Claasz and Comcare (Compensation)
[2019] AATA 800
•3 May 2019
Claasz and Comcare (Compensation) [2019] AATA 800 (3 May 2019)
Division:GENERAL DIVISION
File Number(s): 2018/0838
Re:Kristal Claasz
APPLICANT
AndComcare
RESPONDENT
Decision
Tribunal:Member William Frost
Date:3 May 2019
Place:Canberra
The Tribunal varies the decision under review so that Ms Claasz’s compensation is payable pursuant to section 21 of the Safety, Rehabilitation and Compensation Act1988 on and from 28 October 2017. The decision under review is otherwise affirmed.
............................................................
Member William Frost
Catchwords
PRACTICE AND PROCEDURE – compensation – incapacity resulting from injury – where lump sum payable under superannuation benefit scheme – date compensation payable from – calculation of superannuation amount for the purposes of s 21 of the Safety, Rehabilitation and Compensation Act 1988 – decision varied for date compensation payable – otherwise decision affirmed
Legislation
Administrative Appeals Tribunal Act 1975, ss 37, 43
Australian Federal Police Act 1979, s 32
Safety, Rehabilitation and Compensation Act 1988, ss 4, 14, 19, 21
Superannuation Act 1976, s 54C
Superannuation Act 1990
Superannuation Act 2005, ss 10, 13, 16, 17, 18, 19, 44Cases
Hill and Comcare [2016] AATA 257
Lushington and Comcare [2001] AATA 310Webley and Telstra Corporation Limited [2003] AATA 539
REASONS FOR DECISION
Member W Frost
3 May 2019
introduction
Ms Claasz sought a review of Comcare’s reviewable decision dated 25 January 2018 accepting her entitlement to an amount of compensation for an injury pursuant to s 21 of the Safety, Rehabilitation and Compensation Act 1988 (‘Act’).
It is not disputed that, in accordance with s 21(1) of the Act, Ms Claasz is ‘incapacitated for work as a result of an injury’, that she ‘is retired from…her employment’, and that she received ‘a lump sum benefit under a superannuation scheme as a result of [her] retirement’. It is also not disputed that, under s 21(2) of the Act, Comcare is liable to pay compensation to Ms Claasz for the injury for each week after the date of her retirement in which she is incapacitated.
However, the dispute between the parties is the calculation (and therefore the quantum) of the compensation payable by Comcare under s 21 of the Act. Specifically, Ms Claasz challenges the basis upon which the ‘superannuation amount’ (as defined in s 4 of the Act) was determined by Comcare for the purpose of it identifying the amount of compensation payable as a result of her invalidity retirement from the Australian Federal Police (‘AFP’).
BACKGROUND
Ms Claasz commenced employment with the AFP in August 2010. For over four years, Ms Claasz held various positions with the AFP, including in ‘Child Protection Operations’, ‘Crime Reduction (Child)’ and ‘High Tech Crime Operations Strategic Business Coordination’. Throughout her employment with the AFP, Ms Claasz was a member of the Public Sector Superannuation Accumulation Plan (‘PSSAP’), being a ‘superannuation scheme’ under the Act and administered by the Commonwealth Superannuation Corporation (‘CSC’).
In December 2014, Ms Claasz, then aged 28, lodged a claim with Comcare for workers’ compensation due to ‘depression and anxiety’ as a result of ‘exposure to CPO [Child Protection Operations] material’ on 1 December 2014 during her employment in High Tech Crime Operations with the AFP.[1]
[1] Document entitled Claim for Workers’ Compensation, at T3 (pages 11-25) of the documents provided to the Tribunal pursuant to section 37 of the Administrative Appeals Act 1975 (‘AAT Act’).
In January 2015, Comcare accepted Ms Claasz’s claim and its liability to pay her compensation under s 14 of the Act for ‘post-traumatic stress disorder’ (using the International Classification of Diseases and Injuries).[2] Comcare identified the date of injury as 8 December 2014, being the date Comcare was able to satisfactorily determine, based on a report provided by her treating general practitioner, that Ms Claasz first sought medical treatment for her condition the subject of the claim.
[2] Comcare’s determination dated 8 January 2015 at T5 (pages 30-36) of the documents provided to the Tribunal pursuant to section 37 of the AAT Act.
Ms Claasz did not return to work after she sustained her injury in December 2014 and, since January 2015, she has received compensation in the form of weekly payments from Comcare (backdated to December 2014) based on her normal weekly earnings and the application by Comcare of ss 19 and 21 of the Act.
In November 2016, pursuant to s 32(1) of the Australian Federal Police Act 1979 (‘AFP Act’), Ms Claasz requested that the Commissioner of the AFP retire her because of her mental incapacity due to post-traumatic stress disorder. Pursuant to s 32(4) of the AFP Act, because Ms Claasz had not reached her maximum retiring age (within the meaning of that Act), she could only be retired on the ground of invalidity if the CSC certified in writing (in accordance with s 54C of the Superannuation Act1976) that, if she was retired, she would be entitled to receive invalidity benefits under Division 4 of Part V of the Superannuation Act1976. As a result, Ms Claasz requested the AFP to write to the CSC to apply for her to be medically retired on the basis of her total and permanent disability. In December 2016, the AFP requested that the CSC (via the PSSAP) certify that Ms Claasz would be entitled to receive invalidity benefits as required under the Superannuation Act1976.
In the period between 23 December 2016 and 6 January 2017, Ms Claasz commenced an insurance claim with the PSSAP (underwritten by AIA Australia) on the basis of her total and permanent disability. In July 2017, pursuant to Rule 4.1.4 of the Trust Deed establishing the PSSAP (Trust Deed),[3] AIA Australia paid the PSSAP the amount of $200,000 and this amount was subsequently credited to Ms Claasz’s superannuation account held with the PSSAP.[4]
[3] Superannuation (PSSAP) Trust Deed made on 29 June 2005 under s 10 of the Superannuation Act 2005. The current version of the Trust Deed is that registered on 4 December 2017.
[4] Refer to the letter from PSSAP to Ms Claasz dated 14 November 2017 attaching ‘Member Exit Statement’ listing ‘Insurance Proceeds’ of $200,000 and a ‘Transaction List’ with the description ‘Insurance Claim’ and the amount of $200,000 credited to Ms Claasz’s superannuation account on 26 July 2017.
Following her request in November 2016, Ms Claasz was invalidity retired from employment with the AFP with effect from the date of 27 October 2017.
On 10 November 2017, pursuant to Ms Claasz’s direction, her total superannuation benefit in the amount of $320,248.08 was rolled over from the PSSAP into another Commonwealth-administered superannuation fund, Essential Super. This action resulted in Comcare determining that Ms Claasz had received a lump sum benefit in accordance with s 21 of the Act. Up until and including the day before Ms Claasz received this lump sum benefit, her compensation was determined by Comcare according to the formula for calculating compensation for injuries resulting in incapacity as set out under s 19 of the Act. Ms Claasz’s final weekly rate of compensation payments as determined under s 19 was $1,301.36.
From the date Ms Claasz received the lump sum benefit (10 November 2017), her compensation was determined by Comcare according to the formula in s 21 of the Act, which is to be used for injuries resulting in incapacity where an employee is in receipt of a lump sum benefit. On 20 December 2017, Comcare informed Ms Claasz that her weekly rate of compensation from 10 November 2017 was $1,094.61, determined according to s 21 of the Act. This was a reduction of $206.75 per week from the final weekly rate of compensation determined by Comcare under s 19 of the Act.
On 8 January 2018, Ms Claasz requested a reconsideration of Comcare’s decision. By reviewable decision dated 25 January 2018, Comcare affirmed its decision and was satisfied that, on 10 November 2017, Ms Claasz had received a lump sum benefit for the purposes of the Act by demonstrating an unequivocal power of disposition over her superannuation benefit by rolling it over from the PSSAP into a separate superannuation fund such that s 21, rather than s 19, applied to the calculation of her compensation from that date.
issues
In February 2018, Ms Claasz applied to the Tribunal for a review of Comcare’s decision. The essential issues before the Tribunal were:
(a)What is the date from which compensation is payable to Ms Claasz under s 21 of the Act?; and
(b)What is the ‘superannuation amount’ as defined by s 4 of the Act for the purposes of calculating the amount of compensation payable to Ms Claasz under s 21 of the Act?
LEGISLATION
The Safety, Rehabilitation and Compensation Act 1988
Section 21 of the Act relevantly provides that:
(1)Compensation payable to an employee who is incapacitated for work as a result of an injury is determined in accordance with this section if:
(a)the employee is retired from his or her employment (whether the employee retired voluntarily or was compulsorily retired); and
(b) the employee receives a lump sum benefit under a superannuation scheme as a result of the employee’s retirement.
(2)Comcare is liable to pay compensation to the employee, in respect of the injury, in accordance with this section for each week after the date of the retirement during which the employee is incapacitated.
(3)The amount of compensation is the amount worked out using this formula:
where:
amount of compensation means the amount of compensation that would have been payable to the employee for a week if:
(a) section 19, other than subsection 19(6), had applied to the employee; and
(b) in the case of an employee who was not a member of the Defence Force immediately before retirement—the week were a week referred to in subsection 19(3).weekly interest on the lump sum means the amount worked out by:
(a) multiplying the superannuation amount in relation to the lump sum benefit received by the employee by the rate specified in an instrument made under subsection (5); and
(b) dividing the result of paragraph (a) by 52.… [Emphasis added]
For the purposes of determining ‘weekly interest on the lump sum’ in the above formula under s 21(3) of the Act, the ‘superannuation amount’ is defined in s 4 as follows:
superannuation amount, in relation to a pension received by an employee in respect of a week, or a lump sum benefit received by an employee, being a pension or benefit under a superannuation scheme, means an amount equal to:
(a) if the scheme identifies a part of the pension or lump sum as attributable to the contributions made under the scheme by the Commonwealth, Commonwealth authority or licensed corporation—the amount of that part; or
(b) in any other case—the amount assessed by the relevant authority to be the part of the pension or lump sum that is so attributable or, if such an assessment cannot be made, the amount of the pension received by the employee in respect of that week or the amount of the lump sum, as the case requires. [Emphasis added]
The Superannuation Act 2005
Ms Claasz became a member of the PSSAP because she was a public sector employee and it was the ‘sole eligible choice fund’ for the AFP.[5] Because Ms Claasz was a member of the PSSAP and met the requirements of the Superannuation Act 2005 (Superannuation Act), she was an ‘ordinary employer-sponsored member’ of the PSAAP.[6] The AFP was Ms Claasz’s designated employer and it was required to pay to the CSC any contributions that, under the rules in the Trust Deed, were payable in respect of Ms Claasz.[7]
[5] Sections 13 and 16 of the Superannuation Act 2005 (‘Superannuation Act’).
[6] Section 18 of the Superannuation Act.
[7] Sections 17 and 19 of the Superannuation Act.
The terms of s 44(1) of the Superannuation Act confirm that the rules contained in the Trust Deed apply to Ms Claasz because: ‘A person who is, or has ceased to be, a member of PSSAP is subject to the Rules to the extent that they are applicable in relation to the person’.
THE PSSAP TRUST DEED
Section 10 of the Superannuation Act provides as follows:
(1)Before 1 July 2005, the Minister must, for and on behalf of the Commonwealth, by deed:
(a)establish a superannuation scheme that:
(i) is to be known as the Public Sector Superannuation Accumulation Plan; and
(ii) may also be known as PSSAP; and
(iii) is for the benefit of persons who will be members of PSSAP; and(b)establish, and vest in the Board, a fund for the purposes of PSSAP; and
(c)set out the functions and powers of the Board in relation to PSSAP and the PSSAP Fund.
(2)The deed under subsection (1) is a legislative instrument, but section 42 (disallowance) of the Legislation Act 2003 does not apply to the deed.
As required by the Superannuation Act, the Trust Deed was made on 29 June 2005 and the PSSAP was established from 1 July 2005. The PSSAP is a ‘superannuation scheme’ administered by the CSC in accordance with the Trust Deed for the benefit of members of the PSSAP. The rules for the administration of the PSSAP are contained in the Schedule to the Trust Deed. The PSSAP Fund is vested in the CSC[8] and it administers the PSSAP and the PSSAP Fund in accordance with the provisions of the Superannuation Act and the Trust Deed, including receiving payments from designated employers and paying benefits to those entitled to receive them from the PSSAP.[9]
[8] Rule 2.2 of the Trust Deed.
[9] Rule 3.1 of the Trust Deed.
Rule 2.2.1 of the Trust Deed provides that each pay day the designated employer must pay as contributions to CSC an amount equal to 15.4 per cent of the superannuation salary of an ordinary employer-sponsored member on that day.[10]
[10] An ‘ordinary employer-sponsored member’ means a person who is an ordinary employer-sponsored member or the PSSAP in accordance with Part 4 of the Superannuation Act (being ss 17-19 regarding ‘Contributions’). As noted above under the heading, The Superannuation Act 2005 (Cth), Ms Claasz is an ordinary employer-sponsored member.
Rule 5.1.4 sets out the process for identifying the accumulation amount (which means the amount specified in that rule) of a PSSAP member, as follows:
The accumulation amount of a PSSAP member is equal to the total of the amounts credited to the personal accumulation account of the PSSAP member under Rule 5.1.5 less the total of the amounts debited to the personal accumulation account under Rule 5.1.6.
Pursuant to rule 5.1.5, certain amounts ‘must be credited’ to a member’s accumulation account (which records the member’s accumulation amount), including basic employer contributions, employee contributions, interest credited and ‘any amount paid by an insurance company to CSC in respect of the person in response to a claim against a life policy’.[11]
[11] Rule 5.1.5(f) of the Trust Deed.
Pursuant to rule 5.1.6, certain amounts ‘must be debited’ from a member’s personal accumulation account, including any insurance premium, interest debited and any fees, costs and expenses.
Having regard to the crediting and debiting process required under the Trust Deed, inevitably a PSSAP member’s accumulation account will consist of funds from mixed sources; some funds will be directly attributable to employer contributions, some funds will be directly attributable to employee contributions and some funds will not be so easily attributable.
The term ‘insurance premium’ in rule 5.1.6 relevantly means any amounts payable in respect of a PSSAP member for insurance coverage under Part 4 of the rules in the Trust Deed.[12] Division 1 of Part 4 relates to death and invalidity insurance cover. It provides that ‘CSC must take out a policy or policies with an insurance company or companies in its name to provide death and invalidity cover’ for PSSAP members and a member ‘will be provided with death and invalidity cover on and subject to the terms and conditions of the policy taken out’ by the CSC.[13] Ms Claasz held death and invalidity insurance cover through her superannuation account with the PSSAP. The policy was Life Plus Cover underwritten by AIA Australia with the premiums being paid by the CSC from the PSSAP Fund.[14]
[12] Part 1 Division 2 of the Trust Deed.
[13] Rules 4.1.1 and 4.1.2 of the Trust Deed.
[14] Rule 4.1.5 of the Trust Deed.
The premium determined by the CSC is ‘the same amount as the amount of premium specified in the death and invalidity cover policy, and must be deducted from the personal accumulation account’ of the PSSAP member.[15] That is, the CSC pays a member’s insurance premium out of the PSSAP Fund, and then deducts the equivalent amount from the member’s personal superannuation account. However, this does not occur ‘[w]here a premium payable for death and invalidity cover is more than the amount in the personal accumulation account…of the PSSAP member’.[16] This means that, due to the obligation on the CSC under rule 4.1.5 to first pay the premium for a member’s death and invalidity cover from the PSSAP Fund before deducting that amount from a member’s personal accumulation account, if there are insufficient funds in that account, the CSC is wholly responsible for paying the premium for that member’s insurance cover.
[15] Rule 4.1.6 of the Trust Deed.
[16] Rule 4.1.7 of the Trust Deed.
In respect of insurance funds paid to the CSC pursuant to a claim under a member’s policy, rule 4.1.4 notes that:
Any amount paid by an insurance company to CSC in response to a claim under Rule 4.1.3 [providing for an ordinary employer-sponsored member claim by CSC] against a policy providing death and invalidity cover must be paid into the PSSAP Fund and is credited to the personal accumulation account of the ordinary employer-sponsored member.
CONSIDERATION
What is the date from which compensation is payable to Ms Claasz under s 21 of the Act?
Because of its misapplication of the date from which compensation was payable pursuant to s 21 of the Act, Comcare sought a variation of this element of its reviewable decision. At the hearing, Counsel for Ms Claasz conceded that this matter was not in issue between the parties. As a result, and for the reasons that follow, the Tribunal varies the decision under review in relation to the date from which compensation is payable to Ms Claasz under s 21 of the Act.
In its reviewable decision of 25 January 2018, Comcare incorrectly applied s 21 of the Act to Ms Claasz’s compensation payments from the date she received the lump sum benefit on 10 November 2017, not ‘for each week after the date of the retirement’ from the AFP on and from 27 October 2017, as required under s 21(2) of the Act.
The application of s 21(2) of the Act from the date of retirement where a person has received a lump sum benefit was confirmed by the Tribunal in Webley and Telstra Corporation Limited[17] as follows:
Section 21(1) of the Act comes into operation when a person receives a lump sum benefit. Subsection 21(2) then provides liability under the Act to pay the employee for each week after the date of retirement using the formula in s21(3). The Tribunal accepts the submission of the respondent that the words in accordance with this section for each week after the date of the retirement, as used in s21(2), are sufficient to allow the adjustment to be made for payments of compensation made prior to the date the person receives the lump sum. The Tribunal concludes that the definition of AC in s21(3) referring to the amount of compensation that would have been payable (if section 19 applied), includes amounts which have been paid under s19. Therefore, the use of the expression does not exclude amounts that were paid under s19. A recalculation has to occur as soon as a compensation payer knows that a lump sum has been received. The Tribunal does not accept that because s21(1) refers to the point in time when a person receives the lump sum, the section has no operation for a period prior to that point in time. If that were so, there would be no need for the words in accordance with this section for each week after the date of the retirement in s21(2).
Therefore, the Tribunal rejects the submission of the applicant that the identification of a date of receipt in s21(1) creates two discrete periods of time and that the payment of compensation in the period prior to receiving the lump sum cannot be revisited. This would have the effect of allowing double dipping in the period that predated the receipt of the lump sum.
[17] Webley and Telstra Corporation Limited [2003] AATA 539 at 29-30.
In accordance with the application of s 21(2) of the Act, and pursuant to s 43(1)(b) of the AAT Act, the Tribunal varies Comcare’s decision regarding the date Ms Claasz’s compensation should be determined under s 21 of the Act, so that this provision applies on and from 28 October 2017, not from 10 November 2017. As a result, Ms Claasz’s compensation should be recalculated under s 21(3) of the Act from the day after her retirement from the AFP up until the day before her compensation was calculated by Comcare pursuant to s 21 on 10 November 2017. That is, s 21 of the Act (not s 19(3)(a)) applies to the calculation of Ms Claasz’s compensation for the period on and from 28 October 2017 to 9 November 2017.
What is the ‘superannuation amount’ as defined by s 4 of the Act for the purposes of calculating the amount of compensation payable to Ms Claasz under s 21 of the Act?
Following the parties’ agreement regarding the applicable date from which s 21 of the Act applies to the calculation of Ms Claasz’s compensation, the remaining issue before the Tribunal was the identification of the ‘superannuation amount’ in order to determine the correct calculation and amount of her compensation payable under s 21.
The ‘superannuation amount’ is defined in s 4 of the Act. The definition provides three alternative means for determining the ‘superannuation amount’.
The first way in which the superannuation amount can be determined is if the superannuation scheme ‘identifies a part of the…lump sum as attributable to the contributions made under the scheme by the Commonwealth’ (s 4(a)).
If the superannuation scheme has not identified a part of the lump sum as attributable to the contributions made under the scheme by the Commonwealth, then the superannuation amount is the amount assessed by Comcare[18] (and now the Tribunal) to be the part of the lump sum attributable to the contributions made under the scheme by the Commonwealth (s 4(b)).
[18] Comcare is the ‘relevant authority’ as defined by s 4 of the Act.
If an assessment of that kind “cannot be made”, then the whole of the lump sum is taken to be the superannuation amount (s 4(b)).
Has the superannuation scheme identified a part of the lump sum as attributable to the contributions made by the Commonwealth?
The Tribunal finds that the superannuation scheme, the PSSAP, has not identified a part of the lump sum that is attributable to contributions made under the scheme by the Commonwealth as required under sub-paragraph (a) of the definition of ‘superannuation amount’ in s 4 of the Act.
Ms Claasz contends that Comcare’s decision, and therefore its calculation of her compensation, is incorrect because the amount attributable to the contributions made to her superannuation account by the Commonwealth has been identified by the PSSAP and is the amount of $97,104.15.[19] An internal Comcare email dated 7 December 2017 and an email from the PSSAP to Ms Claasz dated 22 May 2018 refer variously to this amount as ‘employer contributions’, the ‘employer contribution component’ or ‘superannuation contributions made by the employer’. Ms Claasz asserts that the PSSAP has, pursuant to sub-paragraph (a) of the definition of ‘superannuation amount’ in s 4 of the Act, identified that part of the pension or lump sum ‘as attributable to the contributions made under the scheme by the Commonwealth’. Comcare contends that the PSSAP has made no such identification and therefore sub-paragraph (b) of the definition of ‘superannuation amount’ in s 4 applies.
[19] See internal Comcare email dated 7 December 2017 with the subject ‘Policy Advice – Superannuation rolled over into a different fund’ (at T37), and email from the PSSAP to Ms Claasz dated 22 May 2018 (at attachment ‘A’ to Ms Claasz’s Statement of Facts, Issues and Contentions dated 27 September 2018).
The 22 May 2018 email from the PSSAP to Ms Claasz states that: ‘the employer contribution component within the superannuation benefit of $320,248.08 was ($97,104.15 employer contributions, $8,968.00 salary sacrifice)’. By this email, the scheme has identified the amount of contributions made by the employer, but that amount is not the same as the amount of the lump sum in Ms Claasz’s accumulation account that is ‘attributable’ to the contributions made under the scheme by the Commonwealth.
Amounts ‘attributable’ to the Commonwealth are broader than merely employer contributions. To this end, Comcare relies on an earlier decision of the Tribunal in Lushington and Comcare,[20] which said as follows:
it is apparent that a high degree of particularity or certainty is involved in the process of identifying a part of the lump sum benefit "as attributable to" the contributions made under the scheme by the employer. The latter words involve some causal connection between part of the lump sum on the one hand with the employer's contributions to the scheme on the other. The Tribunal has formed the view that the connection need not be sole or direct. A contributory causal connection would suffice. In reaching this conclusion the Tribunal has utilised the absence of such words as "caused by", "directly linked to" in place of "as attributed to" in the legislation coupled with the assistance gained from a consideration of the latter words by Toohey J in Law v Repatriation Commission (1979-80) 29 ALR 64 at 72. [Emphasis Added]
[20] Lushington and Comcare [2001] AATA 310 at [45].
Having regard to the various components making up Ms Claasz’s total superannuation benefit upon her exit from the scheme following invalidity retirement, the Tribunal is satisfied that when identifying the employer contributions amount of $97,105.14, the scheme has not identified the part of the lump sum amount ‘attributable’ to the Commonwealth for the purpose of sub-paragraph (a) of the definition of ‘superannuation amount’ in s 4 of the Act.
In answer to Ms Claasz’s contention regarding the identification of the ‘superannuation amount’ as being the ‘employer contributions’ amount, Comcare submits that[21]:
[t]he amount … attributable is not the amount of basic employer contributions paid by the PSSAP. The superannuation amount should instead account for credits and debits as attributable to the amount paid into the PSSAP fund by the Commonwealth while it was held in the Applicant’s personal accumulation account.
[21] Paragraph 4.16 of Comcare’s Statement of Facts, Issues and Contentions dated 2 November 2018.
This contention reflects the Tribunal’s earlier approach in Lushington and is based on the application of the rules in the Trust Deed, including those regarding the determination of the quantum of a member’s personal accumulation amount (specifically, rules 5.1.4 to 5.1.6 as set out above).
The Tribunal accordingly agrees with Comcare’s submission. The Tribunal finds that the basic employer contributions in the amount of $97,104.15 are not the ‘lump sum…attributable to the contributions made under the scheme by the Commonwealth’. The PSSAP, by identifying the amount of employer contributions, did not identify that part of the lump sum attributable to contributions made to Ms Claasz’s superannuation account by the Commonwealth. Amounts that are ‘attributable’ to the Commonwealth go beyond employer contributions. As noted in Lushington, amounts which are ‘attributable’ include amounts that have a contributory causal connection to the Commonwealth’s contributions and that are required under the rules to be credited to Ms Claasz’s superannuation account.
In this regard, amounts attributable to the Commonwealth’s contributions include earnings on those contributions. In addition, the premiums for Ms Claasz’s insurance cover were paid out of her accumulation account, which was made up primarily of her employer’s contributions. Consequently, a large component of Ms Claasz’s subsequent insurance benefit totalling $200,000 is causally connected to the Commonwealth’s contributions.
The Tribunal therefore finds that the scheme has not identified the ‘part of the…lump sum as attributable to the contributions made under the scheme by the Commonwealth’ and the Tribunal cannot apply sub-paragraph (a) in the definition of ‘superannuation amount’ under s 4 of the Act. Accordingly, sub-paragraph (b) of that definition should be applied to determine the ‘superannuation amount’ for the purposes of calculating Ms Claasz’s compensation under s 21 of the Act.
The Tribunal’s reasons in Lushington[22] set out the manner in which sub-paragraph (b) of the s 4 definition is applied:
If para (a) is not applicable as the tribunal finds that it is not then para (b) provides two other means of arriving at the superannuation amount. The first is by way of assessment, whereas the second is (if assessment cannot be made) the amount of the lump sum received by the employee. It is clear also from the plain wording of para (b) that the use of the words “as the case requires” refers to these two alternatives, the first of which the tribunal now turns to.
At the outset, the tribunal would indicate that in relation to para (b), it is not only the concept of assessment which is applicable, but assessment by the relevant authority, that is, the respondent and this tribunal on review, whereas if para (a) is applicable, then it is the scheme itself which identifies a part of the lump sum as attributable to the contributions made under the scheme by the Commonwealth (the employer). The picture which emerges is that of an assessment taking place where the scheme does not identify and where, in turn, assessment is not possible, then parliament has deemed that the whole amount of the lump sum is to be taken to be the superannuation amount. In this latter regard, the tribunal agrees with the respondent’s submissions. Parliament has made it clear that if the scheme identifies a part of the lump sum as attributable to the employer contributions, then that is the superannuation amount for the purposes of s 21. However, where it is not identifiable then an assessment must be made and where that is not possible then the last resort is to take the whole of the lump sum as being the superannuation amount in question.
Should all or part of the insurance amount paid into Ms Claasz’s superannuation account be used to determine the ‘superannuation amount’?
[22] Lushington and Comcare [2001] AATA 310 at [48]-[49].
The insurance benefit received by the CSC from AIA Australia was paid into Ms Claasz’s personal accumulation account. This insurance amount was funded, if not wholly, then at least in large part, by the Commonwealth, having regard to the terms of the Trust Deed, including the mechanism for the payment of a member’s premiums and benefits under the PSSAP.
In determining the ‘superannuation amount’ under s 21 of the Act, Comcare correctly applied the proportion of the insurance amount attributable to the Commonwealth’s contributions based on its calculation of contributions made by each of Ms Claasz and the Commonwealth. The process undertaken by Comcare of apportioning and calculating the relevant contributions in Ms Claasz’s superannuation account was set out in its internal email dated 7 December 2017.[23] The relevant parts of that email are set out below in response to the question answered below by the Tribunal.
[23] Email dated 7 December 2017, with the subject ‘Policy Advice – Superannuation rolled over into a different fund’ at T37 (pages 113-115) of the documents provided to the Tribunal pursuant to section 37 of the AAT Act.
The Life Plus Cover premiums, and the subsequent proceeds, were funded by both Ms Claasz and the Commonwealth pursuant to the terms of the Trust Deed. Counsel for Ms Claasz raised the decision in Hill and Comcare [2016] AATA 257, which was a dispute regarding the amount of compensation received under the Public Sector Superannuation Scheme (set up under the Superannuation Act 1990) that was attributable to contributions made by the Commonwealth. It was agreed in Hill and Comcare that Mr Hill and the Commonwealth had both paid half of the premiums for his ‘Additional Death and Invalidity Cover’ policy. Mr Hill contended that the insurance amount he received following a claim under that policy was not attributable to the Commonwealth or, alternatively, was only attributable to 50 per cent of the amount based on their respective contributions. Comcare asserted that the whole amount was attributable to the Commonwealth and it relied on the relevant Trust Deed, which provided that ‘[a]ny amount paid by a life assurance company to CSC in response to a claim against a life policy must be paid into the Fund and thereafter be treated as an employer contribution in relation to the former member in the calculation of benefits’. [Emphasis added]
Accordingly, the Tribunal in Hill and Comcare found that the superannuation scheme clearly identified in the relevant Trust Deed ‘a part of a lump sum as attributable to the contributions made under the scheme by the Commonwealth or a Commonwealth authority’ to satisfy sub-paragraph (a) of the definition of ‘superannuation amount’. However, no such equivalent wording regarding the amount being attributable to the employer (or indeed the employee member) exists in the corresponding rule in the Trust Deed now before the Tribunal. And while Counsel for Ms Claasz was correct in asserting that because the Trust Deed does not contain the same wording as the Public Sector Superannuation Scheme Trust Deed considered in Hill and Comcare, Ms Claasz’s ‘invalidity payment is not specifically identified as being due to the employer’s contribution’, it is equally true that the payment is not identifiable as being attributable solely to Ms Claasz’s contribution. Additionally, the contributions between Mr Hill and Comcare were made equally between them, whereas in Ms Claasz’s case, her premiums were paid out of her superannuation accumulation account that held contributions made by both her and the Commonwealth and whose percentage breakdowns are not identifiable in the Trust Deed.
Consequently, the proportion of the insurance premiums, insurance benefit amounts or interest in the superannuation account attributable to either the Commonwealth’s contributions or those of Ms Claasz are not capable of precise identification, and were not identified by the PSSAP in either the Trust Deed or in advance of Comcare’s reviewable decision. Therefore, sub-paragraph (b) in the definition of ‘superannuation amount’ in s 4 of the Act must be applied, rather than sub-paragraph (a), so that Comcare as the relevant authority under the Act must assess the amount ‘to be the part of the…lump sum that is so attributable’ to the contributions made by the Commonwealth under the superannuation scheme to determine the correct ‘superannuation amount’ for the calculation of Ms Claasz’s compensation under s 21.
Comcare’s approach of using the proportion of each of the employer and employee contributions in the accumulation account as the basis for determining how much of the $200,000 insurance payment is ‘attributable to the contributions made…by the Commonwealth’ appropriately reflects the ‘contributory causal connection’ test identified in Lushington. Because the premiums which led to Ms Claasz’s insurance amount were paid from her accumulation account, and the funds in that account were a mix of employee and Commonwealth contributions, the Tribunal is satisfied that a significant proportion of the insurance payment was ‘attributable to the contributions made…by the Commonwealth’.
Counsel for Ms Claasz also raised by way of example, or ‘counterfactual’, a scenario in which Ms Claasz did not elect to receive her death and invalidity cover from the PSSAP, but instead elected to receive identical cover directly with AIA Australia. It was asserted that in those circumstances: Ms Claasz would have received the insurance claim funds of $200,000 without any proportion being Commonwealth funds; premiums would not have been deducted from her accumulation account; and she would have received the amount of those premiums in the total payout of her account upon exiting the PSSAP. Whilst this proposition may be true (and was a course of action available to Ms Claasz, which was not pursued), in these circumstances Ms Claasz would have been required to pay the full amount of the insurance premiums herself, rather than having them deducted from her personal accumulation account held with the PSSAP (which was funded by contributions from both herself and the Commonwealth) or paid solely by the Commonwealth pursuant to rules 4.15 and 4.1.7 of the Trust Deed. Consequently, the Tribunal gives this submission little weight because, other than noting that Ms Claasz had options regarding the source of her insurance cover that would have resulted in potentially different outcomes, it does not advance Ms Claasz’s argument on the specific matter before the Tribunal in relation to the treatment of the funds in her PSSAP superannuation account (including the insurance claim funds) to identify the ‘superannuation amount’ for the purposes of calculating her compensation under s 21 of the Act. In this regard, and as detailed above, the PSSAP does not identify the ‘superannuation amount’ in the Trust Deed; the Superannuation Act establishing the PSSAP also makes no such identification. Therefore, Comcare was correct to calculate the ‘superannuation amount’ pursuant to sub-paragraph (b) in s 4 of the Act to determine Ms Claasz’s compensation payable under s 21.
What is the correct calculation of Ms Claasz’s entitlements pursuant to s 21(3) of the Act?
The Tribunal’s earlier decision in Lushington[24] is instructive on how a relevant authority is to determine the ‘superannuation amount’ for the purposes of calculating a person’s compensation under s 21 of the Act:
What meaning then should be given to the word “assessment”, having regard to its context, the purpose of the section in its context within the Act against the background of the purpose of the Act? The ordinary meaning of “assessment” is “Evaluation, estimation; an estimate of worth, extent, and so on” (The New Shorter Oxford Dictionary). It is clear from its context both within the definition of “superannuation amount” and s 21 of the Act that assessment has the meaning of estimation. This is the meaning which the tribunal adopts.
…The sole source of funding to invest emanates only from the employer and employee by way of contributions. It is that money that is then utilised by way of investment and which then results in the payment of the appropriate benefit. And so what is clear is that there must be said to be in relation to a particular benefit received by an employee a causal connection between the benefit and what the employee and employer contributed. In other words, the contributions, plus the investment process pursuant to the deed, equals the ultimate benefit received by the employee. The material before the tribunal does not indicate how much of the employee’s or employer’s contributions were put into any particular investments of the scheme and when one takes into account the many people making contributions and the changing nature of investments as time goes by that is understandable. However, what is known is the actual amount of the contributions made by both the employer and employee and the amount of the ultimate lump sum benefit. Common sense accords and fairness dictates that the appropriate form of assessment, that is, estimation and one which parliament must have had in mind, is for the part of the lump sum that is to be attributable to the contributions made by the employer is to be the proportion of the lump sum equivalent to the proportion of contributions made by the employer…[24] Lushington and Comcare [2001] AATA 310 at [50] and [52].
It follows that an apportionment of the total superannuation benefit in Ms Claasz’s accumulation account (excluding amounts previously rolled over from non-PSSAP funds) is required to identify what is attributable to contributions made by each of the Commonwealth and Ms Claasz.
Comcare correctly assessed the ‘superannuation amount’ under s 4 of the Act to be $263,259.61 by apportioning the contributions made by each of Ms Claasz and the Commonwealth. This amount was determined by taking the total amount held in Ms Claasz’s superannuation account at the time she exited the PSSAP, being $320,248.08, and:
(a)deducting the amount of $3,373.24 Ms Claasz had rolled in to the PSSAP from her previously held non-PSSAP superannuation accounts; and
(b)deducting the amount of $200,000 received pursuant to Ms Claasz’s insurance claim,
leaving the amount of $116,874.84 to be used to calculate the ratio of the contributions made by each of Ms Claasz and the Commonwealth for the purposes of the calculation required under s 21 of the Act to determine the ‘superannuation amount’.
The Commonwealth’s basic employer contribution was the amount of $97,104.15, which represented 83.08 per cent of the amount of $116,874.84 remaining after the above deductions. Ms Claasz’s contributions were therefore identified as 16.92 per cent of $116,874.84. These two percentage figures were applied to the total amount held in Ms Claasz’s superannuation account (excluding the $3,373.24 rolled over from other funds), which was $316,874.84. That is, the Commonwealth’s 83.08 per cent of $316,874.84 is $263,259.61, which latter amount is the total amount attributable to the Commonwealth’s contributions made to Ms Claasz’s superannuation account, in the sense that the Commonwealth’s contributions are taken to have produced that proportion of the returns on the funds in the account and paid that proportion of the insurance premiums, which resulted in the $200,000 insurance payment. The amount of $263,259.61 is the amount attributable to the Commonwealth’s contributions and therefore the ‘superannuation amount’ under sub-paragraph (b) of s 4 of the Act for the purpose of determining Ms Claasz’s compensation payments under s 21(3) of the Act.
This calculation of Ms Claasz’s compensation was set out by Comcare in its internal email dated 7 December 2017. For completeness, the Tribunal sets out the relevant parts of that email, in which Comcare noted that:
superannuation to be included in the calculation of incapacity payments under section 21 of the Safety, Rehabilitation and Compensation Ace [sic] 1988 (SRC Act) would be calculated based on an apportionment using the superannuation contributions made by the employer, (which we know to be $97,104.15), and employee, excluding any monies rolled over from other funds and the insurance amount, (which is funded from both the employer and employee contributions).
In this case, this would mean that the apportionment would be based on a figure of:
$320,248.08 total
Minus $200,000 Insurance benefit
Minus $92.60 REST
Minus $2,048.28 HESTA
Minus $1,025.37 AGEST
Minus $206.99 Enterprise Super
Remaining $116,874.84 Amount to be used to calculate apportionment
The employer contributed $97,104.15 of this amount, meaning the employee contributions would equal $19,770.69. This would equate to the employer contributing 83.08% of the total contributions, whereas the employee has contributed 16.92% of the contributions.
These percentages are then applied to the total superannuation benefit, (minus the amounts rolled over from other funds), to ascertain the amount attributable to the employer and employee contributions, (with only the employer funded component being included in the section 21 calculation).
Total (excluding amounts rolled over from other funds: $316,874.84
Employer funded component (83.08%) $263,259.61
Employee funded component (16.92%) $53,615.23
So, in this case the employer funded lump sum to be included in the section 21 calculation would be $263,259.61.
…
The superannuation amount that Comcare would be required to take into account would be the amount of pension and/or lump sum identified as being the ‘employer funded component’, i.e. that part of the pension and/or lump sum that has been funded by the contributions of the employee’s Commonwealth employer (refer ‘superannuation amount’ definition in section 4 of the SRC Act).
Upon a complying exit from the superannuation scheme, any ‘insurance’ lump sum that the employee’s superannuation fund receives from the fund’s insurer will be credited to the employee’s superannuation account pending the superannuation fund calculating the value of the employee’s final benefit and payment to the employee. This would bring the insurance amount into the ambit of being a lump sum for the purposes of paragraph 21(1)(b) of the SRC Act.
Therefore, the insurance amount with an employer-funded component will be assessed as a ‘superannuation amount’ for the purposes of calculating incapacity benefits pursuant to sections 20, 21 or 21A (in this particular case, section 21).
CONCLUSION
Having regard to the above findings of the Tribunal, the correct or preferable decision in relation to the identification of the ‘superannuation amount’ is to affirm Comcare’s decision that the amount of $263,259.61 is the ‘superannuation amount’ to be used for the purpose of calculating the amount of compensation payable to Ms Claasz under s 21 of the Act.
In conclusion, pursuant to s 43(1)(b) of the AAT Act, the Tribunal varies the decision under review so that Ms Claasz’s compensation is payable pursuant to s 21 of the Act on and from 28 October 2017. The decision under review is otherwise affirmed pursuant to s 43(1)(a) of the AAT Act.
I certify that the preceding 62 (sixty-two) paragraphs are a true copy of the reasons for the decision herein of Member W Frost.
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Associate
Dated: 3 May 2019
Date(s) of hearing: 15 April 2019 Date final submissions received: 2 November 2018
Counsel for Applicant: Mr Allan Anforth Solicitors for Applicant: Gabbedy Milson Lee Counsel for Respondent: Mr Benjamin Dube
Solicitors for Respondent: Comcare Legal
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