Colin Dunstan and Comcare
[2013] AATA 402
[2013] AATA 402
Division GENERAL ADMINISTRATIVE DIVISION File Number
2013/1379
Re
Colin Dunstan
APPLICANT
And
Comcare
RESPONDENT
DECISION
Tribunal The Hon Brian Tamberlin, QC, Deputy President
Mr S. Webb, MemberDate 17 June 2013 Place Canberra
The decision under review is set aside. In its place, we decide that Mr Dunstan’s weekly compensation from 28 February 2013 and presently is to be calculated under the terms of s 19 of the SRC Act. We remit these calculations to Comcare.
The parties have 14 days in which to file submissions for orders in relation to costs. If no submissions are received, Comcare will be ordered to pay Mr Dunstan’s reasonable costs as agreed or taxed.
...............................[sgd].........................................
The Hon Brian Tamberlin, QC, Deputy President
COMPENSATION – compensation for incapacity resulting from injury – calculation of weekly amounts – effect of eligibility for a superannuation pension or a lump sum benefit on reaching the minimum compulsory preservation age – meaning of ‘receives’ – benefits deferred and not payable – no exercise of discretion by the employee directing payment of the benefit – superannuation pension and lump sum benefit not received – decision set aside
Safety, Rehabilitation and Compensation Act 1988 (Cth), ss 4, 19, 20, 21, 21A, 114B
Superannuation Act 1976 (Cth), s 138
Alcan NT v Territory Revenue [2009] HCA 41
ALH Group Property Holdings Pty Limited v Chief Commissioner of State Revenue [2012]
HCA 6
Re Archer and Comcare [1999] AATA 940
Archer v Comcare [2000] FCA 1296
Bradford v Bradford [1908] HCA 82
Certain Lloyd's Underwriters Subscribing to Contract No IH00AAQS v Cross [2012] HCA 56
Commissioner for Railways (NSW) v Agalianos [1955] HCA 27
Commission for the Safety, Rehabilitation and Compensation of Commonwealth Employees v Neil (1993) 41 FCR 517
Commissioner of Taxation v Unit Trend Services Pty Ltd [2013] HCA 16
Re Dunstan and Comcare [2012] AATA 567
Federal Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55
Tennant v Smith [1892] AC 15
REASONS FOR DECISION
The Hon Brian Tamberlin, QC, Deputy President
Mr S. Webb, Member17 June 2013
Colin Dunstan was injured in employment. He successfully claimed and was paid weekly compensation for incapacity. The amount of his entitlement to weekly incapacity compensation payments is presently in dispute. In a reviewable decision, Comcare decided to reduce Mr Dunstan’s weekly compensation on the basis that he is deemed to have received his accrued superannuation entitlement on reaching the preservation age. Mr Dunstan applied for review.
The issue to be decided is whether Mr Dunstan’s weekly compensation for incapacity from 28 February 2013 is to be calculated under s 21A of the Safety, Rehabilitation and Compensation Act 1988 (Cth) (the SRC Act). This will be so if he is taken to receive an employer funded superannuation pension and a lump sum benefit on the day he reached his minimum preservation age. Thus, the primary issue is one of statutory construction – how is the word ‘receives’ in 21A(1)(b) to be construed?
Factual background
The relevant background facts in respect of Mr Dunstan’s chronic depression injury and his related entitlement to weekly compensation for incapacity were comprehensively addressed in proceedings before this Tribunal (differently constituted) in 2012[1]. Quantification of that entitlement, week by week, from 11 to 16 July 1991, 3 to 10 April 1992, 1 November 1998 to 26 May 1999 and from 3 January 2008 was remitted to Comcare.
[1] Re Dunstan and Comcare [2012] AATA 567
On 21 January 2013 Comcare determined that, from 28 February 2013, Mr Dunstan was entitled to weekly compensation calculated under s 21A of the SRC Act on the following bases[2] –
(a)his employment with the Australian Tax Office ceased on 21 May 2001;
(b)on 27 September 2010 he turned 55, his minimum preservation age under the Commonwealth Superannuation Scheme (CSS);
(c)on that date he was deemed to receive an employer funded lump sum of $42,597.41 and an employer funded superannuation pension of $2,128.24 per fortnight.
[2] T10 folio 168 and T14 folios 183-184.
Mr Dunstan requested reconsideration and on 27 March 2013 the primary determination was affirmed by Comcare.
There is no controversy over the background facts that are set out in points 7.1 to 7.11 of Comcare’s Outline of Submissions dated 21 May 2013. We will proceed on the basis that they are correct.
We note that even though Mr Dunstan’s previous employment with the Tax Office was terminated on 21 May 2001 under s 29 of the Public Service Act 1999 (Cth), under s 5(9) of the SRC Act he is an ‘employee’ for the purposes of Part II of that Act.
Under the terms of his previous Commonwealth employment, Mr Dunstan’s superannuation was initially under a scheme established by the Superannuation Act 1922 (Cth), but this was transferred to the CSS when the Superannuation Act 1976 (Cth) (the 1976 Superannuation Act) commenced. Mr Dunstan is a ‘defined benefits member’ of the CSS, which is an ‘unfunded defined benefits superannuation scheme’ declared under regulation 2A of the Superannuation Contributions Tax (Assessment and Collection) Regulations 1997 (Cth).
It is agreed by the parties that following the cessation of his Commonwealth employment in April 2001, Mr Dunstan made an election under s 137 of the 1976 Superannuation Act to defer his CSS entitlements.
Once he turned 55, it was open for Mr Dunstan to request payment of his superannuation entitlements in the CSS. Unless he did so, release of the benefits could not occur and the benefits would not be payable to him prior to other specified events, such as turning 65. But he did not make a written request for payment. Mr Dunstan’s inaction at that time did not cause any change in the deferred status of his superannuation benefits. The fact of him attaining preservation age did not render any benefits payable to him. None were paid to him, and none were paid on his behalf or were otherwise made available to him.
On 6 December 2012, ComSuper provided Comcare with a Notice under s 114B of the SRC Act, in which it reported that Mr Dunstan made an election to preserve his employer financed contribution (EFC) benefit but, at the date of the notice, this had not been claimed as a pension or a lump sum[3].
[3] T8 folio 160.
The information ComSuper provided in response to the s 114B Notice includes the estimated value of Mr Dunstan’s preserved EFC benefit at the date of his compulsory minimum preservation age (27 September 2010), although this is expressed in rather cryptic terms –
$42579.41 (lump sum)
and/or
$2128.24 (gross f/n pension)
Evidence was adduced confirming that Mr Dunstan was eligible for a pension and a lump sum benefit on reaching the applicable preservation age.
Principles of statutory construction
In reference to the meaning of ‘receives’ in s 21A(1)(b), there is no contest concerning the applicable principles of statutory construction. In recent cases, the High Court emphasised the importance of commencing with the statutory text –
This Court has stated on many occasions that the task of statutory construction must begin with the consideration of the [statutory] text. So must the task of statutory construction end. The statutory text must be considered in its context. That context includes legislative history and extrinsic materials. Understanding context has utility if, and insofar as, it assists in fixing the meaning of the statutory text. Legislative history and extrinsic materials cannot displace the meaning of the statutory text. Nor is their examination an end in itself.[4]
[4] Federal Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55, per French CJ, Hayne, Crennan, Bell and Gageler JJ at [39], referring to Alcan NT v Territory Revenue [2009] HCA 41, per Hayne, Heydon, Crennan and Kiefel JJ at [47].
It is not necessary to attempt to divine the intentions of the legislature by referring to extrinsic materials to which we were referred. The language of the SRC Act is quite clear. Nonetheless, for abundant clarity, it is germane to consider the words of French CJ and Hayne J in Certain Lloyd's Underwriters Subscribing to Contract No IH00AAQS v Cross[5], at [25] to [26] –
[5] [2012] HCA 56.
Determination of the purpose of a statute or of particular provisions in a statute may be based upon an express statement of purpose in the statute itself, inference from its text and structure and, where appropriate, reference to extrinsic materials. The purpose of a statute resides in its text and structure. Determination of a statutory purpose neither permits nor requires some search for what those who promoted or passed the legislation may have had in mind when it was enacted. It is important in this respect, as in others, to recognise that to speak of legislative "intention" is to use a metaphor. Use of that metaphor must not mislead. "[T]he duty of a court is to give the words of a statutory provision the meaning that the legislature is taken to have intended them to have" (emphasis added). And as the plurality went on to say in Project Blue Sky:
"Ordinarily, that meaning (the legal meaning) will correspond with the grammatical meaning of the provision. But not always. The context of the words, the consequences of a literal or grammatical construction, the purpose of the statute or the canons of construction may require the words of a legislative provision to be read in a way that does not correspond with the literal or grammatical meaning."
To similar effect, the majority in Lacey v Attorney-General (Qld) said:
"Ascertainment of legislative intention is asserted as a statement of compliance with the rules of construction, common law and statutory, which have been applied to reach the preferred results and which are known to parliamentary drafters and the courts."
The search for legal meaning involves application of the processes of statutory construction. The identification of statutory purpose and legislative intention is the product of those processes, not the discovery of some subjective purpose or intention.
A second and not unrelated danger that must be avoided in identifying a statute's purpose is the making of some a priori assumption about its purpose. The purpose of legislation must be derived from what the legislation says, and not from any assumption about the desired or desirable reach or operation of the relevant provisions. As Spigelman CJ, writing extra-curially, correctly said:
"Real issues of judicial legitimacy can be raised by judges determining the purpose or purposes of Parliamentary legislation. It is all too easy for the identification of purpose to be driven by what the particular judge regards as the desirable result in a specific case." (emphasis added)
And as the plurality said in Australian Education Union v Department of Education and Children's Services:
"In construing a statute it is not for a court to construct its own idea of a desirable policy, impute it to the legislature, and then characterise it as a statutory purpose."
[footnotes omitted]
The statutory text
Our consideration must first be directed to the statutory text of s 21A –
21A Compensation for injuries resulting in incapacity if employee is in receipt of a superannuation pension and a lump sum benefit
(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:
(i) a pension; and
(ii) a lump sum benefit;
under a superannuation scheme as a result of the employee’s retirement.
…
The word ‘receives’ is not given a special statutory meaning.
In ordinary usage, a person may be understood to receive something when it is taken in hand, the receipt being, in the words of Lord Macnaghten many years ago in respect of a taxpayer’s receipt of income, “what goes into his pocket”[6]. In Archer v Comcare[7], the Federal Court considered the meaning of the word ‘receives’ in s 21, and said at [13] –
…an incapacitated employee "receives a lump sum benefit under a superannuation scheme" when a benefit that is payable to the employee has been paid to him, or has been paid at his direction or when the trustee in some other way has dealt with the benefit at the request or with the consent of the employee. In each of these cases the obligation to pay the benefit to the incapacitated employee will have been discharged or deferred.
[6] Tennant v Smith [1892] AC 150 at 164.
[7] [2000] FCA 1296.
Presently, Comcare is testing the meaning of the word ‘receives’ in circumstances where a superannuation benefit has not actually been paid, but where it is submitted that it has been “dealt with” by the scheme trustee with the consent of the employee. Specifically, Comcare raises issues of entitlement to payment, constructive receipt, tacit consent and legislative intentions, relating to double dipping and consistency.
In order to deal with each of these matters and to properly construe s 21A, the statutory context must first be considered, bearing in mind the need to construe the section in a manner that is consistent with all of the provisions and purposes[8] of the SRC Act.
[8] Commissioner of Taxation v Unit Trend Services Pty Ltd [2013] HCA 16 at [47].
The legislative framework
Division 3 of Part II of the SRC Act sets out provisions governing the payment of weekly compensation to an employee suffers an incapacity for work as result of an injury. Under s 4(9), ‘an incapacity for work’ refers to an incapacity to engage in any work, or to an incapacity to engage in work at the same level. Quite clearly, one of the purposes of the SRC Act is to provide weekly income support to an incapacitated employee whose ability to earn income in employment has been reduced by injury.
The measure of an injured employee’s reduced ability to earn can plainly be seen in the formulae set out in s 19(2) and (3), whereby the weekly amount the incapacitated employee is able to earn in employment is compared to his or her ‘normal weekly earnings’ prior to the injury.
An injured employee’s ‘normal weekly earnings’ amount is to be calculated under s 8. There is no express requirement that employer funded superannuation contributions are to be included in this calculation. While there may be a question whether such contributions would fall within the meaning of an ‘allowance’, and if so, how this would affect the application of the s 19 formulae and the construction of s 21A, this was not raised or agitated in these proceedings and we do not need to consider it further. We simply note that the present evidence does not establish that Mr Dunstan’s normal weekly earnings amount was calculated to include superannuation contributions by his former employer.
Under s 19(3A), the amount of a superannuation pension that is ‘payable’ to an incapacitated employee is to be added to the weekly amount that he or she is able to earn. Considering these provisions, the Full Court in Archer v Comcare[9] construed the word ‘payable’ in s 19 to mean “due and immediately payable… presently payable”[10].
[9] [2000] FCA 1296.
[10] Ibid, at [8].
The s 19 formulae are applied (with the exception of s 19(6)) when calculating the ‘amount of compensation’ in any relevant week for the purposes of ss 20, 21 and 21A. These sections apply if the employee receives a pension (s 20) or a lump sum benefit (s 21), or both (s 21A), under a superannuation scheme.
The plain purpose of these provisions is to reduce the ‘amount of compensation’ assessed under s 19 by an amount derived from a superannuation scheme by way of a pension and/or a lump sum. Thus, in respect of a superannuation pension for example, the amount of the superannuation pension that is due and immediately payable to an employee in continuing employment is included as part of his or her weekly income for the purposes of calculating the amount of weekly compensation under s 19, thereby reducing the amount of weekly compensation for incapacity. And in respect of a retired employee, ‘the superannuation amount in relation to the pension received by the employee in respect of the relevant week’ is applied under ss 20 and 21A with a reducing effect on the amount of his or her weekly compensation for incapacity.
The phrase ‘superannuation amount’ is relevantly defined in s 4(1) –
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.
As can be seen, the superannuation amount, being (relevantly) the quantum of Commonwealth contributions, is derived from a pension or a lump sum benefit that is ‘received’ by the employee. We note that Part VIA of the 1976 Superannuation Act sets out provisions in respect of Productivity Superannuation, including the accumulation of productivity benefits (s 110P) and accumulated employer contributions (s 110Q).
The s 21A(3) calculation also requires assessment of the ‘weekly interest on the lump sum’ and, as Mr Dunstan retired prior to commencement of item 22 of Schedule 1 to the Safety, Rehabilitation and Compensation and Other Legislation Amendment Act 2007 (Cth), the ‘SC’ amount. The former is given the following meaning –
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 21(5); and
(b)dividing the result of paragraph (a) by 52.
Even though the translation of the lump sum benefit into a weekly amount proceeds by applying an annual rate determined by the Minister under s 21(5), the rate is to be applied to the superannuation amount of the lump sum benefit ‘received by the employee’.
Plainly enough, these provisions are intended to ensure that account is taken of the payments an injured employee receives from a superannuation scheme, by way of a pension or a lump sum benefit, when calculating the weekly amount that he or she is entitled to be paid by way of compensation for incapacity. The mischief they are intended to address has been referred to as double payment by the Commonwealth, or “double dipping” by the employee.
Under the Commonwealth (Government Employees) Compensation Act 1971 (Cth) (the 1971 Compensation Act) no provision was made to take account of an injured employee’s income from a superannuation scheme to which the Commonwealth had made contributions on his or her behalf. This meant that a retired employee who was incapacitated by injury might receive weekly compensation payments as well as superannuation income to which the Commonwealth had contributed, and thereby receive a weekly amount greater than the amount of his or her earnings in pre-injury employment prior to the injury. Comcare says that this represents double dipping or double payment. However it is described, it has been progressively addressed by the framework set out in ss 19(3A), 20, 21, 21A and 23 of the SRC Act, whereby superannuation income received by an employee is applied against the weekly compensation amount that, otherwise, would be payable until the age of 65, when weekly compensation for incapacity cuts off.
The off-setting framework is reinforced by notice and overpayment recovery provisions. Under s 114A, if an injured employee retires from relevant employment, the ‘appropriate officer’ must give Comcare a written notice, setting out the date of the retirement and identifying the employee’s superannuation scheme on that date.
Section 114B enables Comcare to recover overpayment amounts from the administrator of a superannuation scheme in certain circumstances, including where the retired employee has received no payment in respect of his or her entitlement to a benefit under the scheme. But the recovery provisions expressly do not apply if all of the retired employee’s benefits in the superannuation scheme have been deferred. As the deferral of Mr Dunstan’s superannuation benefits is a feature of this case, it is germane to consider key elements of this section -
114B Recovery of overpayment to retired employee
(1)If:
(a) an employee retires from his or her employment; and
(b) the retired employee is or may be entitled to a pension or a lump sum, or both a pension and a lump sum, under a superannuation scheme; and
(c) Comcare or a licensed authority is of the opinion that it may pay, or may have paid, to the retired employee an amount or amounts of compensation under this Act in excess of the amount or amounts that he or she was entitled to receive because of section 20, 21 or 21A;
the following provisions of this section apply.
(2)Comcare or the authority, as the case may be, may give written notice to the administrator of the scheme:
…
(c) requiring the administrator, if the retired employee has not received any such payment (unless all the retired employee’s benefits under the scheme have been deferred):
(i) not to pay any pension or lump sum to the retired employee until the administrator receives a notice from Comcare or the authority under subsection (5); and
(ii) to give Comcare or the authority, as soon as practicable, particulars of the rate of pension, or the lump sum worked out as at the date of retirement, or the rate of pension and the lump sum as so worked out, as the case may be, that is payable to the retired employee under the superannuation scheme.
…
(4)The following provisions apply if the retired employee has not received any payment in respect of his or her entitlement referred to in paragraph (1)(b) but do not apply if all the retired employee’s benefits under the scheme have been deferred.
(5)When Comcare or a licensed authority receives from the administrator of the superannuation scheme particulars of the rate of pension, or the lump sum, or the rate of pension and the lump sum, payable to the retired employee, then Comcare or the authority, as the case may be, must, within 2 working days after receiving those particulars:
(a)determine whether an overpayment of compensation to the employee has occurred; and
(b)give written notice to the administrator:
(i) if it determines that no overpayment has occurred—stating that fact; or
(ii) otherwise—stating the amount of the overpayment and requiring the administrator to pay that amount to Comcare or the authority in accordance with this section.
…
(14) This section has effect despite:
…
(d) sections 118 and 119 of the Superannuation Act 1976.
…
As can be seen, the scheme administrator must notify Comcare of the rate of pension and the lump sum at the date of retirement that is payable to the retired employee under the superannuation scheme. This appears to be what ComSuper purported to do in the s 114B Notice it provided Comcare.
The delineation drawn between a superannuation benefit the retired employee receives, whether it is paid or not, and the deferral of superannuation benefits under s 114B(4) is germane to our consideration for three reasons.
Firstly, the delineation means that recovery from a superannuation scheme is only permitted in cases where the employee actually receives or rolls over a superannuation benefit, or where such a benefit is payable to the employee.
Secondly, it avoids the difficulty that otherwise would arise determining the rate of pension and the lump sum on the retirement day that is payable to the employee, and calculating any resulting overpayment, week by week, when the employee’s benefits have been deferred and are not payable. It is difficult to see how an overpayment could arise, and how s 21A could apply, in circumstances where a superannuation benefit is not payable to and has not been received by a retired employee who receives weekly compensation for incapacity.
Thirdly, ComSuper’s s 114B Notice refers to preserved benefits, but it does not refer to deferred benefits. It does not suggest that Mr Dunstan’s preserved EFC benefit was payable to him as a pension and a lump sum when he reached his preservation age, rather it merely estimates the value of his EFC benefit at that time and reports that this had not yet been claimed. Preserved benefits are not payable where a deferral election remains in force unless and until the deferral is brought to an end under the terms of s 138 of the 1976 Superannuation Act.
Policy considerations
We were referred to a number of extrinsic materials. Mr Dunstan says that we are obliged to follow Comcare’s published and presently operative policy. We do not agree.
In 2000, following Archer’s case, Comcare issued Jurisdictional Policy Advice 2000/11. This is largely consistent with the construction Comcare urged upon us in these proceedings. In 2001, however, apparently following the receipt of legal advice, Comcare changed its position and issued Jurisdictional Policy Advice 2001/18. This policy has been followed for more than 10 years without apparent controversy. It is now in question. Since adoption of the 2001 policy, related provisions of the SRC Act have been amended several times, but the Parliament did not move to redress any actual or perceived deficit in the legislation identified in the 2001 policy document. No amendment was made to clarify the meaning of ‘receives’ and the operative scope of ss 20, 21 and 21A even though relevant uncertainties are clearly identified in the 2001 policy. In these proceedings, Comcare is seeking to test the conflicting policies it promulgated and adopted in 2000 and 2001.
We are not bound by the Jurisdictional Policy Advices Comcare promulgated. These are not formal determinations of a binding nature, in the form of instructions or guidelines that should be followed. Nevertheless, we have carefully considered the matters raised in relation to these Advices. Our task is to properly construe and apply the legislation; that task is not assisted by reference to the shifting ground of Comcare’s policy from time to time.
We note the matters raised in respect of a review of the SRC Act commissioned by the Government and the 2012 the Australian Law Reform Commission discussion paper ‘Grey Areas – Age Barriers to Work in Commonwealth Laws’, and the submissions made by Comcare[11]. In relation to these matters we simply observe that the documents tendered add but little by way of context and bear not at all on our consideration of the proper construction of the legislation.
Comcare’s submissions
[11] Exhibits A2, A3, A4 and A5.
Entitlement to payment
Comcare says that Mr Dunstan was entitled to payment of his superannuation benefits on reaching his preservation age. But this is not correct.
Mr Dunstan elected to defer his superannuation entitlements under s 137 of the 1976 Superannuation Act on cessation of his previous Commonwealth employment. Consequently, payment of Mr Dunstan’s deferred superannuation benefits is governed by s 138 of the 1976 Superannuation Act –
138 Circumstances in which person entitled to deferred benefits
(1)Subject to this Division, if a person makes an election under section 137, deferred benefits are applicable in respect of the person.
(2)Deferred benefits that are applicable in respect of a person become payable on the day immediately after the earliest of the following dates:
(a)if CSC is satisfied that the person has, because of invalidity or physical or mental incapacity, become totally and permanently incapacitated within the meaning of Part IVA—the date that CSC considers to have been the date on which the person became so incapacitated;
(b)the date of the person’s death;
(c)subject to subsection (3), if the person, by written notice given to CSC, selects a date (not earlier than the date on which the notice is given) for the start of the payment of the deferred benefits—the date so selected;
(d)the 65th anniversary of the person’s birth.
(3)Paragraph (2)(c) does not apply unless the person will have, by the date selected, reached the age that would have been his or her minimum retiring age for the purposes of this Act if he or she had not ceased to be an eligible employee and had continued to occupy the position held by him or her immediately before so ceasing.
(4)Deferred benefits are not payable unless:
(a)a written application has been made to CSC requesting payment of the benefits; and
(b)the applicant has given CSC any information that is necessary to enable CSC to determine whether the benefits are payable.
On 27 September 2010 and presently, Mr Dunstan is not within the terms of s 138(2)(a), (b) or (d), and he has not given notice of a date for the start of payments under s 138(2)(c).
It is not established that the preserved EFC superannuation amounts nominated by ComSuper in its s 114B Notice were payable to Mr Dunstan when he reached his preservation age.
Under s 31(2)(g) of the Superannuation Industry (Supervision) Act 1993 (Cth) (the Supervision Act), superannuation funds are required to comply with preservation standards that are prescribed in the Superannuation Industry (Supervision) Regulations 1994 (Cth) (the SIS Regulations). Divisions 6.2 and 6.3, and Schedule 1 of these Regulations govern the release and payment of preserved benefits. Under item 110 of Part 1 of Schedule 1 of the SIS Regulations, one condition of release applying to a preserved superannuation benefit is the retired employee achieving preservation age – in this case, 55. Action is required to trigger the release. In this case, the requisite action is a written notice under s 138(2)(c) or a written application under s 138(4)(a) of the 1976 Superannuation Act providing sufficient information to enable the trustee to determine whether benefits are payable. But no such action has been taken.
Thus, merely attaining preservation age did not render any preserved benefits payable to Mr Dunstan on 27 September 2010.
Constructive receipt
Comcare asserts that Mr Dunstan should be taken to have received his superannuation benefits on attaining his preservation age. At this age, so the argument goes, he was entitled to draw down his superannuation in the form of a pension and a lump sum benefit. Even though superannuation benefits were not paid to Mr Dunstan on this date, he was entitled to request payment. On this basis, Comcare says that s 21A of the SRC Act should be construed to apply and Mr Dunstan should be taken to have received the benefits on 27 September 2010.
Comcare’s formulation is, effectively, one of constructive receipt.
Constructive receipt arises, for example, in circumstances where a person may be taken to receive income, or in this case a superannuation benefit, when he or she applies or directs it, even though the income or benefit is not paid directly to the person.
This is not a novel conception. Constructive receipt is well understood, in tax law for example. Part 3-30 of the Income Tax Assessment Act 1997 (Cth) (the 1997 Tax Act) deals with superannuation and defines ‘superannuation benefit’ in terms of various kinds of payments. The test to be applied under this Part when determining whether a superannuation benefit has been paid to or received by a person is set out in s 307.15 –
307.15 Payments for your benefit or at your direction or request
(1)This section applies for the purposes of:
(a)determining whether a payment is a superannuation benefit; and
(b)determining whether a *superannuation benefit is made to you, or received by you.
(2)A payment is treated as being made to you, or received by you, if it is made:
(a)for your benefit; or
(b)to another person or to an entity at your direction or request.
Note: Paragraph (b) would cover, for example, a direction by you that a payment be rolled over from your original superannuation fund into another superannuation fund.
Even though the purposes of the 1997 Tax Act are different to those of the SRC Act, we see no good reason to apply a different and broader conception of constructive receipt for the purposes of s 21A of the SRC Act.
In the present case, having regard to the terms of the CSS, the 1976 Superannuation Act and the Supervision Act, Mr Dunstan took no action whatsoever in respect of his superannuation on reaching his preservation age. This inaction did not authorise or require a payment of any kind to anybody. His earlier election to defer his superannuation entitlements remained in force, and no change was made. When he reached his preservation age, there was no obligation on the trustee of the CSS to pay him a pension or a lump sum. In these circumstances, the tests of constructive receipt are not satisfied.
As the Full Court said in Archer’s case -
… a benefit has not been received merely because the benefit is payable to the incapacitated employee. In order for an employee to receive a benefit, there must be something more than simply the existence of an obligation at law or in equity to pay the incapacitated employee a pension or a lump sum. How much more may be a matter of controversy.[12]
[12] Ibid, at [11].
That observation is apposite in this case.
Even if Mr Dunstan’s inaction was sufficient to establish his tacit consent to continue the deferral (and we make no such finding), the continuing effect of the deferral precludes a present obligation on the CSS trustee to crystalize and pay out his superannuation benefits. Without a present obligation to pay, there can be no constructive receipt.
We reject Comcare’s proposition that an employee’s entitlement to request or direct payment of a benefit, and thereby exercise control over it, should be construed as receipt of the benefit by the employee for the purposes of s 21A of the SRC Act. This is a step too far when control has not been exercised and there is no present obligation on the scheme trustee to pay the benefit.
Tacit consent
Comcare says that taking no action to request or direct payment of a superannuation benefit on reaching preservation age is sufficient to establish tacit consent to continuation of the status quo, requiring or directing the CSS trustee to make no change to an earlier election.
In Comcare’s submission, the “tacit acceptance” referred to in Archer’s case is analogous to Mr Dunstan taking no action on reaching preservation age and, thereby, tacitly consenting to his superannuation benefits remaining, undisturbed, in the CSS. In deciding to take no action, he effectively directed or at the very least tacitly consented to the manner in which his superannuation benefit was to be dealt with thereafter. Comcare asserts that this satisfies the test set out by the Full Court in Archer’s case. This is not correct.
Archer’s case is distinguished on the facts. Mr Archer had requested the trustee of the relevant superannuation scheme to preserve all his benefits in the scheme, including non-preserved withdrawal benefits that were due and payable to him. The trustee informed Mr Archer that his request could not be complied with under the terms of the scheme and provided options. Mr Archer did not respond. Ultimately, the trustee transferred all of Mr Archer’s benefits, including preserved and non-preserved benefits, into the scheme’s eligible roll-over fund, of which AMP was the trustee. Mr Archer gave no instructions as to the disposition of the non-preserved withdrawal benefits (other than that these were not to be paid to him) and the Court said at [7] –
… in the circumstances of this case, it appears that Mr Archer appears to have accepted that the communications between the parties involved a tacit acceptance that the money paid to AMP is being held for his benefit with his concurrence.
While the factual basis of Mr Archer’s apparent tacit acceptance, whether agreed or found, is not entirely clear, the relevant communications between Mr Archer and the scheme trustee are clearly identified in the Statement of Agreed Facts that was accepted into evidence in the anterior Tribunal proceedings[13]. In the present case, there are no such communications or comparable circumstances.
[13] Re Archer and Comcare [1999] AATA 940 at [3].
If Comcare is suggesting that inaction or omission on the part of an employee is consistent with the provision of “tacit consent”, sufficient to form a direction or request under the terms of the CSS, the 1976 Superannuation Act and the Supervision Act, we would reject the suggestion. For consent to be given tacitly, as the minimum, it must be established that the person has knowingly, voluntarily and deliberately chosen to remain silent, or to take no action, in the knowledge that a choice is being made, with real alternatives available. While intention may be inferred by conduct[14], the evidence must be sufficient to support the drawing of the inference –
If a person with respect to whom another proposes to act in a particular way behaves in such a manner that a reasonable man would be induced to believe that he has no objection to the proposed action, he may be taken to consent to it. But some communication must be made. A mere subjective state of mind not disclosed by any act is not sufficient.[15]
[14] ALH Group Property Holdings Pty Limited v Chief Commissioner of State Revenue [2012] HCA 6 at [31]-[32].
[15] Bradford v Bradford [1908] HCA 82, per Griffiths CJ at [2].
The existence of tacit consent must be assessed on the available evidence in the particular circumstances of each case. If an inference of an employee’s intention, or his or her state of mind, is to be drawn, there must be sufficient evidence to support it. An inference of this kind cannot properly be drawn on the basis of conjecture or mere possibilities.
In Mr Dunstan’s case, the evidence does not provide a firm foundation for the drawing of such an inference – he took no action whatsoever. There is evidence before us that Mr Dunstan was provided with a Benefit Estimate in 2001 that informed him his remaining benefits “may be accessed after you have reached your preservation age and also left the workforce on a permanent basis”[16]. The CSS Deferred Benefit Member Statement for 2000-2001 provided similar information[17]. It appears that Mr Dunstan was provided with information about “early access” by telephone on 3 September 2008[18], but the content of the information is not known. Nevertheless, Mr Dunstan was not provided with “direct information regarding his eligibility to claim his superannuation benefits” on reaching his preservation age[19].
[16] Respondent’s bundle of summons documents, page 5.
[17] Ibid, page 22.
[18] Ibid, page 11.
[19] Ibid, page 12.
This is not sufficient to establish that Mr Dunstan provided tacit consent to action of any kind by the trustee of the CSS in respect of his deferred superannuation entitlements. Tacitly or otherwise, he did not request or direct or consent to action of any kind; and none was taken.
Double dipping and consistency
Comcare says that the purposes of ss 20, 21 and 21A include preventing ‘double dipping’, where the Commonwealth may be required to pay twice. As the Commonwealth contributes to Mr Dunstan’s superannuation, albeit with benefits deferred, in Comcare’s submission, it should not also be required to contribute to his weekly compensation payments. Unless the Commonwealth’s contributions to his superannuation are offset by a reduction in his weekly compensation payments, Comcare asserts that the Commonwealth will, in effect, pay Mr Dunstan twice for the same period and he will obtain a benefit in excess of his pre-injury earnings, as adjusted. A construction that allows this, Comcare says, would not be consistent with the purposes of the SRC Act.
In circumstances where an incapacitated employee actually receives a superannuation benefit, the off-setting operation of ss 20, 21 and 21A is clear and uncontroversial. It can be accepted that where a superannuation benefit is payable to and received by an incapacitated employee, the Commonwealth may be said to pay twice and the employee may obtain a benefit in excess of his or her pre-injury earnings in employment, “double dipping” as it was put to us, if the ‘superannuation amount’ of the benefit is not offset against the weekly compensation payments to the employee. Plainly enough, this would be contrary to the operation of ss, 20, 21 or 21A and it may result in overpayment that may be recovered under the mechanisms set out in s 114B.
It does not follow, however, that the same result is obtained in the circumstances of an incapacitated employee with a deferred superannuation benefit that is not presently payable and that has not been received by the employee.
In Mr Dunstan’s case, subject to the 1976 Superannuation Act, the Supervision Act and the SIS Regulations, the Commonwealth is liable to fund growth in the productivity component of his deferred superannuation benefit at some point in the future, when payment of the benefit is triggered and due to Mr Dunstan – when he turns 65, or he dies, or he suffers permanent invalidity, or he requests payment of benefits, whichever occurs first. And, subject to calculations under s 19, the Commonwealth is liable to pay him compensation for incapacity as a result of an injury in Commonwealth employment until he turns 65. If his deferred superannuation benefits become due and payable to him before he turns 65, his weekly compensation will be reduced.
Comcare says that, ultimately, Mr Dunstan would be better off to some degree than an equivalent employee to whom superannuation benefits are due and payable under the terms of a superannuation scheme on reaching the applicable preservation age.
Even if Comcare is correct, variance of this kind may result from divergent terms of different superannuation schemes without any ‘double dipping’ by the employee. The elections a person might make under the terms of a superannuation scheme, such as the rate of contributions, or when benefits are deferred, preserved or paid, may result in one person being better or worse off than other in the same scheme.
Furthermore, the elections that an employee may make under a superannuation scheme are matters of right, governed by the terms of the scheme and the relevant superannuation legislation. We do not think that the SRC Act can properly be construed to require the exercise of rights conferred on an employee by other legislation without express provision. We have found no such express provision in the SRC Act. We note that issues concerning the interoperability of the SRC Act and the 1976 Superannuation Act were squarely addressed by the legislature in s 114B, where s 114B(14) expressly disapplies the bar on the assignment and attachment of benefits under ss 118 and 119 of the 1976 Superannuation Act.
If it was the intention of the drafters to require an incapacitated employee to drawn down his or her superannuation benefits on reaching the minimum compulsory preservation age, as Comcare contends, the terms of the SRC Act could have been drafted or expressly amended to achieve that result. Relying on the word ‘receives’ to achieve this result stretches meaning too far.
Comcare says that s 21A should be construed in a manner that delivers a consistent result for employees who are eligible for superannuation benefits under various schemes, having reached the applicable preservation age, despite differing terms of operation under those schemes. Certainly, consistency of application is a desirable object. But consistency cannot be obtained by a construction that strains the limits of meaning to an untenable degree – there is a point at which interpretation of a statute must give way, even in the face of inconsistency or unfairness, leaving those effects of the legislation to the Parliament to address.
If Comcare is correct, and the present terms of the legislation are productive of inconsistency, it is open for the Parliament to amend the legislation to address the difficulty it has identified. That it has not done so, despite amending Part II of the SRC Act on several occasions, and despite Comcare clearly identifying pertinent policy issues in its 2001 Jurisdictional Policy Advice, suggests that an unnatural reading of s 21A, and the word ‘receives’ in particular, was not intended. Whether or not that is correct, and we do not propose to speculate about the intentions of the legislature, the language and purposes of s 21A are quite clear and there is no need to depart from a natural and grammatical reading.
It was put to us by Comcare that the proper application of s 21A would leave an incapacitated employee who has deferred superannuation benefits with but two choices on reaching preservation age – draw down the superannuation benefit, or accept reduced compensation payments for incapacity resulting from injury. Without express provision in the legislation, we do not accept that this result is intended; and we are satisfied that the statutory text itself does not allow it.
In sum on this point, we are not persuaded that these matters provide a compelling reason to adopt the construction for which Comcare contends and to ignore the clear meaning of the word ‘receives’.
The meaning of ‘receives’
The meaning of ‘receives’ for which Comcare contends is very broad indeed. Comcare says that it is sufficient for an employee to have power or an entitlement to exercise discretion or control in respect of his or her superannuation benefits, albeit at a remove, including taking no action at all when the option exists to act, for the employee to be taken to receive a superannuation pension and a lump sum benefit for the purposes of the SRC Act.
We do not accept the construction Comcare contends for. We do not think that the meaning of the word ‘receives’ in s 21A of the SRC Act can stretch so far as to include something that is not payable at the relevant time and that has not been actually paid or constructively received. It would be necessary to strain the plain meaning of the statutory text in a tortuous manner to achieve that result.
In the context of s 21A, the word ‘receives’ is cast in the present tense – it refers to a pension and a lump sum the employee receives from a superannuation scheme. It does not refer to eligibility for or an entitlement to a superannuation benefit that is retained in a superannuation scheme, under its terms, without payment at the direction or request of an employee.
The construction applied by the Full Court in Archer’s case is that an employee may be taken to receive a superannuation benefit if it is paid, or paid at his or her direction, or otherwise dealt with by the superannuation trustee at his or her request or with his or her consent[20].
[20] Archer v Comcare [2000] FCA 1296 at [13].
In Commission for the Safety, Rehabilitation and Compensation of Commonwealth Employees v Neil[21], Neaves J rejected the proposition that the phrase ‘was receiving’ should be interpreted to mean ‘was entitled to receive’ when construing the definition of ‘former employee’ in s 123 of the SRC Act, observing that the definition is to be read in accordance with its natural and grammatical meaning[22]. Even though His Honour was dealing with a different section of the SRC Act, the distinction between receiving a payment and an entitlement to receive a payment is presently apposite.
[21] (1993) 41 FCR 517.
[22] Ibid, at 528.
Archer’s case and Neil’s case stand for the principle that mere eligibility for or entitlement to a superannuation benefit is not sufficient to establish receipt, or constructive receipt, of the benefit by an employee for the purposes of the SRC Act. Where eligibility is not acted upon and there is no present obligation to pay an entitlement, and the entitlement is retained, undisturbed, under the terms of the particular superannuation scheme, it cannot properly be said that the employee receives the benefit or the entitlement for the purposes of s 21A of the SRC Act. In those circumstances, constructive receipt is not made out and the employee is not deemed to have received a superannuation pension and a lump sum benefit.
Thus, essentially, for the purposes of s 21A an employee ‘receives’ a superannuation pension and a lump sum benefit when there is a present obligation on the scheme trustee to pay the benefits and the benefits are paid at the employee’s request or direction, albeit to another person or entity, or credited to another account for the employee’s benefit, whereby the benefits can truly be said to have been constructively received by the employee.
In Commissioner for Railways (NSW) v Agalianos[23], the High Court decided that the term ‘receives compensation’ was sufficiently broad to encompass a right to be paid compensation even though no payment had been made, it having been established in the circumstances of that case that an injury giving rise to an entitlement to compensation had occurred[24]. It is well established that the liability of an employer (or an insurer such as Comcare) and the right to compensation of an injured employee arise concurrently at the point in time when the injury occurred, unless the governing legislation provides otherwise. It may be analogous to say that Mr Dunstan’s eligibility for or his entitlement to a superannuation benefit arose when he reached the compulsory minimum preservation age, but his right to be paid such a benefit does not arise on the mere passing of that anniversary. As we have said, more is required under s 138 of the 1976 Superannuation Act. On this point, Agalianos’ case is distinguished.
[23] [1955] HCA 27.
[24] Ibid, per Dixon CJ at [5] and Kitto J at [14].
Did Mr Dunstan receive superannuation benefits on reaching his preservation age?
The answer to this question is No.
The deferral election he made means that superannuation benefits were not payable to him on 27 September 2010 and they will not become payable to him unless and until the terms of s 138(2) of the 1976 Superannuation Act are satisfied.
The absence of any action on his part on reaching preservation age cannot be construed to satisfy the requirements of s 138(2)(c) and (4) of the 1976 Superannuation Act. On the present evidence, simply put, when Mr Dunstan reached his preservation age, nothing happened in respect of his deferred superannuation benefits. It appears that Mr Dunstan and the scheme trustee did not communicate about his deferred benefits at that time. He did not tacitly consent to anything in respect of his deferred superannuation entitlements. Mr Dunstan’s superannuation benefits remained undisturbed, subject to the deferral election he made in 2001. And there they will remain until he turns 65, or he dies, or he becomes totally and permanently incapacitated, or he gives notice of a date selected for the start of payment of the deferred benefits, having ceased to be an eligible employee.
In these circumstances, it cannot properly be said that Mr Dunstan received his superannuation benefits as a pension and a lump sum, when in fact he did not.
It follows that s 21A of the SRC Act does not apply and his weekly compensation payments for incapacity must be calculated under s 19.
That being so, the decision under review must be set aside and remitted to Comcare to calculate Mr Dunstan’s weekly compensation from 28 February 2013 under s 19 of the SRC Act.
Conclusion
An employee’s failure or omission to exercise available discretion to draw down superannuation entitlements on attaining preservation age is not sufficient reason to deem him or her to have received them for the purposes of s 21A of the SRC Act. Even if taking no action is found to convey the exercise of choice by the employee in respect of his or her superannuation arrangements under the terms of a scheme, if the choice does not result in the crystallization and payment of the superannuation for the benefit of the employee, at his or her request or direction, it cannot be said that the employee receives the benefit.
In the present circumstances of Mr Dunstan’s case, there is no reason to depart from or to extend what the Full Court said in Archer’s case at [13]. Wherever the outer limits of the meaning of the word ‘receives’ may lie, we are satisfied that the term ‘the employee receives’ in s 21A of the SRC Act does not stretch so far as to include superannuation benefits that have been deferred and are not presently payable to the employee, and that have not, actually or constructively, been received by the employee. In order to obtain that result, it would be necessary to do violence to the plain words of the statute and to torture the ordinary meaning of the word ‘receives’; and that we cannot accept.
Decison
For these reasons the decision under review is set aside. In its place, we decide that Mr Dunstan’s weekly compensation from 28 February 2013 and presently is to be calculated under the terms of s 19 of the SRC Act.
We remit these calculations to Comcare.
The parties have 14 days in which to file submissions for orders in relation to costs. If no submissions are received, Comcare will be order to pay Mr Dunstan’s reasonable costs as agreed or taxed.
I certify that the preceding 97 (ninety -seven) paragraphs are a true copy of the reasons for the decision herein of The Hon Brian Tamberlin, QC, Deputy President, Mr S. Webb, Member .............................[sgd]...........................................
Associate
Dated 17 June 2013
Date of hearing 23 May 2013 Counsel for the Applicant Mr T. Crispin Solicitors for the Applicant Ronald Clapham, Lawyer & Notary Public Counsel for the Respondent Mr B. Dube Solicitors for the Respondent Sparke Helmore Lawyers