Finch v Telstra Super Pty Ltd [2010] HCA 36
High Court of Australia
Decision Date: 20 October 2010
Background
The claimant had commenced employment with Telstra in 1992. In September 1996 the Claimant took sick leave from Telstra due to personal stresses. In October 1996 the Claimant reassumed his position at Telstra. He became severely depressed and suffered from adjustment disorder. In January 1998 he left the employment of Telstra and from 22 February 1999 until 26 March 1999 he worked for Foxtel. During that period, he took two weeks’ sick leave. He then worked part-time for Qantas from 29 November 1999 until 16 May 2000. During that period he took over two weeks’ sick leave.
The Claimant was a member of a superannuation fund, the Telstra Superannuation Scheme (“the Scheme”). The Scheme was regulated by a Trust Deed (“the Deed”). Telstra Super Pty Ltd, is the trustee of the Scheme (“the Trustee”). The Claimant had been seeking benefit payment under the Deed, for Total and Permanent Invalidity (TPI) since May 2000.
The Trustee on 21 March 2002, rejected the Claimant’s claim for a disability benefit. The Claimant requested a reassessment by the Trustee, in September 2002 but the Trustee again dismissed the Claimant’s claim in March 2003, despite medical opinion suggesting that the Claimant was unlikely to engage in gainful work ever again. That is, the Trustee rejected the claim on the basis that the Claimant was not “unlikely ever to engage in gainful work” as required by the second part of the definition of TPI in the deed. The Claimant challenged in the Supreme Court of Victoria, both determinations denying his claims.
Initial Decision – Supreme Court of Victoria
The trial judge held that the Trustee failed to give genuine consideration to the matter, in that it had failed to pursue sufficient inquiries into certain aspects of the claim. That is Trustee had failed to give genuine consideration to the question of whether the Claimant was unlikely ever to engage in gainful work.
The Claimant had relied on strong medical opinion in his favour to demonstrate that he was unlikely ever again to engage in gainful work. The trial judge considered in view of the strength of the medical opinion in favour of the Claimant, the Trustee ought to have made further inquiry into three matters. One was the circumstances of the Claimant’s last months with Telstra. The second related to the circumstances of his employment thereafter with Foxtel and Qantas. The third was a statement by the Claimant to the Chief Executive Officer of the Trustee that his employment with Qantas was “a real job”.
The trial judge remitted the matter to the Trustee for reconsideration.
The Court of Appeal
The Trustee appealed to the Court of Appeal.
The Court of Appeal held that for the Claimant to meet a requirement in the definition of TPI in the trust deed (that the Claimant be absent from active work for at least six months), the Trustee had to be satisfied that the Claimant had been absent from active work with Telstra for at least six months as at the date that the Claimant ceased to work for Telstra. Although there had been a six-month absence by the time the Trustee made its determination, the Court of Appeal did not see this as sufficient.
High Court decision
The Claimant applied to the High Court. In a unanimous decision, the High Court set aside the decision of the Court of Appeal and held that the TPI definition did not require the Claimant to be continuously absent from “all active work” for six months before leaving Telstra’s employment.
The absences from work after the claimant left Telstra’s employment enabled him to satisfy that part of the definition. The High Court stated that to conclude otherwise would mean a member was not able to cease work because of TPI unless they had already ceased to be an employee.
The High Court also indicated that to require the absence from active work for six months to take place before the member ceased to be an employee was to read words into the clause unnecessarily.
As to the determination of whether the Claimant was unlikely ever to engage in any gainful work for which he was for the time being reasonably qualified by education, training or experience, the High Court held that the trustee’s decision did not involve the exercise of a discretion, but was a factual determination.
In forming those opinions by the Trustee, there were factors to be examined and judgements to be made, but it was not a matter of discretionary power, just “an ingredient in the performance of the trust duty“.
Conclusion
The case highlights that determinations as to whether a member is TPI are questions of fact, not discretionary.
Where a superannuation fund trustee is required to form an opinion as part of the exercise of a trust duty, various obligations will apply to the trustee in forming that opinion. For example, the trustee must act impartially and give proper consideration to all relevant matters.