Case: Tonkin v Western Mining Corporation Ltd (1998) 10 ANZ Ins Cases 61-397
Outcome: applied
are three additional matters I should emphasise. First, I have emphasised that it is the review of the Trustee's decision that is of present concern. The present is not a case in which the Trustee was, in substance, deciding a question that was assigned by the Deed itself to an insurer: cf Chammas v Harwood Nominees Pty Ltd [No 1] (1993) 7 ANZ Ins Cas 61-175. Secondly, while both under the general law and under cl 3(1) of the trust deed the Trustee had no duty to give reasons for a determination adverse to Mr Kowalski, a failure to give reasons in circumstances where explanation might be called for is another matter. As Young J observed in Maciejewski v Telstra Super Pty Ltd (1998) 44 NSWLR 601 at 604, in dealing with the suggestion that because a trustee is not bound to give any reasons, therefore the matter is completely unreviewable: Nothing could be further from the truth. Indeed, whilst trustees do not have to give reasons in a case where a plaintiff puts forward a prima facie case that the trustee's discretion has miscarried, the absence of reasons and the absence of any evidence before the Court as to what happened, will tend to make that prima facie case a virtual certainty. This view has been endorsed in many subsequent cases: see Baker v Local Government Superannuation Scheme Pty Ltd ; Hay v Total Risk Management Pty Ltd ; Alcoa of Australia Retirement Plan Pty Ltd v Thompson (2002) 116 FCR 139 at [37]; Flegeltaub v Telstra Super Pty Ltd ; see also Butler LM, "Reviewing Trustees' Decisions: The Right to Reasons" (1999) 7 Aust Property LJ 251. Thirdly, as the Trustee has considered Mr Kowalski's entitlement to a TPD Benefit on a number of occasions and has decided against it, an issue that presently arises is whether, if at all, it is obliged to reconsider that matter and, if so, in what circumstances. These issues have helpfully been considered by the Full Court of Western Australia in Tonkin v Western Mining Corporation Ltd (1998) 10 ANZ Ins Cases 61-397 and in a context not dissimilar from the present. In a judgment endorsed by the other members of the Court, Franklyn J made observations which though lengthy are presently relevant in several respects (at 74,270): In my view, having regard to the terms of the Deed and the relevant definition, there is no obligation on the trustee, on an application for the TPD Benefit supported by evidence inadequate to give rise to the necessary opinion, to seek out, on its own initiative, evidence for its consideration and so strain to obtain evidence relevant to the formation of the necessary opinion, thereby attempting to bring within the definition a member not otherwise within its terms. It may, however, in the exercise of its fiduciary duty and as a matter of discretion, if it considers it appropriate, seek and obtain additional medical evidence. It may also, as a matter of discretion, require medical evidence to be submitted to it for the purposes of its consideration. As trustee, it is not an adversary either for or against an applicant for the benefit. Relevantly, it has a duty only to act in accordance with the trust. If it fails to perform the same, the court will compel it to do so or do so for it. It is not bound by any rules as to how it exercises a discretion conferred on it, save such as it is obliged to comply with by the terms of the Deed, provided always that it must act honestly and in good faith, on an informed view of whether or not to exercise its discretion, and exercise the power with due consideration for the purpose for which it was conferred and for no ulterior purpose. In the case of powers conferred on it and as to whether it should do or refrain from doing something, it must exercise its judgment actively and honestly and act accordingly. The court will not control a trustee in the exercise of its purely discretionary powers unless it is acting mala fide or has misconceived the nature of its discretion and acted upon that misconception. When appointed to exercise a trust according to discretion, a trustee is not bound to state reasons for any conclusion at which it may have arrived and on which it has acted, but again the discretion must be exercised with an absence of indirect motive with honesty of intention and on a fair consideration of the issues. The duty of the court generally is to see that the discretion of the trustee has been exercised in this manner and not to deal with the accuracy of the conclusion at which it may have arrived. See Jacobs' Law of Trusts in Australia , 5 th Ed, p 372-379. In my opinion, it has at all times been open to the appellant to submit further medical evidence, including the reports relied on in para 17.2A to the respondent for its consideration pursuant to the Deed definition in respect of the claim for the TPD Benefit. In such case the respondent is bound to give them proper consideration. No time limit is fixed or imposed by the Deed for making application for the Benefit or for the required consideration of medical evidence. Whether any statutory limitation might apply is not relevant to our consideration as no issue in that respect has been raised. In the event of the respondent, having considered medical evidence before it, failing to form the necessary opinion there is nothing in the Deed or rules to inhibit the appellant from providing, for its further consideration, further medical evidence relevant to the formation of that opinion. There is nothing in the Deed to lead to the conclusion that, once having failed or refused to form the necessary opinion after consideration of the medical evidence then before it, the respondent is under no obligation to consider further medical evidence relevant to the formation of that opinion. Indeed, in my opinion, on the proper construction of the Deed and having regard to the fiduciary nature of the trustee's obligations, the respondent, if requested to do so, is bound to consider such evidence relevant to formation of the opinion as may from time to time be put before it. Consequently, medical evidence, whether coming into existence prior or subsequent to any particular failure or refusal to form the necessary opinion will necessarily have to be considered if made available by or on behalf of the applicant for that purpose. I should note that for present purposes the respondents have conceded that, beyond medical evidence, if other material is provided to a trustee and is of such character as would lead a reasonable trustee to consider whether or not to reconsider its former opinion, that material will have to be considered. Turning now to the 1994 claim in the FASC, several matters seem indisputable. First, no formal application was made of the time of termination for a TPD Benefit. Mr Kowalski does not suggest otherwise. Secondly, the Trustee was unaware that it should consider Mr Kowalski's termination entitlements with such a benefit in mind. It did not inquire into whether there was medical evidence capable of supporting such an entitlement. It had no need, or obligation, to in the circumstances: cf Tonkin , at 74,269. I note that before it could pay a member a TPD Benefit under Rule C7, the Trustee was required to be of the opinion "after consideration of medical evidence satisfactory to them [sic]" that the member is incapacitated to the extent required by the Rule. The Trustee in this matter simply paid a Rule C9 retirement benefit. If the Trustee was later presented with an application for, or medical evidence in support of, a TPD Benefit, the paying of the Rule C9 benefit would not have relieved the Trustee of its obligation to consider that application. This is not to say that the C9 decision was vitiated by some breach of duty on the Trustee's part. Rather, its correctness was examinable because an error may have been made in providing the member with his or her entitlement as a member. Under the Rules of Annex C, the member was entitled to be paid the benefits of the particular Rule which his or her circumstances required. The Trustee may have had to be satisfied that the member met the criteria of a particular rule, but it did not have an unfettered discretion to decide which benefit might be provided to a member. As I will indicate below, the Trustee subsequently considered and rejected Mr Kowalski's claim for a TPD Benefit from the cessation of his employment in 1994. Mr Kowalski's 1994 claim proceeds on two false assumptions. The first, is that the Trustee had, in the circumstances, a duty to consider whether he had an entitlement to a TPD Benefit. I need not repeat what I have said above. The second is that the Trustee was obliged to consider Dr McFarlane's "report" (as the 29 April 1993 interview notes are misdescribed). There is no evidence at all that the Trustee was informed of, or provided with the report, at any time relevant to the determination of Mr Kowalski's 1994 retirement benefit. Mr Kowalski does not contend to the contrary. While it is a trustee's duty to act in the interests of its beneficiaries, absent an express power of dictation, a trustee is not the pawn of a beneficiary. As Tonkin indicates, a beneficiary is entitled to seek the reconsideration of a decision affecting his or her interests unless this is precluded by the nature of the decision itself or by the terms of the trust instrument. But where the decision, as here, requires the Trustee to form a particular opinion and that opinion has previously been formed adversely to the beneficiary, the Trustee is not obliged to reconsider that opinion absent some reason for so doing. Where, as here, what is raised by the beneficiary is matter which the Trustee has previously had raised before it and dealt with, the Trustee is entitled to decline to re-entertain that same matter in the future unless, because of change of circumstances or otherwise, that decision was not one that a reasonable person could then make. Such is not the position here. Accordingly, I am satisfied that having regard to the material underlying Mr Kowalski's 2005 claim, that claim has no reasonable prospects of success. I am conscious that in reaching the conclusions I have, I have made no direct reference to the medical evidence or to issues of causation. As to the medical evidence, I accept that there was material before the Trustee in 2001 which both supported and contradicted Mr Kowalski's position. The Trustee in light of this had to make its own decision. While Mr Kowalski asserts the Trustee's opinion was incorrect, that is not the question with which I am concerned. Not being aware of all of the material that was before the Trustee when it took its decisions in 2001 and 2005, I am left to consider if it can properly be alleged that there was not a real and genuine consideration of the correct question by the Trustee. There is nothing before me reasonably to suggest such was the case and hence should be examined at trial.