FEDERAL COURT OF AUSTRALIA
Cullinane v Mercer Benefit Nominees Limited [2006] FCAFC 82
SUPERANNUATION – appeal from decision of Superannuation Complaints Tribunal affirming decision of trustee of superannuation fund to reject member’s claim for disablement benefit – dismissal of appeal by primary judge – requirement under superannuation fund trust deed that complainant have a “physical or mental incapacity” which renders her “unable to engage” in relevant work – whether Superannuation Complaints Tribunal erred by interpreting phrase “unable to engage” as meaning “permanently unable” – whether primary judge erroneously conflated expressions “permanently unable” and “unable now and for the foreseeable future” – whether requirements for disablement benefit satisfied by complainant demonstrating she has a physical or mental incapacity and is unable to work now and for the foreseeable future
Held: (i) “permanently unable” is a more stringent requirement than “unable now and for the foreseeable future” (ii) the Tribunal erred in requiring the appellant to be “permanently unable” to engage in relevant work (iii) the appellant is entitled to have her claim considered against the requirement that she has a physical or mental incapacity which renders her unable to engage, now and for the foreseeable future, in relevant work
WORDS AND PHRASES – “incapacity” and “unable”
Al-Kateb v Godwin(2004) 219 CLR 562 referred to
Ball v William Hunt & Sons, Limited [1912] AC 496 referred to
Chammas v Harwood Nominees Pty Ltd (1993) 7 ANZ Insurance Cases ¶61-175 referred to
Leeder v The Mayor, Etc, of the Town of Ballarat East [1908] VLR 214 referred to
Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 cited
Repatriation Commission v Moss (1982) 59 FLR 226 referred to
Sinanoglou v Australian Iron and Steel Pty Ltd (1967) 68 SR (NSW) 279 referred to
Superannuation (Resolution of Complaints) Act 1993 (Cth), s 37(6)
JUDITH ANNE CULLINANE v MERCER BENEFIT NOMINEES LIMITED (formerly MELLON NOMINEES LIMITED)
NSD 2158 OF 2005
TAMBERLIN, WEINBERG & ALLSOP JJ
29 MAY 2006
SYDNEY
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IN THE FEDERAL COURT OF AUSTRALIA |
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NEW SOUTH WALES DISTRICT REGISTRY |
NSD 2158 OF 2005 |
ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL
COURT OF AUSTRALIA
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BETWEEN: |
JUDITH ANNE CULLINANE
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AND: |
MERCER BENEFIT NOMINEES LIMITED (formerly MELLON NOMINEES LIMITED) RESPONDENT
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DATE OF ORDER: |
29 MAY 2006 |
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WHERE MADE: |
MELBOURNE |
THE COURT ORDERS THAT:
1. The appeal be allowed.
2. The orders made by the primary judge be set aside.
3. The respondent pay the appellant’s costs of this appeal, and below.
4. The matter be remitted to the Superannuation Complaints Tribunal to be determined according to law.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
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IN THE FEDERAL COURT OF AUSTRALIA |
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NEW SOUTH WALES DISTRICT REGISTRY |
NSD 2158 OF 2005 |
ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL
COURT OF AUSTRALIA
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BETWEEN: |
APPELLANT
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AND: |
MERCER BENEFIT NOMINEES LIMITED (formerly MELLON NOMINEES LIMITED) RESPONDENT
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JUDGES: |
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DATE: |
29 MAY 2006 |
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PLACE: |
MELBOURNE |
REASONS FOR JUDGMENT
1 The primary issue in this appeal concerns the proper construction of a “disablement” clause in a superannuation trust deed. The appellant appeals from a judgment of a judge of this Court, dismissing an “appeal” from a decision of the Superannuation Complaints Tribunal (“the Tribunal”) given on 1 February 2005: Cullinane v Mercer Benefit Nominees Limited (formerly known as Mellon Nominees Limited) [2005] FCA 1470. The “appeal” before his Honour was brought pursuant to s 46 of the Superannuation (Resolution of Complaints) Act 1993 (Cth) (“the SRC Act”), and was in the nature of an application in the original jurisdiction of the Court.
2 The Tribunal affirmed a decision of the trustee (“the Trustee”) of a superannuation fund known as the “Ansett Australia Flight Attendants’ Superannuation Plan”, and also referred to as the “Flight Attendants’ Benefit Scheme” (“the FAB Scheme”). That decision was to reject the appellant’s claim for a superannuation benefit under the FAB Scheme. The Trustee made its decision in April 2003, after it received advice from AMP Life Limited, normally its insurer, but in this case, simply engaged to assess, investigate and manage certain claims, including that of the appellant. For convenience, we shall refer to AMP Life Limited as “the Assessor”.
3 The backgrounds facts are not in contention, and are helpfully summarised in the reasons for judgment of the primary judge at [5]-[15]. Briefly, the appellant was born on 28 October 1964. She received a primary and secondary education, and at university passed units in Marketing, “Legal Framework” and Management. In 1986, she attained a certificate in “Supervision”.
4 In November 1984, she commenced employment as a flight attendant/cabin manager with East-West Airlines. In 1988, East-West Airlines became part of Ansett Airlines. For the next nine years, until November 1997, the appellant was employed as a flight attendant/cabin manager by Ansett Airlines. While working as a flight attendant, she also owned and worked in a retail clothing boutique. On 1 February 1985, the appellant became a member of the FAB Scheme.
5 In the period between 6 and 8 November 1997, the appellant was exposed to airborne chemicals in the course of her duties as a flight attendant. Following this exposure, she became unwell, and stopped attending work, though she attempted, unsuccessfully, to return to flying a week or so later. She last worked for Ansett Airlines on 11 November 1997. She was at that stage 33 years of age. Since that time she has remained unwell, complaining of a number of symptoms. These include cognitive difficulties, and environmental sensitivities, as well as fatigue and speech problems. On 22 January 1998, she attempted a test flight as a passenger, but experienced breathing problems, nausea and difficulty in concentrating. As a result of her illness, she placed the boutique business on the market, finally selling it in January 1999.
6 On 16 October 2001, the appellant submitted a claim for payment of a superannuation disablement benefit under the FAB Scheme. In the claim form, she stated that she was employed by Ansett Airlines, and that she had been so employed for some 13 years, until November 1997. She described herself as being on “unpaid sick leave”. On 4 March 2002, as a result of Ansett Australia Ltd having gone into voluntary administration, her employment was terminated for reasons of redundancy.
7 For whatever reason, the appellant was not informed until April 2003 that her claim for disablement benefit had been rejected. Earlier, on 16 September 2002, she had lodged a complaint with the Tribunal in respect of the Trustee’s failure to make a decision. It is possible that this complaint spurred the Trustee into action. The Trustee then proceeded to act on the advice of the Assessor in declining what the Trustee described as a claim for a “Total and Permanent Disablement” benefit. That decision was taken some time prior to 16 April 2003.
8 On 22 May 2003, the appellant lodged a second complaint with the Tribunal, this time challenging the Trustee’s decision to deny her claim. On 13 August 2003, the Trustee advised the appellant that it had reviewed her claim, but had decided to affirm its earlier decision. In the course of its letter to her informing her of the result of the review, the Trustee referred several times to her claim as being one for a “Total and Permanent Disablement” benefit.
9 Before the Tribunal the appellant relied upon several grounds in challenging the Trustee’s decision. Essentially, those grounds were replicated before the primary judge. In substance, only one of those grounds was pursued in the appeal to this Court. Put simply, the appellant contends that the Trustee, the Tribunal, and the primary judge all misconstrued the term “disablement”, as that term is used in the trust deed underpinning the FAB Scheme. She submits that the term was construed too narrowly, and as a result, she was erroneously found not to have met the test for a disablement benefit.
10 The term “disablement” was defined in an amendment to the FAB Scheme trust deed brought about by a supplementary trust deed executed on 27 October 1994, with effect from 1 July 1994. The supplementary trust deed amended rule 1.1 of the original trust deed by deleting the original definition of “disablement”, and replacing it with the following:
“‘disablement’ means any medical state of physical or mental incapacity which, in the opinion of the Trustee, after having considered independent medical evidence, renders the Member unable to engage in any gainful occupation or business or to perform any work for which, in either case, the Member is reasonably fitted by education, training or experience.”(emphasis added)
11 The Trustee affirmed its decision to decline the claim on the basis that the balance of medical evidence suggested that the appellant did not meet this definition of “disablement”. In arriving at that conclusion, it acted upon advice from the Assessor to that effect.
12 The Tribunal correctly identified its role as being to determine whether the decision of the Trustee was “fair and reasonable” in its operation in relation to the appellant in the circumstances. It approached the matter in that way in accordance with s 37(6) of the SRC Act which provides that the Tribunal “must affirm” a decision of a trustee if it is satisfied that the decision, in its operation in relation to the complainant “was fair and reasonable in the circumstances”.
the medical evidence
13 The Tribunal’s reasons for decision set out in some detail the medical evidence that had been before the Trustee. It observed, correctly, that medical opinion varied greatly as to the nature and seriousness of the appellant’s condition. Some reports had been prepared in relation to her workers’ compensation claim. The issues relating to that claim were, of course, different from those relating to the claim for disablement benefit.
14 The early reports, prepared soon after the commencement of her illness, suggested that there may have been a problem with leakage of the air conditioning unit chemicals into the atmosphere in the aircraft, but generally posited that this would not produce a lasting reaction.
15 One medical expert, Dr Andrew Marsden, a specialist occupational health physician, in reports dated 17 February 1998 and 23 April 1998, described the appellant’s overall presentation, in unfavourable terms, as being “one of a major crusade”, and displaying “significant functional overlay”. Dr Marsden went on to say that he was not convinced that she had a chemical sensitivity. He diagnosed hypoglycaemia, and stated that in his opinion, this diagnosis would not preclude work.
16 On the other hand, Dr William Barnes, a general medical practitioner and the appellant’s treating doctor, saw her on many occasions from April 1998 to September 2002. He prepared seven separate medical reports, finally diagnosing her with multiple chemical sensitivities, and chronic fatigue syndrome. His report of 19 July 2001 concluded that the appellant would not be able to return to work “for some considerable time”. With regard to alternative employment, he concluded that she would only be able to work very limited hours, and that her neurocognitive disabilities, coupled with her fatigue, would make it difficult to hold down a job. On 3 October 2001, he said that she would not be fit to return to work “in the foreseeable future” because of ongoing problems with memory, cognition, fatigue, depression, coordination and stamina. On 25 September 2002, he described her as“unemployable”and stated that,in his opinion, she would “remain so in the unforeseeable [sic] future”.
17 Dr Wai-on Phoon, a professor of occupational health, provided two reports at the appellant’s request. He concluded from an examination of the documents supplied to him, that she had probably been exposed to a toxic chemical or chemicals in November 1997, but that there was no definite evidence of residual organ system damage. He stated that it was not possible to give an opinion as to whether she was fit for work, or whether she had any permanent disability, as he had not examined her. An examination was then arranged. His second report described her as being, clinically, “in reasonably good health”. However, he said that he did not think it possible for her to resume her career as a flight attendant.
18 Ms Margo French, a clinical psychologist, provided three reports dated 24 July 1998, 5 April 2002 and 1 July 2004. She diagnosed significant memory difficulties, and trauma arising from injuries sustained during the course of the appellant’s employment. She said that the appellant was likely to require psychological treatment “over the next five years”. She concluded her report of 1 July 2004 by stating that, in her opinion, the appellant was:
“… unable and unlikely ever again to be able to undertake any form of remunerative work for which she is reasonably fitted by education, training or experience.”
19 Dr Peter Stevenson, a consultant physician who examined the appellant for a workers’ compensation insurer in July 1998, concluded that she had suffered a real reaction to a solvent leak, and that the ongoing symptoms reflected the syndrome of “pseudotoxicity”, rather than of ongoing “neurotoxicity”. However, the appellant had told him that her symptoms were subsiding and that she was now substantially improved. He concluded that she should have a “graduated return to work”, and that she shouldreceive instruction in cognitive-behavioural therapy from an appropriately experienced psychologist.
20 Dr Robert Finlay-Jones, a consultant psychiatrist, examined the appellant at the request of the workers’ compensation insurer on 26 May 1999. In a report dated 1 October 1999, he noted that her symptoms were consistent with anxiety or panic disorder. He doubted that she was fit for work at the time that he saw her, butexpressed the opinion that, after a trial of education and treatment, such as that provided by cognitive behaviour therapy programs, she might become fit for work.
21 Dr Ross Goodheart, a consultant neurologist, saw the appellant on 2 September 1999, and subsequently, at the request of her general practitioner. In his second report dated 19 July 2001, he concluded that she would continue to suffer with concentration and memory problems for the foreseeable future. Although it was possible that she might be able to undertake some home based employment, her concentration and memory problems would significantly interfere with her ability to do so.
22 Dr David Watson, a consultant physician, saw the appellant at the request of her general practitioner on 2 November 2000, and again on 2 May 2001. He concluded, in a report dated 21 May 2001, that she could not work again in the aviation industry, and he saw significant difficulties with respect to her ability to undertake alternative employment. He said that, at the very best, she could hope to work part-time in any occupation that involved relatively brief periods of work, preferably in a self-employed capacity, or with a very sympathetic employer.
23 Dr Jonathan Burdon, a consultant respiratory physician prepared two reports dated 24 May 2001 and 8 March 2002. He said in his first report that he had no doubt that the appellant’s exposure to fumes in the course of her duties as a flight attendant had been the cause of her current illness, which was characterised by neurocognitive dysfunction, typical of hydrocarbon toxicity. He said that she should never return to work in the particular type of aircraft that had brought about her condition, and that it was unlikely that she would return to work in the foreseeable future. He said that the symptoms of hydrocarbon toxicity generally lasted for a considerable period of time. In some cases, they gradually abated, but in others, they continued indefinitely. He added that given her extreme tiredness and lethargy, together with her neurocognitive deficit, she would be unable to take up employment at least at the present time. He said that this “total incapacity” would, in his opinion, last for an extended period, and probably many years to come.
24 Mr Martin Jackson, a consultant clinical neuropsychologist, provided two reports dated 28 February 2002 and 31 December 2002 to the Assessor. His first report concluded that the appellant’s cognitive abilities were only mildly impaired. He thought there was no reason why she could not return to the airline industry, performing administrative duties. She could also undertake administrative work in any other industry. In his second report, he concluded that such mild cognitive impairments as she had sustained were the result of an anxiety or panic disorder.
25 Dr Andrew Harper, an occupational physician who examined the appellant on 17 May 2002 for workers’ compensation purposes at her solicitor’s request, diagnosed her as suffering with multiple chemical sensitivity. He said that he anticipated neither deterioration nor recovery. He regarded her as incapacitated to return to work as a flight attendant, and described her capacity to return to alternative work as “very limited”.
26 Dr Megan Gilbert, a consultant psychiatrist, prepared two reports for the Assessor dated 11 June 2002 and 10 March 2003. She found no evidence of depression or anxiety. She concluded that the appellant did not have a psychiatric illness, and there was no psychiatric reason why she could not return to work.
27 Dr David Rosen, a neurologist, examined the appellant at the request of the Assessor. He prepared two reports dated 18 July 2002 and 11 December 2002. He described her as “currently unfit” to do her job as a flight attendant, and recommended further psychiatric treatment. He said that he believed she would be fit for certain types of part-time, and eventually, full-time work. He said that she might function well in an office environment. He added:
“I do not at this stage consider that [the appellant] ‘will never be fit to return to the workforce’”. (emphasis added)
28 In his second report, Dr Rosen discussed the controversy within the medical community regarding multiple chemical sensitivity. He noted that the American Medical Association had recommended that this condition not be recognised as a clinical syndrome.
29 The medical reports of Dr Gilbert and Dr Rosen were given in response to requests from AMP in letters dated 9 April 2002 seeking a report to cover, among other questions:
“(v) if you consider Miss Cullinane will never be fit to return to the work force, please give detailed reasons for this.”
The appendix to those letters also contained the following:
“Appendix
Under the policy, disablement is established if:
TOTAL AND PERMANENT DISABLEMENT
As a result of illness or injury, AMP has determined that the Insured Person is unlikely EVER to be able to engage in any regular remunerative work for which he/she is reasonably fitted by education, training or experience.”
30 Dr JL Pearce, a specialist physician in occupational and rehabilitation medicine, examined the appellant on 30 July 2002 at the request of the Assessor. He provided two reports dated 31 July 2002 and 28 November 2002. He concluded that she was not capable of returning to her previous occupation as a flight attendant. Headded that she could probably not at present perform any other full-time occupation. He considered that she might be able to engage in part-time employment in an administrative or clerical capacity, and added that as a young woman, “she does not meet the criteria for total and permanent incapacity at this point in time”.
31 There were a number of other medical reports available to the Trustee. It is unnecessary for present purposes to refer to them. The reports summarised above represent those that the Tribunal regarded as being of particular significance, and are a fair sample of the range of views expressed by the various medical experts who had examined the appellant.
the tribunal’s decision
32 The Tribunal accepted that, over a three day period in November 1997, the appellant, while at work, had been exposed to airborne chemicals on an aircraft. As a result, she had become unwell, and had been taken to a hospital. The doctor on duty was unable to determine the cause of her symptoms at that time. The following week, when she next flew, she suffered similar symptoms. On this occasion, these lasted for four or five weeks.
33 The Tribunal observed:
“She has been diagnosed as suffering from multiple chemical sensitivity (MCS), although there was a body of evidence before the Assessor and Trustee disputing this condition … . However, the Complainant has received a workers’ compensation settlement based on evidence that she suffered this injury in the workplace and her claim for total and permanent disablement benefits is based on this condition. It is not the role of the Assessor, Trustee or Tribunal to necessarily resolve a conflict between various medical practitioners concerning a disputed diagnosis.
34 In a critically important passage, the Tribunal then stated:
For a Complainant to succeed under the instant definition two things must be present vis:
(a) “a medical state of physical or mental incapacity”. This may not necessarily be, or be able to be, identified as a known categorisable medical condition, and
(b) a resultant preclusion from ever working in an area for which he/she has relevant qualifications.”
35 The Tribunal accepted that there was a general consensus among the medical experts that the appellant would never be able to return to work as a flight attendant. It then noted that the Assessor had, initially at least, proceeded upon the assumption that the appellant’s claim was for a “Total and Permanent Disablement benefit”. That assumption was erroneous because her claim was in fact for a “disablement benefit”, as defined in the FAB Scheme, and particularly as the term “disablement” was defined in rule 1.1 of the trust deed. As a result, the Assessor had initially approached the appellant’s claim upon the basis that she had to meet what might arguably be said to be a more stringent test of “disablement” than that required by the definition of that term under rule 1.1.
36 The Assessor’s reference to a claim for “Total and Permanent Disablement” first appears in a letter dated 31 March 2003 sent to a representative of the Trustee. That letter advised that, after careful consideration, the Assessor was unable to admit a claim for “Total and Permanent Disablement” for the appellant. It set out, in an attachment, a summary of the medical evidence that had been reviewed, and suggested that the Trustee should consider that evidence for itself in order to “be satisfied that AMP’s decision is a reasonable one”.
37 A possible explanation for the Assessor’s adoption of the term “Total and Permanent Disablement” was the fact that the appellant herself had referred to her claim in these terms.
38 The Tribunal noted, in its reasons for decision, that the Assessor had advised that its submission to the Tribunal of 5 July 2004 should be read in conjunction with its earlier submission to the Tribunal dated 16 October 2003, and related correspondence. The Assessor stated that the amount payable to the appellant, as an insured “TPD benefit” would be $123,521.65, and provided the “TPD definition” it used to assess the appellant’s claim, which included the following:
“… (after a period of six consecutive months’ continuous absence from Service (or any lesser period determined by the Trustee) on account of illness or injury which is proved to the satisfaction of the Trustee) that in the opinion of the Trustee (after considering such medical or other evidence or advice as it may require from time to time) the Member is unable and unlikely ever again to be able to undertake any form of remunerative work for which the Member is reasonably fitted by education or training or experience…” (emphasis added)
39 That definition is to be found in the Ansett Residual Superannuation Fund (“the Residual Fund”) trust deed dated 30 June 2004, and the Residual Fund amending deed dated 21 October 2004, both of which distinguish between “Temporary Total Disablement” and “Total and Permanent Disablement”. An outline of the circumstances under which the Residual Fund was established, after Ansett Industries Ltd went into voluntary administration, appears at [46]-[48] below. It is sufficient for present purposes simply to note that there was no warrant for applying the “TPD definition” to the appellant’s claim for a disablement benefit, which was brought under rule 1.1 of the FAB Scheme.
40 The Tribunal was conscious of the fact that, on one view, the TPD definition employed by the Assessor imposed what was arguably an additional element to the test of “disablement” that the appellant was required to meet. That was that the appellant was “unable and unlikely ever again to be able” to undertake work of the relevant kind. The TPD definition stood in apparent stark contrast with the definition of “disablement” as set out in rule 1.1 which had no such additional requirement.
41 Despite the contrast between these two definitions, the Tribunal went on to say:
“Nevertheless, the Tribunal is of the view that the definition of “disablement” in the Trust Deed is compatible with the TPD test contained in the Policy. Both imply a component of future service. Thus the Tribunal is of the opinion that it is fair and reasonable that the Trustee should be satisfied on the balance of probabilities that a member is permanently “unable to engage in any gainful occupation or business” rather than being incapacitated, or “unable” at a particular point in time when assessing a claim.” (emphasis added)
42 One interpretation of this passage is that the Tribunal was doing no more than responding to a not terribly cogent submission made on behalf of the appellant. That submission was that the term “unable”, in the definition of “disablement” in rule 1.1, should be construed as meaning merely “unable at the present time”. On that interpretation of the passage, the Tribunal was not seeking to define the term “unable” as meaning “permanently unable” for all purposes. It followed that, when the Tribunal described the definition of “disablement” in rule 1.1 as being “compatible” with the TPD definition, it meant nothing more than that both definitions implied a component of future service.
43 However, another interpretation of this passage, and indeed of its earlier formulation of the requirements of the definition of “disablement” in rule 1.1, is that the Tribunal regarded the word “unable” as meaning “unable now, and for all time”. If that view of the Tribunal’s reasoning process is correct (and it accords with the respondent’s submission to this Court, and arguably with the primary judge’s interpretation of what the Tribunal intended), there is a real difficulty with the Tribunal’s analysis.
44 As previously indicated, the Tribunal noted that the conclusions reached by the various medical experts differed greatly in their prognoses of the appellant’s future. The Tribunal described “her claim for total and permanent disablement” as being generally supported in the reports prepared on her behalf by Dr Barnes, Ms French, Dr Goodheart, Dr Watson, Dr Burdon and Dr Harper. All of these experts were said to be of the opinion that she was seriously ill, and would be unable to return to work, at least for the foreseeable future. It noted, however, that a number of other medical reports had been provided for the purposes of her workers’ compensation claim, or at the request of the Assessor. Some of these reports suggested that it was perfectly possible for the appellant to return to work, if not immediately, at least on a graduated basis.
45 The Tribunal observed that at the time that the appellant ceased work, she was only 33 years old. The fact that the medical evidence regarding her condition varied so greatly meant that it had been fair and reasonable for the Trustee to have concluded, on the basis of the evidence as a whole, that she did not satisfy the requirements of the definition of “disablement” in the trust deed. In the Tribunal’s view, the uncertainty regarding the nature and severity of her medical state of physical and mental incapacity left it reasonably open to the Assessor, in the first place, and then to the Trustee, to conclude that it was more likely than not that she would be able to find alternative employment at some point in the future. It was on that basis that the Tribunal affirmed the Trustee’s decision.
the Primary Judge’s reasons
46 The primary judge noted that the Residual Fund was established on 30 June 2004, following an Ansett Industries Ltd Deed of Company Arrangement of 2003. The appellant, having been a member of the FAB Scheme, automatically became a member of the Residual Fund.
47 The trust deed establishing the Residual Fund contained (coincidentally in cl 1.1 of that trust deed) definitions of “Temporary Total Disablement” and “Total and Permanent Disablement”. The definition of “Total and Permanent Disablement” for a former member of the FAB Scheme, such as the appellant, was as follows:
“… any medical state of physical or mental incapacity which, in the opinion of the Trustee, after having considered independent medical evidence, renders the Previous Fund Member [relevantly, a member of the FAB Scheme] unable to engage in any gainful occupation or business or to perform any work for which, in either case, the Previous Fund Member is reasonably fitted by education, training or experience.”
48 His Honour observed that notwithstanding the use of the expression “Total and Permanent Disablement” in the trust deed establishing the Residual Fund, this definition was essentially the same as that of “disablement”, which had been introduced in 1994 into rule 1.1 of the FAB Scheme.
49 The primary judge dealt with the various grounds contained in the notice of appeal seriatim. The first of those grounds alleged that the Tribunal had misconstrued the definition of “disablement” by treating it as having the same meaning as “Total and Permanent Disablement” in an insurance policy issued by the Assessor, which was normally the Trustee’s insurer. The policy in question was referred to by the Tribunal, though it was not included in the appeal papers to this Court. However, for present purposes it may be noted that the definition of “Total and Permanent Disablement” in the policy, and that to which the Assessor had regard, is the same as the definition of that expression contained in cl 1.1 of the Residual Fund trust deed. That definition is set out at [38] of these reasons for judgment.
50 The Assessor acknowledged that it had acted erroneously in applying the definition of “Total and Permanent Disablement” taken from the policy, rather than the definition of “disablement” that appeared in rule 1.1 of the FAB Scheme trust deed. As previously indicated, it was at that point that the Tribunal expressed the view that the two definitions were “compatible”, explaining that both implied a component of future service.
51 In dealing with this first ground of appeal, his Honour concluded that any errors that had been made, whether by the Assessor, the Trustee, or the Tribunal in referring to “Total and Permanent Disablement” had been brought about, in part, by the appellant’s own description of the nature of her claim. In correspondence, she had repeatedly described her condition as giving rise to a claim for total and permanent disability, and had repeated that description in her submissions to the Tribunal. One possible explanation as to how the Assessor’s error had escaped notice was that one limb of the definition of “Total and Permanent Disablement” in the Residual Fund trust deed, that applicable to the appellant, was identical to the definition of “disablement” in the FAB Scheme Rules. The more restrictive limb of that definition, that added the words “and unlikely ever again to undertake any form of remunerative work” of the relevant kind, also appeared in the definition of “Total and Permanent Disablement” in the immediately preceding paragraph, but that limb did not apply to the appellant.
52 His Honour said that he construed the word “compatible” as used by the Tribunal to signify that the definition of “Total and Permanent Disablement” in the policy would have imposed a no more stringent test upon the appellant than the definition of “disablement” in the FAB Scheme Rules.
53 His Honour stated, at [50]-[53]:
“The inapplicable Policy definition said ‘unable and unlikely ever again’, whereas the definition in the FAB Scheme Rules simply used the word ‘unable’. The Tribunal construed ‘unable’, however, to mean ‘permanently unable’. If ‘unable’ in the definition of ‘disablement’ in the Rules does indeed mean ‘permanently unable’, the definition of ‘disablement’ imposed a more stringent test for Ms Cullinane than the expression ‘unable and unlikely ever again to be able’ in the Policy definition would have done.
The meaning of the word ‘unable’ depends on context. To say that a crane is unable to lift beyond a certain specified weight is to speak of a permanent condition, but to say that a child is unable to do so may not be.
The meaning of ‘unable’ in the definition of ‘disablement’ in the FAB Scheme Rules depends on the context provided by those Rules.
It was common ground that in view of the identicality of the definition of ‘disablement’ in the earlier rules of the FAB Scheme as amended, and the relevant part of the definition of ‘Total and Permanent Disablement’ in the deed constituting the Residual Fund, I am not required to determine whether Ms Cullinane’s entitlement arises under the FAB Scheme or the Residual Fund scheme. The parties were right to take that position because, apart from the definitional matter just mentioned, Ms Cullinane’s entitlement to benefits under the Residual Fund is defined to be identical to her entitlement to benefits under the FAB Scheme.”
54 The primary judge then observed that the entire FAB Scheme covered a range of benefits, including normal resignation or retirement benefits, ill health benefits, benefits on death and benefits on disablement. He outlined in some detail the way in which benefits under each of these particular heads were to be calculated, noting that the actual amount to be paid depended upon a number of variables including, for example, years of service. In relation to benefits on disablement prior to the normal retirement date, the benefit payable was calculated as if the member had died on the date of disablement. In effect, the benefit would be 14 per cent of the member’s final average salary, multiplied by the number of years of benefit service, both determined as at the date of disablement.
55 His Honour considered that it was important, when construing the term “unable” in the context of the definition of “disablement” in the FAB Scheme trust deed, to have regard to the basis upon which different benefits were calculated. He noted that the benefit for disablement was the maximum amount of benefit provided for under the FAB Scheme in respect of any class of benefit. Indeed, it was the amount of benefit payable to a person who, at the date of ceasing service, was 55 years old (that is to say, had attained the normal retirement age), and had completed 19 or more years of benefit service.
56 The primary judge accepted the Trustee’s submission that if the appellant’s argument were correct, that is, if the definition of “disablement” did not entail permanent inability to engage in any relevant gainful employment, significant anomalies would result. For example, a member could obtain a greater benefit for temporary total disablement than for permanent inability to perform the duties of a flight attendant by reason of ill health. Moreover, the benefit for a temporary total disablement would be the same as for normal retirement, event though there might be a real expectation that the incapacity would remit, and that the member would return, or continue in, service, or take up other work. In the light of examples such as these, his Honour accepted the Trustee’s submission that it was appropriate to construe the definition of disablement in the FAB Scheme in the context of the amounts of the various classes of superannuation benefits provided for under that scheme.
57 His Honour concluded, at [65]:
“In my opinion ‘unable’ in the definition of ‘disablement’ connotes ‘permanently unable’ or ‘unable now and for the foreseeable future’. The Tribunal applied the definition of ‘disablement’ conformably to that meaning of the term.”
58 The primary judge then dealt with various other grounds of appeal, none of which have been pursued in this Court. Nothing further need be said about them.
consideration
59 The primary submission on behalf of the appellant on this appeal was that the Tribunal erred in holding, as it did, that for a complainant to succeed under the definition of “disablement” in cl 1.1 of the FAB Scheme trust deed, two conditions had to be met. The second of those was, in the Tribunal’s words, “a resultant preclusion from ever working” in an area for which the complainant had relevant qualifications. It was submitted that there was no justification for importing this gloss upon the word “unable” in the definition. Rather, it was submitted, the Trustee had to be satisfied of nothing more than that there was “a medical state of physical or mental incapacity”, and that, by reason of that incapacity, the complainant could not presently work in the relevant area.
60 If we may say so, that submission is entirely unpersuasive. When asked whether an injury, such as a broken hip, which prevents a person from engaging in ordinary employment, but is unlikely to lead to any permanent impairment, constitutes “disablement” for the purposes of the FAB Scheme, the answer given on behalf of the appellant was that it might. The same was said of potentially long-term illnesses such as chronic fatigue syndrome. On the other hand, short-term conditions, such as influenza, were distinguished on the basis that they did not give rise to “incapacity” on the part of the complainant, within the meaning of that term in rule 1.1.
61 Sensibly, an alternative submission was put forward on behalf of the appellant. It was contended that a distinction should be drawn between a statement to the effect that a person would never again be able to work in an area for which that person had relevant qualifications, and a statement to the effect that the person would not be able to do so “now and for the foreseeable future”. It was submitted that a person who fell within the second of these two formulations, though not the first, was still relevantly “disabled” within the meaning of rule 1.1.
62 The primary judge referred separately to these two formulations at [65] of his reasons for judgment. It was submitted, however, that his Honour had erroneously conflated them, in effect treating them as having the same meaning. It was because his Honour saw no difference between them that he concluded that the Tribunal had not erred when it rejected the appellant’s claim on the basis that she had not demonstrated “a resultant preclusion from ever working” in a relevant area.
63 There were several strands to this modified form of the appellant’s submission. It was noted, for example, that the definition of “disablement” in rule 1.1 did not have attached to it any qualifying adjective such as “total” or “permanent”. The expressions “physical or mental incapacity” and “unable” stood alone. They did not have the additional language that followed the word “unable” in the policy, namely “and unlikely ever again to be able…”.
64 The stark contrast became even more apparent when it was seen that the additional language appeared in a paragraph in the Residual Fund trust deed which immediately preceded the paragraph that replicated the definition of “disablement” in rule 1.1 of the FAB Scheme trust deed. The drafter of the Residual Fund trust deed plainly saw a sharp distinction between these two formulations, and, by implication, regarded the limb that was applicable to the appellant as less stringent than that which replicated the TPD definition.
65 A useful starting point, when considering the appellant’s argument, is to have regard to the ordinary and natural meaning of the two key terms in the definition of “disablement” in rule 1.1, namely “incapacity” and “unable”.
66 The Oxford English Dictionary relevantly defines “incapacity” as including:
“Want of capacity; inability, powerlessness; incompetence, natural disqualification; incapability”.
67 There is nothing in this definition that distinguishes between an incapacity that is temporary and one that is permanent. Some assistance may be gained from the attachment of the words “physical or mental” to “incapacity”, suggesting, at least in the context of “mental incapacity”, a condition that is more than merely transient or temporary. It is a matter of common knowledge that a number of mental illnesses, though perhaps amenable to treatment, tend to be of lengthy duration. It is difficult to predict with any certainty whether and if so, when, any treatment will be effectual.
68 Even so, it does not follow that such a condition is necessarily permanent. One would hardly speak of a person unable to attend work because of an illness of finite duration as having a “physical incapacity”.
69 Some assistance can be gained from authorities that have considered the term “incapacity” in the context of statutes dealing with ability to work. It is perhaps significant that these cases tend generally to focus upon the seriousness of the precipitating condition, rather than its duration: see, for example, Sinanoglou v Australian Iron and Steel Pty Ltd (1967) 68 SR (NSW) 279 at 289 and Repatriation Commission v Moss (1982) 59 FLR 226 at 240. In Ball v William Hunt & Sons, Limited [1912] AC 496 at 499-500, Earl Loreburn LC observed that an incapacity in the context of the Workmen’s Compensation Act 1906 (UK) required a “physical defect” which rendered a person’s labour “unsaleable” in any market reasonably accessible to that person.
70 There is one case that, though not directly in point, provides some additional assistance. In Chammas v Harwood Nominees Pty Ltd (1993) 7 ANZ Insurance Cases ¶61-175, the plaintiff submitted a claim for a disablement benefit under a particular retirement fund. The relevant clause in the rules of the fund provided that an employee would be entitled to a lump sum as a disablement benefit upon his disablement “in being incapacitated for further employment”. Hodgson J observed that the word “employment” in that context connoted full-time employment which was reasonably open to the member. His Honour went on to say, at 77,999:
“[t]he requirement that the incapacity be “for” further employment, carries with it, I think, the requirement that the incapacity be permanent or substantially permanent. Mere temporary incapacity would clearly be insufficient.”
71 When one turns to the word “unable”, the various Oxford English Dictionary definitions include:
“Not able, not having ability or power, to do or perform (undergo or experience) something specified”
…
Lacking ability in some implied respect; incompetent, inefficient”.
Characterized by want of ability; inefficient, ineffectual
…
Of persons: Incapable of, not qualified for, some position
…
Not able to be (done); impossible”.
72 The primary judge observed, correctly, that the meaning of the word “unable” depends upon context. There is nothing inherently “permanent” about the status of “incapacity” leading to “inability”. A person may be unable to do something today that the person will, in all likelihood, be able to do at some stage in the future. For example, someone may have no grasp of mathematics at one point, but become an accomplished exponent at a later time. Indeed, there is authority for the proposition that the word “unable” should not be read, in ordinary parlance, as equivalent to “impossible”: Leeder v The Mayor, Etc, of the Town of Ballarat East [1908] VLR 214 [1908] VLR 214 at 218 per A’Beckett J.
73 In fact, the primary judge was plainly well aware of the difficulty of injecting a false note of scientific certainty into what is, at best, an uncertain process of prediction. His Honour added a gloss to the notion of “unable” in the definition of “disablement” when he said, at [65], that this term connoted “permanently unable” or “unable now and for the foreseeable future”.
74 With respect, that must be right. The problem is that, on one interpretation of the Tribunal’s reasons, it did not see the matter that way. Rather, it imposed upon the appellant a greater hurdle than the FAB Scheme required, insisting that she satisfy the Trustee that, by reason of her state of physical or mental incapacity, she would never be able to work again in an area for which she had relevant qualifications.
75 Although the Tribunal regarded the two definitions of “disablement” that have been previously discussed as “compatible”, in the sense that they both imply a component of future service, it seems to us to have gone further. It went on to say that, in its opinion, it was fair and reasonable that a member “is permanently unable to engage in any gainful occupation or business”. It is true that it made that statement in the context of rejecting the appellant’s submission that “unable” meant “unable” at a particular point in time. However, we think that, in the course of rejecting that submission, as it correctly did, the Tribunal created a false dichotomy between disablement that is permanent, and disablement that exists only at the present time.
76 The position seems to us to be more complex than this. In truth, there are more than two positions that can be taken. The question is whether an inability, by reason of physical or mental incapacity, to engage in gainful employment for the foreseeable future, renders a person “unable” to engage in such work, in the sense in which that term is used in rule 1.1. We consider that it does.
77 The distinction between a condition that is permanent, and one that is of indefinite duration, but will last for the foreseeable future, was, in a sense, at the heart of the decision of the High Court in Al-Kateb v Godwin(2004) 219 CLR 562. The context was entirely different, but both the majority view, and that of the dissentients, reflected precisely this distinction.
78 In addition, the distinction between these two formulations seems to be shared by a number of the medical experts who prepared reports concerning the appellant’s future prospects. It may be difficult to say of a 33 year old woman whose diagnosis is uncertain, and whose condition is the subject of considerable controversy, that the likelihood is that she will never be able to work again, whether as a flight attendant, or in any alternative employment of a relevant kind. Not one medical expert was prepared to go so far as to state in unequivocal terms that her prognosis was as bleak as this. However, it is not nearly so difficult to say of a person (as a number of the medical experts did of the appellant) that she is totally incapacitated now, and that she is unlikely, at least for the foreseeable future, to be able to engage in any gainful employment.
79 There is a lurking possibility that the appellant’s case, which was essentially that she was incapacitated now, and would be unable to work for the foreseeable future was never properly considered by the Tribunal. That is because her case, as supported by a number of medical experts, did not rise to the level of establishing that she would never again be able to work. However, given the definition of “disablement” in rule 1.1, the appellant was entitled to have her case considered not on the basis that she would never be able to work, but rather on the basis that she would not be able to do so for the foreseeable future.
80 The matter is perhaps illustrated by posing the following question. What would the Trustee have been required to do, under the FAB Scheme, had the medical opinions uniformly taken the following form:
“I cannot say whether or not the applicant for the benefit is permanently incapacitated. However, I can say that she is incapacitated now, and will be unable to work for the foreseeable future.”
81 This question poses a litmus test for whether or not there is a difference between “permanently incapacitated”, and “incapacitated now and for the foreseeable future”. In the primary judge’s reasons for judgment, at [65], the two formulations appear to be treated as indistinguishable. Indeed, counsel for the respondent endorsed that interpretation of his Honour’s remarks, submitting that there was no difference between the tests, and describing the latter as merely a practical expression of how a decision-maker arrives at a finding of permanency.
82 It was submitted on behalf of the respondent that the question set out above is incapable of answer. It was submitted that this was because it required construction of what the medical experts might mean by “permanent” and “foreseeable”, and what test might be brought to bear upon the facts that would lead to their reticence to opine permanency or otherwise. It was submitted that if the reticence to express an opinion was because the experts considered that scientific certainty was required in order to achieve requisite “permanence”, that would be a misreading of what the FAB Scheme actually required. The law does not require proof of facts to a scientific certainty. Prognosis regarding ability to engage in particular types of work was, at best, an educated guess, and did not, in any event, involve a purely medical question. It was submitted that a better guide to the meaning of the relevant definition could be found from the scheme as a whole, noting the benefits payable under different exigencies. This was precisely the approach that had been taken by the primary judge.
83 There is some force in these submissions. There is also considerable force in the submission that the Tribunal’s reasons for decision should be read in accordance with the well-known admonition of the High Court in Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at [31], that the
“reasons of an administrative decision-maker are meant to inform and not to be scrutinised upon over-zealous judicial review by seeking to discern whether some inadequacy may be gleaned from the way in which the reasons are expressed”.
84 Giving due weight to these submissions, we are nonetheless of the view that the test posited by the Tribunal was incorrect as a matter of law. Its decision cannot be salvaged by the adoption of any of the respondent’s submissions on the appeal. There is a fundamental difference, in our view, between an incapacity that is permanent (even allowing for some latitude in the scientific certainty required for that assessment), and an incapacity that exists now, and will continue to exist in the foreseeable future. The latter test represents a significantly less stringent hurdle for an appellant to overcome, and is the correct test to apply in relation to the definition of “disablement” in rule 1.1.
85 In formulating the test in that way, we acknowledge that there is a difference between an injury such as a broken leg which has a finite, though perhaps uncertain, duration before it will heal, and a condition that may never remit. It is the inability of the medical experts to see an end to the incapacity in the foreseeable future that seems to us to bring the case within the realm of “disablement”, as it applies to the appellant. The problem with the Tribunal’s decision is that it does not allow for that possibility.
86 The risk that the Tribunal applied a more stringent test than was actually applicable to the appellant, in the circumstances of her case, makes it wrong, in our view, to allow the Tribunal’s decision to stand. It is one thing to recognise, as the Tribunal did, that its task was merely to determine whether what the Trustee did was “fair and reasonable”. That requires the Tribunal to focus upon the outcome of the Trustee’s deliberations, rather than the process by which that outcome was achieved. It is another thing altogether to view the Trustee’s decision through the prism of an incorrect statement of the legal test that the appellant had to overcome in order to qualify for the benefit sought.
87 On one view, the Tribunal may have regarded the medical evidence in support of the appellant’s case as more cogent than the evidence in opposition to her case, and still found against her. If it did so, simply on the basis that the Trustee’s decision was fair and reasonable, there would be nothing wrong, as a matter of law, with that course. If, however, it did so because none of the medical experts sympathetic to the appellant’s claim were prepared to say that she would never work again, that would, in our view, constitute clear error on its part. It is for that reason that the matter must be remitted to the Tribunal to be reconsidered according to law.
88 This case illustrates, yet again, the dangers of importing into the language actually employed in an instrument that is intended to govern the rights and obligations of the parties words that they have not themselves chosen to adopt. The expressions actually used by the parties, “physical or mental incapacity” and “unable”, involve ordinary words, and should be given their ordinary meaning. They are likely to be well-understood, in particular, by medical experts, and seem to have been clearly understood by the experts who prepared medical reports in this case. That may be why a number of those experts expressed themselves in the terms that they did, namely by considering what prospects the appellant had of gainful employment in the foreseeable future. Given the uncertain nature of the appellant’s condition, and the even greater uncertainty as to her long term prognosis, the experts, quite sensibly, appeared to follow the adage “never say never”.
89 Experience shows that in cases of this type medical experts often express widely divergent views. If a test that requires a prognosis of permanent disability is applied, even if that test is applied with some flexibility, allowing for the difficulty of expressing any opinion with certainty, the prospects of a complainant being able to satisfy that test must be significantly lower than those required to satisfy a lesser test of inability to work for the foreseeable future. The distinction between these two formulations is not, as the respondent submitted, a product of mere “reticence” on the part of medical experts. It is rather a reflection of the difficulty of anticipating what is likely to occur in relation to certain physical or mental conditions, including that of the appellant.
90 Put simply, if the accepted medical opinion is that a person has an injury or illness that that is sufficiently serious, and non-transient, to amount to “a physical or mental incapacity”, and that person is unable to work now, and for the foreseeable future, that, in our view, is “disablement” within the meaning of rule 1.1 of the FAB Scheme.
91 It must not be forgotten that by the time the Tribunal delivered its reasons for decision, in February 2005, the appellant had not worked for a period of just over seven years. There was nothing in the evidence to suggest that recovery was imminent. Whatever anomalies there may be in the compensation available under the FAB Scheme for someone suffering from her condition, compared to someone suffering from, for example ill-health, the actual lump sum payable to the appellant under that scheme, having regard to what she has been through, can hardly be described as a windfall.
92 Before the primary judge, the appellant sought an order that the matter be remitted to the Tribunal to be determined according to law. Section 46 of the SRC Act expressly provides for the making of such an order. There remain factual matters for the Tribunal to resolve, namely, whether the evidence of the medical experts supports a finding that the appellant is unable to work now, and for the foreseeable future.
93 The appeal should be allowed, with costs. The orders made by the primary judge should be set aside, and in lieu thereof, there should be an order that the respondent pay the appellant’s costs of the appeal below. The matter should be remitted to the Tribunal so that it can consider again, this time applying the correct test for “disablement”, whether the Trustee acted in a fair and reasonable manner when it rejected the appellant’s claim.
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I certify that the preceding ninety-three (93) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Tamberlin, Weinberg and Allsop. |
Associate: Dated: 29 May 2006
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Counsel for the Appellant: |
Mr M. Vincent and Ms B. Pellizzan |
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Solicitors for the Appellant: |
Stacks Goudkamp |
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Counsel for the Respondent: |
Ms V. Heath with Ms M Jhee |
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Solicitors for the Respondent: |
Minter Ellison |
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Date of Hearing: |
15 May 2006 |
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Date of Judgment: |
29 May 2006 |
