Robert James Harmer v Caltex Petroleum Pty Ltd & Ors

Robert James Harmer v Caltex Petroleum Pty Ltd & Ors - [2002] NSWIRComm 43 - NSWIRComm 2001 case summary — Zoe

[30]

10 Mr Harmer initially raised the possibility that Caltex could likewise take such steps with Mr McTaggart. He received no positive response and then organised a petition signed by 59 other employees, in which Caltex and the trustees were asked to assist them in overcoming the effect of the RBL guidelines, which it was believed were unfairly penalizing long serving employees. The petition asked a number of questions and raised various possibilities, including the introduction of indexation of pensions. In October 1986, Mr McTaggart wrote a detailed response on behalf of the board, explaining Caltex's appreciation of the concerns and the effect the RBL guidelines would have on long serving employees, if they elected 100% commutation of their pensions. He explained that the issue of the impact of RBL limits upon long serving employees had been recognised by the Directors before the changes were introduced to the Plan and had been discussed with the 'Superannuation Review Committee". He also advised that there was no prospect of any relief from the RBL ruling from the Tax Commissioner. He said in part: 'At this time we can offer no solution to the limitation of lump sum payouts. However, those of us affected should not lose sight of the fact that we are not being put in a position of being forced to forfeit our entitled benefits. We can still take the 50% commutation/50% pension option which actuarially gives us our full entitlement from the Fund. To the extent that members in electing to take the 100% commutation option may leave monies in the Fund such monies will not work to the benefit of other members. Over a period of time they would work to the benefit of the company in lessening its funding liabilities. However because a member does not have to declare his or her commutation option until the point of retirement, company funding must at all times be sufficient to meet the full actuarial liability - normally the 50% commutation/50% pension option - for each member.'

[154]

122 Given the case advanced at the hearing, that it was Caltex, rather than members of the new fund, which had the benefit of the applicant's unfair deprivation of the excess benefit in question, I am satisfied that no case was made out against the 6th respondent. It follows that the claim against it must be dismissed, with an order for costs in its favour. 123 The same conclusion flows in relation to the individual respondents, each a trustee at one time of the Plan and also a member of the board of Caltex. The basis upon which orders might be made against persons not party to the contract attacked under the section, has oft been discussed. See for instance Brown v Rezitis (1970) 127 CLR 157 at pp163-166 and more recently Ace Business Brokers Pty Ltd. 124 Here it was the applicant's case that the income tax ruling and the rules of the Plan reflecting the RBL limit, were not in reality an impediment to the excess benefit being paid to Mr Harmer out of the Plan funds. However, it was conceded that in order for such a payment to be made, it was Caltex which had to take steps to establish such an excess benefit fund and to amend the Plan rules, to permit payment of any excess benefit to that fund in respect of Mr Harmer. The rules of the Plan contemplated that they could be altered by resolution of the Board of directors of Caltex and of the trustees of the Plan, at duly constituted meetings. It was argued that all that Mr Harmer was seeking could have been achieved, by the adoption of the necessary resolutions, so as to enable Mr Harmer to receive the full benefit of his superannuation entitlements after 40 years service with Caltex. 125 On the evidence, there can, however, be no certainty that all of the trustees of the Plan at the relevant time, were joined as respondents to these proceedings. Indeed the evidence suggests that they were not. The changes made to the Plan in 1986 introduced two new positions of employee elected trustees. No such trustees were made respondents to these proceedings. Mr Bucknall was certainly not a trustee when Mr Harmer retired and opted for 100% commutation of his pension. Mr Babbage may not have been a trustee then, it is not possible to be certain. Who, if anyone replaced Mr Bucknall and Mr Babbage as trustees, was not explored. It follows that all of those responsible for the attitude which the trustees of the Plan were taking on Mr Harmer's retirement, are likely not to be before the Court in these proceedings. Undoubtedly this difficulty might flow from the lapse of time between Mr Harmer's resignation and the commencement of the proceedings and resulting difficulties in identification of the individuals concerned. Nevertheless, it is a difficulty which cannot be overlooked and provides a substantial impediment to any orders being made against those individuals who are respondents to these proceedings.

[182]

154 His Honour relevantly concluded at 349 to 350: 'Can it be said, however, that a scheme is unfair or otherwise offends under the section, simply because in the circumstances affecting the applicant, or in its general application, the scheme has deficiencies, or is not as favourable as other more modern schemes? There is no criteria based on some award of superannuation which might provide some comparison as occurs in the case of remuneration under a contract impugned under s.88F(1)(d) or (e). In my view the issue of fairness or other difficulty which might arise in respect of a scheme because of s.88F(1) is not be determined by comparing what might be said to be outmoded "accumulation" superannuation fund with more beneficial "promised benefit" or "defined benefit" funds, so that some norm or principles are established concerning which funds are fair and which are not. Nor do I see how, as a general proposition, it can be said that a scheme of benefits funded by employer contributions, offends against s.88F(1), because the benefits under it may be less favourable when compared with more beneficial schemes. Obviously the forces of the market place determine what employers can and may wish to concede by way of superannuation benefits. The results of those forces, assuming they can provide a test of relevance under s.88F(1), are inconclusive, The applicant is clearly better off than those members of superannuation schemes who, on resignation, receive no benefit at all from employer contributions. A 1980 survey showed that some 31 per cent of private sector schemes were in this category. Such schemes provided no more than a refund of employee contributions with interest on resignation. The applicant is certainly better off also than employees without any scheme at all. The Australian Bureau of Statistics Employment Benefits Survey of August 1983, reveals that only 52 per cent of male employees in the workforce in New South Wales enjoy superannuation benefits. (For females the proportion is much lower.) I do not see the role of the Commission under s.88F, in that context, as one in which it treads a path though a variety of schemes (which are referred to more generally than specifically in the evidence) to find one which may be average or, in some other sense, fair. A result which, in my view, would certainly not be open on any test under the section, would be to impose on the company the scheme it rejected in 1974. Even if the reasons advanced by the company for not accepting the recommendations then made, were to be rejected, as not being fully supported by the evidence, as suggested in argument, I do not see how it could be said to be an appropriate exercise of discretion under s.88F(1) for the Commission to base any finding on the recommended scheme and to impose an alteration (which the company could not have anticipated as being necessary to fund), as a consequence. It would be a result equally claimable by other employees of the company as well as the applicant. It may well be conceivable, as suggested earlier when discussing jurisdiction, that particular conditions in a superannuation scheme, relevant to the circumstances of an individual member, might be so draconian as a condition of entitlement or otherwise, or work such a consequence that they could be said to be so unfair, or harsh or unconscionable or contrary to the public interest that some avoidance or variation might be claimed under s.88F(1). How does that avail the applicant? There was no suggestion that he had not been treated equally with other employees. In fact, because of the arbitrariness of the working of the scheme, he may well have benefited compared with others. He benefited, on the evidence, by the allocation of funds from the reserve fund which resulted form deductions from credits of others leaving the company. He was well ahead of any employee not invited to join the fund. The applicant certainly suffered an extraordinary drastic reduction in the amount standing contingently to his credit in the fund because of the operation of cl.14(ii). He has a genuine complaint that even if the scheme is entirely funded by the employer, it has a bias which pays scant regard to his long service with the company. But, the credit accumulated his case, as with all beneficiaries under the fund, was not vested. Credits being accumulated were contingent on his continuing through to retirement with well defined consequences on leaving employment at an earlier date. They were conditions which presumably the applicant understood, or should have understood, when he joined the scheme and later when he became trustee. They were clearly set out in the printed deed. Reference was made in argument to restraint of trade because of this bias in the scheme. I do not find the argument compelling, however, that a paternalistic scheme which is directed at providing a benefit at normal retirement age and so influencing an employee to retain his employment, is necessarily contrary to the public interest. It was not established that the applicant was paid markedly less by way of salary because some further contingent accumulation was being apportioned by the company. Even if that were so to some extent, there is no evidence to suggest that the salary paid or such reduction as may have resulted, was so unfair that the section should be invoked. Having considered the evidence and the submissions, I am, therefore, of the view that the superannuation fund in this case, considered either generally or specifically as it affects the applicant because of cl.14(ii), is not such that the Commission should embark under s.88F(1) on a voyage into such uncharted waters as those involved in the rewriting of superannuation schemes. Despite obvious criticisms, that apportionment may be arbitrary or that benefits or their vesting do not measure up to the norm or some desirable optimum, the scheme under attack is not part of an arrangement which, in my view, (subject to what is said in relation to long service leave), can be said to offend against s.88F(1).'

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