Wilkinson & Ors v Clerical Administrative & Related Employees Superannuation Pty Ltd & Ors

(1998) 152 ALR 332
(1997) 79 FCR 469
(1998) 79 IR 172

(Judgment by: HEEREY J)

Between: NEIL WILKINSON, TONY TUOHEY & MARITA WALL - Appellants
And: CLERICAL ADMINISTRATIVE & RELATED EMPLOYEES SUPERANNUATION PTY LTD (trustee of CLERICAL ADMINISTRATIVE & RELATED EMPLOYEES SUPERANNUATION PLAN) & LIFE REINSURANCE OF AUSTRALASIA LTD & DARYL BISHOP - Respondents

Court:
Federal Court of Australia

Judges: LOCKHART J

HEEREY J
SUNDBERG J

Subject References:
CONSTITUTIONAL LAW
superannuation complaints tribunal
review of decision of trustee of superannuation fund
whether exercise of judicial power
SUPERANNUATION
superannuation complaints tribunal
death benefit
whether employee in service of employer at time of death
function of tribunal
whether confined to review of discretionary decisions
whether exercise of judicial power

Legislative References:
Constitution - Ch III
Superannuation (Resolution of Complaints) Act 1993 (Cth) - s 14(2); s 36; s 37

Case References:
Brandy v Human Rights and Equal Opportunity Commission mentioned - (1995) 183 CLR 245
Precision Data Holdings Ltd v Wills discussed - (1991) 173 CLR 167
Re Zantiotis applied - (1993) 113 ALR 441
R v North; Ex parte Oakey applied - [1927] 1 KB 491
In re The Electrolytic Refining and Smelting Company of Australia Proprietary Limited Staff Provident Fund; Taylor v Roberts applied - [1947] VLR 498
Briffa v Hay not followed - (1957) 147 ALR 226
Collins v AMP Superannuation Limited not followed - (1997) 147 ALR 243
Pope v Lawler mentioned - (1996) 41 ALD 127
Federal Commissioner of Taxation v Munro applied - (1926) 38 CLR 153
Huddart, Parker and Co Pty Ltd v Moorehead applied - (1908) 8 CLR 330
R v Trade Practices Tribunal; ex parte Tasmanian Breweries Pty Ltd applied - (1970) 123 CLR 361
Karger v Paul applied - [1984] VR 161
Prentis v Atlantic Coast Line Co mentioned - 211 US 210 (1908)
National Mutual Life Association of Australia Ltd v Jevtovic (Sundberg J, 8 May 1997, unreported) applied - [1997] FCA 359
Adkins v The Health Employees Superannuation Trust Australia Ltd (Heerey J, 15 August 1997) applied - BC 9703695
R v Wicks applied - [1997] 2 WLR 876
Hoffman-La Roche & Co v Secretary of State for Trade and Industry mentioned - [1975] AC 295
Comptroller-General of Customs v Kawasaki Motors Pty Ltd (No 1) mentioned - (1991) 32 FCR 219

Judgment date: 12 FEBRUARY 1998

MELBOURNE


Judgment by:
HEEREY J

I INTRODUCTION

The late Katrina Joy Bishop died on 13 September 1994. She was survived by her husband, the third respondent Daryl Bishop, and her son Michael, aged ten years.

This appeal arises out of a complaint made by Mr Bishop to the Superannuation Complaints Tribunal ("the Tribunal"), a body constituted under the Superannuation (Resolution of Complaints) Act 1993 (Cth) ("the Complaints Act"). Mr Bishop claimed that there was payable to him, as personal representative of his late wife, a Member's Insured Benefit under a superannuation scheme called The Clerical Administrative and Related Employees Superannuation Plan ("the Plan"). The Tribunal upheld Mr Bishop's complaint but on appeal by the trustee of the plan (the first respondent, hereafter "the Trustee") and the insurer under the Plan (the second respondent, hereafter "the Insurer") Northrop J set aside the Tribunal's determination. The members of the Tribunal have now appealed against his Honour's judgment.

The issues which have been argued on this appeal raise questions whether:

(i)
on the proper construction of the Plan and an associated insurance policy a Member's Insured Benefit was payable in respect of the death of the late Mrs Bishop;
(ii)
the jurisdiction of the Tribunal under the Complaints Act is limited to the review of trustees' decisions which are discretionary;
(iii)
the Complaints Act invalidly purports to confer on the Tribunal judicial power of the Commonwealth, contrary to Chapter III of the Constitution.

II THE PLAN

The Plan is constituted by a Deed dated 18 December 1986 and Rules which form part of the Deed. The liabilities of the Trustee under the Plan are covered by a re-insurance agreement dated 8 December 1989 (hereafter "the Policy") made between the Trustee and the Insurer. Rule 8 specifies the benefits payable where a member of the Plan dies before reaching the normal retirement date while Rule 9 empowers the Trustee, in the exercise of a wide discretion, to decide to whom the death benefits are to be paid. Rule 8.1 relevantly provides:

"8. DEATH BENEFITS
A. Death in Service
If the Member dies whilst the Member is in the Service of the Employer prior to the Normal Retirement Date the Benefit payable shall subject to Rule 9 be an amount equal to the aggregate of:

(a)
the Member's Retirement Account at the date of payment of the Benefits following the death of the Member; and
(b)
the Member's Insured Benefit (if any)." (Emphasis added)

Rule 9.1 provides:

"9. PAYMENT OF DEATH BENEFITS
A. Dependant
If the Member dies the Trustee shall pay or apply the Benefits payable in accordance with this Deed and the Rules to or for the benefit of such one or more Dependants of the deceased Member and the Legal Personal Representative of the deceased Member and in such shares and proportions and in such manner as the Trustee in its discretion determines and without limiting the generality of the foregoing the Trustee may utilise the whole or part of the Benefit payable to provide for payment of an Annuity (to any one or more of the Dependants of the deceased Member) of such nature as the Trustee in its discretion determines."

It is to be observed that death benefits comprise two components, the Member's Retirement Account and the Member's Insured Benefit. In the present case the Trustee paid the first component but denied a liability to pay the second.

The Rules contain the following definitions:

"'Employee' means a person who is classified by an Employer as being in the Service of the Employer for the purposes of the Plan.
...
'Insured Benefit' in respect of a Member means the amount (if any) in addition to the Member's Retirement Account payable on the Member's death or Total and Permanent Disablement, the amount of which is determined from the election made by the Member in the Member's Application.
...
'Member' means an Employee who has been admitted as a Member of the Plan or a person in respect of whom a Benefit is payable in accordance with these Rules PROVIDED THAT a person shall cease to be a Member in the event of the death of that person or when all Benefits to which that person is entitled under the Rules have been paid or have otherwise ceased or been terminated as provided in the Deed and Rules whichever is the later.
...
'Service' means continuous service with an Employer and for the purposes of this definition an Employee's service shall not cease to be continuous by reason only of:

(a)
a transfer from the service of one Employer to the service of another Employer PROVIDED THAT the Member makes the election referred to in sub-clause 18.4; or
(b)
the Employee's temporary absence from the service of the Employer

(i)
while the employee is engaged in compulsory military service or in service in the armed forces of Australia or its allies in time of war; or
(ii)
in any other circumstances which for the purposes of the Plan the Employer regards as not resulting in a break in the continuity of the Employee's service,

and 'Service of the Employer' shall have a corresponding meaning." (Emphasis added)

By Rule 2.2 an Eligible Employee (ie an Employee who has not attained the Normal Retirement Date - for present purposes age 65) shall become a member upon submitting to the Trustee a completed Member Application in a form approved by the Trustee.

In order to determine whether an Insured Benefit is "payable", it is necessary to consider the Policy.

Clause 6 of the Policy provides that benefits in respect of death shall cease in respect of a Member on the happening of certain events, including:

1. "At the expiry of a period of 60 days after leaving the service of a Participating Employer"

The following definitions in the Policy are relevant:

"'Member' means an employee of a Participating Employer accepted by (the Insurer) for a benefit.
'Employee' means an employee of a Participating Employer and includes 'Part-time Employees'. A 'Part-time Employee' means an Employee who works for a Participating Employer for a certain number of hours each and every week."

III MR BISHOP'S CLAIM

On 31 July 1992 Mrs Bishop commenced employment with Axiom Advertising Pty Ltd trading as Sanctuary Cove Fruit and Vegetable Trading Co. She joined the Plan in August 1993. The Trustee had provided an Employee/Member Information leaflet which included the following statements ("CARE" meaning the Plan):

"ELIGIBILITY FOR MEMBERSHIP.
Membership is available to employees of any employer which participates in CARE
...
INSURANCE PROTECTION
On joining CARE, you are automatically provided with basic insurance cover for death or total permanent disability (casuals and part-times are only covered for death benefits)."

Mrs Bishop signed the Plan's printed employee membership application form. The form included, in the section dealing with employment, the following details:

"BASIS OF EMPLOYMENT (TICK APPROPRIATE BOX)
FULL-TIME PART-TIME CASUAL"

Mrs Bishop ticked the casual box.

The form contained the following relating to insurance cover:

"E. INSURANCE COVER (REFER TO THE TABLE OF INSURANCE BENEFITS)

YOU ARE AUTOMATICALLY PROVIDED WITH BASIC INSURANCE COVER FOR DEATH & PERMANENT DISABILITY AT $1.00 PER WEEK N.B. PART-TIME AND CASUAL EMPLOYEES HAVE DEATH ONLY COVER AT 50c PER WEEK.
IF YOU ARE EMPLOYED FULL-TIME, DO YOU WANT A HIGHER LEVEL OF COVER AT THE RATE OF $1.50 PER WEEK? YES

NOTE: ALL COST OF INSURANCE COMES OUT OF THE EMPLOYER'S CONTRIBUTIONS - THERE IS NO CASH COST TO YOU!
You may chose to have no insurance cover but please think of your spouse and dependants and what you will do if you become permanently disabled. I do not require any insurance cover:"

Mrs Bishop did not tick the second box; she did not opt out of insurance cover.

Mrs Bishop thereafter made voluntary contributions of $10 per pay period. Her employer made contributions to the Plan, including arrears for the period July 1992 to August 1993. The total contributions, including interest, amounted to $545.54. This amount has been paid to Mr Bishop. The last occasion on which a contribution by Mrs Bishop was recorded was about 15 March 1994. She was ill and unable to work after 3 February 1994. She died on 13 September 1994.

Mr Bishop made a claim on the Trustee for the Member's Insured Benefit. The Trustee referred the claim to the Insurer for comment. On 14 March 1995 the Insurer advised the Trustee that the Insured Benefit was not payable under the Policy since Mrs Bishop had died outside the period of extended cover ie 60 days after "ceasing work" (an expression which does not appear in the Deed or the Policy). On 28 March 1995 the Trustee made a decision to accept the view of the Insurer and refused Mr Bishop's claim. On 30 June 1995 Mr Bishop, through his solicitor, made a complaint under s 14 of the Complaints Act.

IV THE TRIBUNAL'S DECISION

There was before the Tribunal (although not before the Trustee and the Insurer at the time of the decisions complained of) a statutory declaration by a director of the company which had employed Mrs Bishop. It included the following:

"2. KATRINA JOY BISHOP commenced employment with the company on the 31st day of July, 1992 on a casual basis.
3. KATRINA JOY BISHOP continued in the employ of the company from that time until the date of her death, namely the 13th September 1994.
4. Notwithstanding that she was employed by the company from the 31st day of July 1992 until the date of her death, she was on leave from the company solely for medical reasons. She contracted cancer and as a result was unable to return to her normal duties at her place of employment, although, it was made clear to KATRINA JOY BISHOP that she could return to work immediately she recovered from her illness.
5. KATRINA JOY BISHOP died on the 13th September 1994 and had not had the opportunity to return to her place of employment to physically carry out her work for the company, however, remained in the service of the company up until the date of her death. She did not resign from her employment, was never dismissed and remained in the service of the company until her death.
6. On the last day that KATRINA JOY BISHOP physically attended at the workplace to carry out her tasks in her capacity as an employee of the company was the 3rd day of February, 1994."

In its reasons, the Tribunal said:

"The Deceased was employed on a casual basis and had not worked for over 7 months prior to her death. The Complainant and the Employer claim that she was on leave without pay during this period. However, the Trustee submitted that she was not continuously employed. While this might be an accurate reflection of her employment status under employment law or the relevant award, as casuals cannot go on leave without pay, it is important to note that the definition of 'Service' in the Trust Deed can override these other bases for assessing whether or not she was still in Service at the date of her death. The Tribunal therefore rejects the following Trustee's statement:
'It is submitted that in order to satisfy the element of continuity it must be established that the deceased member was engaged in regular remunerative employment activity as at the date of her death.'
The Tribunal is of the view that this submission does not reflect the extended definition of Service in the Trust Deed, where certain situations are deemed not to constitute a break in employment. In particular, sub-rule (b)(ii) requires consideration.
In order to qualify under this sub-rule, it is necessary that the Deceased's absence from work due to sickness was a 'temporary absence'. The Trustee has correctly pointed out that the absence was in fact permanent, as she died before returning to work. However, the Tribunal accepts the evidence of both the Employer and the Complainant that it was intended that the Deceased's absence be only temporary and that she would return to work when she had fully recovered, as was expected. Further, there is no medical evidence to suggest that the Deceased was aware that she would not be well enough to resume her normal duties.
Sub-rule (b)(ii) of the definition of Service in the Trust Deed is the section which governs the impact on 'Service' of leave without pay, such as parental leave. The Employer gave clear evidence that it regarded the Deceased's absence as not resulting in a break in the continuity of her service. The Trustee submitted that it did not accept the Employer's assertions and that the sub-rule required an objective assessment of the employment relationship. However, the Tribunal is of the opinion that the Employer's view was reasonably formed in the circumstances and was the clear point of reference under the terms of the Trust Deed.
The Trustee also submitted that sub-rule (b)(ii) was not intended to apply to members of the Fund who were employed on a casual basis. However, no distinction between casual and part-time employment appears in Rule 8.1 or the definition of Service. As far as the Tribunal is aware, only Rule 13 distinguishes part-time and casual employment and this Rule does not relate to benefits but only to the adjustment of contributions.
The failure to distinguish between casual and part-time employees is consistent with the information provided in the Administration Handbook as follows: Members employed on a part-time or casual basis will be provided with the basic death only cover at a cost of 50 cents a week, or they may elect to have no cover.
The Tribunal finds that the Deceased died while in Service. Therefore, Rule 8.1 applies and the Deceased's accumulated benefit and the 'Insured Benefit (if any)' is payable."

The Tribunal then dealt with and rejected an argument that the status of insured benefits in respect of Mrs Bishop was affected by her having been on leave without pay. It then proceeded to hold that, within the meaning of cl 6 of the Policy, Mrs Bishop did not leave her employer's service on her last day of work.

After considering the Employee/Member Information Leaflet, the Tribunal stated:

"The Tribunal finds that the information set out in this Leaflet accords with the earlier interpretation of the provisions of the Trust Deed and of the Insurance Policy. In the view of the Tribunal, therefore, the expectations of the members derived from the information readily available is consistent with the legally binding requirements under the Trust Deed and Policy. In no way does it provide any suggestion of the interpretation adopted in the Trustee submission on this matter.
CONCLUSION
The Tribunal is of the opinion that Insured Benefits are payable in respect of the Deceased under both the terms of the Trust Deed and the Policy."

IV THE LEGISLATION

The Complaints Act establishes the Tribunal: s 6. The Tribunal must pursue the objectives of providing mechanisms for the review of the decisions to which complaints relate that are fair, economical, informal and quick: s 11. Section 4 provides that a trustee makes a decision if the trustee makes or fails to make a decision or engages in any conduct, or fails to engage in any conduct, in relation to making a decision: s 4. "Decision" is not otherwise defined.

A complaint is defined in s 3(1) to include a complaint made under s 14. For present purposes s 14 applies where a trustee of a fund has made a decision in relation to a particular member or a particular former member of a regulated superannuation fund. Under s 14(2), as originally enacted, a person could make a complaint to the Tribunal that the decision:

"(a)
was in excess of the powers of the trustee; or
(b)
was an improper exercise of the powers of the trustee; or
(c)
is unfair or unreasonable."

An amendment in 1995 introduced by the Superannuation (Resolution of Complaints) Act 1995 (Cth) ("the amending Act") deleted the grounds in s 14(2)(a) and (b). The only ground of complaint now available under s 14(2) is that "the decision is or was unfair or unreasonable" (the words "or was" having been inserted by the amending Act). The Explanatory Memorandum to the Bill for the amending Act makes it clear that the amendment to s 14(2) was prompted by concern that a determination of the Tribunal that a trustee's decision was in excess of or an improper exercise of power would be an exercise of Commonwealth judicial power, having regard to the decision of the High Court in Brandy v Human Rights and Equal Opportunity Commission (1995) 183 CLR 245 .

The parties to a complaint are the complainant, the trustee and any other person who has applied to the Tribunal to be made a party and who the Tribunal believes ought to be made a party to the complaint: s 18. In the present case the Tribunal ruled that the Insurer should be a party to the complaint by Mr Bishop.

Sections 36 and 37 as originally enacted were as follows:

"36. The Tribunal, in reviewing a decision or conduct:

(a)
is not bound by technicalities, legal forms or rules of evidence; and
(b)
is to act as speedily as a proper consideration of the review allows, having regard

(i)
to the objectives laid down by section 11; and
(ii)
the interests of all the members of the fund to which the complaint relates; and

(c)
may inform itself of any matter relevant to a review of a decision in any way it thinks appropriate."

37.(1) Subject to subsection (2), for the purpose of reviewing a decision of the trustee of a fund, the Tribunal has all the powers, obligations and discretions that are conferred on the trustee by law or under the governing rules of the fund or otherwise and is to make a determination in writing:

(a)
affirming the trustee's decision; or
(b)
remitting the matter to which the trustee's decision relates to the trustee for reconsideration in accordance with the directions of the Tribunal; or
(c)
varying the trustee's decision; or
(d)
setting aside the trustee's decision and substituting a decision for the decision so set aside.

(2) The Tribunal must affirm the decision if it is satisfied that the decision, in its operation in relation to the complainant was fair and reasonable in all the circumstances.
(3) The Tribunal must not do anything under subsection (1) that would be contrary to law or to the governing rules of the fund."

The amending Act came into operation on 12 December 1995. The complaint the subject of the determination by the Tribunal relevant to the present case was made by Mr Bishop on or about 30 June 1995 under s 14 of the Complaints Act then in operation, apparently based upon the then s 14(2)(c). Provision was made preserving the rights of complainants making a claim before 12 December 1995 and the power of the Tribunal to review their complaints. However in the exercise of the power the complaint was to be treated as if it had been made under the Complaints Act as amended.

The amending Act substituted new sections 36 and 37 as follows:

"36. Tribunal, in reviewing a decision or conduct:

(a)
is not bound by technicalities, legal forms or rules of evidence; and
(b)
is to act as speedily as a proper consideration of the review allows, having regard to:

(i)
the objectives laid down by section 11; and
(ii)
if the complaint relates to a fund the interests of all the members of the fund.

(c)
may inform itself of any matter relevant to the review in any way it thinks appropriate."

37.(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 it 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."

These provisions applied with respect to the determination by the Tribunal of Mr Bishop's complaint.

Section 41(1) provides that a determination of the Tribunal comes into operation immediately upon the making of the determination. By s 41(3) a decision of a trustee as varied by the Tribunal is taken to be a decision of the trustee. Unless otherwise ordered, on the coming into effect of the Tribunal's determination the decision as varied has effect from the day on which the original decision had effect.

Section 44 of the Complaints Act requires the Tribunal to give copies of its determinations to the parties to a complaint. It may direct the trustee to inform other members of the decision.

Under s 46, a party to a review by the Tribunal may appeal to the Federal Court on a question of law from the determination of the Tribunal. An appeal to the Federal Court "does not affect the operation of the determination or prevent the taking of action to implement the determination" but the Court may grant a stay: s 47.

Provisions complementary to the Complaints Act, are contained in the Superannuation Industry (Supervision) Act 1993 (Cth) ("the Supervision Act").

Section 31(1)(b) of the Supervision Act provides that standards may be prescribed by regulation. A trustee must ensure compliance with such standards: s 34. A person who intentionally or recklessly contravenes s 34(1) is guilty of an offence punishable on conviction by a fine not exceeding 100 penalty units: s 34(2).

Regulation 13.17B of the Superannuation Industry (Supervision) Regulations 1993 (Cth) provides that a standard applicable to the operation of a regulated superannuation fund is that:

"... the trustee must not fail without lawful excuse, to comply with an order, direction or determination of the Superannuation Complaints Tribunal..."

Under s 42 of the Supervision Act regulated status and the tax advantages therefrom can be lost for contravention of the Supervision Act or regulations made thereunder.

Section 315 of the Supervision Act provides for the grant of an injunction by the Federal Court to restrain contravention of the Act or (under ss (5)) an injunction in mandatory form.

VI THE TRIAL JUDGE'S DECISION

His Honour referred to the High Court's statement of principles as to the characterisation of judicial power in Precision Data Holdings Ltd v Wills (1991) 173 CLR 167 at 188-190. His Honour noted the argument of counsel for the Trustee and the Insurer that the words in s 14(2) "that the decision is or was unfair or unreasonable" must have some meaning and should be construed as limiting the right of a member or other persons to make a complaint as to those decisions which involve the exercise of a discretion of the trustee or insurer. His Honour accepted the submissions of counsel as to the authorities which restrict the right to challenge in legal proceedings (apart from the Complaints Act) the exercise of a discretion of a trustee:

"Where a trustee exercises a discretion, it may be impugned on a number of different bases such as that it was exercised in bad faith, arbitrarily, capriciously (Re Pauling's Settlement Trusts [1964] Ch 303 at p 333), wantonly, irresponsibly (Lutheran Church of Australia South Australian District Incorporated v Farmers' Co-Operative Executor and Trustees Ltd (1970) 121 CLR 628 at p 639), mischievously or irrelevantly to any sensible expectation of the settler (Re Manisty's Settlement [1974] Ch 17 ), or without giving a real or genuine consideration to the exercise of the discretion (Karger v Paul [1984] VR 161 , which includes a survey of the authorities). The exercise of a discretion by trustees cannot of course be impugned upon the basis that their decision was unfair or unreasonable (see Dundee General Hospital's Board of Management v Walker [1952] 1 All ER 896 ) or unwise (Gisborne v Gisborne (1877) 2 AC 300 at p 307). Where a discretion is expressed to be absolute it may be that bad faith needs to be shown (Gisborne v Gisborne supra at p 305). The soundness of the exercise of a discretion can be examined where reasons have been given, but the test is not fairness or reasonableness (see Re Londonderry's Settlement [1965] Ch 918 at pp 928-9: Karger v Paul at pp 165-6."

The opposing submission by counsel for Mr Bishop and counsel for the members of the Tribunal was that if the Trustee had made an error of law in arriving at its decision then, of necessity, the decision of the Trustee was, as a matter of ordinary and common English usage both unfair and unreasonable.

His Honour did not accept the latter submissions. His Honour said:

"Some meaning must be given to the words 'unfair or unreasonable' in subsection 14(2). This conclusion is supported by the limitations and restrictions contained in section 37. All these restrictions can be contrasted with the wider and almost unlimited powers conferred upon the AAT under the AAT Act. This conclusion is supported by a reference to the difficulties facing a member of a superannuation fund attempting to challenge the exercise of discretion of a trustee by proceedings in a court. The use of the words 'unjust or unreasonable' in subsection 14(2) of the Resolution of Complaints Act must be given the meaning that a person may make a complaint if, and only if, the decision the subject of the complaint contains some discretionary element.
In the present case, there appears to be no suggestion that the decisions of the trustee and the insurer sought to be made the subject of the complaint involved any exercise of discretion by the trustee or insurer. The decision the subject of the complaint is the decision of the trustee that on the facts before the trustee, Mr Bishop is not entitled to an insurance benefit under Rule 8.1. There was no complaint that the decision of the trustee was unfair or unreasonable. The decision was based upon the wording of the rule and definitions contained in the Rules to the relevant facts."

His Honour then concluded that in making its determination the Tribunal purported to exercise judicial power. The Tribunal's determination, in his Honour's view, was based upon the application of legal principles, being the construction of the provisions of the Rules of the Plan, to facts found. The Tribunal erred in failing to consider whether the decision involved "any and what exercise of discretion by the Trustee or the Insurer".

His Honour ordered that the determination of the Tribunal "should be set aside on the basis that it was the result of the exercise of a judicial power". His Honour ordered that the complaint be remitted to the Tribunal for determination according to law. It is implicit in his Honour's reasoning that if on such remittal the Tribunal characterised the decision as the exercise of a discretion (which his Honour thought could possibly arise under Rule 9) the Tribunal could validly exercise powers under s 37.

His Honour also found a further ground on which the determination of the Tribunal should be set aside. His Honour held that the Tribunal had made an error of law, viz that it "held that Mrs Bishop was a part-time employee even though there was no material before it to support such a finding".

VII THE RIGHTS OF MR BISHOP

It will be convenient to turn at once to the second ground on which his Honour held the Tribunal's determination should be set aside.

The term "part-time employee" is not mentioned in the Deed. It is part of the definition of "Employee" in the Policy. His Honour was informed by the parties that the Trustee and the Insurer were not going to take any point based on the Policy. Their counsel stated that:

"... I have instructions from the insurer and the trustee and that neither will take - propose to take any point based upon the definition of part-time employee."

and later:

"But your Honour will not be troubled to construe the insurance policy or be troubled with any issue in relation to insurance as such. Your Honour will only be asked to determine the questions under the trust deed."

Counsel for Mr Bishop re-iterated the point:

"I put the preface in as a result of my learned friend's submissions. It seems to me that my learned friend is, in fact, conceding that the point that he has taken in his notice of appeal in relation to the deceased not falling within the definition of part-time employee has been conceded now, that he no longer intends to press that point. Does that accord with your Honour's understanding?"

His Honour said:

"I am not worried about the insurance policy. I am told I am not required to examine that."

As counsel for Mr Bishop assumed that no point would be taken in relation to the Insurance Policy, the issue of whether Mrs Bishop fell within the definition of "part-time employee" was not addressed. In this respect his Honour's decision operated to deny Mr Bishop the opportunity to be heard on matters concerning the Policy. In itself this was an error of law: Re Zantiotis (1993) 113 ALR 441 ; R v North; Ex parte Oakey [1927] 1 KB 491 . But in any case, the conclusion the Tribunal reached was correct.

The issue argued before the Tribunal and the Court was whether Mrs Bishop died "whilst... in the Service of the Employer" within the meaning of Rule 8.1. The definitions of the terms "Member, "Employee" and "Service" in the Rules have already been noted.

The terms of the Deed make it clear that it is the Employer's subjective determination of whether a person is an employee at any particular time that is conclusive of that issue. A similar issue was considered by the Supreme Court of Victoria in In re The Electrolytic Refining and Smelting Company of Australia Proprietary Limited Staff Provident Fund; Taylor v Roberts [1947] VLR 498 . Lowe J stated (at 503).

"I must give to 'service' its meaning in the rules: 'continuous service with the company as an employee as hereinbefore defined'. 'Employee' is there defined as 'a permanent staff member engaged in duties of a managerial technical clerical or supervisory nature who is of the male sex and who has attained the age of 21 years, or such other servant of the company who may be declared by the directors to be an employee for the purpose of these rules'. Roberts was an employee of the company up to the time of his enlistment. Continuous service does not involve a condition that the person has throughout the whole period been engaged continuously in rendering service to his employer. It includes periods of, e.g., rest, holidays and leave. Continuous service means service recognised by both parties as continuing." (Emphasis added)

In the present case too, Mrs Bishop's service was recognised by both her and her employer as continuing.

The Tribunal correctly had regard to the Employer's subjective determination in coming to its conclusion that Mrs Bishop was in the "Service" of the Employer when she died. The material considered by the Tribunal included a letter dated 27 January 1995 written by Mr Bishop's solicitor to the Administrator of the Plan. In part, that letter stated:

"Mrs Bishop's employer has indicated that it does not regard Mrs Bishop's absence from work as a break in the continuity of Mrs Bishop's service.
At no stage had Mrs Bishop given notice of her resignation nor had her services been terminated by her employer. She was merely absent from her employment on leave without pay in an attempt to recover from her illness, which was unfortunately unsuccessful."

If the Trustee had correctly interpreted the Deed, the letter was material, not inherently improbable, which was logically probative of the proposition that Mrs Bishop at the time of her death was still "in the Service of the Employer". At the very least the letter should have set the Trustee on a train of inquiry to obtain confirmation from the Employer as to whether it regarded Mrs Bishop as being in its service when she died.

In addition to this letter, the Tribunal also considered the statutory declaration already referred to. That clearly stated that the Employer regarded Mrs Bishop as continuing its service until she died.

The reason the Trustee failed to ask any question of the Employer would seem to be its misunderstanding of the terms of the Deed. In its submissions to the Tribunal, the Trustee claimed that a casual employee could never be continuously employed:

"The contract of employment ceases on the day when the employee last performed paid work for the employer... On the basis of the principles stated in these cases, it is clear that a contract of casual employment cannot result in the employee being continuously employed or in continuous service."

If this argument is correct, a casual employee could never be classified as being in the "Service" of an Employer and thus could never be an "Employee". If a casual employee could never be an "Employee", no casual employee could ever be a member of the Fund. This is clearly contrary to the representations made in the Employee/Member Information Leaflet, to the terms of the application form, and Rule 13.1(d), which treats casual employment as a category of part-time employment. As a matter of contract and trust law Mrs Bishop, as a casual employee, was entitled to the benefits of membership applicable to her. Authorities dealing with the concept of casual employment in other contexts, such as industrial legislation, are not to the point.

Quite apart from the concession of counsel that the Policy was not relevant, Mrs Bishop never left the service of the Employer before she died and thus cl 6 of the Policy did not apply.

Whatever the outcome of the present proceedings, it would seem Mr Bishop has a right enforceable in an appropriate court for payment of the Member's Death Benefit.

VII THE NATURE OF THE TRIBUNAL'S FUNCTION

In a judgment handed down shortly before the judgment of Northrop J in the present case, Merkel J held that the jurisdiction of the Tribunal was not confined to the review of discretionary decisions: Briffa v Hay (1997) 147 ALR 226 . Northrop J referred to Briffa, but declined to follow it. In a later decision, Collins v AMP Superannuation Limited (1997) 147 ALR 243 , Merkel J applied and expounded the view adopted in Briffa.

In Briffa Merkel J said (at 234) that the Complaints Act had provided a "new substantive right that is granted to members of a regulated fund, that is to say a right to challenge certain decisions of trustees, which were otherwise valid and intra vires, on the ground that they were 'unfair and unreasonable' ".

His Honour said:

"As was pointed out by Sundberg J in National Mutual Life Association of Australia Ltd v Jevtovic, 8 May 1997, unreported (at 10-11), the question for the Tribunal, under the Complaints Act is not whether it is of the opinion that the trustees decision was correct as a matter of law or fact. Rather, it is whether the Tribunal is satisfied that the trustee's decision in relation to a member or former member is unfair or unreasonable: see ss 14(1),(2), 37(3) and (4)."

His Honour went on to say:

"Obviously, in arriving at a determination the tribunal might form its own views on the legal obligations of the trustee in relation to the decision or refer questions of law to the Court: see s 39. However, the view of the tribunal or of the court, in respect of those obligations is not determinative of the issue of unfairness or unreasonableness which the tribunal is to determine or of the compensatory relief the tribunal might grant."

In rejecting the argument that the jurisdiction of the Tribunal was limited to discretionary decisions, Merkel J relied on the absence of any such restriction in the language of the Complaints Act and on the inconvenience that would flow from disputes over non-discretionary matters having to be resolved in the slower and more expensive procedures of the ordinary courts. His Honour also considered the argument that the Tribunal would be exercising judicial power if its jurisdiction extended to non-discretionary matters. If that were the case s 15A of the Acts Interpretation Act 1901 (Cth) might result in the legislation being read down to avoid an unconstitutional operation. His Honour discussed Precision Data and Brandy and concluded that the Tribunal exercised administrative rather than judicial power because, in his Honour's view, the determination of the Tribunal created new rights and obligations as between the Trustee and the beneficiaries and did not determine rights and duties based on existing facts and law. Rather its function was to determine what rights and obligations should be created.

In Collins, Merkel J examined more closely the functions of the Tribunal. His Honour concluded (at 254) that if the trustee's decision is legally correct "it will also be fair and reasonable". If the Tribunal finds that the trustee's decision is wrong in law it need not necessarily follow that it is unfair and unreasonable; those aspects still have to be considered.

In my respectful opinion, Northrop J was correct in holding that the Tribunal's jurisdiction is confined to discretionary decisions. The opposing construction would mean that s 14 in its present form is to be construed as though it included decisions falling within the former s 14(2)(a) and (b).

Moreover, as already noted, Collins accepts that there can be no question of unfairness or unreasonableness where a non-discretionary decision of a trustee is legally correct. On that view, the only room left for the criterion of fairness and reasonableness to apply in the case of a non-discretionary decision is where the decision is legally wrong. The Tribunal could determine the decision was also unfair and unreasonable - which would be quite superfluous. Or it could determine the decision was fair and reasonable - in which case the trustee would be faced with a dilemma. If it implements the original decision it would be acting contrary to law and liable to action at the suit of member beneficiaries. If it did not implement the decision it would be disobeying the Tribunal's determination, committing an offence and laying itself open to injunctive remedy and the loss of approved status.

In short, the express terms of s 37(5) make it impossible for the fairness and reasonableness standard to have application otherwise than in relation to discretionary decisions. There are many such decisions falling to be made under the Plan; the choice of a dependent under cl 9.1 being one example. A decision of a trustee under a comparable provision was considered in Pope v Lawler (1996) 41 ALD 127 .

VIII HAS JUDICIAL POWER BEEN CONFERRED?

In my opinion, the following factors lead cumulatively to the conclusion that the power purportedly conferred on the Tribunal by the Complaints Act is judicial power of the Commonwealth.

First, the Tribunal's function is essentially different from that of a body which makes, albeit in a forensic setting, essentially the same decision as a Government official, as for example the Administrative Appeals Tribunal sitting on an appeal against an assessment by the Commissioner of Taxation: Federal Commissioner of Taxation v Munro (1926) 38 CLR 153 at 176-178, 200, 212. While superannuation funds today are subject to a complex regulatory regime, the rights and obligations of members, trustees, employees and insurers as between themselves are governed by trust and contract law, enforceable in the ordinary courts. This area is not within the province of administration. It is not concerned with the rights and obligations of individuals or corporations vis-a-vis government like the tax, social security or migration systems.

Into this area of private law the Complaints Act has inserted the Tribunal as a body with power to "decide controversies" between subject and subject as to rights which relate to property, and to give a "binding and authoritative decision": Huddart, Parker and Co Pty Ltd v Moorehead (1908) 8 CLR 330 at 357 per Griffith CJ.

Secondly, the Tribunal's jurisdiction is enlivened by the complaint of an individual (s 14(2)). By contrast, one of the indicia of administrative as opposed to judicial functions is that only a governmental body can initiate proceedings: Precision Data at 190, R v Trade Practices Tribunal; ex parte Tasmanian Breweries Pty Ltd (1970) 123 CLR 361 at 375.

Thirdly, the Tribunal does not create new rights. It adjudicates on claims that rights conferred by law have been breached. The Complaints Act creates a new substantive right for members of superannuation funds to which the Act applies. Such members are given a right not to be adversely affected by decisions of a trustee which are not fair and reasonable. This is not a right previously known to trust law. A decision of a trustee, otherwise within power and not mala fide, could not be attacked on the grounds of unfairness or unreasonableness: Karger v Paul [1984] VR 161 at 164-166 and the cases there cited.

In determining a complaint, the Tribunal is adjudicating "a dispute about rights and obligations arising solely from the operation of the law on past events or conduct": Precision Data at 188. In the words of Holmes J in Prentis v Atlantic Coast Line Co (1908) 211 US 210 at 226, cited by Windeyer J in Tasmanian Breweries at 396:

"A judicial enquiry investigates, declares, and enforces liabilities as they stand on present or past facts and under laws supposed already to exist. That is its purpose and end."

Some of the High Court formulations of the concept of judicial power refer only to past facts. However there is no suggestion in these cases that a power, otherwise judicial, loses that character if it involves a determination on present as well as past facts. Courts frequently deal with present facts: What is the present medical condition of the plaintiff? Is the defendant's conduct which the plaintiff seeks to enjoin still continuing? In the present case s 37(4) of the Complaints Act requires the Tribunal to make an order to achieve the result that the unfairness or unreasonableness "no longer exists".

The function of the Tribunal involves an application to the trustee's decision of the criteria of fairness and reasonableness. In Jevtovic, a case involving a dispute as to whether a member of a fund was totally and permanently disabled, Sundberg J said (at 10):

The matter to which the Tribunal must first direct its attention under s 37, in a case as the present, is whether it is satisfied that the decision, in its operation in relation to the complainant, was fair and reasonable in the circumstances. That is made clear by s 37(1)(b) - the obligation to make a determination under sub-s(3) is "subject to subsection(6)" - and by sub-s(4) - the Tribunal's power to make a determination under sub-s(3) is conditional upon it having found that the decision was unfair or unreasonable or both.

Shortly after that passage his Honour said:

The sub-s (6) inquiry is not whether the Tribunal is of the opinion that the respondent is totally and permanently disabled, but whether it is satisfied that the trustee's and the insurer's decision that he was not so disabled were fair and reasonable in the circumstances.

In Adkins v The Health Employees Superannuation Trust Australia Ltd (unreported, 15 August 1997) I followed Jevtovic. In my respectful opinion, Sundberg J's analysis demonstrates that the Tribunal is considering present or past facts - the trustee's decision in its operation in relation to the complainant - and asking whether the decision is fair and reasonable.

Fourthly, the Tribunal's function does not involve the application of policy considerations: Precision Data at 191, Tasmanian Breweries at 399-400. Fairness and reasonableness are objective, albeit indeterminate, criteria and no different in that regard from those applied in other contexts by courts: Did the defendant take reasonable care? Is the alleged implied term reasonable?

Fifthly, a decision of the Tribunal can be enforced by civil injunction and criminal penalty. It is not to the point that the actual enforcing is not done by the Tribunal itself: Brandy. Nor does it matter that the determination takes effect as a decision of the trustee.

I do not accept the argument of counsel for the Attorney-General that a decision of the Tribunal, unlike the judgment of a court, is open to collateral attack. The comprehensive review of the law by the House of Lords in R v Wicks [1997] 2 WLR 876 supports the proposition that the question is one of construction of the legislation under which the impugned order is made. In the present case does "order, direction or determination" of the Tribunal in reg 13.17B of the Superannuation Industry (Supervision) Regulations mean (i) an order etc not liable to be quashed on any of the standard grounds in public law, or (ii) an order etc which complies with formal requirements of the Complaints Act and has not actually been quashed on appeal or judicial review? ([1997] 2 WLR at 893). In my opinion, the scheme of the Complaints Act, and in particular the provision for appeals on questions of law to the Federal Court under s 46, indicates the latter. See also Hoffman-La Roche & Co v Secretary of State for Trade and Industry [1975] AC 295 and 365, Comptroller-General of Customs v Kawasaki Motors Pty Ltd (No 1) (1991) 32 FCR 219 at 228-230.

In any event, it is not an answer to the argument on enforceability to say that some decisions of the Tribunal may be invalid on one or other administrative law grounds and may therefore be ignored - or attacked in collateral proceedings. The legislation at the very least provides effective machinery for the enforcement of valid orders of the Tribunal. A trustee faced with an adverse determination of the Tribunal cannot ignore it without fear of sanctions following as a matter of law from the fact of the determination and its being disobeyed. That is an indicium of judicial power.

Finally, my conclusion would be the same if the Complaints Act on its proper construction applied to non-discretionary decisions.

The appeal should be allowed to the extent necessary to set aside his Honour's order that the matter be remitted to the Tribunal. Otherwise the appeal should be dismissed. The appellants should pay the respondents' costs. The Attorney-General did not seek costs.