Gilberg v Maritime Super Pty Ltd

LEGISLATION CITED: Superannuation (Resolution of Complaints) Act 1993 (Cth) s 14 Superannuation Industry (Supervision) Act 1995 (Cth) s 52

CASES CITED: Stevedoring Employees Retirement Fund Pty Ltd v Gilberg [2006] FCA 1590

PARTIES: John GILBERG (Appellant) MARITIME SUPER PTY LIMITED (Respondent)

COUNSEL: B W RAYMENT QC/ M J GOLLAN (Appellant) V M HEATH (Respondent)

SOLICITORS: Firths - The Compensation Lawyers (Appellant) Mallesons Stephen Jaques (Respondent)

LOWER COURT JURISDICTION: Supreme Court - Equity Division

LOWER COURT DATE OF DECISION: 25 November 2008

LOWER COURT MEDIUM NEUTRAL CITATION: John Gilberg v Stevedoring Employees Retirement Fund Pty Ltd [2008] NSWSC 1318

• 14 - IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40041/09 SC 50121/08

ALLSOP P HODGSON JA CAMPBELL JA

8 OCTOBER 2009 John GILBERG v MARITIME SUPER PTY LIMITED Judgment 1 ALLSOP P: I agree with Hodgson JA. 2 HODGSON JA: On 25 November 2008 McDougall J decided proceedings in which the appellant had claimed against the respondent a declaration that he was entitled to benefit under the Stevedoring Employees Retirement Fund (the Fund) on the basis that he was totally and permanently disabled within the meaning of the Rules forming part of the Trust Deed of the Fund, and sought consequential and alternative relief. 3 For reasons given on that day, the primary judge dismissed the proceedings and ordered the appellant to pay the respondent's costs of the proceedings. The appellant appeals from those orders.

Circumstances 4 For some years prior to 12 May 2001, the appellant was a waterside worker. On that date, he sustained an injury. He has not worked since. 5 The appellant had been a member of the Fund since 1982. The Fund's Rules are contained in a Schedule to the Trust Deed made on 16 October 1967, but they have been amended on a number of occasions since then. At times material to this case, Rule 2 and the relevant part of Rule 17 provided as follows: 2. Except where otherwise expressly provided, where any issue of fact or question of fact arises under or in the application of these Rules, a decision of the Trustee hereon shall be final and binding upon all Members, and the Union as hereinafter defined.

17. As from 29 August 2002, a Contributing Member or a Non-Contributing Member is entitled to a total and permanent disablement benefit if: (a) the Member's employment as an Employee or a Permanent Employee is terminated solely on the grounds that the Member's physical or mental condition at that time is such that the Member is permanently incapable of performing the Member's duties satisfactorily or is a danger to others;

(b) the Trustee has received a report from each of at least two medical practitioners which satisfies the guidelines established by the Trustee from time to time and which expressly states that in the medical practitioner's view, the Member is by virtue of the Member's physical or mental condition: (i) incapable of performing the Member's duties or may be a danger to others because of his or her physical or mental condition; and

(ii) unable ever to work again in a job for which the Member is qualified by education, training or experience; and

(c) the Trustee has received a report from each of at least two medical practitioners which have been appointed by the Trustee which satisfies the guidelines established by the Trustee from time to time and which expressly states that in the medical practitioner's view: (i) Member's employment as an Employee or a Permanent Employee was terminated solely on the grounds that the Member's physical or mental condition at that time is such that the Member is permanently incapable of performing the Member's duties satisfactorily or is a danger to others; and

(ii) by virtue of the physical or mental condition referred to in paragraph (i), the Member remains: (A) permanently incapable of performing the Member's duties or may be a danger to others because of his or her physical or mental condition; and

(B) unable ever to work again in a job for which the Member is qualified by education, training or experience; and

(d) after receiving the reports referred to in paragraph (b) and (c) of this Rule, the Trustee determines that the Member is entitled to a benefit under this Rule PROVIDED THAT in the event of a division of medical opinion expressed in the medical reports referred to in paragraph (b) and (c), the Trustee shall appoint (at the election of the Trustee) an additional medical practitioner and the Trustee shall base its determination solely on the medical opinion of the additional medical practitioner so appointed; and

(e) the Member has not received or is not due to receive a benefit under Rules 13, 14, 15 or 16 and the Member has not received or is not due to receive a payment as part of a redundancy or early retirement scheme. 6 On 4 April 2003 the appellant made a claim for total and permanent disability benefit (TPD benefit), supported by opinions by Dr Griffiths and Dr Harris, certifying that each of the elements necessary for a TPD benefit was satisfied. The respondent appointed medical practitioners pursuant to Rule 17(c), and they agreed that the appellant's employment ceased solely for the reason that he was permanently incapable of performing his duties as a waterside worker, and that he remains permanently incapable of performing his duties as a waterside worker. However, they did not agree that he would never be able to work again in a job for which he is qualified by education, training or experience. The respondent then appointed an additional medical practitioner, Dr Oates, pursuant to Rule 17(d). Dr Oates agreed that the appellant was incapable of performing his normal duties as a stevedore, but did not consider that he was unable ever to work again in any job for which he is qualified by his education, training or experience. The relevant report of Dr Oates was dated 13 September 2003; and on 13 October 2003 the respondent declined the appellant's claim. 7 On 28 January 2005, the appellant lodged a complaint under s 14 of the Superannuation (Resolution of Complaints) Act 1993 (Cth) to the Superannuation Complaints Tribunal constituted under that Act. That Tribunal upheld the appellant's complaint, and ordered that the TPD benefit be paid to the appellant. 8 The respondent then appealed to the Federal Court under s 46 of that Act; and on 23 November 2006, Buchanan J held that the Tribunal's decision was vitiated by errors of law and he reinstated the respondent's decision: Stevedoring Employees Retirement Fund Pty Ltd v Gilberg [2006] FCA 1590. 9 On 17 July 2007, the appellant through his solicitors Firths sought reconsideration of his claim. The respondent's solicitors responded by letter dated 13 September 2007, asserting that the TPD determination process had been exhausted. 10 The appellant's solicitors then furnished a further report of Dr Griffiths dated 13 December 2007 and a further report of Dr Harris dated 20 February 2008, and again requested reconsideration. The respondent's solicitors replied by letter dated 4 April 2008, asserting that the respondent had no power to reconsider the appellant's claim; and asserting further that, even if it were open to the appellant to trigger the Rule 17 process a second time, the recent letters from the doctors would be insufficient to do so because of shortcomings in those letters. 11 The appellant's solicitors then obtained a further report of Dr Harris dated 7 May 2008; and by letter dated 26 May 2008 provided it to the respondent's solicitors and foreshadowed court proceedings. 12 It appears that there was no further response from the respondent's solicitors, and these proceedings were commenced in July 2008. In the proceedings, the appellant claimed amongst other things that the respondent's failure to reconsider his application amounted to a breach of trust, and that the Court could and should exercise the powers in the place of the respondent; and alternatively that the respondent's failure amounted to a breach of the duties implied into the Rules by s 52 of the Superannuation Industry (Supervision) Act 1995 (Cth) (the SIS Act) and thus gave him a right to damages equivalent to the amount of the benefit, pursuant to s 55(3) of the SIS Act.

Decision of primary judge 13 The primary judge noted competing submissions of counsel for the parties, namely Mr Rayment QC for the appellant and Ms Heath for the respondent, in which the respondent, which then had the name Stevedoring Employees Retirement Fund Pty Limited, is referred to as SERF: [39] Mr Rayment submitted that: (1) a trustee in the position of SERF was bound, by reason of its fiduciary obligations, to reconsider a decision on a discretionary matter when asked to do so;

(2) alternatively, the duties implied into the fund's rules by s 52(2)(b),(c) of the SIS Act led to the same conclusion; and

(3) the material that Mr Gilberg, through Firths, had put before SERF was more than sufficient to enliven the duty to reconsider.

[40] Ms Heath submitted that: (1) there was no power to reconsider;

(2) alternatively, there was, at most, an obligation to consider whether to reconsider; and

(3) the material put before SERF contained nothing new and did not require SERF to reopen its consideration of his claim. 14 He gave the following reasons for his decision in favour of the respondent: [47] In this case, entitlement to a TPD benefit depends, not on the formation of an opinion by SERF, but on the satisfaction of an objective process. A worker must go through the cl 17 process, and that process must result in a medical opinion (either by consensus, or of a single medical practitioner appointed in the case of a division of opinion) that the requirements set out in paras (b) and (c) of cl 17 have been satisfied. As I have said already, in reality there is no element of discretion reposed in SERF. Nor is there any real element of judgment. To the extent that there is an element of judgment, that is left to the medical practitioners.

[48] There is much to be said for the proposition that, in this case, once the cl 17 process has been followed and has produced a result, that is determinative of what the clause makes clear is a question of entitlement. There is a real interest in the final resolution of questions of entitlement. SERF owes obligations to all members of the fund, not just to Mr Gilberg. It is not in the interests of the other members of the fund that claims properly dealt with (and the decision of Buchanan J makes it clear that Mr Gilberg's claim was properly dealt with) should be open to endless reagitation.

[49] If there were some right to have the matter reconsidered, or some duty on SERF to reconsider, the matters to which I have just referred indicate that an applicant for reconsideration would need to put substantial grounds before SERF to enliven that right or duty. There is no basis for thinking that SERF would be obliged to reconsider whenever and so often as it pleases a dissatisfied applicant to request it. If there is such a right or duty, the applicant must show sufficient grounds - some new material or relevant change in circumstances - that bear (or are rationally capable of bearing) on the questions of medical opinion to which, by cl 17, attention is directed.

[50] In this case, the material on which Mr Gilberg relied is insufficient to enliven any such right or duty. In substance, that material was no more than a resubmission of the medical opinions already provided (updated, but to no different effect), with corroborative material from Mr Gilberg (supplemented by argumentative observations as to the reports of the other medical practitioners involved, including Dr Oates). In 2002 and 2003, the opinions of Drs Griffiths and Harris had been relied upon. The medical practitioners retained by SERF had reached a different view. The division of opinion thus revealed had been resolved, adversely to Mr Gilberg, by Dr Oates.

[51] No truly new material was put before SERF in support of the application for reconsideration. In substance, all that Mr Gilberg said in his statement had been said to Dr Oates, and was summarised in Dr Oates' report. Drs Griffiths and Harris said nothing new; indeed, they asserted that there had been no relevant change in Mr Gilberg's position or prognosis. Thus, there was no relevant change in circumstances, or no fresh material, that might require SERF (or a reasonable trustee in its place, acting on the basis of an understanding of the cl 17 process and with knowledge of relevant circumstances known to SERF) to think again about the decision to which it had come.

[52] In this context, it is necessary to bear in mind that the relevant and dispositive opinion was that of Dr Oates. There was nothing put before SERF in July 2007 to require it (or a reasonable trustee in its place) to exercise any obligation or discretion that may exist to ask Dr Oates to revisit his opinion.

[53] Nor, in my view, was there anything in the material relied upon that SERF (or a reasonable trustee in its place) ought to have regarded as having any likelihood of causing Dr Oates to revisit his opinion.

[54] Had I thought that the material put before SERF was sufficient to enliven the right or discretion relied upon (ie, that it could have persuaded a reasonable trustee in SERF's place to reconsider the question of entitlement) , I would not accept SERF's indication that, having reviewed the material, it did not propose to reopen the matter. Thus, I would not accept SERF's alternative (and fairly briefly put) alternative basis for rejection set out in the second letter of refusal. Accepting the hypothesis with which this paragraph commenced, it could nonetheless be that a reasonable trustee in SERF's position, knowing what SERF knew, could have decided not to reopen the matter. But, in my view, SERF's attitude was overwhelmingly coloured by its view that it had no power to reopen. If it were required to consider the merits of the application (and if, contrary to my view, sufficient merits had been demonstrated to enliven the obligation), it should do so unblinkered by its view as to lack of power; and the alternative and blinkered consideration (in the events that have happened) should not be given dispositive weight.

[55] So far, I have considered the position by reference to the general law. However, as I have said, Mr Rayment relied on s 52 of the SIS Act. That section provides that the governing rules of a "superannuation entity" are to contain certain covenants. It was common ground that SERF was and is a "superannuation entity" for the purposes of s 52.

[56] I set out the covenants in question: (b) to exercise, in relation to all matters affecting the entity, the same degree of care, skill and diligence as an ordinary prudent person would exercise in dealing with property of another for whom the person felt morally bound to provide;

(c) to ensure that the trustee's duties and powers are performed and exercised in the best interests of the beneficiaries;

[57] Assuming that there was a duty or power to reconsider, those covenants add nothing to the case. If there were no power or duty to reconsider, those covenants are incapable of supporting one. But, on either view, the conclusions to which I have come on the general law position mean that any separate cases based on the statutory covenant must fail.

Issues on appeal 15 The appellant relies on the following grounds: 5 His Honour erred in failing to hold that the Respondent had power to reconsider its rejection of the claim of the Appellant for total and permanent disability benefits.

6 His Honour erred in holding that the material placed before the Respondent by the Appellant was not such as to call for reconsideration by the Respondent of its rejection of the Appellant's claim for total and permanent disability benefits.

7 His Honour erred in failing to hold that the refusal of the Respondent to reconsider its rejection of the Appellant's claim to total and permanent disability benefits was a breach of trust.

8 His Honour erred in failing to hold that the Appellant had established that he was entitled to payment of a total and permanent disability benefit.

9 His Honour erred in failing to hold that the Appellant had established a breach of the covenants implied by section 52(2) (b) and (c) of the Superannuation Industry (Supervision) Act 1995.

10 That his Honour erred in failing to hold that the Appellant had established that he suffered loss or damage in consequence of the said breach. 16 I will consider in turn the following issues: (1) Is there power to reopen an application under Rule 17? (2) What is the duty of the Trustee when an application is made to reopen such an application? (3) Was such a duty fulfilled in this case? (4) What, if any, relief should be afforded? 17 The first three of these issues were not explicitly decided by the primary judge. The primary judge in effect went straight to the fourth issue, and held to the effect that, because the material provided by the appellant was insufficient to require a reasonable Trustee to reconsider the appellant's entitlement, the appellant's claim failed. In my opinion, it is appropriate for this Court to consider the first three questions, before addressing the fourth.

Power to reopen 18 It was submitted by Ms Heath for the respondent that there was no power to reopen. There was no reference in Rule 17 to suggest that it could be reactivated. Rule 17 was an elaborate provision, and was to be construed in a context where there was a statutory regime for dispute resolution, including an appeal to the Federal Court. This pointed strongly to finality of decisions under Rule 17; and if it had been intended that the procedure could be reactivated, it would have been easy to say so. 19 Notwithstanding these submissions, in my opinion there is power in the respondent to reopen the question of entitlement under Rule 17. 20 To take a clear case, suppose a Member applies for a TPD benefit, satisfies the requirements of pars (a) and (b) of Rule 17, but fails to satisfy either par (c) or par (d). The medical practitioners who gave the reports satisfying par (b) predicted a specific future course of the Member's physical condition that plainly would prevent the Member ever working again, while the medical practitioners who gave the reports under pars (c) and (d) predicted a quite different course that the Member's physical condition would take, which would not prevent him ever working again. After a few years, it becomes clear that the Member's physical condition did take the course predicted by the medical practitioners who gave the reports under par (b) and did not take the course predicted by the medical practitioners who gave the reports under pars (c) and (d). 21 It seems to me that there is nothing under Rule 17 that would, in such a case, prevent the Member submitting two new reports under par (b) of Rule 17, disclosing what course the Member's physical condition had taken; and that if those reports gave good reason to believe that the reports previously given under pars (c) and (d) were mistaken in their predictions, a Trustee acting reasonably would appoint medical practitioners to give further reports under par (c) and, if necessary, under par (d). 22 This is because Rule 17 provides an entitlement to Members, without suggesting that the entitlement is lost irrevocably if the Member once applies and fails.

The duty of the Trustee 23 However, this does not mean that the Trustee must proceed to activate the Rule 17 procedure and appoint medical practitioners to give reports under par (c) of Rule 17 whenever a member seeks to re-open a determination. 24 In the case of an initial application under Rule 17, in my opinion the Trustee need not proceed to appoint medical practitioners to give reports under par (c) unless the applicant provides material capable of satisfying the Trustee of the requirements of par (a) and also provides reports as required by par (b). 25 In the case of an application to reconsider, it is relevant for the Trustee to take into account the trouble and expense to the Trust involved in obtaining medical reports under par (c), and to the circumstance that the previous determination was a final determination of the previous application. 26 If the Trustee did not consider that the material provided in support of the new application indicated a reasonable possibility of a different result by reason of circumstances occurring since the previous application or by reason of evidence not reasonably available at the time of the previous application, it would, in my opinion, be appropriate for the Trustee to decline to obtain further reports under par (c) for the purposes of the new application and to refuse the application. 27 However, if the Trustee considered that the material provided in support of the new application did indicate a reasonable possibility of a different result, by reason of circumstances occurring since the previous application or by reason of evidence not reasonably available at the time of the previous application, and that, having regard to the interests of the applicant and the interests of other members, that possibility justified the expense of appointing medical practitioners to make further reports under par (c), then it would be appropriate for the Trustee to take that course. 28 In my opinion, the Trustee has a duty to address applications to reconsider on the basis I have indicated.

Breach of duty 29 In the present case, the respondent steadfastly maintained it had no power to reconsider; and as found by the primary judge, its alternative basis for rejection of the appellant's claim was overwhelmingly coloured by its view it had no power to reopen. 30 Accordingly, in my opinion, it was shown that the respondent did not address the appellant's new application as the Trust Deed required it to do.

Remedy 31 It was submitted by Mr Rayment for the appellant that the new material was so strong that the appropriate relief would be for the Court to exercise the function of the Trustee, or alternatively for the Court to award damages under s 55 of the SIS Act. However, in my opinion, no basis is shown for bypassing the necessity to satisfy Rule 17(c) or (d) in relation to the second application; and the Court could not reach a conclusion as to the likely result of following the Rule 17 procedure to finality. Further, it is not shown that the appellant has lost the chance of recovery: the respondent can be ordered properly to consider the appellant's application. 32 The question then is whether the Court should do this, having regard to the finding of the primary judge to the effect that there was no material that would or might require a reasonable Trustee to reactivate the Rule 17 procedure. 33 In my opinion, there are two problems with the reasoning of the primary judge on this matter. 34 First, where a Trustee has breached a trust by failing properly to consider an application made to it by a beneficiary, prima facie the applicant is entitled to an order that the Trustee properly consider the application. The Court may decline to make such an order if the Court is of the view that there is no reasonable possibility that the application will be acceded to, that is, that the material in support of the application is not such as to give a reasonable possibility that the Trustee, acting reasonably, will accede to it. However, that is a different question from that addressed (at least initially) by the primary judge, which was whether the material might (par [51]) or would (par [52]) require the Trustee to reconsider; although it should be noted that in par [54] the question was stated (correctly, I think) in terms of whether the material "could have persuaded a reasonable trustee" to reconsider. 35 Second, in pars [52] and [53], the primary judge posed the question in terms of a discretion to ask Dr Oates to revisit his opinion, and a likelihood of causing Dr Oates to revise his opinion. In my opinion, this misstates the issue before the Trustee. The intention of Rule 17 is to provide a benefit when there is appropriate evidence, in terms of the Rule, that certain things are true of a Member, namely those things set out (for example) in sub-pars (i) and (ii) of Rule 17(c). In relation to pursuing the evidentiary requirements of Rule 17, the Trustee should act in a way that is fair to both the Member applying and to other Members. In the case of an application for reconsideration, if the Trustee considers the new material justifies appointing medical practitioners under par (c), the selection of these medical practitioners should be such that it does not prejudice the fairness of the process; and this consideration may operate quite strongly if it should become necessary to appoint a medical practitioner under par (d). That is, in my opinion, if the process reached that stage in the case of the appellant's application to reopen the matter, the respondent would need to consider whether the appointment of Dr Oates again to give the opinion under par (d) would be fair both to the appellant and to other Members. 36 For those reasons, I do not think this Court is bound to accept the primary judge's view as precluding the grant of relief. In my opinion, it cannot be said that there is no reasonable possibility that the respondent, acting reasonably, would decide to proceed with the appointment of medical practitioners to give opinions under Rule 17(c). As put by Mr Rayment, the appellant's new statement and the new medical opinions support the view that the appellant's condition has certainly not improved but rather has got worse, while Dr Oates' opinion was, at least in part, based on a view that back injuries generally improve. 37 There is force in Ms Heath's submission that at the heart of Dr Oates' opinion was the view that the appellant's failure to return to work was due to demotivation and to psycho-social factors; and that there was no basis in the new material for a changed judgment as to the cause of the appellant's non-return to work. However, even if this were so, the entrenchment of such demotivation and psycho-social factors might reasonably be considered itself an aspect of the appellant's physical and mental condition, which could properly be the subject of a medical opinion.

Conclusion 38 For those reasons, in my opinion, the appeal should be allowed. The relief to be granted to the plaintiff is substantially less than that explicitly sought in the summons and on the appeal; and a question may arise as to the appropriate order for costs. 39 I propose the following orders: (1) Appeal allowed. (2) Orders of primary judge set aside. (3) Order that the respondent consider the appellant's application to reopen his claim under Rule 17 in accordance with these reasons. (4) Respondent to provide within seven days any submissions to the effect that the ordinary result as to costs should not follow either at first instance or on appeal, and the appellant to provide submissions in response within a further seven days. 40 CAMPBELL JA: I agree with Hodgson JA. **********

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