The judgment of the Full Court of the Federal Court of Australia (FCFCA) in Board of Trustees of the State Public Sector Superannuation Scheme v Edington [2011] FCAFC 82 was handed down on 1 February 2011.

The FCFCA rejected the decision of Justice Collier, the single judge of the Federal Court of Australia (FCA), that the SCT should consider whether the decision-making process of the Trustee was fair and reasonable. The SCT had affirmed a decision of the Board of Trustees (Board of Trustees) of the Queensland State Public Sector Superannuation Scheme (established under the Superannuation (State Public Sector) Act 1990 (Qld)) (Scheme) to deny the payment of a total and permanent disablement (TPD) benefit to a member of the Scheme, Mr Edington.

Facts

Mr Edington commenced employment with the Queensland Department of Primary Industries (Department) on 10 September 2001 and became a member of the Scheme on the same day. Through his membership in the Scheme, Mr Edington automatically received four units of TPD insurance coverage, which he increased to 17 units in December 2001.

Mr Edington’s role in the Department was as a field assistant in the Fire Ant Eradication Program. In the course of inspecting a property in January 2002, Mr Edington was chased by two dogs and, in an attempt to escape those dogs, he jumped over a fence, fell and injured his back and right foot. Mr Edington claimed that, as a consequence of this incident, he suffered either post traumatic stress disorder or an anxiety disorder.

Mr Edington ceased work at the Department on 8 July 2002 and was retired from the Department in June 2003.

The terms of TPD insurance coverage and a pre-existing medical condition

Under the Scheme’s TPD cover, a TPD benefit was only payable if the member’s TPD ‘was not related to a condition that ought reasonably to have been disclosed’ upon becoming a member of the Scheme (or increasing units of insurance held). Prior to commencing employment with the Department, Mr Edington had been diagnosed with schizophrenia, a condition from which he continued to suffer both throughout his employment and subsequent to its cessation.

The first decision of the Board of Trustees

In May 2003, Mr Edington’s claim for a TPD benefit was rejected by a delegate of the Board of Trustees on the grounds that he was TPD due to his pre-existing schizophrenia.

Mr Edington subsequently applied for review of the delegate’s decision by the Board of Trustees and then by the SCT, both of which affirmed the delegate’s decision. Mr Edington then appealed the decision of the SCT to the FCA, where he was unsuccessful, and then to the FCAFC. The FCAFC allowed the appeal, set aside the SCT’s decision and remitted the matter back to the Board of Trustees to be determined according to law.

The second decision of the Board of Trustees

Following the direction of the FCAFC, the Board of Trustees considered Mr Edington’s application for a TPD benefit a second time.

The Board of Trustees favoured the evidence of one doctor over others and rejected Mr Edington’s application for a TPD benefit a second time on 25 September 2008 on the grounds that his TPD was due to schizophrenia, a pre-existing medical condition which was not disclosed in a personal medical statement provided by Mr Edington.

Mr Edington’s appeal to the SCT

Mr Edington appealed the second decision of the Board of Trustees to the SCT. In undertaking its review, although the SCT preferred the opinion of different doctors to those preferred by the Board of Trustees, the SCT found that any anxiety disorder following the incident with the dogs was temporary and that the Board of Trustees’ decision that Mr Edington’s TPD ‘was related to his pre-existing, long-standing paranoid schizophrenia was fair and reasonable’. Therefore, the SCT affirmed the Board of Trustees’ overall decision but not for the same reasons.

Mr Edington’s appeal to the FCA

Mr Edington appealed the second decision of the SCT to the FCA. In considering the process undertaken by the SCT in its review of the Board of Trustees’ decision, the FCA stated that in reviewing whether the decision was ‘fair and reasonable’ the SCT must ‘identify the reasoning process that the [Board of Trustees] employed to reach their decision’. In considering this issue, the FCA found that the SCT had failed to examine whether it was ‘fair and reasonable for the Trustees to use a different reasoning process to come to the same conclusion as it did’ regarding the cause of Mr Edington’s TPD.

Consequently, the FCA held that the SCT ‘did not conduct a proper review focusing on the fairness and reasonableness of the [Board of Trustees’] decision’ because its ‘reasons show that it proceeded to decide afresh what it thought the correct decision was, and it then concluded that, because the [Board of Trustees’] decision was to the same ultimate effect as its decision, their decision must have been fair and reasonable’. The FCA therefore allowed the appeal, setting aside the SCT’s decision and remitting the matter to the SCT for reconsideration.

The current appeal

The Board of Trustees appealed the FCA’s finding that the SCT did not properly exercise its powers of review to the FCAFC.

The FCAFC held that the Superannuation (Resolution of Complaints ) Act 1993 (Cth) provides that:

  • the SCT must ‘make its own assessment of the evidence and other information’ and ‘ascertain the facts for itself upon the material before it and satisfy itself by reference to these facts whether the trustee’s decision was fair and reasonable in the circumstances’
  • the SCT is not required to consider ‘whether or not the reasoning process adopted by a trustee in reaching the impugned decision was fair and reasonable’, and
  • the SCT may make ‘factual findings [which] differed from those of the previous decision-maker’ and nevertheless ‘be satisfied that, in the circumstances, the decision under review was in fact fair and reasonable in the relevant way’.  

Applying this reasoning, the FCAFC held that:

  • the SCT was only ‘required to make its own decision on the material before it as to whether the decision made by the [Board of Trustees] was fair and reasonable in its operation in relation to Mr Edington… [and] was not required to take the extra step of comparing the Board’s reasoning process with its own’
  • there was no error of law made by the SCT in preferring different medical opinions to those opinions preferred by the Board of Trustees
  • as the SCT hearing is a ‘hearing de novo’, the SCT 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’
  • the SCT was not required to ‘give any detailed analysis of discrepancies between the [SCT’s] evidential approach and that of the Board of Trustees’, and
  • the SCT is not constrained in the evidence it may consider to that evidence mentioned by the Board of Trustees.

Accordingly, the FCAFC allowed the Board of Trustees’ appeal against the judgement of the FCA to set aside the decision of the SCT. Therefore, the decision of the SCT to uphold the Board of Trustees’ decision to deny a TPD benefit to Mr Edington stands.