretion to conduct its proceedings as it sees fit, subject to these limited statutory obligations. It was pointed out that no provision of the AAT Act expressly required the taking of oral evidence at all. It may be accepted, on the basis of s 33(1) alone, that the Parliament has given the Tribunal considerable latitude to determine how it conducts its proceedings. However these additional provisions are not decisive of the issue raised in these proceedings. 52 Reference should be made to the content of any legal obligation of a court or tribunal to observe a witness giving oral evidence before disbelieving that witness' evidence. Counsel for both parties referred to numerous authorities that deal with the obligation of an appellate court to defer to findings of credibility made by the court or tribunal appealed from, where the latter has seen and heard the witnesses: see for example Walsh v Law Society of New South Wales (1999) 198 CLR 73 at par 54, Devries v Australian National Railways Commission (1993) 177 CLR 472 and Abalos v Australian Postal Commission (1990) 171 CLR 167. While such authorities are of assistance, this ground of appeal is more directly concerned with the obligations of a primary finder of fact. There are a number of authorities which have addressed that issue in various contexts. 53 In Aldridge v Booth (1988) 80 ALR 1, Spender J considered the issue in the context of proceedings brought in the Federal Court under s 82 of the Sex Discrimination Act 1984 (Cth) to enforce a determination of the Human Rights and Equal Opportunities Commission. His Honour said (at ALR 7-8): "The terms of s 82(2) suggest that the court is not concerned only with questions of law; the court is required to be satisfied as to matters of fact. How matters of fact are established to the satisfaction of the court will depend upon the nature of the case but where, as here, the dispute requires an assessment of the credibility of the parties and their witnesses, it seems to me impossible to avoid the conclusion that those issues must be determined on the basis of oral evidence." 54 In D'Antuono v Minister of Health (1997) 80 FCR 226, the Full Federal Court addressed the issue in the context of an application to a single judge of the Court for review of a decision of a judicial registrar under s 377 of the then Industrial Relations Act 1988 (Cth). Such an application was by way of hearing de novo. Carr J observed (at FCR 240): "In my opinion, an attempt to conduct a review, being a review which requires choosing between conflicting evidence to resolve a dispute about primary facts, on the basis of the transcript of the proceedings below runs a great risk of being vitiated by legal error from the outset." 55 His Honour agreed with an observation of Madgwick J in Cosco Holdings Pty Ltd v Thu Thi Van Do (unreported, Industrial Relations Court of Australia, 30 June 1997) that there may be cases where it is possible for the judge to resolve a dispute about primary facts on the papers. However, his Honour was "inclined to think that they will be exceptional cases", and stated: "… [T]he situation is different where the primary facts are uncontested at the review stage. In those circumstances a judge can make ultimate findings of fact "on the papers". Otherwise, where the primary facts are in dispute, and the parties have not agreed to conduct the review as an appeal, I do not think that in an ordinary case the judge should proceed to hear the matter "on the papers". To do so would, in my view, be very likely to give rise to such a substantial procedural error as to constitute error of law." 56 See also Barendse v Comptroller-General of Customs (1996) 136 FLR 243, in which the New South Wales Court of Criminal Appeal considered the question of whether oral evidence should be heard in a hearing de novo before findings of credit (or different findings of credit) were made in the context of an appeal from an order of a magistrate to the District Court under s 122 of the Justices Act 1902 (NSW). 57 The importance of a judicial officer observing witnesses giving oral evidence was emphasised by Lord Merriman P in Bolton v Bolton [1949] 2 All ER 908, by the Privy Council in Chua Chee Chor v Chua Kim Yong [1962] 1 WLR 1464 and by the High Court in Brennan v Brennan (1953) 89 CLR 129 at 136-7 and Teubner v Humble (1963) 108 CLR 491 at 499-500. Each concerned a situation where one judicial officer took over the trial or determination of a matter from another judicial officer: see also Wentworth v Rogers (No 3) (1986) 6 NSWLR 642. 58 However these proceedings concern administrative and not judicial proceedings. The question of whether procedural fairness might require a hearing at which evidence would be given orally (if the credibility of a party to the administrative process is or may be important) before an administrative decision is made is not susceptible of a single answer of universal application. The question has arisen in a variety of contexts and the answer almost invariably lies in the terms of the applicable statute and the circumstances of the particular case: see eg Zhang v Minister for Immigration, Local Government and Ethnic Affairs (1993) 45 FCR 384; Li Shi Ping v Minister for Immigration, Local Government and Ethnic Affairs (1994) 35 ALD 225, and Hartley v O'Loughlin [1999] VSC 138. 59 It cannot be doubted that a person who must ascertain what the facts are can often derive an advantage from seeing a person give an account of the facts where credibility is in issue. As Gleeson CJ said in Re Refugee Review Tribunal; Ex parte Aala [2000] HCA 57 (at par 4): "Decisions as to credibility are often based upon matters of impression, and an unfavourable view taken upon an otherwise minor issue may be decisive." 60 It is for this reason that the examination of a witness where credit is in issue by use of a telephone is deprecated: see Omran v Australian Postal Commission (1991) 14 AAR 51 at 54 per Morling J. 61 Often a view can be formed about a person's account of the facts by their evidence being tested in cross-examination. So much was recognized by the Full Court in Omran v Australian Postal Commission (1992) 15 AAR 232 at 234: "We do not wish to minimise the importance of cross-examination. It is undoubtedly true that in many cases cross-examination has a vital role to play in evaluating the reliability of evidence. This is particularly the case with non-expert evidence, especially where matters of credibility are involved." 62 An illustration of how this may be significant arose in Mayor, Councillors and Citizens of the City of Brighton v Selpam Pty Ltd [1987] VR 54. Vincent J considered the effect of a Planning Appeals Board refusing to allow parties to cross-examine an expert witness who provided a written statement to the Board but had given evidence before the same body (but differently constituted) in earlier proceedings. Two of the three members of the Board who made the decision under challenge had sat as members of the Board who on the earlier occasion heard the witness give evidence and be cross-examined. One issue raised was described by his Honour (at 62): "[It was submitted there] were a number of difficulties arising from the reliance in the appeal under present consideration, upon evidence adduced and submissions made in an earlier appeal. There were differences in the composition of the divisions of the Board which dealt with the different matters so that there were two common members. … Accordingly it was submitted that one member of the Board which heard the appeal presently under consideration was not in a position to consider and form an independent view in relation to all of the material relevant to the proper determination of the issues involved in that appeal." 63 On this issue, his Honour said: "There can be no doubt that the Board was entitled to inform itself in relation to any matter in whatever manner it considered appropriate, provided that in so doing it acted in accordance with the requirements of natural justice. Section 26(4) of the Planning Appeals Board Act provides as follows:- 'The Board is not bound by rules or practice as to evidence but may inform itself in relation to any matter in such manner as it thinks fit.' Nevertheless it is an aspect of the provision of an adequate measure of natural justice that there should be an independent exercise of the Tribunal's function and not reliance upon the fact finding or judgment of others, to such an extent that the ultimate decision arrived at could not be truly said to be the independently reached decision of the tribunal at all." 64 His Honour rejected the suggestion that there had been a denial of natural justice in that matter because the Board was itself an expert body and no objection had been raised at the outset to the composition of the Board. However, his Honour appears to have accepted that natural justice might require, in other circumstances, that each of the members of a Tribunal be in a position to make the findings and judgments necessary to decide a matter and not rely on the knowledge or experiences of another or other members: see also Munday v Munday [1954] 1 WLR 1078 especially at 1081 and In re D (Minors) [1973] Fam 170. 65 In these proceedings there was a hearing at which the applicant's demeanour was observed when she gave both evidence in chief and was cross-examined. However two members of the Tribunal who found the facts and formed a negative view about the applicant did not see her give evidence. This, in my opinion, does raise a question about the fairness of the procedure which was adopted. 66 Section 157(7) of the Superannuation Act requires, for present purposes, the Tribunal to be constituted by three members, one of whom must be an eligible employee or pensioner. The latter requirement is presumably to ensure that the decision making involves a person who can view matters from the perspective of a beneficiary, actual or potential, of the superannuation scheme established by the Superannuation Act. There is nothing in that Act or the AAT Act that would suggest that the duty to make a decision is not intended to fall equally on the three members constituting the Tribunal by operation of s 157(7). However in the present case the Senior Member who saw the applicant give evidence had a clear advantage the other two members did not have. It was an advantage that would have enabled the Senior Member to form a positive or negative view about the applicant's evidence having regard to the way she gave it orally. It can be inferred from the decision given that the Senior Member formed a negative view. However, the other members could not have formed any view by observation. It cannot be assumed that had the other two members observed the applicant give evidence they would have reached the same conclusion as the member who did see the applicant give evidence. 67 Moreover the negative view of the member who did observe the applicant give evidence may have affected, quite possibly unwittingly, the consideration of the applicant's credit by the other two members. They were not in a position to make their own evaluation to the extent that demeanour might have played a part. In addition, if one or both the other members had seen the applicant give evidence and formed a positive view of her then, in any collective discussion of her evidence, the other members may have reflected on any initial adverse impression they may have formed. It is not possible, in my opinion, to conclude that the failure to have the applicant give evidence did not affect the outcome of the hearing: see Stead v State Government Insurance Commission (1986) 161 CLR 141 at 145 and 147, and Re Refugee Review Tribunal; ex parte Aala (supra). 68 It is, of course, necessary to consider the conduct of the applicant after the inappropriate composition of the Tribunal became apparent and steps were taken to rectify the position. However it should be stated at the outset that the applicant was put in the invidious position of having to make a decision about the future conduct of the review after having appeared at a hearing, given evidence and been cross-examined and retained legal representation. Nonetheless the applicant's conduct may have constituted a waiver of rights she may otherwise have had or may have simply evidenced a failure to take up the opportunity she had been provided for a full hearing. For reasons which will be apparent shortly it is unnecessary to enter the debate about the limits of any legal principle concerning waiver of a right to procedural fairness or whether, in the circumstances (having regard to what had occurred earlier) the applicant was given a real choice (given that there had already been a hearing with the attendant personal and financial costs to the applicant) at the directions hearing on 16 December 1999 of a future hearing. 69 It is to be recalled that the applicant indicated in a letter the matter could be determined by reference to the transcript though subject to what was said in the letter. The acceptance by the applicant in the letter dated 16 December 1999 that the transcript could be used was qualified. The scope of the qualification is, in my opinion, of critical importance. The applicant, through her lawyers, was alive to the fact that one member who would determine the matter had seen her give evidence and the other two had not. This was described in the penultimate sentence in the passage quoted in par 33 above as the "benefit of seeing …". The plain import of this expression was a recognition that the applicant's demeanour may play a role in the determination of whether her oral evidence should be accepted or rejected. The question that then arises is what may reasonably be understood by the final sentence in the quoted passage from the letter of 16 December 1999. It may have simply been an offer to provide answers to questions that had not, to that point, been asked. However it is unlikely this was what was meant given the reference in the preceding sentence to the "benefit of seeing …". It is likely, in my opinion, that the offer of the applicant to make herself available was to do so if the Tribunal was disinclined to believe things she had said in answer to questions already asked. 70 Thus the applicant's agreement to the transcript being used did not extend to use of only the transcript if her oral evidence was not going to be believed. If the situation arose where she might not be believed, as it did, then it was incumbent on the Tribunal, in my opinion, to have indicated to the applicant that they would wish to hear her give evidence again about the matters they would have, at that stage, been disinclined to accept her evidence on. The use of only the transcript and the failure to ask the applicant to give further evidence before all the members of the Tribunal constituted, in my opinion, a denial of procedural fairness. This conclusion warrants the decision of the Tribunal being set aside and the matter being remitted for redetermination by the Tribunal differently constituted. It is appropriate, however to deal with another ground raised by the applicant which may have a bearing on the further consideration of this matter.

The remaining grounds of the appeal 71 The applicant submitted that in relation to the Tribunal's extension of time decision, it erred by applying principles of the type found in Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 and not applying principles discussed in Chalk v Commissioner for Superannuation (1994) 50 FCR 150 and Commissioner for Superannuation v Boardman (1994) 50 FCR 236. Also, in relation to that decision, the applicant submitted that the Tribunal failed to take into account relevant considerations, namely the consequences of the decision (significant prejudice to the applicant, insignificant prejudice to the respondent) and the evidence of Rosemary Pears and Drs Skapinker and Sandstrom as to the effect of multiple sclerosis on the applicant who was suffering from that disease. 72 There is, in my opinion, a measure of overlap in these grounds. The contention concerning the medical evidence is, in terms, no more than a complaint that particular pieces of evidence were not considered. That, of itself, does not establish reviewable error: see eg Walsh v Department of Employment, Education, Training and Youth Affairs (1998) 51 ALD 690 at 693. 73 However the applicant did raise before the Tribunal the prejudice she would suffer if time was not extended and ultimately there was not recognition of her late election. This was not addressed by the Tribunal. Had the Tribunal been exercising the power under s 157(1) to allow or recognize a late election, then it would have been required to make a decision whether "in all the circumstances" it is desirable to recognize the late election. This raises for consideration prejudice to the applicant. As Davies J (with whom Black CJ and Cooper J agreed) said in Chalk v Commissioner for Superannuation (supra) (at 155-6): "Many such provisions, including s 157, are not concerned with rights. If an act is not performed within the prescribed time, there is no right to have it performed. But there is a discretion to permit time to be extended should it be appropriate in the circumstances to do so. In the exercise of this discretion, it may be more important to consider the consequences of extending or refusing to extend time than to debate the reasons why the act was not done in time. Section 157 merely requires that the Commissioner 'be satisfied that in all the circumstances of the case it is desirable that the election should be recognised'. 'All the circumstances' include all relevant circumstances existing at the time the discretion is to be exercised." 74 Prejudice to the applicant is a matter that should be considered in the exercise of the power under s 157(1) as part of considering what is fair in order to do justice between an applicant and the interests associated with the administration of the fund. As von Doussa J said in Commissioner for Superannuation v Boardman (supra) at 244: "In the course of argument Senior Counsel for the Commissioner accepted that the connotation of 'desirable' in the context of s 157(1) is that of being fair in order to do justice between the person who seeks to make the late election, and the requirements of the administration of the fund. In my opinion this is correct, and the Court should not seek to further define or expand the meaning of 'desirable'. Although the meaning of 'desirable' was not the question agitated before the Full Court in Chalk v Commissioner for Superannuation (1994) 50 FCR 150 this view accords with the following observation of Davies J, with which Black CJ and Cooper J agreed (at 156) [the passage quoted in par 73 above is then set out]. In saying that the issue before the Tribunal involved a 'determination as to what is fair in the circumstances of this case when the need of the applicant for the extension of time to be granted is weighed against the prejudice to the respondent if that extension is granted' the Tribunal did not apply a wrong test." 75 The discretion to extend time conferred by s 154(2) is a broad one. However, there has been a pattern, both in the Tribunal and this Court to look to the considerations identified by Wilcox J in Hunter Valley Development Pty Ltd v Cohen (1984) 3 FCR 344 at 347 (see eg Comcare v A'Hearn (1993) 45 FCR 441 at 444), which included the merits of the substantive application, as providing a touchstone for the exercise of a discretionary power by the Tribunal to extend time. If the merits of the substantive application raises prejudice to the applicant, then that would, at least ordinarily, arise in any consideration of whether time should be extended to permit the substantive application to be made: see also Barrett v Minister for Immigration, Local Government and Ethnic Affairs (1989) 18 ALD 129 but compare Browne v Minister for Immigration and Multicultural Affairs (1998) 52 ALD 550 at 564. That is not to say, however, that the adequacy of the Tribunal's consideration of this question of the merits of the application in a consideration of whether time should be extended would, in the ordinary course, raise a ground of review based on an error of law: see Telstra Corporation Ltd v Razmovski (1994) 36 ALD 22 at 26 and also Comcare v Smith (unreported, Federal Court of Australia, von Doussa J, 5 March 1997). 76 In the present case, no reference at all was made to potential prejudice to the applicant as part of a consideration of whether time should be extended to review the late election decision. Nor was any explanation given as to why it was not considered. In my opinion it is probable that the Tribunal either did not appreciate it could be considered or elected not to consider it. On either basis, it erred in law: see Ruggeri v Telstra Corporation Ltd (unreported, Federal Court of Australia, Ryan J, 4 July 1996). 77 For these reasons I propose to set aside the decisions of the Tribunal and remit the matter to the Tribunal, differently constituted, to hear and determine. While the respondent succeeded in its cross-appeal (which was conceded by the respondent to be defensive), and the cross-appeal was contested, the applicant has succeeded on what, in my opinion, was the issue of substance. She is entitled to her costs. I certify that the preceding seventy-seven (77) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore.

Solicitor for the respondent: Australian Government Solicitor