Colin Dunstan and Comcare

Case [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, Member
Date 17 June 2013
Place Canberra

  1. 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.

  2. 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, Member

    17 June 2013

  3. 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.

  4. 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

  5. The…

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Colin Dunstan and Comcare [2013] AATA 402
Case
[2013] AATA 402
Decision Date

CaseChat Overview and Summary

The case of Colin Dunstan and Comcare involves the interpretation of section 21A of the Safety, Rehabilitation and Compensation Act 1988 (Cth) (SRC Act) to determine the basis on which Mr. Dunstan’s weekly compensation for incapacity should be calculated. Specifically, the court had to decide whether Mr. Dunstan’s weekly compensation from 28 February 2013 should be calculated under section 21A of the SRC Act, which applies if he is deemed to receive an employer-funded superannuation pension and a lump sum benefit on the day he reached his minimum preservation age. The primary legal issue before the court was the interpretation of the word 'receives' in section 21A(1)(b) of the SRC Act.

The court examined whether Mr. Dunstan’s failure to exercise his discretion to draw down his superannuation entitlements upon reaching his preservation age should be deemed as a receipt for the purposes of section 21A. The court found that the term 'the employee receives' in section 21A does not extend to include superannuation benefits that have been deferred and are not presently payable to the employee. It was determined that in order to conclude otherwise, it would be necessary to do violence to the plain words of the statute and to torture the ordinary meaning of the word 'receives'. Consequently, the court held that Mr. Dunstan’s weekly compensation from 28 February 2013 should be calculated under section 19 of the SRC Act.

In setting aside the decision under review, the court remitted the calculation of Mr. Dunstan’s weekly compensation from 28 February 2013 to Comcare. The court also noted that if no submissions on costs are filed within 14 days, Comcare would be ordered to pay Mr. Dunstan’s reasonable costs as agreed or taxed.

Orders

Orders of the court

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Background

Background to the litigation

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.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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.

Ratio Decidendi

Legal Principle Established

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.