Kelsey-Sugg, David --- "Recent changes to the Superannuation Complaints Tribunal" [2019] PrecedentAULA 7; (2019) 150 Precedent 26

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RECENT CHANGES TO THE SUPERANNUATION COMPLAINTS TRIBUNAL

By David Kelsey-Sugg

Effective alternative dispute resolution mechanisms have always been an important feature of the modern superannuation system.

INTRODUCTION

Since the 1990s, the body with jurisdiction over most consumer disputes relating to superannuation has been the Superannuation Complaints Tribunal (the Tribunal), an independent statutory administrative tribunal that was free for consumers.

On 1 November 2018, the Tribunal was replaced by an ombudsman scheme, the newly created Australian Financial Complaints Authority (AFCA). This was part of a broader change to the framework for external dispute resolution in Australia’s financial system which saw the Financial Ombudsman Service and Credit and Investments Ombudsman also replaced by AFCA.

This article considers the different statutory contexts of the Tribunal and AFCA, and briefly outlines some of the operational similarities and differences between the two bodies.

THE TRIBUNAL

The Tribunal is a federal administrative body established by the Superannuation (Resolution of Complaints) Act 1993 (Cth) (the SRC Act).^[1] In carrying out its functions, it is required to pursue the objectives of providing mechanisms for, among other things, the review of decisions or conduct to which complaints relate that are ‘fair, economical, informal and quick’.^[2]

A unique feature of the Tribunal is that a person could complain to it that a decision made by the trustee of a fund was ‘unfair or unreasonable’.^[3] This was a departure from the traditional basis upon which the exercise of a trustee’s discretion could be impugned in a court of equity.^[4] It gave the Tribunal wider grounds than a court had to review relevant decisions.

The Tribunal survived an early constitutional challenge in Breckler.^[5] It was argued that the Tribunal had impermissibly exercised judicial power, but the High Court rejected this, holding that the Tribunal’s statutory powers were invoked contractually by the voluntary election of trustees. The Tribunal’s powers were therefore private in nature.

Broadly, the Tribunal’s dispute resolution process commences with the separation of enquiries from complaints, then a determination is made as to whether the complaint is within jurisdiction. The importance of this separation is highlighted by the fact that in the year ended 30 June 2018, the Tribunal received 22,714 enquiries compared with 2,255 complaints.^[6]

The Tribunal could treat a complaint as having been withdrawn if it thought the complaint was trivial, vexatious, misconceived or lacking in substance.^[7] If the Tribunal treated a complaint as having been withdrawn, it was bound to provide reasons.^[8] A decision to treat a complaint as withdrawn was possibly subject to different forms of relief than a final substantive decision.^[9]

If a complaint was made and it had not been withdrawn, and the Tribunal was satisfied that it could deal with it, the Tribunal was required to inquire into the complaint and try to settle it by conciliation.^[10] However, the SRC Act gave the Tribunal no power to compel a party to attend a conciliation conference or otherwise take steps to facilitate conciliation.^[11]

If the complaint was still not resolved it advanced to a formal review, followed by a determination.

For the purpose of reviewing a relevant decision of the trustee of a fund, the Tribunal has all the powers, obligations and discretions that are conferred on the trustee.^[12] If an insurer is joined, the Tribunal must also review any relevant decision of the insurer, and for that purpose the Tribunal has all the powers, obligations and discretions that are conferred on the insurer.^[13]

On reviewing the decision of a trustee or insurer that is the subject of, or relevant to, a complaint under s14, the Tribunal must make a determination in writing: (i) affirming the decision; or (ii) remitting the matter to the trustee or insurer for reconsideration; or (iii) varying the decision; or (iv) setting aside the decision and substituting a decision for the decision so set aside.^[14]

The Tribunal could only exercise its determination-making power under s37(3) for the limited purpose of placing a complainant as nearly as practicable in such a position that the unfairness, unreasonableness, or both, that the Tribunal had determined to exist in relation to the trustee’s decision that is the subject of the complaint no longer exists.^[15]

A hearing before the Tribunal is a hearing de novo, following which the Tribunal makes findings of fact relevant to its deliberations.^[16] The Tribunal is not permitted to do anything that would be contrary to law, to the governing rules of the fund concerned and, if a contract of insurance between an insurer and trustee is involved, to the terms of the contract.^[17]

The Tribunal must affirm a decision under s37(3) if it was satisfied that the decision, in its operation in relation to the complainant, was fair and reasonable in the circumstances.^[18] The words ‘the decision ... was fair and reasonable’ in s37(6) are directed to whether the actual decision, rather than the process that led to it, was fair and reasonable.^[19]

In McAtamney,^[20] North J observed^[21] that the Tribunal has a function which is different from the usual function of most administrative tribunals. Having noted that the role of the Tribunal was focused on assisting one party to a transaction by ensuring that that party had been dealt with fairly and reasonably, His Honour said:

‘In fulfilling this function there is less of the element of determining a controversy between two contending parties as might be seen, say, when the Administrative Appeals Tribunal determines a social security or veterans’ claim. Such controversies bear an essential character of inter partes disputation. The focus in this statutory context is well illustrated by the requirements of s16 of the Act which impose on the Tribunal an obligation to assist the complainant in making a complaint. This statutory context then influences the way in which the Tribunal is required to go about its work. It might be required to investigate on its own initiative more than would be required in other statutory contexts, and the obligation to make enquiries even in the absence of material provided by the complainant is higher than the obligation to make further enquiry where the statutory context is concerned with ordinary inter partes disputation. Crennan J captured the purpose of the Act in HEST Australia Ltd v Sykley [2005] FCA 1381; 147 FCR 248 at [49] as “to ensure members and beneficiaries are not adversely affected by unfair and unreasonable decisions of insurers and trustees: see ss14 and 37”.’

The statutory context described above is broadly consistent with the relationship of trust that otherwise exists between superannuation fund members and trustees. It is a relationship where, in respect of certain claims for benefits, there is no onus of proof on a fund member, and there are no adversaries.^[22]

APPEALS FROM THE TRIBUNAL

A party could appeal to the Federal Court on a question of law from a determination of the Tribunal.^[23] The Federal Court is to hear and determine the appeal and may make such order as it thinks appropriate.^[24] Such an appeal is not an ‘appeal’ in the strict sense but lies within the original jurisdiction of the Court.^[25]

The reference to ‘determination of the Tribunal’ in s46 means the ultimate or final disposition of the substance of the complaint or matter which has been brought before the Tribunal. However the preliminary or threshold question of whether the Tribunal has or does not have jurisdiction to consider or determine the complaint before it is not a ‘determination’ under s46.^[26]

Because an appeal to the Federal Court under s46(1) of the SRC Act lies only in respect of a question of law,^[27] it is important to identify the relevant question of law with precision.^[28]

Matters which have been held to constitute questions of law and which were within the scope of the appeal allowed for by s46(1) of the SRC Act have included whether the Tribunal:

• made a finding of fact that was supported by evidence;^[29]

• misconstrued the provisions of a superannuation trust deed and made a determination contrary to those provisions;^[30]

• misconstrued the terms of an insurance policy and made a determination contrary to those terms;^[31]

• made a determination adverse to a party without according the party procedural fairness;^[32]

• on the facts that it found, should have concluded that an interdependent relationship existed within the meaning of s10A of the Superannuation Industry (Supervision) Act 1993 (Cth) and no other conclusion was open to it;^[33]

• misconstrued certain provisions of the Insurance Contracts Act 1984 (Cth);^[34]

• mistook its function under the SRC Act, asked itself the wrong question or applied the wrong test;^[35]

• wrongly placed an onus of proof on an applicant in circumstances where there was no such onus of proof.^[36]

In Ray and Merkel,^[37] the Federal Court considered the other available bases for the intervention of the Court in relation to decisions and conduct of the Tribunal. In Ray, the Court exercised jurisdiction under s39B(1A)(c) of the Judiciary Act 1903 (Cth) to grant mandamus. In Merkel, Gray J also regarded the Administrative Decisions (Judicial Review) Act 1977 (Cth) (ADJR Act) as an applicable basis for relief in certain circumstances.

THE AFCA SCHEME

The AFCA scheme became operational on 1 November 2018, following authorisation by the Minister for Revenue and Financial Services. The scheme’s enabling legislation provides that it is to be operated by AFCA, a non-profit company^[38] limited by guarantee. This arrangement has been described as ‘an ombudsman scheme’, rather than a statutory tribunal.^[39]

Under a new Part 7.10A of the Corporations Act 2001 (Cth), there are provisions relating specifically to superannuation complaints. Among other things, AFCA is given statutory powers specifically relating to superannuation complaints, which resemble the powers conferred upon the Tribunal by the SRC Act. These include the power to:

• join certain persons to a superannuation complaint;^[40]

• obtain information and documents;^[41]

• require attendance at conciliation conferences;^[42]

• give directions;^[43] and

• refer questions of law to the Federal Court for decision.^[44]

It appears from Part 7.10A^[45] that in determining superannuation complaints, AFCA’s statutory task is similar if not the same as that of the Tribunal. For example:

• In making a determination, AFCA has, subject to s1055, all the powers, obligations and discretions that are conferred on the trustee, insurer, RSA (retirement savings account) provider or other person who made a decision or engaged in conduct to which the complaint relates;^[46]

• AFCA must affirm relevant decisions or conduct if it is satisfied that the decision, in its operation in relation to the complainant (or other relevant person), or the conduct, was fair and reasonable in all the circumstances;^[47]

• AFCA must affirm a decision relating to the payment of a death benefit if AFCA is satisfied that the decision, in its operation in relation to the complainant (or other relevant person), was fair and reasonable in all the circumstances.^[48]

However, AFCA operates not only according to its enabling legislation but also by reference to a company constitution, rules and operational guidelines. Where AFCA’s enabling legislation is silent, its Constitution, rules and guidelines largely fill in the gaps. For example:

• The Rules state that AFCA will, among other things, consider complaints submitted to it in a way that is: independent, impartial, fair; in a manner which provides procedural fairness to the parties; efficient, effective, timely; and cooperative, with the minimum of formality: r. A.2.1(c).

• The Rules, rather than the enabling legislation, set out: the time limits for making superannuation complaints: r. B.4.1.1-B.4.1.5; the circumstances in which AFCA will exclude a complaint: r. C.1; and the circumstances in which AFCA may exclude a complaint: r. C.2.

The following features of the AFCA scheme appear to differ from those of the Tribunal:

• The instruments which create and govern AFCA’s superannuation jurisdiction draw no explicit distinction between discretionary and non-discretionary decisions;^[49]

• The stated principles that underpin the AFCA scheme are not identical to the Tribunal’s statutory objectives;

• AFCA is under no obligation to take reasonable steps to help a complainant;^[50]

• The Tribunal could not deal with a complaint unless the complainant had attempted to have the matter resolved.^[51] There is no such requirement for complaints to AFCA; and

• In addition to various mandatory exclusions, AFCA has a discretion to exclude a complaint if it considers it appropriate to do so and there are ‘compelling reasons’.^[52]

APPEALS

Part 7.10A also provides for appeals to the Federal Court, on a question of law, from AFCA’s determination of a superannuation complaint.^[53] This closely resembles the appeal mechanism contained in the SRC Act. It is unclear whether the reference to ‘AFCA’s determination of the complaint’ includes a decision under the AFCA rules to exclude a complaint.

CONCLUSION

While the Tribunal is now obsolete, some of its important features have been retained in the legislation which governs AFCA. Other aspects of the Tribunal’s operation, while no longer enshrined in legislation, have analogues in the rules and guidelines which govern AFCA’s superannuation jurisdiction.

Time will tell whether these changes lead to improvements in the efficient and effective external resolution of superannuation disputes.

David Kelsey-Sugg is a barrister at Castan Chambers, Melbourne. PHONE [phone] EMAIL [e-mail].

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^[1] Superannuation (Resolution of Complaints) Act 1993 (Cth) (SRC Act), s6.

^[2] Ibid, s11.

^[3] Ibid, s14; a person could also complain to the Tribunal that a decision of an insurer in relation to a contract of insurance where premiums are paid from an RSA (as defined in SRC Act, s3) is or was unfair or unreasonable: SRC Act, s15J.

^[4] Attorney-General (Cth) v Breckler (1999) 197 CLR 83 (Breckler).

^[5] Ibid. Summarised in Sinisgalli and Batrouney, ‘Power to the SCT’, Law Institute Journal, Vol. 73, 1999.

^[6] Superannuation Complaints Tribunal, Annual Report 2017-18, 6.

^[7] SRC Act, s22(3)(b); see for example McAtamney v Superannuation Complaints Tribunal [2016] FCA 1062 (McAtamney).

^[8] SRC Act, s22(4).

^[9] McAtamney, per North J, [130].

^[10] SRC Act, s27.

^[11] Howitt-Steven v Unisuper Limited [2001] FCA 1599, per Branson J, [26] – where the Tribunal’s attempts to implement a process of conciliation were unsuccessful because of the unwillingness of the trustee to take part in such a process: upheld in Howitt-Steven v Unisuper Ltd [2002] FCAFC 272.

^[12] SRC Act, s37(1)(a).

^[13] Ibid, s37(2).

^[14] Ibid, s37(3).

^[15] Ibid, s37(4).

^[16] Board of Trustees of the State Public Sector Superannuation Scheme v Edington & Anor [2011] FCAFC 8; (2011) 119 ALD 472.

^[17] SRC Act, s37(5).

^[18] Ibid, s37(6).

^[19] National Mutual Life Association of Australasia Limited v Jevtovic (Unreported, FCA, Sundberg J, 8 May 1997) (Jevtovic), per Sundberg J, 381; Citicorp Life Insurance [2005] FCAFC 102, [119].

^[20] See McAtamney, above note 7.

^[21] At [135].

^[22] See for example Alcoa v Frost [2012] VSCA 238, per Nettle JA, [54].

^[23] SRC Act, s46(1).

^[24] Ibid, s46(3).

^[25] Hannover Life Assurance Re of Australasia Ltd v Membrey [2004] FCA 1095, per Crennan J, [1].

^[26] Ray v Superannuation Complaints Tribunal [2004] FCA 1120; 138 FCR 548 (Ray), per Goldberg J, [49]; see also Merkel v Superannuation Complaints Tribunal [2010] FCA 564 (Merkel), per Gray J, [62].

^[27] AIA Australia Ltd v Lancaster [2017] FCA 962 (Lancaster), per Allsop CJ, [31].

^[28] Haritos v Commissioner of Taxation [2015] FCAFC 92, per Allsop CJ, Kenny, Besanko, Robertson and Mortimer JJ, [62]; see also Hoe v Manningham City Council [2011] VSC 37, per Pagone J, [4].

^[29] Sharma v LGSS Pty Ltd [2018] FCA 167, per Gleeson J, [39].

^[30] Auspine Staff Superannuation Pty Ltd v Henderson [2006] FCA 1281 (Henderson), [47].

^[31] Lancaster; relying upon Federation Insurance Ltd v Banks [1984] VicRp 42; [1984] VR 525, per Kaye J, 533; see also Henderson, [72].

^[32] MLC Nominees Pty Limited v McNally [2018] FCA 1950; Ex parte Aala [2000] HCA 57; (2000) 204 CLR 82; Henderson, [60]; Plaintiff S157/2002 v The Commonwealth [2003] HCA 2; (2003) 211 CLR 476, 506.

^[33] Friar v Brown [2015] FCA 135, per Griffiths J, [79].

^[34] Sharma.

^[35] McAtamney, [168], [170]-[171].

^[36] Ibid, [130]; [138]-[139].

^[37] See Ray and Merkel, above note 26.

^[38] Australian Financial Complaints Limited (ACN 620 494 340).

^[39] See for example Professor P Hanrahan, ‘Legal Framework Governing Aspects of the Australian Superannuation System’, July 2018, A Technical Paper for the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, 91.

^[40] Corporations Act 2001 (Cth) (Corporations Act), s1054.

^[41] Ibid, s1054A.

^[42] Ibid, s1054B.

^[43] Ibid, s1054BA.

^[44] Ibid, s1054C.

^[45] Division 3, Subdivision C.

^[46] Corporations Act, s1055(1).

^[47] Ibid, s1055.

^[48] Ibid.

^[49] cf. SRC Act, s14AA.

^[50] cf. SRC Act, s16; Rule A.3.2 provides that AFCA ‘may’ assist complainants to submit a complaint.

^[51] SRC Act, s19.

^[52] Rules, C.2.1.

^[53] Corporations Act, s1057.