Hay v Total Risk Management Pty Limited

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

3974/01 CRISTOPHER HAY v TOTAL RISK MANAGEMENT PTY LIMITED JUDGMENT 1 HIS HONOUR: The plaintiff seeks relief against the defendant as the current trustee of the BHP Billiton Superannuation Fund which is governed by the BHP Billiton Superannuation Fund Rules (hereinafter "the Rules"). The plaintiff's employment with a BHP company commenced on 12 June 1975; he joined the BHP Employees' Superannuation Fund in 1987 as a 5% contributory member; and by virtue of clause A.1.11 of the Rules, and an election under that clause, he became on 17 November 1993 a contributory member covered by Part 10 of Division B of the Rules. 2 Mr Hay, who was born on 19 July 1957, left school at the age of fourteen or fifteen years without having "[done] his fourth year certificate", having grown up in a then rural area. After doing some work in a service station, he obtained employment on a trawler at the age of sixteen for a year. Then he did some work for a steel cabinet maker, and it was just over a month before he turned eighteen that he joined a BHP company. At BHP, his work has been labouring, stoking, shunting and locomotive driving. He has been described by a psychiatrist whose report was requested by the then trustee, Dr N Rose, as "rather limited in his conceptual ability and in his vocabulary… His general knowledge appeared to be rather poor." His own account, supported by his wife, in affidavits relied on by counsel for the Trustee for another purpose, and which were uncontradicted, is that he left school at the age of fourteen after finishing year 8; that his ability to read is "very limited, [his] writing is also extremely limited"; and that he relies on his wife "to write most letters or to read things to [him] and to assist [him] in daily living". In practical terms, his wife, who is a sub-contractor for Australia Post, states that he is unable to assist her with the filling out of registered mail forms "[b]ecause of his writing skills" (scil. the poor standard of his writing skills). 3 On 21 April 1976, shortly after he was put to work as a "loader learner shunter", his left foot was run over by a train, with the result that he has had amputations of part of the outer right side of his foot involving the little toe and the next toe and parts of the metatarsals. His treatment was prolonged, and it was some years after he had returned to work on light duties that the final amputation of the fourth toe of the foot was performed. The injury had, or may have had, a variety of consequences to which reference will be made. In addition, whether purely as a result of some genetic factor or whether also contributed to by a stressful consequence of the injury, the plaintiff developed the chronic and incurable skin condition known as psoriasis, which may also lead, and in this case according to the evidence of the only rheumatologist involved, an eminent doctor consulted on the question, has led to the serious complications of psoriatic arthritis. 4 On 26 August 1998, the plaintiff ceased work, taking voluntary redundancy. Then, on 14 September 1998, he submitted to the Fund an application for disablement benefit. It was and is his case that the reason he accepted voluntary redundancy was his inability to continue to tolerate the work of a locomotive driver. Notwithstanding that some doctors have commented on his ability to do this work for many years despite his injured foot, the overwhelming weight of the medical evidence supports the proposition that he was unfit to do it by the time he stopped working. He said he was having difficulty with his superiors, despite presenting medical certificates, because of the amount of time he had to take off and he was using up leave periods recuperating. Indeed, a great deal of medical opinion indicates that his condition has not changed between 1998 and now and, as he is now, senior counsel for the Trustee conceded in argument that he does not suggest Mr Hay "can work as a locomotive driver". The Trustee's argument is not that it could reject the plaintiff's claim because unfitness was not the reason he left his employment, but that the circumstance of taking voluntary redundancy, although for that reason, was outside the terms of the Trust deed. To those terms I must now turn. 5 The central provision of the Rules, relevant to this case, is clause 5 of Part 10 of Division B, which includes the following sub-clauses: "5.1 In making a determination as to the Disablement of a Part 10 Contributory Member the Trustee may act upon such medical and other evidence as it thinks fit but shall take into consideration any evidence submitted by or on behalf of the Part 10 Contributory Member and may require the Part 10 Contributory Member to submit himself to a Medical Board or Medical Boards for examination. 5.2 Subject to the Rules there shall be payable by the Trustee out of the Fund to a Part 10 Contributory Member whose services are terminated by reason of Disablement, the Part 10 Contributory Member's Disablement Benefit." Of particular importance for the understanding of these provisions is the definition, expressed to apply "unless the context otherwise requires", of "Disablement" in Clause A.2.1: " Disablement means physical or mental disablement caused through illness infirmity or accident to a degree which the Trustee in its absolute discretion, after obtaining the advice of one or more registered medical practitioners considers likely to render the Member permanently incapable of obtaining or continuing in suitable employment as determined by the Trustee having regard to the Member's qualifications training and experience." Also to be noted is the definition of the expression "Medical Board" in clause 1 of Part 10: " Medical Board means a board consisting of one or more qualified medical practitioners appointed by the Trustee for a particular occasion or for a fixed or indefinite period of time and for a particular locality or generally, which appointments may (subject to the terms of any subsisting contract) be terminated by the Trustee at any time." 6 Although the ground of each of the decisions of the Trustee which are under challenge was expressly that the plaintiff had not brought himself within the definition of "Disablement" for the purposes of clause 5, at the hearing in this court, counsel for the Trustee contended that this question did not really arise because Mr Hay should fall at the first hurdle; his services, they say, were not "terminated" within the meaning of clause 5.2. It is argued that services "are terminated", within the meaning of this clause, only when the employer unilaterally terminates them. 7 It is not in dispute, of course, that a contract of employment, like any other contract, may effectively be terminated by either party to it, although some acceptance by the other party will generally be involved, as was the case when Mr Hay accepted the employer's offer of voluntary redundancy. A worker who resigns because some condition from which he suffers incapacitates him can be said to have terminated the contract by reason of that condition, just as much as an employer might be said to have done so if he terminated the contract for the same reason. 8 But the Trustee's argument seeks to assert that the context narrows the construction of this provision, so that only termination by an act of the employer falls within the clause. Counsel draws attention to the expression in a much earlier clause, clause B.1.8, not applicable to members in the category to which the plaintiff belongs, "on his ceasing to be an Officer and a Member prior to his Normal Retiring Age by reason of his Disablement", the argument being that this expression would be more apt to cover a resignation. Similarly, counsel referred to clause B.1.4 where the expression appears "upon his ceasing to be an Officer and a Member in one of the following circumstances", one of them being "retirement on Disablement prior to the Normal Retiring Age". But not only are these clauses removed from the context of clause 5 of Part 10; counsel for the plaintiff was able to show that the deed is something of a composite of a number of disparate schemes, so that a comparison of this kind must be unreliable. Furthermore, there is in fact a relevant context for the expression "are terminated", the immediate context of clause 5 itself. This includes clause 7.1, which provides: "Subject to the Rules there shall be payable by the Trustee out of the Fund if the Service of a Part 10 Contributory Member shall be terminated by his death - his Death or Disability Benefit." Although the tense is different, this provision uses the same verb in the same voice with the same subject (except that the word "services" is now in the singular) in relation to a termination which would not normally be attributable to an act of either the employer or the employee, although, in a particular case, it could be either - for it could be by reason of suicide, or it could be by reason of the employer's gross negligence in the conduct of an operation causing death. Indeed, an examination of the documents in evidence shows clearly that the concept of termination, applied to services or employment, is commonly used in a broad sense in connection with the employment relationship. 9 The point is highlighted by a BHP Superannuation Fund printed form headed "Notification of Disablement Claim", the form which was used by BHP officials in their report on this very case on 23 August 1998. It includes a section that commences: "What was the primary reason for the termination [emphasis added] of the Member's employment?" There follows a list of suggested reasons accompanied by boxes provided so that the relevant one may be ticked. Those reasons include actions both of the employer and of the employee, and in particular, both "Dismissal" and "Voluntary Resignation". At the bottom of the list is a request from the Trustee to the official completing the form for relevant documents including "copies of any resignation notice or acceptance of termination agreement from the member, or other document containing the terms of any voluntary retirement package accepted by the member", and a few lines before the list the form contains the question "What date was the employee's employment terminated?" This being the very form provided for such a case as the plaintiff's, the Trustee's submission that the termination of an employee's employment by the acceptance of a voluntary retirement package is not such a termination as is meant by clause 5, when it uses the expression "are terminated" with reference to the services of an employee, seems inconsistent both with the Trustee's own use of language when it provided the form and with what appears to have been the normal use of language in this industrial context. The significance, of course, is that this document demonstrates how the expression "are terminated" is understood in such a context - I am not suggesting the act of the Trustee in promulgating the form could per se affect the construction of the Rules: cf L. Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235 at 261, which is discussed in Carter and Harland on Contract Law in Australia, 4 ed (2002) 712. 10 Perusal of other documents in this case reveals further examples. A striking one is the Instrument of Delegation executed by the previous Trustee of the BHP Superannuation Fund under which the earlier decisions to reject Mr Hay's application were made. In a schedule, are listed the powers delegated in respect of the determination of "all applications by Members, former Members and Beneficiaries of the Fund for death and disablement benefits from the Fund, including… determining" a number of questions, of which the first is: "whether a former Member has terminated his or her employment by reason of disablement". 11 Counsel for the Trustee referred me to Teachers' Pensions Agency v Hill [1984] 4 All ER 865, where the application of the expression "his employment was terminated by reason of his redundancy or in the interests of the efficient discharge of the employer's functions" was held by Sullivan J not to be attracted by a mere failure to renew a short-term contract of employment. But this seems to me to be a far cry from the present context. In any case, the more relevant aspect of the decision is a citation (at 869) from the Court of Appeal decision in R v Secretary of State for Social Services, ex parte Khan [1973] 1 WLR 187, where Buckley LJ said (at 191): "[T]he verb "terminate" can be used either transitively or intransitively. A contract may be said to terminate when it comes to an end by effluxion of time, or it may be said to be terminated when it is determined at notice or otherwise by some act of one of the parties [emphasis added]. Here…"terminated"…postulates some act by somebody which is to bring the appointment to an end, and is not applicable to a case in which the appointment comes to an end merely by effluxion of time." 12 I was also referred to Blaikie v SA Superannuation Board (1995) 65 SASR 85, where Olsson J construed s 35(1) of the Superannuation Act 1988 (SA) which refers to a contributor's employment being "terminated by retrenchment". In the context, that could only refer to termination at the instance of the employer. But his Honour made the observation (at 102): "In its normal connotation the verb 'terminate' is somewhat ambulatory. It simply means to bring, put or come to an end. Without qualification, the word 'terminated' simply means brought, or put to an end. It is consistent with either party bringing a contract of employment to an end." 13 Although the question is not free from difficulty, I have concluded that the Trustee's new point fails. It is therefore necessary to turn to the material upon which it must be decided whether it was open to the Trustee to reject the plaintiff's application for a Part 10 Contributory Member's Disablement Benefit. As I have said, that rejection was ultimately (although not perhaps initially and not without a digression to be mentioned) based on the definition of "Disablement" alone, and it cannot, in view of senior counsel's concession in argument, now be suggested Mr Hay was or is other than unfit for his work as a locomotive driver. So the issue is narrowed to whether the Trustee could reasonably conclude Mr Hay's disablement was not such as to be "likely to render [him] permanently incapable of obtaining or continuing in [some other] suitable employment as determined by the Trustee having regard to [his] qualifications training and experience". In reaching its conclusion, the Trustee (by clause 5.1) "may act upon such medical and other evidence as it thinks fit but shall take into consideration any evidence submitted by or on behalf of [Mr Hay]". It did require him to submit himself to a number of medical examinations, and I infer that the examiners in question were appointed as "Medical Boards" within the meaning of cl.5.1. 14 Mr Hay's application was first considered at a meeting of a committee holding the Trustee's delegation pursuant to a power of delegation that was not challenged, the Port Kembla Regional Committee, on 5 May 1999. The minutes of that meeting contain the following record: "The Committee determined the following concerning Christopher Hay's case that:

the member was not suffering from a condition that precluded them [ sic ] from performing the functions of their own position; - this incapacity was likely to be permanent; - the incapacity was not likely to render the member incapable of obtaining or continuing in suitable employment; and - such a condition was not likely to render the member permanently incapable of performing suitable employment with reference to the member's training, education, and experience. It was determined in the case of Christopher Hay that the Resignation Benefit under Part 10 Contributory Member Rule 9 be paid." It would seem probable, having regard to the finding expressed in the words "this incapacity was likely to be permanent", that the first part of this resolution has been erroneously recorded by virtue of the accidental insertion of the word "not" before the word "suffering"; otherwise there would be no incapacity to be picked up by the immediately following expression "this incapacity". So I think it is reasonably clear that what the Committee was finding was simply that Mr Hay's incapacity was not likely to render him incapable of obtaining or continuing in suitable employment. 15 In reaching its conclusion, the Committee had before it a number of medical reports, a letter from a Centrelink Manager showing that the plaintiff had been granted a Disability Support Pension very shortly after he ceased working and an Absenteeism Record described as "dated 3/02/96" but actually covering the period from that date to the middle of August 1998, a record which seems to show a significant increase in the rate at which days were taken off on the basis of illness during the portion of 1998 when Mr Hay worked compared with the previous two years. 16 It is necessary to indicate the nature of the information conveyed by the medical reports. There was a report from a Dr A Rashid, the plaintiff's general practitioner since 1980. She referred to the accident in 1976 as involving "amputation of the fourth and fifth toes and the distal two thirds of the fifth metatarsal and the distal half of the fourth metatarsal", resulting in light duties for two years after which Mr Hay worked as a locomotive driver under "restrictions not to walk long distances and he was exempted from wearing safety boots". The doctor noted that he was "unable to wear safety boots" and "only able to wear soft joggers", the amputation "making him unstable on his left foot" with "callus skin on the sole and [the foot] is very tender along the lateral edge of the foot". In 1989, the doctor records, "he developed psoriasis, which gradually became worse. The rash in the gluteal region and posterior thighs makes it very uncomfortable for him to sit for long periods". The report also refers to "pains in the lower back" which the doctor considers to be "due to myofascial strain". It is noted that x-rays show "grade 1 spondylolisthesis of L5 on S1 with narrowing of L5-S1 disc space and pars defect at L5". Mr Hay "also suffers with pain in the left side of the neck and left shoulder", neck movements being "painful" and shoulder movements restricted. Again an x-ray is said to reveal bony evidence in the form of "a subacromial spur" and "an ultrasound of the left shoulder shows mild supraspinatus tendon impingement on internal rotation and abduction" for which he has been referred to an orthopaedic surgeon for further management. Dr Rashid concluded: "He is unable to do strenuous work because of the pain in the left foot, lower back and left shoulder. Also he is unable to sit for long periods because of the psoriasis. He will need orthopaedic treatment and physiotherapy for the left shoulder pain; and physiotherapy and exercise therapy for the lower back pain and he needs treatment for the psoriasis. The prognosis is fair." (I have made some obvious corrections of typing errors.) 17 The Trustee referred Mr Hay to a dermatologist, a doctor Lobel, for a report on his psoriasis. Dr Lobel found "a moderate degree of psoriasis affecting both flanks extending onto the sides of the abdomen, the whole of the lumbar back and buttocks, the backs of the elbows and a circumferential distribution from the knees to the ankles", with "multiple small spots of psoriasis on the thighs, chest and upper back and a few spots of psoriasis without scaling in the scalp". The doctor considered the psoriasis developed about 1987, and as to its effects, he commented: "Although Mr Hay's psoriasis is very itchy the condition would not affect his ability to drive a diesel locomotive." He considered: "From the point of view of his skin disease (psoriasis) Mr Hay would be fit for light to moderate physical duties such as the work he is currently doing as a locomotive driver." (The doctor obviously must have misunderstood the current situation, since he examined Mr Hay on 8 December 1998, some four months after he had ceased work.) Bearing in mind Mr Hay's restriction of work capacity by reason of the skin disease alone, it is interesting that Dr Lobel refers to that disease as "as a minor part of Mr Hay's problem"; however, he did not consider himself, as a dermatologist, able to comment on the other matters. 18 The orthopaedic problems were referred by the Trustee to an orthopaedic surgeon, Dr Ho, who reviewed Mr Hay on 8 February 1999. He noted the "crush injury to his left foot", which was "run over" by a train causing multiple operations, and he commented: "He still has residual problems of deformity, pain, callosity, unstable gait and limping and [is] not able to wear safety boots at work." There were also complaints of "problems with his neck, left shoulder and his left hip", with "quite significant pain in the neck and stiffness also", soreness of the left shoulder, back pain, and, of course, in addition the plaintiff was suffering from the psoriasis. Dr Ho considered that the plaintiff "look[ed] a little depressed". He noted muscle spasm in the neck, and restriction of movement in the neck, shoulder and back. In the foot, he noted "the skin feels very sensitive" and "[t]he left ankle and the left subtalar joint were all very stiff. He hardly had 50% of the normal movement". The doctor considered an x-ray of the back "showed a Grade 1 spondylolethesis [sic] in L5 on S1". Dr Ho summarised his opinion as follows: "Mr Hay had a lot of medical problems. Certainly a long history of trauma and deformity in the foot creating a lot of mobility problems. He had skin callosity, sensitive stump and pain and he is unable to walk with a normal gait. The injury in the foot has also made it impossible to wear safety shoes and this compounded with the recent onset of neck problems certainly a type of cervical spondylosis with reticulopathy to the left upper limb. I am not sure about the shoulder symptoms, whether it is referred pain from the cervical spine or is another pathology in the shoulder joint. His back also had degeneration with spondylolethesis causing stiffness and pain. All these problems together with the psychological condition of the depression and lack of motivation will make it very difficult for him to find any suitable job. With a painful foot and unable to wear work boots he will not be fit for any job that requires prolonged period[s] of standing or walking or lifting. With a painful back he is unable to do any jobs that involve any prolonged sitting. With a painful neck and stiff shoulder he is not able to do anything which involves a bit of above shoulder activities. All in all I feel it will be difficult to find any suitable job for him. I think the long term prognosis is guarded and future treatment I would aim at first getting psychological support and assessment to rid him of his depression and other chronic psychological problems. He would then be able to be more motivated and active. I am really very doubtful of any suitable kind of job with these multiple kinds of problems and such a chronic history of disability." 19 Although Dr Ho's report is that of an orthopaedic surgeon, and is mainly concerned with multiple physical findings supported by positive x-rays and visible deformity, it will be observed that this opinion also makes reference to "depression and other chronic psychological problems", of which, however, the only evidence noted from the doctor's detailed examination is that "he looks a little depressed". The Trustee accordingly referred Mr Hay to a psychiatrist, a Dr N Rose. Dr Rose saw him on 19 March 1999, when he reported the plaintiff's limited schooling, conceptual ability, vocabulary and general knowledge to which I have already referred. He reached the conclusion: "I do not consider that Mr Hay is suffering from any psychiatric illness or condition. Any irritability that he may have shown in the past does not appear to have been sufficient for a psychiatric diagnosis to have been made." 20 For the Trustee, it was contended at the hearing before me that Dr Rose's finding of no psychiatric illness or condition might have been thought by the Committee to cast a shadow over Dr Ho's opinions generally. However, there is much in Dr Rose's report to confirm that the plaintiff has suffered pain which, in the nature of things, must have had some consequences. The fact that he did not develop a recognised psychiatric condition could not reasonably be taken to mean that he did not exhibit problems to Dr Ho - only that those problems, according to the psychiatrist, were more likely to have been natural reactions to physical disabilities than manifestations of a psychological condition. After all, Dr Rose commenced his own "SUMMARY AND ASSESSMENT": "Mr Hay is a 41 year old man who had a severe injury to his left foot at work in 1976 and who subsequently developed severe psoriasis and musculo-skeletal problems producing pain. He became irritable and moody when he was given oral steroids for his psoriasis. When he stopped taking the steroids his moods improved and when he stopped work on 28 August 1998, his moods improved further because his sleep was better now that he was no longer do[ing] shift work." That assessment followed a history of "pain and exquisite tenderness in the stump of the foot", persisting over many years and up to the present, together with a history of aching and pain "in the head, neck, left shoulder, back and left hip". These complaints, of course, are in accordance with the findings of the orthopaedic specialist. 21 The Committee also had before it a worker's compensation report from a general surgeon, Dr Berry, who examined Mr Hay on 27 January 1999. He considered the foot injury "could certainly result in excess strain being put on the left side of the body especially as the patient tries to compensate", thus leading to the pains which Mr Hay describes. He expressed the opinion: "On the basis of today's examination this patient is fit only for light sedentary work which does not require prolonged standing and walking and which does not require heavy lifting with the left upper limb. His prognosis is guarded as he is still symptomatic. There is unlikely to be any significant change in the foreseeable future. There is no indication at this stage for active surgical intervention and his treatment should therefore remain conservative." 22 Finally, the Committee had before it a report of an orthopaedic surgeon, Dr Daymond, but as this was dated 19 July 1994, it could only have assisted by way of background confirmation of the severity of the original injury to the left foot and the existence of psoriasis over a considerable period. 23 These reports having been considered by the Committee, as I have said, on 5 May 1999, a letter bearing the same date was sent to Mr Hay on behalf of the Trustee, the salient paragraph of which reads: "On Wednesday, 5 May 1999 the Trustee of the BHP Superannuation Fund considered your application for a Disablement benefit and determined that you do not satisfy the definition of Disablement under the Fund's governing rules." It will be seen that the terms of this letter confirm the conclusion already drawn from the language of the minute that there was an error in its formulation, the intention of the resolution being to accept Mr Hay's inability to perform the functions of his position as a locomotive driver, but to reject his claim upon an application of the definition of "Disablement". 24 In the letter advising Mr Hay of the decision upon his application, he was also informed that it was open to him to make a complaint to a named Complaints Officer. His wife telephoned that officer, and subsequently wrote a detailed letter on his behalf, which he signed, seeking a reconsideration of the decision. Further medical reports from a Dr Salmon and a Dr Puri were enclosed, together with photographs illustrating Mr Hay's condition. The letter pointed out how limited his experience and qualifications for employment were. In response, the Trustee advised Mr Hay on 30 June 1999 that his disability claim would be reassessed by the Committee on 23 August 1999, an earlier proposed meeting in July having been cancelled. 25 The report of Dr Salmon referred to consultations with Illawarra Dermatology Associates on 9 April 1990, 1 October 1993, 28 November 1994 and 18 November 1998, when Mr Hay was seen by various dermatologists, Dr Salmon being the one who saw him in 1993. The doctor reported that he "has widespread psoriasis", and that "[t]here is a possible relationship between stress and psoriasis", although "this is very difficult to prove one way or the other". The doctor thought that if Mr Hay "were to see one Dermatologist on a continuing basis, it may be possible to significantly improve his disease". However, he concluded: "It is likely that Mr Hay's psoriasis will be lifelong. As it is thought to be a genetically based disorder, it is impossible to cure, only to suppress. Patients with extensive disease such as his generally have the condition permanently. At the same time, the condition can undergo improvement and exacerbation, but I think that it is most likely to be permanent." 26 Dr Puri is an orthopaedic surgeon in Wollongong. He examined Mr Hay on 8 March 1999. Dr Puri found "cervical muscle spasm and neck movements were very limited" on examination. He also found "lumbar muscle spasm and extension of the lumbar spine was painful", but "straight leg raising was normal". Also "sub-acromial crepitus was present on movements of the shoulders and local tenderness was present on the rotator cuffs which was more marked on the left side". Old x-rays of the cervical and lumbar regions "did not show any significant abnormalities". He noted, of course, the amputation of part of the foot and the "bad psoriasis". Dr Puri's opinion was expressed as follows: "Mr Chris Hay sustained an injury to his left foot in 1976 while working as a shunter which led to a partial amputation of his left foot with the loss of lateral toes. This injury to his left foot has been responsible for continued pain and disability in the left leg and he developed psoriasis which could be related to his injury and suffering from this accident. His psoriasis has caused psoriatic arthropathy ["arthropathy", as a medical dictionary will confirm, is a broad term which comprehends arthritis] involving the spinal joints and his shoulders and left elbow. He is disabled a great deal due to pain in his left hip region and also the left side of the neck which has been caused by his psoriatic arthropathy. I feel his condition is indirectly related to his original injury to his left foot causing nervous imbalance in his body. I consider him unfit for any useful employment due to severe disability in his cervical and lumbar spine. He has 25% percent loss of efficient use of his left arm at and above the left elbow considering the arm as a whole and this is of a permanent nature. He has 30% loss of efficient use of his left leg above the knee considering the leg as a whole and this is also of a permanent nature and this is not considering his left foot disability. Mr Chris Hay is severely disabled due to psoriatic arthropathy mostly affecting his spine and he may be benefited by an opinion from a rheumatologist." Together with the reports of Drs Salmon and Puri, according to minutes of the Committee, there was also submitted an extract from Taber's Cyclopedic Medical Dictionary. The copy in evidence is not legible, but reference to the 18th ed. (1997) of that work reveals that in "about 5% of psoriasis patients, arthritis will develop". 27 Despite the assurance Mr Hay had been given of a consideration of his claim on 23 August 1999 and that the meeting previously proposed for July had been cancelled, the Committee met on 29 July 1999. The minutes of that meeting record: "After considering all the information presented to it, the Committee was satisfied that the Port Kembla Regional Committee had followed correct procedures and that its decision was consistent with the Fund Rules. It therefore determined to affirm the original decision of the Port Kembla Regional Committee that the member did not qualify for a Disablement benefit." Following this decision, a letter was written to Mr Hay on 3 August 1999 on behalf of the Trustee, which contained the following: "On Thursday, 29 July 1999 the Trustee of the BHP Superannuation Fund considered your application for a Disablement benefit and determined that you do not satisfy the definition of Disablement under the Fund's governing Rules. " 28 This second decision denied Mr Hay the opportunity to present further evidence before 23 August 1999, a matter of particular importance having regard to the concluding words of the opinion of Dr Puri suggesting consultation with a rheumatologist. Dr Puri had been the first to consider that the widespread complaints of pain and restriction of movement, which had been previously reported in respect of Mr Hay, might be due, not to the depression Dr Ho had thought might be playing a part, but to a recognised complication of psoriasis, psoriatic arthritis. Plainly, this view, if accepted, would lend strong support to Dr Ho's opinion about the extent of the disability. Dr Ho was also an orthopaedic surgeon practising in Wollongong. But not only was Mr Hay denied an opportunity to supplement the evidence; although the letter of 3 August 1999 suggests the matter had been considered afresh, and another determination made on the basis that the definition of "Disablement" was not satisfied, the fact is the minute shows clearly the Committee had dealt with the matter quite otherwise. What it had decided was that the previous Committee's decision had been made by the following of "correct procedures and that its decision was consistent with the Fund Rules". The minute records that "therefore" the original decision was affirmed. That was not a reconsideration on the merits, but merely a vetting of the process by which the Committee, differently constituted, and considering a significantly less complete evidentiary picture, had already rejected the claim. 29 Mr Hay, who had in the meantime acted on Dr Puri's suggestion, and obtained a report from a rheumatologist, wrote promptly to the Complaints Officer of the Fund on 12 August 1999, pointing out that the bringing forward of the meeting of the Committee had denied him the opportunity to submit his further evidence. He asked that the application "be heard" again and enclosed a report from Dr J V Bertouch, a consultant rheumatologist and the Chairman of the Department of Rheumatology of the Prince of Wales and Prince Henry Hospitals. I confidently infer from the form, style and contents of the letter that it was in fact written by Mrs Hay, and I note that the reply of 19 August 1999 refers to a telephone conversation with her. An apology was proffered by that reply, and it was indicated the matter would be reconsidered. 30 Dr Bertouch referred in his report dated 26 July 1999 to the injury, the development of psoriasis subsequently and the fact that Mr Hay had stopped work on 26 August 1998. He recorded that Mr Hay " told me that prior to this there had been steadily increasing problems with joint pain to the stage where he required assistance to get in and out of the locomotive. He was in the habit of asking one of his work mates to physically assist him to get in and out of the cabin. Joint symptoms and stiffness were progressive leading to his retirement from BHP. " On examination, the doctor found "there was extensive psoriasis of the arms, legs and trunk" with "shedding of skin onto the examination couch and carpet". There was "crepitus with movement of the left shoulder although there was a good range of movement present. He had very pronounced stiffness of movement of the cervical spine… . The lumbar spine was also extremely stiff with all movements being restricted because of pain. … Examination of the hips revealed pronounced stiffness of internal and external rotation of the left hip. The right hip was normal." The doctor referred to the x-rays of the left foot of 13 November 1996 and noted: "[U]nreported by the radiologist were a number of erosions [of] the metatarsal heads of both the 3rd and 4th toes. These are typical findings of psoriatic arthritis and the omission of these findings from the report is surprising. X-rays of the lumbar spine taken on 24th March 1998 show a grade 1 slip (spondylolisthesis) of L5 on S1 with narrowing of the L5-S1 disc and spondylolysis at L5. In addition and again unreported by the radiologist were features of inflammatory change in the mid to lower part of the left sacro-iliac joint. These features are consistent with sacro-ileitis and typical of psoriatic spondylitis. X-rays of the left shoulder taken at the same time showed narrowing of the gleno-humeral joint and sclerosis of the humeral [ scil. humerus] consistent with rotator cuff tendonitis." The doctor summarised these matters as showing: "Mr Hay has clinical and radiological evidence of psoriatic arthritis and spondylitis causing joint pain involving the neck, left upper limb, lumbar spine and left foot with radiating symptoms into the left arm and left leg as well. The inflammatory nature of this condition is responsible for his symptoms and there may be more extensive radiological evidence of the disease if other involved joints had been x-rayed." 31 Dr Bertouch also expressed the opinion: "The condition of psoriasis and accordingly that of psoriatic arthritis is well recognised to be associated with physical or emotional stress. A typical example of this situation is the Koebner phenomenon in which psoriasis develops in a scar or wound including a surgical procedure. In addition mental stress or anxiety is recognised to make the rash of psoriasis (and accordingly the pain of psoriatic arthritis) significantly worse. It is also well recognised and established that psoriasis is a genetic disorder and in this regard it is noteworthy that Mr Hay's mother suffers from the same condition. … At present Mr Hay has significant joint symptoms as described and would be unsuitable for his previous occupation as an engine driver. The cause of the disabilities and pain and stiffness as described is related to psoriatic arthritis together with probable supraspinatus tendonitis in the left shoulder, which may also be psoriasis related but can have a number of different other causes, together with a slip at L5-S1 on the basis of bilateral pars interarticularis defects. And the latter condition is unrelated to psoriasis. The injury to his left foot has changed his gait and is a further contributing factor to the symptoms in the left leg and left side of the lower back region." 32 The minutes of the meeting of the Committee on 23 August 1999 include: "After considering all the information presented to it, the Committee confirmed its previous decision that the member did not qualify for a disablement benefit." Since the previous decision was that he did not qualify because that had already been decided by a process that "had followed correct procedures", the decision being "consistent with the Fund Rules", there is an obvious ambiguity about this minute. The decision to deal with the matter again was not based on any perception that the previous decision had not been a genuine reconsideration of the issues on the merits, but was based on the fact that it had denied Mr Hay the opportunity to furnish Dr Bertouch's report. In the circumstances, the fact that the letter written on behalf of the Trustee on 25 August 1999, which followed the meeting, again stated that the Trustee had "determined that [Mr Hay did] not satisfy the definition of Disablement under the Fund's governing Rules" does not help, since the very same words had been used in the letter advising Mr Hay of the previous decision. No evidence was given on behalf of the Trustee by any person present at the meeting, so that the only reasons revealed to the court are those suggested by the documents to which I have referred. In considering whether any particular inference may be drawn from the documents, I think the court may take into account the fact that the Trustee now had before it the report of an eminent rheumatologist which, on any reasonable view, must have illuminated the apparent conflict between Dr Ho's attribution of some weight to psychological factors and the psychiatric opinion that Mr Hay did not suffer any psychiatric illness. In the light of the report of Dr Puri, so comprehensively confirmed by the opinion of Dr Bertouch, and by Dr Bertouch's re-examination of x-rays that had not previously been reported on properly, it seems to me there was no reasonable basis on which any reasonable trustee could have reached the conclusion that Mr Hay was other than "permanently incapable of obtaining or continuing in suitable employment as determined by the Trustee having regard to the member's qualifications training and experience". The Trustee had not sought a second opinion from a rheumatologist or even from another orthopaedic specialist having the benefit of the finding of extensive psoriatic arthritis and spondylitis confirmed by Dr Bertouch and by radiological evidence. Nor had the Trustee any evidence challenging or qualifying the material that showed how limited were Mr Hay's "qualifications training and experience". 33 In the light of the strength of the case presented on behalf of Mr Hay, I think the proper conclusion is that the Committee retained its erroneous impression of the task it was performing, and that this is the explanation of its decision, upon which the Trustee then acted; alternatively, the Committee failed to give genuine consideration to the issue before it. As confirmation of that conclusion, if there be a doubt, I am entitled to take into account that the Trustee has given no reasons, nor any evidence as to what happened: Maciejewski v Telstra Super Pty Ltd (1998) 44 NSWLR 601 at 604; Knudsen v Kara Kar [2000] NSWSC 715 at [61]. 34 Following this third rejection of his application by the Trustee, Mr Hay commenced the present proceeding in the Supreme Court on 3 July 2002, and he and his wife both swore affidavits in support of his case. This evidence confirmed the statement that prior to 1998 his condition "was getting so that he had to take all his sick leave…and also had to use his holidays…[and] was also using his long service leave to take time off from work" because of his condition. Mr Hay's affidavit confirmed that he was "threatened by management constantly regarding the number of sick days [he] took", that he resorted to annual leave from about 1995 "because I physically could not perform my work" and that he was encroaching on his long service leave. 35 Both Mr and Mrs Hay referred in their affidavits to Mrs Hay's position as a mail contractor for Australia Post. For the financial year from 1 July 2000 onwards Mrs Hay set up a partnership between herself and Mr Hay "for tax purposes". It was she who held the mail contract, but she performed it through the partnership. Mr Hay helped with some activities in relation to the partnership, taking mail and parcels out of a van and into mail delivery boxes. Mrs Hay swore: "If I was not married to Chris, I would not employ him to perform this work since it is something that I could do by myself. He is there basically to keep me company in the performance of delivering the mail and parcels. The only thing that he could actually assist me in doing is filling out the registered mail forms. Because of his writing skills he cannot even assist me with this. I employ somebody else to sort parcels because Christopher cannot do it because of his reading and writing skills. I employ 4 people in total, I do not believe that Christopher could perform any of the tasks that these 4 people perform on [a] regular basis and which would return a profit." 36 Mr Hay's affidavit corroborates his wife concerning the formation of the partnership "for tax purposes". He describes what he does physically in the following terms: "My duties in carrying out the partnership is [ sic ] basically to drive with my wife when delivering the mail and parcels. I will occasionally go to the mail delivery boxes and deposit the pre-sorted mail into these boxes for the postmen to pick up on the routes to continue delivering the mail. I spend probably about 3 to 4 hours driving with my wife a day. My reading and writing skills have improved throughout the years but they are still not up to the average of my friends and associates." 37 In addition to these affidavits, and for the purposes of a reconsideration of Mr Hay's application to which I shall refer, the material filed included a letter from Australia Post dated 30 July 2002 certifying that "Amanda Hay [Mr Hay's wife] is the exclusive holder (Contractor) of the mail service no 6344 being designated as WOLLONGONG SOUTH WEST PARCELS AND DEPOT BAGS." It also included some taxation information showing that Amanda Hay had in the year ending 30 June 2001 made gross payments of $25,250 to Mr Hay and in the year ending 30 June 2002 had made such payments totalling $15,600, and that for the year ending 30 June 2000 Mr Hay's taxable income had been $7,790. The last figure is taken from a notice of assessment and the other two figures are taken from Australian Taxation Department documents headed "PAYG Payment Summary - Individual Non Business". 38 On 10 April 2002, the plaintiff's solicitors obtained a medical report from a surgeon, Dr W G D Patrick of the Mater Medical Centre Crows Nest. Dr Patrick had examined Mr Hay on 19 March 2002 for the purposes of the case. While Dr Patrick is neither an expert in the complications of psoriasis nor a rheumatologist, his report does update and confirm the opinions of other doctors that the plaintiff's condition presents problems, on an organic basis, which are truly incapacitating. The doctor expressed his opinion of Mr Hay in the following terms: "He has been involved in a severe accident while working as a shunter in 1996 [this is plainly a typing error for 1976, since the doctor had earlier referred to x-rays of the left foot showing the amputation and had given the date of those x-rays as 28 May 1984] with crush injury to his left foot with resultant amputation of lateral left forefoot including 4th and 5th toes and distal portion of third toe, as described. Management of this has required a number of surgical interventions. He has been left with local tenderness and some loss of balance and stability. He has also developed psoriasis, a chronic skin condition, symptoms coming on in about 1989, and I believe aggravated by the particular nature and conditions of his work with exposure to dust, oil, graphite, etc., and stress associated with his developing symptoms at left shoulder and low back in particular. I believe he has sustained significant work-related low back injury with aggravation of a developmental spondylolisthesis at the lumbo-sacral level with ongoing low back pain but without significant sciatica. He has also developed significant work related left shoulder injury, with development of rotator cuff tendonitis and some degree of subacromial bursitis/impingement. I believe his continuing symptoms as described are genuine, consistent with and significantly resulting from his work injury and the nature and condition[s] of his work as described. He continues to be incapacitated for his former work as a loco driver, and I believe the reality is that as he presents in March 2002 he is effectively incapacitated for all work. Following my examination of Mr Hay, and taking the total picture into account, it is my opinion that Mr Hay is indeed permanently incapable of obtaining or continuing suitable employment having regard to his injuries, medical condition, qualification, training or experience. I believe that at the time of taking voluntary redundancy in 1998, this situation of permanent incapacit[y] pertained. He presents as genuine." 39 Counsel for the Trustee submitted that it would have been open to the Trustee, upon looking at Dr Patrick's report, to have discounted his opinion about Mr Hay's incapacity on the ground that the doctor was misinformed concerning what he was actually doing. Reliance was placed on a statement in the report: "Mr Hay's wife continues to work full time as a contractor with Australia Post, delivering parcels and mailbags in Wollongong district. She has been doing this for about five years. Mr Christopher Hay himself is not working outside the home at present." 40 But this submission assumes both that the minimal activity described by Mr and Mrs Hay should be counted as "working outside the home" and that, had the doctor taken it into account, it might reasonably be thought he would have reached a different view about incapacity. A submission that Dr Patrick had also misunderstood the date of Mr Hay's injury was withdrawn during the argument upon counsel examining the earlier portions of the report. It seems to me what a reasonable trustee would have made of Dr Patrick's report is simply that a very well qualified general surgeon, who holds appointments in numerous hospitals, considered Mr Hay organically severely incapacitated, although, as he is not a rheumatologist, he may well have been inclined not to see in the x-rays what Dr Bertouch saw and to attribute much of the plaintiff's pain to causes unrelated to psoriatic arthritis. But he is yet another doctor who accepted the pain as genuine, and its consequences as incapacitating. 41 On 27 November 2002, the solicitors for the Trustee obtained a report from yet another surgeon, Dr D C Glenn of Med-Law Associates. Dr Glenn reported concerning the history he was given about Mr Hay's employment situation since August 1998 in terms which may cast some light on the question, on that subject, arising out of Dr Patrick's report. He wrote: "Mr Hay stated that he had not worked since August 1998 when he was retrenched from BHP after having worked for them for approximately 22 years. … Mr Hay said that he has not worked since. He stated that his wife had a business delivering parcels and mailbags for Australia Post and that he was paid a regular salary out of the proceeds from this contract. He said that he did very little work varying between ½ to 2 hours per day. He occasionally sorted some parcels and did some driving for his wife while she was making deliveries." Before going on to indicate Dr Glenn's opinion, I should refer to a further criticism raised by counsel for the Trustee arising out of this statement. He said that it was inconsistent with Mr Hay's affidavit in which he concluded his description of what he did for his wife, it will be recalled, by saying: "I spend probably about 3 to 4 hours driving with my wife a day." But it seems to me this criticism is particularly unconvincing, and could not affect the judgment of a reasonable Trustee. The picture conveyed both by the affidavits of Mr and Mrs Hay and by the history recounted by the doctor is of the small amount of activity associated with the performance of the wife's mail contract, which the affidavit of Mr Hay estimates involves him in spending probably about 3 to 4 hours driving with his wife in a day, and which the history estimates involves him in doing very little work varying between half an hour and two hours per day. Apart from the problem of human fallibility in making such an estimate, which may very well produce variations, it is not at all clear that the doctor may not have been directing attention to what amount of actual work was involved during the time spent, which the wife in her affidavit stated in terms rejecting any notion that it was all work. I shall come back to this point after referring to an additional matter appearing from Dr Glenn's report. But I should add that counsel for the Trustee also relied on the inaccuracy of the word "retrenched" as applied to Mr Hay's departure from BHP. I find it difficult to think the doctor's use of this word in summarising the history could have influenced the Trustee's decision on the question of incapacity. 42 I turn to what the surgeon consulted by the Trustee himself made of his examination of the plaintiff. He wrote: "Mr Hay states that his present condition is much the same as it was in August 1998, and it is probably reasonable to assume that this is accurate and to use his present status to estimate his condition in August 1998. I believe that in August 1998, Mr Hay was not fit to continue his work as a locomotive driver because of the painful restriction of movement of his left foot, the pain in his hips and shoulders and his extensive psoriasis. He also had significant restriction of movement of his neck and thoracolumbar spine and radiological evidence of an L5/S1 spondylolisthesis." The doctor also expressed the view: "I believe that at that time the prognosis of his joint problems, his psoriasis and his foot would have been poor and I do not believe that there would have been any significant increase in his employment prospects." 43 Dr Glenn was also asked specifically to comment on the report of Dr Patrick and on the affidavit of Mr Hay sworn 3 July 2002. The fact that he was asked to do so is, of course, the final refutation of the argument of counsel for the Trustee that the doctor's views might reasonably have been discounted on the basis that he thought Mr Hay was doing less in relation to his wife's mail contract than the affidavit had acknowledged he was actually doing. The doctor had in fact both sources of information, and his report refers to both. In relation to the specific question, the doctor wrote: "As stated above I believe that Mr Hay was not fit to continue his work as a loco driver and that his employment prospects at that time would have been restricted to part time light semi-sedentary work avoiding repetitive powerful use of his left arm. His placement with these restrictions would be extraordinarily difficult. The present part time work he is doing with his wife's mail delivery business for Australia Post would be the limit of his possible activities." 44 A report dated 23 September 1998 signed by a Dr Lu of Health Services Australia Ltd (formerly the Australian Government Health Service) referred to Mr Hay's "severe psoriasis that affects his back, buttocks and lower limbs", comments that the psoriasis "is stress related as well, as he gets better when he is on holidays or not working", and refers also to the amputations, spondylolisthesis of L5/S1, the effect upon his gait, neck stiffness and neck pain. Dr Lu expresses the opinion: "He is considered unfit for all work and to be reviewed in two years to see his progress." 45 An updated report from Dr Rashid refers to "low back pain for the past eight years", the radiological evidence of spondylolisthesis, pain in the left hip region and in the back of the neck and shoulders. The report says the pain "is aggravated by sitting or standing for long periods of time and bending", the neck movements are restricted and x-rays of the cervical spine "show degenerative changes". It says that "shoulders are painful and shoulder movements are restricted (left more than right)" and it refers to the pain from the psoriasis "if he sits for long periods". The doctor concludes: "In my opinion, on the balance of probabilities, Mr Hay was permanently incapable of obtaining or continuing suitable employment having regards [sic] to his injuries, medical conditions, qualifications, training and experience in approximately May 1999. His condition has remained the same since 1999." 46 The Trustee's solicitors obtained a report from a well qualified dermatologist, Dr Susanne Freeman of Randwick, who reported on 28 November 2002. It appears from Dr Freeman's report that she was provided with a copy of Dr Patrick's report, but there is no reference to the report of Dr Puri or Dr Bertouch. Dr Freeman is not, of course, a rheumatologist, she is a dermatologist, and her report must be taken to be limited to that subject. Curiously, she obtained "no family history of eczema or psoriasis". She did have access to Mr Hay's affidavit. 47 Dr Freeman considered "the degree of psoriasis suffered by Mr Hay should not incapacitate him for working as a locomotive driver or, alternatively, for other types of sedentary or clerical duties". Although Dr Freeman refers thus to the possibility of sedentary or clerical work, there is no indication in her report that she gave any consideration to the question of the plaintiff's limited schooling, literacy and numeracy which were clearly raised in materials submitted to her. As to the opinion of Dr Patrick, which was plainly not based on dermatological considerations alone, or even mainly, she was prepared to say: "I disagree with Dr Patrick who states that Mr Hay is permanently incapable of obtaining or continuing suitable employment and that in 1998 he was permanently incapacitated. Although his widespread itching psoriasis would have been a nuisance condition, it would not have caused permanent incapacity to work. In fact he had continued to work despite the prognosis for the previous six years with only occasionally having a few days off work." Although there is no indication that her physical examination of the plaintiff, as reported by her, or the history she took, again as reported by her, involved anything other than dermatological matters and the barest observation and mention of the partial amputation of his foot, she was prepared to add: "Regarding the injured left foot it seems that Mr Hay was able to work with this injured foot between 1976 and 1998, that is for 22 years. Hence I do not believe that this injury would have resulted in any permanent incapacity to work." Needless to say, this way of putting it ignores the expertise of other specialists who wrote at length of the problems that developed either as a result of Mr Hay's altered gait and the strain thrown on the left side of his body or as a result of psoriatic arthritis or by reason of a combination of these factors and also the other conditions of his spine which have been mentioned. 48 While the matter was awaiting hearing, the plaintiff's solicitors raised with the defendant's solicitors the question whether, having regard to the evidence filed in the case and now available, the Trustee would reconsider its decision. They cited Tonkin v Western Mining Corporation Ltd (BC 9801346, 20 April 1998), a decision of the Full Court of the Supreme Court of Western Australia, as authority for the proposition that the Trustee is obliged to reconsider its position, if requested to do so, upon further evidence in support of a claim becoming available. The relevant passage is in the judgment of Franklyn J (with whose reasons Malcolm CJ agreed) at 25. After some debate, the Trustee agreed by letter dated 25 June 2003 to reconsider the matter "having regard to all of the information which has come to hand since its initial determination". A letter dated 7 July 2003 from the Trustee's solicitors states the position as follows: "[T]he Trustee has agreed to reconsider its determination in relation to whether or not Mr Hay satisfies the definition of disablement contained in the Trust Deed having regard to, not only the information which was put before the Trustee at the time of its previous decisions, but also any information which has become available since that time." This letter, it will be observed, confirms that the question was seen as being simply whether Mr Hay could bring himself within the term "Disablement" as defined. The information which had become available was the information which I have attempted to summarise. 49 By letter dated 4 August 2003, it was formally advised that the Trustee through its delegate committee, the Fund Services Committee, had reconsidered and rejected Mr Hay's claim at its meeting on Friday 1 August 2003. No reasons were stated. 50 Counsel for the Trustee suggested there were some inaccuracies, to which I have referred, in some of the medical reports, and they relied on these as creating justifiable doubts about the doctors' conclusions. However, the matter most strongly urged was the proposition that the Trustee was entitled to regard Mr Hay as capable of obtaining or continuing in suitable employment as determined by the Trustee having regard to his qualifications training and experience, because he admitted, and Mrs Hay confirmed, that he was employed in a mail contract business. To this proposition, counsel for the plaintiff had two answers: (1) That the small amount of assistance Mr Hay rendered in relation to the mail contract did not amount to employment, and could not have been seen to do so, being at most analogous to work in a sheltered workshop; (2) That, if it did qualify as employment, or could have been seen as so qualifying, the work was only part time for quite short periods and could not have been regarded as "suitable employment". In my opinion there is merit in both these arguments. 51 As regards the limited part time nature of the employment, it is important to observe that the definition of "Disablement" does not refer to a permanent incapacity for obtaining or continuing in employment, but in suitable employment. It is true that whether a particular postulated employment is suitable is to be determined by the Trustee, equipped by the Rules with an "absolute discretion", having regard to the Member's qualification training and experience. But this provision is concerned with contributory members who must be taken to have bargained, as a term of their contracts of employment, for rights secured through the Fund. Authority to which I shall refer requires that fact to be taken into account in the construction of the Rules. The definition of disablement only comes to be applied to a Part 10 Contributory Member's Disablement Benefit if the services of that member are terminated by reason of Disablement, so that in effect the reference to suitable employment is a reference to some employment alternative to that which is terminated. In my opinion guidance is offered by the reasoning of Hodgson J (as he then was) in Chammas v Harwood Nominees Pty Ltd (1993) 7 ANZ Insurance Cases 77,995 at 77,999, where he said: "However, I do think that employment must be given a reasonable construction; and I think employment should be limited to full-time employment, and to employment which is reasonably open to the member. That is, I think, the employment must be employment which the member is capable of undertaking, having regard to his education, experience and training, or at least employment which he could become capable of undertaking with further training which it would be reasonable for him to undertake." These remarks were made in respect of a clause which was relevantly less precise than the one with which I am concerned; it referred to "disablement in being incapacitated for further employment" and provided "the question of disablement shall be decided by the Trustee in its absolute discretion and for that purpose the Trustee may rely upon the advice of a medical practitioner". Chammas was referred to by Hunter J in Wyllie v National Mutual Life Association of Australasia Ltd (18 April 1997, BC 9703063) at 52, where his Honour was concerned with a differently worded clause, which referred to a member being totally and permanently disabled if (inter alia) he had "become incapacitated to such an extent as to render the Member unlikely ever to engage in or work for reward in any occupation or work for which he is reasonably qualified by education training or experience". In that context, Hunter J said: "I do not think that the disability provision of the policy necessarily requires the insurer in every case to consider the claimant's capability for full-time employment. There may be circumstances which dictate consideration of employment less than full-time employment. That is not the case here and, in any event, I am satisfied that the plaintiff's incapacity falls squarely within the total and permanent disablement provision of the policy. I have no doubt that what full-time work the plaintiff has performed has been done with significant imperfections and was wholly dependent upon the good will or charity of his employer. In the case of his present part-time employment, I think the evidence discloses that his work is done slowly, imperfectly and, I think, with dependence upon the good will and understanding of his employer." 52 It is unnecessary to reach a view as to whether the present clause could be satisfied by some forms of part time work. I consider it certainly cannot, as a matter of construction, be satisfied by such limited work as is in question here. Counsel for the Trustee placed some reliance on the sums of money involved, as revealed by the taxation documents. But there was no evidence at all to contradict or qualify the material indicating that Australia Post had contracted with Mrs Hay alone and that she had involved her husband in the performance of the contract through a partnership for the obvious taxation reasons. It is a matter of common knowledge that in many partnerships between husband and wife one party, more commonly the wife, performs only a minimal amount of work. Here, the Trustee had nothing to indicate that Mr Hay had done more than provide assistance to an extent that, in any commercial situation, would not have been sufficient to gain employment at all. 53 Independently of the difficulty confronting the Trustee's argument that the nature of the activity and the time involved in it could not satisfy reasonably the term "suitable employment", properly construed, its argument must fail as well on the other ground taken by Hunter J in Wyllie, where his Honour made the following comments (at 40): "I think it is fairly obvious that the plaintiff obtained that work through the charitable disposition of his employer. It was a 'small organisation', the principal of which was a 'personal friend' of the plaintiff and his wife. The work could be done by a junior accountant who required no qualifications. The closest description 'would be book-keeper. Like a book-keeper does the hack work'. The plaintiff described the circumstances in which he was offered the work as follows: 'A. My wife, Julie, was already working there on a part-time basis doing administration, and the proprietor of MPA, Frank Garvin, was a personal friend of ours. He asked Julie if I would be interested in some work because he knew I had had a stroke and he had some bookkeeping work that he wanted done and he knew I needed a job. So he basically offered me a job. I think it might have been more out of charity, I'm not sure.'" On the material before the Trustee, the only real difference here from that situation is that Mrs Hay had the opportunity to gain a tax benefit by the common device of splitting her income. 54 The grounds on which a decision of a trustee of the kind here involved may be challenged were stated by McLelland J in Rapa v Patience (4 April 1985, BC 8500888) in terms which have been repeatedly cited since. His Honour said (at 11): "The grounds on which the performance by trustees of functions such as these may be successfully challenged are those applicable generally to the exercise by trustees of discretionary powers, helpfully discussed by McGarvie J in Karger v Paul (1984) VR 161. As encapsulated by his Honour in that case there are three such grounds and in some circumstances a fourth. They are, first, that the discretion was not exercised by the trustees in good faith, second, that the discretion was not exercised upon real and genuine consideration (which includes consideration of the wrong question - see Scott on Trusts 3rd ed. Vol. 3, para. 187.3), third, that the discretion was not exercised in accordance with the purposes for which it was conferred and, fourth, where the trustees have disclosed (otherwise than in the course of the proceedings in which the discretion is challenged) the reasons for the exercise of their discretion that those reasons are not sound." There is an addendum to this broad statement of principle, also repeated many times in the authorities, which Bryson J in his recent decision in Sayseng v Kellogg Superannuation P/L [2003] NSWSC 945 at [62] put in the form of a citation from the judgment of Windeyer J in Maciejewski v Telstra Super Pty Ltd [1999] NSWSC 341 at [13]: "What the plaintiff must establish to make out her claim for relief is that the decision of the trustee to reject her claim was a decision that no reasonable person could come to on the evidence available to it. It is not the function of the Court to decide whether a particular decision might or might not have been more reasonable in its view than the decision to which the Trustees have [ sic ] come." Bryson J added (at [63]): "In a case like the present where the evidence allows the information placed before the Trustee to be identified, if the Trustee came to a conclusion which no reasonable person could have come to one of the first three grounds of challenge referred to it Rapa v Patience must be available; an unreasonable conclusion cannot be reached without either a failure to exercise power in good faith, or a failure to exercise the power upon real and genuine consideration, or a failure to exercise the power in accordance with the purposes for which it was conferred." The point was put succinctly by Callaway JA (with whom Batt JA agreed) in Telstra Super Pty Ltd v Flegeltaub (2000) 2 VR 276 at 284, where his Honour said: "In the case of an obligation to form an opinion, a court may infer a breach of duty if the decision is one which no reasonable trustee could make on the material which was before it." 55 Although it would be sufficient for the plaintiff to discharge an onus expressed in these terms, there are indications in each of the judgments in Telstra Super Pty Ltd v Flegeltaub that something less might suffice. Ormiston JA made this particularly clear at 279, when he indicated his inclination to accept "at the least, the test suggested by Callaway JA that the court is entitled to infer a breach of a trustee's obligations where a decision is 'one which no reasonable trustee could make on the material which was before it'" (emphasis added). Batt JA (at 286) referred to various authorities for the proposition that "a decision of a superannuation fund trustee such as is now under consideration [a decision similar to the one before me] is different in kind from, and arises in a context different from that of, the exercise of a discretion by a trustee of a trust for bounty or charity." To the authorities mentioned by Batt JA, I would add a reference to the remark of Lord Wilberforce (with whom Lord Reid and Viscount Dilhorne agreed) in McPhail v Doulton; In re Baden's Deed Trusts [1971] AC 424 at 452: "I prefer not to suppose that the great masters of equity, if faced with the modern trust for employees, would have failed to adapt their creation to its practical and commercial character." Callaway JA, who wrote the principal judgment, made it clear (at 280) that he was in general agreement with a number of views that had been stated by the trial judge, Byrne J, in the decision below, Flegeltaub v Telstra Super Pty Ltd (3 April 2000, BC 200001407). In one of those passages, Byrne J set out (at [17]) from the decision of Bryson J in Vidovic v Email Superannuation Pty Ltd (3 March 1995, BC 9504297 at 11), the following observations: "It is a marked anomaly to use mechanisms drawn from fields of law remote from employment and relating to trusts for bounty or charity to administer important entitlements in an employment relationship. I find it difficult to understand why the entrenchment of such important rights against review is so usual, and why this kind of arrangement is so commonly found acceptable to employees in view of the economic significance of such decisions and the economic function of superannuation, not well represented in the terms of the documents, as a contracted employment benefit for which value is given. These anomalies appear particularly clearly where, as in this case, the fund out of which benefits are paid is contributory and an employee claiming benefits is claiming to be paid, at least in part, in his own coin. In an arrangement with a contractual character in which value is given in the expectation that a benefit will be available in stated circumstances, a construction in which one party has an entire and unreviewable power to determine whether that party will pay a sum of money to the other or retain it in its own funds has an element of absurdity. Language which appears to produce such a result serves to demonstrate the strength of the expectation of all concerned that the exercise of the power will be honest and reasonable. It is only on that expectation that the transaction could, as a practical matter, be expected to take place at all, and there would have to be an entirely explicit exclusion of such an expectation before language literally capable of excluding it should be given that construction. The context of the employment relationship has an influence which it is impossible to exclude from judicial scrutiny and perceptions of reasonableness of decisions under superannuation deeds." Byrne J went on to refer to the principles stated in Karger v Paul and to comment: "The cases, however, demonstrate that these principles must be applied in the context in which the decision is made. In the present case, relevant considerations include the fact that the decision of the trustee is not one as to whether and how the trust fund is to be distributed; it is whether the member seeking benefits falls within the definition of total and permanent invalidity so that an entitlement to benefit arises under the deed. The discretion conferred on the trustee is conferred upon it to enable this question to be determined. They include the fact that the member, as a contributor to a scheme which is established as part of the terms of her employment, is entitled not to be treated as a mere suppliant or a volunteer. Her application must be considered honestly, freely and with integrity in the light of the material before the trustee. Where, as here, the trustee has the added obligation to determine what information, evidence and advice is relevant for the task, this obligation too must also be discharged in the same way. It is clear that the trustee is not bound by the rules of natural justice, but the circumstances of the case may demand, as a matter of fairness, that, on a particular matter, the position of the applicant be sought so that a proper decision can be made on that matter. This may arise because there is an apparently adverse matter of fact which is peculiarly within the knowledge of the applicant or for which the applicant may reasonably be expected to have an explanation. It may involve a disclosure to the applicant or to her representative of the adverse material. It may, as the trustee in the present case apparently recognised, require the trustee to invite the applicant to bring forward material upon a particular matter and, further for the purpose, to disclose to her what is the matter which is a potential difficulty in the way of her application. Failure to pursue such a matter may lead to the conclusion that there is a lack of genuine consideration and a lack of good faith in the decision-making process. I do not in this way presume to lay down any hard and fast rules. The heavy responsibility imposed by the deed upon the trustee must be seen in the light of the circumstances of the particular case. " In yet another passage approved by Callaway JA, Byrne J said (at [55]): "I am mindful of the fact that there is, in principle, must to be said for the position that the determination of the trustee under this deed to allow or to disallow a claim for total and permanent invalidity benefit is not a true exercise of discretion. It is true that the trustee in making this determination is required by the trust deed to form an opinion upon certain matters. But it cannot be said, as a matter of logic or even common sense, that the trustee is entirely at large in forming the opinion. It is not, therefore, an 'absolute and uncontrolled discretion' within the meaning of cl1.4.1 of the deed. The trustee is not entitled to make the decision perversely, arbitrarily, capriciously, wantonly, irresponsibly, mischievously or on some basis which is irrelevant to the sensible expectation of the settlor. The duty of the trustee is, plainly, to make a decision on the correct question or questions and to do so in good faith and upon a real and genuine consideration of the material. The function of the trustee in the present case, in accordance with the terms of the trust deed, is to apply the facts as it finds them to a given standard: the specified incapacity for work. If the trustee's state of mind is such that the application of these facts to the standard produces the result that it has formed the opinion that the applicant for benefits satisfies that part of the definition for which an opinion is required, then, subject to the other parts of the definition, the trustee must pay the benefit. This is a very different kind of decision from, for example, that involved in the investing of the trust fund or from the decision of a trustee under a non-superannuation trust to pay the fund to a beneficiary or to a selected member of a class of potential beneficiaries." In Sayseng v Kellogg Superannuation P/L (at [59]), Bryson J returned to the same topic when he said: "It should be recognised, in my view, that the context of the employment relationship has some influence on the application of grounds identified in Rapa v Patience when exercise of discretionary powers by superannuation trustees is challenged. The context in which it may be supposed that discretionary trusts first existed was a context of bounty in the management of family property, and of settlements created by deeds or wills in which a benefactor substituted decisions to be made in the future by trustees for exercises of bounty which, had his life or control long continued, he would have made himself. Perhaps in their origin discretionary trusts in superannuation schemes were perceived as having a similar function as exercises of bounty, but if this was once so it has for a long time not accorded with the realities of the employment relationship, in which employees contribute their own funds, sometimes over many years, and bargain for employer contributions which have the economic function of being part of the reward for employee services. Notwithstanding the incorporation of discretionary tests, the shared expectation that benefits will actually be available as contemplated is extremely strong, and reasonably so. These circumstances must have some influence on the responsibilities of trustees and on the approaches of courts to the tests (to which McLelland J referred in Rapa v Patience ) of good faith and the exercise of powers, real and genuine consideration, compliance with the purposes for which power was conferred and soundness of reasons when reasons are given. In the context of the employment relationship, and of the importance of retirement benefits, including benefits for total and permanent disablement, the responsibility of trustees is high and scrutiny of their decisions is only to be expected and is appropriate." With these opinions, I find myself in complete and respectful agreement. See also the comments of Waddell CJ in Eq in Lock v Westpac Banking Corporation (1991) 25 NSWLR 593 at 601-602; Mettoy Pension Trustees Ltd v Evans (1990) 1 WLR 1587 at 1610; and Electrolux Home Products Pty Ltd v Australian Workers Union [2001] FCA 1600 at [27] - [30]. 56 So I apply the test enunciated by Windeyer J and accepted by Callaway JA, but in doing so, I am entitled to bear in mind that the reasonable trustee would not bring to this task anything less than a knowledgeable and practical examination of the material in order to arrive at a proper and informed opinion. If the Trustee needed further information to understand medical reports, or their implications, it must, as the English Court of Appeal has held (see Wilson v Law Debenture Trust Corp plc [1995] 2 All ER 337 at 345) "give properly informed consideration to the application", which, in my opinion, means it must take the trouble to get the information. The trustee's decision, applying the test that has so far been accepted by the courts, will only be overturned if it is such as no reasonable trustee could have arrived at upon the material considered. However, a reasonable trustee would hold to a high standard in the consideration of such a matter, which involves important rights of a contractual nature. 57 The decision of this case does not require me to determine whether the trustee's initial decision failed the test, for the trustee three times thereafter entered upon the task of reconsidering the matter, and upon each of these occasions, in my opinion, the decision was flawed. I have already discussed the first two of these three occasions. The decision on the third occasion, having regard to all of the material, and it was ample, that was by then available to the trustee, can only be described as one to which no reasonable trustee could have come. It is not simply that the material permitted alternative views, of which that taken by the trustee was by far the inferior. The decision was simply so contrary to the great preponderance of evidence as to be unreasonable in the relevant sense. I have referred to the views of the medical practitioners, a number of them eminent, and a number of them chosen by the Trustee itself under its power to appoint medical boards. As I have said, the principal argument urged on behalf of the Trustee against the medical evidence was not a denial of the strength of these medical opinions in favour of the plaintiff, but an attempt to avoid them by claiming the Trustee could reasonably have thought their authors to have been misled as to the activities the plaintiff was in fact sustaining. I have already explained why I reject this contention. As for the proposition that the medical opinions could reasonably have been ignored on the basis the plaintiff was actually working in a "suitable employment" for his wife, the material fell far short of counsel's argument. 58 For these reasons the plaintiff succeeds. His counsel asks me to make an order requiring the Trustee to pay the benefit, the amount of which the parties are able to agree at $187,874, subject to any question of interest. With respect to those who have suggested otherwise, I think it is clear that Lord Wilberforce, in the speech in which Lord Reid and Viscount Dilhorne agreed in McPhail v Doulton, did favour (at 452), if tentatively, the view that the court has power to make such an order in cases of this kind. And (at 457) his Lordship pursued his view by including, among the courses the court may adopt, where "the proper basis for distribution appear[s]", the course (in favour of which he says "[t]he books give many instances", and he cites several) of "itself directing the trustees so to distribute". However, it is also clear that the current of authority has not generally followed his Lordship's lead. As Ormiston JA pointed out in Telstra Super Pty Ltd v Flegeltaub (at 277), the modern decisions in this area are very largely at first instance, but, sitting at first instance, I think I must follow them, even in a case (such as this) where the material has been exhaustively gathered and the Trustee's final decision, which I am setting aside, is its fourth. In Chammas at 78,001, Hodgson J said "the normal course would be for the Court to refer the matter back to the trustee". In Knudsen v Kara Kar (at [62]), Austin J said: "[T]he principal and perhaps the only forms of relief are an order to remove the trustees and appoint others, or an order returning the matter to the trustees for a fresh decision, to be made in light of the Court's judgment. In Vidovic v Email Superannuation , Bryson J said he found it difficult to see how in principle the Court could do anything else." 59 It is true that in Rapa v Patience (at 14), McLelland J accepted Lord Wilberforce's dictum that "the Court may in a proper case execute the trust", but he qualified it by expressing the opinion "it can only be right to take such a course where at the very least it is established that the existing trustees are unlikely to fulfil the relevant duty in a proper manner." That is a test which is both difficult and uncertain, although Gallop ACJ held it was satisfied in Minehan v AGL Employees Superannuation Pty Ltd (1998) 134 ACTR 1 at 12. But in the most recent decision to which I was referred, Sayseng v Kellogg Superannuation P/L, Bryson J said: "If (as in the present case) the Trustee has a duty to come to a conclusion, the Court may compel reconsideration, even to the extent of removing a trustee who fails to consider a discretionary question on a proper basis, and substituting a new trustee. In my view the Court cannot itself exercise the power which the trust deed confers on trustees. The Court cannot undertake all or part of the duty of a trustee of a retirement fund." 60 The power to remove and replace a trustee can be described as almost an ultimate sanction. And in Maciejewski v Telstra Super Pty Ltd, Young J (at 606) showed that it need not be wielded abruptly or bluntly - he required the Trustee to present a report concerning its reconsideration of the matter by a date he fixed. Plainly, in a proper case, this course (for which precedent is provided in some of the early authorities cited by Lord Wilberforce) would insist in an appropriate way on the requirement that even a discretionary power be exercised according to law. I am prepared to follow that example. In setting aside the Trustee's decision, I shall give a direction to the Trustee, not to decide in a particular way, but to consider the application in accordance with its duty and to report to the court. The only formal order I make at this stage is to direct that the plaintiff bring in, on a date to be fixed, short minutes of orders to reflect these reasons.

Last Modified: 03/05/2004 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.