Mercer Superannuation (Australia) Limited v Billinghurst

JUDGE: MOSHINSKY J DATE OF ORDER: 28 OCTOBER 2016

1. The appeal be dismissed.
2. There be no order as to costs. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Introduction 1 In September 2000, the respondent (Mr Billinghurst) retired from his position as Managing Director of Grosvenor International Australia Pty Ltd, a position he had held for 16¼ years. The company was part of a group known as the Grosvenor Group. Upon his retirement, Mr Billinghurst commenced receiving a lifetime pension from a corporate superannuation fund (the Former Fund). He chose a pension option which gave a full reversionary pension to his wife. 2 In May 2006, the applicant (the Trustee) and Grosvenor Australia Asset Management Pty Ltd (which it will be convenient to refer to as the Employer), another company in the Grosvenor Group, entered into a participation agreement to establish an employer-sponsored superannuation plan (the Plan) within the corporate division of a superannuation fund known as the Mercer Super Trust (the Fund). At about that time, the assets and members of the Former Fund (including Mr Billinghurst) were transferred from the Former Fund to the Fund. 3 The terms of the Plan provided that increases in the pension, including for cost of living, were at the discretion of the Employer. In practice, in most years, the Employer increased the amount of the pension to take into account (in part) changes in the consumer price index (CPI). In the 2011 year, Mr Billinghurst's annual pension was $98,780. 4 During the period 2007 to 2011, the Plan Actuary provided reports to the Trustee on the actuarial valuation of the Plan. These included valuations as at 1 July 2006, 30 June 2007, 30 June 2008, 30 June 2009 and 30 June 2010. In each of these reports, the Plan Actuary made an assumption that there would be discretionary increases in the pension in the future (in most of the reports, it was assumed that pensions would increase by 1.9% or 2.0% per annum). 5 In July 2011, the Employer sought advice from the Plan Actuary about the funding level of the Plan as at 30 July 2011 and the possible termination of the Plan. On 29 August 2011, the Plan Actuary provided advice to the Employer about these matters (the August 2011 Advice). On 7 September 2011, the Plan Actuary or the Trustee provided the Employer with a table setting out a summary of options for the 'defined benefit' part of the Plan (the September 2011 Options Paper). This document included indicative values, on alternative bases, for the conversion of the pensions of current pensioners (including Mr Billinghurst) to lump sum amounts. 6 On 15 November 2011, the Employer wrote to the Trustee to the effect that it would be ceasing to operate as a business with effect from 31 December 2011 (the November 2011 Letter). The Employer noted that, under the designated rules of the Plan (the Designated Rules), it would automatically cease to participate in the Plan upon ceasing to carry on business. The Employer stated that it was "committed to reaching a fair and equitable resolution for each member of the Plan, including the current pensioners" and that it intended to provide each pensioner with "a lump sum arrived [at] on the basis of a fair and reasonable valuation of their current entitlement, to allow, should the pensioner wish, the purchase of an annuity, which would maintain their current stream of income". The Employer requested the Trustee to prepare calculations of the 'transfer value' for each member, on the basis that (a) the transfer value for current pensioners "should be determined by reference to the cost of each pensioner purchasing an equivalent annuity" and (b) the equivalent annuity should be valued "consistently with the current pension arrangements, namely the annuities will not increase in future years and should not be linked to CPI". The Employer noted in the letter that there may be a shortfall in the funding required to meet the desired commitments and the Employer "commits to making an additional contribution to make good this shortfall". 7 On 9 December 2011, the Plan Actuary provided a letter to the Trustee setting out his opinion as to the appropriate basis for determining the transfer value for the current pensioners. He set out two alternative values for each pensioner: (a) the first was based on the assumptions used in preparing the actuarial valuations of the Plan (a discount rate of 7.8% per annum and an assumption that there would be future pension increases); and (b) an "alternative valuation basis" based on a discount rate of 4.3% per annum (based on the yield on 10 year government bonds at the time of preparing the August 2011 Advice) and an assumption that there would be no future pension increases. 8 The figures produced on the alternative basis were slightly higher, and the Plan Actuary recommended that these figures be adopted. On this basis, the transfer value for Mr Billinghurst was $1,432,824. 9 In December 2011, the Trustee wrote to Mr Billinghurst to the effect that one of the options it was considering was payment of a lump sum to him; to do this, it would need the approval of the Australian Prudential Regulation Authority (APRA); and the Trustee's estimate of the lump sum equivalent of his pension was $1,432,824. Subsequently, APRA approved the use of pension valuation factors which would produce that lump sum. 10 In March 2012, Mr Billinghurst wrote to the Trustee complaining about the basis used to calculate the lump sum. His main complaints were: (a) the discount rate had been based on the yield on 10 year government bonds at 29 August 2011 (the date of the August 2011 Advice) rather than at 31 December 2011 (the date as at which the pension was to be valued); (b) no allowance had been made for future pension increases; and (c) no provision had been made for expenses that would be incurred by Mr Billinghurst in administering the lump sum. 11 Also in March 2012, Mr Billinghurst received a lump sum payment from the Trustee of $1,432,824 as a rollover amount. 12 In April 2012, the Trustee, having received further advice from the Plan Actuary, maintained that the lump sum amount was fair and reasonable. 13 Mr Billinghurst requested that his complaint be referred to the Trustee's Claims and Complaints Committee for reconsideration. Mr Billinghurst subsequently provided to the Trustee advice from another actuary, which valued the lump sum equivalent of the pension at $1,921,000, based on: a discount rate of 3.7% (based on the yield on 10 year government bonds at 31 December 2011); an allowance for future pension increases of 2%; and an allowance for expenses of administering the assets of $10,000 per year. The Committee decided to affirm the original decision. 14 In February 2013, Mr Billinghurst complained to the Superannuation Complaints Tribunal (the Tribunal) pursuant to the Superannuation (Resolution of Complaints) Act 1993 (Cth) (the Complaints Act), in relation to the Trustee's determination of the lump sum payout to him. 15 On 29 December 2015, the Tribunal determined that it was not satisfied that the Trustee's decision in relation to the calculation of the amount of the lump sum payable to Mr Billinghurst was fair and reasonable in the circumstances. The Tribunal determined to set aside the Trustee's decision and remit the matter to the Trustee for reconsideration on a particular basis, set out in the reasons of the Tribunal (the Reasons). The Tribunal's determination and the Reasons were communicated to the parties in early January 2016. 16 The Trustee 'appeals' to this Court on a question of law from the determination of the Tribunal pursuant to s 46 of the Complaints Act. Mr Billinghurst has not defended the appeal. (I note that the Complaints Act provides that the Court must not make an order awarding costs against a complainant if the complainant does not defend an appeal instituted by another party to the complaint: s 46(5).) 17 The Trustee's principal contention in its notice of appeal (as originally filed) was that that the Tribunal erred in approaching its task primarily as a form of judicial review of the Trustee's decision, and by focusing upon whether the Trustee's reasoning and decision-making process was fair and reasonable, rather than directing itself to the single enquiry it (the Tribunal) is empowered by the Complaints Act to conduct on such reviews; that is, whether the decision to select the impugned valuation methodology for the purpose of converting members' pensions to lump sums was fair and reasonable in its operation in relation to Mr Billinghurst. 18 At the hearing of the appeal, the Trustee also relied in particular on two additional contentions, which were subsequently incorporated into an amended notice of appeal. They were, in summary: (a) The Tribunal erred in failing to have regard to a relevant consideration, namely that the amount to be applied was limited to the amount realised on redemption of units attributable to the Plan supplemented by an additional contribution that the Employer was prepared to make (as specified in the November 2011 Letter). Thus there was only a finite sum available to be distributed. If the amount distributed to Mr Billinghurst were increased, the amount available for distribution to other members would be correspondingly decreased. (b) The Tribunal erred in failing to have regard to the fact that the whole of the amount available for distribution to members had been distributed in accordance with the Trustee's decisions; as there was no amount remaining to be distributed, it was not possible for the Tribunal to make a determination which would serve the purpose of remedying any unfairness or unreasonableness of the decision that was found to exist. (The Trustee accepted that it had not advanced this contention in the Tribunal.) 19 In my view, the Trustee's contentions should be rejected. My reasons, in summary, are as follows. In relation to the contention summarised in [17] above, although it is true that the Reasons are in some respects expressed in language that is familiar in the context of judicial review, in substance the Tribunal addressed the correct question, namely whether the decision of the Trustee was fair and reasonable in the circumstances. The circumstances which may make a decision of a trustee unfair or unreasonable are many and varied and a narrow approach should not be adopted as to what may constitute unfairness or unreasonableness in decision. Unfairness or unreasonableness in process may, in an appropriate case, lead to unfairness or unreasonableness in decision. In the present case, it was open to the Tribunal to conclude that the Trustee's decision was not fair and reasonable because of the process adopted by the Trustee (including the adoption of a basis of valuation which it understood to be required or preferred by the Employer) and therefore to set aside the decision and remit the matter to the Trustee for reconsideration. 20 In relation to the contentions summarised in [18] above, my reasons, in summary, are: (a) The submission summarised in 18 above is premised on the funds available to pay pensioners, including Mr Billinghurst, being limited to the units attributable to the Plan and the additional contribution which the Employer committed to make in the November 2011 Letter (as interpreted by the Trustee). However, I do not think that premise is correct. First, it is not clear that the Designated Rules would not have enabled the Trustee to require an additional contribution from the Employer if there were a shortfall (based on calculations of lump sum amounts at fair value, if this were greater than the amounts calculated by the Plan Actuary). Secondly, the Trustee interpreted the November 2011 Letter as a confined commitment by the Employer only to make good a shortfall if the lump sum amounts were calculated on the basis specified in paragraph 3(b) of the letter (set out at [41] below). But I think the letter is open to being read as a commitment by the Employer to make good any shortfall arising after determination of the lump sum amounts on a fair value basis by the Trustee. Thirdly, and in any event, it was always open to the Trustee to seek additional funds from the Employer if the Trustee formed the view that the lump sum amounts, adopting a fair value basis, were greater than those calculated in accordance with paragraph 3(b) of the November 2011 Letter. Fourthly, the Trustee's contention fails to have regard to the priority accorded to current pensions under the Designated Rules. (b) The Trustee's contention set out in 18 above, if correct, would have the unfortunate effect of undermining the scheme for the independent review of decisions of superannuation trustees established by the Complaints Act. It would mean that a trustee could say, in effect, that there is no utility in the Tribunal considering whether a decision the trustee had made was fair and reasonable because all the money had already been paid away in accordance with the trustee's decision. In any event, in the present case, it would be open to the Trustee to seek additional funds from the Employer if the Trustee (on remitter) forms the view that the lump sum amount, determined on a fair value basis, is greater than that originally determined. On one view, this is what the Employer agreed to do in the November 2011 Letter. 21 It follows that the appeal is to be dismissed.

Background facts 22 The following background facts are drawn from the Reasons, supplemented by the documents provided to the Court in the Appeal Book for the appeal (which documents were before the Tribunal). 23 On 1 October 2000, Mr Billinghurst, on his retirement from his employment with Grosvenor International Australia Pty Ltd, commenced receiving a pension from the Former Fund. 24 On 2 May 2006, the assets and members of the Former Fund (including Mr Billinghurst) were transferred from the Former Fund to the Fund by way of a successor fund transfer. 25 On 3 May 2006, the Trustee and the Employer entered into a participation agreement to establish the Plan in the Fund with effect from 2 May 2006 (the Participation Agreement). I note that the Trustee was then named Mercer Investment Nominees Limited. It has since changed its name to Mercer Superannuation (Australia) Limited. 26 It is convenient at this point to set out some relevant provisions of the Participation Agreement and the Designated Rules of the Plan. The Participation Agreement included the following recitals: A. The Trustee is the trustee of the superannuation fund now known as the Mercer Super Trust ("MST") which was constituted by a trust deed dated 28 June 1995, as amended ("Master Deed"). B. The Participant wishes to establish a plan in the Corporate Superannuation Division ("Division") of the MST to provide retirement and other benefits to its employees and to the employees of associated companies. C. The Trustee and the Participant wish to record the terms and conditions of participation of the Participant in the MST. D. The Trustee and the Participant wish to agree on the form of the Schedule for the proposed plan for the purposes of the Designated Rules of the Division. 27 Clause 1.1 of the Participation Agreement provided that (unless the contrary intention appeared): "Designated Rules" means the Designated Rules adopted on 28 June 1995, as amended, for the Division. "Governing Rules" in relation to the Plan means the Master Deed, the Designated Rules and this Agreement. "Plan" means the Grosvenor Australia Properties Pension Plan (Client code MT309) in the Division. 28 Clause 2 of the Participation Agreement provided as follows: 2. Participant in the MST 2.1 The Participant hereby: (a) applies for establishment of the Plan and admission as a Participant in the Division with effect on and from the Commencement Date and in accordance with the terms and conditions of the Governing Rules; (b) agrees to be bound by the terms and conditions of the Governing Rules; (c) agrees to the Trustee acting as trustee of the MST; (d) acknowledges that neither the Trustee nor any of its related companies guarantees the repayment of capital or the investment performance of the Plan; (e) agrees to pay to the Trustee, as trustee of the MST, from time to time the fees, taxes, expenses and insurance premiums (if any) which the Participant has agreed to pay on behalf of Members; and (f) authorises the Trustee to accept the signatures of any two of the persons nominated by the Participant in writing from time to time for the purpose of nominating new employees to the Plan, authorising requests for payment of benefits, or for any other purpose relating to the administration of the Plan. 2.2 The Trustee hereby accepts the application by the Participant for establishment of the Plan with effect on and from the Commencement Date. 2.3 The Trustee and the Participant agree that the provisions contained in the Annexure will form part of the Schedule for the Plan. 2.4 The Trustee agrees to: (a) admit the Participant as a Participant in the Division; (b) comply with all applicable requirements of Superannuation Law in relation to the MST; and (c) continue to do all things necessary to hold all regulatory licenses required to operate the MST. 29 An annexure to the Participation Agreement, headed "Mercer Super Trust - Grosvenor Australia Properties Pension Plan", set out the specific provisions applicable to the Plan including the benefits payable to members. Part 3 of this annexure dealt with contributions and benefits for defined benefit members. Clause 3.3 within that Part set out the retirement benefits. Clause 3.8 dealt with adjustment of benefits and provided, in summary, that the Employer had a discretion to increase any pension by such amount as it considered appropriate having regard to various matters including changes in the cost of living. 30 The Designated Rules included the following provisions of present relevance: 3.3 Cessation of Participation (a) An Employer: (i) automatically ceases to participate in a Plan if: (A) not being the Participant, none of the Members are Employees of that Employer and the Trustee does not determine that it is likely that in the future there will be Members who are Employees of that Employer; or (B) rule 16 does not apply but that Employer ceases to carry on business for any reason or becomes bankrupt, unless: (I) another person has succeeded to the business of that Employer; (II) the Trustee admits that other person to participate in the Plan under rule 3.2 instead of the Employer; or (ii) may elect to cease participation in a Plan by giving written notice to the Trustee. The Participant may make the election on behalf of the Employer and every person will be bound by that election, including the Employer concerned. … 9.1 Employer Contributions (a) Each Employer: (i) must contribute: (A) in the case of a DB Plan, at the rate determined by the Trustee, after consulting the Participant, on the advice of the Actuary to the Plan; or (B) in the case of an Accumulation Plan, the amount set out in the relevant Schedule. unless contributions are varied under another rule (for example rule 9.5 or rule 14.5); (ii) may make extra contributions to the Employer's Plan: (A) in respect of some or all Members; (B) for crediting to the Member Protection Account; or (C) to be used for the general purposes, of that Plan; (iii) may direct how any extra employer contributions (which are not made to satisfy a requirement under another rule, for example rule 13.4 or rule 13.5) are to be applied; and (iv) must pay its contributions in the manner and at the times agreed between the Trustee and the Participant. … 9.5 Notice to Terminate, Reduce or Suspend Employer Contributions An Employer may terminate, reduce or suspend its obligation (or agreement) to contribute in respect of some or all Members by giving notice to the Trustee. The termination, reduction or suspension takes effect: (a) even if the Employer is then on a contribution holiday; and (b) from the date of receipt of the notice or any later date specified in the notice. The Participant may give a notice in respect of any Employer which is binding on every person including the Employer in respect of whom it is given. … 16.2 Other Circumstances The Trustee must terminate a Plan (other than the SmartSuper Plan) if: (a) directed by the Participant to do so; or (b) all employers have ceased to participate in the Plan under rule 3.3 and sub-rule (d) also applies; (c) all Employers (who are not on a contribution holiday) have ceased to contribute to the Plan; or (d) the Participant has ceased to participate in the Plan and no Employer is willing to act as Participant. 16.3 Termination Date The Termination Date is: (a) the date the Trustee receives the Participant's direction under sub-rule 16.2(a) or any later date specified by the Participant; or (b) the date determined by the Trustee where the Plan is terminating under rule 16.1 or under sub-rules 16.2(b), (c), or (d). … 16.5 Application of Assets On termination, the Trustee must redeem all of the Units attributable to that Plan and apply the Plan's assets in the following order of priority: (a) all costs, expenses and liabilities which have been incurred or are likely to be incurred in respect of the Plan (including the termination of the Plan); (b) pensions being provided from the Plan which commenced payment before the Termination Date and any Minimum Requisite Benefits; (c) paying to or in respect of the Members: (i) in the case of an Accumulation Plan, the Member Account Balance of the Member (less the amount mentioned in sub-rule (b)); (ii) in the case of a DB Plan, the amount which the Actuary to the Plan determines has accrued in respect of the Members under the Plan during the period up to the Termination Date (less the amount mentioned in sub-rule (b)); and (iii) any balance in the Member Protection Account (to be distributed amongst the Members in the manner that the Trustee considers to be appropriate), but if the assets are not sufficient, the amount to be applied in respect of all Members under this rule must be proportionately reduced; and (d) any balance must, subject to rule 16.5A, be paid to the Employers in the proportion determined by: (i) the Participant; or (ii) the Trustee if the Participant cannot be located, unless: (A) the Participant requests the Trustee to use all or part of the balance in increasing Members' entitlements and/or pensions then in payment from the Plan and the Trustee agrees; or (B) the Trustee cannot locate any Employer, then the balance of the assets must be applied in increasing Members' entitlements and pensions then in payment from the Plan on a proportionate basis. … 16.6 Securing of Entitlements (a) The Trustee may make any arrangements it considers appropriate in securing any entitlements of a beneficiary on the termination of a Plan, including: (i) the purchase of an annuity; or (ii) the transfer of assets representing the entitlement to Another Fund; or (iii) payment to the Member, Or any combination of the above, without the beneficiary's consent and even if the arrangement is contrary to the beneficiary's wishes. (b) On completion of the arrangement under sub-rule (a): (i) no person (including any contingent beneficiary) has any right against the Trustee or an Employer in respect of any entitlement under the Plan; (ii) the Trustee is discharged from the trusts of the Plan. (c) No person (including any contingent beneficiary) has any right against the Trustee or an Employer in respect of any money or assets transferred to Another Fund (unless the Participant and the Trustee agree otherwise). (d) The Trustee has no responsibility to enquire about the application of any money or assets transferred to Another Fund. 31 In the period 2007 to 2011, the Plan Actuary prepared a number of reports to the Trustee on the actuarial valuation of the Plan. The Appeal Book includes reports as at the following dates: (a) 3 May 2006 and 1 July 2006; (b) 30 June 2007; (c) 30 June 2008; (d) 30 June 2009; (e) 30 June 2010. 32 In each of the above reports, the Plan Actuary made an assumption that there would be future pension increases. In the first two reports referred to above, the actuarial assumptions included an assumption that pensions would increase by 1.9% per annum. In the reports for 30 June 2008 and 30 June 2009, the assumption was a pension increase rate of 2.0%. In the report for 30 June 2010, the assumption was a pension increase rate of 0.0% for the first year and 2.0% per annum thereafter. 33 On 25 July 2011, the Plan Actuary wrote to the Employer setting out the scope of services to be provided in relation to the possible wind up of the Plan. The letter indicated that the work would include "consideration of the bases that could be used for the determination of the lump sum commutation for the remaining lifetime pensioners". Two alternative bases were outlined: • Post-retirement: discount rate of 7.8% per annum, pension increase assumption of 1.67% per annum (2/3rds of CPI assumed to be 2.5% pa), mortality in Retirement Australian Life Tables 2005-07 Tables plus allowance for future improvement in mortality rates; • As per above but using a post retirement: discount rate which is in line with the yield on the 10 year Commonwealth bond. 34 The letter estimated the fees for the work to be in the range of $18,000 to $20,000 plus GST. The letter is signed by the Plan Actuary, with a statement under his signature that he is an authorised representative of the Trustee. However, the matter proceeded before the Tribunal and before me on the basis that the advice was provided by the Plan Actuary (rather than by the Plan Actuary on behalf of the Trustee). 35 On 29 August 2011, the Plan Actuary provided the Employer with the August 2011 Advice. Under the heading "Scope of Assignment", the letter stated in part: B. Pensioner members The consideration of the bases that could be used for the determination of the lump sum commutation for the remaining lifetime pensioners using: i. A basis that we would use for our ongoing valuation; ii. An alternate basis: as per the valuation basis above but using a post-retirement discount rate which is in line with the yield on the 10 year Commonwealth bond (together with nil pension increases). We have also provided some commentary around the options of purchasing annuities to "buy-out" the pensioner liabilities and some of the regulatory issues surrounding the commutation of pension liabilities. 36 The August 2011 Advice set out advantages and disadvantages of maintaining the defined benefit part of the Plan (pages 4-5) and options for winding up the Plan (pages 5-9). In this section, under a heading "Pensioners", the advice set out a table with valuations on two alternative bases of the pensions of the five current pensioners. The pensioners were identified by letters rather than names. It is apparent from the figures that pensioner "D" in the table is Mr Billinghurst. In relation to each pensioner, two valuations were provided. The first valuation was described as the "valuation basis liability" and reflected assumptions broadly in line with the periodic valuations of the Plan (including an assumed pension increase rate of 1.67% per annum, as set out in the Appendix). The second valuation was described as "alternative basis liability". This used a discount rate which was in line with the yield on 10 year government bonds (4.3% per year) but with a nil pension increase assumption (see page 2 and the Appendix: Actuarial Assumptions). After the table, the letter discussed purchasing annuities and stated: We have considered the option of purchasing life-time annuities for the existing pensioners. We understand that only Comminsure and Challenger are active in the Australian life annuities market. Both have indicated that they are only able to provide joint-life pensions where these are purchased by "non-super" assets. It would appear that this would require the pensioners to commute the pensions and then purchase annuities. This may have some tax and other consequences and would be an arrangement outside the Plan. Also Challenger was prepared to quote for CPI index linked pensions only. Neither life insurer offers a 66.67% reversionary pension. This can be overcome though by taking the required proportions of a joint life and single life annuity to get the desired 66.67% reversionary pension. On the basis of an indicative quote for Pensioner "D", the cost of purchasing his pension with Comminsure (without escalation) would be approximately $1.55m or some 37% more than the actuarial liability on the valuation basis and 18% more than the liability on the alternative valuation basis. 37 I note that, although the third paragraph in the above passage refers to a 66.67% reversionary pension, in Mr Billinghurst's case he had chosen a pension option which gave a full reversionary pension to his wife (see, eg, the Trustee's communication to Mr Billinghurst in December 2011 headed "Further Information for Lifetime Pension members of the [Plan]" which indicates a reversion of 100% to his spouse). The letter also discussed regulatory issues including the need to approach APRA for approval. 38 On 7 September 2011, the September 2011 Options Paper was provided to the Trustee. (A complete version of this document was provided to the Court by email from the Trustee's solicitors on 23 June 2016.) The document is headed "Grosvenor - Summary of Options for Defined Benefit Plan". It is four pages in length and prepared in the form of a table. In respect of each option there are columns setting out advantages, disadvantages, ongoing costs and comments. On the last page, under the heading "Wind Up", there is a table with total values or liabilities in respect of different classes of members. The following is an extract from the table with the figures for current pensioners: Base Actuarial Value More Conservative Value Purchase Annuities for Pensioners Level ($m) ($m) ($m) ($m) Pensioners 4.05 4.05 4.83 5.80

39 Underneath that table, the notes include the following explanation: "Cost of purchasing annuities are indicative. These annuities will … not increase in future years. CPI linked pensions available but will be significantly more expensive. Need to obtain formal quotations." 40 It is unclear whether the September 2011 Options Paper is a document of the Plan Actuary or the Trustee. In substance, it appears to be ancillary to the August 2011 Advice. But the footer on the first page states that the communication is "prepared and sent by Mercer (Australia) Pty Ltd as a corporate authorised representative … of, and on behalf of, Mercer Investment Nominees Limited". There does not appear to be a covering letter under which the September 2011 Options Paper was sent. 41 On 15 November 2011, the Employer provided to the Trustee the November 2011 Letter. Given the significance of the letter in the chronology of events, I set out the letter in full: Further to your meeting with Dori Petrides of our office and Mr John Sullivan of PwC on Tuesday 8 November 2011, please accept this letter as confirmation that, following a restructure within the Grosvenor Group in Australia, Grosvenor Australia Asset Management Pty Ltd ("GAAMPL") will cease to operate as a business with effect from 31 December 2011. GAAMPL is the current participant of the Mercer Master Fund ("the Plan"). As a result of the cessation of business and the fact that no other entity will succeed to the business of GAAMPL, it is understood that GAAMPL will automatically cease to participate in the Plan in accordance with rule 3.3(a)(i)(B) of the Designated Rules. As a consequence of the cessation of GAAMPL's business, it wishes to advise the Trustee of the Plan that: 1) GAAMPL is committed to reaching a fair and equitable resolution for each member of the Plan, including the current pensioners. To this end, the [sic] GAAMPL has: a. Provided each member of the Plan with access to individual personal financial planning advice at no personal cost to the member; and b. Intends to provide to each pensioner a lump sum arrived [at] on the basis of a fair and reasonable valuation of their current entitlement, to allow, should the pensioner wish, the purchase of an annuity, which would maintain their current stream of income. 2) GAAMPL requests that the Trustee convert the current Plan balance to cash progressively between now and mid-December 2011 on the basis of redeeming 20% of the investment in the Mercer Growth Fund into cash each week preferably on the same day of the week, for example Thursday, and placing the funds so raised into an interest bearing cash management account. 3) GAAMPL requests that the Trustee prepare calculations of the first Transfer Value for each member using the valuation terminology outlined in Mercer's correspondence "Grosvenor - Summary of Options for Defined Benefit Plan", dated 7 September 2011, noting that, for: a. Active Members - the Transfer Value for each active member should be determined using the "More Conservative Value" method as outlined in the Mercer document dated 7 September 2011. b. Pensioners - the Transfer Values in relation to the current pensioners should be determined by reference to the cost to each pensioner of purchasing an equivalent annuity. The equivalent annuity should be valued consistently with the current pension arrangements, namely the annuities will not increase in future years and should not be linked to CPI. c. We attach page 4 of the Mercer advice correspondence "Grosvenor - Summary of Options for Defined Benefit Plan", dated 7 September 2011, and have highlighted the methodologies that are referred to in the preceding paragraph. 4) GAAMPL acknowledges that there may be a shortfall in the funding required to meet the desired commitments. The Company commits to making an additional contribution to make good this shortfall. When calculating the additional contribution, please gross up for all additional taxes and any associated costs, including, but not limited to, 15% contributions tax, excess contributions taxes and income taxes as applicable. 5) For ease of calculations, with the exception of the additional contribution required to make up any funding shortfall, GAAMPL will cease to make employer superannuation contributions to the Plan with immediate effect. When the quantum of any shortfall in funding is known, all appropriate actions will be taken by GAAMPL to make the additional payment, to enable the Trustee to make the Transfer payments to each member's chosen fund. 6) Members of the Plan will be given a choice as to the complying fund into which their Transfer Value will be transferred. As previously mentioned, GAAMPL is providing the members with access to independent financial planning advice, to assist them in making an informed decision. In the absence of the member advising the Trustee of full details of their chosen complying superannuation fund, we understand that the default fund for Transfer Values will be the AMP Eligible Rollover Fund. Please provide details of this Fund. 7) We request that the Trustee of the Plan provides GAAMPL and Grosvenor Funds Management Pty Ltd with details of an alternative defined contribution superannuation product that can be offered to current members of the Plan who have been offered new employment with Grosvenor Funds Management Australia Pty Ltd. This entity conducts a Funds Management business which is fundamentally different to the proprietary business management by GAAMPL and to GAAMPL's own business of provision of administrative services. Further, GAAMPL has a Senior Counsel's opinion confirming that the Funds Management business is not a successor to GAAMPL. Accordingly, the Senior Counsel is of the opinion that GAAMPL is ceasing business with no successor and, therefore, will automatically cease to participate in the Plan. 8) GAAMPL confirms that Grosvenor Funds Management Australia Pty Ltd provides insurance coverage outside superannuation for all its employees. Please advise us of any separate insurance arrangements for existing members of the Plan that may need to be offered under the new superannuation arrangements provided by Grosvenor Funds Management Pty Ltd to employees recruited from GAAMPL. 9) GAAMPL kindly requests that the Trustee provides copies of all correspondence sent by Mercer to both active members and pensioners pertaining to the termination of the Plan to the Grosvenor Australia Group Board. GAAMPL understands that, in accordance with Rule 16.3(b) of the Designated Rules of the Plan, the Termination Date is determined by the Trustee. In practice, we understand that this date will be the date that all Transfer Values have been paid from the Plan. We kindly request that the Trustee takes into account the desire of Grosvenor Group to have these matters concluded by 31 December 2011. GAAMPL would appreciate your formal confirmation that the Trustee is agreeable to proceeding on the basis set out in this letter and acknowledging our timeframe to complete the process. (Emphasis added.) 42 In December 2011, the Trustee prepared a document entitled "Notice to Lifetime Pension Members of the Plan" stating that the Employer had notified that it would cease to make contributions to, and cease to participate in, the Plan after 31 December 2011 and that the Trustee was considering what options it had in relation to pension members which may involve offering a lump sum to replace a pension or the Trustee purchasing as similar an annuity as possible. 43 On 9 December 2011, the Plan Actuary provided a letter to the Trustee setting out his advice as to transfer values for current pensioners. The letter included valuations on two alternative bases. The first was described in Appendix A as the "valuation basis liability" or "actuarial value" and was prepared on a basis broadly in line with the assumptions used for the actuarial valuations of the Plan. This valuation assumed a pension increase rate of 1.67% per annum. The second was described in Appendix A as the "alternative basis liability" or "more conservative value". This used a discount rate based on the yield on 10 year government bonds at 29 August 2011. It assumed nil pension increases. The Plan Actuary recommended that the second valuation methodology (which was higher than the first basis) be adopted. This produced a lump sum amount for Mr Billinghurst of $1,432,824. Appendix A also stated that the cost of purchasing an annuity in respect of Mr Billinghurst would be $1,397,913 from Challenger and $1,760,497 from CommInsure. The letter included the following explanation of the approach recommended by the Plan Actuary: The Participant may at its discretion on the advice of the Actuary to the Plan direct the Trustee to increase any pension by such amount as it considers appropriate having regard to the assets of the Plan, the actual and potential liabilities of the Plan under these Rules, and any changes in any statistic indicating changes in the cost of living recommended by the Actuary to the Plan since the last occasion of such review or the date on which such pension became payable, as the case may be. The Participant has indicated in its letter of termination that pensions would not be increased in the future. The liabilities for the pensioners have [been] calculated on two bases: • The (funding) Valuation Basis ("Actuarial Value"); • The Alternative Valuation Basis ("More Conservative Value"). The alternative valuation basis differed from the funding valuation basis in that: • it was assumed that the post-retirement discount rate would be 4.3% pa compound (based on the yield on 10 year Government bonds at the time of preparing the letter) compared to 7.8% pa compound in the funding valuation; and • there would be no future increases in pensions compared to 1.67% pa compound (2/3rds of CPI) in the funding valuation. Providing figures on an alternative basis using a "risk free" investment was considered appropriate given that the assumptions for the funding valuation are determined in aggregate to set a level of funding contribution for the employer. If the future experience differs from the assumptions, the employer can contribute less/needs to contribute more. The circumstances of the wind up of the Plan are different in that the pensioners' entitlements to a lifetime pension are being crystallised to a lump sum benefit. The individual will either need to purchase an annuity or bear the future investment and longevity experience. Grosvenor has obtained annuity quotes from Challenger for the pensioners including [name not reproduced] based on specifications provided by us to replicate the pension terms (including the reversionary amounts). We also obtained quotes verbally from Comminsure who was not prepared to provide us with written quotations. The attachment to this letter shows a comparison of: • The (funding) Valuation Basis ("Actuarial Value"); • The Alternative Valuation Basis ("More Conservative Value"). • The cost of purchasing the annuity from Challenger; and • The cost of purchasing the annuity from Comminsure, • The maximum commutation amounts available under the SIS regulations without approval. The letter from Grosvenor dated 15 November 2011 states that the Transfer Value for Pensioners should be determined by reference to the cost of purchasing an equivalent annuity without any allowance for future pension increases. In my opinion the Alternative Valuation Basis is the appropriate basis for determining the Transfer Value for the pensioners (subject to APRA approval) for the following reasons: • The Alternative Valuation Basis produces results marginally above the cost of purchasing the annuity on the same terms from Challenger (based on quotations obtained by Grosvenor on 29 November 2011). In my opinion this is in accordance with the basis in Grosvenor's letter as the actuarial basis produces similar results to those obtained from Grosvenor. Furthermore in discussions with Nick Scarles (Finance: Grosvenor UK), he clarified that the reference to the cost of the equivalent annuity was intended to convey that Grosvenor's wishes were not to base the Transfer Value on the cost of an equivalent annuity, rather to be satisfied that the pensioner could purchase an equivalent annuity in the market with the Transfer Value if he or she chose to do so. • It is preferable to use actuarial calculations that we can verify in each case. Note that in a number of cases it would not be possible to have one annuity contract that has the appropriate reversionary percentage on the death of the Pensioner as the number of options in the market is restricted and it was not possible to obtain an exact quotation for Pensioner B whose pension reduces to 75% on the death of either the Pensioner or the Eligible Spouse. For the purposes of comparison the quotations from the insurers assume a 75% reversion to the spouse but no reduction if the spouse pre deceases the member. However, the valuation figures correctly allow for the benefit entitlements. (Emphasis in original.) 44 In December 2011, the Trustee prepared a document entitled "Further Information for Lifetime Pension Members of the [Plan]" addressed to Mr Billinghurst stating that his potential lump sum (subject to APRA approval) was $1,432,824, "calculated as at 31 December 2011" (see page 2). 45 On 2 February 2012, the Trustee wrote to Mr Billinghurst advising that the regulator had approved payment to him of a lump sum of $1,432,824. 46 On 20 February 2012, the Plan Actuary sent an email to an actuary engaged by Mr Billinghurst in response to some queries. The Plan Actuary stated, in part, that he had prepared results "on the valuation basis and a 'risk free' basis using a 4.3% pa discount rate to value the pensions (based on [the] 10 year Government bond rate at the time of preparing the calculations). The risk free basis made no allowance for future pension increases as instructed by [the Employer]". 47 On 2 March 2012, Mr Billinghurst wrote to the Trustee complaining about the basis used to calculate the lump sum of $1,432,824, including in relation to the discount rate used of 4.3% instead of a discount rate based on the yield on 10 year government bonds at 31 December 2011 of 3.67%, and in relation to no allowance being made for pension increases or indexation in the future. Mr Billinghurst referred to the accounts of the Employer at 31 December 2010 which noted that the Employer expected to increase pensions at 2% per annum. Mr Billinghurst also said that no provision had been made as an allowance for expenses to be incurred by him in administering his lump sum. 48 On 13 March 2012, the Plan Actuary wrote to the Trustee expressing the view the lump sum amount that had been calculated for Mr Billinghurst was "both fair and reasonable and arguably relatively generous" in that, amongst other things, it provided an amount sufficient to purchase an equivalent annuity (without future pension increases) from an annuity provider regulated by APRA. The letter noted that the basis used to produce the lump sum "required the [Employer] to make a top-up payment to the Fund of approximately $1.5m to cover all Plan members' entitlements". The Plan Actuary stated that "[o]nce the [Employer] had terminated its contributions to the Plan, the Trustee was not in a position to continue to operate the Plan" (page 1). The letter stated that the Employer had "reviewed a number of possible bases that could be used for the determination of the lump sum value of the pensions on wind up" and all of these options required additional contributions from the Employer (page 2). It was stated that the Employer "presumably had the option to terminate its contributions without making any additional contributions" (page 2). The letter contained further discussion and explanation of the valuation approach adopted. 49 On 5 April 2012, the Trustee wrote to Mr Billinghurst in response to his complaint stating that the basis used to determine his lump sum was that recommended by the Plan Actuary and adopted by the Trustee and stating that the calculation of the benefit entitlement would not be altered. The letter included the statement that the Employer had given the Trustee "formal notice of its termination of contributions to the Plan" (page 1; see also page 2). 50 On 30 July 2012, Mr Billinghurst wrote to the Trustee stating that the Trustee had not addressed the issues raised by him in relation to the factors used to calculate his lump sum and expressing his concern that the Trustee (having the power to act to ensure that the Plan was fully funded) had failed to do so. 51 On 5 September 2012, Mr Billinghurst's actuary wrote a letter setting out his advice as to the fair value of a lump sum equivalent to Mr Billinghurst's pension. Using different alternative bases, the actuary's calculations of the lump sum equivalent to the pension ranged from $1,921,000 to $2,065,000. Although there is a reference at the foot of page 3 of the letter to "31 December 2012", it is clear from an email from Mr Billinghurst to the Trustee dated 15 September 2012 that the valuation was as at 31 December 2011. 52 On 20 September 2012, the Trustee's Claims and Complaints Committee considered Mr Billinghurst's complaint. The minutes of the meeting record that the Committee members considered all the background material on the complaint, in conjunction with technical assistance provided by the Plan Actuary. The minutes record that the Committee relevantly determined: • They were satisfied that the basis adopted by the trustee in its determination of the value of the lump sum payments from the Plan for all Plan members including Mr Billinghurst in the circumstances that the Participant had notified that contributions would cease, was fair and reasonable in the circumstances and was made in accordance with the trustee's obligations at law. They re-affirmed the Complaints Officer's original decision as set out in his letter dated 5 April 2012. • They noted that Plan assets at the date of determination of amounts to apply to members were sufficient, after additional funding agreed to be provided by GAAMPL, to provide payments to pensioner members on the basis adopted, and for members who had not yet ceased employment with GAAMPL prior to 31 December 2011 on the basis as recommended by the Plan Actuary, and that no additional funds were available at that time or afterwards from GAAMPL to provide higher payments to any Plan member. 53 On 10 October 2012, the Trustee wrote to Mr Billinghurst advising him of the outcome of the Claims and Complaints Committee meeting. 54 On 8 November 2012, the Trustee wrote to the Employer advising it of the complaint by Mr Billinghurst and by other pensioners and advising the Employer of the outcome of the Claims and Complaints Committee meeting. 55 On 14 December 2012, Mr Billinghurst sent an email to the Employer referring to an offer of payment of $120,000 by the Employer (which Mr Billinghurst did not accept) in response to his complaint and setting out Mr Billinghurst's argument as to why future possible increases in his pension should be taken into account in determining the lump sum equivalent. 56 On 9 January 2013, the Employer sent an email to Mr Billinghurst in response to his email.

The complaint to Tribunal 57 On 1 February 2013, Mr Billinghurst made a complaint to the Tribunal that the Trustee's decision was unfair or unreasonable pursuant to s 14(2) of the Complaints Act. The complaint form attached a number of pages of typed notes. Under a heading "Details of complaint - general", Mr Billinghurst referred to the "Determination of my lump sum payout" indicating that this was the decision which was the subject of the complaint. Mr Billinghurst contended that the decision was unfair and unreasonable for the following reasons: It is unfair and unreasonable, in my circumstances as a member of the plan, that the Trustee (a) did not adopt the same assumption as to future increases in pension that it adopted in the valuation for 30 June 2010, (issued on 3 June 2011) and earlier valuations of the Plan as well as contrary to figures in the published accounts of the Grosvenor Group; in other words future increases in the pension of 2%pa. (b) did not value my payout from the Plan as at 31 December 2011, being the termination date, and utilise the appropriate discount rate (3.7%p.a.) being that applicable at the Termination Date. (c) did not place a value on investment and administrative expenses in my payout from the Plan. (d) used a Challenger fixed annuity proposal made around October 2011 as a benchmark for determining my payout from the Plan. (e) accepted guidance and was directed by the company when making its decision on the amount of my benefit. (Emphasis in original.) 58 Under a heading "What is the amount of the benefits in dispute?", Mr Billinghurst stated: $488,176 being the difference between the value of my pension on a fair and reasonable basis (around $1,921,000) and $1,432,824, plus interest on this amount. The $1,921,000 is based on a valuation that I requested Mr Jeff Humphreys of CHR Consulting P/L to undertake as at 31 December 2011. I attach a copy of the valuation dated 5 September 2012 marked "K". This indicates that the original payment should have been in a range of $1,921,000 to $2,070,000. (Emphasis in original.) 59 The parties provided written submissions to the Tribunal.

The Tribunal's determination 60 On 29 December 2015, the Tribunal made its determination and signed the Reasons. The Reasons state that a review meeting of the Tribunal was conducted under the provisions of the Complaints Act on 26 October 2015. The Reasons then state as follows in [2]-[9]: DECISION UNDER REVIEW 2. The Complainant was a member of a defined benefit division (the Plan) of the Fund, the members of which were employees and retired employees of the Employer. The Employer ceased to carry on business on 31 December 2011 and ceased contributing to the Fund on that date. Consequently, the Trustee resolved to terminate the Plan in the Fund. 3. The Complainant had retired from the Employer's employment well before the termination of the Plan and, at the date of termination, he was being paid a pension from the Plan in accordance with the rules that applied to the Plan. 4. The Trustee advised the Complainant that, as a result of the termination of the Plan, it would be converting his pension to a lump sum amount to be paid to him and the Trustee advised him of its calculation of the lump sum equivalent of his pension. In making its calculation, the Trustee relied on calculations performed by the actuary for the Plan (the Plan Actuary). The same actuary also advised the Employer in relation to ceasing its participation in the Plan and in relation to options available to the Employer. Subsequent to the Plan Actuary's advice to the Employer, the Employer gave directions to the Trustee as to how the lump sum equivalents of pensions should be calculated, including that no account should be taken of potential future pension increases. 5. The Complainant objected to the Trustee's calculation of the lump sum equivalent of his pension and the Trustee considered the Complainant's complaint but decided to maintain its original decision as to the amount of the lump sum payable to the Complainant. 6. The Complainant complained to the Tribunal in relation to the Trustee's decision and it is the Trustee's decision in relation to the calculation of the lump sum payable to him which is the decision under review by the Tribunal. DETERMINATION OF THE TRIBUNAL 7. Under s 37(6) of the Complaints Act, the Tribunal is required to affirm the decision of the Trustee if the Tribunal is satisfied that the Trustee's decision, in its operation in relation to the Complainant, was fair and reasonable in the circumstances. 8. At the review meeting, the Tribunal determined that it was not satisfied that the Trustee's decision in relation to the calculation of the amount of the lump sum payable to the Complainant was fair and reasonable, in the circumstances, in its operation in relation to the Complainant. The Trustee's decision is not, therefore, affirmed. 9. In accordance with the provisions of the Complaints Act, the Trustee's decision is set aside and the Complainant's complaint is remitted to the Trustee for reconsideration by obtaining advice from an actuary, who does not have a conflict of interest, as to what the proper calculation is of the lump sum equivalent, or commutation value, of the Complainant's pension under Designated Rules 16.5 and 16.6. The Trustee is to then calculate the lump sum payable to the Complainant, without acting on any directions or request by the Employer and by applying its prudential obligations and the covenants in s 52(2) of the Superannuation Industry (Supervision) Act 1993 (Cth), including by making a determination that is in the best interests of the beneficiaries, including the Complainant, and in accordance with this determination of the Tribunal. In making the calculation, the Trustee will need to determine whether it is appropriate to make any allowance for future expenses. 61 The Reasons dealt with procedural matters and the jurisdiction of the Tribunal, and then set out the background facts. Next, the Tribunal outlined the governing rules of the Plan and the relevant provisions of the Participation Agreement. 62 The Tribunal summarised the submissions of the parties at [28]-[65]. 63 The Tribunal set out its deliberations and findings at [66]-[108] of the Reasons. In order to provide proper context for the Trustee's submissions on appeal, I set out this section in full: 66. The function of the Tribunal is, initially, to determine whether the decision of the Trustee was fair and reasonable, in the circumstances, in its operation in relation to the Complainant. It is not, therefore, a question of what decision the Tribunal would have made on the evidence that was before the Trustee but whether the Trustee's decision was fair and reasonable. 67. In making its determination, the Tribunal took into account the whole of the evidence and the submissions of the Parties. 68. The Complainant's complaint to the Tribunal contains a number of bases, including that the Trustee calculated his lump sum without allowing for future pension increases, that the Plan Actuary had a conflict of interest in advising the Trustee on the calculation because the actuary also advised the Employer, that the Employer gave directions to the Trustee as to factors to be taken into account and the Trustee acted on them, that the Trustee did not allow for the costs of administering his pension in calculating the lump sum and the Trustee took no notice of the calculations that were undertaken by the Complainant's Actuary. 69. There is a substantial difference in the calculation by the Plan Actuary and the Complainant's Actuary of what the correct amount of the lump sum for the Complainant is. The Plan Actuary, on his alternative valuation basis adopted by the Trustee, calculated it as being $1,432,824, whereas the Complainant's Actuary calculated it as being in the range of $1,921,000 to $2,065,000. 70. In reviewing the decision of the Trustee, the governing rules governing the operation of the Fund and the Plan are highly relevant. The governing rules include Designated Rule 16.5 referred to above which states that, on termination of the Plan, the Trustee was required to apply the assets firstly in payment of costs and, secondly, in payment of pensions which had commenced to be paid before the termination date. Paragraph (c) of Rule 16.5 refers to paying the amount which the actuary of the Plan determines has accrued in respect of members but, in the view of the Tribunal, paragraph (c) refers to those defined benefit members who are not covered by paragraph (b) which refers to those members to whom pensions had commenced to be paid before the termination date. 71. The second priority directed by Rule 16.5 was, therefore, payment of the pensions which had commenced to be paid. However, Designated Rule 16.6(a) permitted the Trustee to make arrangements it considered appropriate in securing the entitlements of the members that were payable under Rule 16.5 including the purchase of an annuity, the transfer of the benefit to another fund or payment of the benefit to the member, which would, in the Tribunal's opinion, include payment of a lump sum. 72. The effect of these provisions is that the Trustee was required to pay to the Complainant, as a pensioner, the amount of his pension or, if the pension was commuted to a lump sum, the lump sum equivalent of the pension if the Trustee chose, as it did, that method of payment. 73. The Trustee was, therefore, required to calculate the lump sum equivalent of the pension that was being paid to the Complainant and it was for the Trustee alone to make the determination of what the lump sum equivalent of the pension was after receiving whatever advice it regarded as appropriate. There is no reference in rules 16.5 and 16.6 to the calculation of the lump sum commutation value of the pension being performed by an actuary but it was, of course, reasonable for the Trustee to rely on the calculation of an actuary, having regard to what was involved in making the calculation. The Trustee applied a fair and reasonable test 74. An issue that arises in relation to the Complainant's complaint is whether the Trustee applied the correct test in determining the Complainant's lump sum equivalent of his pension. 75. The Tribunal has not been provided with any minutes of a meeting of the directors of the Trustee in relation to the calculation of the Complainant's lump sum nor has the Tribunal been provided with any other material, other than the submissions of the Trustee discussed below, which shows the reasoning of the Trustee or what factors it took into account in making the calculation. 76. As a result of the Complainant's complaint, the Trustee's decision as to the lump sum payable was reviewed by the Committee on 20 September 2012. In the minutes of that meeting it is said: They (the Committee) were satisfied that the basis adopted by the trustee in its determination of the value of the lump sum payments made from the Plan for all Plan members including [the Complainant] in the circumstances that the [Employer] had notified that contributions would cease was fair and reasonable in the circumstances and was made in accordance with the trustee's obligations at law. 77. In a similar vein, the Trustee, in a letter to the Complainant of 5 April 2012 said: I am satisfied that the Trustee has taken all necessary steps to ensure that the outcome for all Plan members (including yourself) was fair and reasonable. 78. The Tribunal is of the view that the evidence referred to immediately above indicates that the Trustee and the Committee have both applied the wrong test in the Trustee making its decision and in the Committee reviewing the decision as a result of the Complainant's complaint. In determining the lump sum equivalent of the Complainant's pension, the Trustee was required by the covenant imposed by s 52(2)(c) of the Superannuation Industry (Supervision) Act 1993 (Cth) to perform its duty and exercise its power to calculate the lump sum amounts in the best interests of the beneficiaries, which includes the Complainant. It appears from the evidence referred to above that the Trustee was of the view that it had to apply a fair and reasonable test in making the calculation rather than act in the best interests of the beneficiaries, including the Complainant, in making the calculation. 79. In the view of the Tribunal it was not appropriate for the Trustee to apply a fair and reasonable test in making the calculation and in reviewing whether the calculation had been correctly made. The Trustee was required to apply the covenant in s 52(2)(c) as well as the other covenants in s 52(2) and meet its prudential and fiduciary obligations under both legislation and principles of trust law. It was, therefore, required to act in the best interests of the beneficiaries in making the calculations, exercise the same degree of care, skill and diligence as a prudent trustee would exercise in the circumstances and, if there was any conflict between its duties to the beneficiaries and to anyone else, including itself, to give priority to the interests of the beneficiaries over the interests of others and to ensure that the interests of the beneficiaries were not adversely affected by any conflict of interest. Influence of the Employer 80. Part of the Complainant's complaint is that the Trustee acted on the directions of the Employer in calculating his lump sum. The Trustee has denied that. 81. The material provided to the Tribunal that relates to this issue includes a letter from the Employer to a company associated with the Trustee dated 15 November 2011, in which the Employer advised that it was ceasing to operate its business with effect from 31 December 2011 and in which the Employer said: Pensioners - the Transfer Values in relation to the current pensioners should be determined by reference to the cost to each pensioner of purchasing an equivalent annuity. The equivalent annuity should be valued consistently with the current pension arrangements, namely the annuities will not increase in future years and should not be linked to CPI. 82. The Employer also said in that letter that it: acknowledges that there may be a shortfall in the funding required to meet the desired commitments. The Company commits to making an additional contribution to make good this shortfall. 83. The Plan Actuary, in his letter to the Trustee of 9 December 2011, in which he set out his calculations of the benefits payable, said at page 2 that the Trustee had requested that he provide advice on the calculation of the benefits 'taking into account the wishes of [the Employer] and the top-up contribution it is prepared to make'. 84. The function of the Trustee under Designated Rules 16.5 and 16.6 was to properly calculate the lump sum equivalent of the pension that was being paid to the Complainant and, in doing so, it was not entitled to act on directions from the Employer. 85. In view of the submissions by the Trustee set out below that it took into account the factors referred to below, the Tribunal's findings of facts in relation to those factors are that they were taken into account by the Trustee. 86. The Trustee has submitted to the Tribunal that it was reasonable for the Trustee, and the Plan Actuary in advising the Trustee, to take into consideration the preferences of the Employer in deciding the actuarial basis for converting the pension to a lump sum and to have regard to the Employer's not unlimited commitment to make additional contributions. 87. It is the view of the Tribunal that Rules 16.5 and 16.6 did not permit the Trustee to take those factors into account in making its calculation. 88. The Trustee also submitted to the Tribunal that it adopted the valuation after considering the Employer's position about how much it was prepared to fund by way of additional contributions to the Plan. That was also not a factor, in the opinion of the Tribunal, that Rules 16.5 and 16.6 permitted to be taken into account. 89. The Trustee, in its submissions, also referred to the Employer's request that the Trustee determine the lump sums by assuming there would be no future increases in pensions and the Trustee submitted that, as pension increases were at the discretion of the Employer, it was reasonable to determine the lump sum by assuming there would be no future pension increases. The Plan Actuary, in an email to the Complainant's Actuary of 20 February 2012 said that the calculation basis adopted by him 'made no allowance for future pension increases as instructed by [the Employer]'. 90. Having regard to the history of pension increases in many of the years in which the Complainant's pension had been paid, the Trustee's function, in properly calculating the lump sum equivalent of the Complainant's pension, was to determine whether, in acting in the best interests of the beneficiaries, it was appropriate to adopt the assumption of no pension increases. In making that decision, which was an important factor in calculating the Complainant's lump sum, it is the Tribunal's view that the Trustee was not entitled to be influenced by the Employer and, given the history of pension increases, it was not reasonable for the Trustee to assume that there would be no pension increases in the future. 91. A further submission of the Trustee was that it properly took into account the preferences and objectives of the Employer, including the objective to provide the Complainant with a lump sum that was a fair and reasonable valuation of his pension and which was also sufficient to purchase an equivalent annuity. The cost of purchasing an equivalent annuity was a factor that, in the Tribunal's opinion, Rules 16.5 and 16.6 did not permit to be taken into account in valuing the lump sum equivalent of the Complainant's pension. The Employer's objectives were also not factors that could be taken into account by the Trustee in properly calculating the lump sum commutation value of the Complaint's pension. Conclusion regarding considerations taken into account by the Trustee 92. In reviewing the decision of the Trustee, the effect of the forgoing is that the Tribunal is of the opinion that the factors referred to by the Trustee, in its submissions, as having been taken into account and which are set out above, were not factors that were permitted to be taken into account in calculating, under Rules 16.5 and 16.6 the correct value of the lump sum payable to the Complainant on termination of his pension. They were not, therefore, factors that were fair and reasonable for the Trustee to take into account. Assumed rate of return 93. The Complainant took issue with the assumed rate of return adopted by the Trustee. The Trustee submitted to the Tribunal that, in adopting the calculation that it did, it was fair and reasonable to use an assumed rate of return of 4.3% per annum. In the view of the Tribunal, the Trustee was required to adopt an assumed rate of return that was in the best interests of the beneficiaries, including the Complainant, not one that was fair and reasonable. Future expenses 94. As the Plan Actuary acknowledged in his email to the Complainant's Actuary of 15 February 2012, no allowance was made for future expenses in his calculations. The Trustee adopted his calculations. The Complainant has taken issue with the Trustee not taking future expenses into account. In order for the Tribunal to determine whether it was appropriate, in the circumstances that related to the Complainant, for future expenses to be taken into account in calculating the lump sum, the Tribunal would require further submissions from the Parties on this point. The Tribunal is not in a position, based on the material before it, of being able to determine whether future expenses should be taken into account under Rules 16.5 and 16.6 and that is a matter that the Trustee will need to determine, in acting in the best interests of the beneficiaries including the Complainant, in any future recalculation of the lump sum equivalent of the Complainant's pension. Conflict of Interest 95. Part of the Complainant's complaint is that the Plan Actuary had a conflict of interest in advising the Trustee on the calculation of the lump sum equivalent of his pension because the Plan Actuary had already advised the Employer in relation to the calculations and termination of the Plan. 96. The Plan Actuary wrote a letter to the Employer dated 29 August 2011, in which he set out calculations of the lump sum equivalent of the pensions on two bases, one called the valuation basis and another called the alternative valuation basis and the latter was higher than the former. The Plan Actuary also otherwise advised the Employer in relation to the termination of the Plan and the payment of benefits. 97. The Trustee acknowledges that the Plan Actuary advised both it and the Employer but justified acting on the advice of the Plan Actuary on the basis set out in its submissions summarised above. 98. An issue for the Tribunal, in reviewing the Trustee's decision in relation to the calculation of the Complainant's lump sum benefit, is, could the Trustee's decision to rely on the Plan Actuary's recommendations have led to an incorrect calculation being made? 99. Under the general law, a conflict of interest can arise where a person who is giving advice advises two or more people, each of which has an interest in the outcome of the advice. 100. The Employer had an interest in the outcome of the Plan Actuary's deliberations and recommendations on the lump sum equivalent of the Complainant's pension because, amongst other things, that could determine the amount that the Employer paid into the Plan if the Trustee accepted the Plan Actuary's recommendations. The Trustee, in acting in the best interests of the members, also had an interest, on behalf of the members, in the outcome of the Plan Actuary's deliberations and recommendations in carrying out the Trustee's function under the Designated Rules of determining what the Complainant's lump sum equivalent of his pension was. 101. That the advice given by an adviser may affect the nature or quality of the advice given where there is a conflict of interest is referred to in the Prudential Practice Guide issued by the Australian Prudential Regulation Authority on conflicts of interest where it is said that a person or firm undertaking a material business activity for, or otherwise advising, a registerable superannuation entity licensee may have a conflict that could affect the nature or quality of the advice given. 102. The Tribunal acknowledges the force of the arguments put by the Trustee as to why it was appropriate for it to act on the Plan Actuary's advice even though he had also advised the Employer. The Trustee submitted that there was nothing unusual about the Plan Actuary advising both the Trustee and the Employer and that it is common industry practice. 103. However, in the view of the Tribunal, the fact that there is nothing unusual about it and that it is common industry practice is not determinative of whether it is correct practice. It is a matter of public record that practitioners in other professions apply the legal principles in relation to conflicts of interest in determining who they can advise and those same principles apply to actuaries. 104. In the view of the Tribunal, there was a conflict between the financial interest that the Employer had in the outcome of the Plan Actuary's recommendations and the financial interest that the Trustee had in acting in the best interests of its members, including the Complainant, in the outcome of those recommendations. 105. There was, therefore, in the view of the Tribunal, a conflict of interest in the Plan Actuary advising both the Employer and the Trustee in relation to what was the lump sum equivalent of the Complainant's pension and, because of that conflict of interest, it was not appropriate for the Trustee, because of its fiduciary duties to the Complainant, to act on the advice and recommendations of an actuary who was also advising the Employer. Furthermore, there is no evidence before the Tribunal that clearly demonstrates that the Trustee gave priority to the interests of the beneficiaries, as a result of the conflict of interest. 106. The Trustee submitted that a reason why it was reasonable to rely on the Plan Actuary's recommendations is that they were reviewed by the actuarial committee which, in the Tribunal's understanding, consisted of actuaries employed by an associate of the Trustee. The Tribunal has not been provided with any details of the factors that were considered by that committee. In the view of the Tribunal, the Plan Actuary's conflict of interest was not overcome by the deliberations of the committee because the committee accepted the recommendations of the actuary with the conflict. 107. The Tribunal has also not been provided with any minutes of a meeting of the directors of the Trustee nor with any other material setting out the reasoning of the Trustee or the considerations taken into account by the Trustee, except for the submissions by the Trustee as to the factors that were taken into account. What is clear from the Trustee's submissions and correspondence with the Complainant is that the Trustee acted on the recommendations of the Plan Actuary, who had the conflict of interest. 108. It is the view of the Tribunal that it was not fair and reasonable, in the circumstances, for the Trustee to act on the recommendations of the Plan Actuary in calculating the lump sum equivalent of the Complainant's pension because of the possibility or, at the very least, the perception that the Plan Actuary's recommendations could have been influenced by the fact that he was also advising the Employer, which had an interest in the outcome of the recommendations. 64 The Tribunal set out its conclusions at [109]-[113] of the Reasons: 109. Section 37(6) of the Complaints Act requires the Tribunal to affirm the decision of the Trustee in relation to the calculation of the lump sum payable to the Complainant if the Tribunal is satisfied that the Trustee's decision, in its operation in relation to the Complainant, was fair and reasonable, in the circumstances. 110. For the reasons given above, the Tribunal is not satisfied that the Trustee's decision was fair and reasonable within the meaning of s 37(6) and it is not, therefore, affirmed. Under s 37(3) of the Complaints Act, where a trustee's decision is not affirmed by the Tribunal, the Tribunal can set aside the trustee's decision and can remit the matter to which the decision relates to the trustee, for reconsideration in accordance with the directions of the Tribunal. 111. Section 37(4) of the Complaints Act requires that the Tribunal may only exercise its determination making power for the purpose of placing the Complainant as nearly as practicable in the position he would have been in but for the unfairness or unreasonableness that the Tribunal has determined exists. 112. Section 37(5) of the Complaints Act restricts the Tribunal from doing anything in making its determination that would be contrary to law or the governing rules of the Fund. 113. In accordance with these provisions of the Complaints Act, the Trustee's decision is set aside and the Complainant's complaint is remitted to the Trustee for reconsideration by obtaining advice from an actuary, who does not have a conflict of interest, as to what the proper calculation is of the lump sum equivalent, or commutation value, of the Complainant's pension under Designated Rules 16.5 and 16.6. The Trustee is to then calculate the lump sum payable to the Complainant, without acting on any directions or request by the Employer and by applying its prudential obligations and the covenants in s 52(2) of the Superannuation Industry (Supervision) Act 1993 (Cth), including by making a determination that is in the best interests of the beneficiaries, including the Complainant, and in accordance with this determination of the Tribunal. In making the calculation, the Trustee will need to determine whether it is appropriate to make any allowance for future expenses.

Appeal on a question of law 65 The Trustee appeals to this Court on a question of law from the determination of the Tribunal pursuant to s 46(1) of the Complaints Act. The Trustee was given leave to file an amended notice of appeal (by which it added questions of law 1.1 and 1.2 and the corresponding grounds). The questions of law and grounds in the amended notice of appeal are as follows: Questions of law 1. Did the Tribunal, having regard to its proper function, commit an error of law in its Determination by considering whether the process by which the Applicant arrived at the Decision was fair and reasonable, "appropriate" or "correct", rather than considering the question of whether the Decision itself was fair and reasonable in its operation in relation to the Respondent in the circumstances? 1.1 Did the Tribunal make an error of law, in failing to have regard to a relevant consideration, being that the decision concerned the distribution of the Plan's assets on the termination of the Plan, in accordance with Rule 16.5 of the Designated Rules and that the amount to be applied was limited to the amount realised on the redemption of the Units attributable to the Plan supplemented by the additional contribution the Participant was prepared to make? 1.2 Did the Tribunal make an error of law in failing to have regard to the requirement of s 37(4) of the Superannuation (Resolution of Complaints) Act 1993 that the Tribunal may only exercise its determination making power under s 37(3) for the purpose of placing the complainant as nearly as practicable in such a position that the unfairness, unreasonableness, or both, that the Tribunal has determined to exist in relation to the trustee's decision that is the subject of the complaint no longer exits, and the fact that the whole of the amount available to be applied in accordance with Designated Rule 16.5 had been applied? 2. Did the Tribunal, having regard to its proper function, commit an error of law in its Determination by taking into account irrelevant considerations, namely, the various steps taken by the Applicant as part of the process by which it arrived at the Decision? 3. Did the Tribunal, having regard to its proper function, commit an error of law in its Determination by considering whether the Applicant applied "the correct test" as part of the process by which it arrived at the Decision? 4. Did the Tribunal, having regard to its proper function, commit an error of law in its Determination by considering whether the Decision was the correct or preferable decision, rather than whether the Decision was fair and reasonable in its operation in relation to the Respondent in the circumstances? 5. Did the Tribunal, having regard to its proper function, commit an error of law in its Determination by considering and determining that the use by the Applicant of a "fair and reasonable test" in valuing the Respondent's pension was "not appropriate" and amounted to a failure by the Applicant to "perform its duty and exercise its power … in the best interests of the beneficiaries [of the superannuation plan], including the Respondent"? 6. Did the Tribunal commit an error of law by failing to provide reasons as to why it found the use by the Applicant of a "fair and reasonable test" in valuing the Respondent's pension was inconsistent with the proper discharge of the duties identified by the Tribunal? 7. Did the Tribunal, having regard to the requirement that it stand in the shoes of the Applicant in reviewing the Decision, commit an error of law in its Determination by failing to have proper regard to the relevant surrounding circumstances of the winding up of the superannuation plan and the application of the assets of the plan? 8. Did the Tribunal, having regard to its proper function, commit an error of law in its Determination by considering and determining that the governing rules of the plan did not permit the Applicant to take into account the following matters as part of the process by which it arrived at the Decision: (a) the preferences and objectives of the employer-sponsor of the superannuation plan with respect to the valuation of the Respondent's pension; (b) the amount the employer-sponsor was prepared to contribute to the plan by way of additional funding to meet those preferences and objectives; (c) the cost to purchase an annuity that would provide the Respondent with an income stream equivalent to the pension being paid from the superannuation plan? 9. Did the Tribunal, having regard to its proper function, commit an error of law in its Determination by considering whether it was fair and reasonable or "appropriate" for the Applicant to rely upon and adopt the recommendations of the actuary to the superannuation plan in valuing the respondent's pension? 10. Did the Tribunal commit an error of law in its Determination by taking into consideration an irrelevant matter, namely, whether the actuary of the plan (who did not make the Decision) had a conflict of interest in providing advice to both the employer sponsor of the superannuation plan and the Applicant? 11. Did the Tribunal commit an error of law in its Determination by making a finding that the Applicant had not discharged its duty to act in the best interests of the beneficiaries of the superannuation plan (including the Respondent) without having regard to the legal principles relevant to the duty of a superannuation fund trustee to act in the best interests of the beneficiaries of the fund? 12. Did the Tribunal commit an error of law in its Determination by finding that the Applicant was not permitted to take into account various matters in making the Decision, without having regard to the legal principles applicable to the scope of a superannuation fund trustee's discretionary powers? 13. Did the Tribunal commit an error of law by making a finding of fact that there was a conflict between the duty owed by the Applicant to act in the best interests of the beneficiaries of the superannuation plan and the interests of the employer sponsor of the superannuation plan, in the absence of supporting evidence, or without having regard to evidence that contradicted that finding? … Grounds relied on 1. The Tribunal erred in law in failing to address itself to the correct question under s 37(6) of the Superannuation (Resolution of Complaints) Act 1993 (Cth), which was whether the Decision, in its operation in relation to the Respondent, was fair and reasonable in the circumstances. Instead, the Tribunal addressed itself to a number of questions concerning whether various steps taken in the process by which the Applicant arrived at the Decision were fair and reasonable, appropriate or correct. 1.1 The Tribunal erred in failing to have regard to a relevant consideration, being that the decision concerned the distribution of the Plan's assets on the termination of the Plan, in accordance with Rule 16.5 of the Designated Rules, and that the amount to be applied was limited to the amount realised on the redemption of the Units attributable to the Plan, supplemented by an additional contribution the Participant was prepared to make? 1.2 The Tribunal erred in failing to have regard to the requirement of s 37(4) of the Superannuation (Resolution of Complaints) Act 1993 that the Tribunal may only exercise its determination making power under s 37(3) for the purpose of placing the complainant as nearly as practicable in such a position that the unfairness, unreasonableness, or both, that the Tribunal has determined to exist in relation to the trustee's decision that is the subject of the complaint no longer exits, and the fact that the whole of the amount available to be applied pursuant to Designated Rule 16.5 had been applied in accordance with the trustee's decisions under that rule. 2. The Tribunal erred in law by addressing itself to the question of whether the Decision was the correct or preferable one, rather than whether the Decision, in its operation in relation to the Respondent, was fair and reasonable in the circumstances. 3. In making its Determination the Tribunal did not take into account relevant considerations. 4. In making its Determination the Tribunal took into account irrelevant considerations. 5. In making its Determination the Tribunal erred in law by failing to have regard to the legal principles relevant to the duty of a superannuation fund trustee to act in the best interests of the beneficiaries of the fund. 6. In making its Determination the Tribunal erred in law by failing to have regard to the legal principles relevant to the exercise of a superannuation fund trustee's discretionary powers. 7. In making its Determination the Tribunal erred in law by finding that there was a conflict between the duty owed by the Applicant to act in the best interests of the beneficiaries of the superannuation plan and the interests of the employer sponsor of the plan, in the absence of evidence or without having regard to evidence that contradicted that finding. 8. The Tribunal failed to provide reasons as to why it considered that the use by the Applicant of a fair and reasonable test in valuing the Respondent's pension for the purpose of the Decision was inconsistent with the proper discharge by the Applicant of its duty to act in the best interests of the beneficiaries of the superannuation plan. 66 At the hearing of the appeal, senior counsel for the Trustee indicated that question of law 6 could be disregarded. It follows that the corresponding ground of appeal (ground 8) can also be disregarded.

Complaints Act 67 The Tribunal is established by s 6 of the Complaints Act. Pursuant to s 14, subject to certain matters which are not presently relevant, a person may make a complaint to the Tribunal that a decision by the trustee of a regulated superannuation fund, in relation to a particular member or a particular former member of the fund, is or was unfair or unreasonable. The Fund is a regulated superannuation fund. 68 Section 37 of the Complaints Act sets out the Tribunal's powers when reviewing a decision of a trustee. The section is in the following terms: (1) For the purpose of reviewing a decision of the trustee of a fund that is the subject of a complaint under section 14: (a) the Tribunal has all the powers, obligations and discretions that are conferred on the trustee; and (b) subject to subsection (6), must make a determination in accordance with subsection (3). (2) If an insurer or other decision-maker has been joined as a party to a complaint under section 14: (a) the Tribunal must, when reviewing the trustee's decision, also review any decision of the insurer or other decision-maker that is relevant to the complaint; and (b) for that purpose, has all the powers, obligations and discretions that are conferred on the insurer or other decision-maker; and (c) subject to subsection (6), must make a determination in accordance with subsection (3). (3) On reviewing the decision of a trustee, insurer or other decision-maker that is the subject of, or relevant to, a complaint under section 14, the Tribunal must make a determination in writing: (a) affirming the decision; or (b) remitting the matter to which the decision relates to the trustee, insurer or other decision-maker for reconsideration in accordance with the directions of the Tribunal; or (c) varying the decision; or (d) setting aside the decision and substituting a decision for the decision so set aside. (4) The Tribunal may only exercise its determination-making power under subsection (3) for the purpose of placing the complainant as nearly as practicable in such a position that the unfairness, unreasonableness, or both, that the Tribunal has determined to exist in relation to the trustee's decision that is the subject of the complaint no longer exists. (5) The Tribunal must not do anything under subsection (3) that would be contrary to law, to the governing rules of the fund concerned and, if a contract of insurance between an insurer and trustee is involved, to the terms of the contract. (6) The Tribunal must affirm a decision referred to under subsection (3) if it is satisfied that the decision, in its operation in relation to: (a) the complainant; and (b) so far as concerns a complaint regarding the payment of a death benefit - any person (other than the complainant, a trustee, insurer or decision-maker) who: (i) has become a party to the complaint; and (ii) has an interest in the death benefit or claims to be, or to be entitled to benefits through, a person having an interest in the death benefit; was fair and reasonable in the circumstances. 69 The validity of s 37 of the Complaints Act was upheld by the High Court in Attorney-General for the Commonwealth v Breckler (1999) 197 CLR 83 (Breckler). 70 The nature of the role of the Tribunal under s 37 of the Complaints Act was the subject of consideration by the Full Court of this Court in Board of Trustees of the State Public Sector Superannuation Scheme v Edington (2011) 119 ALD 472; [2011] FCAFC 8 (Edington). In that case, Kenny and Lander JJ (with whom Logan J generally agreed) said at [45]-[51]: 45 Various provisions of the Complaints Act show that, relevantly, a function of the tribunal is to conduct a form of administrative review of decisions made by trustees of regulated superannuation funds, which are challenged by relevant persons as unfair or unreasonable: see, for example, ss 12, 14, 37, and 41. A hearing before the tribunal is a hearing de novo, following which the tribunal makes findings of fact relevant to its deliberations: see Attorney-General (Cth) v Breckler (1999) 197 CLR 83; 163 ALR 576; [1999] HCA 28 at [87] (Breckler) per Kirby J; Lykogiannis v Retail Employees Superannuation Pty Limited (2000) 97 FCR 361; 61 ALD 197; [2000] FCA 327 at [48] (Lykogiannis) per Mansfield J, citing Seafarers' Retirement Fund Pty Ltd v Oppenhuis (1999) 94 FCR 594; [1999] FCA 1683 at [19]-[23] (Oppenhuis) per Merkel J. 46 Under the Complaints Act, the tribunal is not called on to make the same kind of determination as the Administrative Appeals Tribunal under its governing legislation. That is, in contrast to the Administrative Appeals Tribunal, the tribunal under the Complaints Act is not called upon to determine whether the trustee made the correct or preferable decision: see, for example, Jevtovic at 322; Cameron v Board of Trustees of the State Public Sector Superannuation Scheme (2003) 130 FCR 122; [2003] FCAFC 214 at [38]-[43] (Cameron) per Whitlam, Kiefel and Dowsett JJ); and National Mutual Life Association of Australia Limited v Scollary [2002] FCA 695 at [37] per Ryan J. Rather, the tribunal stands in the shoes of the trustee and determines, based on all the information before it, whether or not a decision taken by the trustee was fair or reasonable in the circumstances. In Jevtovic at 321, Sundberg J held that the words "the decision … was fair and reasonable" in s 37(6) were directed to whether the actual decision, rather than the process that led to it, was fair and reasonable, a proposition that has subsequently been accepted as correct: see, for example, Citicorp Life Insurance [2005] FCAFC 102 at [19]; and Colonial Mutual Life Assurance Society Limited v Brayley [2002] FCA 1333 at [31] per Branson J. 47 If the tribunal is satisfied that the decision of the trustee was not fair and reasonable, the tribunal makes a decision that is fair or reasonable in substitution for the decision of the trustee, always providing that the tribunal cannot do anything contrary to law, the rules of the fund, or the terms of insurance: see ss 37(3), (4), (5) and 41(3); also Briffa v Hay (1997) 75 FCR 428 at 437; 147 AR 226 at 232 (Briffa); Breckler at [88] and, recently, Machin v Board of Trustees of the State Public Sector Superannuation Scheme (2010) 272 ALR 508; [2010] FCA 969 at [82] per Dodds-Streeton J. 48 As Kirby J said in Breckler at [88], with respect to a decision made by the tribunal in substitution for that of the trustee (at [89]): The new decision, which might have retrospective operation, will speak from the time specified in the determination. What is involved is not a determination that the trustees misapplied the law to the facts. Nor that they mistook their powers and obligations under the governing rules of the fund. Rather it is a determination by the Tribunal of its own opinion that the trustees' decision is, or was, unfair, unreasonable or both. It is the reaching of that opinion which authorises the Tribunal, conforming with s 37(5) of the Complaints Act, to exercise its own determination-making power and to substitute a fresh decision. The object of the determination is to effect the purpose of removing the unfairness and unreasonableness which the Tribunal has determined to exist [s 37(4) of the Complaints Act]. If, however, the tribunal is satisfied that, in the circumstances, the decision of the trustee was fair and reasonable in its operation in relation to the complainant, it must affirm the decision: see s 37(2) and (6). 49 The Complaints Act does not specify the considerations that the tribunal is bound to take into account in deciding whether or not a decision of the trustee was fair or reasonable: see, in this regard, HEST Australia Ltd v Sykley (2005) 147 FCR 248; [2005] FCA 1381 at [49] (HEST) per Crennan J. These considerations must therefore be determined by reference to the subject-matter, scope and purpose of the Act: see generally Minister for Aboriginal Affairs v Peko-Wallsend (1986) 162 CLR 24; 66 ALR 299. A purpose of the Act is "to ensure members and beneficiaries are not adversely affected by unfair and unreasonable decisions of insurers and trustees": see HEST at [49]. Considered in this light, the governing trust deed and insurance terms will necessarily be relevant considerations: see Retail Employees Superannuation Pty Ltd v Crocker (2001) 48 ATR 359; [2001] FCA 1330 at [28] per Allsop J and Cameron at [32]. This is because an essential part of the statutory scheme is that a determination under s 37(3) substitutes the tribunal's decision for the decision of the trustee; and in consequence, the substituted decision must itself be one that is authorised by the legal instruments governing the fund: compare Briffa at FCR 443; ALR 240 per Merkel J. 50 Furthermore, since the tribunal hearing is a hearing de novo, the tribunal is not "restricted to the documents which were before the trustee, nor is it confined to the manner in which the applicant addressed the subject matter": see HEST at [40], citing Commonwealth Superannuation Scheme Board v Dexter [2004] FCA 1434 at [59]-[60] per Gray J, Crocker at [132]-[133], and Oppenhuis at [22]. It must be borne in mind, however, that, notwithstanding the tribunal has "all the powers, obligations and discretions that are conferred on the trustee" (s 37(1)(a)), the tribunal is primarily concerned with the question whether or not the decision of the trustee was fair and reasonable. The whole of its inquiry, including its fact-finding, is directed to answering this question. As Mansfield J said in Lykogiannis at [48]: Ultimately, whatever findings the Tribunal must make standing in the shoes of the trustee … s 37(6) requires the Tribunal to decide whether the decision under review, in its operation, was fair and reasonable in the circumstances. The focus of s 37(6) is upon the consequence or outcome of the decision in its practical operation, rather than upon the process by which the decision under review came to be made. In Hornsby v Military Superannuation and Benefits Board of Trustees (No 1) (2003) 126 FCR 484; 30 Fam LR 535; [2003] FCA 54, Mansfield J also said (at [19]-[20]): [19] [T]he Tribunal may have to make its own findings of fact for the purpose of determining whether, in its opinion, the decision under review in its operation was fair and reasonable in the circumstances. But it is necessary to make such findings of fact only for that purpose. It does not decide afresh all findings of fact of the primary decision-maker as if that decision had not been made. It does not, in that sense, simply stand in the shoes of the primary decision-maker. [20] Hence, under s 37, although the Tribunal is required to make its own decision in relation to the complaint, it is required to make only such findings of fact as are necessary for its decision. It must do so upon the evidence before it. In the light of such findings or conclusions as it has reached, the Tribunal must consider whether the decision it is reviewing, in its operation, was fair and reasonable in the circumstances: Military Superannuation and Benefits Board (No 1) v Stanger (2002) 68 ALD 12; [2002] FCA 671 at [21]. Section 37(6) requires that step. Ultimately the object of the Tribunal's review is to remove unfairness or unreasonableness in the decision under review … We agree with Mansfield J's approach as stated in these passages. 51 We accept that the Tribunal must make its own assessment of the evidence and other information with a view to making its own findings of fact directed to the fundamental question for determination - whether the decision of the trustee was fair and reasonable. The Tribunal may, of course, accept the findings made by the trustee if it agrees with them, but the Tribunal's function is not discharged merely by forming a view that the trustee's factual findings were fair and reasonable. Rather, the Tribunal must ascertain the facts for itself upon the material before it and satisfy itself by reference to these facts whether the trustee's decision was fair and reasonable in the circumstances. Moore J expressed the same idea in Marks v CSS Board of Trustees [2005] FCA 797 at [23], saying: [Section] 37(6) of the Complaints Act does not authorise … the Tribunal simply reviewing all factual issues and indicating that findings by the prior decision maker were fair and reasonable. That subsection is intended to operate on the ultimate decision made by the prior decision maker, namely the decision under review. What the Tribunal must do is form a view about necessary facts, determine what the facts are and then by reference to those ascertained facts determine whether the decision of the prior decision maker was fair and reasonable in the circumstances. The facts ascertained by the Tribunal constitute "the circumstances" by reference to which the Tribunal makes that evaluation. See also Edwards v Postsuper Pty Ltd [2006] FCA 1380 at [30] per Moore J. 71 Their Honours then said that the Tribunal had correctly identified the fundamental question it was to answer, which was whether or not the Tribunal was satisfied that the decision of the trustees - being the decision under review - was, in its operation in relation to Mr Edington, fair and reasonable in the circumstances (Edington at [53]). Having earlier noted (at [28]) the view of the primary judge that the Tribunal must first identify how the trustees actually came to their decision and that this required the Tribunal to identify the reasoning process that the trustees employed to reach their decision, Kenny and Lander JJ said at [53]: "Nothing in the Complaints Act expressly required the tribunal to consider whether or not the reasoning process adopted by a trustee in reaching the impugned decision was fair and reasonable; and no such obligation should be implied". Their Honours continued (at [53]): … This is because, in the context of s 37(6), the tribunal is required to make its own assessment of the evidence and other information before it, in order to determine whether or not it is satisfied that the decision under review was, in its operation in relation to the complainant, fair and reasonable in the circumstances. The tribunal may make its own findings of fact for this purpose after a de novo hearing. After this new hearing, nothing may turn on the reasoning process of the previous decision-maker, because the tribunal may or may not, for its own reasons having regard to the evidence before it, be satisfied that the decision under review was fair and reasonable in its operation in relation to the complainant in the circumstances as it has found them. Thus, even if the tribunal's factual findings differed from those of the previous decision-maker, the tribunal might nonetheless be satisfied that, in the circumstances, the decision under review was in fact fair and reasonable in the relevant way. Plainly enough, in this event, the process of reasoning adopted by the tribunal in determining whether or not the decision under review was relevantly fair and reasonable would be likely to differ from the reasoning that led to the decision under review. The fact that it did would not necessarily bear on the tribunal's satisfaction as to the reasonableness or fairness of the decision under review. (Emphasis in original.) 72 The passages set out above establish, relevantly for present purposes, the following propositions: (a) Under the Complaints Act, the Tribunal is not called upon to make the same kind of determination as the Administrative Appeals Tribunal. The Tribunal is not called upon to determine whether the trustee made the correct or preferable decision. Rather, the Tribunal is to determine whether or not a decision taken by the trustee was fair or reasonable in the circumstances. (b) The Complaints Act does not specify the considerations that the Tribunal is bound to take into account in determining whether or not a decision of the trustee was fair or reasonable; these must therefore be determined by reference to the subject-matter, scope and purpose of the Act. (c) The governing trust deed and insurance terms will necessarily be relevant considerations. (d) Nothing in the Complaints Act expressly requires the Tribunal to consider whether or not the reasoning process adopted by a trustee in reaching the impugned decision was fair and reasonable; and no such obligation should be implied. 73 It is important to note that the Tribunal's task is not to engage in some form of judicial review of the decision of the trustee. This point was made by Allsop J (as his Honour then was) in Retail Employees Superannuation Pty Ltd v Crocker (2001) 48 ATR 359; [2001] FCA 1330 (Crocker) at [31]: The Tribunal's task is not to engage in ascertaining generally the rights of the parties, nor is it to engage in some form of judicial review of the decision of the trustee or insurer. Rather it is to form a view, from the perspective of the trustee or insurer, as to whether the decision of either was (recognising the overriding framework given by the governing rules and policy terms, respectively) unfair or unreasonable. 74 While a number of cases have said that the role of the Tribunal is to consider whether the actual decision, as opposed to the process by which the decision was reached, was fair and reasonable in the circumstances, there may be circumstances in which unfairness in process may lead to unfairness in decision. This point was made by the Full Court of this Court (Wilcox, Gyles and Downes JJ) in Citicorp Life Insurance Ltd v Smith [2005] FCAFC 102 (Citicorp) at [19]: The actual question for the Tribunal was whether the decision under review was 'unfair or unreasonable' (s 14). If the Tribunal was satisfied that the decision was 'fair and reasonable', it was required to affirm the decision (s 37(6)). It has been said that the role of the Tribunal is to consider 'whether the actual decision, as opposed to the process by which the decision was reached, was fair and reasonable in the circumstances' (Colonial Mutual Life Assurance Society Limited v Brayley [2002] FCA 1333 at [31] per Branson J; see also National Mutual Life Association of Australia Limited v Scollary [2002] FCA 695 at [24] per Ryan J). However, depending upon the circumstances, unfairness in process may lead to unfairness in decision.

Duties of the trustee of a superannuation fund 75 Although the issues raised by the appeal principally concern the nature of the Tribunal's powers when reviewing a decision of the trustee under s 37 of the Complaints Act, it is appropriate to make some brief observations about the duties of the trustee of a superannuation fund, as these duties were referred to in the Reasons of the Tribunal. 76 Section 52(1) of the Superannuation Industry (Supervision) Act 1993 (Cth) (the SIS Act) provides that if the governing rules of a registrable superannuation entity do not contain covenants to the effect of the covenants set out in the section, those governing rules are taken to contain covenants to that effect. Section 52(2) relevantly provides: (2) The covenants referred to in subsection (1) include the following covenants by each trustee of the entity: … (c) to perform the trustee's duties and exercise the trustee's powers in the best interests of the beneficiaries; … 77 Paragraph (c) of s 52(2) was in those terms at the time of the Tribunal's determination in the present case. Previously, it was in slightly different terms, namely: "to ensure that the trustee's duties and powers are performed and exercised in the best interests of the beneficiaries". The provision was amended to its current form by the Superannuation Legislation Amendment (Trustee Obligations and Prudential Standards) Act 2012 (Cth), with effect from 1 July 2013. 78 The covenant in s 52(2)(c) of the SIS Act was considered by the New South Wales Court of Appeal in Commonwealth Bank Officers Superannuation Corporation Pty Ltd v Beck (2016) 334 ALR 692. Bathurst CJ (with whom Macfarlan and Gleeson JJA relevantly agreed) stated that it was common ground between the parties that the covenant in s 52(2)(c) of the SIS Act did not expand the general law (at [136]). Bathurst CJ referred to Manglicmot v Commonwealth Bank Officers Superannuation Corporation Pty Ltd (2011) 282 ALR 167, in which Giles JA, with whom Young and Wheally JJA agreed, stated that s 52(2)(c) does not materially add to the general law duty of the trustees to act in the best interests of the fund. Bathurst CJ noted that in Finch v Telstra Super Pty Ltd (2010) 242 CLR 254 (Finch), the High Court left open the application of Karger v Paul [1984] VR 161 principles to superannuation funds. However, Bathurst CJ noted, the High Court emphasised that so far as they may apply, the decision may be reviewable for want of properly informed consideration (Finch at [66]). 79 In Finch, French CJ, Gummow, Heydon, Crennan and Bell JJ stated that the trustee in that case, as the trustee of a trust, had a duty to distribute to those who fell within the definition of "Total and Permanent Invalidity" and a duty not to distribute to those who did not (at [30]). Forming an opinion under the applicable limb of the definition of "Total and Permanent Invalidity" in the deed was "not a matter of discretionary power to think one thing or another; it was an ingredient in the performance of a trust duty" (at [30]). The Court continued: "The applicant was not the object of a discretionary power of appointment. He was the beneficiary of a trust, and although the precise form and quantum of his beneficial interest was contingent on particular events, he did have a beneficial interest" (at [30]). In relation to the particular context of superannuation, the Court said (at [33]): Another aspect of the factual context is that the Deed is dealing with the superannuation of employees. For some people, superannuation is their greatest asset apart from their houses; for others it is even more valuable. Different criteria might be thought to apply to the operation of a superannuation fund from those which apply to discretionary decisions made by a trustee holding a power of appointment under a non-superannuation trust. Employer superannuation is part of the remuneration of employees. Membership of the employee superannuation fund may be compulsory. Superannuation, unsurprisingly, is a matter of trade union interest. The question of superannuation entitlements may form the subject of an industrial dispute within the meaning of s 51(xxxv) of the Constitution. Superannuation is not a matter of mere bounty, or potential enjoyment of another's benefaction. It is something for which, in large measure, employees have exchanged value - their work and their contributions. It is "deferred pay". These are propositions which are not falsified by arguments advanced by the Trustee to the effect that the Death and Total and Permanent Invalidity benefits under the Deed involve in part an element of bounty. Superannuation is a method of attracting labour. The legitimate expectations which beneficiaries of superannuation funds have that decisions about benefit will be soundly taken are thus high. So is the general public importance of them being sound. (Footnotes omitted.) See also Alcoa of Australia Retirement Plan Pty Ltd v Frost (2012) 36 VR 618 at [59] per Nettle JA (as his Honour then was), Redlich JA and Davies AJA agreeing.

Question of law 1 80 The Trustee contends that the Tribunal erred in approaching its task primarily as a form of judicial review of the Trustee's decision, and by focusing upon whether the Trustee's reasoning and decision-making process was fair and reasonable, rather than directing itself to the single enquiry it is empowered by the Complaints Act to conduct on such reviews; that is, whether the decision to select the impugned valuation methodology for the purpose of converting members' pensions to lump sums was fair and reasonable in its operation in relation to Mr Billinghurst. 81 In relation to the Trustee's functions under the Complaints Act, the Trustee submits as follows: (a) The Tribunal's task is confined to the role given to it by the Act: Crocker at [16]. In determining a complaint brought under the Complaints Act, the Tribunal conducts a form of administrative review (Vision Super Pty Ltd v Poulter (2006) 154 FCR 185 at [31] (Vision Super)), and is to place itself in the shoes of the trustee in assessing whether the trustee's decision was fair and reasonable: see Briffa v Hay (1997) 75 FCR 428 at 442; Collins v AMP Superannuation Ltd (1997) 75 FCR 565 at 574; Lykogiannis v Retail Employees Superannuation Pty Ltd (2000) 97 FCR 361 at [47]-[48]. While s 37(3) of the Complaints Act confers upon the Tribunal the power to affirm, remit, vary or set aside the decision under review, that power is subject to express limitations, including that, in accordance with s 37(6), the Tribunal must affirm the decision if it is satisfied that the decision, in its operation in relation to the member bringing the complaint, was fair and reasonable in the circumstances: see s 37(6); Edington at [49]-[50], [53]. (b) While in the context of the Act the words "unfair" and "unreasonable" have been held to be "words of broad content" (Vision Super at [30]; Edington at [44]), this Court has on several occasions stated that the enquiry as to whether the decision was fair and reasonable does not call upon the Tribunal to determine whether the trustee made the correct or preferable decision: Edington at [46]; see also, eg: National Mutual Life Association of Australia v Jevtovic (1997) 217 ALR 316 at 322 (Jevtovic); Cameron v Board of Trustees of the State Public Sector Superannuation Scheme (2003) 130 FCR 122 at [38]-[43] (Cameron); National Mutual Life Association of Australasia Limited v Scollary [2002] FCA 695 at [37]; Sherrah v Commonwealth Superannuation Corporation (2015) 147 ALD 665 at [32]. (c) Further, and importantly in the context of this appeal, the words "the decision … was fair and reasonable" in s 37(6) are directed to whether the actual decision, rather than the process which led to it, was fair and reasonable: Jevtovic at 321; Citicorp at [19]; Colonial Mutual Life Assurance Society Limited v Brayley [2002] FCA 1333 at [31]. The Act does not require the Tribunal to consider whether or not the reasoning process adopted by a trustee in reaching the impugned decision is fair and reasonable, and no such obligation is to be implied: Edington at [53]. (d) The correct approach to be taken by the Tribunal on review of a complaint made under s 14 of the Act was pithily summarised by Allsop J in Crocker at [31], adopted with approval by the Full Court in Cameron at [43]. 82 The Trustee's submissions that the Tribunal misdirected itself as to its proper function can be summarised as follows: (a) The Tribunal's determination strays repeatedly into the territory of judicial review which, in accordance with the authorities, is a fundamental error. This error is manifest in two key respects: (i) First, the Tribunal asked itself whether the Trustee had applied the correct test in determining the methodology to apply in converting Mr Billinghurst's pension into a lump sum and concluded that the Trustee's application of a "fair and reasonable" test was "not appropriate". (ii) Secondly, the Tribunal concluded that the Designated Rules governing the Fund did not permit the Trustee to take into account the preferences of the Employer in deciding the actuarial basis for converting the pension to a lump sum. (b) Each of these steps - the formulation of a test by the Trustee, and the Trustee regarding or disregarding certain factors - are anterior steps to the ultimate (and only relevant) decision by the Trustee; that is, to select the methodology which converted Mr Billinghurst's pension into a lump sum in the amount of $1,432,824. The Complaints Act only calls upon the Tribunal to determine whether the operational effect of this ultimate decision on Mr Billinghurst was fair and reasonable. The anterior steps are not themselves decisions that were subject to review by the Tribunal under the Complaints Act. (c) The Tribunal's determination is replete with statements exhibiting a focus upon the reasoning process by which the Trustee arrived at its decision, as distinct from forming a view, from the perspective of the Trustee, as to whether the decision to value Mr Billinghurst's pension at the amount that it did for the purpose of converting it to a lump sum, was unfair or unreasonable (see the Reasons at [74]-[108]). In order to discharge its proper function, it was in no way relevant for the Tribunal to have regard to the Trustee's reasoning process in arriving at its decision. Nevertheless, the Tribunal observed that it had not been "provided with any other material, other than the submissions of the Trustee …, which shows the reasoning of the Trustee or what factors it took into account in making the calculation" (Reasons at [75]). (d) Two matters arise from this statement. First, the absence of such material was entirely appropriate having regard to the Tribunal's proper function and, in answering the question asked of the Tribunal on a review under the Complaints Act, it would be an error to have regard to such material for the purpose of determining whether the reasoning process disclosed by such documents was fair and reasonable. Secondly, notwithstanding the acknowledged absence of this material, the Tribunal in any event proceeded to draw conclusions about the fairness and reasonableness of the Trustee's reasoning process. These findings included that the Trustee applied an inappropriate test in determining the amount of the lump sum awarded to Mr Billinghurst, and that the Trustee had regard to factors which the Designated Rules did not permit it to take into account. 83 For the reasons that follow, I do not accept the Trustee's submissions in relation to question 1 and the corresponding ground of appeal. 84 It is true that the cases discussed above make clear that the Tribunal is to conduct a form of 'merits review' rather than 'judicial review' and that the task of the Tribunal is to determine whether the decision of the trustee was fair and reasonable. In considering whether the decision was fair and reasonable, the Tribunal must take into account the terms of the applicable trust deed and rules, as well as superannuation law more generally. In this sense, and particularly if the Tribunal determines that the trustee's decision is to be set aside and another decision substituted, it may be said that the Tribunal 'stands in the shoes' of the trustee. However, this understanding of the role of the Tribunal in determining a review under the Complaints Act does not preclude the Tribunal, in an appropriate case, considering whether the process adopted by the trustee is such as to make its decision unfair or unreasonable. The circumstances which may make a decision of a trustee unfair or unreasonable are many and varied and a narrow approach should not be adopted to what may constitute unfairness or unreasonableness in decision. Unfairness or unreasonableness in process may, in an appropriate case, lead to unfairness or unreasonableness in decision: see Citicorp, quoted in [74] above. 85 In the present case, although it is true that the Reasons are in some respects expressed in language that is familiar in the context of judicial review, in substance the Tribunal addressed the correct question, namely whether the decision of the Trustee was fair and reasonable in the circumstances. The decision in question was the Trustee's determination of the lump sum amount that would be paid by way of commutation of Mr Billinghurst's pension. The Trustee adopted the opinion of the Plan Actuary as to the appropriate value. In forming the view that this valuation was appropriate and should be adopted, the Trustee adopted a position that the valuation should be carried out on the basis of a discount rate based on the yield on 10 year government bonds at 29 August 2011 (being the date of the August 2011 Advice) rather than 31 December 2011 (being the date as at which the pension was to be valued); and on the basis of an assumption that there would be no future increases in the pension (notwithstanding that in each of the actuarial valuations of the Plan it had been assumed that there would be increases in the amount of the pensions). The Trustee also adopted a position that there should be no allowance for expenses that may be incurred in administering the assets. It is apparent from the chronology of events that the Trustee's decision to adopt these positions was largely driven by a view that the Employer had stated in the November 2011 Letter that the valuation should be based on the purchase of an annuity without indexation, and that the Employer would only fund any shortfall in the Plan if the lump sum amounts were calculated on that basis. (As discussed below, this reading of the November 2011 Letter is contestable.) Thus the Trustee does not appear to have addressed what it would have considered to be the appropriate lump sum amount determined on a fair value basis free of (what it perceived to be) the constraints of the November 2011 Letter. In circumstances such as these, in my view, it was open to the Tribunal to form the view that the Trustee's decision was not fair and reasonable and remit the matter to the Trustee for reconsideration. This is a case where it was open to conclude that the Trustee's reasoning process, or the adoption of certain positions by the Trustee, rendered the resultant decision unfair and unreasonable. 86 Although the language used by the Tribunal at [74]-[79] of the Reasons is familiar in the context of judicial review, I think this section of the Tribunal's reasons needs to be read in the context of the Reasons as a whole. It is clear from [66] of the Reasons that the Tribunal correctly understood that its function was to determine whether the decision of the Trustee was fair and reasonable, in the circumstances, in relation to Mr Billinghurst (see also the Reasons at [6], [7], [8], [109] and [110]). Read in the context of the Reasons as a whole, [74]-[79] of the Reasons may be seen as expressing a concern that the Trustee did not focus on its obligation to act in the best interests of the beneficiaries, including Mr Billinghurst, by way of introduction to the Tribunal's consideration of more specific complaints about the Trustee's decision. In any event, I do not think [74]-[79] of the Reasons were material to the ultimate determination of the Tribunal. The Tribunal's reasons for concluding that the Trustee's decision was unfair and unreasonable at [80]-[91] and [95]-[108] provide independent reasons for the conclusion that the Tribunal reached. (I make some additional observations about [74]-[79] of the Reasons in the context of question of law 5, below.) 87 In relation to the Tribunal's conclusion, at [80]-[91] of the Reasons, that the Designated Rules did not permit the Trustee to take into account the preferences of the Employer in deciding the actuarial basis for converting the pension to a lump sum, for the reasons given above, in the circumstances of the present case, it was open to the Tribunal to conclude, as it did in substance, that the Trustee's taking into account of the preferences of the Employer led to unfairness or unreasonableness in decision. While this may be characterised as an aspect of the Trustee's decision-making process, it is clear that this may have had a significant impact on the Trustee's decision as to the amount of the lump sum. In these circumstances, this is a case where it was open to conclude that the process adopted by the Trustee rendered the decision unfair and unreasonable. 88 I also note that it is apparent from the section of the Reasons summarising the Trustee's submissions to the Tribunal (see the Reasons at [45]-[65]) that the Trustee made extensive submissions to the Tribunal in relation to (what may be described as) its reasoning or decision-making process. To some extent, at least, the Tribunal was responding to submissions of the Trustee about these matters in the section of the reasons comprising [80]-[91]. 89 In relation to the Tribunal's observation at [75] of the Reasons that it had not been provided with material that showed the reasoning process of the Trustee or what factors it took into account, I think this paragraph is merely an observation about the state of the material before the Tribunal. 90 I note for completeness that, although in some, perhaps many, cases it will be appropriate for the Tribunal to substitute its own decision for that of the Trustee, in the circumstances of the present case, where further actuarial calculations were required, it was appropriate for the Tribunal to remit the matter to the Trustee rather than to substitute a different decision. The Tribunal, it may be inferred, did not have the resources to obtain its own actuarial valuation.

Question of law 1.1 91 The Trustee submits in relation to question of law 1.1 and the corresponding ground that the Tribunal failed to have regard to the fact that the decision concerned the distribution of the Plan's assets on termination of the Plan, and that there was a limited amount available to be distributed between members. The Trustee makes the following submissions in this regard: (a) The decision under review related to the Trustee's decision in relation to the calculation of the lump sum payable to Mr Billinghurst on the termination of the Plan. (b) The decision under review was required to be made in accordance with rule 16.5 of the Designated Rules. (c) By the November 2011 Letter, the Employer informed the Trustee that it was committed to reaching a fair and equitable resolution for each member of the Plan, including current pensioners. The Employer requested the Trustee to prepare calculations of the final transfer value for each member using the valuation terminology which had been outlined in the September 2011 Options Paper. The Employer acknowledged that there may be a shortfall in the funding required to meet the desired commitments, and committed to making an additional contribution to make good the shortfall. Accordingly, the amount available for distribution to members, including Mr Billinghurst, was the amount realised on the redemption of the Plan assets, supplemented by the Employer in accordance with the commitment it made in the November 2011 Letter. The Employer made no commitment to make an additional contribution to fund payments calculated on a basis which was more generous than the methodologies referred to in the letter. If the amount distributed to Mr Billinghurst was increased, the amount available for distribution to other members would be correspondingly decreased. The Trustee necessarily needed to have regard to the amount which was available for distribution in making its decision under Designated Rule 16.5. 92 The Trustee's submissions are premised on the funds available to pay pensioners, including Mr Billinghurst, being limited to the units attributable to the Plan and the additional contribution which the Employer committed to make in the November 2011 Letter (as interpreted by the Trustee). However, I do not think this premise is correct, for the following reasons. 93 First, it is not clear that the Designated Rules would not have enabled the Trustee to require an additional contribution from the Employer if there were a shortfall (based on calculations of lump sum amounts at fair value, if this were greater than the amounts calculated by the Plan Actuary). The November 2011 Letter stated that the Employer would cease to operate as a business with effect from 31 December 2011 and that it was understood that the Employer would therefore automatically cease to participate in the Plan in accordance with rule 3.3(a)(i)(B) of the Designated Rules (set out in [30] above). The letter also stated, in the penultimate paragraph, that the Employer understood that, in accordance with rule 16.3(b) of the Designated Rules, the Termination Date would be determined by the Trustee, and that the Employer understood that, in practice, this date would be the date when all transfer values had been paid from the Plan. It was requested that the Trustee take into account the Employer's desire to have these matters concluded by 31 December 2011. In the event, the payment to Mr Billinghurst took place in March 2012. 94 It is significant to note that the November 2011 Letter gave notice of cessation of operating a business with effect from 31 December 2011 pursuant to rule 3.3(a)(i)(B). The effect of this notice was that the Employer ceased to participate in the Plan from that date. The giving of this notice did not immediately terminate the Plan. As the letter correctly pointed out, the Termination Date was to be determined by the Trustee under rule 16.3(b). In these circumstances, it would seem to have been open to the Trustee to have required the Employer to make additional contributions to the Plan pursuant to rule 9.1(a) in the period between the November 2011 Letter and 31 December 2011 (when the Employer ceased to participate) or perhaps even the date of termination of the Plan (assuming this was later). I note that paragraph 5 of the November 2011 Letter stated that, "[f]or ease of calculations, with the exception of the additional contribution required to make up any funding shortfall, [the Employer] will cease to make employer superannuation contributions to the Plan with immediate effect". Given the qualifications, and in the absence of specific reference to rule 9.5 of the Designated Rules, it is unclear whether this constituted notice of termination of the Employer's obligation to contribute under rule 9.5 of the Designated Rules. In the circumstances, it may have been open to the Trustee to require contributions to make good any shortfall. 95 Secondly, the Trustee interpreted the November 2011 Letter as a confined commitment by the Employer only to make good a shortfall if the lump sum amounts were calculated on the basis outlined in paragraph 3(b) of the letter. But I think the letter is open to being read as a commitment by the Employer to make good any shortfall arising after determination of the lump sum amounts on a fair value basis by the Trustee. The context in which to read the November 2011 Letter is the August 2011 Advice and the September 2011 Options Paper. The August 2011 Advice set out indicative valuations of lump sum amounts for each of the five current pensioners (at page 7). A table set out values on two alternative bases (the first was the actuarial valuation basis; the alternative basis used a discount rate in line with the yield on 10 year government bonds together with nil pension increases). The commentary below the table referred to the cost of purchasing an annuity with the same characteristics as the pension (including the reversionary pension) from CommInsure. As an example, the cost of purchasing the pension of pensioner "D" (which, it is to be inferred from the amounts set out in the table, is Mr Billinghurst) with CommInsure (without escalation) was stated to be approximately $1.55 million, which was some 18% more than the alternative valuation basis. In the September 2011 Options Paper, figures were provided for the "wind up" option. In relation to current pensioners, the total funding cost was provided on three alternative bases: (a) the actuarial valuation basis ($4.05 million); (b) a "more conservative" basis (which I infer is the same as the alternative valuation basis in the August 2011 Advice) ($4.83 million); and (c) a figure for the purchase of annuities for pensioners ($5.80 million). The notes under the table indicated that the annuities in the third option would not increase in future years and that CPI linked pensions were available but would be significantly more expensive. 96 In the context of the August 2011 Advice and the September 2011 Options Paper, the statement in paragraph 3(b) of the November 2011 Letter that the transfer values in relation to current pensioners should be determined by reference to the cost to each pensioner of purchasing an equivalent annuity (and that such an annuity should be valued on the basis that it would not increase in future years and should not be linked to CPI) reflects the most generous basis of valuation put forward in the August 2011 Advice and the September 2011 Options Paper. This puts a rather different complexion on the statement in paragraph 3(b) of the letter. Of the three different options presented, the Employer indicated its preference for, and willingness to fund, the basis which was most generous to the beneficiaries. 97 Further, the overarching message conveyed by the Employer in the November 2011 Letter was that the Employer was committed to "reaching a fair and equitable resolution for each member of the Plan, including current pensioners" (paragraph 1). The Employer also stated that it "[i]ntends to provide to each pensioner a lump sum arrived [at] on the basis of a fair and reasonable valuation of their current entitlement, to allow, should the pensioner wish, the purchase of an annuity, which would maintain their current stream of income" (paragraph 1(b)). In the context of the overarching message, paragraph 3(b) of the letter is open to being read as a suggested basis of valuation which is subsidiary to the overarching message. On this reading of the letter, it was open to the Trustee to determine, for example, that a fair value basis required the utilisation of a discount rate based on the yield on 10 year government bonds at 31 December 2011 (the date as at which the pension was to be valued) rather than 29 August 2011 (the date of the Plan Actuary's earlier advice to the Employer). If the letter is read in this way, the Employer's commitment to fund any shortfall was commensurate with the overarching message. 98 Thirdly, and in any event, it was always open to the Trustee to seek additional funds from the Employer. Even if the Trustee's interpretation of the November 2011 Letter was correct, and the Employer's commitment to fund any shortfall was conditional on lump sum amounts being calculated on the basis set out in paragraph 3(b) of the letter, if the Trustee formed the view that a fair basis valuation required the adoption of a different basis, the Trustee could of course ask the Employer for an additional contribution to fund the shortfall. However, there is no indication of the Trustee considering this. Rather, the Trustee adopted a position that it was in effect constrained to adopt the valuation basis set out in paragraph 3(b) of the November 2011 Letter. 99 Fourthly, the Trustee's contention fails to have regard to the priority accorded to current pensions under the Designated Rules. Rule 16.5 provides that, on termination, the Trustee must redeem the units attributable to the Plan and apply the Plan's assets in the order of priority there set out (see [30] above). Priority is accorded to "pensions being provided from the Plan which commenced payment before the Termination Date and any Minimum Requisite Benefits" ahead of payments to or in respect of other Members. Thus, if there were an overall shortfall, and the Employer could not be compelled to fund the shortfall and refused voluntarily to do so, the Trustee would be required to give priority to the pensions of current pensioners ahead of payments to other members. 100 The Trustee submits that if the amount distributed to Mr Billinghurst was increased, the amount available for distribution to other members would be correspondingly decreased. There are several answers to this submission. For the reasons given above, I do not accept the premise that there was a finite pool of funds, comprising the units attributable to the Plan and the additional funding commitment in the November 2011 Letter (as interpreted by the Trustee). Further, and in any event, rule 16.5(b) of the Designated Rules gave priority to pensions being provided from the Plan which commenced payment before the Termination Date and any Minimum Benefits. Thus, even if payment of a larger amount to those covered by rule 16.5(b) did decrease the amount available for distribution to other members, this is consistent with the order of priority in the Designated Rules. 101 For these reasons, I do not accept the Trustee's submissions relating to this question of law and the corresponding ground of appeal.

Question of law 1.2 102 The Trustee submits in relation to question of law 1.2 and the corresponding ground of appeal that the Tribunal failed to have regard to the requirement of s 37(4) of the Complaints Act, for the following reasons: (a) The making of the complaint to the Tribunal by Mr Billinghurst did not affect the operation of the Trustee's decision. The Tribunal did not make any order staying or otherwise affecting the operation or implementation of the whole or part of the decision of the Trustee concerning distribution of the assets of the Plan as required by Designated Rule 16.5. Accordingly, the whole of the amount available for distribution to members was distributed in accordance with the Trustee's decisions under Designated Rule 16.5. (b) Section 37(4) of the Complaints Act provides that the Tribunal may only exercise its determination-making power under s 37(3) for the purpose of placing the complainant as nearly as practicable in such a position that the unfairness, unreasonableness, or both, that the Tribunal has determined to exist in relation to the trustee's decision that is the subject of the complaint no longer exists. (c) The Tribunal failed to identify the unfairness or unreasonableness in relation to the decision of the amount to be distributed to Mr Billinghurst, and failed to consider how the exercise of its determination-making power would serve the purpose of placing Mr Billinghurst as nearly as practical in such a position that the unfairness or unreasonableness no longer existed. As there was no amount remaining to be distributed it was not possible for the Tribunal to make a determination which would serve the purpose of remedying any unfairness or unreasonableness of the decision, if any unfairness or unreasonableness had been found to exist. (d) For similar reasons, there is no utility in the Court referring the matter back to the Tribunal for determination in accordance with law. Accordingly, the course that should be adopted, in accordance with s 46 of the Complaints Act, is to set aside the determination of the Tribunal and affirm the Trustee's decision. 103 The Trustee's contention, if correct, would have the unfortunate effect of undermining the scheme for the independent review of decisions of superannuation trustees established by the Complaints Act. It would mean that a trustee could say, in effect, that there is no utility in the Tribunal considering whether a decision the trustee had made was fair and reasonable because all the money had already been paid away in accordance with the trustee's decision. 104 An argument to the effect that there was no utility in the Tribunal considering the matter (because all the money had already been paid away) was not put to the Tribunal. It was raised for the first time at the hearing of the appeal. If it is correct, it means that the entire complaints process before the Tribunal, in which both sides provided detailed written submissions and responsive written submissions and the Tribunal considered the matter carefully and delivered detailed reasons for its determination, was a waste of time and expense. These matters make one pause before accepting the Trustee's submission. 105 I think the better view is that, in circumstances where the Complaints Act forms an important part of the regulatory scheme for regulated superannuation funds (as to which, see Breckler at [38]), and provides a mechanism for the independent review of decisions of trustees against the criteria of fairness and reasonableness, a trustee should not put itself in a position where it is unable to give effect to a determination of the Tribunal. Further, the Designated Rules are to be interpreted in such a way, so far as possible, that the Trustee has power to give effect to a decision of the Tribunal. 106 In any event, in the present case, it would be open to the Trustee to seek additional funds from the Employer if the Trustee (on remitter) forms the view that the lump sum amount, determined on a fair value basis, is greater than that originally calculated by the Plan Actuary. On one view, as discussed above, this is what the Employer agreed to do in the November 2011 Letter. For these reasons, the Trustee has not made good its proposition that "it was not possible for the Tribunal to make a determination which would serve the purpose of remedying any unfairness or unreasonableness of the decision". It follows that I do not accept that the Tribunal's determination was beyond the scope of s 37(4) of the Complaints Act.

Questions of law 2, 3 and 4 107 At the hearing of the appeal, senior counsel for the Trustee indicated that questions of law 2, 3 and 4 raised substantially the same issues as question 1. I refer to my reasons in relation to question 1, set out above.

Question of law 5 108 The Trustee makes the following submissions in relation to question of law 5, which relates to the adoption by the Trustee of a fair and reasonable test: (a) The Tribunal referred to two documents in which the Trustee's Claims and Complaints Committee and the Trustee respectively stated they were satisfied that the lump sum payment outcome was "fair and reasonable", and concluded from this evidence that "the Trustee was of a view that it had to apply a fair and reasonable test in making the calculation rather than act in the best interests of the beneficiaries" (Reasons at [78]). (b) Leaving aside whether this conclusion was properly open on the evidence before and cited by the Tribunal, the Tribunal erred by having regard to the nature of the test formulated and applied by the Trustee in making its decision, and then concluding that the application of a fair and reasonable test by the Trustee was not "appropriate". (c) Significantly, although the Tribunal identifies the question of whether the Trustee applied the correct test as an "issue that arises in relation to the Complainant's complaint" (Reasons at [74]), Mr Billinghurst did not submit to the Tribunal that the Trustee had applied the wrong test in calculating his lump sum. Rather, this is a question which appears to have occurred to the Tribunal in the absence of any submission from the parties, and further illustrates an approach taken by the Tribunal which more closely resembles the curial approach to be taken on judicial review, rather than the confined powers of review conferred by s 37 of the Complaints Act. (d) By asking this question of its own motion, and drawing this conclusion, the Tribunal exercised power beyond what is conferred on it by the Complaints Act. As stated, the Tribunal's role, and only role, was to stand in the shoes of the Trustee and form a view as to whether the decision, in its operation in relation to Mr Billinghurst, was fair and reasonable, not whether the test formulated and applied by the Trustee (if any) was correct or appropriate. 109 As discussed at [86] above, the section of the Reasons comprising paragraphs [74]-[79] needs to be read in the context of the Reasons as a whole. Read in that context, paragraphs [74]-[79] of the Reasons may be seen as expressing a concern that the Trustee did not focus on its obligation to act in the best interests of the beneficiaries, including Mr Billinghurst, by way of introduction to the Tribunal's consideration of more specific complaints about the Trustee's decision. In any event, I do not think they are material to the ultimate determination of the Tribunal. 110 I note for completeness that, while the Tribunal was correct to emphasise, in [74]-[79] of the Reasons, the Trustee's obligation to act in the best interests of the beneficiaries, including Mr Billinghurst, I would not read the extracts from the Trustee's Complaints Committee minutes and the Trustee's letter as necessarily inconsistent with this obligation. However, the way in which these documents are expressed understandably raised concerns for the Tribunal that the Trustee had not addressed its task correctly. The task for the Trustee was to determine, on a fair value basis, the lump sum equivalent of Mr Billinghurst's pension. The language of "fair and reasonable" is the language of the review mechanism under the Complaints Act. Thus the task of the Tribunal is to determine whether a decision of a trustee is fair and reasonable in the circumstances in its operation in relation to a complainant. Contrastingly, the task of the Trustee was to determine an amount (on the basis set out above), not merely to decide whether a figure that had been proposed by the Plan Actuary was within a range of fair and reasonable outcomes.

Questions of law 6 and 7 111 As noted above, the Trustee did not press the issue raised by question of law 6. 112 The issues raised by question of law 7 have been covered in the context of question of law 1.1 and I refer to my reasons in relation to that question.

Question of law 8 113 In relation to the Tribunal's finding that the Trustee was not permitted to take certain factors into account, the Trustee submits: (a) The Tribunal determined that, in selecting a methodology with which to value the pensions for the purpose of converting them to lump sums (with the assistance of the Plan Actuary), the Trustee was not permitted by rules 16.5 and 16.6 of the Designated Rules to take into account the following matters and circumstances: (i) the preferences and funding objectives of the Employer (Reasons, [86]-[87]); (ii) how much the Employer was prepared to fund (Reasons, [88]); and (iii) the cost to purchase an annuity that would provide Mr Billinghurst with an equivalent income stream (Reasons, [91]). (b) The Tribunal's analysis underpinning its finding that the taking of these matters into account vitiated the Trustee's decision more closely resembles the reasoning process of a court performing judicial review than the proper performance of the Tribunal's administrative review function. While the Designated Rules were a consideration to which the Tribunal was to have regard in ensuring that its substituted decision, standing in the shoes of the Trustee, was itself one that was authorised by the legal instruments governing the fund, it was not open to the Tribunal to construe the applicable rules for the purpose of determining whether the Trustee had erred in its reasoning process. The Tribunal's error in navigating this distinction is shown by its legal analysis of the Trustee's function under the Designated Rules, and its conclusion as to which matters the Trustee was prohibited from having regard to, as encapsulated in [84] of the Reasons. (c) While not ultimately relevant to the disposition of the appeal given the Tribunal's errors identified above, there are open legal questions which arise on the Tribunal's construction of rules 16.5 and 16.6 and whether those rules operate to restrain the Trustee in the manner found by the Tribunal. Specifically, at least four legal questions would need to be addressed if this Court held that the Tribunal did not err by misdirecting itself as to its proper role and function. (d) First, Designated Rule 16.5 provides the order of priority in which the assets of the Plan must be distributed upon termination of the Plan. The Tribunal appeared to accept that this rule required the Trustee to convert the pensions being paid from the Plan into lump sums in order to cash them out (or purchase annuities, if the Trustee exercised its discretion to purchase annuities on behalf of members under Designated Rule 16.6), and that it was reasonable for the Trustee to rely upon the calculations of an actuary in performing this task. Having regard to the distinction drawn in Finch between a trustee's discretionary decisions and duties, there is an open question as to whether the decision to adopt a particular methodology with which to value Plan pensions for the purposes of converting them to lump sums involved the exercise of a discretionary power by the Trustee as trustee of the Plan, or whether the decision involved the making of a factual determination (ie, a calculation) in the performance of a trust duty: see Finch at [66]. (e) Secondly, whether a failure by the Trustee to properly inform itself of matters raised by the Employer (and which the Tribunal held ought not to have been taken into account) would be a breach of the duty identified by the High Court in Finch that requires superannuation trustees to undertake inquiries for "information, evidence and advice" which the trustee may consider relevant: Finch at [66]. (f) Thirdly, whether Designated Rule 16.5, on its proper construction, in any way limited the matters that the Trustee could take into account, including matters relating to the Employer's preferences and funding objectives and capability. (g) Fourthly, there is a question as to the scope and content of the Trustee's duty, as trustee, to act in the best interests of members, and whether or not that duty was discharged by the Trustee. As noted by the Tribunal in its determination, a trustee is required to comply with certain covenants imposed by s 52 of the SIS Act, including the covenant to perform its duties and exercise its powers in the best interests of the beneficiaries. That covenant is derived from trust law. The obligation for a trustee to act in the best interests of beneficiaries means the beneficiaries as a whole, "holding the scales impartially between different classes of beneficiaries": see Cowan v Scargill [1985] Ch 270 at 295; cited with approval in, eg, Australian Securities and Investments Commission v Australian Property Custodian Holdings Limited (Receivers and Managers appointed) (in liquidation) (Controllers appointed) (No 3) [2013] FCA 1342. Although it was required to "stand in the shoes" of the Trustee, the Tribunal appears to have determined that the Trustee did not discharge its duty to act in the best interests of the members of the Plan, without expressing a view about the relevance (if any) of the surrounding facts and circumstances, including the Employer's preferences and funding objectives and capability. 114 There is some overlap between the points raised in relation to this question of law and those raised in relation to question of law 1. I refer back to my reasons in relation to question 1. For the reasons there given, although some of the language of the Trustee is familiar in the context of judicial review, in substance the Tribunal was considering whether the decision of the Trustee was fair and reasonable. 115 Further, in my view it was open to the Tribunal to find that the Trustee's having regard to (what it understood to be) the preferences and funding objectives of the Employer led to unfairness or unreasonableness in decision. For reasons discussed above, I think the November 2011 Letter is open to be read in a different way from the way in which it was read by the Trustee. But in any event, the task for the Trustee, consistently with its duty to act in the best interests of the beneficiaries, was to determine, on a fair value basis, the lump sum equivalent of Mr Billinghurst's pension. If this (together with the amounts for other pensioners) produced a total which was greater than the assets of the Plan, such that there was a shortfall, it was the duty of the Trustee (given its obligation to act in the best interests of the beneficiaries) to take all available steps to have the Employer make good the shortfall.

Questions of law 9, 10 and 13 116 In relation to the Tribunal's findings relating to conflict of interest, the Trustee submits as follows: (a) The finding that "it was not fair and reasonable, in the circumstances, for the Trustee to act on the recommendations of the Plan Actuary" because of an actual or perceived conflict of interest on the part of the Plan Actuary (Reasons, [108]), is another example of the Tribunal erroneously applying the fair and reasonable test under s 37 of the Complaints Act to the Trustee's decision-making process as distinct from assessing the operational effect of the relevant decision. (b) Further, any conflict of interest in the Plan Actuary advising both the Employer and the Trustee (Reasons, [95]-[108]) was an irrelevant consideration. It is well accepted that the ground of review of taking into account an irrelevant consideration can only be made out where the decision-maker was forbidden to consider the included consideration. Whether or not a decision-maker is so bound or forbidden is a question to be answered by construing the relevant legislation: Minister for Aboriginal Affairs v Peko-Wallsend Limited (1986) 162 CLR 24 at 39-40. As the Complaints Act does not specify the considerations that the Tribunal is bound to take into account, these considerations must therefore be determined by reference to the subject-matter, scope and purpose of the Act. A purpose of the Complaints Act is "to ensure members and beneficiaries are not adversely affected by unfair and unreasonable decisions of insurers and trustees". Importantly, no finding as to a conflict of interest was made in respect of the Trustee; it was the Plan Actuary, as an adviser, who was held to have a conflict. As the relevant decision is the decision of the Trustee as trustee, not the Plan Actuary, for a conflict of interest to be relevant it would need to be a conflict of the Trustee which somehow directly impacted upon the fairness or reasonableness of the impugned decision's operation in relation to Mr Billinghurst. There was no such finding made by the Tribunal. (c) The Tribunal also erroneously addressed the question of whether the common industry practice of a trustee of a superannuation fund using the same actuary as the employer is "correct practice" (Reasons, [102]-[103]). This was not a matter that the Tribunal should have considered, as its role was to focus on answering the question whether the relevant decision of the Trustee was fair and reasonable in its operation to the Respondent, not whether any particular industry practice was "correct". 117 To some extent, the points raised in relation to questions of law 9, 10 and 13 overlap with those considered in connection with question 1. I refer to my reasons in relation to that question. 118 For the following additional reasons, I think it was open to the Tribunal to conclude that the Trustee's decision was not fair and reasonable in circumstances where the Trustee relied on the advice of an actuary who had advised the Employer about the same subject-matter. 119 Although it may be assumed the Employer had an interest in treating employees and former employees fairly, it also had an interest in minimising its financial exposure to the Plan including on termination of the Plan. The August 2011 Advice addressed advantages and disadvantages to the Employer of maintaining the defined benefit part of the Plan. It is perhaps unclear whether, in providing the Employer with alternative bases for the valuation of the pensions of current pensioners, the Plan Actuary was indicating the approach he would take if called upon by the Trustee to value the pensions rather than proposing valuation methodologies that would be in the interests of the Employer. I note that, in the original scoping letter dated 25 July 2011, the Plan Actuary proposed to value the pensions on two alternative bases: the first was similar to the basis used in carrying out the periodic actuarial valuations of the Plan (and included a pension increase assumption of 1.67% per annum); the second was "[a]s per above but using a post-retirement: discount rate which is in line with the yield on the 10 year Commonwealth bond". In other words, at this stage, it was proposed that the alternative valuation would utilise a discount rate based on the yield on 10 year government bonds but otherwise adopt the same assumptions as the first valuation basis (including as to pension increases). However, in the August 2011 Advice, the Plan Actuary prepared the alternative valuation basis with a nil pension increase assumption. This is to be contrasted with the assumption in each of the actuarial valuations of the Plan that there would be future pension increases (in most of the reports, the assumption was 1.9% or 2.0% per annum). As the valuation of Mr Billinghurst's actuary demonstrates, the assumption made regarding future pension increases can have a significant impact on the amount of the lump sum. 120 Following the August 2011 Advice and the September 2011 Options Paper, the Employer provided the November 2011 Letter. The Plan Actuary then prepared, for the Trustee, a letter dated 9 December 2011 in which he provided his opinion as to the transfer values for current pensioners. In these circumstances, there may be a concern that the Plan Actuary, having adopted a certain valuation approach for the conversion of pensions of current pensioners to lump sum amounts in his advice to the Employer, may have felt constrained to adopt a similar approach when called upon by the Trustee to undertake such a valuation. I note that in the 9 December 2011 letter, the Plan Actuary adopted (for the purposes of the alternative valuation basis) a discount rate based on the yield on 10 year government bonds at 29 August 2011 (the date of his earlier advice to the Employer) rather than at (or close to) 31 December 2011 (the date as at which the pensions were to be valued). As the valuation of Mr Billinghurst's actuary demonstrates, this had a significant impact on the amount of the lump sum. 121 Although the adoption by the Trustee of the Plan Actuary's valuation may be characterised as an aspect of the Trustee's decision-making process, it is obvious that this may have significantly impacted the Trustee's decision as to the amount of the lump sum. In these circumstances, it was open to the Tribunal to conclude, as it in substance did in [95]-[108] of the Reasons, that the decision of the Trustee was unfair and unreasonable because the Trustee acted on the advice and recommendations of an actuary who had advised the Employer on the same matter. 122 For these reasons, I think it was open to the Tribunal to reach the conclusions it did in relation to the conflict of interest issue.

Question of law 12 123 Senior counsel for the Trustee indicated at the hearing that question of law 12 raised substantially the same issues as questions 7 and 8 and did not need to be dealt with separately. I refer to my reasons in relation to those questions.

Conclusion 124 For the reasons set out above, the appeal should be dismissed. Consistently with s 46(5) of the Complaints Act, there should be no order as to costs. I certify that the preceding one hundred and twenty-four (124) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moshinsky.