National Mutual Life Association of Australasia Ltd v Campbell

The Tribunal's decision 6 When the matter came before the Tribunal, the Tribunal found that it should accept Dr LL's diagnosis because he was the respondent's treating psychiatrist; he had been treating the respondent since early 1994, he saw him on a regular basis and had established a relationship of trust with him. The Tribunal concluded that the insurer and the Trustee did not give sufficient weight to Dr LL's opinion, having regard to the fact that he was the respondent's treating psychiatrist. As the insurer and the Trustee did not give sufficient weight to Dr LL's opinion, their decisions were not fair and reasonable. 7 Earlier in its decision, the Tribunal described the issue arising for its determination as being: "whether the decisions of the Trustee and insurer were fair and reasonable in all the circumstances in their operation to (the respondent)." The Tribunal rejected a submission by the insurer that it was required to affirm the decisions of the Trustee and the insurer if it found that the insurer and the Trustee had taken into consideration all relevant matters. In the opinion of the Tribunal, it was required to consider the evidence presented, and to make its decision upon the basis of the evidence and of the submissions.

Proceedings in the Federal Court 8 An "appeal" lies to the Federal Court, on a question of law, from the determination of the Tribunal: s 46. The primary judge dismissed that appeal on the basis that it was for the Tribunal to decide whether the decisions of the insurer and Trustee were unfair or unreasonable. The Tribunal addressed the correct question and made a factual finding that it was unfair, in the sense of being unjust, to reach a determination adverse to the respondent by rejecting the opinion of his treating psychiatrist who had much more familiarity with him than did the forensic psychiatrists retained by the insurer.

The appeal to the Full Court 9 The appellant's first submission was that the Tribunal had misdirected itself about the task it had to perform in the same way as it was found to have misdirected itself by Sundberg J in National Mutual Life Association of Australia Ltd v Jevtovic (unreported, 8 May 1997). The appellant submitted in the alternative that the Tribunal had merely "preferred" (albeit on a reasoned basis) one psychiatrist's view that the respondent was totally and permanently disabled over the contrary views of two other psychiatrists, and that this was not a sufficient ground to authorise the Tribunal to do otherwise than to affirm the decision of the appellant not to pay the respondent the benefit claimed, having regard to the provisions of s 37(6) of the Act. It will be convenient to consider this alternative submission first.

The legislative scheme 10 Section 14 is one of a number of sections which allows a complaint to be made to the Tribunal that a particular decision or particular conduct of a trustee, insurer or other designated person is or was unfair or unreasonable: (s 14, 14A, 15A, 15B, 15CA, 15E, 15F, 15H and 15J). The functions of the Tribunal are to enquire into the complaint, and to try to resolve it by conciliation and, if that fails, to review the decision or conduct to which the complaint relates (s 12). The Tribunal must pursue the objective of providing a mechanism for review that is fair, economical, informal and quick (s 11). 11 The body the subject of the complaint is required to provide to the Tribunal documents that are relevant to the complaint (s 24) and the Tribunal is empowered to obtain further information or documents relevant to a complaint both from the body in relation to whom the complaint is made, and from other persons (s 25). 12 If conciliation (s 27) fails, then the Tribunal is to fix a review meeting, and to notify the parties accordingly (s 32). Ordinarily, parties to the review are confined to making written submissions to the Tribunal for the purpose of the review meeting, but the Tribunal may, if it thinks it necessary, make an order allowing the parties to make oral submissions to the Tribunal at the review meeting (ss 33, 34). In reviewing a decision or conduct, the Tribunal is not bound by technicalities, legal forms or rules of evidence, and may inform itself of any matter relevant to the review in any way it thinks appropriate (s 36). A decision of the Trustee or insurer as varied by the Tribunal, or a decision made by the Tribunal in substitution for a decision of the Trustee or insurer is, for all purposes (other than the making of a complaint about the decision), taken to be a decision of the Trustee or insurer as the case may be (s 41(3)). The Tribunal's powers in dealing with a complaint under s 14 are contained in s 37. Its powers when dealing with complaints made under other sections of the Act are as set forth in s 37A and following.

The position of an insurer 13 Although s 14 provides for a complaint about a decision of the Trustee, the Act was amended in 1995 so as to provide for the joinder of an insurer as a party to the complaint in appropriate circumstances (s 18(1)(c)). Section 17A provides for notification to the insurer in those circumstances. The Tribunal must, when reviewing the Trustee's decision, also review any decision of the insurer that is relevant to the complaint (s 37(2)(a)). For that purpose the Tribunal has all the powers, obligations and discretions that are conferred on the insurer (s 37(2)(b)). In the present case, the insurer was joined as a party to the complaint, and its decision was the subject of review. Subject to s 37(6) the Tribunal was required to make a determination in accordance with s 37(3) in relation to the decision of the insurer: s 37(2)(c). 14 For the purpose of the review, the Tribunal has all the powers, obligations and discretions that are conferred on the Trustee or the insurer respectively (s 37(1)(b); 37(2)(b)). Section 37(3) provides that on reviewing the decision of the Trustee or insurer the Tribunal must make a determination in writing (a) affirming the decision, or (b) remitting the matter to the 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 different decision for the decision so set aside. 15 When exercising its powers under s 37(3) the Tribunal is engaged in a task that results from a complaint that the decision being reviewed is or was unfair or unreasonable, or both. The claimed unfairness or unreasonableness, which was the subject of the complaint, is the central object of the review. The terms of s 37(4) confirm that this is so. 16 The exercise of the s 37(3) power is subject to a number of constraints: - first, the Tribunal must not do anything under s 37(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 trustees is involved, to the terms of the contract (s 37(5)); - second, 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 (s 37(6)); - the Tribunal may only exercise its s 37(3) powers 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 (s 37(4)). 17 According to the Eighteenth Report of the Senate Select Committee on Superannuation (April 1996), "Review of the Superannuation Complaints Tribunal", the capacity of the Tribunal to hear and assess medical evidence had been a contentious issue. Section 14(5) of the Act provides that the Tribunal cannot deal with a complaint under s 14 to the extent that it relates to excluded subject matter. "Excluded subject matter" (s 3) means subject matter that is declared by the regulations to be excluded subject matter for the purposes of the Act. Until 1 November 1995 the regulations defined "Excluded subject matter" to include matter in relation to which the Tribunal, in dealing with the matter: (a) would have to undertake the assessment or evaluation of medical evidence, opinion or reports; or (b) would have to consider, having regard to medical evidence, opinion or reports, the question of a person's incapacity; or (c) would be likely to have to perform a function mentioned in par (a) or (b). 18 As earlier indicated, substantial amendments were made to the Act in relation to the position of insurers by the Superannuation Industry (Supervision) Legislation Amendment Act (No 144 of 1995). In the second reading speech of Mr Elliott, Parliamentary Secretary to the Treasurer, on the Bill for that Act, reference was made to the Tribunal's first year of operation, and Mr Elliott continued: "Unfortunately, the Tribunal has been subject to some criticism relating to the statutory limits on its jurisdiction. These limits have caused a large number of complaints to be excluded by the Tribunal on the grounds that they could not be handled under existing legislative constraints. Included amongst these were complaints about disability benefits involving the assessment of medical evidence and certain complaints about life office superannuation products. This bill aims to improve the effectiveness of the Tribunal by clarifying and strengthening its jurisdiction over these kinds of complaints. Complaints about disability claims are set to be handled by the Tribunal from 1 November 1995, when the regulation excluding the consideration of 'medical evidence' expires. This bill will enhance the effectiveness of the Tribunal handling medical evidence complaints in two important ways. Firstly, it will protect the members of funds that arrange disability cover through an external insurer, by enabling the Tribunal to make orders directly against the insurer. This means funds will not face the unfunded liabilities which could otherwise arise where a fund is ordered to pay a disability benefit that has been rejected by its external insurer. Secondly, the Bill puts in place various time limits to prevent the Tribunal's being swamped with intractable 'old' disability complaints where the trail of medical evidence has gone cold: that is, where the illness or injury which led to a claim may have been obscured by subsequent complications or a new condition. Broadly, the Tribunal will not be able to consider complaints about disability claims decided by fund trustees before 1 November 1994. Given that I announced the Tribunal would deal with 'medical evidence' complaints in October 1994, the amendments are essentially prospective." 19 Section 37(2), introduced as a result of the 1995 amendments is the source of the Tribunal's power to review the decision of the insurer, and s 14(6A), introduced at the same time provides: "14(6A) [Decisions made on or after 1 November 1994] The Tribunal cannot deal with a complaint under this section about a decision of a trustee relating to the payment of a disability benefit because of total and permanent disability unless: (a) the decision is made on or after 1 November 1994; and (b) the complaint is made within a period of one year after the making of the decision to which the complaint relates." 20 This history suggests that it was not the legislative intention in making the 1995 amendments to the Act, thereafter to exclude from the operation of the Act review of decisions as to whether, for example, a person is not entitled to a benefit because he/she is not totally and permanently disabled. Rather the legislative intention appears to be that the exclusion from the Tribunal's jurisdiction of disability complaints which had theretofore been effected by regulation was, with effect from 1 November 1995, to come to an end. It is legitimate to have regard to this history, and the provisions of the regulations, as they stood at that time, to ascertain what the statutory scheme is: Anderson v Wilson [2000] FCA 394 [208].

Consideration 21 Under the terms of the policy, it was for the insurer to form an opinion on the issue of total and permanent disablement after consideration of the medical evidence. No argument was put that the formation of that opinion did not involve the making of a "decision" for the purposes of the Act. The insurer apparently applied its mind to a determination of the correct question, which necessarily involved the making of a judgment as to which of the competing medical views as to whether the respondent suffered from post-traumatic stress disorder it preferred. For those reasons, it is not likely that the insurer's decision could have been the subject of a successful challenge under the general law. 22 Prior to 11 December 1998, the Act did not distinguish in its terms between decisions which involved the exercise of a discretion, and decisions which did not. No such distinction was drawn in the definition of when a person "makes a decision" in s 4, and the subject matter of ss 14 and 37 is simply "a decision". 23 Nevertheless, as Kirby J observed in The Attorney-General for the Commonwealth v Breckler (1999) 197 CLR 83 [par 68-69] a difference of opinion had emerged within this Court as to whether the Tribunal's jurisdiction was confined to the review of discretionary decisions. The view that the jurisdiction was not so confined found favour with Merkel J in Briffa v Hay (1997) 75 FCR 428 and again in Collins v AMP Superannuation Ltd (1997) 75 FCR 565. The contrary view found favour with Northrop J in Wilkinson v Clerical Administrative and Related Employees Superannuation Pty Ltd, and with all members of the Full Court on appeal (1997) 79 FCR 469. 24 In Wilkinson, Sundberg J (dissenting in the result, but not on this point), held that ss 14(2) and 37 require the conclusion that the Tribunal's jurisdiction is limited to the review of discretionary decisions. At p 491 his Honour said: "A non-discretionary decision of a trustee, for example that a person is not entitled to a benefit because he is not totally and permanently disabled is either correct or incorrect in law." His Honour said that if the Tribunal is of the view that the decision is correct, it cannot do any of the matters referred to in s 37(3)(b), (c) or (d) as to do any of those things would be contrary to law and to the governing rules of the Fund. 25 In Wilkinson, the majority in the Full Court (Sundberg J dissenting) held that the provisions of the Act conferring review power on the Tribunal were invalid as that power was part of the judicial power of the Commonwealth. That decision was overruled by the High Court in Breckler. Breckler was concerned with the exercise of a discretionary power on the part of a trustee, hence the present problem did not directly arise. At par [24] in the judgment of Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ it is said: "The limitation of the grounds of complaint to one that the decision was unfair or unreasonable suggests that what is involved is a complaint as to the exercise by the trustee of a discretion rather than the discharge of duties, for example to distribute to those answering specified criteria. In his dissenting judgment in Wilkinson v Clerical Administrative and Related Employees Superannuation Pty Ltd, Sundberg J gave as an example a determination by the trustee that a person was not entitled to a benefit because the criterion of total and permanent disability was not satisfied." 26 On the other hand, Kirby J whilst agreeing that the Tribunal in making a determination was not purporting to exercise the judicial power of the Commonwealth contrary to Chapter III of the Constitution, at par [88-89] said: "Obviously, the occasions for the intervention of the Tribunal on the grounds of 'unfairness, unreasonableness, or both' may, as a practical matter, be confined to cases where the law, the rules of a fund or the terms of the contract of insurance do not yield a single result. The 'unfairness' or 'unreasonableness' which the Tribunal may address will thus arise where the exercise by a trustee of its powers involves an element of discretion, opinion or judgment. That alone will enliven the 'determination-making power' of the Tribunal in a way that can be effective. The restriction of the grounds of complaint to present or past unfairness or unreasonableness matches the restrictions in s 37(4) and (6) of the Complaints Act on the Tribunal's powers to interfere with a decision of a trustee. Although the construction of the Complaints Act as it now stands is by no means certain, the better view is therefore that, as s 14(2) provides, each relevant 'decision' may be the subject of complaint to the Tribunal on the ground that it 'is or was unfair or unreasonable'. But only in those cases where such complaint will give rise to relevant powers on the part of the Tribunal to grant relief, will the result be the substitution by the Tribunal of one of the determinations open to it. Where, as in this case, the Tribunal concludes that the trustees enjoy a power involving an element of discretion, opinion or judgment, it is entitled to make a determination 'setting aside the [trustees'] decision and substituting a decision for the decision so set aside'. The new decision, which might have retrospective operation, will speak from the time specified in the determination. What is involved is not a determination that the trustees misapplied the law to the facts. Nor that they mistook their powers and obligations under the governing rules of the fund. Rather it is a determination by the Tribunal of its own opinion that the trustees' decision is, or was, unfair, unreasonable or both." 27 Shortly prior to the decision in Breckler, s 14AA was inserted into the Act effective 11 December 1998. Section 14AA provides: "14AA(1) [Complaints about any decision] To avoid doubt, a complaint may be made under this Part about a decision whether or not the decision involved the exercise of a discretion. 14AA(2) [Non-discretionary decision contrary to law] However, a decision that did not involve the exercise of a discretion is taken to have been unfair and unreasonable if the decision was contrary to law." The Tribunal's decision in the present case was given on 3 July 1997. 28 Merkel J considered the operation of s 14AA in Seafarers' Retirement Fund Pty Ltd v Oppenhuis [1999] FCA 1683. In his Honour's view, the section was intended to explain, and therefore be declaratory of, the existing state of the law, with the consequence that it was intended to operate from the date on which the Act that it is interpreting came into operation. On that basis, his Honour held that a non-discretionary decision of a trustee taken in 1975 reviewed by the Tribunal in 1997 was within the jurisdiction and power of the Tribunal. 29 On the hearing of this appeal, the argument on both sides assumed that the decision of the insurer/trustee was non-discretionary in character. There was no reference in argument to any difficulties which might be involved in characterising a decision as discretionary, as opposed to non-discretionary in character: cf (in a different context) Mobilio v Balliotis [1998] 3 VLR 833, 835, 838, 853. Nor was it submitted on behalf of the appellant that the Tribunal lacked jurisdiction to review the decision in question. No reference was made in argument to the decision of the Full Court in Wilkinson, or to s 14AA. The appellant's submission was that the Tribunal merely preferred one medical opinion over another, hence the insurer's decision could not, as a matter of law, be characterised as unfair or unreasonable. 30 The holding of the Full Court in Wilkinson that the Tribunal's jurisdiction (prior to s 14AA) is confined to discretionary decisions was made in a context where the relevant decision was whether an employee died in service. The resolution of that question involved a consideration of the definition of "service" in the rules of the Fund. This case is quite different, because whether the decision is labelled "discretionary" or "non-discretionary" it involves the formation of an opinion as a result of a process of evaluation. As no argument was addressed to us in relation to Wilkinson, it would be inappropriate for us to say more than that we do not regard the Full Court's decision as determinative of the present case. 31 As we have said, the insurer was required to form an opinion as to whether the respondent was totally and permanently disabled in terms of the policy definition. The formation of that opinion may involve elements of fact, degree and value judgment, but the decision on that question is not appropriately characterised as being discretionary in character. As noted earlier, no submission was put by the appellant on the basis of Wilkinson that the Tribunal lacked jurisdiction to determine the complaint because the insurer's decision was non-discretionary in character. 32 As Kirby J observed in Breckler at [88], if a particular decision is required by law, the Tribunal will not be able to exercise its powers under s 37(3)(b), (c) or (d) in relation to that decision because of the constraints imposed by s 37(5). But the insurer was not required, as a matter of law, to reach any particular decision in the circumstances of the present case. The issue with which it was confronted was an issue of fact. In one sense its decision may have been "correct" as a matter of law in that it addressed the right question and there was material which supported the conclusion which it reached. The decision may have been "correct" in the limited sense that it could not be impeached under the general law. But the issue under s 37 is not whether the insurer's decision is impeachable under the general law. The issue is whether the s 14(2) complaint has been made out and whether, for the purposes of s 37(6) the Tribunal is satisfied that the decision, in its operation in relation to the respondent, was fair and reasonable in the circumstances. (We note that the present is not a case in which s 37(6)(b) is relevant.) The Tribunal, under s 37(2) stands in the shoes of the insurer subject only to the constraints to which we have earlier referred. 33 Whether a decision, or its operation in relation to a person, is fair and reasonable in the circumstances involves a value judgment, the making of which is committed to the Tribunal. The insurer's decision involved elements of fact, degree, opinion or judgment. A decision involving those elements is capable of being characterised as being unfair or unreasonable. 34 In any event this is not a case in which the Tribunal merely preferred one body of evidence over another. The cause of the claimed incapacity was such that in the Tribunal's view the treating doctor was in a position of advantage over the forensic psychiatrists. In the Tribunal's view, insufficient weight was given to the opinion of the treating psychiatrist in a situation where effective diagnosis and assessment could only be achieved over a period of time, once the patient's trust had been gained. 35 It follows that we reject the submission that the Tribunal was not authorised to act in the way in which it did. 36 There was some discussion during the hearing of the appeal about the meaning of "unreasonable" and "unfair". Reference was made to decisions of the Court in which dictionary definitions of these broad concepts had been adopted. Although the question does not arise for decision in this case, we would comment that attempts to achieve a precise definition of words such as "unreasonable" and "unfair" are likely to run into difficulty. The legislature has quite deliberately used words of broad content. Concepts such as "unreasonable" can be unduly restricted by the use of synonyms and definitions. For example, in ordinary usage conduct may be referred to as "unreasonable" which is not really beyond the bounds of reason at all - it is just "unreasonable". As Kitto J cautioned in Federal Broom Co Pty Ltd v Semlitch (1964) 110 CLR 626 at 633: "Fallacy lurks in paraphrase". See also Kumar v Minister for Immigration and Ethnic Affairs (1997) 144 ALR 441 at 445, 446. 37 It remains to consider the submission that the Tribunal misdirected itself about thetask it had to perform. In National Mutual Life Association of Australia Ltd v Jevtovic (above) Sundberg J concluded that it was clear from the Tribunal's own statement of its understanding of its task and from the process of its reasoning, that it had not asked itself whether the decisions complained of were fair and reasonable in the circumstances (the s 37(6) inquiry) but whether in its opinion the Respondent was totally and permanently disabled. Thus, the Tribunal in that case had failed to appreciate the role assigned to it by s 37(6) and had erred in law. In the present case, no such misapprehension is evident from the Tribunal's reasons. A fair reading of the Tribunal's reasons as a whole shows that it was fully aware of the nature of its task. It directed its mind to the task imposed upon it by s 37(6) as well as to its function under s 37(3). There is no basis, in the present circumstances, for saying that it exceeded the limitation imposed upon it by s 37(4). 38 The primary judge held that the Tribunal addressed the right question and came to a conclusion upon it - a matter which was within its area of its responsibility. We agree with his Honour's conclusion that in so doing the Tribunal did not exceed its functions under the Act. 39 The appeal should be dismissed with costs. I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Court.

Associate: Dated: 23 June 2000 Counsel for the Applicant: G P Harris

Solicitor for the Applicant: Kevin D Le Plastrier

Counsel for the Respondent: P J Hanks QC & P J Coish

Solicitor for the Respondent: Ryan Carlisle Thomas