Case: HEST Australia Ltd v Sykley [2005] FCA 1381 ; (2005) 147 FCR 248
Outcome: cited
The Tribunal is required by s 37(6) of the Act to affirm a relevant decision of a Trustee if it is satisfied that the decision was fair and reasonable in the circumstances. Relevant principles as to fairness and reasonableness in this context include the following: &#8226; the words "unfair" and "unreasonable" as used in the Act are of broad content and purpose, and not to be read restrictively: National Mutual Life v Campbell 99 FCR at 571 &#8226; whether a decision, or its operation in relation to a person, is fair and reasonable in the circumstances involves a value judgment, the making of which is committed to the Tribunal: National Mutual Life v Campbell 99 FCR at 570-571 &#8226; where the Tribunal forms the view that the decision was fair and reasonable it must affirm the decision even though the Tribunal might not itself have made the same decision ( National Mutual Life Association of Australia v Scollary [2002] FCA 695 at [37] , Colonial Mutual Life Assurance Society Ltd v Brayley [2002] FCA 1333 at [31] ) &#8226; a decision under review pursuant to s 37 may be one which so involves elements of fact, degree, opinion or value judgement that different minds can legitimately differ in reaching a decision. That is why the Tribunal's task is not to ask itself whether such a decision was the correct or preferable decision, nor to engage in ascertaining generally the rights of the parties, nor to engage in some form of judicial review of the decision of the trustee or insurer. Rather it is to form a view, from the perspective of the trustee, as to whether the decision was - recognising the overriding framework given by the rules of the fund - unfair or unreasonable (Allsop J in Crocker at ATR 366, 367, the Full Court in Cameron 130 FCR at 133) &#8226; as explained by Branson J in Brayley [2002] FCA 1333 at [32] , if the Tribunal is not satisfied that the decision was fair and reasonable in the circumstances, ss 37(1) and (2) require the Tribunal put itself in the position of the trustee and, in an appropriate case, the insurer and other relevant decision-maker ( National Mutual Life v Campbell 99 FCR at 570; Briffa v Hay (1997) 75 FCR 428 at 443-445). From that position or positions the Tribunal must determine whether, consistently with: (a) the general law; (b) the governing rules of the fund concerned; and (c) if a contract of insurance between the insurer and a trustee is involved, the terms of the contract, the unfairness or unreasonableness that the Tribunal has identified in respect of the trustee's decision can be addressed in whole or in part &#8226; a decision of a trustee or insurer as varied by the Tribunal, or a decision of the Tribunal in substitution for a decision of the trustee or insurer, is for all purposes (other than the making of a complaint about the decision) taken to be a decision of the trustee or insurer and, on the coming into operation of the determination by the Tribunal, unless the Tribunal otherwise orders, has effect on and from the day on which the original decision had effect: s 41(3) &#8226; the Tribunal is obliged to consider the evidence before it by way of hearing de novo : Seafarers' Retirement Fund Pty Ltd v Oppenhuis [1999] FCA 1683 ; (1999) 94 FCR 594 at 598-599. Indeed in reviewing a decision of a Trustee of a fund, the Tribunal has all the powers, obligations and discretions that are conferred on the trustee: s 37(1)(a). In exercising its powers of review, the Tribunal is not restricted to the documents which were before the Trustee, nor is it confined to the manner in which the applicant addressed the subject matter: Commonwealth Superannuation Scheme Board v Dexte r [2004] FCA 1434 ; (2004) 142 FCR 151 at 166-167, Crocker 48 ATR 387-388, Oppenhuis 94 FCR at 599, HEST Australia Ltd v Sykley [2005] FCA 1381 ; (2005) 147 FCR 248 at 259. 18 Following from this point, there was evidence before both the Trustee and the Tribunal, in particular the opinions of Dr Reddan and Dr Olsen, that the cause of the applicant's total and permanent disability was his schizophrenia, and that the applicant did not suffer from PTSD (reports of Dr Reddan and first report of Dr Butler). It appears that the Tribunal, unlike the Trustee, accepted that the applicant suffered a medical condition in the nature of either PTSD or anxiety disorder. Nonetheless there was clear evidence in the report of Dr de Leacy - which was not before the Trustee, but to which the Tribunal could have regard in light of principles emerging from cases including Sykley - that the applicant's pre-existing schizophrenia may have made him more susceptible to experiencing PTSD or an anxiety disorder. It is clearly in respect of the view the Tribunal took of the susceptibility of the applicant to either PTSD or anxiety disorder resulting from his schizophrenia that the Tribunal was referring to the "sufficient relationship" between those disorders and the applicant's schizophrenia, which latter condition was the basis of the Tribunal's finding. It was open to the Tribunal on the evidence to make that finding of fact. Interestingly, while the applicant claims as a ground of appeal that the Tribunal failed to give any or adequate weight to the views of Dr de Leacy - which weight was an issue of fact for the Tribunal in any event - on the contrary, it appears that the Tribunal gave considerable weight to the views of Dr de Leacy regarding the susceptibility of persons (including the applicant) suffering schizophrenia to PTSD or anxiety disorders. 19 Second, in relation to the question of law concerning the improper exercise by the Tribunal of its powers under s 37(1)(a) of the Act , it is clear that the role the Tribunal assumed for itself, and the question it posed for itself, were correct. The Tribunal recognised that, irrespective whether the Tribunal would have made the decision the Trustee made, its role was to consider whether the decision of the Trustee to refuse payment of the TPD benefit because of the applicant's pre-existing illness was fair and reasonable in its operation in relation to the applicant in the circumstances (s 37). 20 Further, and contrary to the submissions raised in the applicant's first ground of appeal , in my view the Tribunal did not err in finding that the Trustee's decision was fair and reasonable, notwithstanding that the Trustee did not have the opportunity to have regard to the opinion of Dr Eric De Leacy in his report dated 22 October 2005. In relation to this point, I note in passing that clearly there was no dearth of psychological or psychiatric material before the Trustee, including several reports favourable to the applicant. However the key issue here is that the Trustee did not have the opportunity to have regard to the opinion of Dr de Leacy. The obvious answer to this point is that the reason for this is because Dr de Leacy's report had been neither sought nor prepared at the time the Trustee made its decision. In my review this issue has no merit.