Sommer v NM Superannuation Pty Ltd

"'Totally and Permanently Disabled' in relation to a Member means injury or illness which: (1) In respect of a Member who is an Agent - will in the opinion of [the Insurer] after consideration of medical evidence satisfactory to [the Insurer] render the Member unlikely to ever again fulfil his obligations under the terms of his appointment as an Agent;Ľ" If Mr Sommer is entitled to be paid the TPI (or TPD) benefit, the amount of it is $465,125.00. 5 On 28 August 1995 Mr Sommer lodged with the Insurer his application for the benefit, but the Insurer decided to reject his claim. The Trustee decided to endorse the Insurer's decision. The Trustee reviewed its original decision and informed Mr Sommer that it had decided to affirm its decision and that of the Insurer to reject the claim. Section 14 of the Act provided for a person placed as Mr Sommer was, to make a complaint to the Tribunal that the decision of the trustee of the relevant superannuation fund was "unfair or unreasonable". On 19 November 1997 Mr Sommer lodged a complaint dated 13 November 1997 with the Tribunal that the decision of the Trustee and of the Insurer not to pay him the benefit was of that kind. On 17 October 2000 the Tribunal determined "that the decision of the Trustee and of the Insurer was fair and reasonable". On 17 November 2000 Mr Sommer filed in this Court notice of his present appeal from the determination of the Tribunal.

background facts 6 On the morning of 17 February 1995 Mr Sommer telephoned Dr George Lianos, consultant psychiatrist and psychotherapist. According to Dr Lianos, Mr Sommer was requesting help, did not know what was happening to him, was tearful, sounded to the doctor to be "flat, depressed, anxious, panicky and desperate" and " felt that he was not able to keep going". Dr Lianos saw Mr Sommer the same day as an emergency appointment. He saw him again on 23 February and on a regular weekly basis afterwards. According to his report, Dr Lianos advised Mr Sommer that he should "cease all kind of work immediately". (Mr Sommer said, and it seems to have been accepted, that Dr Lianos' recommendation was that that he should "cease working as an insurance agent for a period of 3-6 months".) Mr Sommer ceased work immediately and, in fact, sold the insurance agency business shortly afterwards. 7 Mr Sommer subsequently obtained employment managing a pet food business but has never returned to the insurance industry. 8 There were numerous medical reports before the Tribunal. They were provided by the following six doctors: · Dr R O Nichols, Mr Sommer's general practitioner; · Dr George Lianos, Mr Sommer's treating psychiatrist and psychotherapist; · Dr Michael Williamson, consultant psychiatrist whose report was sought by Mr Sommer's solicitors; and · Dr John Albert Roberts, Dr James P Maguire, and Dr Allan White, consultant psychiatrists, each of whom was asked by the Insurer to assess Mr Sommer. 9 The body of expert medical opinion was conflicting. The Tribunal set out extracts from the doctors' reports in its Review Determination and Reasons. 10 Prior to February 1995, there had been several notable events in Mr Sommer's life which formed part of the background to his telephone call to Dr Lianos on 17 February of that year. In summary, they were as follows: · Although he had been in the insurance industry since 1970, Mr Sommer experienced problems in connection with his business from a time prior to 1993 and extending throughout that year and 1994 and down to February 1995. Dr Lianos summarised Mr Sommer's financial and business problems as follows: "Mr Sommer's problems began prior to 1993 and appeared to relate very closely to his business difficulties. Financial pressures were clearly evident by June 1993 when he had a zero income from National Mutual. This was due to the fact that he lost a major client which appears to have precipitated a major financial crisis. He was under enormous financial pressure and as a result he reduced all his costs hoping to survive with new business in 1994. This plan failed. By June 1994 he had exhausted all his personal financial resources which included the residual capital from the sale of the house. In December 1994 a further $35,000 which came from an inheritance was also absorbed by the business without alleviating the problems. He redirected his attempts to estate planning in about November 1994. The long lead time between initiating new business and securing money meant that he was left with no income for a period of time whilst still having fixed costs in excess of $70,000 p.a. As a result he came under extreme pressure from financial companies to meet his repayments. ... He was embarrassed about his predicament and felt that he had made a big mistake. By the time he rang my office he felt that he was not able to keep going." · In February 1992 Mr Sommer's daughter was violently assaulted. In the assault, both her legs and one arm were broken (a cheek bone or jaw bone may also have been broken). The daughter was placed in a Witness Protection Program. A person was convicted and was released from custody, apparently in late 1993; · Mr Sommer and his family moved house in 1994 to assist in concealing his daughter's whereabouts; · Mr Sommer's son attempted suicide in September 1994; · Mr Sommer's wife had serious health problems.

reasons for determination of the tribunal 11 The Tribunal's account of its "Deliberations" occupied only the following 11 paragraphs (I have inserted the paragraph numbers for ease of reference): [1] "The Trust Deed provides that a benefit is payable on retirement if a Member retires permanently from gainful employment before his 55th birthday by reason of his Total and Permanent Incapacity. The Complainant ceased as an insurance agent prior to his 55th birthday but has since that time been gainfully employed managing a pet food business. These circumstances did not exist at the time the Trustee first considered the application. [2] There is a document dated 23 August 1995 headed 'Statutory Declaration' and signed by the Complainant stating 'I have retired from the workforce'. The Complainant also appears to be the witness to the declaration in his capacity as a Justice of the Peace. The question to be resolved is whether it is sufficient for the Complainant to have had the intention of retiring permanently from the workforce at that time or whether the change of circumstances prior to the Tribunal determining the matter is material. [3] The other circumstances that have attracted the Tribunal's attention are the nature of the demise of the Complainant's business and the relationship between his business activities and the medical advice he received. In his complaint to the Tribunal the Complainant said 'In assessing my condition Dr L had the benefit of a long association with me. In February 1995 Dr L recommended that I cease work as an insurance agent for a period of 3-6 months'. [4] Despite this advice the Complainant almost immediately wound up and sold his business. This action did not seem to be consistent with the medical advice and the Complainant by his own action had made it difficult for the Insurer to test the question as to whether he could, in the future, fulfil his obligations under the terms of his appointment as an Agent. [5] The issues raised above suggest that the matters to be determined do not just resolve [sic - revolve] around a contest between conflicting medical opinion. The Insurer in its submission tended to suggest that the weight of opinion supported its view. Experience has shown, and this case demonstrates, that such weighting can often be more of a function of how many reports are obtained by each party rather than the establishment of an objective opinion. [6] What seems clear is that the Complainant was in significant difficulty in February 1995. There also seems to be support for (or suggestions that there was never a problem) [sic] the view that the Complainant improved substantially some months after this pivotal event. It is also clear that the Complainant developed a growing concern about the nature of selling in the insurance industry and reached a point where he was uncomfortable contemplating further such activity. This is a further complicating factor in assessing the primary cause of any perceived inability to 'fulfil his obligations under the terms of his appointments as an AgentĽ'. [7] In response to a questionnaire from the Tribunal the Complainant indicated on 6 June 2000 that; 'I can manage the pet food business which I presently run, together with my wife. I am able to engage in other businesses but I do not think I could return to the life insurance business'. [8] From all these issues the Tribunal concluded that the condition that the Complainant found himself in February 1995 [sic] was primarily the unfortunate consequences of the demise of his business rather than a condition that lead [sic - led] him to the position in 1995 where he was unable to continue as an Agent. His own action in selling the business cannot be offered in support of the view that his capacity to no longer act as an Agent is demonstrated. [9] The conclusion is that the demise and sale of his business and his changed attitude to selling life insurance was the primary cause for his view that 'I do not think I could return to the life insurance business' rather than medical conditions he experienced in 1995 as a result of these events. [10] The Tribunal determines that no TPD is payable. [11] Having concluded that the decision of the Insurer and Trustee was fair and reasonable and therefore no benefit is payable the Tribunal need not consider the question as to whether the Complainant had retired permanently from gainful employment as required by the Deed." 12 After noting its powers under the Act, the Tribunal determined "that the decision of the Trustee and the Insurer was fair and reasonable".

grounds of appeal 13 Mr Sommer's notice of appeal states the grounds of appeal in nine paragraphs. For convenience, however, they can be summarised as being the following four grounds: 1. That the Tribunal erred by basing its decision almost entirely on Mr Sommer's decision to sell his business and in taking into account his decision to do so; 2. That the Tribunal erred in failing to assess the competing medical evidence, or to have regard to the medical evidence adduced by Mr Sommer or by the Trustee and the Insurer to the extent to which Mr Sommer relied on the evidence adduced by them; 3. That the Tribunal failed to accord Mr Sommer procedural fairness by failing to disclose to him, until just prior to making its determination, that it had received a Supplementary Submission from the Insurer, and by having regard to that Supplementary Submission; 4. That the Tribunal's determination was so unreasonable that no reasonable decision maker could have made it. 14 The third "summary ground" identified above calls for the following account of the sequence of submissions. · On 19 November 1997 Mr Sommer lodged his Complaint with the Tribunal; · On 9 June 2000 the Insurer made its written submission to the Tribunal in reply to the Complaint (the Trustee declined the invitation to make a submission); · On 31 August 2000 the Insurer made a "Supplementary Submission" to the Tribunal in reply to the Complaint (it is this submission, apparently received by the Tribunal on 1 September 2000, of which Mr Sommer complains he did not receive appropriate notice); · On 5 September 2000 Mr Sommer's solicitors forwarded to the Tribunal Mr Sommer's submissions in reply to those of the Insurer of 9 June 2000, but, importantly, not to the Insurer's Supplementary Submission, of which Mr Sommer and his solicitors were at the time unaware; · On 11 September 2000, the members of the Tribunal held their "review meeting", as required by subs 34(1) of the Act; · On 9 October 2000 the Tribunal wrote to Mr Sommer's solicitors advising them that the review meeting had taken place and that the Tribunal's determination would be issued in due course. The letter continued: "In the interest of procedural fairness and for the sake of completeness, please find enclosed a copy of the Insurer's response submissions. No response submission was received from the Trustee. This is provided for your client's information only. No response is sought." The document which accompanied the letter was in fact the Insurer's Supplementary Submission dated 31 August 2000, which had not previously been served on Mr Sommer or his solicitors. 15 The Tribunal's Review Determination and Reasons was dated 17 October 2000 and a copy of that document was forwarded to Mr Sommer's solicitors under cover of a letter from the Tribunal dated 18 October 2000. 16 Mr Sommer makes the point that he was not invited to respond to the Insurer's Supplementary Submission and that there was scarcely time for him to do so between his solicitor's receipt of the Tribunal's letter dated 9 October 2000 enclosing a copy of it, and the making of the Review Determination on 17 October 2000.

reasoning 17 It is not suggested that the Tribunal failed to appreciate that its task under subs 37(6) of the Act was to decide whether the actual decision of the Tribunal and of the Insurer was "fair and reasonable": see National Mutual Life Association of Australia Ltd v Jevtovic, (FCA/Sundberg J, 8 May 1997, unreported); National Mutual Life Association of Australia Ltd v Campbell (2000) 99 FCR 562 (FC) at [37]. As noted earlier, Mr Sommer's right of appeal to this Court under s 46 of the Act is on a question of law.

Summary grounds 1, 2 and 4 above 18 Although I have not set them out above, as already noted, the Tribunal set out extracts from the various doctors' reports in its Reasons for Determination. The selection of the extracts demonstrates that the Tribunal considered the expert medical evidence to some extent. But it said in the fifth paragraph of its "Deliberations" that there was more to the case than resolving the conflict between the medical opinions. The Tribunal thought it appropriate to decide the issue before it by reference directly to the background facts rather than by choosing between the medical opinions. It is not shown that in holding that view it erred in law. 19 In the sixth paragraph of its "Deliberations" the Tribunal referred to Mr Sommer's "growing concern about the nature of selling in the insurance industry". In this respect, Dr Roberts' report had included the following: "I discussed with Mr Sommer his cessation of work and it appears that Mr Sommer ceased work on the instruction of his doctor Dr George LIANOS. Mr Sommer commented that he had not imagined in the wildest dreams that he would be told to go home, that having been told to do so led him to feel a failure. I put it to Mr Sommer that if Dr LIANOS had instead of proposing a psychotherapeutic approach, had [sic] said to him that he would prescribe medication and that he should continue work, what would he have done and he replied that he could have soldiered on." (my emphasis) 20 Dr Maguire reported that one of several events apt to cause significant anxiety or depression in a vulnerable personality was "[t]he necessity to return to one particular form of work which [Mr Sommer] found stressful because of the changes in legislation". Dr Maguire's report also contained the following: "[Mr Sommer] has however changed his 'attitude' to what is required of him to work in the insurance industry. He is no longer prepared to make the effort or pay the psychological 'price' needed to adopt the 'persona' necessary to be a successful salesman. While this is a personal choice for him I do not believe it should be confused with the presence of some ongoing 'disorder' that would prevent him from working." 21 To Dr Williamson, Mr Sommer described the life insurance industry as "conning people with Life Insurance". 22 Dr White's report contained the following: "Towards the end of the interview when we were discussing why Mr Sommer felt he was unable to return to the insurance business, he explained that after he lost the Burns Philp account and the brokerage, he was 'pushed back' to selling insurance to 'mums and dads'. He said that this work involved 'being a liar' and having to 'jack myself up'. Although he did not state it at the time, it appears that the need to sell insurance to 'mums and dads' precipitated the change and caused him to 'seek advice'." "In response to my enquiry whether he thought he was so mentally ill that he was unable to work he replied: 'Oh no, I can work. I can't work as a Life Insurance Agent'. In response to my enquiry how he knew that, he replied: 'What a wonderful question'. Even now despite all the questions, it was apparent that Mr Sommer was not taking the interview seriously and was assuming that I would agree that he was incapable of working. He explained that he knew he could not work as an Insurance Agent by saying: 'The answer is by the reverse. By removing the feeling of being a liar. I don't have to jack myself up. I don't have to convince them I am doing them a favour (by selling them insurance). It hurt to manipulate mums and dads'. As mentioned above, he went on to explain at this point of the interview that after he lost the Burns Philp contract and his brokerage, he was 'pushed back' to selling insurance to 'mums and dads' which 'precipitated the change' and resulted in him seeking advice with Dr Lianos." 23 Clearly, there was ample evidence supporting the Tribunal's statement that as at February 1995 Mr Sommer had had an underlying concern about the nature of selling in the insurance industry. 24 In sum, the Tribunal thought that Mr Sommer's ceasing to work arose primarily from two factors: · the demise of his own agency business; and, more generally, · his disillusionment with the life insurance industry and with the activity of selling life insurance. This factual conclusion was at law open to the Tribunal. 25 The Tribunal did not base its decision entirely on Mr Sommer's decision to sell his business. Rather, it considered his decision to sell opportunistic. That is to say, in the Tribunal's view Mr Sommer had a strong desire, as a result of the two factors mentioned, to escape from the insurance industry and he seized on Dr Lianos' unexpected recommendation to cease work as a justification for selling. Dr Roberts noted in the passage from his report set out earlier that Mr Sommer had not "imagined in the wildest dreams" that he would be told to cease work. 26 Counsel for Mr Sommer submitted that the Tribunal attached an undeserved significance to the selling of the business. He said that the sale was not inconsistent with a readiness on Mr Sommer's part to resume work as an insurance agent. Counsel suggested that Mr Sommer could have bought back his own agency or bought another one or become an employed agent. The Tribunal noted that Mr Sommer had signed a "statutory declaration" dated 23 August 1995 stating that he had "retired from the workforce". The only step of "retirement" taken by Mr Sommer to which the document could have been referring was the sale of the insurance agency business shortly after the giving of the advice by Dr Lianos in February 1995. On all the evidence, it was open to the Tribunal to draw the inference of fact that the sale evidenced a decision by Mr Sommer to retire from the insurance industry. 27 For the above reasons, none of summary grounds 1, 2 or 4 are made out.

Summary ground 3 above 28 The respondents do not dispute that the Tribunal was obliged to accord Mr Sommer procedural fairness but they rely on the established principle that an operative breach of the obligation will not lead to the granting of relief if it is quite clear that the same result must, inevitably, have been reached in any event: see, for example, Stead v State Government Insurance Commission (1986) 161 CLR 141 at 145-147; Fares Rural Meat and Livestock Co Pty Ltd v Australian Meat and Live-Stock Corporation (1990) 96 ALR 153 at 171; Australian and Overseas Telecommunications Corporation Ltd v McAuslan (1993) 47 FCR 492 (FC); Turner v Official Trustee in Bankruptcy (1996) 71 FCR 418 (FC) at 420; Giretti v Commissioner of Taxation (1996) 70 FCR 151 at 164-166 per Lindgren J, with whom Jenkinson J agreed. 29 The Insurer's Supplementary Submission dated 31 August 2000 did not raise any new matter, that is, any matter not raised in its earlier submission of 9 June 2000. Counsel for Mr Sommer did not point to any particular matter in the Supplementary Submission to which Mr Sommer would have wished to reply. He said: "... on any fair view the supplementary submissions are really by way of amplification of the primary submissions. They are more detailed on the point but I can't say to your Honour that there is a new theme developed in those submissions. All I can say is that it's, as it were, more of the same. ... I can't say that the applicant would have wished to respond to any of the particular references to the medical reports because they're in the same vein and quite consistent with the approach the complainant had taken in his complaint. They were responsive submissions in the true sense. I suppose all I can say is that there was a lost opportunity there. It wasn't a wholly lost one. I suppose in theory my solicitor on receiving that letter could have acted very quickly in putting some submissions before the decision was handed down ... ." 30 The Supplementary Submission did refer to the sale of the insurance agency business following Mr Sommer's visit to Dr Lianos - a matter mentioned in the Tribunal's Reasons. But this is inconsequential for two reasons. First, the statement in the Supplementary Submission was in the nature of an account of an uncontroversial background fact. Secondly, the Insurer's original submission had recounted the same fact in a not materially different form. 31 In the circumstances, it would have been perverse for the Tribunal to have reached a different result on account of anything contained in the Insurer's Supplementary Submission, since it added nothing material to its original submission, and the Tribunal was not at liberty to be persuaded by "nothing material", that is, to decide capriciously. 32 Although Mr Sommer's solicitors received the Insurer's Supplementary Submission on or shortly after 9 October 2000, they did not ask for the opportunity to respond to it, even though the Tribunal's covering letter advised them: "If you have any queries please contact me on telephone number ...." Apparently the solicitors did not take up the invitation because, like the Tribunal itself and like counsel for Mr Sommer in the present proceeding, they thought the Supplementary Submission raised no new matter calling for a response. 33 Two analyses are open. One is that by its letter dated 9 October 2000 (noted at [14] above) the Tribunal intended to advise Mr Sommer's solicitors that it was not treating the Supplementary Submission as before it. On this analysis, the Tribunal did not breach the rules of natural justice. The alternative analysis is that the Tribunal was treating the Supplementary Submission as before it so that it was obliged to give Mr Sommer an opportunity to be heard in relation to it. I think the latter analysis is preferable because a document prepared for the review meeting on 11 September 2000 listed the Supplementary Submission as one of the submissions which the Tribunal had received from the parties. 34 On the assumption that there was a breach of the obligation to accord procedural fairness, I would not, in the exercise of my discretion, for the reasons given in [28] to [32] above, set aside the Tribunal's decision. (The manner of exercise of discretion in one case has no precedential value for the manner of exercise of discretion in a later case, but I note in passing that Foster J would have exercised his discretion against setting aside a decision for breach of the rules of natural justice in not altogether dissimilar circumstances in Attorney-General (Northern Territory) v Hand (1988) 15 ALD 186.)

conclusion 35 For the above reasons, the application should be dismissed with costs. I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren.

Solicitors for the Applicant: Anderson & Sjoquist

Solicitors for the Respondents: P W Turk & Associates