The Law Handbook 2024

Chapter 5.6: Superannuation 417 benefit on the ground that the member could be retrained for a different job, when the definition required the trustee to ask itself whether the member was capable of carrying on a suitable occupation without retraining. In some circumstances, there may be a duty to make further enquiries (see Finch v Telstra Super Pty Ltd [2010] HCA 36; (2010) 242 CLR 254). However, in many cases judges have stated that trustees’ decisions are not required to be correct, in accordance with the weight of the evidence, or even fair. Trustees are not required to give reasons for their decisions. However, if a trustee’s conduct is sufficiently unreasonable or unfair, it may suggest that they are not acting in good faith. Although trustees cannot be required to give reasons for their decisions, if they do so voluntarily the reasons must be sound. If they are not, a court may set aside the decision. Trustees and insurers ought to provide a claimant with information about material adverse to the claim and with an opportunity of addressing those matters before dismissing a claim. If this is not done, a court may set aside the decision (see Hannover Life Re of Australasia Ltd v Sayseng [2005] NSWCA 214). Numerous observers have noted that these principles are inappropriate for determining rights to benefits provided in a commercial context, often as part of a contract of employment. It is unacceptable for members to be refused a payment when they are objectively disabled within the definition in the trust deed, because they are unable to show that the trustee’s decision was made in bad faith (even though it is shown to be wrong, careless, or based on inadequate evidence). Although no English or Australian court has yet held that the traditional principles do not apply to superannuation trusts, in practice, Australian courts appear to interpret them in a way favourable to beneficiaries where it is clear that the trustee’s decision was not justified by the facts. Internal review The first step in challenging a trustee’s decision about a benefit is to request reconsideration of the decision. Section 101 of the Superannuation Industry (Supervision) Act 1993 (Cth) requires regulated funds to ensure that enquiries or complaints made by beneficiaries are properly dealt with within 90 days. Before requesting reconsideration, ask the trustee to provide a copy of the trust deed, a copy of any relevant insurance policy, an up-to-date statement of benefits, reasons for its decision, and copies of any documents it used in making its decision. A member or other beneficiary is entitled to copies of the first three documents, according to both the law of trusts and the Superannuation Industry (Supervision) Regulations 1994 (Cth), but cannot force the trustee to provide the last two. The next step is to write to the trustee requesting reconsideration, setting out the reasons why you believe the original decision is wrong. In the case of a total and permanent disability benefit, you should mention any factors that limit your employment prospects, including your age, extent of educational and vocational qualifications, and your experience and ability to speak and write English. You should include copies of any supporting medical reports. It would be prudent to obtain legal advice at this stage. Review by the courts If internal review is unsuccessful, the next step to consider is legal action. It is essential to obtain advice from a solicitor experienced in acting for members of superannuation funds before undertaking this step. Some firms of solicitors will act in these matters without payment until the matter is resolved. Nevertheless, substantial costs may be incurred and, if unsuccessful, a member may have to pay the legal costs of both parties to the dispute. A court will only review a decision of a trustee on the basis of the principles set out in the section ‘How trustees should make decisions’, above. This means that if the trustee has not voluntarily given reasons for its decision, you will have to show that the trustee failed to give the matter real and genuine consideration, acted in bad faith or acted for an improper purpose. If the trustee gave reasons for its decision, it will be set aside if the court accepts that the reasons were not sound. Statements by trustees that ‘the medical evidence does not establish that you are disabled within the meaning of the trust deed’, or that ‘in our opinion you are not disabled within the meaning of the trust deed’ have been held to be reasons by the courts. However, a court will not set aside a trustee’s decision simply because the judge would have made a different decision. Even if the court does set aside the decision, it may not always substitute its own decision for that of