FEDERAL COURT OF AUSTRALIA
Nowicka v Superannuation Complaints Tribunal [2008] FCAFC 191
Military Superannuation and Benefits Act 1991 (Cth)
Military Superannuation and Benefits Rules, Rule 69
Superannuation (Resolution of Complaints) Act 1993 (Cth), s 41(3)(b)
Anstis v Secretary, Department of Social Security (1999) 94 FCR 421 applied
Collector of Customs v Gaylor Pty Ltd (1995) 35 NSWLR 649 considered
Glass v Defence Force Retirement and Death Benefits Authority (1992) 38 FCR 534 applied
Godwin v Repatriation Commission (2008) 166 FCR 471 cited
HEST Australia Ltd v Sykley (2005) 147 FCR 248 followed
Leonard Thomas Hinde [2007] NSWSC 640 applied
Lesi v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 134 FCR 27 cited
Military Superannuation and Benefits Board of Trustees No 1 v Batt (2005) 149 FCR 448 disapproved
Nowicka v Superannuation Complaints Tribunal [2008] FCA 939 cited
Secretary, Department of Health and Ageing v Marnotta Pty Ltd (2005) 88 ALD 720 considered
Woozley v Woodall Smith [1950] 1 KB 325 cited
VID 535 of 2008
MOORE, GILMOUR and flick JJ
19 DECEMBER 2008
SYDNEY (BY VIDEO LINK TO MELBOURNE)
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IN THE FEDERAL COURT OF AUSTRALIA |
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VICTORIA DISTRICT REGISTRY |
VID 535 of 2008 |
ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA
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ANETA NOWICKA Appellant
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AND: |
SUPERANNUATION COMPLAINTS TRIBUNAL First Respondent
MARGARET MCDONALD Second Respondent
MILITARY SUPERANNUATION AND BENEFITS BOARD OF TRUSTEES NO 1 Third Respondent
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JUDGES: |
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DATE OF ORDER: |
19 DECEMBER 2008 |
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WHERE MADE: |
SYDNEY (BY VIDEO LINK TO MELBOURNE) |
THE COURT DECLARES THAT:
1. The appellant is entitled to interest on the sum of $207,438.54 paid to her on 18 November 2005 under Rule 69 of the Military Superannuation and Benefits Rules.
THE COURT ORDERS THAT:
1. The appeal be allowed.
2. Orders 1 and 2 of the orders of Sundberg J of 20 June 2008 be set aside, and in their place, there be an order that the decision of the Superannuation Complaints Tribunal of 27 July 2007 be set aside.
3. The decision of the first and second respondents to treat the appellant’s complaint to the Superannuation Complaints Tribunal as withdrawn pursuant to s 22(3)(b) of the Superannuation (Resolution of Complaints) Act 1993 (Cth) be set aside.
4. The matter be remitted to the Superannuation Complaints Tribunal to deal with the appellant’s complaint and proceed to review the third respondent’s decision in accordance with law.
5. The third respondent is to pay the appellant’s costs of the appeal.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.
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IN THE FEDERAL COURT OF AUSTRALIA |
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VICTORIA DISTRICT REGISTRY |
VID 535 of 2008 |
ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA
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BETWEEN: |
ANETA NOWICKA Appellant
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AND: |
SUPERANNUATION COMPLAINTS TRIBUNAL First Respondent
MARGARET MCDONALD Second Respondent
MILITARY SUPERANNUATION AND BENEFITS BOARD OF TRUSTEES NO 1 Third Respondent
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JUDGES: |
MOORE, GILMOUR AND FLICK JJ |
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DATE: |
19 DECEMBER 2008 |
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PLACE: |
SYDNEY (BY VIDEO LINK TO MELBOURNE) |
REASONS FOR JUDGMENT
MOORE AND GILMOUR JJ
1 The facts are set out in the judgment of Flick J. It is unnecessary to repeat them or repeat his Honour’s summary of the reasons for judgment of the primary judge.
2 A central issue in these proceedings is whether, as the Superannuation Complaints Tribunal and the primary judge concluded, the judgment of Kenny J in Military Superannuation and Benefits Board of Trustees No 1 v Batt (2005) 149 FCR 448 provides the answers to the questions raised in these proceedings and, if so, whether those answers are correct.
3 It is convenient to set out, at this point, some of the relevant legislative provisions. The Minister is required by s 4 of the Military Superannuation and Benefits Act 1991 (Cth) to establish an occupational superannuation scheme for, in substance, members of the armed forces with a deed in the form set out in a schedule to the Act (the Deed). The Deed can be amended under s 5. The Act also establishes the Military Superannuation and Benefits Board of Trustees No 1. The Board has such functions and powers as are set out in the Deed. Rule 3 of the Deed provides:
3 Functions and powers of the Board
(1) The functions of the Board are to administer the Superannuation Scheme and to manage and invest the Fund in accordance with the provisions of the Act and this Deed including, without limiting the generality of the foregoing, the following functions:
(a) to pay benefits to or in respect of members, and to make payments to and receive payments from the Commonwealth, as provided for in the Act;
(b) to provide advice to the Minister on proposed changes to the Act and the Deed; and
(c) to determine interest rates for the purposes of the Superannuation Scheme;
...
(2) The Board has power in Australia and elsewhere to do all things necessary or convenient to be done for, or in connection with, the performance of its functions and, in particular, may:
...
(g) establish an Incapacity Classification Committee to determine members’ incapacity classifications under the Rules;
(h) establish 1, or more than 1, Reconsideration Committee:
(i) to examine and report on decisions of the Board and its delegates under the Rules relating to members’ entitlements to benefits; and
(ii) to reconsider decisions of the Board and its delegates under the Rules relating to members’ entitlements and benefits;
4 The power to determine interest rates has been exercised by the Board to make what it described as the Military Superannuation and Benefits (Delayed Payment of Benefits) Determination 2004. Clause 5 provides as follows:
(1) For paragraph 69 (4) (a) of the Rules, and subject to subsection (2), interest is calculated over the period beginning on:
(a) if, under the Rules, the lump sum benefit is payable after a period of preservation — the day the lump sum benefit becomes payable; or
(b) for an associate A benefit — the day the benefit becomes payable; or
(c) in any other case — the day after the day the person ceases to be a member;
and ending on the day on which the lump sum benefit is finally processed.
Note The definition of lump sum benefit includes associate A benefit and associate B benefit. Associate A benefit is not payable after a period of preservation.
(2) Interest is calculated in relation to a lump sum benefit only if the processing period is greater than 15 working days.
(3) For subsection (2):
(a) the processing period is the period commencing on the day the Board receives all required documentation and information, and ending on the day the lump sum benefit is finally processed; and
(b) the Board is taken to have received all required documentation and information only when the last part of the required documentation and information is received by the Board; and
(c) an action performed by ComSuper in relation to the processing of a lump sum benefit is taken to have been performed by the Board.
5 The Board has also established an Incapacity Classification Committee (ICC). The performance by the ICC of its function was an element in the factual matrix considered in Batt, which will be discussed in due course. However the rule in the Deed governing reclassification (from a Class C or Class B pension to a higher level pension) is rule 23. It provides:
(1) Where the Board or the Committee, at any time, is satisfied that there has been such a change in the percentage of incapacity in relation to civil employment of an invalidity pensioner that his or her classification should be altered, the Board or the Committee may reclassify him or her in the appropriate classification set out in rule 22 according to the percentage of his or her incapacity in relation to civil employment.
(2) Where an invalidity pensioner has attained the age of 55 years and the invalidity pensioner is classified:
(a) as Class A — subrule (1) does not apply to him or her; or
(b) as Class B — subrule (1) is taken not to empower the Board to reclassify him or her as Class C.
...
(4) Where the Board or the Committee reclassifies a person under this rule, the Board or the Committee must specify the date from which the reclassification has effect and, on and after that date, the person is, for the purposes of these Rules, taken to be classified under rule 22 accordingly.
(5) Where the Board or the Committee reclassifies a person under this rule, the date specified by the Board or the Committee as the date from which the reclassification has effect is not to be a date earlier than the date on which the Board or the Committee reclassifies the member unless:
(a) the person is reclassified as Class A or, having been classified as Class C, is reclassified as Class B; and
(b) the Board or the Committee is satisfied that special circumstances exist that justify an earlier date being so specified.
...
6 In the present case, the benefits in issue did not take the form of a pension, but rather a lump sum payment to the spouse of a member who had died. The rules in the Deed addressing such a payment are rules 38, 39 and 40 in Division 1 of Part 4. They provide:
Where a member dies and is survived by a spouse or spouses or an eligible child or children, benefits are payable in accordance with this Division.
39 Payment of deceased member’s member benefit
A deceased member’s member benefit is payable as a lump sum as follows:
(a) if the deceased member is survived by a spouse, the benefit is payable to the spouse;
...
40 Payment of deceased member’s employer benefit
(1) A deceased member’s employer benefit or a pension is payable as follows:
(a) if the deceased member is survived by a spouse with or without an eligible child or children, the employer benefit is payable to the spouse as a lump sum;
...
(2) A spouse who is entitled to be paid an employer benefit under paragraph (1) (a) may elect that:
(a) instead of that employer benefit being paid to him or her, it be converted into a pension payable to him or her at an annual rate equal to the relevant percentage in Table 1 in Schedule 4 of the deceased member’s notional invalidity pension and if he or she so elects the benefit is so converted; or
(b) instead of that employer benefit being paid in full to him or her, a specified part of that benefit, being not less than one‑half of the benefit, be converted into a pension payable to him or her at an annual rate equal to the relevant percentage in Table 1 in Schedule 4 of the deceased member’s reduced notional invalidity pension and if he or she so elects:
(i) that part of the benefit is so converted; and
(ii) the balance of the benefit is payable to him or her as a lump sum.
(3) An employer benefit payable under subrule (1) is calculated as if, on the date of the death of the deceased member, he or she had become entitled to invalidity benefits under Division 2 of Part 3 and had been classified as Class A under rule 22.
(4) Subrules (2) and (3) do not apply where:
(a) a member dies and, at the time of his or her death, he or she was absent without leave and had been so absent for a period that exceeds 21 consecutive days; and
(b) the salary and allowances of the deceased member in respect of the period of absence without leave were forfeited under regulations made under the Defence Act 1903 and an amount equal to the amount of the salary and allowances forfeited was not subsequently paid, and is not payable, under those regulations to the deceased member’s personal representative;
unless the Board is satisfied that the absence of the member was due to sufficiently mitigating circumstances.
(5) In this rule:
“notional invalidity pension”, in relation to a deceased member, means the invalidity pension that would have been payable to the deceased member if, on the date of his or her death, he or she had become entitled to invalidity benefits under Division 2 of Part 3 and had been classified as Class A under rule 22;
“reduced notional invalidity pension”, in relation to a deceased member, means the invalidity pension that would have been payable to the deceased member if, on the date of his or her death:
(a) he or she had become entitled to invalidity benefits under Division 2 of Part 3; and
(b) he or she had been classified as Class A under rule 22; and
(c) the amount of his or her employer benefit were the amount which his or her spouse elected under paragraph (2) (b) to convert into a pension.
7 The Deed also makes provision for the payment of interest on either pensions or lump sums. This is addressed in rule 69 which provides:
69 Interest payable where payment of benefit delayed
(1) Where a benefit is payable as a lump sum to a person and the payment of the benefit is delayed, the Board may, in accordance with this rule, approve an increase, by an amount of interest, in the amount of the benefit payable to the person.
(2) Where a pension is payable to, or for the benefit of a person and the commencement of the payment of that pension is delayed, the Board may, in accordance with this rule, approve an increase, by an amount of interest, in the rate of the pension payable to the person for such period as the Board determines.
(3) A pension is not to be increased under subrule (2) if the Board is of the opinion that the amount of the increase would not be significant.
(4) Interest applicable under this rule is calculated in such manner as the Board determines:
(a) in the case of a lump sum payment—in respect of the period of the delay; and
(b) in the case of a pension—in respect of:
(i) each instalment of the pension delayed; and
(ii) the period of delay of that instalment.
(5) In this rule:
“benefit” means employer benefit or member benefit.
37 Tribunal powers—complaints under section 14
(1) For the purpose of reviewing a decision of the trustee of a fund that is the subject of a complaint under section 14:
(a) the Tribunal has all the powers, obligations and discretions that are conferred on the trustee; and
(b) subject to subsection (6), must make a determination in accordance with subsection (3).
(2) If an insurer or other decision‑maker has been joined as a party to a complaint under section 14:
(a) the Tribunal must, when reviewing the trustee’s decision, also review any decision of the insurer or other decision‑maker that is relevant to the complaint; and
(b) for that purpose, has all the powers, obligations and discretions that are conferred on the insurer or other decision‑maker; and
(c) subject to subsection (6), must make a determination in accordance with subsection (3).
(3) On reviewing the decision of a trustee, insurer or other decision‑maker that is the subject of, or relevant to, a complaint under section 14, the Tribunal must make a determination in writing:
(a) affirming the decision; or
(b) remitting the matter to which the decision relates to the trustee, insurer or other decision‑maker for reconsideration in accordance with the directions of the Tribunal; or
(c) varying the decision; or
(d) setting aside the decision and substituting a decision for the decision so set aside.
(4) The Tribunal may only exercise its determination‑making power under subsection (3) for the purpose of placing the complainant as nearly as practicable in such a position that the unfairness, unreasonableness, or both, that the Tribunal has determined to exist in relation to the trustee’s decision that is the subject of the complaint no longer exists.
...
How the determination operates is addressed by s 41:
(1) Subject to subsection (2), a determination of the Tribunal comes into operation immediately upon the making of the determination.
(2) The Tribunal may specify in a determination that the determination is not to come into operation until a later date specified in the determination and, if a later date is so specified, the determination comes into operation on that date.
(3) A decision of a trustee, insurer, RSA provider or other decision‑maker as varied by the Tribunal, or a decision made by the Tribunal in substitution for a decision of a trustee, insurer, RSA provider or other decision‑maker:
(a) is, for all purposes (other than the making of a complaint about the decision) taken to be a decision of a trustee, insurer, RSA provider or other decision‑maker concerned; and
(b) on the coming into operation of the determination by the Tribunal, unless the Tribunal otherwise orders, has effect, and is taken to have had effect, on and from the day on which the original decision has or had effect.
9 It is convenient, at this stage, to consider the judgment of Kenny J in Batt. The facts can be stated briefly. Mr Batt retired on the grounds of invalidity in July 1994 and was paid a Class B pension from 31 July 1994. In a classification review, the ICC determined that Mr Batt was being paid the appropriate pension. This decision was affirmed by the Board on 28 August 1999. A complaint was made to the Tribunal which, on 31 October 2001, set aside the decision of the ICC and substituted a decision that Mr Batt was entitled to payment of a class A pension with effect from 12 June 1997 (being the date of the original determination of the ICC). In a further decision of 26 June 2003 the Tribunal determined that interest was payable on the difference between the two pensions for a period which commenced on 12 June 1997. This decision concerning interest was successfully challenged by the Board in the proceedings before Kenny J. Her Honour concluded that the Tribunal had fallen into error on two bases. Only the second is relevant in these proceedings.
10 The focus of Her Honour’s analysis was on the expression “[w]here a pension is payable to ... a person and the commencement of the payment of that pension is delayed” at the beginning of rule 69(2). Kenny J concluded that the words “where a pension is payable” fixes a point of time and delay, for the purposes of the rule, was elapsed time from that fixed point. Her Honour also concluded that the pension at the reclassified rate was payable only on and from the time the Tribunal made the decision to substitute a decision that Mr Batt should be paid a class A pension.
11 Her Honour’s reasoning was as follows (at [51]–[54]):
... A pension, as defined in the Rules, is a pension payable under the Rules. It is plain enough from this that the pension payable to a person on a Class A classification is not payable to the person until the person is classified as Class A under rule 22. Mr Batt was not classified as Class A until the Tribunal made its decision on 31 October 2001. It follows that, under the Rules, it is only on and from this date that it is possible to say that a pension is payable to Mr Batt on a Class A classification.
The fact that, under rule 23(4), the decision-maker must specify the date from which the reclassification is to take effect and that the person is taken to be classified under rule 22 on and after that date does not alter this conclusion. The fact that the decision-maker may determine that a reclassification is to take effect from a date prior to the reclassification decision does not affect the conclusion that, as a matter of fact, the pension at the reclassified rate is payable from the date of the reclassification decision.
Section 41 of the SRC Act does not require a different conclusion. Section 41(1) does no more than provide that, subject to s 41(2), a determination of the Tribunal comes into operation immediately upon the making of the determination. Section 41(3) further provides that a decision made by the Tribunal in substitution for a decision of a trustee is taken to be the decision of the trustee (s 41(3)(a)) and unless the Tribunal otherwise orders “has effect, and is taken to have had effect on and from the day on which the original decision has or had effect”. As Kirby J explained in Attorney-General (Cth) v Breckler (1999) 197 CLR 83 at 130 [91], in making a determination under s 37(3), the Tribunal creates new rights, albeit in the form of a decision which is then substituted for the decision of the trustee which is set aside. The fact that pursuant to statute a decision of the Tribunal would ordinarily take effect at a date prior to its decision on classification does not alter the fact that the pension at the reclassified rate is payable only from the date of the decision of the Tribunal.
Further, the fact that the reclassification is to take effect from a date prior to a reclassification does not entail the consequence that the commencement of the payment of the pension at the reclassified rate is “delayed” for the purpose of rule 69(2). In order for there to be a relevant delay in the commencement of the payment of the pension that is payable, there must be a classification or reclassification decision that makes the pension payable and delay between the date of this decision and the first payment of the pension in accordance with the Rules (and the decision). The period between the date of reclassification and the date on which, in the SRC Act or under the Rules, the reclassification takes effect is not a period of delay in respect of any instalment of the pension within rule 69(4). This is because no right to receive the pension at the reclassified rate arises before the decision on classification or reclassification is made.
(Emphasis original)
12 For our part we would respectfully adopt a different approach. Batt, in our opinion, was wrongly decided and, in any event, is distinguishable. The starting point has to be, in our respectful opinion, the purpose of rule 69. Various classes of individuals are entitled to benefits under the Deed. Quite obviously decisions have to be made by reference to the Deed in any given case about whether the claimed entitlement truly arises under the Deed. Doubtless in many cases that decision can be made very quickly and the affirmative answer that there is an entitlement is obvious. In other cases the position will be less clear and in some cases the position will probably be quite obscure. This case is probably of the last mentioned category. However, the purpose of rule 69 is to provide a mechanism for the payment of interest where, for whatever reason, a person with a particular entitlement has been denied the entitlement for a material period of time that can reasonably be characterised as “delay”. The delay may arise from the workload of the Board, difficulties in assessing relevant information or as a result of the effluxion of time while processes of review are successfully pursued. While the Deed has to be construed objectively, it represents a scheme designed to benefit ex-serviceman, their spouses and their children. It should not, in our opinion, be construed narrowly.
13 The word “where” has a variety of meanings. As the Court of Appeal said in Woozley v Woodall Smith [1950] 1 KB 325 at 331:
... [t]he opening word “where” – does this mean “in cases in which” (a meaning which, as the Master of the Rolls pointed out during the argument, it is capable of bearing); or does it mean “if and so long as,” as suggested in a dictum of Lord Uththwatt in J & F Stone Lighting & Radio Ltd v Levitt [1947] AC 209 or has it perhaps yet some other meaning? That is the first problem of construction.
14 At the heart of what we consider was the erroneous approach of Kenny J was treating the words “where a pension is payable to” in rule 69(2) as fixing a point in time. While arguably it does, it also arguably, read together with rule 40, simply identifies the nature of the benefit as a lump sum or a pension, in respect of which interest is payable if the payment of the pension is delayed. On that approach, the opening words of the sub-rule simply identify the subject matter on which the sub-rule operates. That is, in our opinion, made clear (and this is a point of distinction from the present case in any event) from the opening words of rule 69(1). The expression “where a benefit is payable as a lump sum” does not obviously fix a point in time. In our opinion, the better view is that the expression simply identifies the circumstances in which the sub-rule operates in contradistinction to the circumstances in which sub-rule (2) operates. The only temporal element in each sub-rule is that “the payment of the [lump sum/ pension] is delayed”. That involves consideration of when the lump sum or pension should have been paid and when it was paid (a lump sum) or first paid (a pension). In the case of Mr Batt, it should have been first paid when the reclassification decision was made on the basis that, had it been made correctly, Mr Batt would have been reclassified as being entitled to a class A pension. In the present case, it should have been paid immediately following the death of the appellant’s spouse. It was not paid then, and indeed for some considerable time, because of a series of erroneous decisions about whether the appellant was the deceased serviceman’s spouse and whether, notwithstanding that he had been absent without leave, his absence was due to sufficiently mitigating circumstances.
15 It is true that before rule 40(3) operates, a state of satisfaction is required to be reached by the Board under rule 40(4) that there were sufficiently mitigating circumstances for the absence of the member. On one view, it cannot be said that the appellant should have been paid a lump sum immediately following the death of her spouse until, at the earliest, the Board arrived at this positive state of satisfaction. However, this approach overlooks how, in our opinion, rule 40 is intended to operate. Sub-rule 40 (1) creates the entitlement in a spouse to a member’s employer benefit if two conditions are met. The first is that the member has died and the second is that the person is a spouse of that member. Absent the disentitling operation of sub-rule (4), the calculation of the entitlement is to be made as directed by sub-rule (3).
16 Sub-rule (4) contains three elements. The first two are conditions that enliven its operation (absence without leave for more than 21 consecutive days and forfeiture of salary which was not repaid or repayable) and the third is a proviso of sorts (the existence, in the Board’s opinion, of sufficiently mitigating circumstances), which renders the sub-rule inapplicable. There is no reason to doubt, in our opinion, that the scheme of the rule is that, in the ordinary course, sub-rule (3) should be treated as effective unless and until the Board addressed all aspects of the operation of sub-rule (4) and that that would be done at the one time. That is, the Board would consider whether the member had been absent without leave and the salary was dealt with in the specified way and also whether there were sufficiently mitigating circumstances. Approached that way, sub-rule (3) would operate unless and until the Board determined that sub-rule (4) had been engaged because it was not satisfied there were mitigating circumstances. In the present case, the Board’s original decision was displaced by the decision of the Tribunal. The Board never determined, as a matter of law, that sub-rule (3) should not operate in terms.
17 We doubt that it can seriously be argued that, as a matter of fact, there has not been considerable delay between the time the lump sum should have been paid to the appellant and the time it was actually paid. However, whether there has been delay is, for present purposes, a matter to be determined by the Board under rule 69. We should add, parenthetically, that we entertain real doubts that the Board was authorised to make the 2004 Determination by rule 3 (1)(c). That provision only authorises the Board to determine interest rates. It does not appear to authorise the promulgation of a scheme for determining whether there has been delay, which appears to be the effect of section 5 of the Determination. The Determination might be thought to fetter the discretionary power conferred by rule 69 to determine whether there has been delay. However, this issue was not argued in the appeal. In any event, the “processing period” under clause 5(2) and (3) of the Delayed Payment of Benefits Determination was much longer than 15 days.
18 The Tribunal erred in concluding that the appellant’s complaint to the Tribunal (challenging the interest decision of the Board) was misconceived. The Tribunal’s decision should be set aside and the matter remitted to the Tribunal. The parties agree that the interest payable for the period 2 April 1999 (the day after the date of death of the appellant’s spouse) to 18 November 2005 (being the date the Board decided to pay the appellant the balance of the employer benefit) is $85,379.16. The parties also agree as to the method of calculating interest (based on the 10 Year Treasury Bond Yield declared by the Reserve Bank) for the period of 18 November 2005 until the date of judgment.
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I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Moore and Gilmour. |
Associate:
Dated: 19 December 2008
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IN THE FEDERAL COURT OF AUSTRALIA |
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victoria district REGISTRY |
VID 535 of 2008 |
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ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA |
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BETWEEN: |
ANETA NOWICKA Appellant
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AND: |
SUPERANNUATION COMPLAINTS TRIBUNAL First Respondent
MARGARET MCDONALD Second Respondent
MILITARY SUPERANNUATION AND BENEFITS BOARD OF TRUSTEES NO 1 Third Respondent
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JUDGES: |
MOORE, GILMOUR AND FLICK JJ |
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DATE: |
19 December 2008 |
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PLACE: |
SYDNEY (BY VIDEO LINK TO MELBOURNE) |
REASONS FOR JUDGMENT
FLICK J
19 On 1 April 1999, Private Robert Przydatek died whilst absent without leave from the Australian Defence Force. At the time of his death he was a member of the Military Superannuation Benefit Scheme (“the Scheme”). Earlier, in March 1999, Private Przydatek had killed the estranged husband of the present appellant, Ms Aneta Nowicka.
20 Thereafter, on 9 October 2000, a claim was made by Ms Nowicka to the third respondent (“the Board”) for benefits payable under the Scheme. She made a claim as Private Pryzdatek’s spouse. That claim was rejected on 4 September 2002 upon the basis that Ms Nowicka was not a “spouse”. That decision, however, was reconsidered and on 4 May 2004 part of the employer benefit, namely the sum of $14,195.55, was paid to her. Interest on that sum in the amount of $4,538.06 was paid on 18 October 2006. On 18 November 2005, Ms Nowicka was paid an additional $207,438.54, being the balance of the employer benefit. No interest was paid in respect to that subsequent amount.
21 Dissatisfied with the non-payment of interest on the balance of the employer benefit, a complaint was lodged by Ms Nowicka with the Superannuation Complaints Tribunal. The Tribunal concluded that the complaint was “based on a legal misconception and has no foundation”. In July 2007, the Tribunal informed the now appellant that the complaint was “misconceived” and would treat it as withdrawn. The Tribunal has power to treat a complaint as withdrawn where it “thinks that the complaint is trivial, vexatious, misconceived or lacking in substance”: Superannuation (Resolution of Complaints) Act 1993 (Cth), s 22(3)(b).
22 A judge of this Court dismissed an application seeking to challenge the decision of the Tribunal: Nowicka v Superannuation Complaints Tribunal [2008] FCA 939.
23 A number of Grounds of Appeal have been advanced. The Grounds of Appeal put in issue the correct construction and application of provisions of the Scheme and, in particular, Rules 38, 40 and 69 of the Military Superannuation and Benefits Rules.
The Decisions as to Benefits Paid
24 The entitlement of the present appellant to be paid both benefits and interest depends upon the terms of the Scheme itself. The Scheme was established by a Trust Deed and isregulated by the Military Superannuation and Benefits Act 1991 (Cth). The Scheme is a regulated superannuation fund for the purposes of the Superannuation (Resolution of Complaints) Act.
25 Rule 38 provides for the circumstances in which benefits “are payable” and Rule 39 identifies those persons to whom the benefit “is payable”. Those Rules relevantly provide as follows:
Applicability of benefits
38. Where a member dies and is survived by a spouse or spouses or an eligible child or children, benefits are payable in accordance with this Division.
Payment of deceased member’s member benefit
39. A deceased member’s member benefit is payable as a lump sum as follows:
(a) if the deceased member is survived by a spouse, the benefit is payable to the spouse;
…
In the present proceeding, it was the application of those Rules which initially led to the rejection of Ms Nowicka’s claim as a “spouse”.
26 The application of Rule 40 was also the source of an initial decision made by the Board on 17 December 2003 adversely to Ms Nowicka — but again that issue was ultimately resolved in her favour. Rule 40 relevantly provides as follows:
Payment of deceased member’s employer benefit
40. (1) A deceased member’s employer benefit or a pension is payable as follows:
(a) if the deceased member is survived by a spouse with or without an eligible child or children, the employer benefit is payable to the spouse as a lump sum…
…
(3) An employer benefit payable under subrule (1) is calculated as if, on the date of the death of the deceased member, he or she had become entitled to invalidity benefits under Division 2 of Part 3 and had been classified as Class A under rule 22.
(4) Subrules (2) and (3) do not apply where:
(a) a member dies and, at the time of his or her death, he or she was absent without leave and had been so absent for a period that exceeds 21 consecutive days…
unless the Board is satisfied that the absence of the member was due to sufficiently mitigating circumstances.
Contrary to the December 2003 decision of the Board, on 27 October 2005 the Tribunal concluded that there were “sufficiently mitigating circumstances” for the absence without leave of Private Przydatek. It was this decision which led to the $207,438.54 being paid in November 2005.
27 None of this administration of the Scheme is presently in issue.
Rule 69: A Benefit Payable and Delay
28 That which is in issue is the application of Rule 69 to these facts as they unfolded. Considerable time had elapsed since Ms Nowicka’s claim was made in October 2000. Her status as a “spouse” was not resolved until May 2004 and the existence of “sufficiently mitigating circumstances” was not resolved until October 2005.
29 It was by reference to these facts that the appellant invoked Rule 69. That Rule provides in relevant part as follows:
Interest payable where payment of benefit delayed
69. (1) Where a benefit is payable as a lump sum to a person and the payment of the benefit is delayed, the Board may, in accordance with this rule, approve an increase, by an amount of interest, in the amount of the benefit payable to the person.
...
(4) Interest applicable under this rule is calculated in such manner as the Board determines:
(a) in the case of a lump sum payment — in respect of the period of the delay…
…
(5) In this rule,
“benefit” means employer benefit or member benefit.
Rule 69 confers a discretion to “approve an increase, by an amount of interest” where two conditions precedent have been satisfied, namely that “a benefit is payable as a lump sum” and “the payment of the benefit is delayed”. Rule 69 also provides for the manner of calculation of interest, that being a calculation in accordance with the Military Superannuation and Benefits (Delayed Payment of Benefits) Determination 2004. Section 5 of that Determination relevantly provides as follows:
5 Calculation of interest
(1) For paragraph 69(4)(a) of the Rules, and subject to subsection (2), interest is calculated over the period beginning on:
…
(c) … the day after the day the person ceases to be a member;
and ending on the day on which the lump sum benefit is finally processed.
(2) Interest is calculated in relation to a lump sum benefit only if the processing period is greater than 15 working days.
(3) For subsection (2):
(a) the processing period is the period commencing on the day the Board receives all required documentation and information, and ending on the day the lump sum benefit is finally processed; and
(b) the Board is taken to have received all required documentation and information only when the last part of the required documentation and information is received by the Board; and
(c) an action performed by ComSuper in relation to the processing of a lump sum benefit is taken to have been performed by the Board.
Insofar as the $207,438.54 sum is concerned, the October 2005 Tribunal determination was received at ComSuper on 1 November 2005 and was paid on 18 November 2005. The payment was within the 15 working days provided for in s 5(2) of the 2004 Determination.
30 The case for the appellant emphasised the death of Private Przydatek in 1999 and, ultimately, the acceptance — albeit years later — of both the conclusion that Ms Nowicka was his “spouse” and the conclusion that there were “sufficiently mitigating circumstances” for his absence. For the purposes of Rule 69 and the two conditions precedent to the exercise of the discretion, the appellant contends that a lump sum was payable to the appellant and there had been “delay”.
31 On Ms Nowicka’s behalf it is further contended that there has been “inordinate delay” — the contention being that “a period of more than 6 years from the date of death is properly considered ‘delay’ … The same position applies if, contrary to the submissions of the Appellant, the proper date for consideration is the date the Appellant made her application”. The “delay” that has occurred, it is contended, was not her “fault”. Had the “right” decision been made shortly after Private Przydatek’s death, she would have received payment far earlier.
32 On Ms Nowicka’s behalf it is contended that “delay may commence before a benefit is payable”. Those administering the Scheme contend that benefits are only payable as from the date upon which a decision is made to make payment.
33 The resolution of these competing constructions of the Military Superannuation and Benefits Rules is essentially to be resolved by construing the Rules in a “practical and purposive” manner: Ansett Australia Ground Staff Superannuation Plan Pty Ltd v Ansett Australia Ltd [2002] VSC 576, 174 FLR 1. Warren J there reviewed the authorities and summarised her conclusion as follows (at 54):
[215] The basic approach applied by the courts to the interpretation of pension schemes is practical and purposive. The courts pay heed to the fact that the beneficiaries under a pension scheme are not volunteers and that the rights of those beneficiaries are founded in the contract of employment.
A construction that undermines the effectiveness of a document for its obvious purpose should be eschewed: Leonard Thomas Hinde [2007] NSWSC 640 at [48]. A “practical and purposive” construction, Ms Nowicka contends, avoids the narrow interpretation being urged by the Trustee and accepted by the trial judge.
A Benefit “Is Payable”?
34 The lump sum of $207,438.54 has been paid to Ms Nowicka. No question can thus arise but that this lump sum “is payable”. The difficulty is to identify the date from which that sum “is payable”.
35 Where a member has been “absent for a period that exceeds 21 consecutive days”, the method of calculation set forth in Rule 40(3) does not apply. That method of calculation only applies where the Board “is satisfied that the absence of the member was due to sufficiently mitigating circumstances”. Until the Board reaches that state of satisfaction, or until the Tribunal reaches that state of satisfaction, it is not considered that the benefit calculated in accordance with Rule 40(3) “is payable”. Entitlement to a benefit in circumstances of “absence” depends upon the Board being satisfied as to the existence of “sufficiently mitigating circumstances”. Prior to that state of “satisfaction” being reached, benefit at that rate is not payable.
36 This construction of Rule 69 is the same as that reached by the learned trial judge and, as the trial judge pointed out, is consistent with the conclusion reached by Her Honour Justice Kenny in Military Superannuation and Benefits Board of Trustees No 1 v Batt [2005] FCA 1865, 149 FCR 448.
37 Mr Batt had retired from the Australian Defence Force in July 1994 on the ground of invalidity. A decision had been made as to his pension classification. The Tribunal redetermined his classification and further decided that interest was to be paid on the difference between the two rates of pension as from the first pension day.
38 Relevantly, Her Honour there concluded:
[50] As noted above, pensions are to be paid in fortnightly instalments on pension pay-days. Rule 69(2) permits an approval of an award of interest in the rate of the pension to a pensioner for such period as the decision-maker determines if two conditions are satisfied. The first is that a pension is payable and the second is that the commencement of the payment of that pension is delayed. The amount of interest is calculated in respect of each instalment of the pension delayed and the period of the delay of that instalment (r 69(4)).
[51] Under r 26, a person who is classified as Class A or Class B under r 22 (whether on retirement or by reason of reclassification under r 23) is entitled to invalidity benefits in accordance with Subdiv B of Div 2 of Pt 3 of the Rules. An invalidity pension, as defined in the Rules, is a pension payable under r 27 or 28 (which appear in Subdiv B of Div 2 of Pt 3). A pension, as defined in the Rules, is a pension payable under the Rules. It is plain enough from this that the pension payable to a person on a Class A classification is not payable to the person until the person is classified as Class A under r 22. Mr Batt was not classified as Class A until the Tribunal made its decision on 31 October 2001. It follows that, under the Rules, it is only on and from this date that it is possible to say that a pension is payable to Mr Batt on a Class A classification.
[52] The fact that, under r 23(4), the decision-maker must specify the date from which the reclassification is to take effect and that the person is taken to be classified under r 22 on and after that date does not alter this conclusion. The fact that the decision-maker may determine that a reclassification is to take effect from a date prior to the reclassification decision does not affect the conclusion that, as a matter of fact, the pension at the reclassified rate is payable from the date of the reclassification decision.
39 There is not considered — for present purposes — to be any relevant distinction as between Batt’s case and the present. Just as in Batt’s case, where the pension was not payable until he had been classified as Class A, so too, in the present case, it is considered that the payment of the $207,438.54 was not payable until the state of satisfaction had been reached that Private Przydatek’s absence was “due to sufficiently mitigating circumstances”.
40 This construction of the phrase “is payable” is, perhaps, not unexpected. The meaning of the phrase presently in issue is to be determined by reference to the Scheme in which it appears. In other cases, however, the term “payable” has also been construed as meaning “something that is presently capable of being paid”: Glass v Defence Force Retirement and Death Benefits Authority (1992) 38 FCR 534. Spender, Ryan and Cooper JJ were there also dealing with a superannuation scheme and the retiring allowance payable and observed (at 537–8):
… “Payable” is an ordinary English word signifying that something is presently capable of being paid. If an amount is not capable of being paid unless and until a specified election shall have been made, or some other event shall have happened, it is not “payable” in accordance with that ordinary meaning. This view conforms with that expressed by Gummow J in Edelsten v Health Insurance Commission (1988) 90 ALR 595 at 599.
We are prepared to accept that, had the appellant made the election specified by Neaves J, a lump sum would have been payable in respect of him upon the termination of his earlier employment. We also accept that such a sum would have been based partly upon contributions made by the appellant. However, for the reasons indicated, there was not presently payable to him a transfer value being a lump sum which, in terms of s 69(1), upon the termination of his New Zealand employment, became payable to him.
The tense of the verb “became” in s 69(1) reinforces the view that “payable” in both that subsection and s 68(1) means “capable of being paid presently or without more” upon the termination of the earlier employment. If the ability to pay a sum depends upon the effluxion of time or the happening of some other event, it cannot be said, as a matter of ordinary usage, that the sum “became” payable before that specified date or the happening of the stipulated event. All that can then be said is that the sum “might become payable”. …
In Anstis v Secretary, Department of Social Security [1999] FCA 1176 at [113], 94 FCR 421 at 441, it was also concluded that “payable” as it appeared in s 1125A of the Social Security Act 1991 (Cth) included that which can be paid, and this necessarily involved calculating the rate of allowance.
41 The $207,438.54 was not “capable of being paid” until the requisite state of satisfaction had been reached. And that had only occurred in October 2005. To the extent that the appellant contended that that amount was payable either from the date of death or from the date of a claim being made, those contentions are rejected.
Delay in Payment?
42 A conclusion that the second lump sum payment did not become payable until the determination of the Tribunal in October 2005, however, leaves unresolved the question as to whether or not “the payment of the benefit is delayed” within the meaning of Rule 69(1). The trial judge concluded that the Tribunal decision “is the date from which any delay in payment is to be measured”.
43 Concurrence cannot be expressed with this conclusion.
44 It was common ground that the second lump was “a benefit … payable as a lump sum” to Ms Nowicka. That which really divided the parties was whether the payment of that benefit had been “delayed”.
45 If the period during which the payment remained outstanding was the period commencing on the date of the Tribunal determination or a period shortly thereafter, there was no delay; if the period for which the payment remained outstanding was some earlier date, there was then a real prospect of Ms Nowicka bringing herself within Rule 69(1).
46 In order to fix the commencing date for payment at a date far earlier than October 2005, reliance was placed by Ms Nowicka upon s 5 of the 2004 Determination or, alternatively, s 41(3)(b) of the Superannuation (Resolution of Complaints) Act.
47 Section 5, it was contended, on its terms conferred an entitlement to interest from that point of time where the Board had been provided with“all required documentation and information”. It was common ground that no new evidence had been presented to the Tribunal and that Ms Nowicka had provided the Board with all required documentation and information by the date of her application on 9 October 2000. It was thus contended that as from at least 9 October 2000, interest was payable up until the second lump sum was paid.
48 For the purposes of s 5, it may be accepted that as from 9 October 2000 all documentation and information had been provided to the Board. But, as at that date, the Board could not pay the $207,438.54 for the simple reason that it was not until 5 years later that the requisite state of satisfaction had been reached. The outstanding “information” which it required in order to make the payment of that sum had not been received until the Tribunal’s decision had been made and communicated to it.
49 Section 5, it is thus considered, does not confer any entitlement to be paid interest until the Board was provided with the Tribunal’s determination.
50 But s 41(3)(b) of the 1993 Act does dictate a conclusion that interest is payable as from an earlier date. Section 41 provides as follows:
Operation of determination
(1) Subject to subsection (2), a determination of the Tribunal comes into operation immediately upon the making of the determination.
(2) The Tribunal may specify in a determination that the determination is not to come into operation until a later date specified in the determination and, if a later date is so specified, the determination comes into operation on that date.
(3) A decision of a trustee, insurer, RSA provider or other decision-maker as varied by the Tribunal, or a decision made by the Tribunal in substitution for a decision of a trustee, insurer, RSA provider or other decision-maker:
(a) is, for all purposes (other than the making of a complaint about the decision) taken to be a decision of a trustee, insurer, RSA provider or other decision-maker concerned; and
(b) on the coming into operation of the determination by the Tribunal, unless the Tribunal otherwise orders, has effect, and is taken to have had effect, on and from the day on which the original decision has or had effect.
51 Once the Tribunal made its determination in October 2005 that there were “sufficiently mitigating circumstances” for Private Pryzdatek’s absence without leave, the contention on Ms Nowicka’s behalf was that that determination was taken to have had effect as from an earlier date. The specification by the appellant of that earlier date varied from the date of death, April 1999, to the date upon which the Board originally made its decision, namely 17 December 2003. Whichever be the date, interest — it was contended — was payable as from a date earlier than 2005.
52 An argument as to the effect s 41 of the 1993 Act upon the payment of a pension under Rule 69(2) was advanced before Her Honour Justice Kenny in Batt. Her Honour concluded that the decision of the Tribunal did “not alter the fact that the pension at the reclassified rate is payable only from the date of the decision of the Tribunal”. Her Honour further concluded that there was in any event no “delay” for the purposes of Rule 69(2). Her Honour expressed her reasons for reaching these two conclusions as follows:
[53] Section 41 of the SRC Act does not require a different conclusion. Section 41(1) does no more than provide that, subject to s 41(2), a determination of the Tribunal comes into operation immediately upon the making of the determination. Section 41(3) further provides that a decision made by the Tribunal in substitution for a decision of a trustee is taken to be the decision of the trustee (s 41(3)(a)) and unless the Tribunal otherwise orders “has effect, and is taken to have had effect on and from the day on which the original decision has or had effect”. As Kirby J explained in Attorney-General (Cth) v Breckler (1999) 197 CLR 83 at [91], in making a determination under s 37(3), the Tribunal creates new rights, albeit in the form of a decision which is then substituted for the decision of the trustee which is set aside. The fact that pursuant to statute a decision of the Tribunal would ordinarily take effect at a date prior to its decision on classification does not alter the fact that the pension at the reclassified rate is payable only from the date of the decision of the Tribunal.
[54] Further, the fact that the reclassification is to take effect from a date prior to a reclassification does not entail the consequence that the commencement of the payment of the pension at the reclassified rate is “delayed” for the purpose of r 69(2). In order for there to be a relevant delay in the commencement of the payment of the pension that is payable, there must be a classification or reclassification decision that makes the pension payable and delay between the date of this decision and the first payment of the pension in accordance with the Rules (and the decision). The period between the date of reclassification and the date on which, in the SRC Act or under the Rules, the reclassification takes effect is not a period of delay in respect of any instalment of the pension within r 69(4). This is because no right to receive the pension at the reclassified rate arises before the decision on classification or reclassification is made.
53 The decision of the Tribunal in the present proceeding unquestionably created for Ms Nowicka an entitlement to be paid the $207,438.54. And, until that determination was made by the Tribunal, she had no entitlement to that further lump sum. But once the determination was made, s 41(3)(b) provides that that determination “is taken to have had effect, on and from the day on which the original decision has or had effect”. The date of that “original decision” was the date of the Board’s decision that was the subject of appeal, namely 17 December 2003.
54 Concurrence cannot be expressed with this aspect of Her Honour’s reasons to the extent that they stand in the way of a conclusion that the effect of the Tribunal’s decision does not operate as from the date of the decision under review and to the extent that the period as between the date of the decision under review and payment cannot constitute “delay”.
55 Section 41(3)(b) is in this respect comparable to s 43(6) of the Administrative Appeals Tribunal Act 1975 (Cth). That subsection provides as follows:
A decision of a person as varied by the Tribunal, or a decision made by the Tribunal in substitution for the decision of a person, shall, for all purposes (other than the purposes of applications to the Tribunal for a review or of appeals in accordance with section 44), be deemed to be a decision of that person and, upon the coming into operation of the decision of the Tribunal, unless the Tribunal otherwise orders, has effect, or shall be deemed to have had effect, on and from the day on which the decision under review has or had effect.
There are obvious distinctions as between s 41(3)(b) of the 1993 Act and s 43(6) of the 1975 Act. One distinction is that s 43(6) contains the phrase “shall be deemed to have had effect”, a phrase missing from s 41(3)(b). There may also be distinctions to be drawn from the various decisions that are susceptible of review by the Administrative Appeals Tribunal and from the potential for the interests of third parties to be more immediately affected by decisions of that Tribunal as compared to the Superannuation Complaints Tribunal.
56 Notwithstanding such distinctions, the two provisions nevertheless have in common an express legislative intent that the decisions of the two Tribunals are “to have … effect, on and from the day” on which the original decision had effect.
57 In the context of s 43(6) of the 1975 Act, that provision has been applied such that interest has been held to be payable as from the date upon which duty had been paid “under protest” for the purposes of s 167 of the Customs Act 1901 (Cth), where the Administrative Appeals Tribunal concluded that no duty was payable: Collector of Customs v Gaylor Pty Ltd (1995) 35 NSWLR 649. Cole JA, with whom Clarke and Handley JJA agreed, concluded (at 662):
The appellant’s contention that interest is payable only from the date of the tribunal’s award is in my view unsustainable for at least two reasons. … Second, s 43(6) of the Administrative Appeals Tribunal Act makes clear that the tribunal’s decision speaks from the date of the initial wrongful determination. The “proper duty”, once determined by the tribunal, was always the proper duty. The consequence is that the Collector demanded and received more duty than the legislature had made exigible. The owner had been deprived of that wrongly levied duty for the period from payment under protest and should be compensated by an award of interest from that date.
A comparable result occurred in Secretary, Department of Health and Ageing v Marnotta Pty Ltd [2005] FCA 1395, 88 ALD 720. A delegate of the Secretary had there revoked the respondent’s approval as a provider under the Aged Care Act 1997 (Cth). This decision was set aside by the Tribunal and the respondent was thus deemed to have retained its approval. See also: Lesi v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 285 at [47], 134 FCR 27 at 39.
58 The “retrospective effect” of s 41(3)(b) follows from the terms of the section itself. Its “retrospective effect” has been recognised and given effect to: HEST Australia Ltd v Sykley [2005] FCA 1381 at [60], 147 FCR 248 at 263–4 per Crennan J. Its effect is relevantly comparable to s 43(6) of the 1975 Act.
59 For the purposes of Rule 69(1), the first condition precedent to the exercise of the discretion is satisfied. A “benefit is payable as a lump sum”. Section 41(3)(b) provides that the October 2005 decision of the Tribunal is “taken to have had effect” as from 17 December 2003. The second condition precedent to the exercise of the discretion then invites inquiry as to whether or not “the payment of the benefit is delayed”. Although the second lump sum may not have been able to be paid prior to the Tribunal’s decision, for the purposes of Rule 69(1) the Tribunal’s decision is “taken to have had effect” as from December 2003.
60 A statutory phrase common to both s 43(6) of the 1975 Act and the current s 41(3) is the phrase “for all purposes”. In the context of the 1975 Act, this is a phrase which may assume importance: Godwin v Repatriation Commission [2008] FCA 576 at [16], 166 FCR 471. For present purposes, the decision of the Tribunal is also taken to have had effect as from December 2003 “for all purposes” — including for the purposes of determining whether or not there has been delay.
61 The period as between December 2003 and October 2005 constituted “delay” and satisfied the second condition precedent to the discretion conferred by Rule 69(1).
62 It matters not what the reason for the “delay” may be. “Delay” may be just as much occasioned by delay on the part of those administering the Scheme as it may by the time taken to pursue such administrative review procedures as were available to Ms Nowicka.
63 This conclusion, it is considered, gives effect to both s 41(3)(b) of the 1993 Act and to Rule 69. It also gives a “practical and purposive” construction to the Scheme.
Conclusion
64 The opportunity has been taken to read the reasons for decision and the orders proposed by Justices Moore and Gilmour.
65 Concurrence is expressed with the orders that the appeal be allowed and that the third respondent should pay the costs of the appellant.
66 Regrettably, concurrence cannot be expressed with so much of their Honours’ reasoning which supports any calculation of interest prior to 17 December 2003.
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I certify that the preceding forty-eight (48) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick. |
Associate:
Dated: 19 December 2008
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Counsel for the Appellant: |
Mr A Watson |
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Solicitor for the Appellant: |
Maurice Blackburn |
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Counsel for the Third Respondent: |
Mr A Dillon |
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Solicitor for the Third Respondent: |
Australian Government Solicitor |
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Date of Hearing: |
17 November 2008 |
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Date of Judgment: |
19 December 2008 |
