National Mutual Life Association of Australasia Ltd v Campbell

Federal Court of Australia|1997-05-08|Before: Sundberg J, Nicholson J, Heerey J

REASONS FOR JUDGMENT 1 The applicant National Mutual Life Association of Australasia Limited (the Insurer) is the insurer of the ANI Group Superannuation Fund (the Fund) established for the benefit of employees of ANI Limited (the Company). The trustee of the Fund is GSF Management Pty Ltd (the Trustee). The respondent Mr Ronald Albert Campbell was a member of the Fund and a Life Assured within the meaning of the Fund's trust deed from 1 July 1985. The trust deed provided for the payment of a total and permanent disablement benefit if a member retired before the age of sixty as a result of his "total and permanent disablement". This expression was defined to mean, in relation to a Life Assured, "…having been absent from employment with the Company through injury of illness for six consecutive months and in the opinion of the Insurer after consideration of medical evidence having become incapacitated to such an extent as to render the Life Assured unlikely ever to engage in or work for reward in any occupation or work for which he is reasonably qualified by education training or experience." 2 The respondent was employed as a leading hand by the Company for ten years to 2 May 1994. The last day he attended work was 15 December 1993. On 26 February 1994 he lodged a claim for total and permanent disablement benefit. The claim was referred to the Insurer which on 3 July 1994 advised that the respondent did not satisfy the definition of "total and permanent disablement". Following that decision the Trustee on 14 July 1995 rejected the respondent's claim. That decision was affirmed on internal review on 22 September 1995. 3 The respondent lodged a complaint with the Superannuation Complaints Tribunal (the Tribunal) under the Superannuation (Resolution of Complaints) Act 1993 (Cth) (the Act). The Tribunal on 20 May 1997 decided to set aside the decisions of both Trustee and the Insurer and substitute its decision that (a) the respondent satisfied the definition of "total and permanent disablement" in the insurance policy; and (b) the respondent is to be paid the total and permanent disablement benefit. 4 The Insurer appeals to this Court under s 46 of the Act which confers a right of appeal on a question of law.

The legislation 5 The objectives of the Tribunal are the provision of mechanisms for the conciliation of complaints and - if complaints cannot be resolved by conciliation - the review of the decisions of the trustees to which the complaints relate. Such mechanisms are to be "fair, economical, informal and quick": s 11. 6 Under s 14(2) of the Act, a person may make a complaint to the Tribunal that a decision of a trustee "is or was unfair or unreasonable". 7 It is worth noting that prior to the 1995 amendments to the Act, introduced as a result of the decision of the High Court in Brandy v Human Rights and Equal Opportunity Commission (1995) 183 CLR 245, s 14(2) provided for complaints that the decision of a trustee "(a) was in excess of the powers of the trustee; or (b) was an improper exercise of the powers of the trustee; or (c) is unfair or unreasonable." 8 Section 36 deals with the way in which the Tribunal is to go about its task. It provides: "The Tribunal, in reviewing a decision or conduct: (a) is not bound by technicalities, legal forms or rules of evidence; and (b) is to act as speedily as a proper consideration of the review allows, having regard to: (i) the objectives laid down by section 11; and (ii) if the complaint relates to a fund - the interests of all the members of the fund to which the complaint relates; and (c) may inform itself of any matter relevant to the review in any way it thinks appropriate." 9 Section 37 then provides: "(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.

The Tribunal's decision 10 The Tribunal had before it a number of medical reports. It did not hear oral evidence or argument. The Tribunal was satisfied that the respondent suffered from bronchial asthma with chronic obstructive airways disease, lower back pain which had been diagnosed as sacro-iliitis, oesophagitis, tinnitus and headaches, eczema and prostate hypertrophy. However the contentious area was the respondent's psychiatric condition. He had served as an infantryman in Vietnam. The Tribunal reviewed the medical evidence as follows: "Three psychiatrists' opinions were provided, two reports were obtained by the Insurer, and several reports from RC's [the respondent's] treating Psychiatrist. The reports from the treating Psychiatrist, Dr LL and Dr AW were diametrically opposed to each other. It was Dr AW's opinion that RC does not suffer form post traumatic stress disorder or any other 'serious or permanent mental disorder'. He referred to the DSM-IV and concluded that post traumatic stress disorder was an incorrect diagnosis for RC's current condition. In contrast, Dr LL had diagnosed RC as suffering from chronic post traumatic stress disorder, noting that RC required continued treatment and medication. The other psychiatric report was prepared by Dr GV. He accepted that RC was suffering moderate anxiety symptoms but did not think that the symptoms were sufficient to prevent RC from working. He suggested that RC was not fit for stressful employment. Given these diametrically opposed opinions, the Tribunal found it most difficult to come to a conclusion in relation to the diagnosis of post traumatic stress disorder. The Tribunal was persuaded by the fact that Dr LL is RC's treating Psychiatrist and has been treating him since early 1994. He sees RC on a regular basis and RC now trusts Dr LL, which is essential for the treatment of a psychiatric disorder. The Tribunal is of the opinion that it should accept Dr LL's diagnosis that his patient RC is suffering from post traumatic disorder. It is also of the opinion that it should accept Dr LL's opinion on the severity of the symptoms suffered by RC. It is Dr LL who has been treating RC for a number of years, and who has had the opportunity to observe RC over a prolonged period." 11 The Tribunal then proceeded to make findings as to the respondent's membership of the Fund, his employment and his cessation of work. The Tribunal found that he suffered from a number of physical disabilities but that these would not prevent him from undertaking his usual work. The critical finding was as follows: "RC also suffers from post traumatic stress disorder. This condition results in significant symptoms such as insomnia, extreme restlessness and agitation. He has a high level of anxiety and is treated with sleeping tablets and anti depressants. Because of this medication RC has side effects of fatigue, poor psycho-motor performance and poor concentration." 12 In its conclusion the Tribunal referred to the provisions of s 37 of the Act. It noted that it was accepted by the Trustee and Insurer that the respondent had been absent from work because of his various medical complaints for six consecutive months. The Tribunal then said: "In its submission to the Tribunal, the Insurer stated that it had preferred the opinion of Dr AW on RC's psychiatric disability. Dr AW had prepared a comprehensive report after examining RC. The Tribunal has carefully considered the medical evidence in relation to RC's psychiatric disability and has preferred the opinion of Dr LL, RC's treating psychiatrist. The Tribunal has set out above why it prefers Dr LL's opinion Dr LL is RC's treating psychiatrist and has diagnosed him as suffering from post traumatic stress disorder. This was based on recognised psychiatric criteria, and the Tribunal accepts that Dr LL has the expertise to make such an [sic] diagnosis. The Tribunal has concluded that the Insurer and the Trustee did not give sufficient weight to Dr LL's opinion, given that Dr LL was RC's treating psychiatrist. RC is suffering from a psychiatric disability, post traumatic stress disorder, and as a result of that disability, he suffers a number of symptoms. Because the Trustee and Insurer had accepted Dr AW's opinion, it did not consider whether RC was fit for his previous employment or any other work for which he is reasonably qualified by education, training or experience. RC has worked as a leading hand which involved labouring work and driving machinery. Dr LL was aware of RC's occupation, and was of the opinion that RC was totally and permanently disabled for all work. The Tribunal accepts that Dr LL's opinion is based on his extensive treatment of RC over several years. In the Tribunal's opinion, the Insurer and the Trustee did not give sufficient weight to Dr LL's opinion, and therefore the decisions of the Trustee and Insurer were not fair and reasonable. The Insurer has submitted that the Tribunal must affirm the decisions of the Trustee and Insurer if it finds that the Insurer and Trustee have taken into consideration all relevant matters. The Tribunal does not accept that submission. It is of the opinion that it must consider the evidence presented, and make its decision based on the submissions and the evidence.

Insurer's submissions on the appeal 13 Counsel for the Insurer argued that the Tribunal could not substitute its own decision. It had to ask whether it was reasonably open for the Trustee to form the view it did. This meant, counsel said, the Tribunal could only upset the Trustee's decision if it was so unreasonable that no reasonable decision-maker could have come to it. The unreasonableness would have to be "something overwhelming": Associated Provincial Picture Houses Limited v Wednesbury Corporation [1948] KB 223 at 230. Counsel also relied on the decision in National Mutual Life Association of Australasia Limited v Jevtovic (unreported, 8 May 1997, Sundberg J). He contended that the Tribunal had asked itself the wrong question, that is to say whether the respondent had retired as a result of total and permanent disablement. Instead, counsel submitted, the question for the Tribunal was whether the Trustee's decision was fair and reasonable.

Conclusion on the appeal 14 It is common ground that in the statutory expression "fair and reasonable", "fair" means "just, unbiased, equitable, impartial" and "reasonable" means "within the limits of reason, not greater or less than might be thought likely or appropriate". The reference to fairness is not to procedural fairness. The effect of s 37(4) and (6) is to require the Tribunal to apply the criteria of fairness and reasonableness to the operation of the decision in relation to the person affected. That is, whether it was fair in that operation, not whether it had been arrived at by a fair process: Pope v Lawler (unreported, 7 May 1996, R D Nicholson J), Jevtovic (supra). 15 However, the problem with the Insurer's argument is that, if correct, the Tribunal would be exercising judicial power, the very thing which the High Court found in Attorney-General (Cth) v Breckler (1999) 163 ALR 576 was not the case. In that case Kirby J said at [89] - [91]: "[89] …The new decision [of the Tribunal], 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 trustee's opinion 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. [90] Whatever may have been the position prior to the 1995 amendments, once the Complaints Act was altered to confine the powers of the tribunal to issues of unfairness or unreasonableness, it was plain that the tribunal's functions were not those normal to a court. Inevitably, the availability of a successful complaint to the tribunal by reference to criteria such as 'unfairness' and 'unreasonableness' would have consequences. In many cases it would encourage decision-making on the part of trustees which was 'fair' and 'reasonable', so as to avoid the risk of a complaint to the tribunal. So much would be a purpose of the legislation. But the criteria of 'unfairness' and 'unreasonableness' are so general and controversial that the trustees' assessment in a particular case might be quite different from that of the tribunal whose determination alone would resolve the difference. [91] The applicable statutory norms are most imprecise. Until applied by the tribunal in response to the case of a complaint which enlivens its powers, the position of the parties would be as the ordinary law provides. Specifically, no complaint would be open to a beneficiary under that law solely on the basis of any suggested unfairness or unreasonableness of a trustee's decision. The Complaints Act changed all that. But it did so by creating a tribunal with a power to make determinations. Its determinations do not declare or enforce the legal rights of the parties. They create new rights by force of the determination, albeit in the form of a decision which is then substituted for the decision of the trustees which is set aside. The functions of the tribunal were accordingly those apt to a non-court body created for a limited purpose within the Executive Government. They involved no attempt to confer on that body functions confined to the judicial power of the Commonwealth and thus to a court …." (Emphasis added) 16 Thus the Tribunal is not acting like a court on judicial review determining whether a particular decision was lawfully open to a decision-maker, or like an appellate court deciding whether there was evidence on which a jury could reach a particular verdict. The Tribunal makes its own decision. 17 That being so, what happened here was that the Tribunal decided that it was unfair, in the sense of being unjust, to reach a determination adverse to the respondent by in effect rejecting the opinion of his treating psychiatrist who had much more familiarity with him than did the forensic psychiatrist retained by the Insurer. In so doing the Tribunal in my opinion did not exceed its functions under the Act. To illustrate the point by a hypothetical example discussed in argument, if a trustee had rejected a claim by preferring a general practitioner of twelve months' experience against the opinions of five professors from the Royal Melbourne Hospital, the Tribunal might understandably conclude that the decision was unfair in the sense of being unjust. The issue in the present case was of course much more finely balanced, but it nevertheless remained a question for the Tribunal itself to decide. 18 Nor did the Tribunal ask itself the wrong question. In the course of its deliberations it had to make findings of fact. As the Full Court said in Statham v Federal Commissioner of Taxation (1988) 16 ALD 723 at 724: "The essential task of any primary tribunal is to find the relevant facts and then to evaluate them in the light of applicable law." 19 But the Tribunal did not, as in Jevtovic, divert its attention from its statutory task. 20 The application will be dismissed with costs, including reserved costs. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey.

Solicitor for the Applicant: Kevin D Le Plastrier

Solicitor for the Respondent: Ryan Carlisle Thomas as agents for R L Whyburn & Associates, Camperdown

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