Samaan and Comcare - [2002] AATA 274

DECISION AND REASONS FOR DECISION [2002] AATA 274

ADMINISTRATIVE APPEALS TRIBUNAL )

) No N2001/172

GENRAL ADMINISTRATIVE   DIVISION        )
           Re      Mikhail Samaan
  Applicant
           And    Comcare
  Respondent

DECISION

Tribunal Dr J D Campbell, Member

Date22 April 2002
PlaceSydney

Decision The Tribunal determines that the decision under review is set aside and in substitution therefor determines that the matter is remitted to the Respondent for re-calculation of the Applicant's weekly incapacity compensation payments in accordance with the Tribunal's reasons for decision herein.

[SGD] Dr J D Campbell Member
CATCHWORDS
COMPENSATION - invalidity retirement - compensation payments - issue of advice - calculation of incapacity payments

Safety, Rehabilitation and Compensation Act 1988 - sections 4, 8, 19, 20

REASONS FOR DECISION

Dr J D Campbell, Member

In this matter, Mr Mikhail Samaan ("the Applicant") seeks a review of the decision of an independent review officer from Comcare ("the Respondent") dated 24 January 2001 which affirmed the decision of the Respondent dated 15 November 2000 that the Applicant was entitled to a gross weekly compensation amount of $141.99.
A hearing was held before the Tribunal on 20 November 2001 at which the self represented Applicant presented oral evidence. The Respondent was represented by Ms Lynette Rieper, solicitor. The Tribunal was assisted by an interpreter fluent in the Arabic language. The matter was adjourned to allow receipt of further information from the Commonwealth Superannuation Fund and the superannuation details of the Applicant recorded on the Comcare computer system. The hearing was resumed on 28 February 2002, at which the self represented Applicant gave further evidence. Mr Bulloch also presented evidence on behalf of the Applicant.
The following material was placed into evidence before the Tribunal:
Exhibit           Description    Date
T1-T125 pp1-226 Documents prepared pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 ("T-documents")
A1      Invalidity Report attached to Defence Corporate Support letter         26 February 2000
R1      Comsuper letter       5 February 2002
R2      Comcare Employee Super details 5 February 2002

issues

The relevant issue in this matter is whether or not the Applicant is being paid the correct amount of compensation since his retirement on 20 October 2000, on the grounds of invalidity.
legislation
The relevant legislation is the Safety, Rehabilitation and Compensation Act 1988 ("the Act") and in particular sections 4, 8, 19 and 20.
background
The Applicant was born on 1 April 1937. The Applicant was formerly employed by the Department of Defence. The Applicant had suffered an injury to his lower back on 19 June 1992. Liability had been accepted by the Respondent since that date. On 13 June 2000 the Applicant was awarded compensation in respect of 15 percent whole person impairment. The Applicant was retired on invalidity grounds as a consequence of his compensible back injury. Up to the time of his invalidity retirement, the Applicant was paid incapacity payments pursuant to section 19(6) of the Act on the basis that he was earning less than minimum earnings when his three dependent children were taken into account. Following his retirement on invalidity grounds, a determination was made by the Respondent on 15 November 2000 that the Applicant's entitlement to incapacity payments pursuant to section 20 of the Act was $141.99 per week (T115). The determination was subject to review by a reconsideration officer, who affirmed the original decision on 24 January 2001, (T124).
applicant's evidence
The Applicant told the Tribunal that he was born in the Sudan on 1 April 1937 and that he came to Australia in 1969. In February 1970 the Applicant stated that he commenced working as a storeman for the Department of Defence (Navy). He stated that he commenced contributing to superannuation in 1982 initially at a 5 percent level, increasing it some two to three years later to 10 percent. The Applicant stated that he had had five hernia operations over time and that in 1992 he injured his back at work.
The Applicant told the Tribunal that he was married with three dependent children, who were either at school or university. He also stated that prior to his retirement on invalidity benefits, on 20 October 2000, he was receiving incapacity payments for his accepted back disability of 90 percent of the salary of the position for which he was employed.
The Applicant stated that prior to his retirement he had approached Mr Plant, the Medical Case Manager at Defence Corporate Support, regarding the amount of incapacity compensation payments he would receive after retiring on invalidity grounds. The Applicant stated that he was told by Mr Plant that he would receive the same compensation incapacity payments after his retirement. The Applicant stated that he agreed to sign the papers relating to his retirement on invalidity grounds on the understanding that he would receive the same incapacity compensation payments after his retirement as he did before, namely 90 percent of the salary for his particular job designation.
The Applicant stated that he was never advised in writing as to what his options may have been (retirement on invalidity grounds, redundancy etc), nor was he ever advised in writing as to what effect his retirement on invalidity grounds would have on the quantum of his incapacity payments. The Applicant also stated that by virtue of the speed of the final process relating to his retirement, he had little opportunity to think through what was happening, seek further information, or pursue alternative advice. Further, the Applicant stated that he was never told of his post retirement entitlement to incapacity payments until he received a letter from Comcare dated 15 November 2000, which stated that his entitlement to weekly incapacity payments was $141.99, being a significant reduction on what he had been receiving pre-retirement.
mr bulloch's evidence
Mr Bulloch told the Tribunal that he was a friend of the Applicant and that he was also a registered financial planning adviser, holding the qualification of Diploma of Financial Planning. Mr Bullock informed the Tribunal that he had talked with the Applicant prior to his retirement and advised him to be careful and to attempt to obtain information in writing, as the issues were quite complex and difficult to appreciate.
submissions
The Applicant contended that he had been given misleading and incorrect advice and had agreed to retirement on grounds of invalidity without being provided with a clear understanding of any existing alternatives or of the future implications of retirement on these grounds. More specifically, the Applicant stated that he was never informed that his incapacity compensation payments would decrease after his retirement, with the first knowledge of such a decrease having been forwarded to him on 15 November 2001.
As a result of the inadequate, incomplete and misleading advice, the Applicant contended that he has suffered a detriment, and in this regard has been pursuing Comcare as he believes that the calculation of his incapacity compensation payments are not what he was led to believe they would be.
The Respondent contended that the only issue before the Tribunal is whether the Applicant's incapacity payments have been correctly calculated. In so stating the Respondent contended that they, the Respondent, have neither control over the personnel functions of the primary employing Department nor over what election the Applicant made in respect of his superannuation.
The Respondent submitted that the Applicant's entitlements to compensation for incapacity can only be worked out in accordance with the Act, namely section 20; that section 20 does not permit the use of calculations pursuant to section 19(6); and further that section 19(3)(a) determines that the Applicant's entitlement to incapacity payments commences with an understanding that the AC component within the designated formula [AC - (SA + SC)] is set at 75 percent of the Applicant's normal weekly earnings less any amount that he may have earned in that week. As a consequence, the Respondent contended that the Applicant's entitlement to compensation has been correctly calculated.
consideration and findings
The Tribunal in preliminary comment, notes that the Applicant's main issues in this matter relate to the following:

an inadequate provision by his previous employer of written information relating to what benefits, and in particular the quantum of compensation payments, he would receive upon accepting retirement on invalidity grounds;
inadequate provision of separation options which may have been available to him at the time his separation from employment occurred on grounds of invalidity; and
misleading advice given by an employee of the employer in relation to the amount of weekly compensation he would receive after his retirement on invalidity grounds.

The Tribunal, in reviewing the main issues raised by the Applicant, concludes that these issues cannot fall within the ambit of the current matter before the Tribunal, for they are matters which must be dealt with in the first instance by the Applicant with his former employer, and if there are issues relating to his superannuation election, by the Applicant with his superannuation fund. Once decisions have been made by the respective authorities and where required further internal review, the Applicant, if remaining dissatisfied, can seek external review on the merits. If on the other hand the matters have been addressed by the appropriate authorities (employer and superannuation fund) and the Applicant remains convinced that his matter has not been properly dealt with, he may seek to raise the particular issue with the Ombudsman.
In this matter the Tribunal must deal with the issue which is before it, namely whether the Applicant has received and continues to receive the correct quantum of weekly compensation for injuries resulting in incapacity where that employee is in receipt of a superannuation pension.
It is common ground between the parties that the Applicant was retired on grounds of invalidity on 20 October 2000. Further, the Tribunal makes the following finding of facts:
(a) the Applicant ceased employment on 20 October 2000 (T114);
(b) the Applicant was a member of the CSS fund at the time of his retirement (T114);
(c) the Applicant was paying a 10 percent superannuation contribution rate equating to fortnightly payments of $101.60, which equates to 5 percent minimum amount payable of $25.40 per week (T114);
(d) the Applicant's review date for assessment of superannuation contribution rate was 1 April of each year, with the minimal notional quantum at time of retirement of $25.40 per week being established on 1 April 2000 (date of birthday), and a further review would have occurred on 1 April 2001, if the Applicant had not ceased employment;
(e) the Applicant received a lump sum payment of $117,787.68 which represented his total accumulated contributions and productivity (Exhibit R1);
(f) the Applicant received a government financed index pension of $11,954.23 which commenced on 21 October 2000 and which has been subject to a pro rata CP1 increase on 29 June 2001 to $12,432.35 per annum and a CP1 increase on 28 December 2001 to $12,569.11 per annum (Exhibit R1); and
(g) the Applicant's salary at time of cessation of employment was $27,714 per annum which equates to a normal weekly earnings figure of $532.96 (T112, p 200, T125, p 224).
statutory framework
The relevant statutory framework is to be found within sections 4, 8, 19 and 20 of the Safety, Rehabilitation and Compensation Act 1988 ("the Act") which provide as follows:

Section 4 of the Act provides the following definitions:
""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;
"superannuation scheme" means any superannuation scheme under which the Commonwealth, a Commonwealth authority or licensed corporation makes contributions on behalf of employees and includes a superannuation or provident scheme established or maintained by the Commonwealth, a Commonwealth authority or a licensed corporation;"
Section 8 defines the concept of normal weekly earnings.
Section 19(2) defines normal weekly earnings as the amount of the employees' normal weekly earnings.
Section 19(3) provides that, subject to this Part of the Act, Comcare is liable to pay compensation to the employee in respect of the injury, for each week during which the employee is incapacitated, other than a week referred to in subsection (2):
- where the employee is not employed during that week, of an amount equal to 75 percent of his or her normal weekly earnings, less the amount (if any) that he or she was able to earn during that week in suitable employment.
Section 20 covers compensation for injuries resulting in incapacity where an employee is in receipt of a superannuation pension, and relevantly provides:
"20(1) This section applies to an employee who, being incapacitated for work as a result of an injury, retires voluntarily, or is compulsorily retired, from his or her employment at any time after the commencement of this section and, as a result of the retirement, receives a pension under a superannuation scheme.
20(2) Comcare is liable to pay compensation to the employee, in respect of the injury, in accordance with this section for each week after the date of the retirement during which the employee is incapacitated.
20(3) The amount of compensation is an amount calculated under the formula:
AC - (SA+SC)
where:
AC is 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);
SA is the superannuation amount; and
SC is the amount of superannuation contributions that would have been required to be paid by the employee in that week if he or she were still contributing to the superannuation scheme."

In addressing the facts of this matter to the statutory framework, the Tribunal notes the following:
(a) the superannuation amount in this matter is that part of the pension which is attributable to contributions made under the scheme by the Commonwealth, namely $11,954.23 per annum which equates to $229.89 per week (SA amount) ;
(b) the amount of weekly compensation that would have been payable to the applicant in accordance with sections 20(3) and 19(3)(a) is 75 percent of $532.96 (normal weekly earnings at time of retirement) which equates to $399.72 per week (AC amount); and
(c) in noting the particular definition of the SC amount contained within section 20(3) of the Act, the Tribunal concludes that the SC amount is $25.40, being one quarter of the $101.60 that the employee would have had to contribute in that week.
In carrying through the calculation, on the evidence before it, the Tribunal does conclude that the Applicant's weekly compensation incapacity payments, in the week following his retirement on invalidity grounds on 20 October 2000, should amount to a gross figure of $399.72 - ($229.89 + $25.40) which equates to $144.43. This figure would need to be adjusted with each consumer price index approved adjustment.
The Tribunal, while concluding that it would appear on the evidence before it that the Applicant has been underpaid his weekly incapacity compensation payments by a small margin ($2.44 per week), recognises there may be aspects of the calculation that reflects assumptions, for example a denominator of 52 in calculating weekly payments, which is inconsistent with the employer's methodology of calculating the same, particularly when a leap year is included in the calculation. This may alter the AC component of the equation and, if such were the case, a similar variation would occur with the SA amount when converted to a weekly figure.
In summary, the Tribunal concludes that there has been a small underpayment of the weekly incapacity compensation payments to the Applicant and remits the matter to the Respondent to calculate the weekly underpayment as adjusted over time in accordance with the Tribunal's reasoning.

determination

The Tribunal determines that the decision under review is set aside and in substitution therefor determines that the matter is remitted to the Respondent for re-calculation of the Applicant's weekly incapacity compensation payments in accordance with the Tribunal's reasons for decision.
I certify that the 25 preceding paragraphs are a true copy of the reasons for the decision herein of Dr J D Campbell, Member
Signed: O. Caragianni           .....................................................................................
  Associate
Dates of Hearing  20 November 2001 and 28 February 2002
Date of Decision  22 April 2002
Applicant  self represented
Solicitor for the Respondent    Ms L Rieper