Marinceski and Comcare

[2007] AATA 1133

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 1133

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No. N2006/253

GENERAL ADMINISTRATIVE DIVISION		)
Re		JOHN MARINCESKI

Applicant

And COMCARE

Respondent

DECISION

Tribunal Senior Member M D Allen

Date16 March 2007

PlaceSydney

Decision The decision under review is set aside and this matter remitted to the Respondent with the direction that the calculation of underpayment to the Applicant is to be increased by the sum of $4,477.09, being the tax paid on his lump sum payment.

.................[sgd]............................

M D Allen
  Senior Member

CATCHWORDS

WORKERS COMPENSATION – rate at which compensation was paid during the period 1 April 1979 to 6 February 1986 – weekly payments of compensation adjusted to off-set amounts paid by way of invalid pension to avoid “double-dipping” – amount of compensation payable reduced considerably – taxation implications not taken into account – decision under review set aside and matter remitted to the Respondent with the direction that the calculation of underpayment to the Applicant be increased by $4,477.09.

Safety Rehabilitation and Compensation Act 1988 – s 62, s 133

Compensation (Commonwealth Government Employees) Act 1971 – s 45, s 52(3)

Social Security Act 1947 – s 24, s 28

Social Security and Veterans’ Entitlements Amendment Act (No. 2) 1987

Social Security Amendment Act 1988

Australian Securities and Investments Commission v Donald (2003) 136 FCR 7

REASONS FOR DECISION

16 March 2007 Senior Member M D Allen

1.      This Application for Review relates to a “reviewable decision” made pursuant to s 62 of the Safety Rehabilitation and Compensation Act 1988, which decision varied a prior determination made in 1986 regarding the rate at which compensation was to be paid to the Applicant.

2.      On 2 April 1979 the Applicant was retired from his position as a gardener with the Department of Capital Territory, Department of Parks and Gardens, on the ground of invalidity.  On 14 December 1983 a claim for compensation which had been lodged on 9 March 1979 pursuant to the Compensation (Commonwealth Government Employees) Act 1971 (the 1971 Act) was rejected.

3.      Following the rejection of this claim the Applicant sought review by the Administrative Appeals Tribunal, and on 19 February 1985 the earlier determination rejecting the Applicant’s claim was revoked and liability accepted and payments made pursuant to s 45 of the 1971 Act.  That section read :

(1)       “Where an injury to an employee results in the employee being totally incapacitated for work, the succeeding provisions of this section have effect. 

(2)Subject to this section, compensation is payable to the employee, during the period of the incapacity, for an amount per week equal to –

(a)thirty-five dollars plus any amount or amounts required to be added to that amount in accordance with the succeeding provisions of this section; or

(b)the average weekly earnings of the employee before the injury, whichever is the less.

(3)If there is a prescribed person who is, or there are prescribed persons who are, wholly or mainly dependent upon the employee, there shall be added to the amount specified in paragraph (a) of the last preceding sub-section the amount of eight dollars fifty cents.

(4)If there is a child in relation to whom this Act applies (whether born before, on or after the date of injury) who is wholly or mainly dependant upon the employee or there are children in relation to whom this Act applies (whether born before, on or after the date of the injury) who are wholly or mainly dependent upon the employee, there shall be added to the amount specified in paragraph (a)of sub-section (2) of this section the amount of Five dollars for that child or each of those children, but an amount shall not be so added for a child in relation to any time before the date of the birth of that child …”

4. In the interim, from about 24 May 1979, the Applicant was in receipt of an Invalid Pension pursuant to s 24 of the Social Security Act 1947. In addition to the basic rate of Invalid Pension, the Applicant pursuant to s 28 of the Social Security Act1947 received additional amounts in respect of his three dependent children.

5.      Following the determination of 19 February 1985, the Applicant continued to receive payments of compensation pursuant to s 45 of the 1971 Act.  On 1 December 1988 the Safety, Rehabilitation and Compensation Act 1988 came into effect and the Applicant has continued to receive incapacity payments pursuant to s 133 of that Act.

6.      The dispute in this matter is the rate at which compensation was paid to the Applicant in the period 2 April 1979 to 6 February 1986.

7.      This question as to the rate of compensation paid arises from the fact that in a decision dated 31 January 1986, which calculated the weekly payments of compensation to be paid to the Applicant in the period 2 April 1979 to 6 January 1986, an adjustment was made to set-off the amounts which had been paid to the Applicant by way of Invalid Pension.

8.      The authority pursuant to which this adjustment was made was ss 53(3) of the 1971 Act which read:

“Where, in relation to any period in respect of which compensation is payable to an employee in accordance with section 45, 46, 47 or 50 of this Act, an amount is, or amounts are, paid or payable to the employee by the Commonwealth (not being an amount or amounts by way of salary, wages or pay) by reason of the injury in respect of which the compensation is payable or by reason of any incapacity resulting from that injury.  The compensation payable to the employee under that section in respect of that period is, subject to the next ceding sub-section, such amount per week as determined by the Commissioner, having regard to the circumstances giving rise to the payment of, or the liability of the Commonwealth to pay, that amount or those amounts, but the amount so determined shall not exceed the amount per week of the compensation that, but for this sub-section, would be payable to the employee under that section in respect of that period.”

9.      This adjustment entitlement was presumably taken as the amendments effected by the Social Security and Veterans’ Affairs (Miscellaneous Amendments) Act 1986 and subsequent amending Acts – namely the Social Security and Veterans’ Entitlements Amendment Act (No. 2) 1987 and the Social Security Amendment Act 1988 – did not apply to the payments of Invalid Pension to the Applicant; those payments being made prior to 1 May 1987.

10. At documents T69 and T70 respectively, of the documents prepared for the Tribunal pursuant to s 37 of the Administrative Appeals Tribunal Act 1975, are letters from the Department of Social Security, both dated 11 May 1992, which set out the situation as it applied to the Applicant and payment of Invalid Pension. The first letter which is to the Compensation Authority reads:

“A search of our record in this State indicates that the abovenamed has not been paid a Benefit Pension or Allowance which would be recoverable under either Division 3A, Part XVII, or Part 3.14 of the Social Security Act.

This being the case, we have no interest in the matter …” 

The second letter to the Applicant reads:

“I am writing to you regarding your Disability Support Pension.

Our compensation Section has been contacted regarding your inquiry.  They have advised that as you were granted pension in 1979 and your compensation commenced in 1985 your payments of compensation would not have been affected by the legislation which came into effect on 1.5.87.  Your invalid pension payments were not recoverable in whole or in part from your payments of compensation.  These payments of compensation are, however, treated as income for pension purposes.”

11.     The first enquiry made of the Department of Social Security was by letter dated 20 August 1985 which reads:

“The abovenamed former employee has been awarded compensation by this Department from 19.2.85. 

At that time it is believed he was claiming the invalid pension from you. 

Would you kindly inform us of the total gross amount you have paid to him before we proceed in paying compensation? …”

12.     On 24 January 1986 the Department of Social Security replied to the above enquiry with a schedule detailing rates of invalid pension paid.  The schedule contains these columns:

Our Period Compensation Payable (Per Week) Amount of Pension Paid (Not Including Additional Payments for Other Family Members) (Per Week) Total Amount of Pension Paid to Employee and Other Members of Family (Per Week) Total Amount of Pension which would have been paid to the Employee and Other Family Members had Compensation Payments Been Taken into Account (Per Week)

13.     Following receipt of the schedule of payments from the Department of Social Security and the calculations adjustments, a delegate of the Commissioner for Employees Compensation on 31 January 1986 made a determination invoking ss 52(3) of the 1971 Act and considerably reduced the amount of compensation payable to the Applicant, to take into account the amount of Invalid Pension paid.

14.     On 4 February 1986 a further determination was made, revoking an earlier determination dated 30 September 1985, which determination had awarded the payment of compensation to the Applicant in the following amounts, namely $160.60 per week to the Applicant and $42.10 to his wife and $20.00 per week to his children.  The determination of 31 January 1986 did not make any allowance for individual payments to the Applicant’s wife and children pursuant to ss 45(3) and 45(4) of the 1971 Act but simply awarded a consolidated sum.

15.     No material was able to be discovered, despite the efforts of the Respondent, to ascertain the policy that existed in the office of the then Commissioner for Employees Compensation at the time the original decision was made, to reduce the payments of compensation to the Applicant in purported reliance upon ss 52(3) of the 1971 Act. 

16. A reading of the correspondence, as contained in the s 37 documents supplied to the Tribunal, makes it clear that at least some public servants in the Office of the Commissioner for Employees Compensation were at pains to safeguard the revenue and regarded the non-repayment of Invalid Pension as a form of “double dipping” which should be corrected.

17.     The rationale behind the thinking is in the Explanatory Note to the Compensation (Commonwealth Employees) Bill of 1971 when it was introduced into the House of Representatives.  At page 15 of the said Explanatory Note the Minister responsible states:

“reduction of compensation in certain cases (clause 52)

Clause 52 relates to the reduction of compensation having regard to other payments made by the Commonwealth.  Sub-clause (1) and (2) provide for reduction in compensation payable for total incapacity where the Commonwealth also makes payments by way of pay (e.g. holiday pay as required under some awards).  Sub-clause (3) provides for the Commissioner to determine the rate of compensation where the employee receives from the Commonwealth another payment in respect of incapacity arising from an injury for which compensation is also payable and sub-clause (4) lists those payments by the Commonwealth that are not to be taken into account …”

18.     Although the purpose of the clause in the Bill is clear as enacted, ss 52(3) gives a completely unfettered discretion to the Commissioner for Employees Compensation. 

19.     The decision under review calculated what the Applicant had been paid by way of incapacity benefits in the period 2 April 1979 to 6 February 1986, by subtracting from the total amount of benefits paid under ss 45(2), (3) and (4) of the 1971 Act, the amount by which payments had been reduced pursuant to ss 52(3) in the original decision of 31 January 1986.  Other calculations were then made.

20.     The basis of these calculations seems to be the figures obtained from the Department of Social Security in the letter dated 24 January 1986.  What is clear from the calculations on that document and in the determination of 31 January 1986 is that the Department of Social Security made a calculation of the amount of Invalid Pension paid to the Applicant and what would have been paid if, at the time of payment, the Applicant had been in receipt of compensation.  That difference in amounts was then subtracted from the amounts to be paid. 

21.     A factor that was not taken into account by the original decision maker on 31 January 1986, and was recognised but avoided by the Review Officer on 15 June 2004, is that as the Applicant’s arrears of workers compensation were paid to him as a lump sum in 1986 that whole amount was regarded by the Commissioner of Taxation as income for the 1985/86 tax year.  The amount of tax paid was, therefore, greater than would have been paid if workers compensation had been paid on a fortnightly basis, commencing from 2 April 1979, that is to say, from the date at which it was subsequently determined the Applicant was entitled to that payment. 

22.     It is trite law that sitting in the shoes of the decision maker I have the same discretions as those available to the original decision maker in the decision under review.   See Australian Securities and Investments Commission v Donald (2003) 136 FCR 7.

23.     As stated above, no material was able to be put before me as to any policy which may have guided the original decision maker, namely the Commissioner for Employees Compensation.  The legislation gives a guide, namely, that benefits paid under the 1971 Act are to be offset against other payments from the Commonwealth, with the exception of certain payments which are set out in ss 52(4) of that Act. 

24.     That policy is clearly directed against what has been termed in the vernacular “double dipping” and as a general policy I see no reason why I should not apply it.  However, the manner in which the discretion has been exercised is crude in that it took no account of taxation implications.

25.     I believe an adjustment should be made so that the Applicant is not worse off than if he had been paid workers compensation from when he was first entitled.  The exact amount I cannot calculate, but I also take into account that the Applicant has been held out of monies to which he was entitled for a considerable period, and although in this Tribunal I have no power to award interest on that sum, an allowance should be made for it.  Likewise, I regard it as a factor in exercising my discretion, the fact that the responsible department, namely the Department of Social Security, was unable pursuant to statute, and indeed was not concerned, to recover amounts of Invalid Pension paid.

26.     I therefore set aside the decision under review and remit this matter to the Respondent with the direction that the calculation of underpayment to the Applicant is to be increased by the sum of $4,477.09, being the amount of tax extracted from his lump sum payment of compensation. 

I certify that the 26 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member M D Allen

Signed:
  [Amanda Aitken]

.....................................................................................

Associate

Date/s of Hearing  6 March 2007 
Date of Decision  16 March 2007
Solicitor for the Applicant              Self-represented        
Solicitor for the Respondent         Australian Government Solicitor