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[2001] FCA 1330
Federal Court of Australia
1997-05-08
Allsop J
Original judgment source is linked above.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
BETWEEN: THE COLONIAL MUTUAL LIFE ASSURANCE SOCIETY LTD
THE COURT:
BETWEEN: THE COLONIAL MUTUAL LIFE ASSURANCE SOCIETY LTD
REASONS FOR JUDGMENT 1 Two 'appeals', on questions of law, are brought to this court under s 46 of the Superannuation (Resolution of Complaints) Act 1993 (Cth) (the Act) from a decision of the Superannuation Complaints Tribunal (the Tribunal) handed down on 8 March 2000. The two appeals have been heard together. 2 The two applicants are Retail Employees Superannuation Pty Ltd (the Trustee) in proceeding N321 of 2000 and The Colonial Mutual Life Assurance Society Limited (the Insurer) in proceeding N338 of 2000. In each proceeding Lisa Anne Crocker is the first respondent and the other applicant, the Insurer in the Trustee's proceedings and the Trustee in the Insurer's proceedings, is the second respondent. 3 The Act was part of the wider legislative reorganisation of superannuation in Australia in 1993. The Act has been amended since 1993. By s 6 of the Act the Tribunal was established. One of its functions was and is to hear and review complaints made by members of superannuation funds about decisions of trustees of funds and of insurance companies which provide policies in connection with the carrying on of superannuation funds. 4 Ms Crocker made a complaint about the Trustee's refusal to recognise her claim for payment of a benefit for her total and permanent disability. Under the powers contained in the Act, in particular ss 17A and 18, the Tribunal joined the Insurer to the complaint and its review. 5 Ms Crocker became a member of the superannuation fund of which the Trustee (originally by another name) was trustee. That fund was governed by a trust deed originally executed on 2 December 1987 and amended from time to time thereafter. There were rules attached to the trust deed which were part of the terms of the trust. Two of the benefits provided by the fund were death benefits (life cover) and total and permanent disability cover. These benefits were made available through an insurance policy arranged from time to time by the Trustee. Initially that policy was with National Mutual Life Association of Australasia Limited (National Mutual or the National Mutual Policy). On and from 1 November 1990 this cover was provided by The Victory Reinsurance Company of Australia Limited (The Victory or The Victory Policy). On and from 1 August 1994 this cover was provided by Prudential Corporation Australia Limited (Prudential or the Prudential Policy). The Insurer later took over this policy of Prudential. 6 Shortly prior to 29 May 1996 Ms Crocker made a claim upon the fund for benefits payable upon total and permanent disablement. She suffered from Crohn's disease which is a chronic inflammatory bowel disease. She was apparently first diagnosed in February or March 1993. 7 The Trustee rejected her claim. The Trustee made no claim upon the Insurer in respect of her claim. The Insurer, which was joined to the complaint and its review, takes the position that the claim is now rejected and would have been rejected if made to it by the Trustee. There is no issue about the genuineness of Ms Crocker's condition or whether she satisfied the disability criteria in the relevant definition. The rejection was based on Ms Crocker's lack of entitlement under the relevant policy to qualify for disability cover. 8 After the Insurer was joined to the complaint the Tribunal conducted a review "on the papers", including submissions from the complainant and the Trustee. The Insurer chose not to participate in the review. 9 The Tribunal decided that the decision to deny Ms Crocker's claim on the ground that she had no "basic" insurance cover for total and permanent disablement was unfair and unreasonable and determined that the claim be remitted to the Trustee and Insurer for reconsideration on the basis that Ms Crocker be assessed and dealt with as a member having insurance cover at the "basic level" for total and permanent disablement. 10 The nature of this determination and the reference to "basic level" and "basic" insurance cover will become apparent when the facts and the policy terms are examined in a little more detail later. It suffices for present purposes to say that this first aspect of the Tribunal's decision rested, substantially, if not wholly, upon the view it took that Ms Crocker had insurance cover under the Prudential Policy for $47,000 upon total disablement and that the Trustee and Insurer were wrong in their interpretation of the relevant legal documents. 11 On "appeal" before me the Trustee and the Insurer sought to identify errors in legal approach to the construction of the insurance policies in question. These were questions of law for the purposes of s 46 of the Act. 12 The Tribunal also dealt with a further matter in the review. This concerned the proposition that Ms Crocker was entitled to a further unit of disability cover, worth another $47,000. This matter was not encompassed within Ms Crocker's written complaint; nevertheless, it appears to have been part of the matters she put to the Tribunal as constituting her unhappiness with the decision or conduct of the Trustee and the Insurer. The Tribunal decided that Ms Crocker was not entitled to such further cover under the terms of the Prudential Policy. However, based apparently on what it saw as misleading conduct by the Trustee, the Tribunal determined as follows: [S]hould the TPD [total and permanent disablement] claim be approved, … the Trustee remedy the unfairness and unreasonableness that the Tribunal also determines to exist in relation to the misrepresentation of an entitlement to an extra unit of TPD cover by paying the complainant such additional amount of TPD benefit. (The Tribunal is satisfied that the power to compound and compromise this part of the dispute rests with the Trustee.) 13 As I read this determination it is directed to the Trustee and not the Insurer. The notices of appeal of both the Trustee and the Insurer complain about this further determination. Both addressed submissions to it. The complaints of both were that the Tribunal had no power or jurisdiction to make these orders. These were questions of law for the purposes of s 46 of the Act. 14 As will become apparent in due course, the complaint of Ms Crocker, at least to the Tribunal, was that she was entitled to disability insurance and that on a number of separate occasions the Trustee had sent documents to her which appeared to indicate that she was entitled to, or had taken out, disability cover in the fund. She complained that the propositions that she was not so entitled, or not so covered, were in conflict with what she had been told. 15 In the context of a trustee acting as the trustee of a superannuation fund pursuant to a trust deed and an insurer issuing a policy to the trustee on behalf of the members of a fund, allegations of the kind just mentioned might throw up for consideration a number of matters if one were concerned with analysing or determining all the legal rights and obligations of the three parties (member, trustee and insurer) inter se: questions as to whether the member was entitled under the terms of the trust or the terms of the insurance policy to disability cover; questions as to whether, irrespective of the terms of the policy, the trustee had bound itself in some fashion to the member to provide disability cover; questions as to whether any such obligation had been created in contract, by estoppel or in some other legal or equitable framework; and questions as to whether, if the trustee had so bound itself and was not entitled to have the insurer pay the claim, it was entitled to indemnify itself out of the trust fund to meet such obligation. 16 However, the Tribunal's task was not to determine all such rights and obligations of the parties. To do so would, in all likelihood, see it purport to engage in the exercise of judicial power. Rather, the Tribunal's task was confined to the role given to it by the Act. At this point I gratefully adopt the description of the legislative scheme set out by the Full Court in National Mutual Life Association of Australia Limited v Campbell (2000) 99 FCR 562 at 565-68 [10] to [20]. This relieves me of refering to the Act, other than to the provisions essential to these reasons. 17 Under s 14 of the Act a person may make a complaint to the Tribunal that a decision of a trustee is or was unfair or unreasonable. Section 4 of the Act provides, relevantly, that a trustee or insurer makes a decision if it makes or fails to make a decision or engages in conduct or fails to engage in conduct in relation to making a decision. 18 The functions of the Tribunal, which are set out in s 12 of the Act, are to inquire into a complaint and to try to resolve it by conciliation and, if that is not possible, review the decision or conduct to which the complaint relates or to conduct an arbitration in respect of the complaint if it has been referred to the Tribunal by an arbitration agreement. There is no arbitration agreement here. 19 Sections 17A and 18, relevantly, provide for the joinder of an insurer to a complaint about the decision of a trustee if the Tribunal decides that the insurer should be joined as a party to the complaint. 20 Central to the understanding of the role and powers of the Tribunal is s 37 of the Act. It is in the following terms: S37 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) 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. 21 The central task of the Tribunal was to review the decision of the Trustee and, since the Insurer had been joined under s 17A and s 18, to review any decision of the Insurer: para 37(2)(a). In carrying out this task the Tribunal had all the powers, obligations and discretions conferred on the Trustee and the Insurer: paras 37(1)(a) and 37(2)(b). In carrying out this task the Tribunal was required to make a determination in accordance with subs 37(3). The Tribunal's task was to decide for itself whether the Trustee's decision and any decision of the Insurer was and is unfair or unreasonable. This flows from, first, the nature of the subject matter of review - a complaint under subs 14(2) as to the unfairness or unreasonableness of the Trustee's decision, secondly, the exhaustive universe of possible determinations in subs 37(3), thirdly, the nature of the limitations on the exercise of the powers in subs 37(3) set out in subs 37(4) and, fourthly, the requirement under subs 37(6) to affirm the decision under subs 37(3) if the Tribunal is satisfied that the decision in its operation in relation to the complainant was fair and reasonable in the circumstances. 22 While the determination of the Tribunal was required to be predicated upon its view as to whether the relevant decision was unfair or unreasonable, the Tribunal was enjoined by subs 37(5) from doing anything under subs 37(3) that would be contrary to law, or to the governing rules of the fund or to the terms of the relevant insurance policy, here the Prudential policy. 23 The phrase "governing rules of the fund" means the terms governing the conduct of the superannuation fund, which was a regulated superannuation fund under the Superannuation Industry (Supervision) Act 1993 (Cth). It is not limited to the schedule to the trust deed which set out the "rules for the management" of the fund. It means the terms of the trust under which the fund is carried on, which includes the "rules for the management" of the fund: clause 1.2 of the annexure to the deed of amendment dated 13 December 1988. 24 In short, the task of the Tribunal was to review the decisions of the Trustee and Insurer as to whether they were (or either was) unfair or unreasonable and to make a determination under subs 37(3) in the light of that consideration. This task was one to be undertaken, to use the language of Merkel J in Briffa v Hay (1997) 75 FCR 428 at 443-4 and Seafarers' Retirement Fund Pty Ltd v Oppenhuis (1999) 94 FCR 594 at 598-99 [19] to [23], "in the shoes of" the Trustee and the Insurer: see also paras 37(1)(a) and 37(2)(b). The directions for reconsideration of the decision (under para 37(3)(b)) or the variation of the decision (under para 37(3)(c)) or the substituted decision (under para 37(3)(c)) either affect or become the original decision of the Trustee and the Insurer. Thus the strictures of subs 37(5) can be seen not only to prevent, at the point of remedy, something unlawful being ordered to be done, but as an essential reflection of the task being undertaken: a consideration of a decision of the Trustee, qua trustee, that is of the Trustee acting in accordance with law and the terms of its governing trust and making a determination, as if the Tribunal were the Trustee, to affect, vary or substitute a decision. The same applies to the task in relation to the Insurer and its decision. 25 It is important to appreciate what I have just said, because in my view it affects the meaning of "unfair or unreasonable". The words "fair" and "reasonable" have been discussed in this Court by Nicholson J in Pope v Lawler (1996) 41 ALD 127 at 135 where his Honour had recourse to the New Shorter Oxford Dictionary (4th Ed) 1993 in ascribing, for the purposes of s 14 and s 37 of the Act, to the word "fair" the meaning "just, unbiased, equitable, impartial" and to the word "reasonable" the meaning "within the limits of reason; not greatly less or more than might be thought likely or appropriate"; by Sundberg J in National Mutual Life Association v Jevtovic (8 May 1997, unreported) at pp 9-10; and by Merkel J in Briffa v Hay, supra at 436 and in Collins v AMP Superannuation (1997) 75 FCR 565 at 578 (referring, without disapproval, to Pope and Jevtovic). 26 While I do not disagree with these expressions of view as to the meaning of these words, it must be the case (and I do not read anything said by their Honours to be to the contrary) that the words must take their meaning from the place and context which they occupy in the statute. Further, I note the comments of the Full Court in National Mutual v Campbell, supra at 571, concerning the dangers of paraphrasing, even through the use of a dictionary. 27 The task of the Tribunal and the meaning of the phrase "unfair or unreasonable" are inextricably intertwined and both are governed by the Act, and, especially, by s 37. It is the decision of the Trustee, recognising its obligation to act in conformity with the governing rules of the fund, and the decision of the Insurer, recognising its obligation (and entitlement) to act in conformity with the terms of the relevant policy, which must be reviewed for unfairness or unreasonableness. The unfairness or unreasonableness must be of the decision (as expanded by s 4) under, and in conformity with, the governing rules or the terms of the policy. It is not some other perceived (rightly or wrongly) unfairness or unreasonableness in and about the conduct of the fund. 28 The question as to whether a decision was unfair or unreasonable cannot be judged otherwise than by having regard to the conformity of the decision with the governing rules of the fund and the terms of the policy. The conformity of the decision with those matters is therefore a relevant consideration in the sense discussed in Minister for Aboriginal Affairs v Peko-Wallsend (1986) 162 CLR 24 at 39-40 and see Telstra Corporation Ltd v Seven Cable Television Pty Ltd (2000) 178 ALR 707 (special leave refused on 20 August 2001). If conformity with the governing rules or the terms of the policy required the very decision, which was made, to be made, the strictures of subs 37(5), the universe of possible conduct under subs 37(3) and the balance of the Act, including subs 37(6), would require a conclusion of the Tribunal that the decision was not unfair or unreasonable. It could not be otherwise, as it would, on this hypothesis, be the only decision capable of being reached by the Trustee or the Insurer in the light of the governing rules or terms of the policy; or, put another way, any determination under paras 37(3)(b),(c) or (d) would involve the Tribunal doing an act contrary to the governing rules or the terms of the policy. 29 It may be that a decision of a trustee or an insurer is in conformity with, but not required by, the governing rules of the fund or the terms of the policy. This may be because the decision could be described as one of a discretionary character: see s 14AA of the Act and Merkel J in Collins v AMP, supra at 578-79. For myself, I would prefer not to use any dichotomy between discretionary and non-discretionary decisions as a tool in this analysis. I do not think that the presence of s 14AA mandates it. The presence of s 14AA is to be understood for reasons other than any which make the terminology used within it a compulsory tool for analysis of the understanding by the Tribunal of its task: see National Mutual v Campbell, supra at 568-70 [21] to [30] and Seafarers' Retirement Fund v Oppenhuis, supra at 596-98. It may be that the decision of a trustee or an insurer is in conformity with, but not required by, the governing rules or policy terms not because there was involved any exercise of discretion, properly so-called, but because the decision was one which so involves elements of fact, degree, opinion or value judgment that different minds can legitimately differ in reaching a decision or because one aspect of the rules or policy terms, but not another, has been the foundation of the decision. A decision of a trustee or an insurer about a matter of judgment, for instance one involving weighing competing expert or lay opinion about a state of affairs, might be lawful and in conformity with the governing rules and policy terms. It might be described as "correct" in that it was the product of an inquiry directed to the right question and in that there was material available to support it. In this, perhaps limited, sense the decision was correct and was open to be made. However, the Tribunal is not engaged in a form of judicial review. It reviews the decision (as expanded by s4) complained of from the position of the trustee or insurer (paras 37(1)(a) and 37(2)(b)). The Tribunal may find, in its opinion, in some degree (see subs 37(4)), the decision to be unfair or unreasonable and may act under subs 37(3) to give effect to its view of the merits as long as subs 37(5) is not infringed. It seems to me that this analysis accords with the approach described by the Full Court in National Mutual v Campbell, supra at 570-71 [32] and [33] and see also Kirby J in Attorney-General v Breckler (1999) 197 CLR 83 at 129 [88]. It seems to me that the very use of the words "unfair" and "unreasonable" in their breadth, individually and in the composite phrase "unfair or unreasonable", supports this view: see, in other contexts, George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd [1983] 2 AC 803 at 815-16, and Samuels JA in Antonovic v Volker (1986) 7 NSWLR 150 at 154-55. 30 It may be that what I have said does not differ in substance from the views of Merkel J in Collins v AMP, supra at 578 and Sundberg J in Wilkinson v Clerical Administrative and Related Employees Superannuation Pty Ltd (1997) 77 FCR 469at 491 about "non-discretionary" decisions if they are "correct" or if they "conform to" or are "made in accordance with" the governing rules of the fund or terms of the policy. In many cases, for non-discretionary questions, the governing rules or policy terms will only yield a single result. 31 The Tribunal's task is not to engage in ascertaining generally the rights of the parties, nor is it to engage in some form of judicial review of the decision of the trustee or insurer. Rather it is to form a view, from the perspective of the trustee or insurer, as to whether the decision of either was (recognising the overriding framework given by the governing rules and policy terms, respectively) unfair or unreasonable. 32 Thus, essential to the task before the Tribunal, as a consideration mandated by the terms of s 37, is an inquiry as to whether the decision by the trustee or insurer was in conformity with the governing rules or the terms of the policy. If the Tribunal finds that the decision is contrary to the governing rules or the terms of the policy it may well be an easy step to conclude that it is unfair or unreasonable. I do not need to decide whether a finding by the Tribunal that the trustee's or insurer's decision was contrary to the governing rules or policy terms required a finding of unfairness or unreasonableness: cf Merkel J in Collins v AMP, supra at 578-79 and Sundberg J in Wilkinson, supra at 492. If the Tribunal finds that the decision of the trustee or the insurer is in conformity, with and required, by the governing rules or policy terms, in the sense which I have discussed above, it cannot other than find or be satisfied that the decision is fair and reasonable. If the Tribunal finds that the decision of the trustee or the insurer is in conformity with, but not required by, the governing rules on policy terms, in the sense which I have discussed above, it may proceed, in effect, to supplant the decision of the trustee or insurer with its view of the merits, bearing in mind the limitations of subs 37(4) and 37(5). 33 Certainly, what the Tribunal is not entitled to do is to make a determination reflecting its view of the rights of the parties inter se, if that is contrary to the terms of the governing rules or policy terms. 34 To appreciate what the Tribunal did and the errors into which it fell in this case it is necessary to understand a little more about the background of the matter. 35 Ms Crocker commenced work with Myer Stores Ltd (Myers) in Launceston on 15 May 1989. She began work as a casual worker. I will turn to the evidence of this below. Myers was at the time an "Employer" for the purposes of the fund. 36 There is no document before the Court (nor was any such document before the Tribunal) which amounts to an original application by Ms Crocker to join the fund. However, there is no debate as to her membership, in particular in the light of clause 2.2 of the rules annexed to the trust deed. There exist membership statements for the years ending 30 June 1991, 1992 and 1993 identifying Ms Crocker as member number 2015546. It appears, and there appears to be no dispute, that she joined the fund on 25 November 1989. 37 The first of the abovementioned membership statements (for the year ending 30 June 1991) dealt with a number of topics. First, it set out Ms Crocker's superannuation contribution by way of deduction from her wages. Secondly, it deducted an administration fee. Thirdly, it deducted the "Federal Government contributions tax". Fourthly, it deducted "insurance premiums". It then gave an account balance taking into account these integers. In a box at the top right hand corner the balance was stated again and preserved, non-preserved and withdrawal benefits were identified. There was a box which had the following under the phrase "insured benefit": Insured Benefit No of Units ($) Death 0 .00 Disability Permanent 0 .00 Temporary 0 .00 38 The next statement, for the year ending 30 June 1992, was in a similar form and structure, identifying similar contributions, administrative fees, government tax, interest and insurance premiums, account balance and benefits. Again there was no amount given for insured benefits in the box of the same kind as set out above. 39 The following membership statement, for the year ending 30 June 1993, was likewise set out, save that the "insured benefit" was set out in the relevant box as follows: Insured Benefit No of Units ($) Death 1 43,000.00 Disability Permanent 1 43,000.00 Temporary 0 .00 40 The following membership statements, for the years ended 30 June 1994, 1995 and 1996 had "insurance premiums" being deducted and identified insurance benefits as in 1993, except that in the boxes in the 1995 and 1996 statements the numbers "47,000.00" had replaced "43,000.00". 41 It was conceded before me by counsel for the Trustee (without demur by counsel for the Insurer) that the premiums deducted each year in which Ms Crocker was identified as having disability insurance were in an amount referable to death and total and permanent disablement cover and were passed on each year to the insurer. I was told, though there does not appear to be any evidence about it, that these premiums were passed on in a global sum to the insurer together with all other members' premiums. There was apparently no separate identification on account of Ms Crocker, such as on bordereaux reflecting the business between the Trustee and the relevant insurer from year to year. 42 It appears that Ms Crocker commenced work at Myers on 15 May 1989 as a "casual". After 19 June 1989 she was employed as a part-time employee 25 hours per week or for a minimum of 25 hours per week. This changed on 6 September 1993 to 23 ˝ hours a week and on 21 March 1994 to 22 hours per week. As from 17 December 1994 she was again employed as a "casual" at Myers for 15 or more hours per week. On 13 January 1995 she resigned from her employment at Myers. 43 Meanwhile, from 19 November 1993 to 14 January 1994, Ms Crocker had also been working at a newsagency. The evidence revealed weekly working hours between those dates at this employer as follows: 19.11.93 - 25.11.93 12 hrs 3.12.93 - 9.12.93 18 ˝ hrs 15.12.93, 17.12.93 7 ˝ hrs 20.12.93, 23.12.93 12 hrs 17.1.94, 20.1.94 8 ˝ hrs 30.1.94 5 ˝ hrs 14.12.94 5 ˝ hrs 44 Thus, at no time prior to her resigning from Myers did Ms Crocker work 30 hours per week for any one employer, but there was evidence to support a finding that for some weeks between 19 November 1993 and 14 February 1994 she worked more than 30 hours, combined, at Myers and the newsagency. 45 On 25 July 1994 Ms Crocker completed a member application form for the fund. She was, at this time, already a member, but she appears to have used this form to regularise collection of superannuation contributions from the newsagency. On the form, in a box marked "Insurance Cover" she had a choice of "basic insurance", "double insurance" and "no insurance". There was a box to tick next to each option and a place for initialling. Immediately underneath these three boxes appeared the following: I am aware that changing the hours I regularly work for an employer making contributions on my behalf to REST to 30 hours or more per week or to less than 30 hours per week can affect my insurance benefit for Death and or Total or Permanent Disablement. 46 Ms Crocker ticked the basic insurance box but did not initial it. There was a reference to a leaflet providing further details. It is not with the papers which were apparently before the Tribunal. I have not been referred to it. There was no definition of "basic insurance". 47 With regard to the employment details on the form in respect of the newsagency, Ms Crocker answered "no" to a question asking whether she regularly worked 30 hours or more for this employer. In the space for indicating whether she was employed full-time, part-time or casually, she answered that she was employed casually. 48 At this time (25 July 1994) Ms Crocker had ceased to work for the newsagency and she was working part-time 22 hours per week (or, as in her statutory declaration "for a minimum of 22 hours per week") at Myers. This was the position as at 1 August 1994 when the Prudential Policy incepted. 49 I will come to the insurance policies and arguments of the parties shortly, but it may be noted that the Trustee and the Insurer draw attention to fact that Ms Crocker did not work more than 30 hours per week at the inception of The Victory Policy on 1 November 1990 or at the inception of the Prudential Policy on 1 August 1994. These facts, it is said, are fundamental in understanding that as at 1 August 1994 Ms Crocker was only entitled under the Prudential Policy to death benefits, not total and permanent disablement benefits. They also say that this had been the position under The Victory Policy. This is so, it was said, notwithstanding the information contained within the members' statement to which I have referred. 50 In October 1994 the Trustee invited members to increase their insurance cover. This invitation was contained in a number of documents. One document, being apparently a brochure entitled "REST INTRODUCES PRUDENTIAL" included the following: From 1 August 1994, Prudential has been responsible for providing REST members with life insurance and total permanent disability cover. Because of its size and strength. Prudential is able to offer REST members an improved level of insurance cover and service. For example the amount you are insured for has been increased (from 1 October 1994) without a rise in the basic cost of your insurance. This means that if you are under age 35, one unit of death or one unit of death and total and permanent disablement cover increases from $43000 to $47000. In addition, to qualify for total and permanent disablement cover you now only need to work 9 hours each week, instead of 30. Prudential is also able to give REST members the flexibility to have up to 5 units of insurance cover (instead of 2). So if you need more cover (and are able to afford the extra premium) - you can, simply by choosing this option in the Application to Vary Insurance included with this package. There are other improved benefits offered by Prudential - just read the attached Application to Vary Insurance or contact REST Administration. In the meantime, the level of your cover will automatically increase by up to 10%, but your premium will not change and will continue to be deducted from your employer contribution. No other change will occur unless you fill in the enclosed form. 51 Another document entitled "REST OFFERS YOU AN OPPORTUNITY TO INCREASE YOUR INSURANCE COVERAGE" included the following: REST is pleased to offer existing fund members a one-off opportunity to increase the number of units of insurance cover without the need for a health declaration. The increased insurance options offered are identical to those which REST has negotiated with its new insurers and offered to members joining the fund from 1 August 1994. The new scale of cover does not apply until 1 October 1994. We recommend that you take time to read the contents of your 1994 Report, especially information relating to these benefits, and this leaflet as soon as you can. If you have any questions please telephone REST Administration (details on page 4) or the REST Trustee Representative in your State (details in your local Telecom White Pages). When you have decided what changes (if any) you will make to your insurance arrangements, please complete the attached Application to Vary Insurance. No changes to insurance arrangements can be made by telephone. When you have completed the Application to Vary Insurance detach it and return the form to REST Administration no later than 31 December 1994. For all members who lodge an Application to Vary Insurance before 31 December 1994, REST's new insurers do not require any statement in regard to health, even if a member decides to increase their Death and TPD insurance to 5 units of cover. Any forms received after 31 December 1994 will be returned with a request for a statement of health. Your choice of units for Death or Death and TPD cover will commence from the day the application is received at REST Administration. If you select Temporary Disability Income Insurance, this will commence no earlier than 1 January 1995. Death and TPD cover provides for a lump sum payment in the event of total and permanent disablement or death. The new scale of benefits is shown below and do not apply until 1 October 1994: What cover am I eligible for? It depends: 1. If you work regularly and average 9 or more hours per week. You are entitled to elect up to five units of insurance which covers both Death and TPD. 2. If you work regularly and average less than 9 hours per week. You are entitled to elect up to five units of insurance which covers Death only. NOTE THAT 3. If you previously worked more than 9 but less than 30 hours each week. You may add TPD cover to your death cover and then increase the number of units of Death and TPD cover you have. However, if you do not add TPD cover to your current cover (Death only) you are unable to increase the number of units of cover you have. 4. If, having regularly worked 9 or more hours weekly, your regular hours decrease to less than 9 hours weekly. You are no longer entitled to coverage for TPD but you will continue to be entitled to Death only insurance cover. You should notify REST if your working hours reduce so that the cost of your insurance can be reduced. 5. If, having regularly worked less than 9 hours weekly, your regular hours increase to 9 or more weekly. You can obtain coverage for both Death and TPD. You must notify REST immediately so that your cover can be adjusted. If you do not notify REST you WILL NOT have any TPD coverage. Note that the cost of your insurance cover will increase from the date you receive TPD cover. 52 On 13 December 1994 Ms Crocker spoke to someone at the Trustee apparently about a change of address. 53 On 17 December 1994 Ms Crocker became a casual employee of Myers, decreasing her hours to 15 per week. 54 On 21 December 1994 it appears that Ms Crocker contacted the Trustee by telephone about disability insurance. It may well be that the subject of a claim was discussed. A note on the Trustee's file contains the following: Member rang asking about disability insurance, told her we have to establish which insurance company she would come under, to what entitlements she would have, she will ring back this afternoon. 55 On the same day, 21 December 1994, Ms Crocker signed a completed "Application for Membership" form. In this form Ms Crocker stated that she worked an average of 9 hours or more per week for Myers as the relevant employer, but that she did not work an average of 20 or more hours per week. Also, in this form, under a heading "Insurance Options", Ms Crocker completed a box made relevant if she worked regularly more than 9 hours but less than 20 hours per week and in that box she circled the number '2' adjacent to the instruction which read, relevantly: "I elect to have (please circle one only) 1 2 3 4 5 … units of DEATH AND TOTAL AND PERMANENT DISABLEMENT insurance coverage." She also initialled and dated this choice. 56 On 13 January 1995 Ms Crocker resigned from Myers. On 18 January 1995 she recommenced work at the newsagency where she worked more than 9 hours per week until 30 June 1995. Thereafter, until 22 December 1995, when she ceased work at the newsagency, she sometimes worked more than 9 hours per week, but more often than not she worked less than 9 hours per week. 57 On 27 January 1995 Ms Crocker received a letter from the Trustee which may or may not have been a response to the July 1994 membership application. Its contents included the following: You are now a member of the Retail Employees superannuation Trust (REST). REST is a superannuation fund which operates for the benefit of employees in Australia of the retail, pharmaceutical and related industries. The purpose of this letter is to welcome you to REST and to confirm your personal details, the insurance option you elected and your benefits. If any of the information shown is incorrect, please contact us immediately. Around the end of September each year you will receive a member statement which shows how much was in your account at the previous 30 June. Your Personal Details and REST Membership Card. Your Date of Birth 08/12/67 Your Employer is MYER LAUNCESTON Date Joined Your Employer 25/05/89 Date Enrolled as a REST member 25/11/89 …... Your Insurance Cover Death $47000 Total and Permanent Disablement $47000 If REST received your first contribution before 1 August 1994 then: Your insurance cover starts from the date that contribution is received by REST. …... In addition, insurance cover is only provided on the condition that contributions made by your employer are up to date at the time of a claim. The value of your insurance will reduce each year once you are over age 36. The scale of insurance cover and further insurance details can be found in your Member's Information Kit. If, on your Application for Membership, you did not correctly complete the insurance election then the amount of insurance cover shown on the previous page is equal to the default cover. The default cover is equal to 1 unit of Death Only cover or 1 unit of Death and Total and Permanent Disablement cover (depending on the number of hours you work each week). Your benefits …... On Death or Total and Permanent Disablement (TPD) You (or your legal personal representative should you die) will receive a lump sum equal to your full account balance plus the amount of any Death or TPD insurance that you have selected, less REST's exit fee and any tax that may be applicable. The value of your insurance cover (if any) is in this letter. Payment of the TPD benefit is not automatic but is dependant upon satisfactory medical and other evidence to prove the TPD. …... A full description of your benefits and how REST works will be found in your Member's Information Kit. Your Application for Membership form was attached to this Kit. If you do not have a Kit or if your Application for Membership form was not attached when you signed it, please ask your employer for a Kit. 58 It should be noted that this letter identifies 1 unit of cover, $47,000, not the two units requested in the 21 December 1994 application. This would indicate that the letter was probably a response to the July 1994 application and the oral enquiries in December 1994 and not an acceptance of the "election" in the application dated 21 December 1994. 59 Shortly prior to 29 May 1996 Ms Crocker made a claim on the fund for total and permanent disablement. There was no written claim form or similar document before me. A business record of the Trustee indicated only that there had been a notification of a disablement claim by Ms Crocker. 60 Some time appears to have been taken in assessing the claim. 61 By letter dated 30 December 1996 the Trustee informed Ms Crocker that because she had worked less than 30 hours per week she was entitled only to death cover. The letter of 30 December 1996 sought to explain that, by mistake, premiums for total and permanent disablement had been deducted as well as for death, since it was said she was not entitled to disablement cover. An offer of a refund was made. The letter was in the following terms: RE: TOTAL AND PERMANENT DISABLEMENT CLAIM MEMBER NUMBER: 2015546 REST's Total and Permanent Disablement cover, applicable at the time, is based upon members working certain hours. Where member [sic] regularly work less that [sic] 30 hours per week, this cover is limited to Death Only cover. Our records do not indicate that you completed a Membership Application when working for Myer Stores Limited. Insurance cover would have defaulted to Basic Death/Total and Permanent Disability (TPD) Cover, until such time as we received a completed Membership Application indicating the correct employment details and insurance election. Upon assessment of your claim, Myer Stores Limited have confirmed that since your commencement of employment in 1989 as a casual employee, you regularly worked under 30 hours per week. As REST was not made aware of these details in the form of a Membership Application, you continued to be afforded both Death /TPD cover. REST however, did receive a Member Application form dated 25 July 1994 in relation to your employment with Elizabeth Street Newsagency, which indicated that you were a casual employee, regularly working under 30 hours per week, therefore under those conditions your previous default insurance cover of Death/TPD should have been amended to reflect death only insurance cover. Elizabeth Street Newagency have [sic] also confirmed that you did work regulary [sic] under 30 hours per week. Under these conditions we are unable to establish an insured benefit claim as you were not entitled to Total and Permanent Disability cover. I have enclosed an extract from the Member Application form together with an extract of the insurance policy for your information. Unfortunately, the above amendment to reflect death only cover was not actioned and insurance premiums for Death/TPD cover continued to be deducted. REST will now apply to the Trustee of the Fund to approve the refund of those premiums which have been incorrectly deducted and we shall re-credit your account. Once we have received the approval from the Trustee, we shall be able to release your account balance only on Total and Permenant [sic] Disablement grounds. A cheque in full settlement will then be duly sent and your account with REST closed. However, should you disagree with the information we have been supplied in order to assess your claim, please provide documents to support your case and we shall be pleased to review your claim. Should you have any queries, please do not hesitate to contact me. 62 Unsurprisingly perhaps, Ms Crocker objected to the course suggested. She apparently then sought assistance from the Legal Aid Commission of Tasmania. On 5 March 1997 a Mr Woodgate for the Director of Legal Aid at the Commission wrote to the secretary of the Trustee. That letter was in the following terms: Dear Sir or Madam LISA ANNE CROCKER I am acting for Ms Crocker in relation to her claim for Total and Permanent Disablement cover from your fund. The claim has been denied. I have read your letter to her dated 30th December 1996. I am quite unable to reconcile the statements therein with other documentation issued to Ms Crocker from time to time by the Trustee Company. Please forward me a copy of your Trust Deed. Yours truly, 63 The letter referred to the inability to reconcile statements in the Trustee's letter of 30 December 1996 with "other documentation issued to Ms Crocker from time to time by the Trustee". It is open to conclude that this comment related to, amongst other things, the documentation referred to in paragraphs [37] to [40], [50], [51] and [55] to [57] above. 64 On 18 March 1997 the "Disablement Claims Administrator" for the Trustee wrote to Mr Woodgate at the Legal Aid Commission in the following terms: RETAIL EMPLOYEES SUPERANNUATION TRUST RE: TOTAL AND PERMANENT DISABLEMENT CLAIM MEMBER NAME: LISA CROCKER MEMBER NO: 2015546 In response to your letter of 5 March 1997 I wish to advise the following:- I am unable to meet your request for copies of documents acquired in relation to the above claim as this information remains the property of the Trustee. In relation to a copy of the Trustee Deed, we have been instructed by the Trustees that the Trust Deed can be sent out for a cost of $10.00, then if returned within two weeks, the $10.00 will be refunded. Yours faithfully 65 The second paragraph of that letter appears to indicate a request additional to that for the trust deed contained in Mr Woodgate's letter of 5 March 1997, for relevant documents. 66 On 7 May 1997 Mr Woodgate wrote another letter to the secretary of the Trustee. It was in the following terms: Dear Sir or Madam LISA ANNE CROCKER You will be aware from my letter dated 5th March and subsequent correspondence that I am acting for Ms Crocker in connection with her claim for a Total and Permanent Disablement benefit under your scheme. I note from your letter dated 30th December that you assert that because Ms Crocker did not work regularly for at least thirty hours weekly, she is ineligible for a Total and Permanent Disablement Benefit. I note also from the material which accompanied your invitation in 1994 to employees, including Ms Crocker, to apply for increased benefits, there is a clear statement that the benefits she seeks are available to anyone who works at least nine hours weekly. A copy is enclosed. Ms Crocker's archive of correspondence and other material emanating from your fund seems to be very comprehensive. I have re-read it in its entirety. I have studied also the Trust Deed you wfsere [sic] kind enough to send me. Whilst I note the obligation in the Trust Deed to keep members informed of various matters, nowhere can I find any advice, whether general or addressed to Ms Crocker personally, which indicates that the major change to eligibility on which you appear to rely was ever communicated to her. Please let me have your advice in relation to the following specific questions. A. Was the information contained in the attached document correct at the time it was distributed to members? B. If it was correct what changes, with the effective dates, have been made to eligibility for TPD benefits since 1994? C. Were these changes ever publicised, and (or) was Ms Crocker ever informed personally in writing? D. What is the authority for the proposition that at all relevant times there was a thirty hours per week threshold for eligibility for TPD benefits. If it is somewhere other than in the Trust Deed please forward a copy of the entire document. E. Do you require any, and if so what, additional documentation from us to assist you to finalise Ms Crocker's claim? Your early attention to this request would be appreciated. 67 While Mr Woodgate refers in the first paragraph of the letter to Ms Crocker's claims for a relevant benefit, the letter clearly broaches the subject of the accuracy and quality of the information which Ms Crocker had been given by the Trustee. 68 By letter dated 25 June 1997 from the Trustee to Mr Woodgate, the Trustee purported to answer the questions asked by Mr Woodgate. I do not set out the letter. It is sufficient to say that it dealt with entitlements (or lack of them for Ms Crocker) under the relevant policies. It also invited Ms Crocker to participate in an "Internal Disputes Procedure". Also on that date a cheque for a contribution refund was sent to Ms Crocker. 69 On 18 July 1997 Mr Woodgate wrote to the Trustee informing it that the cheque for a contribution refund had been placed in the Commission's trust account pending resolution of the matter. The letter continued: I ask that you arrange for REST's Internal Disputes Procedure to be invoked to review this claim. In that regard I note that the essential point of difference is that REST says it did not receive an election for increased cover from Ms Crocker, whereas Ms Crocker insists she transmitted it to you. The internal evidence supplied by REST's letter dated 27th January 1995 to Ms Crocker suggests she is correct in what she says. Attached is a Statutory Declaration sworn by Ms Crocker on 16th July 1997. For the sake of completeness I should add that Ms Crocker is aware of the penalties for false swearing. Please advise the outcome within the ninety days' time limit. 70 The focus of the dispute by this letter appeared to be narrowing. In that context the enclosed statutory declaration of Ms Crocker was in the following terms: I, Lisa Anne Crocker, Disability Support Pensioner, of 15 Forster Street Campbell Town in Tasmania, do solemnly and sincerely declare that:- A. I was employed by Myer at Launceston from 15th May 1989. B. After 19th June 1989 I was employed by Myer as a permanent part time employee for a minimum twenty five (25) hours weekly. C. From 21st March 1994 I was employed by Myer for a minimum of twenty two hours weekly. D. From 17th December 1994 I was employed as a casual employee by Myer at fifteen (15) or more hours weekly. E. I jointed the Superannuation Fund administered by the Retail Employees Superannuation Trust (REST) on or about 25th November 1989. F. Towards the end of 1994 I received a proposal from REST which invited me to apply for additional death and disability cover. Amongst other things, it was a condition of the proposal that members who applied for additional Death and Disability cover before 31st December 1994 would not be required to supply REST with a statement of health. G. A true copy of the proposal is annexed hereto and marked with the letter "A". H. I completed and signed the associated form on 21st December 1994. I faxed the form to REST from Myer Launceston the following day. True copies of the signed and completed form, and the associated facsimile transmission cover sheet, are annexed hereto and marked "B". I. On 27th January 1995 I received a letter from REST which advised that I was a member of the fund with the two (2) Units of Death and Disablement cover which I had requested on 21st December 1994. A true copy of that letter is annexed hereto and marked with the letter "C". J. I believe that the contributions which were made to REST increased soon after my election was made. K. In March 1993 I was diagnosed to be suffering from a serious illness. L. On 13 January 1995 I resigned my employment at Myer because I was no longer able to work because of the effects of my illness. M. On 18 January 1995 I started work at the Elizabeth Street newsagency and Post Office in Launceston at twelve (12) hours or more weekly, to be worked over two days. Those hours were determined by my ability to work within the limits of my health. In about June or July 1995 my hours were reduced to six (6) hours weekly because of the effects of my illness. N. 22nd December 1995 was my last day at work. I have been unable to return. O. In June 1996 I applied to REST for a benefit under the policy. In September 1996 I received a letter (now lost) from REST which advised that my application had been approved. P. More recently REST has reversed its position and claimed that it never received the document dated 21st December 1994 and faxed by me to it on 22 December 1994. 71 By document dated 22 October 1997 a Mr Wode, the Assistant Administration Manager of the Trustee, provided advice to the "Disputes Committee Number 1" of the Trustee. (The document on its face was said to be produced in contemplation of legal proceedings.) I will not set the document out in full, but it contained the following: A dispute has been lodged by the Legal Aid Commission of Tasmania on behalf of Lisa Crocker. The dispute comes as a response to the Trustee's decision to decline the claim for the insured TPD benefit on the basis that the member was ineligible for TPD cover. Please note that the dispute requires a response by 27 October 1997. Facts LS commenced casual employment with Myer on 15.5.89. At various times after that date her employment status changed. However at no time before termination on 13.1.95 did she work in excess of 30 hours per week. LS became a member on 25.1.89 [sic: 25.11.89] upon receipt of the first contribution from Myer. However as REST did not receive a completed application form from the member and was unaware of the member's working hours, LS was given default insurance cover of one unit of death and TPD. On 1.12.93, whilst employed at Myer, LS commenced casual employment with the Elizabeth Street newsagency, and she completed a membership application form. The form was dated 25.7.94 and was received by REST on 26.7.94: The election of basic insurance cover was however invalid as she did not initial it. At this time it appears that the combined working hours at Myer and the newsagency exceeded 30 hours per week. Interestingly, on 21.12.94, LS telephoned REST and requested both information relating to changing her insurance arrangements and a TPD claim form. She then completed a new membership application form (for Myer) on which she requested 2 units of death and TPD cover. This form was 21.12.94 and was received by fax on 22.12.94 (i.e.) within the 3-month amnesty period. LS indicated on that form that she was working in excess of 9 hours/week. The original has not been received by REST. As a consequence of her new membership application form, REST sent a membership card and welcome letter and advised LS that she was insured for $47,000 death and TPD cover. Oddly the amount represented one unit cover despite LS's request for 2 units. … In respect of the subsequent TPD claim the Trustee decided that LS was not entitled to an insured benefit on the ground of ineligibility. Issue Was LS eligible for TPD cover when she became a member of REST, or when she was completed either of her membership application forms? When LS became a member of REST she was employed by Myer on a casual basis. She was subsequently employed on both a part-time and casual basis for no more than 25 hours/week. As TPD cover was only available to members employed on a full-time basis under the LRA policy, LS was not eligible for TPD cover when she became a member. This is so despite default insurance by virtue of which she was insured for death and TPD. … From the information provided by LS, and the fact that she requested a TPD claim form at the time that she sought to increase her insurance, it is apparent that LS was not capable of working full-time and was in fact contemplating a TPD claim. Accordingly waas [sic] not eligible for TPD cover of 2 units. Further, contrary to insurance law principles, LS sought to insure an event (TPD) which had already occurred. I am of the view that LS was suffering TPD by the time she attempted to change her insurance arrangements at the end of 1994 for 3 reasons: 1. in TPD claim certificate dated 24.7.96, Dr Andrew states that LS has "been completely incapacitated since 1994 due to intermittent severe diarrhea [sic], bouts of incapacitating abdominal pain, tiredness and exhaustion"; 2. her employment status at Myer changed from part-time to causal; [sic] and 3. she requested a TPD claim form at the end of 1994, indicating both the state of her health and her intention to make a claim at that time. It also indicates a lack of good faith on her part. However, if LS can overcome the issue of eligibility and argue that she was not TPD at the end of 1994 because she was still working, albeit on reduced hours, then it is arguable that any cover for TPD ceased when she reduced her working hours to 6 hours/week in July 1995. As a result, she was not insured for TPP [sic] when she ceased work definitively in December 1995. A final point to note. As if [sic] often the case, a question arises in respect of member information. Firstly, LS was not advised of the requirement to be in active employment in increasing cover and secondly, she was given written acceptance of her application for increased cover. In this latter regard it is peculiar that despite her application for 2 units, REST advised her that she had been accepted for $47,000 (ie) one unit. It appears that LS is still under the impression that $47,000 represents 2 units. Obviously her claim will increase to $94,000 when that view is corrected. Recommendations. Despite the problem relating to member information it is proposed to decline the member's claim for the insured benefit of 2 units for the reason that: 1. when LS became a member of REST she was employed for less than 30 hours per week, and was accordingly eligible for death only cover; 2. when LS sought to increase her cover in December 1994, she was working in excess of 9 hours per week but was unable to satisfy the requirement of "active employment" as required under the policy. This conclusion is borne out by her doctor's report, her reduction in hours and her request for a TPD claim form; 3. the attempt by LS to increase her cover was contrary to principles of insurance law in so far as LS was already suffering TPD when she made the application; 4. in any event any cover for TPD would have ceased when LS reduced her employment to 6 hours per week in July 1995, 6 months before she ceased employment definitively. 72 The issue posed by the memorandum was one of eligibility for insurance cover. However the discussion of the issues by Mr Wode recognised that she had received information to the effect that she was insured. 73 The resolution signed by the members of the "TPD Review Committee" of the Trustee was: … to decline the claim for the TPD insured benefit of Lisa Crocker Member No. 2015546 for the reason that she was not in "active employment" when she sought to increase her insurance cover. 74 On 11 November 1997 the Trustee, on the basis of the above memorandum, informed Ms Crocker that it affirmed its original decision. The letter included the following: We refer to your Notice of Dispute lodged 28 July 1997 and advise that the Trustee has reviewed the matter and determined to affirm its original decision to decline your claim. When you became a member of REST you were employed a casual basis. As TPD cover was only available to members employed on a full-time basis (working more than 30hours per week) under the policy in force at that time, you were not eligible for TPD cover. However as REST had not been advised of your working hours at that time, you were given default cover of one unit for death and TPD. You subsequently advised, on your first application form, that you were not regularly working more than 30 hours per week. Accordingly you were not entitled to TPD cover. Unfortunately as you did not initial your insurance choice, the election for basic cover was invalid and your default insurance arrangements were maintained until such time as a valid election was made. On the change of insurance arrangements, members were offered the opportunity to increase their insurance cover without personal statements if they were "at work" and in "active employment" on both the date the application was completed and the date the cover commenced. "At work" is defined to mean being employed by an employer to carry out identifiable duties and actually performing those duties. "Active employment" is defined to mean being at work, and able to perform those duties on a full-time basis. On the basis of the information provided by you and your request for a TPD claim form at the time that you sought to increase your insurance, it is apparent that you were not capable of working full-time and were in fact contemplating a TPD claim. Accordingly you were not eligible for TPD cover of 2 units. Moreover, the Trustee is of the view that at the time you sought to increase your insurance cover you were already suffering TPD. The Trustee formed this view after considering 1. your own request in late 1994 for a TPD claim form 2. the comment by Dr Andrew that "you were completely incapacitated since 1994 due to intermittent severe diarrhea [sic], bouts of incapacitating abdominal pain. Tiredness and exhaustion" and 3. the change in your employment status at Myer from part-time to causal, [sic] a week before you completed the second application form. That being the case, you purported to insure an event which had already occurred at the time you lodged your second application form. This is contrary to general insurance principles. On the basis of the matters contained in this letter, the Trustee has determined that you are not eligible for a TPD insured benefit. This concludes the Trustee's response to your Notice of Dispute. If you have any queries please contact [details were included]. 75 The letter then went on to inform Ms Crocker of the availability of review in the Tribunal. 76 On 9 December 1997 Ms Crocker lodged a complaint with the Tribunal which contained the following (the questions on the form being set out in bold): What is the Fund Trustee/Life Company's decision(s) or action(s) you are not satisfied with? Failure to pay TPD benefits on grounds of eligibility. In Dec 1994, I was told I was eligible for T+PD cover if I worked at least 9 hours per week. I was also told I would not have to submit to a medical examination. I applied for and was granted one unit of T + PD coverage ($47,000). I paid the premiums as required. Upon making a claim, I was informed that I was ineligible as I needed to work more than 30 hrs per week to qualify. Please state why you believe that your Fund Trustee/Life Company's decision is unfair or unreasonable: When applying for cover, I was informed in writing that I only needed to work a minimum of 9 hrs per week. My application was accepted by the fund and my premiums were accepted. What is the loss (if any) you claim you have suffered? I have relied on the fact that I would receive $47,000 if and when my condition prevented me from working. I have therefore lost $47,000. …Payment of my entitlement of $47,000. What is the resolution you seek? Payment of my entitlement of $47,000. 77 It is now necessary to examine what the Tribunal did. Before doing so I should refer once again to s 14AA of the Act. Section 14AA was inserted into the Act by Act number 118 of 1998. It became effective on 11 December 1998. It was in the following terms: Complaints may be made about discretionary or non-discretionary decisions 14AA. (1) 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. (2) 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. 78 The decision of the Trustee occurred prior to 11 December 1998. Merkel J expressed the view in Seafarers' Retirement Fund v Oppenhuis, supra at 596-98 [9] to [18] that the provision was declaratory of the law and was retrospective in its operation. No party before me contended to the contrary. No party before me contended that the matter should be viewed as one concerning a non-discretionary decision in respect of which the Tribunal had no jurisdiction by reason of the date of any relevant decision and the temporal operation of the Act. Therefore, I proceed on the basis that the Tribunal was entitled, within the confines otherwise laid down by the Act, to review Ms Crocker's complaint about the decision of the Trustee (and any decision of the Insurer) not to meet her claim, whether or not that decision or those decisions involved the exercise of any discretion. 79 The Tribunal set out Ms Crocker's complaint. It then set out what it saw as relevant background facts, provisions of the trust deed, provisions of The Victory Policy and provisions of two Prudential policies. (On 7 January 1997 there was issued a second Prudential Policy with effect from 1 August 1994 which was intended to replace the Prudential Policy in place up to that point. In relevant respects the replacement policy is more favourable to the member/insured, that is to Ms Crocker. The parties dealt with the matter before me on the basis of the replacement policy alone. I will continue to do so. I will refer to it also as the Prudential Policy.) 80 The Tribunal then proceeded to discuss and deal with various matters under the heading: "The Determining Issues". 81 The first matter posited under this heading was the question: "Was the Complainant Insured for TPD Prior to 1 August 1994?" The Tribunal concluded in the affirmative. 82 The second matter posited under this heading was the question: "Was the Complainant Eligible for TPD Cover as a result of the Insurance Contract with effect from 1 August 1994?" The Tribunal concluded in the affirmative. 83 These two questions are related to the first aspect of the decision. This is whether Ms Crocker was entitled to the one unit of disability cover which she says she thought she had at the time she sought to increase her cover in December 1994. If, as the Tribunal found, she was entitled to such cover, that cover was in the amount of $47,000 as referred to in her complaint to the Tribunal. 84 Two further matters were posited under the heading "The Determining Issues". These were framed as two further questions: · "Was the Complainant Eligible to Increase her Insurance Cover?"; · "Was the Complainant misled by the Trustee?" 85 These matters were directed to the second part of the decision which was not reflected in Ms Crocker's written complaint: whether or not she should be paid for a second unit of disability cover, that is another $47,000 on top of the "basic cover" of $47,000 determined by reference to the earlier two questions. 86 The Tribunal, correctly in my view, first addressed itself to the question whether in late 1995 or early 1996 Ms Crocker was entitled to claim disability benefits under the Prudential Policy. It did so by first examining The Victory Policy. This was a legitimate approach for the reasons which will become evident upon an analysis of the policy terms. However, in my view the Tribunal incorrectly construed the policies of insurance and incorrectly came to the conclusion that Ms Crocker was covered for total and permanent disablement at the basic level from the time of the commencement of the Prudential Policy. 87 The most convenient way of explaining the error of the Tribunal is to examine the policies. The first enquiry must logically have been as to whether Ms Crocker was entitled under the Prudential Policy to disability benefits. 88 Under clause 2.1.3(a) a member who on 1 August 1994 was "at work" (unless on leave caused by sickness or injury) could receive cover. Clause 2.1.3 was in the following terms: 2.1.3 (a) A member who on the policy commencement date is at work(except a member who is on leave caused by sickness or injury) will receive cover. (b) All other members on the policy commencement date will receive limited cover until they are in active employment. 89 The phrase "at work" (see clause 2.1.3(a)) was defined as "being employed (including being on fully paid leave) by an employerto carry out identifiable duties and: · actually performing those duties; or · being on fully paid leave caused by sickness or injury. 90 The Tribunal found that Ms Crocker was "at work". The Trustee accepts that finding. The Insurer attacks it as infected with legal error in that the Tribunal did not direct itself to whether the exception in parentheses applied: whether Ms Crocker was on leave caused by sickness or injury. No such point was taken by the Trustee or the Insurer before the Tribunal (indeed, as I said earlier, the Insurer chose not to participate in the review by the Tribunal). In my view, the Tribunal was entitled, on the evidence and the material before it about hours of work, to which I earlier referred, to proceed on the basis, unless anyone raised an issue to the contrary, that there was no factual issue before it about what appears in parentheses in clause 2.1.3(a). It certainly was not a matter of the kind discussed by the Full Court in Kuswardana v Minister for Immigration and Ethnic Affairs (1981) 35 ALR 187 which the Tribunal was obliged to address irrespective of the conduct of the matter by those interested and participating (or entitled to participate). In my view no error of law arose at this point. 91 Having, correctly, decided that Ms Crocker was entitled to "cover" as at 1 August 1994, the Tribunal was then obliged to examine clause 2.2 and assess the nature and amount of cover to which Ms Crocker was entitled. Clause 2.2 was relevantly in the following terms: 2.1 The amount of cover for a member will be the insured cover subject to the following: ….... 2.2.3 existing members at 1 October 1994 who are working 9 hours per week: (a) and who are in active employment on the date of application may, within 3 months of 1 October 1994, apply to increase their cover to a maximum of 5 units of Death and TPD cover; or (b) may remain covered at their current level and for the current benefit or benefits. without providing us with a health declaration; … 92 The phrase "insured cover" (see clause 2.2. and importantly the definition of "member") was defined as: "the benefit payable for each unit of cover that a member is entitled to upon death or TPD". A table set out thereunder this definition and relevantly provided that for members aged 35 or less at the date of death or disablement the amount per unit of cover for claims arising after 31 July 1994 and before 1 October 1994 would be $43,000 and for claims arising after 30 September 1994 would be $47,000. The definition of "insured cover" continued, relevantly, as follows: A member may select up to two units of cover up to 30 September 1994 and up to five units of cover thereafter subject to Condition 2.2. Cover must be in whole units. There are two categories of members:
Associate: Dated: 20 September 2001 Counsel for the Trustee: Mr F Gleeson
Solicitor for Ms Crocker Jennings Elliot, Hobart
Retail Employees Superannuation Pty Ltd
Crocker
(2000) 99 FCR 562
(1997) 75 FCR 428
(1999) 94 FCR 594
(1997) 75 FCR 565
(1986) 162 CLR 24
(2000) 178 ALR 707
(1999) 197 CLR 83
(1986) 7 NSWLR 150
(1997) 77 FCR 469
(1981) 35 ALR 187