Finch v Telstra Super Pty Ltd

Supreme Court of Victoria|2008-11-28|Before: BYRNE J

SUPERANNUATION - trusts - total and permanent invalidity benefit - trustee's determination that claimant not "unlikely ever to engage in gainful work" - determination of trustee void - whether claim should be remitted to trustee for determination.

COSTS - whether Court should make order for costs in relation to a particular question in a proceeding

1 I have concluded[1] that Mr Finch, is entitled to declarations that the adverse determinations made by Telstra Super, as trustee of the Telstra Superannuation Scheme, on 21 March 2002 and on 20 March 2003 are void and of no effect. Two matters remain for my determination: the question of the further disposition of this proceeding; and costs.

2 I turn first to the question of the further disposition of the proceeding. This essentially is a question as to whether the matter should be remitted to the trustee for determination, or whether the Court itself should make its own determination standing in the shoes of the trustee.

3 On behalf of Mr Finch it was argued that the Court should make its own determination of Mr Finch's entitlement to a TPI benefit and should not remit the matter to the trustee. It was further contended that any determination by the Court should be on the basis of the material available to the trustee at the time of the earlier determinations, and that the Court should not receive further evidence on which to base its own determination. The core of the plaintiff's argument against remitting the matter was that the Court should not be confident the trustee would fairly and objectively assess Mr Finch's claim on its merits, given both the history of this proceeding and my conclusion that the trustee had not complied with its obligations of good faith and genuine consideration.[2]

4 The position of Telstra Super, on the other hand, was that I should remit the matter to the trustee for determination as there were no exceptional circumstances that would require the Court to take on the duty of the trustee and itself determine the claim.

5 It was accepted that the starting point for a consideration of this question is the statement of McLelland J in Rapa v Patience that a Court will substitute its own decision for that of a trustee only "where at the very least it is established that the existing trustees are unlikely to fulfil the relevant duty in a proper manner."[3] Underlying this is that the Court will decline to remit the matter to the trustee where the claimant will not receive a fair hearing from the trustee or where the trustee has deliberately acted improperly or with mala fides so as to lead to an apprehension that a proper reconsideration will not be given to the claim. Absent these circumstances, the appropriate course is usually for the Court to remit the question to the trustee.

6 An additional matter raised by counsel for Mr Finch was that different considerations may apply where the trustee was in fact acting as a self-insurer in making the impugned determination. In such a case, it was said, the matter should be approached on the basis that the default of the decision maker was not that of a trustee for the claimant but that of a party contracting with the plaintiff. In such a case no general principle requires the Court to remit a void decision to the decision maker; it is open to the Court to substitute its own decision for that of the decision maker.[4] In this case, however, an examination of the trust deed[5] demonstrates that Telstra Super did not act qua insurer. The principle has no application.

7 On behalf of the trustee, it was put that there no basis for any apprehension that a fair and impartial approach would not be adopted to Mr Finch's claim if it were remitted. Further, it was said that the constitution of the committee within the trustee had changed, so that the matter would come before a committee of two members, one of whom was a member of the earlier committee, and this was not Mr McCredden.

8 Having considered these matters and reflected upon the evidence before me, I am not satisfied that this is a case where I should depart from the normal practice. The task of deciding claims, such as those of Mr Finch, has been entrusted to the trustee. I am confident that the trustee will perform its functions in the light of the observations which I have made in my earlier judgment and in accordance with the law. Nor do I fear that the trustee approaching the task will not do so in a fair and impartial way, paying due regard to the material presented by the claimant.

9 With respect to my finding that the trustee in making the second determination failed to comply with its obligations of good faith and genuine consideration, I say this. The conclusion was reached in the context of my consideration of an argument that the trustee had failed to observe "due process". I referred to the passage in Flegeltaub's case[6] where Callaway JA preferred to approach such a matter as one raising the question of good faith.[7] It was in this context that I concluded that this requirement was lacking. There is here no finding of mala fides.

10 Finally, there is in place a statutory scheme under which a disappointed claimant may have the determination of a superannuation trustee reviewed. A remitter will leave this course open to Mr Finch in the event that he should receive another adverse decision.

11 Accordingly, I will remit the question to the trustee for its determination according to law. It would be inappropriate for me to give any direction to the trustee setting time limits for making its determination. Nor will I require the trustee to report back to the Court following the remitter. In the light of what I was told by counsel for the trustee, I have every confidence that their client will determine Mr Finch's claim within a reasonable time.

12 Mr Finch has succeeded in having the decision of the trustee set aside. In the normal course he should have an order for his costs. I was invited by counsel for Telstra Super to apportion these costs on the basis of the time spent dealing with different issues, and in accordance with Rule 63.04, order costs only on certain questions. I decline to follow this course. This was a short trial and many issues were raised for and against Mr Finch's claims. It is not a case for allocation of costs to particular issues. I will order that that costs of Mr Finch, including any reserved costs be paid by the defendant. There was a very faint submission that these should be on an indemnity basis as this is a trust claim. I do not think that this is appropriate and will order that they be assessed on the usual basis.

13 Finally, on 17 May 2007 Master Evans made a costs order against Mr Finch. When the parties were unable to agree the quantum of these costs, the solicitors for the trustee delivered an offer of compromise which included the figure they were proposing and this was accepted on behalf of Mr Finch, so that the costs were agreed at $3,799.11. There is no issue that this amount should be paid. What was said was that, as a consequence, the trustee was entitled at its election to judgment for this sum or to an order dismissing the proceeding.[8] The trustee elected for judgment. I will not stay to consider whether this is available where the offer concerns an interlocutory matter; it is sufficient that I conclude, as I do, that the existing order of the Master and the subsequent agreement will suffice to achieve payment of the costs. I will order that these costs be set off against the order for costs in favour of the plaintiff which I have made.

[3] Unreported, SC (NSW), 4 April 1985, BC8500888.

[4] Halloran v Harwood Nominees Pty Ltd [2007] NSWSC 913 at [54]; Chammas v Harwood Nominees Pty Ltd (1993) 7 ANZ Ins Cas 61-175 at 78-001.

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Judgment (22 paragraphs)

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Cases Cited (1)