MLC Nominees Pty Limited v McNally

The application to the Tribunal 8 The complainant's application to the Tribunal was made on 6 May 2015 and was received by the Tribunal on 15 May 2015. 9 As summarised by the Tribunal, the complainant, as a member of the Universal Super Scheme Fund, complained to the trustee that contribution fees to pay commissions to financial planners were being deducted from her account in the Fund but that she had no contact with the financial planners and the fees that had been deducted should be reimbursed to her. On 25 February 2015, the trustee declined to refund the fees that had been deducted. It was that decision of the trustee which was under review by the Tribunal.

The Tribunal's decision 10 The determination of the Tribunal was made on 3 July 2018. 11 The Tribunal was not satisfied that the trustee's decision to refuse to refund any of the contribution fees was fair and reasonable, in the circumstances, in its operation in relation to the complainant. The trustee's decision was not, therefore, affirmed. 12 The Tribunal, at [33] of its written determination, identified as the 2008 decision of the trustee "a business decision to remove the contribution fee if there was no adviser on the member's account". At [62], the Tribunal found that the fee would no longer apply if the member requested the removal of a financial adviser linked to the member's account. The Tribunal also found, at [61], that members were not told about this "business decision". 13 Although there does not appear to be a formal determination document, at [86] of the Tribunal's written determination the trustee's decision not to refund any of the contribution fees debited to the complainant's account was set aside and a decision was substituted that the trustee compromise the complainant's claim by paying to the complainant, or in accordance with her directions, the amounts debited to her account in the Fund as contribution fees in 2013 and 2015 respectively. 14 The Tribunal also, at [79] of its written determination, directed the trustee to inform the members and former members of the Fund who were members at the date of the 2008 decision of the Tribunal's determination in this complaint, unless the Australian Securities and Investments Commission (ASIC) decided otherwise. This is the direction which is also challenged on this judicial review application. 15 The more detailed findings and reasons of the Tribunal were as follows. 16 On 9 November 1990 the complainant signed a proposal addressed to the life insurer, MLC Life Limited, for her to be included in a master life insurance policy owned by the trustee, in its capacity as trustee of the Predecessor Fund, The Individuals Superannuation Fund, for a monthly premium. She selected the "balanced" investment option. The complainant's signature was witnessed by a person identified in the proposal as an "agent". On the same date the complainant also signed an application for membership of the Predecessor Fund in which she declared her annual income and agreed to make an annual contribution to the Predecessor Fund. Her signature was witnessed by the person identified in the proposal as the "agent". 17 On 22 September 1991, the complainant signed a document called an "Application for proposal alteration", to alter her monthly contribution and declared her annual salary to be a different, lower, amount. 18 On 16 August 1999, a letter from the principal company, MLC Limited, advised the complainant that she had been transferred to another superannuation arrangement, which appeared to be part of the Fund. An accompanying statement showed employer contributions paid into her account for the year ended 30 June 1999 from which a contribution fee had been deducted. The statement also included, under the heading "Contribution fee": "We charge a fee of up to 5% on all contributions, including transfers and rollovers". There was no mention of the trustee in these documents. 19 On 10 December 2013, the complainant completed a form entitled "Consolidate your super" in which she requested that her total account balance in an unrelated superannuation fund be transferred or rolled over to the Fund. 20 On 24 December 2013 a statement from the trustee to the complainant confirmed the rollover of a substantial amount to the Fund as a result of her request and showed that a contribution fee had been deducted from the amount rolled over. 21 On 15 December 2014, the complainant completed another "Consolidate your super" form in which she requested that a further amount be transferred or rolled over from an unrelated superannuation fund to the Fund. 22 On 5 January 2015, a statement from the trustee to the complainant confirmed the rollover of that amount and showed that a contribution fee had been deducted from the amount rolled over. 23 On 15 January 2015, the complainant telephoned the trustee and complained that contribution fees had been deducted from the two amounts she transferred to the Fund. She was told that these fees were amounts paid to her financial adviser. The complainant said she had not been in contact with any financial adviser and said she wanted a refund of the contribution fees that had been debited to her account. The person she spoke to said her adviser would be removed from her account. 24 On 30 January 2015, the complainant again spoke to representatives of the trustee by telephone and made a formal complaint in relation to contribution fees being deducted from her account and paid to a financial adviser who did not provide any services to her. 25 On 25 February 2015, the trustee wrote to the complainant responding to her complaint, stating that when she completed her application in November 1990 she had a financial adviser and that the customer information brochure disclosed that a contribution fee of 5% would apply. The trustee also said that the fee was disclosed in her annual statements and that, until 2009, details of her financial adviser were shown on her annual statements. After that, the financial advisers remained on her account until she recently requested that they be removed. The trustee refused her request for a refund of the fees. 26 As I have said, on 6 May 2015, received by the Tribunal on 15 May 2015, the complainant complained to the Tribunal to the effect that if the trustee had advised her years ago that she could remove the name of the financial adviser from her account, she would have done so and contribution fees would not have been deducted from her contributions. She sought a refund of contribution fees paid to the financial adviser. 27 The Tribunal found that there was no mention in either the application for membership of the Predecessor Fund or the proposal completed by the complainant on 9 November 1990 of the complainant appointing a financial adviser. The finding of the Tribunal was that the complainant did not appoint a financial adviser as part of her membership of the Predecessor Fund. 28 The Tribunal found that there was no evidence before it, other than the trustee's assertion, that a customer information brochure was given to the complainant at the time she became a member of the Predecessor Fund. 29 The Tribunal said that to call a fee that was charged an administration charge when the whole of the fee was paid as a commission to a financial adviser could be regarded as misleading. 30 The Tribunal found that, since at least 2008 and, quite possibly, earlier than that, the complainant did not have a financial adviser providing her with any advice or services in relation to her membership of the Predecessor Fund or the Fund. 31 On the issue whether the trustee was entitled to charge the complainant a contribution fee, despite her not receiving advice from a financial adviser linked to her account, over a long period, the finding of the Tribunal was that the fee charged to the complainant's account was disclosed to the complainant in documents provided to her, including annual statements, albeit that it was described in the early years of her membership of the Predecessor Fund as an administration charge. The fact that the contribution fee was misdescribed as an administration fee was not of itself sufficient reason to require the trustee to refund fees debited to the complainant's account prior to 2008. 32 The Tribunal said the fee was a condition attaching to membership of the Predecessor Fund and the Fund that applied to the complainant as a member. The payment of the fee was not stated in the disclosure documents to be conditional on whether the complainant received any advice from a financial adviser. 33 As it was a condition of membership that was disclosed in the annual statements given to the complainant that a 5% fee applied to contributions, the Tribunal's view was that the trustee did not have a legal obligation to refund the fees paid before 2008. 34 The complainant's claim for compensation for contribution fees debited to her account prior to 2008 could not, therefore, be sustained. (The applicant trustee did not seek to challenge that conclusion in the judicial review proceedings and the complainant, the first respondent, brought no such proceedings.) 35 The Tribunal found that the complainant correctly contended the "Final Financial Adviser" was being paid, at her considerable expense, for doing nothing. 36 According to the Tribunal, the trustee submitted that, in 2008, there had been a business decision to remove contribution fees if there was no longer an adviser linked to a member's account but the members were not told about it. The Tribunal said that given the substantial contribution fees that were levied on the complainant's 2013 and 2015 contributions, which she could have avoided if she had been made aware she could have removed the adviser who was not giving her any advice and who played no part in the rollover contributions she made, the 2008 decision was important information for members of the Fund to be made aware of. 37 The Tribunal said, at [62], that s 1017B(1A) of the Corporations Act 2001 (Cth), as it applied in 2008, required the trustee to advise its members of any material change to a matter that would have been required to be specified in a product disclosure statement. A product disclosure statement provided to a prospective member of a superannuation fund was required to contain information in relation to the fund, including in relation to fees: s 1013D of the Corporations Act. In the view of the Tribunal, a contribution fee of 5% of contributions was clearly a matter required to be specified in a product disclosure statement and a decision that the fee would no longer apply if the member requested the removal of a financial adviser linked to the member's account was a material change to such a matter. 38 Furthermore, in the view of the Tribunal at [63], the complainant, as a beneficiary of a trust and as a person in whose best interests the trustee had an obligation to act, as required by s 52(2) of the Superannuation Industry (Supervision) Act 1993 (Cth), was entitled to be told by the trustee that the 5% fee, that had previously been advised to her, would no longer apply if she removed any financial adviser linked to her account. The failure to tell her that, the Tribunal said, took away from her the opportunity to advise the trustee that she did not want a 5% contribution fee to be deducted from any contribution she made and was not in her best interests. The Tribunal said the need for that disclosure was particularly relevant to her because of her not having had a financial adviser advising her for some time. 39 The Tribunal said, at [67], that one of the obligations of a trustee and its delegates was to ensure fairness between the beneficiaries. That was an obligation both under s 52(2) of the Superannuation Industry (Supervision) Act and under principles of trust law. The trustee, in the arrangements it entered into with other companies in the same group of companies in relation to members of the Fund therefore had an obligation to ensure that all members of the Fund were treated fairly so that one group of members was not advantaged over another group in the fees they paid, where there was not justification for it. The removal of the contribution fee for members who complained and not for those who did not was not justifiable, the Tribunal said, because of the unfairness of it. 40 The Tribunal said, at [69], that the effect of the decision was that members who complained and had the financial adviser linked to their account removed were no longer required to pay a contribution fee, but those members who did not complain or who did not know that they could complain about the fee continued to have a 5% fee deducted from each contribution they and their employers made to the Fund. 41 The Tribunal said, at [70], that where it decided that it was not fair and reasonable for the trustee to refuse to compensate the complainant for some or all of the amount that she claimed, it was open to the Tribunal to determine that the trustee should have compromised her claim: Retail Employees Superannuation Pty Ltd v Croker [2001] FCA 1330; 48 ATR 359 at [126]-[136] and Commonwealth Superannuation Scheme Board v Dexter [2004] FCA 1434; 143 FCR 151 at [58]-[65]. 42 At [71], the Tribunal stated its view that the decision made in 2008 should have been disclosed to the complainant and was not fair in its application to her because the result of it was that some other members of the Fund in her position no longer paid a contribution fee but it continued to apply to her. 43 The Tribunal said, at [72], that because the trustee did not tell the complainant that the contribution fee would no longer apply if there was not an adviser linked to her account, she lost an opportunity, from 2008 onwards, to avoid payment of the contribution fee. 44 The Tribunal, at [73], said: As the Complainant did not have an adviser providing her with any advice or services in 2008, it is the Tribunal's view that the Trustee, when it was told in January 2015 that there had not been an adviser from before 2008, should have decided, in order to ensure fairness between members, to apply the compromise power in the Trust Deed and in section 49 of the New South Wales Trustee Act 1925. It should have agreed to compromise the Complainant's claim for a refund of the contribution fees by agreeing to refund to her the contribution fees … levied on her 2013 and 2015 contributions, which were the only contributions made after 2008. 45 The Tribunal said, at [74], that the trustee's decision to refuse to refund contribution fees debited to the complainant's account after the 2008 decision was not, therefore, fair and reasonable, in its operation in relation to the complainant. 46 The trustee's decision not to refund any of the contribution fees debited to the complainant's account was set aside and a decision was substituted that the trustee compromise the complainant's claim by paying to the complainant, or in accordance with her directions, the amounts debited to her account in the Fund as contribution fees in 2013 and 2015 respectively. 47 The Tribunal further decided that to compensate the complainant for lost earnings on those amounts, interest should also be paid on those two amounts, from the date on which each amount was debited to her account to the date on which the total amount was paid to her, at the investment earning rate of the investments in which her account was invested in the Fund and any successor fund. 48 The Tribunal also said, at [79], that it was the Tribunal's view that the possible financial effect on some members and former members of the Tribunal's determination in this matter warranted the power granted by s 44 of the Complaints Act being invoked in this instance. The Tribunal, therefore, directed the trustee to inform the members and former members of the Fund who were members at the date of the 2008 decision of the Tribunal's determination in this complaint, unless ASIC, as the regulator, decided otherwise. If the trustee decided that it was inappropriate to provide the members and former members with a copy of the Tribunal's determination, a fair summary of the determination should be provided to those members and former members so that they were properly informed of it. The Tribunal said it would be appropriate for the form of the summary to be approved by ASIC.

The statutory provisions 49 Section 37 of the Complaints Act relevantly provided: 37 Tribunal powers - complaints under section 14 (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) … (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 50 Section 44 relevantly provided: 44 Notification of determination (1) If the Tribunal determines a review, the Tribunal must cause a copy of its determination and of the reasons for the determination, to be given to each party to the complaint. (2) If the determination was made as a result of a section 14 complaint, the Tribunal may direct the trustee to inform: (a) if the Tribunal's determination was in relation to a particular member or a particular former member of a superannuation fund - all or any of the other members or all or any of the former members of the superannuation fund; or (b) …; of the Tribunal's determination. (2A) … (2B) … (3) A trustee, RSA provider or insurer must not intentionally or recklessly refuse or fail to comply with a direction of the Tribunal. Penalty: 30 penalty units. 51 As at 2008, the Superannuation Industry (Supervision) Act relevantly provided: 52 Covenants to be included in governing rules Governing rules taken to contain covenants (1) If the governing rules of a superannuation entity do not contain covenants to the effect of the covenants set out in subsection (2), those governing rules are taken to contain covenants to that effect. The covenants (2) The covenants referred to in subsection (1) are the following covenants by each trustee of the entity: (a) to act honestly in all matters concerning the entity; (b) to exercise, in relation to all matters affecting the entity, the same degree of care, skill and diligence as an ordinary prudent person would exercise in dealing with property of another for whom the person felt morally bound to provide; (c) to ensure that the trustee's duties and powers are performed and exercised in the best interests of the beneficiaries; (d) to keep the money and other assets of the entity separate from any money and assets, respectively: (i) that are held by the trustee personally; or (ii) that are money or assets, as the case may be, of a standard employer-sponsor, or an associate of a standard employer-sponsor, of the entity; (e) not to enter into any contract, or do anything else, that would prevent the trustee from, or hinder the trustee in, properly performing or exercising the trustee's functions and powers; (f) to formulate and give effect to an investment strategy that has regard to the whole of the circumstances of the entity including, but not limited to, the following: (i) the risk involved in making, holding and realising, and the likely return from, the entity's investments having regard to its objectives and its expected cash flow requirements; (ii) the composition of the entity's investments as a whole including the extent to which the investments are diverse or involve the entity in being exposed to risks from inadequate diversification; (iii) the liquidity of the entity's investments having regard to its expected cash flow requirements; (iv) the ability of the entity to discharge its existing and prospective liabilities; (g) if there are any reserves of the entity - to formulate and to give effect to a strategy for their prudential management, consistent with the entity's investment strategy and its capacity to discharge its liabilities (whether actual or contingent) as and when they fall due; (h) to allow a beneficiary access to any prescribed information or any prescribed documents. … 52 As at the date of the Tribunal's 25 February 2015 decision the Superannuation Industry (Supervision) Act relevantly provided: 52 Covenants to be included in governing rules - registrable superannuation entities Governing rules taken to contain covenants (1) If the governing rules of a registrable superannuation entity do not contain covenants to the effect of the covenants set out in this section, those governing rules are taken to contain covenants to that effect. General covenants (2) The covenants referred to in subsection (1) include the following covenants by each trustee of the entity: (a) to act honestly in all matters concerning the entity; (b) to exercise, in relation to all matters affecting the entity, the same degree of care, skill and diligence as a prudent superannuation trustee would exercise in relation to an entity of which it is trustee and on behalf of the beneficiaries of which it makes investments; (c) to perform the trustee's duties and exercise the trustee's powers in the best interests of the beneficiaries; (d) where there is a conflict between the duties of the trustee to the beneficiaries, or the interests of the beneficiaries, and the duties of the trustee to any other person or the interests of the trustee or an associate of the trustee: (i) to give priority to the duties to and interests of the beneficiaries over the duties to and interests of other persons; and (ii) to ensure that the duties to the beneficiaries are met despite the conflict; and (iii) to ensure that the interests of the beneficiaries are not adversely affected by the conflict; and (iv) to comply with the prudential standards in relation to conflicts; (e) to act fairly in dealing with classes of beneficiaries within the entity; (f) to act fairly in dealing with beneficiaries within a class; (g) to keep the money and other assets of the entity separate from any money and assets, respectively: (i) that are held by the trustee personally; or (ii) that are money or assets, as the case may be, of a standard employer-sponsor, or an associate of a standard employer-sponsor, of the entity; (h) not to enter into any contract, or do anything else, that would prevent the trustee from, or hinder the trustee in, properly performing or exercising the trustee's functions and powers; (i) if there are any reserves of the entity - to formulate, review regularly and give effect to a strategy for their prudential management, consistent with the entity's investment strategies and its capacity to discharge its liabilities (whether actual or contingent) as and when they fall due; (j) to allow a beneficiary of the entity access to any prescribed information or any prescribed documents. … 53 As at January 2008, s 1017B of the Corporations Act relevantly provided: 1017B Ongoing disclosure of material changes and significant events Issuer to notify holders of changes and events (1) If: (a) a person (the holder) acquired a financial product as a retail client (whether or not it was acquired from the issuer); and (b) either: (i) the financial product was offered in this jurisdiction; or (ii) the holder applied for the financial product in this jurisdiction; and (c) the product is not specified in regulations made for the purposes of this paragraph; and (d) the circumstances in which the product was acquired are not specified in regulations made for the purposes of this paragraph; the issuer must, in accordance with subsections (3) to (8), notify the holder of changes and events referred to in subsection (1A). Note: Failure to comply with this subsection is an offence (see subsection 1311(1)). The changes and events that must be notified (1A) The changes and events that must be notified are: (a) any material change to a matter, or significant event that affects a matter, being a matter that would have been required to be specified in a Product Disclosure Statement for the financial product prepared on the day before the change or event occurs; and (b) any other change, event or other matter of a kind specified in regulations made for the purposes of this paragraph. Note: Paragraph (a) applies whether or not a Product Disclosure Statement for the financial product was in fact prepared (or required to be prepared) on the day before the change or event occurs. …

The application for judicial review 54 The application to this Court was filed on 6 August 2018. I grant leave to the applicant to rely on its amended notice of appeal dated 4 December 2018. 55 Rather than set out the very lengthy amended application for judicial review I shall instead set out the questions of law as there framed, refer to the affidavit evidence read and then summarise the submissions on behalf of the applicant. There were no submissions on behalf of the complainant, the first respondent. Questions of law 1. Did the Tribunal, in making the determination, act contrary to the governing rules of the Fund and thereby breach s 37(5) of the Act? 2. Did the Tribunal, in making the determination, fail to properly undertake its statutory task under s 37 of the Act? 3. Did the Tribunal misdirected itself as to the nature of its task under s 37 of the Act by purporting to undertake a review, or a defacto review, of decisions other than the Refund Decision, that were not the subject of the complaint under the Act? 4. Did the Tribunal err by proceeding on the basis that it was part of its statutory task to determine whether members were entitled to be told of the 2008 decision and/or that there was a duty on the Trustee to notify the members of the 2008 decision? 4. Did the Tribunal err in concluding that there was an obligation pursuant to s 1017B(1A)(a) of the Corporations Act 2001 (Cth) to advise McNally of the 2008 decision as a "material change to…a matter", being the matter of "a contribution fee of 5% of contributions"? 4B. Did the Tribunal err in concluding that the Trustee had an obligation under s 52(2) of the SIS Act or the general law to advise McNally of the 2008 decision? 4C. Did the Tribunal err in finding that the Trustee had breached its obligations under s 52(2) of the SIS Act or the general law duty of impartiality to ensure fairness between beneficiaries by reason of the 2008 decision? 4D. Did the Tribunal deny the Trustee procedural fairness by failing to notify the Trustee that it was contemplating making a finding that the Trustee's obligations under s 52(2) of the SIS Act required the Trustee to disclose the 2008 decision to McNally? 4E. Did the Tribunal deny the Trustee procedural fairness by failing to notify the Trustee that it was contemplating making a finding that the Trustee had breached its obligations under s 52(2) of the SIS Act to ensure fairness between beneficiaries by reason of the 2008 decision? 4F. Did the Tribunal deny the Trustee procedural fairness by failing to notify the Trustee that it was contemplating making a finding that the 2008 decision was not fair in its application to the Complainant? 4G. Did the Tribunal deny the Trustee procedural fairness by failing to notify the Trustee that it was contemplating making a finding that the decision under review, in its operation in relation to the Complainant, was not fair and reasonable in the circumstances by reference to a finding that the 2008 decision was not fair in its application to the Complainant? 5. Did the Tribunal, in making the determination, reach the necessary state of satisfaction under s 37(6)? 6. Did the Tribunal err by making findings about the 2008 decision that were based on no evidence? 7. Did the Tribunal's determination lack an evident and intelligible justification and/or was there no logical connection between the findings and the conclusions drawn by the Tribunal? 8. Did the Tribunal deny the Trustee procedural fairness in making a decision to direct the Trustee pursuant to s 44 of the Act that it inform members and former members of the Fund (who were members as at the date of the 2008 decision) of the Tribunal's determination without giving any notice to the Trustee prior to making that decision? 9. If the determination of the Tribunal is vitiated by one or more of the errors alleged, is there any basis for the Tribunal to have made a direction under s 44(2) of the Act that the Trustee inform members and former members of the Fund (who were members as at the date of the 2008 decision) of the Tribunal's determination? 10. Did the Tribunal misdirect itself as to the scope of its power under s 44(2)?

The evidence 56 The applicant first read the affidavit of Mr William Ronald Fitzroy Ashman Nolan, solicitor, sworn 7 August 2018. This affidavit annexed the notification of the Tribunal's determination dated 6 July 2018 and enclosed a copy of the Tribunal's review determination and reasons. 57 The second affidavit read by the applicant was affirmed by Mr David Andrew Taylor, solicitor, dated 26 November 2018. This affidavit exhibited a number of documents, including a copy of the Amending Deed Poll for The Universal Super Scheme dated 14 March 2013 (Trust Deed). 58 Mr Taylor also deposed that there had been no prior instances of the s 44 power being utilised by the Tribunal. 59 Mr Taylor exhibited a true copy of the referral from the Tribunal to ASIC dated 11 July 2018 made under s 64 of the Complaints Act. Counsel for the applicant told me that no challenge was made in these proceedings to that referral decision. 60 The third affidavit read by the applicant was dated 26 November 2018 and affirmed by Mr Christopher Paul Baker. I have referred to this affidavit at [5] above. I admitted this affidavit into evidence, with the exception that the first sentence of [12], referring to the deponent's opinion, was read as submission. Mr Baker deposed that if the applicant and/or the second respondent, as the current trustee, was made to comply with the Tribunal's direction under s 44 this would have a number of consequences that were potentially very significant. Those consequences included potential disadvantage to members; financial repercussions; and reputational damage. He deposed that the Tribunal's direction would result in a very large number of members who were not in products impacted by the Tribunal's determination being notified of the Tribunal's determination unnecessarily. 61 Mr Baker then deposed to the very large number of pages the applicant would be required to print and send to unaffected members. He deposed to other substantial practical difficulties, including the number of further member enquiries from unaffected members, and the substantial cost. He deposed to the prospect of the applicant suffering reputational damage if unaffected members were sent a copy of the Tribunal's determination. He also deposed to the real potential of a significant net outflow of member funds. 62 The fourth affidavit read by the applicant was dated 26 November 2018 and affirmed by Mr Brian John Marriott, Chief Operating Officer of both the applicant and the second respondent. Mr Marriott deposed that the Tribunal gave the applicant no notice that it was contemplating making a direction under s 44 in the terms set out in the Tribunal's determination. He deposed that if the Tribunal had given the applicant notice that it was contemplating making such a direction he would have ensured that the applicant and/or the second respondent provided evidence and submissions to the Tribunal to the effect that the proposed direction was overbroad in significant respects with both costs and reputational implications for the applicant and that no direction should be made at all. 63 Mr Marriott also deposed that the Tribunal gave the applicant no notice that it was contemplating making a finding that the trustee's obligations under s 52(2) of the Superannuation Industry (Supervision) Act required the trustee to disclose the 2008 decision to the complainant or making a finding that the trustee had breached its obligations under that provision to ensure fairness between beneficiaries by reason of the 2008 decision. If the Tribunal had given the applicant such notice, Mr Marriott deposed, he would have ensured that the applicant and/or the second respondent provided submissions to the Tribunal to the effect that those findings ought not be made.

Submissions 64 I now turn to the applicant's submissions, following the order in which the grounds were developed in the written submissions. 65 The first issue, concerning questions of law 1 and 2, was not pressed. 66 Second, the trustee submitted that the Tribunal erred in concluding, at [62] and [71], that there was an obligation pursuant to ss 1017B(1) and (lA)(a) of the Corporations Act to advise Ms McNally of the 2008 decision on the basis that it was a material change to a "matter", being the matter of a contribution fee of 5% of contributions. 67 The trustee did not take issue with the conclusion of the Tribunal at [62] that a contribution fee of 5% of contributions was a matter that was required to be specified in a product disclosure statement. In this respect, the Tribunal accepted that the contribution fee of 5% of contributions had been disclosed to Ms McNally: at [56], [58] and [75]. However, the trustee submitted that the 2008 decision did not meet the description of a "material change" to that matter. The contribution fee of 5% of contributions continued to apply to contributions made by members. There was no change to that fact, or relevantly, that "matter", being a "contribution fee of 5% of contributions". The 2008 decision was a decision by MLC Limited to rebate fees in certain circumstances; namely, to rebate the fee where qualifying criteria in the complaints policy were fulfilled. After the 2008 decision, the trustee would still have been required to specify in a product disclosure statement the matter of a contribution fee of 5% of contributions. 68 Third, it was submitted that the Tribunal also erred, at [63] and [72], in concluding that the trustee had an obligation under s 52(2) of the Superannuation Industry (Supervision) Act or the general law to advise the complainant of the 2008 decision. The applicant submitted the "Best Interests Duty" in s 52(2) of the Superannuation Industry (Supervision) Act and at general law was not an obligation at large, imposing an overarching obligation to act in members' best interests generally. Rather, it was a covenant to "perform the trustee's duties and exercise the trustee's powers in the best interest of the beneficiaries": s 52(2)(c). That is, it operated to qualify the performance of a particular specified duty or the exercise of a specified power. The covenant in s 52(2)(c) did not enlarge the general law duty. It was intended to be a statutory expression of the same general trust law duty: Invensys Australia Superannuation Fund Pty Ltd v Austrac Investments Ltd [2006] VSC 112; 198 FLR 302 at [102], quoting from the speech of the Parliamentary Secretary to the Treasury in the House of Representatives on the second reading of the Superannuation Industry (Supervision) Bill 1993. See also Manglicmot v Commonwealth Bank Officers Superannuation Corporation Pty Ltd [2011] NSWCA 204; 282 ALR 167 at [121]. The relevant interests were those prescribed by the trust instrument. The trustee submitted that the authorities considering the scope of the Best Interests Duty at general law and under s 52(2)(c) emphasised that the duty was not absolute, and depended on the circumstances of the particular case. The duty did not mean that trustees must always, in all circumstances, relentlessly pursue the "very best" interests of the beneficiaries. 69 It was submitted that the Tribunal proceeded, erroneously, on the basis that the s 52(2) duty imposed a positive obligation on the trustee to take such actions as it considered may be in the best interests of Ms McNally. The substance of the Tribunal's reasoning in relation to s 52(2) was that the failure to tell Ms McNally about the 2008 decision "was not in her best interests". The fact that the Tribunal focussed on the best interests of Ms McNally as an individual was buttressed by the fact that the Tribunal went on in the final sentence of [63] to argue that the need for her to be told "was particularly relevant to her because of her not having had a financial adviser advising her for some time". 70 In any event, it was submitted, as set out below, the trustee was denied procedural fairness in relation to this issue. 71 Fourth, it was submitted that the Tribunal also erred in reasoning, at [67]-[69] and [71], that the 2008 decision itself was contrary to the obligations of a trustee to ensure fairness between beneficiaries under s 52(2) of the Superannuation Industry (Supervision) Act and the duty of impartiality under principles of trust law. It was submitted that there was no obligation to ensure fairness between beneficiaries imposed by s 52(2) of the Superannuation Industry (Supervision) Act at 2008. The relevant obligations - to act fairly in dealing with classes of beneficiaries within the entity and to act fairly in dealing with beneficiaries within a class - were first introduced on 1 July 2013: Superannuation Legislation Amendment (Trustee Obligations and Prudential Standards) Act 2012 (No. 117, 2012), Sch 1, cl 12. This was significant because the Tribunal's conclusion about what was required "in order to ensure fairness between members" fed directly into the critical reasoning at [73]. 72 Next, while the trustee accepted that it had an obligation at general law to act impartially between the beneficiaries of the Fund, it submitted that the Tribunal erred in concluding that the adoption of the 2008 decision was contrary to that obligation because members of the Fund were not treated fairly. First, it was submitted, the 2008 decision was fair because it applied to all members equally. Secondly and in any event, it was submitted, the Tribunal erroneously proceeded on the basis that this obligation to act impartially required the trustee to ensure that one group of members was not advantaged over another group of members. That was because the obligation, properly understood, was an obligation to avoid benefitting one class of beneficiaries at the expense of another class of members (and not as an obligation to treat all members equally): Heydon JD and Leeming MJ, Jacobs' Law of Trusts in Australia (7th ed, LexisNexis, 2006) at [1901]. Whether or not the contribution fees were rebated for one member who complained and had the adviser's name removed from the account did not impact the fees paid by other members, it was submitted. The Tribunal accordingly erred in concluding at [67]-[69] and [71] that the 2008 decision was contrary to the obligation at general law to act impartially. This error again gave rise to a question or error of law where, despite stating the correct legal test, the Tribunal on the facts as found, misapplied that test. 73 This conclusion in relation to the obligations of the trustee to ensure fairness between beneficiaries, the applicant submitted, was critical to the Tribunal's reasoning and ultimate determination: see [73] ("in order to ensure fairness between members"). In any event, it was submitted, as set out below, the trustee was denied procedural fairness in relation to this issue. 74 Fifth, it was submitted that the Tribunal concluded at [63] that Ms McNally was entitled to be told of the 2008 decision by reason of the trustee's obligations under s 52(2) of the Superannuation Industry (Supervision) Act. The Tribunal also concluded, at [67], that s 52(2) and the general law of trusts were the source of an obligation on the trustee to ensure fairness between the beneficiaries. The Tribunal, however, did not raise this critical issue with the parties or otherwise adequately put the trustee on notice that it was contemplating making this finding that the trustee's obligations under s 52(2) of the Superannuation Industry (Supervision) Act required it to disclose the 2008 decision to members. The trustee submitted it was therefore denied procedural fairness: Southwell v Equity Trustee Limited [2015] FCA 536 at [130]; Merkel v Superannuation Complaints Tribunal [2010] FCA 564 at [44]-[49]; Queensland Local Government Superannuation Board v Superannuation Complaints Tribunal [2014] FCCA 2473 at [60]; Smith v Superannuation Complaints Tribunal [2008] FCA 1528 at [19]; Employers First v Tolhurst Capital Ltd [2005] FCA 616; 143 FCR 356 at [69] and Auspine Staff Superannuation Pty Ltd v Henderson [2006] FCA 1281. 75 Sixth, it was submitted that the Tribunal mischaracterised the 2008 decision, and thus, what "the circumstances" were, the ascertainment of which were necessary to its task under s 37(6). 76 It was submitted that the Tribunal failed to have regard to the fact that the 2008 decision did not apply to the complainant as she had not, prior to the contribution fees being deducted, sought to have her financial adviser removed from her account and that, accordingly, if the trustee were to refund the contribution fees to her, it would put her in a different position to other members of the Fund (who in fact were in the same position as her as they had not complained and sought to have their financial adviser removed from their account). 77 Rather, it was submitted, the Tribunal erroneously proceeded on the basis that other members of the Fund "in [the complainant's] position" no longer paid a contribution fee ([69] and [71]) when in fact those other members of the Fund were not in the position of the complainant (as they would have had their financial advisor removed upon complaining). 78 This error therefore vitiated, the applicant submitted, the decision where s 37(6) provided that the Tribunal "must" affirm the decision, "if it is satisfied" that the decision in its operation in relation to the complainant was fair and reasonable "in the circumstances". See e.g. Moore J's observations in Marks v CSS Board of Trustees [2005] FCA 797 at [23]. See also Southwell v Equity Trustees Limited [2015] FCA 536 at [145] per Farrell J. 79 The applicant submitted that whether the Tribunal correctly ascertained the relevant "circumstances", and thus carried out its statutory task, was a mixed question of fact and law, but one that was properly considered a question of law for the purposes of s 46(1). The Tribunal's ascertaining of the "circumstances" in this sense were a pre-condition to the exercise of the Tribunal's power in s 37(3) and were thus susceptible to judicial oversight, akin to it being a jurisdictional fact. 80 Seventh, the applicant submitted that the Tribunal's reasoning at [73], set out at [44] above, was illogical for a number of reasons. First, it was submitted, there was no logical connection between the conclusion that a refund should have been given and the fact that the complainant was not receiving advice or services in 2008. This was because the Tribunal had earlier concluded that the payment of the fee was validly charged whether or not the complainant received any advice or service from an adviser. Second, the complainant did have an adviser linked to her account, even though the adviser had not been providing any advice or services to her since at least 2008. Third, it was submitted that the illogical analysis was central to the final conclusion of the Tribunal that the decision to refuse a refund was not fair and reasonable in the circumstances, or that conclusion was founded on the illogicality. The applicant also separately submitted that the Tribunal's reference to ensuring fairness between members involved an additional legal error and also involved a denial of procedural fairness. 81 Eighth, it was submitted that the failure by the Tribunal to give the applicant prior notice that a s 44 direction was being contemplated was a denial of procedural fairness. Moreover, as set out in the affidavit of Brian Marriott affirmed 26 November 2018 at [13], the trustee would have made submissions that the direction should not have been made, and that if it was to be made, that it was overbroad. By the Tribunal not allowing the applicant that opportunity, the applicant suffered practical injustice: see generally Minister for Immigration and Border Protection v WZARH [2015] HCA 40; 256 CLR 326. 82 Ninth, the applicant submitted the power of the Tribunal under s 44(2) was to direct the trustee. Nowhere was ASIC mentioned. Yet when the terms of the Tribunal's direction at [79] were considered, the Tribunal had given ASIC a role "as the regulator". This was ultra vires where the section made no provision for ASIC's involvement.

Consideration 83 I accept the applicant's evidence. As I have already said there was no contradictor. This makes it necessary, in my opinion, for the Court to be cautious in avoiding considerations not essential to disposing of the application for judicial review. 84 So far as possible, I will consider the applicant's grounds separately from each other. 85 On the facts before it, what the Tribunal decided was that the complainant should have been told, but was not, that in 2008 there had been a business decision to remove contribution fees if there was no longer an adviser linked to a member's account. If the complainant had been told about it, the Tribunal found, she could have removed the nominal adviser who was not giving her any advice and who played no part in the rollover contributions she made. The Tribunal decided the complainant was entitled to be told by the trustee that the 5% fee, that had previously been advised to her, would no longer apply if she removed any financial adviser linked to her account. The removal of the contribution fee for members who complained and not for those who did not complain was not justifiable, the Tribunal said, because of the unfairness of it. The Tribunal said the decision made in 2008 should have been disclosed to the complainant and it was not fair in its application to her because the result of it was that some other members of the Fund in her position no longer paid a contribution fee but it continued to apply to her. 86 In my opinion, the Tribunal's essential reasoning was that the trustee's decision was not fair and reasonable in relation to the complainant because she was not told of the 2008 decision: those beneficiaries who were told of it were able to take steps, to remove their financial adviser from their account, whereby they did not have to pay the relevant fees. Because she was not told of the 2008 decision, the applicant was not able to take the same steps. 87 It may well have been simpler for the Tribunal to limit its consideration to whether the decision of the trustee not to refund the amounts to the complainant was or was not fair and reasonable in the circumstances, with reference to s 37(6) of the Complaints Act. Many of the matters the subject of complaint in this Court by the applicant may not have been important to that statutory conclusion. Nevertheless, it is the reasons of the Tribunal as they stand which the Court must consider. 88 I will endeavour to deal with the issues in the order in which they were the subject of oral submissions. As I have said, I do this in part because there is no contradictor and, therefore, I should keep to what it is necessary to decide. Further, the applicant submitted that if I found for the applicant in relation to the procedural fairness points it was not necessary for the Court to go further, and the Court should go no further as the facts found by the Tribunal may change once procedural fairness is afforded to the applicant. Reference was made, in support of this course, to the decision of Gray J in Merkel v Superannuation Complaints Tribunal [2010] FCA 564. I accept this submission. 89 The eighth issue above and the first to be the subject of oral submissions is whether the Tribunal's failure to give the applicant prior notice that a direction under s 44 of the Complaints Act was being contemplated was a denial of procedural fairness. There can be no doubt that procedural fairness applies to the decision-making of the Tribunal: Employers First v Tolhurst Capital Ltd [2005] FCA 616; 143 FCR 356 per Branson J at [66]-[71]. 90 In my opinion, the failure to give the applicant such notice was a denial of procedural fairness, given the substantial impact on the applicant's rights and interests. It is true to say that at [77] the Tribunal noted "the expense and administrative difficulty" for a trustee of a s 44 direction, but that does not answer the procedural obligation on the Tribunal to give the applicant an opportunity to be heard in relation to whether or not, and in what terms, the Tribunal should exercise its power to direct the trustee to inform all or any of the other members or all or any of the former members of the Fund of the Tribunal's determination. 91 I will therefore set aside the direction. If it were necessary to decide, in my opinion the power in s 44 of the Complaints Act and the exercise of it in this case would be sufficiently severable such that, other things being equal, this Court could make an order, under s 46, setting aside the determination to that extent and remitting that exercise of power to the Tribunal to be determined again after affording the applicant the opportunity to be heard: see Kalymnian Shipping Pte Ltd v Rose [2000] FCA 614; 61 ALD 668 per Finn J and the authorities there referred to. As will appear, this issue does not arise. 92 The other issue argued in relation to the s 44 direction, the ninth issue above, was the power to allow ASIC to decide that the trustee need not inform the other members and former members of the Fund of the Tribunal's determination and to allow ASIC to approve the form of a fair summary of the Tribunal's determination. This also does not strictly arise in light of my conclusion on the procedural fairness point so far as concerns the direction under s 44(2). However, it may be worthwhile to say something about it as it now appears in particular 4 of ground 10. 93 It is true to say, as the applicant submits, that ASIC is not mentioned in s 44(2), but I would not accept that [79] of the Tribunal's determination is a direction to ASIC. The direction is to the trustee. 94 Nevertheless, in the first part of the direction the Tribunal has given to ASIC a role in the Tribunal's exercise of power to make a direction, the role given to ASIC being to revise or countermand the exercise of that statutory power by the Tribunal. In my view, that part of the direction was ultra vires. The Tribunal has thus abrogated part of its power. It is reminiscent of Human Rights and Equal Opportunity Commission v Mount Isa Mines Ltd (1993) 46 FCR 301 at 307 per Black CJ, 330 per Lockhart J and 331 per Lee J. It could be argued that the words in the direction "unless the Australian Securities and Investments Commission, as the regulator, decides otherwise" could be severed but it is not possible to conclude that the Tribunal would have made the direction without those words. 95 As to the other reference to ASIC in [79] of the Tribunal's determination, I would regard it as merely advice to the trustee rather than a direction and thus it would not fall within the penalty provisions in s 44(3). In my opinion, that part of [79] of the Tribunal's determination would not of itself amount to or constitute an error of law. 96 The next issue the subject of oral submissions was the fifth issue identified above. It centred on the finding at [63] that the complainant, as a beneficiary of a trust and as a person in whose best interests the trustee had an obligation to act, was entitled to be told that the 5% fee would no longer apply if she removed any financial adviser linked to her account. Specific complaint is made of the Tribunal's reference to s 52(2) of the Superannuation Industry (Supervision) Act. 97 In my opinion, considering this as a procedural issue only, whether the complainant was entitled to be told that the fee would no longer apply if she removed any financial adviser was specifically raised in the Tribunal's letter dated 12 January 2018 to the parties before it and answered in the applicant's response dated 6 March 2018. 98 However I accept the applicant's submission that this correspondence was directed only to s 1017B of the Corporations Act and not to any other source of the complainant's entitlement to be so told. I also accept the submission that the obligation under s 52(2) of the Superannuation Industry (Supervision) Act is qualitatively different to the Corporations Act obligation and that the facts relevant to one are not or may not be the same as the facts relevant to the other. 99 If the source of the complainant's entitlement had not been linked to s 1017B of the Corporations Act but had been posed generally, the answer might be different. In that notional circumstance, it may have been possible to test this procedural issue by removing the reference in [63] of the Tribunal's determination to s 52. It might then be said that the substance of the point would remain the same, that is, the Tribunal's view that the complainant was a beneficiary of a trust and the person in whose best interests the trustee had an obligation to act and was therefore entitled to be told by the trustee that the 5% fee would no longer apply if she removed any financial adviser linked to her account. 100 I raised with counsel whether the point may be answered by the consideration that any procedural defect as to an issue of the source of the legal obligation may be met by the applicant having an opportunity to be heard on the point by a reviewing court: see Stead v State Government Insurance Commission [1986] HCA 54; 161 CLR 141 where the High Court said, at 145: … not every departure from the rules of natural justice at a trial will entitle the aggrieved party to a new trial. By way of illustration, if all that happened at a trial was that a party was denied the opportunity of making submissions on a question of law, when, in the opinion of the appellate court, the question of law must clearly be answered unfavourably to the aggrieved party, it would be futile to order a new trial. 101 I accept the applicant's submission that in the present case the issue is not purely one of law but also involves facts found in consequence of the identification of the legal duties or obligations on the trustee as found by the Tribunal. 102 I also raised with counsel, in light of the principle that the reasons of an administrative decision maker should not be read hypercritically but beneficially, so as to inform the reader of the Tribunal's reasoning: Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6; 185 CLR 259, whether the conclusions of the Tribunal at [62]-[69] should or should not be read as informing the Tribunal's conclusions at [70]-[74], particularly in light of the Tribunal's statement at [70]: "For the reasons stated below,…". 103 I accept the applicant's submission that it should not be concluded that the paragraphs from [62]-[69] were not material to the Tribunal's other reasons and conclusions. I reach this view for two main reasons: first, although the findings in relation to the Superannuation Industry (Supervision) Act and the general law of trusts may have been unnecessary, nevertheless the Tribunal's reasons contain that material and it should not be lightly found by a court on judicial review that these considerations had no bearing. Second, I conclude that the reference at [73] of the Tribunal's determination "to ensure fairness between members" is a reference back to the obligations discussed by the Tribunal at [67] and sourced in s 52(2) of the Superannuation Industry (Supervision) Act and the general law of trusts. 104 I therefore find that the Tribunal denied procedural fairness to the applicant in concluding, at [63], that the complainant's entitlement to be told by the trustee that the 5% fee would no longer apply if she removed any financial adviser linked to her account was sourced in s 52(2) of the Superannuation Industry (Supervision) Act. 105 Similarly, I find that the Tribunal denied procedural fairness to the applicant in concluding, at [67]-[68], that the trustee had an obligation to ensure fairness between the beneficiaries sourced in s 52(2) and in the general law of trusts and that therefore the removal of the contribution fee for members who complained and not for those who did not complain was not justifiable. 106 It is a strong thing to find, without notice to a trustee against whom the finding may be made, that the trustee is in breach of its statutory or general law obligations to which its attention has not been drawn and in respect of which therefore it has not had an opportunity to be heard. In the circumstances of this case I find that the Tribunal's determination was procedurally unfair. 107 This conclusion of procedural unfairness is founded on the focus, in these paragraphs of the Tribunal's reasons, on the 2008 decision. It does not appear that the 2008 decision was sufficiently identified, except to the extent it was identified in the correspondence about s 1017B of the Corporations Act. More importantly, it does not appear that the unfairness or discriminatory operation of the 2008 decision, as found by the Tribunal, was sufficiently raised with the applicant so as to afford the applicant a reasonable opportunity to be heard on that issue. 108 In this respect, by an amendment to the notice of appeal adding paragraphs 4F and 4G, the applicant submitted that [71] of the Tribunal's determination contained a conclusion founded on a lack of procedural fairness, that conclusion being that the 2008 decision should have been disclosed to the complainant and was not fair, construing the reference to fairness in [71] to the statutory term in s 37(6) of the Complaints Act. I accept that submission. It follows from the absence of reference, in the communications between the Tribunal and the applicant, to the unfairness of the 2008 decision. 109 These conclusions suffice to set aside the determination and the direction of the Tribunal and to remit the matter to the Tribunal to be determined again in accordance with law. 110 It is important to go no further where, once procedural fairness is afforded to the applicant, the facts which the Tribunal may find may be different to the facts as presently found by it. For example, the applicant submits that there is not only a procedural fairness error in [63] but there is also an error of substantive law in relation to the meaning and application of s 1017B(1A) of the Corporations Act. 111 In my opinion, it is inappropriate to deal with that issue when the facts found by the Tribunal may change once procedural fairness is afforded, assuming the Tribunal on remitter finds it necessary or appropriate again to consider s 1017B. It is not clear to me, for example, why, on the facts found by it, the Tribunal referred at [62] to a material change rather than to a significant event that affects a matter within s 1017B(1A)(a). 112 I would however add one observation to prevent error on the part of the Tribunal if it were again to found any conclusion on s 52(2) of the Superannuation Industry (Supervision) Act. That observation is that (e) and (f) of that provision, as implicitly referred to by the Tribunal at [67] and [73], were not in force at the time of the 2008 decision. Those paragraphs commenced on 1 July 2013. The question of whether those paragraphs reflected the general law of trusts as it stood at the time of the 2008 decision was not the subject of submission before me.

Conclusion and orders 113 Grounds 8A and 10A are made out in relation to the direction under s 44 of the Complaints Act. Grounds 4D, 4E, 4F and 4G are made out in relation to the determination under s 37 of the Complaints Act. 114 The orders I propose are as follows:

1. Leave is granted to the applicant to amend and rely on its further amended notice of appeal in the form dated 4 December 2018.
2. The appeal be allowed.
3. The determination and the direction of the Tribunal given on 3 July 2018 be set aside.
4. The matter be remitted to be determined again by the Tribunal in accordance with law.
5. There be no order as to costs. I certify that the preceding one hundred and fourteen (114) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Robertson.