Hill and Comcare (Compensation)
[2016] AATA 257
•22 April 2016
Hill and Comcare (Compensation) [2016] AATA 257 (22 April 2016)
Division
GENERAL DIVISION
File Number(s)
2014/6043
Re
Douglas Hill
APPLICANT
And
Comcare
RESPONDENT
Decision
Tribunal Deputy President S E Frost
Date 22 April 2016 Place Sydney The Tribunal directs Comcare to provide, within 14 days of the publication of these reasons, a proposed form of decision capable of disposing of the application in a way that is consistent with these reasons.
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Deputy President S E Frost
Catchwords
COMPENSATION - incapacity payments - calculation of incapacity payments - additional death and invalidity cover - productivity contribution – Comcare directed to provide proposed decision consistent with reasons
Legislation
Safety, Rehabilitation and Compensation 1988 ss 4, 20
Secondary Materials
Public Sector Superannuation Scheme Trust Deed
REASONS FOR DECISION
Deputy President S E Frost
22 April 2016
Introduction
Douglas Hill is a former Commonwealth public servant. His employment with the Commonwealth was terminated on medical invalidity grounds in April 2012.
Since the termination of his employment, Mr Hill has received a pension under the Commonwealth superannuation scheme of which he was a member, and he has also received incapacity payments under the Commonwealth workers’ compensation scheme.
In October 2012 Mr Hill received notice of a determination by Comcare which explained the way his incapacity payments would be calculated. He thought the methodology was wrong, and so he asked Comcare to reconsider its determination. On reconsideration Comcare affirmed its earlier decision. Still dissatisfied, Mr Hill has applied to the Tribunal for review of the determination.
The issue
The issue to be resolved is whether Comcare is correctly calculating Mr Hill’s incapacity payments.
Mr Hill’s entitlement to incapacity payments arises under s 20 of the Safety, Rehabilitation and Compensation Act 1988 (SRC Act). It is not disputed that Mr Hill is ‘incapacitated for work as a result of an injury’, that he is ‘retired from his or her employment’, and that he ‘receives a pension under a superannuation scheme as a result of [his] retirement’ within subsection (1) of s 20. The question is whether the formula in subsection (3) has been applied correctly. The formula says that he should be paid:
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).
There is no dispute between the parties as to the quantum of two of the components in the formula – the ‘amount of compensation’, in accordance with the definition, and ‘5% of the employee’s normal weekly earnings’. Where the parties diverge is on the quantum of the ‘superannuation amount’.
The expression ‘superannuation amount’ is defined in s 4 of the SRC Act 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.
The expression ‘superannuation scheme’, referred to in that definition, is itself defined in s 4 of the SRC Act, in terms that unquestionably cover the Public Sector Superannuation Scheme (PSS) of which Mr Hill is a member.
The dispute between the parties boils down to this: how much of the pension that Mr Hill receives from the PSS is ‘attributable to the contributions made under the scheme by the Commonwealth’? The major area of disagreement between the parties centres on Mr Hill’s having taken Additional Death and Invalidity Cover (ADIC) throughout his employment. Over the entire period of his employment, fourteen and a half years, Mr Hill paid half the premiums for the ADIC and the Commonwealth paid the other half. He contends that the amount that he now receives from the PSS on account of that cover is not ‘attributable to the contributions made under the scheme by the Commonwealth’ or, alternatively, it is only attributable to the extent of 50 per cent. Comcare, on the other hand, says the entire amount is so attributable.
The second area of disagreement is the ‘Productivity Contribution’. This, he says, is part of his remuneration package. He describes it as part of his own earnings, derived by him.
Mr Hill’s contentions
Mr Hill alleges serious misconduct not only by Comcare, but also by Commonwealth Superannuation Corporation (CSC), the corporate trustee of the PSS Fund. He says they have breached their fiduciary duties to him in a number of ways. One of his principal concerns is that CSC has:
…failed to keep properly constructed financial corporate accounts (as required under Australian Accounting Standards and the Corporations Act 2001) for the PSS, instead the CSC appears to have misguidedly used the PSS Trust Deed as some kind of incorrect accounting system. Hence it has made serious errors of fact by the use of a trust deed statement in substitution for a compliant corporate accounting system[1].
[1] Written submissions filed 9 November 2015 (AWS), page 1, reproduced without correction
This, he says, has led to significant underpayment of his workers’ compensation entitlements and overcharging of tax to him. He continues[2]:
The CSC [Department of Finance] apparent inability to correctly account for the actual INPUT six capital contribution components (6 apple trees being the 6 capital components contributed immediately prior to retirement on ‘total and permanent’ invalidity grounds accepted by ARIA/CSC) surrendered to the Public Service Superannuation Scheme under the financial stewardship of the Commonwealth Superannuation Corporation (CSC), that has failed to correctly report the 6 different capital components (1 to 6) contributed. (The CSC apple Trees capital contributions have not been correctly accounted for, as the ownership of each component should be clearly determined on the facts not on a misattribution caused by a trust deed that is not a compliant account recording system under the Corporations Act 2001.
The PSS Trust deed does not relieve the CSC of the corporate responsibility and obligations to report 6 correct financially attributed asset components on the CSC Group certificates.
All contributions INPUT into Australian Government Consolidated revenue at the Reserve Bank of Australia are recorded. However, the financial analysis (is missing) and is therefore not in accordance with the Corporations Act 2001. The CSC has failed to correctly attribute the six capital components INPUT into the PSS and has additionally caused further financial and taxation misattribution errors in the CSC PSS scheme group certificates given to Mr Douglas Hill as a retired PSS member.
A number of the six capital components (6 apple trees) have been incorrectly attributed as belonging to the Employer when in fact at law they clearly are the property of the employee at time of the capital asset surrender. (Even during the 6 component amounts/capital accumulation/capital consolidation time phase the capital has its final character when Mr Hill retired officially on 25 April 2012. The key question is to whom did the 6 Capital INPUT components (6 apple trees) belong to as at this date.
[2] AWS, pages 2-3, reproduced without correction
In other words, as he says at the end of that excerpt, to whom do the components belong? And the answer, in Mr Hill’s view, is that they belong to whoever made each of the contributions.
As far as the ADIC is concerned, he paid half of the premium, and so it cannot be the case that the entire amount payable to him is a Commonwealth contribution.
As far as the Productivity Contribution is concerned, this is a contribution made entirely by Mr Hill.
Comcare’s contentions
Comcare sees things differently. Instead of focusing on accounting methodologies, Comcare has regard to the information provided to it by Commonwealth Superannuation Administration (ComSuper) which, in turn, reflects ComSuper’s understanding of the provisions of the Public Sector Superannuation Scheme Trust Deed (PSS Trust Deed).
With respect to the ADIC, the Trust Deed provides in Part 10, Division 3, as follows:
10.3.11Where a member with additional death and invalidity cover dies or ceases membership on invalidity retirement, CSC will make a claim against the policy providing the additional cover.
10.3.12Any 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.
With respect to the Productivity Contribution, the Trust Deed provides in Part 4, Division 3:
4.3.1A designated employer is required to pay to CSC a fortnightly productivity contribution in relation to a member on each contribution due day the member is employed by that designated employer.
Consideration
The Additional Death and Invalidity Cover
I cannot accept Mr Hill’s contention that clauses 10.3.11 and 10.3.12 of the Trust Deed create a rule that should not apply outside the Trust Deed itself.
There is a clear connection between paragraph (a) of the definition of ‘superannuation amount’ and its reference to the circumstance where a superannuation scheme identifies a part of a lump sum as attributable to the contributions made under the scheme by the Commonwealth or a Commonwealth authority, and clauses 10.3.11 and 10.3.12 of the Trust Deed, which do precisely that. There is no doubt that paragraph (a) of the definition of ‘superannuation amount’ captures Mr Hill’s circumstance, and was intended to do so.
Mr Hill’s contention that CSC has somehow failed in its responsibilities to him is entirely misguided. Clauses 10.3.11 and 10.3.12 stand comfortably alongside clause 10.4.2 of the Trust Deed, which provides that the member will pay half the fortnightly premium in Mr Hill’s circumstances. The fact that this occurred does not mean that half the lump sum paid by the life assurance company is not an employer contribution – because clauses 10.3.11 and 10.3.12 say otherwise.
It follows that, as far as the ADIC component is concerned, Comcare’s approach is entirely correct.
Similarly, with respect to the Productivity Contribution, it seems to me that clause 4.3.1 of the Trust Deed makes it plain that the contribution is made by the employer.
Conclusion
Unfortunately, the way the case was presented and argued makes it difficult for me to formulate an appropriate order to finalise the matter.
I will therefore direct Comcare to provide to the Tribunal, within 14 days of the publication of these reasons, a proposed form of decision capable of disposing of the application in a way that is consistent with these reasons.
I certify that the preceding 25 (twenty -five) paragraphs are a true copy of the reasons for the decision herein of Deputy President S E Frost
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Associate
Dated 22 April 2016
Date(s) of hearing 9 November 2015 Date final submissions received 10 November 2015 Applicant In person Counsel for the Respondent Mr B Dube Solicitors for the Respondent AUSTRALIAN GOVERNMENT SOLICITOR
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