Gale v Australian Financial Complaints Authority

MCEVOY J: 1 This proceeding was an appeal from a decision of the Australian Financial Complaints Authority in which the Authority affirmed a decision by the second respondent, NM Superannuation Pty Ltd (NM Super or the Trustee), that the applicant was not entitled to a pension payable form the superannuation fund of which NM Super is trustee, commencing from the date he turned 55 years of age. The matter was heard on 21 April 2023, and on 15 May 2023 I made orders allowing the appeal, setting aside the determination of the Authority and remitting the matter to the Authority to be determined in accordance with s 1055 of the Corporations Act 2001 (Cth) according to law and the governing rules of the applicant's superannuation fund: see Gale v Australian Financial Complaints Authority [2023] FCA 470. The parties have not been able to agree on appropriate orders as to the costs of the proceeding. 2 The Authority and the Trustee did not participate in the appeal and filed submitting notices save as to costs. Both have now made submissions on the question of costs. The applicant seeks an order that the Trustee and the Authority pay his costs of the proceeding on an indemnity basis apportioned between the respondents as the Court considers fit. The Authority and the Trustee take the position that there should be no order as to costs. For the reasons that follow I have determined that in the particular circumstances of this proceeding the appropriate order is that each party bear their own costs.

The Applicant's Position 3 The applicant submits that the Authority and the Trustee should pay his costs on an indemnity basis for the following reasons: (a) the findings of the existence of legal errors in the determination of the Authority weigh in favour of him being awarded indemnity costs; (b) specifically, the Authority made an elemental error of law in incorrectly identifying the provisions of the AMP Plan Rules governing the applicant's early retirement pension entitlements and the Trustee had ample opportunity to correct the omission but instead notified the Authority on 31 January 2022 that it accepted the recommendation; (c) while there was no evidence of intentional misconduct, the failure of the Trustee correctly to identify the provisions of the AMP Plan Rules, take action to correct the error of the Authority in applying the wrong provisions, and refusing to consider compromising the complaint, despite acknowledging differing interpretations, indicated a lack of sufficient care or inquiry on the part of the Trustee; (d) there is a public importance in ensuring that trustee decisions about member's "deferred pay" (superannuation benefits) are sound, and it is "extremely important to the beneficiaries of superannuation trusts that where they are entitled to benefits, those benefits be paid": Finch v Telstra Super Pty Ltd [2010] HCA 36; (2010) 242 CLR 254 at 271 [33] and 280 [66] (French CJ, Gummow, Heydon, Crennan and Bell JJ); (e) the circumstances of this proceeding ought to be distinguished from those in EEU20 v Meat Industry Employees' Superannuation Fund Pty Ltd (Trustee) (No 2) [2020] FCA 1536 and Bullivant v Australian Meat Industry Superannuation Pty Ltd [2018] FCA 1588, where, in both cases, the trustees had filed submitting appearances and the Court declined to order that the trustee pay the successful applicant's costs because in those cases the trustees did nothing to lead the decision maker into legal error; (f) Bullivant can be further distinguished because the principal error in that case did not necessarily result in the applicant succeeding on remission; (g) while ordinarily a statutory tribunal that abides by the Hardiman principle (R v Australian Broadcasting Tribunal; Ex parte Hardiman (1980) 144 CLR 13 at 35-36 (the Court)) and does not intervene to defend its decision will not be ordered to pay costs, the Authority's failure to engage with the question of whether the Trustee's decision not to compromise Mr Gale's complaint was fair and reasonable was a "glaring error" that warrants a costs order against the Authority despite its submitting notice; and (h) the rejection of the applicant's offer of compromise by the Trustee and subsequently the Authority in circumstances where the Court found that there had been an error of law on the part of the Authority weighs in favour of him being awarded indemnity costs.

The Authority 4 The Authority submits that a respondent tribunal which does not oppose an appeal from or application for review of its decision is ordinarily not ordered to pay a successful party's costs. An adverse costs order may be appropriate, but only if there has been "serious conduct or corruption" or the party has "otherwise acted perversely": MS PD v Registrar of the Federal Court of Australia (No 2) [2021] FCA 1665 at [12] (Logan J) (affirmed on appeal: [2022] FCAFC 161 at [13], [17]); EEU20 at [21] (Mortimer J); Pham v Victims of Crime Assistance Tribunal [2016] VSCA 135 at [5] (the Court); Our Town FM Pty Ltd v Australian Broadcasting Tribunal (No 3) (1987) 77 ALR 609 at 612 (Wilcox J). 5 In EEU20 at [14], Mortimer J (as her Honour then was) said as follows: The absence of active contradiction not only reduces the costs incurred by an applicant, and the time and resources expended by both an applicant and the Court, it removes the prospect of any appeal and provides certainty and finality for an applicant in a situation where an applicant is successful. These are valuable attributes. Parties should not be discouraged from employing these processes by the spectre of a costs order being made against them in any event. 6 The Authority submits also that there is no suggestion here that it acted with any impropriety or engaged in any serious misconduct. Insofar as the applicant submits that the Authority committed a "glaring error", the Authority's position is that: (a) the making of an error of law is not misconduct of the kind that justifies ordering costs against a submitting tribunal, and the fact of an error cannot be sufficient to justify a departure from the usual position that there be no order as to costs: see, for example, MS PD; (b) the error relied on was only one of the four questions, or nine sub-questions, of law raised and thus likely only related to a small part of the applicant's costs; (c) the Court did not describe the error as "glaring", this word being a summary of the applicant's submissions: see judgment at [64].

The Trustee 7 The Trustee submits that its only interest in the proceeding is fulfilling its trust obligations, and complying with the trust deed and the superannuation law. The Trustee contends that its responses to the applicant's request to exercise his early retirement pension option and its decision not to commence payments were based on a bona fide understanding of the relevant trust deed and plan rules, and there is no evidence of misconduct. 8 As with the Authority, the Trustee points out that its submitting notice reduced the applicant's costs, as well as the time spent by the Court in dealing with the proceeding, and has provided the applicant with certainty and finality: EEU20 at [14]. The application, being on a question of law from a decision of the Authority, required the applicant to persuade the Court that there had been an error of law on the part of the Authority and to articulate the basis for that conclusion, even if the respondents had consented to the application being allowed: see s 1057(3) of the Corporations Act and Bullivant at [59] and the cases cited.

Disposition 9 In all the circumstances I am satisfied that for the reasons advanced by the respondents it would not be appropriate to make a costs order against the Authority or the Trustee. Both adopted a responsible position in relation to this appeal. Insofar as the Authority is concerned, this was consistent with the High Court's guidance in Hardiman. As was observed in EEU20 at [14], there is considerable public benefit and benefit for the applicant in such an approach being adopted. The fact that there were found to be errors in the approach taken by the Authority and the Trustee does not affect this analysis. Nor does the applicant's offer of compromise, if that be a correct characterisation of it, require a different outcome. The applicant does not develop the argument that his offer of compromise requires an indemnity costs order, and the Authority submits that it is a mischaracterisation of its determination to suggest in making it there had been any rejection of an offer made by the applicant. 10 The applicant's application that the respondents pay his costs of the proceeding on an indemnity basis will be dismissed. The parties will bear their own costs of the proceeding. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice McEvoy.