Merlino v CSS Board

The 1976 Act 6 Section 80(1) of the 1976 Act provides that, where a person ceases to be an eligible employee (otherwise than by reason of death) and the person is not entitled to benefit under, relevantly, Division 3 of Part IX, the person is entitled to a lump sum benefit of an amount equal to the person's accumulated contributions. 7 Section 137(1) of the 1976 Act allows a person who ceases to be an eligible employee in circumstances where no pension is payable to them, to elect, not later than twenty-one days after they cease to be an eligible employee, to have Division 3 of Part IX apply to them so that their person rights in the CSS Scheme are preserved. 8 Section 157(1) of the 1976 Act gives the CSS Board a discretion to treat an election made outside the period prescribed by the 1976 Act as if it had been made within the period allowed - if the Board is satisfied in all the circumstances of the case that it is "desirable" that the election should be recognised. 9 The CSS Board has adopted a set of guidelines entitled, "Guidelines Applicable to Late Elections for Preservation of Superannuation Rights Lodged under Sub-Section 157(1) of the Superannuation Act 1976", ("the Guidelines") in order to direct the exercise of the discretion conferred by s 157(1). The Guidelines have no statutory foundation, but were intended to provide some administrative consistency in the exercise of the discretion. 10 A decision of the CSS Board not to recognise a late election can be reconsidered by the CSS Board under Part XA of the 1976 Act. The procedure involves reference to an advisory Committee (s 153AR) and a further determination by the CSS Board, after taking the Committee's recommendations into account (s 153AS).

Review under the SRC Act 11 The SRC Act establishes a system for the conciliation of complaints about, and review of, decisions made in the administration of superannuation funds. 12 Section 14(2) of the SRC Act authorises a person to make a complaint to the Tribunal that a decision made by the trustee of a superannuation fund is or was unfair or unreasonable. Section 14AA(1) of the SRC Act makes it clear that a complaint may be made whether or not the decision involved the exercise of a discretion. 13 Part 6 of the SRC Act sets out the procedures and powers of the Tribunal when undertaking its review functions. The central provision regarding the Tribunal's power to review complaints made under s 14 is s 37. 14 Section 37(1) gives the Tribunal, for the purposes of reviewing a decision made by the trustee of a fund, all the powers, obligations and discretions that are conferred on the trustee, and directs the Tribunal, subject to one mandatory direction discussed further below, to make a determination in accordance with s 37(3). 15 Section 37(3) obliges the Tribunal, on reviewing a decision of a trustee, insurer or other decision-maker, to make one of the four types of determinations that are set out in sub-paragraphs (a) to (d), in writing. For example, the Tribunal may affirm the decision - s 37(3)(a); or it may set aside the decision and substitute its own decision - s 37(3)(d). 16 Section 37(4) provides that the Tribunal's determination-making power under s 37(3) may only be exercised for the purpose of placing the complainant, as nearly as practicable, in a position whereby the unfairness and/or unreasonableness that the Tribunal has determined to exist, in relation to the trustee's decision, no longer exists. 17 The constraint that s 37(4) places upon the powers that are conferred upon the Tribunal under s 37(1) is reinforced by s 37(6), which requires the Tribunal to affirm a decision referred to under s 37(3) if the Tribunal is satisfied that the decision, in its operation in relation to (inter alia) the complainant, "was fair and reasonable in the circumstances."

The authorities 18 In cases such as the present, the role of the Tribunal is not to make the correct or preferable decision regrading the recognition of the appellant's late election, but to decide whether the Board's decision not to recognise that the election was fair and reasonable in the circumstances: see National Mutual Life Association of Australia Ltd v Jevtovic (unreported, Sundberg J, 8 May 1997), Adkins v The Health Employees Superannuation Trust Australia Ltd (unreported, Heerey J, 15 August 1997); National Mutual Life Association of Australia Ltd v Campbell (2000) 99 FCR 562 at [7], and Hornsby v Military Superannuation & Benefits Board of Trustees No 1 [2003] FCA 54 at [17]. 19 The criteria of "fair and reasonable" have been framed using words of broad content and should not be unduly restricted by the use of synonyms and definitions: see, for example, the National Mutual Life Association v Campbell (above) at [36]. 20 The Tribunal conducts an administrative review and the intention of the SRC Act is to place the Tribunal in the shoes of the Trustee (or relevant decision-maker), and in place of the Trustee (or relevant decision-maker) when making a determination in respect of a complaint. 21 The determination involves a value judgment, which is committed to the Tribunal. The question may involve elements of fact, degree, or judgment. It is open to the Tribunal to conclude that a decision is or was not fair and reasonable in its operation in relation to the complainant, where it finds that the decision is not supported by the evidentiary material. 22 The Tribunal must make findings of fact that are relevant to its deliberations, and such findings must be supported by evidence.

THE Tribunal's reasoning 23 The Tribunal found that there was a reasonable doubt as to whether the appellant was fully informed of his right to preserve his benefits at the time of his resignation, and whether he was aware, at that time, that he could preserve his contributions for retirement purposes. 24 On the balance of probability, the Tribunal found that the appellant completed Form S2A. This was a standard form in effect in 1986 by which those resigning elected to receive a refund of contributions. 25 Form S2A relevantly reads as follows: 26 Although his employment in the public service was substantial, the Tribunal found that the appellant did not have a long term commitment to the public service, because he left the public service on a permanent basis in order to take up what he saw as preferable opportunities in the private sector, and never returned. The fact that his contributions were not rolled over by him was considered to be evidence that was contrary to the appellant's present view, which is that he would have preserved the benefits if he had been given the correct information in 1986. It is common ground that the appellant used the refund of his contributions to reduce the mortgage on his home, in order to provide future security for his wife and children while embarking on a less secure enterprise in the private sector. He saw reduction of debt as part of this proposal. The Tribunal concluded that the rejection of the rollover option and the finding that he would not have preserved his benefits in 1986, even if he had been fully aware of those rights, was sufficient for the Tribunal to reject the application for review.

Submissions and reasoning on appeal 27 The appellant submits that the Tribunal erred in law by failing to take into account his evidence that he had not been advised of his right to preserve his superannuation rights when he resigned, and that this was the only conclusion available on the evidence. Lack of advice at the time of retirement is a relevant consideration in determining whether to apply s 157: see Chalk v The Commissioner for Superannuation (1994) 50 FCR 150, 155 and 157 ("Chalk") 28 The difficulty with this submission is that in its reasons, the Tribunal expressly, set out, as factors in favour of the appellant's case, the claim that he was given misleading advice and was not informed of his right to preserve benefits in the fund. Nevertheless, the Tribunal concluded that the appellant would have reached the same decision to withdraw the funds and not preserve his benefits, even if he was advised of his right to preserve his benefits, because of his intention to apply the funds to reduce the mortgage on his home to provide security when embarking on a new career. 29 The fact that the appellant would have acted this way, even if advised of his preservation rights, is an important consideration in determining whether the discretion under s 157 should be exercised. In Chalk at 155, Davies J said: "During the course of the hearing of the appeal, counsel for Mr Chalk sought leave to file an amended notice of appeal. I would grant leave to amend. Nevertheless, I would reject all the grounds of appeal which are stated therein. These grounds concentrate upon the lack of advice given by Telecom to Mr Chalk with regard to the provisions of the Superannuation Act as it applied to him. The Tribunal found as a fact that there was a 'general insufficiency of information'. But the Tribunal did not accept that Mr Chalk would have acted differently if he had been otherwise advised. That was because Mr Chalk used his refund to assist with the purchase and running of his farm. At the time, he had a need for the moneys and he expended them. As these were the Tribunal's findings of fact, all the grounds of appeal must fail." (Emphasis added) 30 These observations are apposite to the circumstances of the present case. 31 The finding of fact as to the likely course of conduct of the applicant, if properly informed, does not raise any question of law. It was open to the Tribunal, on the evidence, to make a finding regarding the appellant's likely intention in 1986, especially in view of the appellant's own evidence as to his circumstances in 1986, and the fact that he actually applied the funds to the reduction of debt. 32 The central factual finding by the Tribunal in this matter is that the appellant would not have acted differently even if fully informed as to his preservation option. This weighs heavily in deciding the question as to what is fair and reasonable. 33 The question in the present case is not whether what was done or omitted in 1986 was unfair or unreasonable in all the circumstances, at that time, although those circumstances are relevant to the application of s 157. The question is rather, whether the determination in 2003 was unfair or unreasonable, having regard to all the circumstances of the case including circumstances found to exist both before and after the appellant's resignation from the public service in 1986. 34 It is apparent from the Tribunal reasoning that it did not proceed on the basis that the appellant had been "fully informed" as to his right to preserve his benefits in the CSS. 35 It is further alleged as an error of law that the Tribunal erred in reaching a conclusion that the Form S2A, which was required to be completed in the normal course before a refund of superannuation contributions was made, was probably completed by the appellant prior to receiving the refund. The appellant contends that the only evidence available on this matter was his own, and that in the absence of any evidence to rebut his evidence, his assertions must be accepted, and the Tribunal was therefore bound to conclude and make a finding that he did not sign the form. In considering this submission it must be appreciated that the Tribunal is not bound to accept the evidence of the appellant. The Tribunal can weigh the appellant's evidence against other objective considerations, such as the surrounding circumstances, the appellant's plans and his financial position at the relevant time, together with the inherent probabilities, the usual practice of the public service in refunding superannuation contributions, and the fact that fourteen years have elapsed since the payment was made, which makes exact recollection of the events surrounding this very difficult. 36 The finding on this aspect is again a factual one. While there was some doubt expressed in the reasons, because of the lapse of time, the Tribunal considered that, having regard to the usual practice surrounding the execution of Form S2A before paying out superannuation refunds, it was more likely than not, that the appellant had executed the form. The Tribunal considered that it was important that the appellant did not make any objection to the refund of the moneys to him at the time of his acceptance of the lump sum, which it considered might be expected if he wanted to "preserve" the fund at that time. It is evident that the money was refunded. This finding does not give rise to an error of law. Taking into account the surrounding circumstances, it cannot be said that this conclusion was "mere speculation" as contended for by the appellant. There was supporting material. 37 The next submission by the appellant is that the Tribunal failed to take into account the statement of a Mr Hodgins, dated 2 February 2003, which the appellant said corroborated his own evidence. Mr Hodgins says that he resigned from the Australian Taxation Office in July 1984, completed a Form 52A, and obtained a refund of his entitlements in the CSS. Mr Hodgins was not asked by a Ms Kent, an employee of the Australian Taxation Office, who told him how to complete the form, whether he wished to preserve his benefits, nor was he given any other options. Mr Hodgins states that both at the time, and for many years after, he was unaware that he could have preserved his rights to the benefits, and that he was not alone in his ignorance of his entitlements. Mr Hodgins rejoined employment in the public service in May 1985. 38 The difficulty with this material is that it concerns alleged conversations with other employees two years before the date when the appellant resigned. It concerns circumstances peculiar to Mr Hodgins. There is no evidence that Ms Kent spoke with the appellant when he resigned in September 1986. The fact that Ms Kent may have omitted to say something to Mr Hodgins in July 1984 could reasonably be considered to be of no material significance and irrelevant, from an evidentiary viewpoint, to the determination of what occurred in relation to the appellant in 1986: see J D Heydon, Cross on Evidence, 6th Australian edn, Butterworths, Sydney, 2000, at [1620]. The Tribunal refers to a statement by the appellant which was to the effect that other employees who left the Australian Taxation Office when he did were either not advised of their rights, or were given misleading advice. In my view, the statement of Mr Hodgins provides no useful corroboration to the appellant's assertions. The Tribunal was not bound to give any weight to his statement, and in any event, this material could not affect the critical factual finding that the appellant would not have acted differently if he had been fully informed of his options. 39 The appellant says that the reliance by the Tribunal on his failure to roll over the benefit was contrary to his evidence that he would have preserved his entitlement, and amounted to an error of law. In my view, the failure to roll over was a relevant circumstance, together with the appellant's statement as to his intentions with respect to the money, for the Tribunal to consider in assessing whether the appellant would have acted differently. 40 The Tribunal correctly recognised that the securing of a debt-free home might, in some circumstances, be regarded as part of a long term retirement plan or proposal, as well as being for the immediate short term benefit of reducing debt. It also correctly recognised that it was not fettered by the literal meaning of the Guidelines. Nevertheless, in the circumstances of this case, the Tribunal found as a fact that the appellant's intention was to provide immediate security to his family by using his superannuation refund to reduce debt as he embarked on a "more attractive and less secure enterprise (at least immediately) in his own business in the private sector". It cannot be said that the decision of the Tribunal was grossly unreasonable in the Wednesbury sense. 41 It is said as a matter of evidentiary onus, that the Tribunal was limited to the evidence of the appellant regarding his intentions in 1986, that a prima facie case had been established by the appellant, that the burden of proof passed to the respondent, and that this burden had not been discharged. 42 The Tribunal is not engaged in determining adversary litigation, but rather its task is to consider the whole of the material. No error of law has been disclosed in relation to this ground. Principles in cases such as Watts v Rake (1960) 108 CLR 138, which concern adversary litigation, are not pertinent to the present circumstances in relation to shifting onus and burden of proof. 43 A further alleged error of law is said to be that the Tribunal erred in law by concluding that the appellant did not have a substantial commitment to the public service. This is a question of fact. The appellant has referred to the decision of Finn J in Commissioner for Superannuation v Adams (1997) 25 AAR 324, to the effect that there is no reason to warrant making a distinction between those who have left the public service permanently, and those who later resume employment. In the present case, the Tribunal has drawn no such rigid line. The Tribunal observed that the appellant was not a person who had left the public service for a period and who had returned on a permanent basis. If he had done this, then it might be considered to work in favour of an applicant's case. This observation is correct, and it was simply used by the Tribunal to conclude that, in the present case, the circumstances did not warrant any inference being available in favour of the appellant. The Tribunal did not say that the fact that he had left the public service permanently would be treated as an adverse consideration in respect of the exercise of the power. 44 Finally, it is submitted that the Tribunal erred in taking into account the fact that the appellant could have rolled over his benefit and did not do so, and that this was an error of law. There is nothing to suggest this consideration is irrelevant when examining the question as to what he might have done if fully informed. It was an available option which he did not pursue in circumstances where the Tribunal has found that he knew that he had this additional option.

summary 45 The appellant's claim, in essence, is that he was misled by wrong information, and that he was not given full information when he resigned as to his options and entitlements. However, the facts as found against the appellant are that he was given sufficient information, and that further, if full and correct information had been given, it would not have made any difference to the choice which he made in 1986. This is a cogent consideration in deciding whether it is unfair or unreasonable to refuse his application to make a late election.

result 46 No reviewable error of fact or law has been made out. The appeal is dismissed with costs. I certify that the preceding forty-six (46) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin.

Associate: Dated: 16 December 2003 Counsel for the Applicant: A G Jamieson

Solicitor for the Applicant: Mark Solomon & Associates

Solicitor for the Respondent: Australian Government Solicitor